Lifenet Insurance Company · TSE:7157
Lifenet Insurance — H1 2022 Earnings Presentation
38 slides from Lifenet Insurance's earnings presentation, Nov 10, 2022
Slide 1: Presentation Material for Investors Second Quarter for Fiscal 2022
Securities Code: 7157 TSE Growth Presentation Material for Investors Second Quarter for Fiscal 2022 November 10, 2022
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: 1H of FY2022 Key Highlights
1H of FY2022 Key Highlights ◼ Annualized premium1 of policies-in-force up 13% YoY to JPY 22.9 billion ◼ Revised business forecasts fiscal 2022 mainly due to COVID-19 claims of JPY 883 million for 1H of FY2022 ◼ EEV up 10% YoY to JPY 123.0 billion ◼ Promoting business alliances with au Jibun Bank, Ei
Slide 4: Annualized Premium / 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 22.9 ◼ Continued 20.2 543,635 steady growth 17.2 476,906 14.2 405,403 ◼ Year-on-year 11.9 334,528 annualized 283,207 premium 113.4%, number of policies-in- force 1
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 2Q 2Q 2Q New business Decreased1 business 29,864 (8,833) 26,167 (7,800) in-force business 23,369 543,635 (5,741) +14.0% 476,906 405,403 +17.6% 2020/06 2020/09 2
Slide 6: Marketing Efficiency
Marketing Efficiency : Marketing expenses per new business (JPY thousands) : Marketing expenses / Annualized premium of new business1 78 ◼ Continued 82 75 a certain scale of 2.0 65 66 2.0 1.7 marketing 1.5 1.5 investment while carefully monitoring marketing efficiency (fiscal year) 2018 ’19 ’20 ’21
Slide 7: Marketing Efficiency (Quarter)
【Ref.】 Marketing Efficiency (Quarter) : Marketing expenses per new business (JPY thousands) : Marketing expenses / Annualized premium of new business1 98 86 81 ◼ Improved efficiency 76 2.4 72 in 2Q due to increase 2.1 1.8 1.9 1.8 in new business ◼ Explore the right timing to re-boost marketing inves
Slide 8: 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 13,982 new initiatives 11,845 ◼ Aim to improve in the 10,893 mid-term by further 22.8 % 21.
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 adjusted profit generated from in-force business, while affected by COVID-19 claims of JPY 883 million The method for calculating adjusted profit Adjusted profit＝ⅰ) Ordinary profit（loss)＋ⅱ) Marketing expenses －ⅲ) Impact of modified co-insurance ±ⅳ) Adjustment base
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 ¥1,765 ◼ EEV per share has also steadily increased ¥1,673 ¥1,570 123,093 116,604 : Value of in-force business (JPY millions) : Adjusted net worth (JPY millions) : EEV/share (JP
Slide 13: 1H of FY2022 EEV Movement
1H of FY2022 EEV Movement1 ◼ EEV growth driven by value of new business, and assumption changes of renewal rate and claim incidence rate 123,093 (JPY millions) Adjustments Adjusted incremental EV2 Economic to the values3 variances and assumption as of Assumption changes Sep. 30, ’22 Expected existin
Slide 14: EV Resilience to Financial Changes
EV Resilience to Financial Changes ◼ Limited sensitivity to interest rates and stock prices Sep. 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% 0.5% interest rate increase -4% -5% 0.5% interest rate decrease -5% -6% -7
Slide 15: Financial Condition
Financial Condition ’22/03 ’22/09 (JPY millions) (YY/MM) ◼ Maintained Total assets 67,820 68,065 sufficient financial Cash and deposits 3,761 3,193 Monetary claims bought 3,999 2,999 stability as Money held in trust 5,460 5,635 indicated by Securities 47,425 48,526 solvency margin Government bonds 8
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: Promoting Business Alliances
Promoting Business Alliances ◼ Aim to create new value of online life insurance through partnership au Jibun Bank Business alliance in the group credit life insurance ✓ Start business around 2Q of FY20231 ✓ au Jibun Bank to change its underwriting insurer of existing group credit life insurance cont
Slide 18: New Business Alliance
New Business Alliance ◼ Aim to provide new digital-based customer experiences leveraging strengths of the three Sumitomo Mitsui Lifenet Group Financial Group Leading the Playing the core role online life insurance market in digital financial services Future initiatives ✓ Utilize broad customer base
Slide 19: For More Convenient Services
For More Convenient Services ◼ Improved customer services for policyholders Electronic insurance certificate Second-contact registration Enables policyholders to check Policyholders’ family can inquire using smartphone when necessary about policy details ◼ Gained high external evaluation the 2022 HD
Slide 20: 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 21: Recognition of Business Environment
Recognition of Business Environment ◼ Though affected temporarily by COVID-19, focus on the structural growth potential of the online life insurance market Temporary changes Impact of COVID-19 ✓ Significant increase or decrease in demand for life insurance ✓ Large increase in benefit payment of COVI
Slide 22: Revision of Business Forecasts FY2022
Revision of Business Forecasts FY2022 ◼ Revised due to significant increase in COVID-19 claims Ordinary profit (loss) (JPY millions) (JPY millions） 【Previous】 【Revised】 of which of which (3,400) (5,000) Revised Previous impact of impact of modified co- modified co- COVID-19 insurance insurance COVID
Slide 23: 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 24: 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 25: 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 26: Appendix
Appendix ) LiFENE] LIFENET INSURANCE COMPANY
Slide 27: Annualized Premium / 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 1,104 1,123 1,137 1,051 990 991 981 969 934 933 822 822 794 818 29,864 741 637 572 28,136 26,918 27,553 26,167 23,314 23,369 24,410 23,928 22,164 22,506 19,075 19,
Slide 28: 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% 6.6% 6.3% 0.0% 0.1% 6.0% 0.0% 7.5% 7.6% 7.1% 7.0% 7.1% 7.1% 6.3% 6.5% 6.4% 6.5% 6.4% 6.1% 6.2% 6.0% 5.9% 5.5% 5.5% 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3
Slide 29: Breakdown of Policies-in-Force
Breakdown of Policies-in-Force Component ’21/09 ’22/09 ratio Number of policies-in-force 476,906 543,635 100% - Term Life 232,487 263,856 49% - Whole-life Medical 130,234 150,293 28% - Term Medical Care 8,667 8,304 2% - Long-term Disability 61,908 66,662 12% - Cancer 43,610 54,520 10% Sum insured of
Slide 30: COVID-19 Claims Condition
COVID-19 Claims Condition The amount of payment of insurance claims and benefits related to COVID-19 ：Actual results ：Amount estimated (Image for illustrative purpose） Total actual results From April to October 2022 approx. JPY 1.2 billion 1 September 26 Revised the scope of COVID-19 claims Claims f
Slide 31: Life Time Value and Customer Acquisition Cost
【Ref.】 Life Time Value and Customer Acquisition Cost Key Metrics for a SaaS Company and Lifenet FY2020 FY2021 FY2022/1H 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 4
Slide 32: Condensed Statements of Operation / Fundamental Profit
Condensed Statements of Operation / Fundamental Profit (JPY millions) FY2021/1H FY2022/1H Change Note Increased due to growth in in-force business and reinsurance Insurance premiums and other 12,301 14,146 1,845 income from modified co-insurance. Other 343 600 256 Ordinary income 12,644 14,746 2,101
Slide 33: Three Surplus Factors of Fundamental Profit
Three Surplus Factors of Fundamental Profit First 6 months of FY2022 (JPY millions) Statements of operations Profit analysis Insurance premiums and other 14,146 Ordinary income Premiums income 10,893 Net premiums Expense loading Reinsurance income 3,252 Reinsurance Other reinsurance income income In
Slide 34: Solvency Margin Ratio Calculation
Solvency Margin Ratio Calculation As of Sep. 30, 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 3,187.0% <numerator> ÷ < the denominator> 35,551 2,230/2 Cash and deposits Other liabilities…
Slide 35: EV Sensitivity Analysis
EV Sensitivity Analysis1 Impacts of changes in assumptions (sensitivities) Change in EEV as of Change in (JPY millions) Sep. 30, 2022 VoNB EEV and new business value as of September 30, 2022 123,093 2,543 Sensitivity 1a: 1.0% increase in risk-free rate (5,402) (266) Sensitivity 1b: 1.0% decrease in
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 ⅲ) Impact of ⅳ) modified co- Adjustment ⅱ) Marketing insurance based on expenses stan
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
Slide 38: 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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