Securities Code:7157
TSE Mothers

Reference Datafor
Third Quarter
Fiscal 2015
February 9, 2016

Contents

1. Progress of Mid-term Business Plan
2. Results for 3Q of Fiscal 20151

Mid-term Business Plan
LIFENET 2015

Management Goal

Offer new products andAchieve 9.5 billion in
ordinary income (FY2015)services as an “innovator”
Push the company toward
to create the future of life
insurance that resonate with profitability (FY2015)(Based on ordinary profit before amortization of
stakeholders, and achievedeferred assets under Article 113 of the IBA)
Turn profitable(JPY bn)
the highest sustainablegrowth among online life
insurance businesses.
(1.6)¹FY2012
1.

FY2015The ordinary loss before deferred expenses and amortization of deferred assets under Article 113 of the Insurance Business Act for the fiscal 2012 ended March 31,
2013 included the effect of changing calculation formula of policy reserves on provision, 0.5 billion yen. When excluding the effect, it was 2.1 billion yen.

2

Progress of Mid-term Business Plan
(Ordinary Income) Recorded 108% year on year
(JPY mn)

8,729: Fiscal year
: First 9 months

7,603

of fiscal year

5,976
3,773

6,495
5,607

9,500
6,995
Up 8%
Y-on-Y

Progress ratio
to target
for 3Q

4,348

74%

2,630

FY2011

12

13

14

15

3

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

 Recorded positive earnings, towardachieving annual profitability(JPY mn): Fiscal year
: First 9 monthsof fiscal year

639

Turn profitable

(472)
(782)
(1,101)2(1,407)(510)(1,198)(1,664)31.
2.
3.

(2,184)FY2011

12

13

14

15

Ordinary profit (loss) before amortization of deferred assets under Article 113 of the Insurance Business Act
The ordinary loss before deferred expenses and amortization of deferred assets under Article 113 of the Insurance Business Act for the first 9 months of fiscal 2012
included the effect of changing calculation formula of policy reserves on provision, 445 million yen. When excluding the effect, it was 1,546 million yen.
The ordinary loss before deferred expenses and amortization of deferred assets under Article 113 of the Insurance Business Act for the fiscal 2012 included theeffect of changing calculation formula of policy reserves on provision, 501 million yen. When excluding the effect, it was 2,165 million yen.

4

Contents

1. Progress of Mid-term Business Plan
2. Results for 3Q of Fiscal 20155

Summary of 3Q for FY2015 Results(JPY mn)First 9 months First 9 months
Year on year
of FY2014
of FY2015

Ordinary profit / loss1

6,495
2,944
(510)

6,995
2,247
639

107.7%
76.3%-

Cash flows fromoperating activities

2,098

3,487

166.2%

1,251
8,611
212,304
996
21,095

1,591
9,220
222,598872
18,267127.1%
107.1%
104.8%
87.5%
86.6%

Ordinary income
Operating expenses

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.

6

Key Accomplishment in FY2015 3Q
Ordinary income up 8% year on year
New business performance continues to
exceed that on a year on year basis
Tight control of operating expenses
Recorded positive ordinary profit1

Steadily recorded mortality margin

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

7

Ordinary Income (Quarterly) Up 13% year on year due to number ofpolicies-in-force increase
2,234

2,284

14/4Q

15/1Q

2,345

2,365

15/2Q

15/3Q

2,101

14/3Q

8

Ordinary Income (Quarterly) In addition to steady increase of insurance
premiums and other, investment income
increased by selling down securities(JPY mn)

14/3Q
Insurance premiums and
other

14/4Q

15/1Q

15/2Q

15/3Q

2,154

2,182

2,241

2,261

2,280

Investment income

31

41

41

50

113

Reversal of reserves foroutstanding claims
Other(excl. Reversal of reserves
for outstanding claims)

(89)

6

―

31

(31)

4

3

1

2

3

2,101

2,234

2,284

2,345

2,365

Ordinary Income9Annualized Premium /Number of Policies-in-force (Quarterly) In-force business steadily increased:Number of policies-in-force:Annualized premium of policies-in-force (JPY bn)

212,304

8.6

14/12

215,403 217,335

8.7

15/03

8.9

15/06

219,471

222,598

9.0

9.2

15/09

15/12 (YY/MM)10

Breakdown of Policies-in-force
 137,667 in-force policyholders (as of Dec. 31)(YY/MM)

Number of policies-in-force- “Kazoku”: Term Life
- “Jibun”, New “Jibun”, New “Jibun” for
Women : Whole-Life Medical- “Jibun Plus”: Term Medical Care- “Hataraku Hito”: Long-term Disability

Sum insured of policies-in-force1 (JPY mn)
Number of policyholders(Reference) Surrender and lapse ratio2

14/12

15/12

212,304
110,436

222,598
116,338

64,73367,393

12,06025,075
1,798,389
128,889

11,30427,563
1,889,077
137,667

14/3Q

15/3Q

7.4%

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 of policies-in-force.

6.7%
11

Number of New Business /Annualized Premium (Quarterly) Bottoming out of new business performance:Number of new business:Annualized premium of new business(JPY mn)

6,042
301

14/3Q

6,864

6,887
5,756

5,647

330

14/4Q

323

279

268

15/1Q

15/2Q

15/3Q

12

Number of New Business /Annualized Premium (Monthly) New business performance exceeded those inprevious year for three consecutive months:Number of new business:Annualized premium of new business (JPY mn)

2,528
2,084 2,133

2,117

2,416
2,193 2,255

2,226
1,932

1,841

2,029

1,795

1,878 1,858 1,911

122
107

103
90

14/10

105

103
88

92

99

15/6

105 104
90

88

114

89

15/12
(YY/MM) 13

Amount of Insurance Claims
and Benefits (Quarterly) Decreased year on year due to less insured
events306(JPY mn)

253

254

109

222
110

225

99
99

144

123

14/3Q

14/4Q

154

15/1Q

120

Benefitclaims105

Insurance
claims

197

15/2Q

15/3Q
14

Provision for Policy Reserves (Quarterly) Recorded 950 million yen due toinsurance premium increase:Provision for policy reserves (JPY mn):Provision for policy reserves / Premiums income (%)

950

939

936

931

945

44.3%

43.4%

42.4%

42.4%

41.9%

14/3Q

14/4Q

15/1Q

15/2Q

15/3Q

15

Operating Expenses (Quarterly) Continuously control marketing expenses
814
280(JPY mn)

870
751
322

312

Marketing

124

138

Customer
service

343

315

336

Systemand other

15/1Q

15/2Q

15/3Q

279
143

709

787

269

135
128

390

413

14/3Q

14/4Q

16

Marketing Expenses
per New Business (Quarterly) Slightly improved due to new businessincrease:Marketing expenses per new business (JPY thousand): Marketing expenses / Annualized premium of new business

46

46

48

47

45

0.9

0.9

0.9

1.0

0.9

14/3Q

14/4Q

15/1Q

15/2Q

15/3Q

17

Ordinary Profit / Loss (Quarterly) Ordinary profit keeps profitability(JPY mn)

14/3Q

14/4Q

15/1Q

15/2Q

15/3Q

(59)

38

161

257

220

Amortization cost

(265)

(265)

(265)

(265)

(265)

Ordinary profit (loss)

(324)

(226)

(103)

(7)

(44)

Ordinary profit (loss)
before amortization

257(JPY mn)

161

Ordinary profit (loss) before
amortization of deferredassets under Article 113 of
the Insurance Business Act.

220

38

(59)

18

Condensed Statements of Operation(JPY mn)First 9 months First 9 months
of FY2014
of FY2015

Change

6,310
184
6,495

6,782
212
6,995

472
28
500

1,057

937

(119)

(B)

2,629
2,944
374
7,005

2,847
2,247
322
6,355

218
(697)
(51)
(650)

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

(510)

639

1,150

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

795

795

-

(1,305)(155)

1,150 19

Insurance premiums and other
Other
Ordinary income(A)

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

Ordinary loss(A-B)-(C)Structure Breakdownof Ordinary Profit/Loss1
 Largely improved due to decreased
operating expenses
Transition of ordinary profit (loss) (First 9 months)
Income(JPY mn)

ExpenseDecrease ofoperatingexpenses

Increase of
insurance
premiums
and other

472

28

639

51

697

Decrease of
insurance
claims and
other

Other

Other

119
Increase ofprovisionfor policy
reservesand other

(218)

(510)
14/3Q

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

15/3Q

20

Fundamental Profit
 Continuously recorded mortality margin(JPY mn)

Mortality margin
Expense margin (loss)

Interest margin
Fundamental profit (loss)(Reference) Insurance
premiums and other

14/3Q

14/4Q

15/1Q

15/2Q

15/3Q

382
(683)
4
(295)
2,154

525
(730)
8
(195)
2,182

513
(602)
8
(81)
2,241

545
(547)
14
12
2,261

532
(625)
9
(83)
2,280

277
(JPY mn)

183

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

181

69
(30)

21

Operating Cash Flows (Quarterly) Steadily increased due to operating
expenses control(JPY mn)

1,148

1,195

1,235

15/2Q

15/3Q

1,057

947

14/3Q

14/4Q

15/1Q

22

Financial Condition(JPY mn)

14/03

Total assets

21,188 23,387 29,001

Cash and deposits
Monetary claimsboughtMoney held in trust
Securities
Government bonds
Municipal bonds
Corporate bonds

Stocks1
Foreign securities2
Total liabilities
Policy reserves andotherTotal net assets
1.
2.

15/03

15/12

 Increased assets
1,499
due to third-party
1,000
1,033
1,035
allotment
14,154 17,082 21,983
418

731

771

6,636
6,547
206
764
7,252

8,227
851
6,894
222
886
10,89910,057
1,450
9,413
227
834
13,6406,616

10,084

12,932

 Modified duration
11.6 years

13,935 12,487 15,360

Lifenet holds shares of Advance Create Co., Ltd., its insurance sales agent, for the purpose of maintaining equity and business partnership.
Investment in Kyobo Lifeplanet Life Insurance Company in Korea

23

Solvency Margin Ratio1
 Increased due to ordinary profit before
amortization
2,723%

2,747% 2,782%

2,095% 2,244%
Average of 4 major
insurance companies2
as of March 2015

Average of 4 major
insurance companies2
as of September 2015

957%
14/12

15/03

909%
15/06

15/09

15/12

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(YY/MM)24

Progress of Business Alliancewith KDDI Preparation is in progress as planned
 Started Business Alliance in April 2015
 Established Business Alliance Committee
in May 2015 aiming to discuss details
 Started trial sales at “au shop” for successful
business start-up
 Ensure adequate preparation period tomaximize alliance effect and service details tobe announced shortly

25

Expanded Range of Designatable Beneficiaries
 Ahead of competitors, started to accept same-sex
partners

http://www.lifenet-seimei.co.jp/rainbow/

26

Enhance Agents Channel
 Long-term Disability to penetrate market
via over-the-counter sales agent
Long-termaDisability“Hataraku-Hito”

Direct and agents sales ratio1
Approx. 50% of Long-term Disability applications is via agent

Income and living expenses will becovered if one is not able to work
due to disease and injury
To be covered regardless of causes
within predetermined disability*Except for mental disease and without objective opinion

Via Agent49.3%

Long-term coverage till 65-year old
Insurance premium remains unchanged
during the duration
1. Results for 3Q of FY201527

Oricon Client Satisfaction Rankings Ranked First1 for 2nd consecutive year
Procedure Satisfaction
Ranking
Ranked 1st
Product Coverage
Satisfaction Ranking
Ranked 1st
Insurance Premium
Satisfaction Ranking
Ranked 1st
1. Oricon Client Satisfaction Rankings: 1st Place in the Overall Life Insurance Category

28

Business Forecast
 Business forecast for FY2015 remains
unchanged(JPY mn)

Ordinary income Ordinary profit1

Business forecast
FY2015

9,500

Turn profitable(Reference)
Results for first 9
months of FY2015

6,995

639

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

29

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.

30

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 ofFundamental Profit
First 9 months of FY2015
Profit analysis

Ordinary income

Statements of Operations
Insurance premiums and other 6,782

Premiums income 6,699

Reinsurance income 83

Net premiums

Expense loading

ReinsuranceincomeInterest anddividends

Investment income
204

Gains on salesof securities

Other ordinary
incomeOther ordinary income 7

Ordinary expenses

Insurance claims and other 937

Reinsurance commissions
152

Insurance claims
and benefits
Reinsurance
commissions

Provision for policy reserves
and others 2,847

Change inpolicy reserves

Insurance claims and benefits
785

Change inpolicy reserves

Investment expenses 0
Operating expenses 2,247

Operatingexpenses

Other ordinary
expenses 1,118

Other ordinary
expenses

Projected
interest
Interest
expensesLosses on salesof securities

Capitalgains
64

Ordinary loss (155)

Otheronetimeloss(67)

Extraordinary losses 2

Mortality
marginExpensemarginInterest
marginExtraordinary losses 2

Income taxes (7)1,591(1,776)31

Income taxes (7)Net loss (151)1.

Provision forcontingency
reserves

Some items with minimal amounts have been omitted.

Net loss (151)33

Solvency Margin Ratio Calculation
As of Dec. 31, 2015

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

Solvency margin ratio
2,782.0%
Cash and deposits
771
Monetary claimsbought1,499
Money held in trust

1,035

Securities
21,983=

Total amount of solvency margin<numerator>
18,661Other liabilities
360

Policy reserves 12,634
Contingency reserves 1,285

Excess over the fullZillmerized reserve 4,322

Price fluctuation reserves
11
Deferred tax liabilities onavailable-for-salesecurities
911

Valuation difference on
available-for-salesecurities
1

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

Add liabilities
with strong
capitalcharacteristics
such as pricefluctuation
reserves andcontingency
reserves

224

Deferred assets under
Article 113 of the
Insurance Business Act

2,385

Risk of change in medical incidence rate (hospital
admission rate , etc.)

Assumed interest rate risk R2 1
Risk that the actual investment return will fall below
the expected return used as a basis for calculating
policy reserves[Minimum guarantee risk] R7 －Asset management risk R3 354[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.

12,725

Net assets
15,360

Medical insurance risk R8 235

Risk related to products, such as variable annuities
with minimum guarantees

Tangible fixed assets
Capital stock and83
other assets
Intangible fixed assets

410
Other assets
3,218

Total amount of risk/2< the denominator>
1,341/2

Insurance risk R1 1,007

Deferred tax liabilities(excluding those on availablefor-sale securities) 235
Reserves for outstanding claims 297

÷

Subtract deferred assets
under Article 113 of the
Insurance Business Act fromnet assets

Business management risk R4 47
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 (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.

34