May 25, 2018

Financial Results for the Fiscal Year Ended March 31, 2018
Fukoku Mutual Life Insurance Company (President: Yoshiteru Yoneyama) announces
financial results for the fiscal year ended May 31, 2018.

[Contents]
1. Business Highlights･････････････････････････

P. 1

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

P. 3

3. Non-consolidated Balance Sheets･････････････････････････

P. 11

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

P. 12

5. Breakdown of Ordinary Profits (Fundamental Profit)･････････････････････････

P. 22

6. Non-consolidated Statements of Changes in Net Assets･････････････････････････

P. 23

7. Non-consolidated Statements of Surplus･････････････････････････

P. 25

8. Disclosed Claims Based on Categories of Obligors･････････････････････････

P. 26

9. Risk-monitored Loans･････････････････････････

P. 27

10. Solvency Margin Ratio･････････････････････････

P. 28

11. Status of Separate Account･････････････････････････

P. 29

12. Status of the Company, Subsidiaries and Affiliates･････････････････････････

P. 35

Attached: Supplementary Materials for the Fiscal Year Ended March 31, 2018

Fukoku Mutual Life Insurance Company

Financial Summary for the Fiscal Year Ended March 31, 2018
1. Business Highlights(1) Policies in Force, New Policies and Surrendered and Lapsed Policies(i) Policies in Force
As of March 31, 2017

As of March 31, 2018

Number of policies

Individual insurance

AmountNumber of policies(Thousands)

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

3,171

102.0

231,606

98.9

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

3,180

100.3

227,653

98.3(Thousands)

719

100.5

27,903

100.3

687

95.6

26,684

95.6

3,890

101.7

259,509

99.0

3,868

99.4

254,33898.0

Group insurance－－

171,515

101.1

－

－

170,732

99.5

Group annuities－－

21,567

101.8

－

－

21,803

101.1

Individual annuities
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 foran annuity 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.
2. Policy amount in force for group annuities is equal to the amount of outstanding policy reserve.

(ii) New Policies
Total
Year ended
March 31, 2017

Number of policies(Thousands)

Individual insurance

AmountChanges(%, YoY)(100 millionsof yen)

405

113.0

Net increase by
conversion

New businessAmountChanges(%, YoY)

15,60195.6(100 millionsof yen)AmountChanges(%, YoY)

14,66998.4(100 millionsof yen)Changes(%, YoY)

932

66.6

40

145.5

1,582

156.8

1,599

155.3

(16)

－

446

115.3

17,18499.2

16,268

102.0

915

66.3

Group insurance

－

－

774

171.2

774

171.2

－

－

Group annuities

－

－

16

52.7

16

52.7

－

－

Individual annuities
Subtotal

Total
Year ended
March 31, 2018

Number of policies(Thousands)

Individual insurance

AmountChanges(%, YoY)(100 millionsof yen)363

89.6

Changes(%, YoY)

13,81488.5

New business

Net increase by
conversion

AmountAmount(100 millionsof yen)Changes(%, YoY)

13,21690.1(100 millionsof yen)597

Changes(%, YoY)

64.1

7

17.5

211

13.3

224

14.0

(13)

－

370

83.0

14,025

81.6

13,440

82.6

584

63.9

Group insurance

－

－

343

44.3

343

44.3

－

－

Group annuities

－

－

158

979.1

158

979.1

－

－

Individual annuities
Subtotal

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

(iii) Surrendered and Lapsed Policies (Individual Insurance and Individual Annuities)
Year ended March 31, 2017

Year ended March 31, 2018

Changes(%, YoY)

Changes(%, YoY)

Amount of surrender and lapse(100 millions of yen)

13,135

97.9

12,697

96.7

Surrender and lapse ratio (%)

5.01(0.04)

4.89(0.12)

Notes: 1. The amount of lapse is not offset by the amount of reinstatement which was once lapsed.
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, 2017

As of March 31, 2018

Changes(%, Pre-FYE)

Changes(%, Pre-FYE)

Individual insurance

2,779

101.2

2,747

98.8

Individual annuities

1,343

101.6

1,296

96.5

Total

4,123

101.3

4,043

98.1

1,091

101.5

1,107

101.4

Medical coverage and living benefits(ii) New Policies(100 millions of yen, %)Individual insuranceYear ended March 31, 2017

Year ended March 31, 2018

Changes(%, YoY)

Changes(%, YoY)

212

106.1

Individual annuities

50

Total

263
78

Medical coverage and living benefits

148

69.9

148.5

6

12.2

112.3

154

58.8

111.4

77

99.2

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.

(3) Selected Items of Statements of Operations(100 millions of yen, %)Year ended March 31, 2017

Year ended March 31, 2018

Changes(%, YoY)

Changes(%, YoY)

Premium and other income

5,744

92.9

5,672

98.7

Investment income

1,601

85.8

1,736

108.4

Claims and other payments

4,891

82.8

5,011

102.5

Investment expenses

445

93.1

396

88.9

Ordinary profits

541

89.7

564

104.4

(4) Statements of Surplus(100 millions of yen, %)Year ended March 31, 2017

Year ended March 31, 2018

Changes(%, YoY)

Changes(%, YoY)

Unappropriated surplus

605

92.4

646

106.7

Reserve for dividends to policyholders

345

98.2

386

111.7

Net surplus

22

33.8

22

100.5

Unappropriated surplus carried forward

237

100.0

237

100.0

Note: Unappropriated surplus for the years ended March 31, 2017 and 2018 included reversal of voluntary surplus reserve ofNote: ¥102 million and ¥45 million, respectively.

(5) Total Assets(100 millions of yen, %)As of March 31, 2017

As of March 31, 2018

Changes(%, Pre-FYE)

Total assets

65,6562

101.2

Changes(%, Pre-FYE)

66,266

100.9

Fukoku Mutual Life Insurance Company

2. Investment Results of General Account Assets(1) Asset Composition(Millions of yen)

As of March 31, 2017

As of March 31, 2018

% of total

Amount% of total

AmountCash, deposits, call loans

236,274

Monetary claims bought

753

0.0

443

0.0

29,7870.5

31,502

0.5

Money held in trust
Securities

3.6 %240,462

3.7 %5,297,476

81.6

5,380,830

82.2

Domestic bonds

2,843,537

43.8

2,818,618

43.1

Domestic stocks

656,59010.1

740,828

11.3

Foreign securities

1,702,602

26.2

1,713,869

26.2

Foreign bonds

1,445,002

22.3

1,434,457

21.9

257,599

4.0

279,412

4.3

94,745

1.5

107,514

1.6

Foreign stocks and other securities
Other securities
Loans

627,7229.7

593,734

9.1

Policy loans

59,2380.9

57,181

0.9

Ordinary loans

568,483

8.8

536,553

8.2

Real estate

214,427

3.3

213,674

3.3

Others85,302

1.3

85,664

1.3

Allowance for possible loan losses(1,776)( 0.0)(2,049)(0.0)

6,489,968

100.0

6,544,262

100.0

1,966,868

30.3

1,998,720

30.5

Total
Foreign currency denominated assets(2) Changes (Increase/Decrease) in Assets(Millions of yen)

As of March 31, 2017

As of March 31, 2018

AmountAmountCash, deposits, call loans(76,130)

4,187

Monetary claims bought

(60)

(309)

Money held in trust(58,005)

1,714

Securities

279,757

83,353

Domestic bonds

184,350(24,918)

Domestic stocks

86,204

84,237

Foreign securities

2,590

11,266

Foreign bonds(60,634)(10,545)

Foreign stocks and other securities

63,224

21,812Other securities

6,611

12,768(65,958)(33,987)

Policy loans(2,199)(2,057)

Ordinary loans(63,759)(31,930)

Real estate

1,547

(752)

Others(2,006)

361

74

(273)

79,21754,29391,73431,851

Loans

Allowance for possible loan losses
Total
Foreign currency denominated assets

3

Fukoku Mutual Life Insurance Company

(3) Investment Income(Millions of yen)

Year ended
March 31, 2017

Interest, dividends and other income

Year ended
March 31, 2018

134,451

149,219

21

22

Interest and dividends on securities

109,253

124,480

Interest on loans

11,314

10,054

Income from real estate for rent

13,736

14,541Other interest and dividends

125

120

Gains on money held in trust, net

－

1,769

14,473

15,280Gains on sales of domestic bonds

11,175

4,903

Gains on sales of domestic stocks

2,741

1,798

Gains on sales of foreign securities

556

8,578

7,018

－

Reversal of allowance for possible loan losses

90－

Other investment income

122

819

156,155

167,088

Interest on deposits

Gains on sales of securities

Gains on derivative instruments, net

Total(4) Investment Expenses(Millions of yen)

Year ended
March 31, 2017

Year ended
March 31, 2018

Interest expenses

4,057

4,216

Losses on money held in trust, net

1,144

－

Losses on trading securities, net

7,042

1,498

Losses on sales of securities

5,493

4,977

Losses on sales of domestic bonds

441

391

Losses on sales of domestic stocks

1,312

1,095

Losses on sales of foreign securities

3,739

3,421

－

68

24

0

Losses on valuation of domestic stocks－

0

Losses on valuation of foreign securities

24

－

－

225

15,62416,013－279

Depreciation of real estate for rent and other assets

4,319

4,271

Other investment expenses

6,875

8,158

Total

44,581

39,640

Other losses on sales of securities
Losses on valuation of securities

Losses on derivative instruments, net
Foreign exchange losses, net
Provision of allowance for possible loan losses(5) Net Investment Income(Millions of yen)

Year ended
March 31, 2017

Net investment income

111,573

4

Year ended
March 31, 2018

127,447

Fukoku Mutual Life Insurance Company

(6) Other Information on Investments(i) Investment Yield by Asset Categories(%)

Year ended March 31, 2017

Year ended March 31, 2018

Cash, deposits, call loans

0.00

0.00

Monetary claims bought

1.40

1.35

Money held in trust

3.11

5.94

Securities

2.08

2.34

Domestic bonds

2.09

1.69

Domestic stocks

3.30

3.59

Foreign securities

1.58

2.99

Foreign bonds

1.20

2.24

Foreign stocks and other securities

4.46

7.32

1.75

1.70

1.50

1.44

Real estate

2.33

2.41

Total

1.82

2.06

1.62

2.60

Loans
Ordinary loans

Overseas investments

Notes: 1. Investment yield above are calculated by dividing the net investment income by the average daily balance on a book value basis.
2. Overseas investments represent the total of foreign currency denominated assets and yen denominated assets.

(ii) Average Daily Balance(Millions of yen)

Year ended March 31, 2017

Year ended March 31, 2018

Cash, deposits, call loans

333,361

237,757

Monetary claims bought

783

593

36,68529,792

4,719,222

4,892,260

Domestic bonds

2,650,655

2,793,416

Domestic stocks

341,965

376,094

Foreign securities

1,643,790

1,637,753

Foreign bonds

1,452,058

1,396,318

191,732

241,435

655,723

608,862595,334

550,366

216,026

215,590

6,141,816

6,182,430

1,966,259

2,014,749

Money held in trust
Securities

Foreign stocks and other securities
Loans
Ordinary loans
Real estate
Total
Overseas investments

5

Fukoku Mutual Life Insurance Company

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

As of March 31, 2017
Net valuation gains/losses
included in the statementof operations

Carrying value on
the balance sheet
Trading securities

As of March 31, 2018

208,034

Net valuation gains/losses
included in the statementof operations

Carrying value on
the balance sheet(17,796)

179,768(7,938)

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

(iv) Fair Value Information on Securities (with fair value, other than trading securities)(Millions of yen)

As of March 31, 2017

As of March 31, 2018

Gains/Losses
Book value

Gains/Losses

Fair value
Gains

Book value

Fair value

Losses

Gains

Losses764,914908,680

143,766

143,766－

758,872

897,574

138,702138,702－

Domestic bonds

739,830

882,479

142,649

142,649－

738,632

876,835

138,203138,203－

Foreign bonds

25,084

26,201

1,116

1,116

－

20,23920,738

498

498

－

Monetary claims bought

－

－

－

－

－

－

－

－

－

－

Negotiable certificate of deposits

－

－

－

－

－

－

－

－

－

－

Others

－

－

－

－

－

－

－

－

－

－

1,008,212

1,166,744

158,531

161,427

2,895

973,736

1,134,148

160,412

162,375

1,962

1,002,413

1,160,832

158,418

161,313

2,895

971,937

1,132,289

160,352

162,315

1,962

5,799

5,912

113

113

－

1,799

1,859

59

59

－

－

－

－

－

－

－

－

－

－

－

2,796,789

3,256,735

459,945484,808

24,862

2,941,466

3,404,811

463,345531,772

68,427

Domestic bonds

997,892

1,067,639

69,74674,152

4,405

1,023,447

1,080,932

57,48467,947

10,462

Domestic stocks

302,413587,201

284,787

289,0234,235

305,353

671,850

366,497

370,2783,780

Foreign securities

1,426,510

1,516,052

89,542

104,688

15,146

1,538,185

1,558,823

20,63773,35952,721

1,207,319

1,268,525

61,20573,765

12,5591,290,483

1,290,268(214)

46,42546,640219,190

247,527

28,33630,922

2,586

247,701

268,554

20,852

26,933

6,081

69,97385,842

15,868

16,944

1,075

74,48093,20518,72520,187

1,462

Money held in trust

－

－

－

－

－

－

－

－

－

－

Monetary claims bought

－

－

－

－

－

－

－

－

－

－

Negotiable certificate of deposits

－

－

－

－

－

－

－

－

－

－

Others

－

－

－

－

－

－

－

－

－

－

4,569,917

5,332,161

762,243790,001

27,757

4,674,074

5,436,534

762,459

832,849

70,390

Domestic bonds

2,740,136

3,110,951

370,814378,1157,300

2,734,016

3,090,057

356,040

368,465

12,425

Domestic stocks

302,413587,201

284,787

289,0234,235

305,353

671,850

366,497

370,2783,780

Foreign securities

1,457,394

1,548,166

90,772

105,918

15,146

1,560,224

1,581,421

21,19673,91852,721

Foreign bonds

1,238,203

1,300,639

62,43674,995

12,5591,312,522

1,312,866

343

46,984

46,640219,190

247,527

28,33630,922

2,586

247,701

268,554

20,852

26,933

6,081

69,97385,842

15,868

16,944

1,075

74,48093,20518,72520,187

1,462

Money held in trust

－

－

－

－

－

－

－

－

－

－

Monetary claims bought

－

－

－

－

－

－

－

－

－

－

Negotiable certificate of deposits

－

－

－

－

－

－

－

－

－

－

Others

－

－

－

－

－

－

－

－

－

－

Held-to-maturity debt securities

Policy-reserve-matching bonds
Domestic bonds
Foreign bonds
Investments in subsidiaries and affiliates
Available-for-sale securities

Foreign bonds
Foreign stocks and other securities
Other securities

Total

Foreign stocks and other securities
Other securities

Note: The table above includes assets which are considered appropriate to deem as securities under the Financial Instruments and Exchange Law.
・Book value of securities without fair value are as follows:(Millions of yen)

As of March 31, 2017

As of March 31, 2018－－

Unlisted foreign bonds－－

Others－－

Held-to-maturity debt securities－－

Investments in subsidiaries and affiliates

64,83764,837Available-for-sale securities

22,04428,021

6,109

5,697

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

Unlisted foreign bonds－－

15,934

22,32386,881

92,858

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
Note: on available-for-sale securities corresponding to these holdings by domestic and overseas investment partnerships (¥1,484 million as of March 31, 2017
Note: and ¥1,285 million as of March 31, 2018) are included in their balance sheet carrying amounts.

6

Fukoku Mutual Life Insurance Company

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

As of March 31, 2017

Money held in trust

As of March 31, 2018

Gains/Losses

Carrying valueon the balance
sheet

Fair value

29,78729,787

Gains－

Losses－－Gains/Losses

Carrying valueon the balance
sheet

Fair value

31,50231,502

Gains－

Losses－－･ Money held in trust for trading purpose(Millions of yen)

As of March 31, 2017
Carrying valueon the balance sheet
Money held in trust
for trading purpose

As of March 31, 2018

Net valuation gains/losses includedin the statements of operations

28,787

Carrying valueon the balance sheet0

Net valuation gains/losses includedin the statements of operations

30,5020･ Money held in trust classified as held-to-maturity, policy-reserve-matching and available-for-sale(Millions of yen)

As of March 31, 2017

As of March 31, 2018

Gains/Losses

Book value

Fair value

Money held in trust
for held-to-maturity

－

－

－

－

Money held in trust forpolicy-reserve-matching

－

－

－

Money held in trust
for available-for-sale

－

－

－

Gains/Losses

Book value

Fair value

－

－

－

－

－

－

－

－

－

－

－

－

－

－

－

－

－

－

－

－

Gains

Losses7

Gains

LossesFukoku Mutual Life Insurance Company

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

As of March 31, 2017

Currencyrelated

Stockrelated

Bondrelated

OthersTotal－

13,542

(440)

－

－

Hedge accounting not applied

(500)

1,116

－

(80)

－

535

Total

(500)

14,659

(440)

(80)

－

13,638Hedge accounting applied

Interestrelated

As of March 31, 2018

Currencyrelated

Stockrelated

Bondrelated

Others13,102

Total－

10,755(1,082)－－Hedge accounting not applied

(453)

17

－

(98)

－

(534)

Total

(453)

10,772(1,082)

(98)

－

9,138

Hedge accounting applied

9,672

Note: Gains and losses from applying fair value hedge accounting (currency- related, gains of ¥13,542 million, stock-related losses ofNote: ¥440 million as of March 31, 2017, and currency-related gains of ¥10,755 million, stock-related losses of ¥1,082 million as ofMarch 31, 2018) included in gains and losses with hedge accounting applied, and gains and losses with hedge accounting
not applied are reported in the statements of operations.

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

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

As of March 31, 2018

Fair
value

Gains
(Losses)

Notional amount/contract valueOver 1 year

Fair
value

Gains
(Losses)Over-the-counter transactions
Yen interest rate
swaption contracts
Sold
Receipt fixed,
payment floating [Payment fixed,
receipt floating

－

－
－

－

－

[

－

－ [

－

－ [

－

Total

(500) [

－

－

－

－

－

142

(453)

－ ]

－

－ ]
320,000

192

－
－

－

160,000

692 ]

－

－ ]
－

－ ]
320,000

－ [

－

－ ]

[

BoughtReceipt fixed,
payment floating [Payment fixed,
receipt floating－－ ]160,000

596 ]

(500)

(453)

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

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

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

As of March 31, 2018

Fair
value

Gains
(Losses)

Notional amount/contract valueOver 1 year

Fair
value

Gains
(Losses)Over-the-counter transactions
Currency forward contracts
Sold
U.S. dollar
Canadian dollar
British PoundEuro
Australian dollar
Bought1,182,216
949,252
72,311
77,101
48,704
34,847

－
－
－
－
－
－

1,167,557
936,300
71,35977,008
48,16734,721

14,65912,951
951
92
537
125

807,994
624,796
69,29340,062
39,25834,582

－
－
－
－
－
－

797,222615,445
69,02940,14038,76833,838

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

－

－

－

－

－

－

－

－

Total

14,65910,772

Notes: 1. Forward exchange rates are used for exchange rates as of March 31, 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 the table above.

8

Fukoku Mutual Life Insurance Company

(iv) Stock-related Transactions(Millions of yen)

As of March 31, 2017
Notional amount/contract value

As of March 31, 2018

Fair valueOver 1 year

Gains(losses)

Notional amount/contract value

Fair value

Gains(losses)Over 1 year

Over-the-counter transactions
Yen stock forward contract
Sold

517

517

958

(440)

1,153

1,153

2,235

(1,082)

Bought

－

－

－

－

－

－

－

－

Total

(440)

(1,082)(v) Bond-related Transactions(Millions of yen)

As of March 31, 2017
Notional amount/contract value

As of March 31, 2018

Fair valueOver 1 year

Gains(losses)

Notional amount/contract value

Fair value

Gains(losses)Over 1 year

Exchange-traded transactions
Foreign bond futures
Sold
Bought36,815－36,896(80)

21,714－

21,812

(98)

－

－

－

－

－

－

－

－

Total

(80)

9

(98)

Fukoku Mutual Life Insurance Company

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

As of March 31, 2017

As of March 31, 2018

Carrying value on
the balance sheet

Fair value

Gains(losses)

Carrying value on
the balance sheet

Fair value

Gains(losses)

125,278

241,184

115,905

125,280

253,938

128,658

Notes: 1. As of March 31, 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, 2017.
Notes: 2. As of March 31, 2017, fair value is based on the appraisal value by the real-estate appraiser, the appraisal value forproperty tax as of January 1, 2017 and the road rate as of January 1, 2016.

10

Fukoku Mutual Life Insurance Company

3. Non-consolidated Balance Sheets(Millions of yen)
As ofMarch 31, 2017

As ofMarch 31, 2018

44,681

66,260162

166

44,51866,093

193,000

176,000

753

443

Reinsurance payables

62

56

29,78731,502

Subordinated bonds

191,935

191,935

5,369,678

5,458,790

Other liabilities

2,015,161

2,030,971

Local government bonds

123,972

Corporate bonds

733,459

Cash
Bank deposits
Call loans
Monetary claims bought
Money held in trust
Securities
Government bonds

StocksForeign securities

As ofMarch 31, 2018

5,604,007

5,650,879

Liabilities:

Assets:Cash and deposits

As ofMarch 31, 2017

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

19,533

19,2955,533,544

5,578,187

50,92953,39544,79746,066

Corporate income tax payable

4,733

2,445

114,036

Accounts payable

3,501

2,381

702,661

Accrued expenses

10,52010,834

679,556

768,000

Unearned income

364

369

1,722,752

1,735,580

Deposits received

5,579

5,756

94,774

107,540

Guarantee deposits received

13,505

14,087627,722593,734

Derivatives

2,186

3,052

Policy loans

59,23857,181

Cash collateral received for financial instruments

－

2,712

Ordinary loans

568,483

536,553

Asset retirement obligations

3,250

3,088

Tangible fixed assets

219,515

218,549

Suspense receipts

1,154

1,336

Land

125,276

125,278

Reserve for employees' retirement benefits

25,78925,417

Buildings

88,01086,343

Reserve for price fluctuation

82,464

95,798

Lease assets

2,013

1,565

Deferred tax liabilities

19,132

10,733

Construction in progress

1,140

2,052

Deferred tax liabilities for land revaluation

14,265

14,241Other tangible fixed assets

3,074

3,309

Total liabilities

5,982,454

6,035,126

Other securities
Loans

22,052

23,701

Net assets:

Software

10,836

21,651

Foundation funds

10,00010,000

Other intangible fixed assets

11,216

2,049

Accumulated foundation funds redeemed

106,000

106,000

Intangible fixed assets

Reinsurance receivables

Reserve for revaluation

200

167

60,03259,508

Accounts receivable

5,883

7,268

Legal reserve for future losses

Prepaid expenses

1,291

2,055

Other surplus

Accrued income

27,68028,570Reserve for redemption of foundation funds

4,000

6,000

Deposits

2,241

2,281

Reserve for dividend allowances

20,00020,000

Other assets

Differential account for futures trading

Surplus

112

112

129,427

135,538

2,849

2,954

126,578

132,584

25

98

Accumulated fund for price fluctuation

41,00041,000Derivatives

15,824

12,190257

255

Suspense payments

2,487

2,373

Reserve for advanced depreciation ofreal estate for tax purpose

100－

Lease investment assets

734

700

Rest of the other asset

3,864

3,968

Reserve for special account for advanced
depreciation of real estate for tax purpose(1,776)(2,049)Other reserves

Allowance for possible loan losses

767

767

60,45364,561

Total foundation funds, surplus and others

245,539

251,650

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

333,545

335,658

Unappropriated surplus

Revaluation reserve for land, net of tax
Total valuation and translation adjustments
Total net assets
Total assets

6,565,647

6,626,609

11

Total liabilities and net assets

4,107

4,173

337,652

339,831

583,192

591,482

6,565,647

6,626,609

Fukoku Mutual Life Insurance Company

4. Non-consolidated Statements of Operations(Millions of yen)
Year ended March 31, 2017

Ordinary revenues:
Premium and other income
Premium income
Reinsurance income
Investment income
Interest, dividends and other income
Interest on deposits
Interest and dividends on securities
Interest on loans
Income from real estate for rent
Other interest and dividends
Gains on money held in trust, net
Gains on sales of securities
Gains on derivative instruments, net
Reversal of allowance for possible loan losses
Other investment income
Gains on separate accounts, net
Other ordinary revenues
Fund receipt from annuity rider
Proceeds from deferred insurance
Reversal of reserve for outstanding claims
Reversal of reserve for employees' retirement benefits
OthersTotal ordinary revenues
Ordinary expenses:
Claims and other payments
ClaimsAnnuities
Benefits
Surrenders
Other payments
Reinsurance premiums
Provision of policy reserve and others
Provision of policy reserve
Provision of interest portion of reserve for dividends to policyholders
Investment expenses
Interest expenses
Losses on money held in trust, net
Losses on trading securities, net
Losses on sales of securities
Losses on valuation of securities
Losses on derivative instruments, net
Foreign exchange losses, net
Provision of allowance for possible loan losses
Depreciation of real estate for rent and other assets
Other investment expenses
Operating expenses
Other ordinary expenses
Deferred annuity payments
Taxes
Depreciation
OthersTotal ordinary expenses
Ordinary profits
Extraordinary gains:
Gains on disposal of fixed assets
State subsidy and others
OthersTotal 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
Total extraordinary losses
Surplus before income taxes
Income taxes：
Current
Deferred
Total income taxes
Net surplus for the year

12

Year ended March 31, 2018574,427
574,124302
160,197
134,45121
109,253
11,314
13,736125－
14,473
7,018
90
122
4,041
8,545
743
3,368
1,185
288
2,959
743,169

567,210
566,924286
173,641
149,219
22
124,480
10,054
14,541120
1,769
15,280
－
－
819
6,553
8,854
1,150
3,854
237
371
3,240
749,706

489,162
104,168
173,825
109,736
71,38829,658385
49,202
49,181
20
44,581
4,057
1,144
7,042
5,493
24
－
15,624
－
4,319
6,875
87,21818,891
5,388
5,976
6,647
879
689,056
54,113501,181
126,371
166,137
106,399
73,651
28,357264
44,65544,643
12
39,640
4,216
－
1,498
4,977
0
225
16,013
279
4,271
8,158
88,477
19,282
5,488
6,216
6,677
899
693,237
56,469

2
195
42
240

288
－
－
288

180
71
14,176－
14,42839,925547
141
13,334
3
14,02542,731

13,453(10,202)3,251
36,674

11,374(9,511)
1,862
40,868

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 Business Act of Japan and its related rules and regulations and in conformity with accounting principles
generally accepted in Japan, which are different in certain respects from accounting principles generally accepted incountries and jurisdictions other than Japan.
In addition, the notes to the non-consolidated financial statements include information which is not required
under accounting principles generally accepted in Japan but is presented herein as additional information.
Amounts of less than one million yen have been 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 tosecurities, 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 subsidiaries and affiliates are stated at cost, cost being determined by the moving averagemethod.
v) Available-for-sale securities with fair market value are stated at fair market value based on the market prices
at the end of the fiscal year. Costs of their sales are determined by the moving average method. Net
unrealized gains or losses on these available-for-sale securities, net of taxes, are recorded as a separate
component of net assets.
Available-for-sale securities 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 of interest. Such bonds are stated at amortized cost under the straight-line method, cost being
determined by the moving average method.
(2) Derivative instruments are stated at fair market value.
(3) The Company revalued the land used in the operations 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 therevaluation, net of related taxes, is recorded as revaluation reserve for land as a separate component of net
assets and the related tax is recorded 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 Law:
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 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.
13

Fukoku Mutual Life Insurance Company

Other tangible fixed assets acquired for ¥100,000 or more but less than ¥200,000 are depreciated equally overthree 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
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 ofcredits after the direct write-off described below and the deductions of the amount expected to be collected
through the disposal of collateral or the execution of guarantees.
ii) For the credits of borrowers who are not currently bankrupt but have a high possibility of bankruptcy(hereinafter called “not currently bankrupt borrowers”), the Company provides the amounts deemed asnecessary considering the borrowers’ ability to pay, within the amounts after deductions of the amount
expected to be collected through the disposal of collateral or the execution of guarantees.
iii) For the credits of borrowers other than the above, the Company provides the amounts calculated bymultiplying 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 selfassessment on credit quality. The results of the assessment are reviewed by the audit department, which is
independent of business-related divisions. Subsequently, the allowance for possible loan losses is provided basedon the results of these assessments.
For the credits of legally bankrupt borrowers and substantially bankrupt borrowers, the amounts remaining
after deductions of collateral value or the amounts collectible through the execution of guarantees are written-off
directly from the borrowers’ balances as the estimated uncollectible amounts. The amount written-off as ofMarch 31, 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 ................
• 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 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 theinterest allocated over the lease term from the lease fee received.
(10) Hedge accounting is based on "Accounting Standards for Financial Instruments" (ASBJ Statement No. 10,
August 11, 2006). The Company applies a fair value hedge accounting as a hedge against the risk of foreignexchange fluctuation in relation to bonds denominated in foreign currencies and against the risk of pricefluctuation in relation to domestic stocks, and a designated hedge accounting (“Furiate shori”) for foreign
currency swaps as a hedge against the risk of foreign exchange fluctuation in relation to bonds denominated inforeign 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) 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.

14

Fukoku Mutual Life Insurance Company

(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, are deferred as prepaid expenses and amortized equally over five years. Consumption taxes otherthan deferred consumption 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
the following method:i) In regard to the policies subject to the standard policy reserve, the method as prescribed by theCommissioner of 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,
the Company includes additional funded policy reserves as follows.
Among individual annuity insurance policies with an assumed interest rate of 5.00% or higher, policies
that have an annuity commencement date on or prior to March 31, 2018 (excluding wife’s annuity insurance
additional rider), the Company reduced the assumed interest rate to 1.00% and funded additional policy
reserves. At the end of the fiscal year ended March 31, 2018, the balance of these policy reserves was ¥73,222
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. At the end of the fiscal year ended March 31, 2018, the balance of these policy reserves was ¥5,628
million.
Of the above, the amount funded at the end of the fiscal year ended March 31, 2018 was ¥13,574 million.
As a result, compared to the amount without this additional funding, provision of policy reserve increased¥13,574 million, while ordinary profit and surplus before income taxes decreased ¥13,574 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 policyreserve-matching bonds in accordance with “Temporary Treatment of Accounting and Auditing Concerning
Policy-reserve-matching Bonds in Insurance Industry” (Industry Audit Committee Report No. 21 issued by theJapanese Institute of Certified Public Accountants on November 16, 2000).
2. Asset management of the general accounts other than the separate accounts stipulated in Article 118 Paragraph 1 ofthe Insurance Business Act is conducted on the principle of prudent and profitable investments, considering public
and social responsibilities of the insurance business. Based on this policy, the Company allocates the fund, securing
its liquidity, from the medium-to-long term viewpoints. The Company is diversifying investments in assets such as
foreign securities, stocks and real estates within acceptable risks in order to enhance the profitability, although yendenominated interest bearing assets including debt securities such as Japanese government bonds and loans are thecores of the portfolios under the asset liability management. Derivatives are mainly used to hedge the market risk
regarding spot-priced assets and liabilities. Major financial instruments including securities, loans and derivatives
are exposed to market risk and credit risk.
The Company manages its asset management risk by establishing internal control systems including various
rules pursuant to the “Three Basic Rules related to Enterprise Risk Management” established by the Board of
Directors. Specifically, the Company eliminates excessive risk deviating from the basic principle and secures thesafety of the assets by utilizing control functions of the Financial and Investment Risk Management Department
towards the asset management sections, monitoring the status of market risk and credit risk periodically on a daily
or monthly basis. In addition, the Company quantifies the market risk and credit risk using value-at-risk (VaR)
method in order to control the possible maximum losses which may arise from the holding assets within a certain
range of risk buffers.
The carrying amounts, fair values and their related differences of major financial assets and liabilities in thegeneral account as of March 31, 2018 were as follows:

15

Fukoku Mutual Life Insurance Company

Carrying amount

Fair value(Millions of yen)
Difference

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

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

64,462¥64,462¥–64,46264,462–

176,000

176,000–

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

443

474

30

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

443

474

30

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

30,50230,502–

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

30,50230,502–

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

149,265

149,265–

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

758,872

897,574

138,702

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

973,736

1,134,148

160,412Available-for-sale securities...............................

3,404,811

3,404,811–

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

5,286,686

5,585,800

299,114

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

57,181

57,181(0 )Ordinary loans....................................................

536,553

558,957

22,404

Total loans..........................................................

593,734

616,138

22,404

Assets total.............................................................

6,151,829

6,473,379

321,549

Subordinated bonds*1.............................................

191,935

200,774

8,839

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

191,935

200,774

8,839

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

(534 )(534 )–

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

9,672

9,672

–

Call loans
Monetary claims bought:

Money held in trust:

Securities:

Loans:

Derivative instruments*2:

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

¥

9,138

¥

9,138

¥

–

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

(1) Cash, deposits (excluding financial instruments treated as securities based on “Accounting Standards for
Financial Instruments” (ASBJ Statement No.10)) and call loans:
The fair values of cash, deposits and call loans are based on their book values since fair values approximatebook values due to their short maturities.
(2) Securities including deposits and monetary claims bought which are treated as securities based on “AccountingStandards for Financial Instruments” (ASBJ Statement No.10) 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.
Investments in subsidiaries and affiliates, unlisted stocks and investments in partnerships whereby
partnership assets consist of unlisted stocks whose fair values are deemed extremely difficult to obtain, areexcluded from above securities. The carrying amounts of investments in subsidiaries and affiliates, unlisted
stocks and investments in partnerships were ¥64,837 million, ¥5,697 million, and ¥23,609 million as of March
31, 2018, respectively.

16

Fukoku Mutual Life Insurance Company

(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
and interest rate conditions since their repayment deadlines have not been set up due to the characteristics thatthe loans are limited to the amount of cash surrender values. Therefore, the book values are used as the fairvalues of policy loans.
The fair values of floating interest rate loans among the ordinary loans and monetary claims bought
treated as loans approximate the book values because the market interest rates are reflected in future cash flows
in a short period. Therefore, the fair values of floating interest rate loans and monetary claims bought treated asloans are based on their book values. The fair values of fixed interest rate loans are measured by discounting thefuture cash flows to the present values.
The fair values of loans from legally bankrupt borrowers, substantially bankrupt borrowers and not
currently bankrupt borrowers and monetary claims bought treated as loans are computed by deducting theamount of the allowance for possible loan losses from the book values before direct write-offs.
(4) Subordinated bonds:
Subordinated bonds issued by the Company are stated at 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. The Company holds investment and rental properties such as office buildings in Tokyo and other areas. The carrying
amounts and the fair values of investment and rental properties were ¥172,740 million and ¥295,454 million as ofMarch 31, 2018, respectively. The fair value is mainly based on the value calculated by the Company in accordancewith real estate appraisal standards which includes some adjustments using the reference prices.
The amount corresponding to asset retirement obligations included in the carrying amount of investment andrental properties was ¥841 million as of March 31, 2018.
4. The amount of securities lent under lending agreements was ¥254,467 million as of March 31, 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 ¥1,033 million as of March 31, 2018;i) The balance of credits to bankrupt borrowers was ¥168 million as of March 31, 2018.
ii) The balance of delinquent loans was ¥865 million as of March 31, 2018.
iii) There was no balance of delinquent loans past 3 months or more and restructured loans as ofMarch 31, 2018.
The direct write-offs related to loans decreased credits to bankrupt borrowers described above by ¥1 million as ofMarch 31, 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 orinterest on these loans is unlikely to be collected due to the significant delay in repayment of principal or interest
payment or for some other reasons.
Delinquent loans are credits 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 beensuspended and rescheduled to assist and support the borrowers in the restructuring of their business.
Delinquent loans past 3 months or more are loans for which interest payments or repayments of principal aredelinquent for 3 months or more from the due date under the terms of the related loan agreements, excluding thoseloans classified as credits to bankrupt borrowers and delinquent loans.
Restructured loans are loans for which certain concessions favorable to borrowers, such as interest reduction
or exemption, rescheduling of due date for repayments of principal or interest payment, waiver of claim or otherterms, have been negotiated for the purpose of assisting and supporting the borrowers in the restructuring of theirbusiness. This category excludes loans classified as credits to bankrupt borrowers, delinquent loans and delinquentloans past 3 months or more.

17

Fukoku Mutual Life Insurance Company

6. Accumulated depreciation of tangible fixed assets were ¥163,520 million as of March 31, 2018.
7. Total assets in separate accounts provided for in Article 118 of the Insurance Business Act were ¥82,347 million asof March 31, 2018. The amounts of separate account liabilities were the same as separate account assets.
8. The total amounts of receivables from/payables to subsidiaries were ¥2,466 million and ¥1,687 million as of March
31, 2018, respectively.
9. Deferred tax assets and deferred tax liabilities as of March 31, 2018 were ¥127,044 million and ¥133,230 million,
respectively. Valuation allowance for deferred tax assets was ¥4,547 million.
Major components of deferred tax assets were ¥79,506 million of policy reserves, ¥26,823 million of reservefor price fluctuation and ¥12,343 million of reserve for employees' retirement benefits as of March 31, 2018.
Major component of deferred tax liabilities was ¥128,972 million of net unrealized gains on available-for-salesecurities as of March 31, 2018.
The statutory tax rate and the actual effective tax rate for the year ended March 31, 2018 were 28.2% and4.4%, respectively. The difference between the statutory tax rate and the actual effective tax rate was attributable
mainly to -25.5% of reserve for dividends to the policyholders.
10. Changes in reserve for dividends to policyholders for the year ended March 31, 2018 were as follows:(Millions of yen)

Balance at the beginning of the fiscal year…..……….....................................

¥ 50,929

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

34,592

Dividend payments to policyholders during the fiscal year……………..........

(32,138)

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

12

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

¥ 53,395

11. The amount of stocks of subsidiaries was ¥64,837 million as of March 31, 2018.
12. Assets pledged as collateral as of March 31, 2018 were ¥25,447 million of securities and ¥1,378 million of bankdeposits. Secured debts as of March 31, 2018, were ¥5,174 million.
13. Reserve for outstanding claims for the reinsurance contracts provided in accordance with Article 71 Paragraph 1 of
the Enforcement Regulation of the Insurance Business Act (hereinafter called “reserve for outstanding claims forceded reinsurance”) was ¥10 million as of March 31, 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 ¥31 million as of March 31, 2018.
14. The total amounts of adjustment items for redemption of foundation funds and appropriation of net surplus definedin Article 30 Paragraph 2 of the Enforcement Regulation of the Insurance Business Act was ¥339,944 million as ofMarch 31, 2018.
15. There were unused commitment line agreements under which the Company is the lender of ¥2,490 million as ofMarch 31, 2018.
16. Repayments of subordinated bonds are subordinated to other obligations.
17. The future contribution to the Life Insurance Policyholders Protection Corporation of Japan under Article 259 of the
Insurance Business Act was estimated at ¥8,972 million as of March 31, 2018.
The contribution is recognized as operating expenses when contributed.
18. Matters Related to Employees’ Retirement Benefits as of March 31, 2018
(1) Overview of Employees’ Retirement Benefit Plan
As for a defined benefit plan for office-based employees, the Company has a defined benefit corporate pension
plan and retirement lump-sum payments. As for a defined contribution plan for these employees, the Company
also has a defined contribution pension plan.
18

Fukoku Mutual Life Insurance Company

As for a defined benefit plan for sales employees, the Company has retirement lump-sum payments.
The Company places a retirement benefit trust in relation to the retirement lump-sum grant plan forsales employees.
(2) Defined Benefit Plani) Reconciliation of beginning and end of balance of retirement benefit obligation(Millions of yen)

Retirement benefit obligation at the beginning of the fiscal year........................

¥ 85,277

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

3,493

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

511

Actuarial differences occurred during the fiscal year..........................................

1,232

Retirement benefit payments...............................................................................

(4,313)Retirement benefit obligation at the end of the fiscal year..................................

¥ 86,201ii) Reconciliation of beginning and end of balance of pension plan assets(Millions of yen)

Pension plan assets at the beginning of the fiscal year.........................................

¥ 46,654

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

732

Actuarial differences occurred during the fiscal year...........................................

3,386

Contributions by the employer.............................................................................

2,679

Retirement benefit payments................................................................................

(1,080 )Pension plan assets at the end of the fiscal year...................................................

¥ 52,372

iii) Reconciliation of retirement benefit obligation and pension plan assets with reserve for employees’
retirement benefits presented on the non-consolidated balance sheet(Millions of yen)a. Funded plan retirement benefit obligation........................................................

¥ 74,783

b. Pension plan assets............................................................................................

(52,372 )c. (a + b) ...............................................................................................................

22,410d. Unfunded plan retirement benefit obligation....................................................

11,417e. Unrecognized actuarial differences...................................................................

(8,657 )f. Unrecognized prior service cost........................................................................

247

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

¥ 25,417

iv) Breakdown of retirement benefit gains and losses(Millions of yen)

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

¥ 3,493

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

511

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

(732 )

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

2,345

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

(76 )Retirement benefit expenses related to defined benefit plan……........................

¥ 5,541

19

Fukoku Mutual Life Insurance Company

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

47.7%

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

32.9%

Foreign stocks…...................................................................................................

7.8%

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

7.5%

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

2.7%

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

1.4%

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

100.0%

Within the total of pension assets, 38.1% of this amount is accounted for by the retirement benefit trust
established in relation to the retirement lump-sum payments plan for sales employees.
vi) Method for setting the expected long-term rate of return
To set the expected long-term rate of return on pension plan assets, the Company takes into account thepresent and future allocation of pension plan assets, and the present and expected future long-term rate of
return on a variety of assets that makes up the pension assets.
vii) Underlying actuarial assumptions
Main underlying actuarial assumptions as of March 31, 2018, were as follows:
Discount rate..........................................................................................................

0.6%

Expected long-term rate of return on pension plan assets
Defined Benefit Plan........................................................................................

2.5%

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

0.0%(3) Defined Contribution Plan
The required contribution amount by the Company to the defined contribution plan was ¥213 million as ofMarch 31, 2018.

III. Notes to the Non-consolidated Statements of Operations
1. The total amounts of revenues and expenses in connection with subsidiaries were ¥780 million and ¥8,586 million
for the year ended March 31, 2018.
2. Major items of gains on sales of securities for the year ended March 31, 2018 were as follows:(Millions of yen)Domestic bonds....................................................................................................

¥ 4,903

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

1,798

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

8,578

3. Major items of losses on sales of securities for the year ended March 31, 2018 were as follows:(Millions of yen)Domestic bonds……………................................................................................

¥ 391

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

1,095

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

3,421

20

Fukoku Mutual Life Insurance Company

4. Major items of losses on valuation of securities for the year ended March 31, 2018 was as follows:(Millions of yen)Domestic stocks and others.................................................................................

¥0

5. For the year ended March 31, 2018, in calculating the reversal of reserve for outstanding claims, a provision ofreserves for outstanding claims reinsured of ¥7 million was added. In calculating the provision of policy reserves, aprovision of reserves for policy reserves reinsured of ¥0 million was deducted.

6. Major items of losses on trading securities for the year ended March 31, 2018 were as follows:(Millions of yen)Interest, dividends and other income...................................................................

¥ 5,647

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

(7,938)

7. Gains on money held in trust for the year ended March 31, 2018 included valuation gains of ¥0 million.

8. Losses on derivative instruments for the year ended March 31, 2018 included valuation losses of ¥454 million.

21

Fukoku Mutual Life Insurance Company

5. Breakdown of Ordinary Profits (Fundamental Profit)(Millions of yen)A

Fundamental profit
Capital gains
Gains on money held in trust, net

Year ended
March 31, 2017

Year ended
March 31, 2018

88,93897,495

21,492

16,916

－

1,636

－

－

Gains on sales of securities

14,473

15,280Gains on derivative instruments, net

7,018

－

Foreign exchange gains, net－－

Other capital gains－－

35,89828,361

Gains on trading securities, net

Capital losses
Losses on money held in trust, net

1,248

－

Losses on trading securities, net

13,507

7,145

Losses on sales of securities

5,493

4,977

Losses on valuation of securities

24

0

Losses on derivative instruments, net－

225

15,62416,013－－B(14,406)(11,444)

A+B

74,532

86,050

51

8

－

－

Reversal of contingency reserve－－

Reversal of specific allowance for possible loan losses

51

8

Others－－

20,47029,590－－20,46016,016

Provision of specific allowance for possible loan losses－－

Provision of allowance for specified overseas loans－－

Write-off of loans－－

Foreign exchange losses, net
Other capital losses
Net capital gains (losses)
Fundamental profit plus net capital gains (losses)
Non-recurring gains
Reinsurance income

Non-recurring losses
Reinsurance premiums
Provision for contingency reserve

Others
Non-recurring gains (losses)
Ordinary profits10

13,574C(20,418)(29,581)

A+B+C

54,11356,469Notes: 1. The following amounts in respect of gains / losses on money held in trust have been excluded from capital gains / losses
and included in fundamental profit due to their income nature (being interest and dividend income): ¥103 million in respectof the year ended March 31, 2017 and ¥132 million in respect of the year ended March 31, 2018.
Notes: 2. The following amounts in respect of gains / losses on trading securities have been excluded from capital gains / losses
and included in fundamental profit due to their income nature (being interest and dividend income): ¥6,464 million in respectof the year ended March 31, 2017 and ¥5,647 million in respect of the year ended March 31, 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

6. Non-consolidated Statements of Changes in Net Assets[For the year ended March 31, 2017](Millions of yen)Foundation funds, surplus and others
Surplus
Other surplus

Balance at the beginning of the fiscal year

Foundation
funds

Accumulated
foundation
funds
redeemedReserve forrevaluation

30,00086,000112

Legal reserve Reserve forfor future
redemption oflossesfoundation
funds

2,742

18,000Reserve fordividend
allowances

20,000Reserve foradvanced
Accumulated
depreciation
fund for priceof real estatefluctuation
for tax
purpose41,000266

Reserve for
specialaccount foradvanceddepreciationof real estate
for tax
purpose

Other
reserves

－

767

Total
foundation
funds, surplus
Total
surplus
Unappropriatedand others
surplus65,509148,284

264,397(35,236)(35,236)(35,236)(106)－

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

106

Additions to legal reserve for future losses
Additions to accumulated foundation
funds redeemed

20,000

Payment of interest on foundation funds
Net surplus for the fiscal year
Redemption of foundation funds－
20,000

(316)

(316)

(316)

36,67436,67436,674(6,000)－－(20,000)(20,000)(20,000)(20,000)

Additons to reserve for redemption offoundation funds

6,000

Reversal of reserve for redemption offoundation funds(20,000)

Additons to reserve for advanced
depreciation of real estate for tax purpose

2

(2)

－

－

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

(11)

11

－

－

(100)

－

－

20

20

20

Additons to reserve for special account foradvanced depreciation of real estate
for tax purpose

100

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

(20,000)

20,000－106(14,000)

－

－

(8)

100

－

(5,055)(18,857)(18,857)

Balance at the end of the fiscal year

10,000106,000

112

2,849

4,000

20,00041,000

257

100

767

60,453

129,427

245,539

Valuation and translation adjustments
Net
unrealized
Revaluation
gains (losses)
reserve foron availableland, net offor-saletax
securities, netof taxBalance at the beginning of the fiscal year

338,421

4,128

Total
valuation andtranslation
adjustments

Total
net assets

342,549

606,947

Changes in the fiscal year
Additions to reserve for dividends
to policyholders(35,236)－

Additions to legal reserve for future losses
Additions to accumulated foundation
funds redeemed

20,000(316)

Payment of interest on foundation funds
Net surplus for the fiscal year

36,674

Redemption of foundation funds(20,000)

Additons to reserve for redemption offoundation funds－

Reversal of reserve for redemption offoundation funds(20,000)

Additons to reserve for advanced
depreciation of real estate for tax purpose－

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

Additons to reserve for special account foradvanced depreciation of real estate
for tax purpose－

Reversal of revaluation reserve
for land, net of tax

20

Net changes, excluding foundation funds,
surplus and others(4,876)(20)(4,896)(4,896)

Total changes in the fiscal year

(4,876)(20)(4,896)(23,754)

333,545

4,107

337,652

583,192

Balance at the end of the fiscal year

23

Fukoku Mutual Life Insurance Company

[For the year ended March 31, 2018](Millions of yen)Foundation funds, surplus and others
Surplus
Other surplus

Balance at the beginning of the fiscal year

Foundation
funds

Accumulated
foundation
funds
redeemedReserve forrevaluation

10,000106,000

112

Legal reserve Reserve forfor future
redemption oflossesfoundation
funds

2,849

4,000

Reserve fordividend
allowances

20,000Reserve foradvanced
Accumulated
depreciation
fund for priceof real estatefluctuation
for tax
purpose41,000257

Reserve for
specialaccount foradvanceddepreciationof real estate
for tax
purpose

Other
reserves

100

767

Total
foundation
funds, surplus
Total
surplus
Unappropriatedand others
surplus60,453

129,427

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

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

105

Additions to legal reserve for future losses
Payment of interest on foundation funds
Net surplus for the fiscal year
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 accountfor advanced depreciation of real estate
for tax purpose(100)

Reversal of revaluation reserve
for land, net of tax

(105)

－

－

(100)

(100)

(100)

40,86840,86840,868(2,000)

－

－

1

－

－

100

－

－

(65)

(65)

(65)

Net changes, excluding foundation funds,
surplus and others
Total changes in the fiscal year
Balance at the end of the fiscal year

－

－

－

105

2,000

－

－

(1)

(100)

－

4,107

6,110

6,110

10,000106,000

112

2,954

6,000

20,00041,000

255

－

767

64,561

135,538

251,650

Valuation and translation adjustments
Net
unrealized
Revaluation
gains (losses)
reserve foron availableland, net offor-saletax
securities, netof taxBalance at the beginning of the fiscal year

333,545

4,107

Total
valuation andtranslation
adjustments

Total
net assets

337,652

583,192

Changes in the fiscal year
Additions to reserve for dividends
to policyholders(34,592)－

Additions to legal reserve for future losses(100)

Payment of interest on foundation funds

40,868Net surplus for the fiscal year
Additons to reserve for redemption offoundation funds－

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

Reversal of reserve for special accountfor advanced depreciation of real estate
for tax purpose－

Reversal of revaluation reserve
for land, net of tax(65)

Net changes, excluding foundation funds,
surplus and others

2,113

65

2,178

2,178

Total changes in the fiscal year

2,113

65

2,178

8,289

335,658

4,173

339,831591,482

Balance at the end of the fiscal year

24

Fukoku Mutual Life Insurance Company

7. Non-consolidated Statements of Surplus(Millions of Yen)

Year ended March 31, 2017 Year ended March 31, 2018

Unappropriated surplus

60,45364,561

102

45

1

45

100

－

Total

60,55564,606

Appropriation of surplus

36,797

40,848Reserve for dividends to policyholders

34,592

38,630Net surplus

2,205

2,217

Legal reserve for future losses

105

117

Interest payment for foundation funds

100

100

2,000

2,000

2,000

2,000

23,75823,758

Reversal of voluntary surplus reserve
Reversal of reserve for advanced depreciationof real estate for tax purpose
Reversal of reserve for special accountfor advanced depreciation of real estate for tax purpose

Voluntary surplus reserve
Reserve for redemption of foundation funds
Unappropriated surplus carried forward

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

25

Fukoku Mutual Life Insurance Company

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

As of March 31, 2017

As of March 31, 2018

Claims against bankrupt and quasi-bankrupt obligors

244

181

Claims with collection risk

878

859

Claims for special attention

－

－

1,123

1,040

[0.17%][0.12%]

668,392

850,425

669,516

851,465

Subtotal[Percentage of total]
Claims against normal obligors
Total

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 witha concessionary interest rate, as well as loans with renegotiated conditions in favour of the borrower, including renegotiated schedule
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.

26

Fukoku Mutual Life Insurance Company

9. Risk-monitored Loans(Millions of yen)

As of March 31, 2017

As of March 31, 2018

Credits to bankrupt borrowers

230

168

Delinquent loans

884

865

Delinquent loans past three months or more－－

Restructured loans

－

－

1,115

1,033

[0.18%][0.17%]

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’s balanceas the estimated uncollectible amounts. The amounts written-off related to credits to bankrupt borrowers were ¥1 million as ofMarch 31, 2017 and ¥1 million as of March 31, 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
to assist 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 tobankrupt 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.

27

Fukoku Mutual Life Insurance Company

10. Solvency Margin Ratio(Millions of yen)

As ofMarch 31, 2017

As ofMarch 31, 2018

1,414,023

1,475,658

Foundation funds and surplus

208,227

210,194

Reserve for price fluctuation

82,464

95,798Contingency reserve

171,033

187,050

1,213

1,501

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

415,287

418,167

Net unrealized gains on real estate × 85%

111,340

122,692

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

237,089

252,776

Qualifying subordinated debt

191,935

191,935－－(46,783)(46,783)

42,21742,325

232,798

272,942

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
Deductible items
OthersTotal amount of risk

( R1 + R8 )2 + (R2 + R3 + R7 ) + R4
2

(B)

Insurance risk

R1

23,94923,252

3rd sector insurance risk

R8

9,740

9,687

Assumed investment yield risk

R232,83532,156

Minimum guarantee risk

R7

0

－

Investment risk

R3

192,279

232,788

Business risk

R4

5,176

5,957

1,214.8%

1,081.2%

Solvency margin ratio(A)(1/2) × (B)× 100

Notes: 1. The figures above are calculated based on Articles 86 and 87 of the Enforcement Regulation of the Insurance Business Act
and Ministry of Finance 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.

28

Fukoku Mutual Life Insurance Company

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

As of March 31, 2017

As of March 31, 2018

AmountAmountIndividual variable insurance－－

Individual variable annuities

39

33

Group annuities

75,63982,313

Total

75,67882,347(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, 2017

As of March 31, 2018

Number ofpolicies

AmountNumber ofpolicies

AmountIndividual variable annuities

13

33

10

27

Total

13

33

10

27

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

As of March 31, 2017

As of March 31, 2018

AmountPercentage

AmountPercentage

Cash, deposits, call loans

10

27.3%

7

23.1%

Securities

28

72.7%

26

76.9%

Domestic bonds

－

－

－

－

Domestic stocks

－

－

－

－

Foreign securities

－

－

－

－

Foreign bonds

－

－

－

－

Foreign stocks and other securities

－

－

－

－

28

72.7%

26

76.9%

Loans

－

－

－

－

Others－－－－Allowance for possible loan losses

－

－

－

－

Total

39

100.0%

33

100.0%

Other securities

29

Fukoku Mutual Life Insurance Company

(iii) Investment Income and Expenses of Separate Account for Individual Variable Annuities(Millions of yen)
Year ended March 31, 2017

Year ended March 31, 2018

AmountAmountInterest, dividends and other income

32

Gains on sales of securities－－

Gains on redemption of securities－－

Gains on valuation of securities

88Foreign exchange gains, net－－

Gains on derivative instruments－－

Other investment income

0－

Losses on sales of securities－－

Losses on redemption of securities－－

Losses on valuation of securities

10

8

Foreign exchange losses, net－－

Losses on derivative instruments－－

Other investment expenses

00

Net investment income

12(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, 2017

As of March 31, 2018

Carrying value on
the balance sheet

Net valuation
gains/losses
included in thestatementsof operations

Carrying value on
the balance sheet

Net valuation
gains/losses
included in thestatementsof operations

28

(2)

26

0

Trading securities

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

30

Fukoku Mutual Life Insurance Company

Rreference: 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, 2017
Net valuation gains/losses
included in the statementof operations

Carrying value on
the balance sheet

Trading securities

As of March 31, 2018280,236

Net valuation gains/losses
included in the statementof operations

Carrying value on
the balance sheet(16,953)257,729(5,292)

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, 2017
Book value

As of March 31, 2018

Gains/losses

Fair value

Gains

Book value

Fair value

Gains/losses

Losses

Gains

Losses764,914908,680

143,766

143,766－

758,872

897,574

138,702138,702－

Domestic bonds

739,830

882,479

142,649

142,649－

738,632

876,835

138,203138,203－

Foreign bonds

25,084

26,201

1,116

1,116

－

20,23920,738

498

498

－

Monetary claims bought

－

－

－

－

－

－

－

－

－

－

Negotiable certificate of deposits

－

－

－

－

－

－

－

－

－

－

Others

－

－

－

－

－

－

－

－

－

－

1,008,212

1,166,744

158,531

161,427

2,895

973,736

1,134,148

160,412

162,375

1,962

1,002,413

1,160,832

158,418

161,313

2,895

971,937

1,132,289

160,352

162,315

1,962

5,799

5,912

113

113

－

1,799

1,859

59

59

－

－

－

－

－

－

－

－

－

－

－

2,796,789

3,256,735

459,945484,808

24,862

2,941,466

3,404,811

463,345531,772

68,427

Domestic bonds

997,892

1,067,639

69,74674,152

4,405

1,023,447

1,080,932

57,48467,947

10,462

Domestic stocks

302,413587,201

284,787

289,0234,235

305,353

671,850

366,497

370,2783,780

Foreign securities

1,426,510

1,516,052

89,542

104,688

15,146

1,538,185

1,558,823

20,63773,35952,721

Foreign bonds

1,207,319

1,268,525

61,20573,765

12,5591,290,483

1,290,268(214)

46,42546,640219,190

247,527

28,33630,922

2,586

247,701

268,554

20,852

26,933

6,081

69,97385,842

15,868

16,944

1,075

74,48093,20518,72520,187

1,462

Money held in trust

－

－

－

－

－

－

－

－

－

－

Monetary claims bought

－

－

－

－

－

－

－

－

－

－

Negotiable certificate of deposits

－

－

－

－

－

－

－

－

－

－

Others

－

－

－

－

－

－

－

－

－

－

4,569,917

5,332,161

762,243790,001

27,757

4,674,074

5,436,534

762,459

832,849

70,390

Domestic bonds

2,740,136

3,110,951

370,814378,1157,300

2,734,016

3,090,057

356,040

368,465

12,425

Domestic stocks

302,413587,201

284,787

289,0234,235

305,353

671,850

366,497

370,2783,780

Foreign securities

1,457,394

1,548,166

90,772

105,918

15,146

1,560,224

1,581,421

21,19673,91852,721

Foreign bonds

1,238,203

1,300,639

62,43674,995

12,5591,312,522

1,312,866

343

46,984

46,640219,190

247,527

28,33630,922

2,586

247,701

268,554

20,852

26,933

6,081

69,97385,842

15,868

16,944

1,075

74,48093,20518,72520,187

1,462

Money held in trust

－

－

－

－

－

－

－

－

－

－

Monetary claims bought

－

－

－

－

－

－

－

－

－

－

Negotiable certificate of deposits

－

－

－

－

－

－

－

－

－

－

Others

－

－

－

－

－

－

－

－

－

－

Held-to-maturity debt securities

Policy-reserve-matching bonds
Domestic bonds
Foreign bonds
Investments in subsidiaries and affiliates
Available-for-sale securities

Foreign stocks and other securities
Other securities

Total

Foreign stocks and other securities
Other securities

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

[Held-to-maturity Debt Securities](Millions of yen)

As of March 31, 2017
Carrying
value on the Fair valuebalance sheet

Securities whose fair value exceeds
the carrying value on the balance sheet

As of March 31, 2018

Differences

Carrying
value on the Fair valuebalance sheet

Differences

764,914908,680

143,766

758,872

897,574

138,702

Domestic bonds

739,830

882,479

142,649

738,632

876,835

138,203

Foreign bonds

25,084

26,201

1,116

20,23920,738498

Monetary claims bought

－

－

－

－

－

－

Negotiable certificate of deposits

－

－

－

－

－

－

Others

－

－

－

－

－

－

－

－

－

－

－

－

Domestic bonds

－

－

－

－

－

－

Foreign bonds

－

－

－

－

－

－

Monetary claims bought

－

－

－

－

－

－

Negotiable certificate of deposits

－

－

－

－

－

－

Others

－

－

－

－

－

－

Securities whose fair value does not exceed
the carrying value on the balance sheet

31

Fukoku Mutual Life Insurance Company

[Policy-reserve-matching Bonds](Millions of yen)

As of March 31, 2017
Carrying
value on the Fair valuebalance sheet

Bonds whose fair value exceeds
the carrying value on the balance sheet

As of March 31, 2018

Differences

Carrying
value on the Fair valuebalance sheet

Differences

977,623

1,139,050

161,427

944,136

1,106,511

162,375

Domestic bonds

971,824

1,133,138

161,313942,337

1,104,652

162,315

Foreign bonds

5,799

5,912

113

1,799

1,859

59

－

－

－

－

－

－

30,58927,694(2,895)29,59927,636(1,962)OthersBonds whose fair value does not exceed
the carrying value on the balance sheet
Domestic bonds

30,58927,694(2,895)29,59927,636(1,962)Foreign bonds

－

－

－

－

－

－

Others

－

－

－

－

－

－

[Available-for-sale Securities](Millions of yen)

As of March 31, 2017

Securities whose carrying value on
the balance sheet exceeds the book value

As of March 31, 2018

Book value

Carrying
value on thebalance sheet

Differences

Book value

Carrying
value on thebalance sheet

Differences

531,772

2,097,492

2,582,300

484,808

1,561,884

2,093,656

Domestic bonds

813,898

888,050

74,152

713,551

781,499

67,947

Domestic stocks

260,158

549,181

289,023

274,161

644,439

370,278

Foreign securities

964,556

1,069,245

104,688518,137

591,497

73,359Foreign bonds

800,165

873,930

73,765360,156

406,581

46,425

Foreign stocks

164,391

195,31430,922

157,981

184,915

26,93358,87875,822

16,94456,032

76,22020,187

Money held in trust

－

－

－

－

－

－

Monetary claims bought

－

－

－

－

－

－

Negotiable certificate of deposits

－

－

－

－

－

－

Others

－

－

－

－

－

－

Other securities

Securities whose carrying value on
the balance sheet does not exceed the book value699,297

674,435(24,862) 1,379,581

1,311,154(68,427)

Domestic bonds

183,993

179,588(4,405)309,895

299,433(10,462)

Domestic stocks

42,25438,019(4,235)31,191

27,411(3,780)Foreign securities

461,953446,807(15,146) 1,020,047

967,325(52,721)

Foreign bonds

407,154394,594(12,559)

930,327

883,686(46,640)

Foreign stocks

54,79852,212(2,586)89,72083,639(6,081)

11,095

10,019(1,075)18,447

16,984(1,462)

Money held in trust

－

－

－

－

－

－

Monetary claims bought

－

－

－

－

－

－

Negotiable certificate of deposits

－

－

－

－

－

－

Others

－

－

－

－

－

－

Other securities

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

As of March 31, 2017

As of March 31, 2018－－

Unlisted foreign bonds－－

Others－－

Held-to-maturity bonds－－

Investments in subsidiaries and affiliates

64,83764,837Available-for-sale securities

22,04428,021

6,109

5,697

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

Unlisted foreign bonds－－

15,934

22,32386,881

92,858

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
Note: corresponding to these holdings by domestic and overseas investment partnerships (¥1,484 million as of March 31, 2017 and ¥1,285 million as of March 31, 2018) are included
Note: in their balance sheet carrying amounts.

32

Fukoku Mutual Life Insurance Company

Reference: Fair Value Information on Derivative Instruments
Reference: (Total of General Account and Separate Account)(i) Gains and Losses on Derivatives
As of March 31, 2017

(Millions of yen)Interestrelated

Currencyrelated

Stockrelated

Bondrelated

OthersTotal－

13,542

(440)

－

－

Hedge accounting not applied

(500)

1,116

－

(80)

－

535

Total

(500)

14,659

(440)

(80)

－

13,638Interestrelated

Currencyrelated

Hedge accounting applied

As of March 31, 2018

Stockrelated

Bondrelated

Others13,102

Total－

10,755(1,082)－－Hedge accounting not applied

(453)

17

－

(98)

－

(534)

Total

(453)

10,772(1,082)

(98)

－

9,138

Hedge accounting applied

9,672

Note: Gains and losses from applying fair value hedge accounting (currency- related gains of ¥13,542 million, stock-related losses ofNote: ¥440 million as of March 31, 2017, and currency-related gains of ¥10,755 million, stock-related losses of ¥1,082 million as ofMarch 31, 2018) included in gains and losses with hedge accounting applied, and gains and losses with hedge accounting
not applied are reported in the statements of operations.

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

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

As of March 31, 2018

Fair
value

Notional amount/contract value

Gains(losses)Over 1 year

Fair
value

Gains
(losses)Over-the-counter transactions
Yen interest rate
swaption contracts
Sold
Receipt fixed,
payment floating
Payment fixed,
receipt floating

BoughtReceipt fixed,
payment floating
Payment fixed,
receipt floating

－
[

－
－

－
[

[

[

－

－]
－

－]

－

－

[

－

－

[

－
160,000
192

(500)

[

－

－

－

－

－

142

(453)

－]

－

－]
320,000

692 ]

－
－

－

－]
320,000

－

－

－
[

－

－]

160,000

596 ]

.
Total

(500)

(453)

Note: Figures in [ ] are option premium which are included in the balance sheet.
[Currency-related Transactions](Millions of yen)

As of March 31, 2017
Notional amount/contract valueOver 1 year
Over-the-counter transactions
Currency forward contracts
Sold
US dollar
Canadian dollar
British Pound
Australian dollar
Euro
BoughtAs of March 31, 2018

Fair
value

Gains
(losses)

Notional amount/contract valueOver 1 year

Fair
value

Gains
(losses)

215,605
109,918
27,98430,646
26,26020,796

－
－
－
－
－
－

214,489
109,200
27,72330,803
26,15420,607

1,116
718
260
(157)
106
188

192,046
99,201
26,16726,04026,006
14,629

－
－
－
－
－
－

192,029
99,362
26,32726,027
25,691
14,619

17
(161)
(159)
12
314
10

－

－

－

－

－

－

－

－

Total

1,116

17

Notes: Forward exchange rates are used for exchange rates as of March 31, 2018.

33

Fukoku Mutual Life Insurance Company

[Stock-related Transactions]
No ending balance as of March 31, 2017 and March 31, 2018.

[Bond-related Transactions](Millions of yen)
As of March 31, 2018

As of March 31, 2017
Notional amount /contract value

Fair value

Notional amount /contract value

Gains(losses)Over 1 year

Fair value

Gains(losses)Over 1 year

Exchange-traded transactions
Foreign bond futures
Sold
Bought36,815－36,896

－

－

－

Total

(80)

21,714－

21,812

－

－

－

－

(80)

(98)
－
(98)

(iii) Hedge Accounting Applied[Interest-related Transactions]
No ending balance as of March 31, 2017 and March 31, 2018.
[Currency-related Transactions](Millions of yen)
As of March 31, 2017

Method ofhedge
accounting

Hedging instruments

Hedged items

Currency forward contracts

Foreigncurrencydenominatedbonds

Notional amount /contract value

Fair
value

Hedged items

Notional amount /contract valueOver 1 year

Fair
value

Over 1 year

966,610－953,067

US dollar

839,333－

Canadian dollar

44,327Euro

Foreigncurrencydenominatedbonds

615,948－

605,193827,099525,595－

516,082－

43,636

43,126－42,701

27,908－27,55924,628－24,149British Pound

46,454－

46,205

14,021－

14,113Australian dollar

8,586

－

8,567

8,575

－

8,146

－

－

－

－

－

－

Sold

Fair value
hedge
methodAs of March 31, 2018

BoughtTotal

Notes 1. Forward exchange rates are used for exchange rates as of March 31, 2018.
Notes 2. Regarding assets and liabilities which are denominated in foreign currencies but have fixed settlement in yen under currency forward
Notes 2. contracts and are reported in yen amounts in the balance sheet, those currency forward contracts are excluded from the table above.
[Stock-related Transactions](Millions of yen)
As of March 31, 2017

Method ofhedge
accounting

Hedging instruments

Notional amount /contract value

Fair
value

Hedged items

Notional amount /contract valueOver 1 year
Stock forward contracts

Fair value
hedge
methodHedged items

As of March 31, 2018
Fair
value

Over 1 year

Domestic
stocksDomestic
stocks

Sold

517

517

958

1,153

1,153

2,235

Bought

－

－

－

－

－

－

Total

[Bond-related Transactions]No
No endingending balancebalance as
as ofof March
March 31,
31, 2017
2017 andand September
March 31, 30,
2018.
2017.

34

Fukoku Mutual Life Insurance Company

12. Status of the Company, Subsidiaries and Affiliates(1) Selected Financial Data
(100 millions of yen)

Year ended
March 31, 2017

Year ended
March 31, 2018

Ordinary revenues

8,429

8,064

Ordinary profits

568

583

Net surplus attributable to the parent company

374

411

Comprehensive income

308

466

As of
March 31, 2017

Total assets
Solvency margin ratio

As ofMarch 31, 201884,32984,8881,257.3%

1,127.4%(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

35

Fukoku Mutual Life Insurance Company

(3) Consolidated Balance Sheets(Millions of yen)
As ofMarch 31, 2017

As ofMarch 31, 2018

As ofMarch 31, 2017

As ofMarch 31, 2018

7,438,936

7,467,875

22,22322,166

7,365,185

7,391,773

Liabilities:

Assets:

Policy reserves

Cash and deposits

136,494

157,703

Call loans

193,000

176,000

753

443

29,78731,502

Reserve for dividends to policyholders

50,92953,395

7,130,780

7,203,196

Reserve for dividends to policyholders(subsidiary)

598

539

Loans

631,109597,285

Agency payables

98

70

Tangible fixed assets

219,873

218,895

Reinsurance payables

79

75

Land

125,276

125,278

Subordinated bonds

191,935

191,935

Buildings

88,21286,548Other liabilities

46,00659,5091,565

Net defined benefit liabilities

38,76734,0192,052

Reserve for price fluctuation

91,827

105,521

3,230

3,450

Deferred tax liabilities

16,233

8,875

26,32638,056

Deferred tax liabilities for land revaluation

14,265

14,241

24,643

Total liabilities

7,838,150

7,882,122

Monetary claims bought
Money held in trust
Securities

Lease assets
Construction in progress
Other tangible fixed assets
Intangible fixed assets
Software

2,013
1,140

11,316

Reserve for outstanding claims
Policy reserve

Net assets:

Goodwill

801

37

Lease assets

210

11,226

Foundation funds

10,00010,0002,148

Accumulated foundation funds redeemed

106,000

106,000

Other intangible fixed assets
Agency receivables
Reinsurance receivables
Other assets

13,9974
200
66,237

0

Reserve for revaluation

112

112

221

Consolidated surplus

133,217

139,621

67,341

Total foundation funds, surplus and others

249,329

255,733

342,470

344,585

Net defined benefit asset

42

107

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

Deferred tax assets

153

166

Revaluation reserve for land, net of tax

4,107

4,173

(1,776)(2,049)Foreign currency translation adjustment

Allowance for possible loan losses

(433)

(377)

Accumulated remeasurementsof defined benefit plans(9,240)(6,055)

Total accumulated other comprehensive income

336,904

342,326

8,603

8,690

594,837

606,750

8,432,988

8,488,872

Non-controlling interests
Total net assets
Total assets

8,432,988

8,488,872

36

Total liabilities and net assets

Fukoku Mutual Life Insurance Company

(4) Consolidated Statements of Operations and Comprehensive Income[Consolidated Statements of Operations](Millions of yen)
Year ended March 31, 2017

Year ended March 31, 2018

Premium and other income

648,744597,178

Investment income

185,088

199,395

Interest, dividends and other income

158,645

173,481

Ordinary revenues:

－

1,769

Gains on sales of securities

15,178

16,780Gains on derivative instruments, net

7,018

－
－

Gains on money held in trust, net

Reversal of allowance for possible loan losses

90

Other investment income
Gains on separate accounts, net

114

811

4,041

6,553

Other ordinary revenues

9,082

9,890

Total ordinary revenues

842,915

806,464

Claims and other payments

546,696

561,881

Claims109,450

132,639

Annuities

175,156

167,565

Benefits

121,841

119,468

Surrenders

109,934

113,367

Other payments

30,314

28,840

Provision of policy reserve and others

77,601

26,600

Provision of policy reserve

77,58026,588Provision of interest portion of reserve for dividends to policyholders

20

12Provision of interest portion of reserve for dividends to policyholders (subsidiary)00Investment expenses

43,371

38,278Interest expenses

4,061

4,232

Losses on money held in trust, net

1,144

－

Losses on trading securities, net

7,042

1,498

Losses on sales of securities

5,493

4,977

Ordinary expenses:

Losses on valuation of securities

24

0

Losses on derivative instruments, net－

225

15,61916,012Foreign exchange losses, net
Provision of allowance for possible loan losses
Depreciation of real estate for rent and other assets

－

280

4,319

4,271

Other investment expenses

5,665

6,781

Operating expenses

97,21898,725

Other ordinary expenses

21,161

22,623

Total ordinary expenses

786,049

748,109

Ordinary profits

56,86658,354Extraordinary gains:
Gains on disposal of fixed assets

2

288

State subsidy and others

195

Others42－－

Total extraordinary gains

240

288

Losses on disposal of fixed assets

182

552

Impairment losses

71

141

14,538

13,693Extraordinary losses:

Provision of reserve for price fluctuation
Losses on advanced depreciation of real estate for tax purpose
Total extraordinary losses
Provision of reserve for dividends to policyholders (subsidiary)－3

14,792

14,390419

336

41,89543,916

Current

14,40912,377

Deferred(10,231)(9,722)

Surplus before income taxes
Income taxes：

Total income taxes

4,178

2,655

Net surplus

37,716

41,261

Net surplus attributable to non-controlling interests
Net surplus attributable to the parent company

236

100

37,47941,161

37

Fukoku Mutual Life Insurance Company

(4) Consolidated Statements of Operations and Comprehensive Income (Continued)[Consolidated Statements of Comprehensive Income](Millions of yen)

Year ended March 31, 2017

Year ended March 31, 2018

Net surplus

37,716

41,261Other comprehensive income(6,912)

5,356

Net unrealized gains (losses) on available-for-sale securities, net of tax(7,768)2,115

Revaluation reserve for land, net of tax

0－Foreign currency translation adjustments

(318)

56

Remeasurements of defined benefit plan, net of tax

1,174

3,184

Comprehensive income

30,804

46,618Comprehensive income attributable to the parent company

30,922

46,518(117)

100

Comprehensive income attributable to non-controlling interests

38

Fukoku Mutual Life Insurance Company

(5) Consolidated Statements of Cash Flows(Millions of yen)

Year ended March 31, 2017

Year ended March 31, 2018

41,895
4,319
7,518
71
763
(780)
77,580
20
0
419
(74)
(293)
14,538(158,645)(12,532)
4,061
15,616
110
(1)
(56)
(851)
(382)
(66)
(581)
16,337
8,987
166,861(3,812)(34,695)(472)(9,832)
127,036

43,916
4,271
8,830
141
763
(56)
26,588
12
0
336
273
(390)
13,693(173,481)(18,402)
4,232
16,012(63)
3(20)(1,875)
(28)
(4)
1,642
17,202(56,403)
180,718(4,491)(32,138)(395)(14,492)
72,79874
60－
56,742(944,430)
654,047(66,549)
123,722
1,311(5,309)(180,329)(53,292) ] [(9,040)11(11,089)(200,447)225
271(8,800)8,800(916,556)
821,149(83,642)
108,673
22,930(5,897)(52,845)
19,952 ](7,376)551(6,479)(66,150)

50,000－(20,000)
(316)
2,215
(85)
(501)
31,312(193)(42,292)
370,45870
328,236

30,000(30,000)
－
(100)
－
(13)
(1,526)(1,641)(643)
4,363
328,236－
332,599

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
Decrease (increase) in agency receivable
Decrease (increase) in reinsurance receivable
Decrease (increase) in other assets except from investing and financing activities
Increase (decrease) in agency payable
Increase (decrease) in reinsurance payable
Increase (decrease) in other liabilities except from investing and financing activities
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
Cash flows from financing activities:
Proceeds from issuance of subordinated bonds
Redemption of subordinated bonds
Redemption of foundation funds
Payment of interest on foundation funds
Proceeds from share issuance to non-controlling interests
Dividends paid to non-controlling interests
Payments for lease obligations
Net cash provided by (used in) financing activities
Effect of exchange rate changes on cash and cash equivalents
Net increase (decrease) in cash and cash equivalents
Cash and cash equivalents at the beginning of the fiscal year
Increase (decrease) in cash and cash equivalents resulting from change in scope of consolidation
Cash and cash equivalents at the end of the fiscal year

39

Fukoku Mutual Life Insurance Company

(6) Consolidated Statements of Changes in Net Assets[For the year ended March 31, 2017](Millions of yen)Foundation funds, surplus and others
Foundation
funds
Balance at the beginning of the fiscal year

30,000

Accumulated
foundation funds
redeemedReserve forrevaluation

86,000Consolidated surplus

Total foundation
funds, surplus andothers151,251

267,363(35,236)(35,236)

112

Changes in the fiscal year
Additions to reserve for dividends
to policyholders
Additions to accumulated foundation
funds redeemed

20,00020,000

Payment of interest on foundation funds

(316)

(316)

Net surplus attributable to the parent
company for the fiscal year

37,47937,479

Redemption of foundation funds(20,000)(20,000)

Reversal of reserve for redemption offoundation funds(20,000)(20,000)

Reversal of revaluation reserve
for land, net of tax

20

20

Change of scope of consolidation

30

30

Change in ownership interest of parent
due to transactions with
non-controlling interests

(12)

(12)

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

(20,000)

20,000－(18,033)(18,033)

Balance at the end of the fiscal year

10,000106,000

112

133,217249,329

Accumulated
remeasurements ofdefined benefit plans

Total accumulated
other comprehensive
income(10,414)343,482

Accumulated other comprehensive income

Balance at the beginning of the fiscal year

Net unrealized gains(losses) on availablefor-sale securities, netof tax

Revaluation reserve
for land, net of tax

349,884

4,128

Foreign currencytranslation
adjustments(115)

Non-controllinginterests

6,578

Total net assets

617,425

Changes in the fiscal year
Additions to reserve for dividends
to policyholders(35,236)

Additions to accumulated foundation
funds redeemed

20,000

Payment of interest on foundation funds(316)

Net surplus attributable to the parent
company for the fiscal year

37,479

Redemption of foundation funds(20,000)

Reversal of reserve for redemption offoundation funds(20,000)

Reversal of revaluation reserve
for land, net of tax

20

Change of scope of consolidation

30

Change in ownership interest of parent
due to transactions with
non-controlling interests(12)

Net changes, excluding foundation funds,
surplus and others(7,413)

(20)

(318)

1,174

(6,578)2,024(4,553)

Total changes in the fiscal year

(7,413)

(20)

(318)

1,174

(6,578)2,024(22,587)

Balance at the end of the fiscal year

342,470

4,107

(433)

(9,240)336,904

8,603

594,837

40

Fukoku Mutual Life Insurance Company

[For the year ended March 31, 2018](Millions of yen)Foundation funds, surplus and others
Accumulated
foundation funds
redeemed

Consolidated surplus

Total foundation
funds, surplus andothers133,217249,329(34,592)(34,592)

Payment of interest on foundation funds

(100)

(100)

Net surplus attributable to the parent
company for the fiscal year

41,161

41,161(65)(65)

Foundation
funds
Balance at the beginning of the fiscal year

10,000Reserve forrevaluation

106,000

112

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

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

－

－

－

6,403

6,403

10,000106,000

112

139,621

255,733

Accumulated
remeasurements ofdefined benefit plans

Total accumulated
other comprehensive
income(9,240)336,904

Accumulated other comprehensive income

Balance at the beginning of the fiscal year

Net unrealized gains(losses) on availablefor-sale securities, netof tax

Revaluation reserve
for land, net of tax

342,470

4,107

Foreign currencytranslation
adjustments(433)

Non-controllinginterests

8,603

Total net assets

594,837

Changes in the fiscal year
Additions to reserve for dividends
to policyholders(34,592)

Payment of interest on foundation funds(100)

Net surplus attributable to the parent
company for the fiscal year

41,161

Reversal of revaluation reserve
for land, net of tax(65)

Net changes, excluding foundation funds,
surplus and others

2,115

65

56

3,184

5,422

86

5,508

Total changes in the fiscal year

2,115

65

56

3,184

5,422

86

11,912

344,585

4,173

(377)

(6,055)342,326

8,690

606,750

Balance at the end of the fiscal year

41

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
Mutual Life 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
with accounting principles generally accepted in Japan, which are different in certain respects from accounting
principles generally accepted in countries and jurisdictions other than Japan.
In addition, the notes to the consolidated financial statements include information which is not required 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 March 31, 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 reasonablejudgement 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 theirimpact on net surplus attributable to the parent company and consolidated surplus, and also immaterial as awhole, therefore, application of equity method is not applied.
There are no affiliates for the year ended March 31, 2018.
(3) Fiscal Year of Consolidated Subsidiaries
Among the subsidiaries to be consolidated, fiscal year-end of overseas subsidiaries is December 31. For the
preparation of consolidated financial statements, financial statements as of that date are used and concerning any
important transaction taking place in between December 31 and the consolidated closing date, necessary
adjustments for consolidation are made.
(4) Amortization of Goodwill
Goodwill is amortized by the straight-line method over a period of 10 years and in case of the immaterial amountof goodwill, such amount is fully charged to operating expenses when incurred.

II. Notes to the Consolidated Balance Sheets
1. (1) The valuation of securities, including bank deposits and monetary claims bought which are equivalent tosecurities, 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).
42

Fukoku Mutual Life Insurance Company

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 fiscal year. Costs of their sales are determined by the moving average method. Net
unrealized gains or losses on these available-for-sale securities, net of taxes, are recorded as a separate
component of net assets.
Available-for-sale securities 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 of interest. Such bonds are stated at amortized cost under the straight-line method, cost being
determined by the moving average method.
(2) Derivative instruments are stated at fair market value.
(3) The Company revalued the land used in the operations 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 therevaluation, net of related taxes, is recorded as revaluation reserve for land as a separate component of net
assets and the related tax is recorded 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 overthree years.
(5) Assets and liabilities denominated in foreign currencies, except for investments in unconsolidated subsidiaries
and affiliates, 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
the date of acquisition.
(6) Allowance for possible loan losses is provided in accordance with the Company’s standards of self-assessment
and write-offs and reserves on credit quality:i) For the credits of borrowers who are legally bankrupt such as being in the proceedings of bankruptcy or civil
rehabilitation (hereinafter called “legally bankrupt borrowers”) and who are substantially bankrupt(hereinafter called “substantially bankrupt borrowers”), the Company provides the remaining amount ofcredits after the direct write-off described below and the deductions of the amount expected to be collected
through the disposal of collateral or the execution of guarantees.
ii) For the credits of borrowers who are not currently bankrupt but have a high possibility of bankruptcy(hereinafter called “not currently bankrupt borrowers”), the Company provides the amounts deemed asnecessary considering the borrowers’ ability to pay, within the amounts after deductions of the amount
expected to be collected through the disposal of collateral or the execution of guarantees.
iii) For the credits of borrowers other than the above, the Company provides the amounts calculated bymultiplying 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 selfassessment on credit quality. The results of the assessment are reviewed by the audit department, which is
independent of business-related divisions. Subsequently, the allowance for possible loan losses is provided basedon the results of these assessments.
43

Fukoku Mutual Life Insurance Company

For the credits of legally bankrupt borrowers and substantially bankrupt borrowers, the amounts remaining
after deductions of collateral value or the amounts collectible through the execution of guarantees are written-off
directly from the borrowers’ balances as the estimated uncollectible amounts. The amount written-off as ofMarch 31, 2018 was ¥1 million.
(7) Net defined benefit liabilities, supposed to be incurred as of March 31, 2018, are presented for the employees'
retirement benefits after deducting pension plan assets from retirement benefit obligations, based on estimatedamounts as of the balance sheet date.
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 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 theinterest allocated over the lease term from the lease fee received.
(10) Hedge accounting is based on "Accounting Standards for Financial Instruments" (ASBJ Statement No. 10,
August 11, 2006). The Company applies a fair value hedge accounting as a hedge against the risk of foreignexchange fluctuation in relation to bonds denominated in foreign currencies and against the risk of pricefluctuation in relation to domestic stocks, and a designated hedge accounting (“Furiate shori”) for foreign
currency swaps as a hedge against the risk of foreign exchange fluctuation in relation to bonds denominated inforeign 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, are deferred as prepaid expenses and amortized equally over five years. Consumption taxes otherthan deferred consumption taxes are recognized as an expense when incurred.
(12) Policy reserve is based on Article 116 of the Insurance Business Act, and the premium reserve is calculated by
the following method:i) In regard to the policies subject to the standard policy reserve, the method as prescribed by theCommissioner of 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,
the Company includes additional funded policy reserves as follows.
Among individual annuity insurance policies with an assumed interest rate of 5.00% or higher, policies thathave an annuity commencement date on or prior to March 31, 2018 (excluding wife’s annuity insurance
additional rider), the Company reduced the assumed interest rate to 1.00% and funded additional policy
reserves. At the end of the fiscal year ended March 31, 2018, the balance of these policy reserves was ¥73,222
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. At the end of the fiscal year ended March 31, 2018, the balance of these policy reserves was ¥5,628
million.
Of the above, the amount funded at the end of the fiscal year ended March 31, 2018 was ¥13,574 million.
As a result, compared to the amount without this additional funding, provision of policy reserve increased¥13,574 million, while ordinary profit and surplus before income taxes decreased ¥13,574 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.

44

Fukoku Mutual Life Insurance Company

(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 policyreserve-matching 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 the Japanese Institute of Certified Public Accountants on November 16, 2000).
2. Asset management of the general accounts other than the separate accounts stipulated in Article 118 Paragraph 1 ofthe Insurance Business Act is conducted on the principle of prudent and profitable investments by the Company,
considering public and social responsibilities of the insurance business. Based on this policy, the Company allocatesthe fund, securing its liquidity, from the medium-to-long term viewpoints. The Company is diversifying investments
in assets such as foreign securities, stocks and real estates within the acceptable range of risk in order to enhance theprofitability, although yen-denominated interest bearing assets including debt securities such as Japanese
government bonds and loans are the cores of the portfolios under the asset liability management. Derivatives aremainly used to hedge the market risk regarding spot-priced assets and liabilities. Major financial instruments
including securities, loans and derivatives are exposed to market risk and credit risk.
The Company manages its asset management risk by establishing internal control systems including various
rules pursuant to the “Three Basic Rules related to Enterprise Risk Management” established by the Board of
Directors. Specifically, the Company eliminates excessive risk deviating from the basic principle and secures thesafety of the assets by utilizing control functions of the Financial and Investment Risk Management Department
towards the asset management sections, monitoring the status of market risk and credit risk periodically on a daily
or monthly basis. In addition, the Company quantifies the market risk and credit risk using value-at-risk (VaR)
method in order to control the possible maximum losses which may arise from the holding assets within a certain
range of risk buffers.
The carrying amounts, fair values and their related differences of major financial assets and liabilities in thegeneral account as of March 31, 2018 were as follows:
Carrying amount

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

¥

155,905
155,905

Total cash and deposits…..................................
Call loans

Fair value(Millions of yen)
Difference¥¥

155,905
155,905––

176,000
43,274
123,781443

176,000
43,274
123,781
474

30

443

474

30

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

30,50230,502–

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

30,50230,502–

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

149,265

149,265–

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

1,237,461

1,475,318

237,857

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

2,011,805

2,254,443

242,638

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

3,696,942

3,696,942–

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

7,095,474

7,575,970

480,495

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

60,73260,732(0 )Ordinary loans....................................................

536,553

558,957

22,404

Monetary claims bought:
Claims treated as loans……..............................
Total monetary claims bought...............

–

Money held in trust:

Securities:

Loans:

Total loans..........................................................

597,285

619,690

22,404

Assets total.............................................................

8,055,612

8,558,543

502,930

Subordinated bonds*1.............................................

191,935

200,774

8,839

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

191,935

200,774

8,839

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

(534 )(534 )–

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

9,672

9,672

–

Derivative instruments*2:

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

¥
45

9,138

¥

9,138

¥

–

Fukoku Mutual Life Insurance Company

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

(1) Cash, deposits (excluding financial instruments treated as securities based on “Accounting Standards for
Financial Instruments” (ASBJ Statement No.10)) and call loans:
The fair values of cash, deposits and call loans are based on their book values since fair values approximatebook values due to their short maturities.
(2) Securities including deposits and monetary claims bought which are treated as securities based on “AccountingStandards for Financial Instruments” (ASBJ Statement No.10) 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.
Investments in unconsolidated subsidiaries and affiliates, unlisted stocks and investments in partnerships
whereby partnership assets consist of unlisted stocks whose fair values are deemed extremely difficult to obtain,
are excluded from above securities. The carrying amounts of investments in unconsolidated subsidiaries andaffiliates, unlisted stocks and investments in partnerships were ¥454 million, ¥5,697 million, and ¥23,609
million as of March 31, 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
and interest rate conditions since their repayment deadlines have not been set up due to the characteristics thatthe loans are limited to the amount of cash surrender values. Therefore, the book values are used as the fairvalues of policy loans.
The fair values of floating interest rate loans among the ordinary loans and monetary claims bought
treated as loans approximate the book values because the market interest rates are reflected in future cash flows
in a short period. Therefore, the fair values of floating interest rate loans and monetary claims bought treated asloans are based on their book values. The fair values of fixed interest rate loans are measured by discounting thefuture cash flows to the present values.
The fair values of loans from legally bankrupt borrowers, substantially bankrupt borrowers and not
currently bankrupt borrowers and monetary claims bought treated as loans are computed by deducting theamount of the allowance for possible loan losses from the book values before direct write-offs.
(4) Subordinated bonds:
Subordinated bonds issued by the Company are stated at 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. The Company holds investment and rental properties such as office buildings in Tokyo and other areas. The carrying
amounts and the fair values of investment and rental properties were ¥171,415 million and ¥294,210 million as ofMarch 31, 2018, respectively. The fair value is mainly based on the value calculated by the Company in accordancewith real estate appraisal standards which includes some adjustments using the reference prices.
The amount corresponding to asset retirement obligations included in the carrying amount of investment andrental properties was ¥839 million as of March 31, 2018.
4. The amount of securities lent under lending agreements was ¥254,467 million as of March 31, 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 ¥1,045 million as of March 31, 2018;i) The balance of credits to bankrupt borrowers was ¥180 million as of March 31, 2018.
ii) The balance of delinquent loans was ¥865 million as of March 31, 2018.
iii) There was no balance of delinquent loans past 3 months or more and restructured loans as ofMarch 31, 2018.
46

Fukoku Mutual Life Insurance Company

The direct write-offs related to loans decreased credits to bankrupt borrowers described above by ¥1 million as ofMarch 31, 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 orinterest on these loans is unlikely to be collected due to the significant delay in repayment of principal or interest
payment or for some other reasons.
Delinquent loans are credits 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 beensuspended and rescheduled to assist and support the borrowers in the restructuring of their business.
Delinquent loans past 3 months or more are loans for which interest payments or repayments of principal aredelinquent for 3 months or more from the due date under the terms of the related loan agreements, excluding thoseloans classified as credits to bankrupt borrowers and delinquent loans.
Restructured loans are loans for which certain concessions favorable to borrowers, such as interest reduction
or exemption, rescheduling of due date for repayments of principal or interest payment, waiver of claim or otherterms, have been negotiated for the purpose of assisting and supporting the borrowers in the restructuring of theirbusiness. This category excludes loans classified as credits to bankrupt borrowers, delinquent loans and delinquentloans past 3 months or more.
6. Accumulated depreciation of tangible fixed assets were ¥164,086 million as of March 31, 2018.
7. Total assets in separate accounts provided for in Article 118 of the Insurance Business Act were ¥82,347 million asof March 31, 2018. The amounts of separate account liabilities were the same as separate account assets.
8. The total amounts of receivables from/payables to unconsolidated subsidiaries were ¥2,338 million and ¥110 million
as of March 31, 2018, respectively.
9. Deferred tax assets and deferred tax liabilities as of March 31, 2018 were ¥133,323 million and ¥137,309 million,
respectively. Valuation allowance for deferred tax assets was ¥4,723 million.
Major components of deferred tax assets were ¥80,174 million of policy reserves, ¥29,546 million of reservefor price fluctuation and ¥14,756 million of net defined benefit liability as of March 31, 2018.
Major component of deferred tax liabilities was ¥132,998 million of net unrealized gains on available-for-salesecurities as of March 31, 2018.
The statutory tax rate and the actual effective tax rate for the year ended March 31, 2018 were 28.2% and6.0%, respectively. The difference between the statutory tax rate and the actual effective tax rate was attributable
mainly to -24.8% of reserve for dividends to the policyholders.
10. Changes in reserve for dividends to policyholders for the year ended March 31, 2018 were as follows:(Millions of yen)

Balance at the beginning of the fiscal year……….............................................

¥ 50,929

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

34,592

Dividend payments to policyholders during the fiscal year...............................

(32,138)

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

12

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

¥ 53,395

11. Changes in reserve for dividends to policyholders (Fukokushinrai Life Insurance Co., Ltd.) for the year ended
March 31, 2018 were as follows:(Millions of yen)

Balance at the beginning of the fiscal year.........................................................

¥ 598

Dividend payments to policyholders during the fiscal year...............................

(395)

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

0

Provision for reserve for dividends to policyholders.........................................

336

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

¥ 539

47

Fukoku Mutual Life Insurance Company

12. The amount of stocks of unconsolidated subsidiaries was ¥454 million as of March 31, 2018.
13. Assets pledged as collateral as of March 31, 2018 were ¥25,447 million of securities and ¥1,378 million of bankdeposits. Secured debts as of March 31, 2018, were ¥5,174 million.
14. Reserve for outstanding claims for the reinsurance contracts provided in accordance with Article 71 Paragraph 1 of
the Enforcement Regulation of the Insurance Business Act (hereinafter called “reserve for outstanding claims forceded reinsurance”) was ¥10 million as of March 31, 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 ¥53 million as of March 31, 2018.
15. There were unused commitment line agreements under which the Company is the lender of ¥2,490 million as ofMarch 31, 2018.
16. Repayments of subordinated bonds are subordinated to other obligations.
17. The future contribution to the Life Insurance Policyholders Protection Corporation of Japan under Article 259 of the
Insurance Business Act was estimated at ¥11,039 million as of March 31, 2018.
The contribution is recognized as operating expenses when contributed.
18. Matters Related to Employees’ Retirement Benefits as of March 31, 2018
(1) Overview of Employees’ Retirement Benefit Plan
As for a defined benefit plan for office-based employees, the Company and its consolidated subsidiaries have adefined benefit corporate pension plan and retirement lump-sum payments. As for a defined contribution planfor these employees, the Company also has a defined contribution pension plan.
As for a defined benefit plan for sales employees, the Company has retirement lump-sum payments.
The Company places a retirement benefit trust in relation to the retirement lump-sum grant plan for sales
employees.
(2) Defined Benefit Plani) Reconciliation of beginning and end of balance of retirement benefit obligation(Millions of yen)

Retirement benefit obligation at the beginning of the fiscal year.........................

¥ 85,446

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

3,548

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

511

Actuarial differences occurred during the fiscal year...........................................

1,232

Retirement benefit payments................................................................................

(4,317)Retirement benefit obligation at the end of the fiscal year....................................

¥ 86,420ii) Reconciliation of beginning and end of balance of pension plan assets(Millions of yen)

Pension plan assets at the beginning of the fiscal year..........................................

¥ 46,721

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

732

Actuarial differences occurred during the fiscal year............................................

3,386

Contributions by the employer..............................................................................

2,750

Retirement benefit payments.................................................................................

(1,081 )Others....................................................................................................................

0Pension plan assets at the end of the fiscal year....................................................

¥ 52,509

48

Fukoku Mutual Life Insurance Company

iii) Reconciliation of retirement benefit obligation and pension plan assets with net defined benefit liabilities
presented on the consolidated balance sheets(Millions of yen)a. Funded plan retirement benefit obligation........................................................

¥ 74,811

b. Pension plan assets............................................................................................

(52,509 )c. (a + b) ................................................................................................................

22,302d. Unfunded plan retirement benefit obligation.....................................................

11,608e. Net amount of liabilities and assets presented on the consolidatedbalance sheet.....................................................................................................

33,911

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

34,019g. Net defined benefit assets..................................................................................

(107 )

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

¥ 33,911iv) Breakdown of retirement benefit gains and losses(Millions of yen)

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

¥ 3,548

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

511

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

(732 )

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

2,345

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

(76 )Others.....................................................................................................................

(0 )Retirement benefit expenses related to defined benefit plan………….................

¥ 5,595v) Remeasurements of defined benefit plan
Remeasurements of defined benefit plan (before tax effects) comprised the following:(Millions of yen)Amortization of actuarial differences...................................................................

¥ 4,499

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

(76 )Total..........................................……....................................................................

¥ 4,422vi) Accumulated remeasurements of defined benefit plan
Accumulated remeasurements of defined benefit plan (before tax effects) comprised the following:(Millions of yen)

Unrecognized actuarial differences......................................................................

¥ (8,657 )Unrecognized prior service cost...........................................................................

247

Total..........................................……....................................................................

¥ (8,410 )vii) Breakdown of pension plan assets
The breakdown of asset categories as a percentage of total pension plan assets were as follows:
Domestic stocks...................................................................................................
47.6%
Life insurance general account.............................................................................

33.0%

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

7.8%

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

7.5%

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

2.7%

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

1.4%
100.0%

Within the total of pension assets, 38.0% of this amount is accounted for by the retirement benefit trust
established in relation to the retirement lump-sum payments plan for sales employees.
49

Fukoku Mutual Life Insurance Company

viii) Method for setting the expected long-term rate of return
To set the expected long-term rate of return on pension plan assets, the Company takes into account thepresent and future allocation of pension plan assets, and the present and expected future long-term rate of
return on a variety of assets that makes up the pension assets.
ix) Underlying actuarial assumptions
Main underlying actuarial assumptions as of March 31, 2018, were as follows:
Discount rate.........................................................................................................

0.6%

Expected long-term rate of return on pension plan assets
Defined Benefit Plan.........................................................................................

2.5%

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

0.0%(3) Defined Contribution Plan
The required contribution amount by the Company and its consolidated subsidiaries to the defined contribution
plan was ¥318million.

III. Notes to the Consolidated Statements of Operations
1. The total amounts of revenues and expenses in connection with unconsolidated subsidiaries were ¥95 million and¥2,027 million for the year ended March 31, 2018.
2. For the year ended March 31, 2018, in calculating the reversal of reserve for outstanding claims, a provision ofreserves for outstanding claims reinsured of ¥5 million was added. In calculating the provision of policy reserves, areversal of reserves for policy reserves reinsured of ¥0 million was added.

IV. Notes to the Consolidated Statements of Comprehensive Income
1. Other Comprehensive Income
The reclassification adjustments and tax effect amounts related to other comprehensive income for the year ended
March 31, 2018 were as follows:i) Net unrealized gains (losses) on available-for-sale securities, net of tax(Millions of yen)Amount incurred during the fiscal year...............................................................

¥ 20,802

Reclassification adjustments..............................................................................

(17,598 )Before tax adjustments.....................................................................................

3,204

Tax effects.........................................................................................................

(1,088 )Net unrealized gains (losses) on available-for-sale securities, net of tax…….

2,115ii) Foreign currency translation adjustments(Millions of yen)Amount incurred during the fiscal year..............................................................

¥ 56

Reclassification adjustments.............................................................................

–

Before tax adjustments....................................................................................

56

Tax effects.......................................................................................................

–

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

56

50

Fukoku Mutual Life Insurance Company

iii) Remeasurements of defined benefit plans, net of tax(Millions of yen)Amount incurred during the fiscal year..............................................................

¥2,153

Reclassification adjustments.............................................................................

2,269

Before tax adjustments....................................................................................

4,422

Tax effects.......................................................................................................

(1,238 )Remeasurements of defined benefit plans, net of tax.....................................

3,184

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

¥ 5,356

V. Notes to the Consolidated Statements of Cash Flows
1. Cash and cash equivalents as of March 31, 2018 consist of "Cash," "Deposits in transfer account," "Current
deposits," "Ordinary deposits," "Notice deposits," "Time deposits maturing within 3 months of the date ofacquisition," "Foreign currency deposits maturing within 3 months of the date of acquisition," "Negotiablecertificate of deposits maturing within 3 months of the date of acquisition," "Call loans" and "Monetary claimsbought maturing within 3 months of the date of acquisition."
2. Reconciliations of cash and cash equivalents in the consolidated statements of cash flows to the consolidatedbalance sheet accounts as of March 31, 2018 were as follows:(Millions of yen)

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

¥ 157,703

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

176,000

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

443

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

(100 )

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

(1,003 )Monetary claims bought maturing over 3 months of the date of acquisition………..…

(443 )Cash and cash equivalents...............................................................................................

¥ 332,599

51

Fukoku Mutual Life Insurance Company

(7) Risk-monitored Loans(Millions of yen)

As of March 31, 2017

As of March 31, 2018

Credits to bankrupt borrowers

239

180

Delinquent loans

884

865

Delinquent loans past three months or more－－

Restructured loans

－

－

1,124

1,045

[0.18%][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’s balanceas the estimated uncollectible amounts. The amounts written-off related to credits to bankrupt borrowers were ¥1 million as ofMarch, 2017 and ¥1 million as of March 31, 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
to assist 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 tobankrupt 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.

52

Fukoku Mutual Life Insurance Company

R
R895763142(8) Status of Insurance Claims Paying Ability of the Company and Insurance Subsidiaries(Millions of yen)

As ofMarch 31, 2017

As ofMarch 31, 2018

1,488,469

1,556,422

Foundation funds and surplus

220,040

223,166

Reserve for price fluctuation

91,827

105,521

Contingency reserve

173,088

189,211

－

－

1,213

1,502

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

427,019

429,908

Net unrealized gains on real estate × 85%

111,340

122,692

Sum of unrecognized actuarial differences and unrecognized prior service cost

(12,833)(8,410)

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

239,650

255,285

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 of solvency margin－－

Deductible items－－

45,18745,609236,754

276,097

Total solvency margin(A)

Catastrophe loss reserve
General allowance for possible loan losses

OthersTotal amount of risk

( ( R1 + R5 + R8 + R9 ) 2 + ( R 2 + R3 + R7 ) 2 + R 4 + R6
2

2

(B)

Insurance risk

R1

24,45923,756

General insurance risk

R5

－

－

Catastrophe risk

R6

－

－

3rd sector insurance risk

R8

9,851

9,798

Small amount and short-term insurance risk

R9

－

－

Assumed investment yield risk

R2

33,22532,542

Minimum guarantee risk

R7

0

－

Investment risk

R3

195,706

235,431

Business risk

R4

5,264

6,030

1,257.3%

1,127.4%

Solvency margin ratio
(A)

× 100

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

53

Fukoku Mutual Life Insurance Company

R
R895763142(9) Status of Insurance Claims Paying Ability of Insurance Subsidiaries(Solvency Margin Ratio)[Fukokushinrai Life Insurance Company](Millions of yen)
As ofMarch 31, 2017

As ofMarch 31, 2018

98,596100,176

Foundation funds and surplus

68,58469,434

Reserve for price fluctuation

9,363

9,722

Contingency reserve

2,054

2,161

0

0

13,061

13,064

－

－

2,561

2,509

Qualifying subordinated debt－－

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－－

Deductible items

－

－

2,970

3,284

21,403

21,150Total solvency margin(A)

General allowance for possible loan losses(Net unrealized gains (losses) on securities (before tax) and deferred hedge gains (losses)(before tax)) × 90%
Net unrealized gains on real estate × 85%
Excess amount of policy reserve based on full-time Zillmer method

OthersTotal amount of risk

( R1 + R8 ) + (R2 + R3 + R7 ) + R4
2

2

(B)

Insurance risk

R1

527

519

3rd sector insurance risk

R8

110

110

Assumed investment yield risk

R2

389

385

Minimum guarantee risk

R7

－

－

Investment risk

R320,572

20,328Business risk

R4

432

426

921.3%

947.2%

Solvency margin ratio
(A)

× 100

(1/2) × (B)Note: Above figures are calculated based on Articles 86 and 87 of the Enforcement Regulation of the Insurance Business Act and Ministry of Finance No.50, 1996.

54

Fukoku Mutual Life Insurance Company