Lifenet Insurance Company · TSE:7157
Lifenet Insurance — Q1 2021 Earnings Presentation
45 slides from Lifenet Insurance's earnings presentation, Aug 11, 2021
Slide 1: Presentation Material for Investors
Securities Code: 7157 TSE Mothers Presentation Material for Investors First Quarter for Fiscal 2021 August 11, 2021
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: Overview of 1Q for Fiscal 2021
Overview of 1Q for Fiscal 2021 Annualized premium1 of Annualized premium1 of policies-in-force new business 19,473 (104.1% vs end of FY2020) million yen 1,123 (Y-on-Y 96.2%) million yen EEV (European Embedded Value) Adjusted incremental EV2 97,015 million yen 1,630 million yen (102.0% vs end of FY20
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 19.4 16.4 458,539 13.6 387,775 ◼ Exceeded 450,000 11.5 policies-in-force 321,829 10.2 272,830 243,610 ◼ Year-on-year Annualized premium 118.3%, number of policies-
Slide 5: Changing Factors of Policies-in-Force
Changing Factors of Policies-in-Force Number / Fiscal Year FY2020/1Q FY2021/1Q Number of policies-in-force (BOP) 365,171 439,945 +）Number of new business 28,136 27,553 －）Decreased number of policies1 (5,532) (8,959) Non-recurring record of lapsed policies※ ー (527) Number of policies-in-force (EOP) 3
Slide 6: Surrender and Lapse Ratio
Surrender and Lapse Ratio ◼ Increased partly due to the temporal impact of lapsed policies :Impact of lump-sum recording of policies lapsed in FY2020 :Surrender and lapse ratio without the above 7.6% Temporal impact of lump- sum recording of policies lapsed in FY2020※ ＋0.5% 7.0% 7.1% 6.6% 5.9% 6.0%
Slide 7: Number of New Business
Annualized Premium / Number of New Business : Annualized premium of new business1 (1Q of fiscal year, JPY millions) : Number of new business (fiscal year) : Number of new business (1Q of fiscal year) 100,587 ◼ Exceeded 80,911 27,000 in new business 64,435 1,166 1,123 ◼ Year-on-Year 39,175 822 annual
Slide 8: Number of New Business (Quarter)
Number of New Business (Quarter) ◼ The second highest level after 1Q of FY2020 :Number of new business 27,553 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q FY2017 FY2018 FY2019 FY2020 FY2021 7
Slide 9: Marketing Efficiency
Marketing Efficiency : Marketing expenses per new business (JPY thousands) : Marketing expenses / Annualized premium of new business1 (JPY) 75 73 67 66 65 1.8 ◼ Aggressively 1.5 1.5 1.7 1.5 invested in marketing for further growth (fiscal year) 2017 ’18 ’19 ’20 ’21/1Q Marketing expenses 2,627 4,216
Slide 10: Operating Expenses Ratio
Operating Expenses Ratio : Operating expenses ratio¹ (%) : Insurance premiums (JPY millions) : Operating expenses excl. marketing expenses (JPY millions) 16,892 13,982 ◼ Maintained below 11,845 20% 10,421 22.2 % 22.8 % ◼ Aim to improve 21.6 % 19.6 % 19.8% operational 4,693 efficiency by 3,023 3,317
Slide 11: 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
Slide 12: 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 Profit/loss for Unrealized future profits/losses on policies-in-f
Slide 13: EEV (European Embedded Value)
EEV （European Embedded Value） ◼ Characteristics of Lifenet’s EEV are as follows: Strong growth • Maintaining increase in EEV since listing in March 2012 • Steadily growing even in a low interest rate environment Resilience to interest rate changes • Limited sensitivity to interest rate and stock flu
Slide 14: Strong EEV Growth
Strong EEV1 Growth ◼ EEV and value of in-force business have been growing at a CAGR of 20%2 and 34%, respectively since IPO 97,015 95,140 (JPY millions) Value of in-force business 73,431 Adjusted net worth 76,149 78,702 60,878 18,547 5,122 13,425 12,553 18,990 18,313 2012/03 ’13/03 ’14/03 ’15/03 ’16
Slide 15: Changing Factors of EEV
Changing Factors of EEV1 ◼ EEV growth driven by increase in adjusted incremental EV, mainly due to value of new business (JPY millions) Adjusted incremental EV 97,015 Adjustments to the values2 Operating Assumption Economic as of experience changes variances Jun. 30, ’21 and assumption Expected vari
Slide 16: EV Resilience to Financial Changes
EV Resilience to Financial Changes ◼ Limited sensitivity to interest rates and stock prices June 2021 Reference: March 2021 End1 End Lifenet Lifenet Company A Company B Company C 6% 5% 1.6% 2% 1.4% -0.9% -0.8% -1.6% -1.6% -3% -5% -5% -7% -7% -8% 0.5% interest rate increase 0.5% interest rate decreas
Slide 17: Life Time Value and Customer Acquisition Cost
【Ref.】 Life Time Value and Customer Acquisition Cost Key Metrics for a SaaS Company and Lifenet FY2019 FY2020 FY2021/1Q 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 42,486 JPY 4
Slide 18: Financial Condition
Financial Condition (JPY millions) (YY/MM) ’21/03 ’21/06 Total assets 54,501 55,333 Cash and deposits 2,059 2,158 ◼ Maintained prudent Monetary claims bought 999 － Money held in trust 5,895 5,890 investment Securities 40,007 41,458 management policy Government bonds 9,004 9,006 1,482 1,484 ◼ Maintai
Slide 19: Launched a New Long-term Disability Product in June 2021
Launched a New Long-term Disability Product in June 2021 ◼ Added the industry-first coverage1 New Long-term Disability Hataraku-Hito 3 Support for “living expenses” when one is unable to work due to disease or injury, as well as “medical expenses” or “decrease in income” after returning to work 1. C
Slide 20: Started Sales of Money Forward Life Insurance
Started Sales of Money Forward Life Insurance ◼ Plan to implement a new service by September Assessment of current insurance policy Reduce fixed costs by only purchasing necessary insurance Part of the data that the customer has recorded in Money Forward ME1 is automatically reflected in the informa
Slide 21: LIFENET MIRAI Inc. Established Subsidiary in May 2021
Established Subsidiary in May 2021 ◼ Meet various needs and drive growth of the online life insurance market New company LIFENET MIRAI Inc. Comparison of Proposal for Policy Support for insurance insurance review maintenance insurance claims products (Investment ratio: 80%) (Investment ratio: 20%) •
Slide 22: Develop Online Life Insurance Platform
Develop Online Life Insurance Platform Expand online products and services Supply Lifenet’s products and services ＋ Other insurers’ products and services “Online Platform” connects life insurance products and services with customers Provide products and services which customers need online Search Co
Slide 23: Transformation to an Online Life Insurance Platform
Transformation to an Online Life Insurance Platform ◼ Started online insurance agency business https://www.better-choice.com/ ※Japanese Version Only 22
Slide 24: Transformation to an Online Life Insurance Platform
Transformation to an Online Life Insurance Platform ◼ Started to offer insurance policy management service Manage policies Assess current Support a claim insurance 23
Slide 25: Business Environment surrounding Online Life Insurance Market
Business Environment surrounding Online Life Insurance Market ◼ Financial digitalization is proceeding driven by COVID-19, and structural growth of online life insurance is expected in the future Phase1 Phase2 Phase3 Adaptation to Start up consumer behavior Growth 25.0% Needs for online life insuran
Slide 26: Structural Growth Potential of Online Insurance Market
Structural Growth Potential of Online Insurance Market ◼ Assumed expansion driven by people grown up in the digital age Trend by age group from report of 20181 25.0% :Ratio of intention to purchase policy online 22.0% 23.1% :Ratio of actual online purchase 20.0% 15.0% 13.3% 12.5% High intention for
Slide 27: Management Policy
Management Policy ◼ Our commitment to the current Management Policy remains unchanged to aim for further growth Help our customers embrace life more fully by offering Mission comprehensible, cost-competitive and convenient products and services Vision Be the leading company driving the growth of the
Slide 28: Time Scale for the New Management Goal
Time Scale for the New Management Goal ◼ Aim to achieve double-digit growth of EEV CAGR CAGR 20% 15% EEV(JPY billions) ◼ Become the leading 200 billion yen CAGR 10% company driving the growth of the online insurance market ◼ Double policies-in-force 95.1 and significantly improve operating expenses
Slide 29: Business Forecast FY 2021
Business Forecast FY 2021 ◼ Aim for double-digit growth in in-force policy performance through record-high in new business (JPY millions) FY 2021 Forecast FY 2020 Results Annualized premium1 of policies-in-force 21,800 18,713 Annualized premium1 of new business 4,400 4,197 Of which: impact Of which:
Slide 30: Aim to Realize Lifenet Manifesto
Aim to Realize 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 mak
Slide 31: 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 32: Appendix
Appendix oD) LiFENE] LIFENET INSURANCE COMPANY
Slide 33: Initiatives for Sustainability
Initiatives for Sustainability ◼ Aim to increase the value provided to stakeholders based on Manifesto Lifenet Manifesto Comprehensible, Cost-Competitive, Convenient Enhancement of Customer-focused Adaptation to Corporate Governance business operations social changes • Board of Directors includes ou
Slide 34: Further Strengthen Governance
Further Strengthen Governance ◼ Establish a management structure for strong growth and transformation ■Transition to a company with audit and supervisory committee in June 2021 Board of Directors Number of directors 11 9 Audit and supervisory committee member Outside Directors Outside Directors Rati
Slide 35: New Management Team from June 2021
New Management Team from June 2021 ◼ Transformation into an Internet Service Company of Life Insurance Directors Yasuhiro Koba Ryosuke Mori Representative Director and President Director, Executive Vice President General Manager of Sales & Marketing Division Goldman Sachs Japan Co., Ltd. Head of Cor
Slide 36: Breakdown of Policies-in-Force
Breakdown of Policies-in-Force Component ’21/03 ’21/06 ratio Number of policies-in-force 439,945 458,539 100% - Term Life 213,597 222,984 49% - Whole-life Medical 120,216 125,342 27% - Term Medical Care 8,840 8,740 2% - Long-term Disability 59,567 60,602 13% - Cancer 37,725 40,871 9% Sum insured of
Slide 37: Condensed Statements of Operation
Condensed Statements of Operation / Fundamental Profit (JPY millions) FY2020/1Q FY2021/1Q Change Note Increased due to growth in in-force policies business and Insurance premiums and other 4,633 5,848 1,214 reinsurance income from modified co-insurance. Other 92 93 0 Ordinary income 4,726 5,942 1,21
Slide 38: Three Surplus Factors of Fundamental Profit
Three Surplus Factors of Fundamental Profit 1Q of FY2021 (JPY mn) Statements of operations Profit analysis Insurance premiums and other 5,848 Ordinary income Premiums income 4,693 Net premiums Expense loading Reinsurance income 1,155 Reinsurance Other reinsurance income income Interest and Gains on
Slide 39: Solvency Margin Ratio Calculation
Solvency Margin Ratio Calculation As of June 30, 2021 ( R 1 + R 8 ) 2 + ( R 2 + R 3 + R 7 ) 2 + R 4 / 2 (JPY mn) = Solvency margin ratio Total amount of solvency margin Total amount of risk/2 2,599.9% <numerator> ÷ < the denominator> 28,438 2,187/2 Other liabilities Cash and deposits Insurance risk
Slide 40: EV Sensitivity Analysis
EV Sensitivity Analysis1 Impacts of changes in assumptions (sensitivities) Change in EEV as of Change in (JPY millions) Jun. 30, 2021 VoNB EEV and new business value as of June 30, 2021 97,015 1,272 Sensitivity 1a: 1.0% increase in risk-free rate (3,177) (46) Sensitivity 1b: 1.0% decrease in risk-fr
Slide 41: Adjusted Incremental EV
Adjusted Incremental EV ◼ Adjusted Incremental EV accurately indicates our business growth during a certain period within increase in EEV Adjusted Incremental EV Defined as constitution of components below: - New business value in the fiscal year - Expected existing business contribution - Operating
Slide 42: Adjusted Profit
Adjusted Profit Significance of Adjusted Profit disclosure • As accrual timing of cost and revenue do not match, statutory accounting does not necessarily provide an accurate picture of profitability of our business • We, therefore, disclose the indicator of profit level excluding marketing expenses
Slide 43: Adjusted Profit
Adjusted Profit ◼ Steadily recorded adjusted profit generated from policies-in-force 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 standard policy reserves1 JPY millions / fiscal y
Slide 44: 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 We are currently in the transitional period and will transition all business to ⅲ) Im
Slide 45: 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
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