Ⓒ'76,'15 SANRIO CO.,LTD.
APPROVAL No.G560641

Y E A R E N D E D M A R C H 31, 2015

ANNUAL REPORT 2015

FUKOKU MUTUAL LIFE INSURANCE COMPANY

Fiscal 2014
Fiscal 2014
Fiscal 2015
Social Responsibility (CSR)

Financial Highlights (Non-consolidated)2013
As of March 31,

2014

2015

2015
Millions of
U.S. dollars

Millions of yen

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

¥44,309,547¥43,704,124¥43,234,459$359,777

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

6,007,231
4,633,067
907,508
271,841
5,579,488
5,343,750
66,187427,7426,214,796
4,877,141
835,860
232,1155,720,895
5,412,622
122,346
493,900

6,611,952
5,240,955
763,900
227,591
5,914,159
5,545,647
118,959
697,792

55,021
43,612
6,356
1,893
49,214
46,148989
5,806

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

836,736
647,798
178,808
767,395
50,822

802,326
598,367
193,044730,426
50,622867,736
643,119
213,754770,858
69,043

7,220
5,351
1,778
6,414
574

Solvency margin ratio (%)
Employees

970.8
13,4881,099.9
12,9991,169.3
12,677——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=¥120.17, the rate of exchange on March 31, 2015.
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

Yoshiteru Yoneyama
President

I would like to begin by expressing my sincere gratitude to all
our stakeholders for your continued support of Fukoku Life.
In fiscal 2014, ended March 31, 2015, although theJapanese economy suffered from some pull-back following
heightened demand leading up to the April 2014 increase in
the consumption tax rate, a gradual recovery was evident
subsequently.
Financial and capital markets were generally stable. In
Japan, amid continued extremely low long-term interest rates,
markets remained stable as the yen weakened and stock
prices rose. In overseas markets, the gradual reduction inquantitative easing in the United States came to an end, andattention turned to the question of when interest rates would
begin to rise. Meanwhile, in the eurozone, monetary easing
further advanced, and in January 2015 the European Central
Bank embarked on quantitative easing.
Against this backdrop, Fukoku Life worked to ensurethat its management and employees maintain a “CustomerCentric” approach in all aspects of its business and operations. This approach embodies our philosophy of “employees
providing service in a manner that treats customers as theemployees themselves would like to be treated.” Further, in
accordance with our “Personnel Pledge” --Fukoku Life’s basic
policy for human resources development --we are working totrain and develop personnel able to put the “Customer-Centric”
approach into practice.
In insurance sales, we launched sales of the “IncomeGuarantee Rider (Decreasing-Term Plan)” as a new rider forour mainstay product “Mirai no Tobira” (“door to the future”),
a comprehensive insurance plan with available riders. To coincide with this launch, we also made improvements to our “Life
Compass” customer-proposal tool to make it even more userfriendly. By utilizing these products and tools, we are working
to enhance our precise consulting sales programs, which are
tailored to fit the life plan of each individual customer. Our
sales channel strategy comprises the twin pillars of face-toface sales through customer advisors, and over-the-countersales through financial institutions by subsidiary Fukokushinrai
Life Insurance. Based on these channels, we are committed
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FUKOKU MUTUAL LIFE INSURANCE COMPANY

to providing products that meet customer needs and enhancing our after-sales service.
In the area of asset management, to ensure the safety
and liquidity of assets entrusted to us by our customers, we
maintain our focus on public bonds, debentures and other yeninterest-generating assets. To enhance profitability, we makediversified investments in such assets as foreign securities,
stocks, and real estate, within the scope of acceptable risk.
To ensure financial soundness, we enhanced our capital adequacy by carrying out financing of additional foundation funds amounting to ¥10.0 billion in August 2014, and byincreasing our contingency reserve. As a result, we raised oursolvency margin ratio to 1,169.3%, an increase of 69.4 percentage points compared with the end of fiscal 2013 (March
31, 2014). We will continue to take steps to further bolster ourequity, and provide peace of mind for our customers.
In terms of returning dividends to customers, we increased dividends to policyholders for a third consecutive
year, and increased reserve for dividend allowances by ¥16.1
billion. While ensuring sufficient internal reserves and balance
to maintain financial soundness, we are considering proactive
measures in the area of dividends to provide customers witheffective reductions in insurance premiums.
As a mutual company, Fukoku Life conducts its life insurance business --which has a strong public-interest nature --in a
spirit of mutual assistance. Hence, we aim to put into practice
our management philosophy of “protecting the interests ofour policyholders.” To achieve this goal, Fukoku Life management and employees are committed to demonstrating a“Customer-Centric” approach, while striving to be a company
that earns the highest appraisal of its customers.
We look forward to your continued support and cooperation throughout the coming year.

Yoshiteru Yoneyama
President

Fukoku Life’s Management Philosophy

ValuesOur “Customer-Centric” Values
Possessing “Customer-Centric” values means creating and providing unique services that provide
true peace of mind to customers based on the assumption that all employees treat customers as they
themselves would like to be treated.

Management
Philosophy”Values”
Code of
Conduct

Business
Policies
Tomofumi Akiyama

Yoshiteru Yoneyama
President

Chairman of the Board

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

To contribute to society

Code of Conduct

Personal fulfillment

Business Policies

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

1. Foster personnel with “Customer-Centric” values

To us, “Customer-Centric” values means:

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

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

3. Net increase in the number of policyholders

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

4. Enhance business efficiency

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

FUKOKU MUTUAL LIFE INSURANCE COMPANY

3

Review of Operations (Non-consolidated)

Overview
Indivisual Insurance and Annuies
Based on our “Customer-Centric” approach, we endeavor
to earn the satisfaction of customers by providing insurance
products that meet customer needs, and by offering
comprehensive follow-up services. We believe that such an
approach will translate into a net increase in the number ofpolicyholders.
We particularly focused on the sale of products in suchareas as nursing care insurance and medical insurance, forwhich there is a significant level of customer need. We also
launched a major product in April 2013, called “Mirai no Tobira” (door to the future), which greatly enhances the flexibility of insurance planning. Through this product, we are now
able to offer insurance cover planning that meets customer
needs even more closely than was possible to date.
Following the 2013 launch of “Mirai no Tobira” (“door to
the future”), a comprehensive insurance plan with available
riders that greatly enhances flexibility in insurance planning,
we have augmented our lineup of available riders that enhance and expand its coverage flexibility. In 2014, we added
the “income protection rider <decreasing type>” and in
2015, the “lifestyle disability rider” that protects against therisk of physical disability with easy-to-understand standards
based on the public system of identification booklets for people with disabilities.
Sales Channels
Fukoku Life’s products are sold through two major channels:
its own sales representatives —called Customer Advisors—
and the branches of financial institutions. Our nationwide
sales network consists of 62 branches and around 9,776
Customer Advisors promoting insurance and annuities to individuals and companies. We have strengthened our systemof face-to-face sales through Customer Advisors in an effort
to provide satisfaction when taking out a policy by designingand offering insurance that fits with a customer’s needs, andto ensure that customers continue to hold the policy with

4

FUKOKU MUTUAL LIFE INSURANCE COMPANY

peace of mind by expanding our follow-up services. In alliance with Fukokushinrai Life Insurance Co., Ltd., a subsidiary, we sell our products through shinkin banks with close
ties to local communities.
Fukokushinrai Life Insurance provide ongoing support
for the insurance sales activities of their partner financial
institutions.
We are also developing other sales channels for suchproducts as educational insurance and individual annuities
through insurance shops and websites operated by insurance agencies.
Group Insurance
In the area of group insurance, we provide consulting services related to our corporate clients’ benefit programs. In theyear under review, we provided program and product proposals that responded to a diverse range of customer needs.
Further, in terms of special accounts for corporate
insurance products after retirement, and investment trusts
specifically for defined contribution pensions, in addition toconventional financial analysis, we make socially responsible
investments (SRIs) in companies that work proactively insuch areas as social contribution and environmental protection.
Globalization
Fukoku Life’s representative office in Singapore, establishedin July 2011, was established as the local subsidiary Fukoku
Life Research Singapore Pte. Ltd. on April 1, 2014, as theapproval period for the representative office had concluded.
We already conduct asset management activities in London
and New York via subsidiaries, and now we have augmented
those activities with a presence in Singapore, which continues to advance as an international financial center. The newsubsidiary will continue to conduct research on Asia’s financial and life insurance markets.

Business Performance in Fiscal 2014
Life Insurance in Force
At fiscal year-end, life insurance in force, which comprises
individual life insurance, individual annuities, and group insurance, amounted to ¥43,234.4 billion, down 1.1% comparedwith the previous fiscal year-end. Within this amount, life
insurance for individuals declined 2.2%, to ¥23,684.6 billion,
individual annuities edged down 2.6%, to ¥2,871.8 billion.
The year-end balance of life insurance in force for groups increased 0.8%, to ¥16,678.0 billion. Group annuities in force(policy reserve) rose 4.6%, to ¥2,123.2 billion.
Annualized Premiums for New Policies and Policies inForce
In the year under review, annualized premiums for new policies increased 0.4%, to ¥22.4 billion. Within this amount,individual insurance was down 3.1%, to ¥19.2 billion, andindividual annuities up 28.1%, to ¥3.1 billion. Annualized premiums from medical insurance and living benefit insurance
declined 6.8%, to ¥7.0 billion.
Annualized premiums for policies in force edged down
0.3%, ¥406.4 billion. Within this amount, individual insurance
decreased 0.5%, to ¥273.6 billion, while individual annuities
remained flat, at ¥132.7 billion. Annualized premiums frommedical insurance and living benefit insurance rose 0.5%, to¥106.6 billion.
Premium Income and Payments
In the year under review, premium and other income upturn
7.5%, to ¥643.1 billion. This was mainly attributable to anincrease in single-payment whole life insurance within theindividual insurance category. Claims and other payments
declined 2.7% year on year to ¥490.3 billion, due mainly toa substantial decrease in payment of maturity proceeds forLife insurance in force

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

46.2

45.0

44.3

43.7

665.8

43.2

16.2

16.5

16.3

16.5

16.6

2.9

2.9

3.0

2.9

2.8

27.0

25.9

24.8

24.2

23.6

FY2010

‘11

‘12

‘13

Group insurance
Individual annuities
Individual life insurance

‘14

647.7
589.9

FY2010

‘11

‘12

598.3

‘13

643.1

‘14

group pure endowment insurance.

Performance of Fukoku Life Group (Fukoku Life and Fukokushinrai Life Insurance)
The Fukoku Life Group’s annualized premiums for new
policies increased 9.6%, or ¥3.2 billion, from the previous fiscal year to ¥36.6 billion. This rise was due in part tofavorable sales of individual annuity insurance policies by
Fukoku Life on a standalone basis, although net new salesof “Mirai no Tobira” policies declined. Also, Fukokushinrai
Life Insurance, on a standalone basis, has experienced arecovery in sales of single-payments products since raising its assumed interest rate in 2013. Within this amount,annualized premiums from medical insurance and living
benefit insurance fell 6.7%, or ¥0.5 billion, to ¥7.1 billion.
Annualized premiums for policies in force increased
1.4%, or ¥7.7 billion, to ¥564.2 billion. Annualized premiums from medical insurance and living benefit insurance
were up 0.5%, or ¥0.4 billion, to ¥108.3 billion.
The total value of premium and other income rose
12.6%, or ¥89.4 billion, to ¥796.4 billion. Over-the-countersales through financial institutions (from Fukokushinrai Life
Insurance) expanded 43.6%, or ¥41.1 billion, to ¥135.5
billion, due to robust sales centered on single-payment
whole life insurance.
Assets, Liabilities, and Net Assets
The outstanding balance of non-consolidated total assets,
including separate accounts, edged up 6.4%, or ¥397.2
billion, to ¥6,611.9 billion. General account assets, whichconstitute 98.8% of this total, rose 6.5%, to ¥6,530.2
billion. This was mainly attributable to, in foreign securities, a boost in allocations to hedge against currency risk,
mainly U.S. government bonds with superior liquidity as
an alternative to Japanese public corporation bonds, aswell as increased market values due to yen depreciation.
In stocks, in addition to increasing our balance as planned,
we recorded valuation gains stemming from rising stock
prices. As a result, the year-end balance of securities
stood at ¥5,240.9 billion, an increase of ¥363.8 billion, or
7.5%, compared with the previous fiscal year-end.
Total liabilities edged up 3.4%, or ¥193.2 billion, to¥5,914.1 billion.
Net assets amounted to ¥697.7 billion, up 41.3% compared with the previous fiscal year-end.
On a consolidated basis, total assets rose 6.5%, to¥8,326.5 billion, and net assets increased 41.7%, to ¥708.5
billion.

FUKOKU MUTUAL LIFE INSURANCE COMPANY

5

Review of Operations (Non-consolidated)

Strengthening Our Capital Base
Fukoku Life builds up its internal reserves on an
ongoing basis in order to strengthen its capitalbase. During the subject fiscal year, we boosted
internal reserves by soliciting additional foundation funds and augmenting the contingency
reserve. Foundation funds at a mutual insurer
correspond to capital at a joint-stock company.
Total foundation funds, including the accumulated foundation founds redeemed, amounted
to ¥116.0 billion as of March 31, 2015, due to¥10.0 billion in additional solicitations. Whenfoundation funds are redeemed (refunded), weare legally required to accumulate as internal
reserves a “accumulated foundation founds
redeemed” in an amount equivalent to theredemption. Thus the same amount of owned
capital as the amount collected is retained evenafter the redemption of foundation funds.

We will continue making every effort to maintain a highsolvency margin ratio as one indicator of the added peace ofmind we offer our customers.

Solvency Margin
Fukoku Life’s solvency margin ratio at fiscal year-end was
1,169.3%, up 69.4 percentage points compared with theprevious fiscal year-end. This rise was attributable to higher
owned capital stemming from an increase in the contingency
reserve and the provision of an equalizes reserve for dividends to policyholders, as well as to an increase in valuationdifference on available-for-sale securities stemming from rising stock prices and ongoing yen depreciation. The Company’s solvency margin far exceeds 200%, the level set as anindicator of financial soundness for life insurance companies,and clearly illustrates our superior ability to meet insurance
payments.

Ratings
Fukoku Life relies on four neutral rating organizations toprovide an objective assessment of the Company’s ability tomeet insurance payments. As of August 1, 2015, we havereceived ratings of AA- from Rating and Investment Information, A from Standard & Poor’s, A from Fitch Ratings, and A2
from Moody’s. Despite global financial crises in the autumn
of 2008 and thereafter, these ratings have not changed fromyear to year. Going forward, we will continue striving tomaintain and further improve our high financial ratings.

Total assets

Net assets

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

6,611.9
5,675.2

5,699.5

6,007.2

1,169.3

697.7

6,214.7

1,099.9
970.8
493.9
427.7

1,088.3
741.1

253.4

668.4

194.6

FY2010

6

‘11

‘12

‘13

‘14

FY2010

FUKOKU MUTUAL LIFE INSURANCE COMPANY

‘11

‘12

‘13

‘14

FY2010

‘11

‘12

‘13

‘14

The figures indicated by the blue line
for the fiscal years ended March 31,
2011, 2012, 2013, 2014 and 2015 were
calculated using the current standards.

Investment Performance in Fiscal 2014 (General Account)
Overview
In fiscal 2014, ended March 31, 2015, the Japanese economy recovered modestly towards the end of the fiscal year
after demand weakened early in the fiscal year following thesurge in demand ahead of the consumption tax hike in April
2014. After falling steeply on the tax rise, personal consumption gradually recovered, but it lacked strength against the
backdrop of decreased real purchasing power. Exports rosein the second half of the year as positive effects from yen depreciation materialized. Capital investment, which companies
had previously restrained, increased towards the end of the
fiscal year, as such factors as falling crude oil prices helped
business sentiment improve. The financial and capital markets remained generally stable over the year. Domestically,
whilst the Bank of Japan (BOJ) maintained its policy of quantitative and qualitative easing, the central bank introduced additional measures at the end of October, such as increasing
the amount of its purchases of Japanese government bonds.
In the international markets, the U.S. Federal Reserve Bank
brought its QE3 program of purchasing residential- mortgage
backed securities and U.S. Treasury bonds to conclusion in
October after the gradual tapering. Thereafter, the markets
began to focus on the timing of an interest rate rise. In Europe, the European Central Bank cut its policy interest rates
twice by 0.1 percentage point each in June and September,bringing the rate to a historical low of 0.05%.Furthermore,
the ECB decided on a policy of quantitative easing involving
the purchase of government bonds in January 2015.
With regard to our asset management business, we restrained investing in domestic bonds given that domestic
interest rates remained at extremely low levels and bondmarket liquidity was extraordinarily low. Alternatively, we increased investment in exchange-rate-hedged foreign bonds.
In particular, we augmented holdings of U.S. Treasury bonds,
which offer excellent liquidity. At the same time, whereas

we had held back on investing in domestic stocks since theLehman Shock, we recommenced the steady acquisition ofstocks to diversify our investment assets and improve theprofitability as our risk tolerance increased. With the purposeof investing in growth field, we continued to increase our investment in foreign stocks, including mutual fund emerging
markets. Thus, the diversification of our investment assets
progressed.
Investment income from general accounts increased¥19.2 billion (10.5%), to ¥201.8 billion. Interest, dividends
and other income, including those from trading securities,
amounted to ¥145.7 billion, an increase of ¥10.5 billion (7.8%)
compared with the previous fiscal year. This rise was due
mainly to an increase in interest and dividends, stemmingfrom a higher balance held and the benefit of yen depreciation on interest from foreign bonds, as well as of higher dividends on stocks. Gains from trading securities amounted to¥35.2 billion, an increase of ¥15.8 billion (81.6%), as lower
overseas interest rates and yen depreciation caused substantial valuation gains on foreign bonds. Gains on sales of securities decreased to ¥25.2 billion (24.7%) but still remained
high due mainly to planned disposals of domestic and overseas bonds to secure profits by taking advantage of high prices. Investment expenses dropped ¥14.2 billion (28.6%) to¥35.7 billion. Of this amount, losses on sales of securities totaled ¥1.0 billion (88.4%), down from ¥8.2 billion, thanks toa decrease in losses on sales of stocks and foreign bonds.
Losses from derivative instruments amounted to ¥18.6 billion, a decrease of 25.6%. Losses related to hedging currency risks, which accounted for the majority of those from derivative instruments, were largely offset by foreign exchange
gains on foreign bonds in trading securities. As a result, net
investment income amounted to ¥166.1 billion, an increaseof ¥33.5 billion (25.3%) compared with the previous fiscal
year.

Breakdown of general account assets (Fiscal year ended March 31, 2015)(¥ billions)

Others60.8 (0.9%)

General account assets(¥ billions)
6,530.2
5,594.5

5,619.2

5,929.6

6,133.4

Real estate
223.7 (3.4%)
Cash and deposits, and others
318.1 (4.9%) (Note)
Other securities
82.6 (1.3%)
Foreign securities
1,583.7 (24.3%)

Ordinary loans
700.5 (10.7%)

Policy loans
63.3 (1.0%)

Loans
763.9
(11.7%)

Securities
5,163.6 (79.1%)

Domestic stocks
641.0 (9.8%)

Domestic bonds
2,856.1 (43.7%)

Total: ¥ 6,530.2 billion
FY2010

‘11

‘12

‘13

‘14

Note: This total includes cash and deposits, call loans,monetary claims bought and money held in trust.

FUKOKU MUTUAL LIFE INSURANCE COMPANY

7

Domestic Bonds
At fiscal year-end, domestic bonds amounted to ¥2,856.1
billion, a decrease of ¥20.0 billion (0.7%) compared with theend of the previous fiscal year, due to our curbed purchases
in response to extremely low domestic interest rates andremarkably low liquidity in the bond markets.
Domestic Stocks
Domestic stocks amounted to ¥641.0 billion, up ¥158.7
billion (32.9%). This rise was due to the planned increase of
our investment balance in this category, as well as to valuation gains stemming from rising stock prices.
Foreign Securities
Foreign securities amounted to ¥1,583.7 billion, an increaseof ¥218.3 billion (16.0%) compared with the end of theprevious fiscal year. This rise was attributable mainly to ourinvestment in exchange-rate-hedged U.S. Treasury bonds,
which offer excellent liquidity, as an alternative to domestic
bonds, as well as valuation gains arising from yen depreciation and other factors.
Loans
Loans amounted to ¥763.9 billion, a decrease of ¥71.9 billion(8.6%), as the ultra low interest rates environment kept thebusiness in a difficult positon in terms of profitability.
Real Estate
Mainly owing to depreciation, the year-end balance of realestate was down ¥4.3 billion (1.9%), to ¥223.7 billion.

Domestic bonds

Domestic stocks

Foreign securities

Loans

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

2,971.6
2,737.3

1,583.7

2,876.1 2,856.1

641.0

1,365.3

2,430.6

431.7
352.6

FY2010 ‘11

‘12

‘13

‘14

862.0

353.2

FY2010 ‘11

‘12

‘13

‘14

Investment Policies for Fiscal 2015
Investment Environment
For fiscal 2015, ending March 31, 2016, we anticipate the gradual recovery will continue in the Japanese economy, backed bysolid domestic demand. Globally, we expect advanced countries’ economies to remain firm, due in part to modest recovery
in the United States, while China and other emerging economies are likely to be lackluster. Under such conditions, we ex-

Domestic Bonds
Remaining cautious on domestic bonds, we would continue tomonitor interest rate movements.
Domestic Stocks
We intend to selectively invest in undervalued shares in situations
where share prices contract.
Foreign Securities
For foreign bonds, we would invest selectively in liquid bonds,
while monitoring the spread between domestic and overseasinterest rates. In particular, we would increase holdings of hedged

FUKOKU MUTUAL LIFE INSURANCE COMPANY

907.5

927.3

FY2010 ‘11

‘12

273.2

267.5

1,039.3

1,087.2

482.3

8

281.2
1,143.8‘13‘14FY2010 ‘11

‘12

835.8

‘13

228.1

223.7

‘13

‘14

763.9

‘14

FY2010 ‘11‘12pect a continuation of ultralow interest rates in long-term bonds
in Japan as the BOJ sustains its program of quantitative andqualitative easing. We believe stock prices will be underpinned
by solid corporate earnings. In exchange rates, we expect yen
depreciation against the U.S. dollar to continue because of thediscrepancies in the two countries’ monetary policies. However,
the range of fluctuation could widen depending on the directionof the US monetary policy.
foreign bonds. For foreign stocks, we would increase holdings,
centering on shares that are expected to return stable dividends.
Loans
We will continue to make an effort to maintain the profitability ofthe business by increasing diversity in terms of such factors as
borrower and loan period.
Real Estate
We plan to revise our holdings from a medium- to long-term perspective, with the aim of reinforcing our portfolio.

Governance System

As a mutual life insurance company, Fukoku Life is engaged in the highly public business of protecting policyholders’ rights. Therefore, we are committed to establishing a management system that ensures the soundnessof operations, and to enhancing management measures,

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

Establishment of Management Control Measures
The Board of Directors makes important business decisions
and monitors business execution. The two external directors bring an outside perspective to the deliberations of theBoard. In April 2009, Fukoku Life introduced an executive
officer system. Under this system, we have separated andstrengthened decision-making and business execution functions, with the Board of Directors fulfilling decision-making
and supervisory functions. We are striving to strengtheninternal controls through the activities of various committees, including the Risk Management Committee and theCompliance Committee, which directly report to the Board of
Directors.

The Risk Management Committee is chaired by thepresident of the Company, with full-time directors and otherexecutives serving as members. Directors also head the subcommittees, providing a risk management structure basedon the leadership of top management. The internal auditing
department verifies that the risk management system functions effectively.

Enhancement of Internal Control System
The Company’s Board of Directors has set the terms for thecreation of a system of internal controls to ensure the soundness of operations. We are working to enhance the efficiency of operations, strengthen risk management, and promotecompliance based on the core policies of our internal control
system.
Risk Management System
Fukoku Life’s greatest responsibility from the standpoint of“Customer-Centric” approach is to firmly maintain customer
policies and meet expectations over the long term. To ensure that we fulfill these responsibilities, we must accurately
understand and analyze the various risks facing the Company, and take appropriate measures to maintain and enhancefinancial soundness.
Fukoku Life has established a risk management systemwith close involvement by top management, and makes acontinual effort to enhance the sophistication of its risk management in response to the increasingly varied and complex
risks of the external business environment. In addition, weare steadily implementing a comprehensive enterprise risk
management (ERM) system, including conducting economic
value-based risk management (conducting an assessment ofassets and liabilities consistent with the market in order tounderstand and manage as risk the changes in the value of
assets and liabilities).
ERM is conducted by the Risk Management Committee, established by the Board of Directors. Several subcommittees have been established under the Risk Management
Committee to manage the various risks that arise in business
operations, and to conduct asset and liability management(ALM). The Risk Management Committee consolidates andevaluates these risks at the corporate level, and considers
the appropriate level of acceptable risk and risk response.
Further, the Risk Management Advisory Committee, which
supports the Risk Management Committee, mainly conducts
risk management for the corporate group, along with companywide stress tests.

Compliance System
As members of the community, all executives and employees undergo ongoing training in compliance-related matters
so that they not only observe laws and regulations, but also
comply with protocols and social conventions. To this end, as
well as improving and reinforcing the compliance system, wehold regular hands-on training programs.
However, we recognize that even the most robust of
systems cannot guarantee the complete elimination of improper conduct. We believe that it is important to detect any
improper conduct early, deal with it swiftly and appropriately,
and make constant improvements and work to rectify thesituation in order to prevent a recurrence.
The Compliance Committee, comprised of full-time directors and other executives, and chaired by the President, ismandated by the Board of Directors to promote compliancerelated activities. The Chief Compliance Officer and Compliance Officers stationed at our head office ensure the constant monitoring of compliance.
Protection of Personal Information
As an insurance company that is trusted by its customers,
Fukoku Life takes great care in the handling of personal
information. We ensure compliance with the Personal Information Protection Law that came into effect in Japan in April
2005, as well as related laws and guidelines. The appropriate
management of personal information is also governed by theCompany’s own privacy policy.

Board of Representative Members of Policyholders

FUKOKU MUTUAL LIFE INSURANCE COMPANY

9Corporate Social Responsibility (CSR)

Contribution to Society
In accordance with the highly public
nature of the life insurance business,
Fukoku Life believes that the sound management 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 abetter society.

Visiting Concert

Fukoku Life Concerts
Fukoku Life holds two types of concerts throughout the country: Visiting
Concerts and Charity Concerts. Visiting Concerts are held at the school
and institution for people with disabilities who cannot easily get the opportunity to hear performances of classical music in concert halls. Charity
Concerts are held at concert halls as part of the Company’s commitment
to fostering community welfare.
A Visiting Concert is held after a Charity Concert has been held. Musicians who performed at the Charity Concert visit a local welfare facility
where they play music and improvise as necessary to create an enjoyable
musical occasion for residents. Since April 1993, the Company has held
254 Charity Concerts. Visiting Concerts, which were introduced in April
2003, have been held at a total of 207 welfare facilities.
Concerts are organized and run directly by Fukoku Life executives
and employees, who collaborate with musicians to plan each program.
At Charity Concerts, members of the audience are asked to makedonations, which are given to local welfare groups, and goods made bypeople with disabilities are sold in venue’s lobby.
Smile Gallery
In the shopping mall located in the basement of our head office building,we operate the Smile Gallery, which displays artworks created by children
attending schools for people with disabilities. As well as providing an opportunity for many people to view these works, the Smile Gallery aims to
support these children in their artistic endeavors.
Hello Kitty Hospital Visit Program
Under this program, Fukoku Life’s brand mascot Hello Kitty—which is a
popular character worldwide—makes visits to children’s hospitals to help
cheer up and encourage patients.

Smile Gallery

Flora Preservation

10

FUKOKU MUTUAL LIFE INSURANCE COMPANY

Post-Disaster Relief
To provide assistance for people impacted by the Great East Japan
Earthquake, we arrange Visiting Concerts at schools for the disabled andother facilities in disaster-affected areas.To support the economies of thisregion, we host sales events featuring local produce from Fukushima,
Miyagi and Iwate prefectures. Just after the earthquake, these events
targeted Company employees, but we later opened them to the generalpublic, encouraging even more people to cooperate in this activity.
Forest Conservation
Recently in Japan, there has been an increase in forests left to growunchecked due to the lack of people willing to take over forestry businesses. One particular problem is uncontrolled groves of the vigorously
growing Moso bamboo, which not only invades forests, but also takes
over farmland and causes landslides due to the shallowness of their roots.
This bamboo problem is even found on land owned by the Company inShizuoka Prefecture. Fukoku Life has set up a forest regeneration project
to tackle this problem. The aim of the project is to not only assist forest
regeneration by felling bamboo groves, but to also return some bamboo groves to a healthy state. Since 2006, Fukoku Life’s executives andemployees have taken part in the project. In the year under review, 174
executives, employees, and their family members volunteered their time
to take part in these activities.

World Bank presenting a certificate of appreciation for this investment(from left: Yoshiyuki Arima, Representative, Japan, at the World Bank
Treasury; President Yoneyama)

Lehàr “The Merry Widow”(C)Brigitte Lacombe / Metropolitan Opera

Communicating with Society
We conduct advertising campaigns toraise awareness of Fukoku Life and engage in a variety of corporate communications activities aimed at enhancing
the understanding of our operations
among a broad range of stakeholders.

©’08,’15 SANRIO/SEGA TOYS S.S/W.TX.JLPC©‘76,’90,’93,’96,’01,’05,’12,’15 SANRIO APPROVAL No.SP561186

Other Activities
In March 2014, we invested in sustainable development bonds (SDBs)
issued by the World Bank. In addition to ensuring profitability, this investment accords with the Company’s management philosophy of contributing to society, and we plan to continue conducting this sort of investment
and financing going forward.
The new Osaka Fukoku Mutual Life Insurance Building was completed in October 2010. As well as containing the offices of the Fukoku LifeGroup, the building has such tenants as universities and companies. We
specifically selected tenants that would provide opportunities for interaction and engagement with local communities in such areas as culture andhealth.
Together with Shochiku Co., Ltd., which is involved with the entertainment business, Fukoku Life is a sponsor of the Metropolitan Opera:
Live in High Definition series of screenings, which give members of thegeneral public the opportunity to see some of the finest opera performances in the world.
The Company is a proud sponsor of the Pink Ribbon Campaign,
which promotes the importance of the early detection, diagnosis, andtreatment of breast cancer. We also participate in and support in the Hello
Smile campaign aimed at providing education about prevention of cervicalcancer.
Fukoku Life provides space and sales staff to support a mobile bakery business operated by disabled people. Our executives and employees
also participate in various other initiatives, including neighborhood cleanup
campaigns.
Alliance with Sanrio
The Hello Kitty character, owned by Sanrio Co., Ltd., has attained worldwide popularity. Fukoku Life has adopted this widely 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 we use in numerous situations
to evoke an even greater sense of closeness with customers. Fukoku Lifealso maintains a partnership with Sanrio in relation to two theme parks,
Sanrio Puroland and Harmonyland.
Providing Information
Fukoku Life publishes a variety of materials for its stakeholders. Publications that provide information on the Company’s business activities include the Japanese-language annual disclosure report. “Disclosure” (andabridged versions thereof), booklets written for policyholders, and thisEnglish-language annual report. Our diverse lineup of public relations andadvertising activities include the production of a variety of publications asneeded, in order to strengthen the channels of communication between
the Company, its policyholders, and its many other customers.
FUKOKU MUTUAL LIFE INSURANCE COMPANY

11

Non-consolidated Financial Statements
Non-consolidated Balance Sheets
Fukoku Mutual Life Insurance Company
As of March 31, 2013, 2014 and 2015

As of March 31,

2013

2014

2015

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 ...........................................................................
Other intangible fixed assets ............................................
Reinsurance receivables .......................................................
Other assets:
Accounts receivable .........................................................
Prepaid expenses .............................................................
Accrued income ................................................................
Deposits ...........................................................................
Differential account for futures trading .............................
Derivatives ........................................................................
Suspense payments .........................................................
Lease investment assets ..................................................
Other assets .....................................................................
Allowance for possible loan losses .......................................
Total assets ..........................................................................
12

FUKOKU MUTUAL LIFE INSURANCE COMPANY¥

169
33,39633,56670,3001,111
31,322¥

159
34,60934,768
148,700
1,011
31,981

2015
Millions of
U.S. dollars¥

183
96,33296,515186,500
870
34,319

$

1
801
803
1,551
7
285

2,181,123
168,921652,931454,902
1,108,137
67,0504,633,067

2,097,463
157,102654,161
504,442
1,389,208
74,762
4,877,141

2,061,294
154,616
670,380
664,735
1,607,208
82,7195,240,955

17,153
1,286
5,578
5,531
13,374688
43,612

66,807840,701
907,508

65,206
770,654
835,860

63,311
700,588763,900

526
5,829
6,356

160,528
105,728
1,430
1,297
2,855
271,841

132,912
94,991
1,159
280
2,771
232,115

132,261
90,902
954
630
2,843
227,591

1,100
756
7
5
23
1,893

11,378273
11,652
42

10,554273
10,82778

10,744272
11,017
105

89
2
91
0

7,479
1,155
27,005
2,055
978
3,473
3,222
868
2,780
49,020(2,201)¥6,007,231

6,297
993
28,028
1,894
—
879
2,430
835
3,233
44,592(2,281)¥6,214,796

9,037
898
28,136
1,837
241
5,134
3,108
801
2,929
52,123(1,948)¥6,611,952

75
7
234
15
2
42
25
6
24
433
(16)
$55,021

As of March 31,

2013

2014

2015

Millions of yen

Liabilities:
Policy reserves:
Reserve for outstanding claims .........................................
Policy reserve ....................................................................
Reserve for dividends to policyholders .............................
Reinsurance payables . ..........................................................
Subordinated bonds ..............................................................
Other liabilities:
Corporate income tax payable ...........................................
Accounts payable ..............................................................
Accrued expenses .............................................................
Unearned income ..............................................................
Deposits received . ............................................................
Guarantee deposits received . ...........................................
Differential account for futures trading .............................
Derivatives . .......................................................................
Asset retirement obligations .............................................
Suspense receipts .............................................................
Reserve for employees' retirement benefits ........................
Reserve for price fluctuation of securities . ...........................
Deferred tax liabilities ............................................................
Deferred tax liabilities for revaluation reserve for land ..........
Total liabilities ......................................................................
Net assets:
Foundation funds....................................................................
Accumulated foundation funds redeemed.............................
Reserve for revaluation...........................................................
Surplus:
Legal reserve for future losses...........................................
Other surplus:
Reserve for redemption of foundation funds.................
Reserve for dividend allowances....................................
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-salesecurities, net of tax............................................................
Deferred valuation gains (losses)
under hedge accounting......................................................
Revaluation reserve for land, net of tax..................................
Total valuation and translation adjustments............................
Total net assets ...................................................................
Total liabilities and net assets . ..........................................

¥

22,673
5,268,768
52,307
5,343,750
86
66,187¥2015
Millions of
U.S. dollars

23,067
5,338,547
51,007
5,412,622
98
122,346¥ 21,305
5,475,030
49,311
5,545,647
110
118,959

8,352
2,717
11,268411
5,289
13,584
—
3,937
2,966
1,284
49,81344,965
41,62816,938
16,1195,579,488

11,9452,350
11,112341
5,355
12,839
216
5,223
2,951
1,188
53,524
43,11244,01629,245
15,9295,720,895

15,851
2,911
10,587357
5,355
12,772
—
3,886
3,001
1,259
55,984
46,393
46,53485,741
14,787
5,914,159

131
24
88
2
44
106
—
32
24
10
465
386
387
713
123
49,21435,00071,000112

35,00071,000112

30,00086,000
112

249
715
0

2,399

2,485

2,582

21

9,000
3,895
11,00018,0003,895
21,00012,0003,895
31,000

99
32
257

4,114
767
71,084
99,861
102,260
208,372

3,969
767
74,662
122,294
124,780
230,892

262
767
93,041140,966
143,548259,660

2
6
774
1,173
1,194
2,160

215,885

259,861434,236

3,613

62
3,421
219,370
427,742¥6,007,231

2
3,144
263,008
493,900¥6,214,796

0
3,894
438,131
697,792¥6,611,952

0
32
3,645
5,806
$55,021$

177
45,560410
46,1480989

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

13

Non-consolidated Statements of Operations
Fukoku Mutual Life Insurance Company
For the years ended March 31, 2013, 2014 and 2015

Years ended March 31,

2013

2014

2015

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 from money held in trust, net . ................................
Gains from trading securities, net .....................................
Gains on sales of securities . .............................................
Foreign exchange gains, net .............................................
Reversal of allowance for possible loan losses..................
Other investment income .................................................
Gains from separate accounts, net ...................................
Other ordinary revenues:
Fund receipt from annuity rider .........................................
Fund receipt from deposit of claims paid ..........................
Reversal of reserve for outstanding claims........................
Reversal of reserve for employees'
retirement benefits . .......................................................
Others ...............................................................................
Total ordinary revenues ......................................................
Ordinary expenditures:
Claims and other payments:
Claims . ..............................................................................
Annuities ...........................................................................
Benefits .............................................................................
Surrenders .........................................................................
Other payments ................................................................
Reinsurance premiums .....................................................
Provision for policy reserve and others:
Provision for reserve for outstanding claims .....................
Provision for policy reserve ...............................................
Interest on accumulated dividends to policyholders .........

14

FUKOKU MUTUAL LIFE INSURANCE COMPANY

2015
Millions of
U.S. dollars¥647,446
352
647,798¥598,227140
598,367¥642,774
345
643,119$5,34825,351

1983,604
19,136
16,041
217
119,020
1,157
38,498
7,917
908
—
1,230
10,075
178,808

7
94,534
17,317
14,469235
126,564669
19,40233,4992,212—
279
10,417
193,04414
107,138
15,464
13,832
251
136,700
2,349
35,232
25,221
2,041
270
69
11,869213,754

0
891
128
115
2
1,137
19
293
209
16
2
0
98
1,778

1,071
5,123
—

1,271
5,083
—

457
4,300
1,761

3
35
14

1,351
2,583
10,129836,736

1,849
2,710
10,914
802,326

1,481
2,860
10,861
867,736

12
23
90
7,220

168,766
101,437
129,048
89,34831,283
328
520,212

135,639
134,935
122,255
77,82032,681
385
503,718

112,311
155,577
118,484
75,59427,954440
490,362

934
1,294
985
629
232
3
4,080

58
78,62776¥ 78,762

393
69,77974¥ 70,247—
136,482
54¥136,537—
1,135
0$1,136

Years ended March 31,

2013

2014

2015

Millions of yen

Investment expenses:
Interest expenses . ............................................................
Losses on sales of securities ............................................
Losses on valuation of securities ......................................
Losses from derivative instruments, net . .........................
Provision for allowance for possible loan losses ...............
Depreciation of real estate for rent and other assets ........
Other investment expenses ..............................................
Operating expenses ..............................................................
Other ordinary expenditures:
Claim deposit payments ....................................................
Taxes .................................................................................
Depreciation ......................................................................
Others ...............................................................................
Total ordinary expenditures . ..............................................
Ordinary profits ...................................................................
Extraordinary gains:
Gains on disposal of fixed assets ......................................
Other extraordinary gains...................................................
Total extraordinary gains ....................................................
Extraordinary losses:
Losses on disposal of fixed assets . ..................................
Impairment losses .............................................................
Provision for reserve for price fluctuation of securities .....
Total extraordinary losses . .................................................
Surplus before income taxes . ............................................
Income taxes:
Current ..............................................................................
Deferred ............................................................................
Total income taxes . .............................................................
Net surplus for the year ......................................................

¥

1,777
10,596
1,009
34,773
58
5,802
5,658
59,677
88,846

¥

3,633
9,289
52
25,116
56
5,082
6,778
50,01086,2032015
Millions of
U.S. dollars

¥

4,252
1,075
0
18,679
—
4,877
6,831
35,71586,365

$

35
8
0
155
—
40
56
297
718

8,976
4,771
5,571
578
19,897
767,395
69,340

8,970
4,573
6,023
678
20,246730,426
71,900

8,900
6,069
6,205
701
21,877
770,858
96,877

74
50
51
5
182
6,414
806

60
193
254

2,005
—
2,005

6
—
6

0
—
0

348
600
6,140
7,088
62,506

7,314
1,775
2,388
11,47762,427

165
698
2,518
3,382
93,501

1
5
20
28
778

13,553(1,870)11,683¥ 50,822

19,208(7,403)
11,804¥ 50,622

27,169(2,711)
24,458¥ 69,043

226
(22)
203
574

$

See notes to the non-consolidated financial statements.

FUKOKU MUTUAL LIFE INSURANCE COMPANY

15

Non-consolidated Statements of Changes in Net Assets
Fukoku Mutual Life Insurance Company
For the years ended March 31, 2013, 2014 and 2015
Millions of yen
Foundation funds, surplus and others
Surplus
Other surplus

Foundation
funds

Accumulated
foundation
funds
redeemedReserve forrevaluation

Legal
reservefor future
lossesReserve foradvanced
Reserve for Accumulated depreciation ofdividend
fund for price real estate forallowances
fluctuation
tax purpose

Other
reserves

UnappropriatedsurplusTotal
surplus

Balance at the beginning ofcurrent fiscal year����������������������������� ¥35,000¥71,000¥112¥2,325¥3,895¥767¥57,827¥76,104 ¥182,216(23,989)(23,989)(23,989)

(74)

—

—

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

(621)

(621)

(621)

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

50,82250,82250,822(9,000)——Year ended March 31, 2013

Reserve forredemptionoffoundation
funds

¥

—

¥11,000¥289

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

74

Additons to reserve forredemption of foundation funds���

9,000

Total
foundation
funds, surplus
and others

Additions to reserve foradvanced depreciation ofreal estate for tax purpose�����������

3,857(3,857)——

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

(32)

32

—

—

(55)

(55)

(55)

13,25626,155

26,155

Reversal of revaluation
reserve for land����������������������������
Net changes, excluding foundation
funds, surplus and others�������������
Total changes in the current
fiscal year�����������������������������������������

—

—

—

74

9,000

—

—

3,825

—

Balance at the end of current
fiscal year����������������������������������������� ¥35,000¥71,000¥112¥2,399¥9,000¥3,895¥11,000¥4,114¥767¥71,084 ¥102,260 ¥208,372

Millions of yen
Valuation and translation adjustments

Year ended March 31, 2013

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

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

Deferred valuation gains(losses) under hedge
accounting

Revaluation
reserve for land,
net of tax

Total valuation andtranslation
adjustments

Total
net assets¥67,684¥170¥3,383¥71,239¥253,455

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

(23,989)

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

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

(621)

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

50,822

Additions to reserve for redemption of foundation funds���—Additions to reserve for advanced depreciation of realestate for tax purpose������������������������������������������������������

—

Reversal of reserve for advanced depreciation of realestate for tax purpose������������������������������������������������������

—

Reversal of revaluation reserve for land�����������������������������

(55)

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

148,200(107)

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

148,200(107)

38

148,131

174,287

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

¥215,885¥62¥3,421¥219,370¥427,742

16

FUKOKU MUTUAL LIFE INSURANCE COMPANY

38

148,131

148,131Millions of yen
Foundation funds, surplus and others
Surplus
Other surplus

Foundation
funds

Accumulated
foundation
funds
redeemed

Balance at the beginning ofcurrent fiscal year���������������������������� ¥35,000¥71,000

Year ended March 31, 2014

Reserve forrevaluation

Legal
reservefor future
lossesReserve forredemptionoffoundation
funds

¥112

¥2,399¥9,000Reserve foradvanced
Reserve for Accumulated depreciation ofdividend
fund for price real estate forallowances
fluctuation
tax purpose

Other
reserves

Unappropriatedsurplus¥3,895¥767¥71,084 ¥102,260 ¥208,372¥11,000¥4,114

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

Total
surplusTotal
foundation
funds, surplus
and others(27,762)(27,762)(27,762)

(86)

—

—

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

86

(621)

(621)

(621)

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

50,622

50,622

50,622(9,000)——(10,000)

—

—

144

—

—

281

281

281

3,578

22,51922,519Additions to reserve forredemption of foundation funds���

9,000

Additions to accumulated fund forprice fluctuation����������������������������

10,000

Reversal of reserve foradvanced depreciation of realestate for tax purpose������������������

(144)

Reversal of revaluation
reserve for land����������������������������
Net changes, excluding foundation
funds, surplus and others�������������
Total changes in the current fiscal
year��������������������������������������������������

—

—

—

86

9,000

—

10,000(144)—

Balance at the end of current
fiscal year����������������������������������������� ¥35,000¥71,000¥112¥2,485¥18,000¥3,895¥21,000¥3,969¥767¥74,662 ¥124,780 ¥230,892

Millions of yen
Valuation and translation adjustments

Year ended March 31, 2014

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

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

Deferred valuation gains(losses) under hedge
accounting

Revaluation
reserve for land,
net of tax

Total valuation andtranslation
adjustments

Total
net assets¥215,885¥62¥3,421¥219,370¥427,742

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

(27,762)

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

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

(621)

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

50,622

Additions to reserve for redemption of foundation funds��

—Additions to accumulated fund for price fluctuation�����������

—

Reversal of reserve for advanced depreciation of realestate for tax purpose������������������������������������������������������

—

Reversal of revaluation reserve for land�����������������������������

281

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

43,976

(60)

(277)

43,63843,638

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

43,976

(60)

(277)

43,63866,157

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

¥259,861¥2¥3,144¥263,008¥493,900

FUKOKU MUTUAL LIFE INSURANCE COMPANY

17

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

Foundation
fundsYear ended March 31, 2015
Balance at the beginning ofcurrent fiscal year���������������������������� ¥35,000
Cumulative effects of changes inaccounting policies�����������������������

Restated balance��������������������������������

35,000

Accumulated
foundation
funds
redeemedReserve forrevaluation

Legal
reservefor future
lossesReserve forredemptionoffoundation
funds

Reserve foradvanced
Reserve for Accumulated depreciation ofdividend
fund for price real estate forallowances
fluctuation
tax purpose

Other
reserves

Unappropriatedsurplus¥71,000¥112¥2,485¥18,000¥3,895¥21,000¥3,969¥767¥74,662 ¥124,780 ¥230,892(3,297)(3,297)(3,297)71,000112

2,485

18,0003,895

21,0003,969

767

71,365

121,482

227,595

Total
surplusTotal
foundation
funds, surplus
and others

Changes in the current fiscal year
Issuance of foundation funds���������

10,000Additions to reserve fordividends to policyholders������������
Additions to legal reserve for
future losses��������������������������������
Additions to accumulated
foundation funds redeemed���������
Payment of interest on
foundation funds�����������������������������

10,000(31,595)

15,000(31,595)

15,000Net surplus for the year������������������
Redemption of foundation funds���� (15,000)
Additions to reserve forredemption of foundation funds���
Reversal of reserve for redemptionof foundation funds����������������������
Additions to accumulated fund forprice fluctuation����������������������������
Additions to reserve for advanced
depreciation of real estate for tax
purpose����������������������������������������
Reversal of reserve foradvanced depreciation of realestate for tax purpose������������������
Reversal of revaluation
reserve for land����������������������������
Net changes, excluding foundation
funds, surplus and others�������������
Total changes in the current fiscal(5,000)year��������������������������������������������������
Balance at the end of current¥30,000
fiscal year�����������������������������������������

(31,595)

(97)

97

(621)

(621)

(621)

69,04369,04369,043(15,000)

9,000(9,000)(15,000)
10,000(15,000)(15,000)

239

239

239

21,67522,06532,065(10,000)0(0)(3,707)3,707

15,000—97(6,000)—10,000(3,707)—¥86,000¥112¥2,582¥12,000¥3,895¥31,000

¥262

¥767

¥93,041 ¥143,548 ¥259,660

Millions of yen
Valuation and translation adjustments

Year ended March 31, 2015

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

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

Deferred valuation gains(losses) under hedge
accounting

Revaluation
reserve for land,
net of tax

Total valuation andtranslation
adjustments¥259,861¥2¥3,144¥263,008

259,861

2

3,144

263,008

Cumulative effects of changes in accounting policies�������
Restated balance�������������������������������������������������������������������

Total
net assets¥493,900(3,297)490,603

Changes in the current fiscal year

Additions to accumulated fund for price fluctuation�����������

10,000(31,595)—
15,000(621)
69,043(15,000)—(15,000)—

Additions to reserve for advanced depreciation of realestate for tax purpose�����������������������������������������������������

—Issuance of foundation funds��������������������������������������������
Additions to reserve for dividends to policyholders������������
Additions to legal reserve for future losses������������������������

Additions to accumulated foundation funds redeemed�����
Payment of interest on foundation funds���������������������������
Net surplus for the year������������������������������������������������������

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

Reversal of reserve for redemption of foundation funds��

Reversal of reserve for advanced depreciation of realestate for tax purpose������������������������������������������������������

—239

Reversal of revaluation reserve for land�����������������������������
Net changes, excluding foundation funds,
surplus and others������������������������������������������������������������
Total changes in the current fiscal year����������������������������������
Balance at the end of current fiscal year��������������������������������

18

FUKOKU MUTUAL LIFE INSURANCE COMPANY

174,375
174,375¥434,236

(2)
(2)
¥0

750
750
¥3,894

175,123
175,123¥438,131

175,123
207,188¥697,792

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

Year ended March 31, 2015
Balance at the beginning ofcurrent fiscal year����������������������������
Cumulative effects of changes inaccounting policies�����������������������

Restated balance��������������������������������

Foundation
funds

Accumulated
foundation
funds
redeemedReserve forrevaluation

Legal
reservefor future
lossesReserve forredemptionoffoundation
funds

$291
291

Reserve foradvanced
Reserve for Accumulated depreciation ofdividend
fund for price real estate forallowances
fluctuation
tax purpose

$590

$0

$20

$149

$32

$174

590

0

20

149

32

174

Other
reserves

UnappropriatedsurplusTotal
surplusTotal
foundation
funds, surplus
and others

$33

$6

$621

$1,038$1,921

(27)

(27)

(27)

33

6

593

1,010

1,893

Changes in the current fiscal year
Issuance of foundation funds���������

83

Additions to reserve fordividends to policyholders������������
Additions to legal reserve for
future losses��������������������������������
Additions to accumulated
foundation funds redeemed���������
Payment of interest on
foundation funds�����������������������������

83
(262)

Additions to reserve forredemption of foundation funds���
Reversal of reserve for redemptionof foundation funds����������������������
Additions to accumulated fund forprice fluctuation����������������������������
Additions to reserve for advanced
depreciation of real estate for tax
purpose����������������������������������������
Reversal of reserve foradvanced depreciation of realestate for tax purpose������������������
Reversal of revaluation
reserve for land����������������������������
Net changes, excluding foundation
funds, surplus and others�������������
Total changes in the current fiscal
year��������������������������������������������������
Balance at the end of current
fiscal year�����������������������������������������

(262)

124

124

Net surplus for the year������������������
Redemption of foundation funds����

(262)

(0)

0

(5)

(5)

(5)

574

574

574

(124)

(124)
74

(74)

(124)
83

(124)

(124)

1

1

(83)
0

(0)

(30)

30
1

(41)

124

—

0

(49)

—

83

(30)

—

180

183

266

$249

$715

$0

$21

$99

$32

$257

$2

$6

$774

$1,194$2,160Millions of U.S. dollars
Valuation and translation adjustments

Year ended March 31, 2015

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

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

Deferred valuation gains(losses) under hedge
accounting

Revaluation
reserve for land,
net of tax

Total valuation andtranslation
adjustments$2,162$0$26$2,188

2,162

0

26

2,188

Cumulative effects of changes in accounting policies�������
Restated balance�������������������������������������������������������������������

Total
net assets$4,110(27)
4,082

Changes in the current fiscal year

Additions to accumulated fund for price fluctuation�����������

83
(262)
—
124
(5)
574
(124)
—
(124)
—

Additions to reserve for advanced depreciation of realestate for tax purpose�����������������������������������������������������

—Issuance of foundation funds��������������������������������������������
Additions to reserve for dividends to policyholders������������
Additions to legal reserve for future losses������������������������

Additions to accumulated foundation funds redeemed�����
Payment of interest on foundation funds���������������������������
Net surplus for the year������������������������������������������������������

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

Reversal of reserve for redemption of foundation funds��

Reversal of reserve for advanced depreciation of realestate for tax purpose������������������������������������������������������

—1

Reversal of revaluation reserve for land�����������������������������
Net changes, excluding foundation funds,
surplus and others������������������������������������������������������������
Total changes in the current fiscal year����������������������������������
Balance at the end of current fiscal year��������������������������������

1,451
1,451
$3,613

(0)
(0)
$0

6
6
$32

1,457
1,457
$3,6451,457
1,724$5,806

FUKOKU MUTUAL LIFE INSURANCE COMPANY

19

Non-consolidated Statements of Surplus
Fukoku Mutual Life Insurance Company
For the years ended March 31, 2013, 2014 and 2015

Years ended March 31,

2013

2014

2015

Millions of yen

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

2015
Millions of
U.S. dollars¥71,084¥74,662¥93,041

$774

144

3,707

3

0

144

3,707

3

0

71,22878,36993,044774

27,762

31,59536,698305

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

86

97

160

1

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

621

621

316

2

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

9,000

9,000

6,000

49

Equalized reserve for dividends to policyholders .....

——

16,104134

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

10,00010,00010,000

83

—

0

7

0

19,00019,00032,111267

19,707

19,71832,588271

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

47,47051,314

69,286

576

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

¥23,758¥27,055¥23,758$197

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 advanced depreciationof real estate for tax purpose.................................

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

20

FUKOKU MUTUAL LIFE INSURANCE COMPANY

Notes to the Non-consolidated Financial Statements

I. Presentation of the Non-consolidated Financial
Statements
1. Basis of Presentation
The accompanying non-consolidated financial statements havebeen prepared from the accounts maintained by Fukoku MutualLife Insurance Company (the "Company") in accordance with theprovisions set forth in the Insurance Business Law of Japan andits related rules and regulations and in conformity with accounting principles generally accepted in Japan, which are different incertain respects from accounting principles generally acceptedin countries and jurisdictions other than Japan.
In addition, the notes to the non-consolidated financial
statements include information which is not required under accounting principles generally accepted in Japan but is presented
herein as additional information.
Amounts of less than one million yen have been eliminated.
As a result, total in yen shown herein do not necessarily agreewith the sum of the individual amounts.
2. U.S. Dollar Amounts
The translations of yen amounts into U.S. dollar amounts areincluded solely for the convenience of the reader and have been
made, as a matter of arithmetical computation only, at the rateof ¥120.17 = US$1.00, the effective rate of exchange at the balance sheet date of March 31, 2015. The translations should not
be construed as representations that such yen amounts havebeen or could in the future be, converted into U.S. dollars at thator any other rates.

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

The valuation of securities, including bank deposits and monetary claims bought which are equivalent to securities, andsecurities managed as trust assets in money held in trust, is asfollows:i) Trading securities are stated at fair market value. Costs of
their sales are determined by the moving average method.
ii) Held-to-maturity debt securities are stated at amortized cost
under the straight-line method, cost being determined by themoving average method.
iii) Policy-reserve-matching bonds are stated at amortized cost
under the straight-line method, cost being determined by
the moving average method in accordance with "Temporary
Treatment of Accounting and Auditing Concerning Policy-reserve-matching Bonds in Insurance Industry" (Industry Audit
Committee Report No.21 issued by the Japanese Institute ofCertified Public Accountants on November 16, 2000).
iv) Investments in subsidiaries and affiliates are stated at cost,
cost being determined by the moving average method.
v) Available-for-sale securities with fair market value are stated

at fair market value based on the market prices at the end of
fiscal year. Costs of their sales are determined by the moving average method. Net unrealized gains or losses on theseavailable-for-sale securities, net of taxes, are recorded as aseparate component of net assets.
Available-for-sale securities whose fair values are
deemed extremely difficult to obtain are stated at cost, cost
being determined by the moving average method, except for
public and corporate bonds including foreign bonds, of which
the difference between acquisition cost and face value isconsidered to be an adjustment of interest. Such bonds arestated at amortized cost under the straight-line method, cost
being determined by the moving average method.
(2) Valuation methods of derivative instruments

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

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

Depreciation of tangible fixed assets is calculated by the following methods.
Tangible fixed assets (excluding lease assets): Decliningbalance method
However, buildings (excluding building attachments and structures) acquired on or after April 1, 1998 are depreciated using
Straight-line method.
Lease assets related to finance lease transactions that do nottransfer ownership: Straight-line method over the lease term
without residual value
Other tangible fixed assets acquired for ¥100,000 or more but
less than ¥200,000 are depreciated equally over three years.
(5) Foreign currency translation

Foreign currency-denominated assets and liabilities, except forinvestments in subsidiaries and affiliates, are translated into
Japanese yen at the effective exchange rate prevailing at thebalance sheet date. Investments in subsidiaries and affiliates are

FUKOKU MUTUAL LIFE INSURANCE COMPANY

21

translated into Japanese yen at the exchange rate on the date ofacquisition.
(6) Allowance for possible loan losses

Allowance for possible loan losses is provided in accordancewith the Company's standards of self-assessment and write-offs
and reserves on credit quality:i) For the credits of borrowers who are legally bankrupt such as
being in the proceedings of bankruptcy or civil rehabilitation(hereinafter called "legally bankrupt borrowers") and who aresubstantially bankrupt (hereinafter called "substantially bankrupt borrowers"), the Company provides the remaining amountof credits after the direct write-off described below and the
deductions of the amount expected to be collected throughthe disposal of collateral or the execution of guarantees.
ii) For the credits of borrowers who are not currently bankrupt
but have a high possibility of bankruptcy (hereinafter called“not currently bankrupt borrowers”), the Company provides
the amounts deemed as necessary considering the borrowers' ability to pay, within the amounts after deductions of theamount expected to be collected through the disposal of collateral or the execution of guarantees.
iii) For the credits of borrowers other than the above, the Company provides the amounts calculated by multiplying the borrowers' balance by the actual ratio of bad debt losses on defaults
during a certain past period.
All credits are assessed by the relevant departments in accordance with the Company's standards of self-assessment on
credit quality. The results of the assessment are reviewed by
the audit department, which is independent of business-related
divisions. Subsequently, the allowance for possible loan losses
are provided based on the results of these assessments.
For the credits of legally bankrupt borrowers and substantially bankrupt borrowers, the amounts remaining after deductions of collateral value or the amounts collectible throughthe execution of guarantees is written-off directly from theborrower's balance as the estimated uncollectible amounts.
The amounts written-off as of March 31, 2013, 2014 and 2015
were ¥308 million, ¥271 million and ¥247million (US$2 million),
respectively.
(7) Reserve for employees’ retirement benefits and method ofamortizing retirement benefit expenses

Reserve for employees’ retirement benefits are presented forthe employees’ retirement benefits based on projected benefit
obligation and pension plan assets at the balance sheet date.
The Company uses the following methods for amortizing
retirement benefit obligations and retirement benefit expenses:• Method for allocation of projected retirement benefits������ Benefit formula• Amortization period of actuarial differences��� 10 years• Amortization period of prior service cost����� 10 years

22

FUKOKU MUTUAL LIFE INSURANCE COMPANY(8) Reserve for price fluctuation of securities

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

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

Hedge accounting is based on "Accounting Standards for Financial Instruments" (ASBJ Statement No. 10, August 11, 2006).
For the foreign currency forward contracts against theexchange rate fluctuations in the value of foreign currency-denominated bonds classified as available-for-sale securities, which
qualify for hedge accounting because of high correlation andeffectiveness between the hedging instruments and the hedged
items, valuation gains and losses on the foreign currency forward contracts are recorded in the statements of operations.
For the interest rate swaps against the interest rate fluctuations regarding loans, which qualify for hedge accounting
because of high correlation and effectiveness between thehedging instruments and the hedged items, valuation gains andlosses on the interest rate swaps are deferred until the maturityof the hedged transactions.
The Company applies foreign currency swap appropriatedtreatment as a hedge for the foreign exchange fluctuation risk
associated with foreign currency denominated bonds issued by
the Company.
For judging the effectiveness of hedge used, ratio analysis
of comparing the fluctuations in the fair value or cash flows ofhedged items and hedging instruments is mostly applied.
(12) Accounting for employees’ retirement benefits

Accounting of unrecognized actuarial differences and unrecognized prior service costs related to employees’ retirement
benefits is different to the methods used for these items in the
consolidated financial statements.
(13) Accounting for consumption taxes

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

Policy reserve is based on Article 116 of the Insurance Business
Law, and the premium reserve at the end of fiscal year is calculated by the following method:
In regard to the policies subject to the standard policy
reserve, the method as prescribed by the Commissioner of Financial Services Agency (Ministry of Finance Ordinance No. 48,
1996) is applied.
In regard to the policies not subject to the standard policy
reserve, the net level premium method is applied.
Based on the provision of paragraph 5, Article 69 of the
Enforcement Regulation of the Insurance Business Law, certain
individual annuity insurance policies, certain hospitalization riders with surgery benefits and long-term hospitalization benefits
have funded policy reserves included.
(15) Software

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

efits to a single weighted average discount rate reflecting theestimated payment period and the amount for each estimatedperiod.
As a result, compared with the previous method, unappropriated surplus at the start of the period ended March 31, 2015,
decreased by ¥3,297 million ($27 million). In addition, in theyear ended March 31, 2015, ordinary profits and surplus before
income taxes increased by ¥39 million ($329 thousand).
3. The Principal Accounting Standards Published before
March 31, 2014 but not Applied are as follows.
Notes for the fiscal year ended March 31, 2014
With the publication of “Accounting Standard for Retirement
Benefits” (ASBJ Statement No. 26, May 17, 2012) and “Guidanceon Accounting Standard for Retirement Benefits” (ASBJ Guidance No. 25, May 17, 2012), the method for calculating retirement benefit obligations, current service cost and others will bechanged.
Application of the standard is mandatory from the beginningof the fiscal year commencing on or after April 1, 2014, and theCompany plans to apply the standard from the beginning of fiscal 2014.
The Company is currently evaluating the impact in the fiscal
year after the application of the standard.

(16) Deferred assets

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

Of the bonds corresponding to the sub-groups of individual
insurance and annuities which are set by insurance types andinvestment policies, the bonds that are held to match the duration of liabilities are classified as policy-reserve-matching bonds
in accordance with "Temporary Treatment of Accounting and
Auditing Concerning Policy-reserve-matching Bonds in Insurance
Industry" (Industry Audit Committee Report No. 21 issued by theJapanese Institute of Certified Public Accountants on November
16, 2000).
The amounts of policy-reserve-matching bonds recordedon the balance sheets and the market value of these bonds asof March 31, 2013, 2014 and 2015, were written in Notes No. 4“Financial Instruments.”
2. Accounting changes and corrections of past errors
Notes for the fiscal year ended March 31, 2015
From the year ended March 31, 2015, in accordance with the
Accounting Standard for Retirement Benefits (ASBJ Statement No. 26, May 17, 2012) and the Guidance on AccountingStandard for Retirement Benefits (ASBJ Guidance No. 25, May
17, 2012), the Company changed from a straight-line basis to abenefit formula as the method for allocation of projected retirement benefits. The Company also changed the method used for
determining the discount rate from a discount rate based on theestimated average period until the payment of retirement ben-

4. Financial Instruments
Asset management of the general accounts other than the separate accounts stipulated in Article 118 Paragraph 1 of the Insurance Business Law is conducted on the principle of prudent andprofitable investments, considering public and social responsibilities of the insurance business. Based on this policy, the Company allocates the fund, securing its liquidity, from the medium-tolong term viewpoints. The Company is diversifying investments
in assets such as foreign securities and equity securities within
the acceptable range of risk in order to enhance the profitability,
although yen-denominated interest bearing assets including
debt securities such as Japanese government bonds and loans
are the cores of the portfolios. Derivatives are mainly used tohedge the market risk regarding spot-priced assets. 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 the assets
by utilizing control functions of the Financial and Investment
Risk Management Department towards the asset management
sections, monitoring the status of market risk and credit risk
periodically on a daily or monthly basis. In addition, the Company
quantifies the market risk and credit risk using value-at-risk (VaR)
method in order to control the possible maximum losses which
may arise from the holding assets within a certain range of risk
buffers.

FUKOKU MUTUAL LIFE INSURANCE COMPANY

23

The carrying amounts, fair values and their relateddifferences of major financial assets and liabilities as of March
31, 2013, 2014 and 2015 were as follows:(1) Cash, deposits (excluding financial instruments treated as
securities based on “Accounting Standards for Financial
Instruments” (ASBJ Statement No.10)) and call 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.
		 Carrying amounts, fair values and related differencesof cash and deposits have been disclosed as of March 31,
2014.
(2) Securities including deposits and monetary claims bought
which are treated as securities based on “Accounting Standards for Financial Instruments” (ASBJ Statement No.10) andsecurities managed as trust assets in money held in trust:
The fair values of marketable securities are measured at thequoted market price at the end of fiscal year. The fair values of other securities without the quoted market price arebased on the prices reasonably calculated such as the prices
offered by the information vendors or counterparty financial
institutions.
				 Investments in subsidiaries and affiliates, unlisted stocks
and investments in partnerships whereby partnership assets
consist of unlisted stocks whose fair values are deemed
extremely difficult to obtain, are excluded from above securities. The carrying amounts of investments in subsidiaries andaffiliates, unlisted stocks and investments in partnerships
were ¥35,560 million, ¥7,738 million and ¥7,667 million as ofMarch 31, 2013, ¥35,560 million, ¥7,653 million and ¥7,967
million as of March 31, 2014, and ¥35,560 million (US$295
million), ¥8,338 million (US$69 million), and ¥8,693 million(US$ 72 million) as of March 31, 2015, 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 deadline havenot been set up due to the characteristics that the loan islimited to the amount of cash surrender values. Therefore,
the book values are used as the fair values of policy loans.
		 The fair values of floating interest rate loans among theordinary loans and monetary claims bought treated as loans
approximate the book values because the market interest
rates are reflected in future cash flows in a short period.
Therefore, the fair values of floating interest rate loans andmonetary claims bought treated as loans are based on theirbook values. The fair values of fixed interest rate loans aremeasured by discounting the future cash flows to the present
values.
		 The fair values of loans receivable from legally bankrupt
borrowers, substantially bankrupt borrowers and not currently bankrupt borrowers and monetary claims bought treatedas loans are computed by deducting the amount of the allowance for doubtful accounts from the book values before
direct write-offs.
24

FUKOKU MUTUAL LIFE INSURANCE COMPANY(4) Subordinated bonds:
Subordinated bonds issued by the Company are stated at fairmarket value.
		 Carrying amounts, fair values and related differences ofsubordinated bonds have been disclosed as of March 31,
2014.
(5) Derivative instruments:i) The fair values of the futures and options traded at theexchange are measured at the settlement price of the exchange.
ii) The fair values of options and swaps traded over the counter are based on the quoted prices offered by counterparty
financial institutions.
iii) The fair values of foreign currency forward contracts are
determined based on the spot exchange rate and forward
contract rate.
5. Investment and Rental Property
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 ¥221,052 million and ¥277,714 million as of March 31,
2013, ¥182,229 million and ¥263,688 million as of March 31,
2014, and ¥177,598 million (US$1,477 million) and ¥274,268
million(US$2,282 million) as of March 31, 2015, respectively. The
fair value is mainly based on the value calculated by the Company in accordance with real estate appraisal standards which
includes some adjustments using the reference prices.
The amount corresponding to asset retirement obligations
included in the carrying amount of investment and rental properties were ¥1,275 million, ¥1,192 million, and ¥1,105 million(US$9million) as of March 31, 2013, 2014 and 2015, respectively.
6. Securities Lent under Lending Agreements
The amount of securities lent under lending agreements were¥45,887 million, ¥71,815 million, and ¥50,418 million (US$419
million) as of March 31, 2013, 2014 and 2015, respectively.
7. Loans Receivable
The total amounts of credits to bankrupt borrowers, delinquentloans, delinquent loans past 3 months or more and restructuredloans, which were included in loans, were ¥1,759 million, ¥1,602
million, and ¥1,409 million(US$11 million) as of March 31, 2013,2014 and 2015, respectively.
i) The balances of credits to bankrupt borrowers were ¥217 million, ¥195 million, and ¥194 million(US$1 million) as of March
31, 2013, 2014 and 2015, respectively.
ii) The balances of delinquent loans were ¥590 million, ¥747
million, and ¥844 million (US$7 million) as of March 31, 2013,2014 and 2015, respectively.
iii) There were no balances of delinquent loans past 3 months ormore as of March 31, 2013, 2014 and 2015.
iv) The balances of restructured loans were ¥950 million, ¥660
million and ¥370 million (US$3 million) as of March 31, 2013,2014 and 2015, respectively.
Credits to bankrupt borrowers represent loans, excluding the bal-As of March 31,

2013
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���������������������������������������������
Investments in subsidiaries and affiliates�����������������������������
Available-for-sale securities���������������������������������������������������
Total securities����������������������������������������������������������������������
Loans:
Policy loans���������������������������������������������������������������������������
Ordinary loans�����������������������������������������������������������������������
Total loans�����������������������������������������������������������������������������
Assets total
Subordinated bonds*1
Liabilities total
Derivative instruments*2:
Hedge accounting not applied����������������������������������������������
Hedge accounting applied�����������������������������������������������������
Total derivative instruments��������������������������������������������������

Carrying
amount¥Fair value——
70,300¥2014

Millions of yen——
70,300Carrying
amountDifference

¥

—
—
—

¥

Fair value

34,633
34,633
148,700¥

Difference

34,633
34,633
148,700

¥

—
—
—

1,111
1,111

1,136
1,136

25
25

1,011
1,011

1,054
1,054

43
43

30,32230,32230,32230,322——30,981
30,981

30,981
30,981——

258,193
822,875
1,037,091
1,393
2,386,795
4,506,348

258,193
902,871
1,121,931
948
2,386,795
4,670,740—
79,996
84,840(444)—
164,392

271,060
843,433
1,210,016
1,393
2,421,417
4,747,321

271,060
922,909
1,294,587
1,096
2,421,417
4,911,071—
79,476
84,570(296)—
163,750

66,807840,701
907,508———

66,807
866,908
933,716———(0)
26,207
26,207———

65,206
770,654
835,860
5,798,508
122,346
122,346

65,206
793,401
858,608
5,985,049
126,900
126,900(0)
22,74722,747
186,541
4,554
4,554

331
(795)
(463)

331
(795)
(463)

—
—
—

(1,920)(2,423)(4,343)(1,920)(2,423)(4,343)

—
—
—

¥

¥

¥

¥

¥

¥

As of March 31,

2015

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���������������������������������������������
Investments in subsidiaries and affiliates�����������������������������
Available-for-sale securities���������������������������������������������������
Total securities����������������������������������������������������������������������
Loans:
Policy loans���������������������������������������������������������������������������
Ordinary loans�����������������������������������������������������������������������
Total loans�����������������������������������������������������������������������������
Assets total
Subordinated bonds*1
Liabilities total
Derivative instruments*2:
Hedge accounting not applied����������������������������������������������
Hedge accounting applied�����������������������������������������������������
Total derivative instruments��������������������������������������������������

¥

¥

2015

Millions of yen

Carrying
amount96,46996,469186,500¥

Fair value

Difference

96,46996,469186,500¥———

Millions of U.S. dollars

Carrying
amount$Fair value

802
802
1,551

$

Difference

802
802
1,551

—
—
—

$

870
870

918
918

47
47

7
7

7
7

0
0

33,31933,31933,31933,319

—
—

277
277

277
277

—
—

321,079
811,903
1,215,695
1,433
2,760,905
5,111,017

321,079
926,148
1,346,650
1,236
2,760,905
5,356,020—
114,245
130,954(196)—
245,003

2,671
6,756
10,116
11
22,97442,531

2,671
7,706
11,206
10
22,97444,570

—
950
1,089
(1)
—
2,038

63,311
700,588763,900
6,192,077
118,959
118,959

63,311
724,679
787,990
6,461,219
122,282
122,282(0)
24,09024,090269,141
3,322
3,322

526
5,829
6,356
51,527
989
989

526
6,030
6,557
53,767
1,017
1,017

(0)
200
200
2,239
27
27

426
821
1,247

¥

426
821
1,247

¥

—
—
—

$

3
6
10

$

3
6
10

$

—
—
—

*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 an integral
part of the subordinated bonds that are the hedge items.
*2 Assets and liabilities generated by derivative instruments are offset and presented net. Net liabilities in total are presented in brackets.

ances already written-off, which meet the conditions prescribedin Article 96 Paragraph 1 item 3 and 4 of the Enforcement Regulations of the Corporate Tax Law. Moreover, accruing intereston these loans is not recorded as income after determining thatprincipal of or interest on these loans is unlikely to be collected
due to the significant delay in repayment of principal or interest
payment or for some other reasons.
Delinquent loans are credits whose accruing interest is notrecorded as income due to the same reasons as describedabove, and exclude credits to bankrupt borrowers and loans forwhich interest payments have been suspended and rescheduled
to assist and support the borrowers in the restructuring of theirbusiness.
Delinquent loans past 3 months or more are loans for whichinterest payment or repayment of principal are delinquent for
3 months or more from the due date under the terms of therelated loan agreements, excluding those loans classified as
credits to bankrupt borrowers and delinquent loans.
Restructured loans are loans for which certain concessions
favorable to borrowers, such as interest reduction or exemptions, rescheduling of due date of principal or interest payment,
waiver of claim or other terms, have been negotiated for the purpose of assisting and supporting the borrowers in the restructuring of their business. This category excludes loans classified as

FUKOKU MUTUAL LIFE INSURANCE COMPANY

25

credits to bankrupt borrowers, delinquent loans and delinquentloans past 3 months or more.
The direct write-offs related to loans decreased credits tobankrupt borrowers described above by ¥1 million, ¥251 millionand ¥247 million (US$2 million) as of March 31, 2013, 2014 and2015, respectively.
8. Accumulated Depreciation of Tangible Fixed Assets
Accumulated depreciation of tangible fixed assets totaled to¥142,941 million, ¥145,245 million and ¥149,879 million (US$1,247 million) as of March 31, 2013, 2014 and 2015, respectively.
9. Separate Accounts
Total assets in separate accounts provided for in Article 118 of
the Insurance Business Law were ¥78,815 million, ¥82,680 million and ¥83,004 million (US$690 million) as of March 31, 2013,2014 and 2015, respectively. The amounts of separate accountliabilities were the same as separate account assets.
10. Receivables from/Payables to Subsidiaries
The total amounts of receivables from/payables to subsidiaries
were ¥3,400 million and ¥1,415 million as of March 31, 2013,¥3,445 million and ¥1,324 million as of March 31, 2014, and¥3,200 million (US$26 million) and ¥1,870 million (US$15 million)
as of March 31, 2015, respectively.
11. Income Taxes
Deferred tax assets and deferred tax liabilities as of March 31,
2013 were ¥85,971 million and ¥99,959 million, respectively.
Valuation allowance for deferred tax assets was ¥2,950 million.
Major components of deferred tax assets were ¥50,154
million of policy reserves, ¥13,840 million of reserve for
employees’ retirement benefits and ¥12,813 million of reservefor price fluctuation of securities as of March 31, 2013.
Major component of deferred tax liabilities was ¥95,997
million of net unrealized gains on available-for-sale securities asof March 31, 2013.
The statutory tax rate and the actual effective tax rate
for the year ended March 31, 2013 were 33.3% and 18.7%,
respectively. The major difference between the statutory tax
rate and the actual effective tax rate was (14.8%) of reserve fordividends to the policyholders.
Deferred tax assets and deferred tax liabilities as of March
31, 2014 were ¥91,561 million and ¥117,760 million, respectively. Valuation allowance for deferred tax assets was ¥3,046
million.
Major components of deferred tax assets were ¥56,115

million of policy reserves, ¥13,548 million of reserve for
employees’ retirement benefits and ¥13,270 million of reservefor price fluctuation of securities as of March 31, 2014.
Major component of deferred tax liabilities was ¥115,552
million of net unrealized gains on available-for-sale securities asof March 31, 2014.
The statutory tax rate and the actual effective tax rate
for the year ended March 31, 2014 were 33.3% and 18.9%,
respectively. The major difference between the statutory tax
rate and the actual effective tax rate was (16.9%) of reserve fordividends to the policyholders.
Deferred tax assets and deferred tax liabilities as of March
31, 2015 were ¥95,962 million (US$798 million) and ¥178,133
million (US$1,482 million), respectively. Valuation allowance fordeferred tax assets was ¥3,570 million (US$29 million).
Major components of deferred tax assets were ¥60,473
million (US$503 million) of policy reserves, ¥13,425 million(US$111 million) of reserve for price fluctuation of securitiesand ¥13,384 million (US$111 million) of reserve for employees'
retirement benefits as of March 31, 2015.
Major component of deferred tax liabilities was ¥176,074
million (US$1,465 million) of net unrealized gains on available
for-sale securities as of March 31, 2015.
The statutory tax rate and the actual effective tax rate
for the year ended March 31, 2015 were 30.8% and 26.2%,
respectively. The difference between the statutory tax rate andthe actual effective tax rate was mainly attributable to -11.0%
adjustment relating to reserve for dividends to the policyholders,and +6.5% adjustment relating to the write-down of deferred
tax assets at end of period.
Accompanying the promulgation of the “Act for Partial
Revision to the Income Tax Act, etc.” (Act No. 9, 2015), theeffective statutory tax rate used to calculate deferred tax assets
and deferred tax liabilities was changed. The Company had
previously used an effective statutory tax rate of 30.8% foritems expected to be collected or paid on or after April 1, 2015.
However, owing to the aforementioned law change, the rateapplied was changed to 28.9%. As a result of this change instatutory tax rate, deferred tax liabilities decreased by ¥5,735
million (US$47 million), and deferred tax liabilities for revaluation
reserve for land decreased by ¥989 million (US$8 million).
Deferred income taxes increased by ¥6,043 million (US$50
million).

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

2013

2014

2015

Millions of
U.S. dollars

		Millions of yen

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

26

FUKOKU MUTUAL LIFE INSURANCE COMPANY¥53,969
23,989(25,727)76¥52,307¥52,307
27,762(29,137)74¥51,0072015¥51,007
31,595(33,346)54¥49,311

$424
262
(277)
0
$410

13. Stocks of Subsidiaries
The amounts of stocks of subsidiaries the Company held were¥36,953 million, ¥36,953 million and ¥36,994 million (US$307
million) as of March 31, 2013, 2014 and 2015, respectively.
14. Pledged Assets and Secured Debts
Assets pledged as collateral as of March 31, 2013 were ¥26,930
million of securities and ¥163 million of bank deposits. Secured
debts as of March 31, 2013 were ¥4,583 million.
Assets pledged as collateral as of March 31, 2014 were¥28,231 million of securities and ¥1,241 million of bank deposits.
Secured debts as of March 31, 2014 were ¥4,679 million.
Assets pledged as collateral as of March 31, 2015 were¥33,691 million (US$280 million) of securities and ¥1,542 million(US$12 million) of bank deposits. Secured debts as of March 31,
2015 were ¥4,807 million (US$40 million).
15. Policy Reserves for the Reinsurance Contracts
Reserve for outstanding claims for the reinsurance contracts
provided in accordance with Article 71 Paragraph 1 of the Enforcement Regulation of the Insurance Business Law (hereinafter
called “reserve for outstanding claims for ceded reinsurance”)
were ¥1 million, ¥4 million and ¥50 million (US$418 thousand)as of March 31, 2013, 2014 and 2015, respectively.
Policy reserve for the reinsurance contracts provided in accordance with Article 71 Paragraph 1 of the Enforcement Regulation of the Insurance Business Law (hereinafter called “policy
reserve for ceded reinsurance”) were ¥30 million, ¥30 millionand ¥30 million (US$257 thousand) as of March 31, 2013, 2014
and 2015, respectively.
16. Adjustment Items for Redemption of Foundation Funds
and Appropriation of Net Surplus
The total amounts of adjustment items for redemption of foundation funds and appropriation of net surplus defined in Article
30 Paragraph 2 of the Enforcement Regulation of the Insurance
Business Law were ¥219,482 million, ¥263,120 million and¥438,243 million (US$3,646 million) as of March 31, 2013, 2014
and 2015, respectively.
17. Additional foundation funds
Notes for the fiscal year ended March 31, 2015
In accordance with Article 60 of the Insurance Business Law,
the Company carried out financing of additional foundation funds
totaling ¥10,000 million (US$83 million).
18. Accumulated foundation funds redeemed
Notes for the fiscal year ended March 31, 2015
Accompanying the redemption of foundation funds totaling¥15,000 million (US$124 million), in accordance with Article 56of the Insurance Business Law, the Company transferred thesame amount from reserve for redemption of foundation funds
to additions to accumulated foundation funds redeemed.
19. Commitment Line
There were unused commitment line agreements under which
the Company is the lender of ¥972 million, ¥872 million and¥12,372 million (US$102 million) as of March 31, 2013, 2014 and2015, respectively.
20. Subordinated Bonds
Repayments of subordinated bonds are subordinated to otherobligations.
21. Contribution to Policyholders Protection Corporation
The future contribution to the Life Insurance Policyholders Protection Corporation of Japan under Article 259 of the Insurance
Business Law were estimated at ¥10,972 million, ¥10,534 million and ¥10,372 million (US$86 million) as of March 31, 2013,2014 and 2015, respectively. The contributions were charged as
operating expenses in the year in which they were paid.

22. Reserve for Employees’ Retirement Benefits(1) The reserve for employees’ retirement benefits as of March 31, 2013 was calculated as follows:
As of March 31,

2013
Millions of yen

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

¥(72,507)
20,006(52,500)
8,134
(598)
¥(44,965)

FUKOKU MUTUAL LIFE INSURANCE COMPANY

27

(2) Gross amount of retirement benefit expenses for the year ended March 31, 2013 was as follows:Year ended March 31,

2013
Millions of yen

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

¥2,866
1,456
(515)
1,361
(38)
¥5,131(3) The assumptions used in calculation of the above information were as follows:Year ended March 31,

2013
Method of attributing the projected benefits to periods of service............................................................................

Straight-line
basis

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

2.0%
3.0%
10 years
10 years

23. Matters Related to Employees’ Retirement Benefits as ofMarch 31, 2014 and 2015
(1) Overview of employees’ retirement benefit system
As a defined benefit plan for office-based employees, the Company has a defined benefit corporate pension plan and retire-

ment lump-sum grants. As a defined contribution plan for these
employees, the Company also has a defined contribution pension plan.
As a defined benefit plan for sales employees, the Company has retirement lump-sum grants.

(2) Defined benefit plani) Reconciliation of beginning and end of balance of retirement benefit obligation
As of March 31,

2014

2015

Millions of yen

Retirement benefit obligation at the beginning of current fiscal year...................
Cumulative effects of changes in accounting policies..........................................
Balance at the beginning of the current fiscal year after reflectingchanges in accounting .........................................................................................
Service cost..........................................................................................................
Interest cost.........................................................................................................
Actuarial difference occurred during the fiscal year.............................................
Retirement benefits payments.............................................................................
Retirement benefit obligation at the end of current fiscal year............................

2015
Millions of
U.S. dollars¥72,507—¥71,618
4,763

$595
39

—
2,838
1,448
171
(5,347)¥71,618

76,381
3,088
1,068
788
(4,601)¥76,725

635
25
8
6
(38)
$638

ii) Reconciliation of beginning and end of balance of pension plan assets
As of March 31,

2014

2015

Millions of yen

Pension plan assets at the beginning of current fiscal year................................
Expected return on pension plan assets.............................................................
Actuarial difference occurred during the fiscal year............................................
Contributions by the employer............................................................................
Retirement benefits payments............................................................................
Pension plan assets at the end of current fiscal year..........................................

28

FUKOKU MUTUAL LIFE INSURANCE COMPANY¥20,006
600
1,333
2,309
(1,405)¥22,844

2015
Millions of
U.S. dollars¥22,844
685
1,530
2,339
(1,285)¥26,114

$190
5
12
19
(10)
$217

iii) Reconciliation of end of balance of retirement benefit obligation and pension plan assets with reserve for employees’ retirement
benefits presented on the balance sheets
As of March 31,

2014

2015

Millions of yen

a. Funded plan retirement benefit obligation.........................................................
b. Pension plan assets...........................................................................................
c. (a+b) . ...............................................................................................................
d. Unfunded plan retirement benefit obligation.....................................................
e. Unrecognized actuarial differences...................................................................
f. Unrecognized prior service cost........................................................................
g. Reserve for employees’ retirement benefits (c+d+e+f)...................................

¥ 29,130(22,844)
6,285
42,487(6,212)551¥ 43,112

2015
Millions of
U.S. dollars¥ 32,625(26,114)
6,510
44,100(4,692)475¥ 46,393

$271
(217)
54
366
(39)
3
$386

iv) Breakdown of retirement benefit gains and losses
As of March 31,

2014

2015

Millions of yen

Service cost............................................................................................................
Interest cost...........................................................................................................
Expected return on pension plan assets................................................................
Amortization of actuarial differences......................................................................
Amortization of prior service cost...........................................................................
Retirement benefit expenses related to defined benefit plan................................

¥2,838
1,448
(600)
759
(47)
¥4,3992015
Millions of
U.S. dollars¥3,088
1,068
(685)
778
(76)
¥4,173

$25
8
(5)
6
(0)
$34

v) Breakdown of main pension plan assets
The breakdown of main asset categories as a percentage of total pension plan assets is as follows:
As of March 31,

Life insurance general account................................................................................................
Domestic stocks......................................................................................................................
Domestic bonds......................................................................................................................
Foreign stocks.........................................................................................................................
Foreign bonds..........................................................................................................................
Others.....................................................................................................................................
Total........................................................................................................................................

2014
45.2%
16.7%
16.7%
14.4%
6.1%
0.9%
100.0%

2015
49.1%
18.3%
13.5%
13.1%
5.3%
0.6%
100.0%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 allocationof pension plan assets, and the present and expected future long-term rate of return on the diverse range of assets that makes up thepension assets.
vii) Underlying actuarial assumptions
Main underlying actuarial assumptions as of March 31, 2014 and 2015 were as follows:
As of March 31,

Discount rate...........................................................................................................................
Expected long-term rate of return on pension plan assets......................................................

2014
2.0%
3.0%

2015
1.4%
3.0%

(3) Defined contribution plan
The required contribution amounts by the Company to the defined contribution plan were ¥184 million and 185 million (US$1 million) as
of March 31, 2014 and 2015.
Starting from the year ended March 31, 2014, the Company began disclosing the required contribution amount to the defined
contribution plan.
FUKOKU MUTUAL LIFE INSURANCE COMPANY

29

III. Notes to Statements of Operations
1. Transactions with Subsidiaries
The total amounts of revenues and expenditures in connection
with subsidiaries were ¥1,427 million and ¥7,738 million for theyear ended March 31, 2013, ¥854 million and ¥8,351 million forthe year ended March 31, 2014 and ¥856 million (US$7 million)and ¥8,453 million (US$70 million) for the year ended March 31,
2015, respectively.

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

2013

2014

2015

		
Millions of yen

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

¥4,732
2,220¥ 862¥17,369
13,029¥ 2,658

2015
Millions of
U.S. dollars¥ 8,7463,458¥12,940

$ 72
28
$107

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

2013

2014

2015

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

¥1,2085,729¥3,429¥32
3,617¥5,6392015
Millions of
U.S. dollars

		Millions of yen

¥ 0
259
¥815

$0
2
$6

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

2013

2014

2015

Millions of
U.S. dollars

		Millions of yen

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

5. Policy Reserves for the Reinsurance Contracts
For the year ended March 31, 2013, provision for reservefor outstanding claims for ceded reinsurance considered in
calculation of provision for reserve for outstanding claims was¥0 million and reversal of policy reserve for ceded reinsurance
considered in calculation of provision for policy reserve was ¥0
million.
For the year ended March 31, 2014, provision for reservefor outstanding claims for ceded reinsurance considered in
calculation of provision for reserve for outstanding claims was

30

FUKOKU MUTUAL LIFE INSURANCE COMPANY¥ —¥1,009

¥—
¥52

2015

¥—
¥ 0

$—
$ 0

¥2 million and provision for policy reserve for ceded reinsurance
considered in calculation of reversal of policy reserve was ¥0
million.
For the year ended March 31, 2015, provision for reservefor outstanding claims for ceded reinsurance considered in
calculation of reversal for reserve for outstanding claims was¥46 million (US$383 thousand), and provision for policy reservefor ceded reinsurance considered in calculation of provision ofpolicy reserve was ¥0 million (US$4 thousand).

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

2013

2014

2015

Millions of
U.S. dollars

		Millions of yen

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

¥ 7,532
258¥33,508¥8,652(0)¥7,200¥ 9,0752¥25,399

7. Gains (Losses) from Money Held in Trust
Gains (Losses) from money held in trust for the years ended
March 31, 2013, 2014 and 2015 included valuation gains of ¥0
million, valuation gains of ¥0 million and valuation losses of ¥0
million (US$0 thousand), respectively.

(1) Method of grouping

8. Gains (Losses) from Derivative Instruments
Gains (Losses) from derivative instruments for the years ended
March 31, 2013, 2014 and 2015 included valuation gains of¥1,774 million, valuation gains of ¥2,251 million and valuation
gains of ¥2,346 million (US$19 million), respectively.

(2) Background of recognizing the impairment losses

9. Impairment Losses of Fixed Assets
For the year ended March 31, 2013, 2014 and 2015, impairment
losses of fixed assets were as follows:

2015

$ 75
0
$211

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

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

2013

2014

2015

Millions of
U.S. dollars

Millions of yen

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

¥183

2015

26

¥1,541
140

¥296
136

$2
1

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

210

1,682

432

3

177
212

35
58

235
30

1
0

Total unused real estate (ii)…………………………………………

390

93

266

2

Total:
Land……………………………………………………………………
Buildings and others…………………………………………………

361
239

1,577
198

531
167

4
1

Total (i)+(ii)……………………………………………………………

600¥1,775¥698$5(4) Calculation method of recoverable amount						Recoverable amount is based on net sales value. Net sales value is determined based on appraisal value, posted price or road rate.

FUKOKU MUTUAL LIFE INSURANCE COMPANY

31

Report of Independent Auditors

32

FUKOKU MUTUAL LIFE INSURANCE COMPANY

FUKOKU MUTUAL LIFE INSURANCE COMPANY

33

Consolidated Financial Statements
Consolidated Balance Sheets
Fukoku Mutual Life Insurance Company and consolidated subsidiaries
As of March 31, 2013, 2014 and 2015

As of March 31,

2013

2014

2015

2015
Millions of
U.S. dollars

Millions of yen

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

¥

72,868¥91,021¥

154,319$ 1,284

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

70,300148,700

186,500

1,551

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

1,111

1,011

870

7

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

31,322

31,981

34,319285

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

6,108,723

6,406,927

6,881,578

57,265Loans ....................................................................................

910,657

839,244

767,293

6,385

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

160,528

132,912132,261

1,100

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

105,882

95,14891,048757

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

1,430

1,159

954

7

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

1,297

280

630

5

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

3,089

2,992

3,025

25

272,228

232,492

227,919

1,896

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

12,321

11,33911,613

96

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

3,855

3,091

2,328

19

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

2,271

1,659

1,102

9

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

279

279

279

2

18,727

16,36915,323

127

6

1

4

0

Tangible fixed assets:

Intangible fixed assets:

Agency receivables................................................................
Reinsurance receivables .......................................................

56

94

107

0

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

54,69851,06559,659496

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

362

1,041

640

5

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

(2,201)(2,281)(1,948)(16)

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

¥7,538,862¥7,817,668¥8,326,588$69,290

See notes to the consolidated financial statements.

34

FUKOKU MUTUAL LIFE INSURANCE COMPANYAs of March 31,

2013

2014

2015

2015
Millions of
U.S. dollars

Millions of yen

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

¥

24,663¥

25,170¥

23,501$

195

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

6,779,259

6,918,429

7,160,599

59,587

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

52,30751,00749,311

410

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

697

735

707

5

6,856,928

6,995,343

7,234,120

60,199Agency payables ...................................................................

375

339

377

3

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

113

113

125

1

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

66,187

122,346

118,959

989

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

53,91857,03659,240492

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

45,153———Net defined benefit liabilities..................................................

—

48,84050,691

421

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

46,62550,32555,177459

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

16,93827,502

84,524

703

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

16,11915,92914,787123

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

7,102,360

7,317,778

7,618,005

63,393

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

35,00035,00030,000249

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

71,00071,00086,000715

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

112

112

112

0

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

102,904

126,584

145,942

1,214

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

209,016

232,696

262,0542,180

219,719

263,161

440,109

3,662

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

62

2

0

0

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

3,421

3,144

3,894

32

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

(635)

(261)

(52)

(0)

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

—(3,918)(3,000)(24)

Net assets:

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

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

222,569

262,127

440,951

3,669

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

4,916

5,066

5,576

46

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

436,502499,890

708,582

5,896

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

¥7,538,862¥7,817,668¥8,326,588$69,290

See notes to the consolidated financial statements.

FUKOKU MUTUAL LIFE INSURANCE COMPANY

35

Consolidated Statements of Operations
Fukoku Mutual Life Insurance Company and consolidated subsidiaries
For the years ended March 31, 2013, 2014 and 2015

Years ended March 31,

2013

2014

2015

Millions of yen

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

36

FUKOKU MUTUAL LIFE INSURANCE COMPANY

2015
Millions of
U.S. dollars¥ 862,225¥707,044¥ 796,458$6,627

139,897
1,157
38,498
8,290
907
—
1,230
10,075200,056
10,854
1,073,135

149,176669
19,402
34,672
2,214—
279
10,417
216,832
11,743
935,620

159,905
2,349
35,232
27,3102,041
270
59
11,869239,037
11,7281,047,224

1,330
19
293
227
16
2
0
98
1,989
97
8,714

171,223
101,713
136,427
109,133
32,179550,677

138,689
135,437
131,069
114,188
33,444552,830

116,788
156,377
128,295
116,806
28,694546,964

971
1,301
1,067
972
238
4,551

514
268,44976

507
139,16974—
242,170
54

—
2,015
0

0
269,0400139,752

0242,225

0
2,015

1,801
10,7901,009
34,773
74
5,802
4,820
59,072
99,232
22,2441,000,266¥ 72,868

3,655
9,289
52
25,116
56
5,082
5,751
49,005
95,27822,313
859,179¥ 76,441

4,267
1,075
0
18,679
—
4,877
5,673
34,572
97,20924,646945,618¥ 101,606

35
8
0
155
—
40
47
287
808
205
7,869
$ 845

Years ended March 31,

2013

2014

2015

Millions of yen

Extraordinary gains:
Gains on disposal of fixed assets.......................................
Total extraordinary gains ....................................................
Extraordinary losses:
Losses on disposal of fixed assets . ..................................
Impairment losses .............................................................
Provision for reserve for price fluctuation of securities .....
Other extraordinary losses ................................................
Total extraordinary losses . ................................................
Provision for reserve for dividends topolicyholders (subsidiary) ..............................................
Surplus before income taxes . ............................................
Income taxes:
Current ..............................................................................
Deferred ............................................................................
Total income taxes . .............................................................
Net surplus before minority interests ................................
Minority interests ................................................................
Net surplus for the year ......................................................

¥

60
60

¥ 2,005
2,005

395
600
8,441
2
9,439

2015
Millions of
U.S. dollars

¥

6
6

$ 0
0

7,314
1,775
3,700
—
12,791

167
698
4,851
—
5,718

1
5
40
—
47

455
63,034542
65,112483
95,411

4793

15,138(2,499)12,63950,395
128¥50,267

20,867(7,773)13,09352,019236¥51,782

28,933(3,318)25,614
69,796
163¥69,633

240
(27)
213
580
1
$579

2013

2014

See notes to the consolidated financial statements.

Consolidated Statements of Comprehensive Income
Fukoku Mutual Life Insurance Company and consolidated subsidiaries
For the years ended March 31, 2013, 2014 and 2015

Years ended March 31,

2015

Millions of yen

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

2015
Millions of
U.S. dollars¥ 50,395¥52,019¥ 69,796$ 580

151,291

43,367

177,308

1,475

(107)
(17)
193

(60)
3
373

(0)
8
1
7
1,493
2,069
4
$2,073——

151,359

43,684

(2)
989
208
918
179,422201,248507¥201,755

95,541
162¥95,703

248,696522¥249,218

See notes to the consolidated financial statements.

FUKOKU MUTUAL LIFE INSURANCE COMPANY

37

Consolidated Statements of Cash Flows
Fukoku Mutual Life Insurance Company and consolidated subsidiaries
For the years ended March 31, 2013, 2014 and 2015

Years ended March 31,

2013

2014

2015

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 ..................................
Interest on accumulated dividends to policyholders ...........
Interest on accumulated dividends
to policyholders (subsidiary)..............................................
Provision for reserve for dividends
to policyholders (subsidiary)..............................................
Increase (decrease) in allowance for possible loan losses . ...
Increase (decrease) in reserve for employees'
retirement benefits . .........................................................
Increase (decrease) in net defined benefit liabilities.............
Increase (decrease) in reserve for pricefluctuation of securities ....................................................
Interest, dividends and other income ..................................
(Gains) losses on securities .................................................
Interest expenses . ..............................................................
Foreign exchange (gains) losses, net ..................................
(Gains) losses on tangible fixed assets ...............................
(Increase) decrease in agency receivables ..........................
(Increase) decrease in reinsurance receivables ...................
(Increase) decrease in other assets except frominvesting and financing activities......................................
Increase (decrease) in agency payables ..............................
Increase (decrease) in reinsurance payables .......................
Increase (decrease) in other liabilities except frominvesting and financing activities......................................
Others .................................................................................
Subtotal ...........................................................................
Interest, dividends and other income received ...................
Interest paid ........................................................................
Dividends to policyholders paid ...........................................
Dividends to policyholders paid (subsidiary) ........................
Corporate income tax (paid) refunded .................................
Net cash provided by (used in) operating activities (I) .....
Cash flows from investing activities:(Increase) decrease in deposits ...........................................
Proceeds from sales and redemption of monetaryclaims bought ...................................................................
Payments for increase in money held in trust .....................
Proceeds from 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 settlement of derivatives ............................
Others .................................................................................
Subtotal (IIa) ....................................................................
(I+IIa)................................................................................

38

FUKOKU MUTUAL LIFE INSURANCE COMPANY¥

63,034
5,802
6,528
600
763
514
268,44976¥

65,112
5,082
7,109
1,775
763
507
139,169
74

2015
Millions of
U.S. dollars¥

95,411
4,877
7,323
698
763
(1,669)242,170
54

$

793
40
60
5
6
(13)
2,015
0

0

0

0

0

455
(74)

542
80

483
(333)

4
(2)

(1,231)——(1,973)—(1,467)

—
(12)

8,441
(139,897)(11,447)
1,801
(907)
174
0
67

3,700
(149,176)(30,702)
3,655(2,214)
5,130
5
(37)

4,851
(159,905)(57,006)
4,267(2,041)
144
(3)
(12)

40
(1,330)
(474)
35
(16)
1
(0)
(0)

145
(184)
24

(880)
(36)
(0)

(2,196)
37
12

(18)
0
0

(1,494)
16,632
218,275
146,798(1,392)(25,727)(406)(7,647)
329,899(2,568)17,015
62,135
159,741(3,430)(29,137)(504)(17,291)
171,511(76)
15,712
152,096
171,494(4,308)(33,346)(511)(25,145)
260,278

(0)
130
1,265
1,427
(35)
(277)
(4)
(209)
2,165

(191)

(684)

(146)

(1)

220
—
5,034
(1,048,127)
638,224(94,197)
214,939(37,627)(24,962)(346,686)¥ (16,787)

98(2,000)1,999(867,499)
700,791(86,787)
148,350(21,671)(20,399)(147,800)¥ 23,710

141——(673,696)
546,073(58,621)
121,587(21,481)(60,284)(146,427)¥ 113,851

1——(5,606)
4,544
(487)
1,011
(178)
(501)
(1,218)$947

Years ended March 31,

2013

2014

2015

Millions of yen

Payments for purchase of tangible fixed assets .................
Proceeds from sales of tangible fixed assets . ....................
Payments for purchase of intangible fixed assets................
Proceeds from sales of intangible fixed assets....................
Payments for stocks of subsidiaries and affiliateswith change of scope of consolidation ..............................
Net cash provided by (used in) investing activities . ........
Cash flows from financing activities:
Financing of subordinated bonds ........................................
Financing of additional foundation funds .............................
Redemption of foundation funds . .......................................
Interest payment for foundation funds . ..............................
Dividends paid to minority interests.....................................
Payments for lease obligations.............................................
Net cash provided by (used in) financing activities . ........
Effect of exchange rate changes on cash andcash equivalents .................................................................
Net increase (decrease) in cash and cash equivalents .......
Cash and cash equivalents at the beginning of the year ...
Cash and cash equivalents at the end of the year ..............
See notes to the consolidated financial statements.

¥(4,704)444(3,616)173¥

(4,607)30,441(2,777)—2015
Millions of
U.S. dollars¥(3,357)147(3,343)
—

$

(27)
1
(27)
—

(330)
(354,721)—(124,744)—(152,980)—(1,273)30,000
—
—
(621)
(12)
(518)
28,84749,870
—
—
(621)
(12)
(752)
48,483—
10,000(15,000)
(621)
(12)
(740)
(6,374)

—
83
(124)
(5)
(0)
(6)
(53)

67
4,091
138,504¥ 142,596

526
95,777
142,596¥ 238,373(50)
100,872
238,373¥ 339,246

(0)
839
1,983
$ 2,823

FUKOKU MUTUAL LIFE INSURANCE COMPANY

39

Consolidated Statements of Changes in Net Assets
Fukoku Mutual Life Insurance Company and consolidated subsidiaries
For the years ended March 31, 2013, 2014 and 2015
Millions of yen
Foundation funds, surplus and others

Year ended March 31, 2013

Foundation
funds

Accumulated foundation
funds redeemed

Reserve forrevaluation

Consolidated
surplus

Total foundation funds,
surplus and others

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

¥35,000¥71,000¥112¥77,183¥183,295

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

(23,989)(23,989)

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

(621)

(621)

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

50,26750,267

Reversal of revaluation reserve for land���������������������

(55)

(55)

Change of scope of consolidation������������������������������

120

120

Changes in the current fiscal year

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

—

—

—

25,721

25,721

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

¥35,000¥71,000¥112¥102,904¥209,016

Millions of yen
Accumulated other comprehensive income

Year ended March 31, 2013
Balance at the beginning ofcurrent fiscal year����������������������������������

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

Deferredvaluation
gains (losses)
under hedge
accounting¥68,806¥170

Accumulated
Revaluation
Foreign currency remeasurements
reserve for land,translationof defined
net of tax
adjustment
benefit plans¥3,383¥(828)¥ —Total
accumulated
othercomprehensive
incomeMinority
interests

Total
net assets¥71,532¥4,421¥259,249

Changes in the current fiscal year
Additions to reserve fordividends to policyholders�����������������

(23,989)

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

(621)

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

50,267

Reversal of revaluation
reserve for land���������������������������������

(55)

Change of scope of consolidation�������

120

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

150,912

(107)

38

193

—

151,036495

151,531

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

150,912

(107)

38

193

—

151,036

495

177,252

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

¥219,719¥62¥3,421¥(635)¥ —¥222,569¥4,916¥436,502

40

FUKOKU MUTUAL LIFE INSURANCE COMPANY

Millions of yen
Foundation funds, surplus and others

Year ended March 31, 2014

Foundation
funds

Accumulated foundation
funds redeemed

Reserve forrevaluation

Consolidated
surplus

Total foundation funds,
surplus and others

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

¥35,000¥71,000¥112¥102,904¥209,016

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

(27,762)(27,762)

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

(621)

(621)

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

51,782

51,782

Reversal of revaluation reserve for land���������������������

281

281

Changes in the current fiscal year

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

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

—

—

—

23,67923,679Balance at the end of current fiscal year������������������������

¥35,000¥71,000¥112¥126,584¥232,696

Millions of yen
Accumulated other comprehensive income

Year ended March 31, 2014
Balance at the beginning ofcurrent fiscal year����������������������������������

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

Deferredvaluation
gains (losses)
under hedge
accounting¥219,719¥62

Accumulated
Revaluation
Foreign currency remeasurements
reserve for land,translationof defined
net of tax
adjustment
benefit plans¥3,421¥(635)¥—

Total
accumulated
othercomprehensive
incomeMinority
interests

Total
net assets¥222,569¥4,916¥436,502

Changes in the current fiscal year
Additions to reserve fordividends to policyholders�����������������

(27,762)

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

(621)

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

51,782

Reversal of revaluation
reserve for land���������������������������������

281

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

43,441

(60)

(277)

373

(3,918)39,558149

39,708

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

43,441

(60)

(277)

373

(3,918)39,558

149

63,388

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

¥263,161¥2¥3,144¥(261)¥(3,918)¥262,127¥5,066¥499,890

FUKOKU MUTUAL LIFE INSURANCE COMPANY

41

Millions of yen
Foundation funds, surplus and others

Year ended March 31, 2015

Foundation
funds

Accumulated
foundation funds
redeemedReserve forrevaluation

Consolidated
surplus

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

¥35,000¥71,000¥112¥126,584(3,297)(3,297)35,00071,000112

123,286

229,399

Cumulative effects of changes in accounting policiess���������
Restated balance�����������������������������������������������������������������������

Total foundation funds,
surplus and others¥232,696

Changes in the current fiscal year
Issuance of foundation funds������������������������������������������������

10,00010,000Additions to reserve for dividends to policyholders���������������

(31,595)

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

(31,595)

15,00015,000

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

(621)

(621)

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

69,633

69,633

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

(15,000)(15,000)

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

(15,000)(15,000)

Reversal of revaluation reserve for land��������������������������������

239

239

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

(5,000)15,000—22,65532,655

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

¥30,000¥86,000¥112¥145,942¥262,054

Millions of yen
Accumulated other comprehensive income

Year ended March 31, 2015
Balance at the beginning ofcurrent fiscal year����������������������������������

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

Deferredvaluation
gains (losses)
under hedge
accounting¥263,161¥2

Accumulated
Revaluation
Foreign currency remeasurements
reserve for land,translationof defined
net of tax
adjustment
benefit plans¥3,144¥(261)¥(3,918)

Total
accumulated
othercomprehensive
incomeMinority
interests

Total
net assets¥262,127¥5,066¥499,890

Cumulative effects of changes inaccounting policies����������������������������
Restated balance�������������������������������������

(3,297)263,161

2

3,144

(261)

(3,918)262,127

5,066

496,593

Changes in the current fiscal year
Issuance of foundation funds��������������

10,000Additions to reserve fordividends to policyholders�����������������

(31,595)

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

15,000

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

(621)

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

69,633

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

(15,000)

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

(15,000)

Reversal of revaluation
reserve for land���������������������������������

239

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

176,948

(2)

750

208

918

178,823510

179,333

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

176,948

(2)

750

208

918

178,823510

211,988

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

¥440,109¥0¥3,894¥ (52)¥(3,000)¥440,951¥5,576¥708,582

42

FUKOKU MUTUAL LIFE INSURANCE COMPANY

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

Year ended March 31, 2015
Balance at the beginning of current fiscal year��������������������������

Foundation
funds

Accumulated
foundation funds
redeemedReserve forrevaluation

Consolidated
surplus

$291

$590

$0

$1,053
(27)

(27)

291

590

0

1,025

1,908

Cumulative effects of changes in accounting policiess���������
Restated balance�����������������������������������������������������������������������

Total foundation funds,
surplus and others$1,936

Changes in the current fiscal year
Issuance of foundation funds������������������������������������������������

83

83

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

(262)

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

(262)

124

124

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

(5)

(5)

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

579

579

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

(124)

(124)

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

(124)

(124)

Reversal of revaluation reserve for land��������������������������������

1

1

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

(41)

124

—

188

271

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

$249

$715

$0

$1,214$2,180Millions of U.S. dollars
Accumulated other comprehensive income

Year ended March 31, 2015
Balance at the beginning ofcurrent fiscal year����������������������������������

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

Deferredvaluation
gains (losses)
under hedge
accounting$2,189$0Accumulated
Revaluation
Foreign currency remeasurements
reserve for land,translationof defined
net of tax
adjustment
benefit plans

$26

$(2)

$(32)

Total
accumulated
othercomprehensive
incomeMinority
interests

Total
net assets$2,181$42$4,159Cumulative effects of changes inaccounting policies����������������������������
Restated balance�������������������������������������

(27)
2,189

0

26

(2)

(32)

2,181

42

4,132

Changes in the current fiscal year
Issuance of foundation funds��������������

83

Additions to reserve fordividends to policyholders�����������������

(262)

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

124

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

(5)

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

579

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

(124)

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

(124)

Reversal of revaluation
reserve for land���������������������������������

1

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

1,472

(0)

6

1

7

1,488

4

1,492

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

1,472

(0)

6

1

7

1,488

4

1,764

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

$3,662

$0

$32

$(0)

$(24)

$3,669$46$5,896

FUKOKU MUTUAL LIFE INSURANCE COMPANY

43

Notes to the Consolidated Financial Statements

I. Presentation of the Consolidated Financial
Statements
1. Basis of Presentation
The accompanying consolidated financial statements have been
prepared from the accounts maintained by Fukoku Mutual Life
Insurance Company (the "Company") and its consolidated subsidiaries in accordance with the provisions set forth in the Insurance
Business Law of Japan and its related rules and regulations and in
conformity with accounting principles generally accepted in Japan,
which are different in certain respects from accounting principles
generally accepted in countries and jurisdictions other than Japan.
In addition, the notes to the consolidated financial statements include information which is not required under accounting principles generally accepted in Japan but is presented
herein as additional information.
Amounts of less than one million yen have been eliminated.
As a result, total in yen shown herein do not necessarily agreewith the sum of the individual amounts.
2. U.S. Dollar Amounts
The translations of yen amounts into U.S. dollar amounts are included solely for the convenience of the reader and have been made,as a matter of arithmetical computation only, at the rate of ¥120.17= US$1.00, the effective rate of exchange at the balance sheet
date of March 31, 2015. 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.
3. Principles of Consolidation(1) Scope of consolidation

Consolidated subsidiaries for the year ended March 31,2013,2014 and 2015 are listed below:
Fukoku Capital Management, Inc.
Fukokushinrai Life Insurance Company
Fukoku Information Systems Co., Ltd.
Fukoku Life International (U.K.) Limited
Fukoku Life International (America) Inc.
Effective for the fiscal year ended March 31, 2013, owing to
the sale of all shares of Fukoku Shinyo Hosho Company Limited,on the October 31, 2012, the Company excluded it from scopeof consolidation.
Major unconsolidated subsidiary is Fukoku Seimei Building
Company Limited.
Seven subsidiaries are excluded from the scope of consolidation, as each one of them is small in its total assets, amountof sales, net surplus for the year and surplus and is sufficiently
insignificant to reasonable judgement on its impact on the financial position and results of operation of the Company's group.
(2) Application of equity method

Unconsolidated subsidiaries (such as Fukoku Seimei Building

44

FUKOKU MUTUAL LIFE INSURANCE COMPANY

Company Limited, etc.) are insignificant in their impact on net
surplus and surplus, and also immaterial as a whole, therefore,
application of equity method is withheld.
There are no affiliates for the years ended March 31, 2013,2014 and 2015.
(3) Fiscal year of consolidated subsidiaries

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

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

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

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

The valuation of securities, including bank deposits and monetary claims bought which are equivalent to securities, andsecurities managed as trust assets in money held in trust, is asfollows:i) Trading securities are stated at fair market value. Costs of
their sales are determined by the moving average method.
ii) Held-to-maturity debt securities are stated at amortized cost
under the straight-line method, cost being determined by themoving average method.
iii) Policy-reserve-matching bonds are stated at amortized cost
under the straight-line method, cost being determined by
the moving average method in accordance with “Temporary
Treatment of Accounting and Auditing Concerning Policy-reserve-matching Bonds in Insurance Industry” (Industry Audit
Committee Report No.21 issued by the Japanese Institute ofCertified Public Accountants on November 16, 2000).
iv) Investments in unconsolidated subsidiaries and affiliates
which are not accounted for under the equity method arestated at cost, cost being determined by the moving averagemethod.
v) Available-for-sale securities with fair market value are stated
at fair market value based on the market prices at the end of
fiscal year. Costs of their sales are determined by the moving average method. Net unrealized gains or losses on theseavailable-for-sale securities, net of taxes, are recorded as aseparate component of net assets.
Available-for-sale securities whose fair values are
deemed extremely difficult to obtain are stated at cost, cost
being determined by the moving average method, except for
public and corporate bonds including foreign bonds, of which
the difference between acquisition cost and face value isconsidered to be an adjustment of interest. Such bonds arestated at amortized cost under the straight-line method, cost
being determined by the moving average method.
(2) Valuation methods of derivative instruments

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

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

Law for Revaluation of Land (Government Ordinance No.119
promulgated on March 31, 1998) and the road rate set forth in
Article 2 item 4 of the said Ordinance with certain reasonableadjustments.
(4) Depreciation of tangible fixed assets
Depreciation of the Company's tangible fixed assets is calculated by the following methods.
Tangible fixed assets (excluding lease assets):Declining-balance method
However, buildings (excluding building attachments and structures) acquired on or after April 1, 1998 are depreciated using
Straight-line method.
Lease assets related to finance lease transactions that do nottransfer ownership: Straight-line method over the lease term
without residual value
Other tangible fixed assets acquired for ¥100,000 or more but
less than ¥200,000 are depreciated equally over three years.
(5) Foreign currency translation

Foreign currency-denominated assets and liabilities (excluding the shares of unconsolidated subsidiaries and affiliates) aretranslated into Japanese yen at the effective exchange rate prevailing at the balance sheet date. The shares of unconsolidated
subsidiaries and affiliates are translated into Japanese yen at theeffective exchange rate prevailing on the day the shares wereacquired.
(6) Allowance for possible loan losses

Allowance for possible loan losses is provided in accordancewith the Company's standards of self-assessment and write-offs
and reserves on credit quality:i) For the credits of borrowers who are legally bankrupt suchas being in the proceedings of bankruptcy or civil rehabilitation (hereinafter called "legally bankrupt borrowers") and whoare substantially bankrupt (hereinafter called "substantiallybankrupt borrowers"), the Company provides the remaining
amount of credits after the direct write-off described below
and the deductions of the amount expected to be collected
through the disposal of collateral or the execution of guarantees.
ii) For the credits of borrowers who are not currently bankrupt
but have a high possibility of bankruptcy (hereinafter called“not currently bankrupt borrowers”), the Company provides
the amounts deemed as necessary considering the borrowers' ability to pay, within the amounts after deductions of theamount expected to be collected through the disposal of collateral or the execution of guarantees.
iii) For the credits of borrowers other than the above, the Company provides the amounts calculated by multiplying the borrowers' balance by the actual ratio of bad debt losses on defaults
during a certain past period.
All credits are assessed by the relevant departments in accordance with the Company’s standards of self-assessment on

FUKOKU MUTUAL LIFE INSURANCE COMPANY

45

credit quality. The results of the assessment are reviewed by
the audit department, which is independent of business-related
divisions. Subsequently, the allowance for possible loan losses
are provided based on the results of these assessments.
For the credits of legally bankrupt borrowers and substantially bankrupt borrowers, the amounts remaining after deductions of collateral value or the amounts collectible through theexecution of guarantees is written-off directly from the borrower’s balance as the estimated uncollectible amounts. The
amounts written-off as of March 31, 2013, 2014 and 2015 were¥308 million, ¥271 million and ¥247 million (US$2 million), respectively.
(7) Accounting of employees’ retirement benefits

Net defined benefit liabilities are presented for the employees’
retirement benefits after deducting pension plan assets fromretirement benefit obligations, based on estimated amounts asof the balance sheet date.
The Company uses the following methods of accounting in
relation to retirement benefits.
◦ Method for allocation of projected retirement benefits����� Benefit formula◦ Amortization period of actuarial differences��� 10 years◦ Amortization period of prior service cost����� 10 years(8) Reserve for price fluctuation of securities

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

Hedge accounting is based on "Accounting Standards for
Financial Instruments" (ASBJ Statement No. 10 issued by the
Accounting Standards Board of Japan on August 11, 2006).
For the foreign currency forward contracts against theexchange rate fluctuations in the value of foreign currency-denominated bonds classified as available-for-sale securities, which
qualify for hedge accounting because of high correlation andeffectiveness between the hedging instruments and the hedged
items, valuation gains and losses on the foreign currency forward contracts are recorded in the statements of operations.

46

FUKOKU MUTUAL LIFE INSURANCE COMPANY

For the interest rate swaps against the interest rate fluctuations regarding loans, which qualify for hedge accounting
because of high correlation and effectiveness between thehedging instruments and the hedged items, valuation gains andlosses on the interest rate swaps are deferred until the maturityof the hedged transactions.
The Company applies foreign currency swap appropriatedtreatment as a hedge for the foreign exchange fluctuation risk
associated with foreign currency denominated bonds issued by
the Company.
For judging the effectiveness of hedge used, ratio analysis
of comparing the fluctuations in the fair value or cash flows ofhedged items and hedging instruments is mostly applied.
(12) Accounting for consumption taxes

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

Policy reserve is based on Article 116 of the Insurance Business
Law, and the premium reserve at the end of fiscal year is calculated by the following method:
In regard to the policies subject to the standard policy
reserve, the method as prescribed by the Commissioner of Financial Services Agency (Ministry of Finance Ordinance No. 48,
1996) is applied.
In regard to the policies not subject to the standard policy
reserve, the net level premium method is applied.
Based on the provision of paragraph 5, Article 69 of the
Enforcement Regulation of the Insurance Business Law, theCompany’s certain individual annuity insurance policies, certain
hospitalization riders with surgery benefits and long-term hospitalization benefits have funded policy reserves included.
(14) Amortization method for intangible fixed assets

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

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

Of the bonds corresponding to the sub-groups of individual
insurance and annuities which are set by insurance types andinvestment policies, the bonds that are held to match the duration of liabilities are classified by the Company as policy-reservematching bonds in accordance with “Temporary Treatment of
Accounting and Auditing Concerning Policy-reserve-matching
Bonds in Insurance Industry” (Industry Audit Committee Report
No. 21 issued by the Japanese Institute of Certified Public Accountants on November 16, 2000).
The amounts of policy-reserve-matching bonds recordedon the balance sheets and the market value of these bonds asof March 31, 2013, 2014 and 2015 were written in Notes No. 4“Financial Instruments.”
2. Accounting changes and corrections of past errors(1) Notes for the fiscal year ended March 31, 2014
Effective from the fiscal year ended March 31, 2014, in accordance with “Accounting Standard for Retirement Benefits”(Accounting Standards Board of Japan (ASBJ) Statement No. 26,
May 17, 2012, excluding the provision of article 35) and “Guidance on Accounting Standard for Retirement Benefits” (ASBJ
Guidance No. 25, May 17, 2012, excluding the provision ofarticle 67), the Company has changed its method of presenting
net defined benefit liabilities. These liabilities are presented after
deducting pension plan assets from retirement benefit obligations. Unrecognized actuarial differences and unrecognized priorservice cost are presented within net defined benefit liabilities.
As of March 31, 2014, in accordance with transitional treatment as stipulated in article 37 of the Accounting Standard for
Retirement Benefits, the impact of the changes in accounting
policies is included in accumulated remeasurements of defined
benefit plans in accumulated other comprehensive income.
As a result, the Company recognized ¥48,840 million as net
defined benefit liabilities and accumulated other comprehensive
income decreased by ¥3,918 million.
(2) Notes for the fiscal year ended March 31, 2015
Effective from the fiscal year ended March 31, 2015, in accordance with “Accounting Standard for Retirement Benefits”(Accounting Standards Board of Japan (ASBJ) Statement No.
26, May 17, 2012, and “Guidance on Accounting Standard for
Retirement Benefits” (ASBJ Guidance No. 25, May 17, 2012),
the Company and its consolidated subsidiaries changed from astraight-line basis to a benefit formula as the method for allocation of projected retirement benefits. The Company and its
consolidated subsidiaries also changed the method used for
determining the discount rate from a discount rate based on theestimated average period until the payment of retirement benefits to a single weighted average discount rate reflecting theestimated payment period and the amount for each estimatedperiod.
	��������������������������������������������������������
As a result, compared with the previous method, unappropriated surplus at the start of the period ended March 31, 2015,
decreased by ¥3,297 million ($27 million). In addition, in theyear ended March 31, 2015, ordinary profits and surplus before
income taxes increased by ¥39 million ($329 thousand).

3. The Principal Accounting Standards Published before
March 31, 2014 and 2015 but not Applied are as follows.
(1) Notes for the fiscal year ended March 31, 2014
With the publication of “Accounting Standard for Retirement
Benefits” (ASBJ Statement No. 26, May 17, 2012) and “Guidanceon Accounting Standard for Retirement Benefits” (ASBJ Guidance No. 25, May 17, 2012), the method for calculating retirement benefit obligations, current service cost and others will bechanged.
Compulsory application of this standard is from the commencement of fiscal years beginning on or after April 1, 2014.
The Company plans to apply this standard from the start of the
fiscal year ending March 31, 2015.
The Company and its consolidated subsidiaries are currently
evaluating the impact in the consolidated fiscal years after theapplication of the standards.
(2) Notes for the fiscal year ended March 31, 2015
With the publication of “Accounting Standard for Business Combinations” (Accounting Standards Board of Japan (ASBJ) Statement No. 21, September 13, 2013), “Guidance on AccountingStandard for Business Combinations and Accounting Standard
for Business Divestitures” (ASBJ Guidance No.10, September
13, 2013), and “Accounting Standard for Consolidated Financial
Statements” (ASBJ Statement No. 22, September 13, 2013),
the accounting treatment for handling amount differences stemming from changes in a parent company’s ownership interest ina subsidiary when the parent company retains control over thesubsidiary as well as the treatment of acquisition-related costs ina business combination were revised. In addition, the names of
items presented in the consolidated financial statements wererevised.
Compulsory application of these standards is from the commencement of fiscal years beginning on or after April 1, 2015.
The Company plans to apply this standard from the start of the
fiscal year ending March 31, 2016.
The Company is currently evaluating the impact in the consolidated fiscal years after the application of these standards.

4. Financial Instruments
Asset management of the Company’s general accounts otherthan the separate accounts stipulated in Article 118 Paragraph 1of the Insurance Business Law is conducted on the principle ofprudent and profitable investments, considering public and social
responsibilities of the insurance business. Based on this policy,
the Company allocates the fund, securing its liquidity, from themedium-to-long term viewpoints. The Company is diversifying
investments in assets such as foreign securities and equity
securities within the acceptable range of risk in order to enhance
the profitability, although yen-denominated interest bearing
assets including debt securities such as Japanese government
bonds and loans are the cores of the portfolios. Derivatives aremainly used to hedge the market risk regarding spot-priced
assets. 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

FUKOKU MUTUAL LIFE INSURANCE COMPANY

47

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 the assets
by utilizing control functions of the Financial and Investment
Risk Management Department towards the asset management
sections, monitoring the status of market risk and credit risk
periodically on a daily or monthly basis. In addition, the Company

quantifies the market risk and credit risk using value-at-risk (VaR)
method in order to control the possible maximum losses which
may arise from the holding assets within a certain range of risk
buffers.
The carrying amounts, fair values and their relateddifferences of major financial assets and liabilities as of March
31, 2013, 2014 and 2015, were as follows:
As of March 31,

2013
Carrying
amountCash 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 bonds*1����������������������������������������������������������������
Liabilities total�����������������������������������������������������������������������������
Derivative instruments*2:
Hedge accounting not applied����������������������������������������������
Hedge accounting applied�����������������������������������������������������
Total derivative instruments��������������������������������������������������

¥Fair value

—
—
—

¥

Millions of yen

¥

—
—
—

Difference

¥

—
—
—

¥

90,88690,886
148,700¥

Difference

90,88690,886
148,700

¥

—
—
—

1,136
1,136

25
25

1,011
1,011

1,054
1,054

43
43

30,32230,32230,32230,322——30,981
30,981

30,981
30,981——

258,193
1,230,032
1,888,162
2,640,657
6,017,045

258,193
1,348,605
2,036,166
2,640,657
6,283,622—
118,573
148,003—
266,577

271,060
1,265,332
2,071,506
2,704,248
6,312,148

271,060
1,379,802
2,214,902
2,704,248
6,570,014—
114,470
143,395—
257,865

69,956
840,701
910,657———

69,956
866,908
936,865———(0)26,207
26,207———

68,590770,654839,244
7,422,971
122,346
122,346

68,590793,401
861,991
7,703,628
126,900
126,900(0)
22,74722,747
280,656
4,554
4,554

331
(795)
(463)

331
(795)
(463)

—
—
—

(1,920)(2,423)(4,343)(1,920)(2,423)(4,343)

—
—
—

¥

¥

¥
As of March 31,

Millions of yen

Carrying
amount¥¥Fair value

1,111
1,111

2015

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���������������������������������������������
Investments in subsidiaries and affiliates ����������������������������
Available-for-sale securities���������������������������������������������������
Total securities����������������������������������������������������������������������
Loans:
Policy loans���������������������������������������������������������������������������
Ordinary loans�����������������������������������������������������������������������
Total loans�����������������������������������������������������������������������������
Assets total���������������������������������������������������������������������������������
Subordinated bonds*1����������������������������������������������������������������
Liabilities total�����������������������������������������������������������������������������
Derivative instruments*2:
Hedge accounting not applied����������������������������������������������
Hedge accounting applied�����������������������������������������������������
Total derivative instruments��������������������������������������������������

2014

Carrying
amountFair value

154,273
154,273
186,500¥ 154,273
154,273
186,500

870
870

918
918

33,31933,319$Fair value

Difference$ 1,283
1,283
1,551

47
47

7
7

7
7

0
0

33,31933,319

—
—

277
277

277
277

—
—

321,079
1,278,101
2,124,231
40
3,063,228
6,786,681

321,079
1,453,799
2,330,260
43
3,063,228
7,168,411—
175,697
206,0293—
381,730

2,671
10,635
17,676
025,49056,475

2,671
12,097
19,3910
25,49059,652

—
1,462
1,714
0
—
3,176

66,704
700,588
767,2937,928,939
118,959
118,959

66,704
724,679
791,383
8,334,807
122,282
122,282(0)
24,09024,090405,868
3,322
3,322

555
5,829
6,385
65,981
989
989

555
6,030
6,585
69,358
1,017
1,017

(0)
200
200
3,377
27
27

426
821
1,247

426
821
1,247

—
—
—

3
6
10

3
6
10

—
—
—

¥

—
—
—

2015

1,283
1,283
1,551

¥

¥

¥

Millions of U.S. dollars

Carrying
amountDifference

¥

$

$

$

$

—
—
—

*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 an integral
part of the subordinated bonds that are the hedge items.
*2 Assets and liabilities generated by derivative instruments are offset and presented net. Net liabilities in total are presented in brackets.

48

FUKOKU MUTUAL LIFE INSURANCE COMPANY

(1) Cash, deposits (excluding financial instruments treated as
securities based on “Accounting Standards for Financial
Instruments” (ASBJ Statement No.10)) and call loans:		The fair values of cash, deposits and call loans are
based on their book values since fair values approximate bookvalues due to their short maturities.
		
Carrying amounts, fair values and related differencesof cash, deposits and call loans have been disclosed as ofMarch 31, 2014.
(2) Securities including deposits and monetary claims bought
which are treated as securities based on “Accounting Standards for Financial Instruments” (ASBJ Statement No.10) andsecurities managed as trust assets in money held in trust:
The fair values of marketable securities are measured at thequoted market price at the end of fiscal year. The fair valuesof other securities without the quoted market price arebased on the prices reasonably calculated such as the prices
offered by the information vendors or counterparty financial
institutions.
Investments in unconsolidated subsidiaries and affiliates,
unlisted stocks and investments in partnerships whereby
partnership assets consist of unlisted stocks whose fairvalues are deemed extremely difficult to obtain, are excluded
from above securities. The carrying amounts of investments
in unconsolidated subsidiaries and affiliates, unlisted stocks
and investments in partnerships were ¥519 million, ¥7,738
million and ¥7,667 million as of March 31, 2013, ¥519 million,¥7,653 million and ¥7,967 million as of March 31, 2014 and¥519 million (US$4 million), ¥8,338 million (US$69 million)and ¥8,693 million (US$72 million) as of March 31, 2015,
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 deadline havenot been set up due to the characteristics that the loan islimited to the amount of cash surrender values. Therefore,
the book values are used as the fair values of policy loans.
The fair values of floating interest rate loans among theordinary loans and monetary claims bought treated as loans
approximate the book values because the market interest
rates are reflected in future cash flows in a short period.
Therefore, the fair values of floating interest rate loans andmonetary claims bought treated as loans are based on theirbook values. The fair values of fixed interest rate loans aremeasured by discounting the future cash flows to the present values.
The fair values of loans receivable from legally bankrupt
borrowers, substantially bankrupt borrowers and not currently
bankrupt borrowers and monetary claims bought treated asloans are computed by deducting the amount of the allowance for doubtful accounts from the book values before direct
write-offs.
(4) Subordinated bonds:
Subordinated bonds issued by the Company are stated at fairmarket value.

Carrying amounts, for values and related differences ofsubordinated bonds have been disclosed as of March 31,
2014.
(5) Derivative instruments:i) The fair values of the futures and options traded at theexchange are measured at the settlement price of the exchange.
ii) The fair values of options and swaps traded over the counterare based on the quoted prices offered by counterparty financial institutions.
iii) The fair values of foreign currency forward contracts are
determined based on the spot exchange rate and forward
contract rate.

5. Investment and Rental Property
The Company holds investment and rental properties such as
office buildings in Tokyo and other areas. The carrying amounts
and the fair values of investment and rental properties were
¥216,722 million and ¥273,809 million as of March 31, 2013,¥180,400 million and ¥261,345 million as of March 31, 2014and ¥175,807 million (US$1,462 million) and ¥271,909 million(US$2,262 million) as of March 31, 2015, respectively. The fairvalue is mainly based on the value calculated by the Company inaccordance with real estate appraisal standards which includes
some adjustments using the reference prices.
The amount corresponding to asset retirement obligations
included in the carrying amount of investment and rental properties were ¥1,256 million, ¥1,176, million and ¥1,090 million(US$9million) as of March 31, 2013, 2014 and 2015, respectively.
6. Securities Lent under Lending Agreements
The amount of securities lent under lending agreements were¥45,887 million, ¥71,815 million and ¥50,418 million (US$419
million) as of March 31, 2013, 2014 and 2015, respectively.
7. Loans Receivable
The total amounts of credits to bankrupt borrowers, delinquentloans, delinquent loans past 3 months or more and restructuredloans, which were included in loans, were ¥1,759 million, ¥1,603
million and ¥1,414 million (US$11 million)as of March 31, 2013,2014 and 2015, respectively.
i) The balances of credits to bankrupt borrowers were ¥218 million , ¥195 million and ¥199 million (US$1 million) as of March
31, 2013, 2014 and 2015, respectively.
ii) The balances of delinquent loans were ¥590 million, ¥747
million and ¥844 million (US$7 million) as of March 31, 2013,2014 and 2015, respectively.
iii) There were no balances of delinquent loans past 3 months ormore as of March 31, 2013, 2014 and 2015, respectively.
iv) The balances of restructured loans were ¥950 million, ¥660
million and ¥370 million (US$3 million)as of March 31, 2013,2014 and 2015, respectively.
Credits to bankrupt borrowers represent loans, excluding the balances already written-off, which meet the conditions prescribedin Article 96 Paragraph 1 item 3 and 4 of the Enforcement Regulations of the Corporate Tax Law. Moreover, accruing interest
FUKOKU MUTUAL LIFE INSURANCE COMPANY49

on these loans is not recorded as income after determining thatprincipal of or interest on these loans is unlikely to be collected
due to the significant delay in repayment of principal or interest
payment or for some other reasons.
Delinquent loans are credits whose accruing interest is
not recorded as income due to the same reasons as describedabove, and exclude credits to bankrupt borrowers and loans forwhich interest payments have been suspended and rescheduled
to assist and support the borrowers in the restructuring of theirbusiness.
Delinquent loans past 3 months or more are loans for whichinterest payment or repayment of principal are delinquent for
3 months or more from the due date under the terms of therelated loan agreements, excluding those loans classified as
credits to bankrupt borrowers and delinquent loans.
Restructured loans are loans for which certain concessions
favorable to borrowers, such as interest reduction or exemptions, rescheduling of due date of principal or interest payment,
waiver of claim or other terms, have been negotiated for the purpose of assisting and supporting the borrowers in the restructuring of their business. This category excludes loans classified as
credits to bankrupt borrowers, delinquent loans and delinquentloans past 3 months or more.
The direct write-offs related to loans decreased credits tobankrupt borrowers described above by ¥1 million, ¥251 millionand ¥247 million (US$2 million) as of March 31, 2013, 2014 and2015, respectively.
The direct write-offs related to loans decreased delinquentloans described above by ¥288 million as of March 31, 2013.
8. Accumulated Depreciation of Tangible Fixed Assets
Accumulated depreciation of tangible fixed assets totaledto ¥143,241 million, ¥145,599 million and ¥150,284 million(US$1,250 million)as of March 31, 2013, 2014 and 2015, respectively.
9. Separate Accounts
Total assets in separate accounts provided for in Article 118 of
the Insurance Business Law were ¥78,815 million, ¥82,680 million and ¥83,004 million (US$690 million) as of March 31, 2013,2014 and 2015, respectively. The amounts of separate accountliabilities were the same as separate account assets.
10. Receivables from/Payables to Unconsolidated
Subsidiaries
The total amounts of receivables from/payables to unconsolidated subsidiaries were ¥3,247 million and ¥184 million as ofMarch 31, 2013, ¥3,288 million and ¥182 million as of March
31, 2014 and ¥3,045 million (US$25 million) and ¥185 million(US$1million) as of March 31, 2015, respectively.

11. Income Taxes
Deferred tax assets and deferred tax liabilities as of March 31,
2013 were ¥88,575 million and ¥102,048 million, respectively.
Valuation allowance for deferred tax assets was ¥3,103 million.
Major components of deferred tax assets were ¥50,755
million of policy reserves, ¥14,351 million of reserve for pricefluctuation of securities and ¥13,859 million of reserve for50

FUKOKU MUTUAL LIFE INSURANCE COMPANY

employees’ retirement benefits as of March 31, 2013.
Major component of deferred tax liabilities was ¥98,080
million of net unrealized gains on available-for-sale securities asof March 31, 2013.
The statutory tax rate and the actual effective tax rate
for the year ended March 31, 2013 were 33.3% and 20.1%,
respectively. The major differences between the statutory tax
rate and the actual effective tax rate was (14.7%) of reserve fordividends to the policyholders.
Deferred tax assets and deferred tax liabilities as ofMarch 31, 2014 were ¥96,261 million and ¥119,541 million,
respectively. Valuation allowance for deferred tax assets was¥3,181 million.
Major components of deferred tax assets were ¥56,752
million of policy reserves, ¥15,490 million of reserve for pricefluctuation of securities and ¥15,035 million of net defined
benefit liabilities as of March 31, 2014.
Major component of deferred tax liabilities was ¥117,327
million of net unrealized gains on available-for-sale securities asof March 31, 2014.
The statutory tax rate and the actual effective tax rate
for the year ended March 31, 2014 were 33.3% and 20.1%,
respectively. The major differences between the statutory tax
rate and the actual effective tax rate was (16.2%) of reserve fordividends to the policyholders.
Deferred tax assets and deferred tax liabilities as of March
31, 2015 were ¥100,730 million (US$838 million) and ¥180,921
million (US$1,505 million), respectively. Valuation allowance fordeferred tax assets was ¥3,693 million (US$30 million).
Major components of deferred tax assets were ¥61,093
million (US$508 million) of policy reserves, ¥15,918 million(US$132 million) of reserve for price fluctuation of securities and¥14,627 million (US$121 million) of net defined benefit liabilities
as of March 31, 2015.
Major component of deferred tax liabilities was ¥178,857
million (US$1,488 million) of net unrealized gains on available
for-sale securities as of March 31, 2015.
The statutory tax rate and the actual effective tax rate
for the year ended March 31, 2015 were 30.8% and 26.8%,
respectively. The major differences between the statutory tax
rate and the actual effective tax rate was (10.8%) of reserve fordividends to the policyholders and +6.6% of the write-down ofdeferred tax assets at end of period.
Accompanying the promulgation of the “Act for Partial Revision to the Income Tax Act, etc.” (Act No. 9, 2015), the effective
statutory tax rate used to calculate deferred tax assets and deferred tax liabilities was changed. The Company had previously
used an effective statutory tax rate of 30.8% for items expected
to be collected or paid on or after April 1, 2015. However, owing to the aforementioned law change, the rate of 28.9% isused. As a result of this change in statutory tax rate, deferred
tax assets decreased ¥44 million (US$373 thousand), deferred
tax liabilities decreased by ¥5,735 million (US$47 million), anddeferred tax liabilities for revaluation reserve for land decreasedby ¥989 million (US$8 million). Deferred income taxes increasedby ¥6,274 million (US$52 million).

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

2013

2014

2015

Millions of
U.S. dollars

		Millions of yen

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

¥53,969
23,989(25,727)76¥52,307¥52,307
27,762(29,137)74¥51,0072015¥51,007
31,595(33,346)54¥49,311

$424
262
(277)
0
$410

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

2013

2014

2015

Millions of
U.S. dollars

		Millions of yen

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

14. Stocks of Unconsolidated Subsidiaries
The amounts of stocks of unconsolidated subsidiaries theCompany held as of March 31, 2013, 2014 and 2015 were ¥519
million, ¥519 million and ¥560 million(US$4 million), respectively.
15. Pledged Assets and Secured Debts
Assets pledged as collateral as of March 31, 2013 were ¥26,930
million of securities and ¥163 million of bank deposits. Secured
debts as of March 31, 2013 were ¥4,583 million.
Assets pledged as collateral as of March 31, 2014 were¥28,231 million of securities and ¥1,241 million of bank deposits. Secured debts as of March 31, 2014 were ¥4,679 million.
Assets pledged as collateral as of March 31, 2015 were¥33,691 million (US$280 million) of securities and ¥1,542 million(US$12 million) of bank deposits. Secured debts as of March 31,
2015 were ¥4,807 million (US$40 million).
16. Policy Reserves for the Reinsurance Contracts
Reserve for outstanding claims for the reinsurance contracts
provided in accordance with Article 71 Paragraph 1 of the Enforcement Regulation of the Insurance Business Law (hereinafter
called "reserve for outstanding claims for ceded reinsurance")
were ¥1 million, ¥4 million and ¥50 million (US$418 thousand)as of March 31, 2013, 2014 and 2015, respectively.
Policy reserve for the reinsurance contracts provided in ac-

¥648
(406)
0
455
¥697

¥697
(504)
0
542
¥735

2015

¥735
(511)
0
483
¥707

$6
(4)
0
4
$5

cordance with Article 71 Paragraph 1 of the Enforcement Regulation of the Insurance Business Law (hereinafter called "policy
reserve for ceded reinsurance") were ¥52 million, ¥50 millionand ¥51 million (US$431 thousand) as of March 31, 2013, 2014
and 2015, respectively.
17. Additional foundation funds
Notes for the fiscal year ended March 31, 2015
In accordance with Article 60 of the Insurance Business Law,
the Company carried out financing of additional foundation funds
totaling ¥10,000 million (US$83 million).
18. Accumulated foundation funds redeemed
Notes for the fiscal year ended March 31, 2015
Accompanying the redemption of foundation funds totaling¥15,000 million (US$124 million), in accordance with Article 56of the Insurance Business Law, the Company transferred thesame amount from reserve for redemption of foundation funds
to accumulated foundation funds redeemed.
19. Commitment LineAs of March 31, 2013, 2014 and 2015, there were unused
commitment line agreements under which the Company is thelender of ¥972 million, ¥872 million and ¥2,372 million (US$19
million), respectively.

FUKOKU MUTUAL LIFE INSURANCE COMPANY

51

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

tection Corporation of Japan under Article 259 of the Insurance
Business Law were estimated at ¥12,561 million, ¥12,453 million and ¥12,395 million (US$103 million) as of March 31, 2013,2014 and 2015, respectively. The contributions were charged as
operating expenses in the year in which they were paid.

22. Reserve for Employees’ Retirement Benefits(1) The reserve for employees’ retirement benefits as of March 31, 2013 was calculated as follows:
As of March 31,

2013
Millions of yen

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

¥(72,695)
20,006(52,689)
8,134
(598)
¥(45,153)(2) Gross amount of retirement benefit expenses for the years ended March 31, 2013 was as follows:
Years ended March 31,

2013
Millions of yen

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

¥2,892
1,456
(515)
1,361
(38)
¥5,156(3) The Company’s assumptions used in calculation of the above information were as follows:
Years ended March 31,

2013
Millions of yen

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

Straight-line
basis

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

2.0%
3.0%
10 years
10 years

23. Matters Related to Employees’ Retirement Benefits as ofMarch 31, 2014 and 2015
(1) Overview of employees’ retirement benefit system
As a defined benefit plan for office-based employees, the Company and its consolidated subsidiaries have a defined benefit

52

FUKOKU MUTUAL LIFE INSURANCE COMPANY

corporate pension plan and retirement lump-sum grants. As adefined contribution plan for these employees, the Company also has a defined contribution pension plan.
As a defined benefit plan for sales employees, the Company has retirement lump-sum grants.

(2) Defined benefit plani) Reconciliation of beginning and end of balance of retirement benefit obligation
As of March 31,

2014

2015

Millions of yen

Retirement benefit obligation at the beginning of current fiscal year....................
Cumulative effects of changes in accounting policies...........................................
Balance at the beginning of the current fiscal year after reflecting changes
in accounting..........................................................................................................
Service cost...........................................................................................................
Interest cost..........................................................................................................
Actuarial difference occurred during the fiscal year..............................................
Retirement benefits payments..............................................................................
Others....................................................................................................................
Retirement benefit obligation at the end of current fiscal year.............................

2015
Millions of
U.S. dollars¥72,695—¥71,685
4,763

$596
39

—
2,852
1,448
171
(5,349)(134)¥71,685

76,448
3,106
1,068
788
(4,605)—¥76,806

636
25
8
6
(38)
—
$639

ii) Reconciliation of beginning and end of balance of pension plan assets
As of March 31,

2014

2015

Millions of yen

Pension plan assets at the beginning of current fiscal year..................................
Expected return on pension plan assets...............................................................
Actuarial difference occurred during the fiscal year..............................................
Contributions by the employer..............................................................................
Retirement benefits payments..............................................................................
Pension plan assets at the end of current fiscal year............................................

¥20,006
600
1,333
2,309
(1,405)¥22,844

2015
Millions of
U.S. dollars¥22,844
685
1,530
2,339
(1,285)¥26,114

$190
5
12
19
(10)
$217

iii) Reconciliation of retirement benefit obligation and pension plan assets with net defined benefit liabilities presented on the consolidated balance sheets
As of March 31,

2014

2015

Millions of yen

a. Funded plan retirement benefit obligation.........................................................
b. Pension plan assets...........................................................................................
c. (a+b)...................................................................................................................
d. Unfunded plan retirement benefit obligation.....................................................
e. Net amount of liabilities and assets presented on the consolidatedbalance sheets...................................................................................................
f. Net defined benefit liabilities.............................................................................
g. Net defined benefit assets................................................................................
h. Net amount of liabilities and assets presented on the consolidatedbalance sheets...................................................................................................

2015
Millions of
U.S. dollars¥ 29,130(22,844)
6,285
42,554¥ 32,625(26,114)
6,510
44,181

$ 271
(217)
54
367

48,84048,840—50,691
50,691
—

421
421
—

¥ 48,840¥ 50,691$ 421iv) Breakdown of retirement benefit gains and losses
As of March 31,

2014

2015

Millions of yen

Service cost...........................................................................................................
Interest cost..........................................................................................................
Expected return on pension plan assets...............................................................
Amortization of actuarial differences.....................................................................
Amortization of prior service cost..........................................................................
Retirement benefit expenses related to defined benefit plan...............................

¥2,852
1,448
(600)
759
(47)
¥4,4132015
Millions of
U.S. dollars¥3,106
1,068
(685)
778
(76)
¥4,192

$25
8
(5)
6
(0)
$34

FUKOKU MUTUAL LIFE INSURANCE COMPANY

53v) Accumulated adjustments of defined benefit plan
Accumulated adjustments of defined benefit plan (before tax effects) comprised the following:
As of March 31,

2014

2015

Millions of yen

Amortization of actuarial differences....................................................................
Amortization of prior service cost.........................................................................
Total......................................................................................................................

—
—
—

2015
Millions of
U.S. dollars¥1,520(76)¥1,444

$12
(0)
$12

vi) Accumulated remeasurements of defined benefit plan
Accumulated remeasurements of defined benefit plan (before tax effects) comprised the following:
As of March 31,

2014

2015

Millions of yen

Unrecognized actuarial differences......................................................................
Unrecognized prior service cost...........................................................................
Total......................................................................................................................

¥(6,212)551¥(5,661)

2015
Millions of
U.S. dollars¥(4,692)475¥(4,217)

$(39)
3
$(35)

vii) Breakdown of main pension plan assets
The breakdown of main asset categories as a percentage of total pension plan assets is as follows:
As of March 31,

Life insurance general account................................................................................................
Domestic stocks......................................................................................................................
Domestic bonds......................................................................................................................
Foreign stocks.........................................................................................................................
Foreign bonds..........................................................................................................................

Others. ...................................................................................................................................
Total........................................................................................................................................

2014
45.2%
16.7%
16.7%
14.4%
6.1%
0.9%
100.0%

2015
49.1%
18.3%
13.5%
13.1%
5.3%
0.6%
100.0%

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 allocationof pension plan assets, and the present and expected future long-term rate of return on the diverse range of assets that makes up thepension assets.
ix) Underlying actuarial assumptions
Main underlying actuarial assumptions as of March 31, 2014 and 2015 were as follows:
As of March 31,

Discount rate...........................................................................................................................
Expected long-term rate of return on pension plan assets......................................................

2014
2.0%
3.0%

2015
1.4%
3.0%

(3) Defined contribution plan
The required contribution amounts by the Company and its subsidiaries to the defined contribution plan were ¥255 million and ¥267million (US$2million).
Starting from the year ended March 31, 2014, the Company began disclosing the required contribution amount to the defined contribution plan.

54

FUKOKU MUTUAL LIFE INSURANCE COMPANY

III. Notes to Statements of Operations
1. Transactions with Unconsolidated Subsidiaries
The total amounts of revenues and expenditures in connection
with unconsolidated subsidiaries were ¥97 million and ¥3,054
million for the year ended March 31, 2013, and ¥106 million and¥2,973 million for the year ended March 31, 2014, and ¥112
million (US$938 thousand) and ¥2,962 million (US$24 million) for
the year ended March 31, 2015, respectively.
2. Policy Reserves for the Reinsurance Contracts
For the year ended March 31, 2013, reversal of reservefor outstanding claims for ceded reinsurance considered in
calculation of provision for reserve for outstanding claims was¥3 million and reversal of policy reserve for ceded reinsurance
considered in calculation of provision for policy reserve was ¥1
million.
For the year ended March 31, 2014, provision for reservefor outstanding claims for ceded reinsurance considered in
calculation of provision for reserve for outstanding claims was¥2 million and reversal of policy reserve for ceded reinsurance
considered in calculation of provision for policy reserve was ¥2
million.
For the year ended March 31, 2015, provision for reservefor outstanding claims for ceded reinsurance considered in
calculation of reversal of reserve for outstanding claims was¥46 million (US$383 thousand), and provision for policy reservefor ceded reinsurance considered in calculation of provision forpolicy reserve was ¥1 million (US$14 thousand).
3. Impairment Losses of Fixed Assets
For the year ended March 31, 2013, 2014 and 2015, impairment
losses of fixed assets by the Company were as follows:(1) Method of grouping

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

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

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

		

2013

2014

2015

Millions of yen

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

2015
Millions of
U.S. dollars

¥183
26
210

¥1,541
140
1,682

¥296
136
432

$2
1
3

177
212

35
58

235
30

1
0

Total unused real estate (ii)..................................................................

390

93

266

2

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

361
239

1,577
198

531
167

4
1

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

600¥1,775¥698$5* Figures for March 31, 2013, are omitted owing to their minor level of importance.

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

FUKOKU MUTUAL LIFE INSURANCE COMPANY

55

IV. Notes to Statement of Comprehensive Income
1. Other Comprehensive Income 		The reclassification adjustments and tax effect amounts related to other comprehensive income were as follows:
Years ended March 31,

2013

2014

2015

Millions of yen

Net unrealized gains (losses) on available-for-sale securities, net of tax
Amount incurred during the fiscal year...................................................
Reclassification adjustments...................................................................
Before tax adjustment........................................................................
Tax effects..........................................................................................
Net unrealized gains (losses) on available-for-sale securities,
net of tax............................................................................................
Deferred valuation gains (losses) under hedge accounting, net of tax
Amount incurred during the fiscal year...................................................
Reclassification adjustments...................................................................
Before tax adjustment........................................................................
Tax effects..........................................................................................
Deferred valuation gains (losses) under hedge accounting,
net of tax............................................................................................
Revaluation reserve for land, net of tax
Amount incurred during the fiscal year...................................................
Reclassification adjustments...................................................................
Before tax adjustment........................................................................
Tax effects..........................................................................................
Revaluation reserve for land, net of tax.............................................
Foreign currency translation adjustment
Amount incurred during the fiscal year...................................................
Reclassification adjustments...................................................................
Before tax adjustment........................................................................
Tax effects..........................................................................................
Foreign currency translation adjustment............................................
Remeasurements of defined benefit plans, net of tax
Amount incurred during the fiscal year...................................................
Reclassification adjustments...................................................................
Before tax adjustment........................................................................
Tax effects..........................................................................................
Remeasurements of defined benefit plans, net of tax.......................
Total other comprehensive income.................................................................

56

FUKOKU MUTUAL LIFE INSURANCE COMPANY

2015
Millions of
U.S. dollars¥214,928
3,637
218,566(67,274)¥ 87,278(24,665)
62,613(19,246)¥259,364(20,525)
238,838(61,530)$2,158
(170)
1,987
(512)

151,291

43,367

177,308

1,475

(0)
(160)
(161)
53

(18)
(71)
(90)
30

(0)
(2)
(2)
0

(0)
(0)
(0)
0

(107)

(60)

(2)

(0)

—
—
—
(17)
(17)

—
—
—
3
3

—
—
—
989
989

—
—
—
8
8

193
—
193
—
193

373
—
373
—
373

208
—
208
—
208

1
—
1
—
1

—
—
—
—
—
¥151,359—————¥ 43,684

741
702
1,444
(525)
918
¥179,422

6
5
12
(4)
7
$1,493

V. Notes to Statements of Cash Flows
1. Scope of Cash and Cash Equivalents
Cash and cash equivalents as of March 31, 2013, 2014 and 2015
consist of "Cash," "Deposits in transfer account," "Current deposits," "Ordinary deposits," "Notice deposits," "Time deposits maturing within 3 months of the date of acquisition," "Foreign currency

deposits maturing within 3 months of the date of acquisition,""Negotiable certificate of deposits maturing within 3 months ofthe date of acquisition," "Call loans" and "Monetary claims bought
maturing within 3 months of the date of acquisition."

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

statements of cash flows to the consolidated balance sheets accounts as of March 31, 2013, 2014 and 2015 were as follows:
As of March 31,

2013

2014

		

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

¥ 72,868
70,300
1,111
(200)
(371)
(1,111)¥142,596

2015

Millions of yen¥ 91,021
148,700
1,011(300)(1,047)(1,011)¥238,373

2015
Millions of
U.S. dollars¥154,319
186,500
870(300)(1,273)(870)¥339,246$1,284
1,551
7
(2)
(10)
(7)
$2,823

FUKOKU MUTUAL LIFE INSURANCE COMPANY

57

Management’s Report on Internal Control over Financial Reporting

1. Matters relating to the basic framework of internal control over financial reporting
Yoshiteru Yoneyama, President of Fukoku Mutual Life Insurance Company (the “Company”), is responsible for thedesign and operation of internal control over financial reporting for the Company’s financial statements, namely, consolidated balance sheets and the related consolidated statements of operations, comprehensive income, cash flows,changes in net assets and a summary of significant accounting policies and other explanatory information for the year
ended March 31, 2015, prepared in accordance with Article 110 Paragraph 2 of the Insurance Business Law. The
Company designs and operates its internal control over financial reporting in accordance with the basic framework ofinternal control set forth in the "Standards and Practice Standards for Management Assessment and Audit concerning
Internal Control Over Financial Reporting (Council Opinions)" issued by the Business Accounting Council of the Financial Service Agency of Japan.
Internal control aims at achieving the objectives to a reasonable extent with the organized and integrated function ofindividual components of internal control as a whole. Therefore, internal control over financial reporting cannot always
ensure the prevention or detection of misstatements in the presentation of financial reporting.
2. Matters relating to the scope of assessment, the basis date of assessment and the assessment procedures
The Company performed an assessment of internal control over financial reporting for its consolidated financial statements as of the end of the fiscal year, March 31, 2015 in accordance with generally accepted assessment standards inJapan for internal control over financial reporting.
In the assessment of internal control over financial reporting, the Company first assessed internal controls that havea material impact on overall consolidated financial reporting ("company-level controls") and, based on the results, theCompany selected the business processes to be assessed. In assessing those business processes, the Company
analyzed selected business processes, identified a key control that would have a material impact on the reliability offinancial reporting, and assessed the establishment and operation with regard to the key control. The Company assessed the effectiveness of internal control by the aforementioned procedures.
For the Company and its consolidated subsidiaries, the Company determined the scope of assessment of internal
control over financial reporting from the perspective of their materiality to the reliability of financial reporting. The materiality to the reliability of financial reporting is determined in light of their degree of quantitative and qualitative impact.
The Company rationally determined the scope of assessment of internal controls incorporated into business processes("process-level controls") based on the results of assessment of company-level controls regarding the Company andone consolidated subsidiary. Other than those indicated above, four consolidated subsidiaries were determined to beimmaterial from quantitative and qualitative perspectives. Consequently, they are excluded from the scope of assessment of company-level controls.
With respect to the scope of assessment of process-level controls, the locations or business units were selected indescending order of ordinary revenues (after elimination of inter-company transactions) in the previous fiscal year until
their combined amount reached about two-thirds of consolidated ordinary revenues. As a result, the Company was
selected as "significant locations or business units". At selected significant locations and business units (the Company),business processes related to accounting items that were closely associated with the company's business objectives,
including securities, ordinary loans and policy reserves, as well as premium and other income and claims and otherpayments, which have a material impact on the calculation of policy reserves, were determined to be within the scopeof assessment. Furthermore, at selected significant locations and business units and any other locations and business
units, added to the scope of assessment were business processes relating to important accounting items that havea high possibility of material misstatements and involve estimates and judgments, and business processes relating tobusinesses or operations dealing with high-risk transactions.
3. Matters relating to the results of the assessment
As a result of performing the assessment, the Company concluded that the design and operation of internal control
over financial reporting for the Company were effective as of March 31, 2015.
4. Supplementary information (None)
5. Other special information (None)

			
			
			
			

58

FUKOKU MUTUAL LIFE INSURANCE COMPANY

May 19, 2015
Yoshiteru Yoneyama
President

Fukoku Mutual Life Insurance Company

Report of Independent Auditors

FUKOKU MUTUAL LIFE INSURANCE COMPANY

59

60

FUKOKU MUTUAL LIFE INSURANCE COMPANY

Corporate Organization

Domestic Offices (As of July 2, 2015)
Branch Offices
62
Field Offices
468

Secretarial Div.
Strategic Planning Dept.
Compliance Control Dept.

Employees (As of March 31, 2015)
Office Staff
2,901
Sales Representatives 9,776

Corporate Risk Management Dept.
General Affairs Dept.
Independent Auditors

Audit & Supervisory
Board
Staff of Audit &Supervisory
Board Member

Personnel Dept.
Market Planning Dept.
Retail Management Dept.
Market Developing Dept.
Strategic Market Promotion Dept.
Wholesale Management Dept.
Pension Actuarial Div.

Board of Representative
Members of Policyholders

Board of Directors

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

Nomination Committee of
Candidates for
Representative Members

Secretariat for Nomination
Committee of Candidates for
Representative Members

Chief Actuary

Underwriting and Medical Dept.
Claims Dept.

Human Resourse
Development
Headquarters

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

Board of Full-time Directors

Equities Dept.
Fixed Income Dept.
Loans Dept.

Council

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

FUKOKU MUTUAL LIFE INSURANCE COMPANY

61

Corporate Information

Directors, Audit & Supervisory
Board Members and Executive
Officers

Chairman of the Board

Audit & Supervisory Board Member (Standing)

Tomofumi Akiyama

Akio Imai

President and Chief Executive Ofﬁcer

Audit & Supervisory Board Member (Standing)

Yoshiteru Yoneyama*

Kei Yoshizawa

Deputy President and Executive Ofﬁcer

Managing Executive Ofﬁcer

Katsumasa Furuya

Kenji Sakurai

Director and Managing Executive Ofﬁcer

Executive Ofﬁcer

Kenji Hirai

Toshimitsu Furuhashi

Director and Managing Executive Ofﬁcer

Executive Ofﬁcer

Tadashi Akikawa

Yasuyuki Kitamura

Director and Managing Executive Ofﬁcer

Executive Ofﬁcer

Hitoshi Sakai

Kazuyoshi Hasegawa

Director and Managing Executive Ofﬁcer

Executive Ofﬁcer

Toshihide Fujiwara

Osamu Suzuki

Director and Managing Executive Ofﬁcer

Executive Ofﬁcer

Yuuki Sakurai

Shinji Nakao

Director

Executive Ofﬁcer

Kozo Isshiki**Naoyuki Torii

Director

Executive Ofﬁcer

Kazuo Tanabe**

Masato Nakazuru

Director and Executive Ofﬁcer

Executive Ofﬁcer

Toshikatsu Hayashi

Chikashi Ichikawa

Audit & Supervisory Board Member

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

Audit & Supervisory Board Member(As of July 2, 2015)

Mitsuo Ohashi***
Audit & Supervisory Board Member

Yoshikazu Sashida***62

FUKOKU MUTUAL LIFE INSURANCE COMPANY

Directory

Head Office2-2, Uchisaiwaicho 2-chome, Chiyoda-ku, Tokyo 100-0011, Japan
Phone: 81-3-3508-1101
Facsimile: 81-3-3591-6446
Fukoku Life International (U.K.) Ltd.
3rd Floor, Baltic Exchange, 38 St. Mary Axe, London, EC3A 8EX, U.K.
Phone: 44-20-7283-1331
Facsimile: 44-20-7626-7096
Fukoku Life International (America) Inc.
Times Square Tower, 7 Times Square, 35th Floor, New York, NY 10036, U.S.A.
Phone: 1-212-221-7760
Facsimile: 1-212-221-7794
Fukoku Life Research Singapore Pte. Ltd.
80 Robinson Road #16-04 Singapore 068898
Phone: 65-6220-8308
Facsimile: 65-6220-8736

Fukoku Life International (U.K.) Ltd.
From left : D. Hachigo , J. Doran , D. Hanafusa ,K. Sato and T. Keevil

Fukoku Life International (America) Inc.
From left : A. Chang , H. Oizumi , S. Lester ,M. Xu and T. Ogino

Fukoku Life Research Singapore Pte. Ltd.
From left : Y. Yoshida , A. Sato , T. Aoyama

FUKOKU MUTUAL LIFE INSURANCE COMPANY

63

▲ Tokyo Head Office▲ Osaka Fukoku Mutual Life Insurance Building

64

FUKOKU MUTUAL LIFE INSURANCE COMPANY

P-B10202