Lifenet Insurance Company · TSE:7157
Lifenet Insurance — Q2 2016 Earnings Presentation
49 slides from Lifenet Insurance's earnings presentation, Nov 11, 2016
Slide 1: Investor Meeting Presentation for 2Q of Fiscal 2016
Securities Code:7157 TSE Mothers Investor Meeting Presentation for 2Q of Fiscal 2016 November 11, 2016
Slide 2: Key Highlight
Key Highlight Launched sales of “au Life Insurance” Ordinary income up 8% year on year Bottoming out of new business performance Continuously recorded ordinary profit1 Promote investment in ordinary expenses to aim for returning to steady growth of new business performance 1. Ordinary profit before
Slide 3: Summary of 2Q for FY2016 Results
Summary of 2Q for FY2016 Results (JPY mn) 2015/1H 2016/1H Year on year Ordinary income 4,629 5,016 108.3% Operating expenses 1,460 1,716 117.6% Ordinary profit1 418 327 78.2% Cash flows from operating activities 2,252 2,122 94.2% Mortality margin 1,059 1,139 107.6% Annualized premium2 of policies-in
Slide 4: Contents
Contents 1. Results for 2Q of Fiscal 2016 2. Progress of Mid-term Business Plan 3
Slide 5: Key Accomplishment in FY2016 1H
Key Accomplishment in FY2016 1H Commenced sales of “au Life Insurance” Launched new product “Hataraku-Hito 2” Improvement of customer convenience Started insurance consultation service via LINE More prompt payment via smartphone Highest rating in the 2016 HDI Benchmarking 4
Slide 6: Commenced Sales of “au Life Insurance”
Commenced Sales of “au Life Insurance” Started sales through KDDI from April Smartphone website 8 ： 2 PC website 1 http://au.lifenet-seimei.co.jp/ 1. Ratio of applicant by device from April to September 2016 5
Slide 7: Launched New Product “Hataraku-Hito 2”
Launched New Product “Hataraku-Hito 2” Offer coverage to meet customer needs to choose to choose policy term elimination period, according to purpose 60 days or 180 days Short-type Long-type Until 55y/o Until60y/o Until 65y/o Until 70y/o Recommend Recommend Coverage self-employed office worker acc
Slide 8: Started Insurance Consultation Service via LINE
Started Insurance Consultation Service via LINE Provide convenient insurance consultation service via smartphone 7
Slide 9: More Prompt Payment via Smartphone
More Prompt Payment via Smartphone Filing for benefit claims can be completed via smartphone Previous benefit claim by mail Sending Notification Dispatching back of of claim of documents documents Receipt & Assessment Payment Via smartphone Average 2.55 days1 Notification of claim Submission of da
Slide 10: Highest Rating in the 2016 HDI Benchmarking
Highest Rating in the 2016 HDI Benchmarking Contact center and website awarded highest rating 3 stars for 5th consecutive year1 Phone Support (Contact Center) Web Support (Website) 1. Awarded in the 2016 Benchmarking (Life Insurance Industry) hosted by HDI-Japan 9
Slide 11: Ordinary Income
Ordinary Income Y-on-Y 8% (JPY mn) increase 4,757 5,016 4,629 Steadily increased 108% Y-o-Y 4,858 million yen of insurance premiums and other 15/1H 15/2H 16/1H 10
Slide 12: Annualized Premium / Number of Policies-in-force
Annualized Premium / Number of Policies-in-force :Number of policies-in-force :Annualized premium of policies-in-force (JPY bn) 231,538 9.6 billion yen 225,534 219,471 of annualized 9.6 premium of 9.3 9.0 policies-in-force Exceeded 230,000 of number of policies-in-force 15/09 16/03 16/09 (YY/MM)
Slide 13: Breakdown of Policies-in-force
Breakdown of Policies-in-force 145,626 in-force policyholders (as of Sep. 30) component 15/09 16/09 ratio Number of policies-in-force 219,471 231,538 100.0％ - Term Life1 114,912 120,070 51.9％ - Whole-Life Medical1 66,623 69,441 30.0％ - Term Medical Care1 11,498 10,806 4.7％ - Long-term Disability1
Slide 14: Annualized Premium / Number of New Business
Annualized Premium / Number of New Business :Number of new business :Annualized premium of new business (JPY mn) Y-on-Y 19% increase 13,747 13,619 Annualized premium 11,403 of new business 640 635 635 million yen 548 Y-on-Y 16% increase Number of new business 13,619 15/1H 15/2H 16/1H 13
Slide 15: Amount of Insurance Claims and Benefits
Amount of Insurance Claims and Benefits :Amount of insurance payments (JPY mn) :Amount of insurance payments / Premiums income (%) 772 Benefit 33 insurance claims 264 claims 559 518 and 208 2,856 benefit claims 234 16.3 12.6 Insurance Ratio to premiums 11.3 508 claims income 16% 351 284 15/1H 15
Slide 16: Amount of Insurance Claims and Benefits (Quarterly)
Amount of Insurance Claims and Benefits (Quarterly) Payment of 267 million yen for 2Q :Amount of insurance payments (JPY mn) 505 :Amount of insurance payments / Premiums income (%) 130 306 293 21.5 267 109 225 114 375 134 Benefit 13.7 120 12.7 claims 11.2 197 9.9 179 Insurance 105 133 claims 15/2Q
Slide 17: Provision for Policy Reserves
Provision for Policy Reserves :Provision for policy reserves (JPY mn) :Provision for policy reserves / Premiums income (%) 1,877 1,867 1,837 Remaining at the same level 42.4 Decreased in some 40.8 38.8 in-force policies in accordance with elapsed years 15/1H 15/2H 16/1H 16
Slide 18: Operating Expenses
Operating Expenses (JPY mn) 1,779 1,716 Increasing for returning to 1,460 growth of 753 662 Marketing 548 new business 273 Customer performance 273 service 252 752 781 System and other Operating 658 expenses ratio1 36% 15/1H 15/2H 16/1H 33% 39% 36% Operating expenses ratio¹ 1. The ratio of opera
Slide 19: Marketing Expenses per New Business
Marketing Expenses per New Business :Marketing expenses per new business (JPY thousand) :Marketing expenses / Annualized premium of new business 54 48 48 Remaining at the same level despite increased 1.1 marketing expenses 1.0 1.0 15/1H 15/2H 16/1H 18
Slide 20: Ordinary Profit / Loss
Ordinary Profit / Loss Recorded positive profitability1 continuously (JPY mn) 418 15/1H 15/2H 16/1H Ordinary profit 327 before amortization 418 165 327 of deferred assets Amortization cost (530) (530) (530) 165 Ordinary profit (loss) (111) (364) (202) 15/1H 15/2H 16/1H 1. The ordinary profit (loss
Slide 21: Structure Breakdown of Ordinary Profit
Structure Breakdown of Ordinary Profit Decreased due to increase in insurance payment and operating expenses Transition of ordinary profit 1 (JPY mn) Decrease of provision Other for policy reserves 31 and other Increase of 40 418 insurance Increase of insurance premiums claims and other 327 and ot
Slide 22: Condensed Statements of Operation
Condensed Statements of Operation (JPY mn) 15/1H 16/1H Change Insurance premiums and other 4,502 4,858 355 Other 127 158 31 Ordinary income (A) 4,629 5,016 386 Insurance claims and other 658 893 235 Provision for policy reserves and other 1,877 1,837 (40) Operating expenses 1,460 1,716 256 Other 214
Slide 23: Mortality Margin
Mortality Margin (JPY mn) Y-on-Y 8% increase 1,139 1,059 1,041 Steadily recorded mortality margin Increased 108% Y-o-Y due to premiums income up 15/1H 15/2H 16/1H 22
Slide 24: Fundamental Profit
Fundamental Profit (JPY mn) 15/1H 15/2H 16/1H Mortality margin Expense margin 1,059 1,041 1,139 Expense loss (1,150) (1,444) (1,311) (loss) Interest margin 22 21 14 increased Y-o-Y Fundamental profit (ref.) Insurance (68) (382) (157) due to operating 4,502 4,615 4,858 premiums and other expenses u
Slide 25: Operating Cash Flows
Operating Cash Flows (JPY mn) 2,358 2,252 2,122 Steadily recorded positive operating cash flows Increased assets under management 15/1H 15/2H 16/1H 24
Slide 26: Financial Condition
Financial Condition (JPY mn) (YY/MM) 15/09 16/03 16/09 Total assets 27,972 30,317 31,883 Cash and deposits Monetary claims 680 Promote 734 884 1,499 1,999 1,499 bought Money held in trust 1,033 1,035 999 diversification in Securities 20,804 23,067 25,447 investment assets Government bonds 9,338 10
Slide 27: Solvency Margin Ratio
Solvency Margin Ratio1 2,747% 2,805% 2,809% Maintained at high level Average of 4 major insurance companies2 as of March 31, 2016 continuously 894% 15/09 16/03 16/09 1. The solvency margin ratio measures a life insurance company’s ability to pay out claims when unforeseen events occurs, such as na
Slide 28: European Embedded Value (EEV)
European Embedded Value (EEV)1 (JPY mn) 32,416 31,284 32,008 Increased due to Value of incorporation of 15,377 in-force business payment results despite continuous impact Adjusted 16,630 net worth of lower interest rates 15/092 16/032 16/09 (YY/MM) 1. Lifenet’s EEV is calculated following the EEV
Slide 29: Change in Extrapolation Method of Interest Rates for EEV
Change in Extrapolation Method of Interest Rates for EEV Adopted more stable method for ultra-long insurance liabilities Extrapolation method of interest rates beyond the last liquid data point (40th year)… …assuming the forward rate at the last liquid data point to remain constant beyond this poi
Slide 30: Value of New Business (VoNB) (Ultimate Unit Cost Base)
Value of New Business (VoNB) (Ultimate Unit Cost Base) 1 : Fiscal year : First-half of fiscal year 386 (JPY mn) Decreased Y-o-Y mainly due to decline of interest rates 64 16 20152 16 1. The expense assumptions used to calculate the EEV and the value of new business are set based on the premise tha
Slide 31: Structure Breakdown of VoNB per Policy
Structure Breakdown of VoNB per Policy Decreased due to decline of interest rates VoNB per policy (ultimate unit cost base) (JPY thousand) 33 Initial expense Change in increased extrapolation Insurance method of (0) premiums Interest interest rates per policy rates decreased declined 4 (28) (5) Ex
Slide 32: VoNB (Ultimate Unit Cost Base)
VoNB (Ultimate Unit Cost Base) 15/1H Per new business 16/1H for 2016 1H (JPY mn) (Restated1) (JPY thousand) Certainty equivalent present value of future profit 1,701 1,761 129 －) Time value of financial options and guarantees － － － －) Frictional cost of capital (8) (3) (0) －) Allowance for non-hedge
Slide 33: EV Sensitivity Analysis
EV Sensitivity Analysis1 Impacts of changes in assumptions (sensitivities) (JPY mn) Change in EEV as of Sep. 30, 2016 Change in VoNB EEV and new business value as of September 30, 2016 32,008 14 Sensitivity 1a: 1.0% increase in risk-free rate 1,621 234 Sensitivity 1b: 1.0% decrease in risk-free ra
Slide 34: Impact of Lower Interest Rates
Impact of Lower Interest Rates Impact to our financial results in first-half of FY2016 Interest Ensured profitability margin though certain impact Increased though impact EEV continued from March 31, 2016 Drastically decreased Y-o-Y VoNB with high impact 33
Slide 35: Contents
Contents 1. Results for 2Q of Fiscal 2016 2. Progress of Mid-term Business Plan 34
Slide 36: New Mid-term Business Plan
New Mid-term Business Plan Summary of new 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
Slide 37: To Achieve New Mid-term Business Plan
To Achieve New Mid-term Business Plan Aiming for returning to growth in new business performance in fiscal 2016 Achieve Establish a system Management Goal realizing sustainable Return to profitability growth in new business 2018 performance 2017 2016 36
Slide 38: Revised in Business Forecast for FY2016
Revised in Business Forecast for FY2016 Promote investment in ordinary expenses to ensure returning to growth of new business performance (JPY mn) Ordinary Ordinary income profit1 Business forecast (Before) 10,000 Profitable Business forecast (After) 10,000 (300) (Ref.) Results for FY2015 9,387 58
Slide 39: Progress of Mid-term Business Plan (Ordinary Income)
Progress of Mid-term Business Plan (Ordinary Income) 8% increase Y-o-Y : Fiscal year : First-half of fiscal year 13,500 (JPY mn) 10,000 9,387 Up 8% Y-o-Y Progress ratio 5,016 to target 4,629 for 2Q 50% FY2015 16 18 38
Slide 40: 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 forecast Management goal Results for FY2016 (revised) FY2018 16/1H Ordinary profit (loss) before amortization of deferred assets under Article 113 of (300) - 327 IBA (A
Slide 41: Key Initiatives
Key Initiatives Strengthen product development and channel utilization Online direct sales →Strengthen Smartphone Online optimization, the way to draw direct customers to the website and sales services for policyholders KDDI (exclusive alliance agent) →Launch “au Life Insurance” with Refunds KDDI
Slide 42: “au Life Insurance” with Refunds
“au Life Insurance” with Refunds Start sales as new product in December 2016 au Users “au Life Insurance” au “au Life Insurance” Smartphone with Refunds Monthly refunds of 200 yen per policy for up to 60 months 41
Slide 43: 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 42
Slide 44: 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 45: 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 46: Appendix
Appendix oD) LiFENE] LIFENET INSURANCE COMPANY
Slide 47: Embedded Value and Value of New Business
Embedded Value and Value of New Business (Illustrative purpose only: Based on present value) Appraisal Value (AV) Insurance payments Premium for Value of in-force business is the present value future growth at the valuation date of future after-tax profits distributable to shareholders from in-force
Slide 48: Three Surplus Factors of Fundamental Profit
Three Surplus Factors of Fundamental Profit FY2016 1H (JPY mn) Statements of Operations Profit analysis Insurance premiums and other 4,858 Ordinary income Net premiums Expense loading Premiums income 4,735 Reinsurance income 122 Reinsurance income Investment income Interest and Gains on sales 108 Re
Slide 49: Solvency Margin Ratio Calculation
Solvency Margin Ratio Calculation As of Sep. 30, 2016 (JPY mn) (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 2,809.4% = <numerator> 20,144 ÷ < the denominator> 1,434/2 Cash and deposits Other liabilities 463 Insurance risk
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