Securities Code: 7157
TSE GrowthPresentation
Material for
Investors

Fiscal 2021

May 12, 2022

LIFENET is...

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

FY2021 Key Highlights
FY2021 Results◼ Annualized premium1 of policies-in-force
up 15% YoY to JPY 21.5 billion◼ EEV up 23% YoY to JPY 116.6 billion◼ Raised growth capital of JPY 9.7 billion
Future Initiatives◼ Work on priority areas for sustainable doubledigit growth in in-force business◼ Aim to enhance investment return flexibly
in overseas rising rates environment◼ Aim for IFRS adoption in FY2023 andaccounting profitability
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.

2

Table of Contents

1. Financial Results for Fiscal 2021

2. Future Initiatives

3

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

21.5

18.7
15.5

439,94513.0
11.1

365,171
308,854

507,428◼ The number ofpolicies-in-force
exceeded 500,000

263,847

2018/03 ’19/03
1.

◼ Year-on-year
annualized
premium 115.0%,
number of policiesin-force 115.3%’20/03 ’21/03 ’22/03 （YY/MM）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.

4

Policies-in-Force Movement◼ Tackle further growth acceleration
Number of policies
FY2019FY2021

FY2020New
business

Decreasedbusiness1

in-forcebusiness(33,153)
100,636(25,813)
100,587(24,594)
80,911includingincluding

Surrender &lapse ratio2
6.0%including

Surrender &lapse ratio2
6.6%

507,428

Surrender &lapse ratio2
7.0%+15.3%
439,945
365,171

308,854+20.5%+18.2%

2019/031.
2.

’20/03’21/03

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

’22/03 (YY/MM)
5

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

82
75
67

66

65

2.0

1.7
1.5

1.5

1.5

(fiscal year)

2017

’18

’19

’20

’21

Marketingexpenses

2,627

4,216

6,146

6,712

8,262

◼ Prioritized growth
and aggressively
invest in marketing
based on thebusiness
environment(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.

6

Operating Expenses Ratio: Operating expenses ratio¹ (%): Insurance premiums (JPY millions): Operating expenses excl. marketing expenses (JPY millions)
19,835

16,892

13,982◼ Invested
in human capital

11,845◼ Aim to improve
operational efficiency
22.2 % 22.8 % 21.6 %19.6 %
19.5% by further businessexpansion
3,877
3,317
3,023
2,699
in the mid-term
2,315

10,421

2017
1.

’18

’19

’20

’21 （fiscal year)

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

7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

8Adjusted Profit◼ Steadily increased 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

ⅰ) Ordinary profit（loss)(197)(1,719)(2,382)(3,089)(3,245)ⅱ) Marketing expenses

2,627

4,216

6,146

6,712

8,262

－

－

(1,526)(804)(1,283)

319

347

546

739

721

2,748

2,844

2,784

3,558

4,455

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.

9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

10

Strong EEV1 Growth
EEV and value of in-force business have been growing at a
CAGR of 20%2 and 33%, respectively since IPO
EEV per share has also steadily increased¥1,673¥1,570even after dilution by capital raising◼
◼

¥1,430116,604: Value of in-force business (JPY millions): Adjusted net worth (JPY millions)95,140: EEV/share (JPY)73,431

91,43576,149¥441

60,87818,547
5,122
13,425

2012/03 ’13/03 ’14/03 ’15/03 ’16/03 ’17/03
1.
2.

12,553’18/0318,99025,168’19/03 ’20/03 ’21/03 ’22/03(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.
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 and
9,771 million yen from overseas public offering in September 2021.

11

Changing Factors of EEV1
◼ EEV growth driven by value of new business,revision of claim incidence rate, the improvement ofopex ratio and capital raising

116,604(JPY millions)

Adjusted
incremental EV

Adjustments
to the values2
as ofMar. 31, ’21

95,140

Value ofnew business

4,679

1.
2.
3.

1,313

Operatingexperiencevariances

116

4,652

219

Raised new capitalin Sep. 2021

635

total

’21/03

Expected
existing
business
contribution

Adjustments
to the values3
Economic
as ofvariancesMar. 31, ’22
and assumption
Assumptionchanges
9,846
changes

6,109

million yen’22/03 (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.
This is the impact of changing the risk-free rates from swap rates to Japanese government bond yields on the EEV as of March 31, 2021.
Item for change in capital12

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

Mar. 2022
End
LifenetReference: March 2021 End1
LifenetCompany A

-1.9%

-1.0%

2%

1.6%

-1.6%

Company C

6%

5%
1.8%

Company B

-0.8%
-3%
-5%

-5%
0.5% interest rate increase

-7%

-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.

13

Financial Condition(JPY millions)(YY/MM)

Total assets’21/03’22/0354,501

67,820

2,059

3,761

999

3,999

5,895

5,460

40,00747,425Government bonds

9,004

8,946

Municipal bonds

1,482

1,469

Corporate bonds

21,301

24,042

397

492

7,821

12,37538,69445,74936,63943,54215,80622,071

960

697

Cash and deposits

Monetary claims bought
Money held in trust
Securities

StocksOther securities1

Total liabilities
Policy reserves and otherTotal net assets
Valuation difference on
available-for-sale securities

Solvency margin ratio2
Modified duration (year)3

2,647％

3,182％

11.1

9.9◼ Limited financial
impact caused bychanges ininvestment
environment◼ Maintained
sufficientfinancial stability
as indicated bysolvency margin
ratio2
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.

3.

Duration of yen-denominated bonds

14

Growing Value of In-Force Business◼ Value of in-force business up 20% YoY,
along with growth of value of in-force
business per policy
Number of policies-in-force

Value of in-force businessper policy

Value of in-force business（Unrealized future value on policies-in-force）(JPY thousands)
507,428
167

173(JPY billions)

91.4

180

439,94576.1＋15.3%

365,171’21/03
21/03＝

×＋20.5%

2020/03
20/03＋20.1%

60.8’22/03
22/03（YY/MM）

2020/03
20/03’21/03
21/03’22/03
22/03（YY/MM）＋25.1%

2020/03
20/03’21/03
21/03’22/03
22/03（YY/MM）

15

Overseas Public Offering◼ Aim for further business growth byleveraging raised capital and reinsurance1
Offering
formatAmountraisedUse ofproceeds

Overseas offering mainly in Europe and Asia
（Regulation S only）
FY2021

FY2020

9.0

billion yen2

9.7

billion yen

Marketing

Systemdevelopment

Businessdevelopment

Marketing for acquiring
new business

Products and services
that respond to changes inbusiness environment

Building of online insurance
platform and initiatives withbusiness partners

1.

Modified co-insurance

2.

The total amount including new shares issued and secondary offering was approximately 13.8 billion yen.

16

Expansion of White Label Business◼ Started to offer new customer experience
with Money Forward, Inc.
• Offer Money Forward Life Insurance as a part of the Money Forward Fixed Cost Review

Able to find the appropriate
insurance quickly

Convincing explanations

Clear required premiums• Accelerate development and improve continuously
3Q
2Q
FY2020 4Q
Business
Alliance
Agreement

FY2021 1Q(in preparation)

Startedsales

Improved
UI/UX

4Q
Enhanceuser traffic

17Enhancement of
Customer-Friendly Service◼ Received high evaluation of investment incustomer experience

Improved convenience of
insurance services
Enhancement of app
Newly Provide the function with potential customers
in addition to new function for policyholders

External Evaluation
No.1 in J.D. Power 2022
Japan Life Insurance Contract Customer Satisfaction
StudySM＜Direct Distribution Channel Segment＞1
Highest evaluation
for two consecutive year

Types ofproducts

Interaction
channelPrice

Forms anddocuments

2022 ORICON Customer Satisfaction Survey No.1
in category of Application Process, Life Insurance2

Evaluationfrom actual
customers
1.
2.

The 2022 study is based upon the responses of 1,235 policyholders who have purchased new life insurance policies or renewed a policy during past 12 months.
Survey period: from 2021/08/02 to 08/16, from 2020/08/21 to 08/28, and from 2019/08/21 to 08/28. Survey targets: 10,022 men and women aged 20 to 84
living in Japan who purchased life insurance for their own coverage within the past three years and were involved in the selection process

18

Table of Contents

1. Financial Results for Fiscal 2021

2. Future Initiatives

19

Aim to Realize LIFENET Philosophy

Comprehensible
Cost-Competitive
Convenient◼ Remembering the original purpose oflife insurance – mutual support◼ Helping our customers embrace life more fully
20Growth Potential of
Online Insurance Market◼ Room for market growth is expanding due tostructural shift to online under the COVID-19
environment
Ratio of intention to purchase online1

17.4

9.1% →（2015）

Intention increased in all
generations％

Ratio of intention to purchase insurance
online by age group1（2021）

Lifenet’s annualized
premium2 of policies-in-force

1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q

FY2015
1.
2.

FY2016FY2017FY2018FY2019FY2020

FY2021

2015

2021

29 or
lower

12.5%

19.2%

30s

11.2%

19.0%

40s

14.6%

23.7%

50s

13.3%

20.9%

60s

7.9%

19.9%

70 and
over

2.2%

7.4%

Nationwide Report on the Life Insurance Industry (2021) by the Japan Institute of Life Insurance
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.

21

Competitive Landscape◼ Despite severe competition, our aggressive
investment strengthens No.1 position in online
life insurance market
Expansion of online life insurance market and Lifenet’s position (Image for illustrative purpose）
MarketMarket developmentby pioneers

Market expansion and increased
competition due to new entrants

Narrowing down toa few main companies

Lifenet: Market size (Image for illustrative purpose）

Becoming a dominant
player in the market

Reaped the merit
as a challenger
Businesscommencement

Strengthen
competitive advantagesby aggressive investment

Keeping stable
operating efficiency

Present

Future22

Growth Strategy◼ Actively invest for growth to focus on priority

areas

Business• Continuously enhance UI/UX for website
and strengthen sales channel• Expand platform business

System• Optimize customer touchpoint• Deploy a cloud-based system andimprove infrastructure cost efficiencies

Organization• Promote recruitment of diverse talent• Provide opportunities for challenge
and growth23Initiatives for
In-Force Business Growth◼ Aim for continuous double-digit growththrough two channels
Internet direct channel
Strengthening touchpoint withyoung generation• Work on diversification of promotions andappeal to young generations effectively
New policyholders' distribution by age group1

White label channel
Providing new customer experiences withexisting partners• Aim to lead initiatives leveraging the assets ofpartner companies• Exploring the possibility of new partners
Annualized premium2 of policies-in-force from white label channel

20s-40s
FY2017

1.
2.

FY2021

2017/03 ’18/03 ’19/03 ’20/03 ’21/03 ’22/03 (YY/MM)

Based on the number of Lifenet’s new policyholders in each 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.

24

Journey to Platformer◼ Focus on building the foundation of online

insurance agency business

Online insurance platform（Image for illustrative purpose）
Customers

Online platform
connecting customers and services

Policyholders

Products & Services

Other
companies’
products

Potential
customers

Mortgage

AssetManagement

FamilyOther
companies’
services
CompareReview Manage

Claim

Healthcare+

FY2021

FY2022

Established Lifenet MIRAI Inc.

Focus on online insurance agency business• Launched insurance agency business andinsurance policy management services• Approximately 20 products are listed on ourplatform••

Expand the number of products and aim for listing all online
insurance products (about 100 products) in the future
Enhance function and customer attraction of our website

25

Investment in
System Development◼ Renewing system structure for improvement ofcustomer experience and future business expansion
FY2021

Revamping the frontend infrastructure
Agiledevelopment

Cloud
migration• Accelerate speed of UI/UXdevelopment andimprovement• Improve scalability andon-demand performance

Enhancementof scalability
Speeding up
development

Front-end

CX platform

From FY2022

Renewal of the backend infrastructure
Cloud
migration

CRM

Data driven marketing• Innovate CX by improving
the efficiency of data
Data analysis
analysis and optimizing
touch points with customers• Reduce operating expenses
by improving efficiency ofinfrastructure cost

Back-end

Cost
Reduction

CRM

Marketingautomation

26

Human Capital Investment◼ Invest in the source of our growth toincrease the corporate value

Our Guiding
Principles

Lifenet philosophy:

Embracing diversity and dialogue to keep us abreast of changing
needs and preferences.
Areas

PRIDE Index Gold Ratingfor 6th consecutive year1

the 2022 Certified Health &Productivity Management
Outstanding Organizations
Recognition Program2

Diversity &Inclusion• Retain diverse workforce (1)(2)Engagement of
employees• Quarterly engagement surveys

Human resource
development• Support career enhancement• Personnel system to encourage thegrowth and challenge (3)Healthcare

Comfortableworkplace1.
2.

Ongoing Initiatives• Training program for employees

New investment
from FY2022
1. Strengthen
recruitment activities
centering on systemengineers• Periodical 1-on-1 meetings
2. Target 30%+ ofwomen in leadership
positions• Support system for work with cancer
treatment• Periodical physical/mental healthcheck-ups• System for flexible working system andwork-from-home

3. Promoteorganizational andindividual growth andchallenge• Selectable working style

The PRIDE Index hosted by work with Pride is the benchmark for better working environment for LGBTQ in Japan.
Operated by the Ministry of Economy, Trade and Industry and The Nippon Kenko Kaigi

27

Initiatives for Sustainability◼ Aim to increase the stakeholder value
based on LIFENET philosophy
FY2021

From FY2022• Explained the following
initiatives sincebusiness commencement⁃ Enhancement of corporate
governance⁃ Customer-oriented businessconduct⁃ Adaption to social changes• Further information
disclosure based on
LIFENET philosophy• Continue to communicate
with ESG rating agencies• Launched new
Sustainability webpage
https://ir.lifenet-seimei.co.jp/en/sustainability.html

28

Rising Rate and Asset Management◼ Gradual increase in interest rates gives us

positive opportunities
Asset managementin the mid- to long-term• Aim to increase investment incomeon the back of the current overseas
rising rates environment• Plan to increase allocation to foreign
bonds flexibly29

Business Forecasts FY2022◼ Aim for double-digit growth in in-force businessAnnualized premium1(JPY millions)(Results)

New business

Decreased business2(Business forecast)(Business forecast)
Surrender andlapse ratio

21,511

4,400

Policies-in-force(Business forecast)

24,4006-7%+13%2023/032022/03
FY2022 Forecastof which impact
of modified
co-insurance

Ordinary income

30,3006,300

26,167

4,852

Ordinary profit (loss)(3,400)1,000(3,245)

1,283

Net income (loss)(3,400)1,000(3,319)1,283(JPY millions)

1.
2.

(YY/MM)

FY2021 Resultsof which impact
of modified
co-insurance

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.
Including death, expiration and others in addition to surrender and lapse.

30Adoption of International
Financial Reporting Standards◼ Aim for the voluntary adoption of IFRS 17
from FY2023
Main points• Expect to record an accounting profit1
from FY2023• Capital adequacy2 and dividends will
be regulated by statutory accounting
standards (J-GAAP) even after the
adoption of IFRS
1.
2.

IFRS adoption is still in the preliminary stage, and the estimate is based on the current approximation. It is unaudited information and may differ from the actual
financial information under IFRS to be disclosed in the future.
Regarding capital adequacy, economic value-based solvency regulation is being considered for implementation toward 2025.

31

Purpose of IFRS Adoption◼ Provide financial information with highinternational comparability to better
represent our performance
Statutory accounting(J-GAAP)

Useful for investors’decision-making• Conservative• Historical locked-inassumptions at
policy inception• Best estimate basedon experience• Review periodically• Best estimate basedon experience• Review periodically

The expense isrecognized at the time ofacquisition.

The expected profit for thepolicy period isimmediately recognized.

The expected profit isallocated over the termof the policy.

Policyholder protection

Evaluation of
insurance liabilities
Timing ofprofit recognition(impact of new businessacquisition)

IFRS 17

Economic value of
insurance policies

Main objective(policy reserves)

Embedded value/
Value of new businessprofit・・・・

present
value ofprofitprofit
・・・・

loss

32

Future Direction◼ Give priority to business scale expansion to

improve profitability in the mid- to long-term
FY2023

FY2022
FY2021• Achieved JPY100
billion in EEV, andupdated the Goal to
JPY 200 billion• Exceeded 500,000
number of policiesin-force, up to 15%
YoY• Raised growth
capital1.

• Continue doubledigit growth in inforce business under
the structuralchanges• Invest intransformation into
online life insurance
platformer

Expect to record an
accounting profit
under IFRS 171
Mid-term
Management goal

Achieve EEV of
JPY 200 billion• Aim for voluntary
adoption of IFRS in
FY2023IFRS adoption is still in the preliminary stage, and the estimate is based on the current approximation. It is unaudited information and may differ from the actual
financial information under IFRS to be disclosed in the future.

33

MissionBe the leading company driving the growthof the online life insurance market

Management goal

Priority
areas

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

VisionManagement Policy• 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
34

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.

35

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
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Appendix

Annualized Premium /Number of New Business (Quarter)
1,166: Annualize premium1 of new business (JPY millions)

1,104: Number of new business

1,123
1,051

934
822

822

794

981

991

990

933

24,410

818

741
637
572
523
460

28,136387

17,312

7,793 8,649

1Q

2Q

10,5553Q

FY2017
1.

23,36923,314343

12,1784Q

13,285

1Q

26,918 27,553 26,167
22,50622,164

19,075 19,117 18,795 19,685

14,7632Q

3Q

FY2018

4Q

1Q

2Q

3Q

FY2019

4Q

1Q

2Q

3Q

FY2020

4Q

1Q

2Q

3Q

4Q

FY2021

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.

38

Surrender and Lapse Ratio（Quarter）:Impact of lump-sum recording of policies lapsed1 (%):Surrender and lapse ratio2 without the above (%)

7.6%
0.5%

6.6%
6.3%
0.1%

7.5%
6.5%

5.8%

1Q

2Q

5.5%

3Q

FY2017
1.
2.

6.0%

4Q

6.3%

1Q

6.1%

2Q

7.6%

7.1%

6.5%

3Q

FY2018

7.1%

7.0%

4Q

1Q

2Q

3Q

FY2019

4Q

5.5%

1Q

2Q

5.9%

3Q

FY2020

4Q

0.0%

7.1%

6.4%
5.5%

6.0% 0.0%

1Q

6.2%

6.0%

2Q

3Q

6.5%

4Q

FY2021

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 theimpact of extended policies that were recorded as lapsed policies in a lump sum.
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.

39

Breakdown of Policies-in-Force’21/03’22/03Component
ratio

Number of policies-in-force

439,945

507,428100%- Term Life

213,597

247,754

49%- Whole-life Medical

120,216

138,749

27%- Term Medical Care

8,840

8,485

2%

- Long-term Disability

59,567

63,847

13%- Cancer

37,725

48,59310%

2,994,198

3,351,278

279,243

322,231

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.

40

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 Margin2(Marketing Expenses per
New Policy)

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

Average Policy Term

45%

43%

44%

JPY 42,486

14.3 years
×16.7 years
×

JPY 42,394
×15.2 years
×＝Customer Acquisition Cost3

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

JPY 305,451

JPY 283,531

JPY 75,970

JPY 66,737

JPY 82,113

1. 1 / Churn rate. Churn rate represents the percentage of users who cancelled out their insurance policies.
2. (Insurance premiums – Insurance claims and benefits - Provision for policy reserves and others) / Insurance premiums.
3. Marketing expenses / Number of new business.

41

Condensed Statements of Operation/ Fundamental Profit

Fundamental profit

Condensed statements of operation(JPY millions)

FY2020

FY2021

Change

Note

5,137

507
20,78925,420747
26,167

Increased due to growth in in-force business and reinsuranceincome from modified co-insurance.

240
5,378

Includes utilization of modified co-insurance of 4,852 million yen.

Insurance claims and
other

6,031

8,668

2,637

Insurance claims

2,146

2,546

400

Increased from 172 cases in FY20 to 214 cases in FY21.

Benefit claims

1,140

1,563

422

Increased from 10,206 cases in FY20 to 14,910 cases in FY21.

6,310

6,903

592

Percentage of provision for policy reserves (6,756 million yen) toinsurance premiums is 34.1%.

Ordinary expenses

10,030
6,712
1,071
2,246
1,506
23,87912,140
8,262
1,278
2,599
1,701
29,413

2,109
1,550
206
352
195
5,534

Ordinary profit (loss)(3,089)(3,245)(156)

Insurance premiums and other

20,282

Other
Ordinary income

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

Increased due to an increase in reinsurance commissions frommodified co-insurance. Percentage of insurance claims and benefit
claims to insurance premiums is 20.7%.

Includes 6,777 million yen for advertising expenses.

Includes profit of 1,283M for utilization of modified co-insurance.

Extraordinary losses andincome taxes
Net income (loss)

25

73

48

(3,114)(3,319)(205)

Includes profit of 1,283M for utilization of modified co-insurance.

Mortality margin

3,274

74

Includes 494M loss due to utilization of modified co-insurance.

Expense margin (loss)(6,164)(483)

Includes 1,777M expense margin for utilization of modified coinsurance.

Interest margin (loss)

16(2,874)

3,348(6,648)86(3,213)70(338)

Includes profit of 1,283M for utilization of modified co-insurance.

Fundamental profit

42

Three Surplus Factors ofFundamental Profit
FY2021(JPY mn)

Profit analysis

Statements of operations
Ordinary income

Insurance premiums and other 25,420

Premiums income 19,835

Net premiums

Expense loading

Reinsurance income 5,585

ReinsuranceincomeOther reinsuranceincomeInterest anddividends

Investment income 665

Gains on salesof securities

Other ordinary
incomeOther ordinary income 81

Ordinary expenses

Insurance claims and other 8,668

Insurance claims and benefits
4,109

Insurance claims
and benefits

Reinsurance commissions
4,558

Reinsurance
commissions

Other reinsurance
commissions

Provision for policy
reserves and others 6,903

Change in policy
reserves

Change inpolicy reserves

Interest
expenses

Investment expenses 8
Operating expenses
12,140Operatingexpenses

Other ordinary expenses
1,693

Other ordinary
expenses

Income taxes 4

Mortality
margin (loss)

Expensemargin (loss)

Interest
margin (loss)

3,348(6,648)86

Net profit (loss) (3,319)
1. Some items with minimal amounts have been omitted.

Losses on salesof securities

Capital gains(losses)
190

Ordinary profit (loss)(3,245)Extraordinary profit (loss)(68)

Provision forcontingency
reserves

Projected
interest

Other onetime
gains (losses)(222)

Extraordinary profit (loss)(68)
Income taxes 4

Net profit (loss) (3,319)
43

Solvency Margin Ratio Calculation
As of March 31, 2022

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

Solvency margin ratio
3,182.8%
Cash and deposits
3,761
Monetary claims bought

3,999

Money held in trust
5,460

=

Total amount of solvency margin<numerator>
37,758Other liabilities
1,832

Excess over the fullZillmerized reserve 13,184
Price fluctuation reserves 102

Securities
47,425

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

984

Contingency reserves 2,226

Deferred tax liabilities onavailable-for-sale securities

2441

Valuation difference on
securities available-for-sale6271

Total amount of risk/2< the denominator>
2,372/2

Insurance risk R1 1,077

Reserves for outstanding claims

Policy reserves
42,558÷(JPY mn)

Add liabilities
with strong
capitalcharacteristics
such as pricefluctuation
reserves andcontingency
reserves

Medical insurance risk R8 379
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 1,745

Tangible fixed assets

97
Intangible fixed assets
1,293

Other assets
5,781

Capital stock andother assets
21,373

Net assets
22,071[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 96
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.

44

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

Change in EEV as ofMar. 31, 2022

Change in
VoNB

116,604

4,679

Sensitivity 1a: 1.0% increase in risk-free rate

(4,376)(339)

Sensitivity 1b: 1.0% decrease in risk-free rate

3,983

196

Sensitivity 1c: 0.5% increase in risk-free rate

(2,164)(157)

Sensitivity 1d: 0.5% decrease in risk-free rate

2,069

121

(1,144)

－

4,262

791

856

206

Sensitivity 5: 5% decrease in claim incidence rates for life business

6,037

835

Sensitivity 6: Change the required capital to the statutory minimum

154

21

EEV and new business value as of March 31, 2022

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

1.

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.

45

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

46

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

profitⅰ) Ordinary
profit（loss)

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

Adjustment to provision forpolicy reserves1

721
1.
2.

Provision for policy
reserves

Increase in standard
policy reserves2

6,756

6,035

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. There is no difference at the end of FY2021
because the transition to the standard policy reserve was completed.

47

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 X48

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
49

J-GAAP vs IFRS
Illustration image of accounting structure1■Current Statutory Accounting (J-GAAP)
Heavy initial cost
for acquiring new
business3 isrecognized atinitial fiscal year.

Year 1

Year 2

Year 3

Year 4

Year 5

Revenue2

Revenue2

Revenue2

Revenue2

Revenue2

ProfitProfitProfitProfitYear 2

Year 3

Year 4

Year 5

Revenue

Revenue

Revenue

Revenue

Revenue

ExpenseExpenseExpenseExpenseExpenseProfitProfitProfitProfitProfit・・・・

Expenseforacquiringnewbusiness

Profit(Loss atInitial Year)■IFRS
Initial cost for
acquiring new
business3 isdeferred under
IFRS 17.
1.
2.
3.

Year 1

・・・・

This is illustrative purpose only, and it does not necessarily guarantee that Lifenet will make profits as indicated.
Revenue is insurance premiums – costs for policy management, payment of insurance claims and benefit claims, etc. Expense for acquiring new business is not included.
The definition of “expense for acquiring new business” may differ in each accounting rule.

50

New Management Team1
Directors
Yasuhiro Koba

Ryosuke Mori
Goldman Sachs Japan Co., Ltd.
Head of Corporate Planning Department andGeneral Manager of Corporate Strategy Divisionat Lifenet

Director, Executive Vice President
Executive Officer of Product Development
and Investment
Ministry of Health, Labour and Welfare
Head of Legal Department, General Manager of Corporate
Administration Division and General Manager of Sales &Marketing Division at Lifenet

Ryosuke Kondo

Junpei Yokozawa

Representative Director and President

Director
General Manager of Sales & Marketing DivisionJAPAN POST INSURANCE CO., Ltd.
Head of Corporate Planning Department and Executive
Officer of Corporate Planning, Product Development andInvestment at Lifenet
Director, LIFENET MIRAI INC. 2

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

Jun Hasebe

Takeshi Saito

OutsideRepresentative Director and President,
Tokyo Relations Inc.

OutsideManaging Executive Officer,
au Financial Holdings Corporation

Directors (the Audit and Supervisory Committee Member)

1.
2.

Takahiro Yamasaki

Keiko Hayashi

Tomoyuki Yamashita

Full-time
Nippon Life Insurance Company
Nippon Venture Capital Co., Ltd.
Full-time audit and supervisoryboard member at Lifenet
Corporate Auditor,
LIFENET MIRAI INC.

OutsideOutsideRepresentative Director andPresident, Aon Solutions Japan
Ltd.

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

Election of Directors is subject to approval at the 16th Annual General Meeting of the Shareholders on June 26, 2022
Scheduled to be appointed on June 22, 2022

51