Lifenet Insurance Company · TSE:7157
Lifenet Insurance — FY2018 Earnings Presentation
43 slides from Lifenet Insurance's earnings presentation, May 13, 2019
Slide 1: Presentation Material for Investor Meeting for Fiscal 2018
Securities Code: 7157 TSE Mothers Presentation Material for Investor Meeting for Fiscal 2018 May 13, 2019
Slide 2: LIFENET is... Comprehensible, Cost-Competitive, Convenient
LIFENET is... Comprehensible Cost-Competitive Convenient Remembering the original purpose of life insurance – mutual support Reaching customers with insurance needs with the necessary coverage in appropriate methods 1
Slide 3: Table of Contents
Table of Contents 1. Financial Results for Fiscal 2018 2. New Management Policy and Future Endeavors 2
Slide 4: Overview of Fiscal 2018
Overview of Fiscal 2018 Annualized premium1 of Annualized premium1 of policies-in-force new business 13,085 (117.4% vs end of FY2017) million yen 2,773 million yen (Y-on-Y 161.8%) Adjusted profit2 EEV (European Embedded Value) 2,497 (Y-on-Y 102.8%) million yen 63,378 million yen (Adjusted incrementa
Slide 5: Number of Policies-in-Force
Annualized Premium / Number of Policies-in-Force : Annualized premium of policies-in-force (JPY bn) : Number of policies-in-force 13.0 11.1 10.0 308,854 Annualized 9.3 8.7 263,847 premium 117.4%, 239,800 215,403 225,534 number of policies- in-force 117.1% vs end of FY2017 Continued strong growth
Slide 6: Breakdown of Policies-in-Force
Breakdown of Policies-in-Force Component 18/03 19/03 ratio Number of policies-in-force 263,847 308,854 100% - Term Life1 131,256 150,808 49% - Whole-life Medical1 76,606 85,968 28% - Term Medical Care1 9,924 9,493 3% - Long-term Disability1 42,629 49,214 16% - Cancer1 3,432 13,371 4% Sum insured of
Slide 7: Number of New Business
Annualized Premium / Number of New Business : Annualized premium of new business (JPY mn) : Number of new business 2,773 Recorded historical high of new business 64,435 performance 1,714 1,327 1,189 1,361 Y-on-Y 39,175 annualized 27,982 25,150 29,741 premium 161.8%, number of new business 164.5%
Slide 8: Marketing Efficiency
Marketing Efficiency : Marketing expenses per new business (JPY thousand) : Marketing expenses / Annualized premium of new business 67 65 Maintained 61 efficiency 59 51 while 1.5 1.2 1.3 1.5 expanding 1.0 business scale 2014 ‘15 ‘16 ‘17 ‘18 (fiscal year) Marketing expenses 1,672 1,302 1,822 2,627
Slide 9: Operating Expenses Ratio
Operating Expenses Ratio : Insurance premiums (JPY mn) : Operating expenses excl. marketing expenses (JPY mn) : Operating expenses ratio¹ (%) Prioritizing 11,845 investment in 10,421 growth 9,628 9,007 8,372 Strive for further 22.8% business expansion 25.6 % 23.1 % 22.2 % and operational 21.5 %
Slide 10: Profit Structure under Current Statutory Accounting
Profit Structure under Current Statutory Accounting Takes time to generate profit as initial cost is recognized at the time of acquisition, and revenue is collected gradually over a long period Insurance policy profit structure Total profit/loss Accounting Revenue collected profit/loss over long p
Slide 11: Key Business Indicators of Corporate Value
Key Business Indicators of Corporate Value Key indicators of substantial profitability during current period of growth disclosed as follows: Adjusted profit (Ordinary profit/loss excluding marketing expenses) Indicator of profit generated from policies-in-force EEV (European Embedded Value1) Indic
Slide 12: Adjusted Profit
Adjusted Profit Indicator of profit generated from policies-in-force Significance of Adjusted profit disclosure • As accrual timing of cost and revenue do not match, statutory accounting does not necessarily provide an accurate picture of profitability of our business. • Accrual timing of marketin
Slide 13: Adjusted Profit
Adjusted Profit Slight increase in Adjusted profit due to change in policy reserves accumulation methodology Ordinary profit/loss1 Adjusted profit (Ordinary profit/loss1 excluding marketing expenses) (JPY mn) (JPY mn) Y-on-Y 102.8% 584 2,497 2,429 88 1,887 1,910 (197) (472) 1,200 (1,719) 2014 ‘15
Slide 14: Structure of Embedded Value
Structure of Embedded Value Adjusted EV net worth Value of in-force (Net assets at end of period business + adjustments) Profit/loss for the current fiscal year is reflected in end-of- period net assets Revenue Revenue Expense Expense Profit/loss for Unrealized future profits/losses on policies-in-f
Slide 15: European Embedded Value (EEV)
European Embedded Value1 (EEV) CAGR of EEV is 19%2 and value of in-force business is 38% since IPO 63,378 Steadily growing even in a low interest rate environment 44,440 (JPY mn) Value of in-force business Adjusted net worth 48,518 28,427 18,547 5,122 13,425 16,012 14,860 2012/03 ‘13/03 ‘14/03 ‘
Slide 16: Adjusted Incremental EV
Adjusted Incremental EV Adjusted Incremental EV accurately indicates our business growth during a certain period within increase in EEV Adjusted incremental EV Defined as constitution of components below: - New business value in the fiscal year - Expected existing business contribution - Operating
Slide 17: Structure Breakdown of EEV
Structure Breakdown of EEV1 Adjusted incremental EV indicating periodical growth at 3,779 million yen 63,378 (JPY mn) Economic variances Assumption and assumption Changes changes Adjusted 15,598 (440) incremental EV Expected Operating existing experience business New business variances contributio
Slide 18: EV Sensitivity to Interest Rates and Stock Prices
EV Sensitivity to Interest Rates and Stock Prices Limited sensitivity to interest rates and stock prices March 2019 Reference: March 2018 End1 End Lifenet ライフネット生命 Lifenet ライフネット生命 Company A社 A Company B社 B Company C社 C Company D社 D 10% 7% 5% 3% 1.9% 0.1% -0.6% -0.7% -0.9% -1% -2.0% -3% : 0.5% int
Slide 19: Financial Condition
Financial Condition (JPY mn) (YY/MM) ‘18/03 ‘19/03 Total assets 35,541 38,247 Cash and deposits 926 1,192 Monetary claims bought 1,999 999 Money held in trust 2,567 3,114 Maintained Securities 28,303 30,989 sufficient 8,398 8,071 financial Government bonds Municipal bonds 1,505 1,394 Corporate bon
Slide 20: Competitive Product Lineup
Competitive Product Lineup Extended coverage at reasonable prices continues to advance sales Internet Channel White Label Products （KDDI channel) Renewed April 2018 Renewed April 2018 Term Life Whole-life Medical Whole-life Medical for Women Long-term Disability Released April 2018 Cancer 19
Slide 21: Evaluations of Products
Evaluations of Products Utilizing top ratings to promote sales Long-term Term Life Disability Cancer 1. The most popular insurance products in each category from January through December 2018, receiving the highest number of applications of Kakaku.com Insurance, the sales agent company of insuranc
Slide 22: Continuously Providing Customer-Centric Services
Continuously Providing Customer-Centric Services Applying digital technology to enhance convenience and usability Screen Sharing Smartphone App Visual IVR Support Service Operator Customer Visual service menu sent to Fingerprints and facial customers telephoning Screen sharing to provide recogniti
Slide 23: Innovation of the Customer Experience
Innovation of the Customer Experience Full renewal of website to improve site performance and enhance customer experience - Feedback from customers after renewal “The website was made for people who find insurance difficult to easily understand what it is.” (Male, 30s) “The explanations were very
Slide 24: Table of Contents
Table of Contents 1. Financial Results for Fiscal 2018 2. New Management Policy and Future Endeavors 23
Slide 25: Looking Back
Looking Back New business stalled briefly but making strong comeback Reasons for stagnation Key areas of improvement • Rapid shift from computers to • Smartphone usability • Diversification of sales channels smartphones • Product lineup • Active deployment of marketing • Reduction of marketing exp
Slide 26: Growth Potential of Online Life Insurance Market
Growth Potential of Online Life Insurance Market Expect growth of online insurance market based on growing consumers intention 14.0 % 12.5 % ダイレクト自動車保険シェア Market share of direct automobile insurance1 12.0 % オンライン生命保険シェア（加入） Market share of online life insurance2 10.5 % オンライン生命保険シェア（加入意向） Ratio of
Slide 27: New Management Policy
New 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 e
Slide 28: Business Indicators
Business Indicators Aim for sustainable growth of Embedded Value Key business Embedded Value European Embedded Value (EEV)1 indicators of corporate value (EV) Adjusted incremental EV2 Growth In-force business performance indicators New business performance Business indicators Adjusted pr
Slide 29: Initiatives for EEV Growth
Initiatives for EEV Growth Further growth of new business Improvement of operating expenses efficiency 28
Slide 30: Further Growth of New Business
Further Growth of New Business Aim to strengthen mid- to long-term growth base focusing on two priority areas 1. Innovation of customer experience Provide customers with Create a world where Increase convenience as insurance products and the customer chooses an internet company in services that fu
Slide 31: Improvement of Operating Expenses Efficiency
Improvement of Operating Expenses Efficiency Aim to increase productivity company-wide and expand business Operating expenses ratio1 Marketing efficiency excluding marketing expenses : Marketing expenses per new business (JPY thousand) : Insurance premiums (JPY mn) : Marketing expenses/Annualized
Slide 32: Utilization of Reinsurance (Modified Co-Insurance)
Utilization of Reinsurance (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 rei
Slide 33: Business Forecast FY2019
Business Forecast FY2019 Prioritize investing in growth to increase mid- and long-term corporate value while utilizing modified co-insurance to alleviate pressure capital (JPY mn) FY2019 Forecast (Reference) Impact of modified FY2018 Results co-insurance* Ordinary income 16,200 2,000 12,560 Ordina
Slide 34: Change in Management Structure
Change in Management Structure Increasing corporate governance and decision making agility Before June 2019 10 Directors (4 outside) Ratio of outside directors after change Outside directors After June 2019 50% 8 Directors (4 outside) Outside directors Note: Election of Directors is subject to
Slide 35: Implementation of Restricted Stock to Compensate Directors
Implementation of Restricted Stock to Compensate Directors Continue to enhance corporate value by granting restricted stock to directors for additional incentive Current compensation system Base salary (Fixed) Outside Inside directors directors New compensation system Stock Base salary compensatio
Slide 36: New Management Policy
New Management Policy Mission Help our customers embrace life more fully 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 areas Enhancing
Slide 37: 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 38: 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 39: Appendix
Appendix oD) LiFENE] LIFENET INSURANCE COMPANY
Slide 40: Condensed Statements of Operation / Fundamental Profit
Condensed Statements of Operation / Fundamental Profit (JPY mn) FY2017 FY2018 Change Note Insurance premiums and other 10,616 12,159 1,542 Other 346 401 55 Ordinary income 10,962 12,560 1,598 Increase in in-force policies business Condensed statements of operation Increased due to growth in in-force
Slide 41: EV Sensitivity Analysis
EV Sensitivity Analysis1 Impacts of changes in assumptions (sensitivities) Change in EEV as of Change in (JPY mn) Mar. 31, 2019 VoNB EEV and new business value as of March 31, 2019 63,378 2,443 Sensitivity 1a: 1.0% increase in risk-free rate (2,513) 98 Sensitivity 1b: 1.0% decrease in risk-free rate
Slide 42: Three Surplus Factors of Fundamental Profit
Three Surplus Factors of Fundamental Profit FY2018 (JPY mn) Statements of operations Profit analysis Insurance premiums and other Ordinary income 12,159 Premiums income 11,845 Net premiums Expense loading Reinsurance income 313 Reinsurance income Investment income Interest and Gains on sales 365 div
Slide 43: Solvency Margin Ratio Calculation
Solvency Margin Ratio Calculation As of Mar 31, 2019 ( 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 2,085.2% <numerator> ÷ < the denominator> 19,920 1,910/2 Cash and deposits Other liabilities 1,192 941 Insura
Lifenet Insurance Company — FY2018 Earnings Presentation on 6ix