Lifenet: Fiscal 2023 Presentation Highlights

Fiscal 2023 Key Highlights

Lifenet Insurance Company delivered a strong financial performance in fiscal 2023, marked by significant growth in key indicators:

• Annualized premium of policies-in-force: Increased by 20% year-on-year (YoY) to ¥28,750mn, driven by the addition of Group Credit Life Insurance (GCL).
• Insurance service results: Rose by 24% YoY to ¥8,222mn.
• European Embedded Value (EEV): Experienced a substantial 117.9% YoY increase to ¥146,991mn.

Notable Achievements:

• Implementation of new initiatives for sustainable growth: Lifenet introduced GCL, a group credit life insurance product, and forged an alliance with the SMBC Group.
• Launch of Dementia Insurance: Lifenet co-developed a dementia insurance product with Eisai in April 2024, addressing the growing concerns around dementia in Japan.
• Awarded #1 Direct Life Insurer for 4th Consecutive Year: Lifenet received top ranking in J.D. Power’s Japan Life Insurance Contract Customer Satisfaction Study for Direct Segment.

New Management Policy and Mid-term Plan

Lifenet outlined a new management policy and a mid-term business plan (FY2024–2028) focused on achieving sustainable growth and enhancing shareholder value.

Mission: Help customers embrace life more fully by offering comprehensible, cost-competitive, and convenient products and services.

Vision: Be the leading online life insurer creating the future of life insurance.

Values: Lifenet’s values are based on its “LIFENET Manifesto,” emphasizing:

• Manifesto driven
• Ownership
• Teamwork
• Growth mindset
• Be ambitious

Mid-term Plan (FY2024–2028):

Priority Areas: Embedded (enhancing existing product offerings), Tech & Services (leveraging technology for improved customer experience), Rebranding (refreshing brand image).

Financial Targets:

• Achieve Comprehensive Equity (CE) of ¥200–240bn by FY2028.
• Aim for a stock price of ¥3,000+.
• Achieve an annual growth rate of CE per share of approximately 10%.

Non-Financial Targets (Human Capital):

• Promote organizational transition to focus on priority areas.
• Create a virtuous cycle of employee growth and business growth.
• Maintain and strengthen an organizational culture based on the LIFENET Manifesto.
• Achieve continuous improvement in overall engagement score.
• Increase the ratio of decision-makers to 30% women and 15% under 30s.

Future Initiatives to Improve Market Evaluation

Lifenet recognizes the need to improve market evaluation despite its strong corporate value growth. The company intends to take the following initiatives:

• Adopt Comprehensive Equity (CE) as the new management indicator: CE will replace EEV, aligning Lifenet with global peers using IFRS17.
• Commit to targets and time frames: This will ensure alignment between shareholders and investors.
• Transit to the TSE Prime Market: Aiming for a listing around 2025 to expand the investor base and improve market liquidity.
• Strengthen governance systems: This includes a shift to a Board of Directors with a majority of Independent Outside Directors, enhancing the separation of supervisory and executive functions.

Business Environment and Priority Areas

Lifenet’s business environment is characterized by positive trends:

• Growth of online financial services: Accelerated by COVID-19.
• Increasing online insurance players: This fosters competition and innovation.
• Younger generation’s embrace of technology: This creates opportunities for online insurance adoption.
• Expansion of the online life insurance market: Driven by the digitalization of the financial ecosystem.

Lifenet has identified three priority areas for further growth:

• Tech & Services: Focusing on qualitative changes in the internet direct business.
• Embedded: Enhancing existing products and embedding them into partner ecosystems.
• Rebranding: Refreshing Lifenet’s brand image to appeal to younger generations.

Growth Strategies:

Individual Life Insurance:

• Direct business: Focus on marketing to younger generations through rebranding, nurture marketing, and product & service enhancements.
• Partner business: Deepening ties with existing partners and developing alliances with companies with broad customer bases.

Group Credit Life Insurance (GCL):

• Deepening alliances with existing partners, such as au Jibun Bank.
• Expanding partnerships with new banks by capitalizing on the shift to digitalization in the mortgage loan business.

Human Resources Strategy:

Diversity & Growth Opportunities:

• Emphasizing cross-organizational systems, development through challenges, and strengthening the culture based on the LIFENET Manifesto.

Key Financial Metrics Analysis:

• Insurance Service Results: Increased significantly due to growth in the individual life business, despite higher-than-expected GCL payments.
• EEV: Increased due to the growth of the value of new business (VoNB), including GCL, improvement in operating expense ratio, revision of mortality assumptions, and capital raising.
• Comprehensive Equity (CE): Introduced as a new management indicator, reflecting the company’s value more comprehensively than EEV.
• Solvency Margin Ratio: Demonstrates a strong financial position, exceeding the statutory requirement.

Conclusion

Lifenet Insurance Company is well-positioned for continued growth and success, driven by its commitment to innovation, customer focus, and a strong financial foundation. The company’s strategic initiatives, including the implementation of a new management policy and mid-term business plan, are designed to achieve sustainable growth, enhance shareholder value, and create a positive impact on society.

By focusing on strategic priorities, embracing technological advancements, and fostering a culture of growth and innovation, Lifenet is confident in its ability to continue to deliver value to its customers and stakeholders.

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