Securities Code: 7157
TSE Mothers

Presentation
Material for
Investors
First Quarterfor Fiscal 2020

August 11, 2020

LIFENET is...

Comprehensible
Cost-Competitive
Convenient◼ Remembering the original purpose oflife insurance – mutual support◼ Helping our customers embrace life more fully
1

Overview of 1Q for Fiscal 2020
Annualized premium1 ofpolicies-in-force

Annualized premium1 of
new businessmillion yen

million yen

16,461

1,166(106.1% vs end of FY2019)(Y-on-Y 141.9%)

Adjusted profit2

EEV (European Embedded Value)

854

million yen

75,921

million yen(Adjusted incremental EV3 2,122 million yen)

Notable Achievements◼ Launched new white label product with brand of
Seven Financial Service◼ Ranked #1 in major price comparison websites◼ Raised new capital in July
1.
2.
3.

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.
See page 9, 32 and 33 for details.
Adjusted incremental EV consisted of components accurately reflecting our business growth for fiscal 2020, see page 31 for details.

2Annualized Premium /Number of Policies-in-Force: Annualized premium of policies-in-force1 (JPY billions): Number of policies-in-force

16.4
13.6

387,775

11.5
9.5

228,846

321,829

10.2◼ Accelerated
growth pace272,830
243,610◼ Year-on-year
Annualized
premium 120.6%,
number of policiesin-force 120.5%

2016 1Q
2017 1Q
2018 1Q
2019 1Q
2020 1Q （YY/MM）
2016/06’17/06’18/06’19/06’20/06
1.

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

Breakdown of Policies-in-Force◼ Improved surrender and lapse ratio’20/03’20/06Component
ratio

Number of policies-in-force

365,171387,775

100%- Term Life

175,713

186,984

48%- Whole-life Medical

100,280

106,50827%- Term Medical Care

9,105

9,041

2%

- Long-term Disability

54,66556,41615%- Cancer

25,40828,826

7%2,565,269

2,701,514

232,537

246,432

1Q of FY2019

1Q of FY2020

7.6％

5.5%

Sum insured of policies-in-force1(JPY millions)

Number of policyholders(Reference) Surrender and lapse ratio2

1. Sum insured of polices-in-force are the sum of death coverage, and do not include third-sector insurance.
2. 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 ofpolicies-in-force.

4

Annualized Premium /Number of New Business: Annualized premium of new business (1Q of fiscal year, JPY millions): Number of new business (fiscal year): Number of new business (1Q of fiscal year)

1,166

80,91164,435822

39,175◼ Achieved historical
record high on aquarterly basis◼ Year-on-Year
28,136annualized
premium 141.9%,
number of new
19,117
13,285business 147.2%
572

29,741

341

343

7,307

7,793

2016

’17

’18

’19 ’20/1Q （fiscal year）
5

Marketing Efficiency: Marketing expenses per new business (JPY thousands): Marketing expenses / Annualized premium of new business

75
67
61

65

53
1.7
1.5

1.2

1.5

1.3

◼ Significantly
improved
under COVID-19
environment◼ Aim to improvefrom the level infiscal 2019(fiscal year)

2016

’17

’18

’19

’20/1Q

Marketingexpenses

1,822

2,627

4,216

6,146

1,506

(JPY millions)6Operating Expenses Ratio: Operating expenses ratio¹ (%): Insurance premiums (JPY millions): Operating expenses excl. marketing expenses (JPY millions)
13,982◼ Aim to improve
10,421
9,628
operational
efficiency by
23.1 %
22.8 %
22.2 %
21.6 %
21.2% further businessexpansion
3,940
3,023
in mid-term
2,699
2,315
11,845

2,225

834

2016
1.

’17

’18

’19

’20/1Q（fiscal year)

Operating expenses ratio is calculated by dividing operating expenses excluding marketing expenses by insurance premium.

7

Profit Structure under
Current Statutory Accounting◼ Time lag is caused between the recognition of costs andrevenue as marketing expenses is recognized at thetime of acquisition, and revenue is collected gradually
over a long period.
Insurance policy profit structure
Revenue collected
over long period

Accounting
profit/loss
Initialfiscal
初年度
year

Revenue

Total profit/loss

Year 22年目

Year 33年目

Year 44年目…

Year X
X年目

Premiums

ExpenseMarketingexpenses1.

Heavy initial cost

Costs for policy management, payment of insurance claims and benefit claims, etc.

: Premiums: Operating expenses1 excluding
marketing expenses: Marketing expenses

8Adjusted Profit◼ Steadily recorded adjusted profit generated
from policies-in-force
The method for calculating adjusted profit
Adjusted profit＝ⅰ) Ordinary profit（loss)1＋ⅱ) Marketing expenses－ⅲ) Impact of modified co-insurance±ⅳ) Adjustment based on standard
policy reserves2
JPY millions / fiscal year

2016ⅰ) Ordinary profit（loss)

2017

2018

2019

2020/1Q

88(197)(1,719)(2,382)(647)ⅱ) Marketing expenses

1,822

2,627

4,216

6,146

1,506

ⅲ) Modified co-insurance

-

-

-

(1,526)(212)ⅳ) Adjustment

543

319

347

546

208

2,454

2,748

2,844

2,784

854

Adjusted profit
1.
2.

The ordinary profit (loss) before amortization of deferred assets under Article 113 of the Insurance Business Act
The amount of the adjustment to the policy reserve provision is the adjustment calculated by excluding the provision for contingency reserves and adjusting for the switch
in method for calculating the provision from the Zillmer method to provision based on the standard policy reserves.

9Structure of Embedded ValueEV

Adjusted
net worth

Value of in-force
business(Net assets at end of period+ adjustments)

Profit/loss for thecurrent fiscal year isreflected in end-ofperiod net assets

Revenue

Revenue
ExpenseExpenseProfit/loss for
current fiscal year

Unrealized future profits/losses on policies-in-force
at the end of current fiscal year

10

EEV （European Embedded Value）◼ Characteristics of Lifenet’s EEV are as follows:

Strong growth• Maintaining increase in EEV since listing inMarch 2012
• Steadily growing even in a low interest
rate environment

Resilience to interest rate changes• Limited sensitivity to interest rate andstock fluctuations

11Strong EEV1 Growth◼ EEV and value of in-force business have been

growing at CAGR of 19%2 and 36%,
75,921
respectively
73,431(JPY millions)
Value of in-force business
Adjusted net worth
60,87863,87912,553

12,042

18,547
5,122

13,425

2012/03 ’13/03 ’14/03 ’15/03 ’16/03 ’17/03 ’18/03 ’19/03 ’20/03 ’20/06 (YY/MM)
1.

2.

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. From fiscal 2016 onward, a predetermined ultimate forward rate has been used to extrapolate the level of ultralong-term interest rates past the last liquid data point. This method of extrapolation has also been used to restate EEV as of March 31, 2016. EEV as of June 30, 2020
is calculated applying the same operating assumptions as those used for March 31, 2020, and is not reviewed by third-party specialists.
The calculation includes 3,040 million yen in proceeds from a third-party allotment in May 2015.

12

Changing Factors of EEV1
◼ Value of new business contributed to EEV growth
because of strong new business performance

75,921

Adjusted
incremental EV(JPY millions)

Value ofnew business

1,542

Expected
existing
business
contribution

Operatingexperiencevariances

251

Assumptionchanges

31

Economic
variances
and assumptionchanges

335

329

73,431
total’20/03
1.

2,122

million yen’20/06

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. EEV as of June 30, 2020 is calculated applying the same operating assumptions as those used forMarch 31, 2020, and is not reviewed by third-party specialists.

(YY/MM)13

EV Resilience to Financial Changes◼ Limited sensitivity to interest rates andstock prices

June 2020
End
Lifenetライフネット生命

Reference: March 2020 End1
Lifenetライフネット生命

Company
A社 A

Company
B社 B

Company
C社 C
11%

7%
1.4%

-1.7%

-0.6%

7%

1.5%

-1.7%

-0.6%
-4%

-5%
金利0.5%上昇
0.5% interest rate increase

-10%

-7%
-9%

金利0.5%下落
0.5% interest rate decrease
10% decrease in equity and株式・不動産価値等
10%下落
real estate value andother

1. Prepared by Lifenet based on disclosed information of domestic public life insurance companies.

-17%

14

Financial Condition(JPY millions)(YY/MM)

Total assets
Cash and deposits
Monetary claims bought’20/03’20/0641,14442,298

1,377

1,566

299

－

Government bonds

8,065

Municipal bonds

1,391◼ Solvency margin
32,846
ratio remained
8,034
1,386
above 2,000%

Corporate bonds

18,11918,684313

388

Money held in trust

Securities

Stocks

3,539

32,058Foreign securities

0

Other securities1

4,167

Total liabilities
Policy reserves and otherTotal net assets
Solvency margin ratio2
Modified duration (year)

31,74430,3289,400
2,117％
11.3

3,710◼ Raised capital in
4,352
July to accelerate
33,346growth31,822
8,951
momentum02,093％
11.4

1.

Investment trust including foreign bonds and others.

2.

The solvency margin ratio is a key benchmark for industry
regulators. It measures a life insurance company's ability to
pay out claims when unforeseen events occur.

15

Notable Achievements◼ Launched the second white label business with
Seven & i group◼ Ranked number one in major price comparison
websites1,2
Term Life

Whole-life
MedicalLong-term
Disability

Cancer

1. The most popular insurance products in each category from January through December 2019, receiving the highest number of applications of Kakaku.com
Insurance, the sales agent company of insurance products
2. The Most Chosen Insurance Ranking 2020 of HOKEN ICHIBA is based on compiled date from the number of application from January through December 2019.

16

Overseas Public Offering andSecondary Offering◼ Successfully executed full marketing whileworking remotely under COVID-19
Overview• Offered shares totaled 13.8 billion yen• Raised new capital of 9 billion yen fromoverseas market, mainly Asia and Europe• All the proceeds to be used for future businessgrowth• Low discount rate of 4.02% due to excess
demand• Aim for improvement market liquidity bysecondary offering
17

Objectives for Offering◼ Aim for Growth and Transformation
GrowthConfirm the positioning as a financial
institution with strong growth potential
Accelerate growth of in-force businessTransformation

Realize the mid-term vision of“Internet Service Company of Life Insurance”
Improve the market liquidity
Multiple expansion in stock valuation18

【Ref.】 Life Time Value and Customer Acquisition Cost
Key Metrics for a SaaS Company and Lifenet
Commonly Used SaaS Glossary

ARR per Contract◼

(Annual Recurring Revenue)

Life Time(Term of Contract)

Contract period: from dateentered into contract until
the contract is cancelled◼ Calculated by reciprocal ofchurn rate◼

◼

Gross Margin Rate

CAC
(Customer Acquisition Cost)

1.
2.
3.

Accumulated profit per client
during the contract period◼ Revenue from new client *total revenue profitability(%) * contract period◼

◼

Marketing and sales
expenses incurred in bringing
1 client

Annualized Premiums per
Policy-in-force

Annualized Premiums per
Policy-in-force

××

JPY 42,486

Average Policy Term

14.3 years

1

JPY 42,452

Average Policy Term

18.2 years1

×

×

45%2

44%2

＝

(Life Time Value)

Percentage of revenue left
over after the cost ofservicing that revenue istaken into accountFY2020/1Q＝

LTV

The value of the contracted
recurring revenue
components of the term
subscriptions normalized to a
one-year period

FY2019（Annualized Premiums
per Policy * Life Time *Gross Margin Rate)（Annualized Premiums
per Policy * Life Time *Gross Margin Rate)

Marketing Expenses per
New Policy

Marketing Expenses per
New Policy

JPY 273,397

JPY 75,9703

1 / Churn rate. Churn rate represents the percentage of users who cancelled out their insurance policies.
(Insurance premiums – Insurance claims and benefits - Provision for policy reserves and others) / Insurance premiums.
Marketing expenses / Number of new business.

JPY 339,956

JPY 53,5413

19

Business Forecast FY2020◼ Aim for record high of new businessperformance under COVID-19 environment(JPY millions)

FY2020 Forecast(Reference)
FY2019 Results

Of which: impact
of modified
co-insurance

Ordinary income

20,0002,700

16,8502,034

Ordinary profit(loss)(3,200)650(2,382)

1,526

Net income(loss)(3,200)650(2,400)

1,526(Reference)

Annualized premiumof new business1
1.

Of which: impact
of modified
co-insurance

4,000

3,425

Annualized premium is the amount of money equivalent to what is to be paid to have the insurance coverage for one year. All payments for Lifenet products are inmonthly installments; we calculate annualized premium as multiplying the monthly premium by 12 months.

20

MissionBe the leading company driving the growthof the online life insurance market

Management goal

Priority
areas

Help our customers embrace life more fully
by offering comprehensible, cost-competitiveand convenient products and services

VisionManagement Policy• Innovation of customer experience

Enhancing and evolving the quality of all services with digital technology• Enhancement of promotion capabilities

Generating massive customer traffic by active promotion and expansion of
agent sales and white label business

Aim to achieve EEV (European Embedded
Value) of 100 billion yen by business growth
in a mid-term
21

LIFENET Manifesto
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 thana pound of cure.”(2) Listening to what our customers are saying. Recognizing theirneeds and acting accordingly. Allowing our actions to be borneout of their voices and needs.
(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, ourproducts, and our employees.
(5) Embracing diversity and dialogue to keep us abreast of changing
needs and preferences. Delivering peace of mind that we’ll bearound in 100 years.
(6) Acting in good faith means always taking the high road when it
comes to compliance and ethics.

III.

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

II.

Making Life Insurance Accessible Again - Headache-free(1) Helping the customers help themselves. By making ourmaterials easy to understand, customers can determine which
coverage is truly the best fit.
(2) Turning “clauses” in the insurance contract into succinct points
that your grandmother 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 and beyond 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.

22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

Impact of COVID-19
for 1Q of Fiscal 2020
◼New business performanceachieved record high on a quarterly
basis◼Surrender and lapse ratio improved◼No significant impact on payment of
insurance claim◼Various special measures based on
customer-oriented business25

Number of New Business (Quarter)◼ Recorded historical high28,136:Number of new business1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q
FY2008FY2009FY2010FY2011FY2012FY2013

FY2014FY2015FY2016FY2017FY2018FY2019 FY2020

26

Condensed Statements of Operation/ Fundamental Profit

Fundamental profit

Condensed statements of operation(JPY millions)

FY2019/1Q FY2020/1Q

Change

Note

859

121
3,895

4,633
92
4,726

Increased due to growth in in-force policies business andutilization of modified co-insurance

(28)
831

Includes 558M increase for utilization of modified co-insurance

Insurance claims and
other

772

1,236

463

Increased due to growth in in-force policies. Percentage of
insurance claims and benefit claims to insurance premiums is
18.1%.

Insurance claims

386

447

61

Increased from 27 cases in 1Q of FY19 to 38 in 1Q of FY20.

Benefit claims

227

267

40

Provision for policy
reserves and other

1,015

1,497

481

Ordinary expenses

2,199
1,502
211
486
228
4,216

2,341
1,506
242
592
299
5,374

Increased from 1,960 cases in 1Q of FY19 to 2,201 in 1Q of
FY20.
Increased by transferring to standard policy reserves.
Percentage of provision for policy reserves (1,497 million yen) toinsurance premiums is 38.0%.

141
3
31
106
71
1,157

Ordinary profit (loss)

(321)

(647)

(326)

Insurance premiums and other

3,774

Other
Ordinary income

Operating expenses
Marketing expenses
Customer service
System and other
Other

Extraordinary losses andincome taxes
Net income (loss)

4

4

0

(325)

(652)

(326)

Mortality margin

757

877
(1,424)
(15)
(562)

119

Expense margin (loss)(1,180)Interest margin (loss)

(5)
(428)

Fundamental profit

(243)
(10)
(134)

Includes profit of 212M for utilization of modified co-insurance.

Includes profit of 212M for utilization of modified co-insurance.

Includes 263M expense margin for utilization of modified coinsurance.

27

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

EEV and new business value as of June 30, 2020
Sensitivity 1a: 1.0% increase in risk-free rate
Sensitivity 1b: 1.0% decrease in risk-free rate
Sensitivity 1c: 0.5% increase in risk-free rate
Sensitivity 1d: 0.5% decrease in risk-free rate
Sensitivity 1e: Interest rates based on JGB yields
Sensitivity 2: 10% decrease in equity and real estate value and otherSensitivity 3: 10% decrease in operating expenses
Sensitivity 4: 10% decrease in lapse rate
Sensitivity 5: 5% decrease in claim incidence rates for life business
Sensitivity 6: Change the required capital to the statutory minimum
1.

Change in EEV as ofJune 30, 2020

Change in
VoNB

75,921(2,612)
1,969(1,253)
1,096
962
(442)
3,301
145
3,963
62

1,542
9
(97)
13
(34)
73
－
236
12
183
3

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 morethan 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 accordancewith the IBR, the sensitivities carried out do not affect the reserves at the valuation date. The sensitivity on the value of new business excludes the impact on theadjusted net worth. EEV as of June 30, 2020 is calculated applying the same operating assumptions as those used for March 31, 2020, and is not reviewed by thirdparty specialists.

28

Three Surplus Factors ofFundamental Profit
1Q of FY2020(JPY mn)

Profit analysis

Statements of operations
Ordinary income

Insurance premiums and other 4,633

Premiums income 3,940

Net premiums

Expense loading

Reinsurance income 693

ReinsuranceincomeOther reinsuranceincomeInterest anddividends

Investment income 73

Gains on salesof securities

Other ordinary
incomeOther ordinary income 19

Ordinary expenses

Insurance claims and other 1,236

Insurance claims and benefits
714
Reinsurance commissions
521

Insurance claims
and benefits
Reinsurance
commissions

Other reinsurance
commissions

Provision for policy
reserves and others 1,497

Change in policy
reserves

Change inpolicy reserves

Interest
expenses

Investment expenses 0
Operating expenses 2,341

Operatingexpenses

Other ordinary expenses
299

Other ordinary
expenses

Income taxes 0

Mortality
margin (loss)

Expensemargin (loss)

Interest
margin (loss)

877(1,424)(15)

Net profit (loss) (652)
1. Some items with minimal amounts have been omitted.

Losses on salesof securities

Capital gains(losses)4

Ordinary profit (loss) (647)
Extraordinary profit (loss)(3)

Provision forcontingency
reserves

Projected
interest

Other onetime
gains (losses)(89)

Extraordinary profit (loss)(3)
Income taxes 0

Net profit (loss) (652)29

Solvency Margin Ratio Calculation
As of June 30, 2020

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

Solvency margin ratio
2,093.9%
Cash and deposits
1,566

=

Total amount of solvency margin<numerator>
19,367

Other liabilities
1,190

Risk of change in mortality rate (calculated based on value ofpolicies in force)

634

Policy reserves
31,187
Contingency reserves 1,812

Excess over the fullZillmerized reserve 8,368
Price fluctuation reserves 59

Securities
32,846

Deferred tax liabilities onavailable-for-sale securities

2461

Valuation difference on
securities available-for-sale6341

Total amount of risk/2< the denominator>
1,849/2

Insurance risk R1 1,137

Reserves for outstanding claims

Money held in trust
3,710

÷

Add liabilities
with strong
capitalcharacteristics
such as pricefluctuation
reserves andcontingency
reserves

Medical insurance risk R8 338
Risk of change in medical incidence rate (hospital admission
rate , etc.)

Assumed interest rate risk R2 3
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 withminimum guarantees

Asset management risk R3 984

Tangible fixed assets

88
Intangible fixed assets
764

Other assets
3,320

Capital stock andother assets
8,245

Net assets
8,951[Credit risk] Risk that asset values decline due todeterioration in financial condition of creditees[Price fluctuation risk]Risk of incurring losses due to decline inmarket value of stocks and bonds, etc.

Business management risk R4 73
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.

30

Adjusted Incremental EV◼ Adjusted Incremental EV accurately

indicates our business growth during acertain period within increase in EEV

Adjusted incremental EV
Defined as constitution of components below:- New business value in the fiscal year
- Expected existing business contribution- Operating experience variances
31

Adjusted Profit
Significance of Adjusted profit disclosure• As accrual timing of cost and revenue do not match,statutory accounting does not necessarily provide an
accurate picture of business profit for a given fiscal year.
• We disclose adjusted profit as an indicator of profit generated
by policies-in-force. It is calculated by excluding marketing
expenses for periods other than the period in which income
was generated from ordinary profit (loss) and adjusting forthe benefit from modified co-insurance and the level of policy
reserves.

Adjusted profit
32

Explanation of Adjusted profit
Adjustments to provision for policy reserves based onstandard policy reserves◼

Calculation of adjusted profit

Difference between methods of calculating
provision for policy reservesⅳ)ⅲ) Impact ofmodified co- Adjustmentⅱ) Marketing insurance
based onexpensesstandard policy
Adjustedreserves

We are currently in the transitional period and will transition all business tostandard policy reserves by the end of Fiscal 2022.

profitⅰ) Ordinary
profit（loss)

Method of calculating the “ⅳ) Adjustment based on standard policy reserves”
e.g. 1Q for fiscal 2020 (JPY millions)

Adjustment to provision forpolicy reserves1

208
1.
2.

Provision for policy
reserves

Increase in standard
policy reserves2

1,497

1,288

The amount of the adjustment to switch to provisioning based on standard policy reserves is calculated by excluding the provision for contingency reserves
and adjusting for the switch in method for calculating the provision from the Zillmer method to provision based on the standard policy reserves. Please notethat the provision for contingency reserves is included in the provision for policy reserves, but is not included in the increase in standard policy reserves.
The increase in standard policy reserves is the amount of the increase (decrease) in the standard policy reserve balance for the current fiscal year from thebalance in the previous fiscal year. The standard policy reserves is the amount calculated by excluding the provision for contingency reserves from actuallyprovisioned policy reserves and adding the difference from the provision based on the standard policy reserves. The difference was 837 million yen as of June30, 2020.

33

Modified Co-Insurance◼ Ease pressure of new business costs on P&L◼ Alleviate decrease in capital during growth
Illustration image of change in
profit/loss structure by reinsurance：Revenue

Illustration image of impact ofreinsurance on net assets：Costs ：Effects of reinsurance

Without
Reinsurance

11,773 million yen

With
Reinsurance

With
Reinsurance

Ease pressure of new
business costs
Without
Reinsurance
FY2018End ofMar. 2019Year 1

2

3

4

５

…

Year X

Note: Illustration of P&L structure of reinsuring new business of
single fiscal year, where illustration of impact on net assets ofreinsuring new business for multiple years.

34