Securities Code:7157
TSE Mothers

Reference Data
forFirst Quarter
Fiscal 2016
August 10, 2016

Contents

1. Progress of Mid-term Business Plan
2. Results for 1Q of Fiscal 2016

1

LIFENET is…

Comprehensible
Cost-Competitive
Convenient Returning to the original purpose oflife insurance – mutual support – Plugged-in way to reach customers who needinsurance products with necessary coverage
2New Mid-term Business Plan Summary of new Mid-term Business Plan
FY2018
Management
Goal

13.5 billion yen in ordinary income
Positive profitability of ordinary profit (loss)

Business
Strategy

1. The pillars of business : “Online direct sales”,“KDDI (exclusive alliance agent)” and “Overthe-counter agent”
2. Continuous creation of unique sales point inall channels
3. Commitment to business development for
future growth

Organization

Change, Challenge and Unity
3

To Achieve New Mid-term Business Plan Aiming for returning to growth in new
business performance in fiscal 2016

 Return to
growth in new
business
performance Establish a system
realizing sustainableprofitability

 Achieve
Management Goal

2018

2017

2016
4

Business Strategy
 For reaching more customers using channels
Online direct sales→Realize Manifesto

Onlinedirectsales

KDDI(exclusive
alliance
agent)

KDDI (exclusive alliance agent)→Extend customer baseOver-thecounter
agent

Over-the-counter agent→Develop the market for
long-term disability
5Progress of Mid-term Business Plan
(Ordinary Income) 14% increase year on year
(JPY mn)

13,500: Fiscal year
: 1Q of fiscal year

10,0009,387

Up 14%
Y-on-Y

2,284

2,594

FY201516

Progress ratio
to target
For 1Q
26%

18

6

Progress of Mid-term Business Plan
(Ordinary Profit / Loss) Aiming for positive profitability1 ofordinary profit (loss) in fiscal 2018
(JPY mn)

Business forecast Management Goal
FY2016FY2018

Ordinary profit (loss) before
amortization of deferredassets under Article 113 of
IBA2
Amortization of deferredassets under Article 113 of
IBA2

Ordinary Profit (Loss)

Results for
16/1Q

Profitability-

139(1,060)

-

(265)

N/A

Profitability

(125)

1.

Management indicator is ordinary profit (loss) before amortization of deferred assets under Article 113 of the Insurance Business Act until completion of amortization of deferred assets
under Article 113 in FY2017. Management indicator in FY2018 is positive profitability of accounting ordinary profit (loss).

2.

IBA: Insurance Business Act

7

Contents

1. Progress of Mid-term Business Plan
2. Results for 1Q of Fiscal 20168

Summary of 1Q for FY2016 Results(JPY mn)

2015/1Q

Ordinary income
Operating expenses
Ordinary profit (loss)1
Cash flows fromoperating activities
Mortality margin
Annualized premium2 ofpolicies-in-force
Number of policies-in-force
Annualized premium2 of new
business

Number of new business1.
2.

2016/1Q

Year on year

2,284
751
161

2,594
861
139

113.6%
114.7%
86.4%

1,057

758

71.8%

513
8,917
217,335
279
5,756

549
9,551
228,846341
7,307

107.1%
107.1%
105.3%
122.1%
126.9%The 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.

9

Key Accomplishment in 1Q for FY2016
Ordinary income 114% Y-o-Y
New business performance grew Y-o-Y
Continuously recorded ordinary profit1
Steadily recorded mortality margin

Commenced sales of “au Life Insurance”
1.

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

10

Promote Utilization of Smartphone Realize consideration process suited to the times(April 2016) Renewed Smartphone website
For customers convenience and satisfaction(July 2016) Started consultation service via LINE
Making process convenient and accessible

11Enhance Online Advertising Emphasize our strengths and features
through video advertisinghttps://www.youtube.com/watch?v=7UWWpu37LE8

12

Business Alliance with KDDI Commenced sales of “au Life Insurance” in April

au Term Insurance

au Medical Insurance
for Women

au Medical Insurance13au Life Insurance Approaching customers different fromexisting customers
Gender1

50%

Applying device1

40%

Female40%

Via SPH60%

Via PC

80%

50%

60%

Male

20%
au Life Insurance

Our otherproducts2

1.

Based on number of applications in June 20162.

Our all products excluding au Life Insurance

au Life Insurance

Our otherproducts2

14

Dedicated Product for KDDI “au Life Insurance” with refunds1 will
be launched in December
From April to November 2016

au Life Insurance＋

Set
Discount

Discount on
telecommunication charge
200 yen× 60 months (max)From December 2016

au Life Insurancewith refunds1
1.

Refund frominsurance premium
200 yen× 60 months (max)“au Life Insurance” with refunds is the product which adds refund from insurance premium on each “au Life Insurance” product sold from April 5, 2016 to November 30, 2016.

15

Promotion of Long-term Disability
 Highly evaluated as pioneer in Japan market
Long-term Disability“Hataraku-Hito”

Ranking of insurance recommended
by experts
Ranked number 1 in “Long-term Disability
Product Category”
Weekly Diamond magazine (Diamond Inc., April 23, 2016)

1.

Sales of Long-term Disability insurance “Hataraku-Hito” was ended on May 31, 2016.

16

New Long-term Disability Product Launched in June based on customers requirements
Long-term Disability“Hataraku-Hito”

Long-term Disability“Hataraku-Hito 2”
New

Elimination period:
only “180 days”

Choose from 60 days
and 180 days
New

Insurance term:
only “65 years old”

Choose from 55, 60,
65 and 70 years old
New

Receipt of benefit:
only “one type”

Choose fromStandard-type
and Half-type17

Ordinary Income (Quarterly) 114% year on year by increase of
insurance premiums and other

2,594(JPY mn)

2,284

15/1Q

2,345

2,365

2,392

15/2Q

15/3Q

15/4Q

16/1Q

18

Ordinary Income (Quarterly) In addition to increase of insurance
premiums and other, recorded reversal ofreserves for outstanding claims(JPY mn)

15/1Q

15/2Q

15/3Q

15/4Q

16/1Q

Insurance premiums
and other

2,241

2,261

2,280

2,335

2,444

Investment income

41

50

113

54

51

Reversal of reserves foroutstanding claims
Other(excl. Reversal ofreserves foroutstanding claims)

―

31

(31)

―

96

1

2

3

2

2

2,284

2,345

2,365

2,392

2,594

Ordinary income

19Number of Policies-in-force /Annualized Premium (Quarterly) In-force business and premium steadily increased:Number of policies-in-force:Annualized premium of policies-in-force (JPY bn)

217,335 219,471
8.9

9.0

15/06

15/09

222,5989.2

15/12

228,846

225,534

9.3

9.5

16/03

16/06

(YY/MM)20

Breakdown of Policies-in-force
 143,123 in-force policyholders (as of June 30)(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

15/06

16/06

217,335
113,690
66,185
11,66025,8001,850,441
133,102228,846
119,081
68,961
10,95529,8491,924,095
143,123

15/1Q

16/1Q

7.0％

7.0％

1.

Term Life insurance: “Kazoku” and “au Term Insurance”, Whole-Life Medical insurance: “Jibun”, New “Jibun”, New “Jibun” for Women, “au Medical Insurance” and “au Medical Insurance for
Women”, Term Medical Care insurance: “Jibun Plus”, Long-term Disability insurance: “Hataraku-Hito” and “Hataraku-Hito 2”.

2.

Sum insured of polices-in-force is the sum of death coverage, and does 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.

21

Number of New Business /Annualized Premium (Quarterly) New business performance is bottoming out:Number of new business:Annualized premium of new business(JPY mn)

5,756

6,864

7,307
6,883

323

316

341

15/3Q

15/4Q

16/1Q

5,647

279

268

15/1Q

15/2Q

22

Amount of Insurance Claims
and Benefits (Quarterly) 23 benefit claims, 10 claims increased
year on year

505

(JPY mn)

253

99

306
109
197

15/1Q

15/2Q

375

Insurance
claims

293
225

114

120

154

130

Benefitclaims

105
15/3Q

179
15/4Q

16/1Q

23

Provision for Policy Reserves (Quarterly) Remaining at same level:Provision for policy reserves (JPY mn):Provision for policy reserves / Premiums income

911

931

945

950

917

42.4%

42.4%

41.9%

39.7% 38.8%

15/1Q

15/2Q

15/3Q

15/4Q

16/1Q

24

Operating Expenses (Quarterly) Increased in order to achieve Management Goal
992

(JPY mn)

751
279
128

709

269
124

861

787

441

339

Marketing

135

134

Customer
service

387

Systemand other

16/1Q

312
138

343

315

336

415

15/1Q

15/2Q

15/3Q

15/4Q

25

Marketing Expenses per New Business(Quarterly) Improved year on year despite increase inmarketing expenses:Marketing expenses per new business (JPY thousand):Marketing expenses/Annualized premium of new business

48

47

64

46

45
1.3

0.9

1.0

0.9

15/1Q

15/2Q

15/3Q

0.9
15/4Q

16/1Q

26

Ordinary Profit / Loss (Quarterly) Recorded profitability1 despite increase in
expenses(JPY mn)

Ordinary profit (loss)
before amortizationof deferred assets
Amortization cost
Ordinary profit (loss)
Ordinary profit (loss) before
amortization of deferredassets

15/1Q

15/2Q

15/3Q

15/4Q

16/1Q

161

257

220

(54)

139

(265)
(103)

(265)
(7)
257

(265)
(44)

(265)
(319)

(265)
(125)

220

139

161

(JPY mn)(54)
1.

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

27

Structure Breakdownof Ordinary Profit / Loss
 Decreased due to increase in insurance
payment year on year
Transition of ordinary profit (loss)1(JPY mn)

IncomeExpense

Other
Increase of
insurance
premiums
and other

203

161

107
Increase of
insurance
claims and
other

(263)

Decreaseofprovisionfor policy
reservesand other43

Increase ofoperatingexpenses

(110)
15/1Q
1.

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

139
Other

(2)
16/1Q

28

Condensed Statements of Operation(Quarterly)(JPY mn)

15/1Q

16/1Q

Change

2,241
42
2,284

2,444
150
2,594

203
107
310

301

564

263

954

911

(43)

(B)

751
115
2,122

861
117
2,455

110
2
332

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

161

139

(21)

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

265

265

―

(103)

(125)

(21)

Insurance premiums and other
Other
Ordinary income(A)

Insurance claims and other
Provision for policy reserves
and other
Operating expenses
Other
Ordinary expenses

Ordinary loss(A-B)-(C)29Fundamental Profit
 Continuously recorded mortality margin(JPY mn)

15/1Q

15/2Q

15/3Q

15/4Q

Fundamental profit

513
(602)
8
(81)

545
(547)
14
12

532
(625)
9
(83)

509
(819)
11
(298)

(ref.) Insurance
premiums and other

2,241

2,261

2,280

2,335

Mortality margin
Expense margin (loss)
Interest margin

Adjusted
fundamental
profit1

16/1Q

549
(655)
5
(100)
2,444

277
183

164

181

(JPY mn)(33)
1.

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

30

Operating Cash Flows (Quarterly) Maintain positive despite increase ininsurance payment(JPY mn)

1,195

1,235
1,123

1,057

758

15/1Q

15/2Q

15/3Q

15/4Q

16/1Q

31

Financial Condition
15/03

16/03

16/06

23,38730,317

31,179Cash and deposits

731

734

1,101

Monetary claimsbought

-

1,999

1,499

Money held in trust

1,033

1,035

999

Securities

17,082

23,067

24,252Other securities

8,227
851
6,894
222
886
-

10,102
1,521
10,428211
804-

10,264
1,566
10,967213
731
509

Total liabilities

10,89914,893

15,66810,084

13,90814,723

12,487

15,423

15,511(JPY mn)(YY/MM)

Total assets

Government bonds
Municipal bonds
Corporate bonds
Stocks1
Foreign securities2

Policy reserves andotherTotal net assets

 Promotediversification
in investment
assets Modified
duration
14.8years
1.
2.

Lifenet is holding shares of Advance Create Co., Ltd., its insurance sales
agent, for the purpose of maintaining equity and business partnership.
Investment in Kyobo Lifeplanet Life Insurance Company in Korea

32

1
Solvency Margin Ratio Maintain high level despite investment riskincrease
2,723%

15/06

2,747%

2,782% 2,805% 2,778%

Average2 of 4 major
insurance companies asof September 30, 2015

Average2 of 4 major
insurance companies asof March 31, 2016

909％

894％

15/09

15/12

16/03

16/06

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(YY/MM)33

Impact of Decline of Interest Rate Limited impact in 1Q of fiscal 2016
 Impact on interest margin→Limited because our products are allprotection type
 Impact on balance sheet→Increase in unrealized gains of government
bonds and corporate bonds

 Investment policy→Promote diversification in investment assets
34

Business Forecast
 Business forecast for fiscal 2016 remains
unchanged(JPY mn)

Ordinary income

Ordinary profit1

Business forecast
FY2016

10,000

Profitability(ref.)
Results for 1Q of FY2016

2,594

139

1.

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

35

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.

36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
1Q of FY2016

Ordinary income

Statements of Operations
Insurance premiums and other 2,444

Premiums income 2,347

Reinsurance income 97

Investment income 51
Other ordinary income 99
Insurance claims and other 564

Ordinary expenses

Profit analysis
Net premiums

ReinsuranceincomeReversal ofreserves foroutstanding
claimsReinsurance commissions
59

Insurance claims
and benefits
Reinsurance
commissions

Provision for policy reserves
and others 911

Change inpolicy reserves

Insurance claims and benefits
505

Expense loading

Interest anddividends
Other ordinary
incomeChange inpolicy reserves

Investment expenses 0
Operating expenses 861

Operatingexpenses

Other ordinary
expenses 382

Other ordinary
expenses

Projected
interest
Interest
expenses

Provision forcontingency
reserves
Losses on salesof securities

Capitalgains
ーOrdinary loss (125)Otheronetimeloss(24)

Extraordinary losses 1

Mortality
marginExpensemarginInterest
marginExtraordinary losses 1

Income taxes (2)

549

(655)

5

Income taxes (2)Net loss (124)1.

Gains on salesof securities

Some items with minimal amounts have been omitted.

Net loss (124)39

Solvency Margin Ratio Calculation
As of Jun 30, 2016

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

Solvency margin ratio
2,778.7%
Cash and deposits
1,101
Monetary claimsbought1,499
Money held in trust

999

Securities
24,252=

Total amount of solvency margin<numerator>
19,917

Other liabilities
449

Policy reserves 14,463
Contingency reserves 1,332

Excess over the fullZillmerized reserve 4,714

Price fluctuation reserves
14
Deferred tax liabilities onavailable-for-salesecurities
2801

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

722

Deferred assets under
Article 113 of the
Insurance Business Act

1,855

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 490[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.

12,853

Net assets
15,511

Medical insurance risk R8 264

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

Tangible fixed assets
Capital stock and66
other assets
Intangible fixed assets

457
Other assets
2,801

Total amount of risk/2< the denominator>
1,433/2

Insurance risk R1 1,024

Deferred tax liabilities(excluding those on availablefor-sale securities) 169
Reserves for outstanding claims 260

÷

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

Business management risk R4 53
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.

40