NEWS RELEASE
February 12, 2020
Ryosuke Mori, President
LIFENET INSURANCE COMPANY(Securities Code: 7157, TSE Mothers)

Financial Results for 3Q of Fiscal 2019 Ending March 31, 2020
Annualized premium of new business of 2,435 million yen, up 24.8% year on year
TOKYO, February 12, 2020 - LIFENET INSURANCE COMPANY (TSE Mothers 7157,
President Ryosuke Mori, URL: https://ir.lifenet-seimei.co.jp/en/) discloses financial results for thethird quarter of fiscal 2019 ending March 31, 2020.
1．Overview of the financial results for 3Q of fiscal 2019(1) Business results
Condition of policies-in-force
Annualized premium*1 of new business in 3Q ended December 31, 2019 was 818 million yen(110.4% of 3Q of fiscal 2018). The number of new business was 19,685 (113.7% of 3Q of fiscal
2018). Annualized premium*1 of new business for the nine months ended December 31, 2019was 2,435 million yen (124.8% of the nine months ended December 31, 2018). The number of
new business for the nine months ended December 31, 2019 was 57,597 (127.0% of the ninemonths ended December 31, 2018).
Annualized premium*1 of policies-in-force as of the end of 3Q of fiscal 2019 stands at 14,783
million yen (113.0% of March 31, 2019). The number of policies-in-force resulted in a total of
348,429 (112.8% of March 31, 2019) and exceeded 350,000 in January 2020.
Surrender and lapse ratio*2 for the nine months ended December 31, 2019 was 7.0% (6.3%
for the nine months ended December 31, 2018).
*1: Annualized premium is the amount of money equivalent to what is to be paid to have the insurance coverage for one
year. All payments for Lifenet products are in monthly installments, we calculate annualized premium as multiplying
the monthly premium by 12 months.
*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.

Results of operations
Insurance premiums and other for the nine months ended December 31, 2019 increased to11,945 million yen (133.5% of the nine months ended December 31, 2018) due to an increase in
in-force business and modified co-insurance. Investment income was 258 million yen (88.3% of
the nine months ended December 31, 2018). Other ordinary income was 39 million yen. As aresult, ordinary income for the nine months ended December 31, 2019 amounted to 12,242
million yen (130.8% of the nine months ended December 31, 2018).
Insurance claims and other was 2,743 million yen (140.6% of the nine months ended
December 31, 2018). The ratio of insurance payment amounts to insurance premiums was
19.7% for the nine months ended December 31, 2019, compared with 18.4% for the ninemonths ended December 31, 2018. Provision for policy reserves and other came to 3,604
million yen (121.7% of the nine months ended December 31, 2018). The ratio of provision forpolicy reserves to insurance premiums increased to 35.0% for the nine months ended
December 31, 2019, compared with 34.0% for the nine months ended December 31, 2018.
Operating expenses amounted to 6,772 million yen (139.6% of the nine months ended
December 31, 2018) mainly due to an increase in our marketing spend including advertising.
The components of operating expenses were 4,563 million yen in marketing expenses (160.1%of the nine months ended December 31, 2018), 667 million yen in customer service expenses(115.4% of the nine months ended December 31, 2018), and 1,542 million yen in system andCopyright© LIFENET INSURANCE COMPANY All rights reserved.

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NEWS RELEASE
other expenses (108.5% of the nine months ended December 31, 2018). Other ordinary
expenses was 773 million yen (143.3% of the nine months ended December 31, 2018).
Consequently, ordinary expenses for the nine months ended December 31, 2019 totaled 13,941
million yen (135.3% of the nine months ended December 31, 2018).
As a result, ordinary profit totaled 1,699 million yen loss for the nine months ended December
31, 2019, compared with 944 million yen loss for the nine months ended December 31, 2018.
Net income was 1,711 million yen loss, compared with 957 million yen loss for the nine months
ended December 31, 2018.
In addition, fundamental profit, which is an indicator for the profitability of life insurancecompanies, amounted to 1,675 million yen loss, compared with 936 million yen loss for the ninemonths ended December 31, 2018, mainly due to an increase in operating expenses. The
components of fundamental profit were 2,077 million yen in mortality margin, 3,771 million yen
loss in expense margin and 17 million yen in interest margin.
We are participating in reinsurance transactions from fiscal 2019 by modified co-insurance onpart of new business to achieve continuous growth. By utilizing reinsurance appropriately, we willease the temporary burden imposed on statutory capital by expenses associated with new
business and maintain fiscal soundness. The reinsurance transactions are agreements thattransfer the risk and the profit (loss) structure of the reinsured business to the reinsurancecompany for a certain period of time. We receive ceding commission in accordance with the new
business costs associated with the reinsured business in the initial fiscal year. This leads to anincrease in ordinary income. On the other hand, after the ceding commission is recorded
reinsurance accounts receivable as asset, it is amortized by the profit generated from thereinsured business over following fiscal years. This leads to a decrease in ordinary profit and net
profit.
Once the balance of reinsurance accounts receivable is amortized to zero, the reinsurance
agreement terminates, and subsequent profit on the reinsured business belongs to Lifenet.
Accordingly, from fiscal 2019 onward, we are reinsuring a portion of new business in modified coinsurance which has resulted in raising ordinary income by 1,367 million yen, ordinary profit by
1,096 million yen, and net income by 1,096 million yen for the nine months ended December 31,
2019.
(2) Financial condition
Assets, liabilities and net assets
Total assets as of December 31, 2019 amounted to 40,607 million yen (38,247 million yen asof March 31, 2019). The major account balance was 31,771 million yen in securities mainly
consisting of government bonds and corporate bonds with high credit ratings. Reinsurance
accounts receivable was 1,204 million yen including 1,100 million yen of the balance of
unamortized ceding commission for modified co-insurance.
Liabilities amounted to 30,235 million yen as of December 31, 2019 (26,474 million yen as ofMarch 31, 2019), owing to an increase in policy reserves. The major account balances were28,376 million yen in policy reserves and 484 million yen in reserves for outstanding claims.
Net assets amounted to 10,371 million yen as of December 31, 2019 (11,773 million yen as ofMarch 31, 2019) due to the recording of net loss for the nine months ended December 31,
2019. It includes the effect of raising retained earnings by 1,096 million yen due to the utilizationof modified co-insurance.
The solvency margin ratio as of December 31, 2019 was 2,163.6% (2,085.2% as of March
31, 2019), which indicated that an adequate level of payment capacity was maintained.

Copyright© LIFENET INSURANCE COMPANY All rights reserved.

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NEWS RELEASE
Cash flows
For the nine months ended December 31, 2019, net cash provided by operating activities
amounted to 1,018 million yen (1,923 million yen provided for the nine months ended December
31, 2018) despite the increase in operating expenses. Net cash used by investing activities
amounted to 1,475 million yen (2,675 million yen used for the nine months ended December 31,2018) mainly due to acquisition of securities. Net cash provided by financing activities amounted
to 76 million yen (13 million yen used for the nine months ended December 31, 2018).
Based on these activities described above, cash and cash equivalents as of December 31,
2019 totaled 1,812 million yen (2,192 million yen as of March 31, 2019).
(3) Business forecasts
The business forecasts for fiscal 2019 which was announced on November 12, 2019 remainunchanged as shown below.
(In millions of yen)
Ordinary income
Ordinary profit (loss)
Net income (loss)
Business forecast
for fiscal 2019
(Reference)
Business results
for fiscal 2018

16,500(2,500)(2,500)12,560(1,719)(1,735)The business forecasts for fiscal 2019 includes the impact of reinsurance transactions fromfiscal 2019 by modified co-insurance. We expect the impact on fiscal 2019 results forecasts toincrease ordinary income by around 2,000 million yen, ordinary profit by around 1,400 million
yen and net income by around 1,400 million yen, given that new business will be acquired as
expected. Subsequently, expecting annualized premium of new business will be 3,300 million
yen.

About LIFENETURL: https://ir.lifenet-seimei.co.jp/en/

Remembering the original purpose of life insurance - mutual support - LIFENET INSURANCECOMPANY was founded with the goal of offering simple, convenient and competitively priced
products and services based on the highest levels of business integrity. We sell these products
and services directly to customers over the Internet. We aim to be the leading company driving
the growth of the online life insurance market.
Contact:
Investor Relations, Corporate Planning DepartmentTel:+81-3-5216-7900
e-mail: ir@lifenet-seimei.co.jp
Disclaimer: This is a summarized translation of the original Japanese document, prepared andprovided solely for readers' convenience. In case of any discrepancy or dispute, the Japanese
document prevails.

Copyright© LIFENET INSURANCE COMPANY All rights reserved.

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NEWS RELEASE
2. Non-consolidated Financial Statements(1) Balance Sheets(In millions of yen)March 31,
Dec. 31,2019
2019
ASSETSCash and deposits ·································································

1,192

1,312

Monetary claims bought ··························································

999

499

Money held in trust ································································

3,114

3,698

Securities ············································································

30,98931,771Government bonds····························································

8,071

8,083

Municipal bonds ·······························································

1,394

1,398

Corporate bonds ·······························································

16,76318,037

Stocks ············································································

363

372

Foreign securities ·····························································

45

29

Other securities ································································

4,352

3,849

Tangible fixed assets ······························································

99

98

Intangible fixed assets ····························································

629

716

Agency accounts receivable ····················································

7

9

Reinsurance accounts receivable ··············································

69

1,204

Other assets·········································································

1,146

1,297

Accounts receivable ··························································

955

1,083

Other ·············································································

191

213

Total assets ···························································

38,24740,607

LIABILITIESPolicy reserves and other ························································
Reserves for outstanding claims ··········································

25,25628,861

469

484

Policy reserves ·································································

24,78628,376

Agency accounts payable ·······················································

72

55

Reinsurance accounts payable ·················································

160

206

Other liabilities ······································································

707

754

Reserves under the special laws ···············································

42

52

Reserve for price fluctuations ··············································

42

52

Deferred tax liabilities ·····························································

233

305

Total liabilities ·························································

26,47430,235

Capital stock ········································································

12,136

12,200Capital surplus ······································································

12,136

12,200Retained earnings ·································································(13,101)(14,813)

Shareholders’ equity ················································

11,172

9,587

Valuation difference on available-for-sale securities ······················

600

784

Valuation and translation adjustments ········································

600

784

Total net assets ······················································

11,773

10,371

Total liabilities and net assets ·····································

38,24740,607NET ASSETS

Copyright© LIFENET INSURANCE COMPANY All rights reserved.

4NEWS RELEASE(2) Statements of Operations

Ordinary income····························································
Insurance premiums and other ····································
Premiums income ·················································
Reinsurance income··············································
Investment income ····················································
Interest, dividends and other income ·························
Gains on money held in trust ···································
Gain on sales of securities ······································
Other ordinary income ···············································
Reversal of reserves for outstanding claims ················
Other ·································································
Ordinary expenses ························································
Insurance claims and other ·········································
Insurance claims ··················································
Benefits ······························································
Other refunds ······················································
Reinsurance commissions ······································
Provision for policy reserves and other ··························
Provision for reserves for outstanding claims ··············
Provision for policy reserves ···································
Investment expenses ·················································
Interest expenses ·················································
Loss on valuation of securities ·································
Foreign exchange losses ········································
Operating expenses ··················································
Other ordinary expenses ············································
Ordinary profit (loss) ······················································
Extraordinary losses ······················································
Provision of reserves under the special laws ···················
Provision of reserve for price fluctuations ···················
Income (loss) before income taxes ····································
Income taxes-current ·····················································
Income taxes ································································Net income (loss) ··························································(In millions of yen)
Nine months ended Dec. 31
2018
2019
9,359
12,242
8,949
11,945
8,706
10,269
243
1,675
292
258
167
218
26
22
98
16
117
39
93
－
23
39
10,303
13,941
1,950
2,743
1,105
1,316
498
704
0
0
347
721
2,962
3,604
－
14
2,962
3,590
0
46
0
0
－
46
－
0
4,850
6,772
540
773
(944)
(1,699)
9
9
9
9
9
9
(954)
(1,708)
3
2
3
2
(957)
(1,711)

Copyright© LIFENET INSURANCE COMPANY All rights reserved.

5NEWS RELEASE(3) Statements of Cash Flows(In millions of yen)
Nine months ended Dec. 31
2018

2019

Cash flows from operating activities
Income (loss) before income taxes ··································(954)(1,708)Depreciation and amortization ········································

187

227

Increase (decrease) in reserves for outstanding claims ········

(93)

14

Increase (decrease) in policy reserves ······························

2,962

3,590

Increase (decrease) in reserve for price fluctuations ············

99Interest, dividends and other income ································

(167)

(218)

Loss (gain) related to securities ·······································

(98)

29

Interest expenses ························································

00Decrease (increase) in agency accounts receivable ············

(2)

(2)

Decrease (increase) in reinsurance accounts receivable ·······(33)(1,134)

Decrease (increase) in other assets <excluding assets for investing and financing activities> ··

(104)

(118)

Increase (decrease) in agency accounts payable ····················

14

(17)

Increase (decrease) in reinsurance accounts payable ··········
Increase (decrease) in other liabilities <excluding liabilities for investing and financing activities>·····························································································································
Other,
net ···············································································································································
Subtotal ·····································································

29

45

63

46

(26)

(0)

1,787

762

Interest and dividends income received ····························
Interest expenses paid ··················································

179
(0)

251
(0)

Income taxes (paid) refund ·············································

(43)

4

Net cash provided by (used in) operating activities ·········

1,923

1,018

Cash flows from investing activities
Purchase of money held in trust ······································

(400)

(450)

Purchase of securities ···················································(3,788)(3,130)

Proceeds from sales and redemption of securities ··················

1,727

2,412

Total of net cash provided by (used in) investment transactions(2,460)(1,167)

Total of net cash provided by (used in) operating activities and investment transactions
Purchase of tangible fixed assets ····································
Purchase of intangible fixed assets ··································Net cash provided by (used in) investing activities ··········

(537)
(25)
(189)
(2,675)

(148)
(34)
(273)
(1,475)

Cash flows from financing activities
Proceeds from issuance of stock resulting from exercise of subscription rights to shares－

85

Repayments of lease obligations ·····································

(13)

(8)

Net cash provided by (used in) financing activities ·········

(13)

76

Net increase (decrease) in cash and cash equivalents ·············

(765)

(380)

Cash and cash equivalents, beginning of the year ···················

2,926

2,192

Cash and cash equivalents, end of the period ··························

2,160

1,812

###

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6