Slide 1: Presentation Material for Investors Fiscal 2022
Securities Code: 7157 TSE Growth Presentation Material for Investors Fiscal 2022 May 11, 2023
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: FY2022 Key Highlights
FY2022 Key Highlights FY2022 Results ◼ Annualized premium1 of policies-in-force up 11.7% YoY to JPY 24.0 billion ◼ EEV up 6.9% YoY to JPY 124.6 billion Future Initiatives ◼ Re-accelerate Internet channel growth in the mid-term and work on expansion of business domains ◼ FY2023 business forecasts und
Slide 4: Table of Contents
Table of Contents 1. Financial Results for Fiscal 2022 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 24.0 21.5 18.7 568,674 507,428 ◼ Achieved continuous 15.5 439,945 double digit growth 13.0 365,171 308,854 ◼ Year-on-year annualized premium 111.7%, number of poli
Slide 6: Policies-in-Force Movement
Policies-in-Force Movement ◼ Continued to grow in the mid-term while further acceleration is needed FY2019 FY2020 FY2021 FY2022 New Decreased business business1 In-force Number of policies (37,286) business 98,532 Surrender & (33,153) lapse ratio2 6.5% 100,636 Surrender & lapse ratio2 (25,813) 6.6%
Slide 7: Marketing Efficiency
Marketing Efficiency : Marketing expenses per new business (JPY thousands) : Marketing expenses / Annualized premium of new business1 82 88 75 65 66 ◼ Deteriorated due to 2.0 2.2 decrease in demand 1.7 for life insurance 1.5 1.5 ◼ Aim to improve in the mid-term (fiscal year) 2018 ’19 ’20 ’21 ’22 Mar
Slide 8: Operating Expenses Ratio
Operating Expenses Ratio : Operating expenses ratio¹ (%) : Insurance premiums (JPY millions) : Operating expenses excl. marketing expenses (JPY millions) 22,469 19,835 ◼ Increased mainly 16,892 due to investments in new initiatives 13,982 11,845 ◼ Aim to improve in the 22.8 % mid-term by further 21.
Slide 9: COVID-19 Claims Condition
COVID-19 Claims Condition ◼ Settled down after revising the claim requirements, resulting in total payment of JPY 1.37 billion Total actual results from April 2022 to March 2023 approx. JPY 1.37 billion September 26 Revised the requirements of COVID-19 claims The amount of COVID-19 claims ：Actual re
Slide 10: 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 R
Slide 11: Adjusted Profit
Adjusted Profit ◼ Steadily recorded profit generated from in-force business, while affected by COVID-19 claims of JPY 1.37 billion 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 sta
Slide 12: 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 13: Strong EEV Growth
Strong EEV1 Growth ◼ EEV and value of in-force business have been growing at a CAGR of 19%2 and 32%, respectively since IPO ◼ EEV per share has also steadily increased ¥1,788 ¥1,673 ¥1,570 124,666 ¥1,430 116,604 : Value of in-force business (JPY millions) : Adjusted net worth (JPY millions) ¥1,239 :
Slide 14: Changing Factors of EEV
Changing Factors of EEV1 ◼ Increased due to VoNB and assumption changes despite impact of COVID-19 claims, rising interest rate and inflation (JPY millions) Adjusted incremental EV2 124,666 Economic Adjustments Assumption variances to the values3 Expected Operating changes and assumption as of exist
Slide 15: EV Resilience to Financial Changes
EV Resilience to Financial Changes ◼ Limited sensitivity to interest rates and stock prices Mar. 2023 Reference: March 2022 End1 End Lifenet Lifenet Company A Company B Company C 4% 4% 1.9% 1.8% -0.8% -1.0% - 0% -1% -2.0% -1.9% -4% 0.5% interest rate increase -5% -5% 0.5% interest rate decrease -6%
Slide 16: Financial Condition
Financial Condition (JPY millions) (YY/MM) ’22/03 ’23/03 Total assets 67,820 68,600 Cash and deposits 3,761 5,719 Monetary claims bought 3,999 4,499 Money held in trust 5,460 5,322 ◼ Maintained sufficient Securities 47,425 45,606 financial stability as Government bonds 8,946 7,689 indicated by solve
Slide 17: Growing Value of In-Force Business
Growing Value of In-Force Business ◼ Value of in-force business up 16% YoY, along with the 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
Slide 18: Summary of FY2022
Summary of FY2022 ◼ Launched new initiatives under tough environment FY2022 Results • Achieved continuous double-digit growth of in-force business while affected by COVID-19 situation • Increased EEV steadily despite of the negative impacts by deterioration in efficiency, COVID-19 claims, rising int
Slide 19: Table of Contents
Table of Contents 1. Financial Results for Fiscal 2022 2. Future Initiatives 18
Slide 20: Growth Potential of Online Life Insurance Market
Growth Potential of Online Life Insurance Market ◼ Expect sustainable market growth based on structural changes in the digitalization of financial services Further increasing intentions to purchase policy online Penetrating wide range of generations1 with COVID-19 as opportunity1 Change in intention
Slide 21: Competitive Landscape
Competitive Landscape ◼ Lead expansion of online life insurance market with investments although new entrants increase as the market expands Phase1 Phase2 Phase3 Narrowing down to Market development Competition by new entrants a few main companies Expansion of online life insurance market and Lifene
Slide 22: Growth Loop Leveraging No.1 Position
Growth Loop Leveraging No.1 Position ◼ Aim to unleash great market growth potential by self-reinforcing Increasing opportunities with partners Embedded insurance Unique positioning business with partners as No.1 online insurer creating ecosystem Online life insurance Self- reinforcing Expanding onli
Slide 23: Individual Insurance
Individual Insurance ◼ Focus on building foundation to re-accelerate in-force business Internet direct channel Partner business channel Adapt to customers’ needs that change with Further grow in the mid-term with broad the time period centering on younger generation customer base and strong brand of
Slide 24: Group Credit Life Insurance
Group Credit Life Insurance ◼ Aim to ensure the launch as the first step in new business base and new earnings opportunities Start offering group credit life insurance to au Jibun Bank’s Initiative mortgage borrowers from July 1st, 2023 (planned) Online Mortgage Loans Group Credit Life Insurance In
Slide 25: Platform Business
Platform Business ◼ Expand scale of online insurance agency and launch B2B domain from FY2023 to Consumer (individuals) to Business（corporate） Further development of UI/UX Provision of system and digital tools to as online platform operate for online insurance business Subsidiary LIFENET MIRAI Inc.
Slide 26: Mid-term Growth Path
Mid-term Growth Path ◼ Aim to accelerate growth in policies-in-force by business for individuals and GCL1 Group credit life insurance Steadily grow as new earnings base and consider expansion of alliance partners 2023 Launch GCL1 Individual insurance 2021 Accelerate growth of core Internet direct St
Slide 27: Human Capital for Growth
Human Capital for Growth ◼ Strengthen HR initiatives based on Diversity and Growth opportunities Value Create diversity opportunities for growth Rate of women in Return rate after Rate of 1-on-1 meetings2 Training hours leadership position1 maternity/childcare leave implementation per employee targe
Slide 28: Voluntary Adoption of IFRS
Voluntary Adoption of IFRS1 ◼ Update priority indicators according to new Financial Reporting Standards Schedule • Disclose FY2023 consolidated forecasts under IFRS (P.28) May 2023 FY2022 financial results • Disclose IFRS major figures for the past five fiscal years (P.45) Aug. 2023 • Announce finan
Slide 29: FY2023 Consolidated Business Forecasts
FY2023 Consolidated Business Forecasts ◼ Expect JPY 8.2 bn in insurance service results and JPY 5.3 bn in net income Growth Profitability Annualized premium of policies-in-force1 (JPY millions) Insurance service results (JPY millions) (Business forecast） Group (Business forecast) Individual approx.
Slide 30: Future Direction
Future Direction ◼ Achieve expansion of business scale and high profitability, aiming to further enhance corporate value Future FY2023 and after • Achieve EEV of • Re-accelerate JPY 200 billion Internet direct (Management Goal) channel growth in FY2022 the mid-term • Expand business • Deteriorated d
Slide 31: 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 32: LIFENET Manifesto
LIFENET Manifesto Comprehensible, Cost-Competitive, Convenient I. Our Guiding Principles II. Making Life Insurance Accessible Again - Headache-free (1) Creating the future of the life insurance without losing sight of (1) Helping the customers help themselves. By making our its original premise: “an
Slide 33: 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 34: Appendix
Appendix ) LiFENE] LIFENET INSURANCE COMPANY
Slide 35: Number of New Business (Quarter)
Annualized Premium / Number of New Business (Quarter) : Annualize premium1 of new business (JPY millions) : Number of new business 1,166 1,123 1,137 1,104 1,051 990 991 981 969 889 934 933 923 822 822 818 22,128 794 741 637 572 29,864 28,136 26,918 27,553 26,167 23,369 24,410 23,928 23,314 22,506 22
Slide 36: Surrender and Lapse Ratio (Quarter)
Surrender and Lapse Ratio（Quarter） :Surrender and lapse ratio1 (%) 6.9% 7.5% 7.6% 7.6% 7.1% 7.0% 7.1% 6.5% 6.4% 6.6% 6.4% 6.4% 6.3% 6.1% 6.3% 6.3% 5.9% 6.0% 5.5% 5.5% 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q FY2018 FY2019 FY2020 FY2021 FY2022 1. The surrender and lapse ratio is th
Slide 37: Marketing Efficiency (Quarter)
Marketing Efficiency (Quarter) : Marketing expenses per new business (JPY thousands) : Marketing expenses / Annualized premium of new business1 98 96 101 86 2.4 72 2.3 2.5 2.1 1.8 (fiscal year) 2021/4Q ’22/1Q ’22/2Q ’22/3Q ’22/4Q Marketing expenses (JPY millions) 2,400 2,079 2,157 2,187 2,247 1. The
Slide 38: Breakdown of Policies-in-Force
Breakdown of Policies-in-Force Component ’22/03 ’23/03 ratio Number of policies-in-force 507,428 568,674 100% - Term Life 247,754 276,566 49% - Whole-life Medical 138,749 156,402 28% - Term Medical Care 8,485 7,870 1% - Long-term Disability 63,847 68,142 12% - Cancer 48,593 59,694 10% Sum insured of
Slide 39: Life Time Value and Customer Acquisition Cost
Life Time Value and Customer Acquisition Cost Key Metrics for a SaaS Company and Lifenet FY2020 FY2021 FY2022 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 42,536 JPY 42,394 JPY
Slide 40: Condensed Statements of Operation / Fundamental Profit
Condensed Statements of Operation / Fundamental Profit (JPY millions) FY2021 FY2022 Change Note Increased due to growth in in-force business and reinsurance Insurance premiums and other 25,420 29,207 3,787 income from modified co-insurance. Other 747 1,060 313 Ordinary income 26,167 30,268 4,100 Inc
Slide 41: Detail of Bond Portfolio
Detail of Bond Portfolio1 As of March 31, 2023 Available- Held- (JPY millions) Total for-Sale to-Maturity JPY Bonds 19,634 15,088 34,723 Duration2 4 years 13 years 8 years Foreign Currency Bonds 9,420 — 9,420 Duration2 6 years Non-Currency Hedged 2,355 — 2,355 Currency Hedged 7,065 — 7,065 1. Based
Slide 42: Three Surplus Factors of Fundamental Profit
Three Surplus Factors of Fundamental Profit FY2022 (JPY millions) Statements of operations Profit analysis Insurance premiums and other 29,207 Ordinary income Premiums income 22,469 Net premiums Expense loading Reinsurance income 6,738 Reinsurance Other reinsurance income income Interest and Gains o
Slide 43: Solvency Margin Ratio Calculation
Solvency Margin Ratio Calculation As of March 31, 2023 ( (𝑅 1 + 𝑅 8 )2 + (𝑅 2 + 𝑅 3 + 𝑅 7 )2 + 𝑅 4 )/2 (JPY millions) = Solvency margin ratio Total amount of solvency margin Total amount of risk/2 3,158.2% <numerator> ÷ < the denominator> 31,943 2,022/2 Cash and deposits Other liabilities…
Slide 44: EV Sensitivity Analysis
EV Sensitivity Analysis1 Impacts of changes in assumptions (sensitivities) Change in EEV as of Change in (JPY millions) Mar. 31, 2023 VoNB EEV and new business value as of March 31, 2023 124,666 3,506 Sensitivity 1a: 1.0% increase in risk-free rate (4,995) (429) Sensitivity 1b: 1.0% decrease in risk
Slide 45: 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 46: IFRS Major Accounts in Past Years
IFRS Major Accounts in Past Years1 (JPY millions) FY2018 FY2019 FY2020 FY2021 FY2022 IFRS PL Insurance service results 4,885 5,419 6,606 7,216 6,618 Insurance revenue 10,560 12,550 15,220 17,987 20,732 Insurance service expenses 5,509 7,038 8,468 10,429 13,874 Reinsurance results (165) (92) (144) (3
Slide 47: Management Team
Management Team1 Directors Yasuhiro Koba Ryosuke Mori Director, Executive Vice President Representative Director and President Executive Officer of Business Development Department, Goldman Sachs Japan Co., Ltd. Product Development Department, Creditor Insurance Head of Corporate Planning Department