Lifenet Insurance Company · TSE:7157
Lifenet Insurance — FY2015 Earnings Presentation
67 slides from Lifenet Insurance's earnings presentation, May 13, 2016
Slide 1: Investor Meeting Presentation for Fiscal 2015
Securities Code:7157 TSE Mothers Investor Meeting Presentation for Fiscal 2015 May 13, 2016
Slide 2: FY2015 Key Highlight
FY2015 Key Highlight ✓ Ordinary income up 7.5% year on year, almost achieved JPY 9.5bn as Management Goal ✓ Achieved to turn profitable1 as Management Goal Review of previous mid-term business plan Formulation of new mid-term business plan 1. Based on ordinary profit before amortization of deferred
Slide 3: Summary of FY2015 Results
Summary of FY2015 Results (JPY mn) FY2014 FY2015 Year on year Ordinary income 8,729 9,387 107.5% Operating expenses 3,815 3,239 84.9% Ordinary profit (loss)1 (472) 584 - Cash flows from operating activities 3,247 4,610 142.0% Mortality margin 1,777 2,100 118.2% Annualized premium2 of policies-in-for
Slide 4: Contents
Contents 1. Results for Fiscal 2015 2. Results of Mid-term Business Plan 3. Challenges for Fiscal 2016 3
Slide 5: Overview of FY2015
Overview of FY2015 Improvement of customer convenience - Utilization of Smartphone - Enhance free consultation services - Expanded range of underwriting and designatable beneficiaries Business alliance with KDDI Enhance agents channel 4
Slide 6: Utilization of Smartphone
Utilization of Smartphone Accept application documents via website captured by Smartphone Save customer’s steps of copying and sending Realized payment in 3 days at earliest by saving applications for new policy (from April 2015) customer’s steps of copying and sending documents for claim1 (from Ma
Slide 7: Enhance Free Consultation Services
Enhance Free Consultation Services Expanded free consultation services team, number of calls resulted in 1.7 times year on year You can consult with a Lifenet’s insurance planner for any questions for free 6
Slide 8: Expanded Range of Underwriting and Designatable Beneficiaries
Expanded Range of Underwriting and Designatable Beneficiaries Improved convenience according to customers’ voice Expanded range of underwriting for Long- Expanded range of designatable term Disability to part-time worker with beneficiaries to same-sex partners annual income over JPY 1.5mn Acceptab
Slide 9: Business Alliance with KDDI
Business Alliance with KDDI Commenced sales with KDDI from April 2016 Started Business Alliance in April 2015 Established Business Alliance Committee in May 2015 aiming to discuss detailed measures Started trial sales at “au Shop” in December 2015 for successful business launch Commenced n
Slide 10: au Life Insurance
au Life Insurance Providing life insurance under “au Life Design” concept “au Life Design” au Non-life au Life Insurance Insurance au Home Mortgage au Electricity 9
Slide 11: Enhance Agents Channel
Enhance Agents Channel Direct and agents sales ratio1 Approx. 50% of Long-term Disability applications is via agent Sales over-the- counter promotes Direct Via Agents understanding 50.6% insurance products Build strong position in expanding market 1. Results for 4Q of FY 2015 10
Slide 12: Ordinary Income
Ordinary Income (JPY mn) 9,387 8,729 Increased as growth 7,603 of policies-in-force Almost achieved Management Goal JPY 9.5bn FY2013 14 15 11
Slide 13: 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 mn) 225,534 In-force business Y-on-Y 5% increase 215,403 and insurance premium steadily 9,377 202,963 increased Y-on-Y 8,793 7% increase 8,077 Policies-in-force exceeded 22
Slide 14: Breakdown of Policies-in-force
Breakdown of Policies-in-force Over 140,000 in-force policyholders (YY/MM) 15/03 16/03 Number of policies-in-force 215,403 225,534 - Term Life1 112,420 117,626 - Whole-Life Medical1 65,666 67,999 - Term Medical Care1 11,870 11,132 - Long-Term Disability1 25,447 28,777 Sum insured of policies-in-fo
Slide 15: Number of New Business / Annualized Premium
Number of New Business / Annualized Premium :Number of new business :Annualized premium of new business 46,237 (JPY mn) Annualized premium Y-on-Y of new business 27,982 10% decrease JPY 1,189mn 25,150 1,707 Challenge for stable 1,327 growth in new 1,189 Y-on-Y 10% decrease business performance F
Slide 16: Number of New Business / Annualized Premium (Half Year)
Number of New Business / Annualized Premium (Half Year) Bottoming out in 2H 2015 26,777 :Number of new business :Annualized premium of new business (JPY mn) 19,460 15,053 13,747 975 12,929 11,403 732 694 632 548 640 13/1H 13/2H 14/1H 14/2H 15/1H 15/2H 15
Slide 17: Insurance Claims and Benefits
Insurance Claims and Benefits : Amount of insurance payments (JPY mn) : Amount of insurance payments / Premiums income (%) 1,124 1,159 1,078 Payments decreased 423 436 despite increased Benefit 443 claims policies-in-force 15.0 13.8 12.0 52 insurance claims 701 723 Insurance 635 claims and 4,990
Slide 18: Provision for Policy Reserves
Provision for Policy Reserves : Provision for policy reserves (JPY mn) : Provision for policy reserves / Premiums income (%) 3,744 Increased by 3,566 insurance premium 2,961 increase Calculations 42.6 41.6 based on the five- 39.4 year Zillmer method since business commencement FY2013 14 15 17
Slide 19: Operating Expenses
Operating Expenses 4,131 (JPY mn) 3,815 3,239 Decreased 15% 1,948 1,672 1,302 Marketing due to marketing expenses control 612 558 Customer 526 Operating expenses service ratio1 36% 1,570 1,583 1,410 System and other FY2013 14 15 55% 46% 36% Operating expenses ratio¹ 1. The ratio of operating exp
Slide 20: Operating Expenses (Quarterly)
Operating Expenses (Quarterly) Invested in FY2016 in advance (4Q) 1,172 (JPY mn) 957 992 870 637 814 787 751 432 709 441 Marketing 280 322 279 312 269 Customer 140 139 143 135 135 service 128 124 138 394 385 390 413 343 336 415 System 315 and other 14/1Q 14/2Q 14/3Q 14/4Q 15/1Q 15/2Q 15/3Q 15/4Q 1
Slide 21: Marketing Expenses per New Business
Marketing Expenses per New Business :Marketing expenses per new business (JPY thousand) :Marketing expenses/Annualized premium of new business (%) Y-on-Y 59 improved 13% Marketing expenses 51 for annualized Y-on-Y 42 improved premium improved 13% 1.2 13% year on year 1.1 1.0 Marketing expenses p
Slide 22: Ordinary Profit (Loss)
Ordinary Profit (Loss) Achieved to turn profitable1 as Management Goal (JPY mn) 584 FY2013 FY2014 FY2015 Ordinary loss before deferred expenses and (1,198) (472) 584 amortization Amortization (1,060) (1,060) (1,060) (472) cost Ordinary profit (loss) (2,258) (1,532) (475) (1,198) FY2013 14 15 1. Th
Slide 23: Structure Breakdown of Ordinary Profit (Loss)
Structure Breakdown of Ordinary Profit (Loss) Turned profitable by decreased operating expenses Transition of ordinary profit (loss)1 (JPY mn) Decrease of operating Other 584 Decrease of expenses 44 insurance claims and 575 Increase of other insurance Other premiums 37 and other 33 Increase of pro
Slide 24: Condensed Statements of Operation
Condensed Statements of Operation (JPY mn) FY2014 FY2015 Change Insurance premiums and other 8,493 9,117 624 Other 236 269 33 Ordinary income (A) 8,729 9,387 657 Insurance claims and other 1,324 1,287 (37) Provision for policy reserves and other 3,566 3,824 258 Operating expenses 3,815 3,239 (575) O
Slide 25: Mortality Margin
Mortality Margin (JPY mn) 2,100 1,777 Steadily recorded mortality margin 1,141 Increased 18% year on year FY2013 14 15 24
Slide 26: Fundamental Profit
Fundamental Profit (JPY mn) FY2013 FY2014 FY2015 Mortality margin 1,141 1,777 2,100 Expense margin (loss) (3,234) (3,282) (2,595) Improved Interest margin Fundamental profit 3 (2,089) 19 (1,484) 43 (450) due to expense (ref.) Insurance premiums and other 7,537 8,493 9,117 loss improvement Adjusted
Slide 27: Cash Flows from Operating Activities
Cash Flows from Operating Activities (JPY mn) 4,610 Continuously recorded positive 3,247 operating cash flows on annual basis 1,976 Increased 42% year on year FY2013 14 15 26
Slide 28: Financial Condition
Financial Condition (JPY mn) (YY/MM) 14/03 15/03 16/03 Total assets 21,188 23,387 30,317 Cash and deposits 418 731 734 Monetary claims bought - - Increased assets 1,999 Money held in trust 1,000 1,033 1,035 under management Securities 14,154 17,082 23,067 due to capital Government bonds 6,636 8,22
Slide 29: Solvency Margin Ratio
Solvency Margin Ratio1 2,805% 2,244% Improved by 1,922 % capital increase Average2 of 4 major insurance companies as of September 30, 2015 Maintained at 909% healthy level 14/03 15/03 16/03 (YY/MM) 1. The solvency margin ratio measures a life insurance company’s ability to pay out claims when un
Slide 30: European Embedded Value
European Embedded Value (JPY mn) 30,578 EEV approx. JPY 30.5bn 25,248 22,907 14,492 Value of Increased by capital in-force business increase and review of assumptions despite Adjusted impact of declined 16,086 net worth interest rates 14/03 15/03 16/03 (YY/MM) 29
Slide 31: Value of New Business (VoNB)
Value of New Business (VoNB) 838 (JPY mn) :Value of new business 620 :Value of new business (ultimate unit cost base) 1 Fell into negative VoNB due to decline of interest 152 rates 89 (52)(43) FY2013 14 15 1. The expense assumptions used to calculate the EEV and the value of new business are set b
Slide 32: Structure Breakdown of VoNB per Policy
Structure Breakdown of VoNB per Policy Though initial cost declined, change of interest rates largely effected VoNB per policy (ultimate unit cost base) (JPY thousand) Products mix change Insurance Initial expense increased (0) premiums per policy 5 7 increased (3) Interest rates Other change Ulti
Slide 33: Main Factors of Declined VoNB
Main Factors of Declined VoNB Positive assumption using interest rates as of end of FY2014 (JPY mn) VoNB in Economic Interest VoNB in FY2015 assumptions rate1 FY2015 (ultimate unit of calculation (10 years) cost base) Assumptions as of end of FY2014 0.58％ 476 485 Assumptions as of end of FY2015 0.
Slide 34: VoNB (Ultimate Unit Cost Base)
VoNB (Ultimate Unit Cost Base) Per new business (JPY mn) FY2014 FY2015 for FY2015 (JPY thousand) Certainty equivalent present value of future profit 3,720 3,031 120 －) Time value of financial options and guarantees － － － －) Frictional cost of capital (19) (7) (0) －) Allowance for non market risk (2,
Slide 35: EV Sensitivity Analysis
EV Sensitivity Analysis1 Change in EEV as of Change in value of (JPY mn) March 31, 2016 new business EEV and new business value as of March 31, 2016 30,578 (52) Sensitivity 1a: 1.0% increase in interest rates 1,650 509 Sensitivity 1b: 1.0% decrease in interest rates (2,454) (531) Sensitivity 1c: 0.5
Slide 36: Impact of Negative Interest Rate
Impact of Negative Interest Rate Limited impact to our financial status in FY2015 Interest margin Limited impact Increased though certain EEV impact Decreased with high VoNB impact while having causes of increase 35
Slide 37: Contents
Contents 1. Results for Fiscal 2015 2. Results of Mid-term Business Plan 3. Challenges for Fiscal 2016 36
Slide 38: Previous Mid-term Business Plan
Previous Mid-term Business Plan LIFENET 2015 Management Goal Offer new products and Achieve 9.5 billion in services as an “innovator” ordinary income (FY2015) to create the future of life Push the company toward insurance that resonate with profitability (FY2015) (Based on ordinary profit before a
Slide 39: Transition of Life Insurance Market
Transition of Life Insurance Market Expanding agent channel Trends of sales channels1 Online Other 7.0% 6.4% 6.9% 13.7% Insurance agents Banks, Securities brokers Sales representatives (life insurers) 2006 09 12 15 1. Source: Lifenet, based on data from a nationwide report on the life insurance in
Slide 40: Online Life Insurance Market
Online Life Insurance Market Sluggish of market growth Number of new business 1 Other Lifenet FY2008 09 10 11 12 13 14 1. Source: Lifenet analysis 39
Slide 41: Ordinary Income
Ordinary Income Almost achieved JPY 9.5bn as Management Goal Average annual rate 9,387 of growth 16% 8,729 (JPY mn) 7,603 5,976 FY2012 13 14 15 40
Slide 42: Ordinary Profit (Loss)
Ordinary Profit (Loss)1 Achieved to turn profitable1 as Management Goal (JPY mn) 584 (472) (1,198) (1,664)2 FY2012 13 14 15 1. Ordinary profit (loss) before amortization of deferred assets under Article 113 of the Insurance Business Act 2. The ordinary loss before deferred expenses and amortizatio
Slide 43: Status of Priority Areas
Status of Priority Areas Sustainable growth in insurance premium income (top-line) →Build new sales channels Improvement in productivity →Achieved to turn profitable1 Being an “innovator” (front-runner) in life insurance →Improved customer convenience 1. Ordinary profit before amortization of deferr
Slide 44: Sustainable Growth in Insurance Premium Income (top-line)
Sustainable Growth in Insurance Premium Income (top-line) Enhance business partnerships with agents to enhance sales channels December 2014 April 20151 1. Lifenet concluded an agency agreement with KDDI CORPORATION in November 2015 43
Slide 45: Improvement in Productivity
Improvement in Productivity Controlled operating expenses mainly marketing expenses Operating expenses (JPY mn) 4,976 4,131 3,815 3,239 Marketing FY2012 13 14 15 44
Slide 46: Being an Innovator (Front-runner) in Life Insurance
Being an “Innovator” (Front-runner) in Life Insurance Improved customer convenience continuously Expanded Range of Designatable Beneficiaries Improved customer convenience of process 来風 大輔 20 5 18 Save customer’s 東京都千代田区麹町二丁目14番地2 steps of copying 来風 大輔 20 5 18 and sending 東京都千代田区麹町二丁目14番地2 applic
Slide 47: Challenges for New Mid-term Business Plan
Challenges for New Mid-term Business Plan Return to growth in new business performance Avoid assimilating with competitors Proactive development of products and services 46
Slide 48: Contents
Contents 1. Results for Fiscal 2015 2. Results of Mid-term Business Plan 3. Challenges for Fiscal 2016 47
Slide 49: Current Life Insurance Market
Current Life Insurance Market Huge and mature market over JPY 40tn Insurance premiums1 (JPY tn) 42.7 44.5 43.2 40.5 40.8 41.0 41.1 Cooperative insurance Private insurance FY2008 09 10 11 12 13 14 1. Private insurance: Life insurance companies that are members of The Life Insurance Association of J
Slide 50: Potential of Online Life Insurers Market
Potential of Online Life Insurers Market High potential for future growth Trends of application via online channel1 9.1% Application via online channel Preferred future online channel High potential 4.5% 2.9% 1.8% 2.2% Preferred future 2006 09 12 15 online channels (2015) 1. Source: Lifenet, based
Slide 51: Overseas Online Life Insurers Market
Overseas Online Life Insurers Market Expanded initiatives of “Online x Life Insurance” Oscar : Google Capital invested $ 32.5mn Aviva : Launched venture capital as a part of digital strategy Tencent : Planning to launch online life insurer Allianz : Planning to launch online life insurer in China
Slide 52: New Mid-term Business Plan
New Mid-term Business Plan ・ Stable growth in new business performance ・ Establish foundation for “rebuilding business model and growth story” Management •13.5 billion yen in ・ Implementation of systematic investments for future FY2018 ordinary income Goal 2016 2017 2018 •Positive profitability of o
Slide 53: Management Goal
Management Goal JPY 13.5bn in ordinary income and positive profitability of ordinary profit(loss) Ordinary income and ordinary profit (loss) (JPY mn) 13,500 Ordinary income Ordinary profit (loss) 9,387 (475) 0+ FY2015 16 17 18 52
Slide 54: Business Strategy: Execute on strategy suitable for each channel
Business Strategy Execute on strategy suitable for each channel Online direct sales • Increase the number of visitors to the website • Optimize for a mobile-centered lifestyle • Strengthen and further utilize points of Online contact with policyholders direct sales KDDI (exclusive alliance agent)
Slide 55: Business Strategy: Invest in new business and services
Business Strategy Invest in new business and services Insurance -related Utilize business New latest products technology 54
Slide 56: Organization Changes
Organization Changes Into 5 divisional organization prior to new mid-term business plan from January 2016 Chairman President Corporate Information Corporate Sales & Marketing Customer Services Administration Systems Strategy Strategy Division Division Division Division Division Corporate Customer
Slide 57: Organization Strategy
Organization Strategy Toward more organizational management Change Challenge Unity 56
Slide 58: Key Accounting Points
Key Accounting Points Completion of amortization of deferred assets under Article 113 of Insurance Business Act (end of FY2017) Changed calculation methods of policy reserves from 5-year Zillmer's method into net level premium method (in FY2018 onward) Dividend policy to be considered based on diffe
Slide 59: Focus Areas in FY2016
Focus Areas in FY2016 Enhance each channel as pillar Increase visitors for our website Optimize services for Smartphones Enhance services for existing Online policyholders direct Improve customers sales convenience on website Train sales persons at au Shop Stabilize call center operation E
Slide 60: New Product
New Product Launch of new Long-term Disability product in June Long-term Disability Revised drastically in response to customers “Hataraku-Hito 2” requests! Main points of Long-term Disability “Hataraku-Hito 2” Newly added “Half- Newly added 60 Newly added a type” for customers days of initial ran
Slide 61: Number of Application (Monthly)
Number of Application (Monthly) “au Life Insurance” boosted :Number of application 3,488 3,221 3,048 3,062 2,884 2,839 2,806 2,691 2,604 2,689 2,536 2,429 2,547 15/04 16/04 60
Slide 62: Business Forecast
Business Forecast Aim for JPY 10bn (up 6.5%) in ordinary income (JPY mn) Ordinary income Ordinary profit1 Business forecast FY2016 10,000 Profitability Results of FY2015 9,387 584 1. Ordinary profit before amortization of deferred assets under Article 113 of the Insurance Business Act 61
Slide 63: 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 64: 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 65: Appendix
Appendix oD) LiFENE] LIFENET INSURANCE COMPANY
Slide 66: Three Surplus Factors of Fundamental Profit
Three Surplus Factors of Fundamental Profit FY2015 Statements of Operations Profit analysis Insurance premiums and other 9,117 Ordinary income Net premiums Expense loading Premiums income 9,007 Reinsurance income 110 Reinsurance income Investment income Interest and Gains on sales 259 dividends of s
Slide 67: Solvency Margin Ratio Calculation
Solvency Margin Ratio Calculation As of Mar. 31, 2016 (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 2,805.5% = <numerator> 19,301 ÷ < the denominator> 1,375/2 Cash and deposits Other liabilities 569 Insurance risk R1 1,016
Lifenet Insurance Company — FY2015 Earnings Presentation on 6ix