Lifenet Insurance Company · TSE:7157
Lifenet Insurance — FY2021 Earnings Presentation
52 slides from Lifenet Insurance's earnings presentation, May 12, 2022
Slide 1: Presentation Material for Investors Fiscal 2021
Securities Code: 7157 TSE Growth Presentation Material for Investors Fiscal 2021 May 12, 2022
Slide 2: LIFENET is...
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: FY2021 Key Highlights
FY2021 Key Highlights FY2021 Results ◼ Annualized premium1 of policies-in-force up 15% YoY to JPY 21.5 billion ◼ EEV up 23% YoY to JPY 116.6 billion ◼ Raised growth capital of JPY 9.7 billion Future Initiatives ◼ Work on priority areas for sustainable double- digit growth in in-force business ◼ Aim
Slide 4: Table of Contents
Table of Contents 1. Financial Results for Fiscal 2021 2. Future Initiatives 3
Slide 5: 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 21.5 18.7 15.5 507,428 13.0 439,945 ◼ The number of 11.1 365,171 policies-in-force 308,854 exceeded 500,000 263,847 ◼ Year-on-year annualized premium 115.0%, numbe
Slide 6: Policies-in-Force Movement
Policies-in-Force Movement ◼ Tackle further growth acceleration Number of policies FY2019 FY2020 FY2021 New Decreased business business1 in-force (33,153) business 100,636 including Surrender & (25,813) lapse ratio2 100,587 including 6.6% Surrender & 507,428 (24,594) lapse ratio2 80,911 including 6.
Slide 7: Marketing Efficiency
Marketing Efficiency : Marketing expenses per new business (JPY thousands) : Marketing expenses / Annualized premium of new business1 82 75 67 2.0 65 66 ◼ Prioritized growth 1.7 and aggressively 1.5 1.5 1.5 invest in marketing based on the business environment (fiscal year) 2017 ’18 ’19 ’20 ’21 Mark
Slide 8: Operating Expenses Ratio
Operating Expenses Ratio : Operating expenses ratio¹ (%) : Insurance premiums (JPY millions) : Operating expenses excl. marketing expenses (JPY millions) 19,835 16,892 ◼ Invested 13,982 in human capital 11,845 10,421 ◼ Aim to improve 22.2 % 22.8 % 21.6 % operational efficiency 19.6 % 19.5% by furthe
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 increased adjusted profit generated from policies-in-force The method for calculating adjusted profit Adjusted profit＝ⅰ) Ordinary profit（loss)＋ⅱ) Marketing expenses －ⅲ) Impact of modified co-insurance ±ⅳ) Adjustment based on standard policy reserves1 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 Unrealized future profits/losses on policies-in-force Profit/loss
Slide 12: Strong EEV Growth
Strong EEV1 Growth ◼ EEV and value of in-force business have been growing at a CAGR of 20%2 and 33%, respectively since IPO ◼ EEV per share has also steadily increased ¥1,673 even after dilution by capital raising ¥1,570 ¥1,430 116,604 : Value of in-force business (JPY millions) : Adjusted net worth
Slide 13: Changing Factors of EEV
Changing Factors of EEV1 ◼ EEV growth driven by value of new business, revision of claim incidence rate, the improvement of opex ratio and capital raising (JPY millions) 116,604 Adjustments Adjusted Economic to the values3 as of variances incremental EV and assumption Mar. 31, ’22 Assumption changes
Slide 14: EV Resilience to Financial Changes
EV Resilience to Financial Changes ◼ Limited sensitivity to interest rates and stock prices Mar. 2022 Reference: March 2021 End1 End Lifenet Lifenet Company A Company B Company C 6% 5% 1.8% 1.6% 2% -1.0% -0.8% -1.9% -1.6% -3% -5% -5% 0.5% interest rate increase -7% -7% -8% 0.5% interest rate decreas
Slide 15: Financial Condition
Financial Condition (JPY millions) (YY/MM) ’21/03 ’22/03 Total assets 54,501 67,820 ◼ Limited financial Cash and deposits 2,059 3,761 impact caused by Monetary claims bought 999 3,999 changes in Money held in trust 5,895 5,460 investment Securities 40,007 47,425 Government bonds 9,004 8,946 environm
Slide 16: Growing Value of In-Force Business
Growing Value of In-Force Business ◼ Value of in-force business up 20% YoY, along with growth of value of in-force business per policy Value of in-force business Value of in-force business Number of policies-in-force per policy （Unrealized future value on policies-in-force） (JPY thousands) (JPY bill
Slide 17: Overseas Public Offering
Overseas Public Offering ◼ Aim for further business growth by leveraging raised capital and reinsurance1 Offering Overseas offering mainly in Europe and Asia format （Regulation S only） Amount FY2020 FY2021 9.0 9.7 raised billion yen2 billion yen Use of System Business proceeds Marketing development
Slide 18: Expansion of White Label Business
Expansion of White Label Business ◼ Started to offer new customer experience with Money Forward, Inc. • Offer Money Forward Life Insurance as a part of the Money Forward Fixed Cost Review Able to find the appropriate Convincing explanations Clear required premiums insurance quickly • Accelerate deve
Slide 19: Enhancement of Customer-Friendly Service
Enhancement of Customer-Friendly Service ◼ Received high evaluation of investment in customer experience Improved convenience of External Evaluation insurance services No.1 in J.D. Power 2022 Japan Life Insurance Contract Customer Satisfaction Enhancement of app StudySM＜Direct Distribution Channel S
Slide 20: Table of Contents
Table of Contents 1. Financial Results for Fiscal 2021 2. Future Initiatives 19
Slide 21: Aim to Realize LIFENET Philosophy
Aim to Realize LIFENET Philosophy Comprehensible Cost-Competitive Convenient ◼ Remembering the original purpose of life insurance – mutual support ◼ Helping our customers embrace life more fully 20
Slide 22: Growth Potential of Online Insurance Market
Growth Potential of Online Insurance Market ◼ Room for market growth is expanding due to structural shift to online under the COVID-19 environment Ratio of intention to purchase online1 Intention increased in all 9.1% → （2015） 17.4 （2021） ％ generations Ratio of intention to purchase insurance online
Slide 23: Competitive Landscape
Competitive Landscape ◼ Despite severe competition, our aggressive investment strengthens No.1 position in online life insurance market Expansion of online life insurance market and Lifenet’s position (Image for illustrative purpose） Market Market development Market expansion and increased Narrowing
Slide 24: Growth Strategy
Growth Strategy ◼ Actively invest for growth to focus on priority areas • Continuously enhance UI/UX for website Business and strengthen sales channel • Expand platform business • Optimize customer touchpoint System • Deploy a cloud-based system and improve infrastructure cost efficiencies • Promote
Slide 25: Initiatives for In-Force Business Growth
Initiatives for In-Force Business Growth ◼ Aim for continuous double-digit growth through two channels Internet direct channel White label channel Strengthening touchpoint with Providing new customer experiences with young generation existing partners • Work on diversification of promotions and • Ai
Slide 26: Journey to Platformer
Journey to Platformer ◼ Focus on building the foundation of online insurance agency business Online insurance platform（Image for illustrative purpose） Customers Products & Services Online platform Policy connecting customers and services holders Other Mort- companies’ gage products Potential custome
Slide 27: Investment in System Development
Investment in System Development ◼ Renewing system structure for improvement of customer experience and future business expansion FY2021 • Accelerate speed of UI/UX Revamping the front- development and end infrastructure improvement • Improve scalability and Enhancement on-demand performance of scal
Slide 28: Human Capital Investment
Human Capital Investment ◼ Invest in the source of our growth to increase the corporate value Our Guiding Lifenet philosophy: Principles Embracing diversity and dialogue to keep us abreast of changing needs and preferences. New investment Areas Ongoing Initiatives from FY2022 PRIDE Index Gold Rating
Slide 29: Initiatives for Sustainability
Initiatives for Sustainability ◼ Aim to increase the stakeholder value based on LIFENET philosophy FY2021 From FY2022 • Explained the following • Further information initiatives since disclosure based on business commencement LIFENET philosophy ⁃ Enhancement of corporate governance • Continue to com
Slide 30: Rising Rate and Asset Management
Rising Rate and Asset Management ◼ Gradual increase in interest rates gives us positive opportunities Asset management in the mid- to long-term • Aim to increase investment income on the back of the current overseas rising rates environment • Plan to increase allocation to foreign bonds flexibly 29
Slide 31: Business Forecasts FY2022
Business Forecasts FY2022 ◼ Aim for double-digit growth in in-force business Annualized premium1 Policies-in-force (JPY millions) (Business forecast) New business Decreased business2 (Results) 24,400 21,511 (Business forecast) Surrender and (Business forecast) lapse ratio 4,400 6-7% +13% 2022/03 202
Slide 32: Adoption of International Financial Reporting Standards
Adoption of International Financial Reporting Standards ◼ Aim for the voluntary adoption of IFRS 17 from FY2023 Main points • Expect to record an accounting profit1 from FY2023 • Capital adequacy2 and dividends will be regulated by statutory accounting standards (J-GAAP) even after the adoption of I
Slide 33: Purpose of IFRS Adoption
Purpose of IFRS Adoption ◼ Provide financial information with high international comparability to better represent our performance Statutory accounting Embedded value/ (J-GAAP) Value of new business IFRS 17 Economic value of Useful for investors’ Main objective Policyholder protection insurance poli
Slide 34: Future Direction
Future Direction ◼ Give priority to business scale expansion to improve profitability in the mid- to long-term FY2023 FY2022 Expect to record an accounting profit • Continue double- under IFRS 171 FY2021 digit growth in in- force business under • Achieved JPY100 the structural Mid-term billion in EE
Slide 35: 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 36: 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 37: 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 38: Appendix
Appendix ) LiFENE] LIFENET INSURANCE COMPANY
Slide 39: Annualized Premium / Number of New Business (Quarter)
Annualized Premium / Number of New Business (Quarter) 1,166 : Annualize premium1 of new business (JPY millions) 1,123 1,104 : Number of new business 1,051 990 991 981 934 933 822 822 818 24,410 794 741 637 572 523 460 28,136 26,918 27,553 26,167 387 343 23,314 23,369 22,506 22,164 19,075 19,117 18,7
Slide 40: Surrender and Lapse Ratio (Quarter)
Surrender and Lapse Ratio（Quarter） :Impact of lump-sum recording of policies lapsed1 (%) :Surrender and lapse ratio2 without the above (%) 7.6% 0.5% 6.6% 6.3% 6.0% 0.0% 0.1% 0.0% 7.5% 7.6% 7.1% 7.0% 7.1% 7.1% 6.5% 6.3% 6.5% 6.4% 6.5% 6.0% 6.1% 6.2% 6.0% 5.8% 5.9% 5.5% 5.5% 5.5% 1Q 2Q 3Q 4Q 1Q 2Q 3Q
Slide 41: Breakdown of Policies-in-Force
Breakdown of Policies-in-Force Component ’21/03 ’22/03 ratio Number of policies-in-force 439,945 507,428 100% - Term Life 213,597 247,754 49% - Whole-life Medical 120,216 138,749 27% - Term Medical Care 8,840 8,485 2% - Long-term Disability 59,567 63,847 13% - Cancer 37,725 48,593 10% Sum insured of
Slide 42: Life Time Value and Customer Acquisition Cost
Life Time Value and Customer Acquisition Cost Key Metrics for a SaaS Company and Lifenet FY2019 FY2020 FY2021 Annualized Premiums per Annualized Premiums per Annualized Premiums per ARR per Contract Policy-in-force Policy-in-force Policy-in-force (Annual Recurring Revenue) JPY 42,486 JPY 42,536 JPY
Slide 43: Condensed Statements of Operation / Fundamental Profit
Condensed Statements of Operation / Fundamental Profit (JPY millions) FY2020 FY2021 Change Note Increased due to growth in in-force business and reinsurance Insurance premiums and other 20,282 25,420 5,137 income from modified co-insurance. Other 507 747 240 Ordinary income 20,789 26,167 5,378 Inclu
Slide 44: Three Surplus Factors of Fundamental Profit
Three Surplus Factors of Fundamental Profit FY2021 (JPY mn) Statements of operations Profit analysis Insurance premiums and other 25,420 Ordinary income Premiums income 19,835 Net premiums Expense loading Reinsurance income 5,585 Reinsurance Other reinsurance income income Interest and Gains on sale
Slide 45: Solvency Margin Ratio Calculation
Solvency Margin Ratio Calculation As of March 31, 2022 ( (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 3,182.8% <numerator> ÷ < the denominator> 37,758 2,372/2 Cash and deposits Other liabilities 3,761…
Slide 46: EV Sensitivity Analysis
EV Sensitivity Analysis1 Impacts of changes in assumptions (sensitivities) Change in EEV as of Change in (JPY millions) Mar. 31, 2022 VoNB EEV and new business value as of March 31, 2022 116,604 4,679 Sensitivity 1a: 1.0% increase in risk-free rate (4,376) (339) Sensitivity 1b: 1.0% decrease in risk
Slide 47: 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 48: 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 ⅲ) Impact of ⅳ) modified co- Adjustment ⅱ) Marketing insurance based on expenses stan
Slide 49: 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
Slide 50: 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 51: J-GAAP vs IFRS
J-GAAP vs IFRS Illustration image of accounting structure1 ■Current Statutory Accounting (J-GAAP) Year 1 Year 2 Year 3 Year 4 Year 5 ・・・・ Heavy initial cost Revenue2 Revenue2 Revenue2 Revenue2 Revenue2 for acquiring new business3 is Expense recognized at for initial fiscal year. acquiring new busine
Slide 52: New Management Team
New Management Team1 Directors Yasuhiro Koba Ryosuke Mori Representative Director and President Director, Executive Vice President Executive Officer of Product Development Goldman Sachs Japan Co., Ltd. and Investment Head of Corporate Planning Department and Ministry of Health, Labour and Welfare Ge
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