Lifenet Insurance Company · TSE:7157
Lifenet Insurance — Q3 2022 Earnings Presentation
37 slides from Lifenet Insurance's earnings presentation, Feb 9, 2023
Slide 1: Presentation Material for Investors Third Quarter Fiscal 2022
Securities Code: 7157 TSE Growth Presentation Material for Investors Third Quarter for Fiscal 2022 February 9, 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: Cumulative 3Q of FY2022 Key Highlights
Cumulative 3Q of FY2022 Key Highlights ◼ Annualized premium1 of policies-in-force up 12.8% YoY to JPY 23.5 billion ◼ COVID-19 claims was within expectation of JPY 1.32 billion ◼ EEV up 7.8% YoY to JPY 122.9 billion ◼ Renewed “au Life Insurance” to strengthen white label business with KDDI ◼ Identifi
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 23.5 20.8 ◼ Exceeded 550,000 17.9 556,942 policies-in-force 491,611 14.7 421,073 ◼ Year-on-year 12.5 348,429 annualized 295,662 premium 112.8%, number of policies-
Slide 5: Policies-in-Force Movement
Policies-in-Force Movement ◼ Continues to grow in the mid-term while further acceleration is needed Number of policies FY2020 FY2021 FY2022 3Q 3Q 3Q New business Decreased 22,612 business 1 (9,305) 22,506 (7,801) In-force business 22,164 556,942 (6,494) +13.3% 491,611 +16.8% 421,073 2020/09 2020/12
Slide 6: Marketing Efficiency
Marketing Efficiency : Marketing expenses per new business (JPY thousands) : Marketing expenses / Annualized premium of new business1 82 84 75 ◼ Continued 65 66 2.0 2.1 a certain scale of 1.5 1.7 1.5 marketing investment while carefully monitoring marketing efficiency (fiscal year) 2018 ’19 ’20 ’21
Slide 7: Operating Expenses Ratio
Operating Expenses Ratio : Operating expenses ratio¹ (%) : Insurance premiums (JPY millions) : Operating expenses excl. marketing expenses (JPY millions) 19,835 ◼ Increased mainly 16,892 due to investments in 16,627 new initiatives 13,982 11,845 ◼ Aim to improve in the mid-term by further 19.5 % 21.
Slide 8: COVID-19 Claims Condition
COVID-19 Claims Condition ◼ Decreased to a certain level since revised the requirements of COVID-19 claims The amount of COVID-19 claims ：Actual results ：Amount estimated Total actual results from April 2022 to December 2022 1.32 billion (Image for illustrative purpose） approx. JPY September 26 Revi
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 R
Slide 10: Adjusted Profit
Adjusted Profit ◼ Steadily recorded profit generated from in-force business, while affected by COVID-19 claims of JPY 1.32 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 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 19%2 and 32%, respectively since IPO ¥1,764 ◼ EEV per share has also steadily increased ¥1,673 ¥1,570 122,985 116,604 : Value of in-force business (JPY millions) : Adjusted net worth (JPY millions) : EEV/share (JP
Slide 13: Changing Factors of EEV
Changing Factors of EEV1 ◼ Affected by rising interest rates while EEV growth driven by value of new business and assumption changes in 2Q (JPY millions) Adjusted incremental EV2 Assumption 122,985 Expected Economic Operating changes Adjustments existing variances to the values3 business experience
Slide 14: EV Resilience to Financial Changes
EV Resilience to Financial Changes ◼ Limited sensitivity to interest rates and stock prices Dec. 2022 Reference: March 2022 End1 End Lifenet Lifenet Company A Company B Company C 4% 4% 2.2% 1.8% -0% -0.9% -1.0% -1% -2.2% -1.9% -4% 0.5% interest rate increase -5% -5% 0.5% interest rate decrease -6% -
Slide 15: Financial Condition
Financial Condition (JPY millions) (YY/MM) ’22/03 ’22/12 Total assets 67,820 67,897 Cash and deposits 3,761 4,092 Monetary claims bought 3,999 2,999 Money held in trust 5,460 5,221 ◼ Maintained sufficient Securities 47,425 47,583 financial stability as Government bonds 8,946 8,619 indicated by solve
Slide 16: Growing Value of In-Force Business
Growing Value of In-Force Business ◼ Value of in-force business up 20% 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 17: New Initiative in White Label Business
New Initiative in White Label Business ◼ Launched “au Life Insurance” with Ponta Point1 to strengthen cooperation with KDDI Group Adaptation to the Adaptation to the au Economic Zone based Ponta Points Multi-Brand Strategy Sales to a new customer base “au Life Insurance” can be also available for cu
Slide 18: Promoting Collaboration with Partners
Promoting Collaboration with Partners ◼ Lifenet to play a key role in comprehensive financial services “Olive” launched by Sumitomo Mitsui Financial Group Comprehensive financial Securities services LIFENET MIRAI Inc. • Provide insurance products Cashless • Develop digital tools for Insurance paymen
Slide 19: Initiative for Sustainability
Initiative for Sustainability ◼ Identified Materiality (key sustainability issues) based on the concept of mutual support, the original purpose of life insurance https://ir.lifenet-seimei.co.jp/en/sustainability/materiality.html 18
Slide 20: Adoption of International Financial Reporting Standards
Adoption of International Financial Reporting Standards ◼ Aim for the voluntary adoption of IFRS 17 from FY2023 IFRS 17 Study Meeting ✓ For a better understanding of IFRS financial statements, explained with unaudited figures of past fiscal years1 Main points ✓ Expect to record an accounting profit
Slide 21: Business Forecasts FY2022
Business Forecasts FY2022 ◼ No change from November 2022 disclosure ◼ Aim for double-digit growth in in-force business Annualized premium1 Policies-in-force (JPY millions) Policies-in-force (Business forecast) New business Decreased business2 (Results) 24,300 21,511 (Business forecast) (Business for
Slide 22: 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 23: 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 24: 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 25: Appendix
Appendix ) LiFENE] LIFENET INSURANCE COMPANY
Slide 26: 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 1,051 923 990 991 981 969 934 933 822 822 818 794 741 637 22,612 572 29,864 28,136 26,918 27,553 26,167 23,369 24,410 23,928 23,314 22,506 22,164
Slide 27: 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% 6.3% 6.0% 6.6% 0.0% 6.4% 0.1% 0.0% 7.5% 7.6% 7.1% 7.0% 7.1% 7.1% 6.3% 6.5% 6.4% 6.5% 6.4% 6.3% 6.1% 6.2% 6.0% 5.9% 5.5% 5.5% 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q
Slide 28: Marketing Efficiency (Quarter)
Marketing Efficiency (Quarter) : Marketing expenses per new business (JPY thousands) : Marketing expenses / Annualized premium of new business1 98 96 86 81 2.4 72 2.3 2.1 1.9 1.8 (fiscal year) 2021/3Q ’21/4Q ’22/1Q ’22/2Q ’22/3Q Marketing expenses (JPY millions) 1,833 2,400 2,079 2,157 2,187 1. The
Slide 29: Breakdown of Policies-in-Force
Breakdown of Policies-in-Force Component ’21/12 ’22/12 ratio Number of policies-in-force 491,611 556,942 100% - Term Life 239,838 270,451 49% - Whole-life Medical 134,303 153,628 28% - Term Medical Care 8,598 8,130 1% - Long-term Disability 62,875 67,549 12% - Cancer 45,997 57,184 10% Sum insured of
Slide 30: Life Time Value and Customer Acquisition Cost
Life Time Value and Customer Acquisition Cost Key Metrics for a SaaS Company and Lifenet FY2020 FY2021 FY2022/3Q(YTD) 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,
Slide 31: Condensed Statements of Operation / Fundamental Profit (Cumulative 3Q)
Condensed Statements of Operation / Fundamental Profit (Cumulative 3Q) (JPY millions) FY2021/3Q FY2022/3Q Change Note Increased due to growth in in-force business and reinsurance Insurance premiums and other 18,720 21,599 2,879 income from modified co-insurance. Other 579 649 70 Ordinary income 19,3
Slide 32: Three Surplus Factors of Fundamental Profit
Three Surplus Factors of Fundamental Profit First 9 months of FY2022 (JPY millions) Statements of operations Profit analysis Insurance premiums and other 21,599 Ordinary income Premiums income 16,627 Net premiums Expense loading Reinsurance income 4,972 Reinsurance Other reinsurance income income In
Slide 33: Solvency Margin Ratio Calculation
Solvency Margin Ratio Calculation As of Dec. 31, 2022 ( (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 3,140.6% <numerator> ÷ < the denominator> 34,457 2,194/2 Cash and deposits Other liabilities…
Slide 34: EV Sensitivity Analysis
EV Sensitivity Analysis1 Impacts of changes in assumptions (sensitivities) Change in EEV as of Change in (JPY millions) Dec. 31, 2022 VoNB EEV and new business value as of December 31, 2022 122,985 3,232 Sensitivity 1a: 1.0% increase in risk-free rate (5,315) (393) Sensitivity 1b: 1.0% decrease in r
Slide 35: 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 36: 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 37: 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 for Revenue2 Revenue2 Revenue2 Revenue2 Revenue2 acquiring new business3 is recognized at initial Expense fiscal year. for acquiring new busine
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