Lifenet Insurance Company · TSE:7157
Lifenet Insurance — Q3 2020 Earnings Presentation
37 slides from Lifenet Insurance's earnings presentation, Feb 9, 2021
Slide 1: Presentation Material for Investors, Third Quarter Fiscal 2020
Securities Code: 7157 TSE Mothers Presentation Material for Investors Third Quarter for Fiscal 2020 February 9, 2021
Slide 2: LIFENET is... Comprehensible, Cost-Competitive, Convenient
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: Overview of Cumulative 3Q for Fiscal 2020
Overview of Cumulative 3Q for Fiscal 2020 Annualized premium1 of Annualized premium1 of policies-in-force new business 17,922 (115.5% vs end of FY2019) million yen 3,093 (Y-on-Y 127.0%) million yen EEV2 (European Embedded Value) Adjusted incremental EV3 93,176 million yen 6,196 million yen (126.9% v
Slide 4: 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 17.9 14.7 421,073 12.5 ◼ Maintaining a strong growth 348,429 10.7 9.8 295,662 momentum 255,614 234,828 ◼ Year-on-year Annualized premium 121.2%, number of policies
Slide 5: Breakdown of Policies-in-Force
Breakdown of Policies-in-Force ◼ Policies-in-force of Term Life exceeded 200,000 Component ’20/03 ’20/12 ratio Number of policies-in-force 365,171 421,073 100% - Term Life 175,713 203,466 48% - Whole-life Medical 100,280 115,501 27% - Term Medical Care 9,105 8,944 2% - Long-term Disability 54,665 58
Slide 6: Number of New Business
Annualized Premium / Number of New Business : Annualized premium of new business1 (First 9 months of fiscal year, JPY millions) : Number of new business (Fiscal year) : Number of new business (First 9 months of fiscal year) 3,093 ◼ Achieved 2,435 new record for the first nine 73,669 months of 1,951
Slide 7: Marketing Efficiency
Marketing Efficiency : Marketing expenses per new business (JPY thousands) : Marketing expenses / Annualized premium of new business1 75 67 61 65 62 62 ◼ Improved mainly 1.7 due to temporary 1.3 1.5 1.5 1.4 impact by COVID-19 (fiscal year) 2016 ’17 ’18 ’19 ’20/3Q（YTD） Marketing expenses 1,822 2,627
Slide 8: Operating Expenses Ratio
Operating Expenses Ratio : Operating expenses ratio¹ (%) : Insurance premiums (JPY millions) : Operating expenses excl. marketing expenses (JPY millions) 13,982 ◼ Improved with the 11,845 12,406 growth of in-force 9,628 10,421 business 23.1 % 22.2 % 22.8 % 21.6 % ◼ Aim to improve 19.2% operational e
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
Slide 10: Adjusted Profit
Adjusted Profit ◼ Steadily recorded adjusted profit generated from policies-in-force The method for calculating adjusted profit Adjusted profit＝ⅰ) Ordinary profit（loss)1＋ⅱ) Marketing expenses －ⅲ) Impact of modified co-insurance ±ⅳ) Adjustment based on standard policy reserves2 JPY millions / fiscal
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 Profit/loss for Unrealized future profits/losses on policies-in-f
Slide 12: EEV (European Embedded Value)
EEV （European Embedded Value） ◼ Characteristics of Lifenet’s EEV are as follows: Strong growth • Maintaining significant increase in EEV since listing in March 2012 • Steadily growing even in a low interest rate environment Resilience to interest rate changes • Limited sensitivity to interest rate a
Slide 13: Strong EEV Growth
Strong EEV1 Growth ◼ EEV and value of in-force business have been growing at a CAGR of 20%2 and 35%, respectively 93,176 (JPY millions) 73,431 Value of in-force business Adjusted net worth 72,828 60,878 18,547 5,122 13,425 20,347 12,553 2012/03 ’13/03 ’14/03 ’15/03 ’16/03 ’17/03 ’18/03 ’19/03 ’20/03
Slide 14: Changing Factors of EEV
Changing Factors of EEV1 ◼ Increased due to the strong new business performance, the improvement of operating expenses ratio and capital raising (JPY millions) 93,176 Adjustments to the values2 Economic as of Adjusted variances Dec. 31, ’20 incremental EV Assumption and assumption changes 9,051 chan
Slide 15: EV Resilience to Financial Changes
EV Resilience to Financial Changes ◼ Limited sensitivity to interest rates and stock prices Dec. 2020 Reference: March 2020 End1 End Lifenet Lifenet Company A Company B Company C 11% 7% 7% 1.7% 1.5% -0.8% -0.6% -1.8% -1.7% -4% -5% -7% 0.5% interest rate increase -10% -9% 0.5% interest rate decrease
Slide 16: Life Time Value and Customer Acquisition Cost
【Ref.】 Life Time Value and Customer Acquisition Cost Key Metrics for a SaaS Company and Lifenet Commonly Used SaaS Glossary FY2019 FY2020/3Q (YTD) ◼ The value of the contracted recurring revenue Annualized Premiums per Annualized Premiums per ARR per Contract components of the term Policy-in-force P
Slide 17: Financial Condition
Financial Condition (JPY millions) (YY/MM) ’20/03 ’20/12 Total assets 41,144 53,751 Cash and deposits 1,377 2,516 Monetary claims bought 299 1,999 Money held in trust 3,539 5,422 ◼ Maintained Securities 32,058 38,865 sufficient Government bonds 8,065 9,024 Municipal bonds 1,391 1,488 soundness as Co
Slide 18: Initiatives for Innovation of Customer Experience
Initiatives for Innovation of Customer Experience ◼ Redesigned the application procedure on website in November Easier and stress-free application procedure ＜Feedback from policyholders ＞ I thought it’d be difficult to purchase policies online, but it was actually simple and easy. I would like to re
Slide 19: High Evaluation for Products and Services
High Evaluation for Products and Services ◼ Whole-life Medical awarded No.1, evaluated by policyholders who received benefit payments The medical insurance product ranking of the 2021 Oricon Customer Satisfaction Survey Whole-life Medical Jibun 3 For hospitalization, surgery and advanced medical car
Slide 20: Initiatives for Enhancement of Promotion Capabilities
Initiatives for Enhancement of Promotion Capabilities ◼ Concluded Business Alliance Agreement with Money Forward, Inc., providing new customer experience to its 11.5 million users White label business initiative Plan to launch new services this summer to improve household finances by combining PFM1
Slide 21: Recent Development
Recent Development ◼ Significant growth in new business performance in January 2021, second to that in April 2020 ■ Monthly trend in number of new business1 9,716 121% 8,030 6,497 2019/01 2020/01 2021/01 1. Based on Monthly Disclosure. 20
Slide 22: Future Direction
Future Direction ◼ Leveraging a lifestyle with “new normal”, aim for double-digit growth in in-force business performance ◼ Invest in marketing expenses aggressively while focusing on its efficiency under the current business environment ◼ With expectation of early achievement of the current managem
Slide 23: Business Forecast FY2020
Business Forecast FY2020 ◼ No change from August 2020 announcement since aggressive investment in marketing expenses is planned for the fourth quarter (JPY millions) FY2020 Forecast (Reference) FY2019 Results Of which: impact Of which: impact of modified of modified co-insurance co-insurance Ordinar
Slide 24: Transition to Company with Audit and Supervisory Committee
Transition to Company with Audit and Supervisory Committee ◼ Aim for further strength of corporate governance and “growth and transformation” Number of Directors Directors 11 9 New New Outside Directors Ratio of outside directors after change Director Full-time Audit and Supervisory New Committee Me
Slide 25: 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 26: 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 27: 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 28: Appendix
Appendix oD) LiFENE] LIFENET INSURANCE COMPANY
Slide 29: Number of New Business (Quarter)
Number of New Business (Quarter) ◼ Refrained from additional investment in marketing expenses due to temporary regression after the state of emergency was lifted 22,164 :Number of new business 1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q FY20
Slide 30: Condensed Statements of Operation / Fundamental Profit
Condensed Statements of Operation / Fundamental Profit (Cumulative 3Q) (JPY millions) FY2019/3Q FY2020/3Q Change Note Increased due to growth in in-force policies business and Insurance premiums and other 11,945 14,694 2,749 reinsurance income from modified co-insurance. Other 297 450 152 Ordinary i
Slide 31: EV Sensitivity Analysis
EV Sensitivity Analysis1 Impacts of changes in assumptions (sensitivities) Change in EEV as of Change in (JPY millions) Dec. 31, 2020 VoNB EEV and new business value as of December 31, 2020 93,176 4,526 Sensitivity 1a: 1.0% increase in risk-free rate (3,455) (53) Sensitivity 1b: 1.0% decrease in ris
Slide 32: Three Surplus Factors of Fundamental Profit
Three Surplus Factors of Fundamental Profit First 9 months of FY2020 (JPY mn) Statements of operations Profit analysis Insurance premiums and other 14,694 Ordinary income Premiums income 12,406 Net premiums Expense loading Reinsurance income 2,287 Reinsurance Other reinsurance income income Interest
Slide 33: Solvency Margin Ratio Calculation
Solvency Margin Ratio Calculation As of Dec. 31, 2020 ( 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 2,811.8% <numerator> ÷ < the denominator> 29,080 2,068/2 Cash and deposits Other liabilities 2,516 1,354 Ins
Slide 34: 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 35: Adjusted Profit
Adjusted Profit 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 • We, therefore, disclose the indicator of profit level excluding marketing expenses
Slide 36: 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 We are currently in the transitional period and will transition all business to ⅲ) Im
Slide 37: 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
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