４

Securities Code:7157
TSE Mothers

Investor Meeting
Presentation
for Fiscal 2016
May 15, 2017

FY2016 Key Highlight
Ordinary income up 8% year on year
New business performance bottomed out
Keeping positive ordinary profit1
One-time amortization of deferred assets
under Article 113 of the Insurance BusinessAct

Launched sales of “au Life Insurance”
1.

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

1

Summary of FY2016 Results(JPY mn)

FY2015FY2016

Year on year

Ordinary income

9,387

10,096108%

Operating expenses

3,239

4,047

125%

Ordinary profit (loss)1

584

88

15%

Cash flows fromoperating activities

4,610

3,904

85%

2,100
9,377
225,534
1,189
25,1502,293
10,088239,800
1,361
29,741

109%
108%
106%
115%
118%

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

Ordinary profit (loss) before amortization of deferred assets under Article 113 of the Insurance Business Act
The amount of money equivalent to what is to be paid to have the insurance coverage for one year. All payments are monthly installments, thus the annualized premium is calculated
as multiplying the monthly premium by 12 months.

2

Contents

1. Results of Mid-term Business Plan

2. Results for Fiscal 2016
3. Challenges for Fiscal 20173

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 Unity
4

To Achieve Mid-term Business Plan
 Goal in fiscal 2016 returned to growth innew business performance Return to
growth in new
business
performance Establish a system
realizing sustainableprofitability

 Achieve
Management Goal

2018

2017

2016
5

Progress of Mid-term Business Plan
(Ordinary Income) Steadily increasing to achieve 13.5 billion
yen in ordinary income in fiscal 2018
13,500(JPY mn)

9,387

10,096

Y-on-Y
8% increase

FY201516

18

6

Progress of Mid-term Business Plan
(Ordinary Profit / Loss) Aiming for positive ordinary profit1
in fiscal 2018
(JPY mn)

Business forecasts
FY2016

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

Ordinary profit (loss)(A)-(B)

Management
Goal FY2018

Results for
FY2016

(300)

-

88

1,060

-

2,120

Turn
(1,360) profitable(2,031)

1.

After completion of amortization of deferred assets under Article 113 in fiscal 2016, management indicator for Mid-term Business Plan ending in fiscal 2018 is positive profitability of accounting
ordinary profit (loss).

2.

The Insurance Business Act

7

Contents

1. Results of Mid-term Business Plan

2. Results for Fiscal 2016
3. Challenges for Fiscal 20178

Overview of FY2016
Launched sales of “au Life Insurance”

Promoted new Long-term Disability
Improved services via smartphone
For improving customer convenience

For increasing number of visitors to website

Highly evaluated in Japan market
9Launch of “au Life Insurance”
 Provided as one of au Life Design conceptLife Design

Medium-Term Target of KDDI

Non-life insuranceLife insuranceElectricity

Home mortgage

Source: “Financial Results for the Fiscal Year Ended March 2017 “(P9), KDDI Corporation

FY2015
Apr. 2015 -FY2016

Capital and Business alliance with KDDI
Dec. 2015- Jan. 2016

Trial sales ofour productApr. - Nov. 2016
“au Life Insurance”(Internet sales)

Dec. 2016 “au Life Insurance”
with Refunds(Internet sales)

Apr. 2016 -au Financial Support Center (call center)10

Utilization of KDDI Channel
 KDDI’s advantage of customer platform and brand■ Principal trigger of product choice(single answer)1■ Principal driver of product choice(single answer)1

49%

40%

28%
29%
12%

13%
5%
Informationfrom KDDI

1.

Ad

4%

News /SNS /OthersInternet Introduction
search10%8%2%OthersRefunds
Insurance Trust inConvenience
Coveragepremium brand

Survey result of those who applied “au Life Insurance” with Refunds via smartphone from March 1, 2017 to March 31, 2017 (n=193)

11

Promotion of Long-term Disability Launched new product and promoted throughover-the-counter agent■Number of new business “Long-term Disability”

Establish sales scheme atover-the-counter agent

Launched new
Long-term Disability“Hataraku-Hito2”(June 2016)

Started business
partnership with
Hoken no Madoguchi(Dec. 2014)

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

16/1Q 16/2Q 16/3Q 16/4Q

12

Improvement of Customer Convenience Counseling, Application and Claim– all completed via smartphone

https://www.youtube.com/watch?v=rtaAoSj1eL8

13

For Increasing Visitors to Website
 Creating new contact points with customers
by utilizing SNS
 Video advertising via SNS Lifenet official account of LINE

Insurance premium quotation
auto-reply service and owned media
contents delivery

14

High Evaluation by Outsider
 Term Life and Long-term Disability

highly evaluated1

1.

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

15

Ordinary Income(JPY mn)

10,096

9,387
8,729
7,603

Y-on-Y
8% increase Steadily increased
8% year on year

5,976

 9,816 million yen of
insurance premiums
and other
FY2012 13

14

15

16

16

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

Y-on-Y
6% increase Annualized
239,800
225,534

premium ofpolicies-in-force
increased 8% year
on year215,403
202,963
169,312
8.0
6.8

8.7

9.3

10.0

Y-on-Y
8% increase Policies-in-force
exceeded 240,000
in Apr. 201713/3 14/3 15/3 16/3 17/3 (YY/MM)17

Breakdown of Policies-in-force
 Over 150,000 in-force policyholders (as of Mar. 31)(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

2016/32017/3

225,534
117,626
67,999
11,132
28,777

239,800
122,952
71,172
10,46235,214

1,906,269

1,966,965

140,301

152,545

FY2015(Reference) Surrender and lapse ratio3

6.7%

Component
ratio

100.0%
51.3%
29.7%
4.4%
14.7%

FY2016

6.6%

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”

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.

18

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

60,685

46,237

Y-on-Y
18% increase

2,409
27,982
1,707

FY2012 13

 Increased for the
first time in 5 fiscal
years

29,741

 Number of new
1,327
business increased
1,189 1,361
Y-on-Y
18% year on year
15% increase14

25,15015

1619

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

 68 insurance
claimsand5,756
535 Benefit
claimsbenefit claims

1,540
1,124 1,159 1,078
423

15.0
520
8.9
234

701

436
443

13.8

12.0

723
635

286

FY2012 13

14

15

16.0

 Ratio to
1,005 Insurance
premiums
claimsincome 16%16

20

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

3,566

3,638

3,744

2,961

 Slightly decreasedin accordance withelapsed years

2,036

34.7

39.4

FY2012 13

42.6

41.6

14

15

37.8
16
21

Operating Expenses(JPY mn)

4,976

 Increased
4,131
marketing expenses
4,047
3,815
for returning to
2,761
3,239
growth of
1,948
1,822 Marketing
1,672
new business
1,302
performance
Customer
550
569
612

558

service526

1,664 1,570 1,583 1,410 1,655 Systemand other

FY2012 13
85％
1.

55％

14

46％

15

36％

The ratio of operating expenses to premiums income Operating expenses
ratio1 42%16

42％ Operating expenses ratio¹
22

Operating Expenses (Quarterly) Increased of advertising expenses for 4Q
1,332(JPY mn)

992
751
279
128
343

709
269
124
315

787

441

312
138
336

997
861

855

339

323

731 Marketing

428
Customer
service

135

134

138

153

142

415

387

393

414

459 Systemand other

15/1Q 15/2Q 15/3Q 15/4Q 16/1Q 16/2Q 16/3Q 16/4Q

23

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

61

59
51

45

1.1

42

1.1 1.2

FY2012 1314

 Declined efficiency
because of investingto grow in new
business
1.0 1.3
performance

15

16

24

Ordinary Profit (Loss) Keeping positive ordinary profit1 for thesecond consecutive year

(JPY mn)

FY2013
Ordinary profit (loss)
before amortization ofdeferred assets under
Article 113 of IBA

Amortization cost
Ordinary profit (loss)

FY2014FY2015FY2016(1,198)

(472)

584

88

(1,060)(2,258)(1,060)(1,532)(1,060)(475)
584(2,120)2(2,031)

Ordinary
profit1

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

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

2.

One-time amortization of deferred assets for FY2016 and FY201725

One-time Amortization of Deferred Assets under
Article 113 of the Insurance Business Act

 Amortized deferred assets one year ahead of scheduledue to establishment of stable financial base
Effect on ordinary profit (loss)
by amortization of deferred assets under Article 113 of the Insurance Business Act(JPY mn)(1,060) (1,060) (1,060)(1,060)One-time amortization of deferredassets for FY2016 and FY2017(2,120)FY2013

14

15

16

17

26

Structure Breakdown of Ordinary Profit Decreased due to increase of insurance
claims and other and operating expenses
Transition of ordinary profit1(JPY mn)

Other
Increase of
insurance
premiums
and other584 69810

Decrease ofprovision
Increase of for policy
reserves
insurance
claims and and other
other

(509)

186

Increase ofoperatingexpenses

(807)

Other

(75)

FY2015
1.

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

88
16

27

Condensed Statements of Operation(JPY mn)

FY2015FY2016

Change

(A)

9,117
269
9,387

9,816
280
10,096

698
10
708

(B)

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

1,796
3,638
4,047
526
10,008

509
(186)
807
75
1,205

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

584

88

(496)

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

1,060

2,120

1,060

(475)

(2,031)(1,556)

Insurance premiums and other
Other
Ordinary income

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

Ordinary loss(A-B)-(C)28Mortality Margin
2,293(JPY mn)

2,100
1,777
1,437

 Steadily recorded

Y-on-Y 9%
increasemortality margin
 Increased 9%

1,141

year on year
due to premiums
income up
FY2012 13

14

15

16

29

Fundamental Profit(JPY mn)

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

FY2014FY2015FY2016

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

2,100 2,293
 Expanded expense(2,595) (4,247)
margin (loss) due to43
17
one-time amortization(450) (1,936)
of deferred assets
9,117 9,816

under Article 113 of the
Insurance Business Act

609

Adjusted
fundamental
profit1

183(JPY mn) Keeping positive
ordinary profit1

(424)
1.

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

30

Cash Flows from Operating Activities(JPY mn)

4,610

3,904
3,247

 Continuously
recorded positive
 Increased
assets undermanagement

1,976

(35)
FY2012 13

14

15

16

31

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

15/3

16/3

17/3

23,387 30,317 31,934
731
1,033
17,082
8,227
851
6,894
222
886
10,89910,084

734
1,999
1,035
23,067
10,102
1,521
10,428211
804
14,893
13,908

1,004
1,999
995
26,372
9,876
1,496
11,751
334
819
2,095
18,28817,501

 Promotediversification
asset withinvestment trust Modified duration
11.9 years

12,487 15,423 13,645

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

32

1
Solvency Margin Ratio

2,723%

2,805%

2,266%

2,244%
1,922%
Average2 of 4 major
insurance companies asof September 30, 2016

 Continuously
maintained athealthy level910%
13/3 14/3 15/3 16/3 17/3

(YY/MM)1.

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

2.

Simple arithmetic average

33

European Embedded Value1(JPY mn)

36,261
31,28425,248 EEV JPY 36.2 bn

20,240

Value ofin-forcebusiness

17/3(YY/MM) Caused by refined risk
assessment whilereflecting sophistication
16,021 Adjustedof risk management
net worth
15/3

16/32

1.

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.

2.

EEV as of March 31 2016 is restated by changing extrapolation method of interest rates.

34

Value of New Business (VoNB)(JPY mn)

89

70  Increased due to new
business growth andrefined risk assessmentand others

55

FY2014
1.

151

16

Restated by changing extrapolation method of interest rates for fiscal 2015

35

VoNB
Per new business(JPY thousand)

FY20151

FY2016

3,104

3,604

121

－

－

－

Value of in-force business

8
1,953
1,141

11
1,830
1,762

0
61
59

－)

1,086

1,691

56

55

70

2

18,974

19,601

25,15029,741(JPY mn)

Certainty equivalent present value of future
profit－)Time value of financial options
and guarantees－)

Frictional cost of capital－)

Allowance for non-hedgeable risk

Adjusted net worth

Value of new business(Ref.) Present value of in-force businesspremiums
Number of new business1.

Restated by changing extrapolation method of interest rates.

36

Structure Breakdown of VoNB per Policy
 Remaining at the same level due to refined risk
assessment while initial cost increased
VoNB per policy(JPY thousand)Expected
incidence
rate and otherchange2

2.2

Othervariables

12.6

2.8

2.3

Unit costbase change(4.0)

Initial expense
increased

Interest
rates
change(8.9) Products mix
change(2.2)
FY20151

1.

Restated by changing extrapolation method of interest rates

2.

Including refined risk assessment

Insurance
premiums
per policy
decreased

(5.9)

5.7
16
37

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

EEV and new business value as of March 31, 2017
Sensitivity 1a: 1.0% increase in interest rates
Sensitivity 1b: 1.0% decrease in interest rates

Sensitivity 1c: 0.5% increase in interest rates
Sensitivity 1d: 0.5% decrease in interest rates
Sensitivity 1e: Interest rates based on JGB yields
Sensitivity 2: 10% decrease in value of equity, real estate and investment trust
Sensitivity 3: 10% decrease in operating expenses
Sensitivity 4: 10% decrease in lapse ratio
Sensitivity 5: 5% decrease in claim incidence rates for life business
Sensitivity 6: 5% decrease in mortality for annuity business
Sensitivity 7: Change the required capital to the statutory minimum
1.

Change in EEV as of Change in value ofMarch 31, 2017
new business

36,261492(1,319)
327
(532)
(340)
(233)
2,006
(1,115)
3,099
－
69

70
339
(535)
189
(238)
(44)
－
241
(172)
223
－
8

For each sensitivity, only one specific assumption is changed and other assumptions remain unchanged. It should be noted that the effect of the change of more than one assumption at a time is likely to
be different from the sum of sensitivities carried out separately. As Japanese policy reserves are calculated in accordance with the IBR, the sensitivities carried out do not affect the reserves at thevaluation date. The sensitivity on the value of new business excludes the impact on the adjusted net worth.

38

Contents

1. Results of Mid-term Business Plan

2. Results for Fiscal 2016
3. Challenges for Fiscal 201739

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 Unity40

To Achieve Mid-term Business Plan Aiming for establishing a 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
41

Challenges
Stable growth of new businessperformance with three core channels

Improvement of operating expenses
efficiency
Enhancement of proactive productdevelopment and services utilizing
smartphone42

Utilization of Three Core Channels
 Aim for steady growth of new businessperformance

Online direct sales→ Launch new products andimprove services
via smartphone

Onlinedirectsales

KDDI (exclusive alliance agent)→ Utilize au shops and au
Financial Support CenterKDDI(exclusive
alliance
agent)

Agent

Agent
→ Promote sales ofLong-term Disability throughover-the-counter agent
43

Utilization of KDDI Channel
 au Life Design strategy is new growth
pillar of Medium-Term Target of KDDI

Source: “Financial Results for the Fiscal Year Ended March 2017 “(P9), KDDI Corporation

44

Sales Growth of “au Life Insurance”
 Planning trial sales at some au shops as oneof au Life Design services

Source: “Financial Results for the Fiscal Year Ended March 2017 “(P14), KDDI Corporation

WebsiteWebsiteFollow-up call by
au Financial Support Center

Sales at some
au shops

45

Improved Efficiency of Operating Expenses
 For efficient acquisition of new business: Marketing expenses per new business (JPY thousand)

61

59

51
45

FY2012

42

13

14

15

16

17

46

Enhancement of Smartphone Services
 Improving existing customers convenience

To be launched

47

Business Forecasts
 Ordinary income up 8.9%, 11 billion yen
 Invest necessary operating expenses toestablish a system realizing sustainableprofitability(JPY mn)

Ordinary income

Ordinary profit(loss)Net income(loss)

Business forecasts

11,000

(300)

(300)

(Reference)
Results for FY2016

10,096(2,031)* (1,889)**Amortization of the deferred assets under Article 113 of the Insurance Business Act was 2,120 million yen due to the one-time
amortization. The ordinary profit before amortization of deferred assets under Article 113 of the Insurance Business Act was 88
million yen.

48

Shareholder Return Policy Completed amortization of deferred assets
under Article 113 of the IBA in fiscal 2016
 Specific policies and dates for distributing
retained earnings as dividends is not yet
determined Plan to consider shareholder return in the
future upon having taken into accountamounts of cumulative loss and others
49New Management Team Change of management team in the 10th year sincebusiness commencement
Daisuke Iwase
President & Representative Director

Masayuki Nishida
Executive Vice President, Director

Hitoshi Hatta
Executive Managing Director

Yasuhiro Koba
Director
New

Eiko Shinotsuka
Outside Director

Ryosuke Mori
Director
New

Masanobu Takatani
Outside Director

Yutaka Mizukoshi
Outside Director

Tomohiko Katsuki
Outside Director

Election of Directors is subject to the approval of the proposals at the 11th Annual General Meeting of Shareholders scheduled on June 25, 2017.

50

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
51

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.

52

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.

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Appendix

Three Surplus Factors ofFundamental Profit
FY2016
Ordinary income

Statements of Operations
Insurance premiums and other 9,816

Premiums income 9,628

Reinsurance income 187

Investment income
216
Other ordinary income 63
Insurance claims and other 1,796

Ordinary expenses

Profit analysis
Net premiums

ReinsuranceincomeReversal ofreserves foroutstanding
claimsReinsurance commissions
256

Insurance claims
and benefits
Reinsurance
commissions

Provision for policy reserves
and others 3,638

Change inpolicy reserves

Insurance claims and benefits
1,540

Expense loading

Interest anddividends

Gains on salesof securities

Other ordinary
incomeChange inpolicy reserves

Investment expenses 0
Operating expenses 4,047

Operatingexpenses

Other ordinary
expenses 2,646

Other ordinary
expenses

Projected
interest
Interest
expenses1.

Extraordinary losses 6

Mortality
marginExpensemarginInterest
marginIncome taxes (149)

2,293(4,247)

17

Some items with minimal amounts have been omitted.

Losses on salesof securities

Capitalgains(0)Ordinary loss (2,031)

Net loss (1,889)

Provision forcontingency
reserves

Other
onetimeloss(95)

Extraordinary losses 6

Income taxes(149)

Net loss (1,889)
55

Solvency Margin Ratio Calculation
As of Mar. 31, 2017

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

Solvency margin ratio
2,723.0%
Cash and deposits
1,004
Monetary claims bought
1,999

Money held in trust
995=

Total amount of solvency margin<numerator>
20,357

Other liabilities
577

Excess over the fullZillmerized reserve 5,167

Price fluctuation reserves
19

Securities
26,372

Tangible fixed assets
123

Intangible fixed assets

502
Other assets
935

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

311

Contingency reserves 1,402

Deferred tax liabilities onavailable-for-salesecurities
1701

Valuation difference on
available-for-salesecurities
1

439

Capital stock andother assets
13,157
Net assets
13,645

Total amount of risk/2< the denominator>
1,495/2

Insurance risk R1 1,044

Reserves for outstanding claims

Policy reserves
17,189÷Add liabilities
with strong
capitalcharacteristics
such as pricefluctuation
reserves andcontingency
reserves

Medical insurance risk R8 314
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 473[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 55
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.

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