-<262<4<;<(330-,05:<9(5*,*647(5@Annual Report 2010
Year Ended March 31, 2010

Fukoku Life was founded in 1923. Since then, we have held as our fundamental principle that the interestsof policyholders must be protected to the utmost of our ability. Throughout the life insurance industry,
Fukoku Life is noted for its distinguished investment record and efficient corporate management.
The operating environment for the life insurance industry is becoming increasingly difficult, as a resultof such problems as the aging of society and the uncertainty surrounding the investment environment.
Given these conditions, Fukoku Life will devote still more attention to ensuring the soundness of
insurance operations, and endeavor to develop products tailored to meet increasingly diverse customer
needs. At the same time, it is committed to enhancing efficiency throughout its businesses and to making
active efforts to establish a highly competitive operating base. In this way, it will continue to translate into
practice its management principle of protecting the interests of policyholders.

Contents
Financial Highlights (Non-consolidated) .......................
Message from the President .........................................
Fukoku Life’s Management Philosophy ........................
Review of Operations (Non-consolidated)
Overview .....................................................................
Business Performance in FY2009 ..............................
Investment Performance in FY2009(General Account) .....................................................
Investment Policies for FY2010 .................................
Governance System ........................................................
Corporate Citizenship ......................................................
Non-consolidated Financial Statements ........................
Consolidated Financial Statements ..............................
Corporate Organization .................................................
Corporate Information ...................................................

16

FUKOKU MUTUAL LIFE INSURANCE COMPANY

1
2
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5
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8
9
10
12
32
53
54

Financial Highlights (Non-consolidated)2008
As of March 31,

2010

2009

2010
Millions of
U.S. dollars

Millions of yen¥49,827,169
5,725,231
3,962,459
1,231,963
205,9525,478,270
5,262,578
47,362
246,961¥48,555,655
5,514,454
3,596,377
1,238,205
250,065
5,393,901
5,221,451
38,870120,553¥47,457,381
5,613,104
3,800,984
1,220,945
279,476
5,401,158
5,225,501
37,406211,946$510,075
60,33040,853
13,122
3,003
58,05256,164402
2,278

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

906,459
736,468
146,216
848,381
45,385

881,685646,726
166,730
879,52056,863

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

8,464
6,704
1,588
8,110
280

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

1,146.9
13,477

1,008.4
13,836

1,127.6
14,207——

Life insurance in force ........................................
Total assets .........................................................
Securities .......................................................
Loans .............................................................
Tangible fixed assets ....................................
Total liabilities .....................................................
Policy reserves ..............................................
Subordinated bonds ......................................
Total net assets ...................................................
For the year ended March 31,

Notes 1. U.S. dollar amounts are converted from yen, for convenience only, at the rate of U.S.$1=¥93.04, the rate of exchange on March 31, 2010.
2. Yen and U.S. dollar amounts are rounded down to the nearest million yen or million dollars.

Head Office

FUKOKU MUTUAL LIFE INSURANCE COMPANY

1

Message from the President

Firstly, I would like to take this opportunity to express mysincere gratitude for the understanding and support shown
to Fukoku Life to date by our policyholders. I am Yoshiteru
Yoneyama, appointed in July 2010 as the new president toreplace Tomofumi Akiyama. In my new role, I will do my utmost to earn the trust of all of Fukoku Life’s policyholders.
In fiscal 2009, ended March 31, 2010, financial markets around the world continued to experience uncertainties sparked by the financial crisis, although financial andeconomic measures by individual countries contributed toa general easing of the situation. In Japan too, the environment surrounding the life insurance industry improved compared with the previous year.
Amid these circumstances, we worked hard to ensurethat our “Customer-Centric” philosophy underpinned all

In addition to securing additional foundation funds, weideas and actions. Under this philosophy, the assumption

worked hard to provide further peace of mind to customers

is that all employees treat customers as they themselves

by strengthening our solvency margin ratio. To this end, wewould like to be treated. This serves as the starting point

boosted internal reserves by increasing the accumulated

for our provision of services.

foundation funds redeemed and the reserve for price fluc-

In fiscal 2009, we sought to provide products that weretuation of securities.
In light of the Company’s business performance in fis-easy for customers to use and understand. In April 2009,
for example, we launched a medical insurance productcal 2009, we will maintain dividends paid to policyholders at

combining generous cover and easy-to-comprehend ben-

the same level as the previous fiscal year.
As a company engaged in the highly public business ofefit payment conditions. On the management side too, we
endeavored to utilize the opinions of customers to improvemutual life insurance based on the spirit of mutual assist-management by widely seeking their views and require-ance, Fukoku Life adheres to its management philosophy ofments.

“to protect the interests of our policyholders.” Under thisOn the asset management side, amid ongoing un-

philosophy, all executives and employees will continue im-certainty surrounding the future, we sought to maintain

plementing our “Customer-Centric” approach as we strive

the safety and liquidity of assets we hold on behalf of ourto be a company that is rated the most highly by custom-customers. To this end, we continued the strategy adopted

ers.

in the second half of fiscal 2008 of increasing our holdingsof corporate bonds and primarily domestic bonds, while
decreasing our holdings of stocks and foreign currencydenominated assets.
Yoshiteru Yoneyama
President

2

FUKOKU MUTUAL LIFE INSURANCE COMPANY

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

Chairman of the Board

President

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 bereflected 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

YValuing teamwork
YDeserving the trust of each and every customerYBeing enthusiastic and proud of our work
YPossessing common sense
YContinuing to highlight the importance of life
insurance
YOvercoming any kind of difficultyY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 increasing the number of net customers,
strengthen the design, provision and follow-up services for
insurance products that meet their diverse 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
The insurance needs of customers have become increasingly diverse over time. We endeavor to the satisfaction ofcustomers by designing and proposing policies to meet current needs, and offering comprehensive follow-up services.
In these ways, we attach importance to providing customers with continued peace of mind, and thus achieving a netincrease in the number of policyholders.
In addition to nursing care insurance, medical insurance, and life insurance, we provide a wide range of products and services that meet the varied needs of our customers. We are further expanding the scope of coverage in
the nursing care insurance sector and constantly reviewing
our products in various other insurance fields, in order toprovide customers with optimum insurance that covers
the various risks they are exposed to in the course of theirlives.
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 and around 11,000 salespeople promoting insurance
and annuities to individuals and companies. With the aid of
dedicated mobile computers, introduced to enhance theconsulting skills of sales staff when conducting face-to-facesales, we work hard to provide optimal products to custom-

4

FUKOKU MUTUAL LIFE INSURANCE COMPANY

ers. We have also boosted our follow-up services provided
after a customer takes out a new policy. In alliance with
Fukokushinrai Life Insurance Co., Ltd., a subsidiary, wesell our products through financial institutions, mainly credit
unions with close ties to local communities.
At the end of the period under review, our products
we were being sold via 279 financial institution branches
and 1,859 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 through venues 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. We also offer consulting services for the transition from qualified retirement
pensions to defined-benefit pension plans and definedcontribution pension plans.
We also make socially responsible investments (SRIs)
in companies that work proactively in areas of environmental protection and social contribution.

Business Performance in FY2009
Life Insurance in Force
At fiscal year-end, life insurance in force, which comprises
individual life insurance, individual annuities, and group insurance, amounted to ¥47,457.3 billion, down 2.3% from ayear earlier. Within this amount, life insurance for individuals declined 5.7%, to ¥28,515.9 billion, and individual annuities edged down 0.2%, to ¥2,980.2 billion. By contrast,
the year-end balance of life insurance in force for groups
increased 4.1%, to ¥15,961.1 billion. Meanwhile, group
annuities in force (policy reserve) rose 0.2%, to ¥2,001.6
billion.
Annualized Premiums for New Policies andPolicies in ForceIn the year under review, annualized premiums for new
policies declined 8.8%, to ¥25.2 billion. Within this amount,individual insurance edged down 0.1%, to ¥19.3 billion, andindividual annuities fell 29.0%, to ¥5.8 billion. However,annualized premiums from medical insurance and living
benefit insurance increased 17.1%, to ¥8.7 billion.
Annualized premiums for policies in force slipped 2.4%,¥418.9 billion. Within this amount, individual insurance
decreased 3.9%, to ¥293.7 billion, but individual annuities
increased 1.5%, to ¥125.2 billion. Annualized premiums
from medical insurance and living benefit insurance rose
2.1%, to ¥100.7 billion.
Premium Income and Payments
In the year under review, premium and other income declined 3.5%, to ¥623.7 billion. This was due mainly to a decrease in premium income from lump-payment-type products in the individual insurance field. By contrast, claims
and other payments declined 5.4%, to ¥564.2 billion.

Life insurance in force

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

50.0

49.9
13.4
2.7

49.8

846.0
48.5

47.4
721.9

14.2

15.1

2.8

15.3

2.9

2.9

646.7

623.7

2.9

30.2

31.7

32.8

736.4

15.9

Performance of Fukoku Life Group (Fukoku Life and
Fukokushinrai Life Insurance)
The Fukoku Life Group, including Fukokushinrai Life Insurance, posted a 32.7%, or ¥13.1 billion, increase in annualized premiums for new policies, to ¥53.1 billion, owing
mainly due to healthy sales of fixed-amount annuities by
Fukokushinrai Life Insurance. Within this amount, annualized premiums from medical insurance and living benefit
insurance rose 16.6%, or ¥1.3 billion, to ¥8.8 billion, thanks
to robust sales of a new product launched by the Company
in April 2009.
Annualized premiums for policies in force increased
3.6%, or ¥0.1 billion, to ¥469.0 billion. Annualized premiums from medical insurance and living benefit insurance
totaled ¥102.5 billion.
The total value of premium and other income grew
17.7%, or ¥1.3 billion, to ¥920.1 billion and individual insurance and annuities in force generated from sales via
branches of financial institutions jumped 133.3%, or ¥1.6
billion, to ¥282.4 billion. This was due to Fukokushinrai Life
Insurance’s focus on sales of fixed-amount annuities.
Assets, Liabilities, and Net Assets
The outstanding balance of non-consolidated total assets,
including separate accounts, increased 1.8%, to ¥5,613.1
billion. General account assets, which constitute 98.3% of
this total, rose 2.1%, to ¥5,519.4 billion. The main reason
for the increase in total assets was growth in equity prices
due to a stock market recovery during the period, which
contrasted with the previous year, when the value of theCompany’s equity holdings declined due to falling sharevalues in the domestic equities market.
Policy reserves edged up 0.1%, to ¥5,225.5 billion, andthe reserve for price fluctuation of securities rose 7.4%, to¥26.4 billion. As a result, total liabilities moved up 0.1%, to¥5,401.1 billion.
Net assets at fiscal year-end amounted to ¥211.9 billion, up 75.8% from a year earlier. This was due to a major
recovery in unrealized gains (losses) on available-for-salesecurities compared with the previous year.
On a consolidated basis, total assets increased 6.6%,
to ¥6,088.0 billion, and net assets jumped 77.0%, to ¥214.4
billion.

28.5

33.8

FY2005 ’06

’07

’08

’09

FY2005 ’06

’07

’08

’09

Group insurance
Individual annuities
Individual life insurance

FUKOKU MUTUAL LIFE INSURANCE COMPANY

5

Review of Operations (Non-consolidated)

review stemmed mainly from rises in additional foundation funds and various reserves, as well as an increase inunrealized gains on securities due to stock prices increases
during the period.
We will continue making every effort to maintain ahigh solvency margin ratio as one indicator of the added
peace of mind we offer our customers.

Strengthening Our Capital Base
Fukoku Life is constantly bolstering its internal reserves inorder to reinforce its operational foundation. In the year under review, the Company increased its contingency reserveand the reserve for price fluctuation of securities, whichstood at ¥145.6 billion and ¥26.4 billion, respectively.
The contingency reserve is a legal reserve set up in
preparation for future risks, and the reserve for price fluctuation covers potential future losses on major assets subject
to price fluctuation risks. Both reserves are stated as liabilities in the financial statements, but the Company regards
them as part of its equity capital.

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, 2010,
we have received ratings of AA- from Rating and Investment Information, A- from Standard & Poor’s, A from Fitch
Ratings, and A2 from Moody’s. Going forward, we willcontinue striving to maintain and further improve our highfinancial ratings.

Solvency Margin
Fukoku Life’s solvency margin ratio at fiscal year-end was
1,127.6%, up 119.2 points year-on-year. This shows that
the Company’s solvency margin far exceeds 200%, thelevel set as an indicator of financial soundness for life insurance companies, and clearly illustrates our ability to meeta high level of payments. The increase in the year under

Total assets

Net assets

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

5,684.3

5,893.0

5,725.2

5,514.4 5,613.1
1,228.8
1,146.9395.2

1,127.6

1,139.6
1,008.4

246.9
211.9
120.5

FY2005 ’06

6

’07

’08

’09

FY2006

FUKOKU MUTUAL LIFE INSURANCE COMPANY

’07

’08

’09

FY2005 ’06

’07

’08

’09

Investment Performance in FY2009 (General Account)
Overview
In fiscal 2009, ended March 31, 2010, the Japanese economy turned around thanks to recovery of overseas economies and economic stimulus measures by the government.
Reflecting economic recovery in Asia, especially China, anda bottoming out of economies in Europe and North America
as well, the domestic economy benefited from a moderateincrease in exports and a corresponding continued upturn inproduction activities. Despite some remaining uncertainty,
financial and capital markets returned to stability owing tofinancial measures adopted by various countries.
Against this backdrop, in its asset management activities Fukoku Life continued shifting its emphasis from riskbased assets to yen-denominated fixed-income assets, withthe aim of maintaining asset stability and liquidity. Specifically, we increased our holdings of public bonds, centering
on a national government bonds, while at the same time
reducing our holdings of equities and foreign currency denominated assets. In addition, we increased our holdings ofyen denominated foreign bonds, which produce high yields,
and our holdings of other foreign bonds as a hedge against
currency risk.
At fiscal year-end, total assets including separate accounts, amounted to ¥5,613.1 billion, up 1.8%, or ¥98.6
billion, from a year earlier, due largely to an increase in valuation gains on shares held. General account assets, which
comprise 98.3% of total assets, rose 2.2%, or ¥116.4 billion, to ¥5,519.4 billion.
Investment income from general accounts fell 20.0%,
or ¥33.4 billion, to ¥133.3 billion. Interest and dividends, themain components of investment income, declined 3.7%,
or ¥4.2 billion, to ¥110.7 billion. Major factors included a
decline in the balance of foreign securities, a decrease ininterest income due to the appreciation of the yen, and a
decline in dividends from other equities. Gains on sales of
securities fell 57.2%, or ¥29.4 billion, to ¥22.0 billion, due
mainly to lower sales of domestic bonds.
Investment expenses declined 51.3%, or ¥74.1 billion, to ¥70.2 billion. Major factors were a ¥41.4 billion loss
on sales of securities, centering on foreign securities anddomestic equities, and ¥11.5 billion in losses from derivative instruments, mainly hedge-related expenses aimed ataddressing stock price fluctuation risk.
As a result, investment income, net of investment
expenses, amounted to ¥63.0 billion, up 181.8% from theprevious fiscal year.
Bonds:In the year under review, we allocated proceeds from thesale of foreign securities and shares primarily to domestic
bonds. As a result, the Company’s bond portfolio at fiscal
year-end stood at ¥2,565.9 billion, up 3.9%, or ¥97.1 billion,
from a year earlier.
Stocks:Our year-end holdings of domestic equities were up 13.0%,
or ¥54.3 billion, to ¥473.2 billion. This was mainly due to anincrease in unrealized gains stemming from a recovery inshare prices, which compensated for a ¥39.9 billion fall inbook value.

Breakdown of general account assets(¥ billions)

Others:117.1 (2.1%)
Real estate:275.8 (5.0%)
Cash and deposits, and others:
194.6 (3.5%) (Note)

General account assets(¥ billions)

5,563.4

5,763.9

5,610.5

5,402.9 5,519.4

Other securities:
49.5 (0.9%)
Foreign securities:
622.0 (11.3%)

Ordinary loans:
1,146.7 (20.8%)

Loans:
1,220.9(22.1%)

Policy loans:
74.1 (1.3%)

Securities:
3,710.8 (67.2%)

Stocks:473.2 (8.6%)

Bonds:
2,565.9 (46.5%)

Total: ¥5,519.4 billion
Note: It is including cash and deposits, call loans, monetaryclaims bought and money held in trust
FY2005 ’06

’07

’08

’09

FUKOKU MUTUAL LIFE INSURANCE COMPANY

7

outstanding loans, including policy loans, slipped 1.4%, or¥17.2 billion, to ¥1,220.9 billion.

Foreign Securities:
Our holdings of foreign securities Increased due mainly to arise in foreign bonds and recovery in prices of foreign equities. As a result, the Company’s holdings of foreign securities, including equity holdings, grew 8.3%, or ¥47.4 billion,
to ¥622.0 billion.

Real Estate:
The year-end balance of Fukoku Life’s real estate holdingsrose 12.0%, or ¥29.6 billion, to ¥275.8 billion, mainly reflecting the Osaka Fukoku Mutual Life Insurance Building
reconstruction project, currently under way. This project islocated at the Umeda Terminal, the largest transportation
hub in Western Japan, and is expected to contribute to theCompany’s real estate income in the future.

Loans:
During the period, there was a decline in loans provided
to individuals. As a result, the fiscal year-end balance of

Bonds

StocksForeign securities

Loans

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

2,362.1

2,431.1 2,444.6 2,468.8

2,565.9
790.7

757.4

801.1

275.8

1,250.8 1,266.2 1,231.9 1,238.2
1,220.9

709.9

246.2

622.0

608.9

574.6

601.9

201.4

201.8

FY2005 ’06

’07

191.0
473.2
418.8

FY2005 ’06

’07

’08

’09

FY2005 ’06

’07

’08

’09

FY2005 ’06

’07

’08

’09

FY2005 ’06

’07

’08

’09

’08

’09

Investment Policies for FY2010
Investment Environment
In the fiscal year ending March 31, 2011, we expect the Japanese economy to maintain a recovery trend, although thelevel of growth will be low. In addition to a pullback in overseas demand, the strong yen will also have a restraining impact, causing exports to weaken. We also expect personal consumption to stagnate, reflecting erosion of consumer sentiment stemming from low stock prices. By contrast, we predict that capital expenditures will show a moderate uptrend,
especially in environmental protection and other fields earmarked for future growth, amid improvements in corporate
earnings.
We expect long-term investment rates to remain low thanks to strong investment sentiment among institutional
investors in a difficult operating climate. As investors adopt a strongly cautious view of the economic outlook, meanwhile,
growth in share prices will be sluggish.
Bonds:
Fukoku Life will leave the balance of its bond holdings
unchanged. In a rising interest rate environment, we will
work to enhance profitability by investing in bonds withlonger periods to maturity.
Stocks:Our policy here is to boost earnings by decreasing ourholdings of stocks while reshuffling our portfolio.
Foreign Securities:
With respect to foreign securities, we will make efficient
allocations in yen-denominated and foreign currency-

8

FUKOKU MUTUAL LIFE INSURANCE COMPANY

denominated securities while closely monitoring foreignexchange markets and interest rates.
Loans:Emphasizing profitability and credit risk, we will provide
financing while ensuring diversification of borrower sectors.
Real Estate:
Maintaining real estate holdings at the current level, we
will work to improve the profitability of existing properties.

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 soundness of operations,and to enhancing management measures, including our risk
management system and compliance measures. In addition, we employ our internal control systems to ensure theefficient operation of these 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 strengtheninternal controls through the activities of various committees, including the Risk Management Committee and theCompliance Committee, which are under the direct supervision of the Board of Directors.

ing risks, asset management risks, administration risks, system risks, and other risks. In addition, the audit department
monitors the effective operation of the risk management
system.

Enhancement of Internal Control System
The Company’s Board of Directors has set the terms forthe creation of a system of internal controls to ensure thesoundness of operations. We are working to enhance theefficiency of operations, strengthen risk management, andpromote compliance 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 the full involvement of top management.
The Risk Management Committee manages risk rigorously in accordance with core policies set by the Board of
Directors. We have committees that provide expert risk
management in each of the five risk categories: underwrit-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, we hold regular hands-on training programs.
However, we recognize that even the most robustof 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 the situation in order to prevent a recurrence.
The Compliance Committee, which is chaired by the
President, is mandated by the Board of Directors to promote compliance-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 theCompany’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 happier and more affluent society in line withthe management philosophy of “contributing to society,” to which it has steadfastly adhered since its foundation. At the same time as sponsoring programs and events for the benefit of society, our employees also participate in a range of activities.

Company Sponsored
Activities

Charity concert

Visiting concert©Marty Sohl/Metropolitan Opera

10

FUKOKU MUTUAL LIFE INSURANCE COMPANY

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 to concert halls the opportunity to hear performances ofclassical music. 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 189
Charity Concerts. Visiting Concerts, which were introduced in 2003, havebeen held at a total of 140 welfare facilities.
At Charity Concerts, members of the audience are asked to make donations, which are given to local welfare groups, and goods made by thedisabled are sold from stalls in the hall foyer.
Other Activities
We plan to attract the corporate tenants of the new Osaka Fukoku MutualLife Insurance Building scheduled for completion in 2010, as well nearby
universities and companies, and provide information of interest related to
culture and health.
The Company is a proud sponsor of the Pink Ribbon Campaign, which
promotes the importance of the early detection, diagnosis, and treatmentof breast cancer.
Together with Shochiku Co., Ltd., which is involved with such entertainment business as Japanese Kabuki and films, Fukoku Life is a sponsorof the Metropolitan Opera: Live in High Definition series of screenings,
which give members of the general public the opportunity to see some of
the finest opera performances in the world.

Employee
Activities

Flora Preservation
Recently in Japan, there has been an increase in forests left to grow unchecked 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. Thisbamboo problem is even found in land owned by the Company in Shizuoka
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 and employees
have taken part in the project. In the year under review, 166 executives,
employees and their family members volunteered their time to take part inthese activities.
Other Activities
All of the company’s employees participate in various other initiatives,
including neighborhood cleanup campaigns and collections of PET bottle
lids.

Communicatingwith Societies©1976,2010 SANRIO CO.,LTD. APPROVAL NO. G510813

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, in order tostrengthen the channels of communication between the Company, its policyholders, and its many other customers.

©’08,’10 SANRIO/SEGA TOYS S S/W TX JLPC©’10 SANRIO APPROVAL No.P020901-01

FUKOKU MUTUAL LIFE INSURANCE COMPANY

11

Non-consolidated Financial Statements
Non-consolidated Balance Sheets
Fukoku Mutual Life Insurance Company
As of March 31, 2008, 2009 and 2010

As of March 31,

2008

2009

2010

Millions of
U.S. dollars

Millions of yen

Assets:				
Cash and deposits:
Cash ..................................................................................
¥
128
¥
134
Bank deposits ....................................................................
45,16849,248
		
45,29649,382
Call loans ...............................................................................
125,500
183,600
Monetary claims bought . ......................................................
2,533
2,055
Money held in trust ...............................................................
57,52733,053
Securities:
Government bonds . ..........................................................
1,782,029
1,746,556
Local government bonds ...................................................
138,278
136,848
Corporate bonds ................................................................
560,305
616,227
Stocks . ..............................................................................
643,452
448,295
Foreign securities ..............................................................
787,019596,372
Other securities .................................................................
51,37352,077
		
3,962,459
3,596,377
Loans:
Policy loans . .......................................................................
77,54076,967
Ordinary loans ...................................................................
1,154,423
1,161,237
		
1,231,963
1,238,205
Tangible fixed assets:
Land . .................................................................................
106,720
141,825
Buildings ............................................................................
94,416
98,937
Lease assets .....................................................................
——
Construction in progress ...................................................
759
5,457
Other tangible fixed assets ...............................................
4,056
3,845
		
205,952
250,065
Intangible fixed assets:
Software ............................................................................
7,973
7,337
Other intangible fixed assets . ...........................................
449
448
		
8,423
7,785
Reinsurance receivables . ......................................................
120
122
Other assets:
Accounts receivable ..........................................................
19,165
12,930Prepaid expenses ..............................................................
1,414
2,393
Accrued income ................................................................
26,603
21,523
Deposits ............................................................................
2,247
2,416
Differential account for futures trading .............................
—
5,027
Derivatives . .......................................................................
1,434
1,682
Suspense payment . ..........................................................
4,560
4,340
Other assets ......................................................................
3,974
4,360
		
59,40054,674
Deferred tax assets ...............................................................
36,106
110,422
Allowance for possible loan losses .......................................
(10,052)(11,290)
Total assets . .........................................................................
¥5,725,231¥5,514,454

12

FUKOKU MUTUAL LIFE INSURANCE COMPANY

2010¥          16468,945
69,11091,0001,752
32,902$         1
741
742
978
18
353

1,887,071
124,642588,041505,012646,118
50,0973,800,984

20,282
1,339
6,320
5,427
6,944
538
40,85374,186
1,146,758
1,220,945

797
12,325
13,122

162,160
96,66131
17,0093,613
279,476

1,742
1,038
0
182
38
3,003

7,007
447
7,454
279

75
4
80
2

12,2842,051
22,040
2,228
—
1,216
5,430
4,207
49,46062,170(2,430)¥5,613,104

132
22
236
23
—
13
58
45
531
668
(26)
$60,330

Non-consolidated Balance Sheets (Continued)

As of March 31,

2008

2010

2009

2010
Millions of
U.S. dollars

Millions of yen

Liabilities:						Policy reserves:
Reserve for outstanding claims .........................................
¥ 26,415¥ 28,220¥     25,342$     272
Policy reserve ....................................................................
5,181,780
5,135,913
5,145,399
55,303
Reserve for dividends to policyholders .............................
54,38257,31754,759588
		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 . .......................................................................
Suspense receipt . .............................................................

5,262,578
102
47,3625,221,451
87
38,8705,225,501
117
37,40656,164
1
402

9,316
3,274
10,931479
5,043
12,708
—
1,422
1,557

107
1,680
9,975
517
5,050
11,712
—
8,879
1,625

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

13
35
112
4
53
138
3
73
14

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

44,73349,50453,911
20,07639,55049,29324,622
20,02641,921
49,776
26,451
19,983

450
535
284
214

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

5,478,270

5,393,901

5,401,158

58,05240,00031,000112

40,00031,000112

40,00046,000
112

429
494
1

1,787

1,987

2,187

23

10,000
3,895

20,0003,895

15,000
3,895

161
41

319
767
55,671

311
767
56,660303
767
54,0753
8581

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....................................
Reserve for advanced depreciation ofreal estate for tax purpose............................................
Other reserves................................................................
Unappropriated surplus..................................................
				
Total foundation funds and surplus.........................................
Net unrealized gains (losses) on available-for-salesecurities, net of tax............................................................
Deferred valuation gains
under hedge accounting.......................................................
Revaluation reserve for land, net of tax..................................
Total valuation and translation adjustments............................

70,65372,441
143,553

81,634
83,621
154,733

74,042
76,229162,341

795
819
1,744

115,334(35,474)

48,291

519

408(12,335)
103,407479
814(34,180)

538
773
49,6045
8
533

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

246,961¥5,725,231

120,553¥5,514,454

211,946¥5,613,104

2,278$60,330

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, 2008, 2009 and 2010

Year ended March 31,

2008

2009

2010

Millions of yen

Ordinary revenues:
Premium and other income:Premium income ...............................................................
¥736,241¥646,500¥623,490
Reinsurance income ..........................................................
226
226
288
		
736,468
646,726
623,778
Investment income:Interest, dividends and other income: 					Interest from deposits ...................................................
584
662
493
Interest and dividends from securities ..........................
83,91075,05070,444
Interest from loans ........................................................
25,07524,324
24,812
Income from real estate for rent ...................................
12,771
14,30014,718Other interest and dividends .........................................
641
689
287
		
122,983
115,027
110,757
Gains from trading securities, net .....................................
1,827
—
165
Gains on sales of securities . .............................................
21,03151,491
22,043
Other investment income .................................................
373
212
358
Gains from separate accounts, net ...................................
——
14,428		
146,216
166,730
147,754
Other ordinary revenues:
Fund receipt from annuity rider .........................................
851
557
777
Fund receipt from deposit of claims paid ..........................
18,702
19,967
10,120
Reversal of reserve for outstanding claims........................
1,955
—
2,878
Reversal of policy reserve ................................................
—
45,866—
Reversal of reserve for employees'
retirement benefits . .......................................................
743
211
—
Others ...............................................................................
1,521
1,624
2,208
		
23,774
68,227
15,984
Total ordinary revenues ......................................................
906,459
881,685
787,5172010
Millions of
U.S. dollars$6,701
3
6,704

5
757
266
158
3
1,190
1
236
3
155
1,588
8
108
30
—
—
23
171
8,464

Ordinary expenditures:					Claims and other payments:
Claims . ..............................................................................
235,444
205,663
178,959
1,923
Annuities ...........................................................................
76,21289,55088,092946
Benefits .............................................................................
144,598
151,181
146,378
1,573
Surrenders .........................................................................
120,386
109,976
114,050
1,225
Other payments ................................................................
24,934
39,84036,396
391
Reinsurance premiums .....................................................
349
338
336
3
		
601,926
596,550564,214
6,064
Provision for policy reserve and others:
Provision for reserve for outstanding claims .....................
—
1,804
—
—
Provision for policy reserve ...............................................
73,766—
9,485
101
Interest on accumulated dividends to policyholders .........
200
242
157
1
		
¥ 73,967¥ 2,047¥    9,643$   103

14

FUKOKU MUTUAL LIFE INSURANCE COMPANYNon-consolidated Statements of Operations (Continued)

Year ended March 31,

2008

2010

2009

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 . ..........................................
Provision for allowance for possible loan losses ...............
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 reserve for price fluctuation of securities........
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 .....
Total extraordinary losses . .................................................
Surplus before income taxes . ............................................
Income taxes:
Current ..............................................................................
Deferred ............................................................................
Total income taxes . .............................................................
Net surplus for the year ......................................................

2010¥ 2,466
6,251—
15,511
2,731
961
443
745
4,753
5,965
19,76559,59587,913¥ 1,974
3,912
3,343
95,471
25,268
110
2,348
1,243
4,226
6,450
25,086
169,435
86,137¥   1,852
197—
41,494
1,588
11,555
1,706
—
5,230
6,618
—
70,24487,658$    19
2
—
445
17
124
18
—
56
71
—
754
942

13,377
5,100
6,149

14,532
4,957
5,583

11,551
4,916
5,430

124
52
58

—
350
24,978848,381
58,077—277
25,349879,520
2,164

483
417
22,799754,558
32,958

5
4
245
8,110
354

42
—
—
42

41,72429,289—71,014

326
—
606
933

3
—
6
10

240
398
3,845
4,484
53,635

904
514
—
1,418
71,760

685
865
1,829
3,380
30,511

7
9
19
36
327

18,905(10,655)
8,249¥ 45,385

3,645
11,251
14,896¥ 56,863

3,746
629
4,375
¥ 26,13540
647$  280See 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, 2008, 2009 and 2010

Year ended March 31,

2008

2009

2010

Millions of yen

Foundation funds and surplus:
Foundation funds
		 Balance at the end of previous fiscal year.......................
¥40,000¥40,000¥40,000
		 Changes in the current fiscal year:
			 Financing of additional foundation funds....................
——
15,000			 Redemption of foundation funds................................
——(15,000)
			 Total changes in the current fiscal year.......................
———
		 Balance at the end of current fiscal year.........................
40,00040,00040,000
Accumulated foundation funds redeemed		 Balance at the end of previous fiscal year.......................
31,00031,00031,000		 Changes in the current fiscal year:..................................				
		
Additions to accumulated foundation funds——
15,000			
redeemed.................................................................
			 Total changes in the current fiscal year.......................
——
15,000		 Balance at the end of current fiscal year.........................
31,00031,00046,000Reserve for revaluation
		 Balance at the end of previous fiscal year.......................
112
112
112
		 Changes in the current fiscal year:
			 Total changes in the current fiscal year.......................
———
		 Balance at the end of current fiscal year.........................
112
112
112
Surplus:		 Legal reserve for future losses
			 Balance at the end of previous fiscal year..................
1,587
1,787
1,987
			 Changes in the current fiscal year:				 Additions to legal reserve for future losses............
200
200
200
				 Total changes in the current fiscal year..................
200
200
200
			 Balance at the end of current fiscal year.....................
1,787
1,987
2,187
		 Other surplus:
			 Reserve for redemption of foundation funds				 Balance at the end of previous fiscal year..............
—
10,00020,000				 Changes in the current fiscal year:					 Additions to reserve for redemption of					foundation funds.............................................
10,00010,00010,000					 Reversal of reserve for redemption of					foundation funds.............................................
——(15,000)					 Total changes in the current fiscal year..............
10,00010,000(5,000)				 Balance at the end of current fiscal year................
10,00020,00015,000		
Reserve for dividend allowances				 Balance at the end of previous fiscal year..............
3,895
3,895
3,895
				 Changes in the current fiscal year:					 Total changes in the current fiscal year..............
———
				 Balance at the end of current fiscal year................
3,895
3,895
3,895
			 Reserve for advanced depreciation of			    real estate for tax purpose				 Balance at the end of previous fiscal year..............
343
319
311
				 Changes in the current fiscal year:					 Reversal of reserve for advanced depreciaiton of					real estate for tax purpose..............................
(23)
(8)
(7)
					 Total changes in the current fiscal year..............
(23)
(8)
(7)
				 Balance at the end of current fiscal year................
319
311
303

16

FUKOKU MUTUAL LIFE INSURANCE COMPANY

2010
Millions of
U.S. dollars

$429
161
(161)
—
429
333

161
161
494
1
—
1
21
2
2
23
214
107
(161)
(53)
161
41
—
41
3
(0)
(0)
3

Non-consolidated Statements of Changes in Net Assets (Continued)

Year ended March 31,

2008

2010

2009

Millions of
U.S. dollars

Millions of yen

			 Reserve for directors' retirement allowances				 Balance at the end of previous fiscal year..............
				 Changes in the current fiscal year:					 Reversal of reserve for directors'				retirement allowances.....................................
					 Total changes in the current fiscal year..............
				 Balance at the end of current fiscal year................
			 Other reserves				 Balance at the end of previous 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 end of previous 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..............................................
					 Reversal of reserve for advanced					
depreciation of real estate for tax purpose......
					 Reversal of reserve for directors'					retirement allowances.....................................
					 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 end of previous 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 and surplus
		 Balance at the end of previous 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.........................

2010

2,770

—

—

—

(2,770)(2,270)
—

—
—
—

—
—
—

—
—
—

767

767

767

8

—
767

—
767

—
767

—
8

53,771

55,671

56,660608(35,525)
(200)
(716)
45,385(31,868)
(200)
(716)
56,863(17,856)
(200)
(716)
26,135

(191)
(2)
(7)
280

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

(107)

23

8

7

0

2,770
161
1,899
55,671—(13,098)
988
56,660—44(2,584)54,075

—
0
(27)
581

63,13572,441

83,621

898(35,525)(716)
45,385(31,868)(716)
56,863(17,856)(716)
26,135

(191)
(7)
280

—
161
9,305
72,441—(13,098)
11,18083,621(15,000)
44(7,392)
76,229

(161)
0
(79)
819

134,247

143,553

154,733

1,663—(35,525)—(31,868)

15,000(17,856)

161
(191)

—
(716)
45,385——(716)
56,863—15,000(716)
26,135(15,000)

161
(7)
280
(161)

—
161
9,305
143,553—(13,098)
11,180154,733(15,000)
44
7,607
162,341

(161)
0
81
1,744

FUKOKU MUTUAL LIFE INSURANCE COMPANY

17

Non-consolidated Statements of Changes in Net Assets (Continued)

Year ended March 31,

2008

2009

2010

Millions of
U.S. dollars

Millions of yen

Valuation and translation adjustments:
Net unrealized gains (losses) on available-for-sale   securities, net of tax
		 Balance at the end of previous fiscal year.......................
		 Changes in the current fiscal year:
			 Net changes, excluding foundation funds			and surplus...............................................................
			 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 end of previous fiscal year.......................
		 Changes in the current fiscal year:
			 Net changes, excluding foundation funds			and surplus................................................................
			 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 end of previous fiscal year.......................
		 Changes in the current fiscal year:
			 Net changes, excluding foundation funds			and surplus..............................................................
			 Total changes in the current fiscal year.......................
		 Balance at the end of current fiscal year.........................
Total valuation and translaiton adjustments
		 Balance at the end of previous fiscal year.......................
		 Changes in the current fiscal year:
			 Net changes, excluding foundation funds			and surplus................................................................
			 Total changes in the current fiscal year.......................
		 Balance at the end of current fiscal year.........................
Total net assets
Balance at the end of previous 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		and surplus....................................................................
		 Total changes in the current fiscal year...........................
Balance at the end of current fiscal year..............................

18

FUKOKU MUTUAL LIFE INSURANCE COMPANY

2010

273,377

115,334(35,474)(381)(158,043)(158,043)
115,334(150,809)(150,809)(35,474)

83,766
83,76648,291

900
900
519

(152)

408

479

5

560
560
408

70
70
479

59
59
538

0
0
5

(12,204)(12,335)

814

8

(130)
(130)
(12,335)

13,14913,149
814

(40)
(40)
773

(0)
(0)
8

261,020

103,407(34,180)(367)(157,612)(157,612)
103,407(137,588)(137,588)(34,180)

83,78583,78549,604

900
900
533

395,268

246,961

120,553

1,295—(35,525)—(31,868)

15,000(17,856)

161
(191)

—
(716)
45,385——(716)
56,863—15,000(716)
26,135(15,000)

161
(7)
280
(161)

—
161

—
(13,098)(15,000)
44

(161)
0

(157,612)(148,307)¥ 246,961(137,588)(126,407)¥ 120,553

83,78591,393¥ 211,946

900
982$ 2,278

Non-consolidated Statements of Surplus
Fukoku Mutual Life Insurance Company
For the years ended March 31, 2008, 2009 and 2010

Year ended March 31,

2008

2010

2009

Millions of
U.S. dollars

Millions of yen

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

2010¥55,671¥56,660¥54,075$581

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

8

7

7

0

		

8

7

7

0

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

55,67956,66754,083581

31,86817,856

19,505209

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

200

200

62

0

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

716

716

892

9

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

10,00010,000

5,000

53

		

10,916

10,916

5,954

64

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

42,784

28,772

25,460273

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

¥12,894¥27,894¥28,622$307

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 ¥93.04 = US$1.00, the effective rate of exchange at the balance sheet date of March 31, 2010. 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.
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

20

FUKOKU MUTUAL LIFE INSURANCE COMPANY

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 with no fair market value arestated at cost, cost being determined by the moving averagemethod, except for public and corporate bonds including
foreign bonds, of which the difference between acquisition
cost and face value is considered to be an adjustment ofinterest. Such bonds are stated at amortized cost under thestraight-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.

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, 2008, 2009 and 2010 were¥875 million, ¥852 million and ¥9,036 million (US$97 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.
(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.

(6) Allowance for possible loan losses(9) Lease Transactions as a Lessee

Allowance for possible loan losses is provided in accordancewith the Company's standards of self-assessment and write-offs
and reserves on credit quality:

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.

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, the Company
provides the amounts deemed as necessary considering theborrowers' ability to pay, within the amounts after deductionsof the amount expected to be collected through the disposalof 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.

(10) Lease Transactions as a Lessor
For the years ended March 31, 2009 and 2010, as for thefinance lease transactions where the Company is a lessor, thelease fee is recorded in “interest, dividends and other income”
at the time of receiving lease fee. The corresponding cost of thelease assets is recorded in “other investment expenses”, whichis 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
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.
(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.

22

FUKOKU MUTUAL LIFE INSURANCE COMPANY(14) Software
The software for internal use is amortized based on straight-line
method over the estimated useful lives.
(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 which are set
by insurance types and investment policies, the bonds that areheld to match the duration of liabilities are classified as policy-reserve-matching bonds in accordance with "Temporary Treatmentof 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 recorded on
the balance sheets and the market value of these bonds were¥598,156 million and ¥612,619 million as of March 31, 2008 and¥628,570 million and ¥644,212 million as of March 31, 2009,and ¥639,749 million (US$6,876 million) and ¥657,551 million(US$7,067 million) as of March 31, 2010, respectively.

2. Changes in Accounting Policies(1) 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.
(2) Effective for the year ended March 31, 2009, the Company
adopted “Accounting Standard for Lease Transactions”(ASBJ Statement No. 13 issued by the Accounting Standards
Board of Japan on March 30, 2007). As a result, ordinary
profits decreased by ¥2 million, compared to the previous
methods.
(3) Effective for the year ended March 31, 2008, in accordancewith the revision of Corporate Tax Law, depreciation of
tangible fixed assets acquired on or after April 1, 2007 is calculated by the straight-line method and the declining-balancemethod stipulated in the revised law. As a result, ordinary
profits decreased by ¥45 million, compared to the previous
methods.
The tangible fixed assets acquired on or before March 31,
2007 that are depreciated to their final depreciable limit are
depreciated equally over five years for their remaining bookvalue. As a result, ordinary profits decreased by ¥71 million.

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.

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 are as follows:

As of March 31,

2010
Millions of yen
		Carrying amount

Fair value

Millions of U.S. dollars
Difference

Carrying amount

Fair value

Deposits:
Deposits not treated as securities¥    68,839¥    68,839¥       —$    739$    739
Total deposits		 68,839
68,839—739
739
Call loans		 91,000
91,000—
978
978
Monetary claims bought:							Claims treated as loans		
1,752
1,743
(8)
18
18
Total monetary claims bought		
1,752
1,743
(8)
18
18
Money held in trust:
Trading securities		 31,902
31,902—
342
342
Total money held in trust		 31,902
31,902—
342
342
Securities:
Trading securities		 79,317
79,317—852
852
Held-to-maturity dept securities		 430,883
433,717
2,834
4,631
4,661
Policy-reserve-matching bonds		 639,749
657,551
17,801
6,876
7,067
Investments in subsidiaries and affiliates		
1,393
933
(459)
14
10
Available-for-sale securities		 2,516,197
2,516,197—
27,044
27,044
Total securities		 3,667,541
3,687,718
20,176
39,41839,635Loans:
Policy loans		 74,186
74,186(0)797
797
Ordinary loans		 1,146,758
1,174,444
27,685
12,325
12,623
Total loans		 1,220,945
1,248,630
27,685
13,122
13,420Derivative instruments:
Hedge accounting not applied		(1,644)(1,644)—(17)(17)
Hedge accounting applied		(4,006)(4,006)—(43)(43)
Total derivative instruments		¥    (5,650)¥    (5,650)¥       —$    (60)$    (60)Difference

$  —
—
—
—
(0)
(0)
—
—
—
30
191
(4)
—
216
(0)
297
297
—
—
$  —

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) and call loans:
The fair values of deposits and call loans are based on theircarrying values since fair values approximate carrying values
due to their short maturities.
(2) 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 equity
securities and investments in partnerships whereby partnership assets consist of unlisted equity securities whose fairvalues are deemed extremely difficult to obtain, are excluded
from above securities. The carrying amounts of investments
in subsidiaries and affiliates, unlisted equity securities andinvestments in partnerships as of March 31, 2010 were¥26,132 million (US$280 million), ¥8,851 million (US$95 million) and ¥8,306 million (US$89 million), respectively.
(3) Loans and monetary claims bought treated as loans:
The fair values of policy loans are deemed to approximate
carrying 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 carrying 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 carrying 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 theircarrying 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 borrowers who are not currently bankrupt but havea high possibility of bankruptcy and monetary claims bought
treated as loans are computed by deducting the amount of
the allowance for doubtful accounts from the carrying values
before direct write-offs.

24

FUKOKU MUTUAL LIFE INSURANCE COMPANY(4) 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.

4. Investment and Rental Property
The Company holds investment and rental properties such as
office buildings in Tokyo and other areas. The carrying amountand the fair value of these investment and rental properties asof March 31, 2010 were ¥227,544 million (US$2,445 million)and ¥298,967 million (US$3,213 million), 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.
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 ¥11,032 million,¥10,749 million and ¥2,638 million (US$28 million) as of March
31, 2008, 2009 and 2010, respectively.
i) The balances of credits to bankrupt borrowers were ¥492 million, ¥471 million and ¥352 million (US$3 million) as of March
31, 2008, 2009 and 2010, respectively.
ii) The balances of delinquent loans were ¥10,539 million,¥10,277 million and ¥2,119 million (US$22 million) as of March
31, 2008, 2009 and 2010, respectively.
iii) There were no balances of delinquent loans past 3 months ormore as of March 31, 2008, 2009 and 2010.
iv) The balances of restructured loans were ¥166 million (US$1
million) as of March 31, 2010, and no balances as of March
31, 2008 and 2009.
Credits to bankrupt borrowers represent loans, excluding thebalances already written-off, which meet the conditions prescribed in Article 96 Paragraph 1 Item 3 and 4 of the Enforcement Regulations of the Corporate Tax Law. Moreover, accruinginterest of these loans is not recorded as income after determining that principal of or interest on these loans is unlikely to becollected due to the significant delay in repayment of principal orinterest payment or for some other reasons.
Delinquent loans are credits whose accruing interest is notrecorded as income due to the same reasons as describedabove, 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 ¥87 million, ¥66 millionand ¥8,097 million (US$87 million) as of March 31, 2008, 2009
and 2010, respectively.
The direct write-offs related to loans decreased delinquentloans described above by ¥787 million, ¥786 million and ¥938
million (US$10 million) as of March 31, 2008, 2009 and 2010,
respectively.

6. Accumulated Depreciation of Tangible Fixed Assets
Accumulated depreciation of tangible fixed assets totaledto ¥122,527 million, ¥124,586 million and ¥129,610 million(US$1,393 million) as of March 31, 2008, 2009 and 2010, respectively.
7. Separate Accounts
Total assets in separate accounts provided for in Article 118 of
the Insurance Business Law were ¥117,591 million, ¥113,498
million and ¥95,207 million (US$1,023 million) as of March 31,
2008, 2009 and 2010, respectively. The amounts of separate
account liabilities were the same as separate account assets.
8. Receivables from/Payables to Subsidiaries
The total amounts of receivables from/payables to subsidiaries
were ¥3,642 million and ¥1,479 million as of March 31, 2008,¥3,579 million and ¥1,281 million as of March 31, 2009 and¥3,463 million (US$37 million) and ¥1,433 million (US$15 million), as of March 31, 2010, respectively.

9. Monetary Claims to Directors
Monetary claims to directors as of March 31, 2008, 2009 and2010 were ¥16 million, ¥12 million and ¥8 million (US$93 thousand), respectively.
10. Income Taxes
Deferred tax assets and deferred tax liabilities as of March 31,
2008 were ¥106,636 million and ¥67,693 million, respectively.
Valuation allowance for deferred tax assets was ¥2,836 million.
Major components of deferred tax assets were ¥60,587
million of policy reserves, ¥19,521 million of reserve for pricefluctuation of securities and ¥17,925 million of reserve for employees’ retirement benefits and major component of deferred
tax liabilities was ¥65,469 million of net unrealized gains onavailable-for-sale securities as of March 31, 2008.
The statutory tax rate and the actual effective tax rate for theyear ended March 31, 2008 were 36.2% and 15.4%, respectively. The major difference between the statutory tax rate and theactual effective tax rate was (21.5%) of reserve for dividends topolicyholders.
Deferred tax assets and deferred tax liabilities as of March
31, 2009 were ¥115,089 million and ¥1,939 million, respectively.
Valuation allowance for deferred tax assets was ¥2,727 million.
Major components of deferred tax assets were ¥57,150 million of policy reserves, ¥20,136 million of net unrealized losses
on available-for-sale securities and ¥17,849 million of reserve for
employees’ retirement benefits as of March 31, 2009.
The statutory tax rate and the actual effective tax rate for theyear ended March 31, 2009 were 36.2% and 20.8%, respectively. The major differences between the statutory tax rate andthe actual effective tax rate were (9.0%) of reserve for dividends
to policyholders and (6.6%) of revaluation reserve for land.
Deferred tax assets and deferred tax liabilities as of March
31, 2010 were ¥94,720 million (US$1,018 million) and ¥29,692
million (US$319 million), respectively. Valuation allowance fordeferred tax assets was ¥2,857 million (US$30 million).
Major components of deferred tax assets were ¥57,349 million (US$616 million) of policy reserves, ¥18,024 million (US$193
million) of reserve for employees’ retirement benefits and¥9,577 million (US$102 million) of reserve for price fluctuation of
securities as of March 31, 2010. Major component of deferred
tax liabilities was ¥27,412 million (US$294 million) of net unrealized gains on available-for-sale securities as of March 31, 2010.
The statutory tax rate and the actual effective tax rate for theyear ended March 31, 2010 were 36.2% and 14.3%, respectively. The major difference between the statutory tax rate and theactual effective tax rate was (23.1%) of reserve for dividends topolicyholders.

FUKOKU MUTUAL LIFE INSURANCE COMPANY

25

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

2008

2009

2010

Millions of
U.S. dollars

		Millions of yen

Balance at the end of previous 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, 2008, 2009 and 2010 were ¥17,525 million, ¥27,525
million and ¥27,525 million (US$295 million), respectively.
13. Pledged Assets and Secured Debts
Assets pledged as collateral as of March 31, 2008 were ¥15,145
million of securities and ¥19 million of money held in trust. Secured debts as of March 31, 2008 were ¥4,660 million.
Assets pledged as collateral as of March 31, 2009 were¥25,959 million of securities. Secured debts as of March 31,
2009 were ¥4,645 million.
Assets pledged as collateral as of March 31, 2010 were¥21,642 million (US$232 million) of securities. Secured debts asof March 31, 2010 were ¥4,548 million (US$48 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 ¥31 million, ¥55 million and ¥32 million (US$353 thousand)as of March 31, 2008, 2009 and 2010, 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 ¥29 million, ¥30 millionand ¥30 million (US$330 thousand) as of March 31, 2008, 2009
and 2010, 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 Insur-

26

FUKOKU MUTUAL LIFE INSURANCE COMPANY¥ 52,872
35,525(34,216)200¥ 54,382¥ 54,382
31,868(29,176)242¥ 57,317

2010¥  57,317
17,856(20,571)
157¥  54,759$  616191(221)
1$  588ance Business Law were ¥115,855 million, ¥1,406 million and¥49,716 million (US$534 million) as of March 31, 2008, 2009 and2010, respectively.

16. Additional Foundation Funds
The Company raised additional foundation funds of ¥15,000 million (US$161 million) during the year ended March 31, 2010 inaccordance with Article 60 of the Insurance Business Law.
17. Redemption of Foundation Funds
In the year ended March 31, 2010, in connection with theredemption of foundation funds of ¥15,000 million (US$161
million), the Company reversed the reserve for redemption offoundation funds and provided the equivalent amount for accumulated foundation funds redeemed in accordance with Article
56 of the Insurance Business Law.
18. Commitment LineAs of March 31, 2008, 2009 and 2010, there were unused
commitment line agreements under which the Company is thelender of ¥1,681 million, ¥1,481 million and ¥5,653 million (US$60
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, 2008,2009 and 2010 totaled to ¥716,763 million, ¥463,674 million and¥482,896 million (US$5,190 million), respectively. The principal
foreign currency asset amounts were 2,401 million euros and
US$2,584 million as of March 31, 2008, 1,551 million euros and
US$2,465 million as of March 31, 2009 and 1,466 million euros
and US$2,937 million as of March 31, 2010, respectively.

Liabilities denominated in foreign currencies as of March 31,
2008, 2009 and 2010 totaled to ¥48,542 million, ¥39,840 millionand ¥38,330 million (US$411 million), respectively. The foreign
currency liability amounts as of March 31, 2008, 2009 and 2010
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 ¥11,302 million, ¥11,059 million and ¥10,639 million (US$114 million) as of March 31, 2008,2009 and 2010, 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, 2008, 2009 and 2010 were calculated as follows:
As of March 31,

2008

2010

2009

2010
Millions of
U.S. dollars

		Millions of yen

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

¥(71,776)¥(71,981)¥(71,591)$(769)

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)....................................................................................

18,307(53,469)3,758
206

15,016(56,965)
7,499
172

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

172
(597)
60
1

¥(49,504)¥(49,293)¥(49,776)$(535)(2) Gross amount of retirement benefit expenses for the years ended March 31, 2008, 2009 and 2010 were as follows:Year ended March 31,

2008

2010

2009

		
Millions of yen

Service cost.................................................................................................
Interest cost................................................................................................
Expected return on plan assets...................................................................
Recognized actuarial differences.................................................................
Amortization of prior service cost................................................................
....................................................................................................................

¥3,400
1,472
(964)
523
34
¥4,465¥3,218
1,434
(640)
779
34
¥4,8262010
Millions of
U.S. dollars¥3,166
1,438
(450)
1,231
34
¥5,420

$ 34
15
(4)
13
0
$ 58

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

		

2008

2009

2010

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................................................................
Recognition period of actuarial differences.......................................................................
Amortization period of prior service cost...........................................................................

2.0%
4.5%
10 years
10 years

2.0%
3.5%
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 ¥694 million and ¥8,023 million for theyear ended March 31, 2008, ¥1,032 million and ¥7,170 million

for the year ended March 31, 2009 and ¥982 million (US$10
million) and ¥7,764 million (US$83 million) for the year ended
March 31, 2010, respectively.

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

2008

2009

2010

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

¥ 2,722
11,566
6,743¥29,312
17,176
5,002

2008

2009

2010
Millions of
U.S. dollars

		Millions of yen¥14,017
7,664
333

$150
82
3

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

2010

Millions of
U.S. dollars

		Millions of yen

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

¥4,7207,182
3,608¥ 2,427
43,67949,363

2008

2009

2010

¥     564
12,771
28,158$     6137
302

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

2010

Millions of
U.S. dollars

		Millions of yen

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

28

FUKOKU MUTUAL LIFE INSURANCE COMPANY¥1,949782¥21,507
3,761

2010

¥1,313—$14—

5. Policy Reserves for the Reinsurance Contracts
For the year ended March 31, 2008, reversal of reserve for outstanding claims for ceded reinsurance considered in calculationof reversal of reserve for outstanding claims was ¥12 million andreversal of policy reserve for ceded reinsurance considered in
calculation of provision for policy reserve was ¥2 million.
For the year ended March 31, 2009, provision for reservefor outstanding claims for ceded reinsurance considered in calculation of provision for reserve for outstanding claims was ¥24

million and provision for policy reserve for ceded reinsurance
considered in calculation of reversal of policy reserve was ¥0
million.
For the year ended March 31, 2010, reversal of reserve foroutstanding claims for ceded reinsurance considered in calculation of reversal of reserve for outstanding claims was ¥22 million(US$244 thousand) and provision for policy reserve for ceded
reinsurance considered in calculation of provision for policy
reserve was ¥0 million (US$3 thousand).

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

2008

2009

2010

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

¥ 3,798
1,920(4,006)¥ 2,645734(6,724)¥ 2,527(494)(1,866)

7. Losses from Money Held in Trust
Losses from money held in trust for the years ended March 31,
2008, 2009 and 2010 included valuation losses of ¥5,701 million,
valuation gains of ¥520 million and valuation gains of ¥0 million(US$0 thousand), respectively.

(1) Method of grouping

8. Losses from derivative Instruments
Losses from derivative instruments for the years ended March
31, 2008, 2009 and 2010 included valuation gains of ¥95 million,
valuation losses of ¥6,298 million and valuation gains of ¥5,607
million (US$60 million), respectively.

(2) Background of recognizing the impairment losses

9. Impairment of Fixed Assets
For the years ended March 31, 2009 and 2010, impairment
losses of fixed assets were as follows:			
		

2010

$ 27
(5)
(20)

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.

FUKOKU MUTUAL LIFE INSURANCE COMPANY

29

(3) Asset groups recognized impairment losses and losses by fixed assets
As of March 31,

		

2010

2009

Millions of
U.S. dollars

		Millions of yen

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

2010

¥205
40

¥  71
5

$0
0

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

245

76

0

55
213

136
651

1
7

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

269

788

8

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

260
254

208
656

2
7

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

¥514

¥865

$9

(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.

30

FUKOKU MUTUAL LIFE INSURANCE COMPANY

Report of Independent Auditors

The Board of Directors of Fukoku Mutual Life Insurance Company

We have audited the accompanying non-consolidated balance sheets of Fukoku Mutual Life Insurance Company as of March 31, 2008, 2009 and 2010, and the related non-consolidated statementsof operations, surplus and changes in net assets for the years then ended, all expressed in Japanese yen. These non-consolidated financial statements are the responsibility of the Company's
management. Our responsibility is to independently express an opinion on these non-consolidated
financial statements based on our audits.
We conducted our audits in accordance with auditing standards generally accepted in Japan. Thosestandards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on atest basis, evidence supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits
provide a reasonable basis for our opinion.
In our opinion, the non-consolidated financial statements referred to above present fairly, in all material respects, the non-consolidated financial position of Fukoku Mutual Life Insurance Company
as of March 31, 2008, 2009 and 2010, and the non-consolidated results of their operations for theyears then ended in conformity with accounting principles generally accepted in Japan.
The amounts expressed in U.S. dollars, which are provided solely for the convenience of the reader, have been translated on the basis set forth in Note I. 2 to the accompanying non-consolidated
financial statements with respect to the year ended March 31, 2010.

Tokyo, JapanMay 20, 2010

Kisaragi Audit Corporation

FUKOKU MUTUAL LIFE INSURANCE COMPANY

31

Consolidated Financial Statements
Consolidated Balance Sheets
Fukoku Mutual Life Insurance Company and consolidated subsidiaries
As of March 31, 2008, 2009 and 2010

As of March 31,

2008

2010

2009

2010
Millions of
U.S. dollars

Millions of yen

Assets:Cash and deposits .................................................................
Call loans ...............................................................................

¥

52,963
125,500¥

68,692
183,600¥

83,55791,000$898
978

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

2,533

2,055

1,752

18

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

57,52733,05332,902

353

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

4,019,758

3,760,762

4,248,119

45,659Loans .....................................................................................

1,233,951

1,240,369

1,223,402

13,149Land...................................................................................

106,720

141,825

162,160

1,742

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

94,49999,01496,764

1,040

Tangible fixed assets:

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

—

—

31

0

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

759

5,457

17,009182

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

4,171

3,944

3,728

40

		

206,150

250,242

279,694

3,006

Intangible fixed assets:
Software............................................................................

8,285

7,856

7,626

81

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

7,447

7,087

6,304

67

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

456

454

454

4

		

16,18915,39814,384154

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

1

2

1

0

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

123

127

281

3

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

61,14856,69352,243

561

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

36,769110,604

63,308680

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

(10,189)(11,436)(2,586)(27)

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

¥5,802,427¥5,710,164¥6,088,061$65,434

See notes to the consolidated financial statements.

32

FUKOKU MUTUAL LIFE INSURANCE COMPANY

Consolidated Balance Sheets (Continued)

As of March 31,

2008

2010

2009

2010
Millions of
U.S. dollars

Millions of yen

Liabilities:
Policy reserves:
27,073¥28,855¥26,407$283

Reserve for outstanding claims .........................................

¥

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

5,252,471

5,327,274

5,612,304

60,321

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

55,06357,31754,759588

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

—

533

585

6

		

5,334,607

5,413,981

5,694,057

61,200Agency payables ...................................................................

51

1,208

1,872

20

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

138

113

140

1

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

47,36238,87037,406402

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

45,29340,73043,681

469

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

49,51949,31349,803535

retirement benefits . ............................................................

27

—

—

—

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

54,022

24,772

26,697

286

Deferred tax liabilities ............................................................

0

0

—

—

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

20,07620,026

19,983214

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

5,551,101

5,589,016

5,873,642

63,130Foundation funds . .................................................................

40,00040,00040,000429

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

31,00031,00046,000494

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

112

112

112

1

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

74,36983,36577,020827

Total foundation funds and surplus . ..................................

145,481

154,477

163,132

1,753

115,335(36,210)48,045516

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

408

479

538

5

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

(12,335)

814

773

8

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

(3)

(667)

(583)

(6)

Total valuation and translation adjustments . .....................

103,405(35,584)

48,774524

Reserve for directors' and corporate auditors'

Net assets:

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

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

2,438

2,254

2,513

27

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

251,325

121,147

214,419

2,304

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

¥5,802,427¥5,710,164¥6,088,061$65,434

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, 2008, 2009 and 2010

Year ended March 31,

2008

2009

2010

Millions of
U.S. dollars

Millions of yen

Ordinary revenues:
Premium and other income .....................................................
Investment income:Interest, dividends and other income ..................................
Gains from trading securities, net .......................................
Gains on sales of securities . ...............................................
Other investment income ...................................................
Gains from separate accounts, net .....................................

2010¥736,468¥781,963¥920,125$9,889Other ordinary revenues . ........................................................
Total ordinary revenues ........................................................

122,744
1,827
21,031373—
145,977
25,375907,821117,035—
52,184212—
169,432
23,506
974,902

116,073165
22,398358
14,428
153,424
16,412
1,089,963

1,247
1
240
3
155
1,649
176
11,714

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

235,444
76,212
144,598
120,386
25,284
601,926

207,944
89,662
152,251
114,574
40,503604,936

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

1,947
948
1,588
1,283
398
6,166

—
73,766200

1,782
74,803242—
285,029
157

—
3,063
1

—
73,967076,8291
285,188

0
3,065

2,466
6,244
—
15,511
2,731
961
445
746
—
4,753
5,224
19,76558,85088,77525,031
848,550
59,270

1,974
3,913
3,343
96,04325,556
110
2,348
1,292
—
4,226
5,923
25,086
169,818
95,922
26,226
973,732
1,169

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

19
2
—
448
18
124
18
—
0
56
65
—
753
1,100
259
11,344
370

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 . ............................................
Provision for allowance for possible loan losses .................
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

Consolidated Statements of Operations (Continued)

Year ended March 31,

2008

2010

2009

2010
Millions of
U.S. dollars

Millions of yen

Extraordinary gains:
Gains on disposal of fixed assets ........................................

¥

¥

326

$

3

42

¥41,724

Reversal of reserve for price fluctuation of securities .........

—

29,249——

Reversal of allowance for possible loan losses....................

—

—

527

5

Other extraordinary gains.....................................................

3

—

—

—

Total extraordinary gains ......................................................

46

70,974853

9Losses on disposal of fixed assets . ....................................

243

904

696

7

Impairment losses ...............................................................

398

514

865

9

Provision for reserve for price fluctuation of securities .......

3,845

—

1,924

20

Other extraordinary losses...................................................

6

8

—

—

Total extraordinary losses . ..................................................

4,493

1,427

3,486

37

policyholders (subsidiary) ................................................

—

276

397

4

Surplus before income taxes . ..............................................

54,82370,44031,439337

Current ................................................................................

19,412

4,123

4,379

47

Deferred ..............................................................................

(10,647)

11,970(350)(3)

Total income taxes . ...............................................................

8,765

16,0944,029

43

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

167

(332)

227

2

Net surplus for the year ........................................................

¥45,890¥54,678¥27,182$292

Extraordinary losses:

Provision for reserve for dividends toIncome taxes:

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, 2008, 2009 and 2010

Year ended March 31,

2008

2010

2009

Millions of
U.S. dollars

Millions of yen

Cash flows from operating activities:
Surplus before income taxes . ................................................ ¥54,823
Depreciation of real estate for rent and other assets .............
4,753
Depreciation ...........................................................................
6,182
Impairment losses ..................................................................
398
Amortization of goodwill . .......................................................
—
Increase (Decrease) in reserve for outstanding claims ..........
(1,955)
Increase (Decrease) in policy reserve . ...................................
73,766
Interest on accumulated dividends to policyholders ..............
200
Interest on accumulated dividends
to policyholders (subsidiary).................................................
—
Provision for reserve for dividends
to policyholders (subsidiary).................................................
—
Increase (Decrease) in allowance for possible loan losses ....
746
Increase (Decrease) in reserve for employees'
retirement benefits . ............................................................
(740)
Increase (Decrease) in reserve for directors'
and corporate auditors' retirement benefits ........................
—
Increase (Decrease) in reserve for pricefluctuation of securities .......................................................
3,845
Interest, dividends and other income .....................................
(122,744)(Gains) Losses on securities . .................................................
22,354
Interest expenses . .................................................................
2,466
Foreign exchange (gains) losses, net .....................................
445(Gains) Losses on tangible fixed assets .................................
200(Increase) Decrease in agency receivables ............................
—(Increase) Decrease in reinsurance receivables .....................
(67)(Increase) Decrease in other assets .......................................
(767)
Increase (Decrease) in agency payables ................................
0
Increase (Decrease) in reinsurance payables .........................
28
Increase (Decrease) in other liabilities ....................................
(676)
Others ....................................................................................
4,762
Subtotal ..............................................................................
48,023
Interest, dividends and other income received ......................
124,359
Interest paid ...........................................................................
(2,422)
Dividends to policyholders paid ..............................................
(34,216)
Dividends to policyholders paid (subsidiary) ...........................
—
Corporate income tax paid .....................................................
(20,374)
Net cash provided by (used in) operating activities (I) ........
115,369
Cash flows from investing activities:(Increase) Decrease in deposits .............................................
184
Proceeds from sales and redemption of monetaryclaims bought ......................................................................
332
Payments for increase in money held in trust ........................
(6,000)
Proceeds from decrease in money held in trust ....................
44,448
Payments for purchase of securities ...................................... (1,101,919)
Proceeds from sales and redemption of securities ................
964,247
Payments for additions to loans .............................................
(264,882)
Proceeds from collections of loans ........................................
300,943
Proceeds from settlement of derivative .................................
(1,067)
Others ....................................................................................
(4,086)
Subtotal (IIa) .......................................................................
(67,798)(I+IIa)...................................................................................
47,57036

FUKOKU MUTUAL LIFE INSURANCE COMPANY¥

70,440
4,226
5,741
514
744
1,782
74,803
242

2010

¥

31,439
5,230
5,622
865
783
(2,448)285,029
157

$

337
56
60
9
8
(26)
3,063
1

0

1

0

276
1,246

397
(8,849)

4
(95)

(206)

490

5

(27)

—

—

(29,249)(117,035)
101,869
1,974
2,348(40,820)(0)(3)(3,158)
1,156
(25)
(964)
22,152
98,027
125,583(2,136)(29,176)(423)(20,125)
171,748

1,924(116,073)
18,190
1,852
1,711
370
0
(153)
(2,064)
663
27
1,815
31,101
258,083
118,875(1,851)(20,571)
(346)
3,601
357,79020(1,247)
195
19
18
3
0
(1)
(22)
7
0
19
334
2,773
1,277
(19)
(221)
(3)
38
3,845

(289)

29

0

477
(12,297)
32,932(1,587,041)
1,504,934(181,269)
160,153
1,160(2,856)(84,094)
87,653303(7,000)6,950(2,095,137)
1,720,166(155,444)
148,816(11,775)(1,395)(394,485)(36,695)

3(75)
74(22,518)
18,488(1,670)
1,599
(126)
(14)
(4,239)(394)

Consolidated Statements of Cash Flows (Continued)

Year ended March 31,

2008

2010

2009

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...................
Proceeds from sales of intangible fixed assets.......................
Acquisition of subsidiary, net of cash acquired........................
Net cash provided by (used in) investing activities . ...........
Cash flows from financing activities:
Repayment of subordinated dept loans...................................
Financing of additional foundation funds ................................
Redemption of foundation funds . ..........................................
Interest payment for foundation funds . .................................
Dividends paid to minority interests........................................
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 .................

2010(10,933)387(1,949)0(11,729)(92,023)(67,428)
58,176(1,982)
2—(95,327)(38,458)753(2,156)——(434,346)

(413)
8
(23)
—
—
(4,668)(5,000)
—
—
(716)
(52)
(5,768)

—
—
—
(716)
(52)
(768)

—
15,000(15,000)
(716)
(23)
(739)

—
161
(161)
(7)
(0)
(7)

(546)
17,031
160,924¥177,956(1,983)73,669177,956¥251,626(445)(77,740)
251,626¥173,885

(4)
(835)
2,704
$1,868

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, 2008, 2009 and 2010

Year ended March 31,

2008

2009

2010

Millions of
U.S. dollars

Millions of yen

Foundation funds and surplus:
Foundation funds
		 Balance at the end of previous 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 end of previous 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 end of previous 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 end of previous 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 and surplus
		 Balance at the end of previous 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

2010¥ 40,000¥ 40,000¥ 40,000

$ 429

—
—
—
40,000———40,00015,000(15,000)—
40,000

161
(161)
—
429

31,00031,00031,000333——
31,000——31,00015,00015,00046,000

161
161
494

112

112

112

1

—
112

—
112

—
112

—
1

64,55974,36983,365896(35,525)(716)
45,890(31,868)(716)
54,678(17,856)(716)
27,182

(191)
(7)
292

—
161
9,810
74,369—(13,098)
8,995
83,365(15,000)
44(6,345)77,020

(161)
0
(68)
827

135,671

145,481

154,477

1,660—(35,525)—(31,868)

15,000(17,856)

161
(191)

—
(716)
45,890——(716)
54,678—15,000(716)
27,182(15,000)

161
(7)
292
(161)

—
161
9,810
145,481—(13,098)
8,995
154,477(15,000)
44
8,654
163,132

(161)
0
93
1,753

Consolidated Statements of Changes in Net Assets (Continued)

Year ended March 31,

2008

2010

2009

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 end of previous fiscal year.......................
		 Changes in the current fiscal year:
			 Net changes, excluding foundation funds and surplus...
			 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 end of previous fiscal year.......................
		 Changes in the current fiscal year:
			 Net changes, excluding foundation funds and surplus...
			 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 end of previous fiscal year.......................
		 Changes in the current fiscal year:
			 Net changes, excluding foundation funds and surplus...
			 Total changes in the current fiscal year.......................
		 Balance at the end of current fiscal year.........................
Foreign currency translation adjustment
		 Balance at the end of previous fiscal year.......................
		 Changes in the current fiscal year:
			 Net changes, excluding foundation funds and surplus...
			 Total changes in the current fiscal year.......................
		 Balance at the end of current fiscal year.........................
Total valuation and translaiton adjustments
		 Balance at the end of previous fiscal year.......................
		 Changes in the current fiscal year:
			 Net changes, excluding foundation funds and surplus...
			 Total changes in the current fiscal year.......................
		 Balance at the end of current fiscal year.........................
Minority interests
Balance at the end of previous fiscal year............................
Changes in the current fiscal year:
		 Net changes, excluding foundation funds and surplus....
		 Total changes in the current fiscal year...........................
Balance at the end of current fiscal year..............................
Total net assets
Balance at the end of previous 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 and surplus....
		 Total changes in the current fiscal year...........................
Balance at the end of current fiscal year..............................

2010

273,382

115,335(36,210)(389)(158,046)(158,046)
115,335(151,546)(151,546)(36,210)

84,25584,25548,045

905
905
516

(152)

408

479

5

560
560
408

70
70
479

59
59
538

0
0
5

(12,204)(12,335)

814

8

(130)
(130)
(12,335)

13,14913,149
814

(40)
(40)
773

(0)
(0)
8

53

(3)

(667)

(7)

(56)
(56)
(3)

(663)
(663)
(667)

83
83
(583)

0
0
(6)

261,079

103,405(35,584)(382)(157,673)(157,673)
103,405(138,989)(138,989)(35,584)

84,35884,35848,774

906
906
524

511

2,438

2,254

24

1,927
1,927
2,438

(184)
(184)
2,254

258
258
2,513

2
2
27

397,261

251,325

121,147

1,302—(35,525)—(716)
45,890——(31,868)—(716)
54,678—15,000(17,856)
15,000(716)
27,182(15,000)

161
(191)
161
(7)
292
(161)

—
161
(155,746)(145,935)¥ 251,325—(13,098)(139,173)(130,177)¥ 121,147(15,000)
44
84,617
93,271¥ 214,419

(161)
0
909
1,002
$ 2,304

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 ¥93.04 = US$1.00, the effective rate of exchange at the balance sheet date of March 31, 2010. 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.
3. Principles of Consolidation(1) Scope of consolidation
Consolidated subsidiaries for the year ended March 31, 2010 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.
Fukokushinrai Life Insurance Company, whose shares were acquired by the Company on January 31, 2008, has been consolidated as a consolidated subsidiary since the year ended March
31, 2008.
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.

40

FUKOKU MUTUAL LIFE INSURANCE COMPANY(2) Application of equity method
Unconsolidated subsidiaries (such as Fukoku Seimei building
Company Limited, etc.) are insignificant in their impact on net
surplus for the year 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, 2008,2009 and 2010.
(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) Valuation of subsidiary's assets and liabilities on acquisition
On acquisition of a subsidiary, all of the subsidiary’s assets andliabilities that exist at the date of acquisition are recorded at theirfair value.
(5) Amortization of goodwill
For the years ended March 31, 2008, 2009 and 2010, goodwill
was amortized by the straight-line method over a period of 10
years and in case of the immaterial amount of goodwill, suchamount is fully charged to operating expenses when incurred.

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 non-consolidated 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 with no fair market value arestated at cost, cost being determined by the moving averagemethod, except for public and corporate bonds including
foreign bonds, of which the difference between acquisition
cost and face value is considered to be an adjustment ofinterest. Such bonds are stated at amortized cost under thestraight-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 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 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, the Company
provides the amounts deemed as necessary considering theborrowers' ability to pay, within the amounts after deductionsof the amount expected to be collected through the disposalof 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.
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, 2008, 2009 and 2010 were¥958 million, ¥941 million and ¥9,159 million (US$98 million),
respectively.

FUKOKU MUTUAL LIFE INSURANCE COMPANY

41

(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.
(8) Reserve for directors' and corporate auditors' retirement
benefits
Reserve for directors' and corporate auditors' retirement
benefits of the consolidated subsidiaries as of March 31, 2008
represents the estimated amounts to be recognized to have accrued at the end of the fiscal year.
(9) Reserve for price fluctuation of securities
Reserve for price fluctuation of securities is calculated in accordance with Article 115 of the Insurance Business Law.
(10) 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.
(11) Lease Transactions as a Lessor
For the years ended March 31, 2009 and 2010, as for thefinance lease transactions where the Company is a lessor, thelease fee is recorded in “interest, dividends and other income”
at the time of receiving lease fee. The corresponding cost of thelease assets is recorded in “other investment expenses”, whichis calculated by deducting an amount equivalent to the interest
allocated over the lease term from the lease fee received.
(12) 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 the42

FUKOKU MUTUAL LIFE INSURANCE COMPANY

hedging 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.
(13) Accounting for consumption taxes
The Company and its consolidated subsidiaries account for consumption taxes by the tax-exclusion method. The consumption
taxes on certain assets, which are not deductible from consumption taxes withheld and that are stipulated to be deferred under
the Tax Law, are deferred as prepaid expenses and amortized
equally over five years. Consumption taxes other than deferredconsumption taxes are recognized as an expense when incurred.
(14) 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.
(15) Software
The software for internal use is amortized based on straight-line
method over the estimated useful lives.
(16) Deferred assets
Discount on bonds is amortized equally over the period forwhich interest on bonds is fixed. This amount is deducted frombonds.

(17) Policy-reserve-matching bonds
Of the bonds corresponding to the sub-groups which are set
by insurance types and investment policies, the bonds that areheld to match the duration of liabilities are classified as policy-reserve-matching bonds in accordance with “Temporary Treatmentof 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 recorded on
the balance sheets and the market value of these bonds were¥598,156 million and ¥612,619 million as of March 31, 2008,¥721,357 million and ¥737,056 million as of March 31, 2009,and ¥987,697 million (US$10,615 million) and ¥1,005,145 million(US$10,803 million) as of March 31, 2010, respectively.

2. Changes in Accounting Policies(1) 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.
(2) Effective for the year ended March 31, 2009, the Company
adopted “Accounting Standard for Lease Transactions” (ASBJ
Statement No. 13 issued by the Accounting Standards Boardof Japan on March 30, 2007). As a result, ordinary profits
decreased by ¥2 million, compared to the previous methods.
(3) Effective for the year ended March 31, 2009, the Company
adopted “Practical Solution on Unification of Accounting Policies Applied to Foreign Subsidiaries for Consolidated Financial Statements” (ASBJ PITF No.18 issued by the AccountingStandards Board of Japan on May 17, 2006). There was noeffect of this change on the income.
(4) Effective for the year ended March 31, 2008, in accordancewith the revision of Corporate Tax Law, depreciation of
tangible fixed assets acquired on or after April 1, 2007 is calculated by the straight-line method and the declining-balancemethod stipulated in the revised law. As a result, ordinary
profits decreased by ¥47 million compared to the previous
methods.

The tangible fixed assets acquired on or before March 31,
2007 that are depreciated to their final depreciable limit are
depreciated equally over five years for their remaining bookvalue. As a result, ordinary profits decreased by ¥71 million.

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 are as follows:

FUKOKU MUTUAL LIFE INSURANCE COMPANY43

As of March 31,

2010
Millions of yen
		Carrying amount

Fair value

Millions of U.S. dollars
Difference

Carrying amount

Fair value

Monetary claims bought:						Claims treated as loans		 ¥ 1,752
¥
1,743
¥
(8)
$ 18
$ 18
Total monetary claims bought		
1,752
1,743
(8)
18
18
Money held in trust:						Trading securities		
31,902
31,902—
342
342
Total money held in trust		
31,902
31,902—
342
342
Securities:							Trading securities		
79,31779,317—852
852
Held-to-maturity debt securities		 514,566
519,051
4,485
5,530
5,578
Policy-reserve-matching bonds		 987,697
1,005,145
17,448
10,615
10,803Available-for-sale securities		 2,558,975
2,558,975—
27,50427,504
Total securities		 4,140,556
4,162,490
21,93344,502
44,738Loans:							Policy loans		
76,69576,694(0)824
824
Ordinary loans		 1,146,707
1,174,330
27,623
12,324
12,621
Total loans		 1,223,402
1,251,025
27,623
13,14913,446
Derivative instruments:							Hedge accounting not applied		(1,644)(1,644)—(17)(17)
Hedge accounting applied		(4,006)(4,006)—(43)(43)
Total derivative instruments¥ (5,650)¥ (5,650)¥—$ (60)$ (60)(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 equity securities and investments in partnerships
whereby partnership assets consist of unlisted equity
securities whose fair values are deemed extremely difficult
to obtain, are excluded from above securities. The carrying
amounts of investments in unconsolidated subsidiaries
and affiliates, unlisted equity securities and investments inpartnerships as of March 31, 2010 were ¥240 million (US$2
million), ¥8,863 million (US$95 million) and ¥8,306 million(US$89 million), respectively.
(2) Loans and monetary claims bought treated as loans:
The fair values of policy loans are deemed to approximate
carrying values, considering estimated repayment period and44

FUKOKU MUTUAL LIFE INSURANCE COMPANY

Difference

$ (0)
(0)
—
—
—
48
187
—
235
(0)
296
296
—
—
$ —

interest 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 carrying 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 carrying 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 theircarrying 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 legally bankrupt borrowers, substantially bankrupt borrowers and borrowers who are not currently bankrupt but have a high possibilityof bankruptcy and monetary claims bought treated as loans
are computed by deducting the amount of the allowancefor doubtful accounts from the carrying 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 amountand the fair value of these investment and rental properties asof March 31, 2010 were ¥223,701 million (US$2,404 million)and ¥295,062 million (US$3,171 million), 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.
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 ¥10,979 million,¥10,712 million and ¥2,586 million (US$27 million) as of March
31, 2008, 2009 and 2010, respectively.
i) The balances of credits to bankrupt borrowers were ¥477 million, ¥435 million and ¥300 million (US$3 million) as of March
31, 2008, 2009 and 2010, respectively.
ii) The balances of delinquent loans were ¥10,502 million,¥10,277 million and ¥2,119 million (US$22 million) as of March
31, 2008, 2009 and 2010, respectively.
iii) There were no balances of delinquent loans past 3 months ormore as of March 31, 2008, 2009 and 2010.
iv) The balances of restructured loans were ¥166 million (US$1
million) as of March 31, 2010, and no balances as of March
31, 2008 and 2009.
Credits to bankrupt borrowers represent loans, excluding thebalances already written-off, which meet the conditions prescribed in Article 96 Paragraph 1 Item 3 and 4 of the Enforcement Regulations of the Corporate Tax Law. Moreover, accruinginterest of these loans is not recorded as income after determining that principal of or interest on these loans is unlikely to becollected due to the significant delay in repayment of principal orinterest payment or for some other reasons.
Delinquent loans are credits whose accruing interest is
not recorded 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 ¥102 million, ¥102 million and ¥8,149 million (US$87 million) as of March 31, 2008,2009 and 2010, respectively.
The direct write-offs related to loans decreased delinquentloans described above by ¥824 million, ¥786 million and ¥938
million (US$10 million) as of March 31, 2008, 2009 and 2010,
respectively.

6. Accumulated Depreciation of Tangible Fixed Assets
Accumulated depreciation of tangible fixed assets totaledto ¥122,670 million, ¥124,761 million and ¥129,828 million(US$1,395 million) as of March 31, 2008, 2009 and 2010, respectively.

7. Separate Accounts
Total assets in separate accounts provided for in Article 118 of
the Insurance Business Law were ¥117,591 million, ¥113,498
million and ¥95,207 million (US$1,023 million) as of March 31,
2008, 2009 and 2010, respectively. The amounts of separate
account liabilities were the same as separate account assets.

8. Receivables from/Payables to Unconsolidated Subsidiaries
The total amounts of receivables from/payables to unconsolidated subsidiaries were, ¥3,540 million and ¥162 million as ofMarch 31, 2008, ¥3,425 million and ¥165 million as of March 31,
2009, and ¥3,308 million (US$35 million) and ¥186 million (US$2
million) as of March 31, 2010, respectively.
9. Monetary Claims to Directors
Monetary claims to directors of the Company as of March 31,
2008, 2009 and 2010 were ¥16 million, ¥12 million and ¥8 million (US$93 thousand), respectively.

FUKOKU MUTUAL LIFE INSURANCE COMPANY

45

10. Income Taxes
Deferred tax assets and deferred tax liabilities as of March 31,
2008 were ¥107,538 million and ¥67,932 million, respectively.
Valuation allowance for deferred tax assets was ¥2,836 million.
Major components of deferred tax assets were ¥61,054
million of policy reserves, ¥19,561 million of reserve for pricefluctuation of securities and ¥17,931 million of reserve for employees' retirement benefits and major component of deferred
tax liabilities was ¥65,707 million of net unrealized gains onavailable-for-sale securities as of March 31, 2008.
For the year ended March 31, 2008, the Company's statutory tax rate was 36.2%. The major difference between thestatutory tax rate and 16.0% of the actual effective tax rate was(21.0%) of reserve for dividends to policyholders.
Deferred tax assets and deferred tax liabilities as of March
31, 2009 were ¥116,732 million and ¥1,939 million, respectively.
Valuation allowance for deferred tax assets was ¥4,188 million.
Major components of deferred tax assets were ¥57,809 million of policy reserves, ¥20,318 million of net unrealized losses
on available-for-sale securities and ¥17,857 million of reserve for
employees' retirement benefits as of March 31, 2009.

For the year ended March 31, 2009, the Company's statutory tax rate was 36.2%. The major differences between thestatutory tax rate and 22.8% of the actual effective tax rate
were (9.2%) of reserve for dividends to policyholders and (6.7%)of revaluation reserve for land.
Deferred tax assets and deferred tax liabilities as of March
31, 2010 were ¥96,103 million (US$1,032 million) and ¥29,717
million (US$319 million), respectively. Valuation allowance fordeferred tax assets was ¥3,077 million (US$33 million).
		Major components of deferred tax assets were ¥57,858
million (US$621 million) of policy reserves, ¥18,034 million(US$193 million) of reserve for employees’ retirement benefitsand ¥9,667 million (US$103 million) of reserve for pricefluctuation of securities as of March 31, 2010. Major componentof deferred tax liabilities was ¥27,435 million (US$294 million) of
net unrealized gains on available-for-sale securities as of March
31, 2010.
		For the year ended March 31, 2010, the Company’s statutory tax rate was 36.2%. The major difference between thestatutory tax rate and 12.6% of the actual effective tax rate was(22.5%) of reserve for dividends to policyholders.

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

2008

2009

2010

Millions of
U.S. dollars

		Millions of yen

Balance at the end of previous fiscal year...................................................
Transfer from surplus in previous fiscal year...............................................
Dividends paid in the current fiscal year......................................................
Increase in interest......................................................................................
Increase due to addition of consolidated subsidiary....................................
Balance at the end of fiscal year..................................................................
Reserve for dividends to policyholders as of March 31, 2008
on the balance sheet represented the total of the Company's

46

FUKOKU MUTUAL LIFE INSURANCE COMPANY¥ 52,872
35,525(34,216)200
680¥ 55,063¥ 54,382
31,868(29,176)242—¥ 57,3172010¥57,317
17,856(20,571)
157—¥54,759

$616
191
(221)
1
—
$588

reserve of ¥54,382 million and Fukokushinrai Life Insurance
Company's reserve of ¥680 million.

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

		

2009

2010

		
Millions of yen

2010
Millions of
U.S. dollars

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

¥680
(423)
0
276

¥533
(346)
1
397

$5
(3)
0
4

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

¥533

¥585

$6

13. Stocks of Unconsolidated Subsidiaries
The amounts of stocks of unconsolidated subsidiaries the Company held as of March 31, 2008, 2009 and 2010 were ¥240 million, ¥240 million and ¥240 million (US$2 million), respectively.
14. Pledged Assets and Secured Debts
Assets pledged as collateral as of March 31, 2008 were ¥15,223
million of securities and ¥19 million of money held in trust. Secured debts as of March 31, 2008 were ¥4,660 million.
Assets pledged as collateral as of March 31, 2009 were¥26,010 million of securities. Secured debts as of March 31,
2009 were ¥4,645 million.
Assets pledged as collateral as of March 31, 2010 were¥21,642 million (US$232 million) of securities. Secured debts asof March 31, 2010 were ¥4,548 million (US$48 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 ¥55 million and ¥32 million (US$353 thousand) as of March
31, 2009 and 2010.

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 ¥57 million and ¥56 million(US$604 thousand), as of March 31, 2009 and 2010.

16. Additional Foundation Funds
The Company raised additional foundation funds of ¥15,000 million (US$161 million) during the year ended March 31, 2010 inaccordance with Article 60 of the Insurance Business Law.
17. Redemption of Foundation Funds
In the year ended March 31, 2010, in connection with theredemption of foundation funds of ¥15,000 million (US$161
million), the Company reversed the reserve for redemption offoundation funds and provided the equivalent amount for accumulated foundation funds redeemed in accordance with Article
56 of the Insurance Business Law.
18. Commitment LineAs of March 31, 2008, 2009 and 2010, there were unused
commitment line agreements under which the Company is thelender of ¥1,681 million, ¥1,481 million and ¥5,653 million (US$60
million), respectively.

FUKOKU MUTUAL LIFE INSURANCE COMPANY

47

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 ¥11,527 million, ¥11,283 million and ¥10,915 million (US$117 million) as of March 31, 2008,2009 and 2010, 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, 2008, 2009 and 2010 were calculated as follows:
As of March 31,

2008

2010

2009

Millions of
U.S. dollars

		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)..............................

¥(71,792)
18,307(53,485)3,758
206¥(49,519)¥(71,617)
16,009(55,608)
5,667
137¥(49,803)¥(72,001)
15,016(56,985)
7,499
172¥(49,313)

2010

$769
172
(597)
60
1
$(535)(2) Gross amount of retirement benefit expenses for the years ended March 31, 2008, 2009 and 2010 were as follows:Year ended March 31,

2008

2010

2009

Millions of
U.S. dollars

		Millions of yen

Service cost.................................................................................................
Interest cost................................................................................................
Expected return on plan assets...................................................................
Recognized actuarial differences.................................................................
Amortization of prior service cost................................................................
		¥3,404
1,472
(964)
523
34
¥4,469¥3,224
1,434
(640)
779
34
¥4,831

2010¥3,173
1,438
(450)
1,231
34
¥5,427

$34
15
(4)
13
0
$58

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

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

48

FUKOKU MUTUAL LIFE INSURANCE COMPANY

2008

2009

2010

Straight-line
basis

Straight-line
basis

2.0%
4.5%
10 years
10 years

2.0%
3.5%
10 years
10 years

Straight-line
basis

2.0%
3.0%
10 years
10 yearsIII. Notes to Statements of Operations
1. Transactions with Unconsolidated Subsidiaries
The total amounts of revenues and expenditures in connection
with unconsolidated subsidiaries were ¥121 million and ¥2,604
million for the year ended March 31, 2008, ¥127 million and¥2,558 million for the year ended March 31, 2009, and ¥131
million (US$1 million) and ¥2,825 million (US$30 million) for theyear ended March 31, 2010, respectively.
2. 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(US$244 thousand) and reversal of policy reserve for ceded reinsurance considered in calculation of provision for policy reservewas ¥0 million (US$10 thousand).

3. Impairment of Fixed Assets
For the years ended March 31, 2009 and 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					As of March 31,

		

2009

2010

2010
Millions of
U.S. dollars

		Millions of yen

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

¥205
40
245

¥ 71
5
76

$0
0
0

55
213

136
651

1
7

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

269

788

8

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

260
254

208
656

2
7

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

¥514

¥865

$9

(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.

FUKOKU MUTUAL LIFE INSURANCE COMPANY

49

IV. Notes to Statements of Cash Flows
1. Scope of Cash and Cash Equivalents
Cash and cash equivalents as of March 31, 2008, 2009 and 2010
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, 2008, 2009 and 2010 were as follows:
As of March 31,

2008

2009

2010

Millions of
U.S. dollars

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

3. Acquisition of Fukokushinrai Life Insurance Company
Major components of assets and liabilities of Fukokushinrai Life
Insurance Company which was newly consolidated as a subsid-¥ 52,963
125,500
2,533
(200)
(306)
(2,533)¥177,956¥ 68,692
183,600
2,055
(300)
(366)
(2,055)¥251,6262010¥83,557
91,000
1,752
(200)
(472)
(1,752)¥173,885

$ 898
978
18
(2)
(5)
(18)
$1,868iary during the year ended March 31, 2008 and net payment for
its acquisition were as follows:

As of March 31,
2008
Millions of yen

Assets.................................................................................................................................................
Securities.........................................................................................................................................
Goodwill..............................................................................................................................................
Liabilities.............................................................................................................................................
Policy reserves................................................................................................................................
Minority interests...............................................................................................................................
Acquisition value of Fukokushinrai Life Insurance Company..............................................................
Cash and cash equivalents of Fukokushinrai Life Insurance Company..............................................
Net payment for acquisition of Fukokushinrai Life Insurance Company............................................

50

FUKOKU MUTUAL LIFE INSURANCE COMPANY¥81,897
74,5497,447(72,835)(72,029)(1,812)
14,696(2,966)¥11,729

Management’s Report on Internal Control over Financial Reporting

1. Matters relating to the basic framework of internal control over financial reporting
Tomofumi Akiyama, President of Fukoku Mutual Life Insurance Company (the "Company"), is responsible for the designand operation of internal control over financial reporting for the Company's financial statements, namely, consolidatedbalance sheet and the related consolidated statement of operations, changes in net assets and cash flows preparedin accordance with Paragraph 2, Article 110 of the Insurance Business Law. The Company designs and operates its
internal control over financial reporting in accordance with the basic framework of internal 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, 2009 and 2010, 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, 2009 and 2010.
4. Supplementary Information (None)

			
			
			
			

May 19, 2010
Tomofumi Akiyama
President

Fukoku Mutual Life Insurance Company

FUKOKU MUTUAL LIFE INSURANCE COMPANY

51

Report of Independent Auditors

The Board of Directors of Fukoku Mutual Life Insurance Company
Financial Statements Audit
We have audited the accompanying consolidated balance sheets of Fukoku Mutual Life Insurance Company
and its consolidated subsidiaries as of March 31, 2008, 2009 and 2010, and the related consolidated statements of operations, changes in net assets and cash flows for the years then ended, all expressed in Japanese yen. These consolidated financial statements are the responsibility of the Company's management.
Our responsibility is to independently express an opinion on these consolidated financial statements basedon our audits.
We conducted our audits in accordance with auditing standards generally accepted in Japan. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit also includes assessing theaccounting principles used and significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above present fairly, in all material respects,
the consolidated financial position of Fukoku Mutual Life Insurance Company and its consolidated subsidiaries as of March 31, 2008, 2009 and 2010, and the consolidated results of their operations and their cash
flows for the years then ended in conformity with accounting principles generally accepted in Japan.
The amounts expressed in U.S. dollars, which are provided solely for the convenience of the reader, havebeen translated on the basis set forth in Note I. 2 to the accompanying consolidated financial statementswith respect to the year ended March 31, 2010.
Internal Control Audit
We have also audited the management's report on internal control over financial reporting of the consolidated financial statements of Fukoku Mutual Life Insurance Company as of March 31, 2009 and 2010. The
Company's management is responsible for designing and operating effective internal control over financial
reporting and for preparing its report on internal control. Our responsibility is to express an opinion on management's report on internal control based on our audit. There is a possibility that material misstatements
may not be completely prevented or detected by internal control over financial reporting.
We conducted our internal control audit in accordance with auditing standards for internal control overfinancial reporting generally accepted in Japan. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether management's report on internal control is free of material
misstatement. An internal control audit includes examining, on a test basis, representations on the scope,
procedures and results of the assessment of internal control over financial reporting made by management,
as well as evaluating the overall presentation of management's report on internal control. We believe that
our internal control audit provides a reasonable basis for our opinion.
In our opinion, management's report on internal control referred to above, which represents that the internal
control over financial reporting of the consolidated financial statements of Fukoku Mutual Life Insurance
Company as of March 31, 2009 and 2010, is effectively maintained, presents fairly, in all material respects,
the assessment of internal control over financial reporting in conformity with assessment standards for internal control over financial reporting generally accepted in Japan.

Tokyo, JapanMay 20, 2010

Kisaragi Audit Corporation

52

FUKOKU MUTUAL LIFE INSURANCE COMPANY

Corporate Organization

Organization (as of July 2, 2010)
Branch Office62
Field Office487

Secretarial Div.
Strategic Planning Dept.
Compliance Control Dept.

Employees (as of March 31, 2010)
Office Staff
2,774
Sales Representative 11,433

Corporate Risk Management Dept.
General Affairs Dept.
Personnel Dept.
Marketing Headquarters
Market Planning Dept.
Retail Management Dept.
Independent Auditors

Market Developing Dept.
Strategic Market Promotion Dept.

Board of Statutory
Auditors

Assistant to the
Statutory Auditors

Group Credit Div. Related toJapan Housing Finance Agency
Wholesale Management Dept.
Pension Actuarial Div.
Sales Personnel Training Dept.
Customer Service Headquarters

Board of Representative
Members of Policyholders

Board of Directors

Group Insurance Dept.
Group Annuity Dept.
Customer Service Dept.

Nomination Committee of
Candidates for
Representative Members

Chief Actuary

Secretariat for Nomination
Committee of Candidates for
Representative Members

Executive Committee

Underwriting and Medical Dept.
Claims Dept.
Policy Administration Dept.
Operation & System Planning Dept.
Claim Inspection Dept.
Equities Dept.

CouncilFixed Income Dept.
Loans Dept.
Separate Accounts Management Div.
Investment Assets Administrative Div.
Financial and investment Planning Dept.
Real Estate Dept.
Financial and Investment Risk
Management Dept.
Accounting Dept.
Actuarial Dept.
Internal Auditing Dept.
Affiliated Business Dept.
Committee for Editing History of the Company
Branch Offices

FUKOKU MUTUAL LIFE INSURANCE COMPANY

1353

Corporate Information

Board of Directors andStatutory Auditors

Chairman of the Board

Directors:

Statutory Auditors (Standing):

Tomofumi Akiyama

Katsuhiro Utada
Kozo Isshiki

Shuichi Maeda
Akio Imai

Directors and Executive
Officers:

Executive Officers:

Yoshiteru Yoneyama*
Deputy Presidents andExecutive Officers:

Hitoshi Sakai
Toshihiro Hayashi
Toshihide Fujiwara

Mikio Yamamoto
Katsumasa Furuya

Statutory Auditors:

Directors and Managing
Executive Officers:

Yoshizumi Nezu
Mitsuo Ohashi
Akihiro Mochizuki

President and Chief
Executive Officer

Kenji Hirai
Tadashi Akikawa

Directory

Head Office

FUKOKU MUTUAL LIFE INSURANCE COMPANY*Representative Director(as of July 2, 2010)

2-2, Uchisaiwaicho 2-chome,

Fukoku Life International(U.K.) Ltd.

Fukoku Life International(America) Inc.

Chiyoda-ku, Tokyo 100-0011,

3rd Floor, Baltic Exchange,

Times Square Tower,

Japan

38 St. Mary Axe, London,

7 Times Square, 35th Floor,

Phone: 81-3-3508-1101

EC3A 8EX, U.K.

New York, NY 10036, U.S.A.

Facsimile: 81-3-3591-6446

Phone: 44-20-7283-1331

Phone: 1-212-221-7760

Facsimile: 44-20-7626-7096

Facsimile: 1-212-221-7794

Fukoku Life International (U.K.) Ltd.
From left: J. Doran, K. Sato, J. Morita,
K. Ohkawa and D. Reynolds

14
54

Tsutomu Hiruma
Toshiaki Kiwa
Toshiro Eto
Haruki Kawashima
Toyoaki Oba
Toshimitsu Furuhashi

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

FUKOKU MUTUAL LIFE INSURANCE COMPANY

17

FUKOKU MUTUAL LIFE INSURANCE COMPANY
Annual Report 2010

Printed in Japan