Pan-Asia Catalysts/Events, Quiddity Advisors

Travis Lundy

Pan-Asia Catalysts/Events

Quiddity Advisors

Index Rebalance

Lifenet Insurance Company / Index Rebalance

<ul>
<li>On Thursday 7 August, the TSE/Nikkei <a href="https://indexes.nikkei.co.jp/nkave/archives/news/20250807E_1.pdf" target="_blank" rel="noopener">announced</a> the changes for the JPX Nikkei 400 28 August rebalance. A few surprises, but given there is a nebulous qualitative overlay, that's expected.</li>
<li>39 were added. 34 deleted. We got 63 of 73 actual changes correct, achieving hit rates of 96%, 83%, and 44% for our High/Medium/Low Conviction <a href="https://www.smartkarma.com/insights/quiddity-jpx-nikkei-400-rebal-2025-end-june-2025-ranks-final-expectations" target="_blank" rel="noopener">Leaderboard predictions</a>, respectively. </li>
<li>We see US$7.3bn of flows, two way. There should be another $3bn+ of flows on the 26th and 28th.</li>
</ul>


On Thursday 7 August, the TSE/Nikkei announced the changes for the JPX Nikkei 400 28 August rebalance. A few surprises, but given there is a nebulous qualitative overlay, that's expected.
39 were added. 34 deleted. We got 63 of 73 actual changes correct, achieving hit rates of 96%, 83%, and 44% for our High/Medium/Low Conviction Leaderboard predictions, respectively. 
We see US$7.3bn of flows, two way. There should be another $3bn+ of flows on the 26th and 28th.


[Quiddity Index] JPX Nikkei 400 Rebal Aug 2025 - Final Results

<ul>
<li>On Friday after the close, <a href="https://www.smartkarma.com/entities/lifenet-insurance-company" target="_blank" data-smartkarma-citation="entities:1564:1" rel="noopener">Lifenet Insurance Company (7157 JP)</a> announced that it would move to TSE Prime on 25 July 2025. </li>
<li>That means it will go into TOPIX on 29 August 2025 at the close. There is a lot to buy. Under the old Quiddity TOPIX Inclusion matrix, it's super green.</li>
<li>It also has a very interesting shareholder structure which is worth looking at in detail.</li>
</ul>


On Friday after the close, Lifenet Insurance Company (7157 JP) announced that it would move to TSE Prime on 25 July 2025. 
That means it will go into TOPIX on 29 August 2025 at the close. There is a lot to buy. Under the old Quiddity TOPIX Inclusion matrix, it's super green.
It also has a very interesting shareholder structure which is worth looking at in detail.


[Japan Index] Lifenet Insurance (7157) Super Green TOPIX Inclusion

Fintech & EM-focused Analyst, KT Capital Group

Alec Tseung

Fintech & EM-focused Analyst

KT Capital Group

Principal investments and advisory firm that focuses on connecting the CIS countries with East Asia.

Principal investments and advisory firm

Equity Bottom-Up

Lifenet Insurance Company / Equity Bottom-Up

<ul>
<li>Oasis Management has become a major shareholder in Lifenet in November. Together with another activist investor, Effissimo Capital (the largest shareholder), they now control &gt;30% of the company.</li>
<li>Company announced some new partnerships/initiatives to drive growth but they don't seem to be materially different from what it has been doing to turn around its declining VoNB.</li>
<li>Unless we can see a sustained trend of improving VoNB, it's difficult to justify the premium valuation vs. the other more established peer.</li>
</ul>


Oasis Management has become a major shareholder in Lifenet in November. Together with another activist investor, Effissimo Capital (the largest shareholder), they now control &gt;30% of the company.
Company announced some new partnerships/initiatives to drive growth but they don't seem to be materially different from what it has been doing to turn around its declining VoNB.
Unless we can see a sustained trend of improving VoNB, it's difficult to justify the premium valuation vs. the other more established peer.


Lifenet: Oasis Management Is Now Another Major Shareholder Besides Effissimo

<ul>
<li>Japan Post Insurance might seem undervalued based on a regression analysis, but its relatively strong RoE was due to extraordinary gains.</li>
<li>The company has a much larger portion of its investment securities being carried at cost on the balance sheet vs. its peer, Dai-ichi Life.  </li>
<li>Against the backdrop of Japan's "higher for longer" theme, its embedded value growth could be under more pressure due to ANW's m-t-m adjustments and very weak new business value.</li>
</ul>


Japan Post Insurance might seem undervalued based on a regression analysis, but its relatively strong RoE was due to extraordinary gains.
The company has a much larger portion of its investment securities being carried at cost on the balance sheet vs. its peer, Dai-ichi Life.  
Against the backdrop of Japan's "higher for longer" theme, its embedded value growth could be under more pressure due to ANW's m-t-m adjustments and very weak new business value.


Japan Post Insurance: Embedded Value Unlikely to Benefit from a Rate Increase

Lifenet's management has successfully turned around the company's new business from stalling, and more initiatives are currently underway to drive its future growth.The company is still only trading at 0.8x P/EV. Although its valuation multiple is richer than the traditional life insurers in Japan, we view that it doesn't make sense for Lifenet, which had significant new business growth compared to those traditional life insurers, to trade below its EV.  The management announced its new embedded value target in the medium term. Our calculations showed a base case IRR of 21%if the company can achieve the target in 5 years.Key concerns centered around Lifenet's tech capability and profitability.

Lifenet's management has successfully turned around the company's new business from stalling, and more initiatives are currently underway to drive its future growth.The company is still only trading at 0.8x P/EV. Although its valuation multiple is richer than the traditional life insurers in Japan, we view that it doesn't make sense for Lifenet, which had significant new business growth compared to those traditional life insurers, to trade below its EV.  The management announced its new embedded value target in the medium term. Our calculations showed a base case IRR of 21%if the company can achieve the target in 5 years.Key concerns centered around Lifenet's tech capability and profitability.

Lifenet: A Rejuvenated InsurTech Story in Japan

Japan

LIFENET INSURANCE COMPANY provides a wide range of life insurance products and services. The company mainly provides the products and services through the internet. The company also provides asset management services.

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Lifenet Insurance Company (7157 JP)

[Quiddity Index] JPX Nikkei 400 Rebal Aug 2025 - Final Results

The JPX Nikkei 400 index rebalance this year is larger than most years at US$7.3bn of two-way flow. We also get a chunk of M _ _ _ global index...

Travis Lundy

[Japan Index] Lifenet Insurance (7157) Super Green TOPIX Inclusion

Lifenet Insurance Company is moving from TSE Growth to TSE Prime. That means it moves to TOPIX. The stock has 30% crossholders and 34% held by two...

Travis Lundy

Lifenet: Oasis Management Is Now Another Major Shareholder Besides Effissimo

Effissimo Capital and Oasis Management now control >30% of Lifenet Insurance. We look forward to seeing the demands they might put on management to...

Alec Tseung

Japan Post Insurance: Embedded Value Unlikely to Benefit from a Rate Increase

Japan Post Insurance's share price has come down by c. 10% since its peak when the note was published in mid. Nov. underperforming both the broader...

Alec Tseung

Lifenet: A Rejuvenated InsurTech Story in Japan

Activist investor (Effissimo Capital) has been gradually increasing and building its stake in Lifenet to 18.03% (mid-Oct) and has become the...

Alec Tseung

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