Lifenet Insurance Company · TSE:7157
Lifenet Insurance — Q2 2023 Earnings Presentation
40 slides from Lifenet Insurance's earnings presentation, Nov 15, 2023
Slide 1: Presentation Material for Investors Second Quarter Fiscal 2023
Securities Code: 7157 TSE Growth Presentation Material for Investors Second Quarter for Fiscal 2023 November 15, 2023
Slide 2: 1H for Fiscal 2023 Key Highlights
1H for Fiscal 2023 Key Highlights Key Indicators Corporate Value Growth Profitability EEV Annualized premium1 Insurance service (European Embedded Value) of policies-in-force results ¥ 140,905mn ¥ 27,255mn ¥ 4,088mn (YoY 114.5%) (YoY 118.8%) (YoY 138.8%) Notable Achievements ◼ Started offering GCL2
Slide 3: Annualized Premium of Policies-in-Force
Annualized Premium of Policies-in-Force ◼ Strongly grew 18.8% YoY, with large contribution from newly started GCL YoY +18.8％ :AP1 of policies-in-force for GCL (JPY millions) ¥ 27,255mn :AP1 of policies-in-force for individual life (JPY millions) Group credit 2,570 life insurance Individual 24,685 22
Slide 4: Policies-in-Force Movement
Policies-in-Force Movement ◼ GCL strongly led the growth while demand of individual life was moderate Net increase of GCL :Net increase of AP of policies-in-force for GCL (JPY millions) 2,570 :Net increase of AP of policies-in-force for individual life (JPY millions) Net increase of individual life
Slide 5: Summary IFRS P/L
Summary IFRS P/L ◼ Insurance service results and net income resulted in ¥4,088mn and ¥2,759mn, respectively (JPY millions) （Ref.） Items FY2022/1H2 FY2023/1H2 Change FY20222 Insurance service results 2,946 4,088 1,142 6,618 Financial results1 (423) 66 490 (452) Other results (374) (228) 146 (822) Pro
Slide 6: Insurance Service Results
Insurance Service Results1 ◼ Grew 38.8% YoY and reached ¥4,088mn, maintaining steady growth ◼ 47.5% progress rate over revised business forecasts Business forecasts :Insurance service results (fiscal year, JPY millions) announced in August :Insurance service results (1H, JPY millions) 8,600 7,216 2
Slide 7: Insurance Service Results Analysis
Insurance Service Results Analysis ◼ Increased due to the calm down of COVID-19 claims and increase of CSM release along with the growth of in-force business CSM release Risk (JPY millions) Expected adjustment 303 Insurance service results Items FY2022/1H FY2023/1H Change minus incurred release 52 4
Slide 8: European Embedded Value
European Embedded Value1 ◼ EEV and value of in-force business have been strongly growing at a CAGR of 19%2 and 31%, respectively since IPO ◼ EEV per share maintained at the end of Mar. 2023 level ¥1,755 ¥1,788 despite dilution due to capital raising ¥1,570 ¥1,673 140,905 ¥1,430 : Value of in-force b
Slide 9: Changing Factors of EEV
Changing Factors of EEV1 ◼ Increased due to the growth of VoNB and the improvement of opex ratio with the launch of GCL, and capital raising 140,905 (JPY millions) Adjusted incremental EV2 Adjustments to the values3 as of Sep. 30, 2023 Expected Assumption 9,881 Operating existing changes experience
Slide 10: Strong Business Performance of GCL
Strong Business Performance of GCL ◼ Started offering GCL to mortgage loan borrowers of au Jibun Bank since July ◼ GCL strongly contributed to the financial performance au Jibun Bank’s rapid growth of mortgage loan Contribution to key indicators1 + ¥2,570mn Mortgage loan balances High customer satis
Slide 11: Capital Raising through Public Offering and Third-Party Allotment
Capital Raising through Public Offering and Third-Party Allotment ◼ Raised new capital of ¥9.7bn to further unleash the growth potential of online life insurance and enhance corporate value Unleash the growth potential Diversification of investor base of online life insurance Increase of number of i
Slide 12: Future Pathway of Internet Direct Channel
Future Pathway of Internet Direct Channel ◼ Identified focus areas to attract young customer base and aim for mid-term growth Focus areas of marketing strategy Brand Nurture Data Enhancement Marketing Utilization 11
Slide 13: Expansion of Partner Business
Expansion of Partner Business ◼ Having backed by the tailwind of ”Embedded Finance”, make the most use of two major ecosystems with huge customer base and strong brand Play an important role in individual life and GCL Contribute to the spread of digital financial service July 2023 Started GCL Februa
Slide 14: Alliance with SMBC Group
Alliance with SMBC Group ◼ Plan to offer “Insurance with V-points” from December to be embedded into V-point ecosystem December 2023（planned） Exclusive for Sumitomo Mitsui card holder Insurance with V-points Developed by Lifenet V-Points equivalent to 1% of monthly premiums is awarded when customers
Slide 15: New Initiatives of Lifenet MIRAI
New Initiatives of Lifenet MIRAI ◼ Launched a LINE1-based consultation service in October 2023 LINE-based service to promote ‘Save and Minimize' insurance coverage www.better-choice.com/hoken-diet 1. LINE is a mobile messenger app with 96 million users as of September 2023. 14
Slide 16: Consolidated Business Forecasts for FY2023
Consolidated Business Forecasts for FY2023 ◼ Remains unchanged from August 2023 Growth Profitability (JPY millions) (JPY millions) Annualized premium of Business forecasts Insurance service results Business forecasts GCL policies-in-force approx. 2,700 28,200 8,600 Individual approx. 1,500 6,618 24,
Slide 17: Future Direction
Future Direction ◼ Aim for growth in in-force business for both individual life and GCL ◼ Continue 10% profit growth and aim for TSE Prime Market in around FY2025 Mid-term growth path of in-force business Insurance service results Group credit life insurance Continue 10% profit Steadily grow as new
Slide 18: Management Policy
Management Policy Help our customers embrace life more fully by Mission 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 19: 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 its original (1) Helping the customers help themselves. By making our materials ea
Slide 20: 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 21: Appendix
Appendix
Slide 22: Initiatives for Sustainability
Initiatives for Sustainability ◼ Promote initiatives for Sustainability cherishing life insurance’s original purpose – mutual support Creating the future of life insurance Creating the future Creating the future Creating the future for our customers for a better society with our employees Disclosed
Slide 23: Glossary
Glossary Glossary Explanation Revenue accrued for fulfillment of insurance services. Mainly, expected claims, expected maintenance expenses, risk Insurance revenue adjustment release, CSM release and recovery of insurance acquisition cash flows. Investment components which will be paid regardless of
Slide 24: Breakdown of Policies-in-Force
Individual Breakdown of Policies-in-Force Component 2022/09 2023/09 ratio Number of policies-in-force 543,635 582,784 100% - Term Life 263,856 284,123 49% - Whole-life Medical 150,293 159,705 27% - Term Medical Care 8,304 7,419 1% - Long-term Disability 66,662 68,638 12% - Cancer 54,520 62,899 11% S
Slide 25: Annualized Premium / Number of New Business
Individual Annualized Premium / Number of New Business :AP1 of new business (JPY millions) :Number of new business 1,166 1,123 1,137 1,104 1,051 990 991 981 969 934 933 923 889 822 818 794 747 639 16,036 29,864 28,136 27,553 26,918 26,167 23,314 23,369 24,410 23,928 22,164 22,506 22,612 22,128 19,11
Slide 26: Surrender and Lapse Ratio
Individual Surrender and Lapse Ratio :Surrender and lapse ratio1（%） 7.6% 7.6% 7.1% 7.0% 7.1% 6.9% 6.4% 6.3% 6.6% 6.4% 6.3% 6.4% 6.8% 6.6% 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 2019年度 FY2019 2020年度 FY2020 2021年度 FY2021 2022年度 FY2022 2023年度 FY2023 1. The surrender a
Slide 27: Insurance Acquisition Cash Flows (IACF) Efficiency
Individual Insurance Acquisition Cash Flows (IACF) Efficiency1 :Insurance acquisition cash flows / AP of new business :Insurance acquisition cash flows per new business (JPY thousands) Fiscal year Quarter 127 138 123 114 117 3.5 105 3.2 97 92 3.1 82 85 2.9 2.7 2.8 2.4 2.2 2.3 2.0 2019 ’20 ’21 ’22 ’2
Slide 28: Operating Expenses Ratio
Operating Expenses Ratio1 :Operating Expenses Ratio（％） :Operating expenses excl. insurance acquisition cash flows (JPY millions) Fiscal year Quarter 21.0% 20.7% 20.7% 20.0% 19.3% 19.4% 18.9% 17.8% 4,715 3,896 18.1% Improved due to the 17.4% launch of GCL 3,047 2,757 2,317 1,181 1,162 1,232 1,146 1,1
Slide 29: Summary IFRS P/L (Quarter)
Summary IFRS P/L (Quarter) (JPY millions) Items FY2023/1Q FY2023/2Q Note Insurance service results 2,274 1,813 Expected claims minus incurred claims 368 (104) Actual claim payments increased Risk adjustment release 433 438 CSM release 1,677 1,758 Increased CSM release due to assumption changes Tempo
Slide 30: Breakdown of Insurance Service Results
Breakdown of Insurance Service Results (JPY millions) FY2022 FY2023 Items （Ref.）Fiscal Year １H 1H Insurance revenue 20,732 10,025 11,766 Expected claims 9,569 4,604 5,177 Risk adjustment release 1,698 819 872 CSM release 6,401 3,132 3,435 Recovery of IACF 3,184 1,528 1,765 Others (121) (58) (81) Pre
Slide 31: Breakdown of Financial Results
Breakdown of Financial Results ◼ Unrealized losses of 1H recovered due to rising stock prices in 1Q, despite affected by increasing foreign interest rates since FY2022 (JPY millions) Items FY2022/1H FY2023/1H Change Investment results (390) 116 507 Interest income 150 151 1 Impairment losses on fina
Slide 32: Detail of Bond Portfolio
Detail of Bond Portfolio1 As of September 30, 2023 (JPY millions) Available-for-Sale Held-to-Maturity Total JPY Bonds 18,582 17,285 35,868 Duration2 4 years 11 years 8 years Foreign Currency Bonds 7,523 — 7,523 Duration2 6 years Non-Currency Hedged 681 — 681 Currency Hedged 6,841 — 6,841 1. Based on
Slide 33: CSM Movement
CSM Movement ◼ Large contribution from improvement of opex ratio with the launch of GCL in assumption changes in addition to the new business CSM of individual life Impact of (JPY millions) assumption changes, etc. Items FY2022 FY2023/1H 5,186 CSM, CSM, beginning of the period 74,907 83,604 end of t
Slide 34: CSM Future Allocation
CSM Future Allocation ◼ Stable profits will be realized over long period from in-force CSM ◼ Aim for CSM release growth by adding CSM generated from future acquired new business Future allocation of CSM (JPY billions) Expected timing when CSM is recognized in PL Amount A+year 6 A+year 1 A＋year 2 A＋y
Slide 35: Structure of Embedded Value
Structure of Embedded Value Adjusted net worth Value of in-force EV (Net assets at end of period business + 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 at the end
Slide 36: EV Resilience to Financial Changes
EV Resilience to Financial Changes ◼ Limited sensitivity to interest rates and stock prices Sep. 2023 End Reference: March 2023 End1 Lifenet Lifenet Company A Company B Company C 4% 4% 2.1% 1.9% 1% -0.6% -0.8% -1% -2.1% -2.0% -4% 0.5% interest rate increase -5% -5% -5% 0.5% interest rate decrease -7
Slide 37: EV Sensitivity Analysis
EV Sensitivity Analysis1 ◼ Impacts of changes in assumptions (sensitivities) Change in EEV as of Change in (JPY millions) Sep. 30, 2023 VoNB EEV and new business value as of September 30, 2023 140,905 5,117 Sensitivity 1a: 1.0% increase in risk-free rate (5,877) (864) Sensitivity 1b: 1.0% decrease i
Slide 38: Solvency Margin Ratio Calculation
Solvency Margin Ratio Calculation As of Sep. 30, 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 2,614.9% <numerator> ÷ < the denominator> 【Ref.】 43,363 Consolidated 3,316/2 Solvency margin…
Slide 39: IFRS Reporting
IFRS Reporting ◼ IFRS adoption better presents periodic performance and profitability from policies-in-force ◼ Capital adequacy and dividends are regulated by statutory accounting standards (J-GAAP) Statutory Accounting Embedded Value IFRS 17 （J-GAAP） Economic value of Recognition of revenue Financi
Slide 40: Dividend Policy
Dividend Policy ◼ Aim for the increase in total shareholder return by capital gain1 Profit Policies-in-force & profit and loss（illustrative image） : Policies-in-force : New business : J-GAAP profit and loss Retained earnings are realized after generating profit Marketing expenses are recorded in lum
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