Ⓒ1976, 2020 SANRIO CO., LTD.
APPROVAL NO. L613048

ANNUALREPORTFUKOKU 2020

YEAR ENDED MARCH 31，2020

FUKOKU MUTUAL LIFE INSURANCE COMPANY

Contents
Financial Highlights (Non-consolidated) .............................................. 1
Message from the President ................................................................... 2
Management Principles of Fukoku Life ............................................... 4
Review of Operations (Non-consolidated)
Overview ................................................................................................ 5
Business Performance in Fiscal 2019 .............................................. 6
Investment Performance in Fiscal 2019 (General Account) ........ 8
Investment Policies for Fiscal 2020.................................................. 9
Business Management System ............................................................. 10
Achieving Sustainable Development Goals (SDGs) ............................ 11
Corporate Social Responsibility (CSR) ................................................. 12
Non-consolidated Financial Statements ............................................... 14
Consolidated Financial Statements ...................................................... 36
Corporate Organization ........................................................................... 62
Corporate Information ............................................................................... 63

Financial Highlights (Non-consolidated)

2019
As of March 31,

2020

2020
Millions of
U.S. dollars

Millions of yen

Life insurance in force ...................................................................

¥42,466,826¥42,490,790$390,432

Total assets ....................................................................................
Securities ..................................................................................
Loans ........................................................................................
Tangible fixed assets ...............................................................
Total liabilities ................................................................................
Policy reserves .........................................................................
Subordinated bonds .................................................................
Total net assets..............................................................................

6,684,576
5,567,876
561,138
216,974
6,087,901
5,692,082
191,935
596,674

6,790,871
5,344,665
565,473
219,475
6,250,849
5,775,716
191,935
540,02162,39849,1105,195
2,016
57,43653,0701,763
4,962

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

718,300
525,605
183,473
664,984
36,834

741,870
533,527
195,037
692,970
34,113

6,816
4,902
1,792
6,367
313

Solvency margin ratio (%)
Employees

1,189.7
12,6891,290.8
13,184——

For the years ended March 31,

Notes 1. U.S. dollar amounts are converted from yen, for convenience only, at the rate of U.S.$1=¥108.83, the rate of exchange on March 31, 2020.
2. Yen and U.S. dollar amounts are rounded down to the nearest million yen or million dollars.

FUKOKU MUTUAL LIFE INSURANCE COMPANY

1

Message from the President
In this environment, we made an effort to meet theincreasingly diverse customer needs through launching
Zutto Anshin Care Double, a new rider which provides better
coverage for nursing care and dementia.
The combined fundamental profit of Fukoku Mutual Life
Insurance Company and its subsidiary Fukokushinrai Life
Insurance Co., Ltd. reached ¥82.6 billion. At the same time, ourconsolidated solvency margin ratio—an indicator of financial
soundness—has remained high at 1,331.7%.
Life insurance involves a spirit of mutual assistance, inwhich policyholders comprise an insurance group and help
each other, with insurance premiums received by policyholders
provided as insurance payouts to customers who need them.
In fiscal 2019, along with Fukokushinrai Life, we paid out a totalof ¥484.2 billion in insurance claims, pensions, and benefits.
Whenever required, we will continue to provide reliable
payment of insurance claims and other benefits.
Customer-centered Values
As a mutual company, we work to ensure that our management
and employees maintain customer-centered values in all
I would like to express my deepest sympathy to all those

aspects of business and operations. These ideals, on which we

affected by COVID-19, as well as to the families and friends ofbuild new ideas and plan new activities, embody our philosophy

those who regrettably have passed away due to the disease.

of putting ourselves in our customers’ shoes and creating

The challenge of responding to new and unfamiliar
diseases such as COVID-19 is long and painful, but it is notservices and experiences that only we can offer.
According to our basic policy for human resource

one that must be faced alone. Fukoku Mutual Life Insurance

development, which is at the core of our personnel

Company will continue to closely support its customers.

development philosophy, we strive to ensure that our staff areable to put our customer-centered approach into practice.

Reviewing the Past Year

With regard to initiatives based on our customer-centered

During the first half of fiscal 2019 (ended March 2020), thebusiness management policy that was made for customer

Japanese economy stagnated somewhat, due to sluggish

entrustment, we are engaged in ongoing improvements andexternal demand associated with trade friction between thedisclose the results of these efforts each fiscal year.

United States and China.
The situation became worse during the second half. This

Medium-term Management Plan

was due primarily to the larger burden placed on household

Our medium-term management plan (fiscal 2019 through fiscal

budgets by the consumption tax hike, as well as decreased2021) is based on a vision of becoming the most valuable

inbound tourist demand resulting from COVID-19 andcompany by thorough differentiation. To bring us closer tosubsequent shelter-in-place trend among consumers. Financial

achieving this vision, we have established the creation of aand capital markets continued to be influenced both by tradeperpetually virtuous cycle for sustainable growth (put morenegotiations between the US and China, and speculation

simply, a cycle in which improvement in employee satisfaction

regarding the monetary policies of central banks in a number

leads to improvement in customer satisfaction) as one ofof countries. Since February, volatility has increased due tothe key themes of our medium-term management plan. In

caution concerning the spread of COVID-19. However, the trend

accordance with another theme of our plan, we are conducting

to provide insurance products and services, such as medical

initiatives aimed at achieving our long-term management visionand long-term care, continued in the life insurance industry,of becoming the number one company in terms of customer

as insurance needs changed due to increased longevity andsatisfaction within next 10 years.

lifestyle adjustments.

2

FUKOKU MUTUAL LIFE INSURANCE COMPANY

Centenary Projectnew medical insurance policies that reach maturity with no

As we approach 100 years in business in 2023, we arehospitalization benefits payouts, as well as for death security

working on our centenary project based on a concept, called

policies that are already eligible. With these moves, we

THE MUTUAL.

have raised personal insurance dividends for the eighth

The concept refers to the next generation of mutual aid

consecutive year.

that will evolve over the coming 100 years, as well as our aim to
be an organization embodying real mutual aid by deepening ourconnection to, and mutual support for, each and every person
involved with Fukoku Life.
In fiscal 2019, we launched sectional committee activities
called NEXT100, based on 11 themes, which will serve as anengine for the embodiment of THE MUTUAL. One of the themes
involves an activity called FIND THE MUTUAL, which requires
our employees to search for instances of THE MUTUAL
throughout Japan and to disseminate relevant information.
During fiscal 2019, we conducted interviews at fivebranch offices (the Nara, Kumamoto, Tokyo, Kyoto, andIkebukuro offices) and later published these interviews throughmedia, including a special website of centenary project andnewspaper advertisements.
Now, as we liaise with our 62 branch offices in 47
prefectures, we will expand the degree to which Fukoku Life is
known and understood by considering and exploring what thenext generation of mutual aid and sharing our findings.
We will continue disseminating information about THE
MUTUAL as a concept of our centenary project approaches, sothat by the time it is here, we will be a company that is able toempathize with everyone involved with Fukoku Life.
Improving Financial Soundness, Dividend Payouts
To maintain financial soundness regardless of the operating
environment, we are working to further strengthen our capital.
Our basic policy for strengthening capital is to accumulateinternal reserves, which are the source of net surplus, in
combination with external financing, including the raising offoundation funds and the issuing of subordinated bonds.
In fiscal 2019, we fully amortized ¥10.0 billion in foundation
funds that had been procured in fiscal 2014, thereby procuring
an additional ¥12.0 billion in foundation funds. Further, webuilt up additional reserves as well as increased both ourcontingency and price-fluctuation reserves.
In terms of policyholder dividends, we strive to increase

Our Mission as a Mutual Company
Since our establishment in 1923, we have taken the formof a mutual company. Our mission as a mutual company isto provide customers with effective reductions in insurance
premiums through dividend payouts. Moreover, providing
reliable payment of insurance claims is most important
responsibilities as an insurance company.
To fulfill our mission as a mutual company and our
responsibilities as an insurance company, we have focused
primarily on protecting the interests of our customers by
pursuing an appropriate level of growth that will allow us toserve these interests. We believe that these moves will help
customers develop trust in us and so feel secure.
Life insurance is a covenant that extends beyond a single
lifetime to include subsequent generations, making it a neverending endeavor. In the spirit of mutual aid, we will fulfill thepromises we have made to our customers in perpetuity whileproviding confidential customer support.
We look forward to your continued support and cooperation.

them in line with the expectations of our policyholders.
Anticipating an increase in health-mindedness, since fiscal
2005 we have offered a dividend (healthy dividend) to medical
insurance policyholders with no hospitalization benefit payouts,
and decided to increase this dividend for fiscal 2019.
We also decided to pay special dividends, which werereinstated in fiscal 2014. In these special dividends, we add

Yoshiteru Yoneyama
President
FUKOKU MUTUAL LIFE INSURANCE COMPANY

3

Management Principles of Fukoku Life

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

Management
Philosophy

ValuesCode of
Conduct

Business
Policies

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

To contribute to society

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

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

Business Policies
1. Foster personnel with customer-centered values

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

2. Reinforce how sales representatives structure activities

v Remember the importance of teamwork

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

v Deserve the trust of each and every customer

3. Attain a net increase in the number of policyholders

v Work with enthusiastic and pridev Apply common sense in our workv Emphasize the importance of life insurancev Overcome every difficultyv Create a friendly work environment4

To help our employees achieve
personal fulfillment

FUKOKU MUTUAL LIFE INSURANCE COMPANY

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

4. Enhance business efficiency

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

Review of Operations (Non-consolidated)

Overview
Based on our management philosophy, which aims to protect
the interests of our policyholders, contribute to society andhelp our employees achieve personal fulfillment, all Fukoku
Life executives and employees strove to manage and conductbusiness with customer-centered values as the starting point
for all our ideas and actions, creating and providing distinctive
services and experiences while always treating customers theway they themselves would like to be treated.
Additionally, in accordance with our basic human resources
policy, we focused on developing human resources thatmeet our three requirements of self-motivation, creativity andaltruism in an effort to train personnel capable of implementing
our customer-centered values.
In addition, operating in a low-interest-rate environmentthat appears likely to continue, we have continued striving
to develop and sell products that meet customers’ changing
needs, offer increasingly sophisticated asset investment andpromote enterprise risk management (ERM).
Centenary Project
We celebrated the 95th year since our founding in November
2018. We launched our centenary project based on THE
MUTUAL, a conceptual image of Fukoku Life as it welcomesits 100th anniversary in four years. THE MUTUAL represents
mutual aid that has been developed to meet the standards
and requirements of the next 100 years. Additionally, it
represents our determination to establish organizations that
embody real mutual aid, which involves deepening the supportbased relationships we have with all individuals that share aconnection with us.
In fiscal 2019, we launched sectional committee activities
called NEXT100, based on 11 themes, which will serve as
an engine for the embodiment of THE MUTUAL. One of thethemes involves an activity called FIND THE MUTUAL, which
requires our employees to search for instances of THE MUTUAL
throughout Japan and to disseminate relevant information.
During fiscal 2019, we conducted interviews at fivebranch offices (the Nara, Kumamoto, Tokyo, Kyoto, andIkebukuro offices) and later published these interviews throughmedia, including a special website of centenary project andnewspaper advertisements.
Now, as we liaise with our 62 branch offices in 47
prefectures, we will expand the degree to which Fukoku Life is
known and understood by considering and exploring what thenext generation of mutual aid and sharing our findings.

Medium-term Management Plan

We are currently implementing a medium-term management
plan that began in fiscal 2019 and will end at the conclusionof fiscal 2021. The vision of this plan is the same as the visionthat defined our previous medium-term management plan; “tobecome the most valuable company through differentiation.” To
bring us closer to achieving this vision, we have established thecreation of a perpetually virtuous cycle for sustainable growth(put more simply, a cycle valuable company through in which
improvement in employee satisfaction leads to improvementin customer satisfaction) as one of the key themes of our
medium-term management plan. In accordance with anothertheme of our plan, we are conducting initiatives aimed atachieving our long-term management vision of becoming thelife insurance company with the highest degree of customer
satisfaction, a position we intend to reach within ten years.
As we strive to reach these goals, we are promoting drastic
reforms aimed at enhancing channels for sales staff.
Spreading and Implementing Customer-Centered Values
We are working to spread and implement customer-centeredvalues based on “Our Customer-Centered Values,” principles ofaction that express the attitudes and approaches of our executives
and employees as they engage in daily business operations.

We are implementing customer-centered value training
activities targeting all employees in an effort to encourageawareness and consciousness that enables them to ground theirefforts in customer-centered values. We have reaffirmed thatthese activities will function as a starting point for a wide varietyof corporate activities that require all contributing participants toplace utmost importance on customer-centered values.
Offering Responsible and Optimal Insurance Products andServices that Meet Customer Needs
We are promoting the construction of a highly flexible productscheme that allows customers to secure just the amount ofcoverage that is necessary to meet their individual needs. At
the center of these efforts is “Mirai no Tobira,” a core productthat enables customers to establish coverage, without agreeing
to base policies, through the free combination of special riders.
In October, we launched Zutto Anshin Care Double (asingle-policy special lifetime annuity rider that supplements
costs associated with long-term nursing care for patients ofdementia through annuities) as a new rider for our core product,
Mirai no Tobira. This special rider will pay lifelong annuities
to individuals who qualify under categories two in the public
nursing care insurance system (are aged 40 years of higher).
Furthermore, this special rider will increase annuity paymentsby 50% for individuals who, in accordance with predetermined
requirements, are determined to be sufferers of severe
dementia. Through this special rider, we reliably cover thecost of long-term nursing care, even over especially long careperiods, and have established a means of providing gracious
support for sufferers of dementia.
Enhancing the Information We Provide to Customers
We work to ensure that customers can select insurance
products based on correct information by releasing a variety of
appropriate booklets and brochures in addition to our productpamphlet, including “The Perfect Way to Think about Security”
and serial publications that share morbidity and disease
information that is relevant to our insurance products.
Developing Human Resources That Can Implement
Customer-Centered Values
By further spreading our founding philosophy, we are working
to develop human resources that are capable of implementing
customer-centered values. Additionally, our president continued
to hold regular round-table meetings through which he directly
communicated his ideas regarding customer-centered values.
These meetings provided an environment in which participants
could once again consider what customer-centered value-based
activities they were capable of performing.
In an effort to further implement consulting based on
customer inclinations, we also worked to develop customer
advisors that could take charge of face-to-face sales byencouraging them to become qualified financial planners or
acquire other certifications.
Furthermore, we conducted human resource development
based on an awareness of diversity to create a working
environment that allows active contribution from female
employees while also accommodating a diverse range of otherhuman resources.
Overseas BusinessWe have three asset management subsidiaries, Fukoku LifeInternational (U.K.) Ltd., Fukoku Life International (America)
Inc. and Fukoku Life Investments Singapore Pte. Ltd. The
subsidiary in Singapore also has a research function for
financial markets and insurance markets in Asian countries.
By enhancing our global asset management system, we
will be able to maintain sufficient investment returns wellinto the future. At the same time, we will raise our level ofsophistication in asset management through the cultivation ofhuman resources well-versed in global financial markets andasset management business.

FUKOKU MUTUAL LIFE INSURANCE COMPANY

5

Business Performance in Fiscal 2019
Life Insurance in Force
At fiscal year-end, life insurance in force, which comprises
individual life insurance, individual annuities, and groupinsurance, amounted to ¥42,490.7 billion, up 0.1% comparedwith the previous fiscal year-end. Within this amount, life
insurance for individuals declined 0.8%, to ¥22,429.5 billion,
individual annuities decreased 3.8%, to ¥2,456.0 billion. The
year-end balance of life insurance in force for groups increased
1.7%, to ¥17,605.2 billion.
Group annuities in force (policy reserve) rose 2.0%, to¥2,233.4 billion.
Annualized Premiums for New Policies and Policies in ForceIn the year under review, annualized premiums for new policies
decreased 2.9% compared with the previous fiscal year, to¥14.8 billion. Within this amount, individual insurance was down
4.4%, to ¥14.0 billion, and individual annuities up 32.3%, to ¥0.8
billion. Annualized premiums from medical insurance and living
benefit insurance increased 1.4%, to ¥7.5 billion.
Annualized premiums for policies in force fell 2.9%, ¥385.1
billion. Within this amount, individual insurance decreased 1.1%,
to ¥269.2 billion, and individual annuities declined 6.6%, ¥115.8
billion. Annualized premiums from medical insurance and living
benefit insurance increased 1.3%, to ¥113.5 billion.
Premium Income and Payments
In the year under review, premium and other income increased
1.5% compared with the previous fiscal year, to ¥533.5 billion.
Meanwhile, claims and other payments, which represent
the total of payments under insurance policies, declined 6.1%, to¥439.1 billion.
Performance of Fukoku Life Group (Fukoku Life and
Fukokushinrai Life Insurance)
Annualized premiums for new policies of the Fukoku Life Group,
including Fukokushinrai Life Insurance, rose 15.6% year on
year, or ¥2.7 billion, to ¥20.6 billion. This increase was due tofavorable sales of Fukokushinrai Life Insurance “Interest Rate
Life insurance in force

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

43.1

43.1

42.5

16.9

17.1

2.7

23.4

FY2015

‘16

42.4

42.4

618.0

17.0

17.3

17.6

2.7

2.6

2.5

2.4

23.1

22.7

22.6

22.4

‘17

‘18

‘19

574.4

567.2

525.6

533.5

FY2015 ‘16

‘17

‘18

'19

Group insurance
Individual annuities
Individual life insurance

6

FUKOKU MUTUAL LIFE INSURANCE COMPANY

Renewal Type Single Premium Whole Life” launched in October
2018. Within this amount, annualized premiums from medical
insurance and living benefit insurance increased 1.6%, or ¥0.1
billion, to ¥7.7 billion.
At fiscal year-end, annualized premiums for policies in force
decreased 1.7%, or ¥9.3 billion, to ¥549.6 billion. Annualized
premiums from medical insurance and living benefit insurance
were up 1.4%, or ¥1.5 billion, to ¥115.3 billion.
The total value of premium and other income increase
9.1%, or ¥52.5 billion, to ¥629.9 billion.
Assets, Liabilities, and Net Assets
The outstanding balance of non-consolidated total assets,
including separate accounts, increased 1.6%, or ¥106.2 billion,
to ¥6,790.8 billion. Within this amount, general account assets
rose 1.4%, to ¥6,706.2 billion.
The year-end balance of securities stood at ¥5,344.6
billion, a decrease of ¥223.2 billion, or 4.0%, compared with theprevious fiscal year-end.
Total liabilities increased 2.7%, or ¥162.9 billion, to¥6,250.8 billion.
Net assets amounted to ¥540.0 billion, down 9.5%
compared with the previous fiscal year-end.
On a consolidated basis, total assets rose 0.7%, to ¥8,574.4
billion, and net assets decreased 9.8%, to ¥552.8 billion.

Review of Operations (Non-consolidated)

Strengthening Our Capital Base
The basic policy we apply when strengthening our capital baseentails timely external procurement and places paramountimportance on maintaining an adequate balance between thepayment of dividends and the accumulation of net surplus.

benefits eligible for special settlement dividends paid at maturity.
Thanks to these actions, we were able to raise personal insurance
dividends for the eighth consecutive year. As the spread of thenovel coronavirus pandemic impacts the household budgets ofpolicyholders, the Company is striving to effectively reduce theburden of insurance premiums by increasing dividends.

Solvency Margin
Fukoku Life’s solvency margin ratio at fiscal year-end rose 101.1
percentage points to 1,290.8%, far above 200%, which is one
standard for measuring soundness.

Ratings
Fukoku Life relies on three neutral and unbiased ratingorganizations to provide an objective assessment of theCompany’s ability to meet insurance payments. As of July
1, 2020, we have received ratings of AA- from Rating andInvestment Information, A from Standard & Poor’s and A2
from Moody’s. These ratings represent strong evaluations of
the Company’s soundness and profitability. Going forward, we
will continue striving to maintain and further improve our highfinancial ratings.

Dividends
Fukoku Life is working to provide dividends based on customer
expectations. When settling accounts for the fiscal year ended
March 31, 2020, we raised dividends issued to medical insurance
policyholders who have not received hospitalization benefits(healthy dividends). Moreover, in addition to the death benefit
policyholders who had previously been eligible, we made medical
insurance policyholders who have not received hospitalization

Total assets

Net assets(¥ billions)(¥ billions)

6,489.8

6,565.6

6,626.6

6,684.5

Solvency margin ratio(%)

6,790.8

1,321.8

1,290.8

1,214.8
606.9

583.1

591.4

596.6

1,189.7
1,081.2

540.0

FY2015

‘16

‘17

‘18

‘19

FY2015

‘16

‘17

‘18

‘19

FY2015

‘16

‘17

‘18

‘19

FUKOKU MUTUAL LIFE INSURANCE COMPANY

7

Investment Performance in Fiscal 2019 (General Account)
Overview
Recovery in the Japanese economy came to a standstill in thefirst half of fiscal 2019 due in part to sluggish external demand
resulting from trade friction between the US and China. The
economic situation deteriorated in the latter half of fiscal 2019
due primarily to increasing strain on household budgets causedby the consumption tax hike in late 2019, lower inbound tourist
demand associated with the COVID-19 pandemic and a growing
mood of self-restraint that encouraged consumers to stayindoors. Growth in global economies, which was already slowing
down due to factors such as trade friction between the US andChina, was further hindered by stagnating economic activity inmany countries that implemented immigration and emigration
restrictions or issued stay-at-home orders to help prevent the
spread of the COVID-19 pandemic. In terms of monetary policies,in July 2019, the Federal Reserve Board (FRB) cut interest rates
for the first time in ten and a half years in response to growing
uncertainty caused primarily by the intensifying trade friction
between the US and China and the United Kingdom’s decision towithdraw from the EU. Later, in September, the European Central
Bank (ECB) also decided to lower interest rates and reinstate
quantitative easing policies. Afterward, the FRB responded to
the COVID-19 pandemic by introducing a zero-interest policy
and quantitative easing measures that allowed for the unlimited
purchasing of treasury securities and agency mortgage-backed
securities. Meanwhile, the ECB substantially expanded its
quantitative easing policy. The Bank of Japan (BOJ) enhanced
monetary easing by increasing at annual paces with the upper
limit of which ETFs and J-REITs can be purchased. At the sametime, with regard to yield curve control, the BOJ has left its
interest rate targets unchanged.
In terms of asset management, we curtailed our investment
in domestic and overseas bonds as global long-term interest
rates trended low due primarily to monetary easing policies
implemented by major central banks in the world. To maintainprofitability, we accumulated domestic stocks selectively that are
expected to generate stable dividends during a period in whichdomestic stock prices were decreasing while appropriately
controlling for price fluctuation risk. At the end of fiscal 2019,the volatility of financial and capital markets increased as a resultof the spread of the COVID-19 pandemic. At this time, we solda portion of domestic and foreign government bonds associatedwith substantial increases in unrealized gains and allocated a
portion of the funds received through these sales to domestic
and foreign corporate bonds as we deemed a good entry point
to ensure profitability of our portfolio.
As a signatory to the U.N. Principles for Responsible
Investment (PRI), we actively conduct ESG investment andfinancing aimed at establishing sustainable societies while
ensuring profitability. These activities included investment ina fund that donates a portion of performance fees received
to cancer research institutions and investment in a bond thatprovides support to people with disabilities.
As part of our stewardship activities, we held purposedriven engagement dialogue with major investee companies.
During these engagement dialogues, we aimed to achieve
understanding regarding strategies from a medium- to longterm perspective while making proposals aimed at improving
corporate value. To further enhance the effectiveness of these
dialogues, we asked major investee companies to get feedbacksuch as the helpfulness of our proposals, after visiting. Within
the Stewardship Committee, which is chaired by a member fromoutside of the company, we discussed issues such as the statusconcerning the implementation of these engagement dialogues
and the exercising of voting rights. At the same time, we worked
to further improve the effectiveness of stewardship activities
through discussions covering all of our activities.
In addition to these activities, we concluded amemorandum of understanding regarding European corporatebond management with asset management company Muzinich& Co. (headquarters in New York City, U.S.A.) in May 2019 tostrengthen the medium- to long-term competitiveness of ourasset management. We are aiming not only to enhance ourinvestment capabilities as global institutional investor but todevelop human resources with global perspectives that enable
them asset management enhancement as well by promoting
collaboration with Muzinich & Co. and Payden & Rygel(headquarters in Los Angeles, U.S.A.), which have formed apartnership concerning U.S. corporate bond management with
us in September 2017. The collaboration includes dispatching
trainees to both companies and exchanging views regarding
foreign corporate bond management with them.
Investment income increased ¥12.5 billion (6.9%) year on
year to ¥195.0 billion, due primarily to higher gains on sales of
securities (mainly domestic and foreign bonds). The total interest,
dividends and other income (including that from trading securities)
within this figure increased ¥0.9 billion (0.6%) year on year to¥156.3 billion, reaching a record-high for the second consecutive
year, thanks in part to higher dividends from domestic stocks.
Investment expenses rose ¥6.3 billion (13.0%) year on
year to ¥54.9 billion due primarily to higher loss on valuation of
securities associated with a sharp decline in domestic and foreign
stock prices caused by the COVID-19 pandemic.
As a result, net investment income rose ¥6.2 billion (4.6%)
year on year to ¥140.1 billion.

General account assets

Breakdown of general account assets (Fiscal year ended March 31, 2020)(¥ billions)(¥ billions)

6,410.7

6,489.9

6,544.2

6,612.9

6,706.2

Others 90.6 (1.4%)

Ordinary loans 510.1 (7.6%)
Loans
565.4
(8.4%)

Real estate 215.3 (3.2%)
Cash and deposits, and others
539.9 (8.1%)

Policy loans 55.3 (0.8%)

Securities
5,265.4 (78.5%)

Other securities 117.7 (1.8%)
Foreign securities 1,857.9 (27.7%)

Domestic bonds 2,677.6(39.9%)

Domestic stocks 612.0 (9.1%)
FY2015

'16

'17

'18

'19

Total: ¥ 6,706.2 billion
Note: This total includes cash and deposits, call loans, monetary claims bought and money held in trust.

8

FUKOKU MUTUAL LIFE INSURANCE COMPANY

Domestic Bonds
We curtailed investment as domestic long-term interest rates
trended low. Under these circumstances, domestic bonds
fell ¥104.3 billion (3.7%) year on year to ¥2,677.6 billion due
primarily to our partial sale of government bonds associatedwith substantial increases in unrealized gains at the end of
fiscal 2019, when the volatility of financial and capital markets
increased due to the spread of the COVID-19 pandemic.
Foreign Securities
Foreign bonds fell ¥33.6 billion (2.1%) year on year to ¥1,580.8
billion due to our curtailment of investment in foreign bonds
in response to low long-term interest rates globally and ourpartial sale of government bonds associated with substantial
increases in unrealized gains at the end of fiscal 2019, Although
we invested in a fund that supports cancer treatment research,which we acquired as part of our ESG investment and financing

efforts, and accumulated European and American stocks thatare expected to generate high dividend yields, foreign stocks
and other securities declined ¥39.0 billion (12.4%) year on yearto ¥277.0 billion due primarily to a decline in unrealized gain that
occurred due to a drop in stock prices.
Domestic Stocks
Despite accumulating stocks that are expected to generate
stable dividends while appropriately controlling for risks,
domestic stocks fell ¥60.5 billion (9.0%) year on year to ¥612.0
billion due to a decrease in unrealized gain that occurred due toa drop in stock prices.
Ordinary Loans
Loans rose ¥5.3 billion (1.1%) year on year to ¥510.1 billion due
in part to our efforts to diversify our borrowers, which addedloans for renewable energy projects and non-resident borrowers.

Domestic bonds

Domestic stocks

Foreign securities

Loans

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

2,659.1

2,843.5 2,818.6 2,782.0

1,930.6

740.8

2,677.6
656.5

◆

'17

'18

'19

FY2015 '16

'17

'18

'19

FY2015 '16

'17

693.6

'18

'19

214.4

213.6

212.5

215.3

FY2015 '16

'17

'18

'19

212.8
627.7

612.0

570.3

FY2015 '16

1,857.9

1,700.0 1,702.6 1,713.8

672.5

FY2015 '16

593.7

'17

561.1

565.4

'18

'19

Investment Policies for Fiscal 2020

Investment Environment
In fiscal 2020, ending March 31, 2021, we project that the
global economy will slowly recover despite severe impact fromthe COVID-19 pandemic thanks to large-scale fiscal policies
and strong monetary easing measures, implemented in all
applicable countries. Under these economic conditions, we
forecast that both domestic and foreign long-term interest rates
will remain extremely low as major central banks in the worldcontinue to deploy strong monetary easing policies to provide

support for households and corporations. Although growth instock price will be limited by economic uncertainty, we projectthat domestic and foreign stock market will be steady thanks
primarily to large-scale fiscal policies and strong monetaryeasing measures implemented in all applicable countries. We
do not anticipate that the difference in interest rates between
the U.S. and Japan will change substantially and therefore
project that the exchange rate between the U.S. dollar and theyen will remain in a range bound.

Domestic Bonds
While closely monitoring interest rates situation, we willaccumulate corporate bonds with relatively high yields andstrive to amass interest income by allocating part of cash
position for the purchase of government bonds.
Domestic Stocks
Keeping a tight watch on stock market, we will accumulate
stocks selectively that are expected to generate stable dividends.
Foreign Securities
With regard to foreign currency denominated bonds, we will
reinvest a portion of proceeds from foreign government bonds

into foreign corporate bonds and strive to increase interest
income by allocating part of cash position for the purchaseof foreign corporate bonds. As for foreign stocks and othersecurities, we will invest in funds that are higher risk-adjustedreturn to improve the yields of our portfolio.
Ordinary Loans
We will strive to increase our loan balance by discovering
new lending projects.
Real Estate
We will invest in new project to enhance our real estate
portfolio from a medium-to long-term perspective.

FUKOKU MUTUAL LIFE INSURANCE COMPANY

9

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

10

FUKOKU MUTUAL LIFE INSURANCE COMPANY

the various risks that arise in business operations, and to conduct
asset and liability management (ALM). The Risk Management
Committee consolidates and evaluates these risks at thecorporate level, and considers the appropriate level of acceptablerisk and risk response. Furthermore, the Risk Management
Committee has established a specialized risk management
committee to help enhance enterprise risk management.
Full-time directors are members of the Risk Management
Committee, which is chaired by the president. Other directors
chair subcommittees, creating a risk management structurethat is led by top management.
The specialized risk management committee is central
to understanding the Group’s overall risk management
situation. At Fukokushinrai Life Insurance, the Company’s
Risk Management Committee secretariat and the secretariats
of various subcommittees directly monitor the management
status of risks under their jurisdiction.
Furthermore, the audit department veriﬁes that the risk
management system is functioning effectively.
Compliance System
As members of the community, all executives and employees
undergo ongoing training in compliance-related matters so thatthey not only observe laws and regulations, but also comply
with protocols and social conventions. This training is also
aimed at enhancing the spirit of compliance. To this end, as
well as improving and reinforcing the compliance system, wehold hands-on compliance training on an ongoing basis.
However, we recognize that even the most robust of
systems cannot guarantee the complete elimination of improper
conduct. We believe that it is important to detect any improper
conduct early, deal with it swiftly and appropriately, and makeconstant improvements and work to rectify the situation in orderto prevent a recurrence. Accordingly, we believe that continuous
improvement and correction are important.
The Compliance Committee, comprising full-time directors
and other executives and chaired by the president, has theBoard of Directors’ mandate to deliberate matters related
to compliance promotion and to promote compliance. The
Compliance Control Department serves as secretariat for thiscommittee. Furthermore, the chief compliance officer andcompliance officers are stationed at headquarters to perform
regular compliance checks.
Protection of Personal Information
As an insurance company that is trusted by its customers,
Fukoku Life recognizes the handling of personal information asa topmost priority. Accordingly, we take great care in handlingpersonal information. We comply with the Act on the Protectionof Personal Information, which came into force in September
2015, as well as other related legislation and guidelines, andwe will continue endeavoring to appropriately handle andprotect personal information going forward. The Company has
also formulated its own privacy policy, which describes its
policy on the protection of personal information, and a basic
policy on the handling of specific personal information. In
these ways, we work to appropriately manage the important
personal information entrusted to us by our customers. We also
strive to respond swiftly and appropriately to any questions,consultations or requests from customers with regard to
personal information.
As rules for managing personal information appropriately,
we have formulated Regulations on the Handling of Personal
Information and Regulations on the Handling of Corporate
Customers’ Information. In addition, we appropriately manage
information by conducting spot checks on the status of
personal information and other safety management measures
by subcontractors.

Achieving Sustainable Development Goals (SDGs)
We operate under a Customer-Centered Business
Management Policy to share common values with our
stakeholders, customers, employees, and society.
Fukoku Life’s Approach toward SDGs
・Fukoku Life has always adhered to its management
philosophy (“Contributing to Society”), which has notchanged since the Company’s foundation.
・Given the highly public nature of a life insurance business, alife insurance company’s commitment to its customers mustbe perpetual.
・Accordingly, it is only natural for us to maintain oursustainable development and growth in tandem with society
in order to uphold our perpetual commitment to customers.
As we believe that all our business activities as a mutual life
insurer will contribute to the achievement of SDGs, Fukoku Life
has always maintained the such vision and initiatives.

ESG Investment Concept
・In addition to practicing asset management while prioritizing
policyholder interests, we are striving to fulfill our social
responsibility through asset management by taking into
account the public nature of the life insurance business.
・Since becoming a PRI signatory in March 2016, we haveincorporated ESG factors into both our investment decision
process (provided that they do not violate fiduciary duty) andthe constructive dialogues we hold with investee companies
as part of our stewardship activities.
・As a PRI signatory, we will continue to fulfill our fiduciary duty
to secure profitability while aiming to contribute to a moresustainable society.
Major ESG Investment Initiatives during FY2019
・Invest ¥5.4billion into a fund that invests in companies
engaged in R&D targeting breakthroughs in cancer treatment
and donate a portion of management fees to cancer research
institutes.
・Invest ¥7.7 billion into a bond that provides support to people
with disabilities in collaboration with the World Bank.

Fukoku Life's Stakeholders

Customers・P roviding security through the life
insurance industry
・ Providing customer services
・ Enhancing corporate governance・C onducting highly transparent mutual
insurance company management, etc.

Fukoku Mutual Life Insurance Company
Local Communities and Society・S ocial contribution・E nvironmental protection initiatives
・ Initiatives implemented through asset
management (ESG investments)・S tewardship activities, etc.

Employees・H ealth management initiatives・F urthering workstyle reforms・A dvancing diversity・P romoting compliance, etc.

FUKOKU MUTUAL LIFE INSURANCE COMPANY

11

Corporate Social Responsibility (CSR)

Contribution to Society
In accordance with the highly public nature of the life insurance business, Fukoku Life believes that the soundmanagement of its business is its first priority in terms of fulfilling its corporate social responsibility (CSR).
Furthermore, we believe that the Company should engage proactively in a range of social contribution activities
aimed at helping to build a better society.
Fukoku Life Concerts
This activity began in fiscal 1989 with a Fukoku Salon Concert,held in the lobby of our headquarters building in Uchisaiwaicho.
Fukoku Life holds Visiting Concerts, which are heldat schools and institutions for people with disabilities,
enabling them to enjoy genuine classical music performed byprofessional musicians. We also hold Charity Concerts, which
are held as a community benefit event and on which Fukoku
Life executives collaborate in fund-raising. These concerts areheld in cooperation with the regions where they are held.

・Visiting Concerts
Begun in fiscal 2002, Visiting Concerts are performed byCharity Concert musicians who visit schools and institutions forpeople with disabilities in communities where Charity Concerts
are also being held.

Smile Gallery

Hello Kitty Hospital Visit Program
Under this program, Fukoku Life’s brand mascot Hello Kitty—
which is a popular character worldwide—makes visits tochildren’s hospitals and pediatric wards to support hospitalized
children and their families. Commemorative photos with Hello
Kitty are taken, placed in frames that are handmade at Fukoku
Life and given to children as presents.
Activities to Support Reconstruction in Disaster-Affected
Areas

Visiting Concert

・Charity Concerts
In fiscal 1993, we began holding free-admission Charity
Concerts, which also raise funds through the cooperationof charity donations by customers at concert venues. The
funds raised in this manner are contributed to social welfare
councils and other community organizations, thereby assisting
communities’ social welfare.
From their start in fiscal 2002 through March 31, 2020,
Visiting Concerts had been held in 251 locations, while Charity
Concerts had been held 299 times from their beginning in 1993
through the end of the fiscal year.
Smile Gallery
To support the creation of art by children with disabilities, in the
shopping mall located in the second-floor basement of our head
office building in Uchisaiwaicho, we operate the Smile Gallery.
In this gallery, we display artworks by students of specialeducation schools from around Japan. This activity began in
fiscal 2002 as an offshoot of the Visiting Concerts, which visit
special-education schools.
We also use the artworks provided to create calendars,
which we distribute to employees and customers.
12

FUKOKU MUTUAL LIFE INSURANCE COMPANY

・Disaster-Area Visits and Support Concerts, Visiting
Concerts in Disaster-Affected Areas
It will still be some time before recovery following the Great
East Japan Earthquake is complete. To cheer on the recovery,
Fukoku Life continues to hold disaster-area events and Support
Concerts, as well as Visiting Concerts in disaster-affected areas.
We are conducting these activities in the three prefectures
affected by the earthquake: Fukushima, Miyagi and Iwate.
A portion of the donations received from Charity Concerts
are donated to areas affected by the Great East Japan
Earthquake and the Kumamoto earthquakes.
In fiscal 2019, Visiting Concerts in disaster-affected areas
were held at eight schools and Support Concerts were held at
Sendai branch office and Fukushima branch office.

・Events to Sell Specialty Products from Disaster-Affected
Regions
At an open space in the first basement floor of our headquarters
in Uchisaiwaicho and in the first-floor entrance lobby at our
Chiba New Town headquarters, we hold events to sell specialty
products from the three prefectures affected by the Great East
Japan Earthquake: Fukushima, Miyagi and Iwate, as well as
Kumamoto, which was damaged in the Kumamoto Earthquake.
We receive substantial cooperation for events to sell
specialty products from disaster-affected regions from people
outside the Company, as well as from within the organization.

Environmental Protection Initiatives
・Flora Preservation
Since fiscal 2006, we have been conducting the Fukoku Life
(Inochi) Forest project, mainly as a measure to counter damage
from bamboo. This forest provides a venue for participation in andhands-on experience of environmental preservation activities.
Currently, a growing number of forests in Japan arebeing left to grow unchecked due to the lack of people willingto take over forestry businesses. One particular problem is
uncontrolled groves of Moso bamboo, which invades theforests needed to absorb CO 2 —a greenhouse gas—as well
as farmland. Due to the shallowness of its roots, bamboo canmake ground slippery and contribute to topsoil erosion. It canalso devastate mountainous forests and cause landslides.
Measures are therefore needed to counter this “bamboo
damage,” to protect the environment and respond to disaster.
In the Fukoku Life (Inochi) Forest project, Company
executives and employees take part in cutting away bamboo
forests in order to protect mountainous forest land ownedby the Company. In addition to forest regeneration, thisthinning also aims to restore the bamboo forests themselves
to health. These activities are mainly carried out by Company

Flora Preservation

volunteers organized as the Usami Club. In fiscal 2019, these
activities were conducted seven times, with 81 executives andemployees and their family members participating as volunteers.
Other Activities

・Art Promotion
Fukoku Life is a sponsor of the MET: Live in High Definition
series of screenings by the New York Metropolitan Opera(MET), which are distributed by Shochiku Co., Ltd. By giving
members of the general public the opportunity to see some of
the finest opera performances in the world, we help promote
the arts and culture.
・Lobby Sales EventsThe lobby sales events at Visit & Charity Concerts sponsoredby our Uchisaiwaicho and Chiba New Town headquarters have
led to regular bakery shop sales events operated by institutions
for people with disabilities. The Company's employees
participate as sales staff at these traveling events. Thus weprovide a sales location and cooperate in institutions' activities.
At the same time, through this participation we promote better
understanding within the Company of people with disabilities.

MET Live Viewing 2019–2020
Turandot–Puccini© Marty sohl./Metropolitan Opera

Communication with Society

Our Customer Advisors gather feedback directly from
customers and strive to offer better services, which
we believe to be most the most effective means ofadvertising and communication. We also provide
information through various advertising and public
relations activities to deepen communication between
customers and Customer Advisors and encourage abetter understanding of the Company.
・Alliance with Sanrio
The Hello Kitty character, owned by Sanrio Co., Ltd., has
attained worldwide popularity. Fukoku Life has adopted thiswidely loved character as its brand mascot, and features Hello
Kitty in many communications media, including Fukoku Life
posters and brochures, and in video on our website.
In fiscal 2014, we created an original Gotochi Kitty
character (“Gotochi” referring to a specific region), which weuse in numerous situations to evoke an even greater sense of
closeness with customers.
We also provide the Sanrio Character Boat Ride as afriendly-company attraction at Sanrio Puroland and Harmonyland.

© ’13, ’19 SANRIO S/D · G© ’76, ’90, ’96, ’99, ’01, ’10, ’19 SANRIO APPROVAL No.P11092415

・Providing Information
Fukoku Life publishes a variety of materials for its stakeholders.
Publications that provide information on the Company’sbusiness activities include the Japanese-language annual
disclosure report. “Disclosure” (and abridged versions
thereof), booklets written for policyholders, and this Englishlanguage annual report. Our diverse lineup of public relations
and advertising activities include the production of a variety of
publications as needed, in order to strengthen the channels ofcommunication between the Company, its policyholders, and its
many other customers.

FUKOKU MUTUAL LIFE INSURANCE COMPANY

13

Non-consolidated Financial Statements
Non-consolidated Balance Sheets
Fukoku Mutual Life Insurance Company
As of March 31, 2019 and 2020

As of March 31,

2019

2020

Millions of yen

Assets:Cash and deposits:
Cash …………………………………………………………………………………
Bank deposits ………………………………………………………………………
Call loans ………………………………………………………………………………
Monetary claims bought ……………………………………………………………
Money held in trust ……………………………………………………………………
Securities:
Government bonds …………………………………………………………………
Local government bonds …………………………………………………………
Corporate bonds ……………………………………………………………………
Stocks ………………………………………………………………………………
Foreign securities …………………………………………………………………
Other securities ……………………………………………………………………
Loans:
Policy loans …………………………………………………………………………
Ordinary loans ………………………………………………………………………
Tangible fixed assets:
Land …………………………………………………………………………………
Buildings ……………………………………………………………………………
Lease assets ………………………………………………………………………
Construction in progress …………………………………………………………
Other tangible fixed assets ………………………………………………………
Intangible fixed assets:
Software ……………………………………………………………………………
Lease assets ………………………………………………………………………
Other intangible fixed assets ……………………………………………………
Agency receivables ……………………………………………………………………
Reinsurance receivables ……………………………………………………………
Other assets:
Accounts receivable ………………………………………………………………
Prepaid expenses …………………………………………………………………
Accrued income ……………………………………………………………………
Deposits ……………………………………………………………………………
Derivatives …………………………………………………………………………
Suspense payments ………………………………………………………………
Lease investment assets …………………………………………………………
Rest of the other asset ……………………………………………………………
Deferred tax assets …………………………………………………………………
Allowance for possible loan losses …………………………………………………
Total assets……………………………………………………………………………
14

FUKOKU MUTUAL LIFE INSURANCE COMPANY

2020
Millions of
U.S. dollars¥172
66,59966,771
176,000
299
23,850¥168
288,500
288,668
230,000
269
24,156$2,030,510
102,277
670,914696,181
1,953,608
114,384
5,567,876

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

17,759
943
6,109
5,807
17,408
1,082
49,11056,332504,806
561,138

55,339510,133
565,473

508
4,687
5,195

125,180
84,441
1,241
2,933
3,177
216,974

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

1,149
802
8
26
29
2,016

20,891—
1,410
22,301—
119

18,155873
4,762
23,791
4
111

166
8
43
218
0
1

5,558
1,987
29,898
2,195
4,302
3,145
666
3,585
51,341—(2,096)¥6,684,576

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

54
23
259
20
196
31
—
28
614
270
(18)
$62,398

1
2,650
2,652
2,113
2
221

As of March 31,

2019

2020

2020
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:
Cash received as collateral under securities lending transactions…………
Corporate income tax payable …………………………………………………
Accounts payable …………………………………………………………………
Accrued expenses ………………………………………………………………
Unearned income …………………………………………………………………
Deposits received …………………………………………………………………
Guarantee deposits received ……………………………………………………
Derivatives …………………………………………………………………………
Cash collateral received for financial instruments …………………………
Lease obligations …………………………………………………………………
Asset retirement obligations ……………………………………………………
Suspense receipts ………………………………………………………………
Reserve for employees’ retirement benefits ……………………………………
Reserve for price fluctuation ………………………………………………………
Deferred tax liabilities ………………………………………………………………
Deferred tax liabilities for land revaluation ………………………………………
Total liabilities ………………………………………………………………………

¥ 20,322
5,613,583
58,176
5,692,082
55
191,935¥ 19,814
5,694,979
60,922
5,775,716
86
191,935$ 182
52,329559
53,070
0
1,763

—
4,422
2,561
10,802381
5,987
14,041
7,641
1,051
—
2,892
1,596
51,377
24,517111,279
2,429
14,225
6,087,901

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

623
55
25
98
3
55
128
69
15
8
25
17
1,126
216
1,127
—
130
57,436

10,000106,000
112

12,000116,000
112

110
1,065
1

3,071

3,176

29

8,000
20,00041,000—20,00041,000

—
183
376

210
767
60,633
130,611
133,682249,794

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

1
7
532
1,101
1,130
2,307

342,748
4,132
346,880
596,674¥6,684,576

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

2,616
37
2,654
4,962
$62,398

Net assets:

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

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

FUKOKU MUTUAL LIFE INSURANCE COMPANY

15

Non-consolidated Statements of Operations
Fukoku Mutual Life Insurance Company
For the years ended March 31, 2019 and 2020

Year ended March 31,

2019

2020

Millions of yen

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

16

FUKOKU MUTUAL LIFE INSURANCE COMPANY

2020
Millions of
U.S. dollars¥525,407
198
525,605¥533,396130
533,527$4,901
1
4,902

35
126,834
9,329
14,876
114
151,190—
3,276
27,729——315
962
183,47336
129,290
8,766
15,267
13
153,374314—
35,410
5,577
70
289
—
195,037

0
1,188
80
140
0
1,409
2
—
325
51
0
2
—
1,792

730
4,771
—
898
2,820
9,220
718,300

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

49
31
4
9
27
122
6,816

104,702160,900
111,533
63,78726,754239
467,917

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

857
1,450
1,018
472
235
2
4,035

1,026
35,39512¥ 36,434—
81,39613¥ 81,409

—
747
0
$ 748

Year ended March 31,

2019

2020

Millions of yen

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

¥

3,864
371
—
11,61039
5,875
13,396
88
—
4,165
9,186
—
48,59990,655¥2020
Millions of
U.S. dollars

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

$

35
—
45
17
122
—
161
—
2
39
79
36
540
846

5,595
6,220
8,615
945
21,377
664,984
53,315

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

42
62
81
10
197
6,367
449

3
60
63

5
—
5

0
—
0

142
228
15,481
15,851
37,527181
38
11,466
11,68537,219

1
0
105
107
341

11,752(11,059)693¥ 36,834

13,646(10,540)
3,106¥ 34,113

125
(96)
28
$ 313

See notes to the non-consolidated financial statements.

FUKOKU MUTUAL LIFE INSURANCE COMPANY

17

Non-consolidated Statements of Changes in Net Assets
Fukoku Mutual Life Insurance Company
For the years ended March 31, 2019 and 2020

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

Accumulated
foundation
funds
Reserve forredeemedrevaluation

Legal
reservefor future
lossesReserve forredemptionoffoundation
funds

Reserve fordividend
allowances

Accumulated
fund for pricefluctuation

Reserve foradvanceddepreciation ofreal estate fortax purpose

Other
reserves

UnappropriatedsurplusTotal
surplusTotal
foundation
funds, surplus
and others¥106,000¥2,954¥6,000¥20,000¥41,000

¥255

¥767

¥64,561¥135,538¥251,650(38,630)(38,630)(38,630)

(117)

—

—

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

(100)

(100)

(100)

Net surplus for the fiscal year��

36,83436,83436,834(2,000)

—

—

45

—

—

41

41

41

For the year ended March 31, 2019

Foundation
funds

Balance at the beginning of the fiscal
year������������������������������������������������ ¥10,000¥112

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

117

Additions to reserve for redemptionof foundation funds������

2,000

Reversal of reserve for advanced
depreciation of real estate for tax
purpose����������

(45)

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

—

—

—

117

2,000

—

—

(45)

—

(3,927)(1,855)(1,855)

Balance at the end of the fiscal year���� ¥10,000¥106,000¥112¥3,071¥8,000¥20,000¥41,000

¥210

¥767

¥60,633¥133,682¥249,794

Total changes in the fiscal year��

Millions of yen
Valuation and translation adjustments

For the year ended March 31, 2019

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

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

Revaluation reserve forland, net of tax

Total valuation andtranslation adjustments

Total
net assets¥335,658¥4,173¥339,831¥591,482

Changes in the fiscal year
Additions to reserve for dividends to policyholders���������

(38,630)

Additions to legal reserve for future losses�������������

—Payment of interest on foundation funds��������������

(100)

Net surplus for the fiscal year������������������

36,834

Additions to reserve for redemption of foundation funds�������

—

Reversal of reserve for advanced depreciation of real estate for tax
purpose���������������������������

—

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

41

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

7,089

(41)

7,048

7,048

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

7,089

(41)

7,048

5,192

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

¥342,748¥4,132¥346,880¥596,674

18

FUKOKU MUTUAL LIFE INSURANCE COMPANY

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

For the year ended March 31, 2020

Foundation
funds

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

Accumulated
foundation
funds
Reserve forredeemedrevaluation

Legal
reservefor future
lossesReserve forredemptionoffoundation
funds

Reserve fordividend
allowances

Accumulated
fund for pricefluctuation

Reserve foradvanceddepreciation ofreal estate fortax purpose

Other
reserves

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

¥210

¥767

¥60,633¥133,682¥249,794¥112

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

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

105

Additions to accumulated
foundation funds redeemed��(34,671)(34,671)(34,671)

(105)

—

—

10,00010,000

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

(100)

(100)

(100)

Net surplus for the fiscal year��

34,113

34,113

34,113

Redemption of foundation funds�

(10,000)(10,000)

Additions to reserve for redemptionof foundation funds������

2,000

Reversal of reserve for redemptionof foundation funds������

(10,000)(2,000)

Reversal of reserve for advanced
depreciation of real estate for tax
purpose����������

(1)

Reversal of revaluation reserve forland, net of tax�������

——(10,000)(10,000)

1

—

—

29

29

29

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

2,000

10,000—105(8,000)

—

—

(1)

—

(2,731)(10,628)

1,371

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

¥209

¥767

¥57,901¥123,054¥251,166

Total changes in the fiscal year��

Millions of yen
Valuation and translation adjustments

For the year ended March 31, 2020

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

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

Revaluation reserve forland, net of tax

Total valuation andtranslation adjustments

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

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

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

(34,671)

Additions to legal reserve for future losses�������������

—Additions to accumulated foundation funds redeemed��������

10,000

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

(100)

Net surplus for the fiscal year������������������

34,113

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

(10,000)

Additions to reserve for redemption of foundation funds�������

—

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

(10,000)

Reversal of reserve for advanced depreciation of real estate for tax
purpose���������������������������

—

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

29

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

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

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

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

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

¥284,752¥4,102¥288,855¥540,021

FUKOKU MUTUAL LIFE INSURANCE COMPANY

19

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

For the year ended March 31, 2020

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

Foundation
funds

$91

Accumulated
foundation
funds
Reserve forredeemedrevaluation

$973

$1

Legal
reservefor future
lossesReserve forredemptionoffoundation
funds

Reserve fordividend
allowances

Accumulated
fund for pricefluctuation

Reserve foradvanceddepreciation ofreal estate fortax purpose

Other
reserves

$28

$73

$183

$376

$1

$7

UnappropriatedsurplusTotal
surplusTotal
foundation
funds, surplus
and others$557$1,228$2,295

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

110

110

Additions to reserve for dividends
to policyholders�������
Additions to legal reserve for
future losses��������

0

Additions to accumulated
foundation funds redeemed��

(318)

(318)

(318)

(0)

—

—

91

91

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

(0)

(0)

(0)

Net surplus for the fiscal year��

313

313

313

Redemption of foundation funds�

(91)

(91)

Additions to reserve for redemptionof foundation funds������

18

Reversal of reserve for redemptionof foundation funds������

(91)

(18)

Reversal of reserve for advanced
depreciation of real estate for tax
purpose����������

(0)

Reversal of revaluation reserve forland, net of tax�������

—

—

(91)

(91)

0

—

—

0

0

0

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

18

91

—

0

(73)

—

—

(0)

—

(25)

(97)

12

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

$110$1,065

$1

$29

—

$183

$376

$1

$7

$532

$1,130$2,307

Millions of U.S. dollars
Valuation and translation adjustments

For the year ended March 31, 2020

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

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

Revaluation reserve forland, net of tax

Total valuation andtranslation adjustments

Total
net assets$3,149$37$3,187$5,482

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

110

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

(318)

Additions to legal reserve for future losses�������������

—Additions to accumulated foundation funds redeemed��������

91

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

(0)

Net surplus for the fiscal year������������������

313

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

(91)

Additions to reserve for redemption of foundation funds�������

—

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

(91)

Reversal of reserve for advanced depreciation of real estate for tax
purpose���������������������������

—0

Reversal of revaluation reserve for land, net of tax���������
Net changes, excluding foundation funds, surplus and others�����

(532)

(0)

(533)

(533)

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

(532)

(0)

(533)

(520)

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

$2,616$37$2,654$4,96220

FUKOKU MUTUAL LIFE INSURANCE COMPANYNon-consolidated Statements of Surplus
Fukoku Mutual Life Insurance Company
For the years ended March 31, 2019 and 2020

Year ended March 31,

2019

2020

2020
Millions of
U.S. dollars

Millions of yen¥60,633¥57,901

$532

1

1

0

1

1

0

60,63557,903532

34,671

31,547289

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

105

95

0

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

100

102

0

2,000

2,400

22

2,000

2,400

22

2,205

2,597

23

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

36,87634,144

313

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

¥23,758¥23,758$218

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

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

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

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

FUKOKU MUTUAL LIFE INSURANCE COMPANY

21

Notes to the Non-consolidated Financial Statements

I. Presentation of the Non-consolidated Financial
Statements
1. Basis of presentation
The accompanying non-consolidated financial statements havebeen prepared from the accounts maintained by Fukoku MutualLife Insurance Company (the “Company”) in accordance withthe provisions set forth in the Insurance Business Act of Japanand its related rules and regulations and in conformity withaccounting principles generally accepted in Japan, which are
different in certain respects from accounting principles generally
accepted in countries and jurisdictions other than Japan.
In addition, the notes to the non-consolidated financial
statements include information which is not required underaccounting principles generally accepted in Japan but ispresented herein as additional information.
Amounts of less than one million yen have been rounded
down. As a result, the totals do not add up.
The translations of yen amounts into U.S. dollar amounts
are included solely for the convenience of the reader and havebeen made, as a matter of arithmetical computation only, at therate of ¥108.83 = US$1.00, the effective rate of exchange at thebalance sheet date of March 31, 2020. The translations should
not be construed as representations that such yen amounts
have been or could in the future be, converted into U.S. dollars
at that or any other rates.

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

22

FUKOKU MUTUAL LIFE INSURANCE COMPANY

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

such as being in the proceedings of bankruptcy or
civil rehabilitation (hereinafter called “legally bankrupt
borrowers”) and who are substantially bankrupt(hereinafter called “substantially bankrupt borrowers”), theCompany provides the remaining amounts of credits after
the direct write-off described below and the deductions of
the amount expected to be collected through the disposal ofcollateral or the execution of guarantees.
ii) For the credits of borrowers who are not currently
bankrupt but have a high possibility of bankruptcy(hereinafter called “not currently bankrupt borrowers”),
the Company provides the amounts deemed as necessary
considering the borrowers’ ability to pay, within theamounts after deductions of the amounts expected to becollected through the disposal of collateral or the executionof guarantees.
iii) For the credits of borrowers other than the above, theCompany provides the amounts calculated by multiplying
the borrowers’ balance by the actual ratio of bad debt
losses on defaults during a certain past period.
All credits are assessed by the relevant departmentsin accordance with the Company’s standards of selfassessment on credit quality. The results of the assessment
are reviewed by the audit department, which is independentof business-related divisions. Subsequently, the allowancefor possible loan losses is provided based on the results ofthese assessments.
For the credits of legally bankrupt borrowers andsubstantially bankrupt borrowers, the amounts remaining
after deductions of collateral value or the amounts collectible
through the execution of guarantees are written-off directlyfrom the borrowers’ balances as the estimated uncollectible
amounts. The amount written-off as of March 31, 2019and 2020 were ¥1 million and ¥0 million (US$7 thousand),
respectively.
(7) Reserve for employees’ retirement benefits is presented
based on projected benefit obligations and pension plan
assets at the balance sheet date.
The Company uses the following methods foramortizing retirement benefit obligations and retirement
benefit expenses:• Method for allocation of projected retirement benefits................Benefit formula basis• Amortization period of actuarial gains and losses�� 10 years• Amortization period of prior service cost��������������� 10 years(8) Reserve for price fluctuation is calculated in accordance with
Article 115 of the Insurance Business Act.
(9) Hedge accounting is based on “Accounting Standards for
Financial Instruments” (ASBJ Statement No. 10, March 10,2008). The Company applies a fair value hedge accounting
as a hedge against the risk of foreign exchange fluctuationin relation to bonds and others denominated in foreign
currencies, and a designated hedge accounting (“Furiate
shori”) for foreign currency swaps as a hedge against therisk of foreign exchange fluctuation in relation to bonds
denominated in foreign currencies issued by the Company.
For assessing the effectiveness of hedge used, ratio
analysis of comparing the fluctuations in the fair value orcash flows of hedged items and hedging instruments ismainly applied.
(10)	Accounting of unrecognized actuarial differences andunrecognized prior service costs related to employees’
retirement benefits is different to the methods used forthese items in the consolidated financial statements.
(11)	The Company accounts for consumption taxes by the taxexclusion method. The consumption taxes on certain assets,
which are not deductible from consumption taxes withheld
and that are stipulated to be deferred under the Tax Act, aredeferred as prepaid expenses and amortized equally over five
years. Consumption taxes other than deferred consumption
taxes are recognized as an expense when incurred.
(12)	Policy reserve is based on Article 116 of the Insurance
Business Act, and the premium reserve is calculated by thefollowing method:i) In regard to the policies subject to the standard policy
reserve, the method as prescribed by the Commissioner ofFinancial Services Agency (Ministry of Finance Ordinance
No. 48, 1996) is applied.
ii) In regard to the policies not subject to the standard policy
reserve, the net level premium method is applied.
Based on the provision of Article 69, paragraph 5, of the
Enforcement Regulation of the Insurance Business Act,
the Company includes additional funded policy reserves asfollows.
Among individual annuity insurance policies with anassumed interest rate of 5.00% or higher, for policies thathave begun paying annuities (excluding wife’s annuity
insurance additional rider), the Company reduced theassumed interest rate to 1.00% and funded additional policy
reserves. As of March 31, 2019, the balance of these policy
reserves was ¥73,836 million.
The Company also funded additional policy reserves
for certain individual annuity insurance policies, whole life
insurance policies that include distribution of surplus every
five years, new cancer riders and highly advanced medical
riders. As of March 31, 2019, the balance of these policy
reserves was ¥13,391 million.
Among individual annuity insurance policies with anassumed interest rate of 5.00% or higher, for policies thathave begun paying annuities (excluding wife’s annuity
insurance additional rider), the Company reduced theassumed interest rate to 1.00% and funded additional policy

FUKOKU MUTUAL LIFE INSURANCE COMPANY

23

reserves. As of March 31, 2020, the balance of these policy
reserves was ¥74,007 million (US$680 million).
The Company also funded additional policy reserves
for certain individual annuity insurance policies, whole life
insurance policies that include distribution of surplus every
five years, new cancer riders and highly advanced medical
riders. As of March 31, 2020, the balance of these policy
reserves was ¥29,605 million (US$272 million).
(13) Depreciation of intangible fixed assets is calculated by thefollowing methods.
• Software: Straight-line method over the estimated useful
lives.
• Lease assets related to finance lease transactions that do
not transfer ownership: Straight-line method over the leaseterm with no residual value.
(14) Of the bonds corresponding to the sub-groups of individual
insurance and annuities which are set by insurance types
and investment policies, the bonds that are held to matchthe duration of liabilities are classified as policy-reservematching bonds in accordance with “Temporary Treatmentof Accounting and Auditing Concerning Policy-reservematching Bonds in Insurance Industry” (Industry Audit
Committee Report No. 21 issued by the Japanese Instituteof Certified Public Accountants on November 16, 2000).
2.	Primary accounting standards that have been issued by theend of the fiscal year ended March 31, 2020 but have notbeen applied are as follows.
Methods of calculating the fair value will be revised in
response to the announcements of accounting standards
such as “Accounting Standard for Fair Value Measurement”(ASBJ Statement No. 30, July 4, 2019), “AccountingStandard for Financial Instruments” (ASBJ Statement No. 10,
July 4, 2019) and “Implementation Guidance on AccountingStandard for Fair Value Measurement” (ASBJ Guidance No.
31, July 4, 2019).
These accounting standards and this guidance must be
applied at the beginning of the fiscal year starting on April
1, 2021 and the Company plans to apply these accounting
standards and this guidance at the beginning of the fiscal
year ending March 31, 2022.
The Company is currently in the process of evaluating
the effects of applying these accounting standards and thisguidance for the fiscal year ending March 31, 2022.
3.	Asset management of the general accounts other than theseparate accounts stipulated in Article 118 Paragraph 1 ofthe Insurance Business Act is conducted on the principle
of prudent and profitable investments, considering public
and social responsibilities of the insurance business. Basedon this policy, the Company allocates the fund, securing
its liquidity, from the medium-to-long term viewpoints.

24

FUKOKU MUTUAL LIFE INSURANCE COMPANY

The Company is diversifying investments in assets suchas foreign securities, stocks and real estates within theacceptable range of risks in order to enhance the profitability,
although yen-denominated interest bearing assets including
debt securities such as Japanese government bonds andloans are the cores of the portfolios under the asset liability
management. Derivatives are mainly used to hedge themarket risk regarding spot-priced assets and liabilities.
Major financial instruments including securities, loans
and derivatives are exposed to market risk and credit risk.
The Company manages its asset management risk by
establishing internal control systems including various rules
pursuant to the “Three Basic Rules related to Enterprise
Risk Management” established by the Board of Directors.
Specifically, the Company eliminates excessive risk deviatingfrom the basic principle and secures the safety of theassets by utilizing control functions of the Financial andInvestment Risk Management Department towards theasset management sections, monitoring the status of market
risk and credit risk periodically on a daily or monthly basis. In
addition, the Company quantifies the market risk and credit
risk using value-at-risk (VaR) method in order to control thepossible maximum losses which may arise from the holding
assets within a certain range of risk buffers.
The carrying amounts, fair values and their relateddifferences of major financial assets and liabilities in thegeneral account were as follows:(1)	Cash, deposits (excluding financial instruments treated as
securities based on “Accounting Standards for Financial
Instruments” (ASBJ Statement No.10, March 10, 2008)) andcall loans:
The fair values of cash, deposits and call loans are based on
their book values since fair values approximate book values
due to their short maturities.
(2)	Securities including deposits and monetary claims bought
which are treated as securities based on “AccountingStandards for Financial Instruments” (ASBJ Statement
No.10, March 10, 2008) and securities managed as trust
assets in money held in trust:
The fair values of marketable securities are measured at thequoted market prices at the balance sheet date. The fair values ofother securities without the quoted market prices are based on
the prices reasonably calculated such as the prices offered by the
information vendors or counterparty financial institutions.
Investments in subsidiaries and affiliates, unlisted
stocks and investments in partnerships whereby partnershipassets consist of unlisted stocks whose fair values are
deemed extremely difficult to obtain, are excluded fromabove securities. The carrying amounts of investments in
subsidiaries and affiliates, unlisted stocks and investmentsin partnerships were ¥64,787 million, ¥5,696 million, and¥27,318 million as of March 31, 2019, and ¥64,787 millionAs of March 31,

2019Millions of yen
Carrying amount

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

¥¥65,28265,282
176,000

Fair value¥

65,28265,282
176,000

Difference

¥

—
—
—

299
299

319
319

20
20

22,85022,85022,85022,850——97,110759,519938,273
3,606,817
5,401,721

97,110899,819
1,111,124
3,606,817
5,714,871—
140,300
172,850—
313,150

56,332504,806
561,138
6,227,291
191,935
191,935

56,331
530,223586,555
6,565,879
198,912
198,912(0)25,41725,416
338,588
6,977
6,977

(107)
(3,230)(3,338)(107)(3,230)(3,338)

—
—
—

¥

¥

As of March 31,

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

2020

2020

Millions of yen

Millions of U.S. dollars

Carrying amount

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

269
269

¥

Carrying amount

Fair value

Difference———$ 2,623
2,623
2,113

$ 2,623
2,623
2,113

$

287
287

17
17

2
2

2
2

0
0

23,15623,15623,15623,156

—
—

212
212

212
212

—
—

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

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

609
6,957
8,204
31,70347,475

609
8,083
9,517
31,70349,913

—
1,125
1,312
—
2,438

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

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

508
4,687
5,195
57,623
1,763

508
4,933
5,442
60,308
1,709

(0)
246
246
2,684
(53)

67,866259,801

67,866
253,929—(5,872)

623
2,387

623
2,333

—
(53)

3,589
10,206
13,795

3,589
10,206
13,795

—
—
—

32
93
126

32
93
126

—
—
—

¥

Difference

¥

¥

$

$

—
—
—

$

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

FUKOKU MUTUAL LIFE INSURANCE COMPANY

25

(US$595 million), ¥5,684 million (US$52 million), and ¥28,169
million (US$258 million) as of March 31, 2020, respectively.
(3)	Loans and monetary claims bought treated as loans:
The fair values of policy loans are deemed to approximatebook values, considering estimated repayment period andinterest rate conditions since their repayment deadlines havenot been set up due to the characteristics that the loans arelimited to the amount of cash surrender values. Therefore,
the book values are used as the fair values of policy loans.
The fair values of floating interest rate loans among theordinary loans and monetary claims bought treated as loans
approximate the book values because the market interest
rates are reflected in future cash flows in a short period.
Therefore, the fair values of floating interest rate loans andmonetary claims bought treated as loans are based on theirbook values. The fair values of fixed interest rate loans
are measured by discounting the future cash flows to thepresent values.
The fair values of loans from legally bankrupt borrowers,
substantially bankrupt borrowers and not currently bankrupt
borrowers and monetary claims bought treated as loans
are computed by deducting the amount of the allowancefor possible loan losses from the book values before direct
write-offs.
(4) Subordinated bonds:
Subordinated bonds issued by the Company are stated at fairmarket values.
(5) Cash received as collateral under securities lendingtransactions:
The fair values of cash received as collateral under securities
lending transactions are based on their book values since fairvalues approximate book values due to their short maturities.
(6) Derivative instruments:i) The fair values of the futures and options traded at theexchange are measured at the settlement price of theexchange.
ii) The fair values of forward contracts, options and swaps
traded over the counter are based on the quoted prices
offered by counterparty financial institutions.
iii) The fair values of foreign currency forward contracts are
determined based on the spot exchange rate and forward
contract rate.
4.	The Company holds investment and rental properties suchas office buildings in Tokyo and other areas. The carrying
amounts and the fair values of investment and rental
properties were ¥172,520 million and ¥314,115 million as ofMarch 31, 2019, and ¥174,688 million (US$1,605 million) and¥321,383 million (US$2,953 million) as of March 31, 2020,
respectively. The fair value is mainly based on the value

26

FUKOKU MUTUAL LIFE INSURANCE COMPANY

calculated by the Company in accordance with real estateappraisal standards which includes some adjustments using
the reference prices.
The amount corresponding to asset retirement
obligations included in the carrying amount of investment
and rental properties were 697 million as of March 31,
2019, and ¥588 million (US$5 million) as of March 31, 2020,
respectively.
5.	The amount of securities lent under lending agreements
were ¥299,194 million and ¥345,897 million (US$3,178
million) as of March 31, 2019 and 2020, respectively.
6.	The total amounts of credits to bankrupt borrowers,
delinquent loans, delinquent loans past 3 months or more
and restructured loans, which were included in loans, were¥940 million as of March 31, 2019, and ¥1,079 million (US$9million) as of March 31, 2020, respectively;i) T he balances of credits to bankrupt borrowers were ¥157
million and ¥153 million (US$1 million) as of March 31,
2019 and 2020, respectively.
ii) T he balances of delinquent loans were ¥782 million and¥698 million (US$6 million) as of March 31, 2019 and 2020,
respectively.
iii) T he balances of restructured loans were nil and ¥227
million (US$2 million) as of March 31, 2019 and 2020,
respectively.
iv) T here were no balances of delinquent loans past 3
months or more as of March 31, 2019 and 2020,
respectively.
The direct write-offs related to loans decreased credits tobankrupt borrowers described above by ¥1 million as ofMarch 31, 2019, and ¥0 million (US$7 thousand) as of March
31, 2020, respectively.
Credits to bankrupt borrowers represent loans,
excluding the balances already written-off, which meet theconditions prescribed in Article 96 Paragraph 1 item 3 and 4of the Enforcement Regulations of the Corporate Tax Act.
Moreover, accrued interest on these loans is not recorded
as income after determining that principal of or interest on
these loans is unlikely to be collected due to the significant
delay in repayment of principal or interest payment or forsome other reasons.
Delinquent loans are credits which accrued interest
is 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 been suspended
and rescheduled to assist and support the borrowers in the
restructuring of their business.
Delinquent loans past 3 months or more are loans forwhich interest payments or repayments of principal aredelinquent for 3 months or more from the due date under theterms of the related loan agreements, excluding those loans

classified as credits to bankrupt borrowers and delinquentloans.
Restructured loans are loans for which certain
concessions favorable to borrowers, such as interest
reduction or exemption, rescheduling of due date forrepayments 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 restructuringof their business. This category excludes loans classified
as credits to bankrupt borrowers, delinquent loans anddelinquent loans past 3 months or more.
7.	Accumulated depreciation of tangible fixed assets were¥167,181 million and ¥171,812 million (US$1,578 million) as
of March 31, 2019 and 2020, respectively.
8.	Total assets in separate accounts provided for in Article
118 of the Insurance Business Act were ¥71,585 millionand ¥84,658 million (US$777 million) as of March 31, 2019and 2020, respectively. The amounts of separate accountliabilities were the same as separate account assets.
9.	The total amounts of receivables from/payables tosubsidiaries were ¥3,204 million and ¥1,837 million asof March 31, 2019, and ¥3,155 million (US$28 million)and ¥1,834 million (US$16 million) as of March 31, 2020,
respectively.
10. Deferred tax assets and deferred tax liabilities as of March
31, 2019 were ¥137,650 million and ¥135,958 million,
respectively. Valuation allowance for deferred tax assets

was ¥4,121 million.
Major components of deferred tax assets were
¥86,377 million of policy reserves, ¥31,158 million ofreserve for price fluctuation and ¥12,091 million of reservefor employees’ retirement benefits as of March 31, 2019.
Major component of deferred tax liabilities was¥131,712 million of net unrealized gains on available-for-salesecurities as of March 31, 2019.
The statutory tax rate and the actual effective tax rate
for the year ended March 31, 2019 were 28.0% and 1.8%,
respectively. The difference between the statutory tax rate
and the actual effective tax rate was attributable mainly to-25.9% of reserve for dividends to policyholders.
Deferred tax assets and deferred tax liabilities as ofMarch 31, 2020 were ¥149,590 million (US$1,374 million)and ¥114,839 million (US$1,055 million), respectively.
Valuation allowance for deferred tax assets was ¥5,353
million (US$49 million).
Major components of deferred tax assets were
¥93,815 million (US$862 million) of policy reserves, ¥34,368
million (US$315 million) of reserve for price fluctuation and¥11,812 million (US$108 million) of reserve for employees’
retirement benefits as of March 31, 2020.
Major component of deferred tax liabilities was¥110,413 million (US$1,014 million) of net unrealized gains
on available-for-sale securities as of March 31, 2020.
The statutory tax rate and the actual effective tax rate
for the year ended March 31, 2020 were 28.0% and 8.3%,
respectively. The difference between the statutory tax rate
and the actual effective tax rate was attributable mainly to-23.7% of reserve for dividends to policyholders.

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

2019

2020

2020
Millions of
U.S. dollars

Millions of yen

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

¥53,395¥58,176$534

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

38,63034,671

318

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

(33,862)(31,938)(293)

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

12

13

0

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

¥58,176¥60,922$559

12. The amount of stocks of subsidiaries were ¥64,787 millionand ¥64,787 million (US$595 million) as of March 31, 2019and 2020, respectively.
13. Assets pledged as collateral as of March 31, 2019 were ¥17,839
million of securities and ¥744 million of bank deposits. Secured
debts as of March 31, 2019, were ¥5,387 million.

Assets pledged as collateral as of March 31, 2020 were¥78,124 million (US$717 million) of securities and ¥690
million (US$6 million) of bank deposits. Secured debts as ofMarch 31, 2020, were ¥73,400 million (US$674 million).
These amounts include ¥63,247 million (US$581
million) of investments in securities deposited and ¥67,866
million (US$623 million) of cash received as collateral under

FUKOKU MUTUAL LIFE INSURANCE COMPANY

27

securities lending transactions secured by cash as of March
31, 2020.
14. Reserve for outstanding claims for the reinsurance contracts
provided in accordance with Article 71 Paragraph 1 of the
Enforcement Regulation of the Insurance Business Act(hereinafter called “reserve for outstanding claims forceded reinsurance”) were ¥2 million and ¥0 million (US$0
thousand) as of March 31, 2019 and 2020, respectively.
Policy reserve for the reinsurance contracts provided inaccordance with Article 71 Paragraph 1 of the Enforcement
Regulation of the Insurance Business Act (hereinafter called“policy reserve for ceded reinsurance”) were ¥30 millionand ¥29 million (US$274 thousand) as of March 31, 2019and 2020, respectively.
15. The total amounts of adjustment items for redemption offoundation funds and appropriation of net surplus defined in
Article 30 Paragraph 2 of the Enforcement Regulation of the
Insurance Business Act were ¥346,992 million and ¥288,967
million (US$2,655 million) as of March 31, 2019 and 2020,
respectively.
16. The Company raised additional foundation funds of ¥12,000
million (US$110 million) during the fiscal year ended March
31, 2020 in accordance with Article 60 of the Insurance
Business Act.
17. In the fiscal year ended March 31, 2020, in connection
with the redemption of foundation funds of ¥10,000 million(US$91 million), the Company reversed the reserve forredemption of foundation funds and provided the equivalentamount for accumulated foundation funds redeemed inaccordance with Article 56 of the Insurance Business Act.

18. T
 here were unused commitment line agreements underwhich the Company is the lender of ¥5,994 million and¥9,407 million (US$86 million) as of March 31, 2019 and2020, respectively.
19. R
 epayments of subordinated bonds are subordinated toother obligations.
20. T he future contribution to the Life Insurance Policyholders
Protection Corporation of Japan under Article 259 of the
Insurance Business Act was estimated at ¥8,506 millionand ¥8,400 million (US$77 million) as of March 31, 2019 and2020, respectively.
The contribution is recognized as operating expenses
when contributed.
21. Matters Related to Employees’ Retirement Benefits(1) Overview of Employees’ Retirement Benefit Plan
As for a defined benefit plan for office-based employees, theCompany has a defined benefit corporate pension plan andretirement lump-sum payments. As for a defined contribution
plan for these employees, the Company also has a defined
contribution pension plan.
As for a defined benefit plan for sales employees, theCompany has retirement lump-sum payments.
The Company places a retirement benefit trust in
relation to the retirement lump-sum grant plan for sales
employees.
The simplified method for calculating retirement benefit
obligation is applied to a portion of the Company’s retirement
lump-sum grant plans.

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

As of March 31,

2019

2020

2020
Millions of
U.S. dollars

Millions of yen

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

¥86,201¥87,060$799

Service cost�����������������������������������������������������������������������������������������������������������

3,552

3,434

31

Interest cost����������������������������������������������������������������������������������������������������������

516

520

4

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

1,080

1,308

12

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

(4,289)(4,386)(40)

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

¥87,060¥87,938$808

28

FUKOKU MUTUAL LIFE INSURANCE COMPANY

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

As of March 31,

2019

2020

2020
Millions of
U.S. dollars

Millions of yen

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

¥52,372¥54,880$504

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

972

858

7

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

145(3,071)(28)

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

2,693

2,711

24

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

(1,304)(1,675)(15)

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

¥54,880¥53,704$493iii) Reconciliation of retirement benefit obligation and pension plan assets with reserve for employees’ retirement benefits presented
on the non-consolidated balance sheet
As of March 31,

2019

2020

2020
Millions of
U.S. dollars

Millions of yen

a. Funded plan retirement benefit obligation���������������������������������������������������������

¥75,659¥76,625$704

b. Pension plan assets�������������������������������������������������������������������������������������������

(54,880)(53,704)(493)

c. (a + b)�����������������������������������������������������������������������������������������������������������������

20,77822,920210

d. Unfunded plan retirement benefit obligation�����������������������������������������������������

11,401

11,313103

e. Unrecognized actuarial differences����������������������������������������������������������������

(7,833)(10,809)(99)

f. Unrecognized prior service cost����������������������������������������������������������������������

171

95

0

g. Reserve for employees’ retirement benefits (c + d + e + f)�����������������������������

¥24,517¥23,519$216iv) Breakdown of retirement benefit gains and losses

As of March 31,

2019

2020

2020
Millions of
U.S. dollars

Millions of yen

Service cost..........................................................................................................

¥3,552¥3,434$31

Interest cost.........................................................................................................

516

520

4

Expected return on pension plan assets..............................................................

(972)

(858)

(7)

Amortization of actuarial differences....................................................................

1,759

1,404

12

Amortization of prior service cost.........................................................................

(76)

(76)

(0)

Retirement benefit expenses related to defined benefit plan..............................

¥4,779¥4,425$40

FUKOKU MUTUAL LIFE INSURANCE COMPANY

29v) Breakdown of pension plan assets
The breakdown of asset categories as a percentage of total pension plan assets were as follows:

As of March 31,

2019

2020

Domestic stocks...................................................................................................

44.3%

41.3%

Life insurance general account.............................................................................

33.3%

35.5%

Domestic bonds...................................................................................................

9.6%

10.0%

Foreign stocks......................................................................................................

7.7%

6.9%

Foreign bonds.......................................................................................................

3.0%

3.2%

Others...................................................................................................................

2.1%

3.1%

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

100.0%

100.0%

Within the total of pension assets as of March 31, 2020, 35.4% of this amount is accounted for by the retirement benefit trust
established in relation to the retirement lump-sum payments plan for sales employees.
vi) Method for setting the expected long-term rate of return
To set the expected long-term rate of return on pension plan assets, the Company takes into account the present and future
allocation of pension plan assets, and the present and expected future long-term rate of return on a variety of assets that makes
up the pension assets.
vii) Underlying actuarial assumptions
Main underlying actuarial assumptions were as follows:

As of March 31,

2019

2020

0.6%

0.6%

Defined benefit corporate pension plan............................................................

3.0%

2.5%

Retirement benefit trust....................................................................................

0.0%

0.0%

Discount rate........................................................................................................
Expected long-term rate of return on pension plan assets(3) Defined Contribution Plan
The required contribution amounts by the Company to the defined contribution plan were ¥215 million and ¥216 million (US$1
million) as of March 31, 2019 and 2020, respectively.

III. Notes to the Non-consolidated Statements of Operations
1. The total amounts of revenues and expenses in connection with subsidiaries were ¥871 million and ¥8,823 million for the year ended
March 31, 2019, and ¥909 million (US$8 million) and ¥8,331 million (US$76 million) for the year ended March 31, 2020, respectively.
2. The details of gains on sales of securities were as follows:Year ended March 31,

2019

2020

2020
Millions ofMillions of yen

U.S. dollars

Domestic bonds...................................................................................................

¥ 1,424¥20,386$187

Domestic stocks and others.................................................................................

24,393

11,143102

Foreign securities.................................................................................................

1,911

2,987

27

Others...................................................................................................................

30

FUKOKU MUTUAL LIFE INSURANCE COMPANY

¥

—

¥

892

$

8

3. The details of losses on sales of securities were as follows:Year ended March 31,

2019

2020

2020
Millions ofMillions of yen

U.S. dollars

Domestic bonds...................................................................................................

¥ 1,58247$ 0Domestic stocks and others.................................................................................

2,563

643

5

Foreign securities.................................................................................................

¥ 7,464¥ 1,244$ 11

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

2019

2020

2020
Millions ofMillions of yen

U.S. dollars

Domestic stocks and others.................................................................................

¥39¥ 6,689$ 61

Foreign securities.................................................................................................

—

5,876

53

Others...................................................................................................................

¥—

¥ 776

$ 7

5. For the year ended March 31, 2019, in calculating the provision of reserve for outstanding claims, a reversal of reserves foroutstanding claims reinsured of ¥8 million was added. In calculating the provision of policy reserves, a reversal of reserves forpolicy reserves reinsured of ¥1 million was added.
For the year ended March 31, 2020, in calculating the reversal of reserve for outstanding claims, a reversal of reserves
for outstanding claims reinsured of ¥2 million (US$22 thousand) was deducted. In calculating the provision of policy reserves, areversal of reserves for policy reserves reinsured of ¥0 million (US$2 thousand) was added.

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

2019

2020

2020
Millions ofMillions of yen

Interest, dividends and other income...................................................................

¥ 4,225

U.S. dollars¥ 2,946$ 27

Gains on sales of trading securities......................................................................

—

0

0

Gains on redemption of trading securities............................................................

3,400

1,731

15

Losses on valuation of trading securities.............................................................

¥(4,530)¥ (9,658)$ (88)

7. Losses on money held in trust for the year ended March 31, 2019 included valuation gains of ¥0 million.
Gains on money held in trust for the year ended March 31, 2020 included valuation gains of ¥0 million (US$0 thousand).
8. Losses on derivative instruments for the year ended March 31, 2019 included valuation gains of ¥124 million.
Gains on derivative instruments for the year ended March 31, 2020 included valuation gains of ¥3,696 million (US$33 million).

FUKOKU MUTUAL LIFE INSURANCE COMPANY

31

Report of Independent Auditors

32

FUKOKU MUTUAL LIFE INSURANCE COMPANY

FUKOKU MUTUAL LIFE INSURANCE COMPANY

33

34

FUKOKU MUTUAL LIFE INSURANCE COMPANY

FUKOKU MUTUAL LIFE INSURANCE COMPANY

35

Consolidated Financial Statements
Consolidated Balance Sheets
Fukoku Mutual Life Insurance Company and consolidated subsidiaries
As of March 31, 2019 and 2020

As of March 31,

2019

2020

2020
Millions of
U.S. dollars

Millions of yen

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

¥ 153,017¥ 415,816$ 3,820

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

176,000

230,000

2,113

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

299

269

2

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

23,85024,156

221

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

7,287,916

6,977,554

64,114Loans.................................................................................................................

564,778

569,127

5,229

Land..............................................................................................................

125,180

125,118

1,149

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

84,62487,480803

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

1,241

933

8

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

2,933

2,866

26

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

3,413

3,484

32

217,393

219,883

2,020

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

23,16919,889182

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

9,532

8,666

79

Tangible fixed assets:

Intangible fixed assets:

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

1,553

4,803

44

34,25433,359306

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

1

0

0

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

173

124

1

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

58,81374,059680

Net defined benefit assets................................................................................

177

255

2

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

185

31,885292

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

(2,096)(2,024)(18)

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

¥8,514,764¥8,574,467$78,787

36

FUKOKU MUTUAL LIFE INSURANCE COMPANYAs of March 31,

2019

2020

2020
Millions of
U.S. dollars

Millions of yen

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

¥

24,584¥

23,620$217

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

7,393,634

7,430,271

68,274

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

58,17660,922

559

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

465

328

3

7,476,860

7,515,143

69,053

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

117

114

1

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

88

103

0

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

191,935

191,935

1,763

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

62,838132,340

1,216

Net defined benefit liabilities.............................................................................

32,47034,614318

Reserve for price fluctuation.............................................................................

121,357

133,162

1,223

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

1,743

0

0

Deferred tax liabilities for land revaluation

14,225

14,213130

7,901,637

8,021,628

73,707

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

10,00012,000110

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

106,000

116,000

1,065

Total liabilities..................................................................................................
Net assets:

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

112

112

1

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

137,669

127,315

1,169

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

253,781

255,4272,347

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

352,453

292,980

2,692

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

4,132

4,102

37

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

(496)

(480)

(4)

Accumulated remeasurements of defined benefit plans..................................

(5,517)(7,714)(70)

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

350,571

288,888

2,654

Non-controlling interests...................................................................................

8,774

8,523

78

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

613,127

552,839

5,079

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

¥ 8,514,764¥ 8,574,467$ 78,787

FUKOKU MUTUAL LIFE INSURANCE COMPANY

37

Consolidated Statements of Operations
Fukoku Mutual Life Insurance Company and consolidated subsidiaries
For the years ended March 31, 2019 and 2020

Year ended March 31,

2019

2020

Millions of yen

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

38

FUKOKU MUTUAL LIFE INSURANCE COMPANY

2020
Millions of
U.S. dollars¥ 577,450¥ 629,956$5,788

174,763—3,276
29,281——
315
962
208,598
10,685
796,734

175,964
314—
37,162
5,577
70
289
—
219,379
15,067864,402

1,616
2
—
341
51
0
2
—
2,015
138
7,942

110,872
200,064
125,198
101,023
27,231
564,389

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

924
2,390
1,134
751
239
5,441

2,418
1,860
12

—
36,637
13

—
336
0

0
4,291

0
36,650

0
336

3,892
371
—
11,61039
5,875
13,397
88
—
4,165
7,829
—
47,271
99,232
26,362
741,547¥ 55,187

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

35
—
45
17
122
—
161
—
2
39
67
36
529
926
249
7,482
$ 459

Year ended March 31,

2019

2020

2020
Millions of
U.S. dollars

Millions of yen

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

¥

3

¥

5

$

0

Others...........................................................................................................

60

—

—

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

63

5

0

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

213

183

1

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

228

38

0

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

15,836

11,804108

16,27812,026

110

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

337

172

1

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

38,63537,834347

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

12,345

14,183

130

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

(10,450)(10,666)(98)

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

1,895

3,516

32

Net surplus.......................................................................................................

36,73934,317315

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

1

(70)

(0)

Net surplus attributable to the parent company...........................................

¥36,738¥34,388$315

Extraordinary losses:

Total extraordinary losses

Income taxes:

Consolidated Statements of Comprehensive Income
Fukoku Mutual Life Insurance Company and consolidated subsidiaries
For the years ended March 31, 2019 and 2020

Year ended March 31,

2019

2020

Millions of
U.S. dollars

Millions of yen

Net surplus........................................................................................................

2020¥36,739¥34,317$ 315

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

7,957(59,644)(548)

Foreign currency translation adjustments....................................................

(119)

16

0

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

538(2,197)

(20)

8,376

(61,825)(568)

Comprehensive income attributable to the parent company.......................

45,024(27,264)(250)

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

92

(242)

(2)

¥45,116¥(27,507)$(252)

Other comprehensive income:Comprehensive income:

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, 2019 and 2020

Year ended March 31,

2019

2020

Millions of yen

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

40

FUKOKU MUTUAL LIFE INSURANCE COMPANY

2020
Millions of
U.S. dollars¥ 38,635
4,165
12,147
228
37
2,418
1,860
12

¥ 37,834
4,288
12,55938—(963)
36,637
13

0
337
46
(870)
15,836(174,763)(15,622)
3,892
13,397
145
(1)
47

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

0
1
(0)
(9)
108
(1,616)
(173)
35
161
1
0
0

(878)
47
13

(181)
(3)
14

(1)
(0)
0

915
18,544(79,406)
178,314(3,866)(33,862)(412)(10,790)
49,976(50)
18,415(53,655)
181,158(3,861)(31,938)(309)(12,443)
78,950

(0)
169
(493)
1,664
(35)
(293)
(2)
(114)
725

138
144
(2,000)9,263(644,228)
607,481(89,212)113,336(28,014)(401)
29(1,000)1,000(547,377)
741,782(92,007)
78,936
14,231(3)0(9)
9(5,029)
6,815
(845)
725
130

—
(6,735)(39,825)¥ 10,151

67,866(6,860)256,199¥ 335,150

623
(63)
2,354
$ 3,079

$

347
39
115
0
—
(8)
336
0

Year ended March 31,

2019

2020

2020
Millions of
U.S. dollars

Millions of yen

Payments for purchase of tangible fixed assets...........................................

¥ (6,398)¥ (9,644)

Proceeds from sales of tangible fixed assets...............................................

95

148

$

(88)
1

Payments for purchase of intangible fixed assets........................................

(5,119)(7,423)(68)

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

(51,247)

239,280

2,198—

12,000110

Redemption of foundation funds..................................................................

—(10,000)(91)

Payment of interest on foundation funds.....................................................

(100)

(100)

(0)

Dividends paid to non-controlling interests..................................................

(7)

(9)

(0)

Payments for lease obligations.....................................................................

(2,915)(3,223)(29)

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

(3,023)(1,333)(12)Effect of exchange rate changes on cash and cash equivalents.................

(180)

(514)

(4)

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

(4,475)316,383

2,907

Cash flows from financing activities:
Financing of additional foundation funds......................................................

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

332,599

328,124

3,015

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

¥ 328,124¥ 644,507$5,922

FUKOKU MUTUAL LIFE INSURANCE COMPANY

41

Consolidated Statements of Changes in Net Assets
Fukoku Mutual Life Insurance Company and consolidated subsidiaries
For the years ended March 31, 2019 and 2020

Millions of yen
Foundation funds, surplus and others

Foundation funds

Accumulated
foundation funds
redeemed¥10,000¥106,000

Consolidated surplus

Total foundation funds,
surplus and others¥139,621¥255,733

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

(38,630)(38,630)

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

(100)

(100)

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

36,73836,738

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

41

41

For the year ended March 31, 2019
Balance at the beginning of the fiscal year������������������������������

Reserve for revaluation¥112

Changes in the fiscal year

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

—

—

—

(1,951)(1,951)

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

¥10,000¥106,000¥112¥137,669¥253,781

Millions of yen
Accumulated other comprehensive income

For the year ended March 31, 2019
Balance at the beginning of the fiscal year��������

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

Revaluation
reserve for land,
net of tax¥344,585¥4,173Foreign currencytranslation
adjustments¥(377)

Accumulated
remeasurementsof defined
benefit plans

Total accumulated
othercomprehensive
incomeNon-controllinginterests

Total net assets¥(6,055)¥342,326¥8,690¥606,750

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

(38,630)

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

(100)

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

36,738

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

41

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

7,867

(41)

(119)

538

8,244

84

8,329

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

7,867

(41)

(119)

538

8,244

84

6,377

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

¥352,453¥4,132¥(496)¥(5,517)¥350,571¥8,774¥613,127

42

FUKOKU MUTUAL LIFE INSURANCE COMPANY

Millions of yen
Foundation funds, surplus and others

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

Foundation funds

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

Consolidated surplus

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

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

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

(34,671)

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

10,000

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

(100)

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

(34,671)

10,000(100)

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

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

(10,000)(10,000)

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

29

29

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

2,000

10,000—(10,353)

1,646

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

¥12,000¥116,000¥112¥127,315¥255,427

Millions of yen
Accumulated other comprehensive income

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

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

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

Accumulated
remeasurementsof defined
benefit plans

Total accumulated
othercomprehensive
incomeNon-controllinginterests

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

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

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

(34,671)

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

10,000

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

(100)

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

34,388

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

(10,000)

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

(10,000)

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

29

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

(59,472)(29)

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

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

(59,472)(29)

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

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

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

FUKOKU MUTUAL LIFE INSURANCE COMPANY

43

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

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

Foundation funds

Accumulated
foundation funds
redeemed

$91

$973

Reserve for revaluation

Consolidated surplus

Total foundation funds,
surplus and others$1,264$2,331$1

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

110

110

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

(318)

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

91

91

Payment of interest on foundation funds����������������������������
Net surplus attributable to the parent company
for the fiscal year���������������������������������������������������������������
Redemption of foundation funds�����������������������������������������

(318)

(0)

(0)

315

315

(91)

(91)

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

(91)

(91)

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

00

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

18

91

—

(95)

15

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

$110$1,065$1$1,169$2,347

Millions of U.S. dollars
Accumulated other comprehensive income

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

Net unrealized
gains (losses) on
available-for-salesecurities,
net of tax$3,238

Revaluation
reserve for land,
net of tax$37

Foreign currencytranslation
adjustments$(4)

Accumulated
remeasurementsof defined
benefit plans$(50)

Total accumulated
othercomprehensive
income$3,221

Non-controllinginterests$80

Total net assets$5,633

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

110

Additions to reserve for dividends topolicyholders������������������������������������������������

(318)

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

91

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

(0)

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

315

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

(91)

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

(91)

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

0

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

(546)

(0)

0

(20)

(566)

(2)

(569)

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

(546)

(0)

0

(20)

(566)

(2)

(553)

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

$2,692

$37

$(4)

$(70)

$2,654$78$5,07944

FUKOKU MUTUAL LIFE INSURANCE COMPANY

Notes to the Consolidated Financial Statements

I. Presentation of the Consolidated Financial
Statements
1. Basis of Presentation
The accompanying consolidated financial statements havebeen prepared from the accounts maintained by Fukoku MutualLife Insurance Company (the “Company”) and its consolidated
subsidiaries in accordance with the provisions set forth in
the Insurance Business Act of Japan and its related rules
and regulations and in conformity with accounting principles
generally accepted in Japan, which are different in certain
respects from accounting principles generally accepted incountries and jurisdictions other than Japan.
In addition, the notes to the consolidated financial
statements include information which is not required underaccounting principles generally accepted in Japan but ispresented herein as additional information.
Amounts of less than one million yen have been rounded
down. As a result, the totals do not add up.
The translations of yen amounts into U.S. dollar amounts
are included solely for the convenience of the reader and havebeen made, as a matter of arithmetical computation only, at therate of ¥108.83 = US$1.00, the effective rate of exchange at thebalance sheet date of March 31, 2020. The translations should
not be construed as representations that such yen amounts
have been or could in the future be, converted into U.S. dollars
at that or any other rates.

(2) Application of Equity Method
Unconsolidated subsidiaries (such as Fukoku Business
Service Company Limited, etc.) are insignificant in theirimpact on net surplus attributable to the parent company
and consolidated surplus, and also immaterial as a whole,
therefore, application of equity method is not applied.
There are no affiliates for the year ended March 31,
2019 and 2020.
(3) Fiscal Year of Consolidated Subsidiaries
Among the subsidiaries to be consolidated, fiscal year-end ofoverseas subsidiaries are December 31. For the preparationof consolidated financial statements, financial statements
as of that date are used and concerning any importanttransaction taking place in between December 31 andthe consolidated closing date, necessary adjustments forconsolidation are made.

2. Principles of Consolidation(1) Scope of Consolidation
Consolidated subsidiaries as of March 31, 2019 and 2020 are
listed below:
Fukoku Capital Management, Inc.
Fukokushinrai Life Insurance Co., Ltd.
Fukoku Information Systems Co., Ltd.
Fukoku Life International (U.K.) Ltd.
Fukoku Life International (America) Inc.
Fukoku Life Investments Singapore Pte. Ltd.
Major unconsolidated subsidiary is Fukoku Business
Service Company Limited.
Four subsidiaries are excluded from the scope of
consolidation, as each one of them is small in its total assets,
amount of sales, net surplus for the period and surplus andare sufficiently insignificant to reasonable judgement on theirimpact on the financial position and results of operation of
the Company’s group.

FUKOKU MUTUAL LIFE INSURANCE COMPANY

45

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

46

FUKOKU MUTUAL LIFE INSURANCE COMPANYof the Act for Revaluation of Land (Government OrdinanceNo.119 promulgated on March 31, 1998) and the roadrate set forth in Article 2 item 4 of the said Ordinance withcertain reasonable adjustments.
(4) D epreciation of the Company’s tangible fixed assets is
calculated by the following methods.
• Tangible fixed assets (excluding lease assets): Decliningbalance method
However, buildings (excluding building attachments andstructures acquired on or before March 31, 2016) acquiredon or after April 1, 1998 are depreciated using Straight-line
method.
• Lease assets related to finance lease transactions that
do not transfer ownership: Straight-line method over thelease term with no residual value.
Other tangible fixed assets acquired for ¥100,000 or more
but less than ¥200,000 are depreciated equally over three
years.
(5) A ssets and liabilities denominated in foreign currencies,
except for investments in unconsolidated subsidiaries
and affiliates, are translated into Japanese yen at theeffective exchange rate prevailing at the balance sheet date.
Investments in unconsolidated subsidiaries and affiliates aretranslated into Japanese yen at the exchange rate on thedate of acquisition.
(6) A llowance for possible loan losses for the Company
is provided in accordance with the standards of selfassessment and write-offs and reserves on credit quality:i) F or the credits of borrowers who are legally bankrupt
such as being in the proceedings of bankruptcy or
civil rehabilitation (hereinafter called “legally bankrupt
borrowers”) and who are substantially bankrupt(hereinafter called “substantially bankrupt borrowers”), theCompany provides the remaining amounts of credits after
the direct write-off described below and the deductions of
the amount expected to be collected through the disposalof collateral or the execution of guarantees.
ii) F or the credits of borrowers who are not currently
bankrupt but have a high possibility of bankruptcy(hereinafter called “not currently bankrupt borrowers”),
the Company provides the amounts deemed as necessary
considering the borrowers’ ability to pay, within theamounts after deductions of the amounts expected to becollected through the disposal of collateral or the executionof guarantees.
iii) F or the credits of borrowers other than the above, theCompany provides the amounts calculated by multiplying
the borrowers’ balance by the actual ratio of bad debt
losses on defaults during a certain past period.
All credits are assessed by the relevant departmentsin accordance with the Company’s standards of self-assessment on credit quality. The results of the assessment
are reviewed by the audit department, which is independentof business-related divisions. Subsequently, the allowancefor possible loan losses is provided based on the results ofthese assessments.
For the credits of legally bankrupt borrowers andsubstantially bankrupt borrowers, the amounts remaining
after deductions of collateral value or the amounts collectible
through the execution of guarantees are written-off directlyfrom the borrowers’ balances as the estimated uncollectible
amounts. The amount written-off as of March 31, 2019and 2020 were ¥1 million and ¥0 million (US$7 thousand),
respectively.
(7) Net defined benefit liabilities, which is provided for
employees’ retirement benefits, is calculated by deducting
the amount of pension assets from the amount of retirement
benefit obligations incurred as of the balance sheet datebased on the projected retirement benefits as of the current
fiscal year end.
The Company uses the following methods of accounting
in relation to retirement benefits:• Method for allocation of projected retirement benefits.....Benefit formula basis• Amortization period of actuarial gains and losses...10 years• Amortization period of prior service cost.................10 years(8) Reserve for price fluctuation is calculated in accordance with
Article 115 of the Insurance Business Act.
(9) Hedge accounting is based on “Accounting Standards for
Financial Instruments” (ASBJ Statement No. 10, March 10,2008). The Company applies a fair value hedge accounting
as a hedge against the risk of foreign exchange fluctuationin relation to bonds and others denominated in foreign
currencies, and a designated hedge accounting (“Furiate
shori”) for foreign currency swaps as a hedge against therisk of foreign exchange fluctuation in relation to bonds
denominated in foreign currencies issued by the Company.
For assessing the effectiveness of hedge used, ratio
analysis of comparing the fluctuations in the fair value orcash flows of hedged items and hedging instruments ismainly applied.
(10) The Company accounts for consumption taxes by the taxexclusion method. The consumption taxes on certain assets,
which are not deductible from consumption taxes withheld
and that are stipulated to be deferred under the Tax Act,are deferred as prepaid expenses and amortized equally
over five years. Consumption taxes other than deferredconsumption taxes are recognized as an expense whenincurred.
(11) Policy reserve is based on Article 116 of the Insurance

Business Act, and the premium reserve is calculated by thefollowing method:i) In regard to the policies subject to the standard policy
reserve, the method as prescribed by the Commissionerof Financial Services Agency (Ministry of FinanceOrdinance No. 48, 1996) is applied.
ii) In regard to the policies not subject to the standard policy
reserve, the net level premium method is applied.
Based on the provision of Article 69, paragraph 5, of the
Enforcement Regulation of the Insurance Business Act,
the Company includes additional funded policy reserves asfollows.
Among individual annuity insurance policies with anassumed interest rate of 5.00% or higher, for policies thathave begun paying annuities (excluding wife’s annuity
insurance additional rider), the Company reduced theassumed interest rate to 1.00% and funded additional policy
reserves. As of March 31, 2019, the balance of these policy
reserves was ¥73,836 million.
The Company also funded additional policy reserves
for certain individual annuity insurance policies, whole life
insurance policies that include distribution of surplus every
five years, new cancer riders and highly advanced medical
riders. As of March 31, 2019, the balance of these policy
reserves was ¥13,391 million.
Among individual annuity insurance policies with anassumed interest rate of 5.00% or higher, for policies thathave begun paying annuities (excluding wife’s annuity
insurance additional rider), the Company reduced theassumed interest rate to 1.00% and funded additional policy
reserves. As of March 31, 2020, the balance of these policy
reserves was ¥74,007 million (US$680 million).
The Company also funded additional policy reserves
for certain individual annuity insurance policies, whole life
insurance policies that include distribution of surplus every
five years, new cancer riders and highly advanced medical
riders. As of March 31, 2020, the balance of these policy
reserves was ¥29,605 million (US$272 million).
(12) D epreciation of intangible fixed assets is calculated by thefollowing methods.
• Software: Straight-line method over the estimated useful
lives.
• Lease assets related to finance lease transactions that do
not transfer ownership: Straight-line method over the leaseterm with no residual value.
(13) O f the bonds corresponding to the sub-groups of individual
insurance and annuities which are set by insurance
types and investment policies, the bonds that are held
to match the duration of liabilities are classified as policyreserve-matching bonds by the Company in accordancewith “Temporary Treatment of Accounting and Auditing
Concerning Policy-reserve-matching Bonds in Insurance

FUKOKU MUTUAL LIFE INSURANCE COMPANY

47

Industry” (Industry Audit Committee Report No. 21 issued
by the Japanese Institute of Certified Public Accountants on
November 16, 2000).
2. Primary accounting standards that have been issued by theend of the consolidated fiscal year ended March 31, 2020 but
have not been applied are as follows.
Methods of calculating the fair value will be revised in
response to the announcements of accounting standards
such as “Accounting Standard for Fair Value Measurement”(ASBJ Statement No. 30, July 4, 2019), “AccountingStandard for Financial Instruments” (ASBJ Statement No. 10,
July 4, 2019) and “Implementation Guidance on AccountingStandard for Fair Value Measurement” (ASBJ Guidance No.
31, July 4, 2019).
These accounting standards and this guidance must be
applied at the beginning of the fiscal year starting on April
1, 2021 and the Company plans to apply these accounting
standards and this guidance at the beginning of the fiscal
year ending March 31, 2022.
The Company is currently in the process of evaluating
the effects of applying these accounting standards and thisguidance for the consolidated fiscal year ending March 31,
2022.
3. Asset management of the general accounts other than theseparate accounts stipulated in Article 118 Paragraph 1 ofthe Insurance Business Act is conducted on the principle
of prudent and profitable investments by the Company,
considering public and social responsibilities of the insurance
business. Based on this policy, the Company allocates thefund, securing its liquidity, from the medium-to-long term
viewpoints. The Company is diversifying investments inassets such as foreign securities, stocks and real estates
within the acceptable range of risk in order to enhance
the profitability, although yen-denominated interest
bearing assets including debt securities such as Japanese
government bonds and loans are the cores of the portfolios
under the asset liability management. Derivatives are mainly
used to hedge the market risk regarding spot-priced assets
and liabilities.
Major financial instruments including securities, loans
and derivatives are exposed to market risk and credit risk.
The Company manages its asset management risk by
establishing internal control systems including various rules
pursuant to the “Three Basic Rules related to Enterprise
Risk Management” established by the Board of Directors.
Specifically, the Company eliminates excessive risk deviatingfrom the basic principle and secures the safety of theassets by utilizing control functions of the Financial andInvestment Risk Management Department towards theasset management sections, monitoring the status of market
risk and credit risk periodically on a daily or monthly basis. In
addition, the Company quantifies the market risk and credit

48

FUKOKU MUTUAL LIFE INSURANCE COMPANY

risk using value-at-risk (VaR) method in order to control thepossible maximum losses which may arise from the holding
assets within a certain range of risk buffers.
The carrying amounts, fair values and their relateddifferences of major financial assets and liabilities in thegeneral account were as follows:As of March 31,

2019Millions of yen
Carrying amount

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

¥¥151,527
151,527
176,000

Fair value¥

151,527
151,527
176,000

Difference

¥

—
—
—

299
299

319
319

20
20

22,85022,85022,85022,850——97,1101,256,418
1,923,187
3,909,427
7,186,144

97,1101,505,773
2,174,682
3,909,427
7,686,993—
249,355
251,494—
500,849

59,972504,806
564,778
8,101,599
191,935
191,935

59,971
530,223590,195
8,627,886
198,912
198,912(0)25,41725,416526,286
6,977
6,977

(107)
(3,230)(3,338)(107)(3,230)(3,338)

—
—
—

¥

¥

As of March 31,

2020

2020

Millions of yen

Millions of U.S. dollars

Carrying amount

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

¥¥412,693412,693230,000

Fair value¥

412,693412,693230,000

Difference¥

Carrying amount

Fair value

Difference———$ 3,792
3,792
2,113

$ 3,792
3,792
2,113

$

—
—
—

269
269

287
287

17
17

2
2

2
2

0
0

23,15623,15623,15623,156

—
—

212
212

212
212

—
—

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

66,357
1,498,490
1,954,843
3,773,242
7,292,934—
224,153
204,748—
428,902609
11,70916,08034,67063,071

609
13,76917,962
34,67067,012

—
2,059
1,881
—
3,941

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

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

542
4,687
5,229
74,421
1,763

542
4,933
5,475
78,608
1,709

(0)
246
246
4,187
(53)

67,866259,801

67,866
253,929—(5,872)

623
2,387

623
2,333

—
(53)

3,589
10,206
13,795

3,589
10,206
13,795

—
—
—

32
93
126

32
93
126

—
—
—

¥

¥

$

$

$

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

FUKOKU MUTUAL LIFE INSURANCE COMPANY

49

(1) Cash, deposits (excluding financial instruments treated as
securities based on “Accounting Standards for Financial
Instruments” (ASBJ Statement No.10, March 10, 2008)) andcall loans:
The fair values of cash, deposits and call loans are based on
their book values since fair values approximate book values
due to their short maturities.
(2) Securities including deposits and monetary claims bought
which are treated as securities based on “AccountingStandards for Financial Instruments” (ASBJ Statement
No.10, March 10, 2008) and securities managed as trust
assets in money held in trust:
The fair values of marketable securities are measured at
the quoted market prices at the balance sheet date. The fairvalues of other securities without the quoted market prices
are based on the prices reasonably calculated such as theprices offered by the information vendors or counterparty
financial institutions.
Investments in unconsolidated subsidiaries and affiliates,
unlisted stocks and investments in partnerships whereby
partnership assets consist of unlisted stocks whose fair values
are deemed extremely difficult to obtain, are excluded fromabove securities. The carrying amounts of investments inunconsolidated subsidiaries and affiliates, unlisted stocks andinvestments in partnerships were ¥404 million, ¥5,696 million,and ¥27,318 million as of March 31, 2019 and ¥404 million(US$3 million), ¥5,684 million (US$52 million), and ¥28,169
million (US$258 million) as of March 31, 2020, respectively.
(3) Loans and monetary claims bought treated as loans:
The fair values of policy loans are deemed to approximatebook values, considering estimated repayment period andinterest rate conditions since their repayment deadlines havenot been set up due to the characteristics that the loans arelimited to the amount of cash surrender values. Therefore,
the book values are used as the fair values of policy loans.
The fair values of floating interest rate loans among theordinary loans and monetary claims bought treated as loans
approximate the book values because the market interest rates
are reflected in future cash flows in a short period. Therefore,
the fair values of floating interest rate loans and monetaryclaims bought treated as loans are based on their book values.
The fair values of fixed interest rate loans are measured bydiscounting the future cash flows to the present values.
The fair values of loans from legally bankrupt borrowers,
substantially bankrupt borrowers and not currently bankrupt
borrowers and monetary claims bought treated as loans arecomputed by deducting the amount of the allowance for possible
loan losses from the book values before direct write-offs.
(4) Subordinated bonds:
Subordinated bonds issued by the Company are stated at fairmarket values.

50

FUKOKU MUTUAL LIFE INSURANCE COMPANY(5) C ash received as collateral under securities lendingtransactions:
The fair values of cash received as collateral under securities
lending transactions are based on their book values since fairvalues approximate book values due to their short maturities.
(6) Derivative instruments:i) T he fair values of the futures and options traded at theexchange are measured at the settlement price of theexchange.
ii) T he fair values of forward contracts, options and swaps
traded over the counter are based on the quoted prices
offered by counterparty financial institutions.
iii) T he fair values of foreign currency forward contracts are
determined based on the spot exchange rate and forward
contract rate.
4. T he Company holds investment and rental properties suchas office buildings in Tokyo and other areas. The carrying
amounts and the fair values of investment and rental
properties were ¥171,231 million and ¥312,797 million as ofMarch 31, 2019 and ¥173,454 million (US$1,593 million) and¥320,155 million (US$2,941 million) as of March 31, 2020,
respectively. The fair value is mainly based on the value
calculated by the Company in accordance with real estateappraisal standards which includes some adjustments using
the reference prices.
The amount corresponding to asset retirement
obligations included in the carrying amount of investment
and rental properties were ¥695 million and ¥587 million(US$5 million) as of March 31, 2019 and 2020, respectively.
5. T he amount of securities lent under lending agreements were¥299,194 million and ¥345,897 million (US$3,178 million) as
of March 31, 2019 and 2020, respectively.
6. T he total amounts of credits to bankrupt borrowers,
delinquent loans, delinquent loans past 3 months or more andrestructured loans, which were included in loans, were ¥954
million and ¥1,099 million (US$10 million) as of March 31,
2019 and 2020, respectively:i) T he balances of credits to bankrupt borrowers were ¥172
million and ¥173 million (US$1 million) as of March 31,
2019 and 2020, respectively.
ii) T he balances of delinquent loans were ¥782 million and¥698 million (US$6 million) as of March 31, 2019 and 2020,
respectively.
iii) T he balances of restructured loans were nil and ¥227
million (US$2 million) as of March 31, 2019 and 2020,
respectively.
iv) T here were no balances of delinquent loans past 3 months
or more as of March 31, 2019 and 2020, respectively.
The direct write-offs related to loans decreased credits tobankrupt borrowers described above by ¥1 million and ¥0 million(US$7 thousand) as of March 31, 2019 and 2020, respectively.
Credits to bankrupt borrowers represent loans, excluding
the balances already written-off, which meet the conditionsprescribed in Article 96 Paragraph 1 item 3 and 4 of the
Enforcement Regulations of the Corporate Tax Act. Moreover,accrued interest on these loans is not recorded as income
after determining that principal of or interest on these loans isunlikely to be collected due to the significant delay in repaymentof principal or interest payment or for some other reasons.
Delinquent loans are credits which accrued 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 been suspended
and rescheduled to assist and support the borrowers in the
restructuring of their business.
Delinquent loans past 3 months or more are loans forwhich interest payments or repayments of principal aredelinquent for 3 months or more from the due date under theterms of the related loan agreements, excluding those loansclassified as credits to bankrupt borrowers and delinquent loans.
Restructured loans are loans for which certain
concessions favorable to borrowers, such as interest
reduction or exemption, rescheduling of due date forrepayments 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 restructuringof their business. This category excludes loans classified
as credits to bankrupt borrowers, delinquent loans anddelinquent loans past 3 months or more.
7. Accumulated depreciation of tangible fixed assets were¥167,799 million and ¥172,539 million (US$1,585 million) as
of March 31, 2019 and 2020, respectively.
8. Total assets in separate accounts provided for in Article
118 of the Insurance Business Act were ¥71,585 millionand ¥84,658 million (US$777 million) as of March 31, 2019and 2020, respectively. The amounts of separate accountliabilities were the same as separate account assets.

9. T he total amounts of receivables from/payables tounconsolidated subsidiaries were ¥3,093 million and ¥36
million as of March 31, 2019 and ¥3,065 million (US$28
million) and ¥40 million (US$368 thousand) as of March 31,
2020, respectively.
10. D
 eferred tax assets and deferred tax liabilities as of March
31, 2019 were ¥143,826 million and ¥141,111 million,
respectively. Valuation allowance for deferred tax assets
was ¥4,274 million.
Major components of deferred tax assets were¥87,060 million of policy reserves, ¥33,980 million ofreserve for price fluctuation and ¥14,325 million of net
defined benefit liability as of March 31, 2019.
Major component of deferred tax liabilities was¥136,073 million of net unrealized gains on available-for-salesecurities as of March 31, 2019.
The statutory tax rate and the actual effective tax rate
for the year ended March 31, 2019 were 28.0% and 4.9%,
respectively. The difference between the statutory tax rate
and the actual effective tax rate was attributable mainly to-25.1% of reserve for dividends to policyholders.
Deferred tax assets and deferred tax liabilities as ofMarch 31, 2020 were ¥156,847 million (US$1,441 million)and ¥119,398 million (US$1,097 million), respectively.
Valuation allowance for deferred tax assets was ¥5,563
million (US$51 million).
Major components of deferred tax assets were
¥94,544 million (US$868 million) of policy reserves, ¥37,285
million (US$342 million) of reserve for price fluctuation and¥14,928 million (US$137 million) of net defined benefit
liability as of March 31, 2020.
Major component of deferred tax liabilities was¥114,139 million (US$1,048 million) of net unrealized gains
on available-for-sale securities as of March 31, 2020.
The statutory tax rate and the actual effective tax rate
for the year ended March 31, 2020 were 28.0% and 9.3%,
respectively. The difference between the statutory tax rate
and the actual effective tax rate was attributable mainly to-23.3% of reserve for dividends to policyholders.

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

2019

2020

2020
Millions of
U.S. dollars

Millions of yen

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

¥53,395¥58,176$534

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

38,63034,671

318

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

(33,862)(31,938)(293)

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

12

13

0

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

¥58,176¥60,922$559

FUKOKU MUTUAL LIFE INSURANCE COMPANY

51

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

2019

2020

2020
Millions of
U.S. dollars

Millions of yen

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

¥539

¥465

$4

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

(412)

(309)

(2)

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

0

0

0

Provision for reserve for dividends to policyholders��������������������������������������������

337

172

1

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

¥465

¥328

$3

13. The amount of stocks of unconsolidated subsidiaries were¥404 million and ¥404 million (US$3 million) as of March 31,
2019 and 2020, respectively.
14. Assets pledged as collateral as of March 31, 2019 were
¥17,839 million of securities and ¥744 million of bankdeposits. Secured debts as of March 31, 2019, were ¥5,387
million.
Assets pledged as collateral as of March 31, 2020 were¥78,124 million (US$717 million) of securities and ¥690
million (US$6 million) of bank deposits. Secured debts as ofMarch 31, 2020, were ¥73,400 million (US$674 million).
These amounts include ¥63,247 million (US$581
million) of investments in securities deposited and ¥67,866
million (US$623 million) of cash received as collateral under
securities lending transactions secured by cash as of March
31, 2020.
15. Reserve for outstanding claims for the reinsurance contracts
provided in accordance with Article 71 Paragraph 1 of the
Enforcement Regulation of the Insurance Business Act(hereinafter called “reserve for outstanding claims forceded reinsurance”) were ¥70 million and ¥1 million (US$15
thousand) as of March 31, 2019 and 2020, respectively.
Policy reserve for the reinsurance contracts provided inaccordance with Article 71 Paragraph 1 of the Enforcement
Regulation of the Insurance Business Act (hereinafter called“policy reserve for ceded reinsurance”) were ¥54 millionand ¥48 million (US$447 thousand) as of March 31, 2019and 2020, respectively.
16. The Company raised additional foundation funds of ¥12,000
million (US$110 million) during the fiscal year ended March
31, 2020 in accordance with Article 60 of the Insurance
Business Act.
17. In the fiscal year ended March 31, 2020, in connection
with the redemption of foundation funds of ¥10,000 million

52

FUKOKU MUTUAL LIFE INSURANCE COMPANY(US$91 million), the Company reversed the reserve forredemption of foundation funds and provided the equivalentamount for accumulated foundation funds redeemed inaccordance with Article 56 of the Insurance Business Act.
18. T
 here were unused commitment line agreements underwhich the Company is the lender of ¥5,994 million and¥9,407 million (US$86 million) as of March 31, 2019 and2020, respectively.
19. R
 epayments of subordinated bonds are subordinated toother obligations.
20. T he future contribution to the Life Insurance Policyholders
Protection Corporation of Japan under Article 259 of the
Insurance Business Act was estimated at ¥10,530 millionand ¥10,385 million (US$95 million) as of March 31, 2019and 2020, respectively.
The contribution is recognized as operating expenses
when contributed.
21. M
 atters Related to Employees’ Retirement Benefits(1) O verview of Employees’ Retirement Benefit Plan
As for a defined benefit plan for office-based employees, theCompany and its consolidated subsidiaries have a defined
benefit corporate pension plan and retirement lump-sum
payments. As for a defined contribution plan for these
employees, the Company also has a defined contribution
pension plan.
As for a defined benefit plan for sales employees, theCompany has retirement lump-sum payments.
The Company places a retirement benefit trust in
relation to the retirement lump-sum grant plan for sales
employees.
The simplified method for calculating retirement benefit
obligation is applied to a portion of the Company and someconsolidated subsidiaries’ retirement lump-sum grant plans.

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

As of March 31,

2019

2020

2020
Millions of
U.S. dollars

Millions of yen

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

¥86,420¥87,382$802Service cost���������������������������������������������������������������������������������������������������������

3,667

3,535

32

Interest cost��������������������������������������������������������������������������������������������������������

516

520

4

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

1,080

1,308

12

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

(4,301)(4,391)(40)

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

¥87,382¥88,356$811ii) Reconciliation of beginning and end of balance of pension plan assets

As of March 31,

2019

2020

2020
Millions of
U.S. dollars

Millions of yen

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

¥52,509¥55,090$506

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

972

858

7

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

145(3,071)(28)

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

2,768

2,794

25

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

(1,306)(1,677)(15)

Others������������������������������������������������������������������������������������������������������������������

1

2

0

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

¥55,090¥53,996$496iii) Reconciliation of retirement benefit obligation and pension plan assets with net defined benefit liabilities and assets presented on
the consolidated balance sheet
As of March 31,

2019

2020

2020
Millions of
U.S. dollars

Millions of yen

a. Funded plan retirement benefit obligation�������������������������������������������������������

¥75,691¥76,662$704

b. Pension plan assets�����������������������������������������������������������������������������������������

(55,090)(53,996)(496)

c. (a + b) ��������������������������������������������������������������������������������������������������������������

20,601

22,665208

d. Unfunded plan retirement benefit obligation���������������������������������������������������

11,691

11,693107e. Net amount of liabilities and assets presented on the consolidatedbalance sheet����������������������������������������������������������������������������������������������

32,292

34,359315

f. Net defined benefit liabilities���������������������������������������������������������������������������

32,47034,614318

g. Net defined benefit assets������������������������������������������������������������������������������

(177)

(255)

(2)

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

¥32,292¥34,359$315

FUKOKU MUTUAL LIFE INSURANCE COMPANY

53

iv) Breakdown of retirement benefit gains and losses

As of March 31,

2019

2020

Millions of yen

Service cost���������������������������������������������������������������������������������������������������������

¥3,667

2020
Millions of
U.S. dollars¥3,535$32

Interest cost��������������������������������������������������������������������������������������������������������

516

520

4

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

(972)

(858)

(7)

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

1,759

1,404

12

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

(76)

(76)

(0)

Others������������������������������������������������������������������������������������������������������������������

(1)

(2)

(0)

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

¥4,892¥4,523$41v) Remeasurements of defined benefit plan
Remeasurements of defined benefit plan (before tax effects) comprised the following:

As of March 31,

2019

2020

2020
Millions of
U.S. dollars

Millions of yen

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

¥823¥(2,975)$(27)

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

(76)

(76)

(0)

Total���������������������������������������������������������������������������������������������������������������������

¥747¥(3,051)$(28)vi) Accumulated remeasurements of defined benefit plan
Accumulated remeasurements of defined benefit plan (before tax effects) comprised the following:
As of March 31,

2019

2020

2020
Millions of
U.S. dollars

Millions of yen

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

¥(7,833)¥(10,809)$(99)

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

171

95

0

Total���������������������������������������������������������������������������������������������������������������������

¥(7,662)¥(10,714)$(98)vii) Breakdown of pension plan assets
The breakdown of asset categories as a percentage of total pension plan assets were as follows:

As of March 31,

2019

2020

Domestic stocks���������������������������������������������������������������������������������������������������������������������

44.1%

41.1%

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

33.5%

35.8%

Domestic bonds���������������������������������������������������������������������������������������������������������������������

9.6%

9.9%

Foreign stocks������������������������������������������������������������������������������������������������������������������������

7.7%

6.9%

Foreign bonds�������������������������������������������������������������������������������������������������������������������������

3.0%

3.2%

Others�������������������������������������������������������������������������������������������������������������������������������������

2.1%

3.1%

Total����������������������������������������������������������������������������������������������������������������������������������������

100.0%

100.0%

Within the total of pension assets as of March 31, 2020, 35.2% of this amount is accounted for by the retirement benefit trust
established in relation to the retirement lump-sum payments plan for sales employees.

54

FUKOKU MUTUAL LIFE INSURANCE COMPANY

viii) Method for setting the expected long-term rate of return
To set the expected long-term rate of return on pension plan assets, the Company takes into account the present and future
allocation of pension plan assets, and the present and expected future long-term rate of return on a variety of assets that makes
up the pension assets.
ix) Underlying actuarial assumptions
Main underlying actuarial assumptions were as follows:

As of March 31,

2019

2020

0.6%

0.6%

Defined Benefit Plan���������������������������������������������������������������������������������������������������������

3.0%

2.5%

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

0.0%

0.0%

Discount rate��������������������������������������������������������������������������������������������������������������������������
Expected long-term rate of return on pension plan assets(3) Defined Contribution Plan
The required contribution amounts by the Company and its consolidated subsidiaries to the defined contribution plan were ¥324
million and ¥331 million (US$3 million) as of March 31, 2019 and 2020, respectively.

III. Notes to the Consolidated Statements of Operations
1. The total amounts of revenues and expenses in connection with unconsolidated subsidiaries were ¥83 million and ¥1,806 million forthe year ended March 31, 2019 and ¥75 million (US$695 thousand) and ¥1,201 million (US$11 million) for the year ended March 31,
2020, respectively.
2. For the year ended March 31, 2019, in calculating the provision of reserve for outstanding claims, a provision of reserves foroutstanding claims reinsured of ¥59 million was deducted. In calculating the provision of policy reserves, a provision of reserves forpolicy reserves reinsured of ¥0 million was deducted.
For the year ended March 31, 2020, in calculating the reversal of reserve for outstanding claims, a reversal of reserves foroutstanding claims reinsured of ¥68 million (US$629 thousand) was deducted. In calculating the provision of policy reserves, areversal of reserves for policy reserves reinsured of ¥5 million (US$51 thousand) was added.

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

Year ended March 31,

2019

2020

2020
Millions of
U.S. dollars

Millions of yen

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

¥34,935¥(63,412)$(582)

Reclassification adjustments������������������������������������������������������������������������������������

(23,903)(18,165)(166)

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

11,032(81,578)(749)

Tax effects������������������������������������������������������������������������������������������������������������

(3,074)

21,934201

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

¥ 7,957¥(59,644)$(548)FUKOKU MUTUAL LIFE INSURANCE COMPANY

55ii) Foreign currency translation adjustments

Year ended March 31,

2019

2020

2020
Millions of
U.S. dollars

Millions of yen

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

¥ (119)¥16$0

Reclassification adjustments������������������������������������������������������������������������������������

—

—

—

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

(119)

16

0

Tax effects������������������������������������������������������������������������������������������������������������

—

—

—

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

¥ (119)¥16$0iii) Remeasurements of defined benefit plans, net of tax

Year ended March 31,

2019

2020

2020
Millions of
U.S. dollars

Millions of yen

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

¥ (935)¥ (4,380)$ (40)

Reclassification adjustments������������������������������������������������������������������������������������

1,683

1,328

12

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

747(3,051)(28)

Tax effects������������������������������������������������������������������������������������������������������������

(209)

854

7

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

538(2,197)(20)

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

¥ 8,376¥(61,825)$(568)

V. Notes to the Consolidated Statements of Cash Flows
1. Cash and cash equivalents as of March 31, 2019 and 2020 consist of “Cash,” “Deposits in transfer account,” “Current deposits,”“Ordinary deposits,” “Notice deposits,” “Time deposits maturing within 3 months of the date of acquisition,” “Foreign currency
deposits maturing within 3 months of the date of acquisition,” “Negotiable certificate of deposits maturing within 3 months of thedate of acquisition,” “Call loans” and “Monetary claims bought maturing within 3 months of the date of acquisition.”
2. Reconciliations of cash and cash equivalents in the consolidated statements of cash flows to the consolidated balance sheet accounts
were as follows:Year ended March 31,

2019

2020

2020
Millions of
U.S. dollars

Millions of yen

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

¥153,017¥415,816$3,820Call loans������������������������������������������������������������������������������������������������������������������

176,000

230,000

2,113

Monetary claims bought.������������������������������������������������������������������������������������������

299

269

2

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

(100)

(100)

(0)

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

(792)(1,209)(11)

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

(299)

(269)

(2)

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

¥328,124¥644,507$5,92256

FUKOKU MUTUAL LIFE INSURANCE COMPANY

Management’s Report on Internal Control over Financial Reporting

1. Matters relating to the basic framework of internal control over financial reporting
Yoshiteru Yoneyama, President of Fukoku Mutual Life Insurance Company (the Company), is responsible for the designand operation of internal control over financial reporting for the Company’s financial statements, namely, consolidatedbalance sheet and the related consolidated statements of operations, comprehensive income, cash flows, changes
in net assets and a summary of significant accounting policies and other explanatory information for the year ended
March 31, 2020, prepared in accordance with Article 110 Paragraph 2 of the Insurance Business Act. The Company
designs and operates its internal control over financial reporting in accordance with the basic framework 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, 2020 in accordance with generally accepted assessment
standards in Japan for internal control over financial reporting.
In the assessment of internal control over financial reporting, the Company first assessed internal controls that havea material impact on overall consolidated financial reporting (company-level controls) and, based on the results, theCompany selected the business processes to be assessed. In assessing those business processes, the Company
analyzed selected business processes, identified a key control that would have a material impact on the reliabilityof financial reporting, and assessed the establishment and operation with regard to the key control. The Company
assessed the effectiveness of internal control by the aforementioned procedures.
For the Company and its consolidated subsidiaries, the Company determined the scope of assessment of internal
control over financial reporting from the perspective of their materiality to the reliability of financial reporting. The
materiality to the reliability of financial reporting is determined in light of their degree of quantitative and qualitative
impact. The Company rationally determined the scope of assessment of internal controls incorporated into businessprocesses (process-level controls) based on the results of assessment of company-level controls regarding theCompany and one consolidated subsidiary. Other than those indicated above, five consolidated subsidiaries were
determined to be immaterial from quantitative and qualitative perspectives. Consequently, they are excluded from thescope of assessment of company-level controls.
With respect to the scope of assessment of process-level controls, the locations or business units were selected
in descending order of ordinary revenues (after elimination of inter-company transactions) in the previous fiscal year
until their combined amount reached about two-thirds of consolidated ordinary revenues. As a result, two companies(the Company and its consolidated subsidiary) were selected as significant locations or business units. At selectedsignificant locations and business units, business processes related to accounting items that were closely associatedwith the company's business objectives, including securities, ordinary loans and policy reserves, as well as premiumand other income and claims and other payments, which have a material impact on the calculation of policy reserves,
were determined to be within the scope of assessment. Furthermore, at selected significant locations and business
units and any other locations and business units, added to the scope of assessment were business processes relating
to important accounting items that have a high possibility of material misstatements and involve estimates andjudgments, and business processes relating to businesses or operations dealing with high-risk transactions.
3. Matters relating to the results of the assessment
As a result of performing the assessment, the Company concluded that the design and operation of internal control
over financial reporting for the Company were effective as of March 31, 2020.
4. Supplementary information
Not applicable
5. Other special information
Not applicable
			
			
			
			

May 18, 2020
Yoshiteru Yoneyama
President

Fukoku Mutual Life Insurance Company

FUKOKU MUTUAL LIFE INSURANCE COMPANY

57

Report of Independent Auditors

58

FUKOKU MUTUAL LIFE INSURANCE COMPANY

FUKOKU MUTUAL LIFE INSURANCE COMPANY

59

60

FUKOKU MUTUAL LIFE INSURANCE COMPANY

FUKOKU MUTUAL LIFE INSURANCE COMPANY

61

Corporate Organization

Domestic Offices (As of April 1, 2020)
Branch Offices
62
Field Offices
464

Secretarial Div.
Strategic Planning Dept.
Compliance Control Dept.

Employees (As of March 31, 2020)
Office Staff
2,861
Sales Representatives 10,323

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

Audit & Supervisory
Board

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

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

Board of Representative
Members of Policyholders

Board of Directors

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

Nomination Committee of
Candidates for
Representative Members

Secretariat for Nomination
Committee of Candidates for
Representative Members

Chief Actuary

Individual Customer Service Dept.
Underwriting and Medical Dept.

Human Resourse
Development
Headquarters

Claims Dept.
Policy Administration Dept.
Policy Service Dept.

Board of Full-time Directors

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

Council

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

62

FUKOKU MUTUAL LIFE INSURANCE COMPANY

Corporate Information

Directors, Audit & Supervisory
Board Members and Executive
Officers

President and Chief Executive Officer

Audit & Supervisory Board Member (Standing)

Yoshiteru Yoneyama*

Kei Yoshizawa

Deputy President and Executive Officer

Audit & Supervisory Board Member (Standing)Toshihide Fujiwara

Shinji Nakao

Director and Senior Managing Executive Officer

Managing Executive Officer

Yuuki Sakurai

Osamu Suzuki

Director and Senior Managing Executive Officer

Executive Officer

Toshikatsu Hayashi

Chikashi Ichikawa

Director and Managing Executive Officer

Executive Officer

Takehiko Watabe

Takeshi Oomori

Director

Executive Officer

Hiroto Yoshimura**

Ichiro Yamada

Director

Executive Officer

Masanori Yanagi**

Takeshi Kondou

Director and Executive Officer

Executive Officer

Yasuyuki Kitamura

Naoyuki Asami

Director and Executive Officer

Executive Officer

Keiichi Kurota

Hideaki Shigematsu

Director and Executive Officer

Executive Officer

Naoyuki Torii

Mitsuhiro Hoshino

Director and Executive Officer

Executive Officer

Naoki Sunamoto

Toshihiko Morishita

Audit & Supervisory Board Member*Representative Director

Yoshizumi Nezu*****External Directors***External Audit & Supervisory Board Member

Audit & Supervisory Board Member

Kyohei Takahashi***(As of July 2, 2020)

Audit & Supervisory Board Member

Kunio Otani

FUKOKU MUTUAL LIFE INSURANCE COMPANY

63

Directory

Fukoku Mutual Life Insurance Company (head office)2-2, Uchisaiwaicho 2-chome, Chiyoda-ku, Tokyo 100-0011, Japan
Phone: 81-3-3508-1101
Facsimile: 81-3-3591-6446
Fukoku Life International (U.K.) Ltd.
3rd Floor, Baltic Exchange, 38 St. Mary Axe, London, EC3A 8EX, U.K.
Phone: 44-20-7283-1331
Facsimile: 44-20-7626-7096
Fukoku Life International (America) Inc.
Times Square Tower, 7 Times Square, 35th Floor, New York, NY 10036, U.S.A.
Phone: 1-212-221-7760
Facsimile: 1-212-221-7794
Fukoku Life Investments Singapore Pte. Ltd.
80 Robinson Road #16-04 Singapore 068898
Phone: 65-6220-8308
Facsimile: 65-6220-8736▲ Tokyo Head Office64

FUKOKU MUTUAL LIFE INSURANCE COMPANY▲ Osaka Fukoku Mutual Life Insurance Building▲ Sapporo Fukokuseimei Koshiyama BuildingP-B10202