Annual Report 2012
Year Ended March 31, 2012

Tokyo Head OfficeOsaka Fukoku Mutual Life Insurance Building

Contents
Financial Highlights (Non-consolidated)........................
Message from the President  ..........................................
Fukoku Life’s Management Philosophy .........................
Review of Operations (Non-consolidated)     Overview......................................................................
     Business Performance in FY2011...............................
     Investment Performance in FY2011       (General Account)......................................................
     Investment Policies for FY2012..................................
Governance System.........................................................
Corporate Citizenship.......................................................
Non-consolidated Financial Statements.........................
Consolidated Financial Statements  ...............................
Corporate Organization  ..................................................
Corporate Information  ....................................................

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FUKOKU MUTUAL LIFE INSURANCE COMPANY

1
2
3
4
5
7
8
9
10
12
32
56
57

Financial Highlights (Non-consolidated)2010
As of March 31,

Life insurance in force .........................................
Total assets . ........................................................
Securities .......................................................
Loans . ............................................................
Tangible fixed assets .....................................
Total liabilities ......................................................
Policy reserves ...............................................
Subordinated bonds .......................................
Total net assets....................................................

2011

2012

2012
Millions of
U.S. dollars

Millions of yen¥47,457,381
5,613,104
3,800,984
1,220,945
279,476
5,401,158
5,225,501
37,406211,946¥46,297,750
5,675,214
3,778,639
1,143,863
284,670
5,480,612
5,216,576
35,214
194,601¥45,008,889
5,699,527
4,148,127
1,039,363
276,619
5,446,071
5,226,726
32,896
253,455$547,620
69,34550,46912,6453,365
66,26164,079400
3,083

Total ordinary revenues .......................................
Premium and other income . ..........................
Investment income ........................................
Total ordinary expenditures .................................
Net surplus for the year . .....................................

787,517623,778
147,754754,558
26,135

836,916
665,844
146,400
777,90941,524754,842589,918
145,676
704,41328,778

9,184
7,177
1,772
8,570
350

Solvency margin ratio (%) ...................................
Employees . .........................................................

1,127.6
14,207668.4
13,702741.1
13,502——For the years ended March 31,

Notes 1. U.S. dollar amounts are converted from yen, for convenience only, at the rate of U.S.$1=¥82.19, the rate of exchange on March 31, 2012.
2. Yen and U.S. dollar amounts are rounded down to the nearest million yen or million dollars.
3. Since fiscal year 2011, ended March 31, 2012, counting of solvency margin and measurement of risks on assets have changed stricter andmore defined in some parts.
4. Solvency margin ratio for fiscal year 2011 ended March 31, 2012 was based on new standard. Figure for the fiscal year 2010 ended March
31, 2011 was released in March 2012 and was based on new standard. Figure for the fiscal year 2009 ended March 31, 2010 was based on
old standard.

FUKOKU MUTUAL LIFE INSURANCE COMPANY

1

Message from the President

Yoshiteru Yoneyama
President

Today, more than one year since the Great East Japan Earthquake of March 11, 2011, efforts toward a full recovery continue while those in affected regions are forced to put theirlives on hold. Once again, I would like to express my profoundsympathy and prayers for a return to normal life as soon as
possible.
Immediately after the disaster, Fukoku Life visited customers in affected regions and made every effort to ensurethat insurance payments were made without delay. We willcontinue such efforts so that we can deliver peace of mind tothe many affected Fukoku Life customers.
In fiscal 2011, ended March 31, 2012, the Japanese
economy showed signs of a moderate recovery from January
2012, despite struggling temporarily once it had recoveredfrom the slump in the immediate aftermath of the disaster.
Meanwhile, uncertainties remain surrounding the future offinancial and capital markets amid a worsening European debt
crisis.
Since the revision of the Company’s management philosophy in 2005, all executives and employees have adopted a“Customer-Centric” approach in their daily business activities.
Under this philosophy, all employees treat customers as they
themselves would like to be treated. Furthermore, guided by
the “Personnel Pledge” that underpins Fukoku Life’s personnel development policy, we will continue fostering personnel
capable of adopting the customer’s perspective.
In May 2011, we launched a new insurance product tohelp alleviate the economic burden borne by customers unable to work for 121 days or more due to illness or injury. This
product pays annuities to customers who are hospitalized or

2

FUKOKU MUTUAL LIFE INSURANCE COMPANY

receive nursing care at home. As a product that assures customers long-term care that is not fully covered by conventional
insurance products, it is proving extremely popular.
With respect to asset management, we sought to maintain the safety and liquidity of customer assets entrusted to us
and mitigate risks, by concentrating on domestic public bonds
while reducing holdings of equities and other instruments.
Ahead of the scheduled redemption of a ¥25.0 billion
foundation fund set up in September 2006, we raised an additional foundation fund of ¥20.0 billion in September 2011
to further enhance our financial soundness and provide customers with peace of mind. At the same time, we reinforced
equity capital by bolstering internal resources, which entailed
increasing the reserve for price fluctuation of securities andthe contingency reserve.
As a company engaged in the highly public business ofmutual life insurance based on the spirit of mutual assistance,
Fukoku Life adheres to its management philosophy of “To protect the interests of our policyholders.” Under this philosophy,
all executives and employees will continue implementing our“Customer-Centric” approach as we strive to be a company
that is rated the most highly by customers.

Yoshiteru Yoneyama
President

Fukoku Life’s Management Philosophy

ValuesOur “Customer-Centric” Values
Possessing “Customer-Centric” values means creating and providing unique services 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”Values”
Code of
Conduct

Business
Policies
Tomofumi Akiyama

Yoshiteru Yoneyama
President

Chairman of the Board

Management Philosophy
Fukoku Life will continue adhering to its original management philosophy of protecting the interestsof policyholders and contributing to society. In addition, we will provide a workplace that enables
personal fulﬁllment so that all executives and employees ﬁnd their work rewarding.
To protect the interests of ourpolicyholders

To contribute to society

Code of Conduct

Personal expression

Business Policies

A “Customer-Centric” code of conduct to be
reﬂected in the attitudes of all executives andemployees as they carry out their daily business.

1. Foster personnel with “Customer-Centric” values

To us, “Customer-Centric” values means:

2. Reinforce sales staff structure❖ Valuing teamwork❖ Deserving the trust of each and every customer❖ Being enthusiastic and proud of our work
❖ Possessing common sense❖ Continuing to highlight the importance of life
insurance❖ Overcoming any kind of difﬁculty❖ Aiming to create a bright and friendly work
environment

With the aim of providing customers with peace of mind,
foster confident and proud employees who have the ability toadopt the customer’s perspective.
With the aim of providing meticulous services to customers,
reinforce the structure under which sales personnel conduct
face-to-face sales.

3. Net increase in customers

With the aim of earning the trust of more and more customers, strengthen insurance product design, provision, andfollow-up services to meet customer needs.

4. Enhance business efficiency

With the aim of achieving stable growth, improve the efficiency of the Company’s wide range of business activities.

FUKOKU MUTUAL LIFE INSURANCE COMPANY

3

Review of Operations (Non-consolidated)

Overview
Individual Insurance
Based on our “Customer-Centric” approach, we endeavor toearn the satisfaction of customers by designing and proposing policies that they truly need and offering comprehensive
follow-up services. We believe that such an approach willtranslate into a net increase in the number of policyholders.
In addition to nursing care insurance, medical insurance,and life insurance, we provide a wide range of products andservices that meet the varied needs of our customers. In
May 2011, for example, we launched a new insurance product to help alleviate the economic burden borne by customers unable to work for 121 days or more due to being hospitalized or receiving nursing care at home. In this way, we areupgrading our offerings for people requiring long-term hospital or at-home care but are not fully covered by conventional
insurance products.
Sales Channels
Fukoku Life’s products are sold through two major channels:
its own salespeople and the offices of financial institutions.
Our nationwide sales network consists of 62 branches andaround 10,600 salespeople promoting insurance and annuities to individuals and companies. With the aid of dedicatedmobile computers, introduced to enhance the consulting
skills of sales staff when conducting face-to-face sales, wework hard to provide optimal products to customers. We
have also boosted our follow-up services provided after acustomer takes out a new policy. In alliance with Fukokushinrai Life Insurance Co., Ltd., a subsidiary, we sell our products
through credit unions with close ties to local communities.
At the end of the period under review, our products

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FUKOKU MUTUAL LIFE INSURANCE COMPANY

were being sold via 280 financial institution branches and1,767 other agency outlets. Both Fukoku Life and Fukokushinrai Life Insurance provide ongoing support for the insurance sales activities of their partner financial institutions.
We are also developing other sales channels for suchproducts as tuition insurance and individual annuities throughvenues that include large shopping centers and the Internet.
Group Insurance
Fukoku Life’s group insurance system provides consulting
services for corporate welfare programs. We provide professional consulting services for the design of corporate retirement funds and pension plans. In the lead-up to the abolitionof qualified retirement pensions on March 31, 2012, we
provided consulting services for the transition of all customers to defined-benefit pension plans and defined-contribution
pension plans.
We also make socially responsible investments (SRIs) incompanies that work proactively in such areas as social contribution and environmental protection.
Globalization
On July 1, 2011, Fukoku Life opened a representative officein Singapore, having obtained approvals from local authorities
in April. We already conduct asset management activities
in London and New York via subsidiaries, and now we haveaugmented those activities with a presence in Singapore,
which continues to advance as an international financial
center. The representative office will conduct research into
insurance and asset management markets in Asia, which is
enjoying significant, ongoing economic development.

Business Performance in FY2011
Life Insurance in Force
At fiscal year-end, life insurance in force, which comprises
individual life insurance, individual annuities, and group insurance, amounted to ¥45,008.8 billion, down 2.8% from ayear earlier. Within this amount, life insurance for individuals
declined 4.1%, to ¥25,953.6 billion, and individual annuities
edged up 0.8%, to ¥2,998.9 billion. By contrast, the year-end
balance of life insurance in force for groups decreased 1.2%,
to ¥16,056.2 billion. Meanwhile, group annuities in force(policy reserve) rose 0.3%, to ¥1,972.0 billion
Annualized Premiums for New Policies and Policies inForce
In the year under review, annualized premiums for new policies increased 7.4%, to ¥26.8 billion. Within this amount,individual insurance was up 0.5%, to ¥20.5 billion, andindividual annuities rose 15.6%, to ¥6.3 billion. Annualized
premiums from medical insurance and living benefit insurance climbed 8.7%, to ¥8.3 billion.
Annualized premiums for policies in force edged down
0.2%, ¥411.1 billion. Within this amount, individual insurance decreased 1.4%, to ¥280.9 billion, but individual annuities increased 2.6%, to ¥130.2 billion. Annualized premiums
from medical insurance and living benefit insurance rose
1.7%, to ¥103.5 billion.
Premium Income and Payments
In the year under review, premium and other income declined 11.4%, to ¥589.9 billion. This was due mainly to adecrease in premium income in the group insurance field,
although premium income in the individual field slightly
increased. Claims and other payments fell 21.4%, to ¥482.7

Life insurance in force

Premium and other income(¥ trillions)(¥ billions)

49.8

736.4

48.5
15.1

15.3

2.9

2.9

30.2

‘08

46.2
15.9

2.9

31.7

FY2007

47.4

28.5

‘09

‘10

45.0

646.7

16.2

16.5

2.9

2.9

27.0

25.9

‘11

623.7

665.8

billion, due to a decline in benefit payments for group annuity
insurance.
Performance of Fukoku Life Group (Fukoku Life and Fukokushinrai Life Insurance)
The Fukoku Life Group, including Fukokushinrai Life Insurance, posted a 24.7%, or ¥18.8 billion, decline in annualized
premiums for new policies, to ¥57.3 billion, mainly due tosales adjustments for lump-sum-payment products sold via
financial institutions. Within this amount, however, annualized premiums from medical insurance and living benefit insurance climbed 10.7%, or ¥0.8 billion, to ¥8.5 billion, owing
to healthy sales of new products.
Annualized premiums for policies in force increased
5.3%, or ¥27.3 billion, to ¥538.7 billion. Annualized premiums
from medical insurance and living benefit insurance were up
1.7%, or ¥1.8 billion, to ¥105.3 billion.
The total value of premium and other income declined
21.5%, or ¥259.9 billion, to ¥950.9 billion. Individual insurance and annuities in force generated from sales via branches of financial institutions fell 34.6%, or ¥183.6 billion, to¥347.5 billion. This was due to a significant decline basedon sales adjustments in fixed-amount annuities sold by
Fukokushinrai Life Insurance via branches of financial institutions.
Assets, Liabilities, and Net Assets
The outstanding balance of non-consolidated total assets,
including separate accounts, edged up 0.4%, or ¥24.3 billion,to ¥5,699.5 billion. General account assets, which constitute
98.6% of this total, rose 0.4%, to ¥5,619.2 billion.
Total liabilities edged down 0.6%, or ¥34.6 billion, to¥5,446.0 billion. Net assets at fiscal year-end amounted to¥253.4 billion, up 0.4% from a year earlier.
On a consolidated basis, total assets rose 5.4%, to¥7,033.7 billion, and net assets jumped 31.1%, to ¥259.2
billion.

589.9

With respect to our estimates for insurance payouts
associated with the recent earthquake, we increased areserve for outstanding claims, which was accounted forin the fiscal year ended March 31, 2011.
FY2007

‘08

‘09

‘10

‘11

Group insurance
Individual annuities
Individual life insurance

FUKOKU MUTUAL LIFE INSURANCE COMPANY

5

Review of Operations (Non-consolidated)

Strengthening Our Capital Base
Fukoku Life is constantly bolstering its internal reserves in order to strengthen its
operational foundation. We place particular emphasis on reinforcing the contingency reserve and the reserve for pricefluctuation of securities. The contingency
reserve is a legal reserve set up in preparation for future risks, and the reserve forprice fluctuation covers potential future
losses on major assets subject to pricefluctuation risks. The Company regards
both reserves as part of its equity capital.
In the year under review, the Company increased its contingency reserveby ¥0.1 billion, to ¥146.1 billion, and its
reserve for price fluctuation of securitiesby ¥2.0 billion, to ¥35.4 billion.
Solvency Margin
Fukoku Life’s solvency margin ratio at fiscal year-end was
741.1%, up 72.7 points year-on-year. This was due primarily
to an increase in unrealized gains on bonds stemming fromdeclines in interest rates. Nevertheless, the Company’s solvency margin far exceeds 200%, the level set as an indicator of financial soundness for life insurance companies, andclearly illustrates our ability to meet a high level of payments.
In the year under review, the Company applied new, more
stringent standards for assessing price fluctuation risk forsecurities and other assets.
We will continue making every effort to maintain a highsolvency margin ratio as one indicator of the added peace ofmind we offer our customers.

Ratings
Fukoku Life relies on four neutral rating organizations toprovide an objective assessment of the Company’s ability
to meet insurance payments. As of September 1, 2012, wehave received ratings of AA- from Rating and Investment
Information, A- from Standard & Poor’s, A from Fitch Ratings, and A2 from Moody’s. Despite global financial crises in
the autumn of 2008 and thereafter, these ratings have notchanged from year to year. Going forward, we will continue
striving to maintain and further improve our high financial ratings.

Total assets

Net assets

Solvency margin ratio(¥ billions)(¥ billions)(%)

5,725.2

5,514.4

5,613.1

5,675.2

5,699.5

1,146.9
246.9
211.9

1,127.6
1,008.4

253.4

1,088.3
741.1

194.6

668.4

120.5

The figures for FY2010 indicated twoways, 668.4% was calculated bysame methodology as FY2011, andreleased on the end of FY2011.
FY2007

6

‘08

‘09

‘10

‘11

FY2007

FUKOKU MUTUAL LIFE INSURANCE COMPANY

‘08

‘09

‘10

‘11

FY2007

‘08

‘09

‘10

‘11

Investment Performance in FY2011 (General Account)
Overview
In fiscal 2011, ended March 31, 2012, the Japanese economy turned around after a decline in the wake of the Great
East Japan Earthquake, and then came to a temporary
standstill before returning to a path of moderate recovery in
the final quarter. Financial and capital markets, facing growing concerns about global economic slowdown, continued toremain volatile, especially after August 2011 as the European
debt crisis became more severe.
Against this backdrop, Fukoku Life, seeking to protect
the interests of policyholders, maintains a basic asset management policy emphasizing generation of high levels of
profit according to the principles of safety and customer benefits, while at the same time taking into consideration thecharacteristics of the liability of life insurance. Following thispolicy, we are striving to build a portfolio that can respondswiftly to changing conditions, adopting medium-and longterm perspectives in allocating assets while preserving asset
liquidity. Specifically, from the ALM perspective, our investment portfolio is built around a core of yen-denominated assets, such as domestic bonds and loans, while at the sametime undertaking diversified investments in foreign securities, domestic equities, real estate, and other areas, within
acceptable risk parameters, in order to boost profitability.
At fiscal year-end, total general account assets stood at¥5,619.2 billion, up ¥24.7 billion from a year earlier. Investment income from general accounts slipped 1.6%, to ¥143.9
billion. Interest, dividends and other income, the main components of investment income, rose 1.4%, or ¥1.5 billion, to¥113.5 billion, mainly through extending duration of domestic
bonds and increasing holdings of foreign bonds. And interestand dividends income, including from trading securities, rose

1.9%, or ¥2.2 billion, to ¥121.0 billion. We also posted ¥12.8
billion in gains from trading securities, up from losses of ¥5.0
billion in the previous year, due to valuation gains on foreign
bonds as a result of lowered overseas interest rates. Meanwhile, gains on sales of securities fell 44.7%, or ¥13.6 billion,to ¥16.8 billion, due mainly to decreased sales of domestic
bonds and stocks.
Investment expenses increased 16.1%, to ¥54.6 billion.
Major factors were a 22.1%, or 4.5 billion, rise in losses onsales of securities, to ¥24.9 billion, centering on stocks. We
also posted a ¥5.7 billion loss from derivative instruments,
net, stemming from expenses incurred in hedging currency
risk and interest rate risk.
As a result, investment income, net of investment
expenses, amounted to ¥89.3 billion, down 10.0%, or ¥9.9
billion, from the previous fiscal year.
Bonds:
Our year-end holdings of domestic bonds stood at ¥2,737.3
billion, up 12.6%, or ¥306.7 billion, from a year earlier. This
mainly reflected a shift to bonds following reductions incash and deposits built up at the end of the previous year in
response to the Great East Japan Earthquake and also reduction in Loans.
Stocks:Our year-end holdings of domestic equities edged up 0.2%,
or ¥0.6 billion, to ¥353.2 billion. This was due to increases instock prices, although the book value of domestic equities
decreased by ¥22.3 billion with our ongoing efforts since theglobal financial crisis to reduce equity holdings in order tomitigate risk.

Breakdown of general account assets(¥ billions)

Others:99.3 (1.8%)

General account assets(¥ billions)

5,610.5

5,402.9

5,519.4

5,594.5

5,619.2

Ordinary loans:
969.1 (17.2%)

Real estate:273.2 (4.9%)
Cash and deposits, and others:
131.4 (2.3%) (Note)
Other securities:
57.9 (1.0%)
Foreign securities:
927.3 (16.5%)

Loans:
1,039.3(18.5%)

Policy loans:
70.1 (1.2%)

Securities:
4,075.9 (72.5%)

Stocks:353.2 (6.3%)

Bonds:
2,737.3 (48.7%)

Total: ¥5,619.2 billion
Note: It is including cash and deposits, call loans, monetaryclaims bought and money held in trust
FY2007

‘08

‘09

‘10

‘11

FUKOKU MUTUAL LIFE INSURANCE COMPANY

7

Foreign Securities:
Our year-end holdings of foreign securities grew 7.6%, or¥65.3 billion, to ¥927.3 billion, due mainly to increases in ourforeign bond holdings, as well as higher bond prices caused
by falling overseas interest rates.

Loans:
During the period, there was a decline in loans, especially tocorporations. As a result, the fiscal year-end balance of outstanding loans slipped 9.1%, or ¥104.5 billion, to ¥1,039.3
billion.

Bonds

StocksForeign securities

Loans

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

2,737.3
2,444.6 2,468.8

2,565.9

2,430.6

927.3
862.0

601.9

1,231.9 1,238.2 1,220.9

757.4

FY2007 ‘08

‘09

‘10

‘11

FY2007 ‘08

574.6

‘09

352.6

353.2

‘10

‘11

FY2007 ‘08

622.0

‘09

275.8

281.2

273.2

‘09

‘10

‘11

246.2

1,039.3

473.2
418.8

1,143.8
201.8

‘10

‘11

FY2007 ‘08

‘09

‘10

‘11

FY2007 ‘08

Investment Policies for FY2012
Investment Environment
In the fiscal year ending March 31, 2013, we expect theJapanese economy to recover moderately, driven by internal
demand reflecting solid demand for post-disaster reconstruction, as well as government economic stimulus measures.
From the autumn of 2012, however, we predict that theeconomic recovery will come to a temporary standstill due tothe end of various government measures, such as subsidies

for the purchase of eco-friendly vehicles. Overseas, although
we expect continued economic recovery in the United States
and China, various uncertainties remain. We also forecast
economic stagnation in Europe.
In the financial and securities markets, we expect conditions to remain unstable amid extreme uncertainty surrounding the European sovereign debt situation.

Bonds:
Our policy going forward is to increase its holdings of bonds,
centering on super-long-term national bonds. From the ALM
perspective, meanwhile, we will continue doing duration control
within appropriate level.

flexibly controlling currency risk. With respect to foreign stocks,
we will continue raising our weighting of Asian securities. At
the same time, we will increase the balance of investment trust
funds, which are carefully selected with an emphasis in thosecontaining stocks that pay stable dividends.

Stocks:Regarding stocks, we will strive to enhance profitability and unrealized profit ratios through ongoing reshuffling of our portfolio,
while maintaining the balance of holdings mostly unchanged.

Loans:
With respect to loans, our policy is to underpin profitability
through continued meticulous selection of new loans.

Foreign Securities:
Our policy is to increase our holdings of foreign bonds whileclosely monitoring the strength of overseas interest rates and

8

FUKOKU MUTUAL LIFE INSURANCE COMPANYReal Estate:
In real estate, we will strive to improve yields, with a focus on attracting tenants mainly to our business-use office buildings.

Governance System

As a mutual life insurance company, Fukoku Life is engaged in the highly public business of protecting policyholders’ rights. Therefore, we are committed to establishing a management system that ensures the soundnessof operations, and to enhancing management measures,
Establishment of Management Control Measures
The Board of Directors makes important business decisions
and monitors business execution. The two external directors bring an outside perspective to the deliberations of theBoard. In April 2009, Fukoku Life introduced an executive
officer system. Under this system, we have separated andstrengthened decision-making and business execution functions, with the Board of Directors fulfilling decision-making
and supervisory functions. We are striving to strengthen internal controls through the activities of various committees,
including the Risk Management Committee and the Compliance Committee, which are under the direct supervision of
the Board of Directors.
Enhancement of Internal Control System
The Company’s Board of Directors has set the terms for thecreation of a system of internal controls to ensure the soundness of operations. We are working to enhance the efficiency of operations, strengthen risk management, and promotecompliance based on the core policies of our internal control
system.
Risk Management System
We must enhance financial soundness by addressing thevarious risks we face in order to be able to meet customers’
expectations over the long term, while maintaining their policies. We are working across the entire company to improve
the risk management system in an initiative that includes thefull involvement of top management.
The Risk Management Committee manages risk comprehensively in accordance with core policies set by the
Board of Directors. We also have five dedicated committees,
each providing expert risk management in its own specificrisk category: underwriting risk, asset management risk (covering market-related risk, credit risk, and real estate investment risk), liquidity risk, administrative risk, system risk, andother risk.
Each of these committees is chaired by a Company
director, thus ensuring efficacy and restraint with respect tomanaging its respective risk type. We also have a system
in which management teams themselves take the initiativein implementing risk management. In addition, the internal
auditing department monitors the effective operation of therisk management system.

including our risk management system and compliancemeasures. In addition, we employ our internal control
systems to ensure the efﬁcient operation of these measures.

Compliance System
As members of the community, all executives and employees undergo ongoing training in compliance-related matters
so that they not only observe laws and regulations, but also
comply with protocols and social conventions. To this end, as
well as improving and reinforcing the compliance system, wehold regular hands-on training programs.
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 constant improvements and work to rectify thesituation in order to prevent a recurrence.
The Compliance Committee, which is chaired by the
President, is mandated by the Board of Directors to promotecompliance-related activities. The Chief Compliance Officer
and Compliance Officers stationed at our Head Office ensure
the constant monitoring of compliance.
Protection of Personal Information
As an insurance company that is trusted by its customers,
Fukoku Life takes great care in the handling of personal information. We ensure compliance with the Personal Information Protection Law enacted in Japan in April 2005, as well as
related laws and guidelines. The appropriate management of
personal information is also governed by the Company’s own
privacy policy.

Board of Representative Members of Policyholders

FUKOKU MUTUAL LIFE INSURANCE COMPANY

9Corporate Citizenship

Contributions to Society
Fukoku Life engages in a variety of activities aimed at building a better society inline with the management philosophyof “contributing to society,” which it
has embraced since its foundation. We
believe it is important for employees totake the initiative in such activities, which
form the core of our CSR approach.

Post-Disaster Relief
To provide assistance for people impacted by the Great East Japan Earthquake, we arrange Visiting Concerts at special support schools and otherfacilities in disaster-affected areas. We also endeavor to help economically, including by selling locally made products to executives and employees
throughout the Fukoku Life Group.

Charity concert

Visiting concert

10

Fukoku Life Concerts
Fukoku Life holds two types of concerts throughout the country: Visiting
Concerts and Charity Concerts. Visiting Concerts give children attending schools for the disabled and disabled people living in institutions who
cannot easily get the opportunity to hear performances of classical musicin concert halls. Charity Concerts are held at concert halls as part of theCompany’s commitment to fostering community welfare.
A Visiting Concert is held after a Charity Concert has been held. Musicians who performed at the Charity Concert visit a local welfare facility
where they play music and improvise as necessary to create an enjoyable
musical occasion for residents. Since 1993, the Company has held 220
Charity Concerts. Visiting Concerts, which were introduced in 2003, havebeen held at a total of 172 welfare facilities.
Organization of concerts is handled directly by Fukoku Life employees, and employees join with musicians to plan the specific programs.
At Charity Concerts, members of the audience are asked to makedonations, which are given to local welfare groups, and goods made by
the disabled are sold from stalls in the hall foyer.

FUKOKU MUTUAL LIFE INSURANCE COMPANY

Flora Preservation
Recently in Japan, there has been an increase in forests left to growunchecked due to the lack of people willing to take over forestry businesses. One particular problem is uncontrolled groves of the vigorously
growing Moso bamboo, which not only invades forests, but also takes
over farmland and causes landslides due to the shallowness of their roots.
This bamboo problem is even found on land owned by the Company inShizuoka Prefecture. Fukoku Life has set up a forest regeneration project
to tackle this problem. The aim of the project is to not only assist forest
regeneration by felling bamboo groves, but to also return some bamboo groves to a healthy state. Since 2006, Fukoku Life’s executives andemployees have taken part in the project. In the year under review, 245
executives, employees, and their family members volunteered their time
to take part in these activities.

MET Live Viewing 2011-2012©Nick Heavican/Metropolitan Opera

Other Activities
We invite universities and corporations to the new Osaka Fukoku MutualLife Insurance Building, completed in 2010, to provide informations ofinterest related to culture and health to local communities.
Together with Shochiku Co., Ltd., which is involved with the entertainment business, Fukoku Life is a sponsor of the Metropolitan Opera:
Live in High Definition series of screenings, which give members of thegeneral public the opportunity to see some of the finest opera performances in the world.
The Company is a proud sponsor of the Pink Ribbon Campaign,
which promotes the importance of the early detection, diagnosis, andtreatment of breast cancer. We also participate in the Hello Smile campaign aimed at providing education about prevention of cervical cancer.
Fukoku Life provides space and sales staff to support a mobile bakery business operated by disabled people. Our employees also participate
in various other initiatives, including neighborhood cleanup campaigns andcollections of PET bottle lids.

Communicating with Societies
Fukoku Life engages in advertising activities aimed at raising awareness of its
operations. We are also upgrading ourcorporate communications to help more
and more stakeholders understand thenature of our business.

©1976,2012 SANRIO CO.,LTD.APPROVAL No.G531435

Alliance with Sanrio
The Sanrio character Hello Kitty is famous all over the world. Fukoku Life
uses Hello Kitty in posters and pamphlets, and sponsors the “Sanrio
Character Boat Ride,” one of the many attractions in the Sanrio Puroland
indoor theme park.
Providing Information
Fukoku Life publishes a variety of materials for its stakeholders. Publications that provide information on the Company’s business activities
include the Japanese-language magazine, “Disclosure” (and abridged
versions thereof), booklets written for policyholders, and this English-language annual report. Our diverse lineup of public relations and advertising
activities include the production of a variety of publications as needed, inorder to strengthen the channels of communication between the Company, its policyholders, and its many other customers.

©’08,’12 SANRIO/SEGA TOYS ?S.S/W.TX.JLPC©’12 SANRIO / No.P040913-05

FUKOKU MUTUAL LIFE INSURANCE COMPANY

11

Non-consolidated Financial Statements
Non-consolidated Balance Sheets
Fukoku Mutual Life Insurance Company
As of March 31, 2010, 2011 and 2012

As of March 31,

2010

2011

2012

2012
Millions of
U.S. dollars

Millions of yen

Assets:				
Cash and deposits:
¥
164
¥
156
Cash ..................................................................................
Bank deposits ....................................................................
68,945
237,667
		
69,110237,823
Call loans ...............................................................................
91,000—
Monetary claims bought . ......................................................
1,752
1,424
Money held in trust ...............................................................
32,902
33,169Securities:
Government bonds . ..........................................................
1,887,071
1,695,927
124,642
149,399
Local government bonds ...................................................
Corporate bonds ................................................................
588,041
615,051
505,012379,416
Stocks . ..............................................................................
Foreign securities ..............................................................
646,118
884,029
Other securities .................................................................
50,09754,814		
3,800,984
3,778,639
Loans:
74,186
71,479
Policy loans . .......................................................................
Ordinary loans ...................................................................
1,146,758
1,072,383
		
1,220,945
1,143,863
Tangible fixed assets:
Land . .................................................................................
162,160
163,574
Buildings ............................................................................
96,661
116,548
31
47
Lease assets .....................................................................
Construction in progress ...................................................
17,0091,165
Other tangible fixed assets ...............................................
3,613
3,334
		
279,476
284,670
Intangible fixed assets:
7,007
8,318
Software ............................................................................
447
447
Other intangible fixed assets . ...........................................
		
7,454
8,765
Reinsurance receivables . ......................................................
279
170
Other assets:
12,28463,859Accounts receivable ..........................................................
Prepaid expenses ..............................................................
2,051
1,653
Accrued income ................................................................
22,04023,444
Deposits ............................................................................
2,228
2,145
Differential account for futures trading .............................
—
73
Derivatives . .......................................................................
1,216
881
Suspense payments ..........................................................
5,430
4,740
Other assets ......................................................................
4,207
5,070
		
49,460101,867
Deferred tax assets ...............................................................
62,17087,332
Allowance for possible loan losses .......................................
(2,430)(2,513)
Total assets . .........................................................................
¥5,613,104¥5,675,214

12

FUKOKU MUTUAL LIFE INSURANCE COMPANY¥

154
29,191
29,34565,6001,351
35,194

$

1
355
357
798
16
428

1,991,905
158,459
614,449
377,385
947,574
58,354
4,148,127

24,235
1,927
7,475
4,591
11,529709
50,46970,164
969,199
1,039,363

853
11,792
12,645

161,076
109,935
117
2,234
3,255
276,619

1,959
1,337
1
27
39
3,365

8,126
446
8,573
117

98
5
104
1

10,577
1,249
23,784
2,058
42
1,588
6,497
4,606
50,404
47,130(2,299)¥5,699,527

128
15
289
25
0
19
79
56
613
573
(27)
69,345$

As of March 31,

2010

2011

2012

2012
Millions of
U.S. dollars

Millions of yen

Liabilities:						Policy reserves:¥ 25,342¥ 31,053¥ 22,615$ 275
Reserve for outstanding claims .........................................
Policy reserve ....................................................................
5,145,399
5,132,317
5,190,141
63,148Reserve for dividends to policyholders .............................
54,75953,20553,969656
		
Reinsurance payables . ..........................................................
Subordinated bonds ..............................................................
Other liabilities:
Corporate income tax payable ...........................................
Accounts payable ..............................................................
Accrued expenses .............................................................
Unearned income ..............................................................
Deposits received . ............................................................
Guarantee deposits received . ...........................................
Differential account for futures trading .............................
Derivatives . .......................................................................
Asset retirement obligations .............................................
Suspense receipts .............................................................

5,225,501
117
37,406

5,216,576
86
35,214

5,266,726
67
32,89664,079
0
400

1,291
3,290
10,434452
5,016
12,893
337
6,867
—
1,338

10,85072,288
9,989
435
5,637
13,402
—
8,661
2,846
1,143

1,291
5,894
11,169435
5,301
13,577
142
6,530
2,846
1,188

15
71
135
5
64
165
1
79
34
14

		
Reserve for employees' retirement benefits ........................
Reserve for price fluctuation of securities . ...........................
Deferred tax liabilities for revaluation reserve for land ..........

41,921
49,776
26,451
19,983

125,256
50,10933,432
19,936

48,377
46,32035,48816,195

588
563
431
197

Total liabilities ......................................................................

5,401,158

5,480,612

5,446,071

66,26140,00046,000112

40,00046,000112

35,00071,000
112

425
863
1

2,187

2,249

2,325

28

15,000
3,895—

20,000
3,895
—

—
3,895
11,000

—
47
133

303
767
54,075296
767
69,554289
767
57,827

3
9
703

		
		
Total foundation funds, surplus and others............................
Net unrealized gains (losses) on available-for-salesecurities, net of tax............................................................
Deferred valuation gains (losses)
under hedge accounting......................................................
Revaluation reserve for land, net of tax..................................
Total valuation and translation adjustments............................

74,042
76,229162,341

94,51396,763
182,875

73,77976,104
182,216

897
925
2,217

48,291

9,994

67,684

823

538
773
49,604365
1,366
11,726170
3,383
71,2392
41866

Total net assets ...................................................................
Total liabilities and net assets . ..........................................

211,946¥5,613,104

194,601¥5,675,214

253,455¥5,699,527

3,083$69,345

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..................................................

See notes to the non-consolidated financial statements.
FUKOKU MUTUAL LIFE INSURANCE COMPANY

13

Non-consolidated Statements of Operations
Fukoku Mutual Life Insurance Company
For the years ended March 31, 2010, 2011 and 2012

Years ended March 31,

2010

2011

2012

Millions of yen

Ordinary revenues:
Premium and other income:Premium income ...............................................................
¥623,490¥665,618¥589,599
Reinsurance income ..........................................................
288
226
319
		
623,778
665,844589,918
Investment income:Interest, dividends and other income: 					Interest on deposits ......................................................
493
899
93
Interest and dividends on securities . ............................
70,44472,78976,265Interest on loans . ..........................................................
24,812
23,88322,163
14,71814,141
14,775
Income from real estate for rent ...................................
Other interest and dividends .........................................
287
252
219
		
110,757
111,965
113,517
Gains from money held in trust, net . ................................
—
361
162
Gains from trading securities, net .....................................
165—
12,872
Gains on sales of securities . .............................................
22,04330,455
16,854——338
Gains from redemption of securities .................................
Gains from derivative instruments, net .............................
—
3,335
—
—
—
103
Reversal of allowance for possible loan losses..................
Other investment income .................................................
358
281
148
14,428—
1,679
Gains from separate accounts, net ...................................
		147,754
146,400
145,676
Other ordinary revenues:
Fund receipt from annuity rider .........................................
777
842
1,347
10,1208,295
6,422
Fund receipt from deposit of claims paid ..........................
2,878
—
8,438
Reversal of reserve for outstanding claims........................
Reversal of policy reserve ................................................
—
13,081—
Reversal of reserve for employees'
retirement benefits . .......................................................
——
639
Others ...............................................................................
2,208
2,452
2,399
		
15,984
24,671
19,247
Total ordinary revenues ......................................................
787,517
836,916
754,842

2012
Millions of
U.S. dollars$7,173
3
7,177

1
927
269
179
2
1,381
1
156
205
4
—
1
1
20
1,772
16
78
102
—
7
29
234
9,184

Ordinary expenditures:					Claims and other payments:
Claims . ..............................................................................
178,959
176,286
140,375
1,707
Annuities ...........................................................................
88,092
91,536
94,983
1,155
Benefits .............................................................................
146,378
185,770
127,082
1,546
Surrenders .........................................................................
114,050
130,881
94,006
1,143
36,39629,19426,070317
Other payments ................................................................
Reinsurance premiums .....................................................
336
335
278
3
		
564,214614,005
482,797
5,874
Provision for policy reserve and others:
Provision for reserve for outstanding claims .....................
—
5,711
—
—
Provision for policy reserve ...............................................
9,485—
57,823703
Interest on accumulated dividends to policyholders .........
157
116
83
1
		
¥ 9,643¥ 5,828¥ 57,906$ 704
14

FUKOKU MUTUAL LIFE INSURANCE COMPANY

Years ended March 31,

2010

2011

2012

Millions of
U.S. dollars

Millions of yen

Investment expenses:
Interest expenses . ............................................................
Losses from money held in trust, net................................
Losses from trading securities, net....................................
Losses on sales of securities ............................................
Losses on valuation of securities ......................................
Losses from derivative instruments, net . .........................
Foreign exchange losses, net . ..........................................
Depreciation of real estate for rent and other assets ........
Other investment expenses ..............................................
Losses from separate accounts, net..................................
		
Operating expenses ..............................................................
Other ordinary expenditures:
Claim deposit payments ....................................................
Taxes .................................................................................
Depreciation ......................................................................
Provision for reserve for employees’
retirement benefits...........................................................
Others ...............................................................................
		
Total ordinary expenditures . ..............................................
Ordinary profits ...................................................................
Extraordinary gains:
Gains on disposal of fixed assets ......................................
Reversal of allowance for possible loan losses..................
Total extraordinary gains ....................................................
Extraordinary losses:
Losses on disposal of fixed assets . ..................................
Impairment losses .............................................................
Provision for reserve for price fluctuation of securities .....
Losses on reduction entry of real estate fortax purpose.....................................................................
Effect of applying the accounting standard for asset
retirement obligations.......................................................
Total extraordinary losses . .................................................
Surplus before income taxes . ............................................
Income taxes:
Current ..............................................................................
Deferred ............................................................................
Total income taxes . .............................................................
Net surplus for the year ......................................................

2012¥ 1,852
197—
41,494
1,588
11,555
1,706
5,230
6,618
—
70,24487,658¥ 1,525—
5,069
20,418
5,922
—
2,654
5,732
5,717
3,034
50,07486,511¥ 1,409——24,925
7,986
5,725
1,874
6,477
6,208
—
54,60888,725

11,551
4,916
5,430

10,421
4,793
5,413

9,746
4,831
5,276

118
58
64

483
417
22,799754,558
32,958332
530
21,490777,90959,006—520
20,375
704,41350,429

—
6
247
8,570
613

326
606
933

16
899
915

4,645
—
4,645

56
—
56

685
865
1,829

96
318
6,981

160
433
2,056

1
5
25

—

—

9

0

—
3,380
30,511

966
8,362
51,559—2,659
52,414

—
32
637

3,746
629
4,375
¥ 26,135

13,406(3,370)10,035¥ 41,524

8,623
15,01323,636¥ 28,778

104
182
287
$ 350

$

17
—
—
303
97
69
22
78
75
—
664
1,079

See notes to the non-consolidated financial statements.

FUKOKU MUTUAL LIFE INSURANCE COMPANY

15

Non-consolidated Statements of Changes in Net Assets
Fukoku Mutual Life Insurance Company
For the years ended March 31, 2010, 2011 and 2012

Years ended March 31,

2011

2010

2012

Millions of
U.S. dollars

Millions of yen

Foundation funds, surplus and others:
Foundation funds
		 Balance at the beginning of current fiscal year...............
		 Changes in the current fiscal year:				 Financing of additional foundation funds................
				 Redemption of foundation funds............................
			 Total changes in the current fiscal year.......................
		 Balance at the end of current fiscal year.........................
Accumulated foundation funds redeemed		 Balance at the beginning of current fiscal year...............
		 Changes in the current fiscal year:
Additions to accumulated foundation funds					
redeemed.................................................................
			 Total changes in the current fiscal year.......................
		 Balance at the end of current fiscal year.........................
Reserve for revaluation
		 Balance at the beginning of current fiscal year...............
		 Changes in the current fiscal year:
			 Total changes in the current fiscal year.......................
		 Balance at the end of current fiscal year.........................
Surplus:		 Legal reserve for future losses
			 Balance at the beginning of current fiscal year...........
			 Changes in the current fiscal year:				 Additions to legal reserve for future losses............
				 Total changes in the current fiscal year..................
			 Balance at the end of current fiscal year.....................
		 Other surplus:
			 Reserve for redemption of foundation funds				 Balance at the beginning of current fiscal year......
				 Changes in the current fiscal year:					 Additions to reserve for redemption of					foundation funds.............................................
					 Reversal of reserve for redemption of					foundation funds.............................................
					 Total changes in the current fiscal year..............
				 Balance at the end of current fiscal year................
		Reserve for dividend allowances				 Balance at the beginning of current fiscal year......
				 Changes in the current fiscal year:					 Total changes in the current fiscal year..............
				 Balance at the end of current fiscal year................
			 Accumulated fund for price fluctuation				 Balance at the beginning of current fiscal year......
				 Changes in the current fiscal year:				 Additions to accumulated fund for price					
fluctuation.......................................................
				 Total changes in the current fiscal year..............
				 Balance at the end of current fiscal year................
			 Reserve for advanced depreciation of			real estate for tax purpose				 Balance at the beginning of current fiscal year......
				 Changes in the current fiscal year:					 Reversal of reserve for advanced depreciation of					real estate for tax purpose..............................
					 Total changes in the current fiscal year..............
				 Balance at the end of current fiscal year................

16

FUKOKU MUTUAL LIFE INSURANCE COMPANY

2012¥40,000¥40,000¥ 40,000$ 486

15,000(15,000)—
40,000———40,00020,000(25,000)(5,000)35,000

243
(304)
(60)
425

31,00046,00046,000559

15,00015,00046,000——46,00025,00025,00071,000

304
304
863

112

112

112

1

—
112

—
112

—
112

—
1

1,987

2,187

2,249

27

200
200
2,187

62
62
2,249

76
76
2,325

0
0
28

20,00015,00020,000243

10,000

5,000

5,000

60

(15,000)(5,000)15,000—5,000
20,000(25,000)(20,000)
—

(304)
(243)
—

3,895

3,895

3,895

47

—
3,895

—
3,895

—
3,895

—
47

—

—

—

—

—
—
—

—
—
—

11,00011,00011,000

133
133
133

311

303

296

3

(7)
(7)
303

(7)
(7)
296

(7)
(7)
289

(0)
(0)
3

¥

¥

¥

$

Years ended March 31,

2011

2010

2012

Millions of
U.S. dollars

Millions of yen

			 Other reserves				 Balance at the beginning of current fiscal year......
				 Changes in the current fiscal year:					 Total changes in the current fiscal year..............
				 Balance at the end of current fiscal year................
			 Unappropriated surplus				 Balance at the beginning of current fiscal year......
				 Changes in the current fiscal year:					 Additions to reserve for dividends to					policyholders....................................................
					 Additions to legal reserve for future losses.......
					 Payment of interest on foundation funds..........
					 Net surplus for the year.....................................
					 Additions to reserve for redemption of					foundation funds..............................................
					 Additions to accumulated fund for pricefluctuation.......................................................
										 Reversal of reserve for advanced					
depreciation of real estate for tax purpose......
					 Reversal of revaluation reserve for land............
					 Total changes in the current fiscal year..............
				 Balance at the end of current fiscal year................
		 Total surplus
			 Balance at the beginning of current fiscal year...........
			 Changes in the current fiscal year:				 Additions to reserve for dividends to policyholders...
				 Payment of interest on foundation funds...............
				 Net surplus for the year..........................................
				 Reversal of reserve for redemption of				foundation funds..................................................
				 Reversal of revaluation reserve for land.................
				 Total changes in the current fiscal year..................
			 Balance at the end of current fiscal year.....................
Total foundation funds, surplus and others
		 Balance at the beginning of current fiscal year...............
		 Changes in the current fiscal year:
			 Financing of additional foundation funds....................
			 Additions to reserve for dividends to policyholders....
			 Additions to accumulated foundation			
funds redeemed........................................................
			 Payment of interest on foundation funds...................
			 Net surplus for the year..............................................
			 Redemption of foundation funds................................
			 Reversal of reserve for redemption of			foundation funds......................................................
			 Reversal of revaluation reserve for land......................
			 Total changes in the current fiscal year.......................
		 Balance at the end of current fiscal year.........................

¥

767

¥

767

2012

¥

767

$

9

—
767

—
767

—
767

—
9

56,66054,07569,554846(17,856)
(200)
(716)
26,135(19,505)(62)(892)
41,524(24,381)(76)(892)
28,778

(296)
(0)
(10)
350

(10,000)(5,000)(5,000)

(60)

—

—

(11,000)

(133)

7
44
(2,584)54,0757(592)
15,47969,554

7
837(11,727)
57,827

0
10
(142)
703

83,621

76,22996,763

1,177(17,856)(716)
26,135(19,505)(892)
41,524(24,381)(892)
28,778

(296)
(10)
350

(15,000)
44(7,392)
76,229—(592)
20,53396,763(25,000)
837(20,658)
76,104

(304)
10
(251)
925

154,733

162,341

182,875

2,225

15,000(17,856)—(19,505)

20,000(24,381)

243
(296)

15,000(716)
26,135(15,000)—(892)
41,524—25,000(892)
28,778(25,000)

304
(10)
350
(304)

(15,000)
44
7,607¥162,341—(592)
20,533¥182,875(25,000)
837(658)¥182,216

(304)
10
(8)
$2,217

FUKOKU MUTUAL LIFE INSURANCE COMPANY

17

Years ended March 31,

2010

2011

2012

Millions of
U.S. dollars

Millions of yen

Valuation and translation adjustments:
Net unrealized gains (losses) on available-for-salesecurities, net of tax
		 Balance at the beginning of current fiscal year...............
		 Changes in the current fiscal year:
			 Net changes, excluding foundation funds,			
surplus and others...................................................
			 Total changes in the current fiscal year.......................
		 Balance at the end of current fiscal year.........................
Deferred valuation gains (losses) under hedge accounting
		 Balance at the beginning of current fiscal year...............
		 Changes in the current fiscal year:
			 Net changes, excluding foundation funds,			
surplus and others...................................................
			 Total changes in the current fiscal year.......................
		 Balance at the end of current fiscal year.........................
Revaluation reserve for land, net of tax
		 Balance at the beginning of current fiscal year...............
		 Changes in the current fiscal year:
			 Net changes, excluding foundation funds,			
surplus and others...................................................
			 Total changes in the current fiscal year.......................
		 Balance at the end of current fiscal year.........................
Total valuation and translation adjustments
		 Balance at the beginning of current fiscal year...............
		 Changes in the current fiscal year:
			 Net changes, excluding foundation funds,			
surplus and others....................................................
			 Total changes in the current fiscal year.......................
		 Balance at the end of current fiscal year.........................
Total net assets
Balance at the beginning of current fiscal year....................
Changes in the current fiscal year:
		 Financing of additional foundation funds.........................
		 Additions to reserve for dividends to policyholders........
		 Additions to accumulated foundation		
funds redeemed..............................................................
		 Payment of interest on foundation funds........................
		 Net surplus for the year...................................................
		 Redemption of foundation funds.....................................
		 Reversal of reserve for redemption offoundation funds............................................................
		 Reversal of revaluation reserve for land..........................
		 Net changes, excluding foundation funds,		
surplus and others........................................................
		 Total changes in the current fiscal year...........................
Balance at the end of current fiscal year..............................

18

FUKOKU MUTUAL LIFE INSURANCE COMPANY¥ (35,474)¥ 48,291

83,766
83,76648,291

2012

¥

9,994

$ 121

(38,297)(38,297)
9,994

57,69057,69067,684

701
701
823

479

538

365

4

59
59
538

(173)
(173)
365

(194)
(194)
170

(2)
(2)
2

814

773

1,366

16

(40)
(40)
773

592
592
1,366

2,016
2,016
3,383

24
24
41

(34,180)

49,604

11,726

142

83,78583,78549,604(37,878)(37,878)
11,72659,51259,512
71,239

724
724
866

120,553

211,946

194,601

2,367

15,000(17,856)—(19,505)

20,000(24,381)

243
(296)

15,000(716)
26,135(15,000)—(892)
41,524—25,000(892)
28,778(25,000)

304
(10)
350
(304)

(15,000)
44

—
(592)

(25,000)
837

(304)
10

83,78591,393¥ 211,946(37,878)(17,344)¥194,601

59,51258,854¥253,455

724
716$3,083

Non-consolidated Statements of Surplus
Fukoku Mutual Life Insurance Company
For the years ended March 31, 2010, 2011 and 2012

Years ended March 31,

2010

2011

2012

Millions of
U.S. dollars

Millions of yen

Unappropriated surplus ......................................................

2012¥54,075¥69,554¥57,827$703

of real estate for tax purpose .........................................		

7

7

32

0

		

7

7

32

0

Total ......................................................................................

54,08369,561

57,859703

19,50524,381

23,989291

Legal reserve for future losses . ....................................

62

76

74

0

Interest payment for foundation funds . ........................

892

892

621

7

Reserve for redemption of foundation funds ...........

5,000

5,000

9,000

109

Accumulated fund for price fluctuation ....................

—

11,000——

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

—

—

3,857

46

		

5,000

16,00012,857

156

		

5,954

16,96813,552

164

Total appropriation of surplus ............................................

25,46041,35037,542

456

Unappropriated surplus carried forward . .........................

¥28,622¥28,211¥20,317$247

Reversal of voluntary surplus reserve:
Reversal of reserve for advanced depreciation

Appropriation of surplus:
Reserve for dividends to policyholders .............................
Net surplus:

Voluntary surplus reserve:

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

19

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 with theprovisions set forth in the Insurance Business Law of Japan andits related rules and regulations and in conformity with accounting principles generally accepted in Japan, which are different incertain respects from accounting principles generally acceptedin countries and jurisdictions other than Japan.
In addition, the notes to the non-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 eliminated.
As a result, total in yen shown herein do not necessarily agreewith the sum of the individual amounts.
2. U.S. Dollar Amounts
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 ¥82.19 = US$1.00, the effective rate of exchange at the balance sheet date of March 31, 2012. The translations should not
be construed as representations that such yen amounts havebeen or could in the future be, converted into U.S. dollars at thator any other rates.

II. Notes to Balance Sheets
1. Significant Accounting Policies(1) Valuation methods of securities

The valuation of securities, including bank deposits and monetary claims bought which are equivalent to securities, andsecurities managed as trust assets in money held in trust, is asfollows:i) Trading securities are stated at fair market value. Costs of
their sales are determined by the moving average method.
ii) Held-to-maturity debt securities are stated at amortized cost
under the straight-line method, cost being determined by themoving average method.

20

FUKOKU MUTUAL LIFE INSURANCE COMPANYiii) Policy-reserve-matching bonds are stated at amortized 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 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
fiscal year. Costs of their sales are determined by the moving average method. Net unrealized gains or losses on theseavailable-for-sale securities, net of taxes, are recorded as aseparate component of net assets.
Available-for-sale securities whose fair values 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 isconsidered to be an adjustment of interest. Such bonds arestated at amortized cost under the straight-line method, cost
being determined by the moving average method.
(2) Valuation methods of derivative instruments

Derivative instruments are stated at fair market value.
(3) Revaluation of land

The Company revalued the land for business purposes basedon the Law for Revaluation of Land (Law No.34 promulgated on
March 31, 1998). The difference between fair value and bookvalue resulting from the revaluation, net of related taxes, is recorded as revaluation reserve for land as a separate componentof net assets and the related tax is recorded as deferred tax
liabilities for revaluation reserve for land.
Date of revaluation: March 31, 2002
Method of revaluation as prescribed for in Article 3 Paragraph
3 of the said Law:
Calculation is based on the appraisal value for property tax set
forth in Article 2 item 3 of the Enforcement Ordinance of the
Law for Revaluation of Land (Government Ordinance No.119
promulgated on March 31, 1998) and the road rate set forth in
Article 2 item 4 of the said Ordinance with certain reasonableadjustments.

(4) Depreciation of tangible fixed assets

Depreciation of tangible fixed assets is calculated by the following methods.
Buildings (excluding lease assets)i) Acquired on or before March 31, 1998: Previous decliningbalance methodii) Acquired on or after April 1, 1998 but on or before March 31,
2007: Previous straight-line methodiii) Acquired on or after April 1, 2007: Straight-line method
Assets other than buildings (excluding lease assets)i) Acquired on or before March 31, 2007: Previous decliningbalance methodii) Acquired on or after April 1, 2007: Declining-balance method
Lease assets related to finance lease transactions that do nottransfer ownership: Straight-line method over the lease term
Other tangible fixed assets acquired for ¥100,000 or more but
less than ¥200,000 are depreciated equally over three years.
(5) Foreign currency translation

Foreign currency-denominated assets and liabilities, except forinvestments in subsidiaries and affiliates, are translated into
Japanese yen at the effective exchange rate prevailing at thebalance sheet date. Investments in subsidiaries and affiliates aretranslated into Japanese yen at the exchange rate on the date ofacquisition.
(6) Allowance for possible loan losses

Allowance for possible loan losses is provided in accordancewith the Company's standards of self-assessment 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 aresubstantially bankrupt (hereinafter called "substantially bankrupt borrowers"), the Company provides the remaining amountof credits after the direct write-off described below and the
deductions of the amount expected to be collected throughthe 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 the amounts after deductions of theamount expected to be collected through the disposal of collateral or the execution of guarantees.
iii) For the credits of borrowers other than the above, the Company provides the amounts calculated by multiplying theborrowers' balance by the actual ratio of bad debt losses on
defaults during a certain past period.

All credits are assessed by the relevant departments in 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 independent of business-related
divisions. Subsequently, the allowance for possible loan losses
are provided based on the results of these assessments.
For the credits of legally bankrupt borrowers and substantially bankrupt borrowers, the amounts remaining after deductions of collateral value or the amounts collectible through theexecution of guarantees is written-off directly from the borrower's balance as the estimated uncollectible amounts. The
amounts written-off as of March 31, 2010, 2011 and 2012 were,¥9,036 million, ¥260 million and ¥287 million (US$3 million),
respectively.
(7) Reserve for employees' retirement benefits

The Company adopts accounting standards for employees'
retirement benefits (Business Accounting Council dated June
16, 1998) and accounts for the reserve for employees' retirement benefits based on the projected benefit obligation and plan
assets at the balance sheet date.
The Company adopts “Guidance on Accounting forTransfers between Retirement Benefit Plans” (ASBJ GuidanceNo.1 issued by the Accounting Standards Board of Japanon January 31, 2002) as the Company transferred qualified
retirement pension plans to defined benefit corporate pension
plans, and part of lump sum benefit plans to defined contribution
pension plans on July 1, 2011.
(8) Reserve for price fluctuation of securities

Reserve for price fluctuation of securities is calculated in accordance with Article 115 of the Insurance Business Law.
(9) Lease Transactions as a Lessee

Finance lease transactions that do not transfer ownership tothe lessee whose commencement day was on or before March
31, 2008 continued to be accounted for in a manner similar toaccounting treatment for ordinary rental transactions.
(10) Lease Transactions as a Lessor
As for the finance lease transactions where the Company is alessor, the lease fee is recorded in “interest, dividends and otherincome” at the time of receiving lease fee. The corresponding
cost of the lease transactions is recorded in “other investment
expenses”, which is calculated by deducting an amount equivalent to the interest allocated over the lease term from the lease
fee received.

FUKOKU MUTUAL LIFE INSURANCE COMPANY

21

(11) Accounting for hedge activities(15) Deferred assets

Hedge accounting is based on "Accounting Standards for
Financial Instruments" (ASBJ Statement No. 10 issued by the
Accounting Standards Board of Japan on August 11, 2006).
For the foreign currency forward contracts against the exchange rate fluctuations in the value of foreign currency-denominated bonds classified as available-for-sale securities, which
qualify for hedge accounting because of high correlation andeffectiveness between the hedging instruments and the hedged
items, valuation gains and losses on the foreign currency forward contracts are recorded in the statements of operations.
For the interest rate swaps against the interest rate fluctuations regarding loans, which qualify for hedge accounting
because of high correlation and effectiveness between thehedging instruments and the hedged items, valuation gains andlosses on the interest rate swaps are deferred until the maturityof the hedged transactions.
Deposits denominated in foreign currencies for which forward foreign exchange contracts are used to hedge the foreign
currency fluctuations are translated at the contract rates if theforward contracts qualify for specific hedge accounting. In thiscase, exchange differences between the exchange rate on the
trade date and the forward contract rate are allocated to eachfiscal year from the date contracted to the date settled.
For judging the effectiveness of hedge used, ratio analysis
of comparing the fluctuations in the fair value or cash flows ofhedged items and hedging instruments is mostly applied.

Discount on bonds is amortized equally over the period forwhich interest on bonds is fixed. This amount is deducted frombonds.

(12) Accounting for consumption taxes

The Company accounts for consumption taxes by the tax-exclusion method. The consumption taxes on certain assets, which
are not deductible from consumption taxes withheld and thatare stipulated to be deferred under the Tax Law, are deferred
as prepaid expenses and amortized equally over five years.
Consumption taxes other than deferred consumption taxes arerecognized as an expense when incurred.
(13) Policy reserve

Policy reserve is based on Article 116 of the Insurance Business
Law, and the premium reserve at the end of fiscal year is calculated by the following method:
In regard to the policies subject to the standard policy
reserve, the method as prescribed by the Commissioner of Financial Services Agency (Ministry of Finance Ordinance No. 48,
1996) is applied.
In regard to the policies not subject to the standard policy
reserve, the net level premium method is applied.
(14) Software

The software for internal use is amortized based on straight-line
method over the estimated useful lives.

22

FUKOKU MUTUAL LIFE INSURANCE COMPANY(16) Policy-reserve-matching bonds

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 the duration 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 theJapanese Institute of Certified Public Accountants on November
16, 2000).
The amounts of policy-reserve-matching bonds recordedon the balance sheets and the market value of these bonds asof March 31, 2010, 2011 and 2012, were written in Notes No. 3“Financial Instruments”.
2. Changes in Presentation(1) Effective for the fiscal year ended March 31, 2012, in
accordance with the amendment of the Enforcement
Regulation of the Insurance Business Law, the presentationof financial statements has been changed as follows.
(a) As for the statement of operations, “reversal of
allowance for possible loan losses” which was presented
in “extraordinary gains” until previous fiscal year isincluded in “investment income”.
(b) As for the statement of changes in net assets, the item
which was presented as “balance at the end of previous
fiscal year” until previous fiscal year is presented as“balance at the beginning of current period”.
(2) Effective for the year ended March 31, 2011, the Company
adopted “Accounting Standard for Asset Retirement Obligations” (ASBJ Statement No. 18 issued by the AccountingStandards Board of Japan on March 31, 2008) and “Guidanceon Accounting Standard for Asset Retirement Obligations”(ASBJ Guidance No. 21 issued by the Accounting Standards
Board of Japan on March 31, 2008). As a result, tangible
fixed assets increased by ¥1,722 million and the amount ofasset retirement obligations recorded in balance sheet was¥2,846 million. Ordinary profit decreased by ¥157 million andsurplus before income taxes decreased by ¥1,124 million.
(3) Effective for the year ended March 31, 2010, the Company
adopted “Partial Amendments to Accounting Standard for
Retirement Benefits (Part 3)“ (ASBJ Statement No.19 issued
by the Accounting Standards Board of Japan on July 31,2008). There is no effect of the change on ordinary profit andsurplus before income taxes since the Company has decided
to use the same discount rate as before.

The Company manages its asset management risk by
establishing internal control systems including various rules
pursuant to the “Basic Policy for Risk Management” establishedby the Board of Directors. Specifically, the Company eliminates
excessive risk deviating from the basic principle and secures thesafety of the assets by utilizing control functions of the Financial
and Investment 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 the possible
maximum losses which may arise from the holding assets withina certain range of risk buffers.
The carrying amounts, fair values and their relateddifferences of major financial assets and liabilities as of March
31, 2010, 2011 and 2012 were as follows:

3. Financial Instruments
Asset management of the general accounts other than theseparate accounts stipulated in Article 118 Paragraph 1 of the
Insurance Business Law is conducted on the principle of prudent and profitable investments, considering public and social
responsibilities of the insurance business. Based on this policy,
the Company allocates the fund, securing its liquidity, from themedium-to-long term viewpoints. The Company is diversifying
investments in assets such as foreign securities and equity securities within the acceptable range of risk in order to enhance
the profitability, although yen-denominated interest bearing
assets including debt securities such as Japanese government
bonds and loans are the cores of the portfolios. Derivatives aremainly used to mitigate the market risk regarding the securities
and loans. Major financial instruments including securities, loans
and derivatives are exposed to market risk and credit risk.

As of March 31,

2010

2011
Millions of yen

Carrying			amountFair value
Difference

Deposits:
Deposits not treated as securities.........................................
Total 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..............................................
Investments in subsidiaries and affiliates.............................
Available-for-sale securities....................................................
Total securities.......................................................................
Loans:
Policy loans............................................................................
Ordinary loans........................................................................
Total loans..............................................................................
Derivative instruments:
Hedge accounting not applied...............................................
Hedge accounting applied......................................................
Total derivative instruments...................................................

¥

68,83968,83991,000¥68,83968,83991,000¥Carrying
amount———¥Fair value

237,583
237,583—¥ 237,583
237,583—

Difference

¥

—
—
—

1,752
1,752

1,743
1,743

(8)
(8)

1,424
1,424

1,424
1,424

0
0

31,902
31,902

31,902
31,902——

32,16932,16932,16932,169——79,317
430,883
639,749
1,393
2,516,197
3,667,541

79,317433,717657,551933
2,516,197
3,687,718—
2,834
17,801(459)—
20,176228,171427,312652,180
1,393
2,347,024
3,656,081

228,171436,409
672,087868
2,347,024
3,684,560—
9,096
19,907(524)―
28,47874,186
1,146,758
1,220,945

74,186
1,174,444
1,248,630(0)27,68527,68571,479
1,072,383
1,143,863

71,4791,099,281
1,170,761(0)
26,897
26,897(1,644)(4,006)(5,650)(1,644)(4,006)(5,650)——―(6,049)(1,730)(7,780)(6,049)(1,730)(7,780)

—
—
—

¥

¥

¥

¥

¥

¥

									As of March 31,

2012

2012

Millions of yen

Millions of U.S. dollars

Carrying			amountFair value
Difference

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..............................................
Investments in subsidiaries and affiliates.............................
Available-for-sale securities....................................................
Total securities.......................................................................
Loans:
Policy loans............................................................................
Ordinary loans........................................................................
Total loans..............................................................................
Derivative instruments:
Hedge accounting not applied...............................................
Hedge accounting applied......................................................
Total derivative instruments...................................................

¥

65,600¥65,600¥Carrying
amount—$Fair value

798$

Difference

798

$ —

1,351
1,351

1,374
1,374

23
23

16
16

16
16

0
0

34,19434,19434,19434,194

—
—

416
416

416
416

—
—

214,053
823,530
684,9151,393
2,300,260
4,024,152

214,053
852,343
722,269854
2,300,260
4,089,780—
28,81237,354(538)—
65,6282,604
10,0198,333
1627,987
48,961

2,604
10,3708,787
1027,98749,760

—
350
454
(6)
—
798

70,164
969,199
1,039,363

70,163995,761
1,065,924(0)
26,562
26,561853
11,792
12,645853
12,115
12,969

(0)
323
323

(1,442)(3,506)(4,948)(1,442)(3,506)(4,948)

—
—
—

(17)
(42)
(60)

(17)
(42)
(60)

—
—
$ —

¥

¥

¥

$

$

									FUKOKU MUTUAL LIFE INSURANCE COMPANY

23

(1) Deposits excluding those which are treated as securities
based on “Accounting Standards for Financial Instruments”(ASBJ Statement No.10):
The fair values of deposits are based on their book values
since fair values approximate book values due to their shortmaturities.
		 Carrying amounts, fair values and related differences ofdeposits are omitted from the current fiscal year since themateriality has decreased.

monetary 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 receivable fromlegally bankrupt borrowers, substantially bankrupt borrowers and not currently bankrupt borrowers and monetaryclaims bought treated as loans are computed by deducting
the amount of the allowance for doubtful accounts from thebook values before direct write-offs.

(2) Call loans:
The fair values of call loans are based on their book values
since fair values approximate book values due to their shortmaturities.
Carrying amounts, fair values and related differences ofcall loans have been disclosed from the current fiscal year
since the materiality has increased. In order to reflect thechange in presentation, those amounts for the prior fiscal
years have been disclosed.

(5) Derivative instruments:i) The fair values of the futures and options traded at theexchange are measured at the settlement price of the exchange.
ii) The fair values of 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.

(3) Securities including deposits and monetary claims bought
which are treated as securities based on “Accounting Standards for Financial Instruments” (ASBJ Statement No.10)
and securities managed as trust assets in money held in
trust:
The fair values of marketable securities are measured at thequoted market price at the end of fiscal year. The fair values of other securities without the quoted market price arebased on the prices reasonably calculated such as the prices
offered by the information vendors or counterparty financial
institutions.
				 Investments in subsidiaries and affiliates, unlisted stocks
and investments in partnerships whereby partnership assets
consist of unlisted stocks whose fair values are deemed
extremely difficult to obtain, are excluded from above securities. The carrying amounts of investments in subsidiaries andaffiliates, unlisted stocks and investments in partnerships
were ¥26,132 million, ¥8,851 million and ¥8,306 million as ofMarch 31, 2010, ¥26,616 million, ¥8,845 million and ¥8,201
million as of March 31, 2011, and ¥35,969 million (US$437
million), ¥8,086million (US$98 million), and ¥7,729 million(US$ 94 million) as of March 31, 2012, respectively.
(4) 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 deadline havenot been set up due to the characteristics that the loan islimited 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 and24

FUKOKU MUTUAL LIFE INSURANCE COMPANY

4. Investment and Rental Property
The Company holds investment and rental properties such as
office buildings in Tokyo and other areas. The carrying amounts
and the fair values of investment and rental properties were
¥227,544 million and ¥298,967 million as of March 31, 2010,¥233,921 million and ¥284,059 million as of March 31, 2011,and ¥226,884 million (US$2,760 million) and ¥275,039 million(US$3,346 million) as of March 31, 2012 respectively. The fairvalue is mainly based on the value calculated by the Company inaccordance with real estate appraisal 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 ¥1,434 million and ¥1,355 million (US$16 million) as ofMarch 31, 2011 and 2012, respectively.
5. Loans Receivable
The total amounts of credits to bankrupt borrowers, delinquentloans, delinquent loans past 3 months or more and restructuredloans, which were included in loans, were ¥2,638 million, ¥3,308
million and ¥3,023 million (US$36 million) as of March 31, 2010,2011 and 2012, respectively.
i) The balances of credits to bankrupt borrowers were ¥352 million, ¥297 million and ¥280 million (US$3 million) as of March
31, 2010, 2011 and 2012, respectively.
ii) The balances of delinquent loans were ¥2,119 million, ¥774
million and ¥689 million (US$8 million) as of March 31, 2010,2011 and 2012, respectively.
iii) There were no balances of delinquent loans past 3 months ormore as of March 31, 2010, 2011 and 2012.
iv) The balances of restructured loans were ¥166 million, ¥2,236
million, and ¥2,053 million (US$ 24 million) as of March 31,
2010, 2011 and 2012, respectively.

Credits to bankrupt borrowers represent loans, excluding the balances already written-off, which meet the conditions prescribedin Article 96 Paragraph 1 Item 3 and 4 of the Enforcement Regulations of the Corporate Tax Law. Moreover, accruing intereston these loans is not recorded as income after determining thatprincipal of or interest on these loans is unlikely to be collected
due to the significant delay in repayment of principal or interest
payment or for some other reasons.
Delinquent loans are credits whose accruing interest is notrecorded as income due to the same reasons as describedabove, and exclude credits to bankrupt borrowers and loans forwhich interest payments have been suspended and rescheduled
to assist and support the borrowers in the restructuring of theirbusiness.
Delinquent loans past 3 months or more are loans for whichinterest payment or repayment of principal are delinquent for
3 months or more from the due date under the terms of therelated 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 exemptions, rescheduling of due date of principal or interest payment,
waiver of claim or other terms, have been negotiated for the purpose of assisting and supporting the borrowers in the restructuring of their business. This category excludes loans classified as
credits to bankrupt borrowers, delinquent loans and delinquentloans past 3 months or more.
The direct write-offs related to loans decreased credits tobankrupt borrowers described above by ¥8,097 million, ¥1 million and ¥1million (US$17 thousand) as of March 31, 2010, 2011
and 2012, respectively.
The direct write-offs related to loans decreased delinquentloans described above by ¥938 million, ¥258 million and ¥286
million (US$3 million) as of March 31, 2010, 2011 and 2012,
respectively.
6. Accumulated Depreciation of Tangible Fixed Assets
Accumulated depreciation of tangible fixed assets totaled to¥129,610 million, ¥137,343 million and ¥137,319 million (US$1,670 million) as of March 31, 2010, 2011 and 2012,
respectively.
7. Separate Accounts
Total assets in separate accounts provided for in Article 118 of
the Insurance Business Law were ¥95,207 million, ¥83,280 million, and ¥82,053 million (US$998 million) as of March 31, 2010,2011 and 2012, respectively. The amounts of separate accountliabilities were the same as separate account assets.
8. Receivables from/Payables to Subsidiaries
The total amounts of receivables from/payables to subsidiaries
were ¥3,463 million and ¥1,433 million as of March 31, 2010,¥2,675 million and ¥1,855 million as of March 31, 2011, and¥2,592 million (US$31 million) and ¥1,544 million (US$18 million), as of March 31, 2012, respectively.

9. Monetary Claims to Directors
Monetary claims to directors as of March 31, 2010, 2011 and2012 were ¥8 million, ¥6 million and ¥5 million (US$64 thousand), respectively.
10. Income Taxes
Deferred tax assets and deferred tax liabilities as of March 31,
2010 were ¥94,720 million and ¥29,692 million, respectively.
Valuation allowance for deferred tax assets was ¥2,857 million.
Major components of deferred tax assets were ¥57,349
million of policy reserves, ¥18,024 million of reserve for employees’ retirement benefits and ¥9,577 million of reserve for pricefluctuation of securities as of March 31, 2010.
Major component of deferred tax liabilities was ¥27,412
million of net unrealized gains on available-for-sale securities asof March 31, 2010.
The statutory tax rate and the actual effective tax rate forthe year ended March 31, 2010 were 36.2% and 14.3%, respectively. The major difference between the statutory tax rate andthe actual effective tax rate was (23.1%) of reserve for dividends
to policyholders.
Deferred tax assets and deferred tax liabilities as of March
31, 2011 were ¥98,663 million and ¥8,191 million, respectively.
Valuation allowance for deferred tax assets was ¥3,139 million.
Major components of deferred tax assets were ¥58,929
million of policy reserves, ¥18,144 million of reserve for employees’ retirement benefits and ¥12,105 million of reserve for pricefluctuation of securities as of March 31, 2011.
Major component of deferred tax liabilities was ¥5,673 million of net unrealized gains on available-for-sale securities as ofMarch 31, 2011.
The statutory tax rate and the actual effective tax rate forthe year ended March 31, 2011 were 36.2% and 19.5%, respectively. The major difference between the statutory tax rate andthe actual effective tax rate was (17.1%) of reserve for dividends
to policyholders.
Deferred tax assets and deferred tax liabilities as of March
31, 2012 were ¥83,977 million (US$1,021 million) and ¥33,810
million (US$411 million), respectively. Valuation allowance fordeferred tax assets was ¥3,035 million (US$36 million).
Major components of deferred tax assets were ¥48,892
million (US$594 million) of policy reserves, ¥14,257 million(US$173 million) of reserve for employees’ retirement benefitsand ¥10,923 million (US$132 million) of reserve for pricefluctuation of securities as of March 31, 2012.
Major component of deferred tax liabilities was ¥30,097
million (US$366 million) of net unrealized gains on available-forsale securities as of March 31, 2012.
The statutory tax rate and the actual effective tax rate
for the year ended March 31, 2012 were 36.2% and 45.1%,
respectively. The major differences between the statutory
tax rate and the actual effective tax rate were 24.7% of the
reduction of deferred tax assets due to the changes in tax ratesand (16.6%) of reserve for dividends to the policyholders.

FUKOKU MUTUAL LIFE INSURANCE COMPANY

25

Following the promulgation of the “Act for Partial
Amendment of the Income Tax Act, etc. for the Purpose of
Creating a Taxation System Responding to Changes in Economic
and Social Structures” (Act No.114, 2011) and the “Act on
Special Measures for Securing Financial Resources Necessary
to Implement Measures for Reconstruction following the Great
East Japan Earthquake” (Act No.117, 2011) on December 2,
2011, the corporate income tax rate will be lowered from thefiscal year beginning on April 1, 2012 and a special restoration
surtax will be imposed from the fiscal year beginning on April 1,2012 through the fiscal year beginning on April 1, 2014.
The effective statutory tax rate used by the Company forthe calculation of deferred tax assets and deferred tax liabilities

will consequently be changed from the current rate of 36.2%
to 33.3% for a temporary difference which is expected to bereversed in the period from April 1, 2012 to March 31, 2015,
and to 30.8% for a temporary difference which is expected tobe reversed after April 1, 2015. As a result of these changes,
deferred tax assets as for March 31, 2012 decreased by ¥639
million (US$7 million) and ¥7,009 million (US$85 million),
respectively and deferred tax liabilities for revaluation reserve
for land as of March 31, 2012 decreased by ¥1 million (US$24
thousand) and ¥2,853 million (US$34 million), respectively.
Income taxes deferred for the fiscal year ended March 31, 2012
increased by ¥12,966 million (US$157 million).

11. Reserve for Dividends to Policyholders
Changes in reserve for dividends to policyholders were as follows:
Years ended March 31,

2010

2011

2012

Millions of
U.S. dollars

		Millions of yen

Balance at the beginning of current fiscal year............................................
Transfer from surplus in previous fiscal year...............................................
Dividends paid in the current fiscal year......................................................
Increase in interest......................................................................................
Balance at the end of fiscal year..................................................................
12. Stocks of Subsidiaries
The amounts of stocks of subsidiaries the Company held as ofMarch 31, 2010, 2011 and 2012 were ¥27,525 million, ¥28,009
million and ¥37,362 million (US$454 million), respectively.
13. Pledged Assets and Secured Debts
Assets pledged as collateral as of March 31, 2010 were ¥21,642
million of securities. Secured debts as of March 31, 2010 were
¥4,548 million.
Assets pledged as collateral as of March 31, 2011 were¥23,633 million of securities. Secured debts as of March 31,
2011 were ¥4,629 million.
Assets pledged as collateral as of March 31, 2012 were¥24,300 million (US$295 million) of securities and ¥397 million(US$4 million) of bank deposits. Secured debts as of March 31,
2012 were ¥4,608 million (US$56 million).
14. Policy Reserves for the Reinsurance Contracts
Reserve for outstanding claims for the reinsurance contracts
provided in accordance with Article 71 Paragraph 1 of the Enforcement Regulation of the Insurance Business Law (hereinafter
called "reserve for outstanding claims for ceded reinsurance")
were ¥32 million, ¥42 million and ¥1 million (US$21 thousand)as of March 31, 2010, 2011, and 2012, respectively.
Policy reserve for the reinsurance contracts provided in accordance with Article 71 Paragraph 1 of the Enforcement Regulation of the Insurance Business Law (hereinafter called "policy
reserve for ceded reinsurance") were ¥30 million, ¥31 millionand ¥30 million (US$371 thousand) as of March 31, 2010, 2011

26

FUKOKU MUTUAL LIFE INSURANCE COMPANY¥ 57,317
17,856(20,571)157¥ 54,759¥ 54,759
19,505(21,176)116¥ 53,2052012¥53,205
24,381(23,700)
83¥53,969

$647
296
(288)
1
$656

and 2012, respectively.
15. Adjustment Items for Redemption of Foundation Funds
and Appropriation of Net Surplus
The total amounts of adjustment items for redemption of foundation funds and appropriation of net surplus defined in Article
30 Paragraph 2 of the Enforcement Regulation of the Insurance Business Law were ¥49,716 million, ¥11,838 million and¥71,351 million (US$868 million) as of March 31, 2010, 2011 and2012, respectively.
16. Additional Foundation Funds
The Company raised additional foundation funds of ¥15,000 million and ¥20,000 million (US$243 million) during the year ended
March 31, 2010 and 2012 in accordance with Article 60 of the
Insurance Business Law.
17. Redemption of Foundation Funds
In the fiscal year ended March 31, 2010 and 2012, in connection
with the redemption of foundation funds of ¥15,000 million and¥25,000 million (US$304 million), the Company reversed thereserve for redemption of foundation funds and provided theequivalent amount for accumulated foundation funds redeemedin accordance with Article 56 of the Insurance Business Law.
18. Commitment LineAs of March 31, 2010, 2011 and 2012, there were unused
commitment line agreements under which the Company is thelender of ¥5,653 million, ¥4,056 million and ¥1,023 million (US$12
million), respectively.

19. Subordinated Bonds
Repayments of subordinated bonds are subordinated to otherobligations.
20. Assets Denominated in Foreign Currencies
Assets denominated in foreign currencies as of March 31, 2010,2011 and 2012 totaled to ¥482,896 million, ¥718,304 million and¥791,485 million (US$9,629 million), respectively. The principal
foreign currency asset amounts were 1,466 million euros and
US$2,937 million as of March 31, 2010, 1,799 million euros andUS$4,169 million as of March 31, 2011, and 2,024 million euros
and US$ 4,693 million as of March 31, 2012 respectively.
Liabilities denominated in foreign currencies as of March 31,

2010, 2011 and 2012 totaled to ¥38,330 million, ¥36,075 millionand ¥33,787 million (US$411 million), respectively. The principal
foreign currency liability amounts as of March 31, 2010, 2011
and 2012 were 306 million euros.
21. Contribution to Policyholders Protection Corporation
The future contribution to the Life Insurance Policyholders Protection Corporation of Japan under Article 259 of the Insurance
Business Law were estimated at ¥10,639 million, ¥10,770 million and ¥10,731 million (US$130 million) as of March 31, 2010,2011 and 2012, respectively. The contributions were charged as
operating expenses in the year in which they were paid.

22. Reserve for Employees’ Retirement Benefits(1) The reserve for employees’ retirement benefits as of March 31, 2010, 2011 and 2012 were calculated as follows:
As of March 31,

2010

2011

2012

2012
Millions of
U.S. dollars

		Millions of yen

a. Projected benefit obligation.....................................................................

¥(71,591)¥(71,742)¥(72,872)$(886)

b. Fair value of pension plan assets.............................................................
c. Unfunded benefit obligation (a+b) ..........................................................
d. Unrecognized actuarial differences.........................................................
e. Unrecognized prior service cost..............................................................
f. Reserve for employees' retirement
benefits (c+d+e)....................................................................................

16,009(55,581)
5,667
137

15,728(56,014)5,802
102

17,167(55,704)
10,021
(636)

208
(677)
121
(7)

¥(49,776)¥(50,109)¥(46,320)$(563)(2) Gross amount of retirement benefit expenses for the years ended March 31, 2010, 2011 and 2012 were as follows:
Years ended March 31,

2010

2011

2012

Millions of
U.S. dollars

		Millions of yen

Service cost.................................................................................................
Interest cost................................................................................................
Expected return on pension plan assets.....................................................
Amortization of actuarial differences...........................................................
Amortization of prior service cost................................................................
		¥3,166
1,438
(450)
1,231
34
¥5,420¥3,096
1,430
(480)
1,171
34
¥5,2522012¥2,943
1,451
(471)
1,218
(20)
¥5,122

$35
17
(5)
14
(0)
$62

(3) The assumptions used in calculation of the above information were as follows:
Years ended March 31,

		

2010

2011

2012

Method of attributing the projected benefits to periods of service...................................

Straight-line
basis

Straight-line
basis

Straight-line
basis

Discount rate.....................................................................................................................
Expected rate of return on pension plan assets................................................................
Amortization period of actuarial differences......................................................................
Amortization period of prior service cost...........................................................................

2.0%
3.0%
10 years
10 years

2.0%
3.0%
10 years
10 years

2.0%
3.0%
10 years
10 years

FUKOKU MUTUAL LIFE INSURANCE COMPANY

27

III. Notes to Statements of Operations
1. Transactions with Subsidiaries
The total amounts of revenues and expenditures in connection
with subsidiaries were ¥982 million and ¥7,764 million for theyear ended March 31, 2010, ¥998 million and ¥7,576 million forthe year ended March 31, 2011 and ¥966 million (US$11 million)and ¥7,682 million (US$93 million) for the year ended March 31,
2012, respectively.

2. Gains on Sales of Securities
Major items of gains on sales of securities were as follows:
Years ended March 31,

2010

2011

2012

Domestic bonds..........................................................................................
Domestic stocks and others........................................................................
Foreign securities........................................................................................

¥14,017
7,664
333¥19,211
11,239
4

2010

2011

2012
Millions of
U.S. dollars

		Millions of yen¥11,747
3,780
1,326

$142
45
16

3. Losses on Sales of Securities
Major items of losses on sales of securities were as follows:
Years ended March 31,

2012

Millions of
U.S. dollars

		Millions of yen

Domestic bonds..........................................................................................
Domestic stocks and others........................................................................
Foreign securities........................................................................................

¥

564
12,771
28,158¥908
13,0366,473

2012¥ 1,324
17,027
6,573

$ 16
207
79

4. Losses on Valuation of Securities
Major items of losses on valuation of securities were as follows:
Years ended March 31,

2010

2011

2012

Millions of
U.S. dollars

		Millions of yen

Domestic bonds..........................................................................................
Domestic stocks and others........................................................................
Foreign securities........................................................................................
5. Policy Reserves for the Reinsurance Contracts
For the year ended March 31, 2010, reversal of reserve for outstanding claims for ceded reinsurance considered in calculationof reversal of reserve for outstanding claims was ¥22 million
and provision for policy reserve for ceded reinsurance considered in calculation of provision for policy reserve was ¥0 million.
For the year ended March 31, 2011, provision for reserve foroutstanding claims for ceded reinsurance considered in calculation of provision for reserve for outstanding claims was ¥928

FUKOKU MUTUAL LIFE INSURANCE COMPANY

¥

—
1,313
—

¥

—
5,870
52

2012

¥1,444
6,017
—

$17
73
—

million and provision for policy reserve for ceded reinsurance
considered in calculation of reversal of policy reserve was ¥1
million.
For the year ended March 31, 2012, provision for reservefor outstanding claims for ceded reinsurance considered in
calculation of provision for reserve for outstanding claims was¥40 million (US$498 thousand) and provision for policy reservefor ceded reinsurance considered in calculation of reversal ofpolicy reserve was ¥1 million (US$17 thousand).

6. Gains (Losses) from Trading Securities
Major items of gains (losses) from trading securities were as follows:
Years ended March 31,

2010

2011

2012

2012
Millions of
U.S. dollars

		Millions of yen

Interest, dividends and other income..........................................................
Gains (Losses) on sales of trading securities..............................................
Gains (Losses) on valuation of trading securities........................................

¥ 2,527(494)(1,866)¥ 6,814(8,234)(3,640)¥7,556
(977)
8,474

$ 91
(11)
103

7. Gains (Losses) from Money Held in Trust
Gains (Losses) from money held in trust for the years ended
March 31, 2010, 2011 and 2012 included valuation gains of ¥0
million, valuation losses of ¥0 million and valuation gains of ¥0
million (US$0 thousand), respectively.

(1) Method of grouping

8. Gains (Losses) from Derivative Instruments
Gains (Losses) from derivative instruments for the years ended
March 31, 2010, 2011 and 2012 included valuation gains of¥5,607 million, valuation losses of ¥4,346 million and valuation
gains of ¥4,273 million (US$51 million), respectively.

(2) Background of recognizing the impairment losses

9. Impairment Losses of Fixed Assets
For the year ended March 31, 2010, impairment losses of
fixed assets were as follows:				

Real estate and other assets used for insurance business operations are classified as one asset group as a whole. Other assets
such as real estate for rent and unused real estate are classified
as one group individually.					Profitability of certain real estate for rent dropped down significantly due to a decrease in the level of rental income and a declining trend of market prices of land. The Company reduced its
book values of such real estate for rent and unused real estate
to their recoverable amounts. The amounts reduced were recognized as impairment losses and included in the extraordinary
losses.

(3) Asset groups recognized impairment losses and losses by fixed assets
Year ended March 31,

				

2010
Millions of yen

Real estate for rent:
Land.......................................................................................................................................................................
Buildings and others..............................................................................................................................................

¥ 71
5

Total real estate for rent (i).....................................................................................................................................
Unused real estate:Land.......................................................................................................................................................................
Buildings and others..............................................................................................................................................

76
136
651

Total unused lease property (ii)..............................................................................................................................

788

Total:
Land.......................................................................................................................................................................
Buildings and others..............................................................................................................................................

208
656

Total (i)+(ii)..............................................................................................................................................................

¥865(4) Calculation method of recoverable amount						Recoverable amount is based on net sales value. Net sales value is determined based on appraisal value, posted price or road rate.
(5) Changes in presentation

The amount of impairment losses have been omitted for the current and previous fiscal year since there is less materiality.

FUKOKU MUTUAL LIFE INSURANCE COMPANY

29

Report of Independent Auditors

30

FUKOKU MUTUAL LIFE INSURANCE COMPANY

FUKOKU MUTUAL LIFE INSURANCE COMPANY

31

Consolidated Financial Statements
Consolidated Balance Sheets
Fukoku Mutual Life Insurance Company and consolidated subsidiaries
As of March 31, 2010, 2011 and 2012

As of March 31,

2010

2011

2012

2012
Millions of
U.S. dollars

Millions of yen

Assets:Cash and deposits .................................................................

¥

83,557¥ 314,392¥

73,260$891

Call loans ...............................................................................

91,000—65,600798

Monetary claims bought . ......................................................

1,752

1,424

1,351

16

Money held in trust ...............................................................

32,902

33,16935,194428

Securities . .............................................................................

4,248,119

4,681,280

5,422,669

65,977Loans .....................................................................................

1,223,402

1,146,719

1,042,359

12,682Land...................................................................................

162,160

163,574

161,076

1,959

Buildings............................................................................

96,764

116,647

110,051

1,338

Lease assets......................................................................

31

47

117

1

Construction in progress...................................................

17,009

1,165

2,234

27

Tangible fixed assets:

Other tangible fixed assets................................................

3,728

3,427

3,348

40

		

279,694

284,863

276,828

3,368

Software............................................................................

7,626

8,750

8,696

105

Goodwill.............................................................................

6,304

5,520

4,618

56

Lease assets......................................................................

—

987

761

9

Other intangible fixed assets.............................................

454

453

453

5

		

14,384

15,712

14,529176

Agency receivables.................................................................

1

4

7

0

Intangible fixed assets:

Reinsurance receivables . ......................................................

281

174

123

1

Other assets ..........................................................................

52,243

106,524

56,062

682

Deferred tax assets ...............................................................

63,30888,745

48,211

586

Allowance for possible loan losses .......................................

(2,586)(2,665)(2,468)(30)

Total assets . .........................................................................

¥6,088,061¥6,670,346¥7,033,729$85,578

See notes to the consolidated financial statements.

32

FUKOKU MUTUAL LIFE INSURANCE COMPANYAs of March 31,

2011

2010

2012

2012
Millions of
U.S. dollars

Millions of yen

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

¥

Policy reserve ....................................................................

5,612,304

26,407¥

6,115,914

32,7926,510,809

79,216

Reserve for dividends to policyholders .............................

54,75953,20553,969656¥

24,149$293

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

585

654

648

7

		

5,694,057

6,202,567

6,589,577

80,174

Agency payables ...................................................................

1,872

1,685

560

6

Reinsurance payables . ..........................................................

140

100

88

1

Subordinated bonds ..............................................................

37,40635,21432,896400

Other liabilities . .....................................................................

43,681

129,127

50,593615

Reserve for employees' retirement benefits ........................

49,80350,153

46,384564

Reserve for price fluctuation of securities . ...........................

26,69733,86538,183

464

Deferred tax liabilities for revaluation reserve for land ..........

19,983

19,936

16,195

197

Total liabilities .....................................................................

5,873,642

6,472,650

6,774,480

82,424

Foundation funds . .................................................................

40,00040,00035,000425

Accumulated foundation funds redeemed ............................

46,00046,00071,000863

Net assets:

Reserve for revaluation .........................................................

112

112

112

1

Consolidated surplus .............................................................

77,02098,22877,183939

Total foundation funds, surplus and others .......................

163,132

184,340

183,295

2,230

48,045

10,00668,806837

under hedge accounting ......................................................

538

365

170

2

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

773

1,366

3,383

41

Foreign currency translation adjustment ...............................

(583)

(761)

(828)

(10)

Total accumulated other comprehensive income ..............

48,774

10,977

71,532870

Minority interests ..................................................................

2,513

2,378

4,421

53

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

Total net assets ....................................................................

214,419

197,696259,249

3,154

Total liabilities and net assets . ...........................................

¥6,088,061¥6,670,346¥7,033,729$85,578

See notes to the consolidated financial statements.

FUKOKU MUTUAL LIFE INSURANCE COMPANY

33

Consolidated Statements of Operations
Fukoku Mutual Life Insurance Company and consolidated subsidiaries
For the years ended March 31, 2010, 2011 and 2012

Years ended March 31,

2010

2011

2012

Millions of
U.S. dollars

Millions of yen

Ordinary revenues:
Premium and other income .....................................................
Investment income:Interest, dividends and other income ..................................
Gains from money held in trust, net . ..................................
Gains from trading securities, net .......................................
Gains on sales of securities . ...............................................
Gains from redemption of securities....................................
Gains from derivative instruments, net ...............................
Reversal of allowance for possible loan losses....................
Other investment income ...................................................
Gains from separate accounts, net .....................................

2012¥ 920,125¥1,210,851¥ 950,986$11,570

Other ordinary revenues . ........................................................
Total ordinary revenues ........................................................

116,073—165
22,398———358
14,428
153,424
16,412
1,089,963

124,544361—
30,678
—
3,335
—
354
—
159,276
12,507
1,382,635

131,529162
12,872
19,630
338
—
57
156
1,679
166,427
20,396
1,137,810

1,600
1
156
238
4
—
0
1
20
2,024
248
13,843

Ordinary expenditures:
Claims and other payments:
Claims . ................................................................................
Annuities .............................................................................
Benefits ...............................................................................
Surrenders ...........................................................................
Other payments ..................................................................
		

181,21388,245
147,812
119,42237,075
573,769

178,21091,729189,273
138,695
29,923627,832

142,771
95,211
133,356
107,691
26,800505,831

1,737
1,158
1,622
1,310
326
6,154

—
285,029
157

6,385
503,609116—
394,895
83

—
4,804
1

1
285,1880510,113

0394,979

0
4,805

1,852
197
—
41,753
1,676
11,555
1,711
0
5,230
6,093
—
70,070102,349
24,114
1,055,492¥ 34,470

1,540
—
5,069
20,511
5,922
—
2,654
—
5,732
5,238
3,034
49,704
109,797
23,8691,321,317¥ 61,318

1,423——
26,405
9,222
5,725
1,876
—
6,477
5,607
—
56,740103,441
22,985
1,083,978¥ 53,832

17
—
—
321
112
69
22
—
78
68
—
690
1,258
279
13,188$ 654

Provision for policy reserve and others:
Provision for reserve for outstanding claims .......................
Provision for policy reserve .................................................
Interest on accumulated dividends to policyholders ...........
Interest on accumulated dividends topolicyholders (subsidiary)....................................................
		Investment expenses:
Interest expenses . ..............................................................
Losses from money held in trust, net..................................
Losses from trading securities, net......................................
Losses on sales of securities ..............................................
Losses on valuation of securities ........................................
Losses from derivative instruments, net . ...........................
Foreign exchange losses, net . ............................................
Write-off of loans . ...............................................................
Depreciation of real estate for rent and other assets ..........
Other investment expenses ................................................
Losses from separate accounts, net....................................
Operating expenses ................................................................
Other ordinary expenditures . ..................................................
Total ordinary expenditures . ................................................
Ordinary profits .....................................................................
34

FUKOKU MUTUAL LIFE INSURANCE COMPANY

Years ended March 31,

2011

2010

2012

Millions of
U.S. dollars

Millions of yen

Extraordinary gains:
Gains on disposal of fixed assets ........................................
Reversal of allowance for possible loan losses....................
Gain on change in equity......................................................
Other extraordinary gains.....................................................
Total extraordinary gains ......................................................
Extraordinary losses:
Losses on disposal of fixed assets . ....................................
Impairment losses ...............................................................
Provision for reserve for price fluctuation of securities .......
Losses on reduction entry of real estate for tax purpose.....
Effect of applying the accounting standard for asset
retirement obligations .......................................................
Total extraordinary losses . ..................................................
Provision for reserve for dividends topolicyholders (subsidiary) ................................................
Surplus before income taxes . ..............................................
Income taxes:
Current ................................................................................
Deferred ..............................................................................
Total income taxes . ...............................................................
Net surplus before minority interests ..................................
Minority interests ..................................................................
Net surplus for the year ........................................................

¥

326
527
—
—
853

¥

2012

16
957
—
6
980

¥ 4,645
—
55
—
4,700

$ 56
—
0
—
57

696
865
1,924
—

111
318
7,167
—

161
433
4,318
9

1
5
52
0

—
3,486

967
8,564

—
4,923

—
59

397
31,439456
53,277440
53,168

5
646

4,379
(350)
4,029
27,410227¥27,182

14,719(3,809)10,90942,367
168¥42,199

9,859
14,823
24,68328,485
93¥28,391

119
180
300
346
1
$345

See notes to the consolidated financial statements.

Consolidated Statement of Comprehensive Income
Fukoku Mutual Life Insurance Company and consolidated subsidiaries
For the year ended March 31, 2011 and 2012

Years ended March 31,

2010

2011

2012

Millions of
U.S. dollars

Millions of yen

Net surplus before minority interests.......................................
Other comprehensive income:Net unrealized gains (losses) on available-for-salesecurities, net of tax.....................................................
Deferred valuation gains (losses) under hedge
accounting.....................................................................
Revaluation reserve for land, net of tax............................
Foreign currency translation adjustment..........................
		Comprehensive income attributable to:Parent company................................................................
Minority interests.............................................................
		

2012

¥ 27,410¥ 42,367¥28,485$ 346

84,310(38,009)

58,955

717

59
3
83
84,457

(173)
—
(177)
(38,360)

(194)
2,854
(67)
61,548

(2)
34
(0)
748

111,585281¥ 11,867

3,809
196
4,006

89,784248¥90,033

1,092
3$1,095¥

See notes to the consolidated financial statements.
FUKOKU MUTUAL LIFE INSURANCE COMPANY

35

Consolidated Statements of Cash Flows
Fukoku Mutual Life Insurance Company and consolidated subsidiaries
For the years ended March 31, 2010, 2011 and 2012

Years ended March 31,

2011

2010

2012

Millions of
U.S. dollars

Millions of yen

Cash flows from operating activities:
Surplus before income taxes . ................................................ ¥31,439Depreciation of real estate for rent and other assets .............
5,230
Depreciation ...........................................................................
5,622
Impairment losses ..................................................................
865
Amortization of goodwill . .......................................................
783
Increase (Decrease) in reserve for outstanding claims ..........
(2,448)
Increase (Decrease) in policy reserve . ...................................
285,029
Interest on accumulated dividends to policyholders ..............
157
Interest on accumulated dividends
to policyholders (subsidiary).................................................
1
Provision for reserve for dividends
to policyholders (subsidiary).................................................
397
Increase (Decrease) in allowance for possible loan losses ....
(8,849)
Increase (Decrease) in reserve for employees'
490
retirement benefits . ............................................................
Increase (Decrease) in reserve for pricefluctuation of securities .......................................................
1,924
Interest, dividends and other income .....................................
(116,073)
18,190(Gains) Losses on securities . .................................................
Interest expenses . .................................................................
1,852
Foreign exchange (gains) losses, net .....................................
1,711
370
(Gains) Losses on tangible fixed assets .................................
(Increase) Decrease in agency receivables ............................
0(153)(Increase) Decrease in reinsurance receivables .....................
(Increase) Decrease in other assets except frominvesting and financing activities.........................................
(2,064)
663
Increase (Decrease) in agency payables ................................
Increase (Decrease) in reinsurance payables .........................
27
Increase (Decrease) in other liabilities except from
1,815
investing and financing activities.........................................
Others ....................................................................................
31,101
258,083
Subtotal ..............................................................................
Interest, dividends and other income received ......................
118,875
Interest paid ...........................................................................
(1,851)(20,571)
Dividends to policyholders paid ..............................................
Dividends to policyholders paid (subsidiary) ...........................
(346)
3,601
Corporate income tax (paid) refunded ....................................
Net cash provided by (used in) operating activities (I) ........
357,790
Cash flows from investing activities:(Increase) Decrease in deposits .............................................
29
Proceeds from sales and redemption of monetaryclaims bought ......................................................................
303
Payments for increase in money held in trust ........................
(7,000)6,950
Proceeds from decrease in money held in trust ....................
Payments for purchase of securities ...................................... (2,095,137)
Proceeds from sales and redemption of securities ................
1,720,166
Payments for additions to loans .............................................
(155,444)
Proceeds from collections of loans ........................................
148,816
Proceeds from settlement of derivatives ...............................
(11,775)
Others ....................................................................................
(1,395)
Subtotal (IIa) .......................................................................
(394,485)(I+IIa)................................................................................... ¥ (36,695)

36

FUKOKU MUTUAL LIFE INSURANCE COMPANY¥

53,277
5,732
5,841
318
793
6,385
503,609
116

¥

2012

53,168
6,477
5,802
433
763
(8,643)394,895
83

$

646
78
70
5
9
(105)
4,804
1

0

0

0

456
78

440
(196)

5
(2)

349

(3,768)

(45)

7,167
(124,544)
161
1,540
2,654
1,041
(2)
106

4,318
(131,529)
6,670
1,423
1,876
(4,496)(2)
51

52(1,600)
81
17
22
(54)
(0)
0

(929)
(187)
(39)

(1,365)(1,124)
(12)

(16)
(13)
(0)

985
18,819483,734
129,665(1,556)(21,176)(388)(4,563)585,713

2,364
18,780346,411140,383(1,439)(23,700)(446)(19,825)
441,382

28
228
4,214
1,708
(17)
(288)
(5)
(241)
5,370

160

84

1

327
(3,500)3,581(2,011,445)
1,505,910(124,767)
189,1147,271
5,654(427,690)¥ 158,023

73(9,800)7,929(1,758,975)
1,066,150(101,397)
193,911(9,825)(2,328)(614,177)¥ (172,795)

0
(119)
96
(21,401)
12,971(1,233)
2,359
(119)
(28)
(7,472)$ (2,102)

Years ended March 31,

2010

2011

2012

Millions of
U.S. dollars

Millions of yen

Payments for purchase of tangible fixed assets ....................
Proceeds from sales of tangible fixed assets . .......................
Payments for purchase of intangible fixed assets...................
Payments for additional acquisition of shares of
consolidated subsidiary.........................................................
Net cash provided by (used in) investing activities . ...........
Cash flows from financing activities:
Financing of additional foundation funds ................................
Redemption of foundation funds . ..........................................
Interest payment for foundation funds . .................................
Proceeds from stock issuance to minority share holders........
Dividends paid to minority interests........................................
Payments for lease obligations................................................
Net cash provided by (used in) financing activities . ...........
Effect of exchange rate changes on cash andcash equivalents ....................................................................
Net increase (decrease) in cash and cash equivalents ..........
Cash and cash equivalents at the beginning of the year ......
Cash and cash equivalents at the end of the year .................

2012¥ (38,458)
753(2,156)¥ (13,047)
116(2,737)¥—(434,346)(326)(443,686)—(612,551)—(7,452)

15,000(15,000)
(716)
—
(23)
—
(739)

—
—
(892)
—
(15)
(222)
(1,130)20,000(25,000)
(892)
1,999
(12)
(252)
(4,157)

243
(304)
(10)
24
(0)
(3)
(50)

(445)
(77,740)
251,626¥173,885(842)
140,053
173,885¥313,939(108)(175,434)
313,939¥ 138,504(1)(2,134)
3,819$ 1,685(3,226)
7,078(2,225)

$

(39)
86
(27)

See notes to the consolidated financial statements.

FUKOKU MUTUAL LIFE INSURANCE COMPANY

37

Consolidated Statements of Changes in Net Assets
Fukoku Mutual Life Insurance Company and consolidated subsidiaries
For the years ended March 31, 2010, 2011 and 2012

Years ended March 31,

2010

2011

2012

Millions of
U.S. dollars

Millions of yen

Foundation funds, surplus and others:
Foundation funds
		 Balance at the beginning of current fiscal year...............
		 Changes in the current fiscal year:
			 Financing of additional foundation funds....................
			 Redemption of foundation funds................................
			 Total changes in the current fiscal year.......................
		 Balance at the end of current fiscal year.........................
Accumulated foundation funds redeemed		 Balance at the beginning of current fiscal year...............
		 Changes in the current fiscal year:
			 Additions to accumulated foundation			
funds redeemed.......................................................
			 Total changes in the current fiscal year.......................
		 Balance at the end of current fiscal year.........................
Reserve for revaluation
		 Balance at the beginning of current fiscal year...............
		 Changes in the current fiscal year:
			 Total changes in the current fiscal year.......................
		 Balance at the end of current fiscal year.........................
Consolidated surplus
		 Balance at the beginning of current fiscal year...............
		 Changes in the current fiscal year:
			 Additions to reserve for dividends to policyholders....
			 Payment of interest on foundation funds...................
			 Net surplus for the year..............................................
			 Reversal of reserve for redemption of			foundation funds......................................................
			 Reversal of revaluation reserve for land......................
			 Total changes in the current fiscal year.......................
		 Balance at the end of current fiscal year.........................
Total foundation funds, surplus and others
		 Balance at the beginning of current fiscal year...............
		 Changes in the current fiscal year:
			 Financing of additional foundation funds....................
			 Additions to reserve for dividends to policyholders.....
			 Additions to accumulated foundation funds			redeemed.................................................................
			 Payment of interest on foundation funds...................
			 Net surplus for the year..............................................
			 Redemption of foundation funds................................
			 Reversal of reserve for redemption of			foundation funds......................................................
			 Reversal of revaluation reserve for land......................
			 Total changes in the current fiscal year.......................
		 Balance at the end of current fiscal year.........................

38

FUKOKU MUTUAL LIFE INSURANCE COMPANY

2012¥ 40,000¥ 40,000¥ 40,000$ 486

15,000(15,000)—
40,000———40,00020,000(25,000)(5,000)35,000

243
(304)
(60)
425

31,00046,00046,000559

15,00015,00046,000——46,00025,00025,00071,000

304
304
863

112

112

112

1

—
112

—
112

—
112

—
1

83,36577,02098,228

1,195(17,856)(716)
27,182(19,505)(892)
42,199(24,381)(892)
28,391

(296)
(10)
345

(15,000)
44(6,345)77,020—(592)
21,20898,228(25,000)
837(21,045)
77,183

(304)
10
(256)
939

154,477

163,132

184,340

2,242

15,000(17,856)—(19,505)

20,000(24,381)

243
(296)

15,000(716)
27,182(15,000)—(892)
42,199—25,000(892)
28,391(25,000)

304
(10)
345
(304)

(15,000)
44
8,654¥163,132—(592)
21,208¥184,340(25,000)
837(1,045)¥183,295

(304)
10
(12)
$2,230Years ended March 31,

2010

2011

2012

Millions of
U.S. dollars

Millions of yen

Accumulated other comprehensive income:Net unrealized gains (losses) on available-for-salesecurities, net of tax
		 Balance at the beginning of current fiscal year...............
		 Changes in the current fiscal year:
			 Net changes, excluding foundation funds, surplus and others
			 Total changes in the current fiscal year.......................
		 Balance at the end of current fiscal year.........................
Deferred valuation gains (losses) under hedge accounting
		 Balance at the beginning of current fiscal year...............
		 Changes in the current fiscal year:
			 Net changes, excluding foundation funds, surplus and others
			 Total changes in the current fiscal year.......................
		 Balance at the end of current fiscal year.........................
Revaluation reserve for land, net of tax
		 Balance at the beginning of current fiscal year...............
		 Changes in the current fiscal year:
			 Net changes, excluding foundation funds, surplus and others
			 Total changes in the current fiscal year.......................
		 Balance at the end of current fiscal year.........................
Foreign currency translation adjustment
		 Balance at the beginning of current fiscal year...............
		 Changes in the current fiscal year:
			 Net changes, excluding foundation funds, surplus and others
			 Total changes in the current fiscal year.......................
		 Balance at the end of current fiscal year.........................
Total accumulated other comprehensive income
		 Balance at the beginning of current fiscal year...............
		 Changes in the current fiscal year:
			 Net changes, excluding foundation funds, surplus and others
			 Total changes in the current fiscal year.......................
		 Balance at the end of current fiscal year.........................
Minority interests
Balance at the beginning of current fiscal year....................
Changes in the current fiscal year:
		 Net changes, excluding foundation funds, surplus and others
		 Total changes in the current fiscal year...........................
Balance at the end of current fiscal year..............................
Total net assets
Balance at the beginning of current fiscal year....................
Changes in the current fiscal year:
		 Financing of additional foundation funds.........................
		 Additions to reserve for dividends to policyholders........
		 Additions to accumulated foundation funds redeemed..
		 Payment of interest on foundation funds........................
		 Net surplus for the year...................................................
		 Redemption of foundation funds.....................................
		 Reversal of reserve for redemption of		foundation funds .........................................................
		 Reversal of revaluation reserve for land..........................
		 Net changes, excluding foundation funds, surplus and others
		 Total changes in the current fiscal year...........................
Balance at the end of current fiscal year..............................

2012¥ (36,210)¥ 48,045¥ 10,006$ 121

84,25584,25548,045(38,038)(38,038)
10,006

58,79958,79968,806

715
715
837

479

538

365

4

59
59
538

(173)
(173)
365

(194)
(194)
170

(2)
(2)
2

814

773

1,366

16

(40)
(40)
773

592
592
1,366

2,016
2,016
3,383

24
24
41

(667)

(583)

(761)

(9)

83
83
(583)

(177)
(177)
(761)

(67)
(67)
(828)

(0)
(0)
(10)

(35,584)

48,774

10,977

133

84,35884,35848,774(37,796)(37,796)
10,97760,55560,55571,532

736
736
870

2,254

2,513

2,378

28

258
258
2,513

(134)
(134)
2,378

2,043
2,043
4,421

24
24
53

121,147

214,419

197,696

2,405

15,000(17,856)
15,000(716)
27,182(15,000)—(19,505)—(892)
42,199—20,000(24,381)
25,000(892)
28,391(25,000)

243
(296)
304
(10)
345
(304)

(15,000)
44
84,617
93,271¥ 214,419—(592)(37,931)(16,723)¥ 197,696(25,000)
837
62,59861,553¥259,249

(304)
10
761
748
$3,154

FUKOKU MUTUAL LIFE INSURANCE COMPANY

39

Notes to the Consolidated Financial Statements

I. Presentation of the Consolidated Financial
Statements
1. Basis of Presentation
The accompanying consolidated financial statements have been
prepared from the accounts maintained by Fukoku Mutual Life
Insurance Company (the "Company") and its consolidated subsidiaries in accordance with the provisions set forth in the Insurance Business Law of Japan and its related rules and regulations
and in conformity with accounting principles generally acceptedin Japan, which are different in certain respects from accounting
principles generally accepted in countries and jurisdictions otherthan 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 eliminated.
As a result, total in yen shown herein do not necessarily agreewith the sum of the individual amounts.
2. U.S. Dollar Amounts
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 ¥82.19 = US$1.00, the effective rate of exchange at the balance sheet date of March 31, 2012. The translations should not
be construed as representations that such yen amounts havebeen or could in the future be, converted into U.S. dollars at thator any other rates.

Major unconsolidated subsidiary is Fukoku Seimei Building Company Limited.
Seven subsidiaries are excluded from the scope of consolidation, as each one of them is small in its total assets, amountof sales, net surplus for the year and surplus and is sufficiently
insignificant to reasonable judgement on its impact on the financial position and results of operation of the Company's group.
(2) Application of equity method

Unconsolidated subsidiaries (such as Fukoku Seimei building
Company Limited, etc.) are insignificant in their impact on net
surplus and surplus, and also immaterial as a whole, therefore,
application of equity method is withheld.
There are no affiliates for the years ended March 31, 2010,2011 and 2012.
(3) Fiscal year of consolidated subsidiaries

Among the subsidiaries to be consolidated, fiscal year-end ofoverseas subsidiaries is December 31. For the preparation of
consolidated financial statements, financial statements as ofthat date are used and concerning any important transaction taking place in between December 31 and the consolidated closing
date, necessary adjustments for consolidation are made.
(4) Amortization of goodwill

Goodwill is amortized by the straight-line method over a periodof 10 years and in case of the immaterial amount of goodwill,such amount is fully charged to operating expenses when incurred.
(5) Valuation of subsidiary's assets and liabilities on acquisition

3. Principles of Consolidation(1) Scope of consolidation

Consolidated subsidiaries for the years ended March 31, 2010,2011 and 2012 are listed below:
Fukoku Shinyo Hosho Company Limited
Fukoku Capital Management, Inc.
Fukokushinrai Life Insurance Company
Fukoku Information Systems Co., Ltd.
Fukoku Life International (U.K.) Limited
Fukoku Life International (America) Inc.

40

FUKOKU MUTUAL LIFE INSURANCE COMPANY

On acquisition of a subsidiary, all of the subsidiary’s assets andliabilities that exist at the date of acquisition are recorded at theirfair value.

II. Notes to Balance Sheets
1. Significant Accounting Policies(1) Valuation methods of securities

The valuation of securities, including bank deposits and monetary claims bought which are equivalent to securities, andsecurities managed as trust assets in money held in trust, is asfollows:

i) Trading securities are stated at fair market value. Costs of
their sales are determined by the moving average method.
ii) Held-to-maturity debt securities are stated at amortized cost
under the straight-line method, cost being determined by themoving average method.
iii) Policy-reserve-matching bonds are stated at amortized 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 Insurance Industry” (Industry Audit
Committee Report No.21 issued by the Japanese Institute ofCertified Public Accountants on November 16, 2000).
iv) Investments in unconsolidated subsidiaries and affiliates
which are not accounted for under the equity method arestated at cost, cost being determined by the moving averagemethod.
v) Available-for-sale securities with fair market value are stated
at fair market value based on the market prices at the end of
fiscal year. Costs of their sales are determined by the moving average method. Net unrealized gains or losses on theseavailable-for-sale securities, net of taxes, are recorded as aseparate component of net assets.
Available-for-sale securities whose fair values 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 isconsidered to be an adjustment of interest. Such bonds arestated at amortized cost under the straight-line method, cost
being determined by the moving average method.
(2) Valuation methods of derivative instruments

Derivative instruments are stated at fair market value.
(3) Revaluation of land

The Company revalued the land for business purposes basedon the Law for Revaluation of Land (Law No.34 promulgated on
March 31, 1998). The difference between fair value and bookvalue resulting from the revaluation, net of related taxes, is recorded as revaluation reserve for land as a separate componentof net assets and the related tax is recorded as deferred tax
liabilities for revaluation reserve for land.
Date of revaluation: March 31, 2002
Method of revaluation as prescribed for in Article 3 Paragraph
3 of the said Law:
Calculation is based on the appraisal value for property tax set
forth in Article 2 item 3 of the Enforcement Ordinance of the
Law for Revaluation of Land (Government Ordinance No.119
promulgated on March 31, 1998) and the road rate set forth in
Article 2 item 4 of the said Ordinance with certain reasonableadjustments.

(4) Depreciation of tangible fixed assets
Depreciation of the Company's tangible fixed assets is calculated by the following methods.
Buildings (excluding lease assets)i) Acquired on or before March 31, 1998: Previous decliningbalance methodii) Acquired on or after April 1, 1998 but on or before March 31,
2007: Previous straight-line method
Acquired on or after April 1, 2007: Straight-line methodi) Assets other than buildings (excluding lease assets)ii) Acquired on or before March 31, 2007: Previous decliningbalance methodiii) Acquired on or after April 1, 2007: Declining-balance method
Lease assets related to finance lease transactions that do nottransfer ownership: Straight-line method over the lease term
Other tangible fixed assets acquired for ¥100,000 or more but
less than ¥200,000 are depreciated equally over three years.
(5) Foreign currency translation

Foreign currency-denominated assets and liabilities are translated into Japanese yen at the effective exchange rate prevailingat the balance sheet date.
(6) Allowance for possible loan losses

Allowance for possible loan losses is provided in accordancewith the Company's standards of self-assessment and write-offs
and reserves on credit quality:i) For the credits of borrowers who are legally bankrupt suchas being in the proceedings of bankruptcy or civil rehabilitation (hereinafter called "legally bankrupt borrowers") and whoare substantially bankrupt (hereinafter called "substantiallybankrupt borrowers"), the Company provides the remaining
amount 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 the amounts after deductions of theamount expected to be collected through the disposal of collateral or the execution of guarantees.
iii) For the credits of borrowers other than the above, the Company provides the amounts calculated by multiplying the borrowers' balance by the actual ratio of bad debt losses on defaults
during a certain past period.

FUKOKU MUTUAL LIFE INSURANCE COMPANY

41

All credits are assessed by the relevant departments in 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 independent of business-related
divisions. Subsequently, the allowance for possible loan losses
are provided based on the results of these assessments.
For the credits of legally bankrupt borrowers and substantially bankrupt borrowers, the amounts remaining after deductions of collateral value or the amounts collectible through theexecution of guarantees is written-off directly from the borrower’s balance as the estimated uncollectible amounts. The
amounts written-off as of March 31, 2010, 2011 and 2012 were
¥9,159 million, ¥287 million and ¥332 million (US$4 million),
respectively.
(7) Reserve for employees' retirement benefits

The Company and its consolidated subsidiaries adopt accounting standards for employees' retirement benefits (BusinessAccounting Council dated June 16, 1998) and account for the reserve for employees’ retirement benefits based on the projected
benefit obligation and plan assets at the balance sheet date.
The Company adopts “Guidance on Accounting forTransfers between Retirement Benefit Plans” (ASBJ GuidanceNo.1 issued by the Accounting Standards Board of Japanon January 31, 2002) as the Company transferred qualified
retirement pension plans to defined benefit pension plans, andpart of lump sum benefit plans to defined contribution pension
plans on July 1, 2011.

(11) Accounting for hedge activities

Hedge accounting is based on "Accounting Standards for
Financial Instruments" (ASBJ Statement No. 10 issued by the
Accounting Standards Board of Japan on August 11, 2006).
For the foreign currency forward contracts against theexchange rate fluctuations in the value of foreign currency-denominated bonds classified as available-for-sale securities, which
qualify for hedge accounting because of high correlation andeffectiveness between the hedging instruments and the hedged
items, valuation gains and losses on the foreign currency forward contracts are recorded in the statements of operations.
For the interest rate swaps against the interest rate fluctuations regarding loans, which qualify for hedge accounting
because of high correlation and effectiveness between thehedging instruments and the hedged items, valuation gains andlosses on the interest rate swaps are deferred until the maturityof the hedged transactions.
Deposits denominated in foreign currencies for which forward foreign exchange contracts are used to hedge the foreign
currency fluctuations are translated at the contract rates if theforward contracts qualify for specific hedge accounting. In thiscase, exchange differences between the exchange rate on the
trade date and the forward contract rate are allocated to eachfiscal year from the date contracted to the date settled.
For judging the effectiveness of hedge used, ratio analysis
of comparing the fluctuations in the fair value or cash flows ofhedged items and hedging instruments is mostly applied.
(12) Accounting for consumption taxes(8) Reserve for price fluctuation of securities

Reserve for price fluctuation of securities is calculated in accordance with Article 115 of the Insurance Business Law.
(9) Lease Transactions as a Lessee
Finance lease transactions that do not transfer ownership to thelessee whose commencement day was on or before March 31,
2008 continued to be accounted for in a manner similar to accounting treatment for ordinary rental transactions.
(10) Lease Transactions as a Lessor
As for the finance lease transactions where the Company is alessor, the lease fee is recorded in “interest, dividends and otherincome” at the time of receiving lease fee. The corresponding
cost of the lease transactions is recorded in “other investment
expenses” , which is calculated by deducting an amount equivalent to the interest allocated over the lease term from the lease
fee received.

42

FUKOKU MUTUAL LIFE INSURANCE COMPANY

The Company accounts for consumption taxes by the tax-exclusion method. The consumption taxes on certain assets, which
are not deductible from consumption taxes withheld and thatare stipulated to be deferred under the Tax Law, are deferred
as prepaid expenses and amortized equally over five years.
Consumption taxes other than deferred consumption taxes arerecognized as an expense when incurred.
(13) Policy reserve

Policy reserve is based on Article 116 of the Insurance Business
Law, and the premium reserve at the end of fiscal year is calculated by the following method:
In regard to the policies subject to the standard policy
reserve, the method as prescribed by the Commissioner of Financial Services Agency (Ministry of Finance Ordinance No. 48,
1996) is applied.
In regard to the policies not subject to the standard policy
reserve, the net level premium method is applied.

(14) Amortization method for intangible fixed assets

Intangible fixed assets are amortized as follows:i) Software
Software for internal use is amortized based on a straight-line
method over the estimated useful lives.
ii) Lease assets
Lease assets are amortized based on a straight-line method
over the lease term.
(15) Deferred assets

Discount on bonds is amortized equally over the period forwhich interest on bonds is fixed. This amount is deducted frombonds.
(16) Policy-reserve-matching bonds

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 the duration 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).
The amounts of policy-reserve-matching bonds recordedon the balance sheets and the market value of these bonds asof March 31, 2010, 2011 and 2012 were written in Notes No. 3“Financial Instruments”.
2. Changes in Presentation(1 )Effective for the fiscal year ended March 31, 2012, in
accordance with the amendment of the Enforcement
Regulation of the Insurance Business Law, the presentationof financial statements has been changed as follows.
(a) As for the statement of operations, “reversal of allowancefor possible loan losses” which was presented in“extraordinary gains” until previous fiscal year is included
in “investment income”.
(b) As for the statement of changes in net assets, the item
which was presented as “balance at the end of previous
fiscal year” until previous fiscal year is presented as“balance at the beginning of current period”.
(2) Effective for the year ended March 31, 2011, the Company
and its consolidated subsidiaries adopted “Accounting Standard for Asset Retirement Obligations” (ASBJ Statement No.
18 issued by the Accounting Standards Board of Japan on
March 31, 2008) and “Guidance on Accounting Standard for
Asset Retirement Obligations” (ASBJ Guidance No. 21 issued by the Accounting Standards Board of Japan on March

31, 2008). As a result, tangible fixed assets increased by¥1,725 million and the amount of asset retirement obligations recorded in balance sheet was ¥2,849 million. Ordinary
profit decreased by ¥157 million and surplus before income
taxes decreased ¥1,124 million.
(3) Effective for the year ended March 31, 2010, the Company
adopted “Partial Amendments to Accounting Standard for
Retirement Benefits (Part 3)“ (ASBJ Statement No.19 issued by the Accounting Standards Board of Japan on July 31,2008). There is no effect of the change on ordinary profit andsurplus before income taxes since the Company has decided
to use the same discount rate as before.

3. Financial Instruments
Asset management of the Company’s general accounts otherthan the separate accounts stipulated in Article 118 Paragraph 1of the Insurance Business Law is conducted on the principle ofprudent and profitable investments, considering public and social
responsibilities of the insurance business. Based on this policy,
the Company allocates the fund, securing its liquidity, from themedium-to-long term viewpoints. The Company is diversifying
investments in assets such as foreign securities and equity
securities within the acceptable range of risk in order to enhance
the profitability, although yen-denominated interest bearing
assets including debt securities such as Japanese government
bonds and loans are the cores of the portfolios. Derivatives aremainly used to mitigate the market risk regarding the securities
and loans. Major financial instruments including securities, loans
and derivatives 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 “Basic Policy for Risk Management” establishedby the Board of Directors. Specifically, the Company eliminates
excessive risk deviating from the basic principle and secures thesafety of the assets by utilizing control functions of the Financial
and Investment 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 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 as of March
31, 2010, 2011 and 2012, were as follows:

FUKOKU MUTUAL LIFE INSURANCE COMPANY43

As of March 31,

2010

2011
Millions of yen

Carrying			amountFair value
Difference

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...........................................................................
Derivative instruments:
Hedge accounting not applied.............................................
Hedge accounting applied...................................................
Total derivative instruments................................................

Carrying
amountFair value

Difference

1,752
1,752

1,743
1,743

(8)
(8)

1,424
1,424

1,424
1,424

0
0

31,902
31,902

31,902
31,902——

32,16932,16932,16932,169——79,317514,566
987,6972,558,975
4,140,556

79,317519,051
1,005,145
2,558,975
4,162,490—
4,485
17,448—21,933

228,171685,249
1,270,781
2,400,737
4,584,939

228,171
691,061
1,291,435
2,400,737
4,611,406—
5,811
20,654―
26,466

76,695
1,146,707
1,223,402

76,694
1,174,330
1,251,025(0)
27,62327,62374,357
1,072,361
1,146,719

74,357
1,099,209
1,173,566(0)
26,847
26,846(1,644)(4,006)(5,650)(1,644)(4,006)(5,650)——―(6,049)(1,730)(7,780)(6,049)(1,730)(7,780)

—
—
—

¥

¥

¥

¥

¥

									

¥As of March 31,

2012

2012

Millions of yen

Millions of U.S. dollars

Carrying			amountFair value
Difference

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...........................................................................
Derivative instruments:
Hedge accounting not applied.............................................
Hedge accounting applied...................................................
Total derivative instruments................................................

Carrying
amountFair value

1,351
1,351

1,374
1,374

23
23

16
16

16
16

0
0

34,19434,19434,19434,194

—
—

416
416

416
416

—
—

214,053
1,179,852
1,461,155
2,479,204
5,334,265

214,053
1,218,634
1,522,287
2,479,204
5,434,179—
38,781
61,132—
99,9142,604
14,355
17,77730,16464,901

2,604
14,827
18,52130,164
66,117

—
471
743
—
1,215

73,176969,182
1,042,359

73,176995,689
1,068,865(0)26,506
26,506890
11,791
12,682890
12,11413,004

(0)
322
322

(1,442)(3,506)(4,948)(1,442)(3,506)(4,948)

—
—
—

(17)
(42)
(60)

(17)
(42)
(60)

—
—
—

¥

¥

¥

$

$

									

44FUKOKU MUTUAL LIFE INSURANCE COMPANY

Difference$(1) Securities including deposits and monetary claims bought
which are treated as securities based on “Accounting Standards for Financial Instruments” (ASBJ Statement No.10) andsecurities managed as trust assets in money held in trust:
The fair values of marketable securities are measured at thequoted market price at the end of fiscal year. The fair valuesof other securities without the quoted market price arebased on the prices reasonably calculated such as the prices
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 ¥240 million, ¥8,863
million and ¥8,306 million as of March 31, 2010, ¥398 million,¥8,847 million and ¥8,201 million as of March 31, 2011, and¥398 million (US$4 million), ¥8,086 million (US$98 million)and ¥7,729 million (US$94 million) as of March 31, 2012,
respectively.
(2) 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 deadline havenot been set up due to the characteristics that the loan islimited 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 aremeasured by discounting the future cash flows to the present values. The fair values of loans receivable from legallybankrupt 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 doubtful accounts from the book values
before direct write-offs.

(3) Derivative instruments:i) The fair values of the futures and options traded at theexchange are measured at the settlement price of the exchange.
ii) The fair values of options and swaps traded over the counterare 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. Investment and Rental Property
The Company holds investment and rental properties such as
office buildings in Tokyo and other areas. The carrying amounts
and the fair values of investment and rental properties were
¥223,701 million and ¥295,062 million as of March 31, 2010,¥230,127 million and ¥280,297 million as of March 31, 2011and ¥223,191 million (US$2,715 million) and ¥271,525 million(US$3,303 million) as of March 31, 2012, respectively. The fairvalue is mainly based on the value calculated by the Company inaccordance with real estate appraisal 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 ¥1,411 million and ¥1,334 million (US$16 million) as ofMarch 31, 2011 and 2012, respectively.
5. Loans Receivable
The total amounts of credits to bankrupt borrowers, delinquentloans, delinquent loans past 3 months or more and restructuredloans, which were included in loans, were ¥2,586 million, ¥3,288
million and ¥3,019 million (US$36 million) as of March 31, 2010,2011 and 2012, respectively.
i) The balances of credits to bankrupt borrowers were ¥300 million, ¥280 million and ¥270 million (US$3 million) as of March
31, 2010, 2011 and 2012, respectively.
ii) The balances of delinquent loans were ¥2,119 million, ¥770
million and ¥683 million (US$8 million) as of March 31, 2010,2011 and 2012, respectively.
iii) There were no balances of delinquent loans past 3 months ormore as of March 31, 2010, 2011 and 2012.
iv) The balances of restructured loans were ¥166 million, ¥2,237
million, and ¥2,064 million (US$25 million) as of March 31,
2010, 2011 and 2012, respectively.

FUKOKU MUTUAL LIFE INSURANCE COMPANY

45

Credits to bankrupt borrowers represent loans, excluding the bal-

7. Separate Accounts

ances already written-off, which meet the conditions prescribed

Total assets in separate accounts provided for in Article 118 ofin Article 96 Paragraph 1 Item 3 and 4 of the Enforcement Regu-

the Insurance Business Law were ¥95,207 million, ¥83,280 mil-lations of the Corporate Tax Law. Moreover, accruing interest

lion and ¥82,053 million (US$998 million) as of March 31, 2010,

on these loans is not recorded as income after determining that2011 and 2012, respectively. The amounts of separate accountprincipal of or interest on these loans is unlikely to be collectedliabilities were the same as separate account assets.

due to the significant delay in repayment of principal or interest
payment or for some other reasons.
Delinquent loans are credits whose accruing interest is

8. Receivables from/Payables to Unconsolidated
Subsidiaries

not recorded as income due to the same reasons as described

The total amounts of receivables from/payables to unconsoli-

above, and exclude credits to bankrupt borrowers and loans fordated subsidiaries were, ¥3,308 million and ¥186 million as ofwhich interest payments have been suspended and rescheduled

March 31, 2010, ¥2,508 million and ¥171 million as of March 31,

to assist and support the borrowers in the restructuring of their2011, and ¥2,432 million (US$29 million) and ¥177 million (US$2

business.

million) as of March 31, 2012, respectively.

Delinquent loans past 3 months or more are loans for which
3 months or more from the due date under the terms of the

9. Monetary Claims to Directors
Monetary claims to directors of the Company as of March 31,

related loan agreements, excluding those loans classified as2010, 2011 and 2012 were ¥8 million, ¥6 million and ¥5 million

credits to bankrupt borrowers and delinquent loans.

(US$64 thousand), respectively.

interest payment or repayment of principal are delinquent for

Restructured loans are loans for which certain concessions
tions, rescheduling of due date of principal or interest payment,

10. Income Taxes
Deferred tax assets and deferred tax liabilities as of March 31,

waiver of claim or other terms, have been negotiated for the pur-2010 were ¥96,103 million and ¥29,717 million, respectively.

pose of assisting and supporting the borrowers in the restructur-

Valuation allowance for deferred tax assets was ¥3,077 million.

favorable to borrowers, such as interest reduction or exemp-ing of their business. This category excludes loans classified as

		Major components of deferred tax assets were ¥57,858

credits to bankrupt borrowers, delinquent loans and delinquent

million of policy reserves, ¥18,034 million of reserve forloans past 3 months or more.

employees’ retirement benefits and ¥9,667 million of reserve for

The direct write-offs related to loans decreased credits toprice fluctuation of securities as of March 31, 2010.

bankrupt borrowers described above by ¥8,149 million, ¥19 mil-		Major component of deferred tax liabilities was ¥27,435

lion and ¥12 million (US$147 thousand) as of March 31, 2010,

million of net unrealized gains on available-for-sale securities as2011 and 2012, respectively.

of March 31, 2010.

The direct write-offs related to loans decreased delinquent

The statutory tax rate and the actual effective tax rate forloans described above by ¥938 million, ¥262 million and ¥291

the year ended March 31, 2010 were 36.2% and 12.8%, respec-

million (US$3 million) as of March 31, 2010, 2011 and 2012,

tively. The major difference between the statutory tax rate andrespectively.

the actual effective tax rate was (22.5%) of reserve for dividends
to policyholders.

6. Accumulated Depreciation of Tangible Fixed Assets

Deferred tax assets and deferred tax liabilities as of March

Accumulated depreciation of tangible fixed assets totaled

31, 2011 were ¥100,383 million and ¥8,381 million, respectively.

to ¥129,828 million, ¥137,605 million and ¥137,618 million

Valuation allowance for deferred tax assets was ¥3,257 million.

(US$1,674 million) as of March 31, 2010, 2011 and 2012, re-Major components of deferred tax assets were ¥59,538

spectively.

million of policy reserves, ¥18,161 million of reserve for employees’ retirement benefits and ¥12,262 million of reserve for pricefluctuation of securities as of March 31, 2011.
Major component of deferred tax liabilities was ¥5,859 million of net unrealized gains on available-for-sale securities as ofMarch 31, 2011.

46

FUKOKU MUTUAL LIFE INSURANCE COMPANY

The statutory tax rate and the actual effective tax rate forAmendment of the Income Tax Act, etc. for the Purpose of

the year ended March 31, 2011 were 36.2% and 20.5%,

Creating a Taxation System Responding to Changes in Economic

respectively. The major difference between the statutory tax

and Social Structures” (Act No.114, 2011) and the “Act onrate and the actual effective tax rate was (16.6%) of reserve forSpecial Measures for Securing Financial Resources Necessary

dividends to policyholders.

to Implement Measures for Reconstruction following the Great

Deferred tax assets and deferred tax liabilities as of March

East Japan Earthquake” (Act No.117, 2011) on December 2,

31, 2012 were ¥85,897 million (US$1,045 million) and ¥34,529

2011, the corporate income tax rate will be lowered from themillion (US$420 million), respectively. Valuation allowance forfiscal year beginning on April 1, 2012 and a special restoration

deferred tax assets was ¥3,155 million (US$38 million).

surtax will be imposed from the fiscal year beginning on April

Major components of deferred tax assets were ¥49,440

1, 2012 through the fiscal year beginning on April 1, 2014.

million (US$601 million) of policy reserves, ¥14,279 million

The effective statutory tax rate used by the Company for(US$173 million) of reserve for employees’ retirement benefits

the calculation of deferred tax assets and deferred tax liabilitiesand ¥11,752 million (US$142 million) of reserve for pricewill consequently be changed from the current rate of 36.2%

fluctuation of securities as of March 31, 2012.

to 33.3% for a temporary difference which is expected to be

Major component of deferred tax liabilities was ¥30,806

reversed in the period from April 1, 2012 to March 31, 2015,

million (US$374 million) of net unrealized gains on available-for-and to 30.8% for a temporary difference which is expected tosale securities as of March 31, 2012.

be reversed after April 1, 2015. As a result of these changes,

The statutory tax rate and the actual effective tax rate

deferred tax assets as of March 31, 2012 decreased by ¥676

for the year ended March 31, 2012 were 36.2% and 46.4%,

million (US$8 million) and ¥7,118 million (US$86 million),

respectively. The major differences between the statutory

respectively and deferred tax liabilities for revaluation reserve

tax rate and the actual effective tax rate were 24.9% of thefor land as of March 31, 2012 decreased by ¥1 million (US$24

reduction of deferred tax assets due to the changes in tax rates

thousand) and ¥2,853 million (US$34 million), respectively.

and (16.3%) of reserve for dividends to the policyholders.

Income taxes deferred for the fiscal year ended March 31, 2012

Following the promulgation of the “Act for Partial

increased by ¥13,236 million (US$161 million).

11. Reserve for Dividends to Policyholders
Changes in reserve for dividends to policyholders were as follows:
Years ended March 31,

2010

2011

2012

Millions of
U.S. dollars

		Millions of yen

Balance at the beginning of current fiscal year............................................
Transfer from surplus in previous fiscal year...............................................
Dividends paid in the current fiscal year......................................................
Increase in interest......................................................................................
Balance at the end of fiscal year..................................................................

¥ 57,317
17,856(20,571)157¥ 54,759¥ 54,759
19,505(21,176)116¥ 53,2052012¥ 53,205
24,381(23,700)
83¥ 53,969

$ 647
296
(288)
1
$ 656

FUKOKU MUTUAL LIFE INSURANCE COMPANY

47

12. Reserve for Dividends to Policyholders (Fukokushinrai Life Insurance Company)
Changes in reserve for dividends to policyholders were as follows:
Years ended March 31,

2010

2011

2012

		
Millions of yen

2012
Millions of
U.S. dollars

Balance at the beginning of current fiscal year................................................
Dividends paid in the current fiscal year..........................................................
Increase in interest..........................................................................................
Provision for reserve for dividends to policyholders........................................

¥533
(346)
1
397

¥585
(388)
0
456

¥654
(446)
0
440

$7
(5)
0
5

Balance at the end of fiscal year......................................................................

¥585

¥654

¥648

$7

13. Stocks of Unconsolidated Subsidiaries
The amounts of stocks of unconsolidated subsidiaries the Company held as of March 31, 2010, 2011 and 2012 were ¥240 million, ¥398 million and ¥398 million (US$4 million), respectively.
14. Pledged Assets and Secured Debts
Assets pledged as collateral as of March 31, 2010 were ¥21,642
million of securities. Secured debts as of March 31, 2010 were
¥4,548 million.
Assets pledged as collateral as of March 31, 2011 were¥23,633 million of securities. Secured debts as of March 31,
2011 were ¥4,629 million.
Assets pledged as collateral as of March 31, 2012 were¥24,300 million (US$295 million) of securities and ¥397 million(US$4 million) of bank deposits. Secured debts as of March 31,
2012 were ¥4,608 million (US$56 million).
15. Policy Reserves for the Reinsurance Contracts
Reserve for outstanding claims for the reinsurance contracts
provided in accordance with Article 71 Paragraph 1 of the Enforcement Regulation of the Insurance Business Law (hereinafter
called "reserve for outstanding claims for ceded reinsurance")
were ¥32 million, ¥42 million and ¥5 million (US$69 thousand)as of March 31, 2010, 2011 and 2012, respectively.
Policy reserve for the reinsurance contracts provided in accordance with Article 71 Paragraph 1 of the Enforcement Regulation of the Insurance Business Law (hereinafter called "policy
reserve for ceded reinsurance") were ¥56 million, ¥55 millionand ¥53 million (US$649 thousand), as of March 31, 2010, 2011
and 2012, respectively.

48

FUKOKU MUTUAL LIFE INSURANCE COMPANY

16. Additional Foundation Funds
The Company raised additional foundation funds of ¥15,000 million and ¥20,000 million (US$243 million) during the year ended
March 31, 2010 and 2012 in accordance with Article 60 of the
Insurance Business Law.
17. Redemption of Foundation Funds
In the year ended March 31, 2010 and 2012, in connection
with the redemption of foundation funds of ¥15,000 million and¥25,000 million (US$304 million), the Company reversed thereserve for redemption of foundation funds and provided theequivalent amount for accumulated foundation funds redeemedin accordance with Article 56 of the Insurance Business Law.

18. Commitment LineAs of March 31, 2010, 2011 and 2012, there were unused
commitment line agreements under which the Company is thelender of ¥5,653 million, ¥4,056 million and ¥1,023 million (US$12
million), respectively.

19. Subordinated Bonds
Repayments of subordinated bonds are subordinated to otherobligations.
20. Contribution to Policyholders Protection Corporation
The future contribution to the Life Insurance Policyholders Pro-

tection Corporation of Japan under Article 259 of the Insurance
Business Law were estimated at ¥10,915 million, ¥11,285 million and ¥11,754 million (US$143 million) as of March 31, 2010,2011 and 2012, respectively. The contributions were charged as
operating expenses in the year in which they were paid.

21. Reserve for Employees’ Retirement Benefits(1) The reserve for employees’ retirement benefits as of March 31, 2010, 2011 and 2012, were calculated as follows:
As of March 31,

2010

2011

2012

		
Millions of yen

a. Projected benefit obligation.....................................................................
b. Fair value of pension plan assets.............................................................
c. Unfunded benefit obligation (a+b)...........................................................
d. Unrecognized actuarial differences.........................................................
e. Unrecognized prior service cost..............................................................
f. Reserve for employees' retirement benefits (c+d+e)..............................

¥(71,617)
16,009(55,608)
5,667
137¥(49,803)¥(71,786)
15,728(56,058)
5,802
102¥(50,153)

2012
Millions of
U.S. dollars¥(72,936)
17,167(55,768)
10,021(636)¥(46,384)$(887)
208
(678)
121
(7)
$(564)(2) Gross amount of retirement benefit expenses for the years ended March 31, 2010, 2011 and 2012 were as follows:
Years ended March 31,

2010

2011

2012

		
Millions of yen

Service cost.................................................................................................
Interest cost................................................................................................
Expected return on pension plan assets.....................................................
Amortization of actuarial differences...........................................................
Amortization of prior service cost................................................................
		¥3,173
1,438
(450)
1,231
34
¥5,427¥3,114
1,430
(480)
1,171
34
¥5,2702012
Millions of
U.S. dollars¥2,965
1,451
(471)
1,218
(20)
¥5,143

$36
17
(5)
14
(0)
$62

(3) The Company’s assumptions used in calculation of the above information were as follows:
Years ended March 31,

		

2010

2011

2012

Method of attributing the projected benefits to periods of service.................................
Discount rate...................................................................................................................		
Expected rate of return on pension plan assets..............................................................		
Amortization period of actuarial differences....................................................................		
Amortization period of prior service cost.........................................................................		

Straight-line
basis

Straight-line
basis

Straight-line
basis

2.0%
3.0%
10 years
10 years

2.0%
3.0%
10 years
10 years

2.0%
3.0%
10 years
10 years

FUKOKU MUTUAL LIFE INSURANCE COMPANY

49

III. Notes to Statements of Operations
1. Net Surplus before Minority Interests
Net surplus before minority interests is presented in the consolidated statement of operations for the year ended March 31,
2011 and 2012 in accordance with the revision of the Enforcement Rule of the Insurance Business Law based on “AccountingStandard for Consolidated Financial Statements” (ASBJ Statement No. 22 issued by the Accounting Standards Board of Japanon December 26, 2008).
2. Transactions with Unconsolidated Subsidiaries
The total amounts of revenues and expenditures in connection with unconsolidated subsidiaries were ¥131 million and¥2,825 million for the year ended March 31, 2010, ¥108 millionand ¥2,884 million for the year ended March 31, 2011, and ¥96
million (US$1 million) and ¥2,884 million (US$35 million) for theyear ended March 31, 2012, respectively.
3. Policy Reserves for the Reinsurance Contracts
For the year ended March 31, 2010, reversal of reserve for outstanding claims for ceded reinsurance considered in calculationof reversal of reserve for outstanding claims was ¥22 million andreversal of policy reserve for ceded reinsurance considered in
calculation of provision for policy reserve was ¥0 million.
For the year ended March 31, 2011, provision for reservefor outstanding claims for ceded reinsurance considered in
calculation of provision for reserve for outstanding claims was¥9 million and reversal of policy reserve for ceded reinsurance
considered in calculation of provision for policy reserve was ¥0
million.
For the year ended March 31, 2012, provision for reservefor outstanding claims for ceded reinsurance considered in
calculation of provision for reserve for outstanding claims was¥36 million (US$449 thousand) and reversal of policy reservefor ceded reinsurance considered in calculation of provision forpolicy reserve was ¥1 million (US$24 thousand).
4. Impairment of Fixed Assets
For the year ended March 31, 2010, impairment losses of fixed
assets were as follows:					(1) Method of grouping

Real estate and other assets used for insurance business operations are classified as one asset group as a whole. Other assets
such as real estate for rent and unused real estate are classified
as one group individually.
(2) Background of recognizing the impairment losses

Profitability of certain real estate for rent dropped down
significantly due to a decrease in the level of rental income
and a declining trend of market prices of land. The Company
reduced its book values of such real estate for rent and unused
real estate to their recoverable amounts. The amounts reduced
were recognized as impairment losses and included in theextraordinary losses.

(3) Asset groups recognized impairment losses and losses by fixed assets						Year ended March 31,

				

2010
Millions of yen

Real estate for rent:
Land...............................................................................................................................................................................
Buildings and others.......................................................................................................................................................
Total real estate for rent (i).............................................................................................................................................
Unused real estate:Land...............................................................................................................................................................................
Buildings and others.......................................................................................................................................................

¥ 71
5
76
136
651

Total unused lease property (ii).......................................................................................................................................

788

Total:
Land...............................................................................................................................................................................
Buildings and others.......................................................................................................................................................

208
656

Total (i)+(ii)......................................................................................................................................................................

¥865(4) Calculation method of recoverable amount						Recoverable amount is based on net sales value. Net sales value is determined based on appraisal value, posted price or road rate.

50

FUKOKU MUTUAL LIFE INSURANCE COMPANY

(5) Changes in presentation

The amount of impairment losses have been omitted for the current and previous fiscal year since there is less materiality.
5. Net Income Before Minority Interests
Pursuant to the revision of the Ordinance for enforcement of the
Insurance Business Act, net income before minority interests forthe fiscal year ended March 31, 2010 is disclosed from the current fiscal year.

IV. Notes to Statement of Comprehensive Income
1. Other Comprehensive Income 		The amounts recycled and tax effect amounts related to other comprehensive income were as follows:
				

2012

		
Millions of yen

Net unrealized gains (losses) on available-for-sale securities, net of tax
Amount incurred during the fiscal year ended March 31, 2012.................................................
Amount recycled........................................................................................................................
Before tax adjustment...........................................................................................................
Tax effects.............................................................................................................................
Net unrealized gains (losses) on available-for-sale securities, net of tax...............................
Deferred valuation gains (losses) under hedge accounting, net of tax
Amount incurred during the fiscal year ended March 31, 2012.................................................
Amount recycled........................................................................................................................
Before tax adjustment...........................................................................................................
Tax effects.............................................................................................................................
Deferred valuation gains (losses) under hedge accounting, net of tax.................................
Revaluation reserve for land, net of tax
Amount incurred during the fiscal year ended March 31, 2012.................................................
Amount recycled........................................................................................................................
Before tax adjustment...........................................................................................................
Tax effects.............................................................................................................................
Revaluation reserve for land, net of tax................................................................................
Foreign currency translation adjustment
Amount incurred during the fiscal year ended March 31, 2012.................................................
Amount recycled........................................................................................................................
Before tax adjustment...........................................................................................................
Tax effects.............................................................................................................................
Foreign currency translation adjustment...............................................................................
Total other comprehensive income....................................................................................................

¥ 69,198
14,702
83,901(24,946)
58,9552012
Millions of
U.S. dollars

$

841
178
1,020
(303)
717

14
(330)
(316)
122
(194)

0
(4)
(3)
1
(2)

—
—
—
2,854
2,854

—
—
—
34
34

(67)
—
(67)
—
(67)
¥ 61,548

(0)
—
(0)
—
(0)
748

$

2. Changes in Presentation
Pursuant to the revision of the Ordinance for enforcement of the
Insurance Business Act, the contents of the note to the consolidated financial statements for the fiscal year ended March 31,

2011 concerning the comprehensive income for the fiscal year
ended March 31, 2010 have been disclosed for the current fiscal
year.

FUKOKU MUTUAL LIFE INSURANCE COMPANY

51

V. Notes to Statements of Cash Flows
1. Scope of Cash and Cash Equivalents
Cash and cash equivalents as of March 31, 2010, 2011 and 2012
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 ofthe date of acquisition", "Call loans" and "Monetary claims bought
maturing within 3 months of the date of acquisition".

2. Reconciliations of Cash and Cash Equivalents
Reconciliations of cash and cash equivalents in the consolidated

statements of cash flows to the consolidated balance sheets accounts as of March 31, 2010, 2011 and 2012 were as follows:
As of March 31,

2010

2011

2012

		
Millions of yen

Cash and deposits....................................................................................................
Call loans..................................................................................................................
Monetary claims bought...........................................................................................
Time deposits maturing over 3 months of the date of acquisition...........................
Foreign currency deposits maturing over 3 months of the date of acquisition........
Monetary claims bought maturing over 3 months of the date of acquisition...........
Cash and cash equivalents.......................................................................................

52

FUKOKU MUTUAL LIFE INSURANCE COMPANY¥ 83,557
91,000
1,752
(200)
(472)
(1,752)¥173,885¥314,392
—
1,424
(200)
(252)
(1,424)¥313,939

2012
Millions of
U.S. dollars¥ 73,260
65,600
1,351
(200)
(155)
(1,351)¥138,504

$ 891
798
16
(2)
(1)
(16)
$1,685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 thedesign and operation of internal control over financial reporting for the Company’s financial statements, namely, consolidated balance sheets 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, 2012, prepared in accordance with Article 110 Paragraph 2 of the Insurance Business Law. The
Company designs and operates its internal control over financial reporting in accordance with the basic framework ofinternal control set forth in the "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 years, March 31, 2012 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 reliability offinancial 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 business processes("process-level controls") based on the results of assessment of company-level controls regarding the Company andone consolidated subsidiary. Other than those indicated above, five consolidated subsidiaries were determined to beimmaterial from quantitative and qualitative perspectives. Consequently, they are excluded from the scope of assessment of company-level controls.
With respect to the scope of assessment of process-level controls, the locations or business units were selected indescending 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, the Company was
selected as "significant locations or business units". At selected significant locations and business units (the Company),business processes related to accounting items that were closely associated with the company's business objectives,
including securities, ordinary loans and policy reserves, as well as premium and other income and claims and otherpayments, which have a material impact on the calculation of policy reserves, were determined to be within the scopeof 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 havea high possibility of material misstatements and involve estimates and judgments, and business processes relating tobusinesses 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, 2012.
4. Supplementary Information (None)

			
			
			
			

May 18, 2012
Yoshiteru Yoneyama
President

Fukoku Mutual Life Insurance Company

FUKOKU MUTUAL LIFE INSURANCE COMPANY

53

Report of Independent Auditors

54

FUKOKU MUTUAL LIFE INSURANCE COMPANY

FUKOKU MUTUAL LIFE INSURANCE COMPANY

55

Corporate Organization

Organization (as of July 3, 2012)
Branch Office62
Field Office468

Secretarial Div.
Strategic Planning Dept.
Compliance Control Dept.

Employees (as of March 31, 2012)
Office Staff
2,897
Sales Representative 10,605
Others (as of July 3, 2012)
Overseas
Representative Office

Corporate Risk Management Dept.
General Affairs Dept.
Personnel Dept.
Independent Auditors

Market Planning Dept.
Retail Management Dept.

1
Board of Statutory
Auditors

Market Developing Dept.

Assistant to the
Statutory Auditors

Group Credit Div. Related toJapan Housing Finance Agency

Strategic Market Promotion Dept.

Wholesale Management Dept.
Pension Actuarial Div.
Board of Representative
Members of Policyholders

Board of Directors

Customer Service Headquarters
Corporate Customer Service Dept.
Individual Customer Service Dept.

Nomination Committee of
Candidates for
Representative Members

Secretariat for Nomination
Committee of Candidates for
Representative Members

Chief Actuary

Underwriting and Medical Dept.
Claims Dept.

Human Resourse
Development
Headquarters

Policy Administration Dept.
Operation & System Planning Dept.
Claim Inspection Div.

Executive Committee

Equities Dept.
Fixed Income Dept.
Loans Dept.

Council

Separate Accounts Management Div.
Investment Assets Administrative Dept.
Financial and 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

FUKOKUMUTUAL
MUTUAL
LIFELIFE
INSURANCE
INSURANCECOMPANYCOMPANY56 12FUKOKUCorporate Information

Board of Directors andStatutory Auditors

Chairman of the Board

Statutory Auditor (Standing):

Tomofumi Akiyama

Shuichi Maeda

President and Chief Executive Officer

Statutory Auditor (Standing):

Yoshiteru Yoneyama*

Akio Imai

Deputy Presidents and Executive Officer

Executive Officer

Katsumasa Furuya

Tsutomu Hiruma

Directors and Managing Executive Officer

Executive Officer

Kenji Hirai

Haruki Kawashima

Directors and Managing Executive Officer

Executive Officer

Tadashi Akikawa

Toyoaki Oba

Directors and Managing Executive Officer

Executive Officer

Hitoshi Sakai

Toshimitsu Furuhashi

Directors and Managing Executive Officer

Executive Officer

Toshihiro Hayashi

Shigeki Matsuoka

Director

Executive Officer

Katsuhiro Utada

Takanobu Futaba

Director

Executive Officer

Kozo Isshiki

Yasuyuki Kitamura

Directors and Executive Officer

Toshihide Fujiwara*Representative Director

Directors and Executive Officer(as of July 3, 2012)

Toshikatsu Hayashi
Statutory Auditor

Yoshizumi Nezu
Statutory Auditor

Mitsuo Ohashi
Statutory Auditor

Yoshikazu Sashida

FUKOKUFUKOKUMUTUAL
MUTUAL
LIFELIFE
INSURANCE
INSURANCECOMPANYCOMPANY13 57

Directory

Head Office2-2, 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 Mutual Life Insurance Company Singapore Representative Office
80 Robinson Road #16-04 Singapore 068898
Phone: 65-6220-8308
Facsimile: 65-6220-8736

Fukoku Life International (U.K.) Ltd.
From left : T. Keevil, J. Doran, A. Sato,
K. Sato and K. Ohkawa

Fukoku Mutual Life Insurance Company
Singapore Representative Office
From left: J. Lim, S. Narue and Y. Miki

FUKOKUMUTUAL
MUTUAL
LIFELIFE
INSURANCE
INSURANCECOMPANYCOMPANY58 14FUKOKU

Fukoku Life International (America) Inc.
From left : M. Xu, S. Lester, Y. Shigeta,
S. Nozaki and A. Chang

FUKOKU MUTUAL LIFE INSURANCE COMPANY

15

Printed in Japan