Fukoku Life was founded in 1923. Since then, we have held as our fundamental principle that theinterests of 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 aresult of such problems as the aging of society and the worsening 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 FY2008 .........................................
Investment Performance in FY2008(General Account) .................................................................
Investment Policies for FY2009 .............................................
Governance System .....................................................................
Corporate Citizenship ..................................................................
Non-consolidated Financial Statements ..................................
Consolidated Financial Statements ...........................................
Corporate Organization ...............................................................
Corporate Information .................................................................

16

FUKOKU MUTUAL LIFE INSURANCE COMPANY

1
2
3
4
4
6
8
9
10
12
34
57
58

FINANCIAL HIGHLIGHTS(NON-CONSOLIDATED)

Millions of
U.S. dollars

Millions of yen

2007

2008

2009

2009

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

¥49,974,534
5,893,024
4,109,729
1,266,226
206,472
5,497,755
5,189,257
47,092¥49,827,169
5,725,231
3,962,459
1,231,963
205,9525,478,270
5,262,578
47,362¥48,555,655
5,514,454
3,596,377
1,238,205
250,065
5,393,901
5,221,451
38,870$494,305
56,13836,611
12,6052,545
54,91053,155395

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

395,268

246,961

120,553

1,227

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

888,739
721,989
147,397
828,525
43,502906,459
736,468
146,216
848,381
45,385

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

8,975
6,583
1,697
8,953
578

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

1,228.8
13,771

1,146.9
13,477

1,008.4
13,836

As of March 31,

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=¥98.23, the rate of exchange on March 31, 2009.
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

In fiscal 2008, ended March 31, 2009, financial markets in Japan and around the world continued
to experience extremely challenging conditions due to the worsening financial crisis in the UnitedStates and Europe and growing uncertainties surrounding the global economy. In Japan, thefinancial foundations of life insurance companies were affected by the fall in share prices and theappreciating yen.
Under these circumstances, on the asset management side, from the beginning of the period we ensured that our activities factored in price fluctuation risks and credit risks. In the second half of the year, when turbulence in financial and capital markets around the world worsened, the Company positioned risk reduction as its number one priority in order to prevent further losses caused by the sharp fall in share prices and the rapidly appreciating yen.
On the insurance sales side, adhering to our "Customer-Centric" policy, we endeavored tooffer insurance products designed to meet customers' needs. We worked tirelessly to provide
comprehensive follow-up services to give customers continued peace of mind.
Despite drawdowns in the contingency reserve and the reserve for price fluctuation of securities, a flexible approach to reducing asset management risk in the second half of the year
resulted in a solvency margin ratio that far exceeds the 200% set as an indicator of financial
soundness. Consequently, Fukoku Life continues to maintain a sufficient level of capital.
Due to the impact of falling share prices, however, we will unfortunately have to decrease orleave unchanged dividends for shareholders in the year ending March 31, 2010.
Lastly, I would like to announce that we have made some adjustments from fiscal 2009, to
the Company's management philosophy. Our philosophy has established a "Customer-Centric"
approach advocated since fiscal 2004 as the starting point for all activities to ensure that Fukoku
Life will remain the insurance company of choice regardless of the operating environment. Under the new management philosophy, we are striving even harder to become the provider of"peace of mind" to our customers.

Tomofumi Akiyama
President

2

FUKOKU MUTUAL LIFE INSURANCE COMPANY

FUKOKU LIFE’S MANAGEMENT PHILOSOPHYManagement Philosophy
Fukoku Life will continue adhering to its original management philosophy of protecting the interests of 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 ofour policyholders

To contribute to societyManagement
Philosophy

Personal expression

Our "Customer-Centric" Values
Possessing "Customer-Centric" values means creating and providing unique services that provide true
peace of mind to customers based on the assump-”Values”

tion that all employees treat customers as they themselves would like to be treated.

Code of
Conduct

Business
Policies

Code of Conduct

Business Policies

A "Customer-Centric" code of conduct to be observedby all executives and employees

1. Foster personnel with "Customer-Centric" values

To us, "Customer-Centric" values means:With the aim of providing customers with peace ofmind, foster confident and proud employees who havethe ability to adopt the customer's perspective.

* Valuing teamwork

2. Reinforce sales staff structure* Deserving the trust of each and every customer* Being enthusiastic and proud of our work

With the aim of providing meticulous services to customers, reinforce the structure under which sales personnel conduct face-to-face sales.

* Possessing common sense

3. Net increase in customers* Continuing to highlight the importance of life
insurance

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.

* Overcoming any kind of difficulty* Aiming to create a bright and friendly work
environment

4. Enhance business efficiency
With the aim of achieving stable growth, improve theefficiency of the Company's wide range of businessactivities.

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. With
the aim of achieving a net increase in the number of policyholders, we endeavor toenhance their satisfaction by tailoring policies to meet current needs. Comprehensive
follow-up services reflect the importance attached to providing customers with continued peace of mind.
In addition to providing basic protection-type products and medical insurance, wehave developed a variety of products and services that meet the varied needs of ourcustomers. Today we offer life insurance to business owners with longer-period coverage than before. In the field of protection-type products too, by constantly reviewing
the products we offer, such as nursing care insurance and medical insurance, we provide customers with optimum insurance that covers the various risks they are exposed
to in the course of their lives.

Sales Channels
Fukoku Life's nationwide sales network consists of 64 branches and around 11,000
salespeople promoting insurance and annuities to individuals and companies. With theaid of our mobile computers, known as "PlanDo," introduced to enhance the consulting
skills of sales staff when conducting face-to-face sales, we work hard to provide optimal products to customers. We have also boosted our regular six-monthly and 12monthly follow-up services provided after a customer takes out a new policy.
We are also developing other sales channels for such products as tuition insurance
and individual annuities through venues that include large shopping centers and theinternet.
In line with the Company's focus on communication between ourselves and ourcustomers, moreover, we provide consulting services at all of our sales offices andhave a customer call center that offers customer guidance via the telephone.

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 defined-contribution pension plans.
We also make socially responsible investments (SRIs) in companies that work
proactively in areas of environmental protection and social contribution.

BUSINESSPERFORMANCEIN FY2008

4

FUKOKU MUTUAL LIFE INSURANCE COMPANY

Life Insurance in Force
At fiscal year-end, life insurance in force, which comprises individual life insurance,
individual annuities, and group insurance, amounted to ¥48,555.6 billion, down 2.6%
from a year earlier. Within this amount, life insurance for individuals declined 4.8%, to¥30,232.7 billion, mainly due to a fall in protection-type insurance. By contrast, individual annuities rose 1.6%, to ¥2,986.4 billion, and the year-end balance of life insurance in force for groups increased 1.3%, to ¥15,336.5 billion. Meanwhile, group annuities in force (policy reserve), slipped 1.3%, to ¥1,997.5 billion.

Annualized Premiums for New Policies and Policies in Force

Life insurance in force(¥ trillions)
50.8

49.9

50.0

13.8

13.4

2.5

2.7

34.4

49.8

14.2

15.1

2.8

15.3

2.9

32.8

33.8

48.5

2.9

31.7

In the year under review, annualized premiums for new policies fell 14.4%. Within thisamount, individual insurance decreased 16.1%, to ¥19.4 billion and individual annuities
fell 10.0%, to ¥8.2 billion. Annualized premiums from medical insurance and living benefit insurance decreased 14.4%, to ¥7.4 billion.
Annualized premiums for policies in force declined 3.2%. Within this amount, individual insurance decreased 5.5%, to ¥305.7 billion, but individual annuities increased
3.2%, to ¥123.3 billion. Annualized premiums from medical insurance and living benefit insurance edged up 0.8%.

30.2

Premium Income and Payments
FY2004 ’05

’06

’07

’08

Group insurance
Individual annuities
Individual life insurance

Premium and other income(¥ billions)
846.0
731.7

721.9

736.4
646.7

In the year under review, premium and other income declined 12.2%, to ¥646.7 billion.
This was due to a decrease in income from individual annuities stemming from thetransfer of the Company's bank insurance business to subsidiary Fukokushinrai Life
Insurance Company at the start of fiscal 2008. Claims and other payments edged down
0.9%, to ¥596.5 billion.

Combined Value with Fukokushinrai Life Insurance Company
In April 2008, Fukoku Life transferred its bank insurance business to subsidiary
Fukokushinrai Life Insurance Company. At fiscal year-end, the combined valueof both companies' individual insurance and individual annuities in force stood at¥34,069.3 billion, and annualized premiums for policies in force totaled ¥452.5
billion. For the year, the combined value of premium and other income, which
includes group insurance, was ¥781.9 billion.

Assets, Liabilities, and Net Assets
FY2004 ’05

’06

’07

’08

Total assets(¥ billions)
5,684.3

5,893.0

5,725.2

5,514.4

5,088.6

The outstanding balance of non-consolidated total assets, including separate accounts,
declined 3.7%, to ¥5,514.4 billion. General account assets, which constitute 98.0% of
this total, fell 3.7%, to ¥5,402.9 billion. The main reason for the decrease in total assets
was a fall in the market value of securities stemming from declining share values in thedomestic equities market.
Policy reserves edged down 0.8%, to ¥5,221.4 billion, and total liabilities, including
policy reserves, declined 1.5%, to ¥5,393.9 billion.
Net assets at fiscal year-end amounted to ¥120.5 billion, down 51.2% from a year
earlier.
On a consolidated basis, total assets declined 1.6%, to ¥5,710.1 billion, and net
assets fell 51.8%, to ¥121.1 billion.

Strengthening Our Capital Base

FY2004 ’05

’06

’07

’08

Fukoku Life is constantly bolstering its internal reserves by increasing its contingency
reserve and the reserve for price fluctuation of securities. In fiscal 2008, however,these reserves decreased due to the need to address an increase in negative spread
and a rise in capital losses. At fiscal year-end, the contingency reserve stood at ¥145.1
billion, down ¥9.3 billion year-on-year, and the reserve for price fluctuation of securitieswas ¥24.6 billion, down ¥29.2 billion.

FUKOKU MUTUAL LIFE INSURANCE COMPANY

5

Solvency Margin

Solvency margin ratio(%)
1,228.8
1,146.9

1,139.6

1,008.4

925.0

Fukoku Life's solvency margin ratio at fiscal year-end was 1,008.4%, down 138.5 points
year-on-year. The decline was due to a number of factors, including a reversal of thecontingency reserve and reserve for price fluctuation of securities, as well as unrealized losses on securities stemming from the fall in share prices and the high Japaneseyen. Even so, the Company's solvency margin far exceeds 200%, the level set as anindicator of financial soundness for life insurance companies, and clearly illustrates ourability to meet a high level of payments.
We will continue making every effort to maintain a high solvency margin ratio as
one indicator of the added peace of mind we offer our customers.

Ratings
FY2004 ’05

’06

’07

’08

Fukoku Life relies on four neutral rating organizations to provide an objective assessment of the Company's ability to meet insurance payments. As of September 1, 2009,
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.

Overview

INVESTMENTPERFORMANCE IN
FY2008(GENERAL ACCOUNT)General account assets(¥ billions)
5,563.4

5,763.9 5,610.5

5,402.9

4,989.7

In the second half of fiscal 2008, ended March 31, 2009, the Japanese economy worsened rapidly due to the worldwide economic repercussions of the financial crisis in the
United States and Europe. Financial and capital markets continued to experience extremely challenging conditions amid growing alarm generated by the state of U.S. andEuropean financial systems and uncertainties surrounding the future of the world
economy.
Against this backdrop, from the beginning of the period Fukoku Life emphasizedstability rather than profitability. From the second half of the period, when the chaos in
global financial markets worsened, we worked tirelessly to reduce risks associatedwith asset management. We strengthened our defenses against falling financial markets by selling foreign securities and stocks in order to reBreakdown of general account assets
duce holdings of assets that(¥ billions)have a relatively high level of
Others:Ordinary loans:risk, as well as by increasing
162.6 (3.0%)
1,161.2 (21.5%)
Real estate:
the hedge ratio.
246.2 (4.6%)
At fiscal year-end, general
Cash and deposits, and others:
account assets, which com241.9 (4.5%) (Note)prise 98.0% of total assets,
Other securities:
51.5 (1.0%)
Loans:
amounted to ¥5,402.9 billion,
Foreign securities:
1,238.2
574.6 (10.6%)(22.9%)
down 3.7%, or ¥207.5 billion,
Policy loans:
76.9 (1.4%)
from a year earlier. Total asStocks:
Securities:
418.8 (7.8%)
3,513.8 (65.0%)
sets fell 3.7%, or ¥210.7 billion, to ¥5,514.4 billion.
Bonds:
2,468.8 (45.7%)

FY2004 ’05

’06

’07

’08

Total: ¥5,402.9 billion
Note: It is including cash and deposits, call loans, monetaryclaims bought and money held in trust

6

FUKOKU MUTUAL LIFE INSURANCE COMPANY

Bonds(¥ billions)
2,362.1 2,431.1 2,444.6

2,468.8

2,183.5

FY2004 ’05

’06

’07

’08

StocksBonds: In the year under review, we allocated proceeds from the sale of foreign securities and shares primarily to domestic bonds. As a result, the Company's bond portfolio at fiscal year-end stood at ¥2,468.8 billion, up 1.0%, or ¥24.1 billion, from a year
earlier.

(¥ billions)
790.7

801.1

601.9

549.6

418.8

FY2004 ’05

’06

’07

Investment income from general accounts increased 14.0%, or ¥20.5 billion, to¥166.7 billion. Interest and dividends, the main components of investment income,declined 6.5%, or ¥7.9 billion, to ¥115.0 billion, stemming from a decrease in interest
income from foreign bonds due to the high yen and other factors. Gains on sales of
securities increased 144.8%, or ¥30.4 billion, to ¥51.4 billion, owing mainly to the saleof domestic bonds.
Investment expenses increased 262.4%, or ¥104.5 billion, to ¥144.3 billion. We
recorded ¥95.4 billion in losses on sales of securities due to the sale of foreign securities and shares that generated unrealized losses. These sales were carried out to prevent further losses. We recorded ¥25.2 billion in losses on the valuation of securities,
mainly domestic shares, due to lower share prices caused by the turbulence in financial
markets.

’08

Foreign securities

Stocks: Our year-end holdings of domestic equities were down 30.4%, or ¥183.0
billion, to ¥418.8 billion, due to the sale of stocks and a decline in unrealized gains
stemming from the drop in share prices.
Foreign Securities: Our holdings of foreign securities declined due to the sale of mainly
foreign bonds. As a result, the Company's holdings of foreign securities, including equity holdings, fell 24.1%, or ¥182.8 billion, to ¥574.6 billion.

(¥ billions)
757.4
709.9
608.9

574.6

460.6

FY2004 ’05

’06

’07

’08

Loans
(¥ billions)
1,282.4 1,250.8 1,266.2

1,231.9 1,238.2

Loans: Fukoku Life increased loans provided to corporations amid higher demand forloans by companies arising from the difficulty in procuring funds through direct financing. As a result, the fiscal year-end balance of outstanding loans, including policy loans,increased, 0.5%, or ¥6.2 billion, to ¥1,238.2 billion.
Real Estate: In fiscal 2008, we reshuffled our property portfolio in order to enhance
profitability. As a result of these activities, the balance of our real estate holdings rose
22.0%, or ¥44.3 billion, to ¥246.2 billion. The current project to renovate the Osaka
Fukoku Mutual Life Insurance Building located at the
Umeda Terminal, the largest transportation hub in Western Japan, is scheduled for completion in the autumn ofReal estate
2010, and is expected to contribute to the Company's(¥ billions)
246.2
real estate income in the future.
191.7

FY2004 ’05

’06

’07

’08

191.0

FY2004 ’05

201.4

201.8

’06

’07

’08

FUKOKU MUTUAL LIFE INSURANCE COMPANY

7

INVESTMENT POLICIES FOR FY2009
Investment Environment
In the fiscal year ending March 31, 2010, we expect the Japanese economy to remainlackluster, as the downturn in corporate performance continues to ripple outward into
the real economy. At the same time, we believe the rate of decline will become lesssevere, owing to ongoing inventory adjustments. We also expect companies that responded quickly to the sharp decline will enjoy revenue increases, and anticipate that
economic stimulus measures, including government cash handouts, will help prop up
the economy. We also anticipate that exports will improve owing to a gradual recovery
in overseas demand.
Amid a challenging investment environment, long-term investment rates are notexpected to rise due to strong demand for bonds. Although share prices have been on
the upturn since hitting bottom, the increase in value will be sluggish due to considerable uncertainty surrounding the future of the world's share markets.
Bonds: Fukoku Life will increase its bond holdings. We will ensure profitability by
investing in bonds with longer periods of maturity while carefully monitoring interest
rates.
Stocks: We plan to decrease our holdings of stocks. We will also minimize extreme
risks by the flexible use of hedging.
Foreign Securities: We plan to decrease our foreign bond holdings. While reducing
holdings of foreign currency-denominated assets in our portfolio, we will invest in yendenominated foreign securities with low exchange rate risks expected to yield higher
interest than Japanese bonds.
Loans: We will apply stringent selection criteria to loans, while emphasizing profitability and credit risk.
Real Estate: While continuing our policy of reshuffling our property portfolio, we will
work hard to maintain the profitability of existing properties.

8

FUKOKU MUTUAL LIFE INSURANCE COMPANY

GOVERNANCE SYSTEM

Board of Representative Members of Policyholders

Internal Governanceand Internal Control
SystemAs a mutual life insurance company, Fukoku Life is engaged in the highly
public business of protecting policyholders' rights, and is also an institutional
investor obliged to safely and profitably manage the valuable assets of policyholders. Therefore, we constantly strive to enhance our internal control systems, which consist of a risk management system based on the principle ofself-responsibility, a compliance system, insurance claim payment system
based on our "Customer-Centric" philosophy, and a personal information protection system for safeguarding the privacy of customers.
In addition, our Board of Directors set the terms for the creation of a system of internal controls to ensure the soundness of operations. We will establish and enhance a system of internal controls by promoting complianceand improving risk management based on those core policies.

Risk Management
SystemWe must enhance financial soundness by addressing the various risks weface in order to be able to meet customers' expectations over the long term,
while maintaining their policies. We are working across the entire company toimprove the risk management system in an initiative that includes the full
involvement of top management.
Fukoku Life manages risk rigorously through the Risk Management Committee, as well as committees each tasked with addressing one of the fiverisk categories: underwriting risks, asset management risks, administration
risks, system risks, and large-scale disaster and information leakage risks.
We also have a risk management advisory panel with expertise in risk management.

Compliance System

As members of the community, all executives and employees undergo ongoing training in compliance-related matters so that they not only observe laws
and regulations, but also comply with protocols and social conventions. To
this end, as well as improving and reinforcing the compliance system, wehold regular hands-on training programs. Our system ensures that in the unlikely event of improper conduct, it will be detected early and dealt with swiftly
and appropriately, and we have in place a system to prevent their recurrence.
We have also established a system under which those in charge of compliance-related matters acquire a qualification to become a compliance officer.

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 compliancewith the Personal Information Protection Law enacted in Japan in April 2005,
as well as related laws and guidelines. The appropriate management of personal information is also governed by the Company's own privacy policy.

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 with the 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.

Fukoku Life Concerts

COMPANYSPONSORED
ACTIVITIESFukoku Life holds two types of concerts throughout the country: Visiting Concerts andCharity Concerts. Visiting Concerts give children attending schools for the disabled anddisabled people living in institutions who cannot easily get to concert halls the opportunity to hear performances of classical music. Charity Concerts are held at concert halls
as part of the Company'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 andimprovise as necessary to create an enjoyable musical occasion for residents. Since
1993, the Company has held 172 Charity Concerts. Visiting Concerts, which were introduced in 2003, have been held at a total of 123 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 the disabled are sold from stallsin the hall foyer.

Other Activities❖ We plan to attract the corporate tenants of the new Osaka Fukoku Mutual Life Insurance Building scheduled for completion in 2010, as well nearby universities andcompanies, and provide information of interest related to culture and health.
❖ The Company is a proud sponsor of the Pink Ribbon Campaign, which promotes theimportance of the early detection, diagnosis, and treatment of breast cancer.
❖ Together with Shochiku Co., Ltd., which is involved with such entertainment business as Japanese Kabuki and films, Fukoku Life is a sponsor of the Metropolitan
Opera: Live in High Definition series of screenings, which give members of thegeneral public the opportunity to see some of the finest opera performances in theworld.

Visiting concert

10

FUKOKU MUTUAL LIFE INSURANCE COMPANY

Charity concert

Flora Preservation

EMPLOYEEACTIVITIESRecently in Japan, the lack of people willing to take over forestry businesses has seen
an increase in land on which vegetation grows unchecked. One particular problem is
uncontrolled groves of the vigorously growing Moso bamboo, which not only invades
forests, but also causes landslides and takes over farmland. This bamboo problem iseven found in land owned by the Company in Shizuoka Prefecture. Since 2006, Fukoku
Life executives and employees have taken part in activities aimed at preserving theland's natural vegetation and protecting it from this invasive bamboo.

Other Activities
Company employees also take part in community cleaning campaigns and campaigns
to collect the caps of plastic bottles. Recycling the recovered caps from plastic bottles
has two benefits. First, it limits the generation of CO2. Second the funds obtained fromthe sale of the caps are contributed to the Japan Committee "Vaccines for the world's
children" (JCV) through the volunteers who collected the bottles.

Recovering plastic
bottle caps

President Akiyama directing the work tochop down bamboo

Employees participating in community
cleaning campaigns

COMMUNICATING WITH SOCIETIESAlliance with Sanrio
C 1976, 2009 SANRIO CO., LTD. APPROVAL NO. S502005

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 andadvertising activities include the production of a variety of publications as needed, inorder to strengthen the channels of communication between the Company, its policyholders, and its many other customers.

C '76, '05, '09 SANRIO SANRIO/W TVO MMPC
C '09 SANRIO APPROVAL No.P2309083

FUKOKU MUTUAL LIFE INSURANCE COMPANY

11

Non-consolidated Financial Statements
Non-consolidated Balance Sheets
Fukoku Mutual Life Insurance Company
As of March 31, 2007, 2008 and 2009

As of March 31,

2007

2008

2009

Millions of
U.S. dollars

Millions of yen

Assets:Cash and deposits:
Cash .................................................................................
Bank deposits ...................................................................
Call loans ..............................................................................
Monetary claims bought ......................................................
Money held in trust ..............................................................
Securities:
Government bonds ..........................................................
Local government bonds ..................................................
Corporate bonds ...............................................................
Stocks ..............................................................................
Foreign securities .............................................................
Other securities ................................................................
Loans:
Policy loans ........................................................................
Ordinary loans ..................................................................
Tangible fixed assets:
Land .................................................................................
Buildings ...........................................................................
Construction in progress ..................................................
Other tangible fixed assets ..............................................
Intangible fixed assets:
Software ...........................................................................
Other intangible fixed assets ...........................................
Reinsurance receivables ......................................................
Other assets:
Accounts receivable .........................................................
Prepaid expenses .............................................................
Accrued income ...............................................................
Deposits ...........................................................................
Differential account for futures trading ............................
Derivatives .......................................................................
Suspense payment ..........................................................
Other assets .....................................................................
Deferred tax assets ..............................................................
Allowance for possible loan losses ......................................
Total assets .........................................................................

12

FUKOKU MUTUAL LIFE INSURANCE COMPANY¥

115
60,76460,88096,4002,865
102,186¥

128
45,16845,296
125,500
2,533
57,527

2009

¥

134
49,24849,382
183,600
2,055
33,053

$

1
501
502
1,869
20
336

1,891,859
114,761
460,854853,113746,343
42,7964,109,729

1,782,029
138,278
560,305
643,452
787,019
51,373
3,962,459

1,746,556
136,848616,227
448,295
596,372
52,077
3,596,377

17,780
1,393
6,273
4,563
6,071
530
36,611

79,286
1,186,939
1,266,226

77,5401,154,423
1,231,963

76,967
1,161,237
1,238,205

783
11,821
12,605103,200
97,384819
5,068
206,472

106,720
94,416759
4,056
205,952

141,825
98,9375,457
3,845
250,065

1,443
1,007
55
39
2,545

7,942
451
8,393
52

7,973
449
8,423
120

7,337
448
7,785
122

74
4
79
1

11,625587
25,024
2,416
—
197
5,471
3,893
49,215—(9,399)¥5,893,024

19,165
1,414
26,603
2,247
—
1,434
4,560
3,974
59,40036,106(10,052)¥5,725,231

12,9302,393
21,523
2,416
5,027
1,682
4,340
4,360
54,674110,422(11,290)¥5,514,454

131
24
219
24
51
17
44
44
556
1,124
(114)
$56,138

Non-consolidated Balance Sheets (Continued)

As of March 31,

2007

2008

2009

Millions of
U.S. dollars

Millions of yen

Liabilities:
Policy reserves:
Reserve for outstanding claims ......................................
Policy reserve .................................................................
Reserve for dividends to policyholders ..........................
Reinsurance payables ........................................................
Subordinated bonds ...........................................................
Other liabilities:
Subordinated debt loans ................................................
Corporate income tax payable........................................
Accounts payable ...........................................................
Accrued expenses ..........................................................
Unearned income ...........................................................
Deposits received ..........................................................
Guarantee deposits received .........................................
Differential account for futures trading ..........................
Derivatives .....................................................................
Suspense receipt ...........................................................
Reserve for employees' retirement benefits ....................
Reserve for directors' and corporate auditors'
retirement benefits ........................................................
Reserve for price fluctuation of securities .........................
Deferred tax liabilities .........................................................
Deferred tax liabilities for revaluation reserve for land .......
Total liabilities ...................................................................
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 .......................................
Reserve for directors' retirement allowances ............
Other reserves ...........................................................
Unappropriated surplus ..............................................

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

¥

28,371
5,108,013
52,872
5,189,257
74
47,092¥

2009

26,415
5,181,780
54,382
5,262,578
102
47,362¥ 28,2205,135,913
57,3175,221,451
87
38,870$ 287
52,284583
53,1550395

5,000
10,15528,84911,368797
5,056
12,672
10
1,210
1,297
76,41950,248

—
9,316
3,274
10,931479
5,043
12,708
—
1,422
1,557
44,73349,504

—
107
1,680
9,975
517
5,050
11,712
—
8,879
1,625
39,55049,293

—
1
17
101
5
51
119
—
90
16
402
501

547
50,06663,851
20,1995,497,755—
53,911—
20,076
5,478,270—
24,622—
20,026
5,393,901

—
250
—
203
54,91040,00031,000112

40,00031,000112

40,00031,000
112

407
315
1

1,587

1,787

1,987

20

—
3,895

10,000
3,895

20,000
3,895

203
39

343
2,770
767
53,77161,54863,135
134,247

319—
767
55,671
70,65372,441
143,553311—
767
56,66081,634
83,621
154,733

3
—
7
576
831
851
1,575

273,377

115,334(35,474)

(361)

(152)
(12,204)
261,020395,268¥5,893,024

408(12,335)
103,407
246,961¥5,725,231

479
814(34,180)
120,553¥5,514,454

4
8
(347)
1,227
$56,138

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, 2007, 2008 and 2009

Year ended March 31,

2007

2008

2009

Millions of
U.S. dollars

Millions of yen

Ordinary revenues:
Premium and other income:Premium income ............................................................
Reinsurance income .......................................................
Investment income:Interest, dividends and other income:Interest from deposits ................................................
Interest and dividends from securities .......................
Interest from loans .....................................................
Income from real estate for rent ................................
Other interest and dividends ......................................
Gains from money held in trust, net ..............................
Gains from trading securities, net ..................................
Gains on sales of securities ...........................................
Gains on redemption of securities .................................
Other investment income ..............................................
Gains from separate accounts, net ................................
Other ordinary revenues:
Fund receipt from annuity rider ......................................
Fund receipt from deposit of claims paid .......................
Reversal of reserve for outstanding claims ....................
Reversal of policy reserve ..............................................
Reversal of reserve for employees'
retirement benefits .....................................................
Others ............................................................................
Total ordinary revenues ...................................................
Ordinary expenditures:
Claims and other payments:
Claims ............................................................................
Annuities ........................................................................
Benefits ..........................................................................
Surrenders ......................................................................
Other payments .............................................................
Reinsurance premiums ..................................................
Provision for policy reserve and others:
Provision for reserve for outstanding claims ..................
Provision for policy reserve ............................................
Interest on accumulated dividends to policyholders ......

14

FUKOKU MUTUAL LIFE INSURANCE COMPANY

2009¥721,858130
721,989¥736,241226
736,468¥646,500226
646,726$6,581
2
6,583

1,135
69,70424,981
10,371
302
106,495
3,846
13,025
17,82326
365
5,813
147,397

584
83,91025,075
12,771641
122,983—
1,827
21,031—
373—
146,216662
75,05024,32414,300689
115,027——
51,491—
212—
166,730

6
764
247
145
7
1,171
—
—
524
—
2
—
1,697

432
16,552——851
18,702
1,955—

557
19,967—45,866

5
203
—
466

1,213
1,153
19,351
888,739743
1,521
23,774906,459

211
1,624
68,227
881,685

2
16
694
8,975

185,048
71,522
133,961
106,851
22,019292
519,696

235,444
76,212
144,598
120,386
24,934349
601,926

205,663
89,550151,181
109,976
39,840338
596,550

2,093
911
1,539
1,119
405
3
6,073

898
156,575
51—
73,766
200

1,804
—
242

18
—
2

¥157,525¥ 73,967

¥

2,047

$

20

Non-consolidated Statements of Operations (Continued)

Year ended March 31,

2007

2008

2009

Millions of
U.S. dollars

Millions of yen

Investment expenses:
Interest expenses ..........................................................
Losses from money held in trust, net ............................

¥

2,342
—

¥

2,466
6,251

2009

¥

1,974
3,912

$

20
39

Losses from trading securities, net ...............................

—

—

3,343

34

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

11,168
1,296
4,353
993
6,855
4,383
4,939
—
36,33389,574

15,511
2,731
961
443
745
4,753
5,965
19,76559,59587,913

95,471
25,268
110
2,348
1,243
4,226
6,450
25,086
169,435
86,137

971
257
1
23
12
43
65
255
1,724
876

13,681
5,265
6,094
353
25,395
828,525
60,213

13,377
5,100
6,149
350
24,978848,381
58,077

14,532
4,957
5,583
277
25,349879,520
2,164

147
50
56
2
258
8,953
22

46
—
46

42
—
42

41,72429,28971,014

424
298
722

1,015
466

240
398

904
514

9
5

547
7,468
9,496
50,762

—
3,845
4,484
53,635——
1,418
71,760——14730

17,792(10,532)
7,259¥ 43,502

18,905(10,655)
8,249¥ 45,385

3,645
11,251
14,896¥ 56,863

37
114
151
$ 578

Operating expenses ...........................................................
Other ordinary expenditures:
Claim deposit payments .................................................
Taxes ..............................................................................
Depreciation ...................................................................
Others ............................................................................
Total ordinary expenditures ............................................
Ordinary profits ................................................................
Extraordinary gains:
Gains on disposal of fixed assets ...................................
Reversal of reserve for price fluctuation of securities ....
Total extraordinary gains .................................................
Extraordinary losses:
Losses on disposal of fixed assets ................................
Impairment losses ..........................................................

Provision for reserve for directors' andcorporate auditors' retirement benefits ......................
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 ...................................................
See notes to the non-consolidated financial statements.

FUKOKU MUTUAL LIFE INSURANCE COMPANY

15

Non-consolidated Statements of Changes in Net Assets
Fukoku Mutual Life Insurance Company
For the years ended March 31, 2007, 2008 and 2009

Year ended March 31,

2007

2008

2009

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 .......................
Surplus:
Legal reserve for future losses
Balance at the end of previous fiscal year ................
Changes in the current fiscal year:
Additions to legal reserve for future losses .........
Total changes in the current fiscal year ................
Balance at the end of current fiscal year ..................
Other surplus:
Reserve for redemption of foundation funds
Balance at the end of previous fiscal year ...........
Changes in the current fiscal year:
Additions to reserve for redemption offoundation funds ..........................................
Reversal of reserve for redemption offoundation funds ..........................................
Total changes in the current fiscal year ...........
Balance at the end of current fiscal year ..............
Reserve for dividend allowances
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 ..............
Reserve for advanced depreciation ofreal estate for tax purpose
Balance at the end of previous fiscal year ...........
Changes in the current fiscal year:
Reversal of reserve for advanced depreciaiton ofreal estate for tax purpose ...........................
Total changes in the current fiscal year ...........
Balance at the end of current fiscal year ..............

16

FUKOKU MUTUAL LIFE INSURANCE COMPANY

2009¥ 30,000¥40,000¥40,000$407

40,000(30,000)
10,00040,000———40,000———40,000

—
—
—
407

1,000

31,00031,000315

30,00030,00031,000——31,000——31,000

—
—
315

112

112

112

1

—
112

—
112

—
112

—
1

1,387

1,587

1,787

18

200
200
1,587

200
200
1,787

200
200
1,987

2
2
20

24,000—10,000101

6,000

10,00010,000101(30,000)(24,000)——
10,00010,000—10,00020,000

—
101
203

3,895

3,895

3,895

39

—
3,895

—
3,895

—
3,895

—
39

412

343

319

3

(69)
(69)
343

(23)
(23)
319

(8)
(8)
311

(0)
(0)
3

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

Year ended March 31,

2007

2008

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 topolicyholders .................................................
Additions to legal reserve for future losses .....
Payment of interest on foundation funds ........
Payment of bonus to directors ........................
Net surplus for the year ...................................
Additions to reserve for redemption offoundation 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 ............
Payment of bonus to directors .............................
Net surplus for the year .......................................
Reversal of reserve for redemption offoundation 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 .................
Payment of bonus to directors .................................
Net surplus for the year ............................................
Redemption of foundation funds ..............................
Reversal of reserve for redemption offoundation funds ....................................................
Reversal of revaluation reserve for land ...................
Total changes in the current fiscal year ....................
Balance at the end of current fiscal year .......................

2009

2,770

2,770

—

—

—
—
2,770

(2,770)(2,270)
—

—
—
—

—
—
—

767

767

767

7

—
767

—
767

—
767

—
7

47,27053,771

55,671

566(30,454)
(200)
(531)
(30)
43,502(35,525)
(200)
(716)
—
45,385(31,868)
(200)
(716)
—
56,863

(324)
(2)
(7)
—
578

(6,000)(10,000)(10,000)

(101)

69

23

8

0

—
144
6,501
53,771

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

—
(133)
10
576

80,503

63,13572,441

737(30,454)(531)(30)
43,502(35,525)(716)—
45,385(31,868)(716)—
56,863

(324)
(7)
—
578

(30,000)
144(17,367)
63,135—161
9,305
72,441—(13,098)
11,18083,621

—
(133)
113
851

111,615

134,247

143,553

1,461

40,000(30,454)—(35,525)—(31,868)—(324)

30,000(531)(30)
43,502(30,000)—(716)—
45,385——(716)—
56,863
—

—
(7)
—
578
—

(30,000)
144
22,632
134,247

—
161
9,305
143,553—(13,098)
11,180154,733

—
(133)
113
1,575

FUKOKU MUTUAL LIFE INSURANCE COMPANY

17

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

Year ended March 31,

2007

2008

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 .......................
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 .....................
Payment of bonus to directors ......................................
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 ...........................

18

FUKOKU MUTUAL LIFE INSURANCE COMPANY

2009

249,548

273,377

115,334

1,174

23,82923,829273,377(158,043)(158,043)
115,334(150,809)(150,809)(35,474)(1,535)(1,535)
(361)

—

(152)

408

4

(152)
(152)
(152)

560
560
408

70
70
479

0
0
4

5,244

(12,204)(12,335)(125)(17,449)(17,449)(12,204)

(130)
(130)
(12,335)

13,14913,149
814

133
133
8

254,792

261,020

103,407

1,052

6,227
6,227
261,020(157,612)(157,612)
103,407(137,588)(137,588)(34,180)(1,400)(1,400)(347)

366,408395,268

246,961

2,514

40,000(30,454)—(35,525)—(31,868)—(324)

30,000(531)(30)
43,502(30,000)(30,000)
144

—
(716)
—
45,385
—
—
161

—
(716)
—
56,863——(13,098)

—
(7)
—
578
—
—
(133)

6,227
28,860¥395,268(157,612)(148,307)¥ 246,961(137,588)(126,407)¥ 120,553(1,400)(1,286)$ 1,227

Non-consolidated Statements of Surplus
Fukoku Mutual Life Insurance Company
For the years ended March 31, 2007, 2008 and 2009

Year ended March 31,

2007

2008

2009

Millions of
U.S. dollars

Millions of yen

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

2009¥53,771¥55,671¥56,660$576

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

23

8

7

0

Reversal of reserve for directors' retirement .................

2,770

—

—

—

2,793

8

7

0

56,56555,67956,667576

35,52531,86817,856

181

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

200

200

200

2

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

716

716

716

7

10,00010,00010,000101

10,916

10,916

10,916111

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

46,44142,784

28,772

292

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

¥10,124¥12,894¥27,894$283

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

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

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

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

FUKOKU MUTUAL LIFE INSURANCE COMPANY

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 have been prepared from the accounts maintained by
Fukoku Mutual Life Insurance Company (the "Company") 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 accepted in Japan, which are different in certain 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 notnecessarily agree with the sum of the individual amounts.

2. U.S. Dollar Amounts
The translations of yen amounts into U.S. dollar amounts are included solely for the convenience of the reader andhave been made, as a matter of arithmetical computation only, at the rate of ¥98.23 = US$1.00, the effective rateof exchange at the balance sheet date of March 31, 2009. The translations should not be construed as representations that such yen amounts have been or could in the future be, converted into U.S. dollars at that or any otherrates.

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,
and securities managed as trust assets in money held in trust, is as follows:i) Trading securities are stated at fair market value. Costs of their sales are determined by the moving averagemethod.
ii) Held-to-maturity debt securities are stated at amortized cost under the straight-line method, cost being
determined by the moving 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 of Certified Public Accountants on November 16, 2000).
iv) Investments in subsidiaries and affiliates are stated 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 these available-for-sale securities, net of taxes, are recorded as a separate component of
net assets.
Available-for-sale securities with no fair market value are stated at cost, cost being determined by themoving average method, except for public and corporate bonds including foreign bonds, of which the difference between acquisition cost and face value is considered to be an adjustment of interest. Such bonds arestated at amortized cost under the straight-line method, cost being determined by the moving averagemethod.

20

FUKOKU MUTUAL LIFE INSURANCE COMPANY

(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 based on the Law for Revaluation of Land (Law No.34
promulgated on March 31, 1998). The difference between fair value and book value resulting from the revaluation,
net of related taxes, is recorded as revaluation reserve for land as a separate component of net assets and therelated 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 reasonable adjustments.

(4) Depreciation of tangible fixed assets
Depreciation of tangible fixed assets is calculated by the following methods.
Buildingsi) Acquired on or before March 31, 1998: Previous declining-balance 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 buildingsi) Acquired on or before March 31, 2007: Previous declining-balance methodii) Acquired on or after April 1, 2007: Declining-balance method
Other tangible fixed assets acquired for ¥100,000 or more but less than ¥200,000 are depreciated equally overthree years.

(5) Foreign currency translation
Foreign currency-denominated assets and liabilities, except for investments in subsidiaries and affiliates, are translated into Japanese yen at the effective exchange rate prevailing at the balance sheet date. Investments in subsidiaries and affiliates are translated into Japanese yen at the exchange rate on the date of acquisition.

(6) Allowance for possible loan losses
Allowance for possible loan losses is provided in accordance with the Company's standards of self-assessment
and write-offs and reserves on credit quality:i) For the credits of borrowers who are legally bankrupt such as being in the proceedings of bankruptcy or civil
rehabilitation (hereinafter called "legally bankrupt borrowers") and who are substantially bankrupt (hereinafter called "substantially bankrupt 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 thedisposal 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, theCompany provides the amounts deemed as necessary considering the borrowers' ability to pay, within theamounts after deductions of the amount expected to be collected through the disposal of collateral or the
execution of guarantees.
iii) For the credits of borrowers other than the above, the Company provides the amounts calculated by multiplying the borrowers' balance by the actual ratio of bad debt losses on defaults during a certain past period.

FUKOKU MUTUAL LIFE INSURANCE COMPANY

21

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 independentof 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 the execution of guarantees is written-off directlyfrom the borrower's balance as the estimated uncollectible amounts. The amounts written-off as of March 31,
2007, 2008 and 2009 were ¥784 million, ¥875 million and ¥852 million (US$8 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 directors' and corporate auditors' retirement benefits
Reserve for directors' and corporate auditors' retirement benefits as of March 31, 2007 represents the estimatedamounts to be paid due to abolishing internal rule of retirement benefit plan in relation to directors and corporate
auditors.

(9) Reserve for price fluctuation of securities
Reserve for price fluctuation of securities is calculated in accordance with the ruling in Article 115 of the Insurance
Business Law.

(10) Lease transactions
For the years ended March 31, 2007 and 2008, finance lease transactions that do not transfer ownership to thelessee were accounted for in a manner similar to accounting treatment for ordinary rental transactions.
For the year ended March 31, 2009, finance lease transactions that do not transfer ownership to the 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. For finance lease transaction where the Company is lessor,
the lease fee was recorded in "interest, dividends and other income" and the amount after deduction of the amountequivalent to interest allocated over the lease term from lease fee was recorded in "other investment expenses" as
the cost of the corresponding lease assets, at time of receiving lease fee.

(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 ofhigh correlation and effectiveness between the hedging instruments and the hedged item, valuation gains andlosses 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 the hedging instruments and the hedged item,
valuation gains and losses on the interest rate swaps are deferred until the maturity of the hedged transactions.
Deposits denominated in foreign currencies for which forward foreign exchange contracts are used to hedge theforeign currency fluctuations are translated at the contract rates if the forward contracts qualify for specific hedge
accounting. In this case, exchange differences between exchange rate on trade date and forward contract rate areallocated to each fiscal year from the date contracted to the date settled.

22

FUKOKU MUTUAL LIFE INSURANCE COMPANY

For judging the effectiveness of hedge used, ratio analysis of comparing the cash flow fluctuation of hedged
item with the same of 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 that are stipulated to be deferred under the
Tax Law, are deferred as prepaid expenses and amortized equally over five years. Consumption taxes other thandeferred consumption taxes are recognized 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 Commissionerof Financial Services Agency (Ministry of Finance Ordinance No. 48, 1996) is applied.
In regard to the policies not subject to the standard policy reserve, the net level premium method is applied.

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

(15) Deferred assets
Discount on bonds is amortized equally over the period for which interest on bonds is fixed. This amount is deducted from bonds.

(16) Policy-reserve-matching bonds
Of the bonds corresponding to the sub-groups which are set by insurance types and investment policies, the bondsthat are held to match the duration of liabilities are classified as policy-reserve-matching bonds in accordance with
"Temporary Treatment of Accounting and Auditing Concerning Policy-reserve-matching Bonds in Insurance Industry" (Industry Audit Committee Report No. 21 issued by the Japanese Institute of Certified Public Accountants on
November 16, 2000).
The amounts of policy-reserve-matching bonds recorded on the balance sheets and the market value of thesebonds were ¥540,923 million and ¥542,462 million as of March 31, 2007, ¥598,156 million and ¥612,619 million asof March 31, 2008 and ¥628,570 million (US$6,398million) and ¥644,212 million (US$ 6,558 million) as of March 31,
2009, respectively.

2. Changes in Accounting Policy(1) 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 aresult, ordinary profits decreased by ¥2 million (US$20 thousand), compared to the previous methods.
(2) Effective for the year ended March 31, 2008, in accordance with the revision of Corporate Tax Law, depreciationof tangible fixed assets acquired on or after April 1, 2007 is calculated by the straight-line method and thedeclining-balance method 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 book value. As a result, ordinary profits decreased by ¥71 million.

FUKOKU MUTUAL LIFE INSURANCE COMPANY

23

(3) Effective for the year ended March 31, 2007, the Company adopted "Accounting Standards for Presentation of
Net Assets in the Balance Sheet" (ASBJ Statement No.5 issued by the Accounting Standards Board of Japan on
December 9, 2005). If the previous accounting policy were to be applied, the amount of "Total capital" as ofMarch 31, 2007 was ¥395,420 million.
(4) Effective for the year ended March 31, 2007, the Company adopted "Tentative Solution on Accounting for
Deferred Assets" (ASBJ PITF No.19 issued by the Accounting Standards Board of Japan on August 11, 2006).
As a result, discount on bonds of ¥106 million as of March 31, 2007, which was recorded in other assets until
previous fiscal year, was deducted from bonds.
(5) In accordance with the revised form of the Enforcement Regulation of the Insurance Business Law, the balance
sheet presentation has been changed as follows.
(a) Effective for the year ended March 31, 2007, "Real estate and movables" which was presented as a separate
line item until previous fiscal year is presented as "tangible fixed assets".
(b) Effective for the year ended March 31, 2007, "Intangible fixed assets" which was included in "Other assets"
until previous fiscal year is presented as a separate line item.

3. Loans Receivable
The total amounts of credits to bankrupt borrowers, delinquent loans, delinquent loans past 3 months or more andrestructured loans, which were included in loans, were ¥11,332 million, ¥11,032 million and ¥10,749 million (US$109
million) as of March 31, 2007, 2008 and 2009, respectively.
i) The balances of credits to bankrupt borrowers were ¥443 million, ¥492 million and ¥471 million (US$4
million) as of March 31, 2007, 2008 and 2009, respectively.
ii) The balances of delinquent loans were ¥10,889 million, ¥10,539 million and ¥10,277 million (US$104 million)
as of March 31, 2007, 2008 and 2009, respectively.
iii) There were no balances of delinquent loans past 3 months or more as of March 31, 2007, 2008 and 2009.
iv) There were no balances of restructured loans as of March 31, 2007, 2008 and 2009.
Credits to bankrupt borrowers represent loans, excluding the balances 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, accruing interest of these loans is not recorded as income after determining that principal of or intereston these loans is unlikely to be collected due to the significant delay in repayment of principal or interest payment
or for some other reasons.
Delinquent loans are credits whose accruing interest is not recorded as income due to the same reasons as
described above, and exclude credits to bankrupt borrowers and loans for which interest payments have beensuspended and rescheduled to assist and support the borrowers in the restructuring of their business.
Delinquent loans past 3 months or more are loans for which interest payment or repayment of principal aredelinquent for 3 months or more from the due date under the terms of the related loan agreements, excluding
those loans classified as credits to bankrupt borrowers and delinquent loans.
Restructured loans are loans for which certain concessions favorable to borrowers, such as interest reduction or
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 delinquent loans past 3
months or more.
The direct write-offs related to loans decreased credits to bankrupt borrowers described above by ¥2 million,¥87 million and ¥66 million (US$674 thousand) as of March 31, 2007, 2008 and 2009, respectively.
The direct write-offs related to loans decreased delinquent loans described above by ¥782 million, ¥787 millionand ¥786 million (US$8 million) as of March 31, 2007, 2008 and 2009, respectively.

24

FUKOKU MUTUAL LIFE INSURANCE COMPANY

4. Accumulated Depreciation of Tangible Fixed Assets
Accumulated depreciation of tangible fixed assets totaled to ¥116,318 million, ¥122,527 million and ¥124,586
million (US$1,268 million) as of March 31, 2007, 2008 and 2009, respectively.

5. Separate Accounts
Total assets in separate accounts provided for in Article 118 of the Insurance Business Law were ¥131,182 million,¥117,591 million and ¥113,498 million (US$1,155 million) as of March 31, 2007, 2008 and 2009, respectively. The
amounts of liabilities were the same as these figures.

6. Receivables from/Payables to Subsidiaries
The total amounts of receivables from/payables to subsidiaries were ¥2,886 million and ¥1,933 million as of March
31, 2007, ¥3,642 million and ¥1,479 million as of March 31, 2008, and ¥3,579 million (US$36 million) and ¥1,281
million (US$13 million) as of March 31, 2009, respectively.

7. Monetary Claims to Directors
Monetary claims to directors as of March 31, 2007, 2008 and 2009 were ¥11 million, ¥16 million and ¥12 million(US$128 thousand), respectively.

8. Income Taxes
Deferred tax assets and deferred tax liabilities as of March 31, 2007 were ¥93,069 million and ¥156,920 million,
respectively. Valuation allowance for deferred tax assets was ¥2,653 million.
Major components of deferred tax assets were ¥51,572 million of policy reserves, ¥18,194 million of reserve for
employees' retirement benefits and ¥18,128 million of reserve for price fluctuation of securities and major component of deferred tax liabilities was ¥155,181 million of net unrealized gains on available-for-sale securities as ofMarch 31, 2007.
The statutory tax rate and the actual effective tax rates for the year ended March 31, 2007 were 36.2% and14.3%, respectively. The major difference between the statutory tax rate and the actual effective tax rate was(25.3%) of reserve for dividends to policyholders.
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 forprice fluctuation 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 on available-for-sale securities as ofMarch 31, 2008.
The statutory tax rate and the actual effective tax rates for the year ended March 31, 2008 were 36.2% and15.4%, respectively. The major difference between the statutory tax rate and the actual effective tax rate was(21.5%) of reserve for dividends to policyholders.
Deferred tax assets and deferred tax liabilities as of March 31, 2009 were ¥115,089 million (US$1,171 million)and ¥1,939 million (US$19 million), respectively. Valuation allowance for deferred tax assets was ¥2,727 million(US$27 million).
Major components of deferred tax assets were ¥57,150 million (US$581 million) of policy reserves, ¥20,136
million (US$204 million) of net unrealized losses of available-for-sale securities and ¥17,849 million (US$181 million)of reserve for employees' retirement benefits as of March 31, 2009.
The statutory tax rate and the actual effective tax rates for the year ended March 31, 2009 were 36.2% and20.8%, respectively. The major differences between the statutory tax rate and the actual effective tax rate were(9.0%) of reserve for dividends to policyholders and (6.6%) of revaluation reserve for land.

FUKOKU MUTUAL LIFE INSURANCE COMPANY

25

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

2007

2008

2009

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 fiscal year ........................................
Increase in interest ......................................................
Balance at the end of fiscal year .................................

¥ 54,516
30,454(32,149)51¥ 52,872¥ 52,872
35,525(34,216)200¥ 54,382

2009¥ 54,382
31,868(29,176)242¥ 57,317

$ 553
324
(297)
2
$ 583

10. Stocks of Subsidiaries
The amounts of stocks of subsidiaries the Company held as of March 31, 2007, 2008 and 2009 were ¥2,828
million, ¥17,525 million and ¥27,525 million (US$280 million), respectively.

11. Pledged Assets and Secured Debts
Assets pledged as collateral as of March 31, 2007 were ¥18,050 million of securities and ¥856 million of money
held in trust. Secured debts as of March 31, 2007 was ¥4,710 million.
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 was ¥4,660 million.
Assets pledged as collateral as of March 31, 2009 were ¥25,959 million (US$264 million) of securities. Secured
debts as of March 31, 2009 was ¥4,645 million (US$47 million).

12. Policy Reserves for the Reinsurance Contracts
Reserve for outstanding claims for the reinsurance contracts provided in accordance with Article 71 Item 1 of the
Enforcement Regulation of the Insurance Business Law (hereinafter called "reserve for outstanding claims forceded reinsurance") were ¥43 million, ¥31 million and ¥55 million (US$566 thousand) as of March 31, 2007, 2008
and 2009, respectively.
Policy reserve for the reinsurance contracts provided in accordance with Article 71 Item 1 of the Enforcement
Regulation of the Insurance Business Law (hereinafter called "policy reserve for ceded reinsurance") were ¥32
million, ¥29 million and ¥30 million (US$309 thousand) as of March 31, 2007, 2008 and 2009, respectively.

13. Adjustment Items for Redemption of Foundation Funds and Appropriation of Net Surplus
Adjustment items for redemption of foundation funds and appropriation of net surplus defined in Article 30 Paragraph 2 of the Enforcement Regulation of the Insurance Business Law were ¥273,337 million, ¥115,855 millionand ¥1,406 million (US$14 million) as of March 31, 2007, 2008 and 2009, respectively.

14. Additional Foundation Funds
The Company raised additional foundation funds of ¥40,000 million during the year ended March 31, 2007 inaccordance with Article 60 of the Insurance Business Law.

15. Redemption of Foundation Funds
In the year ended March 31, 2007, according to the redemption of foundation funds of ¥30,000 million, the Company reversed the reserve for redemption of foundation funds and provided the equivalent amount for accumulated foundation founds redeemed in accordance with Article 56 of the Insurance Business Law.

26

FUKOKU MUTUAL LIFE INSURANCE COMPANY

16. Commitment LineAs of March 31, 2007, 2008 and 2009, there were unused commitment line agreements under which the Company
is the lender of ¥1,581 million, ¥1,681 million and ¥1,481 million (US$15 million), respectively.

17. Subordinated Bonds
Repayments of subordinated bonds are subordinated to other obligations.

18. Subordinated Debt Loans
Repayments of subordinated debt loans as of March 31, 2007 are subordinated to other obligations.

19. Assets Denominated in Foreign Currencies
Assets denominated in foreign currencies as of March 31, 2007, 2008 and 2009 totaled to ¥672,918 million, ¥716,763
million and ¥463,674 million (US$4,720 million), respectively. The principal foreign currency asset amounts were2,022 million euros and US$2,579 million as of March 31, 2007, 2,401 million euros and US$2,584 million as ofMarch 31, 2008, and 1,551 million euros and US$2,465 million as of March 31, 2009, respectively.
Liabilities denominated in foreign currencies as of March 31, 2007, 2008 and 2009 totaled to ¥48,275 million,¥48,542 million and ¥39,840 million (US$405 million), respectively. The foreign currency liability amounts as ofMarch 31, 2007, 2008 and 2009 were 306 million euros.

20. Contribution to Policyholders Protection FundThe future contribution to the former Insurance Policyholders Protection Fund of Japan, which was succeeded by
the Life Insurance Policyholders Protection Corporation of Japan based on the Supplementary Article 140 Paragraph 5 of the Financial System Reform Law, were estimated at ¥285 million as of March 31, 2007. The contribution was charged as operating expenses in the year in which they were paid.

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 ¥11,174 million, ¥11,302 million and ¥11,059 million (US$112 million)
as of March 31, 2007, 2008 and 2009, respectively. The contributions were charged as operating expenses in theyear in which they were paid.

22. Reserve for Employees’ Retirement Benefits(1) The reserve for employees’ retirement benefits as of March 31, 2007, 2008 and 2009 were calculated asfollows:
As of March 31,

2007

2008

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

2009¥ (73,651)
21,438(52,212)1,722
241¥ (71,776)
18,307(53,469)
3,758
206¥ (71,981)
15,016(56,965)
7,499
172$ (732)
152
(579)
76
1

¥ (50,248)¥ (49,504)¥ (49,293)$ (501)FUKOKU MUTUAL LIFE INSURANCE COMPANY

27

(2) Gross amount of retirement benefit expenses for the years ended March 31, 2007, 2008 and 2009 were as
follows:
Year ended March 31,

2007

2008

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

¥ 3,472
1,470
(792)
502
34
¥ 4,687¥ 3,400
1,472
(964)
523
34
¥ 4,4652009¥ 3,218
1,434
(640)
779
34
¥ 4,826

$ 32
14
(6)
7
0
$ 49

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

28

2007

2008

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%
4.0%
10 years
10 years

2.0%
4.5%
10 years
10 years

2.0%
3.5%
10 years
10 years

FUKOKU MUTUAL LIFE INSURANCE COMPANY

2009

III. Notes to Statements of Operations
1. Changes in Accounting Policy(1) Effective for the year ended March 31, 2007, the Company adopted "Guidance on Accounting for Other Compound Financial Instruments (Compound Financial Instruments Other than Those with Option to Increase Paidin Capital)" (ASBJ Guidance No.12 issued by the Accounting Standards Board of Japan on March 30, 2006). As
a result, ordinary profits decreased by ¥33 million, compared to the previous methods.
(2) In accordance with the revised form of the Enforcement Regulation of the Insurance Business Law, thepresentation of statements of operations has been changed as follows, effective for the year ended March 31,
2007.
(a) "Gains (losses) on disposal of real estate and movables" which was presented as a separate line item ispresented as "gains (losses) on disposal of fixed assets".
(b) The bottom line of statements of operations has been changed from "Unappropriated surplus" to "Net surplus for the year".

2. Transactions with Subsidiaries
The total amounts of revenues and expenditures in connection with subsidiaries were ¥516 million and ¥7,811
million for the year ended March 31, 2007, ¥694 million and ¥8,023 million for the year ended March 31, 2008, and¥1,032 million (US$10 million) and ¥7,170 million (US$72 million) for the year ended March 31, 2009, respectively.

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

2007

2008

2009

Millions of
U.S. dollars

Millions of yen

Domestic bonds ..........................................................
Domestic stocks and other .........................................
Foreign securities ........................................................

¥
93
15,033
2,697¥ 2,722
11,566
6,743

2009¥ 29,312
17,176
5,002

$ 298
174
50

FUKOKU MUTUAL LIFE INSURANCE COMPANY

29

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

2007

2008

2009

Millions of
U.S. dollars

Millions of yen

Domestic bonds ..........................................................
Domestic stocks and other .........................................
Foreign securities ........................................................

¥ 9,232
1,739
197¥ 4,720
7,182
3,608

2009

¥ 2,427
43,67949,363

$ 24
444
502

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

2007

2008

2009

Millions of
U.S. dollars

Millions of yen

Domestic stocks and other .........................................
Foreign securities ........................................................

¥1,296—¥1,949782

2009¥21,507
3,761

$218
38

6. Policy Reserves for the Reinsurance Contracts
For the year ended March 31, 2007, provision for reserve for outstanding claims for ceded reinsurance consideredin calculation of provision for reserve for outstanding claims was ¥42 million and provision for policy reserve forceded reinsurance considered in calculation of provision for policy reserve was ¥718 thousand.
For the year ended March 31, 2008, reversal of reserve for outstanding claims for ceded reinsurance consideredin calculation of reversal of reserve for outstanding claims was ¥12 million and reversal 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 reserve for outstanding claims for ceded reinsurance considered in calculation of provision for reserve for outstanding claims was ¥24 million (US$248 thousand) and provision
for policy reserve for ceded reinsurance considered in calculation of reversal of policy reserve was ¥0 million (US$5
thousand).

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

2007

2008

2009

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 ......

30

FUKOKU MUTUAL LIFE INSURANCE COMPANY¥ 5,706
5,702
1,357

¥ 3,798
1,920(4,006)2009¥ 2,645734(6,724)

$ 26
7
(68)

8. Gains / Losses from Money Held in Trust
Gains / losses from money held in trust for the years ended March 31, 2007, 2008 and 2009 included valuation
losses of ¥1,945 million, valuation losses of ¥5,701 million and valuation gains of ¥520 million (US$5 million),
respectively.

9. Losses from derivative Instruments
Losses from derivative instruments for the years ended March 31, 2007, 2008 and 2009 included valuation lossesof ¥513 million, valuation gains of ¥95 million and valuation losses of ¥6,298 million (US$64 million), respectively.

10. Impairment of Fixed Assets
For the year ended March 31, 2009, impairment losses of fixed assets was 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 lease property and unused real estate are classified as one group individually.

(2) Background of recognizing the impairment losses
As a result of decline in profitability due to decrease of rental income and decline of market value of land, theCompany reduced the book value of lease property and unused real estate to recoverable amount. The amounts
reduced were recognized as impairment losses included in extraordinary losses.

(3) Asset groups recognized impairment losses and losses by fixed assets
2009
Millions of yen

Lease property:
Land ..................................................................................................................
Buildings and others ..........................................................................................

Millions of
U.S. dollars

¥205
40

$2
0

Total lease property (i) .......................................................................................
Unused real estate:
Land ..................................................................................................................
Buildings and others ..........................................................................................

245

2

55
213

0
2

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

269

2

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

260
254

2
2

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

¥514

$5

(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

31

Report of Independent Auditors

The Board of Directors of Fukoku Mutual Life Insurance Company

We have audited the accompanying non-consolidated balance sheet of Fukoku Mutual Life Insurance Company as of March 31, 2007, and the related non-consolidated statements of operations,surplus and changes in net assets for the year 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 audit.
We conducted our audit 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
audit provides a reasonable basis for our opinion.
In our opinion, the non-consolidated financial statements referred to above present fairly, in allmaterial respects, the non-consolidated financial position of Fukoku Mutual Life Insurance Company as of March 31, 2007, and the non-consolidated results of its operations for the year thenended in conformity with accounting principles generally accepted in Japan.

Tokyo, JapanMay 22, 2007

The Fuji Accounting Office32

FUKOKU MUTUAL LIFE INSURANCE COMPANY

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 and 2009, and the related non-consolidated statements of operations, surplus and changes in net assets for the years then ended, all expressed in Japanese yen. These non-consolidated financial statements are the responsibilityof the Company's management. Our responsibility is to independently express an opinion onthese non-consolidated financial statements based on 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 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 allmaterial respects, the non-consolidated financial position of Fukoku Mutual Life Insurance
Company as of March 31, 2008 and 2009, and the non-consolidated results of their operations for the years then ended in conformity with accounting principles generally accepted inJapan.
The amounts expressed in U.S. dollars, which are provided solely for the convenience of thereader, have been translated on the basis set forth in Note I. 2 to the accompanying nonconsolidated financial statements with respect to the year ended March 31, 2009.

Tokyo, JapanMay 19, 2009

Kisaragi Audit Corporation

FUKOKU MUTUAL LIFE INSURANCE COMPANY

33

Consolidated Financial Statements
Consolidated Balance Sheets
Fukoku Mutual Life Insurance Company and consolidated subsidiaries
As of March 31, 2007, 2008 and 2009

As of March 31,

2007

2008

2009

2009
Millions of
U.S. dollars

Millions of yen

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

¥

65,223¥52,963¥

68,692$

699

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

96,400125,500

183,600

1,869

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

2,865

2,533

2,055

20

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

102,186

57,52733,053336

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

4,107,183

4,019,758

3,760,762

38,285Loans ..................................................................................

1,266,226

1,233,951

1,240,369

12,627

Tangible fixed assets:
Land ..............................................................................

103,200

106,720

141,825

1,443

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

97,436

94,49999,014

1,007

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

819

759

5,457

55

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

5,110

4,171

3,944

40

206,565

206,150

250,242

2,547

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

7,890

8,285

7,856

79

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

—

7,447

7,087

72

Intangible fixed assets:

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

453

456

454

4

8,343

16,18915,398156

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

—

1

2

0

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

52

123

127

1

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

49,575

61,14856,693577

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

190

36,769110,604

1,125

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

(9,648)(10,189)(11,436)(116)

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

¥5,895,164¥5,802,427¥5,710,164$58,130

See notes to the consolidated financial statements.

34

FUKOKU MUTUAL LIFE INSURANCE COMPANY

Consolidated Balance Sheets (Continued)

As of March 31,

2007

2008

2009

2009
Millions of
U.S. dollars

Millions of yen

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

¥

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

5,108,013

5,252,471

5,327,274

54,232

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

52,87255,06357,317583

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

28,371¥

27,073¥28,855

$

293

—

—

533

5

5,189,257

5,334,607

5,413,981

55,115

2

51

1,208

12

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

74

138

113

1

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

47,09247,36238,870395

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

76,52145,29340,730414

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

50,26049,51949,313502

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

573

27

—

—

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

50,06654,022

24,772

252

Reserve for directors' and corporate auditors'

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

63,8560

0

0

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

20,19920,07620,026203

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

5,497,903

5,551,101

5,589,016

56,897

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

40,00040,00040,000407

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

31,00031,00031,000315

Net assets:

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

112

112

112

1

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

64,55974,36983,365848

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

135,671

145,481

154,477

1,572

273,382

115,335(36,210)(368)

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

(152)

408

479

4

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

(12,204)(12,335)

814

8

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

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

53

(3)

(667)

(6)

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

261,079

103,405(35,584)(362)

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

511

2,438

2,254

22

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

397,261

251,325

121,147

1,233

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

¥5,895,164¥5,802,427¥5,710,164$58,130

See notes to the consolidated financial statements.

FUKOKU MUTUAL LIFE INSURANCE COMPANY

35

Consolidated Statements of Operations
Fukoku Mutual Life Insurance Company and consolidated subsidiaries
For the years ended March 31, 2007, 2008 and 2009

Year ended March 31,

2007

2008

2009

Millions of
U.S. dollars

Millions of yen

Ordinary revenues:
Premium and other income ...................................................
Investment income:Interest, dividends and other income ................................
Gains from money held in trust, net .................................
Gains from trading securities, net .....................................
Gains on sales of securities ..............................................
Gains on redemption of securities ....................................
Other investment income .................................................
Gains from separate accounts, net ...................................
Other ordinary revenues .......................................................
Total ordinary revenues ......................................................
Ordinary expenditures:
Claims and other payments:
Claims ...............................................................................
Annuities ...........................................................................
Benefits .............................................................................
Surrenders.........................................................................
Other payments ................................................................
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 ...............
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 ...................................................................

36

FUKOKU MUTUAL LIFE INSURANCE COMPANY

2009¥721,935¥736,468¥781,963$7,960106,296
3,867
13,025
17,82326
365
5,813
147,219
20,687889,842

122,744—
1,827
21,031—373—
145,977
25,375907,821117,035——
52,184—212—
169,432
23,506
974,902

1,191
—
—
531
—
2
—
1,724
239
9,924

185,00971,522
133,961
106,851
22,312519,657

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

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

2,116
912
1,549
1,166
412
6,158

898
156,575
51—
73,766200

1,782
74,803
242

18
761
2

—
157,525—
73,967076,829

0
782

2,342
—
—
11,168
1,296
4,353
995
6,830
4,383
4,175
—
35,54690,40525,446
828,580
61,261

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

20
39
34
977
260
1
23
13
43
60
255
1,728
976
266
9,912
11

Consolidated Statements of Operations (Continued)

Year ended March 31,

2007

2008

2009

2009
Millions of
U.S. dollars

Millions of yen

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

¥

46

¥

42

¥41,724$424

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

——

29,249297

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

—

3

—

—

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

46

46

70,974722

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

1,026

243

904

9

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

466

398

514

5

corporate auditors' retirement benefits .........................

547

—

—

—

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

7,468

3,845

—

—

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

—

6

8

0

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

9,508

4,493

1,427

14

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

—

—

276

2

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

51,79954,82370,440717

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

18,35919,412

4,123

41

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

(10,525)(10,647)

11,970121

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

7,833

8,765

16,094163

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

72

167

(332)

(3)

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

¥ 43,893¥ 45,890¥54,678$556

Extraordinary losses:

Provision for reserve for directors' andProvision for reserve for dividends toIncome taxes:

See notes to the consolidated financial statements.

FUKOKU MUTUAL LIFE INSURANCE COMPANY

37

Consolidated Statement of Changes in Net Assets
Fukoku Mutual Life Insurance Company and consolidated subsidiaries
For the years ended March 31, 2007, 2008 and 2009

Year ended March 31,

2007

2008

2009

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 .................
Payment of bonus to directors .................................
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 .................
Payment of bonus to directors .................................
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

2009¥ 30,000¥ 40,000¥ 40,000$ 407

40,000(30,000)
10,00040,000———40,000———40,000

—
—
—
407

1,000

31,00031,000315

30,00030,00031,000——31,000——31,000

—
—
315

112

112

112

1

—
112

—
112

—
112

—
1

81,48864,55974,369757(30,406)(531)(30)
43,893(30,000)
144(16,929)64,559(35,525)(716)—
45,890—161
9,810
74,369(31,868)(716)—
54,678—(13,098)
8,995
83,365

(324)
(7)
—
556
—
(133)
91
848

112,600

135,671

145,481

1,481

40,000(30,406)
30,000(531)(30)
43,893(30,000)(30,000)
144
23,070135,671—(35,525)—(716)—
45,890
—
—
161
9,810
145,481—(31,868)—(716)—
54,678——(13,098)
8,995
154,477

—
(324)
—
(7)
—
556
—
—
(133)
91
1,572

Consolidated Statement of Changes in Net Assets (Continued)

Year ended March 31,

2007

2008

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 .....................
Payment of bonus to directors ......................................
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 ...........................

2009249,554273,382

115,335

1,174

23,82823,828273,382(158,046)(158,046)
115,335(151,546)(151,546)(36,210)(1,542)(1,542)
(368)

—

(152)

408

4

(152)
(152)
(152)

560
560
408

70
70
479

0
0
4

5,244

(12,204)(12,335)(125)(17,449)(17,449)(12,204)

(130)
(130)
(12,335)

13,14913,149
814

133
133
8

(101)

53

(3)

(0)

154
154
53

(56)
(56)
(3)

(663)
(663)
(667)

(6)
(6)
(6)

254,697

261,079

103,405

1,052

6,381
6,381
261,079(157,673)(157,673)
103,405(138,989)(138,989)(35,584)(1,414)(1,414)
(362)

468

511

2,438

24

42
42
511

1,927
1,927
2,438

(184)
(184)
2,254

(1)
(1)
22

367,767

397,261

251,325

2,558

40,000(30,406)
30,000(531)(30)
43,893(30,000)(30,000)
144
6,423
29,494¥ 397,261—(35,525)—(716)—
45,890——161(155,746)(145,935)¥ 251,325—(31,868)—(716)—
54,678——(13,098)(139,173)(130,177)¥ 121,147

—
(324)
—
(7)
—
556
—
—
(133)
(1,416)(1,325)$ 1,233

FUKOKU MUTUAL LIFE INSURANCE COMPANY

39

Consolidated Statements of Cash Flows
Fukoku Mutual Life Insurance Company and consolidated subsidiaries
For the years ended March 31, 2007, 2008 and 2009

Year ended March 31,

2007

2008

2009

Millions of
U.S. dollars

Millions of yen

Cash flows from operating activities:
Surplus before income taxes ................................................. ¥51,799Depreciation of real estate for rent and other assets .............
4,383
Depreciation ...........................................................................
6,118
Impairment losses ..................................................................
466
Amortization of goodwill ........................................................
—
Increase (Decrease) in reserve for outstanding claims ..........
898
Increase (Decrease) in policy reserve ....................................
156,575
Interest on accumulated dividends to policyholders ..............
51
Interest on accumulated dividends
to policyholders (subsidiary) ................................................
—
Provision for reserve for dividends
to policyholders (subsidiary) ................................................
—
Increase (Decrease) in allowance for possible loan losses ....
6,830
Increase (Decrease) in reserve for employees'
retirement benefits .............................................................
(1,216)
Increase (Decrease) in reserve for directors'
and corporate auditors' retirement benefits ........................
—
Increase (Decrease) in reserve for pricefluctuation of securities .......................................................
7,468
Interest, dividends and other income .....................................
(106,296)(Gains) Losses on securities ..................................................
(23,739)
Interest expenses ..................................................................
2,342
Foreign exchange (gains) losses, net .....................................
995(Gains) Losses on tangible fixed assets .................................
980(Increase) Decrease in agency receivables ............................
—(Increase) Decrease in reinsurance receivables .....................
55(Increase) Decrease in other assets .......................................
(3,307)
Increase (Decrease) in agency payables ................................
2
Increase (Decrease) in reinsurance payables .........................
(10)
Increase (Decrease) in other liabilities ....................................
1,777
Others ....................................................................................
3,479
Subtotal ..............................................................................
109,653
Interest, dividends and other income received ......................
108,523
Interest paid ...........................................................................
(2,230)
Dividends to policyholders paid ..............................................
(32,101)
Dividends to policyholders paid (subsidiary) ...........................
—
Corporate income tax paid .....................................................
(15,594)
Net cash provided by (used in) operating activities (I) ........
168,251
Cash flows from investing activities:(Increase) Decrease in deposits .............................................
(412)
Proceeds from sales and redemption of monetaryclaims bought ......................................................................
201
Payments for increase in money held in trust ........................
(14,582)
Proceeds from decrease in money held in trust ....................
12,017
Payments for purchase of securities ......................................
(1,459,246)
Proceeds from sales and redemption of securities ................
1,345,372
Payments for additions to loans .............................................
(331,387)
Proceeds from collections of loans ........................................
317,902
Proceeds from settlement of derivative .................................
(3,839)Others ....................................................................................
(3,087)
Subtotal (IIa) .......................................................................
(137,061)(I+IIa) ..................................................................................
31,18940

FUKOKU MUTUAL LIFE INSURANCE COMPANY¥

54,823
4,753
6,182
398
—
(1,955)73,766
200

2009

¥

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

$

717
43
58
5
7
18
761
2

—

0

0

—
746

276
1,246

2
12

(740)

(206)

(2)

—

(27)

(0)

3,845
(122,744)
22,354
2,466
445
200
—
(67)
(767)
0
28
(676)
4,762
48,023
124,359(2,422)(34,216)—(20,374)
115,369(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(297)(1,191)
1,037
20
23
(415)
(0)
(0)
(32)
11
(0)
(9)
225
997
1,278
(21)
(297)
(4)
(204)
1,748

184

(289)

(2)

332
(6,000)44,448(1,101,919)
964,247(264,882)
300,943(1,067)(4,086)(67,798)
47,570477(12,297)
32,932(1,587,041)
1,504,934(181,269)
160,153
1,160(2,856)(84,094)
87,653

4(125)
335(16,156)
15,320(1,845)
1,630
11
(29)
(856)
892

Consolidated Statements of Cash Flows (Continued)

Year ended March 31,

2007

2008

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

2009(17,621)277———(154,405)(10,933)387(1,949)0(11,729)(92,023)(67,428)
58,176(1,982)
2—(95,327)

(686)
592
(20)
0
—
(970)

—
40,000(30,000)
(531)
(30)
9,439

(5,000)
—
—
(716)
(52)
(5,768)

—
—
—
(716)
(52)
(768)

—
—
—
(7)
(0)
(7)

(952)
22,332
138,592¥ 160,924(546)
17,031
160,924¥177,956(1,983)73,669177,956¥251,626

(20)
749
1,811
$2,561

See notes to the consolidated financial statements.

FUKOKU MUTUAL LIFE INSURANCE COMPANY

41

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 withaccounting principles generally accepted in Japan, which are different in certain respects from accounting principles generally accepted in countries and jurisdictions other than Japan.
In addition, the notes to the consolidated financial statements include information which is not required underaccounting 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 notnecessarily agree with the sum of the individual amounts.

2. U.S. Dollar Amounts
The translations of yen amounts into U.S. dollar amounts are included solely for the convenience of the reader andhave been made, as a matter of arithmetical computation only, at the rate of ¥98.23 = US$1.00, the effective rateof exchange at the balance sheet date of March 31, 2009. The translations should not be construed as representations that such yen amounts have been or could in the future be, converted into U.S. dollars at that or any otherrates.

3. Principles of Consolidation(1) Scope of consolidation
Consolidated subsidiaries for the year ended March 31, 2009 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, hasbeen 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, amount of sales, net surplus for the year and surplus and is sufficiently insignificant to reasonable judgement on its impact on the financial position and results of operation of the Company's group.

(2) Application of equity method
Unconsolidated subsidiaries (such as Fukoku Seimei building Company Limited, etc.) are insignificant in their impact on net surplus 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, 2007, 2008 and 2009.

42

FUKOKU MUTUAL LIFE INSURANCE COMPANY

(3) Fiscal year of consolidated subsidiaries
Among the subsidiaries to be consolidated, fiscal year-end of overseas subsidiaries is December 31. For the preparation of consolidated financial statements, financial statements as of that 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 and liabilities that exist at the date of acquisition arerecorded at their fair value.

(5) Amortization of goodwill
For the year ended March 31, 2007, goodwill was charged to operating expenses.
For the years ended March 31, 2008 and 2009, goodwill was amortized by the straight-line method over a
period of 10 years and in case of the immaterial amount of goodwill, such amount 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,
and securities managed as trust assets in money held in trust, is as follows:i) Trading securities are stated at fair market value. Costs of their sales are determined by the moving averagemethod.
ii) Held-to-maturity debt securities are stated at amortized cost under the straight-line method, cost being
determined by the moving 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 of Certified Public Accountants on November 16, 2000).
iv) Investments in non-consolidated subsidiaries and affiliates which are not accounted for under the equity
method are stated at cost, cost being determined by the moving average method.
v) Available-for-sale securities with fair market value are stated at fair market value based on the market prices
at the end of fiscal year. Costs of their sales are determined by the moving average method. Net unrealized
gains or losses on these available-for-sale securities, net of taxes, are recorded as a separate component of
net assets.
Available-for-sale securities with no fair market value are stated at cost, cost being determined by themoving average method, except for public and corporate bonds including foreign bonds, of which the difference between acquisition cost and face value is considered to be an adjustment of interest. Such bonds arestated at amortized cost under the straight-line method, cost being determined by the moving averagemethod.

(2) Valuation methods of derivative instruments
Derivative instruments are stated at fair market value.

FUKOKU MUTUAL LIFE INSURANCE COMPANY

43

(3) Revaluation of land
The Company revalued the land for business purposes based on the Law for Revaluation of Land (Law No.34
promulgated on March 31, 1998). The difference between fair value and book value resulting from the revaluation,
net of related taxes, is recorded as revaluation reserve for land as a separate component of net assets and therelated 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 reasonable adjustments.

(4) Depreciation of tangible fixed assets
Depreciation of the Company's tangible fixed assets is calculated by the following methods.
Buildingsi) Acquired on or before March 31, 1998: Previous declining-balance 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 buildingsi) Acquired on or before March 31, 2007: Previous declining-balance methodii) Acquired on or after April 1, 2007: Declining-balance method
Other tangible fixed assets acquired for ¥100,000 or more but less than ¥200,000 are depreciated equally overthree years.

(5) Foreign currency translation
Foreign currency-denominated assets and liabilities are translated into Japanese yen at the effective exchange rate
prevailing at the balance sheet date.

(6) Allowance for possible loan losses
Allowance for possible loan losses is provided in accordance with the Company's standards of self-assessment
and write-offs and reserves on credit quality:i) For the credits of borrowers who are legally bankrupt such as being in the proceedings of bankruptcy or civil
rehabilitation (hereinafter called "legally bankrupt borrowers") and who are substantially bankrupt (hereinafter called "substantially bankrupt 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 thedisposal 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, theCompany provides the amounts deemed as necessary considering the borrowers' ability to pay, within theamounts after deductions of the amount expected to be collected through the disposal of collateral or the
execution of guarantees.
iii) For the credits of borrowers other than the above, the Company provides the amounts calculated by multiplying the borrowers' balance by the actual ratio of bad debt losses on defaults during a certain past period.
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 independentof business-related divisions. Subsequently, the allowance for possible loan losses are provided based on the
results of these assessments.

44

FUKOKU MUTUAL LIFE INSURANCE COMPANY

For the credits of legally bankrupt borrowers and substantially bankrupt borrowers, the amounts remaining
after deductions of collateral value or the amounts collectible through the execution of guarantees is written-off
directly from the borrower's balance as the estimated uncollectible amounts. The amounts written-off as of March
31, 2007, 2008 and 2009 were ¥784 million, ¥958 million and ¥941 million (US$9 million), respectively.
The allowance for possible loan losses of consolidated subsidiaries conforms to the standard used by theCompany.

(7) Reserve for employees' retirement benefits
The Company and its consolidated subsidiaries adopt accounting standards for employees' retirement benefits(Business Accounting 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
The Company's reserve for directors' and corporate auditors' retirement benefits as of March 31, 2007 represents
the estimated amounts to be paid due to abolishing internal rule of retirement benefit plan in relation to directors
and corporate auditors.
Reserve for directors' and corporate auditors' retirement benefits of the consolidated subsidiaries as of March
31, 2007 and 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 the ruling in Article 115 of the Insurance
Business Law.

(10) Lease transactions
For the years ended March 31, 2007 and 2008, the Company's finance lease transactions that do not transfer
ownership to the lessee were accounted for in a manner similar to accounting treatment for ordinary rental transactions.
For the year ended March 31, 2009, finance lease transactions that do not transfer ownership to the 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. For finance lease transaction where the Company is lessor,
the lease fee was recorded in "interest, dividends and other income" and the amount after deduction of the amountequivalent to interest allocated over the lease term from lease fee was recorded in "other investment expenses" as
the cost of the corresponding lease assets, at time of receiving lease fee.

(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 ofhigh correlation and effectiveness between the hedging instruments and the hedged item, valuation gains andlosses 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 the hedging instruments and the hedged item,
valuation gains and losses on the interest rate swaps are deferred until the maturity of 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 the forward contracts qualify for specifichedge accounting. In this case, exchange differences between exchange rate on trade date and forward contract
rate are allocated to each fiscal year from the date contracted to the date settled.
For judging the effectiveness of hedge used, ratio analysis of comparing the cash flow fluctuation of hedged
item with the same of hedging instruments is mostly applied.
FUKOKU MUTUAL LIFE INSURANCE COMPANY

45

(12) 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 deferred consumption taxes are recognized 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 Commissionerof Financial Services Agency (Ministry of Finance Ordinance No. 48, 1996) is applied.
In regard to the policies not subject to the standard policy reserve, the net level premium method is applied.

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

(15) Deferred assets
Discount on bonds is amortized equally over the period for which interest on bonds is fixed. This amount is deducted from bonds.

(16) Policy-reserve-matching bonds
Of the bonds corresponding to the sub-groups which are set by insurance types and investment policies, the bondsthat are held to match the duration of liabilities are classified as policy-reserve-matching bonds in accordance with
"Temporary Treatment of Accounting and Auditing Concerning Policy-reserve-matching Bonds in Insurance Industry" (Industry Audit Committee Report No. 21 issued by the Japanese Institute of Certified Public Accountants on
November 16, 2000).
The amounts of policy-reserve-matching bonds recorded on the balance sheets and the market value of thesebonds were ¥540,923 million and ¥542,462 million as of March 31, 2007, ¥598,156 million and ¥612,619 million asof March 31, 2008 and ¥721,357 million (US$7,343 million) and ¥737,056 million (US$7,503 million) as of March 31,
2009, respectively.

2. Changes in Accounting Policy(1) 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 aresult, ordinary profits decreased by ¥2 million (US$20 thousand), compared to the previous methods.
(2) 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 Accounting Standards Board of Japan on May 17, 2006). There was no effect of this change on
the income.
(3) Effective for the year ended March 31, 2008, in accordance with the revision of Corporate Tax Law, depreciationof tangible fixed assets acquired on or after April 1, 2007 is calculated by the straight-line method and thedeclining-balance method 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 book value. As a result, ordinary profits decreased by ¥71 million.

46

FUKOKU MUTUAL LIFE INSURANCE COMPANY

(4) Effective for the year ended March 31, 2007, the Company adopted "Accounting Standards for Presentation of
Net Assets in the Balance Sheet" (ASBJ Statement No.5 issued by the Accounting Standards Board of Japan on
December 9, 2005). If the previous accounting policy were to be applied, the amount of "Total capital" as ofMarch 31, 2007 was ¥396,902 million.
(5) Effective for the year ended March 31, 2007, the Company adopted "Tentative Solution on Accounting for
Deferred Assets" (ASBJ PITF No.19 issued by the Accounting Standards Board of Japan on August 11, 2006).
As a result, discount on bonds of ¥106 million as of March 31, 2007, which was recorded in other assets until
previous fiscal year, was deducted from bonds.
(6) In accordance with the revised form of the Enforcement Regulation of the Insurance Business Law, the balance
sheet presentation has been changed as follows.
(a) Effective for the year ended March 31, 2007, "Real estate and movables" which was presented as a separate
line item until previous fiscal year is presented as "tangible fixed assets".
(b) Effective for the year ended March 31, 2007, "Intangible fixed assets" which was included in "Other assets"
until previous fiscal year is presented as a separate line item.

3. Loans Receivable
The total amounts of credits to bankrupt borrowers, delinquent loans, delinquent loans past 3 months or more andrestructured loans, which were included in loans, were ¥11,332 million, ¥10,979 million and ¥10,712 million (US$109
million) as of March 31, 2007, 2008 and 2009, respectively.
i) The balances of credits to bankrupt borrowers were ¥443 million, ¥477 million and ¥435 million (US$4
million) as of March 31, 2007, 2008 and 2009, respectively.
ii) The balances of delinquent loans were ¥10,889 million, ¥10,502 million and ¥10,277 million (US$104 million)
as of March 31, 2007, 2008 and 2009, respectively.
iii) There were no balances of delinquent loans past 3 months or more as of March 31, 2007, 2008 and 2009.
iv) There were no balances of restructured loans as of March 31, 2007, 2008 and 2009.
Credits to bankrupt borrowers represent loans, excluding the balances 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, accruing interest of these loans is not recorded as income after determining that principal of or intereston these loans is unlikely to be collected due to the significant delay in repayment of principal or interest payment
or for some other reasons.
Delinquent loans are credits whose accruing interest is not recorded as income due to the same reasons as
described above, and exclude credits to bankrupt borrowers and loans for which interest payments have beensuspended and rescheduled to assist and support the borrowers in the restructuring of their business.
Delinquent loans past 3 months or more are loans for which interest payment or repayment of principal aredelinquent for 3 months or more from the due date under the terms of the related loan agreements, excluding
those loans classified as credits to bankrupt borrowers and delinquent loans.
Restructured loans are loans for which certain concessions favorable to borrowers, such as interest reduction
or 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 delinquent loans past 3
months or more.
The direct write-offs related to loans decreased credits to bankrupt borrowers described above by ¥2 million,¥102 million and ¥102 million (US$1 million) as of March 31, 2007, 2008 and 2009, respectively.
The direct write-offs related to loans decreased delinquent loans described above by ¥782 million, ¥824 millionand ¥786 million (US$8 million) as of March 31, 2007, 2008 and 2009, respectively.

FUKOKU MUTUAL LIFE INSURANCE COMPANY

47

4. Accumulated Depreciation of Tangible Fixed Assets
Accumulated depreciation of tangible fixed assets totaled to ¥116,397 million, ¥122,670 million and ¥124,761
million (US$1,270 million) as of March 31, 2007, 2008 and 2009, respectively.

5. Separate Accounts
Total assets in separate accounts provided for in Article 118 of the Insurance Business Law were ¥131,182 million,¥117,591 million and ¥113,498 million (US$1,155 million) as of March 31, 2007, 2008 and 2009, respectively. The
amounts of liabilities were the same as these figures.

6. Receivables from/Payables to Unconsolidated Subsidiaries
The total amounts of receivables from/payables to unconsolidated subsidiaries were, ¥2,872 million and ¥166
million as of March 31, 2007, ¥3,540 million and ¥162 million as of March 31, 2008, and ¥3,425 million (US$34
million) and ¥165 million (US$1 million), respectively.

7. Monetary Claims to Directors
Monetary claims to directors of the Company as of March 31, 2007, 2008 and 2009 were ¥11 million, ¥16 millionand ¥12 million (US$128 thousand), respectively.

8. Income Taxes
Deferred tax assets and deferred tax liabilities as of March 31, 2007 were ¥93,260 million and ¥156,925 million,
respectively. Valuation allowance for deferred tax assets was ¥2,653 million.
Major components of deferred tax assets were ¥51,572 million of policy reserves, ¥18,199 million of reservefor employees' retirement benefits and ¥18,128 million of reserve for price fluctuation of securities and major
component of deferred tax liabilities was ¥155,185 million of net unrealized gains on available-for-sale securities asof March 31, 2007.
For the year ended March 31, 2007, the Company's statutory tax rate was 36.2%. The major difference between the statutory tax rate and 15.1% of the actual effective tax rate was (24.8%) of reserve for dividends topolicyholders.
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 reservefor price fluctuation 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 on available-for-sale securities asof March 31, 2008.
For the year ended March 31, 2008, the Company's statutory tax rate was 36.2%. The major difference between the statutory tax rate and 16.0% of the actual effective tax rate was (21.0%) of reserve for dividends topolicyholders.
Deferred tax assets and deferred tax liabilities as of March 31, 2009 were ¥116,732 million (US$1,188 million)and ¥1,939 million (US$19 million), respectively. Valuation allowance for deferred tax assets was ¥4,188 million(US$42 million).
Major components of deferred tax assets were ¥57,809 million (US$588 million) of policy reserves, ¥20,318
million (US$206 million) of net unrealized losses of available-for-sale securities and ¥17,857 million (US$181 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 the statutory tax rate and 22.8% of the actual effective tax rate were (9.2%) of reserve for dividends topolicyholders and (6.7%) of revaluation reserve for land.

48

FUKOKU MUTUAL LIFE INSURANCE COMPANY

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

2007

2008

2009

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 fiscal year ........................................
Increase in interest ......................................................
Increase due to addition of consolidated subsidiary ....
Balance at the end of fiscal year .................................

¥ 54,516
30,454(32,149)51—¥ 52,872¥ 52,872
35,525(34,216)200
680¥ 55,063

2009¥ 54,382
31,868(29,176)242—¥ 57,317

$ 553
324
(297)
2
—
$ 583

Reserve for dividends to policyholders as of March 31, 2008 on the balance sheets represented the total of theCompany's reserve of ¥54,382 million and Fukokushinrai Life Insurance Company's reserve of ¥680 million.

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

2007

2008

2009

Millions of
U.S. dollars

Millions of yen

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

—
—
—
—
—

—
—
—
—
—

2009

¥680
423
0
276
¥533

$6
4
0
2
$5

11. Stocks of Unconsolidated Subsidiaries
The amounts of stocks of unconsolidated subsidiaries the Company held as of March 31, 2007, 2008 and 2009were ¥240 million, ¥240 million and ¥240 million (US$2 million), respectively.

12. Pledged Assets and Secured Debts
Assets pledged as collateral as of March 31, 2007 were ¥18,050 million of securities and ¥856 million of money
held in trust. Secured debts as of March 31, 2007 was ¥4,710 million.
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 was ¥4,660 million.
Assets pledged as collateral as of March 31, 2009 were ¥26,010 million (US$264 million) of securities. Secured
debts as of March 31, 2009 was ¥4,645 million (US$47 million).

13. Policy Reserves for the Reinsurance Contracts
Reserve for outstanding claims for the reinsurance contracts provided in accordance with Article 71 Item 1 of the
Enforcement Regulation of the Insurance Business Law (hereinafter called "reserve for outstanding claims forceded reinsurance") were ¥55 million (US$566 thousand) as of March 31, 2009.
Policy reserve for the reinsurance contracts provided in accordance with Article 71 Item 1 of the Enforcement
Regulation of the Insurance Business Law (hereinafter called "policy reserve for ceded reinsurance") were ¥57
million (US$582 thousand) , as of March 31, 2009.

FUKOKU MUTUAL LIFE INSURANCE COMPANY

49

14. Additional Foundation Funds
The Company raised additional foundation funds of ¥40,000 million during the year ended March 31, 2007 inaccordance with Article 60 of the Insurance Business Law.

15. Redemption of Foundation Funds
In the year ended March 31, 2007, according to the redemption of foundation funds of ¥30,000 million, the Company reversed the reserve for redemption of foundation funds and provided the equivalent amount for accumulated foundation founds redeemed in accordance with Article 56 of the Insurance Business Law.

16. Commitment LineAs of March 31, 2007, 2008 and 2009, there were unused commitment line agreements under which the Company
is the lender of ¥1,581 million, ¥1,681 million and ¥1,481 million (US$15 million), respectively.

17. Subordinated Bonds
Repayments of subordinated bonds are subordinated to other obligations.

18. Subordinated Debt Loans
Repayment of subordinated debt loans included in other liabilities of ¥5,000 million as of March 31, 2007 was
subordinated to other obligations.

19. Contribution to Policyholders Protection FundThe future contribution to the former Insurance Policyholders Protection Fund of Japan, which was succeeded by
the Life Insurance Policyholders Protection Corporation of Japan based on the Supplementary Article 140 Paragraph 5 of the Financial System Reform Law, were estimated at ¥285 million as of March 31, 2007. The contribution was charged as operating expenses in the year in which they were paid.

20. 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 ¥11,174 million, ¥11,527 million and ¥11,283 million (US$114 million)
as of March 31, 2007, 2008 and 2009, respectively. The contributions were charged as operating expenses in theyear in which they were paid.

21. Reserve for Employees’ Retirement Benefits(1) The reserve for employees’ retirement benefits as of March 31, 2007, 2008 and 2009 were calculated asfollows:
As of March 31,

2007

2008

2009

Millions of
U.S. dollars

Millions of yen

50

2009

a. Projected benefit obligation .....................................
b. Fair value of pension plan assets ............................

¥(73,663)
21,438¥(71,792)
18,307¥(72,001)
15,016$(732)
152

c. Unfunded benefit obligation (a+b) ...........................
d. Unrecognized actuarial differences .........................
e. Unrecognized prior service cost ..............................

(52,224)1,722
241(53,485)3,758
206(56,985)
7,499
172

(580)
76
1

f. Reserve for employees'
retirement benefits (c+d+e) .................................

¥(50,260)¥(49,519)¥(49,313)$(502)FUKOKU MUTUAL LIFE INSURANCE COMPANY

(2) Gross amount of retirement benefit expenses for the years ended March 31, 2007, 2008 and 2009 were as
follows:
Year ended March 31,

2007

2008

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

¥3,476
1,470
(792)
502
34
¥4,692¥3,404
1,472
(964)
523
34
¥4,4692009¥3,224
1,434
(640)
779
34
¥4,831

$32
14
(6)
7
0
$49

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

2007

2008

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

2009

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%
4.0%
10 years
10 years

2.0%
4.5%
10 years
10 years

2.0%
3.5%
10 years
10 yearsIII. Notes to Statements of Operations
1. Changes in Accounting Policy(1) Effective for the year ended March 31, 2007, the Company adopted "Guidance on Accounting for Other Compound Financial Instruments (Compound Financial Instruments Other than Those with Option to Increase Paidin Capital)" (ASBJ Guidance No.12 issued by the Accounting Standards Board of Japan on March 30, 2006). As
a result, ordinary profits decreased by ¥33 million, compared to the previous methods.
(2) Effective for the year ended March 31, 2007, in accordance with the revised form of the Enforcement Regulation of the Insurance Business Law, "Gains (losses) on disposal of real estate and movables" which was presented as a separate line item is presented as "gains (losses) on disposal of fixed assets".

2. Transactions with Unconsolidated Subsidiaries
The total amounts of revenues and expenditures in connection with unconsolidated subsidiaries were ¥103 millionand ¥2,536 million for the year ended March 31, 2007, ¥121 million and ¥2,604 million for the year ended March 31,
2008, and ¥127 million (US$1 million) and ¥2,558 million (US$26 million) for the year ended March 31, 2009,
respectively.

FUKOKU MUTUAL LIFE INSURANCE COMPANY

51

3. Impairment of Fixed Assets
For the year ended March 31, 2009, impairment losses of fixed assets was 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 lease property and unused real estate are classified as one group individually.
(2) Background of recognizing the impairment losses
As a result of decline in profitability due to decrease of rental income and decline of market value of land, theCompany reduced the book value of lease property and unused real estate to recoverable amount. The amounts
reduced were recognized as impairment losses included in extraordinary losses.
(3) Asset groups recognized impairment losses and losses by fixed assets

2009
Millions of yen

Lease property:
Land ..................................................................................................................
Buildings and others ..........................................................................................

Millions of
U.S. dollars

¥205
40

$2
0

Total lease property (i) .......................................................................................
Unused real estate:
Land ..................................................................................................................
Buildings and others ..........................................................................................

245

2

55
213

0
2

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

269

2

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

260
254

2
2

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

¥514

$5

(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.

IV. Notes to Statements of Cash Flows
1. Scope of Cash and Cash Equivalents
Cash and cash equivalents as of March 31, 2007 consist of "Cash", "Postal money order", "Current deposits", "Ordinary deposits", "Notice deposits", "Time deposits maturing within 3 months of the date of acquisition", "Foreign
currency deposits maturing within 3 months of the date of acquisition", "Negotiable certificate of deposits maturing
within 3 months of the date of acquisition" and "Call loans".
Cash and cash equivalents as of March 31, 2008 and 2009 consist of "Cash", "Deposits in transfer account","Current deposits", "Ordinary deposits", "Notice deposits", "Time deposits maturing within 3 months of the date ofacquisition", "Foreign currency deposits maturing within 3 months of the date of acquisition", "Negotiable certificate
of deposits maturing within 3 months of the date of acquisition", "Call loans" and "Monetary claims bought maturing
within 3 months of the date of acquisition".

52

FUKOKU MUTUAL LIFE INSURANCE COMPANY

2. Reconciliations of Cash and Cash Equivalents
Reconciliations of cash and cash equivalents in the consolidated statements of cash flows to the consolidatedbalance sheets accounts as of March 31, 2008 and 2009 were as follows:
As of March 31,

2008

2009

Millions of
U.S. dollars

Millions of yen

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

2009¥ 52,963
125,500
2,533¥ 68,692
183,600
2,055

$ 699
1,869
20

(200)

(300)

(3)

(306)

(366)

(3)

(2,533)¥177,956(2,055)¥251,626(20)$2,561

3. Acquisition of Fukokushinrai Life Insurance Company
Major components of assets and liabilities of Fukokushinrai Life Insurance Company which was newly consolidated as a subsidiary 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 .........

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

FUKOKU MUTUAL LIFE INSURANCE COMPANY

53

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 thedesign and operation of internal control over financial reporting for the Company's financial statements, namely,
consolidated balance sheet and the related consolidated statement of operations, changes in net assets and cash
flows prepared in 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 year, March 31, 2009, 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 businessprocesses ("process-level controls") based on the results of assessment of company-level controls regarding theCompany and one consolidated subsidiary. Other than those indicated above, five consolidated subsidiaries were
determined to be immaterial from quantitative and qualitative perspectives. Consequently, they are excluded fromthe 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 (theCompany), 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 andclaims and other payments, which have a material impact on the calculation of policy reserves, were determined to
be within the scope of assessment. Furthermore, at selected significant locations and business units and any otherlocations and business units, added to the scope of assessment were business processes relating to importantaccounting items that have a high possibility of material misstatements and involve estimates and judgments, andbusiness processes relating to businesses or operations dealing with high-risk transactions.
3. Matters relating to the results of the assessment
As a result of performing the assessment, the Company concluded that the design and operation of internal control
over financial reporting for the Company were effective as of March 31, 2009.
4. Supplementary Information (None)
Tomofumi Akiyama
President

Fukoku Mutual Life Insurance Company

54

FUKOKU MUTUAL LIFE INSURANCE COMPANY

Report of Independent Auditors

The Board of Directors of Fukoku Mutual Life Insurance Company

We have audited the accompanying consolidated balance sheet of Fukoku Mutual Life Insurance Company and its consolidated subsidiaries as of March 31, 2007, and the related consolidated statements of operations, changes in net assets and cash flows for the year 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 based on our audit.
We conducted our audit 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 the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides 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 andits consolidated subsidiaries as of March 31, 2007, and the consolidated results of their operations and their cash flows for the year then ended in conformity with accounting principles
generally accepted in Japan.

Tokyo, JapanMay 22, 2007

The Fuji Accounting Office

FUKOKU MUTUAL LIFE INSURANCE COMPANY

55

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 and 2009, and the related consolidated statements of operations, changes in net assets and cash flows for the years then ended, all expressed inJapanese 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
based on 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 theoverall 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 and 2009, 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, 2009.
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. The Company's
management is responsible for designing and operating effective internal control over financial reportingand 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 becompletely 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 believethat 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, is effectively maintained, presents fairly, in all material respects, theassessment of internal control over financial reporting in conformity with assessment standards for internal
control over financial reporting generally accepted in Japan.
Tokyo, JapanMay 19, 2009

Kisaragi Audit Corporation

56

FUKOKU MUTUAL LIFE INSURANCE COMPANYCORPORATE ORGANIZATION
Secretarial Div.

Organization (as of July 2, 2009)
Branch Office64

Field Office487

Strategic Planning Dept.
Compliance Control Dept.
Corporate Risk Management Dept.

Employees (as of March 31, 2009)
Office Staff

General Affairs Dept.

2,732

Personnel Dept.

Sales Representative 11,104

Marketing Headquarters
Market Planning Dept.
Retail Management Dept.
Independent Auditors

Market Developing Dept.
Strategic Market Promotion Dept.

Board of Statutory
Auditors

Group Credit Div. Related toJapan Housing Finance Agency
Wholesale Management Dept.

Assistant to the
Statutory Auditors

Pension Actuarial Div.
Sales Personnel Training Dept.

Board of Representative
Members of Policyholders

President
Board of Directors

Customer Service Headquarters
Group Insurance Dept.
Group Annuity Dept.
Customer Service Planning Div.

Nomination Committee of
Candidates for
Representative Members

Chief Actuary

Secretariat for Nomination
Committee of Candidates for
Representative Members

Executive Committee

Customer Service Dept.
Underwriting and Medical Dept.

President

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

CouncilEquities Dept.
Fixed 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

1357

CORPORATE INFORMATION

Board of Directors andStatutory Auditors

Directory

President and Chief

Directors:

Statutory Auditors (Standing):

Executive Officer

Katsuhiro Utada

Shuichi Maeda

Tomofumi Akiyama*

Kozo Isshiki

Akio Imai

Directors and Senior Managing
Executive Officers:

Directors and Executive
Officers:

Executive Officers:

Yoshiki Murayama

Hitoshi Sakai

Toshihide Fujiwara

Mikio Yamamoto

Toshihiro Hayashi

Toshiaki Kiwa

Tadashi Akikawa

Toshiro Eto

Directors and Managing
Executive Officers:

Statutory Auditors:

Katsumasa Furuya

Yoshizumi Nezu

Yoshiteru Yoneyama

Mitsuo Ohashi

Kenji Hirai

Akihiro Mochizuki

Head Office2-2, 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

Haruki Kawashima

Fukoku Life International (U.K.) Ltd.
from left: D. Reynolds, J. Doran, Y. Onodera,
J. Morita and K. Sato

1458

FUKOKU MUTUAL LIFE INSURANCE COMPANY

Tsutomu Hiruma

Toyoaki Oba
Toshimitsu Furuhashi*Representative Director(as of September 1, 2009)

Fukoku Life International (America) Inc.
from left: M. Xu, Y. Suzuki, M. Jensen
and A. Chang

FUKOKU MUTUAL LIFE INSURANCE COMPANY

15