I'm Tamura of Taiyo Life. Thank you very much for giving us your precious time today. I would like to explain the management strategy of Taiyo Life. Please turn to page two. As shown on the slide, this is Taiyo Life's business model. The left-hand side is the chart depicting our business model. In explaining our business model, the foundation that supports includes that the sales activities are done in pairs. The sales reps form a pair in visiting households to conduct the sales activities. That is the foundation. The market shows the assumptions. This reflects the change of Japan overall. The declining birth rate and aging population is progressing. The household market ratio of senior citizens has increased in the household market. This is the market where Taiyo Life does our sales activities and sales method.
The conventional way is our sales rep to visit the households in pairs. In addition, under the COVID-19 pandemic, we integrated the digital and face-to-face. We have been switching our sales method to this hybrid type. The product, it says, the industry-leading products. We are selling life insurance products to households. There are changes to the household market. One element is the increase in elderly population. While the Japanese population decreased, for the next 20 years, the number of elderly population will continue to increase. How to cater to this market will be equal to the enterprise value of Taiyo Life. The right-hand side shows the product development. In 2008, we developed a product called Hoken Kumikyoku Best, and this is in response to the change in the environment.
In the past, our main product was Term Life, but we recognize that this product alone cannot cater to the needs. The third sector product needs have heightened, such as medical and nursing care. This product is customizable, and that is the reason for launching this product. Another typical disease related to the aging population is dementia. We have launched dementia treatment and prevention products. We have also developed products with relaxed underwriting type. Next page, please. This page describes the hybrid style sales by combining the information and the face-to-face sales. The left-hand side shows the evolvement of information sharing. In 2016, we started to test information utilization. It was started as a trial, but then we created Suma Hoken.
In April of 2020, under the COVID-19 pandemic, it was not possible under the pandemic for a pair of sales reps to visit the households. We started to utilize the data from commercials. The information or data is provided to sales reps, and the sales reps will utilize that data to do sales activities. That process has evolved. Currently, we are promoting hybrid style sales activities. The right-hand side shows the trend of the number of information sharing. The number of lead information shared has increased steadily, and the contract ratio has risen to a certain level. Page four, please. This is improvement of productivity and increase in the number of in-house sales representatives. We rely on sales reps to sell our insurance products. The most important sales challenge is to increase the quality and quantity of the sales reps.
The number of sales reps and productivity is depicted on this page. The right-hand side shows the number of in-house sales representatives. The dark red is less than three years. The light red is three to nine years. The top part is 10 years and over. The quality and quantity of sales reps need to be enhanced. To achieve that, we need to have them build up their careers and build up their experience and increase the number of customers. The starting point is people with less than three years of experience. How can we expand this level of sales rep and lead to sales expansion? In 2019, there were 3,200 people with less than three years. Last year, it increased to 4,400 people. There was an increase of more than 1,000 people.
The layer above or layer of people with 10 years and over also increased. On the quality, please refer to the table to the left. Less than three years in 2019 under pandemic, per person ANP of protection type new policies. This is a very important indicator at Taiyo Life. It was JPY 1.13 million, which is up to JPY 1.53 million. Also, three to nine years, JPY 1.5 million rose to JPY 1.74 million. In addition to expansion of the quantity, the productivity has steadily improved. The table or chart below shows a peer comparison of third sector ANP of new policies per person. This includes medical and nursing care. In Taiyo, it is JPY 1.82 million. We are focusing on third sector products. Per person, third sector sales in our case is higher than our peers. Moving on to page five.
Based on these factors, what about our sales results? The graph to the left shows ANP of protection type policies. The line graph shows in force. Also, the bar graph shows new policies. The new policies through the COVID pandemic period increased. During the COVID, it was JPY 15.7 billion, but it grew to JPY 21.9 billion. The number of new policies has also increased. There is a challenge. The policies purchased during the COVID-19 period started to show some lapse from two years ago. Currently, this trend has calmed down. The blue line chart shows the bank insurance channel. The assumed interest rate was lower for these products sold during the pandemic. This is one area we need to focus, although we have switched to different products. Next page, please. Page six.
In promoting these initiatives, we feel the importance of the capability of people. If you look at the left-hand side, this is about promoting operational innovation. The branches, which are the sales branches, we have done the reform. There are various roles, such as clerical work and sales support and customer service. We are shifting the allocation of human capital more to sales support and customer service. In March of 2026, all of the reform will be completed. 70% of the clerical work can be reduced by then. Currently, this initiative is progressing well. The lower part of the slide shows personnel system revision. The role or the job description will shift from the clerical one to sales focus. The job definitions and the work type will also be shifted. That is described here. The right-hand side shows reform of branch office management.
Currently, in FY2025, we have started this reform, and this continues to be our challenge. The branch, which used to have comprehensive functions, and that was for all branches. Now, we created branches dedicated to sales so that we can strengthen our sales activities and the management of our sales initiatives. We have just started this. Moving on to the next page, page seven. This was launched in August last year, what we call T-AI-Face. This is a mobile device that sales rep will carry. We have expanded this in order to expand the market. Even if it's non-face-to-face, the solicitation can be done, which is the same as the face-to-face. We can shorten the distance and time by using these devices, therefore aiming to achieve the market.
Under the enhancement of sales capabilities, AI will analyze customer attributes to propose the best plan for the customers and also enhance sales efficiency. The nearby customer location is shown by the device when a sales rep makes the visit.
Page eight. I've been talking about hybrid style sales. The most important theme here is quickness. That means that if we receive information from a customer through smartphones and telephones, how can we link that and connect that and share that to the sales people? I think that is a great factor to decide whether we can do the business or not. We are providing the seamless connection so that the information would be shared to the sales people in operation-wise as well as the organizational-wise. We have made some revisions.
As you can see on the right-hand side, the volume and the quality of the information has been enhanced. Group pension enrollment information has been now related to the sales representative in-house. We have just started that. Moving on to page nine, expansion of market. As was mentioned earlier, Taiyo Life sales reps visit clients' households one by one. We were not able to open stores with a less populated area. 20,000 people per kilo meter was the measurement that we have been doing. We have been now expanding the market by enhancing proposal method regardless of face-to-face or non-face-to-face sales channels. By doing so, we have been expanding our market. We cannot visit, but using T-AI-Face, we have been making proposals. These types of sales activities have started from last year. Using this, we are able to expand the market with less populated areas.
This is going to be another step. Moving on to page ten. This is enhancing profitability. What are we doing? On the left-hand side, it says improved product margin for the past few years, so to speak, assumed expense ratio. By different types of products, we have been increasing the margin and profitability. Hence, on the left-hand side, you can see the figures. This is a result on the bottom. It says here, assumed or forecast. These are the effects that we will be seeing from the future. On the right-hand side, you can see underwriting capabilities. This is claims and contract assessment. We want to increase this and improve this. On the bottom, I mentioned to you that some of how do we improve surrender and lapse ratio. This was a challenge for us. I think we are seeing a coming down of this increase.
Moving on to page 11 and 12. Those are the profit and sales indicators and forecast that is based on what we have been doing. That's all from me. Thank you very much.
Thank you for the presentation. Moving on to the management strategy of Daido Life. Mr. Kitahara, please.
I'm Kitahara. Thank you very much for your time today. First, I will explain last fiscal year's sales performance and current trends, followed by the latest topics related to our management strategy. Please turn to the next page. This is the sales performance for fiscal 2024. New policy amounts increased by JPY 400 billion year on year to JPY 5.1 trillion since the bubble economy. This is the highest. New policy amounts, which had declined due to the COVID-19 pandemic, recovered strongly from the low point of JPY 3.5 trillion in 2020.
This was achieved through our diligent consulting sales efforts to address the diverse protection needs of our customers and the expansion of our total protection proposal, which promotes the bundling of life insurance and disability income insurance. Also, the new corporate clients total reached 17,000. Next is the in-force policy amount. The increase on net basis was JPY 300 billion. To the right-hand side, the lapse and surrender rate is bottoming out in the middle of the page. To the right, quarterly lapse and surrender is shown. Especially, it declined quite rapidly in the fourth quarter. It is roughly 90% right now. There is a comparison of the total set of policies client and corporate clients with single coverage. The trend of surrender and lapse amount is lower for the corporate clients with total set of policies.
This is the new business EV, and it has been growing steadily. One of the major factors is that the ratio of total coverage is expanding. MCV has grown by 2.5x in the 10-year period and reached JPY 2.7 trillion. Next, I would like to cover the most recent trends. Due to the Trump administration's tariff, there is a concern that there is an impact to SMEs. The left-hand side shows the current level of new policy amount for the April to May period. It has grown 103% year- on- year. June number, although it is not in here, is 109%. We were able to achieve major progress in June. As of now, we are relieved to see this performance. In the future, it is not possible to anticipate what happens to the Trump tariff. We should not be complacent. We will continue to be careful.
The surrender and lapse amount is declining 90% year- on- year, as shown to the right. Next page, please. This is on three Cs, customers, competitors, and companies. First, on customers. At SMEs, there is a structural issue, which is to take care of the business succession and labor shortage. Currently, the management issue has become complex, also partially due to Trump tariff. The unclear situation will continue. The competition, this has been moderate. At one point, thanks to the tax-saving insurance, the market has been active and rather overheated, but that situation has calmed down. In our company, we expect the unclear situation surrounding SMEs will continue, but basically, the needs of the insurance will not be impacted by the economic condition. We have experienced various challenges in the past, and we will be taking measures appropriately.
We have confidence that we will be able to overcome. Next page. Including Trump tariff, we have been doing a market survey. The 64% of the companies are having concerns. Especially, the ratio of manufacturing industry and also retail is rising. The concrete measures include the specific impact, which includes deteriorating earnings, decreasing margin, review of sales pricing. In terms of the measures against the impact, 48% said that they have no feasible countermeasures. The negotiation with the U.S. is still continuing. The unclear market environment surrounding SMEs will likely continue. More than 90% of our agents are tax accountants, and they are providing management guidance by using the use of insurance. That is one of the major characteristics of our sales structure. The independent agent ratio remains the same. We do not see any major changes in the competitive landscape.
There are new products launched by competitors, but we are able to maintain our superiority. Moving on to page nine. Latest topics. First is the growth of our existing channels, including sales reps channels and the tax accounting channels. Both are, as written here, increasing. Moving on to the next page, please. Next is the steady capture of inheritance and business succession needs. The age of SME owners remains high. According to the 2025 edition of the white paper on SMEs, the majority of owners are 60 years or older. In order for SMEs to pass on their valuable management resources to the next generation and continue their business, it is necessary for owners themselves to make preparations from an early stage. For smooth business succession, the support of external experts is essential.
For us, in order to further strengthen our support in dealing with inheritance and business succession, we are expanding our team of FPs and inheritance consultants and have completed the nationwide deployment of them in FY 2024. Attentive consulting, starting from stock valuation, promotes a deep understanding of customers' own protection and coverage. As evidence of this, the average contract value of cases supported by FPs and inheritance consultants is much higher than the company-wide average. We are also providing comprehensive support through introducing other partners, such as financial institutions and M&A intermediary companies to our customers. Next, the development of the disability income protection.
In 2010, we launched J-type, a product that can provide coverage for the risk of the business owners contracting a serious illness and being forced to leave the company for an extended period of time or retire, while also ensuring the high level of coverage necessary to manage the company. Fifteen years have gone since the launch of this J-type, and we have updated them. Particularly for cancer early detection, technology is advancing rapidly. If the cancer is not serious, it is possible to return to management and business operation at an early stage without having to leave the company for a long time or retire. We also have launched a new product in June to meet this demand. As a result of these efforts in volve J-type in line with advances in medical technology and changes in customer needs.
The number of J-type policy enforced at the end of FY2024 is 204,000, and the policy amount enforced is JPY 4.1 trillion. Next page, please. Next is development of mid-size business segment through financial institution channel. In addition to the in-house sales reps channel and tax accountant channel I mentioned earlier, we are strengthening our financial institution channel. Currently, the majority of our business comes from mega banks, leasing companies, and leading regional banks. However, from the perspective of developing new markets and reducing concentration risk, we are also working to develop other regional banks and securities companies. As of the end of FY2024, the number of financial institution agents reached 79, up 12% from FY2022. On the other hand, the new policy amount trend in financial institution channel shows a decrease of 93% from the previous year.
Originally, the financial institutions were selling our business owners' insurance for protection, not an asset-based single payment product. However, with a recent turnaround in the asset management environment, we've seen a series of sales of single payment variable insurance and foreign currency-denominated insurance. We believe that such diversification of product promoted the financial institution agents may have been the factor behind. Although the financial institution channel is more competitive than other channels, we intend to continue to differentiate ourselves by not just our product lineup, but also leveraging our strengths on experiences and service. Next is about Dodai??, touchpoint with new customers. Dodai?? released in 2022, has grown into one of the largest web-based communities for business owners in Japan, with shortly exceeding 100,000 members. In particular, the number of people registering as a member through advertisement and organic search is expanding.
At the end of FY2024, 38% of members registered not through existing channel. As a result, Dodai?? contributed to creating touchpoints with a customer base that has previously been inadequately assessed, such as customers in information telecommunication and young executives in their 20s and 30s. Dodai?? has been launched with the aim of increasing the number of prospective customers who will become our future customer base in the insurance business. Also, we will continue to contribute to the resolution of management issues of SMEs and expansion of exchanges among owners through Dodai?? so that we will be able to have greater social impact, such as growth and development of SMEs, regional revitalization, and creation of new businesses. Next, moving on to page 14. Next is create an employee market through contributions to human capital management.
As labor shortages become more serious, the practice of health and productivity management to keep employees active and energetic for a long time is an important management issue for SMEs. As a tool to support the practice of health and productivity management of SMEs, we have released KENCO SUPPORT PROGRAM in 2017. The number of companies and users of this tool has been steadily increasing. As of the end of fiscal year 2024, the tool has been introduced to 45,000 people. The number of users is 157,000. Through the KENCO SUPPORT PROGRAM, we contribute to the human capital management of SMEs. We are also committed to creating and expanding the employee market to help SMEs prepare for the risk of their employees, who are their most important capital. In addition, the Ministry of Economy, Trade and Industry has been doing the health and productivity management, and they have provided certification.
We are supporting SMEs that can get the certification and also providing some awards in this regard. As mentioned, we will further differentiate ourselves from our competitors by enhancing our presence as a partner that supports the growth of SMEs by providing a variety of support to them. This is the last page. This is the full year forecast, same forecast we announced at the beginning of the fiscal year. I will explain a bit more. The core profit indicator is expected to decrease due to an increase in wages and an increase in business expenses associated with the cost of opening our core system. Regarding sales performance, we will continue to implement the total coverage proposal, which is one of our strengths, and expect to expand the number of new customers and deepen relationships with existing customers.
We expect both new policy amount and policy amount in force to increase. Please note that there are some uncertainties due to U.S. reciprocal tariffs and so forth. This trend may fluctuate our results. That's all for me. Thank you very much.
Thank you very much. Next, we will move on to Q&A . I would like to introduce the first person, SMBC Nikko, Mr. Muraki. Please unmute and state your question.
I'm Muraki of SMBC Nikko. I have two questions. First, Taiyo Life's profitability. On page five, you have a chart that shows that the policy amount is growing quite steadily. The bottom line of the insurance product in the past surpassed JPY 25 billion in the past, but on page 11, it says it's lower, JPY 10 billion, and this fiscal year's plan was JPY 18 billion.
What is the forecast of the bottom line of your insurance business in the future? If the bank assurance has the capital efficiency issue, if you discontinue completely, then in the short term, what would be the downward pressure to this profit? That is my first question.
I'm Tamura of Taiyo Life. Thank you for your question. I would like to reply to your question. The insurance profit and loss last year, in the same time last year, we have presented a certain amount, and now it is lower than that amount. Major factors include first is the wage increase, the internal in-house staff and sales staff. We increase the compensation for those people. Another factor is system investment. As I have said, we have developed the T-AI-Face, and this investment has increased.
In addition to that, the sales rep channel, I said that there is some improvement, but due to deterioration of the surrender, the content of the production has changed. Those are the factors influencing the profit and loss. In case we discontinue completely the bank assurance, what would be the impact? I do not have a specific number at hand, but at bank assurance, the gap, there is a certain contribution. If we discontinue, then we will have an impact on this bottom line and on the gap. If we have another opportunity, I would like to share with you a specific number.
Thank you very much. My second question is to Daido Life. Sony Life will likely go public in the near future. Corporate market is the topic of my question. On page 13, you are explaining the age of the people accessing Dodai? and your clients tend to be young CEOs. I have the impression that they are younger. What is the age breakdown? Also, what is the status of the contracts w ith regards to the demand, relatively young generation, are you going to continue to make a proposal to that generation related to retirement needs? As Sony Life does, the variable investment type of products, is it more appealing if you propose such products? What is your judgment at the moment?
Thank you for the question. Within Dodai?, the access is done by relatively younger corporate customers. Our overall customer age group is relatively higher compared to Dodai?. Sony Life is scheduled to go public, and they have announced that their target will be corporate market.
I would like to refrain from commenting on other companies' strategy. I do not have the full picture, but in any case, variable products will not be a fixed benefit for the death. Some people are preparing for the future benefit, and the corporate protection is a certain need that we do see. For younger management, if they join the insurance at a younger age, the premium will be lower. That is preferred. When they start a company, their focus tends to be more on the business profit and protection for the corporate customers. If they have something or someone to protect, such as more employees or increase of loans, there is no more strong motivation. I believe it is rather difficult to motivate them to purchase coverage when they are young.
Thank you very much. When we look at insurance cash flow, you have 30 years or longer or 40 years or longer. Is it because you have a relatively large portion of young policies, people in their 30s or 40s?
Of course, there are a certain number of people who buy coverage in their 30s and 40s. In our case, the L- type is 100 years old when it matures. The majority of the policyholders join the insurance program when they are in their 40s or 50s.
We would like to move on to the next question, Bank of America, Tsujino-san.
I have two questions to Taiyo Life. First, in the previous IR meeting, that was in May, you talked about information, and you have to review its efficiency and effectiveness. At this point of time, have you found out something, and is there any room of improvement and new measures to be taken? Anything? The second question is per person, new policy, ANP. That is on page four. You mentioned that sales reps are visiting customers in pairs, right? In most of the cases, right? Then per person, and you get divided by per person, right? That is a result of that. Is it per person, actually, in that case? If so, I think your customer visit is very efficient, very, very efficient. Pairing and visiting your customers, the touchpoint. My question is that could you clarify on this point? In reality, and do you think the situation is viable? Could you elaborate on your customer visits?
This is Tamura speaking. Thank you for your question. The first question about information. As for information, as is written here, we use TVCM, we get phone calls, and based on that, we visit customers. As was mentioned earlier, the information is the information that we got through phone calls. Can we smoothly relay that to the sales reps? That is the most important part which leads to the result. In our case, Taiyo Life, I think in our case, when we get the phone call, this is going to be the most quickest time that we relay these information chairs to our sales reps, and our sales reps instantly visit the customers. I think this has shown up the effect. That is a current status. What are the challenges? Yes, naturally, the phone call that we get would not necessarily lead to 100% contract or policy.
If you could look at the right-hand side on page three, the graph, the contract ratio is about 30% or less than 30% or so. The remaining 70% or so has not led to the contract. Of course, we do have the information accumulated in Taiyo Life. Repeatedly, we need to use this information, and based on that, we have to visit the customers and relay that to the sales reps and lead to the contract. I think we have to think about the next so that we can have a higher contract ratio. Here, as I have mentioned to you earlier, I have mentioned LC, Life Counselor in branches. Those clerical workers who were working in clerical things are now transferred to sales, and those are sales reps, and we do have the shared information.
Of course, in advance, we get customers' approval to visit them, and they would get this and visit the customers. In this graph, you can see on the right-hand side, very right-hand side, the shaded 2024 bar chart. This is a portion where LCs had started to support the sales activities and life counselor LCs. I think this job has started from last October, and they have been supporting the sales reps. How can we enhance and improve these capabilities? I think would be important. That is the first part. Second one, if you could turn to page four, per person, new policies, ANP. This is per person, yes. As you have mentioned, Ms. Tsujino, yes, if it is visiting in pairs, if you compare with 2019, yes, JPY 800,000 is another positive vis-à-vis 2019.
That shows the higher quality of sales reps as well as the effectiveness of Suma Hoken and information. I think on a daily basis, those information are actively used in the sales reps' daily activities, and that has led to the result. Naturally, the sales reps, in order to increase their compensation, they're working. If they get the contract, I think that would be high motivation, high motivation for those people to work more. I think that one word of thank you and getting the contract motivates them. I think from the hiring people perspective, this has been a good thing. On page four, right-hand side, we have this, the less than three years reps, we have more and more people joining us.
The next stage is that those people, we want them to retain with us and have more higher quality so that they can stay longer with us.
Thank you very much. If there are challenges, that is on page three, the graph. The red one is the number of information sharing peaked out in 2022. I think maybe in 2022, that was a special factor there, but this is unfortunate that the information sharing is becoming less and less. You are investing in this information, the information sharing volume seems to be declining. What are you going to do with here is the challenge for you. I think you must think about it, and are you doing various measures for this?
Yes. Ms. Tsujino, thank you. Yes, as you say, yes. Here, so to speak, the information sharing, how much can we increase this? This is the challenge. Yes, 2022, in a sense, we had pandemic demand, so to speak. Of course, we had COVID-19. I think people watching TV have increased, but recently, the numbers are declining. During the COVID-19, people stayed home and were watching TVs. They were watching TV longer hours. This is shown in other statistics as well. Having a higher viewing rate is difficult compared to the past. Of course, we have to invest more and control more about the investment into the TV advertisement. We have more than three years of sales reps now with us. For them, I think information, the volume, and the quality is important. It is not just investing into TVCM that makes a difference. I think the difference here or importance here is in what type of program are we going to invest into TV ads.
We have to be selective in programs so that it could be more efficient. Yes, as you say, this is going to be a challenge, and we will keep on going and controlling this as well. Thank you.
Thank you very much indeed.
We would like to move on to the next person, Watanabe-san, of Daiwa Securities. Please unmute and ask your question, please.
I'm Watanabe of Daiwa Securities. I have two questions. First is on Taiyo Life, page three. My question is the number of life counselors in branches right now. The chart to the right shows that you are already enjoying the impact of LCs. Also, what is the additional benefit of the new policies by establishing branches dedicated to sales? Can you expect additional incremental benefit?
Thank you very much, Watanabe-san. First, the number of LCs currently at Taiyo Life. As explained using this material, we are continuing with our operational reform from 10 to 20 years ago. There are massive volumes of clerical work, and we have introduced automation in order to reduce the workload. The initial benefit of that was reflected in the reduction of the labor cost. We reduced headcount and reduced the cost and contributed to the profit. How we did this is that the new recruiting after somebody retires of the new grads, we stopped for a certain period in order to reduce the number of general staff and thus reducing the total headcount. This time, the business operational reform is focused on the quality rather than the number of people. We are changing the quality and productivity. We have 600 or so LCs across Japan, and their job description is changed from clerical ones to sales support.
Page three, bar chart shows the fruits of that. This is a completely new challenge, and little by little, we are asking LCs to make more challenges. Among sales reps, there are reps who have a certain number of customers but not fully leveraging. There is a gap between the number of customers held by a rep and the performance. The approach that a rep should make to the customer is not fully done. Without fully proposing the full possible coverage, their contracts are being made. That part is supported by LCs. When we compare the sales rep with LC support and without LC support, we are starting to see the difference in the productivity. These are the methods that we can further pursue. The second point, on this point, you are exactly right.
The reform of the branch structure, this is on page six for Taiyo Life. When we look back at our history, this is the first attempt to do that. Until now, all branches had uniform same functionalities, but this time, we are challenging to make those changes. We currently have 150 branches categorized into 20 blocks, and this challenge is made in one block. The dedicated sales branch offices focusing on sales promotion. Conventionally, a certain amount of management resource was allocated to clerical part, but June is a campaign month for Taiyo Life, and we are now seeing the expected results now.
Of course, we have various issues since this is the first attempt, but by resolving each issue one by one and deploying this structure across Japan, and also introducing layers to the sales organization, we can achieve the strengthening of the sales management and improvement of the productivity. This is a challenge for Taiyo Life, and we would like to proceed carefully, but in a speedy manner.
I understood quite well. My second question is on product development of Daido Life. I'm looking at page 11, the new product launched in June. What was the reaction from the customers and new business in June? Can you expect an impact from launching new product?
Thank you for your question. The new product this time is easy to explain to the market, especially at the Nikkei newspaper. There is Professor Nakagawa, or Dr. Nakagawa of Tokyo University Hospital who writes a column about cancer on Nikkei newspaper, and he gave us advice on the need of the protection and guarantee for cancer patients. This is easy to appeal and easy to sell. New business in June, especially the growth of J-type, is quite strong. That is it.
Understood. Thank you very much.
Next question. Sasaki-san from Nomura Securities, please.
This is Sasaki from Nomura Securities. Thank you. The first question is for Taiyo Life, sales channel and your sales strategy. First is about you are going, I'm interested in doing insurance business and BS, BS coverage. The cost is reduced, and this is BS means broadcasting. You have a lot of companies, Japanet Takata and so forth, coming into this market. As a broadcasting companies, do you have any intention to have coordination with Japanet Takata or any broadcasting companies? Product, I have one question. Short interest rate is higher now. In the past, we had savings and insurance. We had product in between that type, so close to savings. Selling those products, you have a lot of asset now. Do you intend to go into those products more?
Yes, thank you for your question. Thank you for your two questions. First one is, so to speak, is information sharing, I believe. What you have mentioned, the activities that you have mentioned, we have not been part of the business yet, but when you talk with the people in the forefront, TV broadcasting companies, they are concerned about the lower viewing rates. We do have some involvement in that. We do have the same concern.
The information source, how are we going to expand that? That is a very important theme for us. It is not informational, but as was mentioned earlier, for group life insurance, the customers' information shared to our sales reps may be in the future. Those, we have Shinyo Kumiai or corporate kumiai financial institution, and maybe we can tie up with them and maybe sell similar products with them and acquire some information. It is not just accumulating our own and collecting our own information, but maybe tying up with others and sharing information, maybe sort in the future. The second question is about the interest rate and the new world for us. Currently, when you look at the sales performance, sales-wise, I think we're not putting strings on, but the lump sum type of product compared to the previous year is selling well.
Single payment, I think this shows the needs of our customers. We do have a majority of our customers are seniors. After retirement, of course, they stay home more. As a customer, we have a lot of senior customers, and they do have some amount at hand. In a sense, they have nowhere to put their money. That kind of money, we visit those households, and probably we get more contracts. I think that percentage is higher now for us. The household market, we see some changing needs. We would have to address this and cope with this. As you say, it is not the simple way of selling the product, as you say, visiting households and carefully selling to senior customers. Yes, that's a very important way of selling our products.
I think that is going to be another factor for us for next growth. In the related department, we are now discussing how to do that business. Thank you.
Thank you very much. The second question is to Daido Life. This time, it was not mentioned by your explanation. After COVID-19, for example, corporations, accounting, corporate benefits, and human personal evaluation, I think these have been changed before and after COVID-19. They are using more of the clouds and apps related to cloud now. Those systems, if you have your product on those clouds and systems and apps, maybe it would be easier for customers to buy your product. Are you considering this type of relay with other system integrators and so forth? Do you have any idea of that?
This is rather technical, and we need to consider that in coming years. What I can say is that after COVID-19 and the current situation is that our corporate clients, SMEs, their major challenges are that they cannot hire people. I think human resource-based management is now actively done by large corporations, and they are hiring more young people now. For SMEs, in some cases, they are not able to hire new people, and that is another factor leading them to bankruptcy. I think human capital management is most important. Of course, having better benefits and so forth and wages is important for SMEs. In that sense, we are providing them health and productivity management. They are not being penetrating in that SME market yet. In order to solve social issues, I think in a plan next year, we are incorporating this idea. How are we going to do this?
I am not able to provide you specific things, but these are a very important theme for us, and we are fully aware of that. Thank you.
Thank you. Thank you very much.
Moving on to the next question, JP Morgan Securities, Sato-san, please unmute and ask your question.
I'm Sato of JP Morgan. I have two questions. First question is to Taiyo Life, page 10 of your material. The product margin improvement, various measures are shown here, especially the left-hand side bottom shows expense margin improvement effect, and how much can you realize, utilize this? Up to FY 2024, the impact that you expected, did it materialize? That is my first question. The realization of the impact in the future, the pace, I think, will be faster than the impact felt in the past. What is your assumption?
Why you are not realizing as of today, but why this is the measure, these are measures for the future? That is my first question.
Thank you very much for your question. On page 10, left-hand side bottom, the expense margin improvement effect image, the first point, the actuals, the numbers in actual, how probable or trust reliable these are. For these, this is quite actual, quite accurate, and we have built up these effects. In the right, to the right, these are assumed as for the calculation in the rates for the insurance products, and we have a certain number in the background, the red bar graph, unless there is a major decline in the sales volume or unless there is a major increase in surrender and laps, assuming the current trend of the sales volume and also surrender and laps, then these bar graphs will steadily increase.
That is for the red part. The blue part, you say that the impact may be too early. It says four in 2020, 0.4, and these are the impact of the product sold in April or November in 2019. The blue bar shows the impact after this fiscal year. We do not expect that these timings are too early, but rather correct. The volume of new business, the budgeted business performance, and also surrender and lapse ratio. If the assumptions and the actual vary significantly, then this may not be the result, but given the current budget, these are the impact that we do expect.
I may not have communicated the intent of my question clearly. The red bars, in the future, the improvement measures will accelerate. That is how it is shown. In the past, JPY 2.2 billion for 2024, that is the extent of the effect. The final year, the bar shows nearly JPY 10 billion. Is this, are you progressing in line with this forecast? The blue part, after 2025, the impact of 2025 is shown as JPY 3 billion in 2027. In 2025, the impact is only JPY 3 billion. It seems to be very fast. If there are any measures with stronger result, then you should prioritize that. What kind of menu do you expect to generate this result?
Thank you very much for the question. The question you raised, how the effect has been built up or will be built up from 2019 to 2025, there are various measures to increase business expense margin, assumed business expense. It is not one year worth of the measure, but it is a build-up of the numbers, and it accumulates.
The measures in April 2019 and November 2019, each measure is building up. It is not contributing to just a single year result. Please look at these numbers in such a way. From 2019 to 2025, all of the measures' impact or effect will build up. As we progress into 2025, 2026, 2027, the impact of past measures will accumulate. The blue part shows the results of the measures from this fiscal year onward. You say that this is rather large. Product revision impact, we expect to be larger in the future than in the past. From that perspective, the improvement effect will be larger in the future. In terms of the actual amount, monetary amount, the height of the bar, whether that is accurately reflecting the forecast or not, that may not be precise.
There is a major product revision, which is to relax the underwriting, and that assumed expense is heightened.
The second point, I'm asking a similar question to Daido. This time, there was no mention on the non, but this fiscal year, the P&L related to the insurance will be rather negative due to the increase of the expense. Also, there is inflation and other macro environment. It is better to improve the resilience. Is there any measures to improve the profitability at Daido or any planned measures?
One is disability protection product. The volatility is high. The company is incorporating a buffer. Compared to the past, based on the past experience, the profitability of this type of product is high. If that portion expands, then the profit margin will increase. We are an equity company, and there is no distribution to the policyholders.
Basically, we need to set our sense of value to total revenue. The assumed rate, interest rate of our products is right now far below 1%. If we increase the assumed rate, then that will not contribute to the revenue. Based on the fact that we are steadily, continuously winning new business, we should look at the assumed expense rate on a total basis. The digital cost is rising. We need to move away from host computer. Otherwise, we will not have flexibility, and the maintenance cost of the host computer will rise. Capable human resources will be short in the future. Labor cost will increase. The assumed business expense will need to be raised in order to compensate for such increase of the cost. On total basis, it is important to secure new business margin.
If the assumed expense rate is a concern, then we will raise the assumed rate increase. For customers' perspective, the premium will not change. That does not have a significant meaning in implementing. Thank you very much.
Tsujino San of Bank of America Securities. Because of the time, yes, I am again asking questions. Last September, last year, September, you were trying to launch a new system, core related, and Taiyo and Daido, respectively. You were able to reduce the cost, and the effect will come up. I think that is what you have explained. That was an explanation made by the president, I guess. Since then, some time has passed. Is there any effect that you saw, the timeline as well as the actual amount and so forth?
Thank you very much, Tsujino San. This is going to be answered from [Moriyama].
I think your question was Taiyo and Daido Life shared operational system, and that is considered at the holdings level. As was mentioned earlier, Daido Life, they have made the core system open, and toward 2029, they are progressing with that. That is going to be a group core system, and that is going to be shared by Taiyo Life. Including Taiyo and Daido, I think we are still considering that so that we can reduce the operational cost. For the timeline, the target is the function of policy and contracts. If you take just clerical works, the process, we have so many processes. Up to what level, how much can we share, and how much cost will be reduced? We are now evaluating these effects at this point of time. Within this fiscal year, we will be evaluating, and we have that time schedule.
Based on that, that is going to be, we will decide whether that will be incorporated in a long-term plan. In that sense, according to the plan, in line with the plan, we are working on that. If we are clear with that, we will make another announcement. Thank you very much.
Thank you.