Annual Report 2008
Year Ended March 31, 2008

FUKOKU MUTUAL LIFE
INSURANCE COMPANY

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

14

FUKOKU MUTUAL LIFE INSURANCE COMPANY

FINANCIAL HIGHLIGHTS (NON-CONCOLIDATED)

Millions of
U.S. dollars

Millions of yen

2006

2007

2008

2008

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

¥50,026,617¥49,974,534¥49,827,169$497,326

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

5,684,365

5,893,024

5,725,231

57,143

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

3,916,311

4,109,729

3,962,459

39,549Loans ..................................................................

1,250,813

1,266,226

1,231,963

12,296

Real estate and movables ...................................

196,413———

Tangible fixed assets ..........................................

—

206,472

205,952

2,055

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

5,317,957

5,497,755

5,478,270

54,678

Policy reserves ...................................................

5,033,427

5,189,257

5,262,578

52,525Subordinated bonds ...........................................

42,84347,09247,362472

Total capital .............................................................

366,408———

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

—

395,268

246,961

2,464

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

1,028,769

888,739

906,459

9,047

Premium and other income ..............................

846,008

721,989

736,468

7,350

Investment income ............................................

165,112147,397

146,216

1,459

Total ordinary expenditures ....................................

971,311

828,525

848,3818,467

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

37,87443,50245,385452

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

1,139.6

1,228.8

1,146.9

Employees ...............................................................

13,954

13,771

13,477

As of March 31,

For the year ended March 31,

Notes 1. U.S. dollar amounts are converted from yen, for convenience only, at the rate of U.S.$1=¥100.19, the rate of exchange on March 31, 2008.
2. Yen and U.S. dollar amounts are rounded down to the nearest million yen or million dollars.

Contents
Message from the President ............................................
Management Philosophy and Business Policies ..............
Review of Operations (Non-Consolidated)
Overview .....................................................................
Business Performance in FY2007 ...............................
Investment Performance in FY2007(General Account) .....................................................
Investment Policies for FY2008 .................................
Governance System .........................................................
Corporate Citizenship .....................................................
Non-consolidated Financial Statements .........................
Consolidated Financial Statements .................................
Corporate Organization ..................................................
Corporate Information ....................................................

2
3
4
5
7
9
10
11
12
34
54
55

FUKOKU MUTUAL LIFE INSURANCE COMPANY

1

MESSAGE FROM THE PRESIDENT

In fiscal 2007, ended March 31, 2008, the Japanese economy remained strong in
the first half of the period, but slowed down slightly in the second half. During thislatter half, the credit crunch caused by the U.S. subprime mortgage crisis spread toworld financial markets, and the flow-on effects were felt in Japan in the form of asteadily appreciating yen and substantial declines in share markets.
Under these circumstances, on the insurance sales side, the Company's sales
staff worked hard to provide comprehensive follow-up services and we endeavored
to offer insurance products designed to meet customers' needs. On the asset management side, we worked proactively to raise profitability while paying due attention to risk management.
As a result, in fiscal 2007 the Company achieved a considerable increase in
fundamental profits thanks to a decline in negative spread and other factors. We
used this to return profits to policyholders through dividends, and we maintained
a sound financial status by boosting retained earnings.
In January 2008, we acquired an 80% stake in The Kyoei Kasai Shinrai Life
Insurance Company, and in February we changed that company's name to
Fukokushinrai Life Insurance Company. Following the acquisition, the new company began handling our bancassurance business in April 2008, while Fukoku Liferetains its focus on operations through the sales representative channel.

Tomofumi Akiyama
President
2

FUKOKU MUTUAL LIFE INSURANCE COMPANY2FUKOKU MUTUAL LIFE INSURANCE COMPANYMANAGEMENT PHILOSOPHY

To protect the interests ofour policyholders

To contribute to society

Fukoku Life will continue striving to become a company that provides its customers with greater
peace of mind. To this end, we will adhere to our philosophy of “protecting the interests of ourpolicyholders,” which we have maintained since our establishment. We will also continue contributing to society through our insurance business activities.

BUSINESS POLICIES
Adhering to our management philosophy and supported by our “Customer-Centric” policy,
we have endeavored to differentiate ourselves from our competitors and become more efficient. To this end, we are committed to implementing the business policies outlined below.

Reinforce sales staff structure
Meticulous services by sales staff are vital for assuring customer satisfaction during
each process, from initial contract through to insurance payout. We strive to be theinsurance company of choice by providing personally tailored services to individual
customers made possible through our reinforced sales staff structure.

Reaffirm focus on net increase in policies in force
Obtaining policies in force, the source of the Company's income, is important in order
to continue providing customers with "peace of mind." Under this basic policy, insurance proposals designed to meet customer needs not only encourage customers to takeout policies, but also our comprehensive follow-up services give them the peace ofmind to retain our services. We intend to continue with this approach, which we haveembraced and implemented for many years.

Enhance business efficiency
We will work hard to provide customers with high-quality services and secure management resources. To this end, we will strive to improve efficiency and conduct a comprehensive reassessment of our business processes, based on our "Customer-Centric" policy,
which is not bound by the conventions of the industry or the past.

FUKOKU MUTUAL LIFE INSURANCE COMPANY3FUKOKU MUTUAL LIFE INSURANCE COMPANY

3

REVIEW OF OPERATIONS (NON-CONSOLIDATED)OVERVIEWBusiness Policies
Based on its management policy, Fukoku Life always takes
the customer's perspective when selling life insurance andfinancial products by proposing the best possible options.
We accord top priority to frequent communications withindividual customers to ensure that we accurately meettheir needs. We also strive to offer optimal solutions tailored to customers' individual life plans and lifestyles.
Moreover, our sales managers take the responsibility toprovide long-term follow-up to ensure ongoing support.
Fukoku Life's sales approach is based on three mainprinciples: Face-to-face contact, proposals carefully tailored to the specific needs of each customer, and a personal sales manager system.
Individual Insurance
Recently, the needs of our customers have become increasingly diverse in response to lifestyle changes. With theaim of increasing net policies in force for individual customers and in our quest to assure their satisfaction, we
provide the best possible service by developing optimal
products and scrutinizing the services we provide fromevery possible angle.

In addition to providing basic protection-type products and medical insurance, we have developed a variety
of products and services to meet the varied needs of ourcustomers. Today we offer nursing care insurance andmedical insurance products that provide customers with
optimum insurance, covering the various risks they are
exposed to during the course of their lives.
Fukoku Life's nationwide sales network consists of 65
branches and more than 10,000 salespeople promoting
insurance and annuities to individuals and companies. We
make effective use of our mobile computers, known as"PlanDo," introduced to raise the efficiency of sales staff
when conducting face-to-face sale, and we work hard toprovide optimal products to customers. We have also reinforced our regular six-monthly and 12-monthly followup services provided after a customer takes out a new policy.
In addition, we have increased sales of juvenile insurance, individual annuities, and single-premium endowment
insurance sold via the Internet and at agent offices locatedin large shopping centers.
In order to enhance communication between ourselves
and our customers, we provide consulting services at all of
our sales offices and have a customer call center that offers
customer guidance via the telephone.

Group Insurance
Fukoku Life's group insurance system provides consulting services for corporate welfare programs. We provide
professional consulting services for the design of corporate retirement funds and pension plans. We also offer
consulting services for the transition from optimum retirement pensions to defined-benefit pension plans anddefined-contribution pension plans.
We provide a separate account for corporate pension
plans for socially responsible investments (SRIs) as a vehicle for investments in companies that work proactively
in areas of environmental protection and social contribution. We also have the Fukoku Life SRI Fund, an investment trust fund offered in defined-contribution pension
plans.

4

FUKOKU MUTUAL LIFE INSURANCE COMPANYREVIEW OF OPERATIONS (NON-CONSOLIDATED)BUSINESS PERFORMANCE IN FY2007

Life Insurance in Force

Premium Income and Other Income

In the year under review, the total balance of life insur-

In the year under review, premium and other income rose

ance in force edged down 0.3%, to ¥49,827.1 billion.

2.0%. This was mainly attributable to an increase in in-

Within this amount, life insurance for individuals declined

come from group pension insurance premiums.

3.4%, to ¥31,742.1 billion, mainly due to a drop in protection-type insurance. Individual annuities rose 1.8%, to¥2,938.8 billion, and the balance of life insurance in force
for groups increased 6.4%, to ¥15,146.1 billion.
The main factor behind the fall in individual life insurance was the shift in demand from protection-type products to medical and nursing care insurance stemming fromBreakdown of life insurance in force(¥ billions)Group insurance:
15,146.1 (30.4%)

the aging society and the falling birthrate. The increase inindividual annuities was attributable to higher demand for
asset-building products, also resulting from Japan's aging,low-birthrate society.
Annualized premiums for policies in force declined
3.8%, to ¥323.6 billion for individual insurance, but rose
4.8%, to ¥119.4 billion for individual annuities. Annual-

Individual annuities:

Individual life insurance:

2,938.8 (5.9%)

31,742.1 (63.7%)

ized premiums from medical insurance and living benefit

Total: ¥49,827.1 billion

insurance premiums increased 2.4%.

Life insurance in force

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

51.8

50.8

50.0

49.9

846.0

49.8
740.9

FY2003 ’04

’05

’06

’07

731.7

FY2003 ’04

’05

721.9

736.4

’06

’07

FUKOKU MUTUAL LIFE INSURANCE COMPANY

5REVIEW OF OPERATIONS (NON-CONSOLIDATED)

Assets, Liabilities and Net Assets
The outstanding balance of non-consolidated total assets,
including separate accounts, at fiscal year-end declined
2.8%, to ¥5,725.2 billion. This included a 2.7% fall in
general account assets, to ¥5,610.5 billion. The main reason for the decrease in total assets was a fall in the market
value of securities stemming from declining share values
in the domestic share market.
Policy reserves grew 1.4%, to ¥5,262.5 billion, andtotal liabilities, including policy reserves, edged down
0.4%, to ¥5,478.2 billion.
Net assets at fiscal year-end amounted to ¥246.9 billion, down 37.5% from a year earlier.
On a consolidated basis, total assets declined 1.6%, to¥5,802.4 billion, and net assets also fell, by 36.7%, to ¥251.3
billion.

Solvency Margin
The solvency margin ratio is a benchmark indicator for
management soundness of life insurance companies.
Fukoku Life's solvency margin ratio at fiscal year-end was
1,146.9%, down 81.9 points year-on-year. This far exceeds
the 200% set by the government as an indicator of financial soundness, and clearly illustrates our ability to meet ahigh level of payments. The drop in the ratio is due toconsiderable declines in unrealized gains, primarily inshares, stemming from the fall in the stock market at fiscal
year end, despite an increase in retained earnings owing
to increases in contingency reserves and reserves for pricefluctuation of securities.
We make every effort to maintain a high solvency
margin ratio as we continue to provide our customers withpeace of mind.

Strengthening Our Capital Base
Fukoku Life is constantly reinforcing its financial fundamentals in preparation for various risks. During the year
under review, we increased our contingency reserve by¥23.7 billion, to ¥154.5 billion, and our reserve for pricefluctuation of securities by ¥3.8 billion, to ¥53.9 billion.

RatingIn October 2007, Rating and Investment Information
raised Fukoku Life's rating for its ability to meet insurance payments one ranking from A+ to AA-. We have also
received ratings of A- from Standard & Poor's and A+ from
Fitch Ratings.

Total assets

Solvency margin ratio(¥ billions)(%)

5,684.3

5,893.0 5,725.2

1,228.8
1,146.9

1,139.6

5,004.7 5,088.6
925.0
854.0

FY2003 ’04

6

FUKOKU MUTUAL LIFE INSURANCE COMPANY

’05

’06

’07

FY2003 ’04

’05

’06

’07

REVIEW OF OPERATIONS (NON-CONSOLIDATED)INVESTMENT PERFORMANCE IN FY2007 (GENERAL ACCOUNT)

Overview
In fiscal 2007, ended March 31, 2008, the Japanese
economy remained strong in the first half of the period,
but slowed down slightly in the second half, mainly due toa decline in production activities by companies. Financial
and capital markets fluctuated wildly due to financial instability in the U.S. and Europe caused by the subprime
mortgage crisis.
Against this backdrop, Fukoku Life allocated funds
centered on foreign bonds in order to raise profitability
while maintaining liquidity. We shifted our emphasis from
low-interest bearing domestic bonds to those with higher
rates of return and longer investment terms.
At fiscal year-end, general account assets, which comprise 98.0% of total assets, fell 2.7%, or ¥153.4 billion, to¥5,610.5 billion.
Interest and dividends, the main components of investment income, rose 15.5%, or ¥16.4 billion, to ¥122.9
billion, owing to an increase in the balance of foreign bonds
and higher interest rates for domestic bonds. Income fromgeneral accounts increased 3.3%, or ¥4.6 billion, to ¥146.2
billion.
Investment expenses increased 9.6%, or ¥3.4 billion,to ¥39.8 billion on the back of losses from money held in
trust and losses on the sale of shares, despite the ongoing
decline in expenses for derivative instruments and a fall inprovision for allowance for possible loan losses. This in-General account assets(¥ billions)cludes a ¥0.8 billion loss in securitized products guaranteed by monoline insurers, whose creditworthiness has
declined markedly due to the subprime mortgage crisis.
Fukoku Life does not have any securitized products thatare backed by subprime mortgages.
As a result, investment income, minus expenses, increased 1.0%, or ¥1.1 billion, to ¥106.3 billion. However,
the rate of return edged down 0.03 point, to 1.95%.

Breakdown of general account assets(¥ billions)
Others:91.2 (1.6%)
Real estate:201.8 (3.6%)
Cash and deposits, and others:
230.7 (4.1%) (Note)

Ordinary loans:
1,154.4(20.6%)

Other securities:
50.6 (0.9%)
Foreign securities:
757.4 (13.5%)

Loans:
1,231.9(22.0%)

Policy loans:
77.5 (1.4%)

Securities:
3,854.7 (68.7%)
Stocks:601.9 (10.7%)

Bonds:
2,444.6 (43.6%)

Total: ¥5,610.5 billion
Note:

Cash and deposits, call loans, monetary claims bought and money held in trust

Investment income
minus expenses(¥ billions)

5,763.9 5,610.5
5,563.4

103.9

105.2

106.3

’05

’06

’07

4,915.0 4,989.7
81.0
74.6

FY2003 ’04

’05

’06

’07

FY2003 ’04

FUKOKU MUTUAL LIFE INSURANCE COMPANY

7

REVIEW OF OPERATIONS (NON-CONSOLIDATED)Bonds
In the year under review, we continued replacing low-interest-bearing investments with higher-coupon bonds andstrove to lengthen the maturity periods of our bond portfolio. As a result, the Company's bond portfolio at fiscal
year-end stood at ¥2,444.6 billion, up 0.6%, or ¥13.5 billion, from a year earlier.
StocksOur year-end holdings of domestic equities were down
24.9%, or ¥199.1 billion, to ¥601.9 billion, due to a decline in valuation difference stemming from the sizeable
drop in share prices around the end of the fiscal year.
Foreign Securities
We increased our foreign securities holdings, primarily
through euro-dominated bonds, while considering differences in domestic and foreign interest rates and currencies. As a result, the Company's holdings of foreign securities, including equity holdings, rose 6.7%, or ¥47.4 billion, to ¥757.4 billion.

panies for long-term funding. Individual housing loans andconsumer loans decreased overall. As a result, the fiscal
year-end balance of outstanding loans fell 2.7%, or ¥34.2
billion, to ¥1,231.9 billion.

Real Estate
In fiscal 2007, we undertook a project to renovate the Osaka
Fukoku Mutual Life Insurance Building located at the
Umeda Terminal, the largest transportation terminal inWestern Japan. As a result of this project and other activities, the balance of our real estate holdings rose 0.2%, or¥0.4 billion, to ¥201.8 billion.

Loans

Real estate(¥ billions)(¥ billions)

1,336.4

196.2

1,282.4 1,250.8 1,266.2
1,231.9

191.7

191.0

FY2003 ’04

’05

201.4

201.8

’06

’07

Loans
Fukoku Life decreased the balance of outstanding corporate loans due to a slump in demand from Japanese com-

FY2003 ’04

Bonds(¥ billions)
2,362.1 2,431.1
2,040.3’05’06

StocksForeign securities(¥ billions)(¥ billions)

2,444.6

790.7

757.4

801.1
709.9

2,183.5
608.9

601.9
537.8

’07

549.6
460.6
379.2

FY2003 ’04

8

’05

’06

’07

FY2003 ’04

FUKOKU MUTUAL LIFE INSURANCE COMPANY

’05

’06

’07

FY2003 ’04

’05

’06

’07

REVIEW OF OPERATIONS (NON-CONSOLIDATED)INVESTMENT POLICIES FOR FY2008

Investment Environment
In the fiscal year ending March 31, 2009, we anticipate that the temporary lull in theJapanese economy will continue for the first half of the year, but that the worst will thenbe over owing to continued strong economic growth in China and other emerging economies, as well as the impact of tax cuts in the United States in the second quarter. We
expect that these conditions will contribute to a gradual upturn in the Japanese economy
as exports increase and capital expenditures recover. Long-term interest rates are forecast to fluctuate significantly amid fears of inflation and a cautious approach to businessdevelopment. However, we expect to see a mild improvement as the danger of an economic downturn recedes. Although equity prices will continue to be influenced by world
economic trends, we expect to see a steady recovery, primarily in international blue chip
equities, which are currently undervalued.
Bonds
Fukoku Life will continue to restrain increases in its bond holdings while raising overallprofitability. Specifically, we will reduce investments in government bonds and invest in
corporate bonds offering higher rates of return.
StocksIn light of recent declines in stock market values, we will increase profits by investing in
corporations earmarked for medium-to-long-term growth and companies expected to
be able to pay steady dividends.
Foreign Securities
We plan to increase our foreign bond holdings, centering on open foreign bonds, while
carefully monitoring monetary policy and exchange rates in Japan, the United States,
and Europe. At the same time, we will pay due regard to exchange rate risks, including
increasing investment in yen-dominated foreign securities.
Loans
We will apply stringent selection criteria relating to interest rates and other terms, while
paying due regard to profitability.
Real Estate
In fiscal 2008, we plan to continue making real estate investments based on a mediumto-long-term perspective that emphasizes profitability and geographic distribution. We
will also continue investing in real estate funds as a means of diversifying investment
methods.

FUKOKU MUTUAL LIFE INSURANCE COMPANY

9

GOVERNANCE SYSTEMINTERNAL CONTROL SYSTEM, RISK MANAGEMENTSYSTEM AND COMPLIANCE SYSTEM

Fukoku Life's basic policy on internal control systems

age other people's assets. Therefore, we constantly striveemphasizes ongoing protection of policyholders' interests

to enhance our internal control systems, which consist ofand contribution to society in line with the Company's

a risk management system, compliance system, insurance

management philosophy. We are currently in the process

claim payment administration system, and personal infor-of establishing and implementing our internal control sys-

mation protection system.

tems based on this policy.

We must enhance financial soundness by addressing

The Company is engaged in the highly public busi-

the various risks we face in order to be able to meet cus-

ness of protecting policyholders' rights, and is also an in-tomers' expectations over the long term, while maintain-

stitutional investor obliged to safely and profitably man-ing their policies. We are working across the entire company to improve the risk management system in an initiative that includes the full involvement of top management.
As members of the Company, all executives undergo
ongoing training in compliance-related matters so that they
not only observe laws and regulations, but also comply
with protocols and social conventions. Our system ensuresthat in the unlikely event of improper conduct, it will be
detected early and dealt with swiftly and appropriately.

10

FUKOKU MUTUAL LIFE INSURANCE COMPANYCORPORATE CITIZENSHIP

Fukoku Life is engaged in various public relation activities toward building an affluent and heartfelt society.

Fukoku Life Charity Concert
Since 1993, the Company has held regular classical music Charity Concerts around the country as part of its commitment toenhancing interaction with customers through music and fostering community welfare. Although entry to the concerts is free,
the audience is asked to make donations, which are given to local
welfare groups. Since 2003, we have also held "Mini Concerts,"
where musicians visit schools for disable children, homes for theelderly, and other welfare facilities before or after our classicalconcerts. To date, we have held 151 charity concerts and 101 Mini
Concerts.
Sanrio Puroland
Fukoku Life uses Sanrio's world-famous Hello Kitty character inposters, pamphlets, and other promotional materials. In addition,
Fukoku Life is a sponsor of the "Sanrio Character Boat Ride,"
one of the many attractions in the Sanrio Puroland indoor theme
park.

C

C

1976, 2008 SANRIO CO., LTD. APPROVAL NO. S9090315

Communicating with Stakeholders
In addition to Company-led initiatives, in order to raise awareness of social contribution, Fukoku Life executives plan and implement a diverse range of activities on their own that contribute to
local communities and the environment.
Every year, Fukoku Life publishes a variety of materials as ameans of disclosing information on its business activities to stakeholders. These include its Japanese-language magazine, "Disclosure" (and abridged versions thereof), booklets written for policyholders, and this English-language annual report. In addition,
we produce a variety of publications as needed, in order tostrengthen the channels of communication between the Company, its policy holders, and its many other customers.

'76, '90, '93, '96, '98, '99, '08 SANRIO APPROVAL No. P2209029

FUKOKU MUTUAL LIFE INSURANCE COMPANY

11

NON-CONSOLIDATED FINANCIAL STATEMENTS
NON-CONSOLIDATED BALANCE SHEETS
Fukoku Mutual Life Insurance Company
As of March 31, 2006, 2007 and 2008

As of March 31,

2006

2007

2008

Millions of
U.S. dollars

Millions of yen

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

12

FUKOKU MUTUAL LIFE INSURANCE COMPANY¥

125
69,96770,09265,0003,211
95,849¥115
60,76460,88096,4002,865
102,186

2008

¥

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

$

1
450
452
1,252
25
574

1,918,058
83,086395,303
840,970
639,408
39,484
3,916,311

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

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

17,786
1,380
5,592
6,422
7,855
512
39,54979,2181,171,595
1,250,813

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

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

773
11,522
12,296

100,998
85,311
5,378
4,725
196,413

—
—
—
—
—

—
—
—
—
—

—
—
—
—
—

—
—
—
—
—

103,200
97,384819
5,068
206,472

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

1,065
942
7
40
2,055

—
—
—
108

7,942
451
8,393
52

7,973
449
8,423
120

79
4
84
1

46,287703
20,464

11,625587
25,024

19,165
1,414
26,603

191
14
265

2,408
310
1,537
3,753
13,80589,270—(2,704)¥5,684,365

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

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

22
14
—
45
39
592
360
(100)
$57,143

NON-CONSOLIDATED BALANCE SHEETS (CONTINUED)

As of March 31,

2006

2007

2008

Millions of
U.S. dollars

Millions of yen

Liabilities:
Policy reserves:
Reserve for outstanding claims ............................................
Policy reserve .......................................................................
Reserve for dividends to policyholders ................................

28,371
5,108,013
52,872
5,189,257
74
47,092¥ 26,415
5,181,780
54,382
5,262,578
102
47,362$ 263
51,719542
52,525
1
472

5,000
7,426
38,658
11,821
758
5,217
11,599
—
1,856
250
1,114
83,7055,000
10,15528,84911,368797
5,056
12,672
10
1,210
—
1,297
76,419

—
9,316
3,274
10,931479
5,043
12,708
—
1,422
—
1,557
44,733

—
92
32
109
4
50
126
—
14
—
15
446

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

51,461

50,24849,504494—
42,59760,8602,977

547
50,06663,851
20,199—53,911—
20,076

—
538
—
200

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

5,317,957

5,497,755

5,478,270

54,678

Reinsurance payables ...............................................................
Subordinated bonds .................................................................
Other liabilities:
Subordinated debt loans ......................................................
Corporate income tax payable .............................................
Accounts payable ..................................................................
Accrued expenses .................................................................
Unearned income .................................................................
Deposits received .................................................................
Guarantee deposits received ................................................
Differential account for futures trading ..............................
Derivatives ............................................................................
Deferred valuation gains on hedge ......................................
Suspense receipt ...................................................................

¥ 27,472
4,951,438
54,516
5,033,427
85
42,843¥2008

FUKOKU MUTUAL LIFE INSURANCE COMPANY

13

NON-CONSOLIDATED BALANCE SHEETS (CONTINUED)

As of March 31,

2006

2007

2008

Millions of
U.S. dollars

Millions of yen

Capital:Foundation funds ......................................................................
Accumulated foundation funds redeemed ...............................
Reserve for revaluation ............................................................
Surplus:
Legal reserve for future losses .............................................
Voluntary surplus reserves:
Reserve for redemption of foundation funds ..................
Reserve for dividend allowances ......................................
Reserve for advanced depreciation of realestate for tax purpose ...................................................
Reserve for directors' retirement allowances ..................
Other reserves ..................................................................

30,000
1,000
112

—
—
—

—
—
—

—
—
—

1,387

—

—

—

24,000
3,895

—
—

—
—

—
—

412
2,770
767
31,84547,27037,87480,503
5,244
249,548
366,408¥5,684,365

—
—
—
—
—
—
—
—
—
—
—

—
—
—
—
—
—
—
—
—
—
—

—
—
—
—
—
—
—
—
—
—
—

—
—
—

40,00031,000112

40,00031,000
112

399
309
1

—

1,587

1,787

17

—
—

—
3,895

10,000
3,895

99
38

Total foundation funds and surplus .........................................
Net unrealized gains on securities, 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 .................................................................

—
—
—
—
—
—
—
—

343
2,770
767
53,77161,54863,135
134,247
273,377

319—
767
55,671
70,65372,441
143,553
115,334

3
—
7
555
705
723
1,432
1,151

—
—
—
—

(152)
(12,204)
261,020395,268408(12,335)
103,407
246,961

4
(123)
1,032
2,464

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

—¥5,893,024¥5,725,231$57,143

Unappropriated surplus .......................................................
Net surplus for the year ...................................................
Revaluation reserve for land, net of tax ...................................
Net unrealized gains on securities, net of tax ..........................
Total capital ............................................................................
Total liabilities and capital ....................................................
Net assets:
Foundation funds .....................................................................
Accumulated foundation funds redeemed ...............................
Reserve for revaluation ............................................................
Surplus:
Legal reserve for future losses .............................................
Other surplus:
Reserve for redemption of foundation funds ..................
Reserve for dividend allowances ......................................
Reserve for advanced depreciation ofreal estate for tax purpose ..............................................
Reserve for directors' retirement allowances ..................
Other reserves ..................................................................
Unappropriated surplus ...................................................

See notes to the non-consolidated financial statements.

14

2008

FUKOKU MUTUAL LIFE INSURANCE COMPANYNON-CONSOLIDATED STATEMENTS OF OPERATIONS
Fukoku Mutual Life Insurance Company
For the years ended March 31, 2006, 2007 and 2008

Year ended March 31,

2006

2007

2008

Millions of
U.S. dollars

Millions of yen

Ordinary revenues:
Premium and other income:Premium income ..................................................................
Reinsurance income .............................................................
Investment income:Interest, dividends and other income:Interest from deposits ......................................................
Interest and dividends from securities .............................
Interest from loans ...........................................................
Income from real estate for rent ......................................
Other interest and dividends ...........................................
Gains from money held in trust, net ...................................
Gains from trading securities, net .......................................
Gains on sales of securities ..................................................
Gains on redemption of securities .......................................
Other investment income ....................................................
Gains from separate accounts, net .......................................
Other ordinary revenues:
Fund receipt from annuity rider ..........................................
Fund receipt from deposit of claims paid ............................
Reversal of reserve for outstanding claims ..........................
Reversal of 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 ...........

2008¥ 845,604
403
846,008¥721,858130
721,989¥736,241226
736,468$7,348
2
7,350

1,358
45,74925,101
10,887
86
83,184
11,05016,21428,448—701
25,514
165,1121,135
69,70424,981
10,371
302
106,495
3,846
13,025
17,82326
365
5,813
147,397

584
83,91025,075
12,771641
122,983—
1,827
21,031—
373—
146,216

5
837
250
127
6
1,227
—
18
209
—
3
—
1,459

404
16,371—
166
705
17,647432
16,552
—
1,213
1,153
19,351851
18,702
1,955
743
1,521
23,774

8
186
19
7
15
237

1,028,769

888,739

906,459

9,047

197,973
64,442
123,924
87,322
23,841
315
497,819

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

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

2,349
760
1,443
1,201
248
3
6,007

2,178
320,89455¥ 323,128

898
156,575
51¥157,525—
73,766200¥ 73,967

—
736
2
$ 738

FUKOKU MUTUAL LIFE INSURANCE COMPANY

15

NON-CONSOLIDATED STATEMENTS OF OPERATIONS (CONTINUED)

Year ended March 31,

2006

2007

2008

Millions of
U.S. dollars

Millions of yen

Investment expenses:
Interest expenses ..................................................................
Losses from money held in trust, net ..................................
Losses on sales of securities .................................................
Losses on valuation of securities ..........................................
Losses on redemption of securities ......................................
Losses from derivative instruments, net ..............................
Foreign exchange losses, net ................................................
Provision for allowance for possible loan losses ..................
Depreciation of real estate for rent and other assets ...........
Other investment expenses ..................................................
Losses from separate accounts, net ......................................
Operating expenses ..................................................................
Other ordinary expenditures:
Claim deposit payments .......................................................
Taxes .....................................................................................
Depreciation .........................................................................
Others ...................................................................................
Total ordinary expenditures .................................................
Ordinary profits .....................................................................
Extraordinary gains:
Gains on disposal of real estate and movables .....................
Gains on disposal of fixed assets ..........................................
Reversal of allowance for possible loan losses .....................
Total extraordinary gains ......................................................
Extraordinary losses:
Losses on disposal of real estate and movables ...................
Losses on disposal of fixed assets .........................................
Impairment losses ................................................................

Provision for reserve for directors' andcorporate auditors' retirement benefits ............................
Provision for reserve for price fluctuation of securities ......
Total extraordinary losses ....................................................
Surplus before income taxes ................................................
Income taxes:
Current .................................................................................
Deferred ...............................................................................
Net surplus for the year ........................................................
Surplus carried from the previous year ..............................
Reversal of revaluation reserve for land .............................
Reversal of reserve for directors' retirement ....................
Unappropriated surplus ........................................................
See notes to the non-consolidated financial statements.

16

FUKOKU MUTUAL LIFE INSURANCE COMPANY

¥

1,655
—
5,941
266
19
17,834
1,294
—
4,453
4,149
—
35,61591,376¥

2,342—
11,168
1,296
—
4,353
993
6,855
4,383
4,939
—
36,33389,574

2008

¥

2,466
6,251
15,511
2,731
—
961
443
745
4,753
5,965
19,76559,59587,913

$

24
62
154
27
—
9
4
7
47
59
197
594
877

11,236
5,931
5,612
590
23,370971,31157,457

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

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

133
50
61
3
249
8,467
579

1,165
—
750
1,916

—
46
—
46

—
42
—
42

—
0
—
0

2,570
—
3,920

—
1,015
466

—
240
398

—
2
3

—
11,784
18,27541,098

547
7,468
9,496
50,762

—
3,845
4,484
53,635

—
38
44
535

13,856(10,632)
37,874
10,124(764)
35

17,792(10,532)
43,502———

18,905(10,655)
45,385
—
—
—

188
(106)
452
—
—
—

¥ 47,270

¥

—

¥

—

$

—

NON-CONSOLIDATED STATEMENTS OF SURPLUS
Fukoku Mutual Life Insurance Company
For the years ended March 31, 2006, 2007 and 2008

Year ended March 31,

2006

2007

2008

Millions of
U.S. dollars

Millions of yen

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

2008¥ 47,270¥53,771¥55,671$555

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

69

23

8

0

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

—

2,770

—

—

69

2,793

8

0

47,33956,56555,679555

30,45435,52531,868318

Legal reserves for future losses ........................................

200

200

200

1

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

531

716

716

7

Bonus to directors ............................................................

30

—

—

—

6,000

10,00010,00099

6,761

10,916

10,916108

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

37,21546,44142,784

427

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

¥ 10,124¥10,124¥12,894$128

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

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

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

See notes to the non-consolidated financial statements.

FUKOKU MUTUAL LIFE INSURANCE COMPANY

17

NON-CONSOLIDATED STATEMENT OF CHANGES IN NET ASSETS
Fukoku Mutual Life Insurance Company
For the years ended March 31, 2007 and 2008
Millions of yen

Year ended March 31, 2007
Balance at the end of
previous fiscal year .............................
Changes in the current fiscal year:
Financing of additionalfoundation funds ............................
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 ............................
Payment of bonus to directors ..........
Net surplus for the year ....................
Redemption of foundation
funds ...............................................
Additions to reserve forredemption of foundation funds ....
Reversal of reserve forredemption of foundation funds ....
Reversal of reserve foradvanced depreciation ofreal estate for tax purpose ..............
Reversal of revaluation
reserve for land ...............................
Net change, excluding
foundation funds and surplus .........
Total changes in the current
fiscal year ............................................
Balance at the end of current
fiscal year ............................................

Foundation
funds¥ 30,000

Accumulated
foundation
Reserve
funds
forredeemed revaluation¥ 1,000¥112

Foundation funds and surplus
Surplus
Other surplus
Reserve forReserve
Reserve foradvancedforLegalredemption Reserve
depreciation of directors'
reserveofforfor future foundation dividend real estate for retirement
lossesfunds
allowances tax purpose allowances¥1,387 ¥ 24,000¥3,895¥ 412¥ 2,770

UnappropriOtherated
reserves
surplus¥767¥ 47,270

40,000Total
foundation
funds andsurplusTotal
surplus¥ 80,503 ¥111,615—(30,454)
200

(200)

30,000(531)(30)
43,502(30,000)
6,000(6,000)(30,000)

30,000—200(24,000)¥ 40,000¥31,000¥112¥1,587 ¥—(30,454) (30,454)———

30,000(531)(30)
43,502(531)(30)
43,502—(30,000)——(30,000) (30,000)(69)

10,00040,000

69

—

—

144

144

144

(17,367)

22,632

—

(69)

—

—

6,501

¥3,895¥ 343¥ 2,770¥767¥ 53,771¥ 63,135 ¥134,247

Millions of yen
Valuation and translation adjustments

Year ended March 31, 2007
Balance at the end of previous fiscal year .............................................

18

Net unrealized
gains onsecurities, netof taxDeferredvaluation gains(losses) under hedge
accounting

Revaluation
reserve for land,
net of tax

Total valuationand translation
adjustments

Total
net assets¥249,548¥ —¥ 5,244¥254,792¥ 366,408

Changes in the current fiscal year:
Financing of additional foundation funds ......................................

40,000Additions to reserve for dividends to policyholders ......................

(30,454)

Additions to legal reserve for future losses ....................................

—

Additions to accumulated foundation funds redeemed .................

30,000

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

(531)

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

(30)

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

43,502

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

(30,000)

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

(30,000)

Reversal of revaluation reserve for land .........................................

144—

Net change, excluding foundation funds and surplus ....................

23,829(152)(17,449)

6,227

6,227

Total changes in the current fiscal year ................................................

23,829(152)(17,449)

6,227

28,860

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

¥273,377¥(152)¥(12,204)¥261,020¥ 395,268

FUKOKU MUTUAL LIFE INSURANCE COMPANYNON-CONSOLIDATED STATEMENT OF CHANGES IN NET ASSETS (CONTINUED)

Millions of yen
Foundation funds and surplus
Surplus
Other surplus

Year ended March 31, 2008
Balance at the end of
previous fiscal year .............................

Foundation
funds¥40,000

Accumulated
foundation
Reserve
funds
forredeemed revaluation¥31,000¥112

Reserve forReserve
Reserve foradvancedfor
Legal redemption Reserve
depreciation of directors'
reserveofforfor future foundation dividend real estate for retirement
allowances
lossesfunds
allowances tax purpose¥1,587¥—¥3,895¥343¥ 2,770

UnappropriOtherated
reserves
surplus¥767

Changes in the current fiscal year:
Additions to reserve fordividends to policyholders .............
Additions to legal reservefor future losses ..............................

200

Total
foundation
funds andsurplusTotal
surplus¥ 53,771¥ 63,135 ¥134,247(35,525)(35,525)(35,525)

(200)

—

—

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

(716)

(716)

(716)

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

45,38545,38545,385(10,000)

—

—

23

—

—

2,770

—

—

161

161

161

—

1,899

9,305

9,305

¥767

¥ 55,671

Additions to reserve forredemption of foundation funds ....

10,000

Reversal of reserve foradvanced depreciation ofreal estate for tax purpose ..............

(23)

Reversal of reserve for directors'
retirement allowances ....................
Reversal of revaluation
reserve for land ...............................

(2,770)Net change, excluding foundation
funds and surplus ............................
Total changes in the current
fiscal year ............................................

—

—

—

200

10,000—(23)(2,770)¥40,000¥31,000¥112¥1,787¥10,000¥3,895¥319¥

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

—¥ 72,441 ¥143,553

Millions of yen
Valuation and translation adjustments

Year ended March 31, 2008
Balance at the end of previous fiscal year .............................................

Net unrealized
gains onsecurities, netof tax¥ 273,377

Deferredvaluation gains(losses) under hedge
accounting¥(152)

Revaluation
reserve for land,
net of tax

Total valuationand translation
adjustments

Total
net assets¥(12,204)¥ 261,020¥ 395,268

Changes in the current fiscal year:
Additions to reserve for dividends to policyholders ......................

(35,525)

Additions to legal reserve for future losses ....................................

—

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

(716)

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

45,385Additions to reserve for redemption of foundation funds .............

—

Reversal of reserve for advanced depreciation of realestate for tax purpose ...................................................................

—

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

—

Reversal of revaluation reserve for land .........................................

161

Net change, excluding foundation funds and surplus ....................

(158,043)

560

(130)

(157,612)

Total changes in the current fiscal year ................................................

(158,043)

560

(130)

(157,612)(157,612)(148,307)

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

¥ 115,334¥ 408¥(12,335)¥ 103,407¥ 246,961

FUKOKU MUTUAL LIFE INSURANCE COMPANY

19

NON-CONSOLIDATED STATEMENT OF CHANGES IN NET ASSETS (CONTINUED)

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

Year ended March 31, 2008
Balance at the end of
previous fiscal year .............................

Foundation
funds

AccumuReserve for
lated
Legal
redemption
foundation
Reserve
reserve
of
funds
for
for future foundation
redeemed revaluation
losses
funds

$399

$309

$1

Changes in the current fiscal year:
Additions to reserve fordividends to policyholders ...........
Additions to legal reservefor future losses ............................
Payment of interest on
foundation funds ..........................
Net surplus for the year ..................
Additions to reserve for redemptionof foundation funds ......................
Reversal of reserve foradvanced depreciationof real estate for tax purpose ........
Reversal of reserve for directors'
retirement allowances ..................
Reversal of revaluation
reserve for land .............................
Net change, excluding
foundation funds and surplus ......
Total changes in the current
fiscal year ............................................
Balance at the end of current
fiscal year ............................................

$15

$—

Reserve forReserveadvancedforReservedepreciation of directors'
fordividend real estate for retirement
allowances tax purpose allowances

$38

$3

$ 27

Other
reserves

$7

1

99

(0)
(27)

UnappropriatedsurplusTotal
surplusTotal
foundation
funds andsurplus

$ 536

$ 630

$1,339

(354)

(354)

(354)

(1)

—

—

(7)
452

(7)
452

(7)
452

(99)

—

—

0

—

—

27

—

—

1

1

1

—

—

—

1

99

—

(0)

(27)

—

18

92

92

$399

$309

$1

$17

$ 99

$38

$3

$ —

$7

$ 555

$ 723

$1,432Millions of U.S. dollars
Valuation and translation adjustments

Year ended March 31, 2008
Balance the end of previous fiscal year .................................................

Net unrealized
gains onsecurities, netof tax$ 2,728

Deferredvaluation gains(losses) under hedge
accounting$ (1)Revaluation
reserve for land,
net of tax$(121)

Total valuationand translation
adjustments

Total
net assets$ 2,605$ 3,945

Changes in the current fiscal year:
Additions to reserve for dividends to policyholders ......................
Additions to legal reserve for future losses ....................................
Payment of interest on foundation funds .......................................

(354)
—
(7)

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

452

Additions to reserve for redemption of foundation funds .............

—

Reversal of reserve for advanced depreciation of real

20

estate for tax purpose ...................................................................

—

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

—

Reversal of revaluation reserve for land .........................................

1

Net change, excluding foundation funds and surplus ....................

(1,577)5(1)(1,573)

Total changes in the current fiscal year ................................................

(1,577)5(1)(1,573)(1,480)

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

$ 1,151$ 4$(123)$ 1,032$ 2,464

FUKOKU MUTUAL LIFE INSURANCE COMPANY(1,573)NOTES TO THE NON-CONSOLIDATED FINANCIAL STATEMENTS

I. Presentation of the Non-consolidated Financial Statements
1. Basis of Presentation
The accompanying non-consolidated financial statements have been prepared from the accounts maintained by Fukoku
Mutual Life Insurance Company (the "Company") in accordance with the provisions set forth in the Insurance Business
Law of Japan and its related rules and regulations and in conformity with accounting principles generally accepted inJapan, which are different in certain respects from accounting principles generally accepted in countries and jurisdictions
other than Japan.
In addition, the notes to the non-consolidated financial statements include information which is not required underaccounting principles generally accepted in Japan but 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
agree with the sum of the individual amounts.

2. U.S. Dollar Amounts
The translations of yen amounts into U.S. dollar amounts are included solely for the convenience of the reader and havebeen made, as a matter of arithmetical computation only, at the rate of ¥100.19 = US$1.00, the effective rate of exchange
at the balance sheet date of March 31, 2008. The translations should not be construed as representations that such yen
amounts have been or could in the future be, converted into U.S. dollars at that or any other rates.

II. Notes to Balance Sheets
1. Significant Accounting Policies(1) Valuation methods of securities
The valuations of securities, including bank deposits and monetary claims bought which are equivalent to securities, andsecurities managed as trust assets in money held in trust, are as follows:i) Trading securities are stated at fair market value. Costs of their sales are determined by the moving averagemethod.
ii) Held-to-maturity debt securities are stated at amortized cost under the straight-line method, cost being determined by the moving average method.
iii) Policy-reserve-matching bonds are stated at amortized cost under the straight-line method, cost being determined by the moving average method in accordance with "Temporary Treatment of Accounting and Auditing
Concerning Policy-reserve-matching Bonds in Insurance Industry" (Industry Audit Committee Report No.21
issued by the Japanese Institute of Certified Public Accountants on November 16, 2000).
iv) Investments in subsidiaries and affiliates are stated at cost, cost being determined by the moving average method.
v) Available-for-sale securities with fair market value are stated at fair market value based on the market prices at theend of fiscal year. Costs of their sales are determined by the moving average method. Net unrealized gains orlosses on these available-for-sale securities, net of taxes, are recorded as a separate component of net assets.
Available-for-sale securities with no fair market value are stated at cost, cost being determined by the moving
average method, except for public and corporate bonds including foreign bonds, of which the difference between
acquisition cost and face value is considered to be an adjustment of interest. Such bonds are stated at amortizedcost 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.

FUKOKU MUTUAL LIFE INSURANCE COMPANY

21

(3) Revaluation of land
The Company revalued the land for business purposes based on the Law for Revaluation of Land (Law No.34 promulgated on March 31, 1998). The difference between fair value and book value resulting from the revaluation, net of related
taxes, is recorded as revaluation reserve for land as a separate component of net assets and the related tax is recorded asdeferred tax liabilities for revaluation reserve for land.
Date of revaluation: March 31, 2002
Method of revaluation as prescribed for in Article 3 Paragraph 3 of the said Law:
Calculation is based on the appraisal value for property tax set forth in Article 2 item 3 of the Enforcement
Ordinance of the Law for Revaluation of Land (Government Ordinance No.119 promulgated on March 31,
1998) and the road rate set forth in Article 2 item 4 of the said Ordinance with certain reasonable adjustments.
(4) Depreciation of tangible fixed assets
Depreciation of tangible fixed assets is calculated by the following methods.
Buildingsi) Acquired on or before March 31, 1998: Previous declining-balance methodii) Acquired on or after April 1, 1998 but on or before March 31, 2007: Previous straight-line methodiii) Acquired on or after April 1, 2007: Straight-line method
Assets other than buildingsi) Acquired on or before March 31, 2007: Previous declining-balance methodii) Acquired on or after April 1, 2007: Declining-balance method
Other tangible fixed assets acquired for ¥100,000 or more but less than ¥200,000 are depreciated equally overthree years.
(5) Foreign currency translation
Foreign currency-denominated assets and liabilities, except for investments in subsidiaries and affiliates, are translated
into Japanese yen at the effective exchange rate prevailing at the balance sheet date. Investments in subsidiaries andaffiliates are translated into Japanese yen at the exchange rate on the date of acquisition.
(6) Allowance for possible loan losses
Allowance for possible loan losses is provided in accordance with the Company's standards of self-assessment and writeoffs and reserves on credit quality:i) For the credits of borrowers who are legally bankrupt such as being in the proceedings of bankruptcy or civil
rehabilitation (hereinafter called "legally bankrupt borrowers") and who are substantially bankrupt (hereinafter
called "substantially bankrupt borrowers"), the Company provides the remaining amount of credits after the
direct write-off described below and the deductions of the amount expected to be collected through the disposalof collateral or the execution of guarantees.
ii) For the credits of borrowers who are not currently bankrupt but have a high possibility of bankruptcy, the Company provides the amounts deemed as necessary considering the borrowers' ability to pay, within the amounts
after deductions of the amount expected to be collected through the disposal of collateral or the execution ofguarantees.
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 businessrelated divisions. Subsequently, the allowance for possible loan losses are provided based on the results of these assessments.
22

FUKOKU MUTUAL LIFE INSURANCE COMPANY

For the credits of legally bankrupt borrowers and substantially bankrupt borrowers, the amounts remaining after
deductions of collateral value or the amounts collectible through the execution of guarantees is written-off directly fromthe borrower's balance as the estimated uncollectible amounts. The amounts written-off as of March 31, 2006, 2007 and2008 were ¥833 million, ¥784 million and ¥875 million (US$8 million), respectively.

(7) Reserve for employees' retirement benefits
The Company adopts accounting standards for employees' retirement benefits (Business Accounting Council dated June
16, 1998) and accounts for the reserve for employees' retirement benefits based on the projected benefit obligation andplan assets at the balance sheet date.
(8) Reserve for directors' and corporate auditors' retirement benefits
Reserve for directors' and corporate auditors' retirement benefits represents the estimated amounts to be paid due toabolishing internal rule of retirement benefit plan in relation to directors and corporate auditors.
(9) Reserve for price fluctuation of securities
Reserve for price fluctuation of securities is calculated in accordance with the ruling in Article 115 of the Insurance
Business Law.
(10) Lease transactions
Finance leases, except those leases for which the ownership of the leased property is considered to be transferred to thelessee, are primarily accounted for as operating leases.
(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).
Primarily, for the interest rate swaps on loans qualifying for hedge accounting because of high correlation and effectiveness between the hedging instruments and the hedged item, gains and losses on the interest rate swaps are deferred
until the maturity of the hedged transactions.
Deposits and bonds denominated in foreign currencies for which forward foreign exchange contracts are used tohedge the foreign currency fluctuations are translated at the contract rates if the forward contracts qualify for specifichedge accounting. In this case, exchange differences between exchange rate on trade date and forward contract rate areallocated to each fiscal year from the date contracted to the date settled.
For judging the effectiveness of hedge used, ratio analysis of comparing the cash flow fluctuation of hedged item withthe same of hedging instruments is mostly applied.
(12) Accounting for consumption taxes
The Company accounts for consumption taxes by the tax-exclusion method. The consumption taxes on certain assets,
which are not deductible from consumption taxes withheld and that are stipulated to be deferred under the Tax Law, aredeferred as prepaid expenses and amortized equally over five years. Consumption taxes other than deferred consumption
taxes are recognized as an expense when incurred.
(13) Policy reserve
Policy reserve is based on Article 116 of the Insurance Business Law, and the premium reserve at the end of fiscal year is
calculated by the following method:
In regard to the policies subject to the standard policy reserve, the method as prescribed by the Commissioner ofFinancial 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.

FUKOKU MUTUAL LIFE INSURANCE COMPANY

23

(14) Software
The software for internal use, which was included in other assets as of March 31, 2006 and in software as of March 31,
2007 and 2008, is amortized based on straight-line method over the estimated useful lives.
(15) Deferred assets
Discount on bonds is amortized equally over the period for which interest on bonds is fixed.
(16) Policy-reserve-matching bonds
Of the bonds corresponding to the sub-groups which are set by insurance types and investment policies, the bonds thatare held to match the duration of liabilities are classified as policy-reserve-matching bonds in accordance with "Temporary Treatment of Accounting and Auditing Concerning Policy-reserve-matching Bonds in Insurance Industry" (Industry Audit Committee Report No. 21 issued by the Japanese Institute of Certified Public Accountants on November 16,2000).
The amount of policy-reserve-matching bonds recorded on the balance sheets as of March 31, 2007 and 2008 were
¥540,923 million and ¥598,156 million (US$5,970 million), respectively. The market value of these bonds as of March
31, 2007 and 2008 were ¥542,462 million and ¥612,619 million (US$6,114 million), respectively.

2. Changes in Accounting Policy(1) Effective for the year ended March 31, 2008, in accordance with the revision of Corporate Tax Law, depreciation of
tangible fixed assets acquired on or after April 1, 2007 is calculated by the straight-line method and the decliningbalance method stipulated in the revised law. As a result, ordinary profits decreased by ¥45 million (US$453 thousand), compared to the previous methods.
The tangible fixed assets acquired on or before March 31, 2007 that are depreciated to their final depreciable limit
are depreciated equally over five years for their remaining book value. As a result, ordinary profits decreased by ¥71
million (US$712 thousand).
(2) Effective for the year ended March 31, 2007, the Company adopted "Accounting Standards for Presentation of Net
Assets in the Balance Sheet" (ASBJ Statement No.5 issued by the Accounting Standards Board of Japan on December
9, 2005). If the previous accounting policy were to be applied, the amount of "Total capital" as of March 31, 2007 was¥395,420 million.
(3) Effective for the year ended March 31, 2007, the Company adopted "Tentative Solution on Accounting for Deferred
Assets" (ASBJ PITF No.19 issued by the Accounting Standards Board of Japan on August 11, 2006). As a result,discount on bonds of ¥106 million as of March 31, 2007, which was recorded in other assets until previous fiscal year,
was deducted from bonds.
(4) In accordance with the revised form of the Enforcement Regulation of the Insurance Business Law, the balance sheet
presentation has been changed as follows.
(a) Effective for the year ended March 31, 2007, "Real estate and movables" which was presented as a separate line
item until previous fiscal year is presented as "tangible fixed assets".
(b) Effective for the year ended March 31, 2007, "Intangible fixed assets" which was included in "Other assets" until
previous fiscal year is presented as a separate line item. The amount of "Intangible fixed assets" included in"Other assets" as of March 31, 2006 was ¥9,649 million.

3. Loans Receivable
The total amounts of credits to bankrupt borrowers, delinquent loans, delinquent loans past 3 months or more andrestructured loans, which were included in loans, were ¥2,317 million, ¥11,332 million and ¥11,032 million (US$110
million) as of March 31, 2006, 2007 and 2008, respectively.

24

FUKOKU MUTUAL LIFE INSURANCE COMPANY

i) The balances of credits to bankrupt borrowers were ¥429 million, ¥443 million and ¥492 million (US$4 million)
as of March 31, 2006, 2007 and 2008, respectively.
ii) The balances of delinquent loans were ¥1,882 million, ¥10,889 million and ¥10,539 million (US$105 million) as
of March 31, 2006, 2007 and 2008, respectively.
iii) There were no balances of delinquent loans past 3 months or more as of March 31, 2006, 2007 and 2008.
iv) The balance of restructured loans was ¥5 million as of March 31, and 2006, and there were no balances as ofMarch 31, 2007 and 2008.
Credits to bankrupt borrowers represent loans, excluding the balances already written-off, which meet the conditionsprescribed in Article 96 Paragraph 1 Item 3 and 4 of the Enforcement Regulations of the Corporate Tax Law. Moreover,accruing interest of these loans is not recorded as income after determining that principal of or interest on these loans isunlikely to be collected due to the significant delay in repayment of principal or interest payment or for some otherreasons.
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 for which interest payments have been suspended and rescheduled to assist and support the borrowers in the restructuring of their business.
Delinquent loans past 3 months or more are loans for which interest payment or repayment of principal are delinquent
for 3 months or more from the due date under the terms of the related loan agreements, excluding those loans classified
as credits to bankrupt borrowers and delinquent loans.
Restructured loans are loans for which certain concessions favorable to borrowers, such as interest reduction or exemptions, rescheduling of due date of principal or interest payment, waiver of claim or other terms, have been negotiatedfor the purpose of assisting and supporting the borrowers in the restructuring of their business. This category excludes
loans classified as credits to bankrupt borrowers, delinquent loans and delinquent loans past 3 months or more.
The direct write-offs related to loans decreased credits to bankrupt borrowers described above by ¥51 million, ¥2million and ¥87 million (US$872 thousand) as of March 31, 2006, 2007 and 2008, respectively.
The direct write-offs related to loans decreased delinquent loans described above by ¥782 million, ¥782 million and¥787 million (US$7 million) as of March 31, 2006, 2007 and 2008, respectively.

4. Accumulated Depreciation of Tangible Fixed Assets
Accumulated depreciation of tangible fixed assets totaled to ¥116,318 million and ¥122,527 million (US$1,222 million)
as of March 31, 2007 and 2008, respectively.
Accumulated depreciation of real estate and movables totaled to ¥113,289 million as of March 31, 2006.

5. Separate Accounts
Total assets in separate accounts provided for in Article 118 of the Insurance Business Law were ¥123,046 million,¥131,182 million and ¥117,591 million (US$1,173 million) as of March 31, 2006, 2007 and 2008, respectively. The
amounts of liabilities were the same as these figures.

6. Receivables from/Payables to Subsidiaries
The total amounts of receivables from/payables to subsidiaries were ¥21 million and ¥1,602 million as of March 31,
2006, ¥2,886 million and ¥1,933 million as of March 31, 2007, and ¥3,642 million (US$36 million) and ¥1,479 million(US$14 million) as of March 31, 2008, respectively.

7. Monetary Claims to Directors
Monetary claims to directors as of March 31, 2006, 2007 and 2008 were ¥16 million, ¥11 million and ¥16 million(US$163 thousand), respectively.

FUKOKU MUTUAL LIFE INSURANCE COMPANY

25

8. Income Taxes
Deferred tax assets and deferred tax liabilities as of March 31, 2006 were ¥82,460 million and ¥143,320 million, respectively.
Deferred tax assets and deferred tax liabilities as of March 31, 2007 were ¥93,069 million and ¥156,920 million,
respectively. Valuation allowance for deferred tax assets was ¥2,653 million.
Deferred tax assets and deferred tax liabilities as of March 31, 2008 were ¥106,636 million (US$1,064 million) and¥67,693 million (US$675 million), respectively. Valuation allowance for deferred tax assets was ¥2,836 million (US$28
million).
Major components of deferred tax assets and deferred tax liabilities were as follows:
As of March 31,

2006

2007

2008

Millions of
U.S. dollars

Millions of yen

Deferred tax assets:
Policy reserves .............................................................
Reserve for price fluctuation of securities ..................
Reserve for employees' retirement benefits ...............
Deferred tax liabilities:
Net unrealized gains on securities ..............................

2008¥ 43,026
15,424
18,634¥ 51,572
18,12818,194¥60,587
17,925
19,521

$604
178
194

141,654

155,181

65,469653

The statutory tax rate and the actual effective tax rates for the year ended March 31, 2006 were 36.2% and 7.8%,
respectively. The major differences between the statutory tax rate and the actual effective tax rate was reserve for dividends to policyholders of (26.8%).
The statutory tax rate and the actual effective tax rates for the year ended March 31, 2007 were 36.2% and 14.3%,
respectively. The major differences between the statutory tax rate and the actual effective tax rate was reserve for dividends to policyholders of (25.3%).
The statutory tax rate and the actual effective tax rates for the year ended March 31, 2008 were 36.2% and 15.4%,
respectively. The major differences between the statutory tax rate and the actual effective tax rate was reserve for dividends to policyholders of (21.5%).

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

2006

2007

2008

Millions of
U.S. dollars

Millions of yen

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

26

FUKOKU MUTUAL LIFE INSURANCE COMPANY¥ 57,550
18,966(22,057)
55¥ 54,516¥ 54,516
30,454(32,149)51¥ 52,872

2008¥ 52,872
35,525(34,216)200¥ 54,382

$ 527
354
(341)
2
$ 542

10. Stocks of Subsidiaries
The amounts of stocks of subsidiaries the Company held as of March 31, 2006, 2007 and 2008 were ¥2,826 million,¥2,828 million and ¥17,525 million (US$174 million), respectively.

11. Pledged Assets and Secured Debts
Assets pledged as collateral as of March 31, 2006 was ¥19,440 million. Secured debts as of March 31, and 2006 was ¥4,868
million.
Assets pledged as collateral as of March 31, 2007 were ¥18,050 million of securities and ¥856 million of money held in
trust. Secured debts as of March 31, 2007 was ¥4,710 million.
Assets pledged as collateral as of March 31, 2008 were ¥15,145 million (US$151 million) of securities and ¥19 million(US$196 thousand) of money held in trust. Secured debts as of March 31, 2008 was ¥4,660 million (US$46 million).

12. Policy Reserves for the Reinsurance Contracts
Reserve for outstanding claims for the reinsurance contracts provided in accordance with Article 71 Item 1 of the Enforcement Regulation of the Insurance Business Law (hereinafter called "reserve for outstanding claims for ceded reinsurance") were ¥900 thousand, ¥43 million and ¥31 million (US$311 thousand) as of March 31, 2006, 2007 and 2008,
respectively.
Policy reserve for the reinsurance contracts provided in accordance with Article 71 Item 1 of the Enforcement Regulation of the Insurance Business Law (hereinafter called "policy reserve for ceded reinsurance") were ¥31 million, ¥32
million and ¥29 million (US$297 thousand) as of March 31, 2006, 2007 and 2008, respectively.

13. Net Assets
Net assets defined in Article 30 Paragraph 2 (former Article 24-2 Paragraph 2 Item 2) of the Enforcement Regulation of
the Insurance Business Law were ¥259,925 million, ¥273,337 million and ¥115,855 million (US$1,156 million) as ofMarch 31, 2006, 2007 and 2008, respectively.

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

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

16. Commitment LineAs of March 31, 2006, 2007 and 2008, there were unused commitment line agreements under which the Company is thelender of ¥3,624 million, ¥1,581 million and ¥1,681 million (US$16 million), respectively.

FUKOKU MUTUAL LIFE INSURANCE COMPANY

27

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

18. Subordinated Debt Loans
Repayments of subordinated debt loans are subordinated to other obligations.

19. Assets Denominated in Foreign Currencies
Assets denominated in foreign currencies as of March 31, 2006, 2007 and 2008 totaled to ¥569,822 million, ¥672,918
million and ¥716,763 million (US$7,154 million), respectively. The principal foreign currency asset amounts were 1,487
million euros and US$2,567 million as of March 31, 2006, 2,022 million euros and US$2,579 million as of March 31,
2007, and 2,401 million euros and US$2,584 million as of March 31, 2008, respectively.
Liabilities denominated in foreign currencies as of March 31, 2006, 2007 and 2008 totaled to ¥43,820 million, ¥48,275
million and ¥48,542 million (US$484 million), respectively. The foreign currency liability amounts as of March 31, 2006,
2007 and 2008 were 306 million euros.

20. Contribution to Policyholders Protection FundThe future contribution to the former Insurance Policyholders Protection Fund of Japan, which was succeeded by theLife Insurance Policyholders Protection Corporation of Japan based on the Supplementary Article 140 Paragraph 5 of
the Financial System Reform Law, were estimated at ¥800 million and ¥285million as of March 31, 2006 and 2007,
respectively. The contribution was charged as operating expenses in the year in which they are paid.

21. Contribution to Policyholders Protection Corporation
The future contribution to the Life Insurance Policyholders Protection Corporation of Japan under Article 259 of the
Insurance Business Law were estimated at ¥10,615 million, ¥11,174 million and ¥11,302 million (US$112 million) as ofMarch 31, 2006, 2007 and 2008, respectively. The contribution is charged as operating expenses in the year in which they
are paid.

22. Reserve for Employees’ Retirement Benefits(1) The reserve for retirement benefits as of March 31, 2006, 2007 and 2008 were calculated as follows:
As of March 31,

2006

2007

2008

Millions of
U.S. dollars

Millions of yen

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

28

FUKOKU MUTUAL LIFE INSURANCE COMPANY2008¥ (73,568)
19,810(53,758)
2,020
276¥ (73,651)
21,438(52,212)1,722
241¥ (71,776)
18,307(53,469)
3,758
206$ (716)
182
(533)
37
2

¥ (51,461)¥ (50,248)¥ (49,504)$ (494)

(2) Gross amount of retirement benefit expenses for the years ended March 31, 2006, 2007 and 2008 were as follows:Year ended March 31,

2006

2007

2008

Millions of
U.S. dollars

Millions of yen

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

¥ 3,563
1,464
(551)
780
34
¥ 5,290¥ 3,472
1,470
(792)
502
34
¥ 4,6872008¥ 3,400
1,472
(964)
523
34
¥ 4,465

$ 33
14
(9)
5
0
$ 44

(3) The assumptions used in calculation of the above information were as follows:
Method of attributing the projected benefits to periods of service .......
Straight-line basis
Discount rate ...........................................................................................
2.0%
Expected rate of return on pension plan assets (See Note) ...................
4.5%
Recognition period of actuarial differences ............................................
10 years
Amortization period of prior service cost ...............................................
10 years
Note: Expected rate of return on pension plan assets for the years ended March 31, 2006 and 2007 were 3.5% and4.0%, respectively.

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

2. Transactions with Subsidiaries
The total amounts of revenues and expenditures in connection with subsidiaries were ¥405 million and ¥6,746 million
for the year ended March 31, 2006, ¥516 million and ¥7,811 million for the year ended March 31, 2007, and ¥694 million(US$6 million) and ¥8,023 million (US$80 million) for the year ended March 31, 2008, respectively.

FUKOKU MUTUAL LIFE INSURANCE COMPANY

29

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

2006

2007

2008

Millions of
U.S. dollars

Millions of yen

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

¥ 1,341
25,607
1,499¥

93
15,033
2,697

2008¥ 2,722
11,566
6,743

$ 27
115
67

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

2006

2007

2008

Millions of
U.S. dollars

Millions of yen

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

¥ 702
4,994
244

¥ 9,232
1,739
197

2008

¥ 4,720
7,182
3,608

$ 47
71
36

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

2006

2007

2008

Millions of
U.S. dollars

Millions of yen

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

¥266—¥1,296—2008¥1,949782$19
7

6. Policy Reserve for the Reinsurance Contracts
For the year ended March 31, 2006, reversal of reserve for outstanding claims for ceded reinsurance considered in
calculation of provision for reserve for outstanding claims was ¥26 million and reversal of policy reserve for ceded
reinsurance considered in calculation of provision for policy reserve was ¥8 million.
For the year ended March 31, 2007, provision for reserve for outstanding claims for ceded reinsurance considered in
calculation of provision for reserve for outstanding claims was ¥42 million and provision for policy reserve for ceded
reinsurance considered in calculation of provision for policy reserve was ¥718 thousand.
For the year ended March 31, 2008, reversal of reserve for outstanding claims for ceded reinsurance considered in
calculation of reversal of reserve for outstanding claims was ¥12 million (US$121 thousand) and reversal of policy reservefor ceded reinsurance considered in calculation of provision for policy reserve was ¥2 million (US$24 thousand).

30

FUKOKU MUTUAL LIFE INSURANCE COMPANY

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

2006

2007

2008

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

¥ 8,310
3,299
4,036

¥ 5,706
5,702
1,357

2008

¥ 3,798
1,920
4,006

$ 37
19
39

8. Gains/Losses from Money Held in Trust
Gains from money held in trust for the years ended March 31, 2006 and 2007 included valuation gains of ¥2,447 million
and valuation losses of ¥1,945 million, respectively.
Losses from money held in trust for the year ended March 31, 2008 included valuation losses of ¥5,701 million (US$56
million).

9. Gains/Losses from derivative Instruments
Losses from derivative instruments for the years ended March 31, 2006, 2007 and 2008 included valuation gains of¥1,539 million, valuation loss of ¥513 million and valuation gains of ¥95 million (US$951 thousand), respectively.

10. Impairment of Fixed Assets
Effective for fiscal years beginning on or after April 1, 2005, the Company adopted accounting standards for impairmentof fixed assets (Business Accounting Council dated August 9, 2002). As a result, surplus before income taxes for the year
decreased by ¥3,920 million for the year ended March 31, 2006.
(1) Method of grouping
Real estate and other assets used for insurance business operations are classified as one asset group as a whole. Other
assets such as lease property and unused real estate are classified as one group individually.
(2) Background of recognizing the impairment losses
As a result of decline in profitability due to decrease of rental income and of continuous decline of market value of land,
the Company reduced the book value of lease property and unused real estate to recoverable amount. The amountreduced were recognized as impairment losses included in extraordinary losses.
(3) Asset groups recognized impairment losses and losses by fixed assets• Year ended March 31, 2006

Millions of yen
Impairment losses

Asset

Land

Buildings

OthersTotal(i) Lease property ......................................................................
¥ 952¥1,701¥559¥3,214(ii) Unused real estate ................................................................
307
397
1
706
Total (i)+(ii) ................................................................................
¥1,259¥2,099¥561¥3,920Note : Major item of others was impairment losses of land lease rights which were included in other assets of ¥559 million.
(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 orroad rate.

FUKOKU MUTUAL LIFE INSURANCE COMPANY

31

REPORT OF INDEPENDENT AUDITORSThe Board of Directors of Fukoku Mutual Life Insurance Company

We have audited the accompanying non-consolidated balance sheets of Fukoku Mutual Life
Insurance Company as of March 31, 2006 and 2007, and the related non-consolidated statements ofoperations and surplus for the years then ended, and the non-consolidated statement of changes in
net assets for the year ended March 31, 2007, all expressed in Japanese yen. These non-consolidated
financial statements are the responsibility of the Company's management. Our responsibility is toindependently express an opinion on these non-consolidated financial statements based on our audits.
We conducted our audits in accordance with auditing standards generally accepted in Japan.
Those standards require that we plan and perform the audit to obtain reasonable assurance about
whether the financial statements are free of material misstatement. An audit includes examining, on
a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits
provide a reasonable basis for our opinion.
In our opinion, the non-consolidated financial statements referred to above present fairly, in allmaterial respects, the non-consolidated financial position of Fukoku Mutual Life Insurance Company as of March 31, 2006 and 2007, and the non-consolidated results of its operations for the years
then ended in conformity with accounting principles generally accepted in Japan.
The described in Note III. 10 in the year ended March 31, 2006, the Company adopted the new
accounting standards for impairment of fixed assets.

Tokyo, JapanMay 22, 2007

The Fuji Accounting Office32

FUKOKU MUTUAL LIFE INSURANCE COMPANY

The Board of Directors of Fukoku Mutual Life Insurance Company

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

Tokyo, JapanMay 22, 2008

Kisaragi Audit Corporation

FUKOKU MUTUAL LIFE INSURANCE COMPANY

33

CONSOLIDATED FINANCIAL STATEMENTSCONSOLIDATED BALANCE SHEETS
Fukoku Mutual Life Insurance Company and consolidated subsidiaries
As of March 31, 2006, 2007 and 2008

As of March 31,

2006

2007

2008

2008
Millions of
U.S. dollars

Millions of yen

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

¥

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

73,841¥65,00065,223¥

96,40052,963$

125,500

528
1,252

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

3,211

2,865

2,533

25

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

95,849102,186

57,527574

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

3,913,767

4,107,183

4,019,758

40,121Loans ........................................................................................

1,250,813

1,266,226

1,233,951

12,316

Real estate and movables .........................................................

196,510———

Tangible fixed assets .................................................................

—

206,565

206,150

2,057

Intangible fixed assets ..............................................................

—

8,343

16,189161

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

—

—

1

0

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

108

52

123

1

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

89,66849,575

61,148610

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

191

190

36,769366

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

(2,989)(9,648)(10,189)(101)

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

¥5,685,972¥5,895,164¥5,802,427$ 57,914

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

¥

¥

¥

$

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

4,951,438

5,108,013

5,252,471

52,425Reserve for dividends to policyholders ................................

54,51652,87255,063549

5,033,427

5,189,257

5,334,607

53,244

—

2

51

0

Liabilities:
Policy reserves:

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

27,472

28,371

27,073

270

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

85

74

138

1

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

42,84347,09247,362

472

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

83,93776,52145,293452

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

51,47750,26049,519

494

—

573

27

0

Reserve for directors' and corporate auditors'
retirement benefits .................................................................
Reserve for price fluctuation of securities ...............................

42,59750,06654,022

539

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

60,86063,8560

0

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

2,977

20,19920,076200

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

5,318,205

5,497,903

5,551,101

55,405

Minority interest ....................................................................

468

—

—

—

See notes to the consolidated financial statements.

34

FUKOKU MUTUAL LIFE INSURANCE COMPANYCONSOLIDATED BALANCE SHEETS (CONTINUED)

As of March 31,

2006

2007

2008

2008
Millions of
U.S. dollars

Millions of yen

Capital:Foundation funds .....................................................................

30,000———

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

1,000

—

—

—

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

112

—

—

—

Surplus ......................................................................................

81,488———

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

5,244

—

—

—

Net unrealized gains on securities, net of tax ..........................

249,554———

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

(101)

—

—

—

Total capital ............................................................................

367,298———

Total liabilities, minority interest and capital ....................

¥5,685,972

—

—

—

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

—

40,00040,000399

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

—

31,00031,000309

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

—

112

112

1

Surplus ......................................................................................

—

64,55974,369742

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

—

135,671

145,481

1,452

Net unrealized gains on securities, net of tax ..........................

—

273,382

115,335

1,151

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

—

(152)

408

4

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

—(12,204)(12,335)(123)

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

—

53

(3)

(0)

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

—

261,079

103,405

1,032

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

—

511

2,438

24

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

—

397,261

251,325

2,508

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

—¥5,895,164¥5,802,427$57,914

Net assets:

Deferred valuation gains (losses)

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, 2006, 2007 and 2008

Year ended March 31,

2006

2007

2008

Millions of
U.S. dollars

Millions of yen

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

¥846,007¥721,935¥736,468$7,350

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

83,22911,07016,21428,448—730
25,514
165,207
18,654106,296
3,867
13,025
17,82326
365
5,813
147,219
20,687

122,744—
1,827
21,031—373—
145,977
25,375

1,225
—
18
209
—
3
—
1,457
253

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

1,029,869

889,842

907,8219,060

197,973
64,442
123,924
87,322
24,156497,819

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

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

2,349
760
1,443
1,201
252
6,007

2,178
320,89455
323,128898
156,57551
157,525—
73,766200
73,967

—
736
2
738

Operating expenses .....................................................................
Other ordinary expenditures ......................................................

1,655
—
5,941
266
19
17,834
1,294
—
4,453
3,499
—
34,96592,061
23,417

2,342—
11,168
1,296
—
4,353
995
6,830
4,383
4,175
—
35,54690,40525,4462,466
6,244
15,511
2,731
—
961
445
746
4,753
5,224
19,76558,85088,77525,031

24
62
154
27
—
9
4
7
47
52
197
587
886
249

Total ordinary expenditures ....................................................

971,392

828,580

848,550

8,469

Ordinary profits ........................................................................

58,476

61,261

59,270591

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 ..............
Investment expenses:
Interest expenses .....................................................................
Losses from money held in trust, net .....................................
Losses on sales of securities ....................................................
Losses on valuation of securities .............................................
Losses on redemption of securities .........................................
Losses from derivative instruments, net .................................
Foreign exchange losses, net ...................................................
Provision for allowance for possible loan losses .....................
Depreciation of real estate for rent and other assets ..............
Other investment expenses .....................................................
Losses from separate accounts, net .........................................

36

2008

FUKOKU MUTUAL LIFE INSURANCE COMPANYCONSOLIDATED STATEMENTS OF OPERATIONS (CONTINUED)

Year ended March 31,

2006

2007

2008

2008
Millions of
U.S. dollars

Millions of yen

Extraordinary gains:
Gains on disposal of real estate and movables ........................

¥ 1,165

Gains on disposal of fixed assets .............................................

—

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

¥

—

¥

—

$ —

46

42

0

492

—

—

—

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

—

—

3

0

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

1,657

46

46

0

Losses on disposal of real estate and movables ......................

2,607

—

—

—

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

—

1,026

243

2

Impairment loss .......................................................................

3,920

466

398

3

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

—

547

—

—

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

11,784

7,468

3,845

38

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

—

—

6

0

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

18,312

9,508

4,493

44

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

41,821

51,79954,823547

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

14,31018,35919,412

193

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

(10,741)(10,525)(10,647)(106)

Minority interest .......................................................................

118

72

167

1

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

¥38,134¥ 43,893¥ 45,890$ 458

Extraordinary losses:

Provision for reserve for directors' andIncome taxes:

See notes to the consolidated financial statements.

FUKOKU MUTUAL LIFE INSURANCE COMPANY

37

CONSOLIDATED STATEMENTS OF SURPLUS
Fukoku Mutual Life Insurance Company and consolidated subsidiaries
For the year ended March 31, 2006

Year ended March 31,

2006

2007

2008

2008
Millions of
U.S. dollars

Millions of yen¥63,599———

38,134———

38,134———

Transfer to reserve for dividends to policyholders ..............

18,910———Interest payment for foundation funds ................................

531

—

—

—

Bonus to directors and statutory auditors ...........................

40

—

—

—

Reversal of revaluation reserve for land .................................

764

—

—

—

20,245———¥81,488———

Surplus at the beginning of year ..........................................
Additions:
Net surplus for the year .......................................................

Deductions:Surplus at the end of year ........................................................
See notes to the consolidated financial statements.

38

FUKOKU MUTUAL LIFE INSURANCE COMPANYCONSOLIDATED STATEMENT OF CHANGES IN NET ASSETS
Fukoku Mutual Life Insurance Company and consolidated subsidiaries
For the years ended March 31, 2007 and 2008
Millions of yen
Foundation funds and surplus

Year ended March 31, 2007

Valuation and translation adjustments

Foundation
funds

Accumulated
foundation
funds
redeemedReserveforrevaluation¥ 30,000¥ 1,000¥112 ¥ 81,488 ¥112,600

SurplusTotal
foundation
funds andsurplusNet
Deferred
RevaluaTotal
Foreignunrealized valuation gains
tionvaluation
gains on (losses) under reserve for currency
and
hedge
translation translation
securities,
land,
accounting
net of tax
net of tax adjustment adjustments

Minority
interests

Total
net assets

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

¥249,554¥— ¥ 5,244¥(101) ¥254,697¥468 ¥ 367,767

Changes in the current fiscal year:
Financing of additionalfoundation funds ..........................

40,00040,00040,000(30,406)(30,406)

30,00030,000

(531)

(531)

(531)

(30)

(30)

(30)

43,89343,89343,893(30,000)(30,000)(30,000)(30,000)(30,000)

144

144

144

Additions to reserve fordividends to policyholders ...........

(30,406)

Additions to accumulated
foundation funds redeemed .........

30,000

Payment of interest on
foundation funds ..........................
Payment of bonus todirectors ........................................
Net surplus forthe year ......................................
Redemption of foundation
funds .............................................

(30,000)

Reversal of reserve forredemption of foundation funds ...
Reversal of revaluation
reserve for land .............................
Net change, excluding
foundation funds and surplus .......

23,828(152)(17,449)

154

6,381

42

6,423

23,07023,828(152)(17,449)

154

6,381

42

29,494¥112 ¥ 64,559 ¥135,671¥273,382¥(152) ¥(12,204)¥ 53¥261,079

Total changes in the current
fiscal year ............................................

10,00030,000¥ 40,000¥31,000—(16,929)

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

¥511 ¥ 397,261

FUKOKU MUTUAL LIFE INSURANCE COMPANY

39

CONSOLIDATED STATEMENT OF CHANGES IN NET ASSETS (CONTINUED)

Millions of yen
Foundation funds and surplus

Year ended March 31, 2008

Valuation and translation adjustments

Foundation
funds

Accumulated
foundation
funds
redeemedReserveforrevaluation¥ 40,000¥31,000¥112 ¥ 64,559 ¥135,671

SurplusTotal
foundation
funds andsurplusNet
Deferred
RevaluaTotal
Foreignunrealized valuation gains
tionvaluation
gains on (losses) under reserve for currency
and
hedge
translation translation
securities,
land,
accounting
net of tax
net of tax adjustment adjustments

Minority
interests

Total
net assets

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

¥ 273,382¥(152) ¥ (12,204)¥ 53¥261,079¥ 511 ¥ 397,261

Changes in the current fiscal year:
Additions to reserve fordividends to policyholders ...........

(35,525)(35,525)(35,525)

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

(716)

(716)

(716)

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

45,89045,89045,890

161

161

161

Reversal of revaluation
reserve for land .............................
Net change, excluding
foundation funds and surplus .......

(158,046)

560

(130)

(56)

(157,673)

1,927(155,746)

9,810(158,046)

560

(130)

(56)

(157,673)

1,927(145,935)¥ 74,369 ¥145,481¥ 115,335¥ 408¥(12,335)

Total changes in the current
fiscal year ............................................

—

—

—

¥40,000¥31,000

¥112

9,810

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

¥ (3) ¥103,405¥2,438 ¥ 251,325

Millions of U.S. dollars
Foundation funds and surplus

Valuation and translation adjustments
Net
Deferred
RevaluaTotal
Foreignunrealized valuation gains
tionvaluation
gains on (losses) under reserve for currency
and
hedge
translation translation
securities,
land,
accounting
net of tax
net of tax adjustment adjustments

Foundation
funds

Accumulated
foundation
funds
redeemedReserveforrevaluation

SurplusTotal
foundation
funds andsurplus

$399

$309

$1

$ 644

$1,354

(354)

(354)

(354)

foundation funds ..........................

(7)

(7)

(7)

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

458

458

458

1

1

1

Year ended March 31, 2008

Minority
interests

Total
net assets$ 5$ 3,965

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

$ 2,728$(1)$(121)$0$ 2,605

Changes in the current fiscal year:
Additions to reserve fordividends to policyholders ...........
Payment of interest on

Reversal of revaluation
reserve for land .............................
Net change, excluding
foundation funds and surplus .......

(1,577)

5

(1)

(0)

(1,573)19(1,554)

Total changes in the current
fiscal year ............................................

—

—

—

97

97

(1,577)

5

(1)

(0)

(1,573)19(1,456)

$399

$309

$1

$ 742

$1,452$ 1,151$4$(123)$(0)$ 1,032$24$ 2,508

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

40

FUKOKU MUTUAL LIFE INSURANCE COMPANYCONSOLIDATED STATEMENTS OF CASH FLOWS
Fukoku Mutual Life Insurance Company and consolidated subsidiaries
For the years ended March 31, 2006, 2007 and 2008

Year ended March 31,

2006

2007

2008

Millions of
U.S. dollars

Millions of yen

Cash flows from operating activities:
Surplus before income taxes ......................................................................
Depreciation of real estate for rent and other assets .................................
Depreciation ...............................................................................................
Impairment loss ..........................................................................................
Increase (Decrease) in reserve for outstanding claims ..............................
Increase (Decrease) in policy reserve ........................................................
Interest on accumulated dividends to policyholders .................................
Increase (Decrease) in allowance for possible loan losses .........................
Increase (Decrease) in reserve for employees' retirement benefits ..........
Increase (Decrease) in reserve for price fluctuation of securities .............
Interest, dividends and other income ........................................................
(Gains) Losses on securities .......................................................................
Interest expenses ........................................................................................
Foreign exchange (gains) losses, net ..........................................................
(Gains) Losses on real estate and movables ...............................................
(Gains) Losses on tangible fixed assets ......................................................
(Increase) Decrease in reinsurance receivables .........................................
(Increase) Decrease in other assets ............................................................
Increase (Decrease) in agency payable ......................................................
Increase (Decrease) in reinsurance payables .............................................
Increase (Decrease) in other liabilities ......................................................
Others .........................................................................................................
Subtotal ..................................................................................................
Interest, dividends and other income received ..........................................
Interest paid ...............................................................................................
Dividends to policyholders paid ................................................................
Corporate income tax paid ........................................................................
Net cash provided by (used in) operating activities ..............................
Cash flows from investing activities:(Increase) Decrease in deposits ..................................................................
Proceeds from sales and redemption of monetary claims 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 derivative .....................................................
Others .........................................................................................................
Subtotal ..................................................................................................
Payments for purchase of real estate and movables ..................................
Proceeds from sales of real estate and movables .......................................
Payments for purchase of tangible fixed assets ..........................................
Proceeds from sales of tangible fixed assets ..............................................
Payments for purchase of intangible fixed assets ......................................
Proceeds from sale of intangible fixed assets .............................................
Acquisition of subsidiary, net of cash acquired ..........................................
Net cash provided by (used in) investing activities ...............................
Cash flows from financing activities:
Repayment of subordinated dept loans .....................................................
Proceeds from issueing bonds ...................................................................
Payments for redemption of bonds ...........................................................
Raising of foundation funds .......................................................................
Redemption of foundation funds ...............................................................
Interest payment for foundation funds ......................................................
Others .........................................................................................................
Net cash provided by (used in) financing activities ...............................
Effect of exchange rate changes on cash and cash 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 ...................................

¥

41,821
4,453
5,643
3,920
2,178
320,894
55
(492)
(162)
11,784(83,229)(57,185)
1,655
1,294
1,441
—
(30)
(5,768)
—
6
195
4,461
252,940
97,732(1,649)(22,000)(11,059)
315,963¥

51,799
4,383
6,118
466
898
156,57551
6,830(1,216)
7,468(106,296)(23,739)
2,342
995
—
980
55
(3,307)
2
(10)
1,777
3,479
109,653
108,523(2,230)(32,101)(15,594)
168,251

2008¥

54,823
4,753
6,182
398
(1,955)73,766
200
746
(740)
3,845
(122,744)
22,354
2,466
445
—
200
(67)
(767)
0
28
(676)
4,762
48,023
124,359(2,422)(34,216)(20,374)
115,369

$

547
47
61
3
(19)
736
2
7
(7)
38
(1,225)
223
24
4
—
2
(0)
(7)
0
0
(6)
47
479
1,241
(24)
(341)
(203)
1,151

(15)
351
(10,299)
5,006(1,102,731)
762,325(364,582)
398,529(19,373)(728)(331,517)(17,728)
5,204
—
—
—
—
—
(344,041)

(412)
201
(14,582)
12,017(1,459,246)
1,345,372(331,387)
317,902(3,839)(3,087)(137,061)——(17,621)277———(154,405)

184
332(6,000)44,448(1,101,919)
964,247(264,882)
300,943(1,067)(4,086)(67,798)——(10,933)387(1,949)0(11,729)(92,023)

1
3
(59)
443
(10,998)
9,624(2,643)
3,003
(10)
(40)
(676)
—
—
(109)
3
(19)
0
(117)
(918)

—
40,524(32,500)
—
—
(531)
(18)
7,475
(1,290)(21,893)
160,485
138,592———
40,000(30,000)
(531)
(30)
9,439
(952)
22,332
138,592
160,924(5,000)
—
—
—
—
(716)
(52)
(5,768)(546)
17,031
160,924
177,956

(49)
—
—
—
—
(7)
(0)
(57)
(5)
169
1,606
1,776

¥

¥

¥

$

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

41

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

I. Presentation of the Consolidated Financial Statements
1. Basis of Presentation
The accompanying consolidated financial statements have been prepared from the accounts maintained by Fukoku
Mutual Life Insurance Company (the "Company") and its consolidated subsidiaries in accordance with the provisions set
forth in the Insurance Business Law of Japan and its related rules and regulations and in conformity 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
agree with the sum of the individual amounts.

2. U.S. Dollar Amounts
The translations of yen amounts into U.S. dollar amounts are included solely for the convenience of the reader and havebeen made, as a matter of arithmetical computation only, at the rate of ¥100.19 = US$1.00, the effective rate of exchange
at the balance sheet date of March 31, 2008. The translation 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, 2008 are listed below:
Fukoku Shinyo Hosho Company Limited
Fukoku Capital Management, Inc.
Fukoku Information Systems Co., Ltd.
Fukoku Life International (U.K.) Limited
Fukoku Life International (America) Inc.
Fukoku Shinrai Life Insurance Company
Fukoku Shinrai Life Insurance Company, whose shares were acquired by the Company on January 31, 2008, has ben
consolidated as a consolidated subsidiary in the current fiscal year.
Major unconsolidated subsidiary is Fukoku Seimei Building Company Limited.
Seven subsidiaries are excluded from the scope of consolidation, as each one of them is small in its total assets,
amount of sales, net surplus for the year and surplus and is sufficiently insignificant to reasonable judgement on its
impact on the financial position and results of operation of the Company's group.

(2) Application of equity method
Unconsolidated subsidiaries (such as Fukoku Seimei building Company Limited, etc.) are insignificant in their impact on
net surplus for the year and surplus, and also immaterial as a whole, therefore, application of equity method is withheld.
There are no affiliates for the years ended March 31, 2006, 2007 and 2008.
(3) Fiscal year of consolidated subsidiaries
Among the subsidiaries to be consolidated, fiscal year-end of overseas subsidiaries is December 31. For the preparationof consolidated financial statements, financial statements as of that date are used and concerning any important transaction taking place in between December 31 and the consolidated closing date, necessary adjustments for consolidation are
made.

42

FUKOKU MUTUAL LIFE INSURANCE COMPANY

(4) Valuation of subsidiary's assets and liabilities on acquisition
On acquisition of a subsidiary, all of the subsidiary’s assets and liabilities that exist at the date of acquisition are recordedat their fair value.
(5) Amortization of consolidation goodwill
Consolidation goodwill is charged to operating expenses for the year ended March 31, 2006 and 2007. For the year
ended March 31, 2008, it is calculated by straight-line method for 10 years. Goodwill is amortized by the straight-line
method over a period of 10 years. In case of the immaterial amount of goodwill, such amount is fully charged to income
when incurred.
(6) Treatment of appropriation of surplus
Consolidated statements of surplus for the year ended March 31, 2006 were prepared based on the final appropriation of
surplus within the fiscal year.
(7) Cash and cash equivalents
Cash and cash equivalents, for the purpose of reporting cash flows, are composed of cash in hand, postal saving, current
deposit, ordinary deposit, deposit at notice and call loan. They also include time deposit, foreign currency deposit andnegotiable certificate of deposit, with maturity of three months or less when purchased.

II. Notes to Balance Sheets
1. Significant Accounting Policies(1) Valuation methods of securities
The valuations of securities, including bank deposits and monetary claims bought which are equivalent to securities, andsecurities managed as trust assets in money held in trust, are as follows:i) Trading securities are stated at fair market value. Costs of their sales are determined by the moving averagemethod.
ii) Held-to-maturity debt securities are stated at amortized cost under the straight-line method, cost being determined by the moving average method.
iii) Policy-reserve-matching bonds are stated at amortized cost under the straight-line method, cost being determined by the moving average method in accordance with "Temporary Treatment of Accounting and Auditing
Concerning Policy-reserve-matching Bonds in Insurance Industry" (Industry Audit Committee Report No.21
issued by the Japanese Institute of Certified Public Accountants on November 16, 2000).
iv) Investments in non-consolidated subsidiaries and affiliates which are not accounted for under the equity method
are stated at cost, cost being determined by the moving average method.
v) Available-for-sale securities with fair market value are stated at fair market value based on the market prices at theend of fiscal year. Costs of their sales are determined by the moving average method. Net unrealized gains orlosses on these available-for-sale securities, net of taxes, are recorded as a separate component of net assets.
Available-for-sale securities with no fair market value are stated at cost, cost being determined by the moving
average method, except for public and corporate bonds including foreign bonds, of which the difference between
acquisition cost and face value is considered to be an adjustment of interest. Such bonds are stated at amortizedcost 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.
FUKOKU MUTUAL LIFE INSURANCE COMPANY

43

(3) Revaluation of land
The Company revalued the land for business purposes based on the Law for Revaluation of Land (Law No.34 promulgated on March 31, 1998). The difference between fair value and book value resulting from the revaluation, net of related
taxes, is recorded as revaluation reserve for land as a separate component of net assets and the related tax is recorded asdeferred tax liabilities for revaluation reserve for land.
Date of revaluation: March 31, 2002
Method of revaluation as prescribed for in Article 3 Paragraph 3 of the said Law:
Calculation is based on the appraisal value for property tax set forth in Article 2 item 3 of the Enforcement
Ordinance of the Law for Revaluation of Land (Government Ordinance No.119 promulgated on March 31,
1998) and the road rate set forth in Article 2 item 4 of the said Ordinance with certain reasonable adjustments.
(4) Depreciation of tangible fixed assets
Depreciation of the Company's tangible fixed assets is calculated by the following methods.
Buildingsi) Acquired on or before March 31, 1998: Previous declining-balance methodii) Acquired on or after April 1, 1998 but on or before March 31, 2007: Previous straight-line methodiii) Acquired on or after April 1, 2007: Straight-line method
Assets other than buildingsi) Acquired on or before March 31, 2007: Previous declining-balance methodii) Acquired on or after April 1, 2007: Declining-balance method
Other tangible fixed assets acquired for ¥100,000 or more but less than ¥200,000 are depreciated equally over three
years.
(5) Foreign currency translation
Foreign currency-denominated assets and liabilities are translated into Japanese yen at the effective exchange rate prevailing at the balance sheet date.
(6) Allowance for possible loan losses
Allowance for possible loan losses is provided in accordance with the Company's standards of self-assessment and writeoffs and reserves on credit quality:i) For the credits of borrowers who are legally bankrupt such as being in the proceedings of bankruptcy or civil
rehabilitation (hereinafter called "legally bankrupt borrowers") and who are substantially bankrupt (hereinafter
called "substantially bankrupt borrowers"), the Company provides the remaining amount of credits after the
direct write-off described below and the deductions of the amount expected to be collected through the disposalof collateral or the execution of guarantees.
ii) For the credits of borrowers who are not currently bankrupt but have a high possibility of bankruptcy, the Company provides the amounts deemed as necessary considering the borrowers' ability to pay, within the amounts
after deductions of the amount expected to be collected through the disposal of collateral or the execution ofguarantees.
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 businessrelated divisions. Subsequently, the allowance for possible loan losses are provided based on the results of these assessments.
44

FUKOKU MUTUAL LIFE INSURANCE COMPANY

For the credits of legally bankrupt borrowers and substantially bankrupt borrowers, the amounts remaining after
deductions of collateral value or the amounts collectible through the execution of guarantees is written-off directly fromthe borrower's balance as the estimated uncollectible amounts. The amounts written-off as of March 31, 2006, 2007 and2008 were ¥833 million, ¥784 million and ¥958 million (US$9 million), respectively.
The allowance for possible loan losses of consolidated subsidiaries conforms to the standard used by the Company.

(7) Reserve for employees' retirement benefits
The Company and its consolidated subsidiaries adopt accounting standards for employees' retirement benefits (BusinessAccounting Deliberation Council dated June 16, 1998) and account for the reserve for retirement benefits based on the
projected benefit obligation and plan assets at the balance sheet date.
(8) Reserve for directors' and corporate auditors' retirement benefits
Reserve for directors' and corporate auditors' retirement benefits represents the estimated amounts to be paid due toabolishing internal rule of retirement benefit plan in relation to directors and corporate auditors.
(9) Reserve for price fluctuation of securities
Reserve for price fluctuation of securities is calculated in accordance with the ruling in Article 115 of the Insurance
Business Law.
(10) Lease transactions
Finance leases, except those leases for which the ownership of the leased property is considered to be transferred to thelessee, are primarily accounted for as operating leases.
(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).
Primarily, for the interest rate swaps on loans qualifying for hedge accounting because of high correlation andeffectiveness between the hedging instruments and the hedged item, gains and losses on the interest rate swaps aredeferred until the maturity of the hedged transactions.
Deposits and bonds denominated in foreign currencies for which forward foreign exchange contracts are used tohedge the foreign currency fluctuations are translated at the contract rates if the forward contracts qualify for specifichedge accounting. In this case, exchange differences between exchange rate on trade date and forward contract rate areallocated to each fiscal year from the date contracted to the date settled.
For judging the effectiveness of hedge used, ratio analysis of comparing the cash flow fluctuation of hedged itemwith the same of hedging instruments is mostly applied.
(12) Accounting for consumption taxes
The Company and its consolidated subsidiaries account for consumption taxes by the tax-exclusion method. The consumption taxes on certain assets, which are not deductible from consumption taxes withheld and that are stipulated to bedeferred under the Tax Law, are deferred as prepaid expenses and amortized equally over five years. Consumption taxes
other than deferred consumption taxes are recognized as an expense when incurred.
(13) Policy reserve
Policy reserve is based on Article 116 of the Insurance Business Law, and the premium reserve at the end of fiscal year is
calculated by the following method:
In regard to the policies subject to the standard policy reserve, the method as prescribed by the Commissioner ofFinancial 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.

FUKOKU MUTUAL LIFE INSURANCE COMPANY

45

(14) Software
The software for internal use, which was included in other assets as of March 31, 2006 and in intangible fixed assets as ofMarch 31, 2007 and 2008, is amortized based on straight-line method over the estimated useful lives.
(15) Deferred assets
Discount on bonds is amortized equally over the period for which interest on bonds is fixed.
(16) Policy-reserve-matching bonds
Of the bonds corresponding to the sub-groups which are set by insurance types and investment policies, the bonds thatare held to match the duration of liabilities are classified as policy-reserve-matching bonds in accordance with "Temporary Treatment of Accounting and Auditing Concerning Policy-reserve-matching Bonds in Insurance Industry" (Industry Audit Committee Report No. 21 issued by the Japanese Institute of Certified Public Accountants on November 16,2000).
The amount of policy-reserve-matching bonds recorded on the balance sheets as of March 31, 2007 and 2008 were
¥540,923 million and ¥598,156 million (US$5,970 million), respectively. The market value of these bonds as of March
31, 2007 and 2008 were ¥542,462 million and ¥612,619 million (US$6,114 million), respectively.

2. Changes in Accounting Policy(1) Effective for the year ended March 31, 2008, in accordance with the revision of Corporate Tax Law, depreciation of
tangible fixed assets acquired on or after April 1, 2007 is calculated by the straight-line method and the decliningbalance method stipulated in the revised law. As a result, ordinary profits decreased by ¥47 million (US$470 thousand), compared to the previous methods.
The tangible fixed assets acquired on or before March 31, 2007 that are depreciated to their final depreciable limit
are depreciated equally over five years for their remaining book value. As a result, ordinary profits decreased by ¥71
million (US$713 thousand).
(2) Effective for the year ended March 31, 2007, the Company adopted "Accounting Standards for Presentation of Net
Assets in the Balance Sheet" (ASBJ Statement No.5 issued by the Accounting Standards Board of Japan on December
9, 2005). If the previous accounting policy were to be applied, the amount of "Total capital" as of March 31, 2007 was¥396,902 million.
(3) Effective for the year ended March 31, 2007, the Company adopted "Tentative Solution on Accounting for Deferred
Assets" (ASBJ PITF No.19 issued by the Accounting Standards Board of Japan on August 11, 2006). As a result,discount on bonds of ¥106 million as of March 31, 2007, which was recorded in other assets until previous fiscal year,
was deducted from bonds.
(4) In accordance with the revised form of the Enforcement Regulation of the Insurance Business Law, the balance sheet
presentation has been changed as follows.
(a) Effective for the year ended March 31, 2007, "Real estate and movables" which was presented as a separate line
item until previous fiscal year is presented as "tangible fixed assets".
(b) Effective for the year ended March 31, 2007, "Intangible fixed assets" which was included in "Other assets" until
previous fiscal year is presented as a separate line item. The amount of "Intangible fixed assets" included in"Other assets" as of March 31, 2006 was ¥9,663 million.

3. Loans Receivable
The total amounts of credits to bankrupt borrowers, delinquent loans, delinquent loans past 3 months or more andrestructured loans, which were included in loans, were ¥2,317 million, ¥11,332 million and ¥10,979 million (US$109
million) as of March 31, 2006, 2007 and 2008, respectively.

46

FUKOKU MUTUAL LIFE INSURANCE COMPANY

i) The balances of credits to bankrupt borrowers were ¥429 million, ¥443 million and ¥477 million (US$4 million)
as of March 31, 2006, 2007 and 2008, respectively.
ii) The balances of delinquent loans were ¥1,882 million, ¥10,889 million and ¥10,502 million (US$104 million) as
of March 31, 2006, 2007 and 2008, respectively.
iii) The balances of delinquent loans past 3 months or more were no balances as of March 31, 2006, 2007 and 2008.
iv) The balance of restructured loans was ¥5 million as of March 31, 2006, and there were no balances as of March
31, 2007 and 2008.
Credits to bankrupt borrowers represent loans, excluding the balances already written-off, which meet the conditionsprescribed in Article 96 Paragraph 1 Item 3 and 4 of the Enforcement Regulations of the Corporate Tax Law. Moreover,accruing interest of these loans is not recorded as income after determining that principal of or interest on these loans isunlikely to be collected due to the significant delay in repayment of principal or interest payment or for some otherreasons.
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 for which interest payments have been suspended and rescheduled to assist and support the borrowers in the restructuring of their business.
Delinquent loans past 3 months or more are loans for which interest payment or repayment of principal are delinquent for 3 months or more from the due date under the terms of the related loan agreements, excluding those loansclassified as credits to bankrupt borrowers and delinquent loans.
Restructured loans are loans for which certain concessions favorable to borrowers, such as interest reduction or
exemptions, rescheduling of due date of principal or interest payment, waiver of claim or other terms, have been negotiated for the purpose of assisting and supporting the borrowers in the restructuring of their business. This category
excludes loans classified as credits to bankrupt borrowers, delinquent loans and delinquent loans past 3 months or more.
The direct write-offs related to loans decreased credits to bankrupt borrowers described above by ¥51 million, ¥2million and ¥102 million (US$1 million) as of March 31, 2006, 2007 and 2008, respectively.
The direct write-offs related to loans decreased delinquent loans described above by ¥782 million, ¥782 million and¥824 million (US$8 million) as of March 31, 2006, 2007 and 2008, respectively.

4. Accumulated Depreciation of Tangible Fixed Assets
Accumulated depreciation of tangible fixed assets totaled to ¥116,397 million and ¥122,670 million (US$1,224 million)
as of March 31, 2007 and 2008, respectively.
Accumulated depreciation of real estate and movables totaled to ¥113,363 million as of March 31, 2006.

5. Separate Accounts
Total assets in separate accounts provided for in Article 118 of the Insurance Business Law were ¥123,046 million,¥131,182 million and ¥117,591 million (US$1,173 million) as of March 31, 2006, 2007 and 2008, respectively. The
amounts of liabilities were the same as these figures.

6. Receivables from/Payables to Unconsolidated Subsidiaries
The total amounts of receivables from/payables to unconsolidated subsidiaries were ¥2,869 million and ¥182 million asof March 31, 2006, ¥2,872 million and ¥166 million as of March 31, 2007, and ¥3,540 million (US$35 million) and ¥162
million (US$1 million) as of March 31, 2008, respectively.

7. Monetary Claims to Directors
Monetary claims to directors as of March 31, 2006, 2007 and 2008 were ¥16 million, ¥11 million and ¥16 million(US$163 thousand), respectively.

FUKOKU MUTUAL LIFE INSURANCE COMPANY

47

8. Income Taxes
Deferred tax assets and deferred tax liabilities as of March 31, 2006 were ¥82,658 million and ¥143,328 million, respectively.
Deferred tax assets and deferred tax liabilities as of March 31, 2007 were ¥93,260 million and ¥156,925 million,
respectively. Valuation allowance for deferred tax assets was ¥2,653 million.
Deferred tax assets and deferred tax liabilities as of March 31, 2008 were ¥107,538 million (US$1,073 million) and¥67,932 million (US$678 million), respectively. Valuation allowance for deferred tax assets was ¥2,836 million (US$28
million).
Major components of deferred tax assets and deferred tax liabilities were as follows:
As of March 31,

2006

2007

2008

Millions of
U.S. dollars

Millions of yen

Deferred tax assets:
Policy reserves .................................................................
Reserve for employees’ retirement benefits ...................
Reserve for price fluctuation of securities ......................
Deferred tax liabilities:
Net unrealized gains on securities ..................................

2008¥43,026
18,64015,424¥51,572
18,19918,128¥61,054
17,931
19,561

$609
178
195

141,659

155,185

65,707655

The statutory tax rate and the actual effective tax rates for the year ended March 31, 2006 were 36.2% and 8.5%,
respectively. The major differences between the statutory tax rate and the actual effective tax rate was reserve for dividends to policyholders of (26.3%).
The statutory tax rate and the actual effective tax rates for the year ended March 31, 2007 were 36.2% and 15.1%,
respectively. The major differences between the statutory tax rate and the actual effective tax rate was reserve for dividends to policyholders of (24.8%).
The statutory tax rate and the actual effective tax rates for the year ended March 31, 2008 were 36.2% and 16.0%,
respectively. The major differences between the statutory tax rate and the actual effective tax rate was reserve for dividends to policyholders of (21.0%).

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

2006

2007

2008

Millions of
U.S. dollars

Millions of yen

Balance at the end of previous fiscal year ........................
Transfer from surplus in previous fiscal year ..................
Dividends paid in fiscal year ............................................
Increase in interest ...........................................................
Increase due to addition of consolidated subsidiary .......
Balance at the end of fiscal year ......................................

48

FUKOKU MUTUAL LIFE INSURANCE COMPANY¥ 57,550
18,966(22,057)
55—¥ 54,516¥ 54,516
30,454(32,149)51—¥ 52,872

2008¥ 52,872
35,525(34,216)200
680¥ 55,063

$ 527
354
(341)
2
6
$ 549

10. Stocks of Unconsolidated Subsidiaries
The amounts of stocks of unconsolidated subsidiaries the Company held as of March 31, 2006, 2007 and 2008 were ¥240
million, ¥240 million and ¥240 million (US$2 million), respectively.

11. Pledged Assets and Secured Debts
Assets pledged as collateral as of March 31, 2006 was ¥19,440 million. Secured debts as of March 31, 2006 was ¥4,868
million.
Assets pledged as collateral as of March 31, 2007 were ¥18,050 million of securities and ¥856 million of money held in
trust. Secured debts as of March 31, 2007 was ¥4,710 million.
Assets pledged as collateral as of March 31, 2008 were ¥15,223 million (US$151 million) of securities and ¥19 million(US$196 thousand) of money held in trust. Secured debts as of March 31, 2008 was ¥4,660 million (US$46 million).

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

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

14. Commitment LineAs of March 31, 2006, 2007 and 2008, there were unused commitment line agreements under which the Company is thelender of ¥3,624 million, ¥1,581 million and ¥1,681 million (US$16 million), respectively.

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

16. Subordinated Debt Loans
Repayments of subordinated debt loans are subordinated to other obligations.

17. Contribution to Policyholders Protection FundThe future contribution to the former Insurance Policyholders Protection Fund of Japan, which was succeeded by theLife Insurance Policyholders Protection Corporation of Japan based on the Supplementary Article 140 Paragraph 5 of
the Financial System Reform Law, were estimated at ¥800 million and ¥285 million as of March 31, 2006 and 2007,
respectively. The contribution was charged as operating expenses in the year in which they are paid.

18. 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 ¥10,615 million, ¥11,174 million and ¥11,527 million (US$115 million) as ofMarch 31, 2006, 2007 and 2008, respectively. The contribution is charged as operating expenses in the year in which they
are paid.

FUKOKU MUTUAL LIFE INSURANCE COMPANY

49

19. Reserve for Employees’ Retirement Benefits(1) The reserve for retirement benefits as of March 31, 2006, 2007 and 2008 were calculated as follows:
As of March 31,

2006

2007

2008

2008
Millions of
U.S. dollars

Millions of yen

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

¥(73,584)
19,810¥(73,663)
21,438¥(71,792)
18,307$(716)
182c. Unfunded benefit obligation (a+b) ..................
d. Unrecognized actuarial differences .................
e. Unrecognized prior service cost ......................

(53,774)
2,020
276(52,224)1,722
241(53,485)
3,758
206

(533)
37
2

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

¥(51,477)¥(50,260)¥(49,519)$(494)(2) Gross amount of retirement benefit expenses for the years ended March 31, 2006, 2007 and 2008 were as follows:Year ended March 31,

2006

2007

2008

Millions of
U.S. dollars

Millions of yen

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

¥3,568
1,464
(551)
780
34
¥5,296¥3,476
1,470
(792)
502
34
¥4,692

2008¥3,404
1,472
(964)
523
34
¥4,469

$33
14
(9)
5
0
$44

(3) The assumptions used in calculation of the above information were as follows:
Method of attributing the projected benefits to periods of service .......
Straight-line basis
Discount rate ...........................................................................................
2.0%
Expected rate of return on pension plan assets (Note) ..........................
4.5%
Recognition period of actuarial differences............................................
10 years
Amortization period of prior service cost ...............................................
10 years
Note: Expected rate of return on pension plan assets for the years ended March 31, 2006 and 2007 were 3.5% and4.0%, respectively.

50

FUKOKU MUTUAL LIFE INSURANCE COMPANY

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

2. Transactions with Unconsolidated Subsidiaries
The total amounts of revenues and expenditures in connection with subsidiaries were ¥104 million and ¥2,441 million
for the year ended March 31, 2006, ¥103 million and ¥2,536 million for the year ended March 31, 2007, and ¥121 million(US$1 million) and ¥2,604 million (US$25 million) for the year ended March 31, 2008, respectively.

3. Impairment of fixed assets
Effective for fiscal years beginning on or after April 1, 2005, the Company adopted accounting standards for impairmentof fixed assets (Business Accounting Council dated August 9, 2002). As a result, surplus before income taxes for the year
decreased by ¥3,920 million for the year ended March 31, 2006.
(1) Method of grouping
Real estate and other assets used for insurance business operations are classified as one asset group as a whole. Other
assets such as lease property and unused real estate are classified as one group individually.
(2) Background of recognizing the impairment losses
As a result of decline in profitability due to decrease of rental income and of continuous decline of market value of land,
the Company reduced the book value of lease property and unused real estate to recoverable amount. The amountreduced were recognized as impairment losses included in extraordinary losses.
(3) Asset groups recognized impairment losses and losses by fixed assets• Year ended March 31, 2006

Millions of yen
Impairment losses

Asset

Land

Buildings

OthersTotal(i) Lease property ......................................................................
¥ 952¥1,701¥559¥3,214(ii) Unused real estate ................................................................
307
397
1
706
Total (i)+(ii) ................................................................................
¥1,259¥2,099¥561¥3,920Note : Major item of others was impairment losses of land lease rights which were included in other assets of ¥559 million.
(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 orroad rate.

FUKOKU MUTUAL LIFE INSURANCE COMPANY

51

REPORT OF INDEPENDENT AUDITORSThe Board of Directors of Fukoku Mutual Life Insurance Company

We have audited the accompanying consolidated balance sheets of Fukoku Mutual Life Insurance Company and its consolidated subsidiaries as of March 31, 2006 and 2007, and the related
consolidated statements of operations for the years then ended, the consolidated statement of surplus for the year ended March 31, 2006, the consolidated statement of changes in net assets for theyear ended March 31, 2007, and the consolidated statements of cash flows for the years ended
March 31, 2006 and 2007, all expressed in Japanese yen. These consolidated financial statements
are the responsibility of the Company's management. Our responsibility is to independently express an opinion on these consolidated financial statements based on our audits.
We conducted our audits in accordance with auditing standards generally accepted in Japan.
Those standards require that we plan and perform the audit to obtain reasonable assurance about
whether the financial statements are free of material misstatement. An audit includes examining, on
a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits
provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above present fairly, in allmaterial respects, the consolidated financial position of Fukoku Mutual Life Insurance Company
and its consolidated subsidiaries as of March 31, 2006 and 2007, and the consolidated results of
their operations and their cash flows for the years then ended in conformity with accounting principles generally accepted in Japan.
As described in Note III. 3 in the year ended March 31, 2006, the Company and its consolidated
subsidiaries adopted the new accounting standards for impairment of fixed assets.

Tokyo, JapanMay 22, 2007

The Fuji Accounting Office

52

FUKOKU MUTUAL LIFE INSURANCE COMPANY

The Board of Directors of Fukoku Mutual Life Insurance Company

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

Tokyo, JapanMay 22, 2008

Kisaragi Audit Corporation

FUKOKU MUTUAL LIFE INSURANCE COMPANY53

CORPORATE ORGANIZATION
Secretarial Div.

Organization (as of August 1, 2008)
Branch Office65
Field Office493

Strategic Planning Dept.

Employees (as of March 31, 2008)
Office Staff
2,702
Sales Representative 10,775

General Affairs Dept.

Compliance Control Dept.
Corporate Risk Management Dept.

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

Strategic Market Promotion Dept.
Group Credit Div. Related toJapan Housing Finance Agency

Board of Statutory
Auditors

Wholesale Management Dept.
Sales Personnel Training Dept.

Assistant to the
Statutory Auditors

Customer Service Headquarters
Group Insurance Dept.

Board of Representative
Members of Policyholders

President
Board of Directors

Group Annuity Dept.
Customer Service Planning Div.
Customer Service Dept.
Underwriting Dept.

Nomination Committee of
Candidates for
Representative Members

Chief Actuary

Policy Administration Dept.
President

Secretariat for Nomination
Committee of Candidates for
Representative Members

Claims Dept.

Executive Committee

Medical Dept.
Operation & System Planning Dept.
Claim Inspection Dept.
Financial and Investment Planning Dept.

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

1254

FUKOKU MUTUAL LIFE INSURANCE COMPANYCORPORATE INFORMATIONBOARD OF DIRECTORS AND STATUTORY AUDITORS

President

Tomofumi Akiyama*
Senior Managing Director

Haruhiko Sugimoto
Managing Directors:

Yoshiki Murayama
Mikio Yamamoto
Katsumasa Furuya
Yoshiteru Yoneyama
Kenji Hirai*Representative Director

Statutory Auditors (Standing):

Directors:

Katsuhiro Utada
Kozo Isshiki
Hitoshi Sakai
Tsutomu Hiruma
Toshihiro Hayashi
Toshihide Fujiwara
Tadashi Akikawa
Yuuki Sakurai

Shuuichi Maeda
Akio Imai
Senior Advisers to the Board:

Tetsuo Furuya
Takashi Kobayashi(as of September 1, 2008)

Statutory Auditors:

Yoshizumi Nezu
Mitsuo Ohashi
Akihiro Mochizuki

DIRECTORY
Head Office

Fukoku Life International(U.K.) Ltd.

Fukoku Life International(America) Inc.

Chiyoda-ku, Tokyo 100-0011,

3rd Floor, Baltic Exchange,

Times Square Tower,

Japan

38 St. Mary Axe, London,

7 Times Square, 35th Floor,

Phone: 81-3-3508-1101

EC3A 8EX, U.K.

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

Facsimile: 81-3-3591-6446

Phone: 44-20-7283-1331

Phone: 1-212-221-7760

Facsimile: 44-20-7626-7096

Facsimile: 1-212-221-7794

2-2, Uchisaiwaicho 2-chome,

Fukoku Life International (U.K.) Ltd.

Fukoku Life International (America) Inc.

from left: J. Doram, J. Morita, Y. Onodera,

from left (back): M. Xu, T. Yoshimoto, A. Suzuki and Y. Suzuki

D. Reynolds and K. Sato

FUKOKU MUTUAL LIFE INSURANCE COMPANY

13
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FUKOKU MUTUAL LIFE INSURANCE COMPANY

Printed in Japan