NEWS RELEASE
November 12, 2019
Ryosuke Mori, President
LIFENET INSURANCE COMPANY(Securities Code: 7157, TSE Mothers)

Financial Results for 2Q of Fiscal 2019 Ending March 31, 2020
Annualized premium of new business of 1,616 million yen, up 33.7% year on year
TOKYO, November 12, 2019 - LIFENET INSURANCE COMPANY (TSE Mothers 7157,
President Ryosuke Mori, URL: https://ir.lifenet-seimei.co.jp/en/) discloses financial results for thesecond quarter of fiscal 2019 ending March 31, 2020.
1．Overview of the financial results for 2Q of fiscal 2019(1) Business results
Condition of policies-in-force
Annualized premium*1 of new business in 2Q ended September 30, 2019 was 794 million yen(124.6% of 2Q of fiscal 2018). The number of new business was 18,795 (127.3% of 2Q of fiscal
2018). Annualized premium*1 of new business for the six months ended September 30, 2019was 1,616 million yen (133.7% of the six months ended September 30, 2018). The number of
new business for the six months ended September 30, 2019 was 37,912 (135.2% of the six
months ended September 30, 2018).
Annualized premium*1 of policies-in-force as of the end of 2Q of fiscal 2019 stands at 14,200
million yen (108.5% of March 31, 2019). The number of policies-in-force resulted in a total of334,528 (108.3% of March 31, 2019). Surrender and lapse ratio*2 for the six months ended
September 30, 2019 was 7.3% (6.2% for the six months ended September 30, 2018).
*1: Annualized premium is the amount of money equivalent to what is to be paid to have the insurance coverage for one
year. All payments for Lifenet products are in monthly installments, we calculate annualized premium as multiplying
the monthly premium by 12 months.
*2: The surrender and lapse ratio is the annual equivalent of the monthly number of policies surrendered and/or lapsed
divided by the monthly average number of policies-in-force.

Results of operations
Insurance premiums and other for the six months ended September 30, 2019 increased to
7,754 million yen (132.6% of the six months ended September 30, 2018) due to an increase in
in-force business and modified co-insurance. Investment income grew to 174 million yen(134.1% of the six months ended September 30, 2018). Other ordinary income was 24 million
yen. As a result, ordinary income for the six months ended September 30, 2019 amounted to7,953 million yen (130.4% of the six months ended September 30, 2018).
Insurance claims and other was 1,688 million yen (134.9% of the six months ended
September 30, 2018). The ratio of insurance payment amounts to insurance premiums was
19.2% for the six months ended September 30, 2019, compared with 18.1% for the six months
ended September 30, 2018. Provision for policy reserves and other came to 2,337 million yen(124.0% of the six months ended September 30, 2018). The ratio of provision for policy
reserves to insurance premiums increased to 33.9% for the six months ended September 30,
2019, compared with 33.2% for the six months ended September 30, 2018. Operating expenses
amounted to 4,604 million yen (153.6% of the six months ended September 30, 2018) mainly
due to an increase in our marketing spend including advertising. The components of operating
expenses were 3,186 million yen in marketing expenses (185.1% of the six months ended
September 30, 2018), 424 million yen in customer service expenses (115.6% of the six months
ended September 30, 2018), and 993 million yen in system and other expenses (109.3% of thesix months ended September 30, 2018). Other ordinary expenses was 491 million yen (144.7%
Copyright© LIFENET INSURANCE COMPANY All rights reserved.

1

NEWS RELEASE
of the six months ended September 30, 2018). Consequently, ordinary expenses for the six
months ended September 30, 2019 totaled 9,167 million yen (141.6% of the six months ended
September 30, 2018).
As a result, ordinary profit totaled 1,214 million yen loss for the six months ended September
30, 2019, compared with 376 million yen loss for the six months ended September 30, 2018.
Net income was 1,223 million yen loss, compared with 384 million yen loss for the six months
ended September 30, 2018.
In addition, fundamental profit, which is an indicator for the profitability of life insurancecompanies, amounted to 1,232 million yen loss, compared with 319 million yen loss for the six
months ended September 30, 2018, mainly due to an increase in operating expenses. The
components of fundamental profit were 1,328 million yen in mortality margin, 2,580 million yen
loss in expense margin and 20 million yen in interest margin.
We are participating in reinsurance transactions from fiscal 2019 by modified co-insurance onpart of new business to achieve strong growth continuously. By utilizing reinsurance
appropriately, we will ease the temporary burden imposed on statutory capital by expenses
associated with new business and maintain fiscal soundness. The reinsurance transactions areagreements that transfer the risk and the profit (loss) structure of the reinsured business to thereinsurance company for a certain period of time. We receive ceding commission in accordancewith the new business costs associated with the reinsured business in the initial fiscal year. This
leads to an increase in ordinary income. On the other hand, after the ceding commission isrecorded reinsurance accounts receivable as asset, it is amortized by the profit generated fromthe reinsured business over following fiscal years. This leads to a decrease in ordinary profit andnet profit.
Once the balance of reinsurance accounts receivable is amortized to zero, the reinsurance
agreement terminates, and subsequent profit on the reinsured business belongs to Lifenet.
Accordingly, from fiscal 2019 onward, we are reinsuring a portion of new business in modified coinsurance which has resulted in raising ordinary income by 852 million yen, ordinary profit by 743
million yen, and net income by 743 million yen for the six months ended September 30, 2019.
(2) Financial condition
Assets, liabilities and net assets
Total assets as of September 30, 2019 amounted to 39,707 million yen (38,247 million yen asof March 31, 2019). The major account balance was 31,618 million yen in securities mainly
consisting of government bonds and corporate bonds with high credit ratings.
Liabilities amounted to 28,939 million yen as of September 30, 2019 (26,474 million yen as ofMarch 31, 2019), owing to an increase in policy reserves. The major account balances were
27,058 million yen in policy reserves and 535 million yen in reserves for outstanding claims.
Net assets amounted to 10,768 million yen as of September 30, 2019 (11,773 million yen asof March 31, 2019) due to the recording of net loss for the six months ended September 30,
2019. It includes the effect of raising retained earnings by 743 million yen due to the utilizationof modified co-insurance.
The solvency margin ratio as of September 30, 2019 was 2,132.3% (2,085.2% as of March
31, 2019), which indicated that an adequate level of payment capacity was maintained.

Copyright© LIFENET INSURANCE COMPANY All rights reserved.

2

NEWS RELEASE
Cash flows
For the six months ended September 30, 2019, net cash provided by operating activities
amounted to 586 million yen (1,475 million yen provided for the six months ended September
30, 2018) despite the increase in operating expenses. Net cash used by investing activities
amounted to 897 million yen (2,370 million yen used for the six months ended September 30,2018) mainly due to acquisition of securities. Net cash used by financing activities amounted to
7 million yen (9 million yen used for the six months ended September 30, 2018).
Based on these activities described above, cash and cash equivalents as of September 30,
2019 totaled 1,874 million yen (2,192 million yen as of March 31, 2019).
(3) Business forecasts
The business forecasts for fiscal 2019 which was announced on May 13, 2019 was revised
as shown below.
(In millions of yen)
Ordinary income
Ordinary profit (loss)
Net income (loss)
Previous forecasts(May 13, 2019)
Revised forecasts(November 12, 2019)(Reference)
Business results
for fiscal 201816,200(2,000)(2,000)16,500(2,500)(2,500)12,560(1,719)(1,735)The business forecasts for fiscal 2019 includes the impact of reinsurance transactions fromfiscal 2019 by modified co-insurance. We expect the impact on fiscal 2019 results forecasts toincrease ordinary income by around 2,000 million yen, ordinary profit by around 1,400 million
yen and net income by around 1,400 million yen, given that new business will be acquired as
expected.
Subsequently, the revised forecast for annualized premium of new business will be 3,300 million
yen from the forecasted 3,000 million yen at the beginning of this fiscal year as Lifenet aims to
succeed the record of new business in two consecutive years.
(Reference)(In millions of yen)
Annualized premium
Previous forecasts (May 13, 2019)

3,000

Revised forecasts (November 12, 2019)

3,300(Reference)
Business results for fiscal 2018

2,773

Reasons for revision
Lifenet’s efforts to further increase our business performance through the pursuit of the twopriority areas stated in the management policy – the innovation of customer experience andenhancement of promotion capabilities – continues in fiscal 2019. Lifenet has made regularimprovements to the websites, especially the smartphone site, and continues to actively invest
in marketing and promotional activities with the purpose of increasing traffic to our website. As aresult, Lifenet’s business performance has been stronger than initially forecasted at the
beginning of the fiscal year, and determines that the steady investment in marketing costs willcontribute to the further growth of the company and increase in brand recognition, thus leading
to the revision of the business forecast for fiscal 2019 ending March 31, 2020.
Copyright© LIFENET INSURANCE COMPANY All rights reserved.

3

NEWS RELEASE(4) Basic Rationale for Selection of Accounting Standards
Lifenet is evaluating International Financial Reporting Standards (IFRS), assuming that wewill adopt IFRS in the future. Regarding the new accounting standards for insurance contracts(IFRS 17) which the International Accounting Standards Board (IASB) published, taking into
account the potential effect on the method of creating financial statements, we are continuously
examining their progress.

About LIFENETURL: https://ir.lifenet-seimei.co.jp/en/

Remembering the original purpose of life insurance - mutual support - LIFENET INSURANCECOMPANY was founded with the goal of offering simple, convenient and competitively priced
products and services based on the highest levels of business integrity. We sell these products
and services directly to customers over the Internet. We aim to be the leading company driving
the growth of the online life insurance market.
Contact:
Investor Relations, Corporate Planning DepartmentTel:+81-3-5216-7900
e-mail: ir@lifenet-seimei.co.jp
Disclaimer: This is a summarized translation of the original Japanese document, prepared andprovided solely for readers' convenience. In case of any discrepancy or dispute, the Japanese
document prevails.

Copyright© LIFENET INSURANCE COMPANY All rights reserved.

4NEWS RELEASE
2. Non-consolidated Financial Statements(1) Balance Sheets(In millions of yen)March 31,
Sep. 30,
2019
2019
ASSETSCash and deposits ·································································

1,192

1,074

Monetary claims bought ··························································

999

799

Money held in trust ································································

3,114

3,336

Securities ············································································

30,98931,618Government bonds····························································

8,071

8,104

Municipal bonds ·······························································

1,394

1,405

Corporate bonds ·······························································

16,763

17,632

Stocks ············································································

363

359

Foreign securities ·····························································

45

26

Other securities ································································

4,352

4,088

Tangible fixed assets ······························································

99

86

Intangible fixed assets ····························································

629

706

Agency accounts receivable ····················································

7

8

Reinsurance accounts receivable ··············································

69

842

Other assets·········································································

1,146

1,232

Accounts receivable ··························································

955

1,025

Other ·············································································

191

207

Total assets ···························································

38,24739,707

Copyright© LIFENET INSURANCE COMPANY All rights reserved.

5NEWS RELEASE(In millions of yen)March 31,
Sep. 30,
2019
2019
LIABILITIESPolicy reserves and other ························································
Reserves for outstanding claims ··········································

25,256

27,593

469

535

Policy reserves ·································································

24,786

27,058Agency accounts payable ·······················································

72

48

Reinsurance accounts payable ·················································

160

191

Other liabilities ······································································

707

752

Income taxes payable ·····················································

1

1

Accrued expenses ··························································

594

656

Lease liabilities ······························································

16

9

Asset retirement obligations··············································

33

33

Other ···········································································

60

51

Reserves under the special laws ···············································

42

49

Reserve for price fluctuations ··············································

42

49

Deferred tax liabilities ·····························································

233

302

Total liabilities ·························································

26,47428,939

Capital stock ········································································

12,136

12,157

Capital surplus ······································································

12,136

12,157

Legal capital surplus ·······················································

12,136

12,157Retained earnings ·································································(13,101)(14,324)

Other retained earnings ···················································(13,101)(14,324)

Retained earnings brought forward ·····························(13,101)(14,324)

Shareholders’ equity ·········································

11,172

9,990

Valuation difference on available-for-sale securities ······················

600

777

Valuation and translation adjustments ········································

600

777

Total net assets ···············································

11,773

10,768

Total liabilities and net assets ·····························

38,24739,707NET ASSETS

Copyright© LIFENET INSURANCE COMPANY All rights reserved.

6

NEWS RELEASE(2) Statements of Operations

Ordinary income···························································
Insurance premiums and other ···································
Premiums income ················································
Reinsurance income·············································
Investment income ···················································
Interest, dividends and other income ························
Gains on money held in trust ··································
Gain on sales of securities ·····································
Other ordinary income ··············································
Reversal of reserves for outstanding claims ···············
Other ································································
Ordinary expenses ·······················································
Insurance claims and other ········································
Insurance claims ·················································
Benefits ·····························································
Other refunds ·····················································
Reinsurance commissions ·····································
Provision for policy reserves and other ·························
Provision for reserves for outstanding claims ·············
Provision for policy reserves ··································
Investment expenses ················································
Interest expenses ················································
Loss on valuation of securities ································
Foreign exchange losses ·······································
Operating expenses ·················································
Other ordinary expenses ···········································
Ordinary profit (loss) ·····················································
Extraordinary losses ·····················································
Provision of reserves under the special laws ··················
Provision of reserve for price fluctuations ··················
Income (loss) before income taxes ···································
Income taxes-current ····················································
Income taxes ·······························································Net income (loss) ·························································(In millions of yen)Six months ended Sep. 30
2018
2019
6,097
7,953
5,847
7,754
5,682
6,697
164
1,056
129
174
113
152
16
16
－
5
120
24
105
－
14
24
6,473
9,167
1,251
1,688
710
832
318
455
0
0
222
400
1,885
2,337
－
65
1,885
2,271
0
46
0
0
－
46
－
0
2,997
4,604
339
491
(376)
(1,214)
6
6
6
6
6
6
(382)
(1,221)
2
1
2
1
(384)
(1,223)Copyright© LIFENET INSURANCE COMPANY All rights reserved.

7

NEWS RELEASE(3)

Statements of Changes in Net Assets(In millions of yen)Six months ended Sep. 30
2018
2019

Shareholders' equity:
Capital stock
Balance at the beginning of the year ··························
Changes of items during the period
Issuance of new shares ···································
Total changes of items during the period ·············
Balance at the end of the period ·······························
Capital surplus
Legal capital surplus
Balance at the beginning of the year···················
Changes of items during the period
Issuance of new shares ····························
Total changes of items during the period ······
Balance at the end of the period ························
Total capital surplus
Balance at the beginning of the year···················
Changes of items during the period
Issuance of new shares ····························
Total changes of items during the period ······
Balance at the end of the period ························
Retained earnings
Other retained earnings
Retained earnings brought forward
Balance at the beginning of the year ···········
Changes of items during the period
Net income (loss) ·····························
Total changes of items during theperiod········································
Balance at the end of the period ·················
Total retained earnings
Balance at the beginning of the year···················
Changes of items during the period
Net income (loss) ····································
Total changes of items during the period ······
Balance at the end of the period ························
Total shareholders' equity
Balance at the beginning of the year ··························
Changes of items during the period
Issuance of new shares ···································Net income (loss) ···········································
Total changes of items during the period ·············
Balance at the end of the period ·······························

12,136

12,136－－
12,13620
20
12,157

12,136

12,136－－
12,13620
20
12,157

12,136

12,136－－
12,13620
20
12,157(11,365)(13,101)(384)(1,223)(384)(1,223)(11,750)(14,324)(11,365)(13,101)

(384)
(384)
(11,750)(1,223)(1,223)(14,324)

12,907

11,172

－
(384)
(384)
12,52341(1,223)(1,181)
9,990

Copyright© LIFENET INSURANCE COMPANY All rights reserved.

8

NEWS RELEASE(In millions of yen)Six months ended Sep. 30
2018
2019
Valuation and translation adjustments:
Valuation difference on available-for-sale securities
Balance at the beginning of the year ··························
Changes of items during the period

480

600

114
114
594

176
176
777

480

600

114
114
594

176
176
777

13,387

11,773

－
(384)
114
(269)
13,11841(1,223)176(1,004)
10,768Net changes of items other than shareholders' equity ····

Total changes of items during the period ·············
Balance at the end of the period
Total valuation and translation adjustments
Balance at the beginning of the year ··························
Changes of items during the period
Net changes of items other than shareholders' equity ····

Total changes of items during the period ·············
Balance at the end of the period ·······························Net assets:
Balance at the beginning of the year ··························
Changes of items during the period
Issuance of new shares ··································Net income (loss) ··········································Net changes of items other than shareholders' equity ···Total changes of items during the period ·············
Balance at the end of the period ································

Copyright© LIFENET INSURANCE COMPANY All rights reserved.

9

NEWS RELEASE(4) Statements of Cash Flows(In millions of yen)Six months ended Sep. 30
2018

2019

Cash flows from operating activities
Income (loss) before income taxes ·····································(382)(1,221)

Depreciation and amortization ···········································

126

143

Increase (decrease) in reserves for outstanding claims ···········

(105)

65

Increase (decrease) in policy reserves ·································

1,885

2,271

Increase (decrease) in reserve for price fluctuations ···············

6

6

Interest, dividends and other income ···································

(113)

(152)

Loss (gain) related to securities ··········································－

41

Interest expenses ···························································

00Decrease (increase) in agency accounts receivable ···············

(0)

(1)

Decrease (increase) in reinsurance accounts receivable ··········

(29)

(773)

Decrease (increase) in other assets <excluding assets for investing and financing activities > ·

(53)

(60)

Increase (decrease) in agency accounts payable ························

(9)

(24)

Increase (decrease) in reinsurance accounts payable ·············

16

30

Increase (decrease) in other liabilities <excluding liabilities for investing and financing activities > ·45

65

Other, net ······································································

(16)

(4)

Subtotal ······································································

1,369

386

Interest and dividends income received ·······························
Interest expenses paid ·····················································

132
(0)

192
(0)

Income taxes (paid) refund ················································

(25)

7

Net cash provided by (used in) operating activities ············

1,475

586

Cash flows from investing activities
Purchase of money held in trust ·········································

(300)

(250)

Purchase of securities ······················································(2,641)(1,831)

Proceeds from sales and redemption of securities ······················

715

1,407

Total of net cash provided by (used in) investment transactions ···(2,226)(674)

Total of net cash provided by (used in) operating activities and investment transactions ···

(751)

(87)

Purchase of tangible fixed assets ·······································
Purchase of intangible fixed assets ·····································Net cash provided by (used in) investing activities ·············

(18)
(124)
(2,370)

(34)
(188)
(897)
(7)

Net cash provided by (used in) financing activities ············

(9)
(9)

Net increase (decrease) in cash and cash equivalents ················

(903)

(317)

Cash and cash equivalents, beginning of the year ······················

2,926

2,192

Cash and cash equivalents, end of the period ···························

2,022

1,874

Cash flows from financing activities
Repayments of lease obligations ········································

(7)

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