Overview of LIFENET INSURANCE COMPANY

Transcription

2 Table of Contents Ticker: 7157 Ⅰ. Company Overview Ⅱ. Overview of Japanese Life Insurance Industry Ⅲ. Business Model Ⅳ. Mid-term Business Plan & Strategy Copyright LIFENET INSURANCE COMPANY All rights reserved. 1

3 Lifenet is Comprehensible Cost-Competitive Convenient Returning to the original purpose of life insurance mutual support Lifenet was founded with the goal of offering simple, convenient and competitively priced products and services based on the highest levels of business integrity. We offer these products and services directly to customers over the Internet. By using the Internet, we are able to offer highly cost-competitive products and accept applications from customers at any given time. Copyright LIFENET INSURANCE COMPANY All rights reserved. 2

4 Lifenet Manifesto I. Our Guiding Principles II. Life Insurance will be Comprehensive (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 the employees 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 with laws, regulations, and other social standards. We pledge to be respectable global citizens, acting fairly and ethically. (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 and comprehensible terms and conditions. III. Life Insurance will be Cost-Competitive (1) We believe that no one should pay premiums that are more expensive than necessary, and will be innovative and creative in order to develop and maintain the most cost-competitive products possible. (2) We will handle every step of the process in providing good products to our customers; 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 and our 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. IV. Life Insurance will be Convenient (1) We know our customers have very busy lives. That is why our customers can apply for our life insurance policies via the internet, 24 hours a day, 7 days a 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 and comprehensible. (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 make a 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. Copyright LIFENET INSURANCE COMPANY All rights reserved. 3

5 Lifenet at a Glance History October 23, 2006 May 18, 2008 March 15, 2012 November 12, 2012 Key Figures (FYE 2015/3) Annualized Net Premiums from Policies in Force: Established Commenced operation Listed on Tokyo Stock Exchange Mothers Achieved management target of 150,000 policies-in-force 8,793mn Number of Policies in Force: 215,403 Sum assured: JPY 1,831,081mn Premium and Other Income: 8,493mn Total Assets: 23,387mn Net Assets: 12,487mn Embedded Value: 25,248mn Number of Employees: 90 -Sales Force: 0 Solvency Margin Ratio: 2,244.7% Stock Information Tokyo Stock Exchange Mothers market of the high growth and emerging stocks Ticker 7157 Listed on March 15, 2012 Major Shareholders 1 (as of May 22, 2015) KDDI CORPORATION 15.94% Swiss Reinsurance Company Ltd 11.32% Asuka DBJ Investment Limited Partnership 11.32% MITSUI & CO., LTD. 9.56% Seven Financial Service Co., Ltd. 6.47% Shinsei Bank, Limited 3.23% Recruit Holdings Co., Ltd. 2.49% ASAHI Net, Inc. 2.32% 1. Since KDDI CORPORATION obtained regulatory approval to become a major shareholder of an insurance company, Lifenet issued 8,000,000 shares through the third-party allotment to KDDI CORPORATION on May 22, After the issuance, KDDI CORPORATION became the largest shareholder of Lifenet. Copyright LIFENET INSURANCE COMPANY All rights reserved. 4

6 Management Team ( as of June 21, 2015) Management team is comprised of various backgrounds with a wide age range of generation. In terms of enhancing corporate governance, Board of Directors includes two women, four outside Directors of the nine and three outside Corporate Auditors of the four. Haruaki Deguchi, Founder Chairman & CEO 31 years at Nippon Life serving various positions including Head of Public Affairs and Head of International Planning and Operations. Directors Daisuke Iwase, Co-Founder President & COO Ripplewood Japan and Boston Consulting Group. MBA from Harvard University (Baker Scholar). Masayuki Nishida Director, Executive Vice President JPMorgan Asset Management (Japan) Limited, Russell Investments Japan Co., Ltd. and Mercer Japan Ltd. Sakuya Fujiwara Former Deputy Governor of Bank of Japan Seijiro Isa Former Executive Managing Director of Asahi Mutual Life Insurance Co. Yoko Ishikura Former Professor of Keio University Graduate School, Media Design branch Kazuko Nakada Executive Managing Director Starbucks Coffee Japan (Executive Director and Head of Public Relations). Outside Directors Corporate Auditors Yasuharu Fushimi (Outside) Chairman & President, Tsuneishi Holdings Corporation Kazunari Uchida Professor of Faculty of Commerce, Waseda University Kenichi Masuda (outside) Attorney-at-law, Partner, Anderson Mori & Tomotsune Shunichiro Higuchi Executive Managing Director Head of Policy Research Institute and Financial Supervisory Agency as head of the Insurance Supervisory Division. Tomohiko Katsuki General Manager, Financial and Commerce Business Division, Value Business Sector of KDDI CORPORATION Tadasu Kawai (outside) Former Senior Executive Officer of Sony Corporation Copyright LIFENET INSURANCE COMPANY All rights reserved. 5

7 Annualized premium 1 growth Annualized premium is growing steadily since business commencement in May ,000 7,000 6,000 5,000 4,000 3,000 2,000 1,000 0 (million yen) As of March 31, 2015 The number of policies-in-force 215,403 May 18, 2008 Commencement of Operation ,365 1, ,719 2,189 March 2012 IPO and Listing on the TSE Mothers December 2011 Policies-in-force 100,000 December 2010 Policies-in-force 50,000 2,659 3,180 November 2012 Policies-in-force 150,000 3,784 4,296 4,870 February 2014 Policies-in-force 200,000 5,458 5,953 6,389 6,875 7,853 7,598 7,271 8,793 8,611 8,450 8,249 8,077 Jun. Sep. Dec. Mar. Jun. Sep. Dec. Mar. Jun. Sep. Dec. Mar. Jun. Sep. Dec. Mar. Jun. Sep. Dec. Mar. Jun. Sep. Dec. Mar. Jun. Sep. Dec. Mar. FY2008 FY2009 FY2010 FY2011 FY2012 FY2013 FY 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, thus the annualized premium is calculated as multiplying the monthly premium by 12 months. Copyright LIFENET INSURANCE COMPANY All rights reserved. 6

9 Key Characteristics of the Japanese Life Insurance Market There are huge inefficiencies in the Japanese life insurance industry, huge market. On the other hand, Huge changes are occurring in this market as a result of deregulation. Huge market Huge inefficiencies Huge changes World s 2nd largest market with approx. JPY 40 trln annual premiums Consumers bear the burden of high prices amidst a prolonged stagnation Proliferation of web-based financial services Approx. 90% Japanese households insured Lack of comparative information Diversifying consumer preferences for insurance products Approx. JPY 400,000 average annual premiums per Japanese household High turnover of untrained captive agents Industry deregulation aimed at promoting competition Copyright LIFENET INSURANCE COMPANY All rights reserved. 8

10 Huge Market Japan's life insurance market is the world's second largest, worth approximately JPY40 trillion. Roughly 90% of Japanese households have life insurance policies. Japanese Life Insurance Market (annual premiums) (JPY in tn) Private insurance¹ Cooperative insurance² Former Japan Post³ Ratio of households with policies 4 : 90.5% Average annual premiums per household 4 : JPY 416 thousand Average cover amount per household 4 : JPY 27,628 thousand FY03 FY04 FY05 FY06 FY07 FY08 FY09 FY10 FY11 FY12 FY13 1 Private insurance: Life insurance companies that are members of The Life Insurance Association of Japan; income from premiums and other sources. 2 Cooperative insurance: Cooperative insurance companies that are members of the Japan Cooperative Insurance Association; mutual aid premium contributions (total for life insurance and pension fund contributions). 3 Former Japan Post: Insurance premium until September 2007 (Postal Life Insurance); Japan Post Insurance included in data for private insurance from October 2007 following privatization. 4 Data as of FY2012. Source: Lifenet, based on data from Life Insurance Fact Book 2014 by The Life Insurance Association of Japan, Cooperative insurance in Japan FACT BOOK 2014 by Japan Cooperative Insurance Association and a nationwide report on the life insurance industry (2012) by Japan Institute of Life Insurance. Copyright LIFENET INSURANCE COMPANY All rights reserved. 9

11 Huge Inefficiencies The burden on family budgets has not changed because the ratio of average annual premiums per household to household income remains at a set level while a decrease in household income. The main reason why younger generation have no intension of making insurance contract comes from their financial situation. Trends of average annual premiums per household 1 and household income Reasons for no intension of making insurance contract (ten thousand yen) 83.9% % 67.3% 69.2% Not afford to pay premiums 55.8% 62.1% 58.1% 57.6% 53.5% Have enough insurance 40.7% Household income Average annual premiums per household Not feel the necessity Age limit and health condition 29 and under and (year old) over 1. Average annual premiums per household of private insurance including Japan Post insurance 2. Calculated from average annual premiums per household and the ratio of average annual premiums per household to household income Source: A nationwide report on the life insurance industry (2012) by the Japan Institute of Life Insurance Copyright LIFENET INSURANCE COMPANY All rights reserved. 10

12 Expense loading Premium Net premium Huge Changes Circumstances surrounding life insurance companies have changed, such as the revision of the Insurance Business Act and the evolving consumer needs in conjunction with the changing social structure. Industry deregulation aimed at promoting competition Revision of Insurance Business Act Both life and general insurance companies can now enter medical insurance through subsidiaries Complete clearance of insurance sales through banks Liberalization of insurance products Liberalization of expense loading rates Changes of consumer needs Evolving needs for insurance products along with the changes in household structure like a increase in oneperson household Diversification of sales channels in connection with deregulation Trends in percent distribution of households by structure of household Net premium Calculation based on expected incident rate and expected return rate Comparatively small differences between each life insurance company 1 Approved by the Financial Services Agency Expense loading Calculation based on expected business expense rate Liberalization in principle (Made shift to the expost monitoring system for operating costs) The setting of prices is left to the discretion of the management of each life insurance company 1. Excluded differences between those with or without policyholders dividends and the cash surrender value Source: Statistics and Information Department, Minister s Secretariat, Minister of Health, Labour and Welfare From Comprehensive Survey of Living Conditions, 2013, Graphical Review of Japanese Household Copyright LIFENET INSURANCE COMPANY All rights reserved % 20% 40% 60% 80% 100% One-person household Household of couple only Household of couple with unmarried children House hold of a single parent with unmarried children Three-generation family household Other household

13 Huge Market Potential Sales channels for life insurance have been diversified, and more and more consumers are purchasing life insurance products via the Internet. We expect to see the trends continue going forward. Trends of Sales Channels and Preferred Sales Channels in the future (%) Online High growth potential We believe there is high growth potential in the future because the online life insurers market share still accounts for less than 1% Others Captive agents, Post offices, Banks, Securities brokers Sales representatives (life insurers) Online life insurers market share 0.20% FY2014 Number of new business Industry Total 19,399,180 Sum of AXA Direct and Lifenet 1 39, Preferred sales channel in the future (as of 2012) 1. The sum of the number of new business at each company in FY2014; 11,746 of AXA Direct and 27,982 of Lifenet Source: Data from a nationwide report on the life insurance industry (2012) by the Japan Institute of Life Insurance, financial results for fiscal 2014 at each company and Annual statistics in FY2014 by The Life Insurance Association of Japan Copyright LIFENET INSURANCE COMPANY All rights reserved. 12

15 Business Model with Manifesto High integrity Disclose information thoroughly Communicate with customers proactively Comprehensiveness Provide very simple and pure protection products Create simple and easy-to-understand website Cost-Competitiveness Offer competitively priced products by Internet-based low cost operation Convenience Offer our products and services 24 hours a day, seven days a week Provide convenient services with utilizing My page on website Copyright LIFENET INSURANCE COMPANY All rights reserved. 14

16 Expense loading Premium Net premium Management with High Level of Business Integrity Lifenet discloses information on our management, products and company as a whole on our website to be transparent. Transparent disclosure Disclosure of net premiums Disclosure of agent commission rates Disclosure of monthly operating figures Disclosure of breakdown of insurance premium(example) Term life Kazoku In the case of 30 years old, male, insurance term 10 years, insurance coverage amount 30 million yen Net premium Expense loading Premium (Net premium+expense loading) 2,435yen (76%) 755yen (24%) 3,190yen (100%) Customer communication Regular policyholder meetings Introduction of employees and company through employee s blog since commencement of business Diverse employee backgrounds: work experience, academic backgrounds, qualifications, age and genders Interactive communication with policyholders Copyright LIFENET INSURANCE COMPANY All rights reserved. 15

17 Simple Products We offer simple and competitively priced pure protection products. Internet-based low cost operations enable us to be extremely price competitive. On May 2014, we launched the renewal and new products which offer more extensive coverage with lower premium. Revised premium to be the lowest premium level in the industry 1 while extensive coverage remains unchanged Economy Plan Extensive lifetime coverage at the reasonable premiums Recommendation Plan More extensive coverage Economy Plan Extensive lifetime coverage at the reasonable premiums Recommendation Plan More extensive coverage for women Compensation income for when you are unable to work long term 1 Comparison of Lifenet and 3 other online life insurers term life insurance products (excluding risk sub-divided insurance products) under the following conditions: Insurance coverage amount 10,000 thousand yen / Insurance term 10 years. 2 Our products have no maturity insurance, no dividends and no cash surrender value on our products. 3 As of September 2015, we also offer medical care insurance Jibun Plus. Copyright LIFENET INSURANCE COMPANY All rights reserved. 16

18 Getting Quotes and Apply Online We make simple and easy-to-understand website to support the study of insurance by our customer. age Insured amount Monthly premium Total monthly premium Calculated on September 1, 2015 Copyright LIFENET INSURANCE COMPANY All rights reserved. 17

19 Competitively Priced Products and Services Internet-based low cost operations enable us to be price competitive. (Illustrative purpose only 1 ) Online sales channel holds down sales force Expense loading Costs to maintain sales teams Expense loading Commissions added by insurance companies Sales team personnel costs, employee personnel costs, office costs, utility costs, IT system costs, etc. Net premiums Other business costs Net premiums Other business costs Net premiums Net premiums Used for insurance payouts and other payments Assumed mortality rate based on the Standard Mortality Table 2007 developed by The Institute of Actuaries of Japan Monthly premiums of term life insurance In the case of 30 years old, male, insurance term 10 years, insurance coverage amount 30,000 thousand yen Lifenet Around 3,200 yen (without policyholders dividend) Domestic A Around 7,000 yen (with policyholders dividend) 1. Assuming traditional term life insurance without policyholders dividend through face-to-face selling. The proportion of expense loading and net premiums defers depending on age, sum insured, etc. Source: September 27, 2014, the Nihon Keizai Shimbun, morning paper, page 21 Copyright LIFENET INSURANCE COMPANY All rights reserved. 18

20 Pursuing Convenience Lifenet offers our products and services 24 hours a day, seven days a week through the Internet and extensive convenience as an online insurer. Enable customers to apply insurance anytime We use the Internet to offer products and services that fit the lifestyle of the younger generation. Utilization of My page on website We offer a service that we accept application documents via website My page captured by Smartphone etc. Around 10pm with the majority applying Flow of application customer Lifenet customer Lifenet Plan and application Underwriting Submit documents Contract policy Same-day completion 1 week Few days Completion Easy procedure via website captured by Smartphone etc. The inception date of policy starts since the day of application Source: Lifenet, based on the number of application by time (April 2015 June 2015) Copyright LIFENET INSURANCE COMPANY All rights reserved. 19

21 Advanced Marketing Strategy We develop an advanced marketing strategy with an innovative mix of efforts and channels including high profile advertising icons. We have successfully acquired valuable marketing customers. Efficient advertising approaches to attract website visitors Our unique marketing approaches Documents and publications TVCM Social media Marketing using all our employees Online Advertisement Owned Media Lifenet Journal Online Underlying support Gradual kaizen improvements to marketing via our website and online advertising SEO Initiative Website improvements Copyright LIFENET INSURANCE COMPANY All rights reserved. 20

22 A Unique Customer Base Customers from their 20s to 40s make up roughly 92% of our policyholder base, with 50% of new policyholders taking out life insurance for the first time. We have maintained certain level of surrender and lapse ratio since business commencement. Number of new policies by age group Lifenet 1 1% 0.2% 7% 19% 26% FY Reason for buying a policy 3 The share of households taking out life insurance for the first time accounted for the majority, despite the percentage of households holding policies 4 being 90.5%. 51% 16% 23% 10% 47% 0% 20% 40% 60% 80% 100% Reference: Average for other life insurers 2 18% 17% 12% 17% Taking out life insurance for the first time Supplementing existing cover (a different insurer + Lifenet) Switching from a different insurer Supplimenting exsiting cover and switching from previous policy in Lifenet Surrender and lapse ratio Maintaining between 6% to 7% level since commencement of operation in % 19% Surrender and lapse ratio in FY2014: 7.3% 1. Lifenet Insurance new customer data (FY2014) compiled by Lifenet Insurance customer survey. Based on number of new policies, 27,982 that took out during FY Annual statistics on customer age and gender (FY2014) compiled by The Life Insurance Association of Japan. Based on number of new policies. 3. FY2014 valid responses from 6,051. Copyright LIFENET INSURANCE COMPANY All rights reserved. 21

23 High Quality Services & Third-party Evaluation Lifenet offers high quality services through our Contact Center, the direct point of contact with customers, and through insurance payments, the most important responsibility of an insurance company. As the result, we received various awards for high quality products and services. High quality services -insurance payments- Medical certification submission no longer necessary for most medical claims 1 Medical insurance benefit claim to be made online, 24 hours a day Insurance claims and benefits to be made in minimum 2 days since February 2014 FY2014 Average Claims Payment Period days Awards Ranked 1st in the overall life insurance category by policyholders Contact Center and Website awarded 3 stars in the 2014 HDI Contact Center Awarded Another Voice award for payment ranking for 3rd consecutive year procedure and documents Ranked Highest in Contact Customer Satisfaction for Life Insurance in a tie 1. Excluded whole-life medical New Jibun for Women 2. Not including the number of days required to obtain lacking documents. Cases which required fact confirmation before insurance payments were made are not included when calculating the average number of days required for payment. Source: the Universal Communication Design Association Another Voice Award for Payment Procedure and Documents in the life insurance category, HDI Japan the 2014 HDI Contact Center Rankings(Life Insurance Industry), Oricon Client Satisfaction Rankings 2015 in the Overall Life Insurance Category. J.D. Power Asia Pacific 2015 Japan Life Insurance Contract Customer Satisfaction Study SM (The study based upon the responses of 12,198 policyholders who have purchased new life insurance policies or renewed a policy during past 12 months) Copyright LIFENET INSURANCE COMPANY All rights reserved. 22

25 Mid-term Business Plan Mid-term business plan until the end of FY2015 is as shown blow. Lifenet aims to achieve 9.5 billion in ordinary income and push the company toward profitability 1 in fiscal LIFENET2015 Offer new products and services as an innovator to create a future of life insurance that resonates with stakeholders, and achieve the highest sustainable growth among online life insurance businesses. Management Goal Achieve 9.5 billion in ordinary income, pushing the company toward profitability 1 in fiscal 2015 Priority Areas 1. Sustainable growth in insurance premium income (top-line) 2. Improvement in productivity 3. Being an "innovator" (front-runner) in life insurance Risk Management Area Sophisticate risk management and establish risk-based business management 1. Based on ordinary profit before amortization of deferred assets under Article 113 of the Insurance Business Act Copyright LIFENET INSURANCE COMPANY All rights reserved. 24

26 Initiatives for Achievement of Mid-term Business Plan Lifenet aims to achieve management goal of mid-term business plan through steadily conducting initiatives on each priority area. 1. Sustainable growth in insurance premium income (top-line) Diversify traffic source besides TVCM Enhance business partnerships to reach a wider range of customers Offer free consultation services Enrich existing customer services 2. Improvement in productivity Strictly control operating expenses Build an efficient structure with less than 100 employees 3. Being an "innovator" (front-runner) in life insurance Optimize website focusing on the functionality of PCs, smartphones, and other devices Keep on edgy challenges with social cause Copyright LIFENET INSURANCE COMPANY All rights reserved. 25

27 Progress of Mid-term Business Plan Ordinary income is growing continuously while ordinary loss is improving steadily towards profitability 1. As of September 2015, we have yet to determine the potential impact of transaction with KDDI CORPORATION on Lifenet s business results from mid-term business plan. Ordinary income Ordinary profit and loss 1 (JPY mn) 8,729 9,500 (JPY mn) Turn profitable 7,603 5,976 (472) (1,198) 2 (1,664 ) The ordinary profit (loss) before amortization of deferred assets under Article 113 of the Insurance Business Act 2. The ordinary loss before deferred expenses and amortization of deferred assets under Article 113 of the Insurance Business Act for the fiscal 2012 ended March 31, 2013 included the effect of changing calculation formula of policy reserves on provision, 501 million yen. When excluding the effect, it was 2,165 million yen. Copyright LIFENET INSURANCE COMPANY All rights reserved. 26

28 This material is based on information as of September 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 materially from actual performance due to various risks and uncertainties. Subscribe to our "IR service" to receive news releases and website updates via . Contact: Investor Relations, Corporate Development Dept.