Securities Code:7157
TSE Mothers

Investor Meeting
Presentationfor 2Qof Fiscal 2017

November 13, 2017

Key Highlight
Annualized premium of new business up
15% year on year
Ordinary income up 6% year on year
Ordinary profit (loss) recorded
profitability
Launched Cancer Insurance Double Yelland promoted investment in marketing
In line with Mid-term Business Plan
1

Summary of 2Q for FY2017 Results(JPY mn)

2016/1H
Ordinary income
Operating expenses
Ordinary profit (loss)1

Net income (loss)
Mortality margin
Annualized premium2 ofpolicies-in-force
Number of policies-in-force
Annualized premium2 of
new business

Number of new business
1.
2.

2017/1H

Year on year

5,016
5,338
1,716
2,295
327
1
(191)
(15)
1,139
1,278
9,693
10,493
231,538 248,635
635
730
13,61916,442106.4%
133.7%
0.4%
112.2%
108.3%
107.4%
115.1%
120.7%The ordinary profit (loss) before amortization of deferred assets under Article 113 of the Insurance Business Act for 1H of 2016
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 themonthly premium by 12 months.

2

Contents

1. Progress of Mid-term Business Plan
2. Results for 2Q of Fiscal 20173

Mid-term Business Plan Summary of Mid-term Business Plan
FY2018
Management
Goal

13.5 billion yen in ordinary income
Positive profitability of ordinary profit (loss)

Business
Strategy

1. The pillars of business : Online direct sales,
KDDI (exclusive alliance agent) and Overthe-counter agent
2. Continuous creation of unique sales point inall channels
3. Commitment to business development for
future growth

Organization

Change, Challenge and Unity
4

To Achieve Mid-term Business Plan Aiming for establishing system realizing
sustainable profitability in fiscal 2017
 Achieve
Management Goal
 Return to
growth in new
business
performance Establish a system
realizing sustainableprofitability

2018

2017

2016
5

Progress of Mid-term Business Plan
(Ordinary Income) In line with Mid-term Business Plan
Management Goal

13,500: Fiscal year
: First-half of fiscal year

Business forecasts(JPY mn)

9,387

10,096

11,000Up 6%
Y-on-Y

4,629

5,016

5,338

FY2015

16

17

18

6

Progress of Mid-term Business Plan
(Ordinary Profit/Loss) Aiming for positive profitability1 ofordinary profit (loss) in fiscal 2018
Resultsfor FY2016

Business
forecasts
FY2017(JPY mn)

Management
Goal FY2018

Results for
17/1H

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

88

-

-

-

Amortization ofdeferred assets under
Article 113 of IBA (B)2,1202

-

-

-

(300)

Turn
profitable

1

Ordinary profit(loss) (A)-(B)(2,031)

1.

Management indicator for Mid-term Business Plan before FY2016 is the ordinary profit (loss) before amortization of deferred assets under Article 113 of the Insurance Business Act, the ordinary
profit (loss) is after FY2017.

2.

Amortization of the deferred assets under Article 113 of the Insurance Business Act was 2,120 million yen due to the one-time amortization.

7

Contents

1. Progress of Mid-term Business Plan
2. Results for 2Q of Fiscal 20178

Key Accomplishment in FY2017 1H
Launched Cancer Insurance Double Yellwith aggressive investment in marketing
Improved customers convenience-Enhanced service via smartphone-Highest rating in 2017 HDI Benchmarking

Annualized premium of new businessincreased 15% year on year
9

Insurance for Workers
 Cancer insurance as new product followed
Long-term Disability

Approx. 60％ of
payment for cancer(actual)Launchedin Feb. 2010
Renewedin June 2016

Long-term
Disability

CancerInsurance

Launched
in Aug. 2017

Support working patients receiving treatment for cancer(75％1 of cancer patients are working)1.

Data from Bureau of Social Welfare and Public Health, Tokyo Metropolitan Government

10

Launched Cancer Insurance in August Provides double support for treatment
while working
Treatment
expenses

Incomedecrease

Treatment
supportbenefit

Incomesupportbenefit
Lifenet Cancer Insurance
Double Yell

＋ Survivorship Support Services
11Survivorship Support Services
 Introduces necessary services by partnering
companies based on cancer survivors’ voice
Housekeeping services
Appearance care

Support taxi

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

12

Enhance Advertisement
 Strengthened TV commercial and otherwith new product launch

13Enhance Service via Smartphone Enabled insurance consulting service via
LINE for partner together

Customer

Insurance Planner

Customer’s partner

14

Highest Rating in HDI Benchmarking
 Contact center and website double-awarded
highest rating 3 stars for 6th consecutive year1,
longest record in life insurance industry2
 Phone Support (Contact Center)

1.
2.

Awarded in the 2017 Benchmarking (Life Insurance Industry) hosted by HDI-Japan
According to our own research Web Support (Website)

15

Ordinary Income

5,338(JPY mn)
5,016
4,629

5,080

4,757

Y-on-Y 6%
increase

15/1H 15/2H 16/1H 16/2H 17/1H

 Steadily
increased 6%
year on year
 5,196 million yen
of insurance
premiums and
other
16

Annualized Premium /Number of Policies-in-force:Number of policies-in-force:Annualized premium of policies-in-force (JPY bn)

248,635
239,800
219,471

225,534

10.0
9.0

9.3

 Steadily increased

231,538

9.6

10.4

15/09 16/03 16/09 17/03 17/09

 Exceeded 250,000
of number ofpolicies-in-forcein October(YY/MM)17

Breakdown of Policies-in-force
 Long-term Disability increased
Number of policies-in-force1

250,000

682

38,553Cancer(Launched in August)

10,176Long-term Disability
Term Medical Care73,122Whole-life Medical

120,070

126,102

Term Life

2016/092017/0931,221200,000

10,806150,000

69,441

Y-on-Y
up 23%

100,000

50,0000
Number of policies-in-force
Sum insured of policies-in-force2 (JPY mn)
Number of policyholders(reference) Surrender and lapse ratio3

231,538
1,936,576
145,6266.6%

248,635
2,001,647
159,519
6.1%

1.

Term Life insurance: Kazoku and au Term Insurance, Whole-life Medical insurance: Jibun, New Jibun, New Jibun for Women, au Medical Insurance and au Medical Insurance for Women, Term Medical Careinsurance: Jibun Plus, Long-term Disability insurance: Hataraku-Hito, Hataraku-Hito 2 and au Long-term Disability Insurance, Cancer insurance: Double Yell.

2.

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

3.

The surrender and lapse ratio is the annual equivalent of the monthly number of policies surrendered and/or lapsed divided by the monthly average number of policies-in-force.

18

Annualized Premium /Number of New Business:Number of new business in fiscal year
:Number of new business in first-half of fiscal year
:Annualized premium of new business in first-half of fiscal year (JPY mn)
975

Y-on-Y 15%
increase

730
694
635

Y-on-Y 21%
increase

548
26,777

16,442
15,053

13,61911,403

FY2013

14

15

16

17

 Number of New
Business increased
21% year on year Steady growth by
new product launchand channel
diversification
19

Annualized Premium /Number of New Business(Quarterly) Number of new business increased
37% year on year
9,142

8,649

:Number of new business:Annualized premium of new business(JPY mn)
6,864

7,793
7,307
6,980

6,883

387

6,312
5,756

406

5,647

343

341
323
279

320

316
293

268

15/1Q 15/2Q 15/3Q 15/4Q 16/1Q 16/2Q 16/3Q 16/4Q 17/1Q 17/2Q

20

Amount of Insurance Claims
and Benefits:Amount of insurance payments (JPY mn):Amount of insurance payments / Premiums income (%)

821
772

767

508

497

559
518

351

533

16.3
284

15.7

12.6

16.2

11.3

208

234

264

270

 35 insurance
claims and3,039 benefit
Insurance
claimsclaims288

 Ratio topremiums
Benefitclaimsincome 16%

15/1H 15/2H 16/1H 16/2H 17/1H
21

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

1,877

1,867

1,837

1,801

1,786

42.4
40.8
38.8
36.8

35.1

 Decreased inaccordance withelapsed years andother

15/1H 15/2H 16/1H 16/2H 17/1H
22

Operating Expenses(JPY mn)

2,330

1,779

1,716

1,159

1,460
753

662

273

273

752

781

39%

36%

548
296


Aggressive
2,295
investment inmarketingMarketingexpenses forfurther growth
Customer
1,115

327

service Operating
Systemand other
expenses
1 45%
ratio
15/1H 15/2H 16/1H 16/2H 17/1H
252

658

33%
1.

The ratio of operating expenses to premiums income

874

48%

852

45% Operating expenses ratio¹
23

Marketing Expenses (Quarterly) Enhanced advertisement with new productlaunch

690

731(JPY mn)

441

428

339
312
279

425

323

269

15/1Q 15/2Q 15/3Q 15/4Q 16/1Q 16/2Q 16/3Q 16/4Q 17/1Q 17/2Q

24

Marketing Expenses per New Business:Marketing expenses per new business (JPY thousand):Marketing expenses / Annualized premium of new business

71

67

54
48

48

1.5

1.5
1.1
1.0

1.0

 Improved efficiency
despite of aggressive
investment inmarketing expenses

15/1H 15/2H 16/1H 16/2H 17/1H
25

Ordinary Profit/Loss and Net Income/Loss Recorded profitability
by less payment than expected
Ordinary profit (loss)1
before amortization of deferredassets under Article 113 of IBA

Amortization cost
Ordinary profit (loss)
Net income (loss)

15/1H

15/2H

16/1H

16/2H

418

165

327

(239)

(530)
(111)
(102)

(530)
(364)
(326)

(530)
(202)
(191)

(1,590)2(1,829)2(1,697)(JPY mn)

17/1H

1
1
(15)

418
327

Ordinary profit (loss)1(JPY mn)

1

165

(239)
1.
2.

The ordinary profit (loss) before amortization of deferred assets under Article 113 of the Insurance Business Act until FY2016, the ordinary profit (loss) for FY2017
Amortization of the deferred assets under Article 113 of the Insurance Business Act was 1,590 million yen due to the one-time amortization.

26

Structure Breakdownof Ordinary Profit/Loss1
 Declined due to increase of operating
expenses
Transition of ordinary profit (loss)1(JPY mn)

Other

327

Increaseof insurance
premiums
and other

(15)

338

Decrease ofprovision
Increase of forpolicyinsurance reserves
and otherclaimsand other

(77)

50

Increase ofoperatingexpenses

(578)
Other

(42)
16/1H
1.

IncomeExpenseThe ordinary profit (loss) before amortization of deferred assets under Article 113 of the Insurance Business Act for FY2016, the ordinary profit (loss) for FY2017

1
17/1H
27

Condensed Statements of Operation(JPY mn)

16/1H

17/1H

Change

4,858
158
5,016

5,196
142
5,338

338
(15)
322

893

971

77

1,837

1,786

(50)

(B)

1,716
240
4,688

2,295
283
5,337

578
42
648

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

327

1

(326)

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

530

-

(530)

Ordinary profit (loss)

(202)

1

203

Insurance premiums and other

Other
Ordinary income(A)

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

Ordinary expenses(A-B)-(C)28Mortality Margin
Y-on-Y 12%
increase(JPY mn)

1,278
1,139
1,059

1,153

1,041

 Increased
12% year on year
due to premiums
income up

15/1H 15/2H 16/1H 16/2H 17/1H
29

Fundamental Profit(JPY mn)

2016/1H 2016/2H 2017/1H
Mortality margin
Expense margin (loss)
Interest margin
Fundamental profit(ref.) Amortization
cost under Article 113(ref.) Insurance
premiums and other

Adjusted
fundamental
profit1

1,139
1,153 1,278(1,311) (2,936) (1,232)1434(157) (1,778)50(530) (1,590)2
4,858 4,958
5,196

 Expense loss
remains same levelyear on year due tomarketing expenses
increase

372(JPY mn)

50 Recorded positive
ordinary profit

(188)
1.
2.

The fundamental profit before amortization of deferred assets under Article 113 of the Insurance Business Act until FY2016, the fundamental profit for FY2017
Amortization of the deferred assets under Article 113 of the Insurance Business Act was 1,590 million yen due to the one-time amortization.

30

Financial Condition
16/09

17/03

17/09

31,88331,93433,706

Cash and deposits

884

1,004

890

Monetary claimsbought

1,499

1,999

999
25,447
10,126
1,531
10,753
287
748
2,000
16,573995
26,372
9,876
1,496
11,751
334
819
2,095
18,28815,703

17,501

19,285

15,31013,645

13,633(JPY mn)(YY/MM)

Total assets

Money held in trust

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

Total liabilities
Policy reserves andotherTotal net assets

Solvency marginratio

Promoted
asset
1,999
diversification with
1,507
27,666
investment trust
8,365
1,497
13,768
330
807
2,897
20,0722,809％ 2,723％ 2,599％

 Modified duration
11.9 years

1.

Lifenet is holding shares of Advance Create Co., Ltd., its insurance sales agent,
for the purpose of maintaining equity and business partnership.

2.

Investment in Kyobo Lifeplanet Life Insurance Company in Korea

3.

Investment trust including foreign bonds and stocks

31

European Embedded Value (EEV)1(JPY mn)

39,62936,261
32,00820,24023,560

Value ofin-forcebusiness

15,377

1.

16,63016,021

16,068Adjusted
net worth

16/09

17/03

17/09

(YY/MM) Increased 9% fromthe end of fiscal 2016
by incorporation of
payment results

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.

32

Value of New Business (VoNB): Fiscal year
: First-half of fiscal year
(JPY mn) Same level year on
year

70

14

FY201615

 Continuously challenge
to improve marketing
efficiency

17
33

Structure Breakdown of VoNB per Policy
 Increased initial expense due to marketing
expenses increase
Value of new business per policy(JPY thousand)

1.0

0.9
Unit costOtherbase change variables

Initial expense
increased(16.9) Products mix Insurancechange(3.5)

premiums
per policy
decreased

(8.4)

16/1H

Interest
rates
changeExpected
incidence
rate change

(4.6)

0.6

22.5

10.1

17/1H

34

Value of New Business (VoNB)
16/1H

17/1H

1,761

2,012

122.3

Time value of financial options
and guarantees

-

-

-

Frictional cost of capital

(3)

(6)

(0.3)

(1,073)
684

(821)
1,184

(49.9)
72.0(669)(1,168)(71.0)

14

15

0.9

9,824
13,61910,10016,442(JPY mn)
Certainty equivalent present value of future profit
－)
－)
－)

Allowance for non-hedgeable risk

Value of in-force business－)

Per new businessfor 2017 1H(JPY thousand)

Adjusted net worth

Value of new business(Ref.) Present value of in-force business premiums
Number of new business35

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

EEV and new business value as of September 30, 2017

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: 5% decrease in mortality for annuity business
Sensitivity 7: Change the required capital to the statutory minimum
1.

Change in EEV as of
Sep. 30, 2017

Change in VoNB

39,629332(1,199)
250
(465)
238
(325)
2,107
(1,115)
3,016
74

15
142
(235)
80
(103)
22
133
(63)
102
4

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 from the 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 thevaluation date. The sensitivity on the value of new business excludes the impact on the adjusted net worth.

36

Future Direction
 Supports life of workers × child-rearing
generation utilizing technology
Workers ×Child-rearing generation
Money

RaisingchildrenWork

Insurance
Medicalcare

Digital Technology
FinTechInsurTech

HealthTech

HealthLife support by insurance and related information/services

37

New Challenge Promotes new products development andenhances sales channel
Online direct sales→ Improve services via
smartphone and promote
Cancer Insurance Double Yell

Onlinedirectsales

KDDI(exclusive
alliance
agent)

Agent

KDDI (exclusive alliance agent)→ Utilize website, au Financial
Support Center and au shops
Agent→ Promote Long-term Disability
and Cancer insurance via
over-the-counter agent
38

Business Forecasts FY2017
 Business forecasts disclosed in May 2017
remains unchanged(JPY mn)

Business
forecasts for
FY2017(Reference)
Results for FY2016

Ordinary income

11,00010,096

Ordinary profit(loss)(300)(2,031)1

1. 保険業法第113条繰延資産を一括償却したことにより、保険業法第113条繰延資産償却費2,120百万円を計上(1,889)1

Net income (loss)(300)

1. Amortization of the deferred assets under Article 113 of the Insurance Business Act was 2,120 million yen due to the one-time amortization.

39

LIFENET is…

Comprehensible
Cost-Competitive
Convenient Returning to the original purpose oflife insurance – mutual support – Plugged-in way to reach customers who needinsurance products with necessary coverage
40

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.

41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 of Fundamental Profit
2Q of FY2017
Ordinary income

Statements of operations
Insurance premiums and other 5,196

Premiums income 5,083

Reinsurance income 112

Investment income
120
Other ordinary income 21
Insurance claims and other 971

Ordinary expenses

Profit analysis
Net premiums

ReinsuranceincomeReversal ofreserves foroutstanding
claimsReinsurance commissions
149

Insurance claims
and benefits
Reinsurance
commissions

Provision for policy reserves
and others 1,786

Change inpolicy reserves

Insurance claims and benefits
821

Expense loading

Interest anddividends
Other ordinary
incomeChange inpolicy reserves

Investment expenses 0
Operating expenses 2,295

Operatingexpenses

Other ordinary
expenses 283

Other ordinary
expenses

Projected
interest
Interest
expenses

Provision forcontingency
reserves
Losses on salesof securities

Capitalgains(0)Ordinary profit 1

Otheronetimeloss(48)

Extraordinary losses (4)Mortality
marginExpensemarginInterest
marginExtraordinary losses(4)

Income taxes 11

1,278(1,232)

4

Income taxes 11

Net profit (15)1.

Gains on salesof securities

Some items with minimal amounts have been omitted.

Net profit (15)44

Solvency Margin Ratio Calculation
As of September 30, 2017

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

Solvency margin ratio
2,599.6%
Cash and deposits
890
Monetary claims bought
1,999
Money held in trust
1,507

=

Total amount of solvency margin<numerator>
20,626

Other liabilities
571

Excess over the fullZillmerized reserve 5,393

Price fluctuation reserves
24

Securities
27,666

Deferred tax liabilities onavailable-for-salesecurities
1721

Valuation difference on
available-for-salesecurities 4421

Intangible fixed assets

Capital stockand otherassets13,141

560
Other assets
963

Net assets
13,633

Tangible fixed assets
116

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

308

Contingency reserves 1,451

Total amount of risk/2< the denominator>
1,586/2

Insurance risk R1 1,060

Reserves for outstanding claims

Policy reserves
18,976

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

Medical insurance risk R8 347
Risk of change in medical incidence rate (hospital
admission rate , etc.)

Assumed interest rate risk R2 2
Risk that the actual investment return will fall below
the expected return used as a basis for calculating
policy reserves[Minimum guarantee risk] R7 －Risk related to products, such as variable annuities
with minimum guarantees

Asset management risk R3 589[Credit risk] Risk that asset values decline due todeterioration in financial condition of creditees[Price fluctuation risk]Risk of incurring losses due todecline in market value of stocks and bonds, etc.

Business management risk R4 59
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.

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