Dai ichi Life : Disclosure of European Embedded Value as of March 31, 2017 (Summary) PDF

[Unofficial translation]

[Unofficial Translation] May 15, 2017

Seiji Inagaki President and Representative Director Dai-ichi Life Holdings, Inc.

Code: 8750 (TSE First section)

Disclosure of European Embedded Value as of March 31, 2017 (Summary)

Dai-ichi Life Holdings, Inc. (hereinafter "Dai-ichi Life Holdings") hereby discloses the European Embedded Value ("EEV") of Dai-ichi Life Group (hereinafter "the Group") as of March 31, 2017.

Dai-ichi Life Group completed the transition to a holding company structure on October 1, 2016. The range of covered business has been revised to reflect the holding company structure.

The Group EEV includes the EEV of the Dai-ichi Life Insurance Company, Limited (hereinafter "Dai-ichi Life"), The Dai-ichi Frontier Life Insurance Co., Ltd (hereinafter "Dai-ichi Frontier Life" or "DFL"), The Neo First Life Insurance Company, Limited (hereinafter "Neo First Life" or "NFL"), Protective Life Corporation (hereinafter "Protective Life") and TAL Dai-ichi Life Australia Pty Limited (hereinafter "TAL") and the EV of Dai-ichi Life Insurance Company of Vietnam, Limited (hereinafter "Dai-ichi Life Vietnam" or "DLVN") calculated using traditional embedded value ("TEV") methodology.

1. EEV of the Group

   (billions of yen)

   March 31, 2016	March 31, 2017	Increase (Decrease)
   Group EEV			4,646.1	5,495.4	849.3
   Covered business EEV		4,646.1	5,690.1	1,043.9
   Adjusted net worth	6,287.3	6,073.5	(213.7)
   Value of in-force business	(1,641.2)	(383.4)	1,257.7
   Adjustment related to non-covered business		-	(194.6)	(194.6)

   Year ended March 31, 2016	Year ended March 31, 2017	Increase (Decrease)
   Value of new business	216.1	145.5	(70.5)

   (Reference)

   Unrealized gains (losses) which constitute a part of adjusted net worth are expected to be realized as accounting profits in the future, therefore the sum of value of in-force business and unrealized gains (losses) may be considered to represent expected future profits from in-force business.

   Breakdown of Group EEV based on this idea is as follows.

   (billions of yen)

   March 31, 2016	March 31, 2017	Increase (Decrease)
   Group EEV		4,646.1	5,495.4	849.3
   Total net assets on the balance sheet + Retained earnings in liabilities*1	1,409.4	1,524.5	115.0
   Value of in-force business + Unrealized gains (losses) of fixed income assets*2	1,879.0	2,400.8	521.8
   Unrealized gains (losses) of assets other than fixed income assets*3	1,357.5	1,570.0	212.4

   *1 This item is calculated by deducting the amount of unrealized gains (losses) from sum of the Group's adjusted net worth and adjustment related to non-covered business. It represents accumulated amount of realized profits.

   *2 The sum of the Group's value of in-force business, unrealized gains (losses) of fixed income assets of Dai-ichi Life, and unrealized gains (losses) of assets of DFL or NFL is reported. It is a component of unrealized profits which is mainly affected by interest rate; the change in the value of in-force business due to interest rate fluctuation is offset by the change in unrealized gains (losses) of fixed income assets.

   *3 The amount of unrealized gains (losses) of assets other than fixed income assets of Dai-chi Life, including equities, un-hedged foreign bonds and real estate is reported.

2. EEV by company

1. Dai-ichi Life

   (billions of yen)

   March 31, 2016	March 31, 2017	Increase (Decrease)
   EEV		4,441.4	4,427.6	(13.7)
   Adjusted net worth	6,483.3	5,351.9	(1,131.4)
   Value of in-force business	(2,041.9)	(924.2)	1,117.6

   Year ended March 31, 2016	Year ended March 31, 2017	Increase (Decrease)
   Value of new business	134.6	111.0	(23.6)

2. Dai-ichi Frontier Life

   (billions of yen)

   March 31, 2016	March 31, 2017	Increase (Decrease)
   EEV		303.2	353.7	50.5
   Adjusted net worth	183.8	156.6	(27.2)
   Value of in-force business	119.4	197.1	77.7

   Year ended March 31, 2016	Year ended March 31, 2017	Increase (Decrease)
   Value of new business	53.2	17.5	(35.7)

3. Neo First Life

   (billions of yen)

   March 31, 2016	March 31, 2017	Increase (Decrease)
   EEV		41.4	38.0	(3.3)
   Adjusted net worth	27.7	21.9	(5.8)
   Value of in-force business	13.6	16.1	2.5

   Year ended March 31, 2017
   Value of new business	(3.9)

   (Reference) The value of new business based on ultimate unit-costs

   For NFL, improvement of operating efficiency is expected in the future with the progress of business expansion because the new business has been operated for only a short period of time. Therefore, based on the projection of new business trend and of operating expenses in the mid-term business plan, unit-costs are assumed to decrease over 9 years; it is expected to reach an ultimate level within 10 years after new business expansion started.

   Value of new business calculated based on the assumption that the ultimate unit-costs are realized at the time of sale is as follows:

   (billions of yen)

   Year ended March 31, 2017
   Value of new business (based on ultimate unit-costs)	2.4

4. Protective Life

   (billions of yen)

   December 31, 2015	December 31, 2016	Increase (Decrease)
   EEV		551.2	589.8	38.5
   Adjusted net worth	414.9	421.4	6.5
   Value of in-force business	136.3	168.3	31.9

   Eleven months ended December 31, 2015	Year ended December 31, 2016	Increase (Decrease)
   Value of new business	5.6	3.8	(1.7)

   * For EEV as of December 31, 2015 and value of new business for the eleven months ended December 31, 2015, exchange rate of JPY 120.61 to USD 1.00 is used. For EEV as of December 31, 2016 and value of new business for the year ended December 31, 2016, exchange rate of JPY 116.49 to USD 1.00 is used.

   (Reference) Protective Life's EEV in US Dollar

   (millions of USD)

   December 31, 2015	December 31, 2016	Increase (Decrease)
   EEV		4,570	5,063	492
   Adjusted net worth	3,440	3,618	178
   Value of in-force business	1,130	1,444	314

   Eleven months ended December 31, 2015	Year ended December 31, 2016	Increase (Decrease)
   Value of new business	46	33	(13)

5. TAL

(billions of yen)