Lifenet Insurance Company · TSE:7157
Lifenet Insurance — FY2016 Earnings Presentation
57 slides from Lifenet Insurance's earnings presentation, May 15, 2017
Slide 1: Investor Meeting Presentation for Fiscal 2016
Securities Code:7157 ４ TSE Mothers Investor Meeting Presentation for Fiscal 2016 May 15, 2017
Slide 2: FY2016 Key Highlight
FY2016 Key Highlight Ordinary income up 8% year on year New business performance bottomed out Keeping positive ordinary profit1 One-time amortization of deferred assets under Article 113 of the Insurance Business Act Launched sales of “au Life Insurance” 1. Ordinary profit (loss) before amortization
Slide 3: Summary of FY2016 Results
Summary of FY2016 Results (JPY mn) FY2015 FY2016 Year on year Ordinary income 9,387 10,096 108% Operating expenses 3,239 4,047 125% Ordinary profit (loss)1 584 88 15% Cash flows from operating activities 4,610 3,904 85% Mortality margin 2,100 2,293 109% Annualized premium2 of policies-in-force 9,377
Slide 4: Contents
Contents 1. Results of Mid-term Business Plan 2. Results for Fiscal 2016 3. Challenges for 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. Conti
Slide 6: To Achieve Mid-term Business Plan
To Achieve Mid-term Business Plan Goal in fiscal 2016 returned to growth in new business performance Achieve Establish a system Management Goal realizing sustainable Return to profitability growth in new business 2018 performance 2017 2016 5
Slide 7: Progress of Mid-term Business Plan: Ordinary Income
Progress of Mid-term Business Plan (Ordinary Income) Steadily increasing to achieve 13.5 billion yen in ordinary income in fiscal 2018 13,500 (JPY mn) 10,096 9,387 Y-on-Y 8% increase FY2015 16 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 ordinary profit1 in fiscal 2018 (JPY mn) Business forecasts Management Results for FY2016 Goal FY2018 FY2016 Ordinary profit (loss) before amortization of deferred assets under Article 113 of (300) - 88 IBA2 (A) Amorti
Slide 9: Contents
Contents 1. Results of Mid-term Business Plan 2. Results for Fiscal 2016 3. Challenges for Fiscal 2017 8
Slide 10: Overview of FY2016
Overview of FY2016 Launched sales of “au Life Insurance” Promoted new Long-term Disability Improved services via smartphone For improving customer convenience For increasing number of visitors to website Highly evaluated in Japan market 9
Slide 11: Launch of "au Life Insurance"
Launch of “au Life Insurance” Provided as one of au Life Design concept Medium-Term Target of KDDI Life Design Non-life insurance Life insurance Source: “Financial Results for the Fiscal Year Ended March 2017 “(P9), KDDI Corporation Electricity Home mortgage FY2015 FY2016 Apr. 2015 - Capital and B
Slide 12: Utilization of KDDI Channel
Utilization of KDDI Channel KDDI’s advantage of customer platform and brand ■ Principal trigger of product choice ■ Principal driver of product choice (single answer)1 (single answer)1 49% 40% 28% 29% 13% 12% 10% 8% 5% 4% 2% Information Ad News / SNS / Others Insurance Trust in Refunds Others Inte
Slide 13: Promotion of Long-term Disability
Promotion of Long-term Disability Launched new product and promoted through over-the-counter agent ■Number of new business “Long-term Disability” Launched new Long-term Disability “Hataraku-Hito2” Establish sales scheme at (June 2016) over-the-counter agent Started business partnership with Hoken
Slide 14: Improvement of Customer Convenience
Improvement of Customer Convenience Counseling, Application and Claim – all completed via smartphone https://www.youtube.com/watch?v=rtaAoSj1eL8 13
Slide 15: For Increasing Visitors to Website
For Increasing Visitors to Website Creating new contact points with customers by utilizing SNS Video advertising via SNS Lifenet official account of LINE Insurance premium quotation auto-reply service and owned media contents delivery 14
Slide 16: High Evaluation by Outsider
High Evaluation by Outsider Term Life and Long-term Disability highly evaluated1 1. The most popular insurance products in each category from January through December 2016, receiving the highest number of applications in each category of Kakaku.com Insurance, the sales agent company of insurance p
Slide 17: Ordinary Income
Ordinary Income (JPY mn) 10,096 9,387 8,729 7,603 Y-on-Y Steadily increased 8% increase 8% year on year 5,976 9,816 million yen of insurance premiums and other FY2012 13 14 15 16 16
Slide 18: Number of Policies-in-force / Annualized Premium
Number of Policies-in force / Annualized Premium :Number of policies-in-force :Annualized premium of policies-in-force (JPY bn) Y-on-Y 6% increase 239,800 Annualized 215,403 225,534 premium of 202,963 policies-in-force 169,312 9.3 10.0 increased 8% year 8.7 8.0 Y-on-Y 8% increase on year 6.8 Pol
Slide 19: Breakdown of Policies-in-force
Breakdown of Policies-in-force Over 150,000 in-force policyholders (as of Mar. 31) Component (YY/MM) 2016/3 2017/3 ratio Number of policies-in-force 225,534 239,800 100.0% - Term Life1 117,626 122,952 51.3% - Whole-Life Medical1 67,999 71,172 29.7% - Term Medical Care1 11,132 10,462 4.4% - Long-te
Slide 20: Number of New Business / Annualized Premium
Number of New Business / Annualized Premium :Number of new business :Annualized premium of new business (JPY mn) 60,685 Increased for the 46,237 Y-on-Y first time in 5 fiscal 18% increase years 2,409 27,982 29,741 1,707 25,150 Number of new 1,189 1,361 business increased 1,327 Y-on-Y 15% increas
Slide 21: Insurance Claims and Benefits
Insurance Claims and Benefits : Amount of insurance payments (JPY mn) : Amount of insurance payments / Premiums income (%) 1,540 68 insurance claims and 5,756 535 Benefit 1,124 1,159 1,078 claims benefit claims 423 436 443 15.0 13.8 16.0 Ratio to 520 12.0 8.9 234 701 723 1,005 Insurance claims p
Slide 22: Provision for Policy Reserves
Provision for Policy Reserves : Provision for policy reserves (JPY mn) : Provision for policy reserves / Premiums income (%) 3,566 3,744 3,638 2,961 Slightly decreased 2,036 in accordance with elapsed years 42.6 41.6 34.7 39.4 37.8 FY2012 13 14 15 16 21
Slide 23: Operating Expenses
Operating Expenses (JPY mn) 4,976 Increased 4,131 3,815 4,047 marketing expenses for returning to 2,761 3,239 1,948 1,822 Marketing growth of 1,672 1,302 new business 550 569 Customer performance 612 558 service 526 1,664 1,570 1,583 1,410 1,655 System Operating expenses and other ratio1 42% FY2
Slide 24: Operating Expenses (Quarterly)
Operating Expenses (Quarterly) Increased of advertising expenses for 4Q (JPY mn) 1,332 992 997 861 855 731 Marketing 751 787 709 441 428 339 323 279 312 Customer 269 135 134 138 153 142 service 128 124 138 343 315 336 415 387 393 414 459 System and other 15/1Q 15/2Q 15/3Q 15/4Q 16/1Q 16/2Q 16/3Q 1
Slide 25: Marketing Expenses per New Business
Marketing Expenses per New Business :Marketing expenses per new business (JPY thousand) :Marketing expenses/Annualized premium of new business (%) 59 61 51 45 Declined efficiency 42 because of investing to grow in new business 1.1 1.1 1.2 1.0 1.3 performance FY2012 13 14 15 16 24
Slide 26: Ordinary Profit (Loss)
Ordinary Profit (Loss) Keeping positive ordinary profit1 for the second consecutive year (JPY mn) FY2013 FY2014 FY2015 FY2016 Ordinary profit (loss) before amortization of deferred assets under (1,198) (472) 584 88 Article 113 of IBA Amortization cost (1,060) (1,060) (1,060) (2,120)2 Ordinary prof
Slide 27: One-time Amortization of Deferred Assets under Article 113
One-time Amortization of Deferred Assets under Article 113 of the Insurance Business Act Amortized deferred assets one year ahead of schedule due to establishment of stable financial base Effect on ordinary profit (loss) by amortization of deferred assets under Article 113 of the Insurance Busines
Slide 28: Structure Breakdown of Ordinary Profit
Structure Breakdown of Ordinary Profit Decreased due to increase of insurance claims and other and operating expenses Transition of ordinary profit1 (JPY mn) Decrease of Other provision Increase of for policy Increase of 10 insurance reserves insurance claims and and other premiums other and other
Slide 29: Condensed Statements of Operation
Condensed Statements of Operation (JPY mn) FY2015 FY2016 Change Insurance premiums and other 9,117 9,816 698 Other 269 280 10 Ordinary income (A) 9,387 10,096 708 Insurance claims and other 1,287 1,796 509 Provision for policy reserves and other 3,824 3,638 (186) Operating expenses 3,239 4,047 807 O
Slide 30: Mortality Margin
Mortality Margin (JPY mn) 2,293 2,100 Steadily recorded 1,777 Y-on-Y 9% increase mortality margin 1,437 1,141 Increased 9% year on year due to premiums income up FY2012 13 14 15 16 29
Slide 31: Fundamental Profit
Fundamental Profit (JPY mn) FY2014 FY2015 FY2016 Mortality margin 1,777 2,100 2,293 Expense margin Expanded expense (loss) (3,282) (2,595) (4,247) Interest margin 19 43 17 margin (loss) due to Fundamental profit (1,484) (450) (1,936) one-time amortization (ref.) Insurance premiums and 8,493 9,117
Slide 32: Cash Flows from Operating Activities
Cash Flows from Operating Activities (JPY mn) 4,610 3,904 3,247 Continuously recorded positive 1,976 Increased assets under management (35) FY2012 13 14 15 16 31
Slide 33: Financial Condition
Financial Condition (JPY mn) (YY/MM) 15/3 16/3 17/3 Total assets 23,387 30,317 31,934 Cash and deposits Monetary claims bought 731 - 734 1,999 1,004 1,999 Promote Money held in trust 1,033 1,035 995 diversification Securities Government bonds 17,082 8,227 23,067 10,102 26,372 9,876 asset with Muni
Slide 34: Solvency Margin Ratio
Solvency Margin Ratio1 2,723% 2,805% 2,266% 2,244% Continuously 1,922% maintained at Average2 of 4 major insurance companies as of September 30, 2016 healthy level 910% 13/3 14/3 15/3 16/3 17/3 (YY/MM) 1. The solvency margin ratio measures a life insurance company’s ability to pay out claims when
Slide 35: European Embedded Value
European Embedded Value1 (JPY mn) 36,261 31,284 EEV JPY 36.2 bn Value of 25,248 20,240 in-force business Caused by refined risk assessment while reflecting sophistication 16,021 Adjusted net worth of risk management 15/3 16/32 17/3 (YY/MM) 1. Lifenet’s EEV is calculated following the EEV Princip
Slide 36: Value of New Business (VoNB)
Value of New Business (VoNB) (JPY mn) 89 70 Increased due to new 55 business growth and refined risk assessment and others FY2014 151 16 1. Restated by changing extrapolation method of interest rates for fiscal 2015 35
Slide 37: VoNB
VoNB Per new business (JPY mn) FY20151 FY2016 (JPY thousand) Certainty equivalent present value of future profit 3,104 3,604 121 －) Time value of financial options and guarantees － － － －) Frictional cost of capital 8 11 0 －) Allowance for non-hedgeable risk 1,953 1,830 61 Value of in-force business
Slide 38: Structure Breakdown of VoNB per Policy
Structure Breakdown of VoNB per Policy Remaining at the same level due to refined risk assessment while initial cost increased VoNB per policy (JPY thousand) Expected incidence rate and other Other 2.2 change2 12.6 variables 2.3 2.8 Unit cost base change Initial expense (4.0) increased Interest ra
Slide 39: EV Sensitivity Analysis
EV Sensitivity Analysis1 Impacts of changes in assumptions (sensitivities) Change in EEV as of Change in value of (JPY mn) March 31, 2017 new business EEV and new business value as of March 31, 2017 36,261 70 Sensitivity 1a: 1.0% increase in interest rates 492 339 Sensitivity 1b: 1.0% decrease in
Slide 40: Contents
Contents 1. Results of Mid-term Business Plan 2. Results for Fiscal 2016 3. Challenges for Fiscal 2017 39
Slide 41: 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. Conti
Slide 42: To Achieve Mid-term Business Plan
To Achieve Mid-term Business Plan Aiming for establishing a 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 41
Slide 43: Challenges
Challenges Stable growth of new business performance with three core channels Improvement of operating expenses efficiency Enhancement of proactive product development and services utilizing smartphone 42
Slide 44: Utilization of Three Core Channels
Utilization of Three Core Channels Aim for steady growth of new business performance Online direct sales → Launch new products and Online improve services direct via smartphone sales KDDI (exclusive alliance agent) → Utilize au shops and au Financial Support Center KDDI (exclusive Agent Agent alli
Slide 45: Utilization of KDDI Channel
Utilization of KDDI Channel au Life Design strategy is new growth pillar of Medium-Term Target of KDDI Source: “Financial Results for the Fiscal Year Ended March 2017 “(P9), KDDI Corporation 44
Slide 46: Sales Growth of "au Life Insurance"
Sales Growth of “au Life Insurance” Planning trial sales at some au shops as one of au Life Design services Source: “Financial Results for the Fiscal Year Ended March 2017 “(P14), KDDI Corporation Follow-up call by Sales at some Website Website au shops au Financial Support Center 45
Slide 47: Improved Efficiency of Operating Expenses
Improved Efficiency of Operating Expenses For efficient acquisition of new business : Marketing expenses per new business (JPY thousand) 59 61 51 45 42 FY2012 13 14 15 16 17 46
Slide 48: Enhancement of Smartphone Services
Enhancement of Smartphone Services Improving existing customers convenience To be launched 47
Slide 49: Business Forecasts
Business Forecasts Ordinary income up 8.9%, 11 billion yen Invest necessary operating expenses to establish a system realizing sustainable profitability (JPY mn) Ordinary profit Net income Ordinary income (loss) (loss) Business forecasts 11,000 (300) (300) (Reference) Results for FY2016 10,096 (
Slide 50: Shareholder Return Policy
Shareholder Return Policy Completed amortization of deferred assets under Article 113 of the IBA in fiscal 2016 Specific policies and dates for distributing retained earnings as dividends is not yet determined Plan to consider shareholder return in the future upon having taken into account amo
Slide 51: New Management Team
New Management Team Change of management team in the 10th year since business commencement Daisuke Iwase Masayuki Nishida President & Representative Director Hitoshi Hatta Executive Vice President, Director Executive Managing Director Yasuhiro Koba Ryosuke Mori Director Director New New Eiko Shino
Slide 52: 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 51
Slide 53: 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 54: 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 55: Appendix
Appendix oD) LiFENE] LIFENET INSURANCE COMPANY
Slide 56: Three Surplus Factors of Fundamental Profit
Three Surplus Factors of Fundamental Profit FY2016 Statements of Operations Profit analysis Insurance premiums and other 9,816 Ordinary income Net premiums Expense loading Premiums income 9,628 Reinsurance income 187 Reinsurance income Investment income Interest and Gains on sales 216 Reversal of di
Slide 57: Solvency Margin Ratio Calculation
Solvency Margin Ratio Calculation As of Mar. 31, 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 2,723.0% = <numerator> 20,357 ÷ < the denominator> 1,495/2 Cash and deposits Other liabilities 1,004 577 Insurance risk R1
Lifenet Insurance Company — FY2016 Earnings Presentation on 6ix