Securities Code: 7157
TSE Mothers

Presentation
Material for
Investors
Fiscal 2020

May 13, 2021

LIFENET is...

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

Table of Contents

1. Financial Results for Fiscal 2020

2. Future Initiatives

2

Overview of Fiscal 2020
Annualized premium1 ofpolicies-in-force

Annualized premium1 of
new businessmillion yen

million yen

18,713

4,197(120.6% vs end of FY2019)(Y-on-Y 122.5%)

EEV (European Embedded Value)

Adjusted incremental EV2

95,140

million yen(129.6% vs end of FY2019)

7,553

million yen(Y-on-Y 189.1%)

Notable Achievements
Raised new capitalfor future growth

1.
2.
3.

Expanded white label business Received high evaluation3

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.
Adjusted incremental EV consisted of components adequately reflecting our business growth for fiscal 2020, see page 14 and 45 for details.
The 2021 Oricon Client Satisfaction Survey conducted by Oricon Inc., and J.D. Power 2021 #1 Life Insurance Contract Customer Satisfaction Study ＜Direct Distribution
Channel＞

3

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

18.7

15.5

13.0
11.1
10.0

439,945

365,171

308,854

263,847
239,800◼ Accelerated
growth momentum◼ Year-on-year
Annualized
premium 120.6%,
number of policiesin-force 120.5%

2017/03 ’18/03 ’19/03 ’20/03 ’21/03 （YY/MM）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.

4Changing Factors of Policies-in-Force◼ Increased due to growth of new business andimprovement of surrender and lapse ratio
Fiscal 2019
Number of policies-in-force(BOP)

308,854

365,171

80,911

100,587－）Decreased number of policies1(24,594)(25,813)

Surrender and lapse ratio2

7.0%

6.0%

Number of policies-in-force(EOP)

365,171439,945+）Number of new business

1.
2.

Fiscal 2020

Decreased number of policies include death, expiration and others in addition to surrender and lapse.
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.

5

Annualized Premium /Number of New Business: Annualized premium of new business1 (JPY millions): Number of new business

4,197

3,425

2,773

80,911

100,587◼ Recorded
historical high64,435◼ Year-on-Yearannualized
premium 122.5%,
number of new
business 124.3%

1,714
1,361
39,17529,741

2016
1.

’17

’18

’19

’20（fiscal year）

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Marketing Efficiency: Marketing expenses per new business (JPY thousands): Marketing expenses / Annualized premium of new business1 (JPY)

75

67

66

65

61

1.7

1.5

1.5

1.5

1.3

(fiscal year)

2016

’17

’18

’19

’20

Marketingexpenses

1,822

2,627

4,216

6,146

6,712

◼ Aggressively
invested inmarketing in Q4
for further growth◼ Improved mainly
due to temporary
impact by COVID19(JPY millions)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.

7

Operating Expenses Ratio: Operating expenses ratio¹ (%): Insurance premiums (JPY millions): Operating expenses excl. marketing expenses (JPY millions)
16,892

13,982
11,845◼ Improved with thegrowth of in-force
business

10,421
9,628◼ Aim to improve22.2 % 22.8 % 21.6 %
19.6% operational
efficiency by
3,317
3,023
further business
2,699
2,315
2,225
expansionin mid-term

23.1 %

2016
1.

’17

’18

’19

’20 （fiscal year)

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

8

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

Total profit/loss
Revenue collected
over long period

Accounting
profit/loss
Initialfiscal
初年度
year

RevenueYear 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

9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 yearⅰ) Ordinary profit（loss)ⅱ) Marketing expensesⅲ) Modified co-insuranceⅳ) Adjustment

Adjusted profit
1.
2.

2016

2017

2018

2019

2020

88

(197)

(1,719)(2,382)(3,089)

1,822

2,627

4,216

6,146

6,712

－

－

－

(1,526)

(804)

543

319

347

546

739

2,454

2,748

2,844

2,784

3,558

The ordinary profit (loss) before amortization of deferred assets under Article 113 of the Insurance Business Act until fiscal 2016.
The amount of the adjustment to the policy reserve provision is the adjustment calculated by excluding the provision for contingency reserves andadjusting for the switch in method for calculating the provision from the Zillmer method to provision based on the standard policy reserves.

10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

11

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

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

growing at a CAGR of 20%2 and 35%,
respectively since IPO(JPY millions)95,14073,431

Value of in-force business
Adjusted net worth

76,14960,87818,547
5,122
13,425

12,55318,9902012/03 ’13/03 ’14/03 ’15/03 ’16/03 ’17/03 ’18/03 ’19/03 ’20/03 ’21/03 (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.
The calculation includes 3,040 million yen in proceeds from a third-party allotment in May 2015 and 9,005 million yen from overseas public offering in July 2020.

13

Changing Factors of EEV1◼

Increased due to the strong new business performance, theimprovement of operating expenses ratio and capital raising

95,140(JPY millions)

Adjusted
incremental EV

Value ofnew business

5,798

Expected
existing
business
contribution

1,311

Operatingexperiencevariances444

Economic
variances
and assumptionchangesAssumptionchanges
1,162

Adjustments
to the values2
as ofMar. 31, ’21

9,063

3,927

Raised new capitalin July 2020

73,431
total’20/03
1.
2.

7,553

million yen’21/03 (YY/MM)

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.
Item for change in capital14

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

March 2021
End
LifenetReference: March 2020 End1
LifenetCompany A

Company B

Company C
11%

7%

1.6%

-1.6%

-0.8%

7%

1.5%

-1.7%

-0.6%
-4%

-5%
-7%
0.5% interest rate increase-10%

0.5% interest rate decrease
10% decrease in equity andreal estate value and other

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

-9%

-17%

15

【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 Profit Margin

CAC(Customer Acquisition Cost)

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 42,536

Average Policy Term

16.7 years1

×

×

45%2

43%2

＝

(Life Time Value)

Percentage of revenue left
over after the cost ofservicing that revenue istaken into accountFY2020＝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 Profit Margin)（Annualized Premiums
per Policy * Life Time *Gross Profit Margin)

Marketing Expenses per
New Policy

Marketing Expenses per
New Policy

JPY 273,397

JPY 75,9703

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

JPY 305,451

JPY 66,7373

16

Financial Condition(JPY millions)(YY/MM)

Total assets
Cash and deposits’20/03’21/03

41,14454,501

1,377

2,059

32,058◼ Maintained prudent
999
investment
5,895
management policy
40,007

Government bonds

8,065

9,004

Municipal bonds

1,391

1,482

Corporate bonds

18,119

Monetary claims bought
Money held in trust

Securities

Stocks299
3,539

30,328◼ Maintained
sufficient
397
soundness0in terms of
7,821
38,694solvency margin
36,639ratio29,400

15,806

2,117％

2,647％

313

Foreign securities

0

Other securities1

4,167

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

31,744

11.3

21,301

11.1

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.

17

Overseas Public Offering andSecondary Offering◼ Raised new capital for future business growththrough overseas public offering in July 2020
• Offered shares totaled

Distribution of share ownershipas of Mar. 31, 2021

13.8 billion yen

Financial
Japanese Institutions
Individuals 6.85%
and others Securities
5.91% Companies
1.58%• Raised new capital of 9 billion yen

from overseas market, mainly
Asia and Europe• Aim for improvement of market

liquidity by secondary offering

Foreign
Corporation andIndividuals

55.89%

Other JapaneseBusiness
Corporations
29.77%• Expanded investor base after

overseas public offering

Total number of issued shares：
60,611,136

18

Expanded White Label Business◼ Gained more partners for mid to longterm growth

Launched products from April
2020 by leveraging the brandpower and strong customer baseof Seven & i Group

Plan to distribute products fromsummer 2021 as a part of Money
Forward Fixed Cost Review toimprove household finances

Seven Financial Service
Life Insurance

19

High Evaluation for Products and Services◼ Achieved high level of customer satisfaction
J.D. Power 2021 #1 Japan Life Insurance Contract Customer Satisfaction StudySM＜Direct Distribution Channel Segment＞

Highest in the all factors•

Interaction channel Satisfaction Ranking•

Types of products Satisfaction Ranking•

Price Satisfaction Ranking•

Forms and documents Satisfaction Ranking

Main awards for fiscal 2020

Contact Center1

1.
2.
3.

Website1

Medical insurance2

LGBTQ
initiatives3

2020 HDI Benchmarking (Life Insurance Industry) hosted by HDI-JapanThe 2021 Oricon Client Satisfaction Survey conducted by Oricon Inc., and J.D. Power 2021 Japan Life Insurance Contract Customer Satisfaction StudySMPRIDE Index 2020 hosted by work with Pride20

Raise the Competitiveness of
Products and Services◼ Launch new long-term disability productwith industry-first coverage in June 2021
New
Long-term Disability
Hataraku-Hito 3
Support “living expenses” which cannot be covered by social welfare andmedical insurance when one is not able to work due to disease or injury

Lifenet’s progress of long-term
disability insurance market
Started sales of long-term
disability insurance productfor individuals ahead of thelife insurance industry

Add industry-first1
coverage for support
to come back to work
Added new coverage
including injury anddisease allowance
Long-term Disability
Hataraku-Hito 2

Long-term disability
insurance market

Long-term Disability
Hataraku-Hito

2010
1.

Long-term Disability
Hataraku-Hito 3

2016

Industry-first full-scale long-term disability insurance for individuals (Lifenet Research as of the end of April, 2021）

2021(year)

21

Table of Contents

1. Financial Results for Fiscal 2020

2. Future Initiatives

22

Aim to Realize Lifenet Manifesto
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.

23

Impact of COVID-19◼ Temporary changes and structural changes
brought by the Pandemic
Temporarychanges• Emerging customer needs for life insurance
due to health concerns• Restricted business activities because ofwork-from-home requests

Structuralchanges• Change in consumers’ behavior
from offline to online

For life insurers with super-long-term business,structural changes contribute to sustainablegrowth opportunities
24

Business Environment surrounding
Online Life Insurance Market◼ Financial digitalization is proceeding driven by
COVID-19, and structural growth of online life
insurance is expected in the future
Phase2Phase1

Phase3

Adaptation to
consumer behavior

Start up

Growth25.0%

Needs for online life insurance
are expanding and diversifying.
20.0%

12.5%

15.0%

10.0%

5.0%

Ratio of individuals who haveintention to buy life insurance
via Internet1

3.3%

Ratio of online application towhole application channelsof life insurance1

0.0%

2006
1.

09

12

15

a nationwide report on the life insurance industry (2018) by the Japan Institute of Life Insurance

18

20XX

25

Investment in Priority Areas◼ Innovation of customer experience andenhancement of promotion capabilities are key
sources of competitivenessInternet Channel

White Label Channel

Further improve brand awarenessand frictionless CX

Expand strategic partners

Brand
Awareness

46.8%1

Telecom×
Insurance

Retail×
Insurance

Internet service
×
Insurance

Customer base

Customer base

Customer base

27 million2

1.
2.
3.
4.

69 million3

Source: “MyVoice Communications survey on awareness rate of insurance companies”
Source: “KDDI Integrated Report 2019” The sum of the number of contractors from au and MVNO as of March 31, 2019.
Source: Seven Financial Service’s company numbers: The number of issued Nanaco cards as of February 2020.
Source: “Presentation Material for FY11/21 1Q Financial Results” The number of Money Forward ME users

12 million4

26

Develop Online Life Insurance Platform
Expand online products and services
SupplyLifenet’s products and services＋

Other insurers’ products and services“Online Platform”
connects life insurance products and services with customers
Provide products and services which customers need online

DemandSearchConsult

ApplyManage

Review

Claim

Diversifying customer needs
27

Established New Joint Venture◼ Launch online insurance agency services

in July 2021

New company

LIFENET MIRAI Inc.
Comparison of
insurance
products

Proposal for
insurance review(Investment ratio: 80%)

• Create a stress-free CX• Generate website traffic• Bring expertise in life
insurance area

PolicymaintenanceSupport for
insurance claims(Investment ratio: 20%)

• Build data infrastructure• Utilize AI technologies
such as machine learning,
OCR and others• Bring expertise infinancial engineering
28

Update the Management Goal
◼ Our commitment to the current Management Policy

MissionBe the leading company driving the growth of theonline life insurance market

changeManagem-ent Goal

Priority
Areas

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

Visionremains unchanged to aim for further growth• 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
200 billion yen by business growth in a mid-term
29

Initiatives for Sustainability◼ Aim to increase the value provided to
stakeholders based on Manifesto
LifenetManifesto

Comprehensible, Cost-Competitive, Convenient

Enhancement ofCorporate Governance

Customer-focusedbusiness operations

Adaptation tosocial changes• Board of Directors includes outside
directors and independent outside
directors since our business
commencement in 2008

• Disclose the policy for customerfocused business operations,performance indicators and theaccomplishments• Established the discretionary
Nomination and Compensation
Committee• Promote efforts for diversity
including LGBTQ• Work on reduction of thepolicyholders’ burden on
procedures and development of
comfortable work environment for
employees under COVID-19
pandemic• Introduced restricted stockcompensation as director’s
remuneration• Disclose securities report before
Annual General Meeting of
Shareholders (Japanese version only)
1.
2.
3.

• Disclose the breakdown of
insurance premiums for the firsttime in life insurance industry1• Evaluated as #1 by policy holders2,
realizing stress-free CX online

According to Lifenet’s research（as of the end of April, 2021）
J.D. Power 2021 Japan Life Insurance Contract Customer Satisfaction StudySM
New joint venture (subsidiary) LIFENET MIRAI Inc. will launch its business in July 2021

• Widely provide more convenientservices by partnering with crossindustrial partners• Plan to provide customer-centeredservices online through new joint
venture330

Further Strengthen Governance◼ Establish a management structure forstrong growth and transformation■Transition to a company with audit and supervisory committee1

Board of Directors

Audit and supervisorycommittee member

Outside directors

Outside Directors

Number of directors

11

9

Ratio of outside directors

44%

Audit/
Supervision With voting right■New management remuneration system
Inside directors2
Basecompensation(Fixed)1.
2.

＋

From 2019

New schemefrom 2021

Restricted stockcompensation

Short-term
performance-linked
compensation

Subject to the approval at the 15th Annual General Meeting of the shareholders on June 20, 2021
Excluding director who is a full-time audit and supervisory committee member＋(Cash bonus)

31

Future Direction
FY 2018

Established a new management policy toachieve EEV of 100 billion yen in a mid-term
as a management goal

FY 2020

Accelerated business growth by adapting to the
COVID-19 environment, and getting closer to the
management goal of EEV 100 billion yen

FY 2021• Adapt to new business environment and change
in customer behavior• Transform into “Internet Service Company ofLife Insurance”• Aim for double-digit growth in in-force business

Aim to achieve new management goal of 200 billion yen in
EEV in a mid-term and turn into the black in operating
profit in the mid-2020s

32

Business Forecast FY 2021
◼ Aim for double-digit growth in in-force
business performance(JPY millions)
FY 2021 Forecast FY 2020 Results

1.

Annualized
premium1 ofpolicies-in-force

21,80018,713

Annualized
premium1 of new
business

4,400

4,197

Of which: impact
of modified
co-insurance

Of which: impact
of modified
co-insurance

Ordinary income

25,5004,400

20,7892,778

Ordinary profit (loss)(3,800)700(3,089)804

Net income (loss)(3,800)700(3,114)804

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.

33

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
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Appendix

New Management Team1
Directors
Yasuhiro Koba

Ryosuke Mori

Director, Executive Vice President
General Manager of Sales & Marketing Division

Representative Director and President
Goldman Sachs Japan Co., Ltd.
Head of Corporate Planning Department andGeneral Manager of Corporate Strategy Divisionat Lifenet

Ministry of Health, Labour and Welfare
Head of Legal Department and General Manager ofCorporate Administration Division at Lifenet
Director, LIFENET MIRAI INC.

Junpei Yokozawa

Ryosuke Kondo

JAPAN POST INSURANCE CO., Ltd.
Head of Corporate Planning Department and General
Manager of Sales & Marketing Division at Lifenet

Director
General Manager of Customer Services Division
General Manager of Information Systems Strategy
Division
NTT DATA Net’s CORPORATIONHead of KDDI Business Department and head ofOperations Planning Department at Lifenet

Yutaka Mizukoshi

Takeshi Saito

OutsideSenior Advisor, The Boston Consulting Group

OutsideGeneral Manager of Corporate Strategy
Planning Department,
Managing Executive Officer,
au Financial Holdings Corporation

Director
Executive Officer of Corporate Planning, ProductDevelopment and Investment

Directors (the Audit and Supervisory Committee Member)
Takahiro Yamasaki

Keiko Hayashi

Tomoyuki Yamashita

Full-time
Nippon Life Insurance Company
Nippon Venture Capital Co., Ltd.

OutsideOutsideRepresentative Director andPresident, Aon Solutions Japan
Ltd.

Full-time audit and supervisoryboard member at Lifenet

1.

Executive Board Member,
The Japanese Institute of Certified
Public Accountants Partner, Deloitte
Touche Tohmatsu LLC

Election of Directors is subject to approval at the 15th Annual General Meeting of the Shareholders on June 20, 2021

36

Expand Online Life Insurance Market
with Lifenet’s Strengths
Generate customer trafficby aggressive promotion

Annual website trafficof over 10 million

××

Improve CVR by
innovation ofcustomer experience＝

Maximize revenue
Diversify revenue source

Lifenetproducts＝

Insurance premiumbusiness（underwriting）＋

Other insurers’
products（agency）＋＝

Commission business

Aim to become a central presence in the online life
insurance industry and further expand the market
37

Number of New Business (Quarter)
26,918:Number of new business1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4Q
FY2008FY2009FY2010FY2011FY2012FY2013

FY2014FY2015FY2016FY2017FY2018FY2019FY202038

Number of New Business (Monthly):Monthly trend in number of new business1
11,078

8,890

5,605

2019/04
1.

Based on Monthly Disclosure

2020/04

2021/0439

Breakdown of Policies-in-Force’20/03’21/03Component
ratio

Number of policies-in-force

365,171439,945100%- Term Life

175,713

213,59749%- Whole-life Medical

100,280

120,21627%- Term Medical Care

9,105

8,840

2%

- Long-term Disability

54,66559,56714%- Cancer

25,40837,7259%2,565,269

2,994,198

232,537

279,243

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

Number of policyholders

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

40

Condensed Statements of Operation/ Fundamental Profit

Fundamental profit

Condensed statements of operation(JPY millions)

FY 2019

FY 2020

Change

Note

3,827

395
16,85020,282507
20,789

Increased due to growth in in-force policies business andreinsurance income from modified co-insurance.

112
3,939

Includes utilization of modified co-insurance of 2,778 million yen.

Insurance claims and
other

3,759

6,031

2,272

Insurance claims

1,694

2,146

451

Increased from 132 cases in FY19 to 172 in FY20.

941

1,140

198

Increased from 8,473 cases in FY19 to 10,206 in FY20.

5,072

6,310

1,238

Other

9,169
6,146
892
2,130
1,232

860
566
179
115
273

Ordinary expenses

19,233

10,030
6,712
1,071
2,246
1,506
23,8794,645

Ordinary profit (loss)(2,382)(3,089)(706)

Insurance premiums and other

16,455

Other
Ordinary income

Benefit claims

Provision for policy
reserves and other
Operating expenses
Marketing expenses
Customer service
System and other

Increased due to an increase in reinsurance commissions frommodified co-insurance. Percentage of insurance claims and benefit
claims to insurance premiums is 19.5%.

Percentage of provision for policy reserves (6,111 million yen) toinsurance premiums is 36.2%.

Increased due to an increase in reinsurance commissions frommodified co-insurance and provision for policy reserves and other.
Includes profit of 804M for utilization of modified co-insurance.

Extraordinary losses andincome taxes
Net income (loss)

17

25

7

(2,400)(3,114)(713)

Includes profit of 804M for utilization of modified co-insurance.

Mortality margin

2,851

422

Includes 283M loss due to utilization of modified co-insurance.

Expense margin (loss)(5,064)(1,100)Includes 1,087M expense margin for utilization of modified coinsurance.

Interest margin (loss)

17(2,195)

3,274(6,164)16(2,874)(1)(678)

Includes profit of 804M for utilization of modified co-insurance.

Fundamental profit

41

Three Surplus Factors ofFundamental Profit
FY2020(JPY mn)

Profit analysis

Statements of operations
Ordinary income

Insurance premiums and other 20,282

Premiums income 16,892

Net premiums

Expense loading

Reinsurance income 3,389

ReinsuranceincomeOther reinsuranceincomeInterest anddividends

Investment income 433

Gains on salesof securities

Other ordinary
incomeOther ordinary income 73

Ordinary expenses

Insurance claims and other 6,031

Insurance claims and benefits
3,286

Insurance claims
and benefits

Reinsurance commissions
2,743

Reinsurance
commissions

Other reinsurance
commissions

Provision for policy
reserves and others 6,310

Change in policy
reserves

Change inpolicy reserves

Interest
expenses

Investment expenses 2
Operating expenses
10,030Operatingexpenses

Other ordinary expenses
1,503

Other ordinary
expenses

Income taxes 4

Mortality
margin (loss)

Expensemargin (loss)

Interest
margin (loss)

3,274(6,164)16

Net profit (loss) (3,114)
1. Some items with minimal amounts have been omitted.

Losses on salesof securities

Capital gains(losses)65

Ordinary profit (loss)(3,089)Extraordinary profit (loss)(20)

Provision forcontingency
reserves

Projected
interest

Other onetime
gains (losses)(280)

Extraordinary profit (loss)(20)
Income taxes 4

Net profit (loss) (3,114)
42

Solvency Margin Ratio Calculation
As of March 31, 2021

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

Solvency margin ratio
2,647.1%=

Total amount of solvency margin<numerator>
28,455

Cash and deposits
2,059

Other liabilities
1,605

Monetary claims bought

Reserves for outstanding claims

999

Money held in trust
5,895

Contingency reserves 2,003

Excess over the fullZillmerized reserve 10,328
Price fluctuation reserves 76

Securities
40,007

Deferred tax liabilities onavailable-for-sale securities

3361

Valuation difference on
securities available-for-sale8641

Total amount of risk/2< the denominator>
2,149/2

Insurance risk R1 1,113
Risk of change in mortality rate (calculated based on value ofpolicies in force)

837

Policy reserves
35,801

÷Add liabilities
with strong
capitalcharacteristics
such as pricefluctuation
reserves andcontingency
reserves

Medical insurance risk R8 358
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 1,440

Tangible fixed assets

95
Intangible fixed assets
1,252

Other assets
4,190

Capital stock andother assets
14,846

Net assets
15,806[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 87
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.

43

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

EEV and new business value as of March 31, 2021
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 ofMar. 31, 2021

Change in
VoNB

95,140(3,213)
2,733(1,505)
1,533
635
(807)
3,655
405
4,410
196

5,798
(120)
(97)
(29)
(1)
127
－
783
111
699
32

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.

44

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
45

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 profitability of our business• We, therefore, disclose the indicator of profit levelexcluding marketing expenses as there is a time lag
between the recognition of revenue and marketing
expenses as acquisition cost

Ordinary profit excluding marketing expenses

Adjusted Profit

46

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. fiscal 2020 (JPY millions)

Adjustment to provision forpolicy reserves1

739
1.
2.

Provision for policy
reserves

Increase in standard
policy reserves2

6,111

5,371

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 498 million yen as ofMarch 31, 2021.

47

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：Costs ：Effects of reinsurance

Without
Reinsurance：Revenue

Illustration image of impact ofreinsurance on net assets

With
Reinsurance

With
Reinsurance

Ease pressure of new
business costs
Without
Reinsurance
End of Mar. 2019
FY2018

Note: Illustration of P&L structure of reinsuring new business of single fiscal year,
where illustration of impact on net assets of reinsuring new business for multiple years.
Lifenet has utilized reinsurance transactions by modified co-insurance method on partof new business since fiscal 2019.

Year 1

2

3

4

５

…

Year X

48