NEWS RELEASE
May 13, 2019
Ryosuke Mori, President
LIFENET INSURANCE COMPANY(Securities Code: 7157, TSE Mothers)

Financial Results for Fiscal 2018 Ended March 31, 2019
Annualized premium of new business of 2,773 million yen, up 61.8% year on year
TOKYO, May 13, 2019 - LIFENET INSURANCE COMPANY (TSE Mothers 7157, President
Ryosuke Mori, URL: https://ir.lifenet-seimei.co.jp/en/) discloses financial results for fiscal 2018
ended March 31, 2019.
1．Overview of the financial results for fiscal 2018
(1) Business results
Condition of policies-in-force
Annualized premium*1 of new business in 4Q ended March 31, 2019 was 822 million yen(157.2% of 4Q of fiscal 2017) with the number of new business at 19,075 (156.6% of 4Q of
fiscal 2017). New business performance for fiscal 2018 recorded a historical high. Annualized
premium*1 of new business for fiscal 2018 was 2,773 million yen (161.8% of fiscal 2017) with
the number of new business at 64,435 (164.5% of fiscal 2017).
Annualized premium*1 of policies-in-force as of March 31, 2019 stands at 13,085 million yen(117.4% of March 31, 2018). Sum insured of policies-in-force was 2,289,567 million yen(111.2% of March 31, 2018). The number of policies-in-force exceeded 300,000 in January 2019and resulted in a total of 308,854 (117.1% of March 31, 2018). The number of policyholders was
197,669. Surrender and lapse ratio*2 for fiscal 2018 was 6.6% (5.9% for fiscal 2017).
*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 fiscal 2018 increased to 12,159 million yen (114.5% of
fiscal 2017) due to an increase in the number of policies-in-force. Investment income was 365
million yen (115.3% of fiscal 2017). Other ordinary income was 35 million yen. As a result,ordinary income for fiscal 2018 amounted to 12,560 million yen (114.6% of fiscal 2017).
Insurance claims and other was 2,535 million yen (134.0% of fiscal 2017). The ratio of
insurance payment amounts to insurance premiums increased to 17.3% for fiscal 2018,
compared with 15.0% for fiscal 2017. Provision for policy reserves and other came to 4,070
million yen (110.5% of fiscal 2017). The ratio of provision for policy reserves to insurance
premiums was 34.0% for fiscal 2018, compared with 34.2% for fiscal 2017. Operating expenses
amounted to 6,916 million yen (139.9% of fiscal 2017). The components of operating expenses
were 4,216 million yen in marketing expenses including advertising (160.5% of fiscal 2017), 786
million yen in customer service expenses (114.4% of fiscal 2017), and 1,913 million yen insystem and other expenses (117.5% of fiscal 2017). Other ordinary expenses was 757 million
yen (123.4% of fiscal 2017). Consequently, ordinary expenses for fiscal 2018 totaled 14,280
million yen (128.0% of fiscal 2017).
As a result, ordinary loss totaled 1,719 million yen for fiscal 2018, compared with 197 million
yen for fiscal 2017. Net loss was 1,735 million yen, compared with 249 million yen for fiscal
2017. Adjusted Profit*3, an indicator of profit generated from policies-in-force as defined in the
Copyright© LIFENET INSURANCE COMPANY All rights reserved.

1

NEWS RELEASENew Management Policy announced in November 2018, was 2,497 million yen compared with
2,429 million yen for fiscal 2017.
In addition, fundamental profit, which is one of the indicators for the profitability of life insurancecompanies, amounted to 1,656 million yen loss, compared with 120 million yen loss for fiscal 2017
mainly due to an increase in operating expenses. The components of fundamental profit were2,753 million yen in mortality margin, 4,395 million yen loss in expense margin and 14 million yen
loss in interest margin.
*3: Ordinary profit(loss) excluding marketing expenses to acquire new business(2) Financial condition
Assets, liabilities and net assets
Total assets as of March 31, 2019 amounted to 38,247 million yen (35,541 million yen as ofMarch 31, 2018). The major account balance was 30,989 million yen in securities mainly
consisting of government bonds and corporate bonds with high credit ratings.
Liabilities amounted to 26,474 million yen as of March 31, 2019 (22,153 million yen as ofMarch 31, 2018), owing to an increase in policy reserves. The major account balances were
24,786 million yen in policy reserves, and 469 million yen in reserves for outstanding claims. In
terms of policy reserves, new business from fiscal 2018 has been transferred from 5-year
Zillmer’s method to standard policy reserves. The difference in policy reserves will be enhanced
over five fiscal years, from fiscal 2018 to 2022, with the standing difference at the end of fiscal
2018 at 1,462 million yen.
Net assets decreased to 11,773 million yen as of March 31, 2019 (13,387 million yen as ofMarch 31, 2018) due to the recording of net loss for fiscal 2018.
Solvency margin ratio as of March 31, 2019 was 2,085.2% (2,455.8% as of March 31, 2018),
which indicated that an adequate level of payment capacity was maintained.
(3) Cash flows
For fiscal 2018, net cash provided by operating activities amounted to 2,506 million yen(3,820 million yen provided for fiscal 2017) despite increased of operating expenses. Net cashused by investing activities amounted to 3,223 million yen (3,852 million yen used for fiscal
2017) mainly due to acquisition of securities. Net cash used by financing activities amounted to
16 million yen (19 million yen used for fiscal 2017).
Based on these activities described above, cash and cash equivalents as of March 31, 2019
totaled 2,192 million yen (2,926 million yen as of March 31, 2018).

Copyright© LIFENET INSURANCE COMPANY All rights reserved.

2

NEWS RELEASE(4) Business forecasts
Business forecasts for fiscal 2019 are as follows. Lifenet discloses ordinary income, ordinary
profit (loss) and net income (loss).

Business forecasts
for fiscal 2019
(Reference)
Business results
for fiscal 2018
Change(In millions of yen)
Net income (loss)

Ordinary income

Ordinary profit (loss)

16,200(2,000)(2,000)12,560(1,719)(1,735)

29.0%

-

-

Lifenet will proactively invest in marketing to attain further business growth by undertaking
initiatives for the “innovation of customer experience” and “enhancement of promotion
capabilities” as disclosed as priority areas in the New Management Policy. Actual results ofordinary profit (loss) and net income (loss) may greatly diverge from forecasts if the amount of
insurance claims and benefits fluctuates beyond our expectation.
From fiscal 2019 onward, we plan to participate in reinsurance transactions*1 by modified coinsurance method on part of new business as one means of capital enhancement. By utilizingthese reinsurance transactions appropriately, we will ease the temporary burden imposed on
statutory capital by expenses associated with new business and maintain fiscal soundness. We
expect the impact of these reinsurance transactions on fiscal 2019 results forecasts to increase
ordinary income by around 2.0 billion yen, ordinary profit by around 1.4 billion yen and net
income by around 1.4 billion yen, given that new business will be acquired as expected. We
also expect amortization over a four-year period to decrease ordinary profit by around 350
million yen each year from fiscal 2020. Such reinsurance agreements can also be continued for
new business in the next fiscal year and thereafter, depending on the status of capital.
Accordingly, Lifenet is forecasting ordinary income of 16.2 billion yen, ordinary loss of 2.0
billion yen and net loss of 2.0 billion yen million yen for fiscal 2019. As the table below indicates,
we project annualized premium *2 of new business of 3,000 million yen.
(Reference) Annualized premium *2(In millions of yen)
Business forecasts
for fiscal 2019
Business results
for fiscal 2018

3,000
2,773

*1: These reinsurance transactions are agreements that transfer the risk and the profit (loss) structure of the reinsured
business to the reinsurance company for a certain period of time. After receiving ceding commission in accordancewith the new business costs associated with the reinsured business in the initial fiscal year, it is amortized by the
profit generated from the reinsured business over following fiscal years. Once the balance of ceding commission
received is amortized to zero, the reinsurance agreement terminates, and subsequent profit on the reinsured
business belongs to the insurance company. The effective cost to the insurance company is the risk charge on thebalance of ceding commission received.
*2: 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.

Copyright© LIFENET INSURANCE COMPANY All rights reserved.

3

NEWS RELEASE(5) Dividend policy
Lifenet has yet to determine its specific dividend policies and dates for the start of distributing
retained earnings as dividends as we still record cumulative loss and will be prioritizing
strengthening our growth base to increase mid to long term profitability. Lifenet will consider
paying dividends in the future.
Lifenet's Articles of Incorporation stipulates that a decision on the distribution of retained
earnings as specified in each Item of Paragraph 1, Article 459 of the Companies Act can bemade by a resolution of the Board of Directors, except as otherwise determined by law.

2．Business policy(1) Basic management policy
Lifenet’s management philosophy is helping our customers embrace life more fully by offering
comprehensible, cost-competitive and convenient products and services based on the highest
levels of business integrity. With the internet as our main sales channel, we utilize technology
and strive to be the leading company driving the growth of the online life insurance market
through our customer-centric products and services.
(2) Target indicator
As stated in Lifenet’s New Management Policy presented in November 2018, we aim toachieve EEV (European Embedded Value), our main management goal, of 100 billion yen as
early as possible. We have also set the number of policies-in-force and new business as growthindicators, profitability and Adjusted Profit (ordinary profit (loss) excluding marketing expenses)
and marketing efficiency of new business as profitability indictors, and solvency margin ratio assoundness indicator.
(3) Mid- to long-term business strategy and challenges
We formulated a new management policy in November 2018 aimed at the continued steady
growth and achievement of high profitability over the mid- to long-term. The policy issummarized below:
Summary of New Management Policy
MissionHelp our customers embrace life more fully by offering comprehensible,
cost-competitive and convenient products and services

VisionBe the leading company driving the growth of the online life insurance
marketInnovation of customer experience
Enhancing and evolving the quality of all services with digital

Priority areas

technology
Enhancement of promotion capabilities
Generating massive customer traffic by active promotion andexpansion of agent sales and white label business

Management
goal

Aim to achieve EEV (indicator of corporate value) of 100 billion yen bybusiness growth in a mid-term

Copyright© LIFENET INSURANCE COMPANY All rights reserved.

4NEWS RELEASE
Research by the Japan Institute of Life Insurance released in September 2018 indicated thatroughly 12% of potential subscribers of life insurance intended to apply for a policy through theInternet in the future, although only around 3% of life insurance subscribers actually did so.
Meanwhile, the share of direct automobile insurance has steadily grown, reached approximately
8%*1. We are certain there is potential for growth in the online life insurance market in light ofthese circumstances; however, insurance providers, including Lifenet, are not yet capable offully catering to customer needs at this stage.
Considering the above, we continue to pursue our mission, “helping our customers embracelife more fully by offering comprehensible, cost-competitive and convenient products andservices”, and strive to achieve our vision of being the leading company driving the growth ofthe online life insurance market.
We have also designated EEV as the key indicator of corporate value and strive to achieve
100 billion yen as early as possible.
Please note that from fiscal 2019 onward we will target further growth in line with the
management policy announced in November 2018. We believe that responding flexibly to therapidly changing Internet and its surrounding environment is important in order to achievesustained growth and higher earning power over the mid- to long-term. We will therefore aim toincrease corporate value by making optimal management decisions according to changes in theenvironment, based on our new management policy, rather than on a plan with a predetermined
timeframe.
We will undertake initiatives addressing the following important challenges and target further
enhancement of corporate value in the mid- to long-term.
(1) Further growth in business performance
We will aim for growth in business performance through two priority areas stated in
the new management policy: “Innovation of customer experience” and “Enhancement ofpromotion capabilities.”
We recognize that providing our customers with quality experience is essential forthem to continuously choose Lifenet and is a critical element in achieving increased
growth. To achieve this, we will endeavor to provide customers with not only products
and services, but also to innovate the customer experience by providing more userfriendly processes and administrative procedures. Increasing customer satisfaction andstrengthening our relationship with customers by improving each encounter ourcustomers have with us is also essential, and thus we will optimize the data we havegathered through our customers’ actions to improving our website. We will
simultaneously work to create a convenient life insurance, which we believe to befundamental in meeting customer expectations. We will also strive to communicate with
our approximately 200,000 existing policyholders, gaining further trust and loyalty.
In addition, we will strengthen our sales capabilities and strive to generate massive
customer traffic. To expand our internet channel, we will continuously air televisioncommercials and engage in other advertising and promotional efforts to further
strengthen our brand, and in doing so, increase recognition of Lifenet among potential
customers.
We will also strengthen agent channels and white label sales in order to provide theproducts and services of Lifenet to an even greater number of customers. Collaboration
with existing and new corporate partners, such as KDDI CORPORATION whose
customer base we use to provide au life insurance, is an area we will continue to focuson.

Copyright© LIFENET INSURANCE COMPANY All rights reserved.

5NEWS RELEASE(2) Improvement of operating expenses efficiency
Lifenet will utilize the fact that the life insurance industry is a business withdependable recurring earnings to expand the scale of our business and enable Lifenet
to benefit maximally from the merits of scale. We also strive to improve businessefficiency by pursuing initiatives aimed at improving productivity company-wide. The
use of technology, such as partially automating operations, will aid these efforts. We willcontinue to invest in operating expenses as we continue to target growth in new
business performance in fiscal 2019, focusing on operating expense efficiency, and will
always work to maximize the benefits derived from investing in marketing by gathering,
managing, and analyzing data on the cost versus the benefits.
*1: Data from website of Sony Financial Holdings Inc., “Automobile Insurance Market and Market Share of Major Direct
Non-life insurers”

About LIFENET URL： 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, and by doing so, are able to offer highly
cost-competitive products and accept applications from customers at all hours of the day.
Contact:
Investor Relations, Corporate Planning DepartmentTel:+81-3-5216-7900
e-mail: ir@lifenet-seimei.co.jp
Disclaimer: This is a summarized translation/version of the original Japanese document, prepared and provided
solely for readers' convenience. In case of any discrepancy or dispute, the Japanese document prevails.

Copyright© LIFENET INSURANCE COMPANY All rights reserved.

6

NEWS RELEASE
3. Non-consolidated Financial Statements(1) Balance Sheets(In millions of yen)March 31
2018

2019

ASSETSCash and deposits ·····························································

926

1,192

Bank deposits ····························································

926

1,192

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

1,999

999

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

2,567

3,114

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

28,30330,989Government bonds ······················································

8,398

8,071

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

1,505

1,394

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

13,892

16,763

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

346

363

Foreign securities ························································－

45

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

4,161

4,352

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

109

99

Buildings ···································································

18

16

Leased assets ····························································

40

19

Other tangible fixed assets ············································

50

62

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

621

629

Software····································································

465

553

Software in progress ····················································

138

70

Leased assets ····························································

17

5

Other intangible fixed assets ·········································

0－

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

4

7

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

45

69

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

964

1,146

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

802

955

Prepaid expenses ·······················································

50

72

Accrued income ··························································

36

44

Deposits ····································································

73

73

Suspense payments ····················································

1

1

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

35,541

38,247

Copyright© LIFENET INSURANCE COMPANY All rights reserved.

7

NEWS RELEASE(In millions of yen)March 31
2018

2019

Policy reserves and other ····················································
Reserves for outstanding claims·····································

21,18625,256429

469

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

20,757

24,786

Agency accounts payable ····················································

59

72

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

108

160

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

581

707

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

23

1

Accounts payable ························································

45

37

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

427

594

Deposits received ·······················································

13

13

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

33

16

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

33

33

Suspense receipt ························································

5

9

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

30

42

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

30

42

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

186

233

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

22,153

26,474

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

12,136

12,136

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

12,136

12,136

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

12,136

12,136

Retained earnings ······························································(11,365)(13,101)

Other retained earnings ················································(11,365)(13,101)

Retained earnings brought forward ··························(11,365)(13,101)

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

12,907

11,172

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

480

600

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

480

600

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

13,387

11,773

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

35,541

38,247

LIABILITIESNET ASSETS

Copyright© LIFENET INSURANCE COMPANY All rights reserved.

8

NEWS RELEASE(2) Statements of Operations

Ordinary income ·····················································
Insurance premiums and other····························
Premiums income ·····································
Reinsurance income ··································
Investment income ···········································
Interest, dividends and other income ·············
Interest from deposits ··························
Interest and dividends from securities ·····
Other interest and dividends ·················
Gain on money held in trust ························
Gain on sales of securities ·························
Gain on derivative financial instruments ········
Other ordinary income·······································
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 ······································
Foreign exchange losses ····························
Other investment expenses ·························
Operating expenses ·········································
Other ordinary expenses ···································
Taxes ······················································
Depreciation·············································
Other ······················································
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)
Year ended March 31
2018
2019
10,962
12,56010,616
12,15910,421
11,845
194
313
317
365
232
230
0
0
232
230
0
0
17
36
47
98
19
－
28
35
28
35
11,16014,280
1,891
2,535
978
1,353
584
701
0
0
329
480
3,684
4,070
117
40
3,567
4,029
27
1
0
0
26
－
0
1
4,942
6,916
613
757
355
503
254
251
3
1
(197)
(1,719)
11
11
11
11
11
11
(209)
(1,731)
39
4
39
4
(249)
(1,735)

Copyright© LIFENET INSURANCE COMPANY All rights reserved.

9

NEWS RELEASE(3) Statements of Changes in Net Assets(In millions of yen)
Year ended March 31
2018
2019
Shareholders' equity:
Capital stock
Capital stock ······················································
Changes of items during the period
Total changes of items during the period ···········
Capital stock ······················································
Capital surplus
Legal capital surplus
Legal capital surplus ·····································
Changes of items during the period
Total changes of items during the period ·······
Legal capital surplus ···········································
Total capital surplus
Capital surplus ·············································
Changes of items during the period
Total changes of items during the period ·······
Capital surplus ·············································
Retained earnings
Other retained earnings
Retained earnings brought forward
Retained earnings brought forward ··············
Total changes of items during the period
Net income (loss) ·································
Total changes of items during the period ···Retained earnings brought forward ··············
Total retained earnings
Retained earnings ······································
Changes of items during the period
Net income (loss) ···································
Total changes of items during the period ·····
Retained earnings ·····································
Total shareholders' equity
Shareholders' equity ·········································
Changes of items during the period
Net income (loss) ·········································
Total changes of items during the period ···········
Shareholders' equity ·········································

12,136

12,136－
12,136－
12,136

12,136

12,136－
12,136－
12,136

12,136

12,136－
12,136－
12,136(11,116)(11,365)

(249)
(249)
(11,365)(1,735)(1,735)(13,101)(11,116)(11,365)

(249)
(249)
(11,365)(1,735)(1,735)(13,101)

13,157

12,907(249)(249)
12,907(1,735)(1,735)
11,172

Copyright© LIFENET INSURANCE COMPANY All rights reserved.

10

NEWS RELEASE(In millions of yen)
Year ended March 31
2018
2019
Valuation and translation adjustments:
Valuation difference on available-for-sale securities
Valuation difference on available-for-sale securities
Changes of items during the period
Net changes of items other than shareholders'equity ····················································
Total changes of items during the period ········
Valuation difference on available-for-sale securities
Total valuation and translation adjustments
Total valuation and translation adjustments ···········
Changes of items during the period
Net changes of items other than shareholders'equity ····················································
Total changes of items during the period ········
Total valuation and translation adjustments ···········Net assets:
Net assets ·····························································
Changes of items during the period
Net income (loss) ·············································Net changes of items other than shareholders' equity·····································································
Total changes of items during the period ···············Net assets ·····························································

488

480

(8)
(8)
480

120
120
600

488

480

(8)
(8)
480

120
120
600

13,645

13,387(249)(1,735)

(8)

120

(257)
13,387(1,614)
11,773Copyright© LIFENET INSURANCE COMPANY All rights reserved.

11

NEWS RELEASE(4) Statements of Cash Flows(In millions of yen)
Year ended March 31
2018
2019
Cash flows from operating activities
Income (loss) before income taxes ···································
Depreciation and amortization ·········································
Increase (decrease) in reserves for outstanding claims ········
Increase (decrease) in policy reserves ······························
Increase (decrease) in reserve for price fluctuations ············
Interest, dividends and other income ································
Loss (gain) related to securities ·······································
Interest expenses ·························································
Foreign exchange losses (gains) ····································
Decrease (increase) in agency accounts receivable·············
Decrease (increase) in reinsurance accounts receivable·······
Decrease (increase) in other assets <excluding assets for investing and financing activities> ··Increase (decrease) in agency accounts payable ····················
Increase (decrease) in reinsurance accounts payable ··········
Increase (decrease) in other liabilities <excluding assets for investing and financing activities >··Other, net ····································································
Subtotal ······································································
Interest and dividends income received ·····························
Interest expenses paid ···················································
Income taxes paid·························································Net cash provided by (used in) operating activities ··········Cash flows from investing activities
Purchase of money held in trust·······································
Purchase of securities ···················································
Proceeds from sales and redemption of securities ···················
Total of net cash provided by (used in) investment transactions ····
Total of net cash provided by (used in) operating activities and investment transactions····Purchase of tangible fixed assets ·····································
Purchase of intangible fixed assets ··································Net cash provided by (used in) investing activities ··········Cash flows from financing activities
Repayments of lease liabilities ········································Net cash provided by (used in) financing activities ··········
Effect of exchange rate changes on cash and cash equivalents ·Net increase (decrease) in cash and cash equivalents ·············Cash and cash equivalents, beginning of the year ···················Cash and cash equivalents, end of the year ···························

Copyright© LIFENET INSURANCE COMPANY All rights reserved.

(209)
254
117
3,567
11
(232)
(47)
1
26
(2)
(15)
(80)
19
39
99
(35)
3,514
307
(1)
(0)
3,820

(1,731)
251
40
4,029
11
(230)
(98)
1
－
(2)
(24)
(156)
13
52
172
(35)
2,293
258
(0)
(44)
2,506

(1,600)(6,302)
4,401(3,501)
318
(21)
(330)
(3,852)(400)(4,593)
2,027(2,965)
(459)
(32)
(225)
(3,223)

(19)
(19)
(26)
(78)
3,004
2,926

(16)
(16)
－
(733)
2,926
2,192

12