ＤＤ RELEASE
NEWSMay 12, 2016
Daisuke Iwase, President & COO
LIFENET INSURANCE COMPANY(Securities Code: 7157, TSE Mothers)

Announcement of New Mid-term Business Plan
Aim to achieve 13.5 billion yen in ordinary income
and positive profitability of ordinary profit (loss)
TOKYO, May 12, 2016 – LIFENET INSURANCE COMPANY (TSE Mothers 7157, President &COO Daisuke Iwase, URL: http://ir.lifenet-seimei.co.jp/en/) hereby announces that it has
formulated the new mid-term business plan covering the period from fiscal 2016 through fiscal
2018.
Returning to the original purpose of life insurance - mutual support - Lifenet, with the manifesto
of offering simple, convenient and competitively priced products and services, has realized astable growth to this day, by means of establishing the online direct sales channel as the main
channel, offering highly cost-competitive products and accepting applications from customers atany given time. As a result, the number of policies-in-force exceeded 220,000 in October 2015
and the number of policyholders reached 140,000 in March 2016. Aiming to achieve its stable
growth in the future, Lifenet formulated the new mid-term business plan. The summary is asfollows.
Summary of new mid-term business plan
FY2018
Management
Goal

13.5 billion yen in ordinary income
Positive profitability of ordinary profit (loss)
1. The pillars of business: “Online direct sales”, “KDDI (exclusiveBusiness
Strategy

alliance agent)” and “Over-the-counter agent”
2. Continuous creation of unique sales point in all channels
3. Commitment to business development for future growth

Organizational
Strategy
RiskManagement
Area

Change, challenge and unity

Sophisticate systems for risk management and customer protectionthat support business strategyA review of the previous mid-term business plan and an outline of the new mid-term businessplan are as follows.
1. Review of Previous Mid-term Business Plan
Lifenet, in the previous mid-term business plan ending in fiscal 2015, has set our corporate
vision towards fiscal 2015 as “Offer new products and services as an “innovator” to create thefuture of life insurance that resonate with stakeholders, and achieve the highest sustainable

Copyright© LIFENET INSURANCE COMPANY All rights reserved.

1ＤＤ RELEASE
NEWSgrowth among online life insurance businesses” and worked to realize our Management Goal of1“Achieve 9.5 billion yen in ordinary income, pushing the company toward profitability* in FY2015”.
The business environment we faced in the period of the previous mid-term business plan wascharacterized by slower expansion of the online life insurance market than anticipated andcompetitors who newly entered the market. The competitive environment surrounding Lifenet
has become increasingly intense.
Under these circumstances, ordinary income for fiscal 2015 amounted to 9,387 million yen
which almost achieved the Management Goal of 9.5 billion yen, while ordinary profit before
amortization of deferred assets under the Article 113 of the Insurance Business Act resulted inprofitable, recorded 584 million yen, which achieved the Management Goal successfully. The
status of implementation efforts in the priority areas of “Sustainable growth in insurance premiumincome (top-line)”, ”Improvement in productivity” and “Being an “innovator” (front-runner) in life
insurance”, set in the previous mid-term business plan, is as follows:(1) “Sustainable growth in insurance premium income (top-line)”
We commenced the agent sales through “HOKEN NO MADOGUCHI” for customers whowish face-to-face consultation. Moreover, preparations were made in order to offer “auLife Insurance” for such as au smartphones users, through the business alliance withKDDI CORPORATION (“KDDI”). These initiatives to establish new sales channels otherthan the conventional online direct sales channel enabled us to offer our insurance
products to a broad customer base.
(2) “Improvement in productivity”
We achieved profitability in terms of ordinary profit (loss) before amortization of deferredassets under the Article 113 of the Insurance Business Act through appropriate control ofoperating expenses.
(3) “Being an “innovator” (front-runner) in life insurance”
We started to accept same-sex partners as the designated beneficiary for our life
insurance products anew. Additional initiatives for customer's extra convenience utilizing
technologies realized during the period include service that accepts application
documents and benefits claim documents via the website captured by smartphones.
Meanwhile, improving the performance in new business is the greatest challenge for us.
Through the continuous initiatives taken in the period of the previous mid-term business plan,
there is a sign of improvement of the performance in new business. To solidify this trend,focusing continuously on the online direct sales as the main channel, with the aim ofcomplementing our growth potential, we will strive to build and establish solid sales channels via
agents. In addition, by creating the unique sales point, we will work to differentiate ourselves fromcompetitors. Moreover, we will establish the system for the proactive provision of products andservices and offer products and services for customers in a timely manner.
1. Ordinary profit (loss) before amortization of deferred assets under the Article 113 of the Insurance Business ActCopyright© LIFENET INSURANCE COMPANY All rights reserved.

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NEWS

2. Outline of New Mid-term Business Plan
Approximately 10% potential subscribers have intent to apply to insurance via online channel
in the huge life insurance market over 40 trillion yen of insurance premiums in total per year.
Furthermore the trend of utilizing Internet in overseas life insurance markets in recent years,
although there is a sign of slowdown in online life insurance market’s growth, we believe that
there is a great deal of growth potential for online life insurance over the long term.
In view of the challenges in the previous mid-term business plan and future businessenvironment, aiming to achieve its stable growth in the future, Lifenet formulated the new
mid-term business plan through fiscal 2018 as follows.
First, as the Management Goal, we will seek to achieve 13.5 billion yen in ordinary income,pushing the company toward profitability on an ordinary profit (loss) basis in fiscal 2018. For thatpurpose, we will work to return to growth in new business performance in fiscal 2016 andestablish a system that enhance the new business performance steadily and realize sustainableprofitability in fiscal 2017. As a result of the foregoing efforts, we will endeavor to achieve theManagement Goal in fiscal 2018.
In order to achieve this Management Goal, Lifenet will focus on the following businessstrategies.
(1) The pillars of business: “Online direct sales”, “KDDI (exclusive alliance agent)”
and “Over-the-counter agent”
By fully leveraging partnerships built in the previous mid-term business plan,establishing “Online direct sales channel”, “KDDI (exclusive alliance agent)” and ”
Over-the-counter agent” as the pillars for our business, and offering products andservices that fit to each channel, we will endeavor to acquire new business in excess of
60,000 in fiscal 2018.
Online direct sales channel

Renew our efforts to increase the number of visitors to the website



Optimize for a mobile-centered lifestyle mainly for smartphones

Strengthen and further utilize points of contact with existing policyholders

KDDI (exclusive alliance agent)Realize solid launch and success over the mid-term

Create synergy effects with their main business

Over-the-counter agent
Achieve stable growth with a sales channel expansion

Develop the market for Long-term Disability(2) Continuous creation of unique sales point in all channels
Based on manifesto, while implementing our own initiatives and leveraging technologies,
we will strive to create the unique sales point differentiated from other life insurers in all
channels continuously to avoid assimilating with competitors,Copyright© LIFENET INSURANCE COMPANY All rights reserved.

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NEWS(3) Commitment to business development for future growth
While focusing on existing business as needed, we will allocate a certain part ofmanagement resources into business development to achieve continuous growth in thefuture.
In terms of internal control, we will establish the foundation for sophisticating systems for risk
management and customer protection that support the business strategy.
In order to realize the stated above plan, we changed our organization structure in January
2016 in advance, and started the divisional organization which appointed Executive Officers asGeneral Managers to enhance business execution. Centering on the divisional organization, wewill deepen a sense of unity with active communication as well as continue to challenge to meetthe needs of the times and customers. By means of taking a solid implementation of the strategy,
we will work steadily to achieve the new Management Goal.

About LIFENETURL： http://ir.lifenet-seimei.co.jp/en/

Returning to the original purpose of life insurance - mutual support - LIFENET INSURANCE
was founded with the goal of offering simple, convenient and competitively priced products andservices based on the highest levels of business integrity. We sell these products and services
directly to customers over the Internet. By using the Internet, we are able to offer highly
cost-competitive products and accept applications from customers at any given time.
Contact:
Investor Relations, Corporate Planning DepartmentTel:+81-3-5216-7900
e-mail: ir@lifenet-seimei.co.jp
Disclaimer: This is a summarized translation/version of the original Japanese document, prepared andprovided solely for readers' convenience. In case of any discrepancy or dispute, the Japanese document
prevails.

Copyright© LIFENET INSURANCE COMPANY All rights reserved.

4

Securities Code:7157
TSE Mothers

New Mid-term
Business Plan
Supportdocumentation
May 12, 2016

Contents

1. Review of Previous Mid-term Business Plan
2. Outline of New Mid-term Business Plan

1

Previous Mid-term Business Plan
LIFENET 2015

Management Goal

Offer new products andAchieve 9.5 billion inordinary 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 ofstakeholders, 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 the effect of changing calculation formula of policy reserves on provision, 0.5 billion yen. When excluding the effect, it was 2.1 billion yen.

2

Transition of Life Insurance Market Expanding agent channel
Trends of Sales Channels1OnlineOther

7.0%

6.4%

6.9%

13.7% Insurance agents
Banks,Securities brokers

Sales representatives(life insurers)

2006
1.

09

12Source: Lifenet, based on data from a nationwide report on the life insurance industry (2015) by the Japan Institute of Life Insurance.

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

OtherLifenet

FY2008 09
1. Source: Lifenet analysis

1011

1213144

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

8,729

9,387

7,6035,976

FY20121314155

Ordinary Profit / Loss1
 Achieved to turn profitability1 asManagement Goal

584

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

(1,664)2
FY2012131415

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 ofchanging calculation formula of policy reserves on provision, 501 million yen. When excluding the effect, it was 2,165 million yen.

6

Status of Priority Areas
Sustainable growth in insurance premiumincome (top-line)→Build new sales channels
Improvement in productivity→Achieved to turn profitability1
Being an “innovator” (front-runner) in life
insurance→Improved customer convenience
1.

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

7

Sustainable Growthin 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 20158Improvement in Productivity
 Control operating expenses
mainly marketing expenses
Operating expenses(JPY mn)

4,976

4,131

3,815

3,239
Marketing

FY20121314159

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

Improved customer convenience of process

来風

20

大輔

518

東京都千代田区麹町二丁目14番地2

来風大輔

20

518

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)10

Challenges for
New Mid-term Business Plan

Return to growth in new businessperformance
Avoid assimilating with competitors
Proactive development of productsand services
11

Contents

1. Review of Previous Mid-term Business Plan
2. Outline of New Mid-term Business Plan

12

Current Life Insurance Market
 Huge mature market over JPY 40trillion
Insurance premiums144.543.242.7
41.1
40.8
41.0
40.5
Cooperative(JPY in tn)

insurance

Privateinsurance

1.

FY2008 09

1011121314

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 insurance13Future of Online Life Insurers Market
 Continuous high potential for future
growth9.1%

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

Highpotential

4.5%
2.9%

2.2%

1.8%

2006
1.

09

1215

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

1514

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

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
15

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 inordinary income•Positive profitability ofordinary profit/loss

Business

Corporate Strategy

FY2018
ManagementGoal

New Mid-term Business Plan

Challenge
Unity

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

16

Management Goal
 13.5 billion yen in ordinary income andpositive 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

16171817

Business Strategy
 Execute on strategy suitable for each
Online direct sales
channel• Increase the number of visitors to the website• Shift to the model optimized for a mobilecentered lifestyle• Strengthen and further utilize points ofcontact with policyholders

Onlinedirectsales

KDDI (exclusive alliance agent)KDDI(exclusiveallianceagent)Over-thecounteragent• 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-the-counter agent• Aiming to grow stably with a sales network
expansion• Develop the market for long-term disability

18

Business Strategy
 Invest in new business and services
Utilizelatesttechnology

Insurance-relatedbusinessNew
products

19

New Product Launch of new Long-term Disability
product in June
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
20Changes in Organization
 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

Actuarial
Department

Agency Sales
Promotion
Department

Operations
Planning
Department

ProductDevelopment
Department
Finance
Strategy
Department

Human
Resources &General Affairs
Department
RiskManagement
Department

Information
Systems Strategy
Division
Information
Systems
Planning
Department
InformationSystemsOperations
Department

Sales Planning
Department

21

Organization Strategy
 Toward more organizational
management
ChangeChallenge
Unity
22

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)
Policy of shareholder return to becomprehensively considered difference fromstandard policy reserve and amount of
cumulative loss

23

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 ofpreparation. 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/
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