Case Study

How Japan’s leading online insurer achieved ambitious growth

In moving to a global accounting standard IFRS, LIFENET, Japan’s pioneer online insurer, is generating compelling evidence for investors.

The better the question

How can global accounting standards support growth in Japan?

Moving to IFRS 17 helps LIFENET Insurance Company transform and embark on a sustainable growth journey.


The EY organization has been working with insurers around the world to implement the new global harmonizing accounting standard, IFRS 17, which is improving comparability and transparency in the global industry. Reporting against IFRS 17 requires insurers to transform their processes, controls and technology and prepare data at a new level of granularity, using modern accounting platforms.

While IFRS 17 is not mandatory in Japan, the Japanese online life insurance pioneer, LIFENET, has voluntarily adopted this accounting standard to support its transformative growth strategy. The company is spearheading a partnership strategy of selling insurance to the customer bases of other companies in adjacent industries. LIFENET also recently started a group credit life insurance business.

“We are working to innovate the customer experience,” says LIFENET Executive Officer, Takeshi Kawasaki. “Our management goal is to achieve Comprehensive Equity of 200 billion yen to 240 billion yen in fiscal 2028.”

The company has an innovative manifesto to ‘create the future of life insurance’, but as LIFENET sought to attract investors to fund its growth ambitions, it bumped up against an unexpected issue. The way Japanese accounting standards treat insurance contracts has a particular effect on financial reporting.

“Because Japanese standards emphasize soundness, they do not allow us to defer new contract costs,” explains Kawasaki.

“From 2017 to 2018, our number of new contracts grew rapidly. But, according to Japanese accounting standards, our deficit increased. The way we were reporting our financial results did not provide a full picture of the long-term profitability of the business,” he adds.

IFRS 17 is still voluntary in Japan, but its focus on periodic profit and loss was highly attractive to LIFENET. “We realized that IFRS would enable us to defer new contract fees over the policy period in alignment with the policy income generating at the same time. This meant we would be able to disclose periodic profit and loss in line with our company's actual state,” says Kawasaki.

With IFRS disclosures offering a more accurate picture of LIFENET’s strong financial fundamentals, the company could then approach the market with a compelling story.

Being able to disclose information using a universally recognized global accounting standard would also help LIFENET to widen their investor base beyond Japan. “With the insurance industry continuing to globalize, it was important that we match the benchmark of IFRS to support international comparison,” Kawasaki says.

LIFENET decided to become Japan’s first independent insurance company to implement IFRS17.

Mount Fuji in Autumn

The better the answer

Hands-on support for a 5-year IFRS implementation project

An EY team gave early insight into what the new reporting would look like and supported implementation right up to market briefings.


When LIFENET was considering its bold move, IFRS 17 had just been announced. There was no precedent for its implementation. “Although we made trial calculations by applying the IFRS standards internally, there were many things we couldn’t determine, such as whether the calculations were correct and whether it was really possible to defer our new contract costs, which were mainly advertising expenses,” recalls Kawasaki. “We collaborated with the EY organization where the professionals are familiar with IFRS. A team of five EY accountants and consultants came on board to work with us full time.”

Once the EY team helped with trial calculations in various patterns of deferrals, it became clear that IFRS accounting standards could indeed represent the actual state of LIFENET.

Harnessing a culture of innovation

"LIFENET’s corporate culture of creating value by taking on new challenges was a key element in mobilizing internal support for the novel implementation," says Kawasaki. “We have always pushed the envelope in Japan, such as by disclosing the breakdown of insurance premium,” he says. LIFENET’s executive team reached a consensus that, even though it was unprecedented, the company should aim to implement IFRS from the first year of IFRS 17, which was 2023.

Shortly after the project started, the EY team held an IFRS study session at LIFENET. During this session a very passionate listener sat in the front row asking many questions. “This was Ryosuke Mori, the President and Representative Director of LIFENET,” says Kawasaki.

Having the company president in the front row of the study session perhaps encapsulated LIFENET’s attitude to major change.

"When we decide to do something, the entire company is able to act as one – led from the front,” he notes.

Educating the market and industry

Before switching to IFRS from FY23, LIFENET embarked on market education. Taking EY’s recommendation, LIFENET disclosed its performance forecast under IFRS for FY22 and held seminars for investors and stakeholders.

“Each of the three investor study sessions received excellent feedback,” recalls Kawasaki. “Across the industry, our firm was now known as the company working on new things, which also had a positive effect on recruitment.”

Happy japanese family spending time outdoor

The better the world works

Key metrics for future-proof life insurance

More granular and representative profit and cost data provides the insight and agility to hone offerings to attract younger customers.


With globally comparable financial reporting in place, LIFENET is now considering how its IFRS17 data will reshape the way the business is managed, especially its KPI settings.

“The business model of life insurance companies is to recover initial costs through long-term revenues. By implementing IFRS, we have already been able to record stable profits overall,” says Kawasaki. “But, in future, we will have the data to look at profitability management for each product and channel,” he adds.

In terms of product design, he says LIFENET will be looking more closely at the impact on revenues more and focus on reducing the costs of acquiring and maintaining new contracts.

As a result, LIFENET is also confident it will achieve the goal it announced to the market: moving from the Tokyo Stock Exchange (TSE) Growth Market to the TSE Prime Market by FY25. This will require the company to deliver a total profit of 2.5 billion yen for two consecutive years.

“The implementation of IFRS has increased our potential for achieving this critical goal,” says Kawasaki. “Moving to TSE Prime Market will provide security and trust to policyholders, and we can expect various other positive effects, such as expanding our investor base.”

Ultimately, implementing IFRS has become a major underpinning element of LIFENET’s growth strategy.

“The first step in achieving our manifesto to ‘create the future of life insurance’ is to build a stable customer base,” says Kawasaki. “We want to be a company that young people continue to sign contracts with over the long term.” As the income of the younger generation is stagnant, it is important to consider how to provide incentives for them to purchase life insurance. The more granular profitability data LIFENET receives from IFRS reporting, the more it will help the company understand how to deliver sustainable value to this cohort.

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