Lifenet Insurance Company · TSE:7157
Lifenet Insurance — FY2012 Earnings Presentation
54 slides from Lifenet Insurance's earnings presentation, May 17, 2013
Slide 1: Investor Meeting Presentation for Fiscal 2012
Securities Code:7157 TSE Mothers Investor Meeting Presentation for Fiscal 2012 May 17, 2013
Slide 2: Agenda: Overview of FY2012
1. Overview of FY2012 2. Highlights of Results 3. Mid-term Business Plan and Challenges 1
Slide 3: LIFENET is… Comprehensible, Cost-Competitive, Convenient
LIFENET is… Comprehensible Cost-Competitive Convenient Returning to the original purpose of life insurance – mutual support – Lifenet was founded with the goal of offering simple, convenient and competitively priced products and services based on the highest levels of business integrity. We offer th
Slide 4: Achieved Management Target
Achieved Management Target Achieved 150,000 policies-in-force 173,262 169,312 Policies-in-force 155,947 "Hataraku-hito" (Long-term disability) 21,348 "Jibun-Plus"(Term medical care) 144,575 5,865 "Jibun" (Whole-life medical) "Kazoku" (Term life) 132,551 118,040 54,001 103,875 91,249 76,296 63,188
Slide 5: Policy Holders Exceeded 100,000
Policy Holders Exceeded 100,000 Became a brand supported 103,816 by 100,000 customers 96,923 91,125 83,999 75,622 67,316 59,835 51,051 43,214 35,899 28,497 23,047 17,680 13,698 9,804 6,595 3,965 2,083 341 1,097 08/06 09/03 10/03 11/03 12/03 13/03 4
Slide 6: New Product “Jibun Plus”
New Product “Jibun Plus” “Jibun Plus” exceeded 5,000 policies-in-force in half a year after starting sales in Oct. 2012 4,968 3,990 ・ Coverage of individual 3,042 copayment regardless of the number of days of 2,029 hospitalization ・ Coverage for “cancer” and 1,214 “advanced medical care” 418 ・ 10-
Slide 7: Exclusion of Specific Organs
Exclusion of Specific Organs Started targeting specific segment (expecting mothers) Launched new series of TV commercials Started measures for expecting mothers 6
Slide 8: Removed Medical Certificate Submission for Policy Claims
Removed Medical Certificate Submission for Policy Claims For more prompt payment Previously (LN) (Customer and medical institution) (Customer) Preparation Preparation Request for and acquisition of medical certificate (LN) (Customer) and and Assessment Notification dispatching dispatching and to L
Slide 9: General Recruitment of Affiliated Insurance Planners
General Recruitment of Affiliated Insurance Planners Started the services in Feb. 2013 (15 planners as of Apr. 2013) Does this plan meet my needs? Affiliated Customer Advice Insurance Planner Apply Affiliation LIFENET http://www.lifenet-seimei.co.jp/planner/ 8
Slide 10: Long-Term Disability Policies-in-Force Exceeded 20,000
Number of policies-in-force of Long-Term Disability exceeded 20,000 Achieved 20,000 policies-in-force in 3 years after its launch Number of policies-in-force of Long-Term Disability 20,995 19,712 18,333 16,542 14,129 11,831 9,833 7,424 5,457 3,750 2,177 1,067 144 10/03 11/03 12/03 13/03 9
Slide 11: Contact Center and Website Awarded
Contact Center and Website Awarded¹ Contact Center and Website awarded the highest rating three stars and ranked 1st in the industry in the 2012 HDI Contact Center Rankings Contact Center Support Portal (Website) 1. Awarded in the 2012 HDI Contact Center Rankings (life insurance industry) hosted b
Slide 12: New Mid-term Business Plan
New Mid-term Business Plan LIFENET 2015 Management Goal Archive 15 billion in Offer new products and ordinary income (FY 2015) services as an “innovator” Push the company toward to create the future of life profitability (FY 2015) (Based on ordinary profit before amortization of insurance that res
Slide 13: Management Changes
Management Changes Newly created the post of Chairman, CEO and COO in order to strengthen its corporate governance at a global standard Representative Director, Chairman & CEO Haruaki Deguchi Representative Director, President & COO Daisuke Iwase Note: The changes in titles of the Representative D
Slide 14: Highlights of Results
1. Overview of FY2012 2. Highlights of Results 3. Mid-term Business Plan and Challenges 13
Slide 15: FY2012 Key Highlights
FY2012 Key Highlights Rapid growth in ordinary income Operating expense control Steady increase in mortality margin Positive operating cash-flow in 2H/2012 Decrease in ordinary loss 14
Slide 16: Rapid Growth in Ordinary Income
Rapid Growth in Ordinary Income (JPY mn) 5,976 Growth with the increase in 3,773 policies-in-force YoY Growth: 1,827 158% 2010 11 12 (Fiscal year) 15
Slide 17: Operating Expense Control
Operating Expense Control (JPY mn) 4,976 Active advertising 3,984 expenses in 1H/2012 2,761 Marketing Accordingly 2,724 2,160 controlled expenses Customer 1,438 550 service in 2H/2012 446 297 System Operating expenses 1,378 1,664 and other 988 ratio 85%1 2010 11 12 (Fiscal year) 154% 107% 85%
Slide 18: Operating Expenses (Quarterly)
Operating Expenses (Quarterly) (JPY mn) 1,285 1,309 1,311 1,228 1,129 987 747 776 791 649 Marketing 544 510 125 131 127 143 137 Customer Service 114 362 412 401 441 442 System 392 and others 11/3Q 11/4Q 12/1Q 12/2Q 12/3Q 12/4Q 17
Slide 19: Steady Increase in Mortality Margin
Steady Increase in Mortality Margin 1,437 YoY increase: 2.9x (JPY mn) (Effect of Changing Calculation Formula of Policy Reserves on Provision) Effect of changing 501 calculation formula of 935 policy reserves on provision: 490 279 JPY501mn (Pro-forma YoY increase: 1.9x) 2010 11 12 (Fiscal year)
Slide 20: Positive Operating Cash-flow in 2H/2012
Positive Operating Cash-flow in 2H/2012 (JPY mn) 397 Operating cash- flow turned positive since 3Q/2012 (332) (433) 2H/2011 1H/2012 2H/2012 (Fiscal year) 19
Slide 21: Decrease in Ordinary Loss
Decrease in Ordinary Loss (JPY mn) FY2010 FY2011 FY2012 Ordinary income 1,827 3,773 5,976 Ordinary expenses 2,648 4,461 5,999 Provision of policy reserves and others 565 1,130 1,535 Operating loss Operating expenses Other ordinary expenses 2,724 595 3,984 1,041 4,976 1,544 shrunk to JPY Amortizati
Slide 22: Deferred Assets under Article 113 of the IBA
Deferred Assets under Article 113 of the IBA¹ Insurance company is allowed to record deferred assets under Article 113 of the IBA¹ for the first 5 years since business commencement (FY2012) Illustrative image of impact on P/L (focus on the relationship between operating expenses and deferred asset
Slide 23: Policies-in-Force and Annualized Premium
Policies-in-Force (# in thousand) 169 Number of 118 Policies-in-Force 169,312 63 Annualized 23 Premium1 JPY 6.8bn 10/03 11/03 12/03 13/03 (YY/MM) 1.0 2.6 4.8 6.8 Annualized Premium (JPY in bn) 1. The amount of money equivalent to what is to be paid to have the insurance coverage for one year. Al
Slide 24: New Business
New Business (# in thousand) 60 60 Number of new business 42 maintained the same level 19 Number of policies per customer¹ up 5 to 178% 2008 2009 2010 2011 2012 (Fiscal year) 129% 132% 154% 168% 178% number of policies per customer¹ 1. The ratio of new business / new customers of each half years
Slide 25: New Business (Quarterly)
New Business (Quarterly) (# in thousand) 16.5 Recovering 16.1 15.9 16.2 growth 14.2 14.2 14.1 momentum in 13.7 2012 4Q after the slowdown in 2012 2Q and 3Q 11/2Q 11/4Q 12/2Q 12/4Q (Quarterly) 24
Slide 26: Increase of the Number of New Business
Increase of the Number of New Business Launch new TV commercials to further appeal new measures introduced after Oct. 2012 Continuously improve the website - Usability, “plan suggestion” Work on new measurements - Trial of follow-ups for those who requested brochures 25
Slide 27: New TV Commercials on Air
New TV commercials on Air Communicate the removal of medical certificate submission for policy claim & exclusion of specific organs 26
Slide 28: Continuous Improvement of Website: A/B Testing
Continuous Improvement of Website Renew the top page thru A/B testing Selected the most effective one 27
Slide 29: Continuous Improvement of Website: Plan Suggestion
Continuous Improvement of Website A new page for “plan suggestion” Suggest 3 plans according to the entered profile 28
Slide 30: New Measurements
New Measurements Reinforce support for potential customers Brochure Brochure Consideration Application request mail Follow-ups (Potential customer) Follow-up calls Enclose leaflet 29
Slide 31: Historical Financials
Historical Financials Fiscal 2009 Fiscal 2010 Fiscal 2011 Fiscal 2012 (JPY mn) Ordinary income 658 1,827 3,773 5,976 Insurance premiums and other 591 1,765 3,720 5,915 Investment income 66 60 47 51 Other ordinary income 0 1 5 9 Ordinary expenses 1,690 2,648 4,461 5,999 Insurance claims and other 34
Slide 32: Fundamental Profit
Fundamental Profit (JPY mn) Fiscal year 2010 2011 2012 Mortality margin 279 490 1,437 Fundamental Expense margin (loss) Interest (911) (919) (1,219) profit went black margin 58 37 27 Fundamental Profit (574) (391) 244 for the first time (ref.) Insurance premiums 1,765 3,720 5,976 on a fiscal year
Slide 33: Marketing Expenses / Value of New Business per Policy
Marketing Expenses / Value of New Business per Policy (JPY thousand) 45 Marketing expenses per policy Fluctuations due 34 35 to active advertising and deceleration of 27 new business 23 Increased 11 confidence from Value of new business per policy (ultimate unit cost base) improved name recognit
Slide 34: Financial Condition
Financial Condition Invested (JPY mn) 11/3 12/3 13/3 Total assets 10,523 18,861 20,450 Cash and deposits 380 428 353 conservatively Securities 7,200 13,800 13,488 Short-term Government bonds 3,556 9,939 7,331 government local government - - - bonds switched bonds Corporate bonds 3,532 3,721 5,98
Slide 35: Solvency Margin Ratio
Solvency Margin Ratio1 3,499% 3,283% Maintained at a healthy level, decrease due 2,266% to the increase Average of 4 major in policies-in- insurance company as of March 31, 20123 force 650% 11/032 12/03 13/03 (YY/MM) 1. The solvency margin ratio is an important financial indicator and a key benchm
Slide 36: 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 37: European Embedded Value
European Embedded Value1 18,547 18,746 (JPY mn) Value of In-Force 6,668 Business Value of in- force business 9,551 130%2 of Adjusted March 31, 2012 12,078 Net Asset 11/03 12/03 13/03 (YY/MM) 1. Lifenet has fully adopted the EEV Principles, while also taking into account a market-consistent approac
Slide 38: Value of New Business (VoNB)
Value of New Business (VoNB) : value of new business : value of new business (ultimate unit cost base) 1,692 Value of new (JPY mn) business (ultimate unit 1,010 cost base¹) 42% 788 of FY2011 709 Improved by operating 127 expenses control (65) in 2H/2012 2010 11 12 (Fiscal year) 1. The expense as
Slide 39: VoNB (Ultimate Unit Cost Base)
VoNB (Ultimate Unit Cost Base) Per new business (JPY mn) FY2011 FY2012 for FY2012 (JPY thousand) Certainty equivalent present value of future profit 6,270 5,795 95 －） Time value of financial options and guarantees － － － －） Frictional cost of capital (45) (38) (0) －） Allowance for non market risk (2,
Slide 40: Structure Breakdown of VoNB per Policy
Structure Breakdown of VoNB per Policy Decrease due to active advertising expenses with IPO 27 VoNB per policy (ultimate unit cost base) (JPY thousand) Initial expenses increased Insurance (10) premiums per policy Other variables increased Assumption (decline of changes corporate (2) tax rate, etc
Slide 41: Mid-term Business Plan and Challenges
1. Overview of FY2012 2. Highlights of Results 3. Mid-term Business Plan and Challenges 40
Slide 42: Huge Market Unchanged
Huge Market Unchanged Life Insurance Market in Japan is approx. 40 trillion (JPY in tn) Private insurance¹ Cooperative insurance² Former Japan Post³ 50.0 45.8 44.9 44.6 43.6 44.4 45.0 42.7 42.0 41.0 40.9 40.5 40.8 40.0 11.2 5.7 15.2 11.7 4.6 5.3 5.5 5.9 14.3 12.3 9.2 35.0 4.5 4.5 4.2 30.0 4.9 4.3
Slide 43: Huge Market Potential
Huge Market Potential High Growth Potential - More consumers to purchase life insurance products via the Internet Preferred Future Service Channels1 (%) Market Share of Online Life Insurance (Number of Policies in Force) 0.2 2.9 4.5 10.5 Online 29.3 Others Captive agents, 22.7 Post offices, Banks,
Slide 44: New Mid-term Business Plan
New Mid-term Business Plan LIFENET 2015 Management Goal Archive 15 billion in Offer new products and ordinary income (FY 2015) services as an “innovator” Push the company toward to create the future of life profitability (FY 2015) (Based on ordinary profit before amortization of insurance that res
Slide 45: Priority Areas in Mid-term Business Plan
Priority Areas in Mid-term Business Plan 1. Sustainable growth in insurance premium income (top-line) Review its operations centering on its core values, and build a sustainable growth structure – Efficiency in the existing business model (pull-marketing model) – Build up the scheme to follow-up p
Slide 46: Sustainable Growth in Insurance Premium Income
Sustainable Growth in Insurance Premium Income (top-line) Enhance credibility Earn customers’ trust with consistent operation Promotion towards specific segments Proposals to meet specific segment needs Strengthen measures to follow up with prospects Started outbound calls to potential custome
Slide 47: Enhance Credibility
Enhance Credibility Started to send “Lifenet Letter” for customers to confirm their registrated information and contents of their policies 46
Slide 48: Improve Operating Efficiency
Improve Operating Efficiency Containing marketing cost compared to fiscal 2012 (million yen) 2,761 2,160 1,438 2010 2011 2012 2013 (fiscal year) 47
Slide 49: Change in Competitive Business Environment: Smartphone Site
Change in Competitive Business Environment Major renewal of Smartphone site in April 2012 http://www.lifenet-seimei.co.jp/sph/ 48
Slide 50: Change in Competitive Business Environment: Online Insurers
Change in Competitive Business Environment “Online Insurance” companies - 7 in total (2 pure-Internet companies + 5 others)1 （Apr. 2008 -） AXA Direct Life （May 2008 - ） LIFENET （May 2011 -） ORIX Life （Sep. 2011 -） Rakuten Life （Dec. 2011 -） MetLife Alico Life （Sep. 2012 -） Sompo Japan DIY Life （No
Slide 51: “Innovator” (Front-runner) in Life Insurance
“Innovator” (Front-runner) in life insurance Lead the competitive “Online Insurance” market as a pioneer based on our manifesto Comprehensible Cost-Competitive Convenient 50
Slide 52: Strategic Alliance with Swiss Re
Strategic Alliance with Swiss Re A Joint Committee is to be established Swiss Re Lifenet Joint Committee knowledge and personnel exchange in areas such as online distribution, product development and underwriting 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: ir.lifenet-seimei.co.jp/en
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 fo
Lifenet Insurance Company — FY2012 Earnings Presentation on 6ix