Securities Code:7157
TSE Mothers

Investor Meeting
Presentation
for Fiscal 2015
May 13, 2016

FY2015 Key Highlight✓ Ordinary income up 7.5% year on year,
almost achieved JPY 9.5bn as
Management Goal
✓ Achieved to turn profitable1 as
Management Goal
Review of previous mid-term business
plan
Formulation of new mid-term businessplan
1. Based on ordinary profit before amortization of deferred assets under Article 113 of the Insurance Business Act

1

Summary of FY2015 Results(JPY mn)

FY2014FY2015

Year on year

Ordinary profit (loss)1

8,729
3,815
(472)

9,387
3,239
584

107.5%
84.9%-

Cash flows fromoperating activities

3,247

4,610

142.0%

1,777
8,793
215,403
1,327
27,982

2,100
9,377
225,534
1,189
25,150118.2%
106.6%
104.7%
89.6%
89.9%

Ordinary income
Operating expenses

Mortality margin
Annualized premium2 ofpolicies-in-force
Number of policies-in-force
Annualized premium2 of
new business
Number of new business1.
2.

Ordinary profit (loss) before amortization of deferred assets under Article 113 of the Insurance Business Act
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.

2

Contents

1. Results for Fiscal 2015

2. Results of Mid-term Business Plan
3. Challenges for Fiscal 20163

Overview of FY2015
 Improvement of customer convenience- Utilization of Smartphone- Enhance free consultation services- Expanded range of underwriting anddesignatable beneficiaries
 Business alliance with KDDI Enhance agents channel
4Utilization of Smartphone
Accept application documents via
website captured by Smartphone
Save customer’s steps of copying and sending
applications for new policy (from April 2015)

来風

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Realized payment in 3 days at earliest by saving
customer’s steps of copying and sending
documents for claim1 (from March 2016)18

東京都千代田区麹町二丁目14番地2

来風

大輔

20

5

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東京都千代田区麹町二丁目14番地2

3 days at earliest# actually utilized at Kumamoto earthquake in 2016

1.

Whole-life Medical New “Jibun” for Woman is excluded from this service.

5

Enhance Free Consultation Services
 Expanded free consultation services team,
number of calls resulted in 1.7 times year on
year
You can consult with a Lifenet’s
insurance planner for any questions
for free6

Expanded Range of Underwriting
and Designatable Beneficiaries
 Improved convenience according tocustomers’ voice
Expanded range of underwriting for Longterm Disability to part-time worker withannual income over JPY 1.5mn

Expanded range of designatablebeneficiaries to same-sex partners

Acceptable occupation
To Nov. 30 2015

From Dec. 1 2015

(annual income
over JPY 1.5mn)･Office workers (incl.
contractors and temps)･Public servants･Corporate officials･Self-employed(annual income
over JPY 1.5mn)･Office workers (incl.
contractors and temps)･Public servants･Corporate officials･Self-employed･Part-time workers

7Business Alliance with KDDI Commenced sales with KDDI from April 2016
 Started Business Alliance in April 2015
 Established Business Alliance Committee
in May 2015 aiming to discuss detailed measures Started trial sales at “au Shop” in December
2015 for successful business launch Commenced nationwide sales of “au Life
Insurance” from April 20168

au Life Insurance Providing life insurance under“au Life Design” concept“au Life Design”
au Life Insurance

au Non-life
Insurance

au Home Mortgage

au Electricity

9Enhance Agents Channel
Direct and agents sales ratio1
Approx. 50% of Long-term Disability applications is via agent

DirectVia Agents50.6%

 Sales over-thecounter promotes
understanding
insurance products

 Build strong position
in expanding market
1.

Results for 4Q of FY 201510

Ordinary Income(JPY mn)

8,729

9,387

7,603

 Increased as growthof policies-in-force Almost achieved
Management Goal
JPY 9.5bn

FY201314

15
11

Number of Policies-in force/ Annualized Premium:Number of policies-in-force:Annualized premium of policies-in-force (JPY mn)

225,534  In-force businessand insurance
215,403premium steadily
9,377
202,963
increased
Y-on-Y
5% increase

8,793

Y-on-Y
7% increase Policies-in-force
exceeded 220,000

8,077

14/03

15/03

16/03
12

Breakdown of Policies-in-force
 Over 140,000 in-force policyholders(YY/MM)

Number of policies-in-force- Term Life1- Whole-Life Medical1- Term Medical Care1- Long-Term Disability1
Sum insured of policies-in-force2 (JPY mn)
Number of policyholders(Reference) Surrender and lapse ratio3

15/03

16/03

215,403
112,420
65,666
11,87025,447
1,831,081
131,319

225,534
117,626
67,999
11,132
28,777
1,906,269
140,301

FY2014FY2015

7.3%

6.7%

1.

Term Life insurance: “Kazoku” , Whole-Life Medical insurance: “Jibun”, New “Jibun”, and New “Jibun” for Women, Term Medical Care insurance: “Jibun Plus”, Long-Term Disability insurance:“Hataraku Hito”.

2.

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

3.

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.

13

Number of New Business /Annualized Premium
46,237:Number of new business:Annualized premium of new business(JPY mn)

27,982

 Annualized premiumof new businessY-on-Y
10% decrease
JPY 1,189mn

25,1501,707

FY2013

 Challenge for stable
1,327
growthinnew
1,189
Y-on-Ybusiness
performance
10% decrease
14

15
14

Number of New Business /Annualized Premium (Half Year) Bottoming out in 2H 2015
26,777:Number of new business:Annualized premium of new business(JPY mn)

19,46015,053
975
732

13/1H

13/2H

694

14/1H

12,92913,747

11,403

632

548

640

14/2H

15/1H

15/2H
15

Insurance Claims and Benefits: Amount of insurance payments (JPY mn): Amount of insurance payments / Premiums income (%)

1,124 1,159
423

436

15.0

13.8

701

723

FY201314

1,078

 Payments decreased
despite increased
Benefit
443 claims
policies-in-force
52
insurance
claims12.0
Insuranceand 4,990 benefit
635 claims
claims15

16

Provision for Policy Reserves: Provision for policy reserves (JPY mn): Provision for policy reserves / Premiums income (%)

3,566

3,744

2,961

39.4

42.6

41.6

FY201314

15

 Increased byinsurance premiumincrease Calculations
based on the fiveyear Zillmer method
since business
commencement
17

Operating Expenses
4,131
1,948

612

1.

(JPY mn)

3,815

3,239


Decreased
15%
1,672
1,302 Marketing due to marketing
expenses control
558

526

Customer
service

1,570 Operating expenses
1 36%
ratio
System
1,583 1,410

FY2013

14

55%

46%

and other

The ratio of operating expenses to premiums income

1536%Operating expenses ratio¹

18

Operating Expenses (Quarterly) Invested in FY2016 in advance (4Q)
1,172

(JPY mn)

957
814

637
432

280

992

870
751
322
279

140

139

143

135

394

385

390

413

128
343

709
269

787

441 Marketing

312
Customer

124

138

315

336

135 service

415 Systemand other

14/1Q 14/2Q 14/3Q 14/4Q 15/1Q 15/2Q 15/3Q 15/4Q
19

Marketing Expenses per New Business:Marketing expenses per new business (JPY thousand):Marketing expenses/Annualized premium of new business (%)

59

51
Y-on-Y
improved
13%

42
1.1

FY2013

1.2

14

1.0

15

Y-on-Y
improved
13%

 Marketing expenses
for annualized
premium improved
13% year on year Marketing expenses
per new business ofapprox. JPY 51K
20

Ordinary Profit (Loss) Achieved to turn profitable1 as
Management Goal

584

(JPY mn)

Ordinary loss
before deferred
expenses andamortization
Amortization
cost

(472)

Ordinary
profit (loss)

FY2013

FY2014FY2015(1,198)

(472)

584

(1,060)(1,060)(1,060)(2,258)(1,532)(475)(1,198)FY20131.

14

15

The ordinary loss before deferred expenses and amortization of deferred assets under Article 113 of the Insurance Business Act.

21

Structure Breakdownof Ordinary Profit (Loss) Turned profitable by decreased operating
expenses
Transition of ordinary profit (loss)1(JPY mn)

Increase of
insurance
premiums
and other624

Decrease ofoperatingexpenses

Decrease of
insurance
claims and
other
Other

33

37

575

Other

44

584

Increase ofprovisionfor policy
reservesand other

(258)

(472)
FY2014
1.

IncomeOrdinary profit (loss) before amortization of deferred assets under Article 113 of the Insurance Business Act

Expense2015

22

Condensed Statements of Operation(JPY mn)

FY2014FY2015

Change

(A)

8,493
236
8,729

9,117
269
9,387

624
33
657

(B)

1,324
3,566
3,815
495
9,202

1,287
3,824
3,239
451
8,802

(37)
258
(575)
(44)
(399)

Ordinary profit (loss) before amortization ofdeferred assets under Article 113 of IBA (A-B)

(472)

584

1,057

Amortization of deferred assets under Article
113 of IBA
(C)

1,060

1,060

‐

Ordinary loss

(1,532)

(475)

1,057

Insurance premiums and other
Other
Ordinary income

Insurance claims and other
Provision for policy reserves
and other
Operating expenses
Other
Ordinary expenses(A-B)-(C)23Mortality Margin(JPY mn)

2,100
1,777

 Steadily recorded
mortality margin

1,141

FY2013

 Increased 18%
year on year

14

15
24

Fundamental Profit(JPY mn)

Mortality margin
Expense margin (loss)
Interest margin
Fundamental profit(ref.) Insurance
premiums and other

FY2013

FY2014FY2015

1,141(3,234)3(2,089)
7,537

1,777
(3,282)19(1,484)
8,493

2,100
(2,595)
43
(450)
9,117

609

Adjusted
fundamental
profit1(JPY mn)(424)

 Improved
due to expense
loss improvement
 Adjusted
fundamental
profit1 of
JPY 609mn(1,029)1.

Fundamental profit before deferred expenses and amortization of deferred assets under Article 113 of the Insurance Business Act.

25

Cash Flows from Operating Activities
4,610(JPY mn)

3,247

1,976

FY2013

 Continuously
recorded positive
operating cash
flows on annual basis
 Increased 42% year
on year14

15
26

Financial Condition
14/03

15/03

16/03

21,18823,38730,317

418

731

734

-

-

1,000

1,033

14,15417,082

6,636

8,227

Municipal bonds-

851

Corporate bonds

6,547

6,894

Stocks1

206

222

Foreign securities2

764

886

7,252

10,899

 Modified duration
804
13.6 years
14,893

6,616

10,084

13,90813,935

12,487

15,423(JPY mn)(YY/MM)

Total assets
Cash and deposits
Monetary claims bought
Money held in trust
Securities
Government bonds

Total liabilities
Policy reserves and otherTotal net assets

 Increased assets
1,035
under management
23,067due to capital
10,102increase
1,521
1,999

10,428211

1.

Lifenet is holding shares of Advance Create Co., Ltd., its insurance sales agent, for the purpose of maintaining equity and business partnership.

2.

Investment in Kyobo Lifeplanet Life Insurance Company in Korea

27

1
Solvency Margin Ratio

2,805%
2,244%
1,922 %
Average2 of 4 major
insurance companies asof September 30, 2015

 Maintained athealthy level

909%
14/03

15/03

16/03

 Improved bycapital increase(YY/MM)1.

The solvency margin ratio measures a life insurance company’s ability to pay out claims when unforeseen events occurs, such as natural disaster or a stock market collapse.

2.

Simple arithmetic average

28

European Embedded Value(JPY mn)

30,578 EEV approx. JPY 30.5bn

25,24822,907

14/03

14,492

Value ofin-forcebusiness

 Increased by capitalincrease and review ofassumptions despite
impact of declined
Adjusted
16,086 net worth interest rates

15/03

16/03 (YY/MM)
29

Value of New Business (VoNB)
838(JPY mn):Value of new business

620:Value of new business(ultimate unit cost base) 1

89

152

 Fell into negative
VoNB due todecline of interest
rates(52)(43)
FY20131.

14

15

The expense assumptions used to calculate the EEV and the value of new business are set based on the premise that unit costs decrease as the number of policies in force increases, and reach theirultimate equilibrium levels, at which income and expenses are equal, in the tenth year after the company’s start-up (fiscal 2017). For reference, “Value of new business (Ultimate Unit Cost base)” shows
the value of new business calculated applying the ultimate unit costs to all years.

30

Structure Breakdown of VoNB per Policy Though initial cost declined,change of interest rates largely effected
VoNB per policy (ultimate unit cost base)5

Products mix
change Insurance
Initial expense
premiums
increased
per policy
increased

(0)

7

(3)

Interest
rates
changeOther
Ultimate variables
unit costbase change

(22)

0

Surrender
and lapse
rate change
Expected
incidence
rate change

FY2014(JPY thousand)

9

(0)

2

(1)
15
31

Main Factors of Declined VoNB
 Positive assumption using interest
rates as of end of FY2014(JPY mn)

VoNB in
FY2015(ultimate unit
cost base)

Economicassumptionsof calculation

Interest
rate1(10 years)

Assumptions asof end of FY2014

0.58％

476

485

Assumptions asof end of FY2015

0.15％

(52)

(43)

1.

VoNB in
FY2015

Swap rate as risk-free rate as of calculation date

32

VoNB (Ultimate Unit Cost Base)
FY2014FY2015

Per new businessfor FY2015(JPY thousand)

3,720

3,031

120

－

－

－

(19)
(2,010)(7)(1,986)(0)(78)

Value of in-force business

1,689

1,037

41

－)

(1,537)(1,081)(42)

Value of new business(Ultimate unit cost base)

152

(43)

(1)

(Ref.) Value of new business

89

(52)

(2)

20,36727,982

19,02525,150(JPY mn)
Certainty equivalent present value of
future profit
－)
－)
－)

Time value of financial options
and guarantees
Frictional cost of capital
Allowance for non market risk

Adjusted net worth(Ref.) Present value of in-force business premiums
New business (policy)

33

1
EV Sensitivity Analysis(JPY mn)

EEV and new business value as of March 31, 2016
Sensitivity 1a: 1.0% increase in interest rates
Sensitivity 1b: 1.0% decrease in interest rates
Sensitivity 1c: 0.5% increase in interest rates

Sensitivity 1d: 0.5% decrease in interest rates
Sensitivity 1d’: 0.5% decrease in interest rates (without flooring)Sensitivity 1e: Interest rates based on JGB yields
Sensitivity 1f: Interest rates as of March 31, 2015 (VoNB only)
Sensitivity 2: 10% decrease in equity and real estate value
Sensitivity 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: 5% decrease in mortality for annuity business

Sensitivity 7: Change the required capital to the statutory minimum
1.

Change in EEV as ofMarch 31, 2016

30,5781,650(2,454)990(1,952)(1,424)
601
－
(73)
1,916
(2,167)4,094－
46

Change in value of
new business

(52)
509
(531)
286
(431)
(368)
90
529
－
205
(298)
400
－
5

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 more than 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 accordance with the IBR, the sensitivities carried out do not affect the reserves at thevaluation date. The sensitivity on the value of new business excludes the impact on the adjusted net worth.

34

Impact of Negative Interest Rate Limited impact to our financial

status in FY2015
Interest margin

EEV
VoNB

Limited impact
Increased though certain
impactDecreased with highimpact while having causes
of increase
35

Contents

1. Results for Fiscal 2015

2. Results of Mid-term Business Plan
3. Challenges for Fiscal 201636

Previous Mid-term Business Plan
LIFENET 2015

Management Goal

Offer new products andAchieve 9.5 billion in
ordinary income (FY2015)services as an “innovator”
Push the company toward
to create the future of life
insurance that resonate with profitability (FY2015)(Based on ordinary profit before amortization of
stakeholders, and achievedeferred assets under Article 113 of the IBA)
Turn profitable(JPY bn)
the highest sustainablegrowth among online life
insurance businesses.
(1.6)¹FY2012
1.

FY2015The ordinary loss before deferred expenses and amortization of deferred assets under Article 113 of the Insurance Business Act for the fiscal 2012 ended March 31, 2013 included theeffect of changing calculation formula of policy reserves on provision, JPY 0.5bn. When excluding the effect, it was JPY 2.1bn.

37

Transition of Life Insurance Market
 Expanding agent channel
Trends of sales channels1
Online
Other

7.0%

6.4%

6.9%

13.7% Insurance agents
Banks,
Securities brokers

Sales representatives(life insurers)

2006
1.

09

12

Source: Lifenet, based on data from a nationwide report on the life insurance industry (2015) by the Japan Institute of Life Insurance.

15
38

Online Life Insurance Market
 Sluggish of market growth
Number of new business 1

OtherLifenet

FY20081.

Source: Lifenet analysis

09

10

11

12

13

14
39

Ordinary Income
 Almost achieved JPY 9.5bn as
Management Goal
Average annual rateof growth 16%(JPY mn)

8,729

9,387

7,603

5,976

FY2012

13

14

15
40

Ordinary Profit (Loss)1
 Achieved to turn profitable1 as
Management Goal

584

(JPY mn)(472)(1,198)(1,664)2
FY2012
1.
2.

13

14

15

Ordinary profit (loss) before amortization of deferred assets under Article 113 of the Insurance Business Act
The ordinary loss before deferred expenses and amortization of deferred assets under Article 113 of the Insurance Business Act for the fiscal 2012 included the effect of changing calculation
formula of policy reserves on provision, JPY 501mn. When excluding the effect, it was JPY 2,165mn.

41Status of Priority Areas
Sustainable growth in insurance premiumincome (top-line)→Build new sales channels
Improvement in productivity→Achieved to turn profitable1
Being an “innovator” (front-runner) in life
insurance→Improved customer convenience
1.

Ordinary profit before amortization of deferred assets under Article 113 of the Insurance Business Act

42

Sustainable Growth
in Insurance Premium Income (top-line)

 Enhance business partnerships withagents to enhance sales channels
December 2014

April 20151

1.

Lifenet concluded an agency agreement with KDDI CORPORATION in November 201543

Improvement in Productivity
 Controlled operating expenses
mainly marketing expenses
Operating expenses(JPY mn)

4,976

4,131

3,815

3,239
Marketing

FY2012

13

14

15
44

Being an “Innovator” (Front-runner)in Life Insurance Improved customer convenience
continuously
Expanded Range of Designatable Beneficiaries

Improved customer convenience of process

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東京都千代田区麹町二丁目14番地2

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東京都千代田区麹町二丁目14番地2

3 days at earliest

1.

Whole-life Medical New “Jibun” for Woman is excluded from this service.

Save customer’s
steps of copying
and sending
applications
for new policy(from April 2015)
Realized payment
in 3 days at earliest
by saving customer’s
steps ofcopying and sending
documents
for claim1(from March 2016)45

Challenges for
New Mid-term Business Plan

Return to growth in new businessperformance
Avoid assimilating with competitors
Proactive development of products
and services
46

Contents

1. Results for Fiscal 2015

2. Results of Mid-term Business Plan
3. Challenges for Fiscal 201647

Current Life Insurance Market
 Huge and mature market over JPY 40tn
Insurance premiums1

44.5
43.2
42.7
41.1
40.8
41.0
40.5
Cooperative(JPY tn)insurance

Privateinsurance

FY2008
1.

09

10

11

12

13

14

Private insurance: Life insurance companies that are members of The Life Insurance Association of Japan; income from premiums and other sources. Cooperative insurance: Cooperative
insurance companies that are members of the Japan Cooperative Insurance Association; mutual aid premium contributions (total for life insurance and pension fund contributions).
Source: Lifenet, based on data from Life Insurance Fact Book 2015 (Japanese ver.) by The Life Insurance Association of Japan, Cooperative insurance48

Potential of Online Life Insurers Market
 High potential for future growth

9.1%

Trends of application via online channel1
Application via online channel
Preferred future online channelHighpotential

4.5%
2.9%

2.2%

1.8%

2006
1.

09

12

15

Source: Lifenet, based on data from a nationwide report on the life insurance industry (2015) by the Japan Institute of Life Insurance.

Preferred future
online channels(2015)

49

Overseas Online Life Insurers Market
 Expanded initiatives of “Online x Life
Insurance”
Oscar : Google Capital invested $ 32.5mn

Aviva : Launched venture capital as a part ofdigital strategy
Tencent : Planning to launch online life insurer
Allianz : Planning to launch online life insurer
in China
50

Risk
Management
Area

・ Stable growth in new business performance
・ Establish foundation for “rebuilding business model and growth story”
・ Implementation of systematic investments for future

2016
Return to growthin new business

2017

2018

Stable in new business performance
Achieve
Establish a system that realize
Management Goal
sustainable profitability

The pillars of business : “Online direct sales”,“KDDI (exclusive alliance agent)” and“Over-the-counter agent”
Continuous creation of unique sales point
in all channels
Commitment to business development
for future growth

ChangeOrganization•13.5 billion yen in
ordinary income•Positive profitability ofordinary profit (loss)

Business

Corporate Strategy

FY2018
Management
Goal

New Mid-term Business Plan

Challenge
Unity

Sophisticate systems for risk management and customer protection that
support corporate strategy

51

Management Goal
 JPY 13.5bn in ordinary income and positive
profitability of ordinary profit(loss)
Ordinary income and ordinary profit (loss)

13,500(JPY mn)

Ordinary income
Ordinary profit (loss)

9,387

0+

(475)
FY2015

16

17

18

52

Business Strategy
 Execute on strategy suitable for each
Online direct sales
channel• Increase the number of visitors to the website• Optimize for a mobile-centered lifestyle• Strengthen and further utilize points ofcontact with policyholders

Onlinedirectsales

KDDI(exclusive
alliance
agent)

KDDI (exclusive alliance agent)• Realize solid launch and success over the midto long-term• Focus on understanding the needs of partnercompanies and creation of synergy effects
with their main business

Over-thecounter
agent

Over-the-counter agent• Aiming to grow stably with a sales network
expansion• Develop the market for long-term disability

53

Business Strategy
 Invest in new business and services
Utilizelatesttechnology

Insurance-relatedbusinessNew
products

54Organization Changes
 Into 5 divisional organization prior to new
mid-term business plan from January 2016
ChairmanPresident
Corporate
Strategy DivisionCorporate
Administration
Division

Sales & Marketing
Division

Customer Services
Division

Corporate
Planning
Department

Legal
Department

Marketing
Department

Customer
Services
Department

Business
Development
Department

Accounting
Department

Application
SupportDepartment

ClaimsDepartment

Product
Development
Department

Actuarial
Department

Agency Sales
Promotion
Department

Operations
Planning
Department

Finance
Strategy
Department

Human
Resources &General Affairs
Department
Risk
Management
Department

Information
Systems Strategy
Division
Information
Systems
Planning
Department
Information
Systems
Operations
Department

Sales Planning
Department

55

Organization Strategy
 Toward more organizational
management
ChangeChallenge
Unity
56

Key Accounting Points
Completion of amortization of deferredassets under Article 113 of Insurance
Business Act (end of FY2017)

Changed calculation methods of policy reserves
from 5-year Zillmer's method into net level
premium method (in FY2018 onward)
Dividend policy to be considered based on
difference from standard policy reserve andamount of cumulative loss
57

Focus Areas in FY2016
 Enhance each channel as pillar

 Improve customers
convenience on website
Train sales persons at au Shop
Stabilize call center operationKDDI(exclusive
alliance
agent)

Onlinedirectsales

Increase visitors for our website
Optimize services for Smartphones
Enhance services for existing
policyholders

Establish sales structureExpand sales footprints
Over-thecounter
agent

58

New Product Launch of new Long-term Disability
product in June
Long-term Disability“Hataraku-Hito 2”

Revised drasticallyin response tocustomers
requests!

Main points of Long-term Disability “Hataraku-Hito 2”
Newly added 60
days of initial
exclusion period

Newly added a
range of insurance
terms to choose

Newly added “Halftype” for customers
who wish to lower
their premiums
59

Number of Application (Monthly) “au Life Insurance” boosted:Number of application

3,488
2,691 2,604

15/04

2,536 2,429 2,547

2,689

2,884

3,048

3,221
2,839

3,062
2,806

16/04

60

Business Forecast
 Aim for JPY 10bn (up 6.5%) in ordinary
income(JPY mn)

Ordinary income Ordinary profit1

Business forecast
FY2016

10,000 Profitability

Results of FY2015

9,387

1.

Ordinary profit before amortization of deferred assets under Article 113 of the Insurance Business Act

584
61

LIFENET ManifestoI.

Our Guiding Principles(1) We believe that our responsibility to society is to return life insurance to its
original state. Life insurance is for the customers, not for the company. In
order to achieve this goal, we will only offer products we can recommend
with confidence.
(2) We will be transparent. We will disclose information on our management,
products and company as a whole on our website to actively communicate
with customers and society.
(3) We will be fair. We believe that our services will be more benevolent if theemployees are free of any and all limitations they may feel in the work
environment, and as such, we will not discriminate against education,
gender, age, nationality, or familial situations.
(4) We will adhere to laws protecting personal information and comply withlaws, regulations, and other social standards. We pledge to be respectableglobal citizens, acting fairly and ethically.

III.

Life Insurance will be Cost-Competitive(1) We believe that no one should pay premiums that are more expensive thannecessary, and will be innovative and creative in order to develop andmaintain the most cost-competitive products possible.
(2) We will handle every step of the process in providing good products to ourcustomers; from the development of the products to the sales. This allows
for us to maintain our cost-competitive prices.
(3) Our products will be cost-competitive, but the content of the products andour services will not be sacrificed. All communication with customers will
be conducted accurately and quickly, including claim processes.
(4) Life insurance is a very expensive purchase, and life is also very expensive.
We want for our customers to spend less on life insurance, and more on
enjoying life.

II.

Life Insurance will be Comprehensive(1) Our products will be simple and comprehensible. There will not be complex
policies with special provisions.
(2) Life insurance is a financial product designed to mitigate risk, and we believe
the customer should decide what products are necessary for them. As we
feel it is critical for customers to be well informed of products and policies,
we will make accessible any and all relevant information on our website
for customers to make logical and rational decisions. The Customer
Contact Center is also available for further clarifications and questions.
(3) Our website will promote the understanding of not only our company's
products, but of life insurance in general.
(4) We will make life insurance products tangible via clearly written policies andcomprehensible terms and conditions.

IV.

Life Insurance will be Convenient(1) We know our customers have very busy lives. That is why our customers canapply for our life insurance policies via the internet, 24 hours a day, 7 daysa week.
(2) Our documents require only a signature. There are no other typical official
items required to verify personal identification.
(3) Our definition of "surgery" is aligned with the national healthcare insurance
point table, making the claim process much more convenient andcomprehensible.
(4) We have a proxy claim system, allowing for the third party designated by
the claim holder to file a claim. The appointed proxy need simply to makea phone call to our contact center for necessary documents.

This manifesto is not simply as a declaration. This is how we do things.
Join us on our journey.

62

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.

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

Appendix

Three Surplus Factors ofFundamental Profit
FY2015
Ordinary income

Statements of Operations

Profit analysis

Insurance premiums and other 9,117

Premiums income 9,007

Reinsurance income 110

Net premiums

Expense loading

ReinsuranceincomeInterest anddividends

Investment income
259

Gains on salesof securities

Other ordinary
incomeOther ordinary income 10

Ordinary expenses

Insurance claims and other 1,287

Reinsurance commissions
209

Insurance claims
and benefits
Reinsurance
commissions

Provision for policy reserves
and others 3,824

Change inpolicy reserves

Insurance claims and benefits
1,078

Change inpolicy reserves

Investment expenses 0
Operating expenses 3,239

Operatingexpenses

Other ordinary
expenses 1,510

Other ordinary
expenses

Projected
interest
Interest
expensesLosses on salesof securities

Capitalgains
64

Ordinary loss (475)

Otheronetimeloss(89)

Extraordinary losses 3

Mortality
marginExpensemarginInterest
marginExtraordinary losses 3

Income taxes (49)2,100(2,595)43

Income taxes (49)

Net loss (429)1.

Provision forcontingency
reserves

Some items with minimal amounts have been omitted.

Net loss (429)65

Solvency Margin Ratio Calculation
As of Mar. 31, 2016

(R 1  R 8 )2  (R 2  R 3  R 7 )2  R 4 / 2

Solvency margin ratio
2,805.5%
Cash and deposits
734
Monetary claimsbought
1,999
Money held in trust

1,035

Securities
23,067=

Total amount of solvency margin<numerator>
19,301Other liabilities
569

Policy reserves 13,551
Contingency reserves 1,307

Excess over the fullZillmerized reserve 4,529

Price fluctuation reserves
12
Deferred tax liabilities onavailable-for-salesecurities
2061

Valuation difference on
available-for-salesecurities
1

Risk of change in mortality rate (calculated based onvalue of policies in force)

Add liabilities
with strong
capitalcharacteristics
such as pricefluctuation
reserves andcontingency
reserves

531

Deferred assets under
Article 113 of the
Insurance Business Act

2,120

Risk of change in medical incidence rate (hospital
admission rate , etc.)

Assumed interest rate risk R2 1
Risk that the actual investment return will fall below
the expected return used as a basis for calculating
policy reserves[Minimum guarantee risk] R7 －Asset management risk R3 397[Credit risk] Risk that asset values decline due todeterioration in financial condition of creditees[Price fluctuation risk]Risk of incurring losses due todecline in market value of stocks and bonds, etc.

12,712

Net assets
15,423

Medical insurance risk R8 248

Risk related to products, such as variable annuities
with minimum guarantees

Tangible fixed assets
Capital stock and72
other assets
Intangible fixed assets

437
Other assets
2,969

Total amount of risk/2< the denominator>
1,375/2

Insurance risk R1 1,016

Deferred tax liabilities(excluding those on availablefor-sale securities) 172
Reserves for outstanding claims 357

÷

Subtract deferred assets
under Article 113 of the
Insurance Business Act fromnet assets

Business management risk R4 49
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 (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.

66