ORIX Life Insurance Corporation: President's Message

Kazunori Kataoka
President,
ORIX Life Insurance Corporation

Life Insurance Business Supporting the ORIX Group

The ORIX Group operates a diverse portfolio of businesses. In addition to financial and real estate operations in Japan, we also engage in global private equity and asset management businesses. Within this portfolio, the life insurance business is distinguished by its long-term relationships with customers and its ability to generate stable earnings.

I believe these very characteristics define the important role of the life insurance business within the ORIX Group. Having both growth-oriented businesses and businesses that generate stable earnings is what supports the Group’s sustainable growth as a whole. At the same time, because life insurance is a very stable business by its nature, we must never fear change and must continue to evolve. To continue providing long-term protection to customers and fulfilling our responsibilities to pay claims and benefits, we must keep evolving our business model with a forward-looking perspective. In fact, ORIX Life Insurance has continuously transformed its business model in response to changes in the operating environment. I believe that it is precisely to fulfill our responsibility to customers that we must continue to evolve.

By fulfilling our social mission as a life insurance company, and by generating stable profits and maintaining a sound financial foundation, we will contribute to the ORIX Group’s sustainable growth. This is the role expected of us, and the future that ORIX Life Insurance aims to achieve.

Building the Foundation for Future Earnings

ORIX Life Insurance has grown for many years with a focus on medical insurance. Since launching our medical insurance product CURE in 2006, we have expanded our business in the individual protection market, at times acquiring more than 700,000 new policies in a single year. It appears that many customers may strongly associate ORIX Life Insurance with medical insurance products, and that perception reflects the business foundation we have built in that field. Despite this success, however, I believed that resting on our laurels could make future growth difficult.

Medical insurance is a product that is easy for customers to understand and has high demand, as it provides protection against familiar risks. At the same time, it is a business model built on selling a large number of relatively low-premium policies, and profitability tends to decline as competition intensifies. Moreover, because most products are non-savings-type insurance, they generate premium income but do not easily accumulate assets that lead to future investment returns. I was concerned that, with the eventual return of a positive interest rate environment, ORIX Life Insurance might not be positioned to fully capture the benefits.

For this reason, beginning around 2017, we made a major strategic shift from a medical insurance-centered business model toward the death protection segment, with whole life insurance at its core. Our aim was not to continue growth through increases in policy counts. It was to build a business structure that achieves growth in premium income while simultaneously accumulating assets — creating a foundation that generates future investment returns. This shift represented a major strategic decision for the company. It required prioritizing the foundation for future growth over short-term results. For a company that had grown through medical insurance, this strategic change — accompanied by a decline in new policy counts — demanded considerable resolve. In fact, new policy counts have decreased from a peak of roughly 710,000 per annum to about 190,000 most recently. However, premiums per policy have increased, and both premium income and total assets have expanded steadily.

What is particularly important is that the expansion of total assets is driving growth in investment income. A life insurance company is not only a provider of protection — it is also an institution that manages assets over the long term. Simply accumulating assets is not enough. How those assets are invested, and how they generate returns, determines a life insurer’s competitiveness. Accordingly, alongside our shift in product strategy, we have also strengthened our asset management capabilities. We have recruited investment professionals from outside the company, restructured the Asset Management Division, and expanded beyond our traditional bond-centered approach into more diversified investment strategies. Today, roughly 10% of our total assets are allocated to alternative investments, and we are enhancing our investment capabilities in collaboration with Robeco and ORIX USA, both ORIX Group companies.

As a result of these efforts, investment income has grown significantly, and segment profit exceeded ¥100 billion in the fiscal year ending March 2026. This achievement is not simply the result of changes in the interest rate environment. It reflects the shift toward products that accumulate assets and the strengthening of our investment platform — efforts that are now bearing fruit. ORIX Life Insurance is not aiming to preserve past success models.

Our goal is to provide the protection customers need while building a business foundation that can grow through both insurance income and investment income. We will continue to value the customer base and brand we cultivated through medical insurance, while evolving our business model to enhance future earning power. I believe this transformation will become the most important foundation supporting ORIX Life Insurance’s next stage of growth.

Toward the Next Stage of Growth

Through our shift in product strategy and the strengthening of our investment capabilities, ORIX Life Insurance has enhanced its earnings base across both insurance income and investment income. Our next challenge is to further build on this foundation and translate it into long-term growth in corporate value.

To do so, allocating management resources to growth areas will be essential. We are focusing on the corporate market and the high-net-worth market. In these segments, we can respond not only to protection needs but also to diverse customer needs such as asset formation and wealth transfer to the next generation. Policies in these markets also tend to have larger premiums, enabling us to build a portfolio that contributes to growth in both insurance income and investment income. By concentrating our efforts in these areas, we aim to further strengthen our future earnings base.

When evaluating the value of a life insurance company, I believe we should not look only at single-year profits.
Life insurance is a business that accumulates long-term contracts, and the fundamentals of management lie in how we enhance the value that will be generated over the long term. In this sense, continuously increasing Embedded Value (EV) is a major theme in ORIX Life Insurance’s management. At the same time, life insurers have a mission to fulfill their protection responsibilities to customers over the long term. Maintaining financial soundness is therefore of utmost importance. We maintain a sufficiently high solvency margin ratio and a strong level of financial soundness. On top of that, it is essential not only to preserve a sound financial base but also to use capital effectively to enhance corporate value.

Life insurance has unique business characteristics and should not be evaluated solely by the same metrics as other businesses in the Group. However, as a member of the ORIX Group, we intend to manage with an even greater focus on capital efficiency, including ROE. By growing EV, generating stable profits, and using capital effectively, we will enhance ORIX Life Insurance’s corporate value. This is our challenge as we move toward the next stage of growth.

Structural Reform Supporting the Next Stage of Growth

The area where I currently see the greatest potential for transformation is AI. Life insurers carry out many operational processes to continue providing protection to customers, including policy administration and claims assessment. We have advanced digitalization over the years, but many tasks still require human judgment and verification. Today, however, advances in technology — especially generative AI — are revealing significant possibilities for transforming operations that were previously difficult to automate. We are introducing AI primarily in claims assessment and customer contact center operations. The aim is not merely to improve efficiency — instead, we aim to re-examine the business processes themselves.

I do not believe AI should be introduced solely for cost reduction. The key is to concentrate management resources on work that requires human judgment, expertise, and creativity. By streamlining routine and administrative tasks, we can redirect talent toward customer engagement, product development, and work that requires more advanced judgment.

ORIX Life Insurance has continually evolved its business model in response to changes in the operating environment — shifting away from a medical insurance-centered model, strengthening our investment capabilities, and advancing initiatives to enhance corporate value. AI-driven transformation is the natural extension of these efforts.

The role expected of life insurers will not change: to continue providing customers with peace of mind. To fulfill this mission, we must embrace change and evolve both our business model and our operations. By enhancing the value we deliver to customers and society, we aim to contribute to the ORIX Group’s sustainable growth.