Securities Code:7157
TSE Mothers

Reference Data
forFirst Quarter
Fiscal 2018
August 10, 2018

Contents

1. Results for 1Q of Fiscal 2018
2. Future Initiatives

1Key Highlight of 1Q for Fiscal 2018
Achieved significant business results• Annualized premium of new business up 67%
year on year
Ordinary income up 11% year on year
Ordinary loss 90 million yen, further investment
to continue
Changed into new management team forfurther business growth
Revision of business forecast for FY20182

Summary of 1Q for FY2018 Results(JPY mn)

2017/1Q
Ordinary income
Operating expenses
Ordinary profit (loss)
Net income (loss)
Mortality margin
Annualized premium1 ofpolicies-in-force
Number of policies-in-force
Annualized premium1 of new
business
Number of new business1.

2018/1Q

Year on year

2,651
2,954
1,005
1,380
136
(90)
109
(95)
616
681
10,263 11,529
243,610 272,830
343
572
7,793 13,285

111.4%
137.3%
110.5%
112.3%
112.0%
166.7%
170.5%

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) Increased strongly by investment in marketing
expenses and channel development:Number of new business:Annualized premium of new business(JPY mn)

12,17810,555

8,649
7,793
343

17/1Q

523
460

387

17/2Q

17/3Q

17/4Q

13,285

Y-on-Y
70% increase572

Y-on-Y
67% increase

18/1Q

4

Annualized Premium/Number of Policies-in-force (Quarterly) Policies-in-force exceeded 270,000 and steadily
increased: Number of policies-in-force: Annualized premium of policies-in-force (JPY bn)

243,610
10.2

17/06
1

263,847
255,614248,635
10.4

17/09
2

272,830

10.7

17/12
3

11.1

18/03
4

11.5

18/06 (YY/MM) 5
5

Breakdown of Policies-in-force
 175,337 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- Cancer1
Sum insured of policies-in-force2(JPY mn)

Number of policyholders

17/06

18/06

243,610
124,325
72,092
10,29936,894
1,981,955
155,817272,830
135,060
78,2989,824
44,2805,368
2,106,247
175,337

6.5%

6.3%

17/1Q

(Reference) Surrender and lapse ratio3

Component
ratio

100%
50%
29%
4%
16%
2%

18/1Q

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 and au Cancer insurance.

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.

6

Ordinary Income (Quarterly) Up 11% year on year by steady increase ofpolicies-in-force
2,891(JPY mn)

2,651

1

17/1Q

2,687

2

17/2Q

2,954

Y-on-Y
up 11%

2,732

3

17/3Q

4

17/4Q

5

18/1Q

7

Insurance Claims and Benefits (Quarterly) Increased due to growth of policies-in-force493: Amount of insurance payments (JPY mn): Amount of insurance payments / Premiums income (%)

394
260

Insurance
claimsBenefitclaimsInsurance claims
Benefit claims
Total

15.7%

426
273

373

366

228

217

13.6%

17.7%

16.7%
14.2%

334

134

153

145

149

159

2017 1Q
17/1Q

2017 2Q
17/2Q

2017 3Q
17/3Q

2017 4Q
17/4Q

2018 1Q
18/1Q

20
1,445
1,465

15
1,594
1,609

20
1,565
1,585

20
1,561
1,581

22
1,606
1,628 8

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

879

34.9%

907

35.4%

903

34.3%

876

32.4%

899

32.2%

 Transferred from

5-year Zillmer's
method to
standard policy
reserves1

 Limited impact

for 1Q

1
2
3
4
5
18/1Q
17/3Q
17/2Q
17/1Q
17/4Q
1.

Transferred to standard policy reserves of new business including renewal insurance contracts from fiscal 20189

Operating Expenses (Quarterly) Continued aggressive investment in marketing
expenses since new product launch(JPY mn)
1,289

Launched
Aug 2017

1,458

1,380

885

739

Marketing188

Customer
service

1,188

1,005
690
425

166

160

626

182

177

413

438

380

395

453

17/1Q

17/2Q

17/3Q

17/4Q

18/1Q

Systemand other10Marketing Expenses per New Business(Quarterly)Kept same level year on year despite
increase in marketing expenses: Marketing expenses per new business (JPY thousand): Marketing expenses / Annualized premium of new business

79

72

54

59
1.7
1.3

1.2

17/1Q

1.6

55
1.2

17/2Q

17/3Q

17/4Q

18/1Q

11

Ordinary Profit/Loss (Quarterly) Decreased by aggressive investment inmarketing expenses
136

Ordinary profit (loss)(JPY mn)

(12)

(186)

(90)

17/4Q

18/1Q

(135)

(JPY mn)

Ordinary profit (loss)
Net income (loss)

17/1Q

136
109

17/2Q

(135)
(124)

17/3Q

(12)
(27)

(186)
(206)

(90)
(95)
12

Structure Breakdownof Ordinary Profit/Loss Decreased due to increase of in operating
expenses by marketing investment
Transition of ordinary profit (loss)(JPY mn)

Increaseof insurance
premiums
and other

294

(133)

Other

8

136

Increaseof insurance
claimsDecreaseand other of provision
for policy
reservesand other

12

Increase ofoperatingexpenses

(374)

Other

(35)
Income17/1Q

Expense(90)

18/1Q 13

Condensed Statements of Operation(Quarterly)(JPY mn)

17/1Q
2,588
63
2,651

18/1Q
2,882
71
2,954

Insurance claims and other

467

600

133

Provision for policy reserves and
other

912

899

(12)

Ordinary expenses

1,005
128
2,514

1,380
163
3,045

374
35
530

Ordinary profit (loss)

136

(90)

(227)

27
109

4
(95)

(23)
(204)

Insurance premiums and other
Other
Ordinary income

Operating expenses
Other

Extraordinary losses and income taxes

Net income (loss)

Change

294
8
302

14

Fundamental Profit
 Mortality margin recorded steadily
661

662

17/2Q

17/3Q

682

681

17/4Q

18/1Q

616
Mortality
margin(JPY mn)(JPY mn)

Mortality margin
Expense margin(loss)
Interest margin(loss)
Fundamental profit(loss)

17/1Q

616
(454)

661
(778)

662
(642)

682
(877)

(2)

7

(2)

6

159

(109)

17

(188)

681
(754)
(5)
(77)

15

Financial Condition
17/03

18/03

18/06

Cash and deposits

31,934
1,004

35,541926

36,435977

Monetary claimsbought

1,999

1,999

1,499

Money held in trust

995
26,372
9,876
1,496
11,751
334
819
2,095
18,2882,567
28,303
8,398
1,505
13,892346
4,161
22,1532,641
29,498
8,402
1,506
14,997432
4,158
23,04417,501

21,18622,082

13,645

13,387

13,391(JPY mn)(YY/MM)

Total assets

Securities
Government bonds
Municipal bonds
Corporate bonds
Stocks1
Foreign securities2
Other securities3

Total liabilities
Policy reserves andotherTotal net assets
Solvency margin
ratio

2,723%

2,455%

2,402％

 Promotediversification
in investment
assets Modified
duration 12.3
years
1.

Holds shares of Advance Create Co., Ltd. and others for the purpose ofbusiness partnership etc. in online sales

2.

Investment in Kyobo Lifeplanet Life Insurance Company in Korea, sold inMarch 2018

3.

Investment trust including foreign bonds and others

16Renewal of Term Life Insurance Driving growth of new business performancewith the lowest premium level1 and coverage
to meet broad age groups’ needs

1. Comparison of Lifenet and 5 other online life insurance companies’ Term Life insurance products (excluding risk sub-divided insurance products) under the following conditions:30, 40 and 50 years
old / Male and female / Insurance coverage amount 5,000 and 10,000 thousand yen / Insurance term 10 years / Monthly installments / Riders like living benefit etc. are not considered (as of Apr. 2,
2018)

17

Expanding of au Life Insurance
 Steady growth with au Cancer Insurance
newly launched
April 2018
RENEWAL

April 2018
NEW!

18

Evaluation for Products
 Product lineup highly evaluated

1. The most popular insurance products in each category from January through December 2017, receiving the highest number of applications of Kakaku.com Insurance, the sales agent company of insurance products
2. The Most Chosen Insurance Ranking 2018 of HOKEN ICHIBA is based on compiled date from the number of brochure request and application from January through December 2017.
3. Lifenet Cancer Insurance Double Yell received the Grand Prize in the cancer insurance product category in the Nikkei TRENDY magazine published by Nikkei Business Publications, Inc. in May 201819

Enhanced Survivorship Support Services
 Introduces necessary services by partnering
companies based on cancer survivors’ voice
Remotesecond opinion services

Housekeeping
services

Appearance
care

New!

Commuting tohospital/workNew!

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

New!

20

Start to Provide App for Our Customer
 Aim to further improve policyholders’convenience and usability
Enable to log-in to My page, using fingerprint and facerecognition technology without ID and Password1

1. Only for iPhone users (as of Aug. 2018)21

Contents

1. Results for 1Q of Fiscal 2018
2. Future Initiatives

22

10th Anniversaryof Business Commencement

 Continuing our challenge with customer-oriented
approach
Number of policies-in-force
Exceeded
200,000

Exceeded
100,000

09/03

18/03

23

Changed into New Management Team Striving for significant business growth under
new leadership
Daisuke Iwase
Chairman, Director

Masayuki Nishida
Executive Vice President,
Director

Hitoshi Hatta
Executive Managing
Director

Eiko Shinotsuka
Outside Director

Masanobu Takatani
Outside Director

Ryosuke Mori
President, Representative Director
Masanori Sakasai
Executive Managing
Director

Yutaka Mizukoshi
Outside Director

Yasuhiro Koba
Director

Tomohiko Katsuki
Outside Director

24Direction of New Management
 Focusing on further expanding businessscale by accelerating investment for
growth Transform to Internet company of life
insurance from online insurer Consistent principle; “Comprehensible,
Cost-Competitive, Convenient”
25

Focusing on Expanding Scaleof Our Business Aggressive investment in marketing
expenses for improving profitability in the
mid-to-long term
Enhanced
profit base

Insurance
premiums
increase

Cycle ofexpandingbusinessscale

Further
investment
in marketing
expenses

Lower ratioof operating
expenses1

Profitability
improvementin the mid-tolong term

Growth of
new businessperformance1.

The ratio of operating expenses (excluding marketing expenses) to premiums income26Advantage Brought by Expanding
Business Scale With lower ratio of operating expenses1,
profitability improvement in the mid-to-long term
to be realized with further growth investment: Insurance premium (JPY mn): Operating expenses excluding marketing expenses (JPY mn): Ratio of operation expenses (Operating expenses excluding marketing expenses/Insurance premiums)

37.7%
10,421
22.2%

5,876
Insurance
premiums

2,215

2012

Decreasing by insurance
premium increase
Operatingexpenses2

2,315

2017

1.

The ratio of operating expenses (excluding marketing expenses) to premiums income

2.

Operating expenses excluding marketing expenses

Future FY(image)27

Investment Effect of Marketing Expenses
 Steadily contributed to growth of new
business performance
Started to invest
aggressively in marketing
expenses in Aug. 2017

: Number of new business: Marketing expenses (JPY mn)

13,285
12,17810,555

9,142

6,864
5,756

6,883

7,307

6,980

731

7,793
626

5,647

279

269

15/1Q

2Q

312

3Q

4Q

428
339

323

16/1Q

2Q

739

690

6,312

441

885

8,649

3Q

425

4Q

17/1Q

2Q

3Q

4Q

18/1Q

28

Business Forecast FY2018
 Accelerate investment in marketing
expenses to expand scale of our business(JPY mn)【Revised】【Original】

Business forecast Business forecast(Reference)for FY2018

for FY2018

Results for FY2017

Ordinary income

12,30012,00010,962

Ordinary profit(loss)Net income(loss)

(800)
(600)

0
0

(197)
(249)
29

Enhancement of Three Channels
 Aim for further business growth
Online direct sales→ Promote sales by aggressive
investment in marketing expenses→ Improve website continuously to
optimize smartphone site

Onlinedirectsales

KDDI (agent)→ Enhance sales of new Cancer
Insurance product→ Trial sales at shops in progress
KDDI

Agent

Agent

→ Expanding scale of agents/shops→ Enhance sales of Long-term
Disability product30

Utilization of Technology
 Aim to provide further products, services
and information from customer
perspective utilizing technology
Money
Child
-rearing

Work

Insurance
Medicalcare

Digital Technology
FinTechInsurTech

HealthTech

HealthLife support by insurance and related information/services

31

LIFENET Manifesto
Revised in June 2018 for the future
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 than a pound of cure.”(2) Listening to what our customers are saying. Recognizing their needs andacting accordingly. Allowing our actions to be borne out of their voices andneeds.
(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, our products, and our employees.
(5) Embracing diversity and dialogue to keep us abreast of changing needs
and preferences. Delivering peace of mind that we’ll be around in 100
years.
(6) Acting in good faith means always taking the high road when it comes tocompliance and ethics.

III.

Making Life Insurance Accessible Again - Affordable(1) Giving the customer what he/she needs. No more, no less at a fair price.
(2) Staying vigilant as to how we can provide our products more costefficiently.
(3) Always putting ourselves in our customers’ shoes in thinking about how tominimize their premiums.

II.

Making Life Insurance Accessible Again - Headache-free(1) Helping the customers help themselves. By making our materials easy tounderstand, customers can determine which coverage is truly the best fit.
(2) Turning “clauses” in the insurance contract into succinct points that yourgrandmother 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 andbeyond 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.

32

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
news releases and website updates via email.

Appendix

Three Surplus Factors ofFundamental Profit

1Q of FY2018
Ordinary income

Statements of operations
Insurance premiums and other 2,882

Premiums income 2,792

Reinsurance income 89

Investment income 61
Other ordinary income 10

Ordinary expenses

Insurance claims and other 600
Insurance claims and benefits
493

Reinsurance commissions
107

Provision for policy reserves
and others 899

Profit analysis
Net premiums

Expense loading

ReinsuranceincomeReversal ofreserves foroutstanding
claimsInsurance claims
and benefits
Reinsurance
commissions

Change inpolicy reserves

Other ordinary
incomeChange inpolicy reserves

Investment expenses 0

Operatingexpenses

Operating expenses 1,380

Other ordinary
expenses 163

Interest anddividends

Projected
interest
Interest
expenses

Other ordinary
expenses

Income taxes 1

Mortality
margin (loss)
681

Net profit (loss) (95)1.

Some items with minimal amounts have been omitted.

Expensemargin (loss)(754)

Losses on salesof securities

Capital gains(losses)0

Ordinary profit (loss) (90)Extraordinary profit (loss) (2)Gains on salesof securities

Interest
margin (loss)(5)

Provision forcontingency
reserves

Other
onetimegains (losses)(13)

Extraordinary profit (loss)(2)
Income taxes 1

Net profit (loss) (95)35

Solvency Margin Ratio Calculation
As of June 30, 2018

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

Solvency margin ratio
2,402.5%
Cash and deposits
977
Monetary claims bought

1,499

Money held in trust
2,641

=

Total amount of solvency margin<numerator>
20,750

Other liabilities
703
Policy reserves

21,656

Contingency reserves 1,532

Excess over the fullZillmerized reserve 5,648

Securities
29,498

Tangible fixed assets

99
Intangible fixed assets
613

Other assets
1,105

Price fluctuation reserves
33
Deferred tax liabilities onavailable-for-salesecurities
1

202
Valuation difference on
available-for-salesecurities
1520

Capital stockand otherassets12,812
Net assets
13,391

Total amount of risk/2< the denominator>
1,727/2

Insurance risk R1 1,098

Reserves for outstanding claims425÷

Add liabilities
with strong
capitalcharacteristics
such as pricefluctuation
reserves andcontingency
reserves

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

Medical insurance risk R8 388
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 736[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 66
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.

36