Securities Code: 7157
TSE GrowthPresentation Material
for Investors
Third Quarterfor Fiscal 2023

February 13, 2024

Cumulative 3Q for Fiscal 2023 Key Highlights
Key Indicators
Corporate Value

GrowthProfitability

EEV

Annualized premium1of policies-in-force

Insurance service
results(European Embedded Value)¥

144,294mn(YoY 117.3%)¥

27,872mn(YoY 118.5%)¥

6,275mn(YoY 128.9%)

Notable Achievements◼

Individual life performance bottomed out and GCL2 maintained strong momentum◼

Started offering “Insurance with V-points” from December as an alliance with SMBC Group◼

Updated customer experience for same-sex partners in de facto marriages from February

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 (for GCL,
expected premium income for the next month based on the in-force business) by 12 months (The same will apply hereafter).
2. GCL stands for Group Credit Life Insurance1Annualized Premium of Policies-in-Force◼ Strongly grew 18.5% YoY, with large contribution of ¥2.8bn
from newly started GCL:AP1 of policies-in-force for GCL (JPY millions)¥:AP1 of policies-in-force for individual life (JPY millions)

20,862

23,52827,872mn
2,877Group credit
life insurance

24,995

Individuallife insurance

17,922

YoY+6.2％

14,7832019 3Q
2019/12
1. Annualized premium

2020 3Q
2020/12YoY+18.5％

2021 3Q
2021/122022 3Q
2022/122023 3Q
2023/12（YY/MM）

2

Policies-in-Force Movement◼ GCL strongly grew and reached ¥306mn◼ Individual life performance has bottomed out
Net increase of
Net increase of GCL:Net increase of AP of policies-in-force for GCL (JPY millions)individual life

310

:Net increase of AP of policies-in-force for individual life (JPY millions)

2,570

504

AP of
policies-in-force¥27,872mn

276

375

YoY

18.5％

+

306

27,25524,40823,5282022/1224,0332023/032023/06

2023/092023/12 （YY/MM）3

Summary IFRS P/L◼ Insurance service results and net income resulted in¥6,275mn and ¥4,365mn, respectively
Items

1.
2.

FY2022/3Q(YTD)2

FY2023/3Q(YTD)2(JPY millions)

Change（Ref.）FY20222

Insurance service results

4,867

6,275

1,407

6,618

Financial results1

(636)

276

912

(452)

Other results

(552)

(335)

216

(822)

Profit before tax

3,679

6,215

2,536

5,343

Net income attributable toowners of the Company

2,461

4,365

1,904

3,562

Total of investment results from financial assets, insurance finance income or expense and reinsurance finance income or expense
3Q of FY2022(YTD) includes ¥1,326mn, 3Q of FY2023(YTD) includes ¥32mn and FY2022 includes ¥1,378mn of insurance claims and benefit related to COVID-19

4

Insurance Service Results1◼ Significantly increased 28.9% YoY and reached ¥6,275mn◼ 73.0% progress rate over revised business forecasts in August:Insurance service results (fiscal year, JPY millions)

Business forecasts:Insurance service results (3QYTD, JPY millions)

8,600
7,216
6,618

6,606

6,275ｍn2￥

2

Progress rate

73.0％

5,419

YoY

5,236

5,330

2020

2021

3,847

2019
1.
2.

＋28.9％
4,867

2

2022

Figures for FY2021 and earlier are for reference use only as they are before date of transition to IFRS
3Q of FY2022(YTD) includes ¥1,326mn, 3Q of FY2023(YTD) includes ¥32mn and FY2022 includes ¥1,378mn of insurance claims and benefit related to COVID-19

2023/3Q(YTD)(fiscal year)

5Insurance Service Results Analysis◼ Growth driven by settling down of COVID-19 claims andincreasing of CSM release, while GCL claims deteriorated in 3Q(JPY millions)
FY2022/3Q(YTD)

FY2023/3Q(YTD)

ChangeExpected claims minus incurredclaims1

(804)

594

1,399

Risk adjustment release

1,250

1,270

20

Items

4,728

CSM release
Reinsurance results
OthersResults from GCL

2

Insurance service results

5,191

CSM release
Risk
Expected adjustment
minus incurred release
Reinsurance
Othersresults

462

1,399

20

(215) (38)

(85)

(123)

(38)

ー

(221)

(221)

4,867

6,275

1,407

4,867

YoY

+¥1,407mn

2022/3Q
(YTD)
1.
2.

Results from
GCL

Incl. temporary
adjustment of¥(160)mn in 2Q

Insuranceserviceresults
(215)

(435)

6,275

(221)

462

(220)

Insuranceservice results

Applied only for individual life. 3Q of FY2022(YTD) includes ¥1,326mn and 3Q of FY2023(YTD) includes ¥32mn of insurance claims and benefit related to COVID-19
Insurance service results related to contracts measured under the Premium Allocation Approach (Excluding reinsurance results)

2023/3Q(YTD)
6

European Embedded Value1◼
◼

EEV and value of in-force business have been strongly growing
at a CAGR of 19%2 and 31%, respectively since IPO
EEV per share continued its growth trend, offset dilution by capital raising in Sep.
¥1,797¥1,788¥1,673

144,294¥1,570¥1,430: Value of in-force business (JPY millions)

124,666: Adjusted net worth (JPY millions)

116,604: EEV/share (JPY)
95,140117,841

73,431
91,435106,299

76,149¥441
60,87818,547

5,122
13,425

2012/03

12,553’13/03’14/03’15/03’16/03’17/03’18/03’19/03’20/0318,990’21/0325,168’22/0318,367’23/03

26,453’23/12 (YY/MM)

1. Lifenet’s EEV is calculated following the EEV Principles and Guidance and in terms of allowance for risk, MCEV Principles (The European Insurance CFO Forum Market Consistent Embedded Value Principles©) is referred. From fiscal
2016 onward, a predetermined ultimate forward rate has been used to extrapolate the level of ultra-long-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 December 31, 2023 is calculated applying the same operating assumptions as those used for September 30, 2023, and has not been reviewed by third-party specialists.
2. The calculation includes ¥3,040mn in proceeds from a third-party allotment in May 2015 and ¥9,005mn from overseas public offering in July 2020 and ¥9,771mn from overseas public offering in September 2021 and ¥9,770mn frompublic offering and third-party allotment in September 2023.

7

Changing Factors of EEV1
◼ Increased due to the growth of VoNB including GCL and theimprovement of opex ratio, and capital raising
144,294(JPY millions)
Adjusted incremental EV2

Value ofnew business

6,350

Expected
existing
business
contribution

1,106

Incl.
VoNB of GCL

5,233

124,666
total ¥

2023/03

Operatingexperiencevariances

642

Assumptionchanges

1,439

Economic
variances
and assumptionchanges

Adjustments
to the values3
as of Dec. 31, 2023

9,881

207

Changed assumptions at
the end of 2Q for FY2023

Raised new capitalin Sep. 2023

8,099mn
2023/12 (YY/MM)

1. Lifenet’s EEV is calculated following the EEV Principles and Guidance and in terms of allowance for risk, MCEV Principles (The European Insurance CFO Forum Market Consistent Embedded Value Principles©) is referred. EEV as ofDecember 31, 2023 is calculated applying the same operating assumptions as those used for September 30, 2023, and has not been reviewed by third-party specialists.
2. Adjusted Incremental EV accurately indicates our business growth during a certain period within increase in EEV.
3. Item for change in capital8

Strong Business Performance of GCL◼ Backed by the growth of Jibun Bank’s mortgage loan,
GCL business has been progressing steadily

au Jibun Bank’s rapid growth of mortgage loan

Contribution to key indicators1

Nov. 2023¥3.5tnJun. 2023

AP ofpolicies-in-force¥3.0tnNov. 2022¥2.5tnIn approx. 8 years,
the amount exceeded

Achieved business forecastsof ¥2,700mn

Mar. 2022¥3.5tn+ ¥2,877mn¥2.0tnEEV(VoNB)

Jun. 2021¥1.5tn+ ¥5,233mn

Sep. 2020¥1.0tnMay 2019¥0.5tnInsurance Service
Results

(221)

¥

mn

2

*Expecting to generate profit from FY2024
1.
2.

As of December 2023
Insurance service results related to contracts measured under the Premium Allocation Approach (Excluding reinsurance results)

9

Embed into Point Ecosystem◼ Boosting sales efforts aimed at Ponta Point users,
utilizing “au Life Insurance” with Ponta Points as the anchor

au Ecosystem
July 2023
Started GCL

Ponta Point’s Customer Base

Targeting sales forpoint collectors

February 2023
“au Life Insurance”
with Ponta Points

10Alliance with SMBC Group◼ Launched exclusive products for SMBC Group from December
to be embedded into V-point ecosystem
Initial performance of “Insurance with V-points”

AP of policies-in-force

Launched

V-Points
equivalent to
1% of monthly
premiums isawardedPrevious products(without V-points)

Mar.
2023年3月
2023

2023年4月
Apr. 2023

2023年5月
May 2023

2023年6月
Jun. 2023

2023年7月
Jul. 2023

2023年8月
Aug.
2023

2023年9月
Sep. 2023 2023年10月
Oct. 2023 2023年11月
Nov. 2023 2023年12月
Dec. 2023

2024年1月
Jan. 2024

11

Initiatives to Diversifying Customer Needs◼ Updated customer experience with same-sex partners in de facto
marriages
Feb. 2024

Nov. 2023

Customers can designate same-sex partners as
beneficiary for our term-life insurance bysubmission of partnership certificates issued by
local government
BeforeAfter

DesignatedResidence
document＋
provided byregistry
LifenetPartnershipcertificatesalso available

Received Gold Rating for LGBTQ initiatives
for 8th consecutive year, industry record1
Main Initiatives
Customer• Pioneered in the life insurance industry in expanding therange of designated beneficiaries to same-sex partners

Society• Donating LGBTQ-related books to schools nationwide• Conducting surveys on the attitudes of LGBTQ

Employee• A 'recruitment manifesto' that prioritizes merit over factors
like gender, sexual orientation, nationality, and education＋
Streamline procedure1.

the PRIDE Index 2023 for LGBTQ hosted by work with Pride (wwP)• Celebratory and mourning leave, as well as nursing leave, areavailable regardless of gender12

Consolidated Business Forecasts for FY2023◼ Remains unchanged from August 2023
GrowthAP of policies-in-force
Individual
approx. 1,500(JPY millions)

GCL
approx. 2,700

Business forecasts

Profitability

Insurance service results

Business forecasts

28,200

8,600

6,618

24,0332023/03(JPY millions)

FY20222024/03

FY2022(JPY millions)

Results

FY2023

FY2023
3Q(YTD) Results

Forecasts

Annualized premium of policies-in-force

24,03327,872

28,200Insurance revenue

20,732

18,087

24,900Insurance service results

6,618

6,275

8,600

Net income attributable to owners of theCompany

3,562

4,365

5,800
13

Future Direction◼ Aim for growth in in-force business for both individual life and GCL◼ Continue 10% profit growth and aim for TSE Prime Market in around FY2025

Mid-term growth path of in-force businessInsurance service resultsGroup credit life insuranceContinue
10% profit
growth(JPY millions)

Steadily grow as new earnings base andconsider expansion of partner bankBusiness
forecasts
8,600

Individual life insurance
Accelerate growth of core Internet directchannel and expand partner business channel

7,216
6,606

6,618

5,419

FY2008FY2023

FY2019FY202314

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

Management goal

Priority
areas

Help our customers embrace life more fully byoffering comprehensible, cost-competitive andconvenient 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
200 billion yen by business growth in a mid-term
15

LIFENET Manifesto
Comprehensible, Cost-Competitive, ConvenientI.

Our Guiding Principles

II.

Making Life Insurance Accessible Again - Headache-free(1) Creating the future of the life insurance without losing sight of its original
premise: “an ounce of prevention is worth more than a pound of cure.”(1) Helping the customers help themselves. By making our materials easy tounderstand, customers can determine which coverage is truly the best fit.

(2) Listening to what our customers are saying. Recognizing their needs andacting accordingly. Allowing our actions to be borne out of their voices
and needs.

(2) Turning “clauses” in the insurance contract into succinct points that yourgrandmother could grasp.

(3) Delivering the caliber of products and services that we would feel
confident recommending to our own friends and families.

(3) Making all touch points headache-free. Beyond the application process,ensuring the claims and billing processes are also easy to understand.

(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.

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.

16All information on this document that is not historical fact constitutes
forward-looking information and is based on assumptions and forecasts
available to the company at the time of preparation. The company cannot
guarantee the accuracy of these assumptions and forecasts.
Earnings projections and other information on this may differ materiallyfrom actual performance due to various risks and uncertainties.
This is a translation of the original Japanese document, prepared andprovided solely for readers' 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

Glossary
Glossary

Explanation

Insurance revenue

Revenue accrued for fulfillment of insurance services. Mainly, expected claims, expected maintenance expenses, risk
adjustment release, CSM release and recovery of insurance acquisition cash flows. Investment components which will be
paid regardless of insurance event are excluded from expected claims.

Insurance service
expenses

Expenses incurred related to insurance service. Mainly, incurred claims, incurred maintenance expenses, amortization of
insurance acquisition cash flows and losses on onerous contracts. Investment components which will be paid regardless of
insurance event are excluded from incurred claims.

Insurance service
results

Insurance revenue less insurance service expenses, plus reinsurance results.

Financial results

Total of investment results from financial assets, insurance finance income or expenses from insurance contract liabilities(or assets) and reinsurance finance income or expenses from reinsurance contract liabilities (or assets).

Other results

Expenses not directly related to insurance services such as product development costs and income/loss on other thaninsurance businesses such as results of subsidiaries.

CSM (Contractual
Service Margin)

A component of insurance contract liabilities (or assets), which represents the unearned profit that the company willrecognize as it provides services over the coverage period. Accumulation of CSM is important for future profit growth.

New business CSM

CSM at the time of acquisition of new contracts during the period.

Risk adjustment

A component of insurance contract liabilities (or assets), which is the adjustment for uncertainty of future cash flows(addition on liabilities).

Insurance acquisition
cash flows (IACF)

Cash flows from expenses which are directly attributable to acquisition of insurance contracts. Advertising expenses for
new business, agency commissions and administrative expenses for underwriting new business are included. The
difference from marketing expenses we had used for J-GAAP is addition of administrative expenses for underwriting.

Maintenance expenses

Expenses directly related to fulfillment of insurance contracts other than insurance acquisition cash flows. Administrative
expenses for the maintenance of contracts and overhead expenses for the provision of insurance services are included.

19

Individual life

Breakdown of Policies-in-Force

2022/12Component
ratio

556,942590,097

100%- Term Life

270,451

288,01349%- Whole-life Medical

153,628

161,384

27%- Term Medical Care

8,130

7,248

1%

- Long-term Disability

67,54969,074

12%- Cancer

57,18464,378

11%

3,576,874

3,746,702

352,758

374,671

Number of policies-in-force

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

Number of policyholders
1.

2023/12

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

20

Individual life

Annualized Premium / Number of New Business:AP1 of new business (JPY millions)
1,166:Number of new business

1,104

1,137

1,123
1,051

991

990

981
934

822

794

933

969
923

889

818
747
639

675

16,99328,13623,36923,314
19,117

18,795

26,91827,55329,864
26,16722,50622,164

24,41023,92822,612

22,128

19,685

18,471
16,036

1Q

2Q

3Q

2019年度FY2019
1.

4Q

1Q

2Q

3Q

2020年度FY2020

4Q

1Q

2Q

3Q

2021年度FY2021

4Q

1Q

2Q

3Q

2022年度FY2022

4Q

1Q

2Q

3Q

2023年度FY2023

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.

21

Individual life

Surrender and Lapse Ratio:Surrender and lapse ratio1（%）
7.6%

7.6%
7.1%

7.1%

7.0%
6.4%

6.3%
5.9%

1Q

2Q

3Q

2019年度FY2019
1.

4Q

5.5%

5.5%

1Q

2Q

3Q

2020年度FY2020

4Q

1Q

2Q

6.6%

6.9%
6.4%

6.0%

3Q

2021年度FY2021

4Q

1Q

6.3%

6.4%

2Q

3Q

2022年度FY2022The 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.

4Q

6.8%

1Q

6.6%

6.3%

2Q

3Q

2023年度FY202322

Individual life

Insurance Acquisition Cash Flows (IACF) Efficiency1:Insurance acquisition cash flows / AP of new business:Insurance acquisition cash flows per new business (JPY thousands)

Fiscal year

Quarter

125

138
123
114

105
97

92

82
2.2

3.1

121

3.5

3.1

2.9

2.4
2.0

2019

’20

’21

IACF

7,484

8,339

9,854 10,390

1.

2.8

2.7

(fiscal year)(JPY millions)

3.1

117

’22

’23/3Q(YTD)

6,473

Figures for FY2021 and earlier are for reference use only as they are before date of transition to IFRS.

(fiscal year) 2022/3Q

IACF(JPY millions)

2,600’22/4Q’23/1Q’23/2Q’23/3Q

2,737

2,177

2,222

2,072
23

Operating Expenses Ratio1:Operating Expenses Ratio（％）:Operating expenses excl. insurance acquisition cash flows (JPY millions)Fiscal year

19.4%

19.3%

Quarter

20.7%

20.0%

20.7%
18.9%

17.8%
4,715
3,896

2,757

(fiscal year)

1.

2019

17.4%

18.3%
3,598

Recording ofsystem charges, etc

3,047

’20

’21

’22

’23/3Q(YTD)

18.6%(fiscal year)

1,162

1,232

1,146

1,171

1,280

2022/3Q’22/4Q’23/1Q’23/2Q’23/3Q

Ratio of operating expenses excluding IACF divided by average in-force annualized premium for the period (annualized). Figures for FY2021 and earlier are for reference use only as they are before date of transition to IFRS.

24

Summary IFRS P/L (Quarter)(JPY millions)

Items

1.
2.
3.

FY2023/1Q

FY2023/2Q

FY2023/3Q

Insurance service results

2,274

1,813

2,186

Expected claims minus incurredclaims1

368

(104)

331

Risk adjustment release

433

438

397

CSM release

1,677

1,758

1,755

Reinsurance results

(157)

(225)

(52)

Results from GCL2

－

(4)

(217)

Financial results3

367

(300)

209

Other results

(120)

(108)

(106)

Profit before tax

2,521

1,404

2,289

Net income attributable toowners of the Company

1,765

993

1,606

Applied only for individual life
Insurance service results related to contracts measured under the premium allocation approach (excluding reinsurance results)
Total of investment results from financial assets, insurance finance income or expense and reinsurance finance income or expenseNote

Due to individual life’s lower incurredclaims than expectedTemporary loss of 160 million yen from theadjustment related to reinsurance at 2Q
Due to GCL’s higher incurred claims than
expected
Increase in valuation gain from investment
trust due to lower foreign interest rates andhigher stock prices

25Breakdown of Insurance Service Results(JPY millions)

Items

FY2022（Ref.）Fiscal Year

3Q(YTD)

Insurance revenue

20,732

15,27718,087

Expected claims

9,569

7,042

7,788

Risk adjustment release

1,698

1,250

1,270

CSM release

6,401

4,728

5,191

Recovery of IACF

3,184

2,340

2,687

Others

(121)

(85)

(110)

－

－

1,261

13,874

10,188

11,377

10,688

7,847

7,193

－

－

1,483

3,184

2,340

2,687

2

0

13

Reinsurance results

(239)

(220)

(435)

Insurance service results

6,618

4,867

6,275

Premium income of GCL1
Insurance service expenses
Incurred claims（Individual life）
Incurred claims（GCL）
Amortization of IACF
Others1.

FY2023
3Q(YTD)

Insurance revenue related to contracts measured under the premium allocation approach26

Breakdown of Financial Results◼ Increase in foreign interest rates has been mitigated, resulting in arecovery in the valuation of investment trusts and other assets(JPY millions)

Items

FY2022/3Q(YTD)

FY2023/3Q(YTD)

Investment results

(604)

371

976

Interest income

224

272

47

(0)

(3)

(2)

Other investment income

(829)

102

931

Insurance finance income (expense)

(33)

(104)

(70)

Reinsurance finance income (expense)

2

9

7

(636)

276

912

Impairment losses on financial assets, net

Financial results

Change27

Detail of Bond Portfolio1
As of December 31, 2023

JPY Bonds
Duration2

Foreign Currency Bonds(JPY millions)

Available-for-Sale

Held-to-Maturity

17,931

20,484

38,415

4 years

10 years

7 years

9,095

—

9,095

Duration2

1.
2.

Total

5 years

Non-Currency Hedged

1,214

—

1,214

Currency Hedged

7,881

—

7,881

Based on J-GAAP balance sheet
Calculated by Lifenet

28

CSM Movement◼ Large contribution from improvement of opex ratio with the launch of GCL
in assumption changes in addition to the new business CSM of individual life
Impact ofassumptionchanges, etc.

(JPY millions)

5,520

Items

CSM,
end of the period

83,604

New business CSM

6,879

2,690

CSM,
beginningof the period

83,6042,690

Interest accretion

710

631

Assumption changes, etc.

7,508

5,520

Amortization of CSM(6,401)(5,191)

CSM, end of the period

83,60487,25687,256

631

Changedassumptions at
2Q for FY2023

Amortizationin current
period(5,191)

Recorded as
insurance revenue
on PL

2023/03

FY2023/3Q(YTD)

74,907

CSM, beginning of the period
Interest
New business accretionCSM

FY20222023/12（YY/MM）29

CSM Future Allocation◼ Stable profits will be realized over long period from in-force CSM◼ Aim for CSM release growth by adding CSM generated from futureacquired new business
Future allocation of CSM(JPY billions)
Expected timing when CSM is recognized in PL
AmountActualIn-force
CSM

As of Dec. 2023
(A)

87.2

A＋year 2

A＋year 3

A＋year 4

A＋year 5

6.8

6.4

6.1

5.9

5.6

56.2

X

+
X

X

X

XX

X

X

X

X

XX

X

X

X

XX

X

X

XX

X

XX

XX

XXX

+

Forecast

New
Business
CSM(B)

A + year 1

XX

A + year 2

XX

A + year 3

XX

A + year 4

XX

A + year 5XX

CSM release（A+B）

A+year 6
and moreA+year 1

X

XX

XX

XX

XX

30

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 year31

EV Resilience to Financial Changes◼ Limited sensitivity to interest rates and stock prices
Dec. 2023 End
LifenetReference: March 2023 End1
LifenetCompany A

4%
2.1%

Company B

Company C

4%

1.9%
1%

-0.4%
-2.2%

-0.8%

0.5% interest rate increase
0.5% interest rate decrease
10% decrease in equity and realestate value and other

1.

-1%

-2.0%

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

-5% -5%

-4%

-5%
-7%

32

EV Sensitivity Analysis1◼ Impacts of changes in assumptions (sensitivities)
Change in EEV as ofDec. 31, 2023

Change in
VoNB

144,294

6,350

Sensitivity 1a: 1.0% increase in risk-free rate

(6,319)(1,097)

Sensitivity 1b: 1.0% decrease in risk-free rate

6,196

1,103

Sensitivity 1c: 0.5% increase in risk-free rate

(3,204)(590)

Sensitivity 1d: 0.5% decrease in risk-free rate

3,093

509

Sensitivity 2: 10% decrease in equity and real estate value and other

(510)

－

Sensitivity 3: 10% decrease in operating expenses

5,750

1,057

Sensitivity 4: 10% decrease in lapse rate

1,496

322

Sensitivity 5: 5% decrease in claim incidence rates for life business

6,256

200

Sensitivity 6: Change the required capital to the statutory minimum

413

106

(JPY millions)

EEV and new business value as of December 31, 2023

1.

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

33

Solvency Margin Ratio Calculation
As of Dec. 31, 2023

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

Solvency margin ratio
2,333.8%
Cash and deposits
9,351
Monetary claims bought

9,999

Money held in trust
10,286=

Total amount of solvency margin<numerator>
43,910Price fluctuation reserves 139

Securities
45,570

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

1,745

Excess over the fullZillmerized reserve 17,262

Deferred tax liabilities onavailable-for-sale securities 1－

Valuation difference on
securities available-for-sale(648)1【Ref.】
Consolidated
Solvency margin ratio

Insurance risk R1 2,211

Reserves for outstanding claims

Contingency reserves 4,123

Total amount of risk/2< the denominator>
3,762/2

2,470.2 %Other liabilities
2,018

Policy reserves
56,616

÷(JPY millions)

Add liabilities
with strong
capitalcharacteristics
such as pricefluctuation
reserves andcontingency
reserves

Medical insurance risk R8 815
Risk of change in medical incidence rate (hospital admission
rate , etc.)

Assumed interest rate risk R2 4
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 1,968

Tangible fixed assets

72
Intangible fixed assets
1,741

Other assets
5,884
1.
2.

Capital stock andother assets
23,035

Net assets
22,386[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 149
3% of the total of the amounts of the other 5 risks (in the
Company’s case)

90% of the valuation difference on available-for-sale securities and deferred gains or losses on hedges (pre-tax) (if negative, 100%)
Items that do not apply to the Company or for which the amount is minimal have been omitted, except for certain bracketed items.

34

IFRS Reporting◼
◼

IFRS adoption better presents periodic performance and profitability from policies-in-force
Capital adequacy and dividends are regulated by statutory accounting standards (J-GAAP)
Statutory Accounting（J-GAAP）

Important perspective

Embedded ValueIFRS 17

Financial soundness forpolicyholder protection

Economic value of
insurance policies including
future profit

Recognition of revenue
based on the retentionof in-force business

Acquisition expense isrecognized at the time ofacquisition.

The expected profit for thepolicy period isimmediately recognized.

The expected profit isallocated over the termof the policy.

Year1

Timing ofprofit recognition

Year1

Year2 Year3
profitYear4
・・・・

present
value ofprofitYear1
profitYear2 Year3

Year4
・・・・

loss

35

Dividend Policy◼ Aim for the increase in total shareholder return by capital gain1
ProfitPolicies-in-force & profit and loss（illustrative image）: Policies-in-force: New business: J-GAAP profit and loss

Retained earnings are realized aftergenerating profit

Marketing expenses are recordedin lump-sum on the initial year of
insurance period
Loss

1.

Lifenet has yet to determine its specific dividend policies and dates for the start of distributing retained earnings, as we prioritize strengthening our growth base to increase mid to long term profitability.

36