LIFENET INSURANCE COMPANY

Business Details

The Group is a life insurance company whose primary sales channel is the internet. It operates two businesses: Individual Insurance (Direct Business and Partner Business) and Group Credit Life Insurance (Danshin). Its strength lies in low-cost premiums and simple product design achieved by eliminating sales staff and store-related costs. IFRS has been voluntarily applied since the first quarter of FY2024 (ending March 2024). The company employs its own proprietary corporate value metric, "Comprehensive Equity," and has set a medium-term target of reaching ¥200.0-240.0 billion in Comprehensive Equity by fiscal year 2028.

Recent Overview

FY2026 (ending March 2026) closed with higher revenue and profit; capital and business alliance with JAL occurred as a subsequent event

In FY2026 (ending March 2026), insurance revenue was ¥34,388 million (up 14.3% year on year), and profit attributable to owners of the parent was ¥8,041 million (up 34.2% year on year), representing a significant increase in profit. Actual insurance benefit payments for individual insurance came in below forecast, and an increase in Danshin profit boosted the insurance service result. Comprehensive Equity expanded to ¥176,149 million (up 5.4% year on year). On April 30, 2026, the company agreed that its major shareholder, au Financial Holdings, would transfer all of its shares to JAL, and entered into a capital and business alliance with JAL. The earnings forecast for FY2027 (ending March 2027) calls for annualized premium in force of ¥41,300 million and profit attributable to owners of the parent of ¥8,200 million (up 2.0% year on year). The insurance service result is forecast at ¥11,200 million (down 3.5% year on year), a conservative forecast that reflects the reversal of the favorable claims experience seen in fiscal year 2025.

Key Products

Growth Drivers

• Acceleration in new individual insurance policies (up 18.7% year on year to 86,990 policies in FY2026 (ending March 2026)) and improvement in the lapse and surrender rate (5.5%, versus 5.7% in the prior year), driving steady accumulation of policies in force
• Continued increase in CSM release (¥7,871 million for the period, versus ¥7,440 million in the prior year), structurally expanding insurance revenue and the insurance service result
• Expansion of the Danshin business (annualized premium in force of ¥8,571 million, up 12.2% from the prior year-end) and deepening of the partnership with au Jibun Bank
• Diversification of the customer base and sales channels (strengthening of the Embedded domain) through the new capital and business alliance with JAL
• Expansion of interest income through increased corporate bond holdings (¥1,255 million, versus ¥974 million in the prior year) and the turnaround to positive financial income/loss (¥266 million)
• Improvement in customer experience and utilization of AI and the Individual Number (My Number) system through concentrated investment in the three priority areas of the medium-term plan: "Tech & Services," "Rebranding," and "Embedded"
• Improvement in standalone earnings through strengthened modified coinsurance-type reinsurance (standalone ordinary profit of ¥2,857 million, turning positive from a loss of ¥3,027 million in the prior year)

Risks

• Risk of fluctuation in actual insurance claim and benefit payments: while claim payments in fiscal year 2025 were favorable and came in below expectations, the forecast for fiscal year 2026 assumes a standard level of claim occurrence, and the insurance service result could deteriorate if actual results exceed this assumption
• Risk related to business integration associated with the capital and business alliance with JAL: the specific content and timing of the business alliance have not yet been finalized and are not reflected in the earnings forecast for FY2027 (ending March 2027); the realization of alliance benefits could be delayed or reduced
• Risk of changes to the business alliance with au Financial Holdings and KDDI: changes to the business alliance with au Financial Holdings and KDDI resulting from the change in major shareholder could affect existing partner businesses, including Danshin (via au Jibun Bank)
• Interest rate and foreign exchange risk: fluctuation in demand for protection-type products due to rising interest rates, and deterioration in financial income/loss due to foreign exchange losses (other investment income/loss of negative ¥938 million)
• Risk of intensifying competition: continued upward pressure on the cost of acquiring insurance business (cash flow of ¥10,458 million, up 6.6% year on year) due to an increase in entrants from other industries into the online life insurance market
• Risk associated with the introduction of economic value-based solvency regulation (ESR): new regulations will be introduced from the end of March 2026; while the ESR (preliminary figure) of 333% and internal ESR of 394% are at sufficient levels, a divergence from the final figures could arise as external audit has not yet been completed
• Constraints on shareholder returns due to continued accumulated losses under Japanese GAAP: accumulated losses remain on a non-consolidated financial statement basis, and the specific timing for implementing shareholder returns, including dividends, has not been determined