Lifenet Insurance Company · TSE:7157
Lifenet Insurance — Q2 2017 Earnings Presentation
46 slides from Lifenet Insurance's earnings presentation, Nov 13, 2017
Slide 1: Investor Meeting Presentation for 2Q of Fiscal 2017
Securities Code:7157 TSE Mothers Investor Meeting Presentation for 2Q of Fiscal 2017 November 13, 2017
Slide 2: Key Highlight
Key Highlight Annualized premium of new business up 15% year on year Ordinary income up 6% year on year Ordinary profit (loss) recorded profitability Launched Cancer Insurance Double Yell and promoted investment in marketing In line with Mid-term Business Plan 1
Slide 3: Summary of 2Q for FY2017 Results
Summary of 2Q for FY2017 Results (JPY mn) 2016/1H 2017/1H Year on year Ordinary income 5,016 5,338 106.4% Operating expenses 1,716 2,295 133.7% Ordinary profit (loss)1 327 1 0.4% Net income (loss) (191) (15) - Mortality margin 1,139 1,278 112.2% Annualized premium2 of policies-in-force 9,693 10,493
Slide 4: Contents
Contents 1. Progress of Mid-term Business Plan 2. Results for 2Q of Fiscal 2017 3
Slide 5: Summary of 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. Continuous
Slide 6: To Achieve Mid-term Business Plan
To Achieve Mid-term Business Plan Aiming for establishing system realizing sustainable profitability in fiscal 2017 Achieve Management Goal Establish a system realizing sustainable Return to profitability growth in new 2018 business performance 2017 2016 5
Slide 7: Progress of Mid-term Business Plan (Ordinary Income)
Progress of Mid-term Business Plan (Ordinary Income) In line with Mid-term Business Plan Management Goal : Fiscal year : First-half of fiscal year 13,500 Business forecasts (JPY mn) 11,000 10,096 9,387 Up 6% Y-on-Y 4,629 5,016 5,338 FY2015 16 17 18 6
Slide 8: Progress of Mid-term Business Plan (Ordinary Profit/Loss)
Progress of Mid-term Business Plan (Ordinary Profit/Loss) Aiming for positive profitability1 of ordinary profit (loss) in fiscal 2018 (JPY mn) Business Results Management Results for forecasts for FY2016 Goal FY2018 17/1H FY2017 Ordinary profit (loss) before amortization of deferred assets under 8
Slide 9: Contents
Contents 1. Progress of Mid-term Business Plan 2. Results for 2Q of Fiscal 2017 8
Slide 10: Key Accomplishment in FY2017 1H
Key Accomplishment in FY2017 1H Launched Cancer Insurance Double Yell with aggressive investment in marketing Improved customers convenience -Enhanced service via smartphone -Highest rating in 2017 HDI Benchmarking Annualized premium of new business increased 15% year on year 9
Slide 11: Insurance for Workers
Insurance for Workers Cancer insurance as new product followed Long-term Disability Approx. 60％ of payment for cancer (actual) Launched in Feb. 2010 Long-term Cancer Launched Disability Insurance in Aug. 2017 Renewed in June 2016 Support working patients receiving treatment for cancer (75％1 of can
Slide 12: Launched Cancer Insurance in August
Launched Cancer Insurance in August Provides double support for treatment while working Treatment Income expenses decrease Treatment Income support support benefit benefit Lifenet Cancer Insurance Double Yell ＋ Survivorship Support Services 11
Slide 13: Survivorship Support Services
Survivorship Support Services Introduces necessary services by partnering companies based on cancer survivors’ voice Housekeeping services Appearance care Support taxi http://www.lifenet-seimei.co.jp/survivorship/ (Japanese only) 12
Slide 14: Enhance Advertisement
Enhance Advertisement Strengthened TV commercial and other with new product launch 13
Slide 15: Enhance Service via Smartphone
Enhance Service via Smartphone Enabled insurance consulting service via LINE for partner together Customer Insurance Planner Customer’s partner 14
Slide 16: Highest Rating in HDI Benchmarking
Highest Rating in HDI Benchmarking Contact center and website double-awarded highest rating 3 stars for 6th consecutive year1, longest record in life insurance industry2 Phone Support (Contact Center) Web Support (Website) 1. Awarded in the 2017 Benchmarking (Life Insurance Industry) hosted by
Slide 17: Ordinary Income
Ordinary Income (JPY mn) 5,338 4,757 5,016 5,080 Steadily 4,629 increased 6% Y-on-Y 6% year on year increase 5,196 million yen of insurance premiums and 15/1H 15/2H 16/1H 16/2H 17/1H other 16
Slide 18: Number of Policies-in-force
Annualized Premium / Number of Policies-in-force :Number of policies-in-force :Annualized premium of policies-in-force (JPY bn) 248,635 239,800 219,471 225,534 231,538 Steadily increased 9.3 9.6 10.0 10.4 Exceeded 250,000 9.0 of number of policies-in-force in October 15/09 16/03 16/09 17/03 17/0
Slide 19: Breakdown of Policies-in-force
Breakdown of Policies-in-force Long-term Disability increased Number of policies-in-force1 Cancer 250,000 682 (Launched in August) 38,553 Long-term Disability Y-on-Y 31,221 up 23% 200,000 10,176 Term Medical Care 10,806 73,122 Whole-life Medical 150,000 69,441 100,000 120,070 126,102 Term Life 50,
Slide 20: Annualized Premium / Number of New Business
Annualized Premium / Number of New Business :Number of new business in fiscal year :Number of new business in first-half of fiscal year :Annualized premium of new business in first-half of fiscal year (JPY mn) 975 Y-on-Y 15% increase Number of New Business increased 730 694 635 21% year on year 54
Slide 21: Annualized Premium / Number of New Business (Quarterly)
Annualized Premium / Number of New Business(Quarterly) Number of new business increased 37% year on year :Number of new business 9,142 8,649 :Annualized premium of new business 7,793 (JPY mn) 7,307 6,864 6,883 6,980 5,756 5,647 6,312 406 387 341 343 323 316 320 293 279 268 15/1Q 15/2Q 15/3Q 15/4Q
Slide 22: Amount of Insurance Claims and Benefits
Amount of Insurance Claims and Benefits :Amount of insurance payments (JPY mn) :Amount of insurance payments / Premiums income (%) 821 35 insurance 772 767 claims and 559 518 533 Insurance 3,039 benefit 508 497 claims claims 16.3 16.2 351 15.7 284 12.6 11.3 Ratio to 264 270 288 Benefit premiums
Slide 23: Provision for Policy Reserves
Provision for Policy Reserves :Provision for policy reserves (JPY mn) :Provision for policy reserves / Premiums income (%) 1,877 1,867 1,837 1,801 1,786 42.4 Decreased in 40.8 38.8 36.8 accordance with 35.1 elapsed years and other 15/1H 15/2H 16/1H 16/2H 17/1H 22
Slide 24: Operating Expenses
Operating Expenses (JPY mn) 2,295 Aggressive 2,330 investment in 1,779 1,716 1,159 marketing Marketing 1,115 1,460 753 662 expenses for 548 296 Customer further growth 327 273 273 service 252 Operating System 658 752 and other expenses 781 874 852 15/1H 15/2H 16/1H 16/2H 17/1H ratio1 45% 33% 39%
Slide 25: Marketing Expenses (Quarterly)
Marketing Expenses (Quarterly) Enhanced advertisement with new product launch (JPY mn) 731 690 441 428 425 339 312 323 279 269 15/1Q 15/2Q 15/3Q 15/4Q 16/1Q 16/2Q 16/3Q 16/4Q 17/1Q 17/2Q 24
Slide 26: Marketing Expenses per New Business
Marketing Expenses per New Business :Marketing expenses per new business (JPY thousand) :Marketing expenses / Annualized premium of new business 71 67 54 Improved efficiency 48 despite of aggressive 48 1.5 1.5 investment in 1.1 1.0 marketing expenses 1.0 15/1H 15/2H 16/1H 16/2H 17/1H 25
Slide 27: Ordinary Profit/Loss and Net Income/Loss
Ordinary Profit/Loss and Net Income/Loss Recorded profitability by less payment than expected (JPY mn) 15/1H 15/2H 16/1H 16/2H 17/1H Ordinary profit (loss)1 before amortization of deferred assets under Article 113 of IBA 418 165 327 (239) 1 Amortization cost (530) (530) (530) (1,590)2 - Ordinary p
Slide 28: Structure Breakdown of Ordinary Profit/Loss
Structure Breakdown of Ordinary Profit/Loss1 Declined due to increase of operating expenses Transition of ordinary profit (loss)1 (JPY mn) Decrease of provision Increase of for Other policy insurance reserves Increase (15) claims and other of insurance premiums and other 50 and other (77) Increase
Slide 29: Condensed Statements of Operation
Condensed Statements of Operation (JPY mn) 16/1H 17/1H Change Insurance premiums and other 4,858 5,196 338 Other 158 142 (15) Ordinary income (A) 5,016 5,338 322 Insurance claims and other 893 971 77 Provision for policy reserves and other 1,837 1,786 (50) Operating expenses 1,716 2,295 578 Other 24
Slide 30: Mortality Margin
Mortality Margin (JPY mn) Y-on-Y 12% increase 1,278 1,139 1,153 1,059 1,041 Increased 12% year on year due to premiums income up 15/1H 15/2H 16/1H 16/2H 17/1H 29
Slide 31: Fundamental Profit
Fundamental Profit (JPY mn) 2016/1H 2016/2H 2017/1H Mortality margin 1,139 1,153 1,278 Expense margin (loss) (1,311) (2,936) (1,232) Expense loss Interest margin 14 3 4 remains same level Fundamental profit (157) (1,778) 50 year on year due to (ref.) Amortization cost under Article 113 (530) (1,59
Slide 32: Financial Condition
Financial Condition (JPY mn) (YY/MM) 16/09 17/03 17/09 Total assets 31,883 31,934 33,706 Cash and deposits 884 1,004 890 Monetary claims 1,499 1,999 1,999 Promoted asset bought Money held in trust 999 995 1,507 diversification with Securities 25,447 26,372 27,666 investment trust Government bonds
Slide 33: European Embedded Value (EEV)
European Embedded Value (EEV)1 (JPY mn) 39,629 36,261 32,008 Value of Increased 9% from 23,560 in-force 15,377 20,240 business the end of fiscal 2016 by incorporation of payment results Adjusted 16,630 16,021 16,068 net worth 16/09 17/03 17/09 (YY/MM) 1. Lifenet’s EEV is calculated following the E
Slide 34: Value of New Business (VoNB)
Value of New Business (VoNB) : Fiscal year : First-half of fiscal year (JPY mn) 70 Same level year on year Continuously challenge to improve marketing 14 15 efficiency FY2016 17 33
Slide 35: Structure Breakdown of VoNB per Policy
Structure Breakdown of VoNB per Policy Increased initial expense due to marketing expenses increase (JPY thousand) Value of new business per policy 1.0 0.9 Unit cost Other base change variables Initial expense increased Expected (4.6) 0.6 incidence (16.9) Products mix Insurance Interest rate chang
Slide 36: Value of New Business (VoNB)
Value of New Business (VoNB) Per new business 16/1H 17/1H for 2017 1H (JPY thousand) (JPY mn) Certainty equivalent present value of future profit 1,761 2,012 122.3 －) Time value of financial options and guarantees - - - －) Frictional cost of capital (3) (6) (0.3) －) Allowance for non-hedgeable risk
Slide 37: EV Sensitivity Analysis
EV Sensitivity Analysis1 Impacts of changes in assumptions (sensitivities) Change in EEV as of (JPY mn) Sep. 30, 2017 Change in VoNB EEV and new business value as of September 30, 2017 39,629 15 Sensitivity 1a: 1.0% increase in risk-free rate 332 142 Sensitivity 1b: 1.0% decrease in risk-free rate
Slide 38: Future Direction
Future Direction Supports life of workers × child-rearing generation utilizing technology Workers × Child-rearing generation Money Raising Digital Technology Work children Insurance FinTech InsurTech HealthTech Medical Health care Life support by insurance and related information/services 37
Slide 39: New Challenge
New Challenge Promotes new products development and enhances sales channel Online direct sales Online → Improve services via direct smartphone and promote sales Cancer Insurance Double Yell KDDI (exclusive alliance agent) → Utilize website, au Financial Support Center and au shops KDDI Agent (excl
Slide 40: Business Forecasts FY2017
Business Forecasts FY2017 Business forecasts disclosed in May 2017 remains unchanged (JPY mn) Business (Reference) forecasts for Results for FY2016 FY2017 Ordinary income 11,000 10,096 Ordinary profit (loss) (300) (2,031)1 (1,889)1 1. 保険業法第113条繰延資産を一括償却したことにより、保険業法第113条繰延資産償却費2,120百万円を計上 Net incom
Slide 41: 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 40
Slide 42: 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 43: 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 44: Appendix
Appendix oD) LiFENE] LIFENET INSURANCE COMPANY
Slide 45: Three Surplus Factors of Fundamental Profit
Three Surplus Factors of Fundamental Profit 2Q of FY2017 Statements of operations Profit analysis Insurance premiums and other 5,196 Ordinary income Net premiums Expense loading Premiums income 5,083 Reinsurance income 112 Reinsurance income Investment income Interest and Gains on sales 120 Reversal
Slide 46: Solvency Margin Ratio Calculation
Solvency Margin Ratio Calculation As of September 30, 2017 (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 2,599.6% = <numerator> 20,626 ÷ < the denominator> 1,586/2 Cash and deposits Other liabilities 890 571 Insurance risk
Lifenet Insurance Company — Q2 2017 Earnings Presentation on 6ix