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ANNUAL REPORT������������������������

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Management Principles of Fukoku Life

ValuesOur Customer-Centered Values
Possessing customer-centered values means creating and providing distinctive services andexperiences that provide true peace of mind to customers based on the assumption that all employees
treat customers as they themselves would like to be treated.

Management
Philosophy

ValuesCode of
Conduct

Business
Policies

Management Philosophy
Fukoku Life will continue adhering to its original management philosophy ofprotecting the interests of policyholders and contributing to society.
In addition, we will continue to help our employees achieve personal fulfillment.
To protect the interests of ourpolicyholders

To contribute to society

Code of Conduct
A customer-centered code of conduct to bereflected in the attitudes of all executives andemployees as they carry out their daily business.

We believe that having customer-centeredvalues requires us to do the following:

To help our employees achieve
personal fulfillment

Business Policies
1. Foster personnel with customer-centered values

To provide customers with peace of mind, foster confident
and proud employees who have the ability to adopt acustomer’s perspective.

2. Reinforce how sales representatives structure activities

v Remember the importance of teamwork

To ensure meticulous service to customers, reinforce thestructure according to which sales personnel conduct face-toface sales activities.

v Deserve the trust of each and every customer

3. Attain a net increase in the number of policyholders

v Work with enthusiastic and pridev Apply common sense in our workv Emphasize the importance of life insurancev Overcome every difficultyv Create a friendly work environment

To earn the trust of a growing number of customers,
strengthen insurance product presentation design, provision,and follow-up services to meet customer needs.

4. Enhance business efficiency

To achieve stable growth, improve the efficiency of theCompany’s wide range of business activities.

Contents
Message from the President ������������������������������������������������������������������������������������ 2
Fiscal 2020 Topics ����������������������������������������������������������������������������������������������������� 4
Medium-term Management Plan (Fiscal 2019–2021) ����������������������������������������������� 5
Review of Operations in Fiscal 2020
Business Performance������������������������������������������������������������������������������������������ 6
Financial Soundness and Profitability (Non-consolidated) ������������������������������������� 8
Investment Performance (General Account) ��������������������������������������������������������� 10
Investment Policies for Fiscal 2021����������������������������������������������������������������������� 11
Business Management System �������������������������������������������������������������������������������� 12
Centenary Project ����������������������������������������������������������������������������������������������������� 13
Sustainability—Corporate Activities Leading to Sustainability ����������������������������������� 14
Principles for Responsible Investment (PRI) ��������������������������������������������������������� 15
Contribution to Society ��������������������������������������������������������������������������������������������� 16
Non-consolidated Financial Statements �������������������������������������������������������������������� 18
Consolidated Financial Statements ��������������������������������������������������������������������������� 40
Corporate Organization ��������������������������������������������������������������������������������������������� 69
Corporate Information ����������������������������������������������������������������������������������������������� 70

FUKOKU MUTUAL LIFE INSURANCE COMPANY

1

Message from the President

I would like to express my deepest condolences to those whohave lost loved ones as a result of the pandemic, and to extend
my heartfelt thoughts to all who have been impacted by thecoronavirus�

COVID-19 Response
We have set up a task force that will implement timely andappropriate measures in accordance with our basic policies ofprioritizing the lives of customers, employees, and prevent the
spread of infections resulting from our business activities�
Following Japan’s first declaration of a state of emergency
in April last year, we started to limit in-person insurance
solicitations and to focus on remote after-sales services� Since
the lifting of this state of emergency in June, we gradually haveresumed our sales activities and have begun responding toclient demands through a combination of in-person and remotemethods� We have introduced online consultations and anelectronic transmission system for sending sales materials�
In addition, we started offering “Infection Disease Support
Plus” as part of our medical insurance plan, which pays
twice the consolation money (paid in lump-sum) to patients
hospitalized for particular infectious diseases including COVID-19�
Further, we have strengthened our telephone and postal aftersales services, and are providing detailed information on special
initiatives related to COVID-19�
As a mutual company, we work to ensure that our management
and employees maintain “customer-centered values” in all aspectsof business and operations� These ideals, on which we build
new ideas and plan new activities, embody our philosophy of2

FUKOKU MUTUAL LIFE INSURANCE COMPANY

putting ourselves in our customers’ shoes and creating services
and experiences that only we can offer� Based on our values,
we are close to customers who have anxiety about COVID-19�
The Past Year in Review
Performance in terms of new policies dropped off substantiallyduring the first quarter, due to restrictions on sales activities
as a result of the pandemic� However, in the second quarter,
performance recovered to a level higher than during theprevious year� And it has remained so thanks to the launch of
Hataraku Sasae Plus (a disability insurance rider [2020]) and theintroduction of Infection Disease Support Plus�
Meanwhile, Surrendered and lapsed policies improved
significantly due to better after-sale services and increased
insurance needs�
Reflecting our policy of taking risks commensurate withour capital levels, we have endeavored to maintain stableprofitability despite low long-term interest rates worldwide�This we have done by accumulating domestic and foreign
stocks, projected to generate stable dividends, as well as
foreign currency-denominated corporate bonds with relatively
high yields�
Interest, dividends, and other income reached a record high forthe third consecutive year due to, in part, both the increase indomestic and foreign stock prices that occurred toward the endof the fiscal year, and the shift to a weak yen�Consequently, including the figure for Fukokushinrai Life
Insurance Co�, Ltd�, we saw a 0�3% year-on-year rise to ¥82�8
billion in terms of fundamental profit—the standard measure of
an insurance company’s profitability�Meanwhile, our consolidated solvency margin ratio, an indicatorof soundness, declined to 1,303�9% (down 27�8 percentage
points compared with the figure at the end of the previous
fiscal year), but remained at a high level regardless�
In accordance with the expectations of our policyholders, weraised dividends for policy holders of both individual and groupinsurances� This marked the ninth consecutive year that we haveincreased the dividend paid to individual insurance policyholders�Life insurance involves a spirit of mutual assistance, in which
policyholders comprise an insurance group and help each other,with insurance premiums received by policyholders provided as
insurance payouts to customers who need them� In fiscal 2020,
along with Fukokushinrai Life, we paid out a total of ¥554�9billion in insurance claims, annuities, and benefits� We willcontinue to provide reliable payment of insurance claims andother benefits�

To maintain financial soundness regardless of the operating
environment, we are working to further strengthen our capital�Our basic policy for doing so is to accumulate internal reserves,which are funded by ordinary profits, and to combine thesewith external financing, which includes raising foundation funds
and issuing subordinated bonds�
During fiscal 2020, we issued ¥50�0 billion in subordinatedbonds in December and increased our price fluctuation
reserves as internal reserves� We plan to continue our efforts
to improve our financial soundness and provide our customers
with security and peace of mind�

Medium-term Management Plan
Our medium-term management plan (fiscal 2019 through fiscal
2021) is based on our vision of becoming the most valuable
company by thorough differentiation� To bring us closer toachieving this vision, we have established the creation of aperpetually virtuous cycle for sustainable growth (put more
simply, a cycle in which improvement in employee satisfaction
leads to improvement in customer satisfaction) as one of the
key themes of our plan�Reflecting another theme of our plan, we are conducting
initiatives aimed at achieving our long-term management goal:
to become the number one company in terms of customer
satisfaction within the next 10 years�
Centenary Project
As we approach 100 years in business in 2023, we are working on
our centenary project based on a concept, called THE MUTUAL�The concept refers to the next generation of mutual aid that will
evolve over the coming century, as well as our aim to become
an enterprise representing real mutual aid, by deepening ourconnection to, and mutual support for, all our stakeholders�
Currently, we are conducting committee activities called
NEXT100, based on 12 themes, which will serve as an engine
for helping to realize THE MUTUAL�FIND THE MUTUAL, one of the 12 above-mentioned themes,
requires our employees to find instances of connections andmutual support that characterize THE MUTUAL around Japan�In fiscal 2020, we conducted activities at our Hiroshima,
Chiba, Maebashi, and Hakodate branch offices� In November,
we launched THE MUTUAL Art for children to help children
connect with society� The initiative uses works of art fromthe Smile Gallery in designs for eco bags and other products�
At the gallery—in the second basement of our head office inUchisaiwaicho, Tokyo—we display art created by students
attending special needs schools throughout Japan�
Financial Soundness
We must continue to ensure sound management to achievesustainable growth as social and economic environments
undergo major changes�

Our Mission as a Mutual Company
We believe that our most important responsibility as aninsurance company is to ensure reliable payment of claims, nomatter when� At the same time, we see our mission as a mutualcompany as being to provide customers with reductions ininsurance premiums by striving to increase our dividend payouts�
To fulfill our responsibilities as an insurance company andour mission as a mutual company, we have focused primarily
on protecting the interests of our customers by pursuing anappropriate level of growth that will allow us to serve theseinterests� We believe that these moves will help customers
develop trust in us and so feel secure� Life insurance is acovenant that extends beyond a single lifetime to include
subsequent generations, making it a never-ending endeavor� In
the spirit of mutual aid, we will fulfill the promises we have madeto our customers in perpetuity, while being close to customers�
We look forward to your continued support and cooperation�

Yoshiteru Yoneyama
President

FUKOKU MUTUAL LIFE INSURANCE COMPANY

3

Fiscal 2020 Topics
2020
April

▪ Hataraku Sasae Plus Launched
We updated our special disability insurance rider—Hataraku Sasae Plus—which had been launched in 2011 in
response to potential risks linked to disability-related unemployment� The rider allows policyholders to prepare
for risks associated with short- and long-term unemployment resulting from disabilities�

July▪ The 98 th AGM Votes to Increase Personal Insurance Dividends for the Eighth Consecutive YearIn fiscal 2019, we increased dividends for holders of medical insurance policies available since fiscal 2005 thatprovide no hospitalization benefit� At the same time, we set up long-term special dividends for holders of medical
insurance policies that reach maturity with no hospitalization benefit� These dividends amounted to ¥3�6 billion,up ¥0�3 billion in this year�▪ Deal signed with Pendal Group Limited (Australian Asset Management Firm)
We signed a memorandum of understanding concerning share management in Oceania� It allows us to
outsource share management in Australia to Pendal Group Limited, supply it with trainees, and share
information on asset management�

December▪ Subordinated Bonds
We issued ¥50 billion in subordinated bonds to further strengthen our capital base�▪ Infection Disease Support PlusIn December 2020, we began offering Infection Disease Support Plus, which is available until January 31,
2022, and pays twice the consolation money (paid in lump-sum) to patients hospitalized for particular infectious
diseases including COVID-19�

2021
March

▪ HQ Renovation
In March 2021, renovation of our Uchisaiwaicho headquarters (in the Fukoku Seimei Building) was completed�
Since the Company promotes flexible and efficient in-office workstyles, the premises feature spaces
designed to make it easier to work� The design is based on the idea of creating opportunities for face-to-facecommunication, changing workstyles, and introducing comfort while eliminating stress�
Last July, before renovation had been completed, we opened the lounge and conference are called Reiwart, that
may be used by tenant companies, individuals, and enterprises that do business with us� Paintings and otherartworks belonging to the Company decorate the area�

Reception

Art lounge

Clubhouse

4

FUKOKU MUTUAL LIFE INSURANCE COMPANY

Medium-term Management Plan (Fiscal 2019–2021)
OutlineThrough our Medium-term Management Plan, we aim to improve
the quality of our operational processes and increase employee
engagement, rather than focus on revenue and profit targets
alone� We believe that these efforts in turn will boost our
financial results�
BackgroundWe are currently conducting initiatives associated with our
Medium-term Management Plan� As in our previous plan,achieving the highest possible level of customer acclaim

through thorough differentiation is the goal of our current
plan� To this end, one of its core themes is to create perpetual
positive cycle of sustainable growth, where improved employee
satisfaction leads to an increase in customer satisfaction�
At the same time, we are conducting initiatives aimed atachieving our long-term management vision to generate greater
customer satisfaction than any other life insurance company�
This is also both a theme of our current plan and an ideal wehope to achieve within 10 years� Through these initiatives, wewill carry out major reforms aimed at making the channels usedby our sales representatives more sophisticated�

Our Vision
To achieve the highest possible level of customer acclaim through thorough differentiation.
▪ Customer Satisfaction
Our customer satisfaction improves▪ Dividend Enhancement
We reduce our customers’ premium
burdens�▪ Profitability, Maintenance ofFinancial Soundness
A higher rate of renewal of our policies
result in higher profitability andongoing financial soundness�▪ Improved Customer Loyalty
Our customer loyalty increases▪ Employee Motivation
With customer praise, employees
feel greater motivation�

Perpetual Positive
Cycle of
Sustainable Growth▪ Employee Satisfaction
Our staff feel greater satisfaction as
their sense of fulfillment grows�

▪ Product and Service Quality
We continue to improve the qualityof our products and services�▪ Employee Productivity
As the quality of our human resources
improves, overall productivity increase�

Core Themes
Create a Perpetual Positive Cycle of Sustainable Growth
Improved employee satisfaction (ES) improves to an increase in customer
satisfaction (CS)

Increase in ES

Increase in CS

Facilitation System• Initiatives Implemented at Headquarters, Branch Offices
In accordance with the philosophy and core themes behind our
Medium-term Management Plan, we have formulated actionplans to support the setting up of a perpetual positive cycle ofsustainable growth, and are implementing them in all sectionsat headquarters�
At the same time, we are supporting initiatives targeting theachievement of our long-term management vision by creatingand enforcing action plans with a central focus on the planning
section of our corporate headquarters�
Meanwhile, our branch offices are striving to increase customer
satisfaction through the efforts of the Branch Office Mediumterm Management Plan Committee, comprising customer
advisors and branch office staff�
• Customer-centered Activities
To encourage awareness and consciousness that will enable
our staff to perform their duties in accordance with values that

Vision-related Initiatives
We aim to use the following initiatives to generate, within 10 years, greater
customer satisfaction than any other life insurance company�
1� Building of a sustainable, domestic business model that responds todemographic shifts�
2� Providing products and services differentiated as a result of
collaboration and cooperation with companies from other industries�
3� Maintaining face-to-face operations through investment in IT and theuse of financial technology�

prioritize our customers, we provide employees in all sections
with primarily discussion-based training regarding customercentered activities�
We have been conducting this training since fiscal 2013, basedon the recognition that developing human resources who canadhere to customer-centered values leads to differentiation and,then, to greater customer satisfaction�
Progress
In the two years since the launch of our current Medium-termManagement Plan, responses to surveys measuring staff
satisfaction indicate that contentment is on the rise� This showsthat efforts aimed at increasing employee satisfaction are
bearing fruit�
Regarding initiatives targeting the achievement of our longterm management vision, several action plans have been more
successful than initially expected� This is the result of effective
COVID-19-related responses, including the setting up of ITbased means of communicating with customers�

FUKOKU MUTUAL LIFE INSURANCE COMPANY

5

Review of Operations in Fiscal 2020
Business Performance
Note� Consolidated: total for both Fukoku Mutual Life Insurance Company and Fukokushinrai Life Insurance Company;
non-consolidated: total for Fukoku Mutual Life Insurance Company

New Policies (Individual Insurance and Individual Annuities, Consolidated)
Annualized Premiums¥18.1 billion (¥12.0 billion, non-consolidated)
Annualized premiums for new policies fell 12�3% year on year, to ¥18�1
billion primarily due to restrictions placed on sales activities by the
COVID-19 pandemic�▪ What are annualized premiums?
Annualized premiums are a indicator that demonstrates how much revenue a life
insurance company earns from its policies in one year� They are calculated byadjusting for differences in payment methods and payment periods among various
policies (monthly payments, yearly payments, single-premium payments, etc�)and determining the average amount of premiums paid over the entire durations ofthese policies�

■ Annualized Premiums(¥ billions)Individual insurance
Individual annuities
Fukoku Shinraiseimei
Annualized premiums corresponding to medical benefits, living benefits, etc.

20.6
18.1

5.8

6.1

0.8

0.5
14.0

11.4
7.7

6.2

FY2019FY2020■ Policy Amounts

Policy Amounts¥1,610.5 billion (¥1,499.8 billion, non-consolidated)

Non-consolidated
12.0

Individual insurance

Individual annuities

Policy amounts for new policies decreased 3�5% year on year, to ¥1,610�5billion�

1,668.8111.0
28.9

1,610.5
110.6
20.5▪ What are policy amounts?
Policies amounts indicate the total monetary guarantees for which a life
insurance company is responsible�

1,528.8

1,479.3

FY2019(¥ billions)
Fukoku Shinraiseimei

Non-consolidated
1,499.8

FY2020Surrendered and Lapsed Policies (Individual Insurance and Individual Annuities, Consolidated)
Annualized Premiums¥12.3 billion (¥10.3 billion, non-consolidated)■ Annalized Premiums and Ratio
Fukoku Life

2.72%

Surrendered and Lapsed Ratio (based on annualized premiums)

15.2
2.7

2.25 % (2.68 %, non-consolidated)
Annualized premiums for surrendered and lapsed policies declined
18�8% year on year, to ¥12�3 billion� Meanwhile, the surrendered andlapsed ratio (based on corresponding annualized premiums) was 2�25%, an
improvement of 0�47 percentage points year on year�

6

FUKOKU MUTUAL LIFE INSURANCE COMPANY

12.3
2.0

FY2019FY2020

Annualized premiums for
surrendered and lapsed policies
Surrendered and lapsed policy ratio=(based on annualized premiums)
Policies in force at the beginningof the fiscal year

■ Policy Amounts and Ratio
Fukoku Life

Fukoku Shinraiseimei

4.63%

Policy amounts for surrendered and lapsed policies fell 16�5% year on
year, to ¥1,067�1 billion� Meanwhile, the surrendered and lapsed ratio(based on corresponding amounts insured) was 3�91%, an improvementof 0�72 percentage points year on year�(¥ billions)

2.25%

10.3

Surrendered and Lapsed Ratio (based on amounts insured)
3.91 % (4.10 %, non-consolidated)

Ratio

12.4

Policy Amounts¥1,067.1 billion (¥1,019.5 billion, non-consolidated)

Fukoku Shinraiseimei

1,278.4
56.1(¥ billions)

Ratio

3.91%
1,067.1
47.6

1,222.3

1,019.5

FY2019FY2020

Policy amounts for surrendered
and lapsed policies
Surrendered and lapsed policy ratio=(based on amounts insured)
Policies in force at the beginningof the fiscal year

Policies in Force (Individual Insurance and Individual Annuities, Consolidated)■ Annualized Premiums

Annualized Premiums(¥ billions)Individual insurance
Individual annuities
Fukoku Shinraiseimei
Annualized premiums corresponding to medical benefits, living benefits, etc.

¥548.8 billion (¥378.5 billion, non-consolidated)
Annualized premiums for policies in force decreased 0�1% comparedwith the end of FY2019, to ¥548�8 billion� Medical coverage and living
benefits included in this amount increased for the 17th consecutive year,
dating back to the point at which the Company began disclosing statistics
regarding these benefits�

549.6

548.8

164.4

170.3

115.8

112.0

269.2

266.5

Non-consolidated
378.5

116.2

115.3

FY2020FY2019■ Policy Amounts

Policy Amounts
Individual insurance¥27,001.7 billion (¥24,764.3 billion, non-consolidated)
Policy amounts in force declined 1�0% at fiscal year-end, to ¥27,001�7 billion�

Individual annuities

27,286.8
2,401.3
2,456.0

27,001.7
2,237.4
2,362.4

22,429.5

22,401.8(¥ billions)
Fukoku Shinraiseimei

Non-consolidated
24,764.3

FY2020FY2019Corporate Insurance (Group Insurance and Group Annuities, Non-consolidated)
We provide comprehensive support to our corporate insurance customers by proposing various products and plans geared toward
corporations� Policy amounts in force for group insurance fell 0�4% compared with the end of FY2019, to ¥17,536�2 billion� Meanwhile,
policy amounts in force for group annuities increased 1�2% at fiscal year-end, to ¥2,261�0 billion�

■ Policy Amounts for Group Insurance(¥ billions)■ Policy Amounts for Group Annuities(Policy reserve)(¥ billions)17,605.2

17,536.2

2,233.4

2,261.0

FY2019FY2020FY2019FY2020Premiums and Other Income (Consolidated)¥584.7 billion (¥485.0 billion, non-consolidated)
Premiums and other income decreased to ¥584�7 billion, down
7�2% year on year�■ Premiums and Other Income
Individual insuranceGroup annuities

629.9
96.4
175.5

Individual annuities
Other(¥ billions)Group insurance
Fukoku Shinraiseimei

584.7
99.7

47.6
45.6

131.3
47.0
44.0

260.5

258.6

FY2019FY2020Non-consolidated
485.0

FUKOKU MUTUAL LIFE INSURANCE COMPANY

7

Financial Soundness and Profitability (Non-consolidated)
Fundamental Profit■ Fundamental Profit¥84.3 billion(¥ billions)

Fundamental profit rose to ¥84�3 billion, up 1�1% year on year�▪ What is fundamental profit?
Fundamental profit is a indicator that demonstrates the periodic fundamental
profit or loss of a life insurance company� It includes impact from both
insurance-related income and expenses (insurance premiums, payment of
insurance claims, operating expenses, etc�) and investment income andexpenses (primarily interest, dividends, and other income)� It is similar tooperating profit reported by general industrial companies and net operating profit
recorded by banks�
▪ What is cost differential?
Cost differential is the difference between projected operating expenditures
based on the expenditure rate assumed when calculating insurance premiums
and actual operating expense�▪ What is risk differential?
Risk differential is the difference between projected payments of claims andbenefits based on the insured event occurrence rate assumed when calculating
insurance premiums and actual payments of claims and benefits�▪ What is profit differential?
Profit differential is the difference between projected investment income based oninterest rates assumed when calculating insurance premiums and actual investment
income�

88.9

97.4

91.2

83.4

84.3

FY2016FY2017FY2018FY2019FY2020■ Breakdown of Fundamental Profit(¥ billions)

FY2019FY2020

83.4

84.3

47�5

47�2

Cost differential(18�0)(21�0)

Risk differential

65�5

68�3

Profit differential

35�9

37�0

Fundamental profit
Insurance-related profit/loss

Solvency Margin Ratio■ Solvency Margin Ratio

1,261.6%
The solvency margin ratio declined to 1,261�6%, down 29�2 percentage
points year on year� This ratio greatly exceeds the level of 200%, which is
widely considered to be a standard indicating financial soundness�

Total solvency margin
Solvency margin ratio

Total amount of risk

1,290.8%

1,214.8%

1,189.7%(¥ billions)

1,261.6%

1,081.2%▪ What is solvency margin ratio?
Life insurance companies maintain policy reserves primarily in preparation for
the future payment of claims� These policy reserves enable them to respondto predictable risks� However, unexpected events such as major disasters or
stock market crashes can occur at any time� Solvency margin ratio is an indicatorused by regulatory authorities that measures an insurance company’s ability torespond to unexpected risks�

1,414.0

1,475.6

1,550.1

1,537.8

1,847.2

232.7

272.9

260.5

238.2

292.8

FY2016FY2017FY2018FY2019FY2020Capital¥946.6 billion
The capital increased to ¥946�6 billion, up ¥88�9 billion year on year�Our capital ratio (capital ÷ total assets) was 13�22%� The capital alone
accounted for 646�5% of the total solvency margin�
▪ What Is capital?
We place a great deal of importance on the portion of our total solvency margin
that constitutes capital base (excluding unrealized gains on securities and realestate, etc�)� Accordingly, we routinely strive to strengthen our capital base,enhancing our internal reserves and obtaining financing from external sources�

8

FUKOKU MUTUAL LIFE INSURANCE COMPANY

� Breakdown of Capital(¥ billions)Foundation funds, Accumulated foundation funds redeemed
Voluntary surplus reserve
Surbodinated obligation
Reserve for price fluctuation
Contingency reserve and additional policy reserve
Other
Capital ratio

12.20%

12.63%

13.22%

11.20%

11.66%

735.1
8.9

772.8
9.2

243.7

265.9

291.6

318.6

82.4

95.7

111.2

122.7

191.9

191.9

191.9

191.9

241.9

92.2
116.0

84.1
116.0

96.5
116.0

89.3
128.0

91.4
128.0

FY2016FY2017FY2018FY2019FY2020

815.2
8.0

857.6
7.1

946.6
7.8
304.8
172.7

Real Net Assets■ Real Net Assets¥1,949.2 billion
Real net assets

Real net assets increased to ¥1,949�2 billion, up 14�0% year on year�
Meanwhile, our real net assets ratio (real net assets÷general accountassets) came to 27�6%, up 2�1 percentage points year on year�(¥ billions)

Real net assets ratio

27.6%

26.9%
25.8%

25.0%

▪ What are real net assets?
In addition to solvency margin ratio, real net assets is a indicator used bysupervisory authorities to measure the financial soundness of life insurancecompanies� It is calculated by subtracting liabilities (excluding liabilities withhighly capitalistic characteristics, such as reserve for price fluctuation andcontingency reserve) from the current market value of total assets� Negative real
net assets values sometimes lead to judgments of effective insolvency, as wellas business-suspension orders and other restrictions�

25.5%

1,623.6

1,690.3

1,779.5

1,709.4

FY2016FY2017FY2018FY20191,949.2

FY2020

Unrealized Gains on Securities and Real Estate■ Breakdown of Fundamental Profit¥1,004.0 billion
Unrealized gains on securities and real estate rose to ¥1,004�0 billion, up¥191�5 billion year on year� Unrealized gains on securities increased to ¥855�8billion, up ¥196�8 billion, and unrealized gains on real estate decreased to¥148�1 billion, down ¥5�2 billion year on year, respectively�▪ What are unrealized gains/losses?
Unrealized gains/losses are calculated by subtracting the book values of assets fromtheir corresponding market values� A positive value indicates an unrealized gain,
while a negative value indicates an unrealized loss�(¥ billions)

As of March As of March
31, 2020
31, 2021
Securities

659.0

855.8

Domestic bonds

347�3

283�0

Domestic stocks

209�7

370�2

Foreign secutities

96�7

171�2

Real Estate(land, leasehold right)

153.3

148.1

Total

812.4

1,004.0

Ratings
To help our customers objectively determine how capable we are of paying claims, Fukoku Life obtain ratings from three neutral andunbiased rating organizations� Our current ratings can be found below�
▪ What are life insurance company ratings?
Ratings of life insurance companies are determined by independent third-party rating agencies and demonstrate the degree of reliability at whichlife insurance companies are capable of paying insurance claims and benefits in accordance with policies (insurance claims paying ability)�
Rating and Investment Information, Inc.
(Insurance Claims Paying Ability)

S&P Global Ratings(Insurer Financial Strength Rating)AA-

A

Very high claims paying ability
supported by some excellent factors�

The Company has a high capacity for fulfilling its
insurance policy obligations, but is slightly too
susceptible to potential impact from businessenvironment deterioration to achieve either of ourhighest two ratings (AAA and AA)�

AAA

AA

A

BBB

BB

Moody’s(Insurance Financial Strength Rating)

A2

B

The Company is in the upper-middle
range of rated organizations and has
low credit risk�

CCC

CC

C

Notes:
1� The ratings indicated are current as of July 1, 2021�
2� The ratings indicated were provided upon request from the Company by Rating and Investment Information, Inc�, S&P Global Ratings, and Moody’s InvestorsService�3� The ratings indicated are the opinions of their respective rating agencies and do not indicate guarantees regarding the payment of insurance claims� These ratings
are also continuously monitored by their respective agencies and are subject to change�
4� Rating and Investment Information, Inc�, S&P Global Ratings, and Moody’s Investors Service are credit rating agencies as defined in Japan’s Financial Instruments
and Exchange Act�FUKOKU MUTUAL LIFE INSURANCE COMPANY

9

Investment Performance (General Account)
Overview
Thanks to large-scale fiscal policies and intensive monetaryeasing in countries around the world, the global economy
generally improved in fiscal 2020 despite significant decline
caused by the COVID-19 pandemic during the quarter from
April through June 2020� Economic performance in China began
to achieve growth ahead of other regions as strict restrictions
curbed the spread of the pandemic at an early stage� The
Japanese economy deteriorated significantly due primarily
to orders issued by the Japanese government asking somebusinesses such as, restaurants, department stores, theaters,
to close and requesting that individuals stay at home during
the state of emergency it declared in April 2020� However,along with states of emergency were lifted and as economic
activity gradually reopened, the Japanese economy began torecover thanks to a rise in the volume of exports to China, whichbounced back before other regions, and measures aimed at
stimulating demand, including the “Go To” campaign launchedin the Summer of 2020� Domestic demand was impeded by asubsequent wave of the COVID-19 pandemic that occurred in
winter 2020 and resulted in an another state of emergency inJanuary 2021� Despite this downward impact, recovery wasmaintained thanks to support from strong overseas demand�In terms of monetary policies, major central banks
implemented intensive monetary easing initiatives such as
emergency funding measures and expansion of quantitativeeasing to facilitate corporate financing� Additionally, Federal
Reserve Board indicated that it would continue to maintain ageneral approach of monetary easing as it adopted average
inflation targeting in August 2020 and implied that it would
extend its zero interest-rate policy�
With regard to financial and stock markets, stock pricesrose sharply, driven primarily by large-scale fiscal policies, as
long-term interest rates remained low around the globe due tointensive monetary easing from major central banks�
To maintain stable profitability while long-term interest rates
remain low worldwide, we accumulated domestic and foreign
stocks expected to stable dividends, as well as foreign currencydenominated corporate bonds, in accordance with our policy oftaking risks that take advantage of our ample capital� At the sametime, we endeavored risk hedging appropriately associated withfluctuations in stock prices and exchange rates through derivatives
trading� We also purchased super-long-term government bonds
by reducing cash position in an effort to raise our earnings while
maintaining a predetermined level of liquidity�
Along with these measures, we also conducted efforts
aimed at executing our management philosophy of contributing
to society through asset management while performing ourfiduciary duty of ensuring profitability� In terms of specificinitiatives, we took part in the world’s first project through whichissuers of corporate bonds and investors united to assert theimportance of supporting the education of children in developing
countries through bond investment and invested in impact funds
that target private companies capable of contributing to SDGs
achievement� In addition to these efforts, we actively conducted
ESG-related investment and financing to contribute to theachievement of sustainable societies�
As part of our stewardship activities, we held purposedriven engagement dialogues with major investee companies�
During these dialogues, we aimed to achieve understanding
regarding strategies from a medium- to long-term perspective
while making proposals aimed at improving corporate value� In
response to revisions to Japan’s Stewardship Code, we preparedfor efforts aimed at further intensifying our stewardship activities
and increasing transparency by amending our StewardshipResponsibility Fulfillment Policy, which serves in part to clarify
our views concerning sustainability, and expanding disclosure of
information related to these activities�
In addition to these activities, we strove to further differentiate
our asset management with initiatives targeting expansion of ourglobal diversified investment operations through the strengtheningof our three overseas subsidiary in London, New York, andSingapore and enhancement of our relationships with asset
management companies which we have business relationship�
In July 2020, we endorsed a memorandum of understanding
along with asset management company Pendal Group Limited(headquartered in Sydney), outsourcing management of ourAustralian stock portfolio to the latter� Meanwhile, we areenhancing our assessment capabilities as an institutional investor
and acquiring valuable management expertise by dispatching
trainees to, and regularly exchanging views with, Pendal Group;
Payden & Rygel (headquartered in Los Angeles), which haveformed a business relationship concerning US corparate bondmanagement and Muzinich & Co� (headquartered in New York),
with whom we have previously endorsed a memorandum of
understanding regarding the management of corporate bonds in
Europe� At the same time, we are developing human resources
who are equipped with global perspectives and are capable ofperforming optimal asset management�Investment income decreased ¥7�6 billion (3�9%) year
on year to ¥187�3 billion due primarily to a decline in gains onsales of securities generated from the trading of domestic andforeign bonds� Of this amount, total interest, dividends andother income (after accounting for impact from trading securities)
reached a record high for the third consecutive year at ¥157�2
billion, up ¥0�9 billion (0�6%) year on year despite declines
in both interest from public and corporate bonds and share
dividends� This increase occurred primarily thanks to a risein dividends generated by equity funds that stemmed fromgrowth in stock prices in Japan and abroad, as well as an uptick
in interest and dividends from foreign-currency denominatedassets that was driven by depreciation of the Japanese yen�
Investment expenses amounted to ¥49�4 billion, down
¥5�4 billion (10�0%) year on year due to losses on valuation ofGeneral account assets

Breakdown of general account assets (Fiscal year ended March 31, 2021)(¥ billions)(¥ billions)

6,489.9

6,544.2

6,612.9

6,706.2

7,052.9

Others 76.0 (1.1%)

Ordinary loans 517.2 (7.3%)
Loans
568.0
(8.1%)

Real estate 239.5 (3.4%)
Cash and deposits, and others
316.7 (4.5%)

Policy loans 50.7 (0.7%)

Securities
5,857.0 (83.0%)

Other securities 162.5 (2.3%)
Foreign securities 2,128.0 (30.2%)

Domestic bonds 2,779.4(39.4%)

Domestic stocks 786.8 (11.2%)
FY2016

'17

'18

'19

'20

Total: ¥ 7,052.9 billion
Note: This total includes cash and deposits, call loans, monetary claims bought and money held in trust.

10

FUKOKU MUTUAL LIFE INSURANCE COMPANY

from depreciation of the Japanese yen� Meanwhile, foreign
stocks and other securities came to ¥417�4 billion, up ¥140�3billion (50�7%) year on year� This increase occurred mainly
due to the outsourcing of management of our Australianstock portfolio to Australian asset management company
Pendal Group, with whom we endorsed a memorandum of
understanding concerning the management of our shares in
the Oceania region in July 2020; an increase in the total valueof Western bonds managed by asset management companies
we have a buisiness relationship; our accumulation of sharesin Western companies and other corporate organizations thatare expected stable dividends; and unrealized gain growth
stemming from a rise in stock prices�
Ordinary Loans
Loans amounted to ¥517�2 billion, up ¥7�1 billion (1�4%) year on
year as we strove to diversify our portfolio of borrowers, addingorganizers of renewable energy projects and overseas borrowers�
Real estate
Real estate came to ¥239�5 billion, up ¥24�2 billion (11�3%) year
on year due primarily to our investment in properties expected
to generate stable rent income over the medium to long term�

securities, mainly domestic stocks�
Consequently, net investment income was ¥137�8 billion,
down ¥2�2billion (1�6%) year on year�
Domestic Bonds
Domestic bonds amounted to ¥2,779�4 billion, up ¥101�7 billion(3�8%) year on year� This increase was primarily due to ouraccumulation of corporate bonds and efforts aimed at raising ourearnings while maintaining a predetermined level of liquidity bypurchasing super-long-term government bonds using short termmoney�
Domestic Stocks
In total, domestic stocks were ¥786�8 billion, up ¥174�8 billion(28�6%) year on year thanks primarily to our strategy of selectively
acquiring stocks that we expect to stable dividends while
appropriately controlling for associated risks and a unrealized
gain increase stemming from a rise in stock prices�
Foreign Securities
Foreign bonds amounted to ¥1,710�5 billion, up ¥129�7 billion(8�2%) year on year due primarily to our focus on purchasing
corporate bonds issued by Western companies during the firsthalf of the year, when they were available at the prices wedetermined undervalued, and unrealized gain growth stemming
Domestic bonds

Domestic stocks

Foreign securities

Loans

Real estate(¥ billions)(¥ billions)(¥ billions)(¥ billions)(¥ billions)

2,128.0
2,843.5 2,818.6 2,782.0

2,677.6

2,779.4656.5

FY2016 '17

'18

'19

'20

786.8

740.8

FY2016 '17

1,930.6

239.5

1,857.9
627.7

612.0

'18

'19

'20

FY2016 '17

213.6

212.5

215.3

FY2016 '17

'18

'19

214.4

1,702.6 1,713.8

672.5

'18

'19

'20

593.7

FY2016 '17

561.1

565.4

568.0

'18

'19

'20

'20

Investment Policies for Fiscal 2021
Investment Environment
Despite ongoing risk associated with the spread of COVID-19
variants, projections indicate that the global economy will
likely continue to recover in fiscal 2021 as an increasingly
large share of the population becomes vaccinated, resulting inrelaxed restrictions� Under these economic conditions, longterm interest rates in the United States will presumptively
be subjected to upward pressure stemming mainly fromexpectations of economic recovery achieved through large-scaleeconomic measures� However, any increase in interest rates
is likely to be limited due to intensive monetary easing policies
that are projected to remain in effect� Long-term interest rates
in Japan are expected to remain low due to the Bank of Japan’s
ongoing yield curve control policy� In defiance of existing
concerns regarding potential long-term interest rate increases
in the United States, domestic and foreign stock prices areprojected to remain stable as the financial environment remains
accommodative, fostering expectations of recovery both
economic and corporate performance� Meanwhile, the rate ofexchange between the US dollar and the Japanese yen will
likely remain in its narrow range because the present difference
in interest rates between the US and Japan is not expectedchange significantly�Domestic Bonds
We will accumulate corporate bonds while closely monitoring
interest rates and utilize cash position to purchase super-longterm government bonds�
Domestic Stocks
We target increase in the profitability of our stock portfolio
by routinely adjusting the domestic stocks contained therein,
ensuring that they generate appraisal gains�
Foreign Securities
We will focus on the accumulation of foreign currencydenominated corporate bonds issued by Western companies�
Meanwhile, we will also invest in foreign stocks and othersecurities to improve our portfolio in terms of risk-adjustedreturn�
Ordinary Loans
We plan to increase our loan balance as we seek newinvestment projects�
Real Estate
We will implement a policy of selecting and investing inproperties expected to generate stable rent income over the
medium to long term�

FUKOKU MUTUAL LIFE INSURANCE COMPANY

11

Business Management System
Corporate Governance Enhancement Initiatives
We have formulated a Basic Policy on Corporate Governanceto foster an understanding of our perspective to enhance
corporate governance� We publicize this policy, along with our
Corporate Governance Report�Basic Approach to Corporate GovernanceOur mutual company’s insurance business is a business of
our policyholders that have entrusted the management of
this business to us� No matter the circumstances, we must
survive as a life insurance company to continue fulfilling our
responsibility of reliably paying insurance claims and benefits�
To this end, we will establish a corporate governance system
based on this fundamental policy in an effort to stabilize andensure the stability our business while providing policyholders
with peace of mind�
Establishment of Management Control Measures
The Board of Directors makes important business decisions andmonitors business execution� The two external directors bringan outside perspective to the deliberations of the board� In
April 2009, Fukoku Life introduced an executive officer system�
Under this system, we have separated and strengthened
decision-making and business execution functions, with theBoard of Directors fulfilling decision-making and supervisory
functions� The Board of Full-Time Directors, comprising thepresident and executive officer and other titled executive
officers, deliberates important business execution policy
for the Company� Meanwhile, various committees havebeen established beneath the Board of Directors in an effort
to strengthen internal controls�
Members of the Audit & Supervisory Board attend meetingsof the Board of Directors, the Board of Full-Time Directors andother important boards, auditing the execution of operations
by directors� The internal audit department performs internal
audits, verifies the appropriateness of corporate operations andstrives to ensure the soundness of business operations�
Enhancement of Internal Control System
We are a mutual company that operates a highly public life
insurance business with the goal of protecting the livelihoods ofpolicyholders� As such, we have established a “Basic Internal
Control System Policy” aimed at ensuring the suitability of
our operations, with the ultimate goal of achieving sound andappropriate management� Based on this policy, we are working
to enhance our internal control systems, which include our risk
management and compliance systems�
Enterprise risk management (ERM)
Life insurance is a “promise” to pay insurance claims andbenefits in the event of an unforeseen emergency, a lifetime
commitment to customers that can even span generations�
Events may occur, such as drastic changes in the economic
environment or other catastrophes, during the many months
and years in which we accompany customers on theirlife journey� When this happens, the role of life insurancecompanies becomes even more important�Only after keeping this promise with unwavering reliability
regardless of the circumstances can customers enjoy peaceof mind� To maintain this reliability into the future, Fukoku
Life promotes enterprise risk management (ERM) for
overall management of a diverse range of complicated risks
from a strategic perspective based on the recognition that
12

FUKOKU MUTUAL LIFE INSURANCE COMPANY

each executive officer and employee is responsible for risk
management commensurate with their position�
At Fukoku Life, the Board of Directors has established the
Risk Management Committee to perform enterprise risk
management (ERM)� Several subcommittees have been
established under the Risk Management Committee to manage
the various risks that arise in business operations, and to conduct
asset and liability management (ALM)� The Risk Management
Committee consolidates and evaluates these risks at thecorporate level, and considers the appropriate level of acceptablerisk and risk response� Furthermore, the Risk Management
Committee has established a specialized risk management
committee to help enhance enterprise risk management�Full-time directors are members of the Risk Management
Committee, which is chaired by the president� Other directors
chair subcommittees, creating a risk management structurethat is led by top management�
The specialized risk management committee is central
to understanding the Group’s overall risk management
situation� At Fukokushinrai Life Insurance, the Company’s
Risk Management Committee secretariat and the secretariats
of various subcommittees directly monitor the management
status of risks under their jurisdiction�
Furthermore, the audit department verifies that the risk
management system is functioning effectively�
Compliance System
As members of the community, all executives and employees
undergo ongoing training in compliance-related matters so thatthey not only observe laws and regulations, but also comply
with protocols and social conventions� This training is also
aimed at enhancing the spirit of compliance� To this end, as
well as improving and reinforcing the compliance system, wehold hands-on compliance training on an ongoing basis�
However, we recognize that even the most robust of systems
cannot guarantee the complete elimination of improper conduct�We believe that it is important to detect any improper conduct
early, deal with it swiftly and appropriately, and make constantimprovements and work to rectify the situation in order toprevent a recurrence� Accordingly, we believe that continuous
improvement and correction are important�
The Compliance Committee, comprising full-time directors andother executives and chaired by the president, has the Board of
Directors’ mandate to deliberate matters related to compliancepromotion and to promote compliance� The ComplianceControl Department serves as secretariat for this committee�
Furthermore, the chief compliance officer and complianceofficers are stationed at headquarters to perform regularcompliance checks�
Protection of Personal Information
Fukoku Life believes that proper handling of personal informationis one of the elements most vital toward maintenance of its
status as an insurance company that is trusted by its customers�
Accordingly, we have formulated our own privacy policy anda basic policy on the handling of specific personal information
to ensure appropriate treatment and safeguarding of personaldata�
Moving forward, we will continue to comply with Japan's Act
on the Protection of Personal Information and other related
laws and ordinances while maintaining proper handling andprotection of personal data�Centenary Project
Launch of Centenary Project
Looking ahead to its centenary in November 2023, the Company
has already set in train a centenary project based on theconcept of THE MUTUAL�
THE MUTUAL refers to the next generation of mutual aid
that will evolve over the coming century, as well as our aim tobecome an enterprise representing true mutual aid, by deepening

our connection to, and mutual support for, all our stakeholders�
Through our centenary project, we will ensure that weshare affinity with a greatly expanded circle of individuals andorganizations by conveying the message of mutual aid associatedwith THE MUTUAL� These efforts will support our goalof becoming a company that can empathize with all of its
stakeholders�

Launch of Centenary ProjectCentenary▪ Our centenary project is designed toreaffirm our philosophy and ideas at theend of our first 100 years� We decided
to convey this to our customers over thefive years leading up to the anniversary,
while at the same time exploring thenext generation of mutual aid▪ The actor Takumi Saitoh was selected tobe the ambassador for THE MUTUAL▪ We achieve THE MUTUAL as a concept▪ We become a company that can empathizewith all of its stakeholders

Founding▪ The Company was founded as a mutualcompany, based on the idea that the only
path ahead for the insurance business lay
in customer-centered values�
▪ It is the only company that has maintained
a mutual company structure since its
founding�

2023
The 100th
Anniversary

2018
The 95th
Anniversary

2019〜2020

1923
Founding

Sectional Committee Activities Launched
These activities function as a propulsion engine that will drive our efforts toachieve THE MUTUAL� Under the moniker NEXT100, the sectional committee
will introduce activities aimed at preparing for our next 100 years� Activities
based on 12 themes including FIND THE MUTUAL and external PR are
currently underway�
FIND THE MUTUAL
As we liaise with our 62 branch offices nationwide, we are implementing a
program called FIND THE MUTUAL� This entails considering and exploring
what the next generation of mutual aid might be, as we turn our attention toconnections between people and the ideas they generate� In fiscal 2019, fivebranch offices (Nara, Kumamoto, Tokyo, Kyoto, and Ikebukuro) and in fiscal
2020, four (Hiroshima, Chiba, Maebashi, and Hakodate) were implementing
the program respectively�

Kumamoto Branch Office staff who participated in the Romantic
Furumachi Festival on November 10, 2019�

FUKOKU MUTUAL LIFE INSURANCE COMPANY

13

Sustainability—Corporate Activities Leading to Sustainability
Achieving Sustainable Development Goals (SDGs)
Given the highly public nature of the life insurance business, a life insurance company’s commitment to customers is perpetual� Hence,
it is only natural for us to maintain our sustainable development and growth in tandem with society in order to uphold our timelesscommitment to customers� As we believe that all of our business activities as a mutual life insurer will contribute to the achievement ofSDGs, Fukoku Life has always maintained such vision and initiatives�

Customers
・ Offer protection through our insurance business・ Corporate management as a mutual life insurer
・ Board of Representative Members of Policyholders
・ Initiatives to reflect the voice of customers in our management(Conference of Policyholders)

Fukoku Mutual Life Insurance Company

Society・ Contributing to society
・ Environmental protection
・ Initiatives through asset management (ESG)・ Stewardship activities

Employees
・ Health management initiatives
・ Promote work style reform, Promote diversity
・ Employees’ personal fulfilment

Operate under the “Customer-Centered Business Management Policy” to share common values with our stakeholders; customers,society and employees�
Next-Generation Mutual Aid
We are the only company that has maintained a mutual company structure since its founding in Japan� As we approach our centenary,
we are working on our Centenary Project1 aimed at achieving next-generation mutual aid based on our concept of THE MUTUAL, while
ensuring that this new mutual aid remains inspired by past and current forms�
The initiatives associated with the project are directly related to Sustainable Development Goal 17 (Partnership for the Goals) and will
help sustain ongoing efforts to deepen our ties with stakeholders and contribute to the achievement of a sustainable society�
Notes:
1� Please refer to page 13 for more information on the Centenary Project�

14

FUKOKU MUTUAL LIFE INSURANCE COMPANY

Contributing to a Sustainable Society
Principles for Responsible Investment (PRI)
Endorsement
The Company became a signatory of the UN’s PRI on March
21, 2016, indicating its approval of the intent behind the PRI�
We believe that investing and financing, according to theseprinciples, improve the profitability we can generate using
the important funds entrusted to us by our customers andfurther increase our ability to fulfill our responsibilities as an
institutional investor�ESG Investment, Financing
As it prioritizes the interests of its customers, the Company iswell aware of the public nature of the life insurance industry
and strives to ensure that its asset management fulfills social
responsibilities� In March 2016, we endorsed the UN’s PRI,
and are currently taking into account ESG issues when making
investment decisions, while ensuring that these considerations
do not interfere with our fiduciary duty�At the same time, we have made ESG issues one of thethemes of our stewardship activities and are focusing on primarilyon communicating with investee companies�
In June 2020, we also became a supporter of the Financial
Stability Board’s Task Force on Climate-related Financial
Disclosures� In future, we will continue with our investment,
financing, and stewardship activities, at the same time
maintaining an awareness of climate change and the wide
variety of other issues that affect societal sustainability�Meanwhile, we also will strive to contribute to achieving asustainable society, while fulfilling our fiduciary duty to secure
profitability�
ExamplesWe are conducting investment and financing activities primarily
associated with assets that are thematically linked to solutions
for environmental challenges and other societal issues�
• Supporting Children’s Education
In September 2020, we invested in sustainable development
bonds issued by the World Bank� Investment in these bonds
constitutes the first global project through which both issuingentities and investors invoke the importance of providing
support for education during the COVID-19 pandemic� Funds
raised through investment in these bonds will be used tosupport a swift response to the pandemic-related impact on
education in Turkey�** Funds raised by investment in sustainable development bonds will financethis and all other projects conducted by the World Bank�

• Climate Change
In February 2021, we invested in sustainable development
bonds issued by the Inter-American Development Bank�
Funds procured through investment in these bonds are partly
used to support proper forest management in Honduras, aswell as agroforestry, which combines agriculture and forestry
by maintaining livestock and cultivated crops in the spaces
between trees that are being planted and raised�• Private Equity Impact Investment
In December 2020, we invested in a private equity impact fund�It supports the achievement of a society that consistently aims
to fulfill the UN’s Sustainable Development Goals by investingin unlisted companies that contribute to this end through thepromotion of sustainable growth and employment, efforts
targeting improved healthcare, support for gender equality,
climate change initiatives and responses to energy demands,
as well as environmental conservation� Through this type ofinvestment, the fund aims to generate both economic andsocial returns�

FUKOKU MUTUAL LIFE INSURANCE COMPANY

15

Contribution to Society
Fukoku Life Concerts
This activity began in fiscal 1989 with a Fukoku Salon Concert,held in the lobby of our headquarters building in Uchisaiwaicho�
Fukoku Life holds Visiting Concerts, which are heldat schools and institutions for people with disabilities,
enabling them to enjoy genuine classical music performed byprofessional musicians� We also hold Charity Concerts, which
are held as a community benefit event and on which Fukoku
Life executives collaborate in fund-raising� These concerts areheld in cooperation with the regions where they are held�• Visiting and Charity Concerts
Fukoku Life holds Visiting Concerts at schools and institutions

for people with disabilities, enabling the audiences to enjoyclassical music performed by professional musicians� To assist
communities in the areas in which these Visiting Concerts
are held, we also hold charity concerts at which Company
executives help to raise funds that are earmarked to support
the community’s welfare�• 2020 Benefit Concert
Since the spread of the pandemic made giving concerts inthe usual format difficult in fiscal 2020, we held and filmed
a concert in an empty concert hall, uploaded the video on
the Company’s official YouTube channel, and have made it
accessible through December 24, 2021�

Musicians at 2020 Benefit Concert

Smile Gallery
To support the creation of art by children with disabilities, we
run the Smile Gallery in a shopping mall located on the secondfloor basement of our head office building in Uchisaiwaicho�
In this gallery, we display artworks created by students
of special education schools nationwide� Began in fiscal 2003,
the exhibitions are an offshoot of the Visiting Concert program,which goes to special education schools� In fiscal 2020, we
displayed submissions from nine schools�
Reconstruction Support through Marketing Events
The COVID-19 pandemic forced us to cancel external marketing
events at which we had planned to sell specialty products from
Fukushima, Miyagi, and Iwate Prefectures, which had been
adversely impacted by the Great East Japan Earthquake andTsunami of 2011�
Moreover, the Fukushima-related event had to becancelled because it overlapped with a government-imposed
state of emergency�
Nevertheless, we were able to accept and fill advanceorders our Company received from members of the public�

16

FUKOKU MUTUAL LIFE INSURANCE COMPANY

Works on display

Smile Gallery works on Company calendar�

Bake Sales Help People with Disabilities
Inspired by the success of sales held in the lobbies of ourheadquarters in Uchisaiwaicho and Chiba New Town when
Visiting and Charity Concerts have been held, we opened thelobbies to regular bake sales run by institutions for people withdisabilities�
In addition, we have collaborated with the establishments
and encouraged our staff to participate� We believe that doing
so helps promote understanding of employees with disabilities
and, in turn, motivates them to take part in societal activities�
In fiscal 2020, in a move to help curb the spread of thepandemic, we accepted advance orders for bake sale items�

Environment-friendly Real Estate Development
Opened in 2010, the Osaka Fukoku Seimei Building received
a commendation during the Fifth Award Ceremony for
Buildings in Osaka, receiving the year’s highest Comprehensive
Assessment System for Built Environment Efficiency
evaluation�
Meanwhile, the Sapporo Fukoku Seimei Koshiyama
Building opened in 2017 is the first building in Sapporo
to be certified gold under the Leadership in Energy andEnvironmental Design rating system managed by the US Green
Building Council�
The structure also received praise as an energy-saving andenvironment-friendly office building, obtaining a four-star rating
according to the Development Bank of Japan’s Green Building
Certification System�
Due primarily to its green walls and highly efficientfacilities, the Koiwa Fukoku Seimei Building (completed in fiscal
2019) became the first building maintained by Fukoku Life toreceive a top ranking and ZEB Ready certification under the
Building-Housing Energy-efficiency Labeling System promotedby the Japanese government�Osaka Fukoku Seimei Building

decreasing the amount of OA equipment in use; and reducing
elevator usage�
In addition, we are engaged in ongoing efforts toconserve energy and reduce CO 2 emissions associated withour buildings� Included among the efforts is the ongoing
introduction of highly efficient air conditioning, LED lighting,water-saving plumbing fixtures, and hybrid outdoor lamps that
use CO 2 emission-reducing solar panels and wind-powered
generators�In fiscal 2019, these efforts lowered our CO 2 emissions
12�1% year on year�
CO2 Emissions(t-CO 2 )FY2017FY2018FY201951,22547,85942,057

Sanrio Alliance
The Hello Kitty character, owned by Sanrio Co�, Ltd�, has
attained worldwide popularity� Fukoku Life has adopted thiswidely loved character as its brand mascot and features
Hello Kitty in many media, including Fukoku Life posters andbrochures and videos posted on our website�In fiscal 2014, we created an original Gotochi Kitty
character (Gotochi meaning a local region), which we use
in numerous situations to evoke a sense of closeness withcustomers�
We also provide the Sanrio Character Boat Ride as afriendly company attraction at Sanrio Puroland in Tokyo andHarmonyland in Oita, on the Japanese main island of Kyushu�

Sapporo Fukoku Seimei Koshiyama Building© 2021 SANRIO CO., LTD. APPROVAL No.P1309281 S/D · G

Koiwa Fukoku Seimei Building

Energy Conservation
Fukoku Life is promoting a variety of energy-saving efforts,such as curtailing the use of interior lighting and eliminating its
use when unnecessary; running air conditioning at appropriate
temperatures and refraining from using it when possible;

Information Dissemination
Fukoku Life publishes a variety of materials for its stakeholders�
Publications that provide information on the Company’s businessactivities include the Japanese-language annual disclosure
report (and abridged versions thereof), booklets written forpolicyholders, and this English-language annual report� Our
diverse lineup of public relations and advertising activities
includes the production of a variety of publications on an asneeded basis, which serves to strengthen the channels ofcommunication between the Company, its policyholders, andits many other customers�

FUKOKU MUTUAL LIFE INSURANCE COMPANY

17

Non-consolidated Financial Statements
Non-consolidated Balance Sheets
Fukoku Mutual Life Insurance Company
As of March 31, 2020 and 2021

As of March 31,

2020

2021

Millions of yen

Assets:Cash and deposits:
Cash ………………………………………………………………………………
Bank deposits ……………………………………………………………………
Call loans ……………………………………………………………………………
Monetary claims bought …………………………………………………………
Money held in trust …………………………………………………………………
Securities:
Government bonds ………………………………………………………………
Local government bonds ………………………………………………………
Corporate bonds …………………………………………………………………
Stocks ……………………………………………………………………………
Foreign securities ………………………………………………………………
Other securities …………………………………………………………………
Loans:
Policy loans ………………………………………………………………………
Ordinary loans ……………………………………………………………………
Tangible fixed assets:
Land ………………………………………………………………………………
Buildings …………………………………………………………………………
Lease assets ……………………………………………………………………
Construction in progress ………………………………………………………
Other tangible fixed assets ……………………………………………………
Intangible fixed assets:
Software …………………………………………………………………………
Lease assets ……………………………………………………………………
Other intangible fixed assets …………………………………………………
Agency receivables …………………………………………………………………
Reinsurance receivables …………………………………………………………
Other assets:
Accounts receivable ……………………………………………………………
Prepaid expenses ………………………………………………………………
Accrued income …………………………………………………………………
Deposits …………………………………………………………………………
Derivatives ………………………………………………………………………
Cash collateral paid for financial instruments …………………………………
Suspense payments ……………………………………………………………
Rest of the other asset …………………………………………………………
Prepaid pension cost ………………………………………………………………
Deferred tax assets …………………………………………………………………
Allowance for possible loan losses ………………………………………………
Total assets …………………………………………………………………………
18

FUKOKU MUTUAL LIFE INSURANCE COMPANY¥

168
288,500
288,668
230,000
269
24,156¥

2021
Millions ofU�S� dollars

155
159,276
159,431
136,000
239
25,277

$

1
1,438
1,440
1,228
2
228

1,932,731
102,704
664,875
631,989
1,894,581
117,783
5,344,665

2,005,536
99,212
699,187
813,227
2,175,012
162,612
5,954,789

18,115
896
6,315
7,345
19,646
1,468
53,78755,339510,133
565,473

50,797517,293568,091

458
4,672
5,131

125,118
87,320
909
2,866
3,260
219,475

146,816
92,635578
93
4,362
244,487

1,326
836
5
0
39
2,208

18,155873
4,762
23,791
4
111

19,181
686
4,388
24,256
10
124

173
6
39
219
0
1

5,973
2,508
28,2682,239
21,360
—
3,381
3,148
66,881—
29,397(2,023)¥6,790,871

6,974
3,339
28,168
2,250
352
1,747
3,005
3,234
49,072

63
30
254
20
3
15
27
29
443

547

4

—
(4,386)¥7,157,940—(39)$64,654

As of March 31,

2020

2021

2021
Millions ofU�S� dollars

Millions of yen

Liabilities:

Policy reserves:
Reserve for outstanding claims ……………………………………………
Policy reserve …………………………………………………………………
Reserve for dividends to policyholders ……………………………………
Reinsurance payables ……………………………………………………………
Subordinated bonds ………………………………………………………………
Other liabilities:
Cash received as collateral under securities lending transactions ……
Corporate income tax payable ………………………………………………
Accounts payable ………………………………………………………………
Accrued expenses ……………………………………………………………
Unearned income ………………………………………………………………
Deposits received ………………………………………………………………
Guarantee deposits received …………………………………………………
Derivatives ………………………………………………………………………
Cash collateral received for financial instruments ………………………
Lease obligations ………………………………………………………………
Asset retirement obligations …………………………………………………
Suspense receipts ……………………………………………………………
Reserve for employees’ retirement benefits …………………………………
Reserve for price fluctuation ……………………………………………………
Deferred tax liabilities ……………………………………………………………
Deferred tax liabilities for land revaluation ……………………………………
Total liabilities……………………………………………………………………

¥ 19,814
5,694,979
60,922
5,775,716
86
191,935¥ 19,551
5,729,511
63,232
5,812,295
87
241,935$ 176
51,752571
52,50002,185

67,866
6,002
2,783
10,689361
6,079
13,941
7,564
1,694
966
2,754
1,928
122,632
23,519122,745—
14,2136,250,849

61,8192,764
7,272
10,280367
6,303
13,88741,391
10
761
2,603
1,679
149,141
23,735
172,797
26,43014,1846,440,606

558
24
65
92
3
56
125
373
0
6
23
15
1,347
214
1,560
238
128
58,17512,000116,000
112

12,000116,000
112

108
1,047
1

3,176

3,271

29

—
20,00041,0002,400
20,00041,000

21
180
370

209
767
57,901
119,878
123,054251,166

207
767
59,102
123,477
126,748
254,860

1
6
533
1,115
1,144
2,302

284,752
4,102
288,855
540,021¥6,790,871

458,287
4,185
462,473
717,333¥7,157,940

4,139
37
4,177
6,479
$64,654

Net assets:

Foundation funds …………………………………………………………………
Accumulated foundation funds redeemed ……………………………………
Reserve for revaluation …………………………………………………………
Surplus:
Legal reserve for future losses ………………………………………………
Other surplus:
Reserve for redemption of foundation funds …………………………
Reserve for dividend allowances …………………………………………
Accumulated fund for price fluctuation …………………………………
Reserve for advanced depreciation ofreal estate for tax purpose ………………………………………………
Other reserves ………………………………………………………………
Unappropriated surplus ……………………………………………………
Total foundation funds, surplus and others …………………………………
Net unrealized gains (losses) on
available-for-sale securities, net of tax ………………………………………

Revaluation reserve for land, net of tax …………………………………………
Total valuation and translation adjustments ………………………………………
Total net assets ……………………………………………………………………
Total liabilities and net assets ……………………………………………………
See notes to the non-consolidated financial statements�

FUKOKU MUTUAL LIFE INSURANCE COMPANY

19

Non-consolidated Statements of Operations
Fukoku Mutual Life Insurance Company
For the years ended March 31, 2020 and 2021

Year ended March 31,

2020

2021

Millions of yen

Ordinary revenues:
Premium and other income:Premium income …………………………………………………………………
Reinsurance income ……………………………………………………………
Investment income:Interest, dividends and other income:Interest on deposits …………………………………………………………
Interest and dividends on securities ………………………………………
Interest on loans ………………………………………………………………
Income from real estate for rent ……………………………………………
Other interest and dividends ………………………………………………
Gains on money held in trust, net ……………………………………………
Gains on trading securities, net …………………………………………………
Gains on sales of securities ……………………………………………………
Gains on derivative instruments, net …………………………………………
Reversal of allowance for possible loan losses ………………………………
Other investment income ………………………………………………………
Gains on separate accounts, net ………………………………………………
Other ordinary revenues:
Fund receipt from annuity rider ………………………………………………
Proceeds from deferred insurance ……………………………………………
Reversal of reserve for outstanding claims …………………………………
Reversal of reserve for employees’ retirement benefits ……………………
Others ……………………………………………………………………………
Total ordinary revenues …………………………………………………………
Ordinary expenses:
Claims and other payments:
Claims ……………………………………………………………………………
Annuities …………………………………………………………………………
Benefits …………………………………………………………………………
Surrenders ………………………………………………………………………
Other payments …………………………………………………………………
Reinsurance premiums …………………………………………………………
Provision of policy reserve and others:
Provision of policy reserves ……………………………………………………
Provision of interest portion of reserve for dividends to policyholders ……

20

FUKOKU MUTUAL LIFE INSURANCE COMPANY

2021
Millions ofU�S� dollars¥533,396130
533,527¥484,868
143
485,011$4,37914,380

36
129,290
8,766
15,267
13
153,374314—
35,410
5,577
70
289
—
195,037

5
131,735
8,137
15,534
146
155,559
1,127
6,523
23,959——170
19,315
206,657

0
1,189
73
140
1
1,405
10
58
216
—
—
1
174
1,866

5,397
3,420
508
996
2,984
13,306
741,870

2,205
3,618
262
246
3,196
9,529
701,198

19
32
2
2
28
86
6,333

93,315
157,816
110,820
51,40425,588230
439,176

77,539151,810
106,884
52,88826,083
231
415,436

700
1,371
965
477
235
2
3,752

81,39613¥ 81,409

34,53213¥ 34,545

311
0
$ 312

Year ended March 31,

2020

2021

Millions of yen

Investment expenses:
Interest expenses ………………………………………………………………
Losses on trading securities, net ………………………………………………
Losses on sales of securities …………………………………………………
Losses on valuation of securities ………………………………………………
Losses on derivative instruments, net ………………………………………
Foreign exchange losses, net …………………………………………………
Provision of allowance for possible loan losses ………………………………
Write-offs of loans ………………………………………………………………
Depreciation of real estate for rent and other assets ………………………
Other investment expenses ……………………………………………………
Losses on separate accounts, net ……………………………………………
Operating expenses …………………………………………………………………
Other ordinary expenses:
Deferred annuity payments ……………………………………………………
Taxes ………………………………………………………………………………
Depreciation ………………………………………………………………………
Others ……………………………………………………………………………
Total ordinary expenses …………………………………………………………
Ordinary profits ……………………………………………………………………
Extraordinary gains:
Gains on disposal of fixed assets ………………………………………………
Total extraordinary gains …………………………………………………………
Extraordinary losses:
Losses on disposal of fixed assets ……………………………………………
Impairment losses ………………………………………………………………
Provision of reserve for price fluctuation ……………………………………
Others ……………………………………………………………………………
Total extraordinary losses ………………………………………………………
Surplus before income taxes ……………………………………………………
Income taxes:
Current ……………………………………………………………………………
Deferred …………………………………………………………………………
Total income taxes ………………………………………………………………
Net surplus for the year …………………………………………………………

¥

3,860
4,979
1,935
13,342—
17,543
—
262
4,288
8,698
3,955
58,867
92,072¥

2021
Millions ofU�S� dollars

4,093—
11,809404
12,967
4,602
2,369
—
4,427
8,767
—
49,44391,599

$

36
—
106
3
117
41
21
—
39
79
—
446
827

4,669
6,788
8,879
1,106
21,444
692,970
48,899

3,944
7,304
9,739
1,069
22,057613,083
88,115

35
65
87
9
199
5,537
795

5
5

133
133

1
1

181
38
11,466—
11,68537,219801
198
50,051
1,059
52,11036,137

7
1
452
9
470
326

13,646(10,540)
3,106¥ 34,113

11,227(10,516)710¥ 35,427

101
(94)
6
$ 320

See notes to the non-consolidated financial statements�

FUKOKU MUTUAL LIFE INSURANCE COMPANY

21

Non-consolidated Statements of Changes in Net Assets
Fukoku Mutual Life Insurance Company
For the years ended March 31, 2020 and 2021

Millions of yen
Foundation funds, surplus and others
Surplus
Other surplus

For the year ended March 31, 2020

Foundation
funds

Balance at the beginning of the fiscal
year ������������������������������������������������ ¥10,000

Accumulated
foundation
funds
Reserve forredeemedrevaluation

Legal
reservefor future
lossesReserve forredemptionoffoundation
funds

Reserve fordividend
allowances

Accumulated
fund for pricefluctuation

Reserve foradvanceddepreciation ofreal estate fortax purpose

Other
reserves

UnappropriatedsurplusTotal
surplusTotal
foundation
funds, surplus
and others¥106,000¥3,071¥8,000¥20,000¥41,000

¥210

¥767

¥60,633¥133,682¥249,794¥112

Changes in the fiscal year
Financing of additional foundation
funds ……………………………

12,00012,000Additions to reserve for dividends
to policyholders …………………
Additions to legal reserve for
future losses ……………………

(34,671)(34,671)(34,671)

(105)

—

—

105

Additions to accumulated
foundation funds redeemed……

10,00010,000

Payment of interest on foundation
funds ……………………………

(100)

(100)

(100)

Net surplus for the fiscal year ……

34,113

34,113

34,113

Redemption of foundation funds …

(10,000)(10,000)

Additions to reserve for redemptionof foundation funds ………………

2,000

Reversal of reserve for redemptionof foundation funds ………………

(10,000)(2,000)

Reversal of reserve for advanced
depreciation of real estate for tax
purpose …………………………

(1)

Reversal of revaluation reserve forland, net of tax …………………

——(10,000)(10,000)

1

—

—

29

29

29

Net changes, excluding foundation
funds, surplus and others ………

2,000

10,000—105(8,000)

—

—

(1)

—

(2,731)(10,628)

1,371

Balance at the end of the fiscal year ���� ¥12,000¥116,000¥112¥3,176—¥20,000¥41,000

¥209

¥767

¥57,901¥123,054¥251,166

Total changes in the fiscal year ……

Millions of yen
Valuation and translation adjustments

For the year ended March 31, 2020

Balance at the beginning of the fiscal year ……………………………………

Net unrealized gains(losses) on available-for-salesecurities, net of tax

Revaluation reserve forland, net of tax

Total valuation andtranslation adjustments

Total
net assets¥342,748¥4,132¥346,880¥596,674

Changes in the fiscal year
Financing of additional foundation funds ……………………………………

12,000Additions to reserve for dividends to policyholders ………………………

(34,671)

Additions to legal reserve for future losses …………………………………

—Additions to accumulated foundation funds redeemed ……………………

10,000

Payment of interest on foundation funds ……………………………………

(100)

Net surplus for the fiscal year ………………………………………………

34,113

Redemption of foundation funds ……………………………………………

(10,000)

Additions to reserve for redemption of foundation funds …………………

—Reversal of reserve for redemption of foundation funds …………………

(10,000)

Reversal of reserve for advanced depreciation of real estate for tax
purpose ………………………………………………………………………

—Reversal of revaluation reserve for land, net of tax ………………………

29

Net changes, excluding foundation funds, surplus and others ……………

(57,995)(29)(58,025)(58,025)

Total changes in the fiscal year …………………………………………………

(57,995)(29)(58,025)(56,653)

Balance at the end of the fiscal year ……………………………………………

¥284,752¥4,102¥288,855¥540,021

22

FUKOKU MUTUAL LIFE INSURANCE COMPANY

Millions of yen
Foundation funds, surplus and others
Surplus
Other surplus

Accumulated
foundation
funds
Reserve forredeemedrevaluation

Legal
reservefor future
lossesReserve forredemptionoffoundation
funds

Reserve fordividend
allowances

Accumulated
fund for pricefluctuation

Reserve foradvanceddepreciation ofreal estate fortax purpose

Other
reserves

UnappropriatedsurplusTotal
surplusTotal
foundation
funds, surplus
and others¥116,000¥3,176—¥20,000¥41,000

¥209

¥767

¥57,901¥123,054¥251,166(31,547)(31,547)(31,547)

(95)

—

—

Payment of interest on foundation
funds ……………………………

(102)

(102)

(102)

Net surplus for the fiscal year ……

35,42735,42735,427(2,400)

—

—

1

—

—

(83)

(83)

(83)

For the year ended March 31, 2021

Foundation
funds

Balance at the beginning of the fiscal
year ������������������������������������������������ ¥12,000¥112

Changes in the fiscal year
Additions to reserve for dividends
to policyholders …………………
Additions to legal reserve for
future losses ……………………

95

Additions to reserve for redemptionof foundation funds ………………

2,400

Reversal of reserve for advanced
depreciation of real estate for tax
purpose …………………………

(1)

Reversal of revaluation reserve forland, net of tax …………………
Net changes, excluding foundation
funds, surplus and others ………

—

—

—

95

2,400

—

—

(1)

—

1,200

3,694

3,694

Balance at the end of the fiscal year ���� ¥12,000¥116,000¥112¥3,271¥2,400¥20,000¥41,000

¥207

¥767

¥59,102¥126,748¥254,860

Total changes in the fiscal year ……

Millions of yen
Valuation and translation adjustments

For the year ended March 31, 2021

Balance at the beginning of the fiscal year ……………………………………

Net unrealized gains(losses) on available-for-salesecurities, net of tax

Revaluation reserve forland, net of tax

Total valuation andtranslation adjustments

Total
net assets¥284,752¥4,102¥288,855¥540,021

Changes in the fiscal year
Additions to reserve for dividends to policyholders ………………………

(31,547)

Additions to legal reserve for future losses …………………………………

—Payment of interest on foundation funds ……………………………………

(102)

Net surplus for the fiscal year ………………………………………………

35,427

Additions to reserve for redemption of foundation funds …………………

—Reversal of reserve for advanced depreciation of real estate for tax
purpose ………………………………………………………………………

—Reversal of revaluation reserve for land, net of tax ………………………

(83)

Net changes, excluding foundation funds, surplus and others ……………

173,534

83

173,617

173,617

Total changes in the fiscal year …………………………………………………

173,534

83

173,617

177,312

Balance at the end of the fiscal year ……………………………………………

¥458,287¥4,185¥462,473¥717,333

FUKOKU MUTUAL LIFE INSURANCE COMPANY

23

Millions of U�S� dollars
Foundation funds, surplus and others
Surplus
Other surplus

Reserve fordividend
allowances

Accumulated
fund for pricefluctuation

Reserve foradvanceddepreciation ofreal estate fortax purpose

Other
reserves

UnappropriatedsurplusTotal
surplusTotal
foundation
funds, surplus
and others

$180

$370

$1

$6

$523

$1,111$2,268

(284)

(284)

(284)

(0)

—

—

Payment of interest on foundation
funds ……………………………

(0)

(0)

(0)

Net surplus for the fiscal year ……

320

320

320

(21)

—

—

0

—

—

(0)

(0)

(0)

For the year ended March 31, 2021

Balance at the beginning of the fiscal
year ������������������������������������������������

Foundation
funds

$108

Accumulated
foundation
funds
Reserve forredeemedrevaluation$1,047$1

Legalreservefor future
losses$28

Reserve forredemptionoffoundation
funds

—

Changes in the fiscal year
Additions to reserve for dividends
to policyholders …………………
Additions to legal reserve for
future losses ……………………

0

Additions to reserve for redemptionof foundation funds ………………

21

Reversal of reserve for advanced
depreciation of real estate for tax
purpose …………………………

(0)

Reversal of revaluation reserve forland, net of tax …………………
Net changes, excluding foundation
funds, surplus and others ………
Total changes in the fiscal year ……

—

—

—

0

21

—

—

(0)

—

10

33

33

Balance at the end of the fiscal year ����$108

$1,047

$1

$29

$21

$180

$370

$1

$6

$533

$1,144$2,302Millions of U�S� dollars
Valuation and translation adjustments

For the year ended March 31, 2021

Balance at the beginning of the fiscal year ……………………………………

Net unrealized gains(losses) on available- for-salesecurities, net of tax

Revaluation reserve forland, net of tax

Total valuation andtranslation adjustments

Total
net assets$2,572$37$2,609$4,877

Changes in the fiscal year
Additions to reserve for dividends to policyholders ………………………

(284)

Additions to legal reserve for future losses …………………………………

—Payment of interest on foundation funds ……………………………………

(0)

Net surplus for the fiscal year ………………………………………………

320

Additions to reserve for redemption of foundation funds …………………

—Reversal of reserve for advanced depreciation of real estate for tax
purpose ………………………………………………………………………

—Reversal of revaluation reserve for land, net of tax ………………………

(0)

Net changes, excluding foundation funds, surplus and others ……………

1,567

0

1,568

1,568

Total changes in the fiscal year …………………………………………………

1,567

0

1,568

1,601

Balance at the end of the fiscal year ……………………………………………

$4,139$37$4,177$6,47924

FUKOKU MUTUAL LIFE INSURANCE COMPANYNon-consolidated Statements of Surplus
Fukoku Mutual Life Insurance Company
For the years ended March 31, 2020 and 2021

Year ended March 31,

2020

2021

2021
Millions ofU�S� dollars

Millions of yen¥57,901¥59,102

$533

1

1

0

1

1

0

57,903

59,103533

31,54732,744295

Legal reserve for future losses ………………………………………………

95

99

0

Interest payment for foundation funds ………………………………………

102

102

0

2,400

2,400

21

2,400

2,400

21

2,597

2,601

23

Total appropriation of surplus……………………………………………………

34,14435,345

319

Unappropriated surplus carried forward ………………………………………

¥23,758¥23,758$214

Unappropriated surplus
Reversal of voluntary surplus reserve:
Reversal of reserve for advanced depreciationof real estate for tax purpose …………………………………………………

Total …………………………………………………………………………………
Appropriation of surplus
Reserve for dividends to policyholders …………………………………………
Net surplus:

Voluntary surplus reserve:
Reserve for redemption of foundation funds ………………………………

Note: Net surplus is calculated by deducting reserve for dividends to policyholders from the sum of unappropriated surplus and reversal of voluntary surplus reserve�

FUKOKU MUTUAL LIFE INSURANCE COMPANY

25

Notes to the Non-consolidated Financial Statements

I. Presentation of the Non-consolidated Financial
Statements
1� Basis of presentation
The accompanying non-consolidated financial statements havebeen prepared from the accounts maintained by Fukoku MutualLife Insurance Company (the “Company”) in accordance withthe provisions set forth in the Insurance Business Act of Japanand its related rules and regulations and in conformity withaccounting principles generally accepted in Japan, which are
different in certain respects from accounting principles generally
accepted in countries and jurisdictions other than Japan�In addition, the notes to the non-consolidated financial
statements include information which is not required underaccounting principles generally accepted in Japan but ispresented herein as additional information�
Amounts of less than one million yen have been rounded down�As a result, the totals do not add up�
The translations of yen amounts into U�S� dollar amounts areincluded solely for the convenience of the reader and have been
made, as a matter of arithmetical computation only, at the rateof ¥110�71 = US$1�00, the effective rate of exchange at thebalance sheet date of March 31, 2021� The translations should
not be construed as representations that such yen amounts
have been or could in the future be, converted into U�S� dollars
at that or any other rates�

II. Notes to the Non-consolidated Balance Sheets1� (1) The valuation of securities, including cash and deposits
and monetary claims bought which are equivalent tosecurities, and securities managed as trust assets inmoney held in trust, is as follows:i) Trading securities are stated at fair market value� Costsof their sales are determined by the moving averagemethod�ii) Held-to-maturity debt securities are stated at amortizedcost under the straight-line method, cost being
determined by the moving average method�iii) Policy-reserve-matching bonds are stated atamortized cost under the straight-line method, cost
being determined by the moving average method in
accordance with “Temporary Treatment of Accounting
and Auditing Concerning Policy-reserve-matching Bonds
in the Insurance Industry” (Industry Audit Committee
Report No�21 issued by the Japanese Institute ofCertified Public Accountants on November 16, 2000)�
iv) Investments in subsidiaries and affiliates are stated at cost,
cost being determined by the moving average method�v) Available-for-sale securities with fair market value
are stated at fair market value based on the market
prices at the end of the fiscal year� Costs of their sales
are determined by the moving average method� Net
unrealized gains or losses on these available-for-salesecurities, net of taxes, are recorded as a separate
component of net assets�

26

FUKOKU MUTUAL LIFE INSURANCE COMPANY

Available-for-sale securities whose market value are
deemed extremely difficult to obtain are stated at cost,
cost being determined by the moving average method,
except for public and corporate bonds including foreign
bonds, of which the difference between acquisition
cost and face value is considered to be an adjustment
of interest� Such bonds are stated at amortized cost
under the straight-line method, cost being determinedby the moving average method�
(2) Derivative instruments are stated at fair market value�(3) The Company revalued the land used in the operations basedon the Act for Revaluation of Land (Act No�34 promulgatedon March 31, 1998)� The difference between fair value andbook value resulting from the revaluation, net of related
taxes, is recorded as revaluation reserve for land as aseparate component of net assets and the related tax isrecorded as deferred tax liabilities for land revaluation�
• Date of revaluation: March 31, 2002
• Method of revaluation as prescribed for in Article 3
Paragraph 3 of the said Act:
Calculation is based on the appraisal value for property tax
set forth in Article 2 item 3 of the Enforcement Ordinanceof the Act for Revaluation of Land (Government OrdinanceNo�119 promulgated on March 31, 1998) and the roadrate set forth in Article 2 item 4 of the said Ordinance withcertain reasonable adjustments�
(4) Depreciation of tangible fixed assets is calculated by thefollowing methods�
• Tangible fixed assets (excluding lease assets): Decliningbalance method
However, buildings (excluding building attachments andstructures acquired on or before March 31, 2016) acquiredon or after April 1, 1998 are depreciated using Straight-line
method�• Lease assets related to finance lease transactions that
do not transfer ownership: Straight-line method over thelease term with no residual value�
Other tangible fixed assets acquired for ¥100,000 or more but
less than ¥200,000 are depreciated equally over three years�
(5) Assets and liabilities denominated in foreign currencies,
except for investments in subsidiaries and affiliates, aretranslated into Japanese yen at the effective exchange
rate prevailing at the balance sheet date� Investments in
subsidiaries and affiliates are translated into Japanese yen at
the exchange rate on the date of acquisition�
(6) Allowance for possible loan losses is provided in accordancewith the Company’s standards of self-assessment and writeoffs and reserves on credit quality:i) For the credits of borrowers who are legally bankrupt

such as being in the proceedings of bankruptcy or
civil rehabilitation (hereinafter called “legally bankrupt
borrowers”) and who are substantially bankrupt(hereinafter called “substantially bankrupt borrowers”), theCompany provides the remaining amounts of credits after
the direct write-off described below and the deductions of
the amount expected to be collected through the disposalof collateral or the execution of guarantees�ii) For the credits of borrowers who are not currently
bankrupt but have a high possibility of bankruptcy(hereinafter called “not currently bankrupt borrowers”),
the Company provides the amounts deemed as necessary
considering the borrowers’ ability to pay, within theamounts after deductions of the amounts expected to becollected through the disposal of collateral or the executionof guarantees�iii) For the credits of borrowers other than the above, theCompany provides the amounts calculated by multiplying
the borrowers’ balance by the actual ratio of bad debt
losses on defaults during a certain past period�All credits are assessed by the relevant departmentsin accordance with the Company’s standards of selfassessment on credit quality� The results of the assessment
are reviewed by the audit department, which is independentof business-related divisions� Subsequently, the allowancefor possible loan losses is provided based on the results ofthese assessments�
For the credits of legally bankrupt borrowers andsubstantially bankrupt borrowers, the amounts remaining
after deductions of collateral value or the amounts collectible
through the execution of guarantees are written-off directlyfrom the borrowers’ balances as the estimated uncollectible
amounts� The amount written-off as of March 31, 2020
and 2021 were ¥0 million and ¥0 million (US$8 thousand),
respectively�
(7) Reserve for employees’ retirement benefits and prepaid
pension cost are presented based on projected benefit
obligations and pension plan assets at the balance sheet
date�
The Company uses the following methods for amortizing
retirement benefit obligations and retirement benefit
expenses:• Method for allocation of projected retirement benefits����������������Benefit formula basis• Amortization period of actuarial gains and losses �� 10 years• Amortization period of prior service cost ��������������� 10 years(8) Reserve for price fluctuation is calculated in accordance with
Article 115 of the Insurance Business Act�(9) Hedge accounting is based on “Accounting Standards for
Financial Instruments” (ASBJ Statement No� 10, March 10,2008)� The Company applies a fair value hedge accounting

as a hedge against the risk of foreign exchange fluctuationin relation to bonds and others denominated in foreign
currencies, and a designated hedge accounting (“Furiate
shori”) for foreign currency swaps as a hedge against therisk of foreign exchange fluctuation in relation to bonds
denominated in foreign currencies issued by the Company�
For assessing the effectiveness of hedge used, ratio analysis
of comparing the fluctuations in the fair value or cash flowsof hedged items and hedging instruments is mainly applied�(10) Accounting of unrecognized actuarial differences andunrecognized prior service costs related to employees’
retirement benefits is different to the methods used forthese items in the consolidated financial statements�(11) The Company accounts for consumption taxes by the taxexclusion method� The consumption taxes on certain assets,
which are not deductible from consumption taxes withheld
and that are stipulated to be deferred under the Tax Act, aredeferred as prepaid expenses and amortized equally over five
years� Consumption taxes other than deferred consumption
taxes are recognized as an expense when incurred�(12) Initial premium incomes are recorded by the relevant
amounts received when the premium incomes have been
received and the responsibilities on the insurance contract
have been commenced, in principal�
Subsequent premium incomes are also recorded as theamount of payments that have been received�Of premium incomes that have been received, the portion
corresponding to the period that has yet to pass as of theend of the fiscal year is accumulated as policy reserve inaccordance with Article 116 of the Insurance BusinessAct and Article 69 Paragraph 1 Item 2 of the Enforcement
Regulation of the Insurance Business Act�Premium incomes associated with the acceptance of group
annuities are recorded as amounts equivalent to the policy
reserve received when accepting the transfers of thesegroup annuities�(13) Claims and other payments (excluding reinsurance
premiums) are recorded by the relevant amounts paid
when the cause for payment under the policy conditions is
occurred and the calculated amounts are paid based on thepolicy conditions�In accordance with Article 117 of the Insurance BusinessAct and Article 72 of the Enforcement Regulation of the
Insurance Business Act, reserve for outstanding claims areaccumulated as for claims for which the Company has apayment due but has not paid, or for which the occurrence ofcause for payment has not been reported but the Company
recognizes that insured payment has already occurred as ofthe end of the fiscal year�
Claims and other payments associated with the outgoing

FUKOKU MUTUAL LIFE INSURANCE COMPANY

27

transfer of group annuities are recorded as amounts
equivalent to the policy reserve transferred when recognizing
the transfers of these group annuities�(14) Policy reserve of the Company is accumulated in accordancewith the methods stated in the statement of calculation
procedures for Insurance Premiums and Policy Reserves(Article 4 Paragraph 2 Item 4 of the Insurance BusinessAct) pursuant to Article 116 Paragraph 1 of the Insurance
Business Act to prepare for the future performance ofobligations under the insurance contracts for which theinsurer’s responsibilities have started as of the end of the
fiscal year�
Premium reserves, one of the components of policy reserve,
are calculated by the following method�i) In regard to the policies subject to the standard policy
reserve, the method as prescribed by the Commissioner ofFinancial Services Agency (Ministry of Finance OrdinanceNo�48, 1996) is applied�ii) In regard to the policies not subject to the standard policy
reserve, the net level premium method is applied�
Appointed actuary, for each fiscal year, verifies whether aportion of the policy reserve is reasonably accumulated inaccordance with Article 121 Paragraph 1 of the Insurance
Business Act and Article 80 of the Enforcement Regulationof the Insurance Business Act�Contingency reserves, one of the components of policy
reserve, are accumulated pursuant to Article 116 of the
Insurance Business Act and Article 69 Paragraph 1 Item 3 ofthe Enforcement Regulation of the Insurance Business Act
to cover risks that may accrue in the future in order to ensure
performing future obligations under the insurance contracts�
The balance of policy reserve as of the end of the fiscal
year calculated indicated above includes policy reserve that
was additionally accumulated as follows in accordance with
Article 69 Paragraph 5 of the Enforcement Regulation of the
Insurance Business Act�Among individual annuity insurance policies with an assumed
interest rate of 5�00% or higher, for policies that havebegun paying annuities (excluding wife’s annuity insurance
additional rider), the Company reduced the assumed interest
rate to 1�00% and funded additional policy reserves� As of
March 31, 2020, the balance of these policy reserves was¥74,007 million�
The Company also funded additional policy reserves forcertain individual annuity insurance policies, whole life
insurance policies that include distribution of surplus every
five years, new cancer riders and highly advanced medical
riders� As of March 31, 2020, the balance of these policy
reserves was ¥29,605 million�
Among individual annuity insurance policies with an assumed
interest rate of 5�00% or higher, for policies that havebegun paying annuities (excluding wife’s annuity insurance
additional rider), the Company reduced the assumed interest

28

FUKOKU MUTUAL LIFE INSURANCE COMPANY

rate to 1�00% and funded additional policy reserves� As of
March 31, 2021, the balance of these policy reserves was¥73,354 million (US$662 million)�
The Company also funded additional policy reserves forcertain individual annuity insurance policies, whole life
insurance policies that include distribution of surplus every
five years and new cancer riders� As of March 31, 2021, thebalance of these policy reserves was ¥1,654 million (US$14
million)�
(15)Depreciation of intangible fixed assets is calculated by thefollowing methods�
• Software: Straight-line method over the estimated useful
lives�
• Lease assets related to finance lease transactions that do
not transfer ownership: Straight-line method over the leaseterm with no residual value�(16) Of the bonds corresponding to the sub-groups of individual
insurance and annuities which are set by insurance types andinvestment policies, the bonds that are held to match theduration of liabilities are classified as policy-reserve-matching
bonds in accordance with “Temporary Treatment of
Accounting and Auditing Concerning Policy-reserve-matching
Bonds in Insurance Industry” (Industry Audit Committee
Report No� 21 issued by the Japanese Institute of Certified
Public Accountants on November 16, 2000)�
2� Primary accounting standards that have been issued by theend of the fiscal year ended March 31, 2021 but have notbeen applied are as follows�Methods of calculating the fair value will be revised in
response to the announcements of accounting standards
such as “Accounting Standard for Fair Value Measurement”(ASBJ Statement No� 30, July 4, 2019), “AccountingStandard for Financial Instruments” (ASBJ Statement No� 10,
July 4, 2019) and “Implementation Guidance on AccountingStandard for Fair Value Measurement” (ASBJ Guidance No�
31, July 4, 2019)�
These accounting standards and this guidance must be
applied at the beginning of the fiscal year starting on April 1,
2021 and the Company plans to apply these accounting
standards and this guidance at the beginning of the fiscal
year ending March 31, 2022�
The Company is currently in the process of evaluating theeffects of applying these accounting standards and thisguidance for the fiscal year ending March 31, 2022�
3� Asset management of the general accounts other than theseparate accounts stipulated in Article 118 Paragraph 1 ofthe Insurance Business Act is conducted on the principle
of prudent and profitable investments, considering public
and social responsibilities of the insurance business� Basedon this policy, the Company allocates the fund, securingRisk Management” established by the Board of Directors�
Specifically, the Company eliminates excessive risk deviatingfrom the basic principle and secures the safety of theassets by utilizing control functions of the Financial andInvestment Risk Management Department towards theasset management sections, monitoring the status of market
risk and credit risk periodically on a daily or monthly basis� In
addition, the Company quantifies the market risk and credit
risk using value-at-risk (VaR) method in order to control thepossible maximum losses which may arise from the holding
assets within a certain range of risk buffers�
The carrying amounts, fair values and their relateddifferences of major financial assets and liabilities in thegeneral account were as follows:

its liquidity, from the medium-to-long term viewpoints�
The Company is diversifying investments in assets suchas foreign securities, stocks and real estates within theacceptable range of risks in order to enhance the profitability,
although yen-denominated interest bearing assets including
debt securities such as Japanese government bonds andloans are the cores of the portfolios under the asset liability
management� Derivatives are mainly used to hedge themarket risk regarding spot-priced assets and liabilities�
Major financial instruments including securities, loans andderivatives are exposed to market risk and credit risk�
The Company manages its asset management risk by
establishing internal control systems including various rules
pursuant to the “Three Basic Rules related to Enterprise

As of March 31,

2020
Millions of yen

Cash and deposits:
Cash and deposits not treated as securities ������������������������
Total cash and deposits ��������������������������������������������������������
Call loans �����������������������������������������������������������������������������������
Monetary claims bought:
Claims treated as loans ��������������������������������������������������������
Total monetary claims bought����������������������������������������������
Money held in trust:
Trading securities �����������������������������������������������������������������
Total money held in trust �����������������������������������������������������
Securities:
Trading securities �����������������������������������������������������������������
Held-to-maturity debt securities�������������������������������������������
Policy-reserve-matching bonds ��������������������������������������������
Available-for-sale securities��������������������������������������������������
Total securities ���������������������������������������������������������������������
Loans:
Policy loans ��������������������������������������������������������������������������
Ordinary loans ����������������������������������������������������������������������
Total loans ����������������������������������������������������������������������������
Assets total��������������������������������������������������������������������������������
Subordinated bonds1 �����������������������������������������������������������������Cash received as collateral under securities
lending transactions �������������������������������������������������������������
Liabilities total ����������������������������������������������������������������������������
Derivative instruments2:
Hedge accounting not applied ���������������������������������������������
Hedge accounting applied����������������������������������������������������
Total derivative instruments�������������������������������������������������

Carrying amount

Fair value¥ 285,545
285,545
230,000¥ 285,545
285,545
230,000

269
269

287
287

17
17

23,15623,15623,15623,156——

66,357757,178
892,940
3,450,284
5,166,760

66,357879,7121,035,765
3,450,284
5,432,119—
122,534
142,825—
265,359

55,339510,133
565,473
6,271,205
191,935

55,339536,915592,254
6,563,363
186,062(0)
26,781
26,781
292,158(5,872)

67,866259,801

67,866
253,929—(5,872)

3,589
10,206
13,795

3,589
10,206
13,795

—
—
—

¥

¥

Difference

¥

¥

—
—
—

FUKOKU MUTUAL LIFE INSURANCE COMPANY29

As of March 31,

Cash and deposits:
Cash and deposits not treated as securities ������������������������
Total cash and deposits ��������������������������������������������������������
Call loans �����������������������������������������������������������������������������������
Monetary claims bought:
Claims treated as loans ��������������������������������������������������������
Total monetary claims bought ����������������������������������������������
Money held in trust:
Trading securities �����������������������������������������������������������������
Total money held in trust������������������������������������������������������
Securities:
Trading securities �����������������������������������������������������������������
Held-to-maturity debt securities�������������������������������������������
Policy-reserve-matching bonds ��������������������������������������������
Available-for-sale securities ��������������������������������������������������
Total securities ���������������������������������������������������������������������
Loans:
Policy loans ��������������������������������������������������������������������������
Ordinary loans ����������������������������������������������������������������������
Total loans ����������������������������������������������������������������������������
Assets total��������������������������������������������������������������������������������
Subordinated bonds1 �����������������������������������������������������������������
Liabilities total ����������������������������������������������������������������������������
Derivative instruments2:
Hedge accounting not applied ���������������������������������������������
Hedge accounting applied����������������������������������������������������
Total derivative instruments �������������������������������������������������

2021

2021

Millions of yen

Millions of U�S� dollars

Carrying amount

Fair value¥ 155,190
155,190
136,000¥ 155,190
155,190
136,000

239
239

¥

Carrying amount

Fair value

Difference———$ 1,401
1,401
1,228

$ 1,401
1,401
1,228

$

254
254

14
14

2
2

2
2

0
0

24,277
24,277

24,277
24,277

—
—

219
219

219
219

—
—

29,426757,339
873,677
4,095,801
5,756,244

29,426
863,820
989,433
4,095,801
5,978,481—
106,481
115,755—
222,237

265
6,840
7,891
36,99551,993

265
7,802
8,937
36,99554,001

—
961
1,045
—
2,007

50,797517,293568,091
6,640,043
241,935
241,935

50,797537,281
588,078
6,882,283
246,577
246,577(0)
19,987
19,987242,239
4,642
4,642

458
4,672
5,131
59,976
2,185
2,185

458
4,853
5,311
62,164
2,227
2,227

(0)
180
180
2,188
41
41

(3,394)(37,644)(41,039)(3,394)(37,644)(41,039)

—
—
—

(30)
(340)
(370)

(30)
(340)
(370)

—
—
—

¥

Difference

¥

¥

$

$

$

—
—
—

Notes: 1� The fair value of derivative instruments that are currency swaps under designated hedge accounting is included in the fair value of subordinated bonds because it is accounted for as anintegral part of the subordinated bonds that are the hedge items�
2� Assets and liabilities generated by derivative instruments are offset and presented net� Net liabilities in total are presented in brackets�

(1) Cash, deposits (excluding financial instruments treated as
securities based on “Accounting Standards for Financial
Instruments” (ASBJ Statement No�10, March 10, 2008)) andcall loans:
The fair values of cash, deposits and call loans are based on
their book values since fair values approximate book values
due to their short maturities�
(2) Securities including deposits and monetary claims bought
which are treated as securities based on “AccountingStandards for Financial Instruments” (ASBJ StatementNo�10, March 10, 2008) and securities managed as trust
assets in money held in trust:
The fair values of marketable securities are measured at
the quoted market prices at the balance sheet date� The fairvalues of other securities without the quoted market prices
are based on the prices reasonably calculated such as theprices offered by the information vendors or counterparty
financial institutions�
Investments in subsidiaries and affiliates, unlisted stocks
and investments in partnerships whereby partnershipassets consist of unlisted stocks whose fair values are
deemed extremely difficult to obtain, are excluded fromabove securities� The carrying amounts of investments in
subsidiaries and affiliates, unlisted stocks and investments

30

FUKOKU MUTUAL LIFE INSURANCE COMPANY

in partnerships were ¥64,787 million, ¥5,684 million, and¥28,169 million as of March 31, 2020, and ¥64,787 million(US$585 million), ¥6,224 million (US$56 million), and ¥29,744
million (US$268 million) as of March 31, 2021, respectively�
(3) Loans and monetary claims bought treated as loans:
The fair values of policy loans are deemed to approximatebook values, considering estimated repayment period andinterest rate conditions since their repayment deadlines havenot been set up due to the characteristics that the loans arelimited to the amount of cash surrender values� Therefore,
the book values are used as the fair values of policy loans�
The fair values of floating interest rate loans among theordinary loans and monetary claims bought treated as loans
approximate the book values because the market interest
rates are reflected in future cash flows in a short period�
Therefore, the fair values of floating interest rate loans andmonetary claims bought treated as loans are based on theirbook values� The fair values of fixed interest rate loans
are measured by discounting the future cash flows to thepresent values�
The fair values of loans from legally bankrupt borrowers,
substantially bankrupt borrowers and not currently bankrupt
borrowers and monetary claims bought treated as loans
are computed by deducting the amount of the allowancefor possible loan losses from the book values before direct
write-offs�
(4) Subordinated bonds:
Subordinated bonds issued by the Company are stated at fairmarket values�(5) Derivative instruments:i) The fair values of the futures and options traded at theexchange are measured at the settlement price of theexchange�ii) The fair values of forward contracts, options and swaps
traded over the counter are based on the quoted prices
offered by counterparty financial institutions�iii) The fair values of foreign currency forward contracts are
determined based on the spot exchange rate and forward
contract rate�
4� The Company holds investment and rental properties suchas office buildings in Tokyo and other areas� The carrying
amounts and the fair values of investment and rental
properties were ¥174,688 million and ¥321,383 million as ofMarch 31, 2020, and ¥193,459 million (US$1,747 million) and¥324,155 million (US$2,927 million) as of March 31, 2021,
respectively� The fair value is mainly based on the value
calculated by the Company in accordance with real estateappraisal standards which includes some adjustments using
the reference prices�
The amount corresponding to asset retirement obligations
included in the carrying amount of investment and rental
properties were ¥588 million as of March 31, 2020, and ¥417
million (US$3 million) as of March 31, 2021, respectively�
5� The amount of securities lent under lending agreements
were ¥345,897 million and ¥465,351 million (US$4,203
million) as of March 31, 2020 and 2021, respectively�
6� The total amounts of credits to bankrupt borrowers,
delinquent loans, delinquent loans past 3 months or more
and restructured loans, which were included in loans, were
¥1,079 million as of March 31, 2020, and ¥3,199 million(US$28 million) as of March 31, 2021, respectively;i) The balances of credits to bankrupt borrowers were ¥153
million and ¥147 million (US$1 million) as of March 31,
2020 and 2021, respectively�ii) The balances of delinquent loans were ¥698 million and¥2,522 million (US$22 million) as of March 31, 2020 and
2021, respectively�iii) The balances of restructured loans were ¥227 millionand ¥529 million (US$4 million) as of March 31, 2020 and
2021, respectively�iv) There were no balances of delinquent loans past 3 months
or more as of March 31, 2020 and 2021, respectively�

The direct write-offs related to loans decreased credits tobankrupt borrowers described above by ¥0 million as ofMarch 31, 2020, and ¥0 million (US$8 thousand) as of March
31, 2021, respectively�
Credits to bankrupt borrowers represent loans, excluding
the balances already written-off, which meet the conditionsprescribed in Article 96 Paragraph 1 item 3 and 4 of
the Enforcement Regulations of the Corporate Tax Act�
Moreover, accrued interest on these loans is not recorded
as income after determining that principal of or interest on
these loans is unlikely to be collected due to the significant
delay in repayment of principal or interest payment or forsome other reasons�Delinquent loans are credits which accrued interest is notrecorded as income due to the same reasons as describedabove, and exclude credits to bankrupt borrowers andloans for which interest payments have been suspended
and rescheduled to assist and support the borrowers in the
restructuring of their business�
Delinquent loans past 3 months or more are loans for whichinterest payments or repayments of principal are delinquent
for 3 months or more from the due date under the terms of
the related loan agreements, excluding those loans classified
as credits to bankrupt borrowers and delinquent loans�
Restructured loans are loans for which certain concessions
favorable to borrowers, such as interest reduction or
exemption, rescheduling of due date for repayments ofprincipal or interest payment, waiver of claim or otherterms, have been negotiated for the purpose of assistingand supporting the borrowers in the restructuring of theirbusiness� This category excludes loans classified as credits
to bankrupt borrowers, delinquent loans and delinquent loans
past 3 months or more�7� Accumulated depreciation of tangible fixed assets were
¥171,812 million and ¥173,746 million (US$1,569 million) as
of March 31, 2020 and 2021, respectively�
8� Total assets in separate accounts provided for in Article 118of the Insurance Business Act were ¥84,658 million and¥104,979 million (US$948 million) as of March 31, 2020
and 2021, respectively� The amounts of separate accountliabilities were the same as separate account assets�9� The total amounts of receivables from/payables to subsidiaries
were ¥3,155 million and ¥1,834 million as of March 31, 2020,and ¥3,070 million (US$27 million) and ¥2,167 million (US$19
million) as of March 31, 2021, respectively�
10� Deferred tax assets and deferred tax liabilities as of March
31, 2020 were ¥149,590 million and ¥114,839 million,
respectively� Valuation allowance for deferred tax assets
was ¥5,353 million�
Major components of deferred tax assets were ¥93,815

FUKOKU MUTUAL LIFE INSURANCE COMPANY

31

million of policy reserves, ¥34,368 million of reservefor price fluctuation and ¥11,812 million of reserve for
employees’ retirement benefits as of March 31, 2020�
Major component of deferred tax liabilities was ¥110,413
million of net unrealized gains on available-for-sale securities
as of March 31, 2020�
The statutory tax rate and the actual effective tax rate forthe year ended March 31, 2020 were 28�0% and 8�3%,
respectively� The difference between the statutory tax rate
and the actual effective tax rate was attributable mainly to-23�7% of reserve for dividends to policyholders�
Deferred tax assets and deferred tax liabilities as of March 31,
2021 were ¥159,775 million (US$1,443 million) and ¥181,233
million (US$1,637 million), respectively� Valuation allowancefor deferred tax assets was ¥4,972 million (US$44 million)�
Major components of deferred tax assets were ¥90,033
million (US$813 million) of policy reserves, ¥48,383 million(US$437 million) of reserve for price fluctuation and¥11,872 million (US$107 million) of reserve for employees’
retirement benefits as of March 31, 2021�
Major component of deferred tax liabilities was ¥176,729
million (US$1,596 million) of net unrealized gains onavailable-for-sale securities as of March 31, 2021�
The statutory tax rate and the actual effective tax rate forthe year ended March 31, 2021 were 28�0% and 2�0%,respectively� The difference between the statutory tax rate
and the actual effective tax rate was attributable mainly to-25�4% of reserve for dividends to policyholders�11� Changes in reserve for dividends to policyholders were as follows:Year ended March 31,

2020

2021

Millions of yen

Balance at the beginning of the fiscal year ������������������������������������������������������������

¥ 58,176

2021
Millions ofU�S� dollars¥ 60,922$ 550

Transfer from surplus in the previous fiscal year ���������������������������������������������������

34,671

31,547284

Dividend payments to policyholders during the fiscal year �������������������������������������

(31,938)(29,252)(264)

Increase in interest ������������������������������������������������������������������������������������������������

13

13

0

Balance at the end of the fiscal year ���������������������������������������������������������������������

¥ 60,922¥ 63,232$ 571

12� The amount of stocks of subsidiaries were ¥64,787 millionand ¥64,787 million (US$585 million) as of March 31, 2020
and 2021, respectively�
13� Assets pledged as collateral as of March 31, 2020 were ¥78,124
million of securities and ¥690 million of bank deposits� Secured
debts as of March 31, 2020, were ¥73,400 million�
These amounts include ¥63,247 million of investments insecurities deposited and ¥67,866 million of cash received ascollateral under securities lending transactions secured bycash as of March 31, 2020�
Assets pledged as collateral as of March 31, 2021 were¥99,608 million (US$899 million) of securities and ¥790
million (US$7 million) of bank deposits� Secured debts as ofMarch 31, 2021, were ¥67,546 million (US$610 million)�
These amounts include ¥60,241 million (US$544 million)of investments in securities deposited and ¥61,819 million(US$558 million) of cash received as collateral under
securities lending transactions secured by cash as of March
31, 2021�
14� Reserve for outstanding claims for the reinsurance contracts
provided in accordance with Article 71 Paragraph 1 of the
Enforcement Regulation of the Insurance Business Act

32

FUKOKU MUTUAL LIFE INSURANCE COMPANY(hereinafter called “reserve for outstanding claims forceded reinsurance”) were ¥0 million and ¥4 million (US$36
thousand) as of March 31, 2020 and 2021, respectively�
Policy reserve for the reinsurance contracts provided inaccordance with Article 71 Paragraph 1 of the Enforcement
Regulation of the Insurance Business Act (hereinafter called“policy reserve for ceded reinsurance”) were ¥29 millionand ¥30 million (US$273 thousand) as of March 31, 2020
and 2021, respectively�
15� The total amounts of adjustment items for redemption offoundation funds and appropriation of net surplus defined in
Article 30 Paragraph 2 of the Enforcement Regulation of the
Insurance Business Act were ¥288,967 million and ¥462,585
million (US$4,178 million) as of March 31, 2020 and 2021,
respectively�
16� There were unused commitment line agreements underwhich the Company is the lender of ¥9,407 million and¥8,733 million (US$78 million) as of March 31, 2020 and
2021, respectively�
17� Repayments of subordinated bonds are subordinated toother obligations�18� The future contribution to the Life Insurance Policyholders
Protection Corporation of Japan under Article 259 of the
Insurance Business Act was estimated at ¥8,400 millionand ¥7,946 million (US$71 million) as of March 31, 2020 and
2021, respectively�
The contribution is recognized as operating expenses whencontributed�
19� Matters Related to Employees’ Retirement Benefits(1) Overview of Employees’ Retirement Benefit Plan
As for a defined benefit plan for office-based employees, theCompany has a defined benefit corporate pension plan andretirement lump-sum payments� As for a defined contribution
plan for these employees, the Company also has a defined
contribution pension plan�As for a defined benefit plan for sales employees, theCompany has retirement lump-sum payments�
The Company places a retirement benefit trust in relation to
the retirement lump-sum grant plan for sales employees�
The simplified method for calculating retirement benefit
obligation is applied to a portion of the Company’s retirement
lump-sum grant plans�

(2) Defined Benefit Plani) Reconciliation of beginning and end of balance of retirement benefit obligation

As of March 31,

2020

2021

2021
Millions ofU�S� dollars

Millions of yen

Retirement benefit obligation at the beginning of the fiscal year ��������������������������

¥87,060¥87,938$794

Service cost �����������������������������������������������������������������������������������������������������������

3,434

3,455

31

Interest cost ����������������������������������������������������������������������������������������������������������

520

526

4

Actuarial differences occurred during the fiscal year���������������������������������������������

1,308

2,881

26

Retirement benefit payments��������������������������������������������������������������������������������

(4,386)(4,279)(38)

Prior service costs occurred during the fiscal year ������������������������������������������������

—

54

0

Retirement benefit obligation at the end of the fiscal year �����������������������������������

¥87,938¥90,576$818

ii) Reconciliation of beginning and end of balance of pension plan assets

As of March 31,

2020

2021

Millions of yen

Pension plan assets at the beginning of the fiscal year�����������������������������������������

¥54,880

2021
Millions ofU�S� dollars¥53,704$485

Expected return on pension plan assets ���������������������������������������������������������������

858

867

7

Actuarial differences occurred during the fiscal year���������������������������������������������

(3,071)

6,673

60

Contributions by the employer ������������������������������������������������������������������������������

2,711

2,577

23

Retirement benefit payments��������������������������������������������������������������������������������

(1,675)(1,578)(14)

Pension plan assets at the end of the fiscal year ��������������������������������������������������

¥53,704¥62,244$562

FUKOKU MUTUAL LIFE INSURANCE COMPANY

33iii) Reconciliation of retirement benefit obligation and pension plan assets with reserve for employees’ retirement benefits and prepaid
pension cost presented on the non-consolidated balance sheet
As of March 31,

2020

2021

2021
Millions ofU�S� dollars

Millions of yena� Funded plan retirement benefit obligation ���������������������������������������������������������

¥ 76,625¥ 78,508$ 709

b� Pension plan assets �������������������������������������������������������������������������������������������

(53,704)(62,244)(562)c� (a + b)�����������������������������������������������������������������������������������������������������������������

22,92016,263146d� Unfunded plan retirement benefit obligation �����������������������������������������������������

11,313

12,067109e� Unrecognized actuarial differences ����������������������������������������������������������������

(10,809)(5,111)(46)

f� Unrecognized prior service cost ����������������������������������������������������������������������

95

(31)

(0)

g� Net amount of liabilities and assets presented
on the non-consolidated balance sheet �����������������������������������������������������������

23,51923,187209h� Reserve for employees’ retirement benefits�����������������������������������������������������

23,51923,735214

I� Prepaid pension cost �����������������������������������������������������������������������������������������

—

(547)

(4)

j� Net amount of liabilities and assets presented
on the non-consolidated balance sheet �����������������������������������������������������������

¥ 23,519¥ 23,187$ 209iv) Breakdown of retirement benefit gains and losses

As of March 31,

2020

2021

2021
Millions ofU�S� dollars

Millions of yen

Service cost ���������������������������������������������������������������������������������������������������������

¥3,434¥3,455$31

Interest cost ��������������������������������������������������������������������������������������������������������

520

526

4

Expected return on pension plan assets �������������������������������������������������������������

(858)

(867)

(7)

Amortization of actuarial differences �������������������������������������������������������������������

1,404

1,905

17

Amortization of prior service cost ������������������������������������������������������������������������

(76)

(72)

(0)

Retirement benefit expenses related to defined benefit plan �����������������������������

¥4,425¥4,947$44v) Breakdown of pension plan assets
The breakdown of asset categories as a percentage of total pension plan assets were as follows:

As of March 31,

2020

2021

Domestic stocks ��������������������������������������������������������������������������������������������������

41�3%

42.9%

Life insurance general account ����������������������������������������������������������������������������

35�5%

31.8%

Domestic bonds ��������������������������������������������������������������������������������������������������

10�0%

9.9%

Foreign stocks �����������������������������������������������������������������������������������������������������

6�9%

8.9%

Assets under joint management �������������������������������������������������������������������������

—

3.3%

Foreign bonds ������������������������������������������������������������������������������������������������������

3�2%

3.2%

Others������������������������������������������������������������������������������������������������������������������

3�1%

—

Total ���������������������������������������������������������������������������������������������������������������������

100�0%

100.0%

34

FUKOKU MUTUAL LIFE INSURANCE COMPANY

Within the total of pension assets as of March 2021, 35�6% of this amount is accounted for by the retirement benefit trust
established in relation to the retirement lump-sum payments plan for sales employees�
vi) Method for setting the expected long-term rate of return
To set the expected long-term rate of return on pension plan assets, the Company takes into account the present and future
allocation of pension plan assets, and the present and expected future long-term rate of return on a variety of assets that makes
up the pension assets�vii) Underlying actuarial assumptions
Main underlying actuarial assumptions were as follows:

As of March 31,

2020

2021

0�6%

0.6%

Defined benefit plan �����������������������������������������������������������������������������������������

2�5%

2.5%

Retirement benefit trust �����������������������������������������������������������������������������������

0�0%

0.0%

Discount rate �������������������������������������������������������������������������������������������������������
Expected long-term rate of return on pension plan assets(3) Defined Contribution Plan
The required contribution amounts by the Company to the defined contribution plan were ¥216 million and ¥219 million (US$1
million) as of March 31, 2020 and 2021, respectively�

III. Notes to the Non-consolidated Statements of Operations
1� The total amounts of revenues and expenses in connection with subsidiaries were ¥909 million and ¥8,331 million for the year ended
March 31, 2020, and ¥869 million (US$7 million) and ¥8,916 million (US$80 million) for the year ended March 31, 2021, respectively�
2� The details of gains on sales of securities were as follows:Year ended March 31,

2020

2021

2021
Millions ofMillions of yen

U�S� dollars

Domestic bonds ��������������������������������������������������������������������������������������������������

¥20,386¥ 7,447$ 67

Domestic stocks and others ��������������������������������������������������������������������������������

11,143

14,974135

Foreign securities ������������������������������������������������������������������������������������������������

2,987

1,400

12

Others������������������������������������������������������������������������������������������������������������������

¥892

3� The details of losses on sales of securities were as follows:

¥

137

$

1

Year ended March 31,

2020

2021

2021
Millions ofMillions of yen

Domestic bonds ��������������������������������������������������������������������������������������������������

47

¥ 735

$ 6

Domestic stocks and others ��������������������������������������������������������������������������������

643

7,592

68

Foreign securities ������������������������������������������������������������������������������������������������

1,244

3,451

31

29

$ 0

Others������������������������������������������������������������������������������������������������������������������

¥U�S� dollars

¥

—

¥

FUKOKU MUTUAL LIFE INSURANCE COMPANY

35

4� The details of losses on valuation of securities were as follows:Year ended March 31,

2020

2021

2021
Millions ofMillions of yen

U�S� dollars

Domestic bonds ��������������������������������������������������������������������������������������������������

¥

—

¥ 65

$ 0

Domestic stocks and others ��������������������������������������������������������������������������������

6,689

281

2

Foreign securities ������������������������������������������������������������������������������������������������

5,876

57

0

Others������������������������������������������������������������������������������������������������������������������

¥ 776

¥ —

$ —

5� For the year ended March 31, 2020, in calculating the reversal of reserve for outstanding claims, a reversal of reserves foroutstanding claims reinsured of ¥2 million was deducted� In calculating the provision of policy reserves, a reversal of reserves forpolicy reserves reinsured of ¥0 million was added�
For the year ended March 31, 2021, in calculating the reversal of reserve for outstanding claims, a provision of reserves foroutstanding claims reinsured of ¥3 million (US$35 thousand) was added� In calculating the provision of policy reserves, a provisionof reserves for policy reserves reinsured of ¥0 million (US$3 thousand) was deducted�

6� The details of gains on trading securities were as follows:Year ended March 31,

2020

2021

2021
Millions ofMillions of yen

Interest, dividends and other income ������������������������������������������������������������������

¥ 2,946

U�S� dollars¥ 1,687$ 15

Gains on sales of trading securities ���������������������������������������������������������������������

0

0

0

Gains on redemption of trading securities�����������������������������������������������������������

1,731

—

—

Losses on redemption of trading securities ��������������������������������������������������������

—(3,475)(31)

Gains on valuation of trading securities ���������������������������������������������������������������

—

8,310

75

Losses on valuation of trading securities ������������������������������������������������������������

¥(9,658)

—

$ —

¥

7� Gains on money held in trust included valuation gains of ¥0 million and ¥0 million (US$0 thousand) for the year ended March 31,
2020 and 2021, respectively�
8� Gains on derivative instruments for the year ended March 31, 2020 included valuation gains of ¥3,696 million�
Losses on derivative instruments for the year ended March 31, 2021 included valuation losses of ¥6,984 million (US$63 million)�
9� “Others” within “Extraordinary losses” consists of expenses associated with salary guaranties provided to sales representatives
as a countermeasure aimed at preventing the spread of COVID-19�

36

FUKOKU MUTUAL LIFE INSURANCE COMPANY

Report of Independent Auditors

FUKOKU MUTUAL LIFE INSURANCE COMPANY

37

38

FUKOKU MUTUAL LIFE INSURANCE COMPANY

FUKOKU MUTUAL LIFE INSURANCE COMPANY

39

Consolidated Financial Statements
Consolidated Balance Sheets
Fukoku Mutual Life Insurance Company and consolidated subsidiaries
As of March 31, 2020 and 2021

As of March 31,

2020

2021

2021
Millions ofU�S� dollars

Millions of yen

Assets:Cash and deposits ��������������������������������������������������������������������������������������������

¥ 415,816¥ 325,854$ 2,943

Call loans ����������������������������������������������������������������������������������������������������������

230,000

136,000

1,228

Monetary claims bought �����������������������������������������������������������������������������������

269

239

2

Money held in trust ������������������������������������������������������������������������������������������

24,15625,277

228

Securities ����������������������������������������������������������������������������������������������������������

6,977,554

7,417,165

66,996Loans ����������������������������������������������������������������������������������������������������������������

569,127

571,420

5,161

Land �������������������������������������������������������������������������������������������������������������

125,118

146,816

1,326

Buildings ������������������������������������������������������������������������������������������������������

87,48092,773837

Lease assets������������������������������������������������������������������������������������������������

933

618

5

Construction in progress �����������������������������������������������������������������������������

2,866

93

0

Other tangible fixed assets��������������������������������������������������������������������������

3,484

4,521

40

219,883

244,823

2,211

Software ������������������������������������������������������������������������������������������������������

19,88919,877

179

Lease assets������������������������������������������������������������������������������������������������

8,666

6,015

54

Tangible fixed assets:

Intangible fixed assets:

Other intangible fixed assets �����������������������������������������������������������������������

4,803

4,462

40

33,35930,355

274

Agency receivables�������������������������������������������������������������������������������������������

0

0

0

Reinsurance receivables �����������������������������������������������������������������������������������

124

170

1

Other assets �����������������������������������������������������������������������������������������������������

74,05955,447500

Net defined benefit assets �������������������������������������������������������������������������������

255

339

3

Deferred tax assets ������������������������������������������������������������������������������������������

31,885732

6Allowance for possible loan losses�������������������������������������������������������������������

(2,024)(4,386)(39)

Total assets ������������������������������������������������������������������������������������������������������

¥8,574,467¥8,803,440$79,518

40

FUKOKU MUTUAL LIFE INSURANCE COMPANYAs of March 31,

2020

2021

2021
Millions ofU�S� dollars

Millions of yen

Liabilities:
Policy reserves:
Reserve for outstanding claims �������������������������������������������������������������������

¥23,620¥23,713$214

Policy reserve ����������������������������������������������������������������������������������������������

7,430,271

7,331,271

66,220Reserve for dividends to policyholders��������������������������������������������������������

60,922

63,232

571

Reserve for dividends to policyholders (subsidiary)�������������������������������������

328

308

2

7,515,143

7,418,526

67,008Agency payables�����������������������������������������������������������������������������������������������

114

112

1

Reinsurance payables ���������������������������������������������������������������������������������������

103

103

0

Subordinated bonds������������������������������������������������������������������������������������������

191,935

241,935

2,185

Other liabilities ��������������������������������������������������������������������������������������������������

132,340

156,292

1,411

Net defined benefit liabilities ����������������������������������������������������������������������������

34,61428,762

259

Reserve for price fluctuation ����������������������������������������������������������������������������

133,162

183,520

1,657

Deferred tax liabilities ���������������������������������������������������������������������������������������

025,857

233

Deferred tax liabilities for land revaluation��������������������������������������������������������

14,213

14,184128

Total liabilities �������������������������������������������������������������������������������������������������

8,021,628

8,069,294

72,886

Foundation funds ����������������������������������������������������������������������������������������������

12,00012,000108

Accumulated foundation funds redeemed �������������������������������������������������������

116,000

116,000

1,047

Net assets:

Reserve for revaluation�������������������������������������������������������������������������������������

112

112

1

Consolidated surplus ����������������������������������������������������������������������������������������

127,315

131,699

1,189

Total foundation funds, surplus and others��������������������������������������������������

255,427

259,8112,346

Net unrealized gains (losses) on available-for-sale securities, net of tax ����������

292,980

465,855

4,207

Revaluation reserve for land, net of tax ������������������������������������������������������������

4,102

4,185

37

Foreign currency translation adjustment ����������������������������������������������������������

(480)

(571)

(5)

Accumulated remeasurements of defined benefit plans ���������������������������������

(7,714)(3,703)(33)

Total accumulated other comprehensive income ����������������������������������������

288,888465,765

4,207

Non-controlling interests ����������������������������������������������������������������������������������

8,523

8,568

77

Total net assets �����������������������������������������������������������������������������������������������

552,839

734,145

6,631

Total liabilities and net assets ������������������������������������������������������������������������

¥8,574,467¥8,803,440$79,518

FUKOKU MUTUAL LIFE INSURANCE COMPANY

41

Consolidated Statements of Operations
Fukoku Mutual Life Insurance Company and consolidated subsidiaries
For the years ended March 31, 2020 and 2021

Year ended March 31,

2020

2021

Millions ofU�S� dollars

Millions of yen

Ordinary revenues:
Premium and other income ������������������������������������������������������������������������������
Investment income
Interest, dividends and other income ����������������������������������������������������������
Gains on money held in trust, net ���������������������������������������������������������������
Gains on trading securities, net �������������������������������������������������������������������
Gains on sales of securities �������������������������������������������������������������������������
Gains on derivative instruments, net �����������������������������������������������������������
Reversal of allowance for possible loan losses �������������������������������������������
Other investment income����������������������������������������������������������������������������
Gains on separate accounts, net �����������������������������������������������������������������
Other ordinary revenues �����������������������������������������������������������������������������������
Total ordinary revenues ���������������������������������������������������������������������������������
Ordinary expenses:
Claims and other payments:
Claims ����������������������������������������������������������������������������������������������������������
Annuities������������������������������������������������������������������������������������������������������
Benefits �������������������������������������������������������������������������������������������������������
Surrenders ���������������������������������������������������������������������������������������������������
Other payments�������������������������������������������������������������������������������������������
Provision of policy reserve and others:
Provision of reserve for outstanding claims ������������������������������������������������
Provision of policy reserves �������������������������������������������������������������������������
Provision of interest portion of reserve for dividends to policyholders �������
Provision of interest portion of reserve for dividends to policyholders(subsidiary)�������������������������������������������������������������������������������������������������
Investment expenses:
Interest expenses ����������������������������������������������������������������������������������������
Losses on trading securities, net�����������������������������������������������������������������
Losses on sales of securities ����������������������������������������������������������������������
Losses on valuation of securities ����������������������������������������������������������������
Losses on derivative instruments, net ��������������������������������������������������������
Foreign exchange losses, net ����������������������������������������������������������������������
Provision of allowance for possible loan losses ������������������������������������������
Write-offs of loans ���������������������������������������������������������������������������������������
Depreciation of real estate for rent and other assets ����������������������������������
Other investment expenses ������������������������������������������������������������������������
Losses on separate accounts, net ���������������������������������������������������������������
Operating expenses �����������������������������������������������������������������������������������������
Other ordinary expenses ����������������������������������������������������������������������������������
Total ordinary expenses ���������������������������������������������������������������������������������
Ordinary profits�����������������������������������������������������������������������������������������������42

FUKOKU MUTUAL LIFE INSURANCE COMPANY

2021¥629,956¥584,794$5,282

175,964
314—
37,162
5,577
70
289
—
219,379
15,067864,402175,540
1,127
6,523
26,764——170
19,315229,442
109,905
924,142

1,585
10
58
241
—
—
1
174
2,072
992
8,347

100,635
260,181
123,451
81,76026,116592,144

85,657352,581
116,736
76,283
26,673657,932

773
3,184
1,054
689
240
5,942

—
36,637
13

92
—
13

0
—
0

0
36,650

0
106

0
0

3,885
4,979
1,935
13,342—
17,547
—
262
4,288
7,389
3,955
57,587
100,850
27,141
814,374¥ 50,028

4,113—
11,809404
12,967
4,604
2,369
—
4,427
7,444
—
48,14299,99727,923
834,101¥ 90,040

37
—
106
3
117
41
21
—
39
67
—
434
903
252
7,534
$ 813

Year ended March 31,

2020

2021

2021
Millions ofU�S� dollars

Millions of yen

Extraordinary gains:
Gains on disposal of fixed assets ����������������������������������������������������������������
Total extraordinary gains �������������������������������������������������������������������������������

¥

5

¥

133

$

1

5

133

1

Losses on disposal of fixed assets ��������������������������������������������������������������

183

801

7

Impairment losses ���������������������������������������������������������������������������������������

38

198

1

Provision of reserve for price fluctuation �����������������������������������������������������

11,80450,357454

Others����������������������������������������������������������������������������������������������������������

—

1,059

9

Total extraordinary losses ������������������������������������������������������������������������������

12,02652,417

473

Provision of reserve for dividends to policyholders (subsidiary) ���������������

172

168

1

Surplus before income taxes �������������������������������������������������������������������������

37,83437,588339

Current���������������������������������������������������������������������������������������������������������

14,183

11,950107

Deferred ������������������������������������������������������������������������������������������������������

(10,666)(10,603)(95)

Total income taxes ������������������������������������������������������������������������������������������

3,516

1,346

12

Net surplus ������������������������������������������������������������������������������������������������������

34,31736,241327

Net surplus (loss) attributable to non-controlling interests ������������������������

(70)

125

1

Net surplus attributable to the parent company ������������������������������������������

¥34,388¥36,116$326

Extraordinary losses:

Income taxes:

Consolidated Statements of Comprehensive Income
Fukoku Mutual Life Insurance Company and consolidated subsidiaries
For the years ended March 31, 2020 and 2021

Year ended March 31,

2020

2021

Millions ofU�S� dollars

Millions of yen

Net surplus �������������������������������������������������������������������������������������������������������

2021¥ 34,317¥ 36,241$ 327

Net unrealized gains (losses) on available-for-sale securities, net of tax �����

(59,644)

172,797

1,560

Foreign currency translation adjustments ���������������������������������������������������

16

(91)

(0)

Remeasurements of defined benefit plan, net of tax ����������������������������������

(2,197)4,011

36(61,825)

176,717

1,596

Comprehensive income attributable to the parent company ����������������������

(27,264)

212,910

1,923

Comprehensive income attributable to non-controlling interests ����������������

(242)

48

0

¥(27,507)¥ 212,959$1,923

Other comprehensive income:Comprehensive income:

FUKOKU MUTUAL LIFE INSURANCE COMPANY

43

Consolidated Statements of Cash Flows
Fukoku Mutual Life Insurance Company and consolidated subsidiaries
For the years ended March 31, 2020 and 2021

Year ended March 31,

2020

2021

Millions of yen

Cash flows from operating activities:
Surplus before income taxes �����������������������������������������������������������������������
Depreciation of real estate for rent and other assets ���������������������������������
Depreciation ������������������������������������������������������������������������������������������������
Impairment losses ���������������������������������������������������������������������������������������
Increase (decrease) in reserve for outstanding claims ��������������������������������
Increase (decrease) in policy reserve ����������������������������������������������������������
Provision of interest portion of reserve for dividends to policyholders �������
Provision of interest portion of reserve for dividends
to policyholders (subsidiary) ���������������������������������������������������������������������
Provision of reserve for dividends to policyholders (subsidiary) ������������������
Increase (decrease) in allowance for possible loan losses ��������������������������
Increase (decrease) in net defined benefit liabilities������������������������������������
Increase (decrease) in reserve for price fluctuation�������������������������������������
Interest, dividends and other income ����������������������������������������������������������
Losses (gains) on securities, net ����������������������������������������������������������������
Interest expenses ����������������������������������������������������������������������������������������
Foreign exchange losses (gains), net ���������������������������������������������������������
Losses (gains) on tangible fixed assets, net ������������������������������������������������
Decrease (increase) in agency receivable����������������������������������������������������
Decrease (increase) in reinsurance receivable ��������������������������������������������
Decrease (increase) in other assets except frominvesting and financing activities ���������������������������������������������������������������
Increase (decrease) in agency payable ��������������������������������������������������������
Increase (decrease) in reinsurance payable �������������������������������������������������
Increase (decrease) in other liabilities except frominvesting and financing activities ���������������������������������������������������������������
Others����������������������������������������������������������������������������������������������������������
Subtotal ��������������������������������������������������������������������������������������������������
Interest, dividends and other income received �������������������������������������������
Interest expenses paid ��������������������������������������������������������������������������������
Dividends to policyholders paid �������������������������������������������������������������������
Dividends to policyholders paid (subsidiary) ������������������������������������������������
Corporate income tax (paid) refunded ���������������������������������������������������������
Net cash provided by (used in) operating activities (a) ���������������������������Cash flows from investing activities:
Net decrease (increase) in deposits ������������������������������������������������������������
Proceeds from sales and redemption of monetary claims bought �������������
Increase in money held in trust �������������������������������������������������������������������
Decrease in money held in trust �����������������������������������������������������������������
Payments for purchase of securities �����������������������������������������������������������
Proceeds from sales and redemption of securities �������������������������������������
Payments for additions to loans ������������������������������������������������������������������
Proceeds from collections of loans �������������������������������������������������������������
Proceeds from and payments for settlements of derivatives, net ��������������
Increase (decrease) in cash received as collateral under
securities lending transactions �����������������������������������������������������������������
Others����������������������������������������������������������������������������������������������������������
Subtotal (b) ���������������������������������������������������������������������������������������������
(a + b) �����������������������������������������������������������������������������������������������������

44

FUKOKU MUTUAL LIFE INSURANCE COMPANY

2021
Millions ofU�S� dollars¥ 37,834
4,288
12,55938(963)
36,63713¥ 37,588
4,427
13,542
198
92(98,999)
13

0
172
(72)
(985)
11,804(175,964)(18,840)
3,885
17,547
144
1
49

0
168
2,362
(365)
50,357(175,540)(28,549)
4,113
4,604
590
(0)
(45)

0
1
21
(3)
454
(1,585)
(257)
37
41
5
(0)
(0)

(181)
(3)
14

(540)
(2)
0

(4)
(0)
0

(50)
18,415(53,655)
181,158(3,861)(31,938)(309)(12,443)
78,95082
17,629(168,270)
178,058(3,933)(29,252)(188)(14,932)(38,518)0
159(1,519)
1,608
(35)
(264)
(1)
(134)
(347)

(401)
29
(1,000)1,000(547,377)
741,782(92,007)
78,936
14,231(4,753)29(1,500)1,500(839,487)
742,811(96,899)
87,839(31,354)

(42)
0
(13)
13
(7,582)
6,709
(875)
793
(283)

67,866(6,860)256,199¥ 335,150(6,047)(7,463)(155,325)¥ (193,844)

(54)
(67)
(1,402)$ (1,750)

$

339
39
122
1
0
(894)
0

Year ended March 31,

2020

2021

2021
Millions ofU�S� dollars

Millions of yen

Payments for purchase of tangible fixed assets������������������������������������������

¥ (9,644)¥ (33,165)$ (299)Proceeds from sales of tangible fixed assets ����������������������������������������������

148

387

3

Payments for purchase of intangible fixed assets ���������������������������������������

(7,423)(8,218)(74)

Net cash provided by (used in) investing activities ���������������������������������

239,280(196,321)(1,773)—50,000451

Financing of additional foundation funds �����������������������������������������������������

12,000——

Redemption of foundation funds �����������������������������������������������������������������

(10,000)——

Payment of interest on foundation funds ����������������������������������������������������

(100)

(102)

(0)

Cash flows from financing activities:
Proceeds from issuance of subordinated bonds �����������������������������������������

Dividends paid to non-controlling interests �������������������������������������������������

(9)

(3)

(0)

Payments for lease obligations��������������������������������������������������������������������

(3,223)(3,533)(31)

Net cash provided by (used in) financing activities ���������������������������������

(1,333)46,361418

Effect of exchange rate changes on cash and cash equivalents ����������������

(514)

(205)

(1)

Net increase (decrease) in cash and cash equivalents ��������������������������������

316,383(188,684)(1,704)

Cash and cash equivalents at the beginning of the fiscal year�������������������

328,124

644,507

5,821

Cash and cash equivalents at the end of the fiscal year �����������������������������

¥ 644,507¥ 455,823$ 4,117

FUKOKU MUTUAL LIFE INSURANCE COMPANY

45

Consolidated Statements of Changes in Net Assets
Fukoku Mutual Life Insurance Company and consolidated subsidiaries
For the years ended March 31, 2020 and 2021

Millions of yen
Foundation funds, surplus and others

For the year ended March 31, 2020
Balance at the beginning of the fiscal year ������������������������������

Foundation funds

Accumulated
foundation funds
redeemed¥10,000¥106,000Reserve for revaluation

Consolidated surplus

Total foundation funds,
surplus and others¥137,669¥253,781¥112

Changes in the fiscal year
Financing of additional foundation funds �����������������������������

12,00012,000Additions to reserve for dividends to policyholders �������������

(34,671)

Additions to accumulated foundation funds redeemed �������

10,000

Payment of interest on foundation funds ����������������������������

(100)

Net surplus attributable to the parent company
for the fiscal year ���������������������������������������������������������������
Redemption of foundation funds �����������������������������������������

(34,671)

10,000(100)

34,38834,388(10,000)(10,000)

Reversal of reserve for redemption of foundation funds �����

(10,000)(10,000)

Reversal of revaluation reserve for land, net of tax �������������

29

29

Net changes, excluding foundation funds, surplus
and others ��������������������������������������������������������������������������
Total changes in the fiscal year ������������������������������������������������

2,000

10,000—(10,353)

1,646

Balance at the end of the fiscal year ���������������������������������������

¥12,000¥116,000¥112¥127,315¥255,427

Millions of yen
Accumulated other comprehensive income

For the year ended March 31, 2020
Balance at the beginning of the fiscal year ��������

Net unrealized
gains (losses) on
available-for-salesecurities,
net of tax

Revaluation
reserve for land,
net of tax¥352,453¥4,132Foreign currencytranslation
adjustments¥(496)

Accumulated
remeasurementsof defined
benefit plans

Total accumulated
othercomprehensive
incomeNon-controllinginterests

Total net assets¥ (5,517)¥350,571¥8,774¥613,127

Changes in the fiscal year
Financing of additional foundation funds �������

12,000Additions to reserve for dividends topolicyholders ������������������������������������������������

(34,671)

Additions to accumulated foundation
funds redeemed ������������������������������������������

10,000

Payment of interest on foundation funds ������

(100)

Net surplus attributable to the parent
company for the fiscal year��������������������������

34,388

Redemption of foundation funds �������������������

(10,000)

Reversal of reserve for redemption offoundation funds ������������������������������������������

(10,000)

Reversal of revaluation reserve for land,
net of tax������������������������������������������������������

29

Net changes, excluding foundation funds,
surplus and others ���������������������������������������

(59,472)(29)

16(2,197)(61,683)(251)(61,934)

Total changes in the fiscal year ��������������������������

(59,472)(29)

16(2,197)(61,683)(251)(60,288)

Balance at the end of the fiscal year �����������������

¥292,980¥4,102¥(480)¥ (7,714)¥288,888¥8,523¥552,839

46

FUKOKU MUTUAL LIFE INSURANCE COMPANY

Millions of yen
Foundation funds, surplus and others

Foundation funds

Accumulated
foundation funds
redeemed¥12,000¥116,000

Consolidated
surplus

Total foundation funds,
surplus and others¥127,315¥255,427

Additions to reserve for dividends to policyholders �������������

(31,547)(31,547)

Payment of interest on foundation funds ����������������������������

(102)

(102)

Net surplus attributable to the parent company
for the fiscal year ���������������������������������������������������������������

36,116

36,116

Reversal of revaluation reserve for land, net of tax �������������

(83)

(83)

For the year ended March 31, 2021
Balance at the beginning of the fiscal year ������������������������������

Reserve for revaluation¥112

Changes in the fiscal year

Net changes, excluding foundation funds, surplus
and others ��������������������������������������������������������������������������
Total changes in the fiscal year ������������������������������������������������

—

—

—

4,383

4,383

Balance at the end of the fiscal year ���������������������������������������

¥12,000¥116,000¥112¥131,699¥259,811

Millions of yen
Accumulated other comprehensive income

For the year ended March 31, 2021
Balance at the beginning of the fiscal year ��������

Net unrealized
gains (losses) on
available-for-salesecurities,
net of tax

Revaluation
reserve for land,
net of tax¥292,980¥4,102Foreign currencytranslation
adjustments¥(480)

Accumulated
remeasurementsof defined
benefit plans

Total accumulated
othercomprehensive
incomeNon-controllinginterests

Total net assets¥ (7,714)¥288,888¥8,523¥552,839

Changes in the fiscal year
Additions to reserve for dividends topolicyholders ������������������������������������������������

(31,547)

Payment of interest on foundation funds ������

(102)

Net surplus attributable to the parent
company for the fiscal year��������������������������

36,116

Reversal of revaluation reserve for land,
net of tax������������������������������������������������������

(83)

Net changes, excluding foundation funds,
surplus and others ���������������������������������������

172,874

83

(91)

4,011

176,87745

176,923

Total changes in the fiscal year ��������������������������

172,874

83

(91)

4,011

176,87745

181,306

Balance at the end of the fiscal year �����������������

¥465,855¥4,185¥(571)¥ (3,703)¥465,765¥8,568¥734,145

FUKOKU MUTUAL LIFE INSURANCE COMPANY

47

Millions of U�S� dollars
Foundation funds, surplus and others

Foundation funds

Accumulated
foundation funds
redeemed$108$1,047

Consolidated surplus

Total foundation funds,
surplus and others$1,149$2,307

Additions to reserve for dividends to policyholders �������������

(284)

(284)

Payment of interest on foundation funds ����������������������������

(0)

(0)

Net surplus attributable to the parent company
for the fiscal year ���������������������������������������������������������������

326

326

Reversal of revaluation reserve for land, net of tax �������������

(0)

(0)

For the year ended March 31, 2021
Balance at the beginning of the fiscal year ������������������������������

Reserve for revaluation$1

Changes in the fiscal year

Net changes, excluding foundation funds, surplus
and others ��������������������������������������������������������������������������
Total changes in the fiscal year ������������������������������������������������

—

—

—

39

39

Balance at the end of the fiscal year ���������������������������������������

$108$1,047$1$1,189$2,346

Millions of U�S� dollars
Accumulated other comprehensive income

For the year ended March 31, 2021
Balance at the beginning of the fiscal year ��������

Net unrealized
gains (losses) on
available- for-salesecurities,
net of tax$2,646

Revaluation
reserve for land,
net of tax$37

Foreign currencytranslation
adjustments$ (4)Accumulated
remeasurementsof defined
benefit plans$(69)

Total accumulated
othercomprehensive
income$2,609Non-controllinginterests$76

Total net assets$4,993

Changes in the fiscal year
Additions to reserve for dividends topolicyholders ������������������������������������������������

(284)

Payment of interest on foundation funds ������

(0)

Net surplus attributable to the parent
company for the fiscal year��������������������������

326

Reversal of revaluation reserve for land,
net of tax������������������������������������������������������

(0)

Net changes, excluding foundation funds,
surplus and others ���������������������������������������

1,561

0

(0)

36

1,597

0

1,598

Total changes in the fiscal year ��������������������������

1,561

0

(0)

36

1,597

0

1,637

Balance at the end of the fiscal year �����������������

$4,207$37$(5)$ (33)$4,207$77$6,63148

FUKOKU MUTUAL LIFE INSURANCE COMPANY

Notes to the Consolidated Financial Statements

I. Presentation of the Consolidated Financial
Statements
1� Basis of Presentation
The accompanying consolidated financial statements havebeen prepared from the accounts maintained by Fukoku MutualLife Insurance Company (the “Company”) and its consolidated
subsidiaries in accordance with the provisions set forth in the
Insurance Business Act of Japan and its related rules andregulations and in conformity with accounting principles
generally accepted in Japan, which are different in certain
respects from accounting principles generally accepted incountries and jurisdictions other than Japan�In addition, the notes to the consolidated financial statements
include information which is not required under accounting
principles generally accepted in Japan but is presented herein as
additional information�
Amounts of less than one million yen have been rounded down�As a result, the totals do not add up�
The translations of yen amounts into U�S� dollar amounts areincluded solely for the convenience of the reader and have been
made, as a matter of arithmetical computation only, at the rateof ¥110�71 = US$1�00, the effective rate of exchange at thebalance sheet date of March 31, 2021� The translations should
not be construed as representations that such yen amounts
have been or could in the future be, converted into U�S� dollars
at that or any other rates�

(2) Application of Equity Method
Unconsolidated subsidiaries (such as Fukoku Business
Service Company Limited, etc�) are insignificant in theirimpact on net surplus attributable to the parent company
and consolidated surplus, and also immaterial as a whole,
therefore, application of equity method is not applied�
There are no affiliates for the year ended March 31, 2020 and
2021�
(3) Fiscal Year of Consolidated Subsidiaries
Among the subsidiaries to be consolidated, fiscal year-end ofoverseas subsidiaries are December 31� For the preparationof consolidated financial statements, financial statements
as of that date are used and concerning any importanttransaction taking place in between December 31 and theconsolidated closing date, necessary adjustments forconsolidation are made�

2� Principles of Consolidation(1) Scope of Consolidation
Consolidated subsidiaries as of March 31, 2020 and 2021 arelisted below:
Fukoku Capital Management, Inc�
Fukokushinrai Life Insurance Co�, Ltd�
Fukoku Information Systems Co�, Ltd�
Fukoku Life International (U�K�) Ltd�
Fukoku Life International (America) Inc�
Fukoku Life Investments Singapore Pte� Ltd�
Major unconsolidated subsidiary is Fukoku Business Service
Company Limited�
Four subsidiaries are excluded from the scope of
consolidation, as each one of them is small in its total assets,
amount of sales, net surplus for the period and surplus andare sufficiently insignificant to reasonable judgement on theirimpact on the financial position and results of operation of
the Company’s group�

FUKOKU MUTUAL LIFE INSURANCE COMPANY

49

II. Notes to the Consolidated Balance Sheets1� (1) The valuation of securities, including cash and deposits
and monetary claims bought which are equivalent tosecurities, and securities managed as trust assets inmoney held in trust, is as follows:i) Trading securities are stated at fair market value� Costsof their sales are determined by the moving averagemethod�ii) Held-to-maturity debt securities are stated at amortizedcost under the straight-line method, cost being
determined by the moving average method�iii) Policy-reserve-matching bonds are stated at amortizedcost under the straight-line method, cost being determinedby the moving average method in accordance with
“Temporary Treatment of Accounting and Auditing
Concerning Policy-reserve-matching Bonds in the
Insurance Industry” (Industry Audit Committee ReportNo�21 issued by the Japanese Institute of Certified Public
Accountants on November 16, 2000)�
iv) Investments in unconsolidated subsidiaries andaffiliates which are not accounted for under the equity
method are stated at cost, cost being determined by
the moving average method�v) Available-for-sale securities with fair market value
are stated at fair market value based on the market
prices at the end of the fiscal year� Costs of their sales
are determined by the moving average method� Net
unrealized gains or losses on these available-for-salesecurities, net of taxes, are recorded as a separate
component of net assets�
Available-for-sale securities whose market value are
deemed extremely difficult to obtain are stated at cost,
cost being determined by the moving average method,
except for public and corporate bonds including foreign
bonds, of which the difference between acquisition
cost and face value is considered to be an adjustment
of interest� Such bonds are stated at amortized cost
under the straight-line method, cost being determinedby the moving average method�
(2) Derivative instruments are stated at fair market value�(3) The Company revalued the land used in the operations basedon the Act for Revaluation of Land (Act No�34 promulgatedon March 31, 1998)� The difference between fair value andbook value resulting from the revaluation, net of related
taxes, is recorded as revaluation reserve for land as aseparate component of net assets and the related tax isrecorded as deferred tax liabilities for land revaluation�
• Date of revaluation: March 31, 2002
• Method of revaluation as prescribed for in Article 3
Paragraph 3 of the said Act:
Calculation is based on the appraisal value for property tax
set forth in Article 2 item 3 of the Enforcement Ordinance

50

FUKOKU MUTUAL LIFE INSURANCE COMPANYof the Act for Revaluation of Land (Government OrdinanceNo�119 promulgated on March 31, 1998) and the roadrate set forth in Article 2 item 4 of the said Ordinance withcertain reasonable adjustments�
(4) Depreciation of the Company’s tangible fixed assets is
calculated by the following methods�
• Tangible fixed assets (excluding lease assets): Decliningbalance method
However, buildings (excluding building attachments andstructures acquired on or before March 31, 2016) acquiredon or after April 1, 1998 are depreciated using Straight-line
method�• Lease assets related to finance lease transactions that
do not transfer ownership: Straight-line method over thelease term with no residual value�
Other tangible fixed assets acquired for ¥100,000 or more
but less than ¥200,000 are depreciated equally over three
years�
(5) Assets and liabilities denominated in foreign currencies,
except for investments in unconsolidated subsidiaries
and affiliates, are translated into Japanese yen at theeffective exchange rate prevailing at the balance sheet date�
Investments in unconsolidated subsidiaries and affiliates aretranslated into Japanese yen at the exchange rate on thedate of acquisition�
(6) Allowance for possible loan losses for the Company
is provided in accordance with the standards of selfassessment and write-offs and reserves on credit quality:i) For the credits of borrowers who are legally bankrupt
such as being in the proceedings of bankruptcy or civil
rehabilitation (hereinafter called “legally bankrupt borrowers”)
and who are substantially bankrupt (hereinafter called“substantially bankrupt borrowers”), the Company provides
the remaining amounts of credits after the direct write-off
described below and the deductions of the amount expected
to be collected through the disposal of collateral or the
execution of guarantees�ii) For the credits of borrowers who are not currently
bankrupt but have a high possibility of bankruptcy(hereinafter called “not currently bankrupt borrowers”),
the Company provides the amounts deemed as necessary
considering the borrowers’ ability to pay, within theamounts after deductions of the amounts expected to becollected through the disposal of collateral or the executionof guarantees�iii) For the credits of borrowers other than the above, theCompany provides the amounts calculated by multiplying
the borrowers’ balance by the actual ratio of bad debt
losses on defaults during a certain past period�All credits are assessed by the relevant departmentsin accordance with the Company’s standards of self-assessment on credit quality� The results of the assessment
are reviewed by the audit department, which is independentof business-related divisions� Subsequently, the allowancefor possible loan losses is provided based on the results ofthese assessments�
For the credits of legally bankrupt borrowers and substantiallybankrupt borrowers, the amounts remaining after deductionsof collateral value or the amounts collectible through theexecution of guarantees are written-off directly from theborrowers’ balances as the estimated uncollectible amounts�
The amount written-off as of March 31, 2020 and 2021 were
¥0 million and ¥0 million (US$ 8 thousand), respectively�

Subsequent premium incomes are also recorded as theamount of payments that have been received�Of premium incomes that have been received, the portion
corresponding to the period that has yet to pass as of theend of the fiscal year is accumulated as policy reserve inaccordance with Article 116 of the Insurance BusinessAct and Article 69 Paragraph 1 Item 2 of the Enforcement
Regulation of the Insurance Business Act�Premium incomes associated with the acceptance of group
annuities are recorded as amounts equivalent to the policy
reserve received when accepting the transfers of thesegroup annuities�

(7) Net defined benefit liabilities and assets, which are provided
for employees’ retirement benefits, are calculated bydeducting the amount of pension assets from the amountof retirement benefit obligations incurred as of the balance
sheet date based on the projected retirement benefits as of
the current fiscal year end�The Company uses the following methods of accounting in
relation to retirement benefits:• Method for allocation of projected retirement benefits�����������������������������������������������������������Benefit formula basis• Amortization period of actuarial gains and losses ���10 years• Amortization period of prior service cost ���������������10 years(12) Claims and other payments (excluding reinsurance
premiums) are recorded by the relevant amounts paid when
the cause for payment under the policy conditions is occurred
and the calculated amounts are paid based on the policy
conditions�In accordance with Article 117 of the Insurance BusinessAct and Article 72 of the Enforcement Regulation of the
Insurance Business Act, reserve for outstanding claims areaccumulated as for claims for which the Company has apayment due but has not paid, or for which the occurrence ofcause for payment has not been reported but the Company
recognizes that insured payment has already occurred as ofthe end of the fiscal year�
Claims and other payments associated with the outgoingtransfer of group annuities are recorded as amounts
equivalent to the policy reserve transferred when recognizing
the transfers of these group annuities�

(8) Reserve for price fluctuation is calculated in accordance with
Article 115 of the Insurance Business Act�(9) Hedge accounting is based on “Accounting Standards for
Financial Instruments” (ASBJ Statement No� 10, March 10,2008)� The Company applies a fair value hedge accounting
as a hedge against the risk of foreign exchange fluctuationin relation to bonds and others denominated in foreign
currencies, and a designated hedge accounting (“Furiate
shori”) for foreign currency swaps as a hedge against therisk of foreign exchange fluctuation in relation to bonds
denominated in foreign currencies issued by the Company�
For assessing the effectiveness of hedge used, ratio analysis
of comparing the fluctuations in the fair value or cash flowsof hedged items and hedging instruments is mainly applied�(10) The Company accounts for consumption taxes by the taxexclusion method� The consumption taxes on certain assets,
which are not deductible from consumption taxes withheld
and that are stipulated to be deferred under the Tax Act, aredeferred as prepaid expenses and amortized equally over five
years� Consumption taxes other than deferred consumption
taxes are recognized as an expense when incurred�(11) Initial premium incomes are recorded by the relevant
amounts received when the premium incomes have been
received and the responsibilities on the insurance contract
have been commenced, in principal�

(13) Policy reserve of the Company is accumulated in accordancewith the methods stated in the statement of calculation
procedures for Insurance Premiums and Policy Reserves(Article 4 Paragraph 2 Item 4 of the Insurance BusinessAct) pursuant to Article 116 Paragraph 1 of the Insurance
Business Act to prepare for the future performance ofobligations under the insurance contracts for which theinsurer’s responsibilities have started as of the end of the
fiscal year�
Premium reserves, one of the components of policy reserve,
are calculated by the following method�i) In regard to the policies subject to the standard policy
reserve, the method as prescribed by the Commissioner ofFinancial Services Agency (Ministry of Finance OrdinanceNo�48, 1996) is applied�ii) In regard to the policies not subject to the standard policy
reserve, the net level premium method is applied�
Appointed actuary, for each fiscal year, verifies whether aportion of the policy reserve is reasonably accumulated inaccordance with Article 121 Paragraph 1 of the Insurance
Business Act and Article 80 of the Enforcement Regulationof the Insurance Business Act�Contingency reserves, one of the components of policy

FUKOKU MUTUAL LIFE INSURANCE COMPANY

51

reserve, are accumulated pursuant to Article 116 of the
Insurance Business Act and Article 69 Paragraph 1 Item 3 ofthe Enforcement Regulation of the Insurance Business Act
to cover risks that may accrue in the future in order to ensure
performing future obligations under the insurance contracts�
The balance of policy reserve as of the end of the fiscal year
calculated indicated above includes policy reserve that was
additionally accumulated as follows in accordance with
Article 69 Paragraph 5 of the Enforcement Regulation of the
Insurance Business Act�Among individual annuity insurance policies with an assumed
interest rate of 5�00% or higher, for policies that have begun
paying annuities (excluding wife’s annuity insurance
additional rider), the Company reduced the assumed interest
rate to 1�00% and funded additional policy reserves� As of
March 31, 2020, the balance of these policy reserves was¥74,007 million�
The Company also funded additional policy reserves forcertain individual annuity insurance policies, whole life
insurance policies that include distribution of surplus every
five years, new cancer riders and highly advanced medical
riders� As of March 31, 2020, the balance of these policy
reserves was ¥29,605 million�
Among individual annuity insurance policies with an assumed
interest rate of 5�00% or higher, for policies that have begun
paying annuities (excluding wife’s annuity insurance additional
rider), the Company reduced the assumed interest rate to1�00% and funded additional policy reserves� As of March
31, 2021, the balance of these policy reserves was ¥73,354
million (US$662 million)�
The Company also funded additional policy reserves forcertain individual annuity insurance policies, whole life
insurance policies that include distribution of surplus every
five years and new cancer riders� As of March 31, 2021, thebalance of these policy reserves was ¥1,654 million (US$14
million)�
(14) Depreciation of intangible fixed assets is calculated by thefollowing methods�
• Software: Straight-line method over the estimated useful
lives�
• Lease assets related to finance lease transactions that do
not transfer ownership: Straight-line method over the leaseterm with no residual value�(15) Of the bonds corresponding to the sub-groups of individual
insurance and annuities which are set by insurance types andinvestment policies, the bonds that are held to match theduration of liabilities are classified as policy- reserve-matching
bonds by the Company in accordance with “Temporary
Treatment of Accounting and Auditing Concerning Policyreserve-matching Bonds in Insurance Industry” (Industry
Audit Committee Report No� 21 issued by the JapaneseInstitute of Certified Public Accountants on November 16,

52

FUKOKU MUTUAL LIFE INSURANCE COMPANY

2000)�
2� Primary accounting standards that have been issued by theend of the consolidated fiscal year ended March 31, 2021 but
have not been applied are as follows�Methods of calculating the fair value will be revised in
response to the announcements of accounting standards
such as “Accounting Standard for Fair Value Measurement”(ASBJ Statement No� 30, July 4, 2019), “AccountingStandard for Financial Instruments” (ASBJ Statement No� 10,
July 4, 2019) and “Implementation Guidance on AccountingStandard for Fair Value Measurement” (ASBJ Guidance No�
31, July 4, 2019)�
These accounting standards and this guidance must be
applied at the beginning of the fiscal year starting on April 1,
2021 and the Company plans to apply these accounting
standards and this guidance at the beginning of the fiscal
year ending March 31, 2022�
The Company is currently in the process of evaluating theeffects of applying these accounting standards and thisguidance for the consolidated fiscal year ending March 31, 2022�
3� Asset management of the general accounts other than theseparate accounts stipulated in Article 118 Paragraph 1 of the
Insurance Business Act is conducted on the principle of prudent
and profitable investments by the Company, considering public
and social responsibilities of the insurance business� Based on thispolicy, the Company allocates the fund, securing its liquidity, fromthe medium-to-long term viewpoints� The Company is diversifying
investments in assets such as foreign securities, stocks and realestates within the acceptable range of risk in order to enhance theprofitability, although yen-denominated interest bearing assets
including debt securities such as Japanese government bonds andloans are the cores of the portfolios under the asset liability
management� Derivatives are mainly used to hedge the market
risk regarding spot-priced assets and liabilities�
Major financial instruments including securities, loans andderivatives are exposed to market risk and credit risk�
The Company manages its asset management risk by
establishing internal control systems including various rules
pursuant to the “Three Basic Rules related to Enterprise Risk
Management” established by the Board of Directors� Specifically,
the Company eliminates excessive risk deviating from the basic
principle and secures the safety of the assets by utilizing control
functions of the Financial and Investment Risk Management
Department towards the asset management sections,monitoring the status of market risk and credit risk periodicallyon a daily or monthly basis� In addition, the Company quantifies
the market risk and credit risk using value-at-risk (VaR) method inorder to control the possible maximum losses which may arise
from the holding assets within a certain range of risk buffers�
The carrying amounts, fair values and their relateddifferences of major financial assets and liabilities in thegeneral account were as follows:As of March 31,

2020
Millions of yen
Carrying amount

Cash and deposits:
Cash and deposits not treated as securities�����������������������
Total cash and deposits ������������������������������������������������������
Call loans ��������������������������������������������������������������������������������
Monetary claims bought:
Claims treated as loans ������������������������������������������������������
Total monetary claims bought���������������������������������������������
Money held in trust:
Trading securities ����������������������������������������������������������������
Total money held in trust ����������������������������������������������������
Securities:
Trading securities ����������������������������������������������������������������
Held-to-maturity debt securities �����������������������������������������
Policy-reserve-matching bonds�������������������������������������������
Available-for-sale securities ������������������������������������������������
Total securities ��������������������������������������������������������������������
Loans:
Policy loans �������������������������������������������������������������������������
Ordinary loans���������������������������������������������������������������������
Total loans ���������������������������������������������������������������������������
Assets total�����������������������������������������������������������������������������
Subordinated bonds1 ��������������������������������������������������������������Cash received as collateral under securities
lending transactions… ��������������������������������������������������������
Liabilities total �������������������������������������������������������������������������
Derivative instruments2 :Hedge accounting not applied ��������������������������������������������
Hedge accounting applied ��������������������������������������������������
Total derivative instruments������������������������������������������������

¥¥412,693412,693230,000

Fair value¥

412,693412,693230,000

Difference

¥

—
—
—

269
269

287
287

17
17

23,15623,15623,15623,156——

66,357
1,274,337
1,750,094
3,773,242
6,864,032

66,357
1,498,490
1,954,843
3,773,242
7,292,934—
224,153
204,748—
428,902

58,993510,133
569,127
8,099,279
191,935

58,993536,915595,9088,554,980
186,062(0)
26,781
26,781455,701(5,872)

67,866259,801

67,866
253,929—(5,872)

3,589
10,206
13,795

3,589
10,206
13,795

—
—
—

¥

¥

As of March 31,

2021

2021

Millions of yen

Millions of U�S� dollars

Carrying amount

Cash and deposits:
Cash and deposits not treated as securities�����������������������
Total cash and deposits ������������������������������������������������������
Call loans ��������������������������������������������������������������������������������
Monetary claims bought:
Claims treated as loans ������������������������������������������������������
Total monetary claims bought���������������������������������������������
Money held in trust:
Trading securities ����������������������������������������������������������������
Total money held in trust ����������������������������������������������������
Securities:
Trading securities ����������������������������������������������������������������
Held-to-maturity debt securities �����������������������������������������
Policy-reserve-matching bonds�������������������������������������������
Available-for-sale securities ������������������������������������������������
Total securities ��������������������������������������������������������������������
Loans:
Policy loans �������������������������������������������������������������������������
Ordinary loans���������������������������������������������������������������������
Total loans���������������������������������������������������������������������������
Assets total�����������������������������������������������������������������������������
Subordinated bonds1 ��������������������������������������������������������������
Liabilities total �������������������������������������������������������������������������
Derivative instruments2 :Hedge accounting not applied ��������������������������������������������
Hedge accounting applied ��������������������������������������������������
Total derivative instruments������������������������������������������������

¥¥321,613
321,613136,000

Fair value¥

321,613
321,613136,000

Difference¥

Carrying amount

Fair value

Difference———$ 2,905
2,905
1,228

$ 2,905
2,905
1,228

$

—
—
—

239
239

254
254

14
14

2
2

2
2

0
0

24,277
24,277

24,277
24,277

—
—

219
219

219
219

—
—

29,426
1,277,057
1,591,559
4,384,960
7,283,003

29,426
1,470,397
1,756,290
4,384,960
7,641,074—
193,340
164,730—
358,071265
11,535
14,37539,60765,784265
13,281
15,86339,60769,018

—
1,746
1,487
—
3,234

54,126517,293
571,420
8,336,553
241,935
241,935

54,126537,281591,4078,714,627
246,577
246,577(0)
19,987
19,987
378,073
4,642
4,642

488
4,672
5,161
75,300
2,185
2,185

488
4,853
5,341
78,715
2,227
2,227

(0)
180
180
3,414
41
41

(3,394)(37,644)(41,039)(3,394)(37,644)(41,039)

—
—
—

(30)
(340)
(370)

(30)
(340)
(370)

—
—
—

¥

¥

$

$

$

Notes: 1� The fair value of derivative instruments that are currency swaps under designated hedge accounting is included in the fair value of subordinated bonds because it is accounted for as anintegral part of the subordinated bonds that are the hedge items�
2� Assets and liabilities generated by derivative instruments are offset and presented net� Net liabilities in total are presented in brackets�

FUKOKU MUTUAL LIFE INSURANCE COMPANY

53

(1) Cash, deposits (excluding financial instruments treated as
securities based on “Accounting Standards for Financial
Instruments” (ASBJ Statement No�10, March 10, 2008)) andcall loans:
The fair values of cash, deposits and call loans are based on
their book values since fair values approximate book values
due to their short maturities�
(2) Securities including deposits and monetary claims bought
which are treated as securities based on “AccountingStandards for Financial Instruments” (ASBJ StatementNo�10, March 10, 2008) and securities managed as trust
assets in money held in trust:
The fair values of marketable securities are measured at
the quoted market prices at the balance sheet date� The fairvalues of other securities without the quoted market prices
are based on the prices reasonably calculated such as theprices offered by the information vendors or counterparty
financial institutions�
Investments in unconsolidated subsidiaries and affiliates,
unlisted stocks and investments in partnerships whereby
partnership assets consist of unlisted stocks whose fairvalues are deemed extremely difficult to obtain, are excluded
from above securities� The carrying amounts of investments
in unconsolidated subsidiaries and affiliates, unlisted stocks
and investments in partnerships were ¥404 million, ¥5,684
million, and ¥28,169 million as of March 31, 2020 and ¥404
million (US$3 million), ¥6,224 million (US$56 million), and¥29,744 million (US$268 million) as of March 31, 2021,
respectively�
(3) Loans and monetary claims bought treated as loans:
The fair values of policy loans are deemed to approximatebook values, considering estimated repayment period andinterest rate conditions since their repayment deadlines havenot been set up due to the characteristics that the loans arelimited to the amount of cash surrender values� Therefore,
the book values are used as the fair values of policy loans�
The fair values of floating interest rate loans among the ordinaryloans and monetary claims bought treated as loans approximate
the book values because the market interest rates are reflectedin future cash flows in a short period� Therefore, the fair valuesof floating interest rate loans and monetary claims bought
treated as loans are based on their book values� The fair valuesof fixed interest rate loans are measured by discounting thefuture cash flows to the present values�
The fair values of loans from legally bankrupt borrowers,
substantially bankrupt borrowers and not currently bankrupt
borrowers and monetary claims bought treated as loans arecomputed by deducting the amount of the allowance forpossible loan losses from the book values before direct writeoffs�

54

FUKOKU MUTUAL LIFE INSURANCE COMPANY(4) Subordinated bonds:
Subordinated bonds issued by the Company are stated at fairmarket values�(5) Derivative instruments:i) The fair values of the futures and options traded at theexchange are measured at the settlement price of theexchange�ii) The fair values of forward contracts, options and swaps
traded over the counter are based on the quoted prices
offered by counterparty financial institutions�iii) The fair values of foreign currency forward contracts are
determined based on the spot exchange rate and forward
contract rate�
4� The Company holds investment and rental properties suchas office buildings in Tokyo and other areas� The carrying
amounts and the fair values of investment and rental
properties were ¥173,454 million and ¥320,155 million as ofMarch 31, 2020 and ¥192,277 million (US$1,736 million) and¥323,000 million (US$2,917 million) as of March 31, 2021,
respectively� The fair value is mainly based on the value
calculated by the Company in accordance with real estateappraisal standards which includes some adjustments using
the reference prices�
The amounts corresponding to asset retirement obligations
included in the carrying amount of investment and rental
properties were ¥587 million and ¥417 million (US$3 million)
as of March 31, 2020 and 2021, respectively�
5� The amounts of securities lent under lending agreements
were ¥345,897 million and ¥465,351 million (US$4,203
million) as of March 31, 2020 and 2021, respectively�
6� The total amounts of credits to bankrupt borrowers,
delinquent loans, delinquent loans past 3 months or more
and restructured loans, which were included in loans, were
¥1,099 million and ¥3,216 million (US$29 million) as ofMarch 31, 2020 and 2021, respectively:i) The balances of credits to bankrupt borrowers were ¥173
million and ¥164 million (US$1 million) as of March 31,
2020 and 2021, respectively�ii) The balances of delinquent loans were ¥698 million and¥2,522 million (US$22 million) as of March 31, 2020 and
2021, respectively�iii) The balances of restructured loans were ¥227 millionand ¥529 million (US$4 million) as of March 31, 2020 and
2021, respectively�iv) There were no balances of delinquent loans past 3 months
or more as of March 31, 2020 and 2021, respectively�
The direct write-offs related to loans decreased credits tobankrupt borrowers described above by ¥0 million and ¥0 million(US$8 thousand) as of March 31, 2020 and 2021, respectively�Credits to bankrupt borrowers represent loans, excluding
the balances already written-off, which meet the conditionsprescribed in Article 96 Paragraph 1 item 3 and 4 of
the Enforcement Regulations of the Corporate Tax Act�
Moreover, accrued interest on these loans is not recorded
as income after determining that principal of or interest on
these loans is unlikely to be collected due to the significant
delay in repayment of principal or interest payment or forsome other reasons�Delinquent loans are credits which accrued interest is notrecorded as income due to the same reasons as describedabove, and exclude credits to bankrupt borrowers andloans for which interest payments have been suspended
and rescheduled to assist and support the borrowers in the
restructuring of their business�
Delinquent loans past 3 months or more are loans for whichinterest payments or repayments of principal are delinquent
for 3 months or more from the due date under the terms of
the related loan agreements, excluding those loans classified
as credits to bankrupt borrowers and delinquent loans�
Restructured loans are loans for which certain concessions
favorable to borrowers, such as interest reduction or
exemption, rescheduling of due date for repayments ofprincipal or interest payment, waiver of claim or otherterms, have been negotiated for the purpose of assistingand supporting the borrowers in the restructuring of theirbusiness� This category excludes loans classified as credits
to bankrupt borrowers, delinquent loans and delinquent loans
past 3 months or more�7� Accumulated depreciation of tangible fixed assets were
¥172,539 million and ¥174,603 million (US$1,577 million) as
of March 31, 2020 and 2021, respectively�
8� Total assets in separate accounts provided for in Article 118of the Insurance Business Act were ¥84,658 million and¥104,979 million (US$948 million) as of March 31, 2020
and 2021, respectively� The amounts of separate accountliabilities were the same as separate account assets�9� The total amounts of receivables from/payables tounconsolidated subsidiaries were ¥3,065 million and ¥40
million as of March 31, 2020 and ¥2,980 million (US$26
million) and ¥37 million (US$338 thousand) as of March 31,
2021, respectively�
10� Deferred tax assets and deferred tax liabilities as of March
31, 2020 were ¥156,847 million and ¥119,398 million,
respectively� Valuation allowance for deferred tax assets
was ¥5,563 million�
Major components of deferred tax assets were ¥94,544
million of policy reserves, ¥37,285 million of reserve forprice fluctuation and ¥14,928 million of net defined benefit
liability as of March 31, 2020�
Major component of deferred tax liabilities was ¥114,139
million of net unrealized gains on available-for-sale securities
as of March 31, 2020�
The statutory tax rate and the actual effective tax rate forthe year ended March 31, 2020 were 28�0% and 9�3%,
respectively� The difference between the statutory tax rate
and the actual effective tax rate was attributable mainly to-23�3% of reserve for dividends to policyholders�
Deferred tax assets and deferred tax liabilities as of March
31, 2021 were ¥165,511 million (US$1,494 million) and¥185,492 million (US$1,675 million), respectively� Valuation
allowance for deferred tax assets was ¥5,144 million (US$46
million)�
Major components of deferred tax assets were ¥90,790
million (US$820 million) of policy reserves, ¥51,385 million(US$464 million) of reserve for price fluctuation and ¥13,291
million (US$120 million) of net defined benefit liabilities as ofMarch 31, 2021�
Major component of deferred tax liabilities was ¥180,162
million (US$1,627 million) of net unrealized gains onavailable-for-sale securities as of March 31, 2021�
The statutory tax rate and the actual effective tax rate forthe year ended March 31, 2021 were 28�0% and 3�6%,
respectively� The difference between the statutory tax rate
and the actual effective tax rate was attributable mainly to-24�4% of reserve for dividends to policyholders�11� Changes in reserve for dividends to policyholders were as follows:Year ended March 31,

2020

2021

Millions of yen

Balance at the beginning of the fiscal year ����������������������������������������������������������

¥ 58,176

2021
Millions ofU�S� dollars¥ 60,922$ 550

Transfer from surplus in the previous fiscal year �������������������������������������������������

34,671

31,547284

Dividend payments to policyholders during the fiscal year ���������������������������������

(31,938)(29,252)(264)

Increase in interest ����������������������������������������������������������������������������������������������

13

13

0

Balance at the end of the fiscal year �������������������������������������������������������������������

¥ 60,922¥ 63,232$ 571

FUKOKU MUTUAL LIFE INSURANCE COMPANY

55

12� Changes in reserve for dividends to policyholders (Fukokushinrai Life Insurance Co�, Ltd�) were as follows:Year ended March 31,

2020

2021

2021
Millions ofU�S� dollars

Millions of yen

Balance at the beginning of the fiscal year ����������������������������������������������������������

¥ 465

¥ 328

$2

Dividend payments to policyholders during the fiscal year ���������������������������������

(309)

(188)

(1)

Increase in interest ����������������������������������������������������������������������������������������������

0

0

0

Provision of reserve for dividends to policyholders ���������������������������������������������

172

168

1

Balance at the end of the fiscal year �������������������������������������������������������������������

¥ 328

¥ 308

$2

13� The amounts of stocks of unconsolidated subsidiaries were¥404 million and ¥404 million (US$3 million) as of March 31,
2020 and 2021, respectively�
14� Assets pledged as collateral as of March 31, 2020 were¥78,124 million of securities and ¥690 million of bankdeposits� Secured debts as of March 31, 2020, were¥73,400 million�
These amounts include ¥63,247 million of investments insecurities deposited and ¥67,866 million of cash received
as collateral under securities lending transactions secured bycash as of March 31, 2020�
Assets pledged as collateral as of March 31, 2021 were¥99,608 million (US$899 million) of securities and ¥790
million (US$7 million) of bank deposits� Secured debts as ofMarch 31, 2021, were ¥67,546 million (US$610 million)�
These amounts include ¥60,241 million (US$544 million)of investments in securities deposited and ¥61,819 million(US$558 million) of cash received as collateral under
securities lending transactions secured by cash as of March
31, 2021�
15� Reserve for outstanding claims for the reinsurance contracts
provided in accordance with Article 71 Paragraph 1 of the
Enforcement Regulation of the Insurance Business Act(hereinafter called “reserve for outstanding claims for ceded
reinsurance”) were ¥1 million and ¥26 million (US$239
thousand) as of March 31, 2020 and 2021, respectively�
Policy reserve for the reinsurance contracts provided inaccordance with Article 71 Paragraph 1 of the Enforcement
Regulation of the Insurance Business Act (hereinafter called“policy reserve for ceded reinsurance”) were ¥48 million and¥49 million (US$445 thousand) as of March 31, 2020 and
2021, respectively�

56

FUKOKU MUTUAL LIFE INSURANCE COMPANY

16� There were unused commitment line agreements underwhich the Company is the lender of ¥9,407 million and¥8,733 million (US$78 million) as of March 31, 2020 and
2021, respectively�
17� Repayments of subordinated bonds are subordinated toother obligations�
18� The future contribution to the Life Insurance Policyholders
Protection Corporation of Japan under Article 259 of the
Insurance Business Act were estimated at ¥10,385 millionand ¥9,833 million (US$88 million) as of March 31, 2020 and
2021, respectively�
The contribution is recognized as operating expenses whencontributed�
19� Matters Related to Employees’ Retirement Benefits(1) Overview of Employees’ Retirement Benefit Plan
As for a defined benefit plan for office-based employees, theCompany and its consolidated subsidiaries have a defined
benefit corporate pension plan and retirement lump-sum
payments� As for a defined contribution plan for these
employees, the Company also has a defined contribution
pension plan�As for a defined benefit plan for sales employees, theCompany has retirement lump-sum payments�
The Company places a retirement benefit trust in relation to
the retirement lump-sum grant plan for sales employees�
The simplified method for calculating retirement benefit
obligation is applied to a portion of the Company and someconsolidated subsidiaries’ retirement lump-sum grant plans�(2) Defined Benefit Plani) Reconciliation of beginning and end of balance of retirement benefit obligation

As of March 31,

2020

2021

2021
Millions ofU�S� dollars

Millions of yen

Retirement benefit obligation at the beginning of the fiscal year ������������������������

¥87,382¥88,356$798

Service cost ���������������������������������������������������������������������������������������������������������

3,535

3,551

32

Interest cost ��������������������������������������������������������������������������������������������������������

520

526

4

Actuarial differences occurred during the fiscal year�������������������������������������������

1,308

2,881

26

Retirement benefit payments������������������������������������������������������������������������������

(4,391)(4,317)(39)

Prior service costs occurred during the fiscal year ����������������������������������������������

—

54

0

Retirement benefit obligation at the end of the fiscal year ���������������������������������

¥88,356¥91,051$822ii) Reconciliation of beginning and end of balance of pension plan assets

As of March 31,

2020

2021

Millions of yen

Pension plan assets at the beginning of the fiscal year���������������������������������������

¥55,0902021
Millions ofU�S� dollars¥53,996$487

Expected return on pension plan assets �������������������������������������������������������������

858

867

7

Actuarial differences occurred during the fiscal year�������������������������������������������

(3,071)

6,673

60

Contributions by the employer ����������������������������������������������������������������������������

2,794

2,666

24

Retirement benefit payments������������������������������������������������������������������������������

(1,677)(1,579)(14)

Others������������������������������������������������������������������������������������������������������������������

2

2

0

Pension plan assets at the end of the fiscal year ������������������������������������������������

¥53,996¥62,627$565iii) Reconciliation of retirement benefit obligation and pension plan assets with net defined benefit liabilities and assets presented on
the consolidated balance sheet
As of March 31,

2020

2021

2021
Millions ofU�S� dollars

Millions of yena� Funded plan retirement benefit obligation �������������������������������������������������������

¥ 76,662¥ 78,551$ 709

b� Pension plan assets �����������������������������������������������������������������������������������������

(53,996)(62,627)(565)c� (a + b) ��������������������������������������������������������������������������������������������������������������

22,665

15,924143d� Unfunded plan retirement benefit obligation ���������������������������������������������������

11,693

12,499112e� Net amount of liabilities and assets presented on the consolidatedbalance sheet ����������������������������������������������������������������������������������������������

34,35928,423256f� Net defined benefit liabilities ���������������������������������������������������������������������������

34,61428,762259

g� Net defined benefit assets ������������������������������������������������������������������������������

(255)

(339)

(3)

h� Net amount of liabilities and assets presented on the consolidatedbalance sheet ����������������������������������������������������������������������������������������������

¥ 34,359¥ 28,423$ 256

FUKOKU MUTUAL LIFE INSURANCE COMPANY

57

iv) Breakdown of retirement benefit gains and losses

As of March 31,

2020

2021

Millions of yen

Service cost ���������������������������������������������������������������������������������������������������������

¥3,535

2021
Millions ofU�S� dollars¥3,551$32

Interest cost ��������������������������������������������������������������������������������������������������������

520

526

4

Expected return on pension plan assets �������������������������������������������������������������

(858)

(867)

(7)

Amortization of actuarial differences �������������������������������������������������������������������

1,404

1,905

17

Amortization of prior service cost ������������������������������������������������������������������������

(76)

(72)

(0)

Others������������������������������������������������������������������������������������������������������������������

(2)

(2)

(0)

Retirement benefit expenses related to defined benefit plan �����������������������������

¥4,523¥5,039$45v) Remeasurements of defined benefit plan
Remeasurements of defined benefit plan (before tax effects) comprised the following:

As of March 31,

2020

2021

2021
Millions ofU�S� dollars

Millions of yen

Amortization of actuarial differences �������������������������������������������������������������������

¥(2,975)¥5,698$51

Amortization of prior service cost ������������������������������������������������������������������������

(76)

(126)

(1)

Total ���������������������������������������������������������������������������������������������������������������������

¥(3,051)¥5,571$50vi) Accumulated remeasurements of defined benefit plan
Accumulated remeasurements of defined benefit plan (before tax effects) comprised the following:
As of March 31,

2020

2021

2021
Millions ofU�S� dollars

Millions of yen

Unrecognized actuarial differences ���������������������������������������������������������������������

¥(10,809)¥(5,111)$(46)

Unrecognized prior service cost ��������������������������������������������������������������������������

95

(31)

(0)

Total ���������������������������������������������������������������������������������������������������������������������

¥(10,714)¥(5,143)$(46)vii) Breakdown of pension plan assets
The breakdown of asset categories as a percentage of total pension plan assets were as follows:

As of March 31,

2020

2021

Domestic stocks ���������������������������������������������������������������������������������������������������������������������

41�1%

42.6%

Life insurance general account �����������������������������������������������������������������������������������������������

35�8%

32.3%

Domestic bonds ���������������������������������������������������������������������������������������������������������������������

9�9%

9.8%

Foreign stocks ������������������������������������������������������������������������������������������������������������������������

6�9%

8.8%

Assets under joint management ��������������������������������������������������������������������������������������������

—

3.3%

Foreign bonds �������������������������������������������������������������������������������������������������������������������������

3�2%

3.2%

Others�������������������������������������������������������������������������������������������������������������������������������������

3�1%

—

Total ����������������������������������������������������������������������������������������������������������������������������������������

100�0%

100.0%58

FUKOKU MUTUAL LIFE INSURANCE COMPANY

Within the total of pension assets, 35�4% of this amount is accounted for by the retirement benefit trust established in relation to
the retirement lump-sum payments plan for sales employees�
viii) Method for setting the expected long-term rate of return
To set the expected long-term rate of return on pension plan assets, the Company takes into account the present and future
allocation of pension plan assets, and the present and expected future long-term rate of return on a variety of assets that makes
up the pension assets�ix) Underlying actuarial assumptions
Main underlying actuarial assumptions were as follows:

As of March 31,

2020

2021

0�6%

0.6%

Defined benefit plan ��������������������������������������������������������������������������������������������������������

2�5%

2.5%

Retirement benefit trust ����������������������������������������������������������������������������������������������������

0�0%

0.0%

Discount rate ��������������������������������������������������������������������������������������������������������������������������
Expected long-term rate of return on pension plan assets(3) Defined Contribution Plan
The required contribution amounts by the Company and its consolidated subsidiaries to the defined contribution plan were ¥331
million and ¥334 million (US$3 million) as of March 31, 2020 and 2021, respectively�

III. Notes to the Consolidated Statements of Operations
1� The total amounts of revenues and expenses in connection with unconsolidated subsidiaries were ¥75 million and ¥1,201 million forthe year ended March 31, 2020 and ¥93 million (US$840 thousand) and ¥1,355 million (US$12 million) for the year ended March 31,
2021, respectively�
2� For the year ended March 31, 2020, in calculating the reversal of reserve for outstanding claims, a reversal of reserves foroutstanding claims reinsured of ¥68 million was deducted� In calculating the provision of policy reserves, a reversal of reserves forpolicy reserves reinsured of ¥5 million was added�
For the year ended March 31, 2021, in calculating the provision of reserve for outstanding claims, a provision of reserves foroutstanding claims reinsured of ¥24 million (US$224 thousand) was deducted� In calculating the reversal of policy reserves, aprovision of reserves for policy reserves reinsured of ¥0 million (US$5 thousand) was added�
3� “Others” within “Extraordinary losses” consists of expenses associated with salary guaranties provided to sales representatives as acountermeasure aimed at preventing the spread of COVID-19�

IV. Notes to the Consolidated Statements of Comprehensive Income1� Other Comprehensive Income
The reclassification adjustments and tax effect amounts related to other comprehensive income were as follows:i) Net unrealized gains (losses) on available-for-sale securities, net of tax

Year ended March 31,

2020

2021

2021
Millions ofU�S� dollars

Millions of yen

Amount incurred during the fiscal year���������������������������������������������������������������������

¥(63,412)¥256,428$2,316

Reclassification adjustments ������������������������������������������������������������������������������������

(18,165)(17,606)(159)

Before tax adjustments ����������������������������������������������������������������������������������������

(81,578)

238,8212,157

Tax effects ������������������������������������������������������������������������������������������������������������

21,934(66,023)(596)

Net unrealized gains (losses) on available-for-sale securities, net of tax ��������������

¥(59,644)¥172,797$1,560

FUKOKU MUTUAL LIFE INSURANCE COMPANY

59ii) Foreign currency translation adjustments

Year ended March 31,

2020

2021

2021
Millions ofU�S� dollars

Millions of yen

Amount incurred during the fiscal year���������������������������������������������������������������������

¥16

¥(91)

$(0)

Reclassification adjustments ������������������������������������������������������������������������������������

—

—

—

Before tax adjustments ����������������������������������������������������������������������������������������

16

(91)

(0)

Tax effects ������������������������������������������������������������������������������������������������������������

—

—

—

Foreign currency translation adjustments ������������������������������������������������������������

¥16

¥(91)

$(0)

iii) Remeasurements of defined benefit plans, net of tax

Year ended March 31,

2020

2021

2021
Millions ofU�S� dollars

Millions of yen

Amount incurred during the fiscal year���������������������������������������������������������������������

¥ (4,380)¥ 3,738

Reclassification adjustments ������������������������������������������������������������������������������������

1,328

1,833

Before tax adjustments ����������������������������������������������������������������������������������������

(3,051)

5,571

50

Tax effects ������������������������������������������������������������������������������������������������������������

854(1,559)

(14)

$

33
16

Remeasurements of defined benefit plans, net of tax �����������������������������������������

(2,197)

4,011

36

Total other comprehensive income ��������������������������������������������������������������������������

¥ (61,825)¥176,717$1,596

V. Notes to the Consolidated Statements of Cash Flows1� Cash and cash equivalents as of March 31, 2020 and 2021 consist of “Cash,” “Deposits in transfer account,” “Current deposits,”“Ordinary deposits,” “Notice deposits,” “Time deposits maturing within 3 months of the date of acquisition,” “Foreign currency
deposits maturing within 3 months of the date of acquisition,” “Negotiable certificate of deposits maturing within 3 months of thedate of acquisition,” “Call loans” and “Monetary claims bought maturing within 3 months of the date of acquisition�”2� Reconciliations of cash and cash equivalents in the consolidated statements of cash flows to the consolidated balance sheet accounts
were as follows:Year ended March 31,

2020

2021

2021
Millions ofU�S� dollars

Millions of yen

Cash and deposits ����������������������������������������������������������������������������������������������������

¥415,816¥325,854$2,943

Call loans ������������������������������������������������������������������������������������������������������������������

230,000

136,000

1,228

Monetary claims bought �������������������������������������������������������������������������������������������

269

239

2

Time deposits maturing over 3 months of the date of acquisition ���������������������������

(100)(5,100)(46)

Foreign currency deposits maturing over 3 months of the date ofacquisition ���������������������������������������������������������������������������������������������������������������

(1,209)

(931)

(8)

Monetary claims bought maturing over 3 months of the date ofacquisition ���������������������������������������������������������������������������������������������������������������

(269)

(239)

(2)

Cash and cash equivalents ���������������������������������������������������������������������������������������

¥644,507¥455,823$4,11760

FUKOKU MUTUAL LIFE INSURANCE COMPANY

FUKOKU MUTUAL LIFE INSURANCE COMPANY

61

Management’s Report on Internal Control over Financial Reporting

1. Matters relating to the basic framework of internal control over financial reporting
Yoshiteru Yoneyama, President of Fukoku Mutual Life Insurance Company (the Company), is responsible for the designand operation of internal control over financial reporting for the Company’s financial statements, namely, consolidatedbalance sheet and the related consolidated statements of operations, comprehensive income, cash flows, changes
in net assets and a summary of significant accounting policies and other explanatory information for the year ended
March 31, 2021, prepared in accordance with Article 110 Paragraph 2 of the Insurance Business Act� The Company
designs and operates its internal control over financial reporting in accordance with the basic framework for internal
control set forth in the Revision of Standards and Practice Standards for Management Assessment and Audit
Concerning Internal Control Over Financial Reporting (Council Opinions) issued by the Business Accounting Council of
the Financial Service Agency of Japan�
Internal control aims at achieving the objectives to a reasonable extent with the organized and integrated function ofindividual components of internal control as a whole� Therefore, internal control over financial reporting cannot always
ensure the prevention or detection of misstatements in the presentation of financial reporting�2. Matters relating to the scope of assessment, the basis date of assessment and the assessment procedures
The Company performed an assessment of internal control over financial reporting for its consolidated financial
statements as of the end of the fiscal year, March 31, 2021 in accordance with generally accepted assessment
standards in Japan for internal control over financial reporting�In the assessment of internal control over financial reporting, the Company first assessed internal controls that havea material impact on overall consolidated financial reporting (company-level controls) and, based on the results, theCompany selected the business processes to be assessed� In assessing those business processes, the Company
analyzed selected business processes, identified a key control that would have a material impact on the reliabilityof financial reporting, and assessed the establishment and operation with regard to the key control� The Company
assessed the effectiveness of internal control by the aforementioned procedures�
For the Company and its consolidated subsidiaries, the Company determined the scope of assessment of internal
control over financial reporting from the perspective of their materiality to the reliability of financial reporting� The
materiality to the reliability of financial reporting is determined in light of their degree of quantitative and qualitative
impact� The Company rationally determined the scope of assessment of internal controls incorporated into businessprocesses (process-level controls) based on the results of assessment of company-level controls regarding theCompany and one consolidated subsidiary� Other than those indicated above, five consolidated subsidiaries were
determined to be immaterial from quantitative and qualitative perspectives� Consequently, they are excluded from thescope of assessment of company-level controls�With respect to the scope of assessment of process-level controls, the locations or business units were selected
in descending order of ordinary revenues (after elimination of inter-company transactions) in the previous fiscal year
until their combined amount reached about two-thirds of consolidated ordinary revenues� As a result, two companies(the Company and its consolidated subsidiary) were selected as significant locations or business units� At selectedsignificant locations and business units, business processes related to accounting items that were closely associatedwith the company's business objectives, including securities, ordinary loans and policy reserves, as well as premiumand other income and claims and other payments, which have a material impact on the calculation of policy reserves,
were determined to be within the scope of assessment� Furthermore, at selected significant locations and business
units and any other locations and business units, added to the scope of assessment were business processes relating
to important accounting items that have a high possibility of material misstatements and involve estimates andjudgments, and business processes relating to businesses or operations dealing with high-risk transactions�
3. Matters relating to the results of the assessment
As a result of performing the assessment, the Company concluded that the design and operation of internal control
over financial reporting for the Company were effective as of March 31, 2021�
4. Supplementary information
Not applicable
5. Other special information
Not applicable

June 4, 2021
Yoshiteru Yoneyama
President

Fukoku Mutual Life Insurance Company

62

FUKOKU MUTUAL LIFE INSURANCE COMPANY

Report of Independent Auditors

FUKOKU MUTUAL LIFE INSURANCE COMPANY

63

64

FUKOKU MUTUAL LIFE INSURANCE COMPANY

FUKOKU MUTUAL LIFE INSURANCE COMPANY

65

66

FUKOKU MUTUAL LIFE INSURANCE COMPANY

FUKOKU MUTUAL LIFE INSURANCE COMPANY

67

68

FUKOKU MUTUAL LIFE INSURANCE COMPANY

Corporate Organization

Domestic Offices (As of April 1, 2021)
Branch Offices
62
Field Offices
467

Secretarial Div.
Strategic Planning Dept.
Compliance Control Dept.

Employees (As of March 31, 2021)
Office Staff
2,916
Sales Representatives 10,552

Corporate Risk Management Dept.
Credit Analysis Div.
General Affairs Dept.
Independent Auditors

Audit & Supervisory
Board

Personnel Dept.
Market Planning Dept.
Retail Management Dept.
Sales Administration Dept.

Audit & Supervisory
Board Members' OfficeMarket Developing Dept.
Strategic Shinkin Bank Promotion Dept.
Strategic Market Promotion Dept.

Board of Representative
Members of Policyholders

Board of Directors

Pension Consulting Dept.
Customer Service Headquarters
Corporate Customer Service Dept.

Nomination Committee of
Candidates for
Representative Members

Secretariat for Nomination
Committee of Candidates for
Representative Members

Chief Actuary

Individual Customer Service Dept.
Underwriting and Medical Dept.

Human Resourse
Development
Headquarters

Claims Dept.
Policy Administration Dept.
Policy Service Dept.

Board of Full-time Directors

Operation and System Planning Dept.
Claim Inspection Div.
Securities Investment Dept.

Council

Credit Investment and Loans Dept.
Separate Accounts Management Div.
Securities Administrative Dept.
Investment Planning Dept.
Real Estate Dept.
Accounting Dept.
Actuarial Dept.
Internal Auditing Dept.
Affiliated Business Dept.
Committee for Editing History of the Company
Branch Offices

FUKOKU MUTUAL LIFE INSURANCE COMPANY

69

Corporate Information

Directors, Audit & Supervisory
Board Members and Executive
Officers

President and Chief Executive Officer

Audit & Supervisory Board Member (Standing)

Yoshiteru Yoneyama*

Kei Yoshizawa

Deputy President and Executive Officer

Audit & Supervisory Board Member (Standing)Toshihide Fujiwara

Shinji Nakao

Director and Senior Managing Executive Officer

Managing Executive Officer

Yuuki Sakurai

Takeshi Oomori

Director and Senior Managing Executive Officer

Executive Officer

Toshikatsu Hayashi

Chikashi Ichikawa

Director and Managing Executive Officer

Executive Officer

Takehiko Watabe

Ichiro Yamada

Director and Managing Executive Officer

Executive Officer

Yasuyuki Kitamura

Takeshi Kondou

Director

Executive Officer

Hiroto Yoshimura**

Naoyuki Asami

Director

Executive Officer

Masanori Yanagi**

Hideaki Shigematsu

Director and Executive Officer

Executive Officer

Keiichi Kurota

Mitsuhiro Hoshino

Director and Executive Officer

Executive Officer

Naoyuki Torii

Toshihiko Morishita

Director and Executive Officer

Executive Officer

Naoki Sunamoto

Kenichi Yoshioka

Audit & Supervisory Board Member

Executive Officer

Yoshizumi Nezu***Yuuji Yoshida

Audit & Supervisory Board Member*Representative Director

Kyohei Takahashi*****External Directors***External Audit & Supervisory Board Member

Audit & Supervisory Board Member

Kunio Otani***70

FUKOKU MUTUAL LIFE INSURANCE COMPANY(As of July 2, 2021)

Directory

Fukoku Mutual Life Insurance Company (head office)2-2, Uchisaiwaicho 2-chome, Chiyoda-ku, Tokyo 100-0011, Japan
Phone: 81-3-3508-1101
Facsimile: 81-3-3591-6446
Fukoku Life International (U.K.) Ltd.
3rd Floor, Baltic Exchange, 38 St� Mary Axe, London, EC3A 8EX, U�K�
Phone: 44-20-7283-1331
Facsimile: 44-20-7626-7096
Fukoku Life International (America) Inc.
Times Square Tower, 7 Times Square, 35th Floor, New York, NY 10036, U�S�A�
Phone: 1-212-221-7760
Facsimile: 1-212-221-7794
Fukoku Life Investments Singapore Pte. Ltd.
80 Robinson Road #16-04 Singapore 068898
Phone: 65-6220-8308
Facsimile: 65-6220-8736▲ Tokyo Head Office▲ Osaka Fukoku Mutual Life Insurance Building▲ Sapporo Fukokuseimei Koshiyama Building

FUKOKU MUTUAL LIFE INSURANCE COMPANY

71

P-B10202