November 22, 2018

Financial Results for the Six Months Ended September 30, 2018
Fukoku Mutual Life Insurance Company (President: Yoshiteru Yoneyama) announces financial
results for the six months ended September 30, 2018.

[Contents]
1. Business Highlights ……………………………………………..……………………

P. 1

2. Investment Results of General Account Assets …………………………………..….

P. 3

3. Non-consolidated Balance Sheets ………………………….………………………..

P. 10

4. Non-consolidated Statements of Operations …………………………………….…..

P. 11

5. Non-consolidated Statements of Changes in Net Assets …………………………..

P. 12……………….………..…

P. 22

7. Disclosed Claims Based on Categories of Obligors ……………………………….

P. 23

8. Risk-monitored Loans ………………………………………………………………

P. 24

9. Solvency Margin Ratio ………………………….…………………………………..

P. 25…………………………….……………………………

P. 26

11. Status of the Company, Subsidiaries and Affiliates …………………………………

P. 33

6. Breakdown of Ordinary Profits (Fundamental Profit)

10. Status of Separate AccountAttached: Supplementary Materials for the Six Months Ended September 30, 2018

Fukoku Mutual Life Insurance Company

1. Business Highlights(1) Policies in Force, New Policies and Surrendered and Lapsed Policies(i) Policies in Force
As of March 31, 2018

As of September 30, 2018

Number of policies

AmountNumber of policies(Thousands)(100 millions of yen)Amount(Thousands)

Changes(%, Pre-FYE)(100 millionsof yen)Changes(%, Pre-FYE)

Individual insurance

3,180

227,653

3,180

100.0

226,826

99.6

Individual annuities

687

26,684671

97.7

26,090

97.8

3,868

254,338

3,852

99.6

252,916

99.4

Group insurance–

170,732––

172,154100.8

Group annuities–

21,803––

21,984100.8

Subtotal

Notes: 1. Policy amounts for individual annuities are equal to (a) the funds to be held at the time annuity payments are to commence for anannuity for which annuity payments have not yet commenced and (b) the amount of policy reserve for an annuity for which
payments have commenced and (c) special riders for term insurance attached to individual annuities.
Notes: 2. Policy amount in force for group annuities is equal to the amount of outstanding policy reserve.

(ii) New Policies

Six months ended
September 30, 2017

Total

Net increase by
conversion

New business

Number of policies

AmountAmountAmount(Thousands)(100 millions of yen)(100 millions of yen)(100 millions of yen)

Individual insurance

180

6,979

6,691

288

Individual annuities

3

90

97

(7)

183

7,070

6,789

281

Group insurance

–

315

315

–

Group annuities

–

158

158

–

Subtotal

Total
Six months ended
September 30, 2018

Number of policies(Thousands)

AmountChanges(%, YoY)

Net increase by
conversion

New business(100 millionsof yen)AmountChanges(%, YoY)(100 millionsof yen)AmountChanges(%, YoY)(100 millionsof yen)Changes(%, YoY)

Individual insurance

174

96.7

7,539

108.0

6,577

98.3

961

333.4

Individual annuities

3

117.5

104

115.1

111

114.2

(7)

–

177

97.1

7,644

108.1

6,689

98.5

954

339.2

Group insurance

–

–

492

156.0

492

156.0

–

–

Group annuities

–

–

0

0.4

0

0.4

–

–

Subtotal

Notes: 1. Number of new policies is the sum of new business and policies after conversion.
Notes: 2. Amount of new policies for individual annuities, both new business and net increase by conversion, is equal to the funds to beheld at the time annuity payments are to commence and special riders for term insurance attached to individual annuities.
Notes: 3. Amount for group annuities is equal to the initial premium payment.

(iii) Surrendered and Lapsed Policies (Individual Insurance and Individual Annuities)
Six months ended
September 30, 2017

Six months ended
September 30, 2018
Changes(%, YoY)

Amount of surrender andlapse (100 millions of yen)

6,334

6,151

97.1

Surrender and lapse ratio (%)

2.44

2.42

(0.02)

Notes: 1. The amount of lapse is not offset by the amount of reinstatement which was once lapsed.
Notes: 2. The column of "Changes" of surrender and lapse ratio is increase-decrease points over year.

1

Fukoku Mutual Life Insurance Company

(2) Annualized Premiums(i) Policies in Force(100 millions of yen, %)As of March 31, 2018

As of September 30, 2018
Changes (%, Pre-FYE)

Individual insurance

2,747

2,736

99.6

Individual annuities

1,296

1,266

97.7

Total

4,043

4,003

99.0

1,107

1,113

100.6

Medical coverage and living benefits(ii) New Policies(100 millions of yen, %)Six months ended September 30, 2017

Six months ended September 30, 2018
Changes (%, YoY)

Individual insurance

73

76

103.2

Individual annuities

2

3

112.4

Total

76

79

103.5

39

36

93.3

Medical coverage and living benefits

Notes: 1. Annualized premiums are calculated by using coefficients based on the premium payment method. (For single premium
contracts, the amount is calculated by dividing the premium by the coverage period.)
Notes: 2. Figures for medical coverage and living benefits represent portion of annualized premium corresponding to the medical
benefits (hospitalization benefits and surgery benefits, etc.), living benefits (nursing care benefits, etc.) and premium waiver
benefits, in which disability cause is excluded but causes such as specific illness are included.
Notes: 3. New policies include net increase by conversion.

2

Fukoku Mutual Life Insurance Company

2. Investment Results of General Account Assets(1) Asset Composition(Millions of yen, %)Cash, deposits, and call loans

As of March 31, 2018

As of September 30, 2018

AmountAmount% of total

240,462
443

Monetary claims bought

3.7 %% of total

191,069

0.0

320

2.9 %
0.0

31,5020.5

31,9710.5

5,380,830

82.2

5,556,277

83.6

Domestic bonds

2,818,618

43.1

2,791,453

42.0

Domestic stocks

740,82811.3

761,564

11.5

Foreign securities

1,713,869

26.2

1,892,390

28.5

Foreign bonds

1,434,457

21.9

1,590,116

23.9

279,4124.3

302,274

4.6

107,5141.6

110,869

1.7

593,7349.1

567,050

8.5

Policy loans

57,181

0.9

56,8880.9

Ordinary loans

536,5538.2

510,162

7.7

Real estate

213,674

3.3

212,701

3.2

Others85,664

1.3

85,369

1.3

Allowance for possible loan losses(2,049)(0.0)(1,998)(0.0)

6,544,262

100.0

6,642,762

100.0

1,998,720

30.5

2,201,280

33.1

Money held in trust
Securities

Foreign stocks and other securities
Other securities
Loans

Total
Foreign currency denominated assets

Note: The amount of real estate is equal to the amounts of land, buildings, and construction in progress.

(2) Changes (Increase/Decrease) in Assets(Millions of yen)Six months ended September 30, 2017

Six months ended September 30, 2018

Cash, deposits, and call loans

21,872(49,392)

Monetary claims bought

(291)

(123)

Money held in trust

995

468

Securities

185,266

175,447

Domestic bonds

29,330(27,164)

Domestic stocks

71,203

20,736

Foreign securities

77,251

178,520

Foreign bonds

53,800155,658

Foreign stocks and other securities

23,451

22,862

7,480

3,354

(31,916)(26,684)

Other securities
Loans
Policy loans

(331)

(292)

Ordinary loans(31,584)(26,391)

Real estate(1,908)(973)

Others(8,449)

(294)

(67)

51

165,502

98,500130,115

202,560

Allowance for possible loan losses
Total
Foreign currency denominated assets

Note: The amount of real estate is equal to the amounts of land, buildings, and construction in progress.

3

Fukoku Mutual Life Insurance Company

(3) Investment Income(Millions of yen)Six months ended September 30, 2017

Six months ended September 30, 2018

71,021

74,5177

18Interest and dividends on securities

58,64562,255Interest on loans

5,135

4,760

Income from real estate for rent

7,171

7,425

Other interest and dividends

61

57

Gains on money held in trust, net

1,084

498

Gains on trading securities, net

8,311

5,380

Gains on sales of securities

12,062

14,983

Gains on sales of domestic bonds

4,621

859

Gains on sales of domestic stocks

1,208

12,604

Gains on sales of foreign securities

6,232

1,519

–

48

734

201

93,214

95,630Interest, dividends and other income
Interest on deposits

Reversal of allowance for possible loan losses
Other investment income
Total(4) Investment Expenses(Millions of yen)Six months ended September 30, 2017

Six months ended September 30, 2018

Interest expenses

2,190

1,933

Losses on sales of securities

1,800

5,916

Losses on sales of domestic bonds

–

1,416

Losses on sales of domestic stocks

535

391

Losses on sales of foreign securities

1,196

4,107

Other losses on sales of securities

68

–

–

241

–

241

Losses on derivative instruments, net

10,1438,754

Foreign exchange losses, net

6,298

3,939

67

–

2,113

2,065

Losses on valuation of securities
Losses on valuation of foreign securities

Provision of allowance for possible loan losses
Depreciation of real estate for rent and other assets
Other investment expenses

3,333

3,791

Total

25,947

26,642(5) Net Investment Income(Millions of yen)Six months ended September 30, 2017

Six months ended September 30, 201867,267

68,987

Net investment income

4

Fukoku Mutual Life Insurance Company

(6) Net Valuation Gains/Losses on Trading Securities(Millions of yen)

As of March 31, 2018
As of September 30, 2018
Carrying value on the Net valuation gains/losses included Carrying value on the Net valuation gains/losses included
balance sheet
in the statement of operationsbalance sheet
in the statement of operations

Trading securities

179,768(7,938)

151,713

3,196

Note: The table above includes money held in trust for trading purpose.

(7) Fair Value Information on Securities (with fair value, other than trading securities)(Millions of yen)
As of March 31, 2018
Book value Fair value

As of September 30, 2018

Gains/losses
Gains

Gains/losses

Book value Fair value

Losses

Gains

Losses

Held-to-maturity debt securities

758,872

897,574

138,702138,702–760,598

885,497

124,899

124,977

Domestic bonds

738,632

876,835

138,203––

739,050

863,809124,758

124,758–

Foreign bonds

20,23920,738498––

21,547

21,688

140

219

78

Monetary claims bought

–

–

–

–

–

–

–

–

–

–

Negotiable certificate of deposits

–

–

–

–

–

–

–

–

–

–

Others

–

–

–

–

–

–

–

–

–

–

Policy-reserve-matching bonds

973,736

1,134,148

160,412

162,375

1,962

959,209

1,097,964

138,754

142,0623,307

Domestic bonds

971,937

1,132,289

160,352

162,315

1,962

957,410

1,096,116

138,706

142,0143,307

Foreign bonds

1,799

1,859

59

59

–

1,799

1,847

48

48

–

–

–

–

–

–

–

–

–

–

–

Available-for-sale securities

2,941,466

3,404,811

463,345531,772

68,427

3,110,092

3,621,701

511,609558,563

46,954

Domestic bonds

1,023,447

1,080,932

57,48467,947

10,462

1,028,728

1,077,325

48,59658,94910,353

Domestic stocks

305,353

671,850

366,497

370,2783,780

308,401

692,588384,187

387,323

3,135

Foreign securities

1,538,185

1,558,823

20,63773,35952,721

1,697,968

1,754,688

56,71989,01232,292Foreign bonds

Investments in subsidiaries and affiliates

78

1,290,483

1,290,268(214)

46,42546,6401,441,180

1,463,694

22,514

51,82529,311

Foreign stocks and other securities

247,701

268,554

20,852

26,933

6,081

256,788

290,994

34,20537,186

2,981

Other securities

74,48093,20518,72520,187

1,462

74,99397,09922,10523,278

1,172

Money held in trust

–

–

–

–

–

–

–

–

–

–

Monetary claims bought

–

–

–

–

–

–

–

–

–

–

Negotiable certificate of deposits

–

–

–

–

–

–

–

–

–

–

Others

–

–

–

–

–

–

–

–

–

–

Total

4,674,074

5,436,534

762,459

832,849

70,3904,829,900

5,605,164

775,263825,603

50,340

Domestic bonds

2,734,016

3,090,057

356,040

368,465

12,4252,725,189

3,037,251

312,061

325,722

13,661

Domestic stocks

305,353

671,850

366,497

370,2783,780

308,401

692,588384,187

387,323

3,135

Foreign securities

1,560,224

1,581,421

21,19673,91852,721

1,721,315

1,778,224

56,90889,28032,371

Foreign bonds

1,312,522

1,312,866

343

46,984

46,6401,464,527

1,487,230

22,70352,09329,389Foreign stocks and other securities

247,701

268,554

20,852

26,933

6,081

256,788

290,994

34,20537,186

2,981

Other securities

74,48093,20518,72520,187

1,462

74,99397,09922,10523,278

1,172

Money held in trust

–

–

–

–

–

–

–

–

–

–

Monetary claims bought

–

–

–

–

–

–

–

–

–

–

Negotiable certificate of deposits

–

–

–

–

–

–

–

–

–

–

Others

–

–

–

–

–

–

–

–

–

–

Note: The table above includes assets which are considered appropriate to deem as securities under the Financial Instruments andExchange Law.

• Book value of securities without fair value are as follows:(Millions of yen)

As of March 31, 2018––––
64,83728,021
5,697––
22,32392,858

Held-to-maturity debt securities––
Policy-reserve-matching bonds
Investments in subsidiaries and affiliates
Available-for-sale securities
Unlisted domestic stocks (except over-the-counter stocks)
Unlisted foreign stocks (except over-the-counter stocks)
Unlisted foreign bonds
OthersTotal

As of September 30, 2018––––
64,837
26,696
5,696––
20,99991,533

Note: In this table, domestic and overseas investment partnerships are included in “Others” within “Available-for-sale securities.”
However, unrealized gains on available-for-sale securities corresponding to these holdings by domestic and overseas
investment partnerships (¥1,285 million as of March 31, 2018 and ¥2,492 million as of September 30, 2018) are included intheir balance sheet carrying amounts.

5

Fukoku Mutual Life Insurance Company

(8) Fair Value Information on Money Held in Trust(Millions of yen)

As of March 31, 2018

Money held in trust

Carrying valueon the balance
sheet

Fair value

31,50231,502As of September 30, 2018

Gains/losses
Gains

LossesCarrying valueon the balance
sheet

–

–

31,971–

Gains/losses
Fair value

31,971–

Gains

Losses––• Money held in trust for trading purpose(Millions of yen)

As of March 31, 2018
Carrying valueon the balance sheet

Money held in trust
for trading purpose

As of September 30, 2018

Net valuation gains/losses
included in the statementsof operations

30,502

Net valuation gains/losses
included in the statementsof operations

Carrying valueon the balance sheet

030,971

289• Money held in trust classified as held-to-maturity, policy-reserve-matching and available-for-sale(Millions of yen)

As of March 31, 2018

As of September 30, 2018

Gains/losses
Book value

Gains/losses

Fair value

Book value
Gains

LossesFair value
Gains

LossesMoney held in trust
for held-to-maturity

–

–

–

–

–

–

–

–

–

–

Money held in trust
for policy-reservematching

–

–

–

–

–

–

–

–

–

–

Money held in trust
for available-for-sale

–

–

–

–

–

–

–

–

–

–

6

Fukoku Mutual Life Insurance Company

Reference: Fair Value Information on Derivative Instruments (General Account)(i) Gains and Losses on Derivatives(Millions of yen)

As of March 31, 2017

Interest-related

Currency- related

Stock- related

Bond- related

–
(453)
(453)

10,75517
10,772(1,082)–(1,082)

–
(98)
(98)

Interest- related Currency- related

Stock- related

Bond- related

–
–
–

–
89
–

Hedge accounting applied
Hedge accounting not applied
Total
As of September 30, 2018

–
(524)
(524)

Hedge accounting applied
Hedge accounting not applied
Total(13,488)(3,662)(17,151)

Others

Total

–
–
–

9,672
(534)
9,138

Others

Total

–
–
–

(13,488)(4,097)(17,586)

Note: Gains and losses from applying fair value hedge accounting (currency-related gains of ¥10,755 million, stock-related losses of¥1,082 million as of March 31, 2018, and currency-related losses of ¥13,488 million as of September 30, 2018) included in gains
and losses with hedge accounting applied, and gains and losses with hedge accounting not applied are reported in the statementsof operations.

(ii) Interest-related Transactions(Millions of yen)

As of March 31, 2017
Notional amount/contract value
Fair valueOver 1 year

Gains
(Losses)

As of September 30, 2018
Notional amount/contract value
Fair valueOver 1 year

Gains
(Losses)Over-the-counter transactions
Yen interest rate swaption contracts
Sold–

Receipt fixed, payment floating
[

[

–

– ]
–

Payment fixed, receipt floating

–
–

– [

–

– ]
–

–

– ]

– [

–
–

–

–

–

–

–

71

(524)

–

– ]

Bought–Receipt fixed, payment floating[
Payment fixed, receipt floating–– ]320,000

[

–
–

– [

160,000– ]320,000

596 ]

142

Total

(453) [
(453)

–

596 ]

160,000(524)

Notes: Figures in [ ] are option premiums which are included in the balance sheet.

7

Fukoku Mutual Life Insurance Company

(iii) Currency-related Transactions(Millions of yen)

As of March 31, 2017
Notional amount/contract value
Fair valueOver 1 year

Over-the-counter transactions
Currency forward contracts
Sold
U.S. dollar
Canadian dollar
Euro
British Pound
Australian dollar
BoughtCurrency options
Sold
Call
[
U.S. dollar[
Put[
BoughtCall[
Put[
U.S. dollar[
Canadian dollar[
Australian dollar[

Gains(Losses)

As of September 30, 2018
Notional amount/contract value
Fair valueOver 1 year

Gains
(Losses)

807,994
624,796
69,29339,25840,062
34,582

–
–
–
–
–
–

797,222615,445
69,02938,76840,14033,838

10,772
9,351
264
489
(78)
744

724,634
517,073
72,57565,57339,75329,657

–
–
–
–
–
–

741,376
530,924
74,812
65,94739,982
29,709(16,742)(13,851)(2,236)
(373)
(228)
(51)

–

–

–

–

–

–

–

–

–
–]
–
–]
–
–]

–
– [

97,211207 ]
97,211
207 ]
–
–]

–

–

280

(73)

280

(73)

–

–

–
–]
–
–]
–
–]
–
–]
–
–]

–

–
–]
147,267562 ]
74,210207 ]38,760153 ]34,297
201 ]

–
–

–

227

(335)

42

(164)

64

(89)

120

(81)
(17,151)

–
–

– [

–
–

– [

–

– [

–
–

– [

–
–

– [

–
–

– [

–
–

Total

– [
10,772

–
–

–
–
–
–

Notes:1. Forward exchange rates are used for exchange rates as of September 30, 2018.
Notes:2. Figures in [ ] are option premiums which are included in the balance sheet.
Notes:3. Regarding assets and liabilities which are denominated in foreign currencies but have fixed settlement in yen under currency
forward contracts and are reported in yen amounts in the balance sheet, those currency forward contracts are excluded from thetable above.

(iv) Stock-related Transactions(Millions of yen)Over-the-counter transactions
Yen interest rate swaption contracts
Sold
BoughtAs of March 31, 2017
Notional amount/contract value
Fair valueOver 1 year

Gains
(Losses)

1,153

1,153

2,235

(1,082)

–

–

–

–

–

–

–

–
(1,082)

–

–

–

–
–

Total

As of September 30, 2018
Notional amount/contract value
Fair valueOver 1 year

Gains
(Losses)(v) Bond-related Transactions(Millions of yen)

As of March 31, 2017
Notional amount/contract value
Fair valueOver 1 year

Exchange-traded transactions
Foreign bond futures
Sold
Bought

Gains(Losses)

As of September 30, 2018
Notional amount/contract value
Fair valueOver 1 year

Gains
(Losses)

21,714–

21,812

(98)

6,834

–

6,744

89

–

–

–

–
(98)

–

–

–

–
89

Total

8

Fukoku Mutual Life Insurance Company

Reference: Fair Value of Real Estate (Land and Leaseholds)(Millions of yen)

As of March 31, 2018
Carrying valueon the balance sheet

125,280

Fair value

253,938

As of September 30, 2018
Carrying valueon the balance sheet

Gains (losses)

128,658

125,210

Fair value

254,292

Gains (losses)

129,081

Notes: 1. As of September 30, 2018, fair value is based on the appraisal value by the real-estate appraiser, the appraisal value forproperty tax as of January 1, 2018 and the road rate as of January 1, 2018.
Notes: 2. As of March 31, 2018, fair value is based on the appraisal value by the real-estate appraiser, the appraisal value for property
tax as of January 1, 2018 and the road rate as of January 1, 2017.

9

Fukoku Mutual Life Insurance Company

3. Non-consolidated Balance Sheets(Millions of yen)

Assets:Cash and deposits
Call loans
Monetary claims bought
Money held in trust
Securities:[Government bonds][Local government bonds][Corporate bonds][Stocks][Foreign securities]
Loans:
Policy loans
Ordinary loans
Tangible fixed assets
Intangible fixed assets
Reinsurance receivables
Other assets:
Lease investment assets
Rest of the other asset
Allowance for possible loan losses
Total assets

Liabilities:
Policy reserves:
Reserve for outstanding claims
Policy reserve
Reserve for dividends to policyholders
Reinsurance payables
Subordinated bonds
Other liabilities:
Corporate income tax payable
Asset retirement obligations
Rest of the other liabilities
Reserve for employees' retirement benefits
Reserve for price fluctuation
Deferred tax liabilities
Deferred tax liabilities for land revaluation
Total liabilities
Net assets:
Foundation funds
Accumulated foundation funds redeemed
Reserve for revaluation
Surplus:
Legal reserve for future losses
Other surplus
Reserve for redemption of foundation funds
Reserve for dividend allowances
Accumulated fund for price fluctuation
Reserve for advanced depreciation of real estate for tax purpose
Other reserves
Unappropriated surplus
Total foundation funds, surplus and others
Net unrealized gains (losses) on available-for-sale securities, net of tax
Revaluation reserve for land, net of tax
Total valuation and translation adjustments
Total net assets
Total liabilities and net assets

10

As of March 31, 2018

As of September 30, 201866,260176,000
443
31,502
5,458,790[2,030,971][114,036][702,661][768,000][1,735,580]
593,734
57,181
536,553
218,549
23,701
167
59,508700
58,807(2,049)6,626,609

60,792132,000
320
31,971
5,639,563[2,025,005][102,181][696,419][788,411][1,916,651]
567,050
56,888510,162
217,316
22,72760
58,740683
58,056(1,998)6,728,544

As of March 31, 2018

As of September 30, 2018

5,650,879
19,295
5,578,187
53,39556
191,935
46,0662,445
3,088
40,532
25,417
95,798
10,733
14,241
6,035,126

5,693,414
19,0455,598,508
75,85966
191,935
59,862
5,304
3,115
51,44225,066
97,52823,271
14,232
6,105,376

10,000106,000
112
135,538
2,954
132,584
6,000
20,00041,000255
767
64,561
251,650
335,658
4,173
339,831591,4826,626,609

10,000106,000
112
131,420
3,071
128,349
8,000
20,00041,000210
767
58,371
247,532
371,486
4,149
375,635
623,168
6,728,544

Fukoku Mutual Life Insurance Company

4. Non-consolidated Statements of Operations(Millions of yen)Six months ended
September 30, 2017

Six months ended
September 30, 2018

Ordinary revenues:
Premium and other income

317,834

277,997[Premium income][317,752][277,924]

Investment income

98,13999,860[Interest, dividends and other income][71,021][74,517][Gains on money held in trust, net]

[1,084][498][Gains on trading securities, net]

[8,311][5,380][Gains on sales of securities][12,062][14,983][Gains on separate accounts, net]

[4,924][4,229]Other ordinary revenues

4,758

4,622

[Reversal of reserve for outstanding claims]

[480]

[249]

420,732

382,480

Claims and other payments

280,394

237,785[Claims][85,851][66,792][Annuities][82,817][79,531][Benefits][50,449][53,044][Surrenders][45,413][24,562][Other payments][15,730][13,735]

Provision of policy reserve and others:

12,722

20,326

Provision of policy reserve

12,716

20,32056Investment expenses

25,947

26,642[Interest expenses][2,190][1,933][Losses on sales of securities][1,800][5,916]

[–]

[241]

[Losses on derivative instruments, net]

[10,143][8,754][Foreign exchange losses, net]

[6,298][3,939]Operating expenses

44,06944,644

Other ordinary expenses

9,227

10,543

Total ordinary expenses

372,360

339,943

Ordinary profits

48,371

42,536

Gains on disposal of fixed assets

244

1

Total extraordinary gains

244

1

58

20

Total ordinary revenues
Ordinary expenses:

Provision of interest portion of reserve for dividends to policyholders[Losses on valuation of securities]

Extraordinary gains:

Extraordinary losses:
Losses on disposal of fixed assets
Impairment losses
Provision of reserve for price fluctuation

140

68

1,647

1,730

3

–

Total extraordinary losses

1,848

1,819

Surplus before income taxes

46,76740,718Current

8,596

7,243

Deferred105(1,113)Losses on advanced depreciation of real estate for tax purpose

Income taxes:

Total income taxes

8,702

6,130

Net surplus for the period

38,06534,588

11

Fukoku Mutual Life Insurance Company

5. Non-consolidated Statements of Changes in Net Assets[For the six months ended September 30, 2017](Millions of yen)Foundation funds, surplus and others
Surplus
Other surplus
AccumulatedFoundation foundation Reserve for
Legal
funds
funds
revaluation reserve forredeemed
future losses

Balance at the beginning of the current period

10,000106,000

112

2,849

Reserve forredemptionof foundation
funds
4,000

Reserve forReserve foradvancedspecial accountReserve for Accumulated
depreciation
for advanced
dividend
fund for priceof real estate depreciation ofallowances
fluctuation
for tax
real estate forpurposetax purpose
20,00041,000

257

100

Other
reserves

767

UnappropriatedsurplusTotal
surplusTotal
foundation
funds,
surplus andothers60,453

129,427

245,539(34,592)(34,592)(34,592)

(105)

–

–

(100)

(100)

(100)

38,06538,06538,065(2,000)

–

–

1

–

–

100

–

–

(85)

(85)

(85)

Changes in the current period
Additions to reserve for dividends topolicyholders
Additions to legal reserve for future losses

105

Payment of interest on foundation funds
Net surplus for the current period
Additons to reserve for redemption offoundation funds

2,000

Reversal of reserve for advanced
depreciation of real estate for tax purpose(1)

Reversal of reserve for special account foradvanced depreciation of real estate for tax
purpose(100)

Reversal of revaluation reserve for land, netof tax
Net changes, excluding foundation funds,
surplus and others
Total changes in the current period
Balance at the end of the current period

Balance at the beginning of the current period

–

–

–

105

2,000

–

–

(1)

(100)

–

1,284

3,287

3,287

10,000106,000

112

2,954

6,000

20,00041,000

255

–

767

61,737

132,714

248,827

Valuation and translation adjustments
Net
unrealized
Total
gains
Revaluation
valuation(losses) on
reserve forandavailableland, net oftranslation
for-saletax
adjustments
securities,
net of tax

Total net
assets

333,545583,192

4,107

337,652

Changes in the current period
Additions to reserve for dividends
to policyholders(34,592)

Additions to legal reserve for future losses–

Payment of interest on foundation funds(100)

Net surplus for the current period

38,065Additons to reserve for redemption offoundation funds–

Reversal of reserve for advanced
depreciation of real estate for tax purpose–

Reversal of reserve for special account foradvanced depreciation of real estate for tax
purpose–

Reversal of revaluation reserve for land, netof tax(85)

Net changes, excluding foundation
funds, surplus and others

60,027

85

60,11260,112

Total changes in the current period

60,027

85

60,112

63,399Balance at the end of the current period

393,572

4,193

397,765

646,592

12

Fukoku Mutual Life Insurance Company

[For the six months ended September 30, 2018](Millions of yen)Foundation funds, surplus and others
Surplus
Other surplus
AccumulatedFoundation foundation Reserve for
Legal
funds
funds
revaluation reserve forredeemed
future losses

Balance at the beginning of the current period

10,000106,000

112

2,954

Reserve forredemptionof foundation
funds
6,000

Reserve foradvanced
Reserve for Accumulated
depreciation
dividend
fund for priceof real estate
allowances
fluctuation
for tax
purpose20,00041,000255

Otherreserves

767

UnappropriatedsurplusTotal
surplusTotal
foundation
funds,
surplus andothers64,561

135,538

251,650(38,630)(38,630)(38,630)

(117)

–

–

(100)

(100)

(100)

34,58834,58834,588(2,000)

–

–

45

–

–

24

24

24

Changes in the current period
Additions to reserve for dividends topolicyholders
Additions to legal reserve for future losses

117

Payment of interest on foundation funds
Net surplus for the current period
Additons to reserve for redemption offoundation funds

2,000

Reversal of reserve for advanced depreciationof real estate for tax purpose(45)

Reversal of revaluation reserve for land, net oftax
Net changes, excluding foundation funds,
surplus and others
Total changes in the current period
Balance at the end of the current period

Balance at the beginning of the current period

–

–

–

117

2,000

–

–

(45)

－

(6,190)(4,118)( 4,118)

10,000106,000

112

3,071

8,000

20,00041,000210

767

58,371

131,420

247,532

Valuation and translation adjustments
Net
unrealized
Total
gains
Revaluation
valuation(losses) on reserve forandavailableland, net oftranslation
for-saletax
adjustments
securities,
net of tax

Total net
assets335,658

591,482

4,173

339,831

Changes in the current period
Additions to reserve for dividends topolicyholders(38,630)

Additions to legal reserve for future losses–

Payment of interest on foundation funds(100)

Net surplus for the current period

34,588Additons to reserve for redemption offoundation funds–

Reversal of reserve for advanced depreciationof real estate for tax purpose–

Reversal of revaluation reserve for land, net oftax

24

Net changes, excluding foundation funds,
surplus and others

35,828(24)

35,80335,803

Total changes in the current period

35,828(24)

35,80331,685

Balance at the end of the current period

371,486

4,149

375,635

623,168

13

Fukoku Mutual Life Insurance Company

Notes to the Non-consolidated Financial Statements
I.

Presentation of the Non-consolidated Financial Statements

1. Basis of presentation
The accompanying non-consolidated financial statements 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 BusinessAct 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 otherthan 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 rounded down. As a result, the totals do not add up.

II. Notes to the Non-consolidated Balance Sheets
1. (1) The valuation of securities, including bank deposits and monetary claims bought which are equivalent to securities, andsecurities managed as trust assets in money held in trust, is as follows:i) Trading securities are stated at fair market value. Costs of their sales are determined by the moving average method.
ii) Held-to-maturity debt securities are stated at amortized cost under the straight-line method, cost being determinedby the moving average method.
iii) Policy-reserve-matching bonds are stated at amortized cost under the straight-line method, cost being determinedby the moving average method in accordance with “Temporary Treatment of Accounting and Auditing Concerning
Policy-reserve-matching Bonds in the Insurance Industry” (Industry Audit Committee Report No.21 issued by theJapanese 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 the current period. Costs of their sales are determined by the moving average method. Net unrealized gains
or losses on these available-for-sale securities, net of taxes, are recorded as a separate component of net assets.
Available-for-sale securities whose market value are deemed extremely difficult to obtain are stated at cost, cost
being determined by the moving average method, except for public and corporate bonds including foreign bonds, ofwhich the difference between acquisition cost and face value is considered to be an adjustment of interest. Suchbonds are stated at amortized cost under the straight-line method, cost being determined by the moving averagemethod.
(2) Derivative instruments are stated at fair market value.
(3) The Company revalued the land used in the operations based on the Act for Revaluation of Land (Act No.34
promulgated on March 31, 1998). The difference between fair value and book value resulting from the revaluation, netof related taxes, is recorded as revaluation reserve for land as a separate component of net assets and the related tax isrecorded as deferred tax liabilities for land revaluation.
• Date of revaluation: March 31, 2002
• Method of revaluation as prescribed for in Article 3 Paragraph 3 of the said Act:
Calculation is based on the appraisal value for property tax set forth in Article 2 item 3 of the Enforcement
Ordinance of the Act 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.
14

Fukoku Mutual Life Insurance Company

(4) Depreciation of tangible fixed assets is calculated by the following methods.
• Tangible fixed assets (excluding lease assets): Declining-balance method
However, buildings (excluding building attachments and structures acquired on or before March 31, 2016)acquired on or after April 1, 1998 are depreciated using Straight-line method.
• Lease assets related to finance lease transactions that do not transfer ownership: Straight-line method over thelease term with no residual value.
Other tangible fixed assets acquired for ¥100,000 or more but less than ¥200,000 are depreciated equally over three
years.
(5) Assets and liabilities denominated in foreign currencies, except for investments in subsidiaries and affiliates, aretranslated into Japanese yen at the effective exchange rate prevailing at the balance sheet date. Investments in
subsidiaries and affiliates are translated into Japanese yen at the exchange rate on the date of acquisition.
(6) Allowance for possible loan losses is provided in accordance with the Company’s standards of self-assessment andwrite-offs and reserves on credit quality:i) For the credits of borrowers who are legally bankrupt such as being in the proceedings of bankruptcy or civil
rehabilitation (hereinafter called “legally bankrupt borrowers”) and who are substantially bankrupt (hereinafter
called “substantially bankrupt borrowers”), the Company provides the remaining amount of credits after the direct
write-off described below and the deductions of the amount expected to be collected through the disposal ofcollateral or the execution of guarantees.
ii) For the credits of borrowers who are not currently bankrupt but have a high possibility of bankruptcy (hereinafter
called “not currently bankrupt borrowers”), the Company provides the amounts deemed as necessary considering
the borrowers’ ability to pay, within the amounts after deductions of the amount expected to be collected throughthe disposal of collateral or the execution of guarantees.
iii) For the credits of borrowers other than the above, the Company provides the amounts calculated by multiplying theborrowers’ 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 is provided based on the results of theseassessments.
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 are written-off directlyfrom the borrowers’ balances as the estimated uncollectible amounts. The amount written-off as of September 30,
2018 was ¥1 million.
(7) Reserve for employees' retirement benefits is presented based on projected benefit obligations and pension plan assets
at the balance sheet date.
The Company uses the following methods for amortizing retirement benefit obligations and retirement benefit
expenses:• Method for allocation of projected retirement benefits ................

Benefit formula basis• Amortization period of actuarial gains and losses.........................

10 years• Amortization period of prior service cost......................................

10 years

15

Fukoku Mutual Life Insurance Company

(8) Reserve for price fluctuation is calculated in accordance with Article 115 of the Insurance Business Act.
(9) As for the finance lease transactions where the Company is a lessor, the lease fee is recorded in “Interest, dividends
and other income” at the time of receiving lease fee. The corresponding cost of the lease transactions is recorded in“Other investment expenses”, which is calculated by deducting an amount equivalent to the interest allocated over thelease term from the lease fee received.
(10) Hedge accounting is based on "Accounting Standards for Financial Instruments" (ASBJ Statement No. 10, March 10,2008). The Company applies a fair value hedge accounting as a hedge against the risk of foreign exchange fluctuationin relation to bonds denominated in foreign currencies and against the risk of price fluctuation in relation to domestic
stocks, and a designated hedge accounting (“Furiate shori”) for foreign currency swaps as a hedge against the risk offoreign exchange fluctuation in relation to bonds denominated in foreign currencies issued by the Company.
For assessing the effectiveness of hedge used, ratio analysis of comparing the fluctuations in the fair value orcash flows of hedged items and hedging instruments is mainly applied.
(11) Accounting of unrecognized actuarial differences and unrecognized prior service costs related to employees’ retirement
benefits is different to the methods used for these items in the consolidated financial statements.
(12) 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 Act, aredeferred as prepaid expenses and amortized equally over five years. Consumption taxes other than deferredconsumption taxes are recognized as an expense when incurred.
(13) Policy reserve is based on Article 116 of the Insurance Business Act, and the premium reserve is calculated by thefollowing method:i) 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.
ii) In regard to the policies not subject to the standard policy reserve, the net level premium method is applied.
Based on the provision of Article 69, paragraph 5, of the Enforcement Regulation of the Insurance Business Act, theCompany includes additional funded policy reserves as follows.
Among individual annuity insurance policies with an assumed interest rate of 5.00% or higher, for policies thathave begun paying annuities (excluding wife’s annuity insurance additional rider), the Company reduced the assumed
interest rate to 1.00% and funded additional policy reserves. As of September 30, 2018, the balance of these policy
reserves was ¥73,347 million.
The Company also funded additional policy reserves for certain individual annuity insurance policies, whole
life insurance policies that include distribution of surplus every five years and highly advanced medical riders. As of
September 30, 2018, the balance of these policy reserves was ¥5,628 million.
(14) The software for internal use is amortized based on straight-line method over the estimated useful lives.
(15) Of the bonds corresponding to the sub-groups of individual insurance and annuities which are set by insurance types
and investment policies, the bonds that are held to match the duration of liabilities are classified as policy-reservematching bonds in accordance with “Temporary Treatment of Accounting and Auditing Concerning Policy-reservematching Bonds in Insurance Industry” (Industry Audit Committee Report No. 21 issued by the Japanese Institute ofCertified Public Accountants on November 16, 2000).

16

Fukoku Mutual Life Insurance Company

2. The carrying amounts, fair values and their related differences of major financial assets and liabilities in the generalaccount as of September 30, 2018 were as follows:(Millions of yen)
Difference

Carrying amount

Fair value

Cash and deposits not treated as securities…....

¥ 59,069¥ 59,069¥–

Total cash and deposits…..................................

59,06959,069–Call loans…...............................................................

132,000

132,000–

Claims treated as loans……..............................

320

338

17

Total monetary claims bought………...............

320

338

17

Trading securities..............................................

30,97130,971–

Total money held in trust..................................

30,97130,971–

Trading securities..............................................

120,741

120,741–

Held-to-maturity debt securities........................

760,598

885,497

124,899

Policy-reserve-matching bonds.........................

959,209

1,097,964

138,754

Available-for-sale securities..............................

3621,701

3,621,701–

Total securities..................................................

5,462,251

5,725,905

263,654

Policy loans.......................................................

56,88856,888(0)

Ordinary loans...................................................

510,162

529,042

18,879Total loans.........................................................

567,050

585,930

18,879Assets total......................................................…......

6,251,663

6,534,215

282,551

Subordinated bonds1..........................….....…..........

191,935

199,104

7,169

Liabilities total…..............................................…....

191,935

199,104

7,169

Hedge accounting not applied...........................

(4,097)(4,097)–

Hedge accounting applied……..........................

(13,488)(13,488)–

Total derivative instruments..............................

¥ (17,586)¥ (17,586)¥–

Cash and deposits:

Monetary claims bought:

Money held in trust:

Securities:

Loans:

2

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

(1) Cash, deposits (excluding financial instruments treated as securities based on “Accounting Standards for Financial
Instruments” (ASBJ Statement No.10, March 10, 2008)) and call loans:
The fair values of cash, deposits and call loans are based on their book values since fair values approximate bookvalues due to their short maturities.
(2) Securities including deposits and monetary claims bought which are treated as securities based on “AccountingStandards for Financial Instruments” (ASBJ Statement No.10, March 10, 2008) and securities managed as trust assets
in money held in trust:
The fair values of marketable securities are measured at the quoted market prices at the balance sheet date. The fairvalues of other securities without the quoted market prices are based on the prices reasonably calculated such as the17

Fukoku Mutual Life Insurance Company

prices offered by the information vendors or counterparty financial institutions.
Investments in subsidiaries and affiliates, unlisted stocks and investments in partnerships whereby partnershipassets consist of unlisted stocks whose fair values are deemed extremely difficult to obtain, are excluded from above
securities. The carrying amounts of investments in subsidiaries and affiliates, unlisted stocks and investments inpartnerships were ¥64,837 million, ¥5,696 million, and ¥23,492 million as of September 30, 2018, respectively.
(3) Loans and monetary claims bought treated as loans:
The fair values of policy loans are deemed to approximate book values, considering estimated repayment period andinterest rate conditions since their repayment deadlines have not been set up due to the characteristics that the loans arelimited to the amount of cash surrender values. Therefore, the book values are used as the fair values of policy loans.
The fair values of floating interest rate loans among the ordinary loans and monetary claims bought treated asloans approximate the book values because the market interest rates are reflected in future cash flows in a short period.
Therefore, the fair values of floating interest rate loans and monetary claims bought treated as loans are based on theirbook values. The fair values of fixed interest rate loans are measured by discounting the future cash flows to thepresent values.
The fair values of loans from legally bankrupt borrowers, substantially bankrupt borrowers and not currently
bankrupt borrowers and monetary claims bought treated as loans are computed by deducting the amount of theallowance for possible loan losses from the book values before direct write-offs.
(4) Subordinated bonds:
Subordinated bonds issued by the Company are stated at fair market values.
(5) Derivative instruments:i) The fair values of the futures and options traded at the exchange are measured at the settlement price of theexchange.
ii) The fair values of forward contracts, options and swaps traded over the counter are based on the quoted prices
offered by counterparty financial institutions.
iii) The fair values of foreign currency forward contracts are determined based on the spot exchange rate and forward
contract rate.

3. Notes related to the fair value of investment and rental properties are omitted as no significant change has occurred since
the previous fiscal year-end.

4. The amount of securities lent under lending agreements was ¥259,698 million as of September 30, 2018.

5. The total amounts of credits to bankrupt borrowers, delinquent loans, delinquent loans past 3 months or more andrestructured loans, which were included in loans, was ¥1,042 million as of September 30, 2018;i) The balance of credits to bankrupt borrowers was ¥164 million as of September 30, 2018.
ii) The balance of delinquent loans was ¥877 million as of September 30, 2018.
iii) There was no balance of delinquent loans past 3 months or more and restructured loans as of
September 30, 2018.
The direct write-offs related to loans decreased credits to bankrupt borrowers described above by ¥1 million as of
September 30, 2018.
18

Fukoku Mutual Life Insurance Company

Credits to bankrupt borrowers represent loans, excluding the balances already written-off, which meet the conditionsprescribed in Article 96 Paragraph 1 item 3 and 4 of the Enforcement Regulations of the Corporate Tax Act. Moreover,accrued interest on these loans is not recorded as income after determining that principal of or interest on these loans isunlikely to be collected due to the significant delay in repayment of principal or interest payment or for some otherreasons.
Delinquent loans are credits which accrued 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 andrescheduled to assist and support the borrowers in the restructuring of their business.
Delinquent loans past 3 months or more are loans for which interest payments or repayments of principal aredelinquent 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
exemption, rescheduling of due date for repayments of principal or interest payment, waiver of claim or other terms, havebeen 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.

6. Accumulated depreciation of tangible fixed assets were ¥164,234 million as of September 30, 2018.

7. Total assets in separate accounts provided for in Article 118 of the Insurance Business Act were ¥85,782 million as of
September 30, 2018. The amounts of separate account liabilities were the same as separate account assets.

8. Changes in reserve for dividends to policyholders for the six months ended September 30, 2018 were as follows:(Millions of yen)

Balance at the beginning of the current period…...............................................

¥ 53,395

Transfer from surplus in the previous fiscal year...............................................

38,630

Dividend payments to policyholders during the current period…..…………...

(16,172)

Increase in interest....................................................……………………..........

6

Balance at the end of the current period.............................................................

¥ 75,859

9. The amount of stocks of subsidiaries was ¥64,837 million as of September 30, 2018.

10. Assets pledged as collateral as of September 30, 2018 were ¥21,003 million of securities and ¥759 million of bankdeposits. Secured debts as of September 30, 2018, were ¥5,287 million.

11. Reserve for outstanding claims for the reinsurance contracts provided in accordance with Article 71 Paragraph 1 of the
Enforcement Regulation of the Insurance Business Act (hereinafter called “reserve for outstanding claims for ceded
reinsurance”) was ¥5 million as of September 30, 2018.
Policy reserve for the reinsurance contracts provided in accordance with Article 71 Paragraph 1 of the Enforcement
Regulation of the Insurance Business Act (hereinafter called “policy reserve for ceded reinsurance”) was ¥29 million as
of September 30, 2018.
19

Fukoku Mutual Life Insurance Company

12. There were unused commitment line agreements under which the Company is the lender of ¥4,363 million as of
September 30, 2018.

13. Repayments of subordinated bonds are subordinated to other obligations.

14. The future contribution to the Life Insurance Policyholders Protection Corporation of Japan under Article 259 of the
Insurance Business Act was estimated at ¥8,506 million as of September 30, 2018.
The contribution is recognized as operating expenses when contributed.

20

Fukoku Mutual Life Insurance Company

III. Notes to the Non-consolidated Statements of Operations
1. Major items of gains on sales of securities for the six months ended September 30, 2018 were as follows:(Millions of yen)Domestic bonds....................................................................................................

¥ 859

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

12,604Foreign securities..................................................................................................

1,519

2. Major items of losses on sales of securities for the six months ended September 30, 2018 were as follows:(Millions of yen)Domestic bonds……………................................................................................

¥ 1,416

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

391

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

4,107

3. Major items of losses on valuation of securities for the six months ended September 30, 2018 was as follows:(Millions of yen)

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

¥ 241

4. For the six months ended September 30, 2018, in calculating the reversal of reserve for outstanding claims, a reversal ofreserves for outstanding claims reinsured of ¥5 million was deducted. In calculating the provision of policy reserves, areversal of reserves for policy reserves reinsured of ¥1 million was added.

5. Breakdown of interest, dividends and other income for the six months ended September 30, 2018 was as follows:(Millions of yen)Interest on deposits……........................................................................................
Interest and dividends on securities.......................................................................
Interest on loans....................................................................………………….....
Income from real estate for rent.............................................................................
Other interest and dividends...................................................................................
Total........................................................................................................................

21

¥ 18
62,255
4,760
7,425
57
¥ 74,517

Fukoku Mutual Life Insurance Company

6. Breakdown of Ordinary Profits (Fundamental Profit)(Millions of yen)Six months ended
September 30, 2017

Six months ended
September 30, 2018

48,206

47,115

18,412

18,412

Gains on money held in trust, net

974

421

Gains on trading securities, net

5,374

3,087

Gains on sales of securities

12,062

14,983

Gains on derivative instruments, net––

Foreign exchange gains, net––

Other capital gains––

18,242

18,851

Losses on money held in trust, net––

Losses on trading securities, net

–

–

1,800

5,916

–

241

Losses on derivative instruments, net

10,1438,754

Foreign exchange losses, net

6,298

3,939

–

–

Fundamental profit

A

Capital gains

Capital losses

Losses on sales of securities
Losses on valuation of securities

Other capital losses
Net capital gains (losses)

B

169

(359)

Fundamental profit plus net capital gains (losses)

A+B

48,37546,756

6

5

Reinsurance income––

Reversal of contingency reserve––

Reversal of specific allowance for possible loan losses

65

Others

–

–

10

4,225

Reinsurance premiums––

Provision for contingency reserve

10

433

Provision of specific allowance for possible loan losses––

Provision of allowance for specified overseas loans––

Write-off of loans––

Others

–

3,792

(3)

(4,219)48,371

42,536

Non-recurring gains

Non-recurring losses

Non-recurring gains (losses)

C

Ordinary profits

A+B+C

Notes: 1. The following amounts in respect of gains / losses on money held in trust have been excluded from capital gains / losses andincluded in fundamental profit due to their income nature (being interest and dividend income): ¥110 million in respect of thesix months ended September 30, 2017 and ¥77 million in respect of the three months ended September 30, 2018.
Notes: 2. The following amounts in respect of gains / losses on trading securities have been excluded from capital gains / losses andincluded in fundamental profit due to their income nature (being interest and dividend income): ¥2,936 million in respect of thethree months ended September 30, 2017 and ¥2,292 million in respect of the three months ended September 30, 2018.
Notes: 3. Other non-recurring losses represent the losses relating to provision of the additional policy reserves in accordance with Article
69, Paragraph 5 of the Enforcement Regulations of the Insurance Business Act.

22

Fukoku Mutual Life Insurance Company

7. Disclosed Claims Based on Categories of Obligors(Millions of yen)

As of March 31, 2018

As of September 30, 2018

Claims against bankrupt and quasi-bankrupt obligors

181

178

Claims with collection risk

859

871

Claims for special attention––

Subtotal[Percentage of total]

1,040[0.12%]

1,049[0.13%]

Claims against normal obligors

850,425

828,863

Total

851,465

829,913

Notes: 1. Claims against bankrupt and quasi-bankrupt obligors are loans to borrowers who are subject to bankruptcy, corporate
reorganisation or rehabilitation or other similar proceedings and other borrowers in serious financial difficulties.
Notes: 2. Claims with collection risk are loans to obligors (other than bankrupt and quasi-bankrupt obligors) with deteriorated financial
condition and results of operations from which it is unlikely that the principal and interest on the loans will be recovered.
Notes: 3. Claims for special attention are loans on which principal and/or interest are past due for three months or more and loans with aconcessionary interest rate, as well as loans with renegotiated conditions in favour of the borrower, including renegotiatedschedule and/or waivers, in each case, other than the loans described in note 1 or 2 above.
Notes: 4. Claims against normal obligors are all other loans.

23

Fukoku Mutual Life Insurance Company

8. Risk-monitored Loans(Millions of yen)

As of March 31, 2018

As of September 30, 2018

Credits to bankrupt borrowers

168

164

Delinquent loans

865

877

Delinquent loans past three months or more––

Restructured loans

–

–

1,033
[0.17%]

1,042[0.18%]

Total[Percentage of total loans]

Notes: 1. For the credits of legally bankrupt borrowers and substantially bankrupt borrowers, the amounts remaining after deductions ofcollateral value or the amounts collectible through the execution of guarantees is written-off directly from the borrower’sbalance as the estimated uncollectible amounts. The amounts written-off related to credits to bankrupt borrowers were ¥1
million as of March 31, 2018 and ¥1 million as of September 30, 2018.
Notes: 2. Credits to bankrupt borrowers represent loans which are subject to bankruptcy, corporate reorganization or rehabilitation orother similar, including but not limited to foreign, proceedings. Accruing interest of these loans is not recorded as income after
determining that principal of or interest on these loans is unlikely to be collected due to the significant delay in repayment ofprincipal or interest payment or for some other reasons.
Notes: 3. Delinquent loans are credits whose accruing interest is not recorded as income due to the same reasons as described in note 2
above, and exclude credits to bankrupt borrowers and loans for which interest payments have been suspended and rescheduled toassist and support the borrowers in the restructuring of their business.
Notes: 4. Delinquent loans past three months or more are loans for which interest payment or repayment of principal are delinquent forthree 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.
Notes: 5. 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 tobankrupt borrowers, delinquent loans and delinquent loans past three months or more.

24

Fukoku Mutual Life Insurance Company

9. Solvency Margin Ratio(Millions of yen)

As ofMarch 31, 2018

As of
September 30, 2018

1,475,658

1,551,115

Foundation funds and surplus

210,194

225,603

Reserve for price fluctuation

95,79897,528Contingency reserve

187,050

187,483

1,501

1,458

(Net unrealized gains (losses) on securities (before tax)
and deferred hedge gains (losses) (before tax)) × 90%

418,167

462,691

Net unrealized gains on real estate × 85%

122,692

125,844

Excess amount of policy reserve based on full-time Zillmer method

252,776

256,889

Qualifying subordinated debt

191,935

191,935––

Deductible items(46,783)(46,783)

Others42,32548,464272,942

285,595

Total solvency margin(A)

General allowance for possible loan losses

The amount of "excess amount of policy reserve based on full-time Zillmer method"and "qualifying subordinated debt" excluded from the calculation of solvency margin

Total amount of risk √(𝑅1 + 𝑅8 )2 + (𝑅2 + 𝑅3 + 𝑅7 )2 + 𝑅4

(B)

Insurance risk

R1

23,252

23,111

3rd sector insurance risk

R8

9,687

9,722

Assumed investment yield risk

R2

32,156

31,835

Minimum guarantee risk

R7

–

–

Investment risk

R3

232,788245,617

Business risk

R4

5,957

6,205

1,081.2%

1,086.2%

Solvency margin ratio
(A)
× 100
(1/2) × (B)Notes: 1. Above figures are calculated based on the provisions of Articles 86 and 87 of the Enforcement Regulation of the Insurance
Business Act and Ministry of Finance Notification No. 50, 1996.
Notes: 2. "Deductible items" represent the capital increase to the subsidiary, Fukokushinrai Life Insurance Co., Ltd.
Notes: 3. "Minimum guarantee risk" is calculated by standard method.

25

Fukoku Mutual Life Insurance Company

10. Status of Separate Account(1) Separate Account Assets by Products(Millions of yen)

As of March 31, 2018

As of September 30, 2018

AmountAmountIndividual variable insurance––

Individual variable annuities

33

31

Group annuities

82,31385,751

Total

82,34785,782(2) Individual Variable Insurance (Separate Account)
The Company has not sold the individual variable insurance.

(3) Individual Variable Annuities (Separate Account)(i) Policies in Force(Millions of yen except number of policies)

As of March 31, 2018
Number ofpolicies

As of September 30, 2018
Number ofpolicies

AmountAmountIndividual variable annuities

10

27

9

25

Total

10

27

9

25

(ii) Breakdown of Separate Account Assets for Individual Variable Annuities(Millions of yen)

As of March 31, 2018
AmountAs of September 30, 2018

Percentage

AmountPercentage

Cash, deposits, call loans

7

23.1%

7

22.8%

Securities

26

76.9%

24

77.2%

Domestic bonds

–

–

–

–

Domestic stocks

–

–

–

–

Foreign securities

–

–

–

–

Foreign bonds

–

–

–

–

Foreign stocks and other securities

–

–

–

–

26

76.9%

24

77.2%

Loans

–

–

–

–

Others––––Allowance for possible loan losses

–

–

–

–

Total

33

100.0%

31

100.0%

Other securities

26

Fukoku Mutual Life Insurance Company

(iii) Investment Income and Expenses of Separate Account for Individual Variable Annuities(Millions of yen)Six months ended
September 30, 2017

Six months ended
September 30, 2018

AmountAmountInterest, dividends and other income

11

Gains on sales of securities––

Gains on valuation of securities

88

Gains on redemption of securities––

Gains on derivative instruments––

Foreign exchange gains, net––

Other investment income–

0

Losses on sales of securities––

Losses on valuation of securities

8

8

Losses on redemption of securities––

Losses on derivative instruments––

Foreign exchange losses, net––

Other investment expenses––

Net investment income

10(iv) Fair Value Information on Securities in Separate Account for Individual Variable Annuities• Net Valuation Gains/Losses on Trading Securities(Millions of yen)

As of March 31, 2018

As of September 30, 2018

Net valuation
Net valuation
Carrying value on gains/losses included in Carrying value on gains/losses included in
the balance sheet
the statements ofthe balance sheet
the statements ofoperations
operations

Trading securities

26

0

24

(0)

Note: The Company had no balances of money held in trust and derivative instruments.

27

Fukoku Mutual Life Insurance Company

Reference: Fair Value Information on Securities (Total of General Account and Separate Account)
Net Valuation Gains/Losses on Trading Securities(Millions of yen)
As of March 31, 2018

As of September 30, 2018

Carrying value on thebalance sheet

Net valuation gains/losses included in
the statement of operations

Carrying value on thebalance sheet

257,729(5,292)

234,998

Trading securities

Net valuation gains/losses included in
the statement of operations
5,281

Note: The table above includes money held in trust for trading purpose.

Fair Value Information on Securities (with fair value, other than trading securities)(Millions of yen)
As of March 31, 2018

As of September 30, 2018

Gains/losses

Fair value

Held-to-maturity debt securities

758,872

897,574

138,702138,702–760,598

885,497

124,899

124,977

Domestic bonds

738,632

876,835

138,203138,203–

739,050

863,809124,758

124,758–

Foreign bonds

20,23920,738

498

498

–

21,547

21,688

140

219

78

Monetary claims bought

–

–

–

–

–

–

–

–

–

–

Negotiable certificate of deposits

–

–

–

–

–

–

–

–

–

–

Others

–

–

–

–

–

–

–

–

–

–

Policy-reserve-matching bonds

973,736

1,134,148

160,412

162,375

1,962

959,209

1,097,964

138,754

142,0623,307

Domestic bonds

971,937

1,132,289

160,352

162,315

1,962

957,410

1,096,116

138,706

142,0143,307

Foreign bonds

1,799

1,859

59

59

–

1,799

1,847

48

48

–

–

–

–

–

–

–

–

–

–

–

Available-for-sale securities

2,941,466

3,404,811

463,345531,772

68,427

3,110,092

3,621,701

511,609558,563

46,954

Domestic bonds

1,023,447

1,080,932

57,48467,947

10,462

1,028,728

1,077,325

48,59658,94910,353

Domestic stocks

305,353

671,850

366,497

370,2783,780

308,401

692,588384,187

387,323

3,135

Foreign securities

1,538,185

1,558,823

20,63773,35952,721

1,697,968

1,754,688

56,71989,01232,292Foreign bonds

Investments in subsidiaries and affiliates

Gains

Book value Fair value

Gains/losses

Book value

Losses

Gains

Losses78

1,290,483

1,290,268(214)

46,42546,6401,441,180

1,463,694

22,514

51,82529,311

Foreign stocks and other securities

247,701

268,554

20,852

26,933

6,081

256,788

290,994

34,20537,186

2,981

Other securities

74,48093,20518,72520,187

1,462

74,99397,09922,10523,278

1,172

Money held in trust

–

–

–

–

–

–

–

–

–

–

Monetary claims bought

–

–

–

–

–

–

–

–

–

–

Negotiable certificate of deposits

–

–

–

–

–

–

–

–

–

–

Others

–

–

–

–

–

–

–

–

–

–

Total

4,674,074

5,436,534

762,459

832,849

70,3904,829,900

5,605,164

775,263825,603

50,340

Domestic bonds

2,734,016

3,090,057

356,040

368,465

12,4252,725,189

3,037,251

312,061

325,722

13,661

Domestic stocks

305,353

671,850

366,497

370,2783,780

308,401

692,588384,187

387,323

3,135

Foreign securities

1,560,224

1,581,421

21,19673,91852,721

1,721,315

1,778,224

56,90889,28032,371

Foreign bonds

1,312,522

1,312,866

343

46,984

46,6401,464,527

1,487,230

22,70352,09329,389Foreign stocks and other securities

247,701

268,554

20,852

26,933

6,081

256,788

290,994

34,20537,186

2,981

Other securities

74,48093,20518,72520,187

1,462

74,99397,09922,10523,278

1,172

Money held in trust

–

–

–

–

–

–

–

–

–

–

Monetary claims bought

–

–

–

–

–

–

–

–

–

–

Negotiable certificate of deposits

–

–

–

–

–

–

–

–

–

–

Others

–

–

–

–

–

–

–

–

–

–

Note: The table above includes assets which are considered appropriate to deem as securities under the Financial Instruments andExchange Law.

[Held-to-maturity Debt Securities]
As of March 31, 2018
Carrying value on
Fair value
the balance sheet
Securities whose fair value exceeds the carrying
value on the balance sheet
Domestic bonds
Foreign bonds
Monetary claims bought
Negotiable certificate of deposits
OthersSecurities whose fair value does not exceed thecarrying value on the balance sheet
Domestic bonds
Foreign bonds
Monetary claims bought
Negotiable certificate of deposits
OthersDifferences(Millions of yen)
As of September 30, 2018
Carrying value on
Fair value
Differences
the balance sheet

758,872

897,574

138,702741,950

866,928

124,977

738,632
20,239–––876,835
20,738–––138,203
498–––

739,050
2,899
–
–
–

863,809
3,118
–
–
–

124,758
219
–
–
–

–

–

–

18,647

18,569

(78)

–
–
–
–
–

–
–
–
–
–

–
–
–
–
–

–
18,647––––
18,569
–
–
–

–
(78)
–
–
–

28

Fukoku Mutual Life Insurance Company

[Policy-reserve-matching Bonds](Millions of yen)
As of March 31, 2018
Carrying value on
the balance sheet
Bonds whose fair value exceeds the carrying valueon the balance sheet

As of September 30, 2018

Fair value

Differences

Carrying value on
the balance sheet

Fair value

Differences

944,136

1,106,511

162,375

907,794

1,049,857

142,062

Domestic bonds

942,337

1,104,652

162,315

905,995

1,048,009

142,014

Foreign bonds

1,799
–

1,859
–

59
–

1,799
–

1,847
–

48
–

29,59927,636(1,962)

51,414

48,107(3,307)29,599––27,636––(1,962)––

51,414––

48,107––(3,307)––

OthersBonds whose fair value does not exceed thecarrying value on the balance sheet
Domestic bonds
Foreign bonds
Others[Available-for-sale Securities](Millions of yen)
As of March 31, 2018

Securities whose carrying value on the balance
sheet exceeds the book value
Domestic bonds
Domestic stocks
Foreign securities
Foreign bonds
Foreign stocks
Other securities
Money held in trust
Monetary claims bought
Negotiable certificate of deposits
OthersSecurities whose carrying value on the balance
sheet does not exceed the book value
Domestic bonds
Domestic stocks
Foreign securities
Foreign bonds
Foreign stocks
Other securities
Money held in trust
Monetary claims bought
Negotiable certificate of deposits
Others

As of September 30, 2018

Book value

Carrying value on
the balance sheet

Differences

Book value

Carrying value on
the balance sheet

Differences

1,561,884

2,093,656

531,772

1,935,610

2,494,173

558,563

713,551
274,161
518,137
360,156
157,981
56,032––––

781,499
644,439
591,497
406,581
184,915
76,220––––67,947370,278
73,35946,42526,933
20,187––––753,175
272,334
853,388
640,134
213,253
56,711––––

812,125
659,657
942,400
691,960
250,440
79,990––––58,949387,323
89,012
51,82537,18623,278––––1,379,581

1,311,154(68,427)

1,174,482

1,127,528(46,954)309,895
31,191
1,020,047
930,327
89,72018,447––––

299,433
27,411
967,325883,686
83,63916,984––––(10,462)(3,780)(52,721)(46,640)(6,081)(1,462)––––

275,552
36,067
844,580801,045
43,534
18,282––––

265,199
32,931
812,287
771,734
40,553
17,109––––(10,353)(3,135)(32,292)(29,311)(2,981)(1,172)––––• Book value of securities without fair value are as follows:(Millions of yen)
As of March 31, 2018

As of September 30, 2018––

Unlisted foreign bonds––

Others––

Held-to-maturity debt securities––

Investments in subsidiaries and affiliates

64,83764,837Available-for-sale securities

28,021

26,696

5,697

5,696

Unlisted foreign stocks (except over-the-counter stocks)––

Unlisted foreign bonds––

22,32320,99992,85891,533

Policy-reserve-matching bonds

Unlisted domestic stocks (except over-the-counter stocks)

OthersTotal

Note: In this table, domestic and overseas investment partnerships are included in “others” within “available-for-sale securities.”
However, unrealized gains on available-for-sale securities corresponding to these holdings by domestic and overseas investment
partnerships (¥1,285 million as of March 31, 2018 and ¥2,492 million as of September 30, 2018) are included in their balance
sheet carrying amounts.

29

Fukoku Mutual Life Insurance Company

Reference: Fair Value Information on Derivative Instruments (Total of General Account and Separate Account)(i) Gains and Losses on Derivatives(Millions of yen)

As of March 31, 2018

Interest- related

Currency- related

Stock- related

Bond- related

OthersTotal–

10,755(1,082)

–

–

9,672

Hedge accounting not applied

(453)

17

–

(98)

–

(534)

Total

(453)

10,772(1,082)

(98)

–

9,138

Bond- related

Hedge accounting applied

As of September 30, 2018

Interest- related

Currency- related

Stock- related

OthersTotal–(13,488)–––(13,488)

Hedge accounting not applied(524)(3,662)–89–(4,097)

Total

(524)

(17,151)–89–(17,586)

Hedge accounting applied

Note: Gains and losses from applying fair value hedge accounting (currency-related gains of ¥10,755 million, stock-related losses of¥1,082 million as of March 31, 2018, and currency-related losses of ¥13,488 million as of September 30, 2018) included in gains
and losses with hedge accounting applied, and gains and losses with hedge accounting not applied are reported in the statementsof operations.

(ii) Hedge Accounting not Applied[Interest-related Transactions](Millions of yen)

As of March 31, 2018
Notional amount/contract value
Fair valueOver 1 year

Gains
(Losses)

As of September 30, 2018
Notional amount/contract value
Fair valueOver 1 year

Gains
(Losses)Over-the-counter transactions
Yen interest rate swaption contracts
Sold–

Receipt fixed, payment floating
[

[

–

– ]
–

Payment fixed, receipt floating

–
–

– [

– ]
–

–
–

– ]

– [

–
–

–

–

–

–

–

71

(524)

–

– ]

Bought–Receipt fixed, payment floating[
Payment fixed, receipt floating–– ]320,000

[

–
–

– [

160,000– ]320,000

596 ]

142

Total

(453) [
(453)

–

596 ]

160,000(524)

Note: Figures in [ ] are option premiums which are included in the balance sheet.

30

Fukoku Mutual Life Insurance Company

[Currency-related Transactions](Millions of yen)

As of March 31, 2018
Notional amount/contract value
Fair valueOver 1 year

Over-the-counter transactions
Currency forward contracts
Sold
U.S. dollar
British Pound
Australian dollar
Canadian dollar
Euro

Gains
(Losses)

As of September 30, 2018
Notional amount/contract value
Fair valueOver 1 year

Gains
(Losses)

192,046
99,201
26,04026,006
26,167
14,629

–
–
–
–
–
–

192,029
99,362
26,027
25,691
26,327
14,619

17
(161)
12
314
(159)
10

150,160
63,54626,03725,51624,303
10,756

–
–
–
–
–
–

153,413
66,39725,91425,62324,642
10,835(3,253)(2,850)
122
(106)
(339)
(79)

Bought

–

–

–

–

–

–

–

–

Currency options
Sold
Call

–

–

–

–

–
–]
–
–]
–
–]

–

280

(73)

280

(73)

–

–

–
–]
–
–]
–
–]
–
–]
–
–]

–

–

–

227

(335)

42

(164)

64

(89)

120

(81)
(3,662)[
U.S. dollar[
Put[
BoughtCall[
Put[
U.S. dollar[
Canadian dollar[
Australian dollar
[

–

–

– [

–
–

– [

–
–

– [

–

– [

–
–

– [

–
–

– [

–
–

– [

–
–

– [
17

Total

97,211207 ]
97,211
207 ]
–
–]

–

–
–]
147,267562 ]
74,210207 ]38,760153 ]34,297
201 ]

–

–
–

–
–
–
–

Notes: 1. Forward exchange rates are used for exchange rates as of September 30, 2018.
Notes: 2. Figures in [ ] are option premiums which are included in the balance sheet.

[Stock-related Transactions]
No ending balance as of March 31, 2018 and September 30, 2018.
[Bond-related Transactions](Millions of yen)

As of March 31, 2018
Notional amount/contract value
Fair valueOver 1 year

Gains
(Losses)

As of September 30, 2018
Notional amount/contract value
Fair valueOver 1 year

Gains
(Losses)

Exchange-traded transactions
Foreign bond futures
Sold
Bought21,714–

21,812

(98)

6,834

–

6,744

89

–

–

–

–

–

–

–

–

Total

(98)

31

Fukoku Mutual Life Insurance Company

89

(iii) Hedge Accounting Applied[Interest-related Transactions]
No ending balance as of March 31, 2018 and September 30, 2018.
[Currency-related Transactions](Millions of yen)
Method ofhedge
accounting

As of March 31, 2018
Hedging instruments

Fair value Hedged items

Notional amount/contract valueOver 1 year

Fair value

574,483–

587,972

453,533–

464,534

54,819–55,113–

525,595–

Euro

24,628–Foreigncurrencydenominated516,082bonds
24,149Canadian dollar

43,126–42,701

48,272–50,170British Pound

14,021–

14,113

13,716–

14,068Australian dollar

8,575

–

8,146

4,141

–

4,085

Sold
U.S. dollar

Foreigncurrencydenominatedbonds

Notional amount/contract valueOver 1 year

615,948

Currency forward contracts

Fair value
hedge
methodHedged items

As of September 30, 2018

605,193––––
Bought–Total
Notes:1. Forward exchange rates are used for exchange rates as of September 30, 2018.
Notes:2. Regarding assets and liabilities which are denominated in foreign currencies but have fixed settlement in yen under currency
forward contracts and are reported in yen amounts in the balance sheet, those currency forward contracts are excluded from thetable above.

–[Stock-related Transactions](Millions of yen)
As of March 31, 2018
Method ofhedge
accounting

Fair value
hedge
methodHedging instruments

Stock forward contracts
Sold
BoughtTotal

Hedged items

Domestic
stocks

As of September 30, 2018

Notional amount/contract valueOver 1 year

Fair value Hedged items

1,153

1,153

2,235

–

–

–

Domestic
stocks

Notional amount/contract valueOver 1 year

Fair value

–

–

–

–

–

–

[Bond-related Transactions]
No ending balance as of March 31, 2018 and September 30, 2018.

32

Fukoku Mutual Life Insurance Company

11. Status of the Company, Subsidiaries and Affiliates(1) Selected Financial Data
(100 Millions of yen)Six months ended
September 30, 2017

Six months ended
September 30, 2018

Ordinary revenues

4,482

4,107

Ordinary profits

493

433

Net surplus attributable to the parent company

382

340

Comprehensive income

988

690

As of March 31, 2018

As of September 30, 201884,88885,701

1,127.4%

1,130.4%

Total assets
Solvency margin ratio(2) Scope of Consolidation and Application of Equity Method
Number of consolidated subsidiaries: 6
Number of unconsolidated subsidiaries accounted for under the equity method: 0
Number of affiliates accounted for under the equity method: 0

33

Fukoku Mutual Life Insurance Company

(3) Consolidated Balance Sheets(Millions of yen)

As of March 31, 2018

As of September 30, 2018

Assets:Cash and deposits

157,703

149,483

Call loans

176,000

132,000

443

320

Monetary claims bought
Money held in trust

31,502

31,971

7,203,196

7,367,439

Loans

597,285

570,599

Tangible fixed assets

218,895

217,669

Intangible fixed assets

38,05635,979Securities

Agency receivables
Reinsurance receivables

0

0

221

60

67,341

66,313Net defined benefit asset

107

143

Deferred tax assets

166

203

(2,049)(1,998)8,488,872

8,570,186

Other assets

Allowance for possible loan losses
Total assets

As of March 31, 2018

As of September 30, 2018

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

7,467,875

7,492,484

22,16622,391

7,391,773

7,393,759

53,39575,859Reserve for dividends to policyholders (subsidiary)

539

474

Agency payables

70

60

Reinsurance payables

75

84

Subordinated bonds

191,935

191,935

Other liabilities

59,50972,219Net defined benefit liabilities

34,01932,840Reserve for price fluctuation

105,521

107,429

Deferred tax liabilities

8,875

21,824

Deferred tax liabilities for land revaluation

14,241

14,2327,882,122

7,933,109

Foundation funds

10,00010,000

Accumulated foundation funds redeemed

106,000

106,000

112

112

Consolidated surplus

139,621

134,989

Total foundation funds, surplus and others

255,733

251,102

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

344,585

379,208

4,173

4,149

Total liabilities
Net assets:

Reserve for revaluation

Revaluation reserve for land, net of tax
Foreign currency translation adjustment

(377)

(467)

Accumulated remeasurements of defined benefit plans(6,055)(5,449)Total accumulated other comprehensive income

342,326

377,440

Non-controlling interests
Total net assets
Total liabilities and net assets

34

8,690

8,534

606,750

637,077

8,488,872

8,570,186

Fukoku Mutual Life Insurance Company

(4) Consolidated Statements of Operations and Comprehensive Income[Consolidated Statements of Operations](Millions of yen)Six months ended
September 30, 2017

Six months ended
September 30, 2018

Ordinary revenues:
Premium and other income
Investment income[Interest, dividends and other income][Gains on money held in trust, net]
[Gains on trading securities, net]
[Gains on sales of securities][Gains on separate accounts, net]
Other ordinary revenues[Reversal of reserve for outstanding claims]
Total ordinary revenues

332,534
110,304[83,120][1,084][8,311][12,133][4,924]
5,374[579]
448,213

293,442
112,354[86,296][498][5,380][15,698][4,229]4,982[–]
410,780

Ordinary expenses:
Claims and other payments[Claims][Annuities][Benefits][Surrenders][Other payments]
Provision of policy reserve and others:
Provision of reserve for outstanding claims
Provision of policy reserve
Provision of interest portion of reserve for dividends to policyholders
Provision of interest portion of reserve for dividends to policyholders (subsidiary)
Investment expenses[Interest expenses][Losses on sales of securities][Losses on valuation of securities][Losses on derivative instruments, net]
[Foreign exchange losses, net]
Operating expenses
Other ordinary expenses

311,120[88,937][83,496][57,119][65,606][15,745]
3,463
–
3,457
5
0
25,283[2,190][1,800][–][10,143][6,299]48,935
10,051

277,519[69,881][90,790][59,782][43,121][13,760]
2,217
225
1,985
6
0
25,959[1,948][5,916][241][8,754][3,940]48,86012,920Total ordinary expenses
Ordinary profits

398,854
49,359367,477
43,303244

1Extraordinary gains:
Gains on disposal of fixed assets
Total extraordinary gains
Extraordinary losses:
Losses on disposal of fixed assets
Impairment losses
Provision of reserve for price fluctuation
Losses on advanced depreciation of real estate for tax purpose

244

1

58
140
1,829
3

20
68
1,908
–

Total extraordinary losses
Provision of reserve for dividends to policyholders (subsidiary)

2,031
174

1,997
187

Surplus before income taxes
Income taxes:
Current
Deferred
Total income taxes

47,397

41,119

9,080
(8)
9,072

7,501
(449)
7,051

Net surplus for the period
Net surplus attributable to non-controlling interests

38,32459

34,068(7)

Net surplus attributable to the parent company

38,26534,07535

Fukoku Mutual Life Insurance Company

(4) Consolidated Statements of Operations and Comprehensive Income (Continued)[Consolidated Statements of Comprehensive Income](Millions of yen)Six months ended
September 30, 2017

Six months ended
September 30, 2018

Net surplus

38,32434,068Other comprehensive income:

60,54434,997Net unrealized gains (losses) on available-for-sale securities, net of tax

59,73534,481

Foreign currency translation adjustments

(8)

(90)

Remeasurements of defined benefit plan, net of tax

816

606

Comprehensive income:

98,86869,066Comprehensive income attributable to the parent company

98,84069,21328(147)

Comprehensive income attributable to non-controlling interests

36

Fukoku Mutual Life Insurance Company

(5) Consolidated Statements of Cash Flows(Millions of yen)Six months ended
September 30, 2017

Six months ended
September 30, 2018

47,397
2,113
3,432
140
381
(579)
3,457
5
0
174
67
(344)
1,829
(83,120)(14,510)
2,190
6,299
(220)
4,650
(26,634)
88,155(2,157)(16,276)(279)(6,861)35,946

41,119
2,065
5,950
68
18
225
1,985
6
0
187
(51)
(373)
1,908
(86,296)(10,894)
1,948
3,940
15
(1,425)(39,601)
89,650(1,934)(16,172)(252)(4,915)
26,77314
253(8,800)8,833(433,376)
342,383(36,803)
64,9144,081(2,350)(60,848)(24,901)(1,956)411(4,206)(66,598)(29)
123(2,000)2,000(416,483)
350,901(30,230)
53,028(26,910)(3,045)(72,644)(45,870)(2,489)61(2,273)(77,346)

Cash flows from financing activities:
Proceeds from issuance of subordinated bonds
Payment of interest on foundation funds
Dividends paid to non-controlling interests
Payments for lease obligations
Net cash provided by (used in) financing activities

30,000
(100)
(13)
(140)
29,745–(100)(7)(1,435)(1,544)

Effect of exchange rate changes on cash and cash equivalents
Net increase (decrease) in cash and cash equivalents(609)(1,515)(83)(52,200)

Cash and cash equivalents at the beginning of the period
Cash and cash equivalents at the end of the period

328,236
326,720332,599
280,398

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

37

Fukoku Mutual Life Insurance Company

(6) Consolidated Statements of Changes in Net Assets[For the six months ended September 30, 2017](Millions of yen)Foundation funds, surplus and others

Balance at the beginning of the current period

Foundation funds

Accumulated
foundation funds
redeemed

10,000106,000

Total foundation
Consolidated surplus funds, surplus andothersReserve forrevaluation

112

133,217249,329(34,592)(34,592)

(100)

(100)

38,26538,265(85)(85)

Changes in the current period
Additions to reserve for dividends topolicyholders
Payment of interest on foundation funds
Net surplus attributable to the parent
company for the current period
Reversal of revaluation reserve for land,
net of tax
Net changes, excluding foundation funds,
surplus and others
Total changes in the current period
Balance at the end of the current period

–

–

–

3,487

3,487

10,000106,000

112

136,705

252,817

Accumulated other comprehensive income
Net unrealized gains(losses) on available- Revaluation reservefor-sale securities, net for land, net of tax
of taxBalance at the beginning of the current period

342,470

Foreign currencytranslation
adjustments

4,107

(433)

Accumulated
Total accumulated
remeasurements of other comprehensive
defined benefit plansincome(9,240)336,904

Non-controllinginterests

Total net assets

8,603

594,837

Changes in the current period
Additions to reserve for dividends topolicyholders(34,592)

Payment of interest on foundation funds(100)

Net surplus attributable to the parent
company for the current period

38,265

Reversal of revaluation reserve for land,
net of tax(85)

Net changes, excluding foundation funds,
surplus and others

59,765

85

(8)

816

60,66014

60,675

Total changes in the current period

59,765

85

(8)

816

60,66014

64,162

Balance at the end of the current period

402,236

4,193

(441)

(8,423)

397,564

8,618

659,000

38

Fukoku Mutual Life Insurance Company

[For the six months ended September 30, 2018](Millions of yen)Foundation funds, surplus and others

Balance at the beginning of the current period

Foundation funds

Accumulated
foundation funds
redeemed

10,000106,000

Total foundation
Consolidated surplus funds, surplus andothersReserve forrevaluation

112

139,621

255,733(38,630)(38,630)

(100)

(100)

34,07534,07524

24

Changes in the current period
Additions to reserve for dividends topolicyholders
Payment of interest on foundation funds
Net surplus attributable to the parent
company for the current period
Reversal of revaluation reserve for land,
net of tax
Net changes, excluding foundation funds,
surplus and others
Total changes in the current period
Balance at the end of the current period

–

–

–

(4,631)(4,631)

10,000106,000

112

134,989

251,102

Accumulated other comprehensive income
Net unrealized gains(losses) on available- Revaluation reservefor-sale securities, net for land, net of tax
of taxBalance at the beginning of the current period

344,585

Foreign currencytranslation
adjustments

4,173

(377)

Accumulated
Total accumulated
remeasurements of other comprehensive
defined benefit plansincome(6,055)342,326

Non-controllinginterests

Total net assets

8,690

606,750

Changes in the current period
Additions to reserve for dividends topolicyholders(38,630)

Payment of interest on foundation funds(100)

Net surplus attributable to the parent
company for the current period

34,075

Reversal of revaluation reserve for land,
net of tax

24

Net changes, excluding foundation funds,
surplus and others

34,622

(24)

(90)

606

35,113(155)

34,958

Total changes in the current period

34,622

(24)

(90)

606

35,113(155)

30,327

Balance at the end of the current period

379,208

4,149

(467)

(5,449)377,440

8,534

637,077

39

Fukoku Mutual Life Insurance Company

Notes to the Consolidated Financial Statements
I. Presentation of the Consolidated Financial Statements
1. Basis of Presentation
The accompanying consolidated financial statements have been prepared from the accounts maintained by Fukoku MutualLife Insurance Company (the “Company”) and its consolidated subsidiaries in accordance with theprovisions set forth in the Insurance Business Act of Japan and its related rules and regulations and in conformity withaccounting principles generally accepted in Japan, which are different in certain respects from accounting principles
generally accepted in countries and jurisdictions other than Japan.
In addition, the notes to the consolidated financial statements include information which is not required underaccounting principles generally accepted in Japan but is presented herein as additional information.
Amounts of less than one million yen have been rounded down. As a result, the totals do not add up.

2. Principles of Consolidation(1) Scope of Consolidation
Consolidated subsidiaries as of September 30, 2018 are listed below:
Fukoku Capital Management, Inc.
Fukokushinrai Life Insurance Co., Ltd.
Fukoku Information Systems Co., Ltd.
Fukoku Life International (U.K.) Ltd.
Fukoku Life International (America) Inc.
Fukoku Life Investments Singapore Pte. Ltd.
Major unconsolidated subsidiary is Fukoku Business Service Company Limited.
Five subsidiaries are excluded from the scope of consolidation, as each one of them is small in its total assets,
amount of sales, net surplus for the period and surplus and are sufficiently insignificant to reasonable judgement on
their impact on the financial position and results of operation of the Company's group.
(2) Application of Equity method
Unconsolidated subsidiaries (such as Fukoku Business Service Company Limited, etc.) are insignificant in their impact
on net surplus attributable to the parent company and consolidated surplus, and also immaterial as a whole, therefore,
application of equity method is not applied.
There are no affiliates for the six months ended September 30, 2018.
(3) Interim closing dates of consolidated subsidiaries
Among the subsidiaries to be consolidated, fiscal year-end of overseas subsidiaries is June 30. For the
preparation of consolidated financial statements, financial statements as of that date are used and concerning any
important transaction taking place in between June 30 and the consolidated closing date, necessary
adjustments for consolidation are made.

40

Fukoku Mutual Life Insurance Company

II. Notes to the Consolidated Balance Sheets
1. (1) The valuation of securities, including bank deposits and monetary claims bought which are equivalent to securities,
and securities managed as trust assets in money held in trust, is as follows:i) Trading securities are stated at fair market value. Costs of their sales are determined by the moving averagemethod.
ii) Held-to-maturity debt securities are stated at amortized cost under the straight-line method, cost being
determined by the moving average method.
iii) Policy-reserve-matching bonds are stated at amortized cost under the straight-line method, cost being
determined by the moving average method in accordance with “Temporary Treatment of Accounting and Auditing
Concerning Policy-reserve-matching Bonds in the Insurance Industry” (Industry Audit Committee Report No.21
issued by the Japanese Institute of Certified Public Accountants on November 16, 2000).
iv) Investments in unconsolidated subsidiaries and affiliates which are not accounted for under the equity
method are stated at cost, cost being determined by the moving average method.
v) Available-for-sale securities with fair market value are stated at fair market value based on the market
prices at the end of the current period. Costs of their sales are determined by the moving average method.
Net unrealized gains or losses on these available-for-sale securities, net of taxes, are recorded as aseparate component of net assets.
Available-for-sale securities whose market value are deemed extremely difficult to obtain are stated at cost,
cost being determined by the moving average method, except for public and corporate bonds including foreign
bonds, of which the difference between acquisition cost and face value is considered to be an adjustment ofinterest. Such bonds are stated at amortized cost under the straight-line method, cost being determined by themoving average method.
(2) Derivative instruments are stated at fair market value.
(3) The Company revalued the land used in the operations based on the Act for Revaluation of Land (Act No.34
promulgated on March 31, 1998). The difference between fair value and book value resulting from the revaluation, netof related taxes, is recorded as revaluation reserve for land as a separate component of net assets and the related tax isrecorded as deferred tax liabilities for land revaluation.
• Date of revaluation: March 31, 2002
• Method of revaluation as prescribed for in Article 3 Paragraph 3 of the said Act:
Calculation is based on the appraisal value for property tax set forth in Article 2 item 3 of the Enforcement
Ordinance of the Act for Revaluation of Land (Government Ordinance No.119 promulgated on March 31,
1998) and the road rate set forth in Article 2 item 4 of the said Ordinance with certain reasonableadjustments.
(4) Depreciation of the Company’s tangible fixed assets is calculated by the following methods.
• Tangible fixed assets (excluding lease assets): Declining-balance method
However, buildings (excluding building attachments and structures acquired on or before March 31, 2016)acquired on or after April 1, 1998 are depreciated using Straight-line method.
• Lease assets related to finance lease transactions that do not transfer ownership: Straight-line method over thelease term with no residual value.
Other tangible fixed assets acquired for ¥100,000 or more but less than ¥200,000 are depreciated equally over three
years.
41

Fukoku Mutual Life Insurance Company

(5) Assets and liabilities denominated in foreign currencies, except for investments in unconsolidated subsidiaries andaffiliates, are translated into Japanese yen at the effective exchange rate prevailing at the balance sheet date.
Investments in unconsolidated subsidiaries and affiliates are translated into Japanese yen at the exchange rate on thedate of acquisition.
(6) Allowance for possible loan losses for the Company is provided in accordance with the standards of self-assessment
and write-offs and reserves on credit quality:i) For the credits of borrowers who are legally bankrupt such as being in the proceedings of bankruptcy or civil
rehabilitation (hereinafter called “legally bankrupt borrowers”) and who are substantially bankrupt (hereinafter

called “substantially bankrupt borrowers”), the Company provides the remaining amount of credits after
the direct write-off described below and the deductions of the amount expected to be collected through thedisposal of collateral or the execution of guarantees.
ii) For the credits of borrowers who are not currently bankrupt but have a high possibility of bankruptcy(hereinafter called “not currently bankrupt borrowers”), the Company provides the amounts deemed
as necessary considering the borrowers’ ability to pay, within the amounts after deductions of theamount expected to be collected through the disposal of collateral or the execution of guarantees.
iii) For the credits of borrowers other than the above, the Company provides the amounts calculated by multiplying

the borrowers’ balance by the actual ratio of bad debt losses on defaults during a certain past period.
All credits are assessed by the relevant departments in accordance with the Company’s standards of self- assessment
on credit quality. The results of the assessment are reviewed by the audit department, which is independent ofbusiness-related divisions. Subsequently, the allowance for possible loan losses is provided based on the results ofthese assessments.
For the credits of legally bankrupt borrowers and substantially bankrupt borrowers, the amounts remaining after
deductions of collateral value or the amounts collectible through the execution of guarantees are written-off directlyfrom the borrowers’ balances as the estimated uncollectible amounts. The amount written-off as of September 30,
2018 was ¥1 million.
(7) Net defined benefit liability, which is provided for employees’ retirement benefits, is calculated by deducting theamount of pension assets from the amount of retirement benefit obligations incurred as of the balance sheet date basedon the projected retirement benefits as of the current fiscal year end.
The Company uses the following methods of accounting in relation to retirement benefits:• Method for allocation of projected retirement benefits ........................
• Amortization period of actuarial gains and losses.................................

Benefit formula basis
10 years• Amortization period of prior service cost..............................................

10 years(8) Reserve for price fluctuation is calculated in accordance with Article 115 of the Insurance Business Act.
(9) As for the finance lease transactions where the Company is a lessor, the lease fee is recorded in “Interest, dividends andother income” at the time of receiving lease fee. The corresponding cost of the lease transactions is recorded in “Other
investment expenses”, which is calculated by deducting an amount equivalent to the interest allocated over the leaseterm from the lease fee received.

42

Fukoku Mutual Life Insurance Company

(10) Hedge accounting is based on "Accounting Standards for Financial Instruments" (ASBJ Statement No. 10, March 10,2008). The Company applies a fair value hedge accounting as a hedge against the risk of foreign exchange fluctuationin relation to bonds denominated in foreign currencies and against the risk of price fluctuation in relation to domestic
stocks, and a designated hedge accounting (“Furiate shori”) for foreign currency swaps as a hedge against the risk offoreign exchange fluctuation in relation to bonds denominated in foreign currencies issued by the Company.
For assessing the effectiveness of hedge used, ratio analysis of comparing the fluctuations in the fair value or cash
flows of hedged items and hedging instruments is mainly applied.
(11) 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 Act, aredeferred as prepaid expenses and amortized equally over five years. Consumption taxes other than deferredconsumption taxes are recognized as an expense when incurred.
(12) Policy reserve is based on Article 116 of the Insurance Business Act, and the premium reserve is calculated by thefollowing method:i) In regard to the policies subject to the standard policy reserve, the method as prescribed by the Commissionerof Financial Services Agency (Ministry of Finance Ordinance No. 48, 1996) is applied.
ii) In regard to the policies not subject to the standard policy reserve, the net level premium method is applied.
Based on the provision of Article 69, paragraph 5, of the Enforcement Regulation of the Insurance Business Act, theCompany includes additional funded policy reserves as follows.
Among individual annuity insurance policies with an assumed interest rate of 5.00% or higher, for policies thathave begun paying annuities (excluding wife’s annuity insurance additional rider), the Company reduced the assumed
interest rate to 1.00% and funded additional policy reserves. As of September 30, 2018, the balance of these policy
reserves was ¥73,347 million.
The Company also funded additional policy reserves for certain individual annuity insurance policies, whole life
insurance policies that include distribution of surplus every five years and highly advanced medical riders. As of
September 30, 2018, the balance of these policy reserves was ¥5,628 million.
(13) Intangible fixed assets are amortized as follows:i) Software for internal use is amortized based on the straight-line method over the estimated useful lives.
ii) Lease assets are amortized based on the straight-line method over the lease term.

(14) Of the bonds corresponding to the sub-groups of individual insurance and annuities which are set by insurance types
and investment policies, the bonds that are held to match the duration of liabilities are classified as policy- reservematching bonds by the Company in accordance with “Temporary Treatment of Accounting and Auditing Concerning
Policy-reserve-matching Bonds in Insurance Industry” (Industry Audit Committee Report No. 21 issued by theJapanese Institute of Certified Public Accountants on November 16, 2000).

43

Fukoku Mutual Life Insurance Company

2. The carrying amounts, fair values and their related differences of major financial assets and liabilities in the generalaccount as of September 30, 2018 were as follows:(Millions of yen)

Carrying amount

Fair value

Difference

Cash and deposits:
Cash and deposits not treated as securities………..

¥ 147,760¥ 147,760¥–

Total cash and deposits…........................................

147,760

147,760–

Call loans

132,000

132,000–

Claims treated as loans……....................................

320

338

17

Total monetary claims bought.......………..............

320

338

17

Trading securities.......................................……......

30,97130,971–

Total money held in trust..........................................

30,97130,971–

Monetary claims bought:

Money held in trust:

Securities:
Trading securities......................................…….......

120,741

120,741–

Held-to-maturity debt securities...............................

1,241,076

1,453,106

212,030

Policy-reserve-matching bonds................……........

1,980,133

2,189,402

209,269

Available-for-sale securities........................………......

3,912,559

3,912,559–

Total securities.......................................……..........

7,254,511

7,675,810

421,299

Policy loans..............................................……........

60,43760,436(0)

Ordinary loans...........................................…….......

510,162

529,042

18,879Total loans................................................……........

570,599

589,478

18,879Assets total........................................................……....

8,136,162

8,576,359

440,197

Subordinated bonds ................................……..........

191,935

199,104

7,169

Liabilities total….........................................…….........

191,935

199,104

7,169

Hedge accounting not applied.................…….........

(4,097)(4,097)–

Hedge accounting applied……................................

(13,488)(13,488)–

Total derivative instruments.......................……......

¥ (17,586)¥ (17,586)¥–

Loans:

1

Derivative instruments2:

Notes: 1. The fair value of derivative instruments that are currency swaps under designated hedge accounting is includedin the fair value of subordinated bonds because it is accounted for as an integral part of the subordinated bondsthat are the hedge items.
Notes: 2. Assets and liabilities generated by derivative instruments are offset and presented net. Net liabilities in total arepresented in brackets.

(1) Cash, deposits (excluding financial instruments treated as securities based on “Accounting Standards for Financial
Instruments” (ASBJ Statement No.10, March 10, 2008)) and call loans:
The fair values of cash, deposits and call loans are based on their book values since fair values approximate bookvalues due to their short maturities.
(2) Securities including deposits and monetary claims bought which are treated as securities based on “AccountingStandards for Financial Instruments” (ASBJ Statement No.10, March 10, 2008) and securities managed as trust assets
in money held in trust:
The fair values of marketable securities are measured at the quoted market prices at the balance sheet date. The
fair values of other securities without the quoted market prices are based on the prices reasonably calculated such as
the prices offered by the information vendors or counterparty financial institutions.
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Fukoku Mutual Life Insurance Company

Investments in unconsolidated subsidiaries and affiliates, unlisted stocks and investments in partnerships
whereby partnership assets consist of unlisted stocks whose fair values are deemed extremely difficult to obtain, areexcluded from above securities. The carrying amounts of investments in unconsolidated subsidiaries and affiliates,
unlisted stocks and investments in partnerships were ¥454 million, ¥5,696 million, and ¥23,492 million as of
September 30, 2018, respectively.
(3) Loans and monetary claims bought treated as loans:
The fair values of policy loans are deemed to approximate book values, considering estimated repayment period andinterest rate conditions since their repayment deadlines have not been set up due to the characteristics that the loans arelimited to the amount of cash surrender values. Therefore, the book values are used as the fair values of policy loans.
The fair values of floating interest rate loans among the ordinary loans and monetary claims bought treated asloans approximate the book values because the market interest rates are reflected in future cash flows in a short period.
Therefore, the fair values of floating interest rate loans and monetary claims bought treated as loans are based on theirbook values. The fair values of fixed interest rate loans are measured by discounting the future cash flows to thepresent values.
The fair values of loans from legally bankrupt borrowers, substantially bankrupt borrowers and not currently
bankrupt borrowers and monetary claims bought treated as loans are computed by deducting the amount of theallowance for possible loan losses from the book values before direct write-offs.
(4) Subordinated bonds:
Subordinated bonds issued by the Company are stated at fair market values.
(5) Derivative instruments:i) The fair values of the futures and options traded at the exchange are measured at the settlement price of theexchange.
ii) The fair values of forward contracts, options and swaps traded over the counter are based on the quoted prices
offered by counterparty financial institutions.
iii) The fair values of foreign currency forward contracts are determined based on the spot exchange rate andforward contract rate.

3. Notes related to the fair value of investment and rental properties are omitted as no significant change has occurred since
the previous fiscal year-end.

4. The amount of securities lent under lending agreements was ¥259,698 million as of September 30, 2018.

5. The total amounts of credits to bankrupt borrowers, delinquent loans, delinquent loans past 3 months or more andrestructured loans, which were included in loans, was ¥1,053 million as of September 30, 2018;i) The balance of credits to bankrupt borrowers was ¥175 million as of September 30, 2018.
ii) The balance of delinquent loans was ¥877 million as of September 30, 2018.
iii) There was no balance of delinquent loans past 3 months or more and restructured loans as of September 30,
2018.

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Fukoku Mutual Life Insurance Company

The direct write-offs related to loans decreased credits to bankrupt borrowers described above by ¥1 million as of
September 30, 2018.
Credits to bankrupt borrowers represent loans, excluding the balances already written-off, which meet theconditions prescribed in Article 96 Paragraph 1 item 3 and 4 of the Enforcement Regulations of the Corporate Tax Act.
Moreover, accrued interest on these loans is not recorded as income after determining that principal of or interest on theseloans is unlikely to be collected due to the significant delay in repayment of principal or interest payment or for someother reasons.
Delinquent loans are credits which accrued interest is not recorded as income due to the same reasons as
described above, and exclude credits to bankrupt borrowers and loans for which interest payments have been suspended
and rescheduled to assist and support the borrowers in the restructuring of their business.
Delinquent loans past 3 months or more are loans for which interest payments or repayments of principal aredelinquent 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
exemption, rescheduling of due date for repayments of principal or interest payment, waiver of claim or other terms, havebeen 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.

6. Accumulated depreciation of tangible fixed assets were ¥164,846 million as of September 30, 2018.

7. Total assets in separate accounts provided for in Article 118 of the Insurance Business Act were ¥85,782 million as of
September 30, 2018. The amounts of separate account liabilities were the same as separate account assets.

8. Changes in reserve for dividends to policyholders for the six months ended September 30, 2018 were as follows:(Millions of yen)

Balance at the beginning of the current period…...............................................

¥ 53,395

Transfer from surplus in the previous fiscal year...............................................

38,630

Dividend payments to policyholders during the current period…..…………...

(16,172)

Increase in interest....................................................……………………..........

6

Balance at the end of the current period.............................................................

¥ 75,859

9. Changes in reserve for dividends to policyholders (Fukokushinrai Life Insurance Co., Ltd.) for the six months
ended September 30, 2018 were as follows:(Millions of yen)

Balance at the beginning of the current period…...............................................

¥ 539

Dividend payments to policyholders during the current period…..…………...

(252)

Increase in interest....................................................……………………..........

0

Provision of reserve for dividends to policyholders……………………….….

187

Balance at the end of the current period.............................................................

¥ 474

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Fukoku Mutual Life Insurance Company

10. The amount of stocks of unconsolidated subsidiaries was ¥454 million as of September 30, 2018.

11. Assets pledged as collateral as of September 30, 2018 were ¥21,003 million of securities and ¥759 million of bankdeposits. Secured debts as of September 30, 2018, were ¥5,287 million.

12. Reserve for outstanding claims for the reinsurance contracts provided in accordance with Article 71 Paragraph 1 of the
Enforcement Regulation of the Insurance Business Act (hereinafter called “reserve for outstanding claims for ceded
reinsurance”) was ¥40 million as of September 30, 2018.
Policy reserve for the reinsurance contracts provided in accordance with Article 71 Paragraph 1 of the
Enforcement Regulation of the Insurance Business Act (hereinafter called “policy reserve for ceded reinsurance”) was¥50 million as of September 30, 2018.

13. There were unused commitment line agreements under which the Company is the lender of ¥4,363 million as of
September 30, 2018.

14. Repayments of subordinated bonds are subordinated to other obligations.

15. The future contribution to the Life Insurance Policyholders Protection Corporation of Japan under Article 259 of the
Insurance Business Act was estimated at ¥10,530 million as of September 30, 2018.
The contribution is recognized as operating expenses when contributed.

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Fukoku Mutual Life Insurance Company

III.

Notes to the Consolidated Statements of Operations

1. For the six months ended September 30, 2018, in calculating the provision of reserve for outstanding claims, a provisionof reserves for outstanding claims reinsured of ¥29 million was deducted. In calculating the provision of policy reserves,a reversal of reserves for policy reserves reinsured of ¥2 million was added.

IV.

Notes to the Consolidated Statements of Cash Flows

1. Cash and cash equivalents as of September 30, 2018 consist of "Cash," "Deposits in transfer account," "Current deposits,""Ordinary deposits," "Notice deposits," "Time deposits maturing within 3 months of the date of acquisition," "Foreign
currency deposits maturing within 3 months of the date of acquisition," "Negotiable certificate of deposits maturing
within 3 months of the date of acquisition," "Call loans" and "Monetary claims bought maturing within 3 months of thedate of acquisition."

2. Reconciliations of cash and cash equivalents in the consolidated statements of cash flows to the consolidated balance
sheet accounts as of September 30, 2018 were as follows:(Millions of yen)

Cash and deposits.............................................................................................................

¥ 149,483

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

132,000

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

320

Time deposits maturing over 3 months of the date of acquisition...................................

(100)

Foreign currency deposits maturing over 3 months of the date of acquisition….……...

(984)

Monetary claims bought maturing over 3 months of the date of acquisition……..……

(320)

Cash and cash equivalents...............................................................................................

¥ 280,398

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Fukoku Mutual Life Insurance Company

(7) Status of Insurance Claims Paying Ability of the Company and Insurance Subsidiaries(Millions of yen)

As ofMarch 31, 2018

Total solvency margin

(A)

As of
September 30, 2018

1,556,422

1,630,790

Foundation funds and surplus

223,166

237,928

Reserve for price fluctuation

105,521

107,429

Contingency reserve

189,211

189,707

–

–

1,502

1,458

(Net unrealized gains (losses) on securities (before tax) and deferredhedge gains (losses) (before tax)) × 90%

429,908

472,938

Net unrealized gains on real estate × 85%

122,692

125,844

Sum of unrecognized actuarial differences and unrecognized prior service cost

(8,410)(7,568)

Excess amount of policy reserve based on full-time Zillmer method

255,285259,321

Qualifying subordinated debt

191,935

191,935

The amount of "excess amount of policy reserve based on full-time Zillmer
method" and "qualifying subordinated debt" excluded from the calculation ofsolvency margin––

Deductible items––

45,60951,795

276,097

288,513

Catastrophe loss reserve
General allowance for possible loan losses

OthersTotal amount of risk √(√𝑅12 + 𝑅52 + 𝑅8 + 𝑅9)2 + (𝑅2 + 𝑅3 + 𝑅7)2 + 𝑅4 + 𝑅6

(B)

Insurance risk

R1

23,756

23,614General insurance risk

R5

–

–

Catastrophe risk

R6

–

–

3rd sector insurance risk

R8

9,798

9,835

Small amount and short-term insurance risk

R9

–

–

Assumed investment yield risk

R232,542

32,219Minimum guarantee risk

R7

–

–

Investment risk

R3

235,431

248,031

Business risk

R4

6,030

6,274

1,127.4%

1,130.4%

Solvency margin ratio
(A)
× 100
(1/2) × (B)Notes: 1. Above figures are calculated based on the provisions of Articles 86-2 and 88 of the Enforcement Regulation of the Insurance
Business Act and the Financial Services Agency Notification No. 23, 2011.
Notes: 2. "Minimum guarantee risk" is calculated by standard method.

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Fukoku Mutual Life Insurance Company