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

November 15, 2023

1H for Fiscal 2023 Key Highlights
Key Indicators
Corporate Value

GrowthProfitability

EEV

Annualized premium1of policies-in-force

Insurance service
results(European Embedded Value)¥

140,905mn(YoY 114.5%)¥

27,255mn(YoY 118.8%)¥

4,088mn(YoY 138.8%)

Notable Achievements◼

Started offering GCL2 to mortgage loan borrowers of au Jibun Bank from July. Due to GCL,
annualized premium of policies-in-force and EEV added ¥2.5bn and ¥4.4bn3, respectively◼

Raised capital through public offering and third-party allotment to further unleash thegrowth potential of online life insurance◼

Sumitomo Mitsui Card and Lifenet to start offering “Insurance with V-points” from December

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 Insurance
3. Additional amount of value of new business1

Annualized Premium of Policies-in-Force◼ Strongly grew 18.8% YoY, with large contribution
from newly started GCL
YoY:AP1 of policies-in-force for GCL (JPY millions)¥:AP1 of policies-in-force for individual life (JPY millions)

22,94727,255mn
2,570Group credit
life insurance

24,685

Individuallife insurance

20,231

YoY+7.6％

17,234
14,2002019 2Q
2019/09
1. Annualized premium

2020 2Q
2020/09+18.8％

2021 2Q
2021/092022 2Q
2022/092023 2Q
2023/09（YY/MM）

2

Policies-in-Force Movement◼ GCL strongly led the growth while demand of individual life wasmoderate
Net increase of
GCL

2,570

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

Net increase ofindividual life

276
375

504

581

AP of
policies-in-force¥27,255mn
YoY

18.8％

+

22,9472022/0923,5282022/1224,033

24,4082023/032023/06

2023/09（YY/MM）

3

Summary IFRS P/L◼ Insurance service results and net income resulted in¥4,088mn and ¥2,759mn, respectively（Ref.）FY20222

FY2022/1H2

FY2023/1H2

ChangeInsurance service results

2,946

4,088

1,142

6,618

Financial results1

(423)

66

490

(452)

Other results

(374)

(228)

146

(822)

Profit before tax

2,147

3,926

1,778

5,343

Net income attributable toowners of the Company

1,437

2,759

1,321

3,562

Items

1.
2.

(JPY millions)

Total of investment results from financial assets, insurance finance income or expense and reinsurance finance income or expense
1H of FY2022 includes ¥883mn, 1H of FY2023 includes ¥25mn and FY2022 includes ¥1,378mn of insurance claims and benefit related to COVID-19

4

Insurance Service Results1◼ Grew 38.8% YoY and reached ¥4,088mn, maintaining steady growth◼ 47.5% progress rate over revised business forecasts
Business forecasts
announced in August:Insurance service results (fiscal year, JPY millions)

8,600:Insurance service results (1H, JPY millions)
7,216
6,618

6,606

2

5,419

4,088ｍn￥2

Progress rate

47.5％

YoY

3,575

3,549

2020

2021

2,492

2019
1.
2.

2

2,946

2022

Figures for FY2021 and earlier are for reference use only as they are before date of transition to IFRS
1H of FY2022 includes ¥883mn, 1H of FY2023 includes ¥25mn and FY2022 includes ¥1,378mn of insurance claims and benefit related to COVID-19＋38.8％

2023/1H (fiscal year)
5Insurance Service Results Analysis◼ Increased due to the calm down of COVID-19 claims andincrease of CSM release along with the growth of in-force business(JPY millions)
Items
Expected claims minus incurredclaims1

FY2022/1H

FY2023/1H

Change

(808)

263

1,072

819

872

52

CSM release

3,132

3,435

303

Reinsurance results

(137)

(383)

(245)

(58)

(95)

(36)

ー

(4)

(4)

2,946

4,088

1,142

Risk adjustment release

OthersResults from GCL

2

Insurance service results

CSM release
Risk
Expected adjustment
minus incurred release

303

1,072

52

2,946

(4)

Includingtemporary adjustmentof ¥(160)mn
YoY+¥1,142mn

2022/1H
1.
2.

4,088

Reinsurance
Results from
Othersresults
GCL(245) (36)Insuranceservice results

Insuranceservice results

Applied only for individual life. 1H of FY2022 includes ¥883mn and 1H of FY2023 includes ¥25mn of insurance claims and benefit related to COVID-19
Insurance service results related to contracts measured under the Premium Allocation Approach (Excluding reinsurance results)

2023/1H
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 maintained at the end of Mar. 2023 level¥1,755despite dilution due to capital raising
140,905¥1,788¥1,673¥1,570¥1,430: Value of in-force business (JPY millions)

124,666: Adjusted net worth (JPY millions)

116,604: EEV/share (JPY)
95,140114,627

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

26,277’23/03’23/09 (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 September 30, 2023 is calculated applying the updated operating assumptions from those used for June 30, 2023, and is not 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 and the improvement of opex
ratio with the launch of GCL, and capital raising
140,905(JPY millions)

Adjusted incremental EV2
Expected
existing
business
contribution

Value ofnew business

751

5,117

Including
VoNB of GCL

124,666

4,408

Operatingexperiencevariances

233

Adjustments
to the values3
as of Sep. 30, 2023

9,881

Assumptionchanges

1,319

Economic
variances
and assumptionchanges(1,064)Raised new capitalin September 2023

6,101mn

total ¥

2023/032023/09 (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 of
September 30, 2023 is calculated applying the updated operating assumptions from those used for June 30, 2023, and is not 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◼ Started offering GCL to mortgage loan borrowers of au Jibun Bank
since July
◼ GCL strongly contributed to the financial performance

au Jibun Bank’s rapid growth of mortgage loan
Mortgage loan balances¥High customer satisfaction

2.3tn

1.5
YoY

Contribution to key indicators1
AP ofpolicies-in-force+ ¥2,570mn

EEV(VoNB)+ ¥4,408mn+56.2%

Sep. 2022
1.

As of September 2023

Sep. 2023

2023 Oricon Customer
Satisfaction® Survey
Mortgage “Interest Rate" No.1

Insurance Service
Results

(4)

¥

mn

*Expecting to generate profit from FY2024

9

Capital Raising through Public Offering and Third-Party Allotment◼ Raised new capital of ¥9.7bn to further unleash the growth potential of
online life insurance and enhance corporate value
Unleash the growth potentialof online life insurance

Diversification of investor base

18.0%
Customers who have intention to purchasethrough the Internet1
Customers who actually purchased throughthe Internet1

10.9

Increase of number of individual shareholder2
As of Mar. 31, 2023
（Before）

As of Sep. 30, 2023
（After）

5,373

7,006

GrowthPotential
Third-party allotment

5.9

4.4%
2.8

au Financial Holdings

1.0

Sumitomo Mitsui Card Corporation
2010

2013

2016

2019

1. Source: Survey on Life Protection by the Japan Institute of Life Insurance
2. Japanese Individuals and Others includes Treasury stock

2022

10

Future Pathway of Internet Direct Channel◼ Identified focus areas to attract young customer base andaim for mid-term growth

Focus areas of marketing strategy

Brand
Enhancement

NurtureMarketingData
Utilization
11

Expansion of Partner Business◼ Having backed by the tailwind of ”Embedded Finance”, make the most use of
two major ecosystems with huge customer base and strong brandPlay an important role in individual life and GCL

Contribute to the spread of digital financial service

July 2023
Started GCL

February 2023
“au Life Insurance”
with Ponta Points

12Alliance with SMBC Group◼ Plan to offer “Insurance with V-points” from December
to be embedded into V-point ecosystem
December 2023（planned）
Exclusive for
Sumitomo Mitsui card holder

Insurance with V-points
Developed by Lifenet

V-Points equivalent to 1% of monthly premiums is awarded
when customers purchase insurance through services of SMBC group
Aim to develop new insurance products beyond individual insurance andimprove customer experiences
13

New Initiatives of Lifenet MIRAI◼ Launched a LINE1-based consultation service in October 2023

LINE-based service topromote ‘Save and Minimize'insurance coverage

www.better-choice.com/hoken-diet
1. LINE is a mobile messenger app with 96 million users as of September 2023.

14

Consolidated Business Forecasts for FY2023◼ Remains unchanged from August 2023
GrowthAnnualized premium ofpolicies-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

FY2023

FY2022(JPY millions)

Results

FY2023
1H Results

Forecasts

Annualized premium of policies-in-force

24,03327,25528,200Insurance revenue

20,732

11,766

24,900Insurance service results

6,618

4,088

8,600

Net income attributable to owners of theCompany

3,562

2,759

5,800
15

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

FY2019FY202316

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
17

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.

18

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

Initiatives for Sustainability◼ Promote initiatives for Sustainability cherishing life insurance’s original
purpose – mutual support
Creating the future of life insurance
Creating the futurefor our customers

Creating the future
for a better society

Creating the futurewith our employees

Disclosed the performance in fiscal 2022
for “customer-oriented businessconduct principles”

Disclosed the greenhouse gas
emissions (GHG emissions)for Scope 1 and Scope 2

Developed policies ofhuman resources development andinternal environmental improvement

Corporate governance to create the future
Adopted non-financial indicators to performance-linked compensation to Directors1
Added “Sustainability” as one of the items of skill matrix of Directors
1.

Excluding the directors who are audit and supervisory committee members and outside directors

21

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.

22

Individual

Breakdown of Policies-in-Force

2022/09

Component
ratio

543,635

582,784

100%- Term Life

263,856

284,123

49%- Whole-life Medical

150,293

159,705

27%- Term Medical Care

8,304

7,419

1%

- Long-term Disability

66,662

68,63812%- Cancer

54,52062,89911%

3,514,030

3,708,366

344,441

370,017

Number of policies-in-force

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

Number of policyholders
1.

2023/09

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

23

Individual

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

1,166
1,104

1,137

1,123
1,051

991

990

981
934

822

794

933

969
923

889

818
747

639

16,03628,13623,36923,314
19,117

18,795

19,685

1Q

2Q

3Q

FY2019FY20191.

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

24,41023,92822,612

22,12818,471

4Q

1Q

2Q

3Q
FY2020

FY2020

4Q

1Q

2Q

3Q

FY2021
FY2021

4Q

1Q

2Q

3Q

4Q

FY2022

FY2022

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.

1Q

2Q
FY2023

FY202324

Individual

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%

6.4%

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.

6.9%

6.8%

6.6%

4Q

1Q

2Q

2023年度FY202325

Individual

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

138

127
105
97

92
82
2.2

IACF
(JPY millions)

1.

123
114

3.2

85

2.7
2.4

117

3.5
3.1

2.8

2.9

2.3

2.0

2019

’20

’21

’22

7,484

8,339

9,854 10,389’23/1H (fiscal year)

4,400

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

2022/2Q’22/3Q’22/4Q’23/1Q’23/2Q (fiscal year)

2,565

2,599

2,737

2,177

2,222

IACF
(JPY millions)26

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

Quarter

21.0%

20.8%
19.4%

19.3%

20.2%

20.7%
18.9%

17.8%
4,726
3,896

2,757

2019

1.

18.1%

17.4%

Improved due to thelaunch of GCL

3,047

2,317

’20

’21

’22

’23/1H (fiscal year)

1,181

1,173

1,232

1,146

1,171

2022/2Q’22/3Q’22/4Q’23/1Q’23/2Q (fiscal year)

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.

27

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

Items

FY2023/1Q

FY2023/2Q

2,274

1,813

Expected claims minus incurred claims

368

(104)

Risk adjustment release

433

438

CSM release

1,677

1,758

Increased CSM release due to assumption changes

Reinsurance results

(157)

(225)

Temporary loss of 160 million yen from theadjustment related to reinsurance

Results from GCL1－

(4)

Financial results2

367

(300)

Other results

(120)

(108)

Profit before tax

2,521

1,404

Net income attributable toowners of the Company

1,765

993

Insurance service results

1.
2.

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 expense

Note

Actual claim payments increased

Valuation loss from investment trust due to theincrease in foreign interest rates

28

Breakdown of Insurance Service Results(JPY millions)

Items

FY2022（Ref.）Fiscal Year

１H

Insurance revenue

20,732

10,025

11,766

Expected claims

9,569

4,604

5,177

Risk adjustment release

1,698

819

872

CSM release

6,401

3,132

3,435

Recovery of IACF

3,184

1,528

1,765

Others

(121)

(58)

(81)

－

－

595

13,874

6,941

7,294

10,688

5,413

4,914

－

－

600

3,184

1,528

1,765

2

0

14

Reinsurance results

(239)

(137)

(383)

Insurance service results

6,618

2,946

4,088

Premium income of GCL1

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

FY2023
1H

Insurance revenue related to contracts measured under the premium allocation approach29

Breakdown of Financial Results◼ Unrealized losses of 1H recovered due to rising stock prices in 1Q,
despite affected by increasing foreign interest rates since FY2022(JPY millions)

Items

FY2022/1H

FY2023/1H

ChangeInvestment results

(390)

116

507

Interest income

150

151

1

(0)

(1)

(0)

Other investment income

(539)

(33)

505

Insurance finance income (expense)

(38)

(58)

(19)

Reinsurance finance income (expense)

5

7

2

(423)

66

490

Impairment losses on financial assets, net

Financial results

30

Detail of Bond Portfolio1
As of September 30, 2023

JPY Bonds
Duration2

Foreign Currency Bonds(JPY millions)

Available-for-Sale

Held-to-Maturity

18,582

17,28535,8684 years

11 years

8 years

7,523

—

7,523

Duration2

Non-Currency Hedged
Currency Hedged
1.
2.

Based on J-GAAP balance sheet
Calculated by Lifenet

Total

6 years

681

—

681

6,841

—

6,841
31

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
(JPY millions)

Impact ofassumptionchanges, etc.

Items

5,186

CSM,
end of the period

CSM,
beginningof the period

Interest
New business accretion
CSM

1,761

418

87,535

Amortizationin current
periodFY2023/1H

74,907

83,604

New business CSM

6,879

1,761

Interest accretion

710

418

Assumption changes, etc.

7,508

5,186

Amortization of CSM(6,401)(3,435)CSM, end of the period

83,60487,535CSM, beginning of the period(3,435)83,604

Recorded as
insurance revenue
on PL

2023/03

FY20222023/09（YY/MM）32

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 Sep. 2023
(A)

87.5

A＋year 2

A＋year 3

A＋year 4

A＋year 5

6.8

6.4

6.1

5.8

5.6

56.5

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

33

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 year34

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

4%
2.1%

Company B

Company C

4%

1.9%
1%

-0.6%
-2.1%

-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%

35

EV Sensitivity Analysis1◼ Impacts of changes in assumptions (sensitivities)
Change in EEV as of
Sep. 30, 2023

Change in
VoNB

140,905

5,117

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

(5,877)(864)

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

5,847

975

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

(2,954)(445)

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

2,948

473

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

(837)

－

Sensitivity 3: 10% decrease in operating expenses

5,615

872

Sensitivity 4: 10% decrease in lapse rate

1,447

241

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

6,123

77

Sensitivity 6: Change the required capital to the statutory minimum

404

94

(JPY millions)

EEV and new business value as of September 30, 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.

36

Solvency Margin Ratio Calculation
As of Sep. 30, 2023

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

Solvency margin ratio
2,614.9%
Cash and deposits
7,650
Monetary claims bought

14,999

Money held in trust
5,998

=

Total amount of solvency margin<numerator>
43,363

Price fluctuation reserves 134

Securities
44,643

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

1,713

Excess over the fullZillmerized reserve 16,776

Deferred tax liabilities onavailable-for-sale securities 1－

Valuation difference on
securities available-for-sale(1,032)1【Ref.】
Consolidated
Solvency margin ratio

Insurance risk R1 2,115

Reserves for outstanding claims

Contingency reserves 3,911

Total amount of risk/2< the denominator>
3,316/2

2,760.9%

Other liabilities
1,845

Policy reserves
54,605

÷(JPY millions)

Add liabilities
with strong
capitalcharacteristics
such as pricefluctuation
reserves andcontingency
reserves

Medical insurance risk R8 763
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 1,366

Tangible fixed assets

88
Intangible fixed assets
1,718

Other assets
5,741
1.
2.

Capital stock andother assets
23,573

Net assets
22,540[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 127
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.

37

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

38

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.

39