Securities Code: 7157
TSE Mothers

Presentation
Material for
Investors
First Quarterfor Fiscal 2021
August 11, 2021

LIFENET is...

Comprehensible
Cost-Competitive
Convenient◼ Remembering the original purpose oflife insurance – mutual support◼ Helping our customers embrace life more fully
1

Overview of 1Q for Fiscal 2021
Annualized premium1 ofpolicies-in-force

Annualized premium1 of
new businessmillion yen

million yen

19,473

1,123(104.1% vs end of FY2020)(Y-on-Y 96.2%)

EEV (European Embedded Value)

Adjusted incremental EV2

97,015

million yen

1,630(102.0% vs end of FY2020)

million yen(Y-on-Y 76.8%)

Notable Achievements
Launched a new
product

Expanded the White Labelbusiness

Transformation toan online platform

Long-term Disability
Hataraku-Hito 3

1.
2.

The amount of money equivalent to what is to be paid to have the insurance coverage for one year. All payments are monthly installments, thus the annualized
premium is calculated as multiplying the monthly premium by 12 months.
Adjusted incremental EV consisted of components adequately reflecting our business growth for fiscal 2020, see page 14 and 40 for details.

2Annualized Premium /Number of Policies-in-Force: Annualized premium of policies-in-force1 (JPY billions): Number of policies-in-force

19.4

16.4

13.6
11.5

458,539387,775

321,829◼ Exceeded 450,000
policies-in-force

10.2
272,830
243,610◼ Year-on-year
Annualized
premium 118.3%,
number of policiesin-force 118.2%

2017 1Q
2018 1Q
2019 1Q
2020 1Q
2021 1Q （YY/MM）
2017/06’18/06’19/06’20/06’21/06
1.

The amount of money equivalent to what is to be paid to have the insurance coverage for one year. All payments are monthly installments, thus the annualized
premium is calculated as multiplying the monthly premium by 12 months.

3Changing Factors of Policies-in-Force
Number / Fiscal Year

Number of policies-in-force(BOP)

FY2020/1Q

FY2021/1Q

365,171439,945+）Number of new business

28,13627,553－）Decreased number of policies1(5,532)(8,959)Non-recurring record oflapsed policies※

ー

(527)

Number of policies-in-force(EOP)

387,775

458,539※Lifenet has extended grace period for insurance premium payment as one of the special measures in the COVID19 pandemic. Decreased number of policies includes the impact of extended policies that were recorded as
lapsed policies in a lump sum.
1.

Decreased number of policies include death, expiration and others in addition to surrender and lapse.

4Surrender and Lapse Ratio◼ Increased partly due to the temporal impactof lapsed policies:Impact of lump-sum recording of policies lapsed in FY2020:Surrender and lapse ratio without the above

7.6%
Temporal impact of lumpsum recording of policies
lapsed in FY2020※

＋0.5%

5.9%

17
2017

6.6%

18
’18

7.1%

7.0%
6.0%

19
’19

20
’20

21/1Q
（fiscal year）’21/1Q※Lifenet has extended grace period for insurance premium payment as one of the special measures in the COVID-19 pandemic.
Surrender and lapse ratio includes the impact of extended policies that were recorded as lapsed policies in a lump sum.
1.

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 policiesin-force.

5

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
27,000 in new
business

80,91164,43539,175

19,117

’19

’20

822
572

343

7,793

2017
1.

13,285’18

1,123◼ Year-on-Yearannualized
27,553premium 96.2%,
number of new
28,136business 97.9%
1,166’21/1Q（fiscal year）

The amount of money equivalent to what is to be paid to have the insurance coverage for one year. All payments are monthly installments, thus the annualized
premium is calculated as multiplying the monthly premium by 12 months.

6

Number of New Business (Quarter)◼ The second highest level after 1Q of FY2020

27,553:Number of new business

1Q

2Q

3Q

FY2017

4Q

1Q

2Q

3Q

FY2018

4Q

1Q

2Q

3Q

FY2019

4Q

1Q

2Q

3Q

FY20204Q

1Q
FY2021

7

Marketing Efficiency: Marketing expenses per new business (JPY thousands): Marketing expenses / Annualized premium of new business1 (JPY)

73

75
67

66

65

1.8

1.7
1.5

1.5

1.5

(fiscal year)

2017

’18

’19

’20

’21/1Q

Marketingexpenses

2,627

4,216

6,146

6,712

2,033

◼ Aggressively
invested inmarketing for
further growth(JPY millions)1.

The amount of money equivalent to what is to be paid to have the insurance coverage for one year. All payments are monthly installments, thus the annualized
premium is calculated as multiplying the monthly premium by 12 months.

8

Operating Expenses Ratio: Operating expenses ratio¹ (%): Insurance premiums (JPY millions): Operating expenses excl. marketing expenses (JPY millions)
16,892◼ Maintained below
20%

13,982
11,845

10,42122.2 %

2,315

2017
1.

◼ Aim to improve21.6 %
19.6 %
19.8% operational
efficiency by
4,693
further business
3,317
3,023
2,699
expansion929
in mid-term

22.8 %

’18

’19

’20

’21/1Q （fiscal year)

Operating expenses ratio is calculated by dividing operating expenses excluding marketing expenses by insurance premium.

9

Profit Structure under
Current Statutory Accounting◼ Time lag is caused between the recognition of costs andrevenue as marketing expenses is recognized at thetime of acquisition, and revenue is collected gradually
over a long period.
Insurance policy profit structure

Total profit/loss
Revenue collected
over long period

Accounting
profit/loss
Initialfiscal
初年度
year

RevenueYear 22年目

Year 33年目

Year 44年目…

Year X
X年目

Premiums

ExpenseMarketingexpenses1.

Heavy initial cost

Costs for policy management, payment of insurance claims and benefit claims, etc.

: Premiums: Operating expenses1 excluding
marketing expenses: Marketing expenses

10Structure of Embedded ValueEV

Adjusted
net worth

Value of in-force
business(Net assets at end of period+ adjustments)

Profit/loss for thecurrent fiscal year isreflected in end-ofperiod net assets

Revenue

Revenue
ExpenseExpenseProfit/loss for
current fiscal year

Unrealized future profits/losses on policies-in-force
at the end of current fiscal year

11

EEV （European Embedded Value）◼ Characteristics of Lifenet’s EEV are as follows:

Strong growth• Maintaining increase in EEV since listing inMarch 2012
• Steadily growing even in a low interest
rate environment

Resilience to interest rate changes• Limited sensitivity to interest rate andstock fluctuations

12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
Adjusted net worth

73,431

76,14978,702

18,99018,31360,87818,547
5,122
13,425

12,553

2012/03 ’13/03 ’14/03 ’15/03 ’16/03 ’17/03 ’18/03 ’19/03 ’20/03 ’21/03 ’21/06
1.

2.

(YY/MM)

Lifenet’s EEV is calculated following the EEV Principles and Guidance and in terms of allowance for risk, MCEV Principles (The European Insurance CFO Forum Market
Consistent Embedded Value Principles©) is referred. From fiscal 2016 onward, a predetermined ultimate forward rate has been used to extrapolate the level of ultralong-term interest rates past the last liquid data point. This method of extrapolation has also been used to restate EEV as of March 31, 2016. EEV as of June 30, 2021
is calculated applying the same operating assumptions as those used for March 31, 2021, and is not reviewed by third-party specialists.
The calculation includes 3,040 million yen in proceeds from a third-party allotment in May 2015 and 9,005 million yen from overseas public offering in July 2020.

13

Changing Factors of EEV1
◼ EEV growth driven by increase in adjusted
incremental EV, mainly due to value of new business

97,015Adjusted
incremental EV(JPY millions)

Value ofnew business

1,272

Expected
existing
business
contribution

Operatingexperiencevariances

14

Assumptionchanges

11

Economic
variances
and assumptionchanges

Adjustments
to the values2
as ofJun. 30, ’21

14

221

343

95,140
total’21/03
1.
2.

1,630

million yen’21/06 (YY/MM)

Lifenet’s EEV is calculated following the EEV Principles and Guidance and in terms of allowance for risk, MCEV Principles (The European Insurance CFO Forum
Market Consistent Embedded Value Principles©) is referred. EEV as of June 30, 2021 is calculated applying the same operating assumptions as those used forMarch 31, 2021, and is not reviewed by third-party specialists.
Item for change in capital14

EV Resilience to Financial Changes◼ Limited sensitivity to interest rates andstock prices

June 2021
End
LifenetReference: March 2021 End1
LifenetCompany A

-1.6%

-0.9%

2%

1.6%

-1.6%

Company C

6%

5%
1.4%

Company B

-0.8%
-3%
-7%

-5%

-5%

0.5% interest rate increase

-8%

-7%

0.5% interest rate decrease
10% decrease in equity andreal estate value and other

1. Prepared by Lifenet based on disclosed information of domestic public life insurance companies.

15

【Ref.】 Life Time Value and Customer Acquisition Cost
Key Metrics for a SaaS Company and Lifenet

ARR per Contract(Annual Recurring Revenue)

Life Time1(Term of Contract)

Gross Profit Margin3(Marketing Expenses per
New Policy)

1.
2.
3.
4.

Annualized Premiums per
Policy-in-force

Annualized Premiums per
Policy-in-force

×

JPY 42,536
×Annualized Premiums per
Policy-in-force

Average Policy Term

Average Policy Term

16.7 years
×

Average Policy Term

13.9 years2
×

45%

43%

46%

JPY 42,486

14.3 years
×

JPY 42,468
×＝Customer Acquisition Cost4

FY2021/1Q＝(Annualized Premiums per
Policy * Life Time * Gross Profit
Margin)FY2020＝Life Time ValueFY2019JPY 273,397

JPY 305,451

JPY 271,540

JPY 75,970

JPY 66,737

JPY 73,811

1 / Churn rate. Churn rate represents the percentage of users who cancelled out their insurance policies.
Exclude the impact of lump-sum recording for lapsed policies in FY2020.
(Insurance premiums – Insurance claims and benefits - Provision for policy reserves and others) / Insurance premiums.
Marketing expenses / Number of new business.

16

Financial Condition(JPY millions)(YY/MM)

Total assets
Cash and deposits’21/03’21/0654,501

55,333

2,059

2,158

40,007◼ Maintained prudent－
investment
5,890
management policy
41,458Government bonds

9,004

9,006

Municipal bonds

1,482

1,484

Corporate bonds

21,301

22,144

Monetary claims bought
Money held in trust
Securities

Stocks

999
5,895

397

Foreign securities

0

Other securities1

7,821

Total liabilities◼ Maintained sufficientsoundness in terms
391
of solvency margin100
ratio2
8,331

38,69440,282

36,63938,231

Total net assets

15,806

15,050

Solvency margin ratio2

2,647％

2,599％

Policy reserves and other

Modified duration (year)

11.1

10.8

1.

Investment trust including foreign bonds and others.

2.

The solvency margin ratio is a key benchmark for industry
regulators. It measures a life insurance company's ability to
pay out claims when unforeseen events occur.

17

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.

Coverage for support to come back to work. Industry-first full-scale long-term disability insurance for individuals (Lifenet Research as of the end of April, 2021）

18

Started Sales of Money Forward Life Insurance◼ Plan to implement a new service bySeptember

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 information needed for thereview of life insurance contracts

1.

Money Forward ME is Personal Financial Management app in Japan.

19

Established Subsidiary in May 2021
◼ Meet various needs and drive growthof the online life insurance market
New company

LIFENET MIRAI Inc.
Comparison of
insurance
products

Proposal for
insurance review(Investment ratio: 80%)

• Create a stress-free CX• Generate website traffic• Bring expertise in life
insurance area

PolicymaintenanceSupport for
insurance claims(Investment ratio: 20%)

• Build data infrastructure• Utilize AI technologies
such as machine learning,
OCR and others• Bring expertise infinancial engineering
20Develop Online Life Insurance Platform
Expand online products and services
SupplyLifenet’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

DemandSearchConsult

ApplyManage

Review

Claim

Diversifying customer needs
21

Transformation toan Online Life Insurance Platform◼ Started online insurance agency

business

https://www.better-choice.com/※Japanese Version Only

22

Transformation toan Online Life Insurance Platform◼ Started to offer insurance policy

management service

Manage policies

Assess current
insurance

Support a claim

23

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
Phase2Phase1

Phase3

Adaptation to
consumer behavior

Start up

Growth25.0%

Needs for online life insurance
are expanding and diversifying.
20.0%

12.5%

15.0%

10.0%

Ratio of intention to purchasepolicy online1

5.0%

Ratio of actual online
purchase1

3.3%

0.0%

2006
1.

09

12

15

Nationwide Report on the Life Insurance Industry (2018) by the Japan Institute of Life Insurance

18

20XX

24

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%

22.0%

:Ratio of intention to purchase policy online

23.1%:Ratio of actual online purchase

20.0%

15.0%

12.5%

13.3%

High intention
for Purchasing

10.2%

10.0%

5.3%

5.5%

5.0%

4.4%

3.5%

4.4%
1.2%

0.9%

0.0%

29歳以下
29
or lower

1.

30代
30s

40代
40s

50代
50s

Based on a Nationwide Report on the Life Insurance Industry (2018) by the Japan Institute of Life Insurance

60代
60s

70歳以上
70
and over25

Management Policy◼ Our commitment to the current Management Policy

MissionBe the leading company driving the growth of theonline life insurance market

Managem-ent Goal

Priority
Areas

Help our customers embrace life more fully by offering
comprehensible, cost-competitive and convenient
products and services

Visionremains unchanged to aim for further growth• Innovation of customer experience

Enhancing and evolving the quality of all services with digital technology• Enhancement of promotion capabilities

Generating massive customer traffic by active promotion and expansion of agent sales
and white label business

Aim to achieve EEV (European Embedded Value) of
200 billion yen by business growth in a mid-term
26

Time Scale for the New Management Goal

◼ Aim to achieve double-digit growth of EEVCAGR CAGR
20% 15%EEV(JPY billions)

200 billion yen

95.1

18.5

◼

Become the leading
company driving the
growth of the online
insurance market◼

Double policies-in-force
and significantly
improve operating
expenses ratio (excl.
marketing)

CAGR
10%

27

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 ofpolicies-in-force

21,80018,713

Annualized
premium1 of
new business

4,400

4,197

Of which: impact
of modified
co-insurance

1.

Of which: impact
of modified
co-insurance

Ordinary income

25,5004,400

20,7892,778

Ordinary profit (loss)(3,800)700(3,089)804

Net income (loss)(3,800)700(3,114)804

The amount of money equivalent to what is to be paid to have the insurance coverage for one year. All payments are monthly installments, thus the annualized
premium is calculated as multiplying the monthly premium by 12 months.

28

Aim to Realize Lifenet Manifesto
LIFENET Manifesto
Comprehensible, Cost-Competitive, ConvenientI.

Our Guiding Principles(1) Creating the life insurance of the future without losing sight of
its original premise: “an ounce of prevention is worth more thana pound of cure.”(2) Listening to what our customers are saying. Recognizing theirneeds and acting accordingly. Allowing our actions to be borneout of their voices and needs.
(3) Delivering the caliber of products and services that we would
feel confident recommending to our own friends and families.
(4) Being a “straight-shooter”. Committing to transparency.
Communicating openly about our management team, ourproducts, and our employees.
(5) Embracing diversity and dialogue to keep us abreast of changing
needs and preferences. Delivering peace of mind that we’ll bearound in 100 years.
(6) Acting in good faith means always taking the high road when it
comes to compliance and ethics.

III.

Making Life Insurance Accessible Again - Affordable(1) Giving the customer what he/she needs. No more, no less at afair price.
(2) Staying vigilant as to how we can provide our products morecost-efficiently.
(3) Always putting ourselves in our customers’ shoes in thinking
about how to minimize their premiums.

II.

Making Life Insurance Accessible Again - Headache-free(1) Helping the customers help themselves. By making ourmaterials easy to understand, customers can determine which
coverage is truly the best fit.
(2) Turning “clauses” in the insurance contract into succinct points
that your grandmother could grasp.
(3) Making all touch points headache-free. Beyond the application
process, ensuring the claims and billing processes are also easy
to understand.

IV.

Making Life Insurance Accessible Again - Convenient(1) Thinking about our customers’ convenience from every angle
and every touch point along the way.
(2) Forming alliances with like-minded partners who can add value
above and beyond our products and services to our customers.
(3) Providing health and wellness tips beyond the framework of life
insurance to create value in our policyholders’ lives.
(4) Creating a precedent for future generations as to what life
insurance is (and should be) all about.

We wish to be a company that helps our customers embrace life more fully.
In order to live out that vision, we continue to challenge ourselves.

29All information on this document that is nothistorical fact constitutes forward-looking
information and is based on assumptions andforecasts available to the company at the time of
preparation. The company cannot guarantee theaccuracy of these assumptions and forecasts.
Earnings projections and other information on thismay differ materially from actual performance due
to various risks and uncertainties.
This is a translation of the original Japanese
document, prepared and provided solely forreaders' convenience. In case of any discrepancy or
dispute, the Japanese document prevails.

https://ir.lifenet-seimei.co.jp/en/
Subscribe to our "IR email service" to receive
news releases and website updates via email.

Appendix

Initiatives for Sustainability◼ Aim to increase the value provided to
stakeholders based on Manifesto
LifenetManifesto

Comprehensible, Cost-Competitive, Convenient

Enhancement ofCorporate Governance

Customer-focusedbusiness operations

Adaptation tosocial changes• Board of Directors includes outside
directors and independent outside
directors since our business
commencement in 2008

• Disclose the policy for customerfocused business operations,performance indicators and theaccomplishments• Established the discretionary
Nomination and Compensation
Committee• Promote efforts for diversity
including LGBTQ• Work on reduction of thepolicyholders’ burden on
procedures and development of
comfortable work environment for
employees under COVID-19
pandemic• Introduced restricted stockcompensation as director’s
remuneration• Disclose securities report before
Annual General Meeting of
Shareholders (Japanese version only)
1.
2.

• Disclose the breakdown of
insurance premiums for the firsttime in life insurance industry1• Evaluated as #1 by policy holders2,
realizing stress-free CX online

According to Lifenet’s research（as of the end of June, 2021）
J.D. Power 2021 Japan Life Insurance Contract Customer Satisfaction Study SM• Widely provide more convenientservices by partnering with crossindustrial partners• Provide customer-centeredservices online through new joint
venture32

Further Strengthen Governance◼ Establish a management structure forstrong growth and transformation■Transition to a company with audit and supervisory committee in June 2021

Board of Directors

Audit and supervisorycommittee member

Outside Directors

Outside Directors

Number of directors

11

9

Ratio of outside directors

44%

Audit/
Supervision With voting right■New management remuneration system
Inside directors1

Basecompensation(Fixed)1.

＋

From 2019

New schemefrom 2021

Restricted stockcompensation

Short-term
performance-linked
compensation

Excluding director who is a full-time audit and supervisory committee member＋(Cash bonus)

33

New Management Team from June 2021
◼ Transformation into an Internet Service
Company of Life Insurance
Directors
Yasuhiro Koba

Ryosuke Mori

Director, Executive Vice President
General Manager of Sales & Marketing Division

Representative Director and President
Goldman Sachs Japan Co., Ltd.
Head of Corporate Planning Department andGeneral Manager of Corporate Strategy Divisionat Lifenet

Ministry of Health, Labour and Welfare
Head of Legal Department and General Manager ofCorporate Administration Division at Lifenet
Director, LIFENET MIRAI INC.

Junpei Yokozawa

Ryosuke Kondo

JAPAN POST INSURANCE CO., Ltd.
Head of Corporate Planning Department and General
Manager of Sales & Marketing Division at Lifenet

Director
General Manager of Customer Services Division
General Manager of Information Systems Strategy
Division
NTT DATA Net’s CORPORATIONHead of KDDI Business Department and head ofOperations Planning Department at Lifenet

Yutaka Mizukoshi

Takeshi Saito

OutsideSenior Advisor, The Boston Consulting Group

OutsideGeneral Manager of Corporate Strategy
Planning Department,
Managing Executive Officer,
au Financial Holdings Corporation

Director
Executive Officer of Corporate Planning, ProductDevelopment and Investment

Directors (the Audit and Supervisory Committee Member)
Takahiro Yamasaki

Keiko Hayashi

Tomoyuki Yamashita

Full-time
Nippon Life Insurance Company
Nippon Venture Capital Co., Ltd.

OutsideOutsideRepresentative Director andPresident, Aon Solutions Japan
Ltd.

Full-time audit and supervisoryboard member at Lifenet

Executive Board Member,
The Japanese Institute of Certified
Public Accountants
Partner, Deloitte Touche Tohmatsu LLC

34

Breakdown of Policies-in-Force’21/03’21/06Component
ratio

Number of policies-in-force

439,945458,539100%- Term Life

213,597

222,984

49%- Whole-life Medical

120,216

125,34227%- Term Medical Care

8,840

8,740

2%

- Long-term Disability

59,56760,602

13%- Cancer

37,72540,8719%

2,994,198

3,093,646

279,243

291,262

Sum insured of policies-in-force1(JPY millions)

Number of policyholders

1. Sum insured of polices-in-force are the sum of death coverage, and do not include third-sector insurance.

35

Condensed Statements of Operation/ Fundamental Profit

Fundamental profit

Condensed statements of operation(JPY millions)

FY2020/1Q FY2021/1Q

Change

Note

1,214

92
4,726

5,848
93
5,942

Increased due to growth in in-force policies business andreinsurance income from modified co-insurance.

0
1,215

Includes utilization of modified co-insurance of 956 million yen.

Insurance claims and
other

1,236

1,907

670

Increased due to an increase in reinsurance commissions frommodified co-insurance. Percentage of insurance claims and benefit
claims to insurance premiums is 19.9%.

Insurance claims

447

605

158

Increased from 38 cases in 1Q of FY20 to 56 in 1Q of FY21.

Benefit claims

267

328

60

Increased from 2,201 cases in 1Q of FY20 to 3,033 in 1Q of FY21.

1,497

1,592

94

Percentage of provision for policy reserves (1,528 million yen) toinsurance premiums is 32.6%.

Other

2,341
1,506
242
592
299

622
527
64
30
100

Ordinary expenses

5,374

2,963
2,033
306
622
400
6,862

1,488

Ordinary profit (loss)

(647)

(920)

(272)

Insurance premiums and other

4,633

Other
Ordinary income

Provision for policy
reserves and other
Operating expenses
Marketing expenses
Customer service
System and other

Includes 1,659 million yen for promotion expenses.

Increased due to an increase in reinsurance commissions frommodified co-insurance and provision for policy reserves and other.
Includes profit of 206M for utilization of modified co-insurance.

Extraordinary losses andincome taxes
Net income (loss)

4

6

1

(652)

(926)

(274)

Includes profit of 206M for utilization of modified co-insurance.

Mortality margin

877

901
(1,744)
(14)
(856)

24

Includes 92M loss due to utilization of modified co-insurance.

(319)

Includes 298M expense margin for utilization of modified coinsurance.

1
(293)

Includes profit of 206M for utilization of modified co-insurance.

Expense margin (loss)(1,424)

Interest margin (loss)

(15)
(562)

Fundamental profit

36Three Surplus Factors ofFundamental Profit
1Q of FY2021(JPY mn)

Profit analysis

Statements of operations
Ordinary income

Insurance premiums and other 5,848

Premiums income 4,693

Net premiums

Expense loading

Reinsurance income 1,155

ReinsuranceincomeOther reinsuranceincomeInterest anddividends

Investment income 74

Gains on salesof securities

Other ordinary
incomeOther ordinary income 19

Ordinary expenses

Insurance claims and other 1,907

Insurance claims and benefits
933

Insurance claims
and benefits

Reinsurance commissions
973

Reinsurance
commissions

Other reinsurance
commissions

Provision for policy
reserves and others 1,592

Change in policy
reserves

Change inpolicy reserves

Interest
expenses

Investment expenses 0
Operating expenses 2,963

Operatingexpenses

Other ordinary expenses
400

Other ordinary
expenses

Income taxes 0

Mortality
margin (loss)

Expensemargin (loss)

Interest
margin (loss)

901(1,744)(14)

Net profit (loss) (926)
1. Some items with minimal amounts have been omitted.

Losses on salesof securities

Capital gains(losses)(3)

Ordinary profit (loss) (920)
Extraordinary profit (loss)(5)

Provision forcontingency
reserves

Projected
interest

Other onetime
gains (losses)(60)

Extraordinary profit (loss)(5)
Income taxes 0

Net profit (loss) (926)37

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
2,599.9%
Cash and deposits
2,158

=

Total amount of solvency margin<numerator>
28,438Other liabilities
1,534

Risk of change in mortality rate (calculated based on value ofpolicies in force)

901

Policy reserves
37,330Contingency reserves 2,063

Excess over the fullZillmerized reserve 10,963
Price fluctuation reserves 81

Securities
41,458Deferred tax liabilities onavailable-for-sale securities

3911

Valuation difference on
securities available-for-sale

1,0051

Total amount of risk/2< the denominator>
2,187/2

Insurance risk R1 1,103

Reserves for outstanding claims

Money held in trust
5,890

÷

Add liabilities
with strong
capitalcharacteristics
such as pricefluctuation
reserves andcontingency
reserves

Medical insurance risk R8 364
Risk of change in medical incidence rate (hospital admission
rate , etc.)

Assumed interest rate risk R2 3
Risk that the actual investment return will fall below the
expected return used as a basis for calculating policy
reserves[Minimum guarantee risk] R7 －Risk related to products, such as variable annuities withminimum guarantees

Asset management risk R3 1,496

Tangible fixed assets

91
Intangible fixed assets
1,262

Other assets
4,471

Capital stock andother assets
13,933

Net assets
15,050[Credit risk] Risk that asset values decline due todeterioration in financial condition of creditees[Price fluctuation risk]Risk of incurring losses due to decline inmarket value of stocks and bonds, etc.

Business management risk R4 89
3% of the total of the amounts of the other 5 risks (in the
Company’s case)

1. 90% of the valuation difference on available-for-sale securities and deferred gains or losses on hedges (pre-tax) (if negative, 100%)
2. Items that do not apply to the Company or for which the amount is minimal have been omitted, except for certain bracketed items.

38

EV Sensitivity Analysis1
Impacts of changes in assumptions (sensitivities)(JPY millions)

EEV and new business value as of June 30, 2021
Sensitivity 1a: 1.0% increase in risk-free rate
Sensitivity 1b: 1.0% decrease in risk-free rate

Sensitivity 1c: 0.5% increase in risk-free rate
Sensitivity 1d: 0.5% decrease in risk-free rate
Sensitivity 1e: Interest rates based on JGB yields

Sensitivity 2: 10% decrease in equity and real estate value and otherSensitivity 3: 10% decrease in operating expenses
Sensitivity 4: 10% decrease in lapse rate
Sensitivity 5: 5% decrease in claim incidence rates for life business
Sensitivity 6: Change the required capital to the statutory minimum
1.

Change in EEV as ofJun. 30, 2021

Change in
VoNB

97,015(3,177)2,375(1,522)
1,326
1,075
(851)
3,751
243
4,523
94

1,272
(46)
(21)
(16)
0
56
－
220
36
171
4

For each sensitivity, only one specific assumption is changed and other assumptions remain unchanged. It should be noted that the effect of the change of morethan one assumption at a time is likely to be different from the sum of sensitivities carried out separately. As Japanese policy reserves are calculated in accordancewith the IBR, the sensitivities carried out do not affect the reserves at the valuation date. The sensitivity on the value of new business excludes the impact on theadjusted net worth.

39

Adjusted Incremental EV◼ Adjusted Incremental EV accurately

indicates our business growth during acertain 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 experience variances
40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 levelexcluding marketing expenses as there is a time lag
between the recognition of revenue and marketing
expenses as acquisition cost

Ordinary profit excluding marketing expenses

Adjusted Profit

41

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 year

2017

2018

2019

2020

2021/1Qⅰ) Ordinary profit（loss)(197)(1,719)(2,382)(3,089)(920)ⅱ) Marketing expenses

2,627

4,216

6,146

6,712

2,033

－

－

(1,526)

(804)

(206)

319

347

546

739

163

2,748

2,844

2,784

3,558

1,070

ⅲ) Modified co-insuranceⅳ) Adjustment

Adjusted profit
1.

The amount of the adjustment to the policy reserve provision is the adjustment calculated by excluding the provision for contingency reserves andadjusting for the switch in method for calculating the provision from the Zillmer method to provision based on the standard policy reserves.

42

Explanation of Adjusted Profit
Adjustments to provision for policy reserves based onstandard policy reserves◼

Calculation of adjusted profit

Difference between methods of calculating
provision for policy reservesⅳ)ⅲ) Impact ofmodified co- Adjustmentⅱ) Marketing insurance
based onexpensesstandard policy
Adjustedreserves

We are currently in the transitional period and will transition all business tostandard policy reserves by the end of Fiscal 2022.

profitⅰ) Ordinary
profit（loss)

Method of calculating the “ⅳ) Adjustment based on standard policy reserves”
e.g. 1Q for fiscal 2021 (JPY millions)

Adjustment to provision forpolicy reserves1

163
1.
2.

Provision for policy
reserves

Increase in standard
policy reserves2

1,528

1,364

The amount of the adjustment to switch to provisioning based on standard policy reserves is calculated by excluding the provision for contingency reserves
and adjusting for the switch in method for calculating the provision from the Zillmer method to provision based on the standard policy reserves. Please notethat the provision for contingency reserves is included in the provision for policy reserves, but is not included in the increase in standard policy reserves.
The increase in standard policy reserves is the amount of the increase (decrease) in the standard policy reserve balance for the current fiscal year from thebalance in the previous fiscal year. The standard policy reserves is the amount calculated by excluding the provision for contingency reserves from actuallyprovisioned policy reserves and adding the difference from the provision based on the standard policy reserves. The difference was 394 million yen as of June30, 2021.

43Modified Co-Insurance◼ Ease pressure of new business costs on P&L◼ Alleviate decrease in capital during growth
Illustration image of change in
profit/loss structure by reinsurance：Costs ：Effects of reinsurance

Without
Reinsurance：Revenue

Illustration image of impact ofreinsurance on net assets

With
Reinsurance

With
Reinsurance

Ease pressure of new
business costs
Without
Reinsurance
End of Mar. 2019
FY2018

Note: Illustration of P&L structure of reinsuring new business of single fiscal year,
where illustration of impact on net assets of reinsuring new business for multiple years.
Lifenet has utilized reinsurance transactions by modified co-insurance method on partof new business since fiscal 2019.

Year 1

2

3

4

５

…

Year X

44