Securities Code:7157
TSE Mothers

Reference Datafor
Third Quarter
Fiscal 2017
February 9, 2018

Contents

1. Results for 3Q of Fiscal 2017

2. Future Initiatives
3. Progress of Mid-term Business Plan

1

Key Highlight of 3Q for Fiscal 2017
Annualized premium sustains strong• Up 44% year on year in 3Q• Up 25% YTD year on year
Sales channel diversification and aggressive
investment in marketing expenses drove growth
Ordinary income up 7% year on year
Ordinary loss 11 million yen, further investment
to continue
2Summary of 3Q for FY2017 Results(JPY mn)First 9 months
of FY2016

First 9 months
of FY2017

Year on year

7,568
2,714
347
(424)
1,691
9,856

8,071
3,484
(11)
(42)
1,941
10,796106.6%
128.4%
114.8%
109.5%

Number of policies-in-force

234,828

255,614108.9%

Annualized premium2 of new
business

955

1,191

124.7%

20,59926,997131.1%

2017/3Q

Year on year

460
10,555143.7%
151.2%

Ordinary income
Operating expenses
Ordinary profit (loss)1
Net income (loss)
Mortality margin
Annualized premium2 of policies-inforce

Number of new business2016/3Q
Annualized premium2 of new
business
1.
2.

320
6,980

Numberof new business
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.

3

Annualized Premium /Number of New Business (Quarterly) Annualized premium increased 44% year on year Drove by channel diversification and aggressive
investment in marketing expenses

10,555: Number of new business: Annualized premium of new business (JPY mn)

Up 51%
Y-o-Y

9,142
8,649
7,793

460

6,980
406

387
343

320

16/3Q

Up 44%
Y-o-Y

16/4Q

17/1Q

17/2Q

17/3Q

4

Annualized Premium of New Business(Monthly) Continue to exceed year on year after new
product launch(JPY mn)
Up 43% Y-o-Y (average)
Launched
CancerInsurancein August
124

136

109

102

05

06

108
101

07

114

108
95

96

08

09

97

10

11

162

FY2017

144

142

124
115
109

04

159

156

118

FY201612

01

5

Annualized Premium / Numberof New Business (Year to Date) Annualized premium increased 25% year
on year: Number of new business: Annualized premium of new business (JPY mn)

20,599
955

16/3Q
(YTD)

26,997Up 31%
Y-o-Y

1,191

Up 25%
Y-o-Y

17/3Q
(YTD)

6

Annualized Premium /Number of Policies-in-force (Quarterly) Steadily increased, exceeded 250,000
in Oct. 2017

255,614: Number of policies-in-force: Annualized premium of policies-in-force (JPY bn)
248,635
239,800

243,610

234,828

9.8

16/12

10.0

17/03

10.2

17/06

10.4

17/09

10.7

17/12 (YY/MM)7

Breakdown of Policies-in-force
 Long-term Disability strongly increased(YY/MM)

Number of policies-in-force- Term Life1- Whole-Life Medical1- Term Medical Care1- Long-term Disability1- Cancer1
Sum insured of policies-in-force2(JPY mn)

Number of policyholders

Component
ratio

16/12

17/12

234,828
121,208
70,033
10,64532,942
1,948,424
148,509

255,614 100.0％
128,440 50.2％
74,699 29.2％
10,062
3.9％
40,491 15.8％
1,922
0.8％
2,028,245
164,174

16/3Q

17/3Q

(Reference) Surrender and lapse ratio3

6.5%

5.9%

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, Hataraku-Hito 2 and au Long-term Disability Insurance, Cancer insurance: Double Yell.

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.

8

Ordinary Income (Quarterly) Up 7% year on year as policies-in-force
increased(JPY mn)
2,651
2,551

16/3Q

2,687

2,528

16/4Q

2,732
Up 7%
Y-on-Y

17/1Q

17/2Q

17/3Q

9

Insurance Claims and Benefits (Quarterly) Decreased as amount of insurance
payments are fluctuating
Amount of insurance
payments (JPY mn)

424

426
394
343

Insurance
claims290

Benefitclaims

134

136

134

16/3Q

16/4Q

17/1Q

Insurance claims
Benefit claims
Sum

373

273
260

228

207

21
1,432
1,453

14
1,468
1,482

20
1,445
1,465

153

145

17/2Q

17/3Q

15
1,594
1,609

20
1,565
1,585

10

Provision for Policy Reserves (Quarterly) Remaining at same level mainly inaccordance with elapsed year
: Provision for policy reserves (JPY mn): Provision for policy reserves / Premiums income
917

37.8%

16/3Q

907

903

883

879

35.8%

34.9%

35.4%

34.3%

16/4Q

17/1Q

17/2Q

17/3Q

11

Operating Expenses (Quarterly) Aggressive investment in marketing
expenses after new product launch(JPY mn)

1,332

Launched
CancerInsurancein August

1,188

1,005

997
731

690
626

Marketing182

Customer
service

425

428

153

1,289

142

414

459

16/3Q

16/4Q

166

160

413

438

17/1Q

17/2Q

380

17/3Q

Systemand other12Marketing Expenses
per New Business (Quarterly) Improved efficiency despite of continuous
investment in marketing expenses: Marketing expenses per new business (JPY thousand): Marketing expenses / Annualized premium of new business
79

79

59

61
1.8

54

1.7

1.3

1.3
1.2

16/3Q

16/4Q

17/1Q

17/2Q

17/3Q

13

Ordinary Profit/Loss (Quarterly) Same level year on year due to increase of
marketing expenses
136

Ordinary profit (loss)1

19

(135)

(12)

17/2Q

17/3Q

(JPY mn)

(258)

16/3Q

16/4Q

17/1Q

19

(258)

136

(135)

(12)

Amortization cost(265)

(1,325)2---

Ordinary profit (loss)

(245)
(232)

(1,584)2(1,465)

136
109

(135)
(124)

(12)
(27)

(JPY mn)

Ordinary profit (loss)1
before amortization of deferredassets under Article 113 of IBA

Net income (loss)
1.
2.

The ordinary profit (loss) before amortization of deferred assets under Article 113 of the Insurance Business Act until FY2016, the ordinary profit (loss) for FY2017
Amortization of the deferred assets under Article 113 of the Insurance Business Act was 1,325 million yen due to the one-time amortization.

14

Condensed Statements of Operation (YTD)(JPY mn)

16/3Q
7,321
246
7,568

17/3Q
7,867
203
8,071

Insurance claims and other

1,384

1,426

41

Provision for policy reserves and
other

2,754

2,737

(17)

Operating expenses
Other
Ordinary expenses

2,714
367
7,220

3,484
434
8,082

770
66
861

Ordinary profit (loss) before amortization ofdeferred assets under Article 113 of IBA1

347

(11)

(358)

Amortization of deferred assets under
Article 113 of IBA

795

-

(795)

Ordinary profit (loss)

(447)

(11)

436

(23)
(424)

31
(42)

55
381

Insurance premiums and other
Other
Ordinary income

Extraordinary losses and income taxes

Net income (loss)
1.

ChangeThe ordinary profit (loss) before amortization of deferred assets under Article 113 of the Insurance Business Act for FY2016, the ordinary profit (loss) for FY2017

545
(42)
502

15

Structure Breakdownof Ordinary Profit/Loss1 (YTD)

 Declined mainly due to increase of marketing
expenses Transition of ordinary profit (loss) (Year to date)1

Income(JPY mn)

Increaseof insurance
premiums
and other

545

347

Other

(42)

ExpenseIncrease Decreaseofof
insurance provision
claimsfor policy
and other reserves
and other

(41)

17

Increase ofoperatingexpenses

(770)
Other

(66)
16/3Q
1.

The ordinary profit (loss) before amortization of deferred assets under Article 113 of the Insurance Business Act for FY2016, the ordinary profit (loss) for FY2017

(11)

17/3Q
16

Fundamental Profit (Quarterly) Positive result due to steady record ofmortality margin
159

Adjusted
fundamental profit1

17

40(JPY mn)
(109)
(229)
(JPY mn)

16/3Q

16/4Q

17/1Q

17/2Q

17/3Q

Fundamental profit

552
(777)
1
(224)

601
(2,158)2(1,554)

616
(454)
(2)
159

661
(778)
7
(109)

662
(642)
(2)
17

(ref.) Amortization cost under
Article 113(ref.) Insurance premiums and
other

265
2,463

1,325
2,494

-

-

-

2,588

2,608

2,670

Mortality margin
Expense margin (loss)

Interest margin

1.

The fundamental profit before amortization of deferred assets under Article 113 of the Insurance Business Act until FY2016, the fundamental profit for FY201717

Financial Condition(JPY mn)(YY/MM)

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

Stocks1
Foreign securities2
Other securities3

Total liabilities
Policy reserves and otherTotal net assets

Solvency margin
ratio

16/03

17/03

17/12

30,31731,934 35,263

1,186
1,999
1,999
1,999
1,035
995
2,283
23,067
26,372 28,083
10,102
9,876
8,380
1,521
1,496
1,500
10,42811,751 13,872
211
334
338 
804
819
866
2,095
3,124
14,893
18,288 21,515
13,90817,501 20,239
15,423 13,645 13,747
734

1,004

2,805％ 2,723％ 2,534％

 Promoted asset
diversification in
investment asset
Modified duration
11.9 years

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

3.

Investment trust including foreign bonds and stocks18

Launched Cancer Insurance in August Provides double support for treatment
while working
Lifenet Cancer Insurance
Double Yell
Treatment support benefit

Income decrease after suffering cancer
and living expenses are supplemented

3 major cancer treatments

Income support benefit – once a year
for up to a maximum of five times
Lump-sum payment upon cancer diagnosis: 1 million yen case

Surgery

Radiationtherapy

Covers hospitalizationand hospital visit

Therapy with
anti-cancer agents

Lump-sumpayment uponcancer diagnosis

JPY 0.1 mn
a month

5 times inmaximum

JPY 2.5 mn/5 times
in max＋
Survivorship Support Services
19

Enhanced Survivorship Support Services

 Introduces necessary services by partnering
companies based on cancer survivors’ voice
Remote second opinion
services

NEW

Housekeeping
services

Commuting tohospital/work

Appearance careNEW

http://www.lifenet-seimei.co.jp/survivorship/ (Japanese only)

20

Started Direct Payment
for Advanced Medical Treatment

 Direct payment from LIFENET to medical
institutions removes burden on customers

21

High Evaluation for Our Products
 Term Life and Long-term Disability highly
evaluated1
Hataraku-Hito2

KazokuMONOQLO the
MONEY Vol.2
magazinepublished by
Shinyusha Co.,Ltd

Hoken Kanzen
Guide (Insurance
Perfect Guide)magazinepublished by
Shinyusha Co., Ltd

1.

Yoi Hoken Warui
Hoken (Good
Insurance Bad
Insurance)
magazinepublished by
TAKARAJIMASH
A,Inc.

The most popular insurance products in each category from January through December 2016, receiving the highest number of applications of Kakaku.com Insurance, the sales agent company of insurance
products.

22

Highest Rating in HDI Benchmarking
 Contact center and website double-awarded
highest rating 3 stars for 6th consecutive year1,
longest record in life insurance industry2
 Phone Support (Contact Center)

1.
2.

Awarded in the 2017 Benchmarking (Life Insurance Industry) hosted by HDI-Japan
According to our own research Web Support (Website)

23

KDDI Channel Progress
 KDDI’s shareholding ratio increased from 15.6% to25.0％
 Aim for further growth by improving sales routes

Websiteau Financial
Support Center

Application increased by
improvement of website
and application process

Application increasedby expanding outboundlist and consulting
procedure improvement

KDDI directlymanaged stores
Keeping on
trial sales

24

Contents

1. Results for 3Q of Fiscal 2017

2. Future Initiatives
3. Progress of Mid-term Business Plan

25

Future Direction
 Supports life of workers × child-rearing
generation utilizing technology
Workers ×Child-rearing generation
Money

Child
-rearing

Work

Insurance
Medicalcare

Digital Technology
FinTechInsurTech

HealthTech

HealthLife support by insurance and related information/services

26

Utilization of Three Core Channels
 Aim for steady growth of new businessperformance
Online direct sales→ Enrich services via
smartphone and enhancecustomer-drawing power

Onlinedirectsales

KDDI(exclusive
alliance
agent)

Agent

KDDI (exclusive alliance agent)→ Utilize au Financial Support
Center and au shops
Agent→ Promote Long-term Disability
and Cancer Insurance via
over-the-counter agent
27

Marketing Expenses per New Business Further challenge to improve expenses
efficiency with investment in marketing: Marketing expenses per new business (JPY thousand)

48

54

71

67

48

15/1H 15/2H 16/1H 16/2H 17/1H 17/2H

28

Contents

1. Results for 3Q of Fiscal 2017

2. Future Initiatives
3. Progress of Mid-term Business Plan

29

Mid-term Business Plan Summary of 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 Unity30

To Achieve Mid-term Business Plan Aiming for establishing system realizing
sustainable profitability in fiscal 2017
 Achieve
Management Goal
 Return to
growth in new
business
performance Establish a system
realizing sustainableprofitability

2018

2017

2016
31

Progress of Mid-term Business Plan
(Ordinary Income) Business forecast : 73% progressing
 Keep on establishing system realizing profitability toachieve Management GoalManagement Goal

13,500: Fiscal year
: Year to date

Business forecasts(JPY mn)

9,387

10,096

11,00073%
progress
rate

Up 7%
Y-on-Y

6,995

7,568

8,071

FY2015

16

17

18

32

Progress of Mid-term Business Plan
(Ordinary Profit/Loss)1

 Keep on investment in FY2017 to establish
system realizing profitability for FY2018(JPY mn)

Resultsfor FY2016

Business
forecasts
for FY2017

Management
Goal FY2018

Results for
17/3Q

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

88

-

-

-

Amortization ofdeferred assets under
Article 113 of IBA (B)2,1202

-

-

-

(300)

Turn
profitable(11)

Ordinary profit(loss) (A)-(B)(2,031)

1.

Management indicator for Mid-term Business Plan before FY2016 is the ordinary profit (loss) before amortization of deferred assets under Article 113 of the Insurance Business Act, the ordinary
profit (loss) is after FY2017.

2.

Amortization of the deferred assets under Article 113 of the Insurance Business Act was 2,120 million yen due to the one-time amortization.

33

Business Forecasts FY2017
 Business forecasts disclosed in May 2017
remains unchanged(JPY mn)

Business
forecasts for
FY2017(Reference)
Results for FY2016

Ordinary income

11,00010,096

Ordinary profit(loss)(300)(2,031)1

1. 保険業法第113条繰延資産を一括償却したことにより、保険業法第113条繰延資産償却費2,120百万円を計上(1,889)1

Net income (loss)(300)

1. Amortization of the deferred assets under Article 113 of the Insurance Business Act was 2,120 million yen due to the one-time amortization.

34

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.

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.

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 of Fundamental Profit
First 9 months of FY2017
Ordinary income

Statements of operations
Insurance premiums and other 7,867

Premiums income 7,718

Reinsurance income 149

Investment income
180
Other ordinary income 23
Insurance claims and other 1,426

Ordinary expenses

Profit analysis
Net premiums

ReinsuranceincomeReversal ofreserves foroutstanding
claimsReinsurance commissions
231

Insurance claims
and benefits
Reinsurance
commissions

Provision for policy reserves
and others 2,737

Change inpolicy reserves

Insurance claims and benefits
1,195

Expense loading

Interest anddividends
Other ordinary
incomeChange inpolicy reserves

Investment expenses 0
Operating expenses 3,484

Operatingexpenses

Other ordinary
expenses 434

Other ordinary
expenses

Projected
interest
Interest
expenses

Provision forcontingency
reserves
Losses on salesof securities

Capitalgains
0Ordinary profit (11)Otheronetimeloss(79)

Extraordinary losses (8)Mortality
marginExpensemarginInterest
marginExtraordinary losses(8)

Income taxes 23

1,941(1,875)

1

Income taxes 23

Net profit (42)1.

Gains on salesof securities

Some items with minimal amounts have been omitted.

Net profit (42)38

Solvency Margin Ratio Calculation
As of December 31, 2017

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

Solvency margin ratio
2,354.1%
Cash and deposits
1,186
Monetary claims bought
1,999
Money held in trust
2,283

=

Total amount of solvency margin<numerator>
20,900

Other liabilities
1,002

Excess over the fullZillmerized reserve 5,484

Price fluctua4ion reserves
27

Securities
28,083

Deferred tax liabilities onavailable-for-salesecurities
2211

Valuation difference on
available-for-salesecurities 5691

Intangible fixed assets

Capital stockand otherassets13,114595
Other assets
1,009

Net assets
13,747

Tangible fixed assets
104

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

359

Contingency reserves 1,482

Total amount of risk/2< the denominator>
1,649/2

Insurance risk R1 1,072

Reserves for outstanding claims

Policy reserves
19,880÷

Add liabilities
with strong
capitalcharacteristics
such as pricefluctuation
reserves andcontingency
reserves

Medical insurance risk R8 365
Risk of change in medical incidence rate (hospital
admission rate , etc.)

Assumed interest rate risk R2 2
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
with minimum guarantees

Asset management risk R3 666[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.

Business management risk R4 63
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.

39