May 25, 2017

Financial Results for the Fiscal Year Ended March 31, 2017
Fukoku Mutual Life Insurance Company (President: Yoshiteru Yoneyama) announces
financial results for the fiscal year ended March 31, 2017.

[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. 36

Attached: Supplementary Materials for the Fiscal Year Ended March 31, 2017

Fukoku Mutual Life Insurance Company

Financial Summary for the Fiscal Year Ended March 31, 2017
1. Business Highlights(1) Policies in Force, New Policies and Surrendered and Lapsed Policies(i) Policies in Force
As of March 31, 2016

As of March 31, 2017

Number of policies

Individual insurance

AmountNumber of policies(Thousands)

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

3,109

101.4

234,174

98.9

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

3,171

102.0

231,606

98.9
100.3

(Thousands)

715

96.8

27,833

96.9

719

100.5

27,903

3,825

100.5

262,008

98.7

3,890

101.7

259,50999.0

Group insurance－－

169,723

101.8

－

－

171,515101.1

Group annuities－－

21,18999.8－－

21,567

101.8

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, 2016

Number of policies(Thousands)

Individual insurance

AmountChanges(%, YoY)(100 millionsof yen)

358

101.0

Net increase by
conversion

New businessAmountChanges(%, YoY)

16,316104.3(100 millionsof yen)AmountChanges(%, YoY)

14,915102.8(100 millionsof yen)Changes(%, YoY)

1,400

123.2

28

128.1

1,009

139.2

1,029

138.2

(20)

－

386

102.6

17,325105.8

15,945

104.5

1,379

123.6

Group insurance

－

－

452

340.7

452

340.7

－

－

Group annuities

－

－

30

13,528.6

30

13,528.6－－

Individual annuities
Subtotal

Total
Year ended
March 31, 2017

Number of policies(Thousands)

Individual insurance

AmountChanges(%, YoY)(100 millionsof yen)

405

113.0

Changes(%, YoY)

15,601

95.6

New business

Net increase by
conversion

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

14,66998.4(100 millionsof yen)932

Changes(%, YoY)

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

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, 2016

Year ended March 31, 2017

Changes(%, YoY)

Changes(%, YoY)

Amount of surrender and lapse(100 millions of yen)

13,41793.2

13,135

97.9

Surrender and lapse ratio (%)

5.05(0.25)

5.01(0.04)

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, 2016

As of March 31, 2017

Changes(%, Pre-FYE)

Changes(%, Pre-FYE)

Individual insurance

2,748

100.4

2,779

101.2

Individual annuities

1,322

99.7

1,343

101.6

Total

4,071

100.2

4,123

101.3

1,075

100.8

1,091

101.5

Medical coverage and living benefits(ii) New Policies(100 millions of yen, %)Individual insuranceYear ended March 31, 2016

Year ended March 31, 2017

Changes(%, YoY)

Changes(%, YoY)

200

104.2

Individual annuities

34

Total

234
70

Medical coverage and living benefits

212

106.1

107.2

50

148.5

104.6

263

112.3

100.0

78

111.4

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, 2016

Year ended March 31, 2017

Changes(%, YoY)

Changes(%, YoY)

Premium and other income

6,180

96.1

5,744

92.9

Investment income

1,866

87.3

1,601

85.8

Claims and other payments

5,905

120.4

4,891

82.8

Investment expenses

478

134.1

445

93.1

Ordinary profits

603

62.3

541

89.7

(4) Statements of Surplus(100 millions of yen, %)Year ended March 31, 2016

Year ended March 31, 2017

Changes(%, YoY)

Changes(%, YoY)

Unappropriated surplus

655

70.4

605

92.4

Reserve for dividends to policyholders

352

96.0

345

98.2

Net surplus

65

20.0

22

33.8

Unappropriated surplus carried forward

237

100.0

237

100.0

Note: Unappropriated surplus for the years ended March 31, 2016 and 2017 included reversal of voluntary surplus reserve ofNote: ¥11 million and ¥102 million, respectively.

(5) Total Assets(100 millions of yen, %)As of March 31, 2016

As of March 31, 2017

Changes(%, Pre-FYE)

Total assets

64,8982

98.2

Changes(%, Pre-FYE)

65,656

101.2

Fukoku Mutual Life Insurance Company

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

As of March 31, 2016
AmountCash, deposits, call loans

312,405

Monetary claims bought

813

Money held in trust
Securities
Domestic bonds

As of March 31, 2017

% of total

4.9 %
0.0

Amount236,274753% of total

3.6 %
0.0

87,793

1.4

29,7870.5

5,017,719

78.3

5,297,476

81.6

2,659,186

41.5

2,843,537

43.8

Domestic stocks

570,3868.9

656,590

10.1

Foreign securities

1,700,012

26.5

1,702,602

26.2

Foreign bonds

1,505,637

23.5

1,445,002

22.3

194,374

3.0

257,599

4.0

Foreign stocks and other securities
Other securities

88,134

1.4

94,745

1.5

693,680

10.8

627,722

9.7

Policy loans

61,4371.0

59,2380.9

Ordinary loans

Loans

632,2429.9

568,483

8.8

Real estate

212,879

3.3

214,427

3.3

Others87,3091.4

85,302

1.3

Allowance for possible loan losses(1,850)( 0.0)(1,776)( 0.0)

6,410,750

100.0

6,489,968

100.0

1,875,134

29.2

1,966,868

30.3

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

Year ended March 31, 2016

Cash, deposits, call loans

Year ended March 31, 2017

29,435

Monetary claims bought(76,130)

(57)

(60)

53,473(58,005)(145,891)

279,757

Domestic bonds(196,964)

184,350

Domestic stocks(70,680)

86,204Foreign securities

116,233

2,590

Foreign bonds

218,334(60,634)

Foreign stocks and other securities(102,100)

63,224

5,520

6,611

(70,219)(65,958)

Money held in trust
Securities

Other securities
Loans
Policy loans(1,873)(2,199)Ordinary loans(68,345)(63,759)

Real estate(10,914)

1,547

Others

24,559(2,006)

Allowance for possible loan losses
Total
Foreign currency denominated assets

3

97

74

(119,516)

79,217

302,432

91,734

Fukoku Mutual Life Insurance Company

(3) Investment Income(Millions of yen)

Year ended March 31, 2016

Year ended March 31, 2017

137,324

134,45127

21

Interest and dividends from securities

110,276

109,253

Interest from loans

13,343

11,314

Income from real estate for rent

13,444

13,736

Other interest and dividends

231

125

Gains on money held in trust, net

11,332－

Gains on sales of securities

37,54814,473

Gains on sales of domestic bonds

30,067

11,175

Gains on sales of domestic stocks

2,934

2,741

Gains on sales of foreign securities

4,546

556

Gain on derivative instruments, net

－

7,018

Reversal of allowance for possible loan losses

77

90

Other investment income

360

122

186,642

156,155

Interest, dividends and other income
Interest from deposits

Total(4) Investment Expenses(Millions of yen)

Year ended March 31, 2016

Year ended March 31, 2017

4,314

4,057

Interest expenses

－

1,144

Losses on trading securities, net

12,422

7,042

Losses on sales of securities

5,820

5,493

Losses on sales of domestic bonds－

441

Losses on sales of domestic stocks

2,701

1,312

Losses on sales of foreign securities

3,119

3,739

－

24

－

24

Losses on derivative instruments, net

3,549

－

Foreign exchange losses, net

8,600

15,624

Depreciation of real estate for rent and other assets

4,482

4,319

Other investment expenses

6,340

6,875

Total

45,53244,581

Losses on money held in trust, net

Losses on valuation of securities
Losses on valuation of foreign securities(5) Net Investment Income(Millions of yen)

Year ended March 31, 2016

Year ended March 31, 2017

141,110

111,573

Net investment income

4

Fukoku Mutual Life Insurance Company

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

Year ended March 31, 2016

Year ended March 31, 2017

Cash, deposits, call loans

0.06

0.00

Monetary claims bought

1.45

1.40

Money held in trust

32.88

3.11

Securities

2.57

2.08

Domestic bonds

2.09

2.09

Domestic stocks

3.53

3.30

Foreign securities

3.17

1.58

Foreign bonds

2.36

1.20

Foreign stocks and other securities

7.94

4.46

1.83

1.75

1.60

1.50

Real estate

2.41

2.33

Total

2.40

1.82

2.88

1.62

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, 2016

Year ended March 31, 2017

Cash, deposits, call loans

185,218

333,361

Monetary claims bought

841

783

34,46536,685

4,540,109

4,719,222

Domestic bonds

2,641,549

2,650,655

Domestic stocks

329,310

341,965

Foreign securities

1,497,783

1,643,790

Foreign bonds

1,281,227

1,452,058

216,556

191,732

734,390655,723

672,149595,334

216,949

216,026

5,883,829

6,141,816

1,699,826

1,966,259

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, 2016

Net valuation gains/losses
included in the statementof operations

Carrying value on
the balance sheet
Trading securities

As of March 31, 2017319,809

Net valuation gains/losses
included in the statementof operations

Carrying value on
the balance sheet(36,617)

208,034(17,796)

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, 2016

Book value

As of March 31, 2017

Gains/losses

Fair value

Gains

Book value

Fair value

Gains/losses

Losses

Gains

Losses768,786

936,313

167,526

167,526－

764,914908,680

143,766

143,766－

Domestic bonds

740,989

906,313

165,323

165,323－

739,830

882,479

142,649

142,649－

Foreign bonds

27,79730,000

2,202

2,202

－

25,084

26,201

1,116

1,116

－

Monetary claims bought

－

－

－

－

－

－

－

－

－

－

Negotiable certificate of deposits

－

－

－

－

－

－

－

－

－

－

Others

－

－

－

－

－

－

－

－

－

－

1,074,535

1,280,612

206,077

206,077－

1,008,212

1,166,744

158,531

161,427

2,895

Domestic bonds

1,044,436

1,250,268

205,832

205,832－

1,002,413

1,160,832

158,418

161,3132,895

Foreign bonds

30,09830,343

244

244

－

5,799

5,912

113

113

－

－

－

－

－

－

－

－

－

－

－

2,412,509

2,880,337

467,828

484,876

17,0482,796,789

3,256,735

459,945484,808

24,862

Domestic bonds

735,758

822,51386,75487,055300

997,892

1,067,639

69,74674,152

4,405

Domestic stocks

291,475

528,697

237,221244,234

7,012

302,413587,201

284,787

289,023

4,235

Foreign securities

1,320,427

1,450,900

130,472

138,130

7,658

1,426,510

1,516,052

89,542

104,688

15,146

1,157,841

1,265,973

108,131

111,8813,750

1,207,319

1,268,525

61,20573,765

12,559162,586

184,927

22,341

26,2493,908

219,190

247,527

28,33630,922

2,586

64,84678,226

13,37915,456

2,076

69,97385,842

15,868

16,944

1,075

Money held in trust

－

－

－

－

－

－

－

－

－

－

Monetary claims bought

－

－

－

－

－

－

－

－

－

－

Negotiable certificate of deposits

－

－

－

－

－

－

－

－

－

－

Others

－

－

－

－

－

－

－

－

－

－

4,255,831

5,097,263

841,432

858,480

17,0484,569,917

5,332,161

762,243790,001

27,757

Domestic bonds

2,521,184

2,979,095

457,910458,211300

2,740,136

3,110,951

370,814378,115

7,300

Domestic stocks

291,475

528,697

237,221244,234

7,012

302,413587,201

284,787

289,023

4,235

Foreign securities

1,378,324

1,511,244

132,919

140,578

7,658

1,457,394

1,548,166

90,772

105,918

15,146

Foreign bonds

1,215,738

1,326,317

110,578

114,3283,750

1,238,203

1,300,639

62,43674,995

12,559162,586

184,927

22,341

26,2493,908

219,190

247,527

28,33630,922

2,586

64,84678,226

13,37915,456

2,076

69,97385,842

15,868

16,944

1,075

Money held in trust

－

－

－

－

－

－

－

－

－

－

Monetary claims bought

－

－

－

－

－

－

－

－

－

－

Negotiable certificate of deposits

－

－

－

－

－

－

－

－

－

－

Others

－

－

－

－

－

－

－

－

－

－

Held-to-maturity debt securities

Policy-reserve-matching 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, 2016

As of March 31, 2017－－

Unlisted foreign bonds－－

Others－－

Held-to-maturity debt securities－－

36,99464,837

21,84822,044

6,127

6,109

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

Unlisted foreign bonds－－

15,72015,934

58,84386,881

Policy-reserve-matching bonds
Investments in subsidiaries and affiliates
Available-for-sale securities
Unlisted domestic stocks (except over-the-counter stocks)

OthersTotal

Note: In this table, domestic and overseas investment partnerships are included in “Others” within “Available-for-sale securities.” However, unrealized gains on available-for-sale securities corresponding to these holdings
by domestic and overseas investment partnerships (¥2,201 million as of March 31, 2016 and ¥1,484 million as of March 31, 2017) 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, 2016

Money held in trust

As of March 31, 2017

Gains/losses

Carrying valueon the balance
sheet

Fair value

87,79387,793

Gains－

Losses－Gains/losses

Carrying valueon the balance
sheet

Fair value

29,78729,787－

Gains－

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

As of March 31, 2016
Carrying value on
the balance sheet
Money held in trust
for trading purpose

As of March 31, 2017

Net valuation gains/losses includedin the statements of operations

86,793Carrying value on
the balance sheet(0)

Net valuation gains/losses includedin the statements of operations

28,7870･ Money held in trust classified as held-to-maturity, policy-reserve-matching and available-for-sale(Millions of yen)

As of March 31, 2016

As of March 31, 2017

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, 2016

Currencyrelated

Stockrelated

Bondrelated

OthersTotal－

18,558265－－

Hedge accounting not applied

(972)

(797)

－

(212)

－

(1,982)

Total

(972)

17,760

265

(212)

－

16,841Hedge accounting applied

Interestrelated

As of March 31, 2017

Currencyrelated

Stockrelated

Bondrelated

Others18,823

Total－

13,542

(440)

－

－

Hedge accounting not applied

(500)

1,116

－

(80)

－

535

Total

(500)

14,659

(440)

(80)

－

13,638Hedge accounting applied

13,102

Note: Gains and losses from applying fair value hedge accounting (currency- related, gains of ¥18,558 million, stock-related gains ofNote: ¥265 million as of March 31, 2016, and currency-related gains of ¥13,542 million, stock-related losses of ¥(440) million as ofMarch 31, 2017) 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, 2016
Notional amount/contract valueOver 1 year

As of March 31, 2017

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

BoughtReceipt fixed,
payment floating
Payment fixed,
receipt floating

－

－

－

－ ]

[

－

－

－

－
300,000
[

－

－ [

－

－ [

－
100,000

1,164 ]

Total(972) [

－

－

－

－

－

192

(500)

－ ]

－

－ ]
320,000

191

－
－

－

－ ]

[

－

－ ]
－

－ ]

[

－ [

160,000

692 ]

(972)

(500)

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

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

As of March 31, 2016
Notional amount/contract valueOver 1 year

As of March 31, 2017

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
British Pound
Canadian dollar
Euro
Australian dollar
Bought1,375,442
1,128,269
81,926
41,782
76,33947,124

－
－
－
－
－
－

1,357,681
1,109,234
80,87042,49076,871
48,215

17,76019,035
1,055
(707)
(531)
(1,091)

1,182,216
949,252
77,101
72,311
48,704
34,847

－
－
－
－
－
－

1,167,557
936,300
77,00871,35948,16734,721

14,65912,951
92
951
537
125

－

－

－

－

－

－

－

－

Total

17,76014,659Notes: 1. Forward exchange rates are used for exchange rates as of March 31, 2017.
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, 2016
Notional amount/contract value

As of March 31, 2017

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

823

823

557

265

517

517

958

(440)

Bought

－

－

－

－

－

－

－

－

Total

265

(440)

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

As of March 31, 2016
Notional amount/contract value

As of March 31, 2017

Fair valueOver 1 year

Gains(losses)

Notional amount/contract value

Fair value

Gains(losses)Over 1 year

Exchange-traded transactions
Yen bond futures
Sold
Bought151,069－

151,300

(231)

－

－

－

－

－

－

－

－

－

－

－

－

38,343－38,32418

36,815－36,896

(80)

－

－

－

－

－

－

－

－

Foreign bond futures
Sold
Bought
Total

(212)

9

(80)

Fukoku Mutual Life Insurance Company

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

As of March 31, 2016

As of March 31, 2017

Carrying value on
the balance sheet

Fair value

Gains(losses)

Carrying value on
the balance sheet

Fair value

Gains(losses)

125,312233,848

108,535

125,278

241,184

115,905

Notes: 1. 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.
Notes: 2. As of March 31, 2016, fair value is based on the appraisal value by the real-estate appraiser, the appraisal value forproperty tax as of January 1, 2016 and the road rate as of January 1, 2015.

10

Fukoku Mutual Life Insurance Company

3. Non-consolidated Balance Sheets(Millions of yen)
As ofMarch 31, 2016

As ofMarch 31, 2017

114,182

44,681

182

162

113,999

44,518200,000

193,000

813

753

Reinsurance payables

133

62

87,79329,787

Subordinated bonds

141,935

191,935

5,091,762

5,369,678

Other liabilities

43,65344,797

1,881,618

2,015,161

891

4,733

Local government bonds

142,336

123,972

Accounts payable

3,869

3,501

Corporate bonds

663,209733,459

Accrued expenses

10,281

10,520594,312679,556

Unearned income

362

364

1,722,110

1,722,752

Deposits received

5,625

5,579

12,92913,505

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

StocksForeign securities

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

Corporate income tax payable

88,175

94,774

Guarantee deposits received

693,680

627,722

Differential account for future trading

Policy loans

61,43759,238

Ordinary loans

632,242

Tangible fixed assets

218,565Land

125,310125,276

Buildings

85,978

Lease assets

2,324

Construction in progress
Other tangible fixed assets

Other securities

As ofMarch 31, 2017

5,555,450

5,604,007

Liabilities:

Assets:Cash and deposits

As ofMarch 31, 2016

20,71919,5335,484,362

5,533,544

50,36850,92999－

Derivatives

5,037

2,186

568,483

Asset retirement obligations

3,351

3,250

219,515

Suspense receipts

1,204

1,154

Reserve for employees' retirement benefits

26,08325,78988,010Reserve for price fluctuation

68,28882,464

2,013

Deferred tax liabilities

33,05019,132

1,590

1,140

Deferred tax liabilities for land revaluation

14,274

14,265

3,360

3,074

Total liabilities

5,882,868

5,982,454

16,09322,052

Net assets:

Software

10,526

10,836

Foundation funds

30,00010,000

Other intangible fixed assets

5,567

11,216

Accumulated foundation funds redeemed

86,000106,000

Loans

Intangible fixed assets

Reinsurance receivables

Reserve for revaluation

144

200

68,63160,032

Accounts receivable

8,585

5,883

Legal reserve for future losses

Prepaid expenses

1,053

1,291

Other surplus

Accrued income

27,731

27,680Reserve for redemption of foundation funds

18,0004,000

Deposits

2,239

2,241

Reserve for dividend allowances

20,00020,000

Other assets

Differential account for futures trading

Surplus112

112

148,284

129,427

2,742

2,849

145,542

126,578761

25

Accumulated fund for price fluctuation

41,00041,000Derivatives

21,877

15,824

257

2,192

2,487

Reserve for advanced depreciation ofreal estate for tax purpose

266

Suspense payments－

100

Lease investment assets

767

734

Rest of the other asset

3,421

3,864

Reserve for special account for advanced
depreciation of real estate for tax purpose(1,850)(1,776)

Other reserves

Allowance for possible loan losses

767

767

65,50960,453

Total foundation funds, surplus and others

264,397245,539

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

338,421333,545

Unappropriated surplus

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

6,489,815

6,565,647

11

Total liabilities and net assets

4,128

4,107

342,549

337,652

606,947

583,192

6,489,815

6,565,647

Fukoku Mutual Life Insurance Company

4. Non-consolidated Statements of Operations(Millions of yen)
Year ended March 31, 2016

Year ended March 31, 2017618,073
617,742331
186,642
137,324
27
110,276
13,343
13,444231
11,33237,548
－
77
360
－
9,606
656
3,741
586
1,641
2,980
814,323

574,427
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

590,510
126,262
202,982
119,535
110,088
31,163
477
9,379
9,332
47
47,886
4,314－
12,422
5,820
－
3,549
8,600
4,482
6,340
2,354
86,50019,702
6,327
6,061
6,499
814
753,979
60,344

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
54,113

1,503
7,913
140
－
9,557

2
－
195
42
240

266
242
21,754
22,26347,638180
71
14,176
14,42839,925

14,390(8,304)
6,086
41,551

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

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, net
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 for 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, net
Losses on valuation of securities, net
Losses on derivative financial instruments, net
Foreign exchange losses, net
Depreciation of real estate for rent and other assets
Other investment expenses
Losses on separate accounts, net
Operating expenses
Other ordinary expenses
Deferred annuity payments
Taxes
Depreciation
OthersTotal ordinary expenses
Ordinary profits
Extraordinary gains:
Gains on disposal of fixed assets
Gains on contribution of securities to retirement benefit trust
State subsidy and others
OthersTotal extraordinary gains
Extraordinary losses:
Losses on disposal of fixed assets
Impairment losses
Provision of reserve for price fluctuation
Total extraordinary losses
Surplus before income taxes
Income taxes：
Current
Deferred
Total income taxes
Net surplus for the year

12

Fukoku Mutual Life Insurance Company

Notes to the Non-consolidated Financial Statements
I.

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 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, 2017 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.........................
• Amortization period of prior service cost......................................

Benefit formula basis
10 years
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.
At the end of the fiscal year ended March 31, 2013, among individual annuity insurance policies with anassumed interest rate of 5.00% or higher, policies that have an annuity commencement date on or prior to March
31, 2013 (excluding wife’s annuity insurance additional rider), the Company reduced the assumed interest rate
to 1.00% and funded additional policy reserves. As of March 31, 2017, the balance of these policy reserves was¥42,748 million.
At the end of the fiscal year ended March 31, 2016, among individual annuity insurance policies with anassumed interest rate of 5.00% or higher, policies that have an annuity commencement date from April 1, 2013,
through March 31, 2017 (excluding wife’s annuity insurance additional rider), the Company reduced theassumed interest rate of policy reserve to 1.00% and funded additional policy reserves. Furthermore, for certain
whole life insurance policies that include distribution of surplus every five years the Company funded additional
policy reserves. As of March 31, 2017, the balance of these policy reserves was ¥29,931 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. In line with a revision to the Corporation Tax Act, the Company adopted the “Practical Solution on a Change inDepreciation Method Due to Tax Reform 2016” (PITF No. 32, June 17, 2016) from the current fiscal year.
Accordingly, the method of depreciation was changed from the declining-balance method to the straight-line method
for facilities attached to buildings and structures acquired on or after April 1, 2016.
As a result, both ordinary profits and the surplus before income taxes increased by ¥100 million.
3. 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, 2017 were as follows:

15

Fukoku Mutual Life Insurance Company

Carrying amount

Cash and deposits:
Cash and deposits not treated as securities…....
Total cash and deposits…..................................
Call loans
Monetary claims bought:
Claims treated as loans……...............................
Total monetary claims bought………................
Money held in trust:
Trading securities...............................................
Total money held in trust....................................
Securities:
Trading securities...............................................
Held-to-maturity debt securities.........................
Policy-reserve-matching bonds..........................
Available-for-sale securities...............................
Total securities...................................................
Loans:
Policy loans........................................................
Ordinary loans....................................................
Total loans..........................................................
Assets total.............................................................
Subordinated bonds*1.............................................
Liabilities total…....................................................
Derivative instruments*2:
Hedge accounting not applied............................
Hedge accounting applied……..........................
Total derivative instruments...............................

¥¥

43,274
43,274
123,781
193,000

Fair value¥

43,274
43,274
123,781
193,000(Millions of yen)
Difference

¥

–
–
–

753
753

808
808

54
54

28,78728,78728,78728,787––179,246764,914
1,008,212
3,256,735
5,209,110

179,246
908,680
1,166,744
3,256,735
5,511,408–
143,766
158,531–302,297

59,238568,483
627,722
6,102,649
191,935
191,935

59,238592,719
651,958
6,429,237
199,659
199,659(0 )24,23524,235326,588
7,724
7,724

535
13,102
13,638535
13,102
13,638

¥

–
–
¥

–

*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, ¥6,109 million, and ¥17,418 million as of March
31, 2017, 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 as
16

Fukoku Mutual Life Insurance Company

loans 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.
4. 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 ¥172,312 million and ¥283,598 million as ofMarch 31, 2017, 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 ¥974 million as of March 31, 2017.
5. The amount of securities lent under lending agreements was ¥38,863 million as of March 31, 2017.
6. 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 ¥1,115 million as of March 31, 2017;i) The balance of credits to bankrupt borrowers was ¥230 million as of March 31, 2017.
ii) The balance of delinquent loans was ¥884 million as of March 31, 2017.
iii) There was no balance of delinquent loans past 3 months or more and restructured loans as ofMarch 31, 2017.
The direct write-offs related to loans decreased credits to bankrupt borrowers described above by ¥1 million as ofMarch 31, 2017.
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.
7. Accumulated depreciation of tangible fixed assets were ¥158,873 million as of March 31, 2017.
8. Total assets in separate accounts provided for in Article 118 of the Insurance Business Act were ¥75,678 million asof March 31, 2017. The amounts of separate account liabilities were the same as separate account assets.
9. The total amounts of receivables from/payables to subsidiaries were ¥2,471 million and ¥2,187 million as of March
31, 2017, respectively.
17

Fukoku Mutual Life Insurance Company

10. Deferred tax assets and deferred tax liabilities as of March 31, 2017 were ¥117,179 million and ¥132,077 million,
respectively. Valuation allowance for deferred tax assets was ¥4,235 million.
Major components of deferred tax assets were ¥73,414 million of policy reserves, ¥23,089 million of reservefor price fluctuation and ¥12,447 million of reserve for employees' retirement benefits as of March 31, 2017.
Major component of deferred tax liabilities was ¥127,885 million of net unrealized gains on available-for-salesecurities as of March 31, 2017.
The statutory tax rate and the actual effective tax rate for the year ended March 31, 2017 were 28.2% and8.1%, respectively. The difference between the statutory tax rate and the actual effective tax rate was attributable
mainly to -24.5% of reserve for dividends to the policyholders.
11. Changes in reserve for dividends to policyholders for the year ended March 31, 2017 were as follows:(Millions of yen)

Balance at the beginning of the fiscal year…..……….....................................
Transfer from surplus in the previous fiscal year…..........................................
Dividend payments to policyholders during the fiscal year……………..........
Increase in interest............................................................................................
Balance at the end of the fiscal year….............................................................

¥ 50,368
35,236(34,695)
20¥ 50,929

12. The amount of stocks of subsidiaries was ¥64,837 million as of March 31, 2017.
13. Assets pledged as collateral as of March 31, 2017 were ¥27,012 million of securities and ¥1,688 million of bankdeposits. Secured debts as of March 31, 2017, were ¥4,974 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 ¥3 million as of March 31, 2017.
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 ¥30 million as of March 31, 2017.
15. 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 ¥337,765 million as ofMarch 31, 2017.
16. In line with the redemption of ¥20,000 million in foundation funds, the same amount of reserve for redemption offoundation funds is transferred to accumulated foundation funds redeemed in accordance with Article 56 of the
Insurance Business Act.
17. There were unused commitment line agreements under which the Company is the lender of ¥10,500 million as ofMarch 31, 2017.
18. Repayments of subordinated bonds are subordinated to other obligations.
19. The future contribution to the Life Insurance Policyholders Protection Corporation of Japan under Article 259 of the
Insurance Business Act was estimated at ¥9,406 million as of March 31, 2017.
The contribution is recognized as operating expenses when contributed.
20. Matters Related to Employees’ Retirement Benefits as of March 31, 2017
(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.
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.

18

Fukoku Mutual Life Insurance Company

(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........................
Service cost..........................................................................................................
Interest cost..........................................................................................................
Actuarial differences occurred during the fiscal year..........................................
Retirement benefit payments...............................................................................
Retirement benefit obligation at the end of the fiscal year..................................

¥ 85,184
3,508
510
656
(4,583)¥ 85,277ii) Reconciliation of beginning and end of balance of pension plan assets(Millions of yen)

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

¥ 44,636
671
57
2,689
(1,400 )¥ 46,654iii) 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........................................................
b. Pension plan assets............................................................................................
c. (a + b) ...............................................................................................................
d. Unfunded plan retirement benefit obligation....................................................
e. Unrecognized actuarial differences...................................................................

¥ 73,902(46,654 )
27,247
11,375(13,156 )323¥ 25,789

f. Unrecognized prior service cost........................................................................
g. Reserve for employees’ retirement benefits (c + d + e + f) ..............................
iv) Breakdown of retirement benefit gains and losses(Millions of yen)

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

¥ 3,508510(671 )
2,306(76 )¥ 5,578v) Breakdown of pension plan assets
The breakdown of asset categories as a percentage of total pension plan assets were as follows:
Domestic stocks....................................................................................................
Life insurance general account.............................................................................
Domestic bonds....................................................................................................
Foreign stocks.......................................................................................................
Foreign bonds.......................................................................................................
Others....................................................................................................................
Total.......................................................................................................................

46.1%
34.2%
8.0%
7.9%
2.7%
1.1%
100.0%

Within the total of pension assets, 37.2% of this amount is accounted for by the retirement benefit trust
established in relation to the retirement lump-sum payments plan for sales employees.
19

Fukoku Mutual Life Insurance Company

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, 2017, were as follows:
Discount rate..........................................................................................................
Expected long-term rate of return on pension plan assets
Defined Benefit Plan........................................................................................
Retirement benefit trust....................................................................................

0.6%
2.5%
0.0%

(3) The required contribution amount by the Company to the defined contribution plan was ¥194 million as ofMarch 31, 2017.
21. The “Implementation Guidance on Recoverability of Deferred Tax Assets” (ASBJ Guidance No. 26, March 28,2016) has been applied from the year ended March 31, 2017.

20

Fukoku Mutual Life Insurance Company

III. Notes to Non-consolidated Statements of Operations
1. The total amounts of revenues and expenses in connection with subsidiaries were ¥877 million and ¥8,084 million
for the year ended March 31, 2017.
2. Major items of gains on sales of securities for the year ended March 31, 2017 were as follows:(Millions of yen)Domestic bonds....................................................................................................

¥ 11,175

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

2,741

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

556

3. Major items of losses on sales of securities for the year ended March 31, 2017 were as follows:(Millions of yen)Domestic bonds……………................................................................................

¥

441

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

1,312

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

3,739

4. Major items of losses on valuation of securities for the year ended March 31, 2017 was as follows:(Millions of yen)

Foreign securities………….................................................................................

¥

24

5. For the year ended March 31, 2017, reversal of reserve for outstanding claims for ceded reinsurance considered in
calculation of reversal of reserve for outstanding claims was ¥11 million, and provision of policy reserve for ceded
reinsurance considered in calculation of provision for policy reserve was ¥0 million.

6. Major items of losses on trading securities for the year ended March 31, 2017 were as follows:(Millions of yen)Interest, dividends and other income...................................................................
Losses on valuation of trading securities.............................................................

¥ 6,464(17,796)

7. Losses on money held in trust for the years ended March 31, 2017 included valuation gains of ¥0 million.

8. Gains on derivative instruments for the year ended March 31, 2017 included valuation gains of ¥2,224 million.

21

Fukoku Mutual Life Insurance Company

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

Year ended
March 31, 2016

Year ended
March 31, 2017

92,32988,93848,666

21,492

11,118－－－37,54814,473

Gains on derivative instruments, net

－

7,018

Foreign exchange gains, net－－

Other capital gains－－

39,42835,898－1,248

Losses on trading securities, net

21,456

13,507

Losses on sales of securities

5,820

5,493

－

24

A
Capital gains
Gains on money held in trust, net
Gains on trading securities, net
Gains on sales of securities

Capital losses
Losses on money held in trust, net

Losses on valuation of securities
Losses on derivative instruments, net

3,549

－

Foreign exchange losses, net

8,600

15,624

－

－

B

9,238

(14,406)

A+B

101,568

74,532－

51

Reinsurance income－－

Reversal of contingency reserve－－

Reversal of specific allowance for possible loan losses－

51

Other capital losses
Net capital gains (losses)
Fundamental profit plus net capital gains (losses)
Non-recurring gains

Others
Non-recurring losses
Reinsurance premiums
Provision for contingency reserve－－

41,224

20,470

－

－

8,050

20,460

Provision of specific allowance for possible loan losses

73－

Provision of allowance for specified overseas loans

－

－

－

－

33,10010C(41,224)(20,148)

A+B+C

60,344

54,113

Write-off of loans
Others
Non-recurring gains (losses)
Ordinary profits

Notes: 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): ¥213 million in respectof the year ended March 31, 2016 and ¥103 million in respect of the year ended March 31, 2017.
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): ¥9,034 million in respectof the year ended March 31, 2016 and ¥6,464 million in respect of the year ended March 31, 2017.
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, 2016](Millions of yen)Foundation funds, surplus and others
Surplus
Other surplus

Balance at the beginning of the current period

Foundation
funds

Accumulated
foundation
funds
redeemed

30,00086,000Reserve forrevaluation

Legal reservefor future
lossesReserve forredemption offoundation
funds

Reserve fordividend
allowances

112

2,582

12,0003,895

Reserve foradvanced
Accumulated depreciation offund for price real estate forfluctuation
tax purpose

31,000262

Otherreserves

767

UnappropriatedTotal surplus
surplusTotal
foundation
funds, surplus
and others

93,041

143,548259,660(36,698)(36,698)(36,698)

(160)

－

－

Changes in the current period
Additions to reserve for dividends
to policyholders

160

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

6,000
16,104

Additions to reserve for dividend allowances
Additions to accumulated fund forprice fluctuation

(316)

(316)

(316)

41,551

41,551

41,551(6,000)－－(16,104)－－(10,000)－－

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

7

(7)

－

－

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

(3)

3

－

－

199

199

199

10,000

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

－

－

－

160

6,000

16,10410,0003－(27,531)

4,736

4,736

30,00086,000112

2,742

18,00020,00041,000266

767

65,509148,284

264,397

Net unrealized
Deferred
gains (losses)
valuation
on available- gains (losses)
for-sale
under hedge
Revaluation Total valuation
securities, net accounting, net reserve for and translationof taxof taxland, net of tax adjustments

Total
net assets

Valuation and translation adjustments

Balance at the beginning of the current period

434,2360

3,894

438,131

697,792

Changes in the current period
Additions to reserve for dividends
to policyholders(36,698)－

Additions to legal reserve for future losses(316)

Payment of interest on foundation funds

41,551

Net surplus for the current period
Additons to reserve for redemption offoundation funds－

Additions to reserve for dividend allowances－

Additions to accumulated fund forprice fluctuation－

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

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

Reversal of revaluation reserve
for land, net of tax

199

Net changes, excluding foundation funds,
surplus and others(95,815)(0)234(95,581)(95,581)

Total changes in the current period(95,815)(0)234(95,581)(90,845)

Balance at the end of the current period

338,421－4,128

342,549

606,947

23

Fukoku Mutual Life Insurance Company

[For the year ended March 31, 2017](Millions of yen)Foundation funds, surplus and others
Surplus
Other surplus

Balance at the beginning of the current period

Reserve for
specialReserve for account foradvancedadvanced
Accumulated
Reserve fordepreciation depreciation
foundation
Legal reserve redemption of Reserve for Accumulated of real estate of real estate
Foundation
funds
Reserve forfor future
for tax
foundation
dividend
fund for pricefor tax
funds
redeemedrevaluation
lossespurposefunds
allowances
fluctuation
purpose

Other
reserves－

767

30,00086,000112

2,742

18,00020,00041,000266

UnappropriatedTotal surplus
surplusTotal
foundation
funds,
surplus andothers65,509148,284

264,397(35,236)(35,236)(35,236)

(106)

－

－

(316)

(316)

(316)

36,67436,67436,674

Changes in the current period
Additions to reserve for dividends
to policyholders
106

Additions to legal reserve for future losses
Additons to accumlated foundation
funds redeemed

20,00020,000

Payment of interest on foundation funds
Net surplus for the current period
Redemption of foundation funds(20,000)(20,000)

Additions to reserve for redemption offoundation funds

6,000

Reversal of reserve for redemption offoundation funds(20,000)(6,000)－－(20,000)(20,000)

Additions 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

－

－

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

100

Reversal of revaluation reserve
for land, net of tax

(100)

－

－

20

20

20

Net changes, excluding foundation funds,
surplus and others
Total changes in the current period(20,000)

20,000－106(14,000)

－

－

(8)

100

－

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

Balance at the end of the current period

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
gains(losses) on
availablefor-salesecurities,
net of tax
Balance at the beginning of the current period

338,421

Total
Revaluation
valuation
reserve forandland, net of translationtax
adjustments
4,128

342,549

Total
net assets
606,947

Changes in the current period
Additions to reserve for dividends
to policyholders(35,236)－

Additions to legal reserve for future losses
Additons to accumlated foundation
funds redeemed

20,000(316)

Payment of interest on foundation funds
Net surplus for the current period

36,674

Redemption of foundation funds(20,000)

Additions to reserve for redemption offoundation funds－

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

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

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

Additions 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 current period(4,876)(20)(4,896)(23,754)

Balance at the end of the current period

333,545

4,107

337,652

583,192

24

Fukoku Mutual Life Insurance Company

7. Non-consolidated Statements of Surplus(Millions of Yen)
Year ended March 31, 2016

Unappropriated surplus

Year ended March 31, 2017

65,50960,453

11

102

Reversal of reserve for advanced depreciationof real estate for tax purpose

11

1

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

－

100

Total

65,52160,555

Appropriation of surplus

41,762

36,797

Reserve for dividends to policyholders

35,236

34,592

Net surplus

6,526

2,205

Legal reserve for future losses

106

105

Interest payment for foundation funds

316

100

6,103

2,000

6,000

2,000

2

－

100

－

23,75823,758

Reversal of voluntary surplus reserve

Voluntary surplus reserve
Reserve for redemption of foundation funds
Reserve for advanced depreciationof real estate for tax purpose
Reserve for special account for advanced depreciationof real estate for tax purpose
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, 2016

As of March 31, 2017

Claims against bankrupt and quasi-bankrupt obligors

260

244

Claims with collection risk

736

878

Claims for special attention

－

－

996

1,123

[0.14%][0.17%]

714,152

668,392

715,149

669,516

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, 2016

As of March 31, 2017

Credits to bankrupt borrowers

217

230

Delinquent loans

773

884

Delinquent loans past three months or more－－

Restructured loans

－

－

Total

990

1,115

[0.14%][0.18%][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 ¥247 million as ofMarch 31, 2016 and ¥1 million as of March 31, 2017.
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, 2016

As ofMarch 31, 2017

1,374,588

1,414,023

Foundation funds and surplus

226,683

208,227

Reserve for price fluctuation

68,28882,464

Contingency reserve

150,573

171,033

1,251

1,213

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

423,026

415,287

Net unrealized gains on real estate × 85%

105,577

111,340

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

236,087

237,089

Qualifying subordinated debt

141,935

191,935－－(19,000)(46,783)

40,16542,217

207,983

232,798

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

24,61623,9493rd sector insurance risk

R8

9,577

9,740

Assumed investment yield risk

R2

33,481

32,835

Minimum guarantee risk

R7

0

0

Investment risk

R3

166,913

192,279

Business risk

R4

4,691

5,176

1,321.8%

1,214.8%

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, 2016

As of March 31, 2017

AmountAmountIndividual variable insurance－－

Individual variable annuities

67

39

Group annuities

78,99775,639Total

79,06575,678(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, 2016

As of March 31, 2017

Number ofpolicies

AmountNumber ofpolicies

AmountIndividual variable annuities

23

64

13

33

Total

23

64

13

33

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

As of March 31, 2016

As of March 31, 2017

AmountPercentage

AmountPercentage

Cash, deposits, call loans

26

39.1%

10

27.3%

Securities

41

60.9%

28

72.7%

Domestic bonds

－

－

－

－

Domestic stocks

－

－

－

－

Foreign securities

－

－

－

－

Foreign bonds

－

－

－

－

Foreign stocks and other securities

－

－

－

－

41

60.9%

28

72.7%

Loans

－

－

－

－

Others－－－－Allowance for possible loan losses

－

－

－

－

Total

67

100.0%

39

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, 2016

Year ended March 31, 2017

AmountAmountInterest, dividends and other income

223

Gains on sales of securities－－

Gains on redemption of securities－－

Gains on valuation of securities

10

8

Foreign exchange gains, net－－

Gains on derivative instruments－－

Other investment income

00

Losses on sales of securities－－

Losses on redemption of securities－－

Losses on valuation of securities

32

10

Foreign exchange losses, net－－

Losses on derivative instruments－－

Other investment expenses

00

Net investment income

01(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, 2016

As of March 31, 2017

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

41

(22)

28

(2)

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, 2016
Net valuation gains/losses
included in the statementof operations

Carrying value on
the balance sheet

Trading securities

As of March 31, 2017

393,852

Net valuation gains/losses
included in the statementof operations

Carrying value on
the balance sheet(43,873)

280,236(16,953)

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, 2016
Book value

As of March 31, 2017

Gains/losses

Fair value

Gains

Book value

Fair value

Gains/losses

Losses

Gains

Losses768,786

936,313

167,526

167,526－

764,914908,680

143,766

143,766－

Domestic bonds

740,989

906,313

165,323

165,323－

739,830

882,479

142,649

142,649－

Foreign bonds

27,79730,000

2,202

2,202

－

25,084

26,201

1,116

1,116

－

Monetary claims bought

－

－

－

－

－

－

－

－

－

－

Negotiable certificate of deposits

－

－

－

－

－

－

－

－

－

－

Others

－

－

－

－

－

－

－

－

－

－

1,074,535

1,280,612

206,077

206,077－

1,008,212

1,166,744

158,531

161,427

2,895

Domestic bonds

1,044,436

1,250,268

205,832

205,832－

1,002,413

1,160,832

158,418

161,3132,895

Foreign bonds

30,09830,343

244

244

－

5,799

5,912

113

113

－

－

－

－

－

－

－

－

－

－

－

2,412,509

2,800,337

467,828

484,876

17,0482,796,789

3,256,735

459,945484,808

24,862

Domestic bonds

735,758

822,51386,75487,055300

997,892

1,067,639

69,74674,152

4,405

Domestic stocks

291,475

528,697

237,221244,234

7,012

302,413587,201

284,787

289,023

4,235

Foreign securities

1,320,427

1,450,900

130,472

138,130

7,658

1,426,510

1,516,052

89,542

104,688

15,146

Foreign bonds

1,157,841

1,265,973

108,131

111,8813,750

1,207,319

1,268,525

61,20573,765

12,559162,586

184,927

22,341

26,2493,908

219,190

247,527

28,33630,922

2,586

64,84678,226

13,37915,456

2,076

69,97385,842

15,868

16,944

1,075

Money held in trust

－

－

－

－

－

－

－

－

－

－

Monetary claims bought

－

－

－

－

－

－

－

－

－

－

Negotiable certificate of deposits

－

－

－

－

－

－

－

－

－

－

Others

－

－

－

－

－

－

－

－

－

－

4,255,831

5,097,263

841,432

858,480

17,0484,569,917

5,332,161

762,243790,001

27,757

Domestic bonds

2,521,184

2,979,095

457,910458,211300

2,740,136

3,110,951

370,814378,115

7,300

Domestic stocks

291,475

528,697

237,221244,234

7,012

302,413587,201

284,787

289,023

4,235

Foreign securities

1,378,324

1,511,244

132,919

140,578

7,658

1,457,394

1,548,166

90,772

105,918

15,146

Foreign bonds

1,215,738

1,326,317

110,578

114,3283,750

1,238,203

1,300,639

62,43674,995

12,559162,586

184,927

22,341

26,2493,908

219,190

247,527

28,33630,922

2,586

64,84678,226

13,37915,456

2,076

69,97385,842

15,868

16,944

1,075

Money held in trust

－

－

－

－

－

－

－

－

－

－

Monetary claims bought

－

－

－

－

－

－

－

－

－

－

Negotiable certificate of deposits

－

－

－

－

－

－

－

－

－

－

Others

－

－

－

－

－

－

－

－

－

－

Held-to-maturity debt securities

Policy-reserve-matching 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, 2016
Carrying
value on the Fair valuebalance sheet

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

As of March 31, 2017

Differences

Carrying
value on the Fair valuebalance sheet

Differences

768,786

936,313

167,526

764,914908,680

143,766

Domestic bonds

740,989

906,313

165,323

739,830

882,479

142,649

Foreign bonds

27,79730,0002,202

25,084

26,201

1,116

Monetary claims bought

－

－

－

－

－

－

Negotiable certificate of deposits

－

－

－

－

－

－

Others

－

－

－

－

－

－

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

－

－

－

－

－

－

Domestic bonds

－

－

－

－

－

－

Foreign bonds

－

－

－

－

－

－

Monetary claims bought

－

－

－

－

－

－

Negotiable certificate of deposits

－

－

－

－

－

－

Others

－

－

－

－

－

－

31

Fukoku Mutual Life Insurance Company

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

As of March 31, 2016
Carrying
value on the Fair valuebalance sheet

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

As of March 31, 2017

Differences

Carrying
value on the Fair valuebalance sheet

Differences

1,064,535

1,270,612

206,077

977,623

1,139,050

161,427

Domestic bonds

1,044,436

1,250,268

205,832

971,824

1,133,138

161,313

Foreign bonds

20,09820,343

244

5,799

5,912

113

－

－

－

－

－

－

10,00010,000－30,58927,694(2,895)

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

－

－

－

30,58927,694(2,895)

10,00010,000

－

－

－

－

－

－

－

－

－

－

Domestic bonds
Foreign bonds
Others[Available-for-sale Securities](Millions of yen)

As of March 31, 2016

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

As of March 31, 2017

Book value

Carrying
value on thebalance sheet

Differences

Book value

Carrying
value on thebalance sheet

Differences

484,808

2,156,181

2,641,058

484,876

2,097,492

2,582,300

Domestic bonds

707,189794,245

87,055

813,898

888,050

74,152

Domestic stocks

245,523

489,757

244,234

260,158

549,181

289,023

Foreign securities

1,162,372

1,300,503

138,130

964,556

1,069,245

104,688

Foreign bonds

1,028,891

1,140,772

111,881

800,165

873,930

73,765

Foreign stocks

133,481

159,730

26,249164,391

195,31430,922

41,09656,552

15,45658,87875,822

16,944

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 value

256,327

239,278(17,048)

699,297

674,435(24,862)

Domestic bonds

28,56828,268(300)

183,993

179,588(4,405)

Domestic stocks

45,95238,939(7,012)42,25438,019(4,235)

Foreign securities

158,055

150,396(7,658)461,953446,807(15,146)

Foreign bonds

128,950

125,200(3,750)407,154394,594(12,559)

Foreign stocks

29,10425,196(3,908)54,79852,212(2,586)23,75021,674(2,076)

11,095

10,019(1,075)

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, 2016

As of March 31, 2017－－

Unlisted foreign bonds－－

Others－－

Held-to-maturity bonds－－

Investments in subsidiaries and affiliates

36,99464,837Available-for-sale securities

21,84822,044

6,127

6,109

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

Unlisted foreign bonds－－

15,72015,934

58,84386,881

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 (¥2,201 million as of March 31, 2016 and ¥1,484 million as of March 31, 2017) 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, 2016

(Millions of yen)Interestrelated

Currencyrelated

Stockrelated

Bondrelated

OthersTotal－

18,558265－－

Hedge accounting not applied

(972)

(799)

－

(212)

－

(1,983)

Total

(972)

17,759

265

(212)

－

16,840Interestrelated

Currencyrelated

Stockrelated

Hedge accounting applied

As of March 31, 2017

Bondrelated

Others18,823

Total－

13,542

(440)

－

－

Hedge accounting not applied

(500)

1,116

－

(80)

－

535

Total

(500)

14,659

(440)

(80)

－

13,638Hedge accounting applied

13,102

Note: Gains and losses from applying fair value hedge accounting (currency- related, gains of ¥18,558 million, stock-related gains ofNote: ¥265 million as of March 31, 2016, and currency-related gains of ¥13,542 million, stock-related losses of ¥(440) million as ofMarch 31, 2017) 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, 2016
Notional amount/contract valueOver 1 year

As of March 31, 2017

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

－
[

－
－

－
[

[

[

－

－

[

－

－

[

－
100,000
191

Total

(972)

[

－

－

－

－

－

192

(500)

－

－]
320,000

1,164 ]

－
－

－]

－

－]

－

－]
－

－]

300,000

－

－

－
[

－

－]

160,000

692 ]

(972)

(500)

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

As of March 31, 2016
Notional amount/contract valueOver 1 year
Over-the-counter transactions
Currency forward contracts
Sold
US dollar
British Pound
Canadian dollar
Australian dollarEuro
Swedish krona
Bought
Euro

Fair
value

As of March 31, 2017
Gains(losses)

Notional amount/contract valueOver 1
year

Fair
value

Gains
(losses)

331,876
192,187
34,10132,451
36,92936,197
8

－
－
－
－
－
－
－

332,676
191,366
34,10032,99237,48536,724
8

(800)
821
1
(540)
(555)
(526)
(0)

215,605
109,918
30,64627,98426,26020,796
－

－
－
－
－
－
－
－

214,489
109,200
30,80327,723
26,15420,607
－

1,116
718
(157)
260
106
188
－

100
100

－
－

101
101

1
1
(799)

－
－

－
－

－
－

－
－
1,116

Total
Notes: Forward exchange rates are used for exchange rates as of March 31, 2017.

33

Fukoku Mutual Life Insurance Company

[Stock-related Transactions]
No ending balance as of March 31, 2016 and March 31, 2017.

[Bond-related Transactions](Millions of yen)

Fair value

Gains(losses)

Fair valueOver 1 year

Gains(losses)Over 1 year

Exchange-traded transactions
Yen bond futures
Sold
Bought151,069－

151,300

(231)

－

－

－

－

－

－

－

－

－

－

－

－

38,343－38,32418

36,815－36,896

(80)

－

－

－

－

－

－

－

－

Foreign bond futures
Sold
Bought

Total

(212)

34

(80)

Fukoku Mutual Life Insurance Company

(iii) Hedge Accounting Applied[Interest-related Transactions]
No ending balance as of March 31, 2016 and March 31, 2017
[Currency-related Transactions](Millions of yen)
As of March 31, 2016

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

1,045,083－

1,026,525

US dollar

936,723－

British Pound

47,937

Canadian dollar

Foreigncurrencydenominatedbonds

966,610－953,067

918,504

839,333－

827,099－

46,88346,454－

46,205

9,359

－

9,527

44,327－

43,636

Euro

40,849－40,862

27,908－27,559Australian dollar

10,213－

10,748

8,586

－

8,567

－

－

－

－

－

－

Sold

Fair value
hedge
methodAs of March 31, 2017

BoughtTotal

Notes 1. Forward exchange rates are used for exchange rates as of March 31, 2017.
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, 2016

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, 2017
Fair
value

Over 1 year

Domestic
stocksDomestic
stocks

Sold

823

823

557

517

517

958

Bought

－

－

－

－

－

－

Total

[Bond-related Transactions]
No ending balance as of March 31, 2016 and March 31, 2017.

35

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, 2016

Year ended
March 31, 2017

Ordinary revenues

10,104

8,429

Ordinary profits

631

568

Net surplus attributable to the parent company

421

374

Comprehensive income

(541)

308

As of
March 31, 2016

Total assets
Solvency margin ratio

As ofMarch 31, 201783,30684,3291,341.5%

1,257.3%(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* Added Fukoku Life Investments Singapore Pte. Ltd.

36

Fukoku Mutual Life Insurance Company

(3) Consolidated Balance Sheets(Millions of yen)
As ofMarch 31, 2016

As ofMarch 31, 2017

As ofMarch 31, 2016

As ofMarch 31, 2017

7,361,627

7,438,936

23,00322,223

7,287,604

7,365,185

Liabilities:

Assets:

Policy reserves

Cash and deposits

172,049

136,494

Call loans

200,000

193,000

813

753

87,79329,787

Reserve for dividends to policyholders

50,36850,9296,859,234

7,130,780

Reserve for dividends to policyholders(subsidiary)

650

598

Loans

697,056

631,109

Agency payables

480

98

Tangible fixed assets

218,974

219,873

Reinsurance payables

146

79

Land

125,310125,276

Subordinated bonds

141,935

191,935

Buildings

86,217

88,212Other liabilities

45,94046,006

2,013

Net defined benefit liabilities

40,64938,767

1,140

Reserve for price fluctuation

77,28991,827

3,531

3,230

Deferred tax liabilities

30,837

16,233

20,941

26,326

Deferred tax liabilities for land revaluation

14,274

14,265

11,316

Total liabilities

7,713,180

7,838,150

Monetary claims bought
Money held in trust
Securities

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

2,324
1,590

11,259Reserve for outstanding claims
Policy reserve

Goodwill

1,564

801

Net assets:

Lease assets

658

210

Foundation funds

30,00010,000

Accumulated foundation funds redeemed

86,000106,000

Other intangible fixed assets
Agency receivables
Reinsurance receivables
Other assets
Net defined benefit asset
Deferred tax assets
Allowance for possible loan losses

7,457
2
144
75,30813,997
4

Reserve for revaluation

112

112

200

Consolidated surplus

151,251

133,217

Total foundation funds, surplus and others

267,363249,329

349,884

342,470

66,237－42

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

137

153

Revaluation reserve for land, net of tax

4,128

4,107

(1,851)(1,776)

Foreign currency translation adjustment

(115)

(433)

Accumulated remeasurementsof defined benefit plans(10,414)(9,240)Total accumulated other comprehensive income

343,482

336,904

6,578

8,603

617,425594,837

8,330,606

8,432,988

Non-controlling interests
Total net assets
Total assets

8,330,606

8,432,988

37

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, 2016

Year ended March 31, 2017

Premium and other income

788,854648,744

Investment income

210,908

185,088

Interest, dividends and other income

160,709

158,645

Gains on money held in trust, net

11,332－

Gains on sales of securities

38,43815,178

Gains on derivative instruments, net

－

7,018

Reversal of allowance for possible loan losses

77

90

Other investment income

350

114

－

4,041

Ordinary revenues:

Gains on separate accounts, net
Other ordinary revenues

10,715

9,082

Total ordinary revenues

1,010,478

842,915

Claims and other payments

653,164546,696

Claims130,954

109,450

Annuities

204,136

175,156

Benefits

130,191

121,841

Surrenders

155,996

109,934

Other payments

31,88430,314

Provision of policy reserve and others

127,052

77,601

Provision for policy reserve

127,004

77,580

Provision of interest portion of reserve for dividends to policyholders

47

20

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

46,59643,371

Interest expenses

4,324

4,061

－

1,144

Losses on trading securities, net

12,422

7,042

Losses on sales of securities

5,820

5,493

－

24

Ordinary expenses:

Losses on money held in trust, net

Losses on valuation of securities
Losses on derivative financial instruments, net

3,549

－

Foreign exchange losses, net

8,603

15,619Depreciation of real estate for rent and other assets

4,482

4,319

Other investment expenses

5,038

5,665

Losses on separate accounts, net

2,354

－

Operating expenses

98,07897,218Other ordinary expenses

22,435

21,161

Total ordinary expenses

947,327

786,049

Ordinary profits

63,151

56,866Extraordinary gains:
Gains on disposal of fixed assets

1,503

2

Gains on contribution of securities to retirement benefit trust

7,913

－

140

195

State subsidy and others

－

42

9,557

240

Losses on disposal of fixed assets

283

182

Impairment losses

242

71

Provision of reserve for price fluctuation

22,111

14,538

Total extraordinary losses

22,637

14,792OthersTotal extraordinary gains
Extraordinary losses:

Provision for reserve for dividends to policyholders (subsidiary)

422

419

Surplus before income taxes
Income taxes：

49,64741,895Current

15,61914,409Deferred(8,336)(10,231)

Total income taxes

7,282

4,178

Net surplus

42,36437,716

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

240

236

42,12437,47938

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, 2016

Year ended March 31, 2017

Net surplus

42,36437,716

Other comprehensive income(96,487)(6,912)Net unrealized gains (losses) on available-for-sale securities, net of tax(89,444)(7,768)Deferred valuation gains (losses) under hedge accounting, net of tax(0)－

Revaluation reserve for land, net of tax

433

0

Foreign currency translation adjustments

(62)

(318)

Remeasurements of defined benefit plan, net of tax(7,414)

1,174

Comprehensive income(54,123)30,804Comprehensive income attributable to the parent company(55,144)

30,922

1,021

(117)

Comprehensive income attributable to non-controlling interests

39

Fukoku Mutual Life Insurance Company

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

Year ended March 31, 2016

Year ended March 31, 2017

49,647
4,482
7,425
242
763
(7,913)(498)
127,004
47
0
422
(96)
(1,623)
22,111(160,709)(25,624)
4,324
8,602
(1,231)1(37)(1,037)
103
21
1,626
15,51843,574
172,162(4,943)(35,688)(479)(31,682)
142,943

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(73)
57－(1,050,013)
821,187(71,613)
132,491
45,173(4,093)(126,884)
16,059 ] [(7,838)
11,410(8,925)(132,237)74
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)

62,065(40,326)
－
(316)
－
(19)
(520)
20,883(377)
31,212339,246－
370,458

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

Cash flows from operating activities:
Surplus before income taxes
Depreciation of real estate for rent and other assets
Depreciation
Impairment losses
Amortization of goodwill
Losses (gains) on securities contribution to employees' retirement benefits trust
Increase (decrease) in reserve for outstanding claims
Increase (decrease) in policy reserve
Provision for interest on reserve for dividends to policyholders
Provision for 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
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 bonds
Redemption of subordinated bonds
Redemption of foundation funds
Interest payment for foundation funds
Proceeds from share issuance to non-controlling shareholders
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 year
Increase (decrease) in cash and cash equivalents resulting from change in scope of consolidation
Cash and cash equivalents at the end of the year

40

Fukoku Mutual Life Insurance Company

(6) Consolidated Statements of Changes in Net Assets[For the year ended March 31, 2016](Millions of yen)Foundation funds, surplus and others

Balance at the beginning of
the current period

Foundation
funds

Accumulated
foundation
funds redeemed

Reserve forrevaluation

Consolidated
surplus

Total foundation
funds, surplus andothers

30,00086,000112

145,942

262,054(36,698)(36,698)

(316)

(316)

42,124

42,124199

199

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

Balance at the end of the current period

－

－

－

5,309

5,309

30,00086,000112

151,251

267,363

Accumulated other comprehensive income
DeferredNet unrealized valuation gains
gains (losses)(losses) underon available-forhedge
Revaluation
sale securities, accounting, net
reserve fornet of tax
of taxland, net of tax
Balance at the beginning of
the current period

440,109

0

3,894

Total
Accumulated
accumulated
remeasurements ofotherdefined benefit
comprehensive
plansincomeForeigncurrencytranslation
adjustments(52)(3,000)440,951

Noncontrollinginterests

Total net
assets5,576

708,582

Changes in the current period
Additions to reserve for dividends
to policyholders(36,698)(316)

Payment of interest on foundation funds
Net surplus attributable to the parent
company for the current period

42,124

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

199(90,225)

(0)

234

(62)

(7,414)(97,468)

1,002(96,466)

Total changes in the current period(90,225)

(0)

234

(62)

(7,414)(97,468)

1,002(91,157)

Balance at the end of the current period

349,884

－

4,128

(115)

(10,414)343,482

6,578

617,425

41

Fukoku Mutual Life Insurance Company

[For the year ended March 31, 2017](Millions of yen)Foundation funds, surplus and others

Balance at the beginning of
the current period

Foundation
funds

Accumulated
foundation
funds redeemed

Reserve forrevaluation

Consolidated
surplus

Total foundation
funds, surplus andothers

30,00086,000112

151,251

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

Changes in the current period
Additions to reserve for dividends
to policyholders
Addtions to accumulated foundation
funds redeemed

20,00020,000

Payment of interest on foundation funds
Net surplus attributable to the parent
company for the current period
Redemption of foundation funds

(316)

(316)

37,47937,479(20,000)(20,000)

Reversal of reserve for redemptionof foundation 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 interestof parent due to transactions
with non-controlling interests

(12)

(12)

Net changes, excluding foundation
funds, surplus and others
Total changes in the current period(20,000)

20,000－(18,033)(18,033)

Balance at the end of the current period

10,000106,000

112

133,217249,329

Accumulated other comprehensive income

Net unrealized
gains (losses)
on available-for- Revaluation
sale securities, reserve for land,
net of tax
net of tax
Balance at the beginning of
the current period

349,884

Foreigncurrencytranslation
adjustments

4,128

(115)

Accumulated Total accumulated
remeasuremenother
ts of definedcomprehensive Non-controllinginterests
benefit plansincome(10,414)343,482

6,578

Total net
assets617,425

Changes in the current period
Additions to reserve for dividends
to policyholders(35,236)

Addtions to accumulated foundation
funds redeemed

20,000(316)

Payment of interest on foundation funds
Net surplus attributable to the parent
company for the current period

37,479

Redemption of foundation funds(20,000)

Reversal of reserve for redemptionof foundation funds(20,000)

Reversal of revaluation reserve
for land, net of tax

20

Change of scope of consolidation

30

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

Net changes, excluding foundation
funds, surplus and others
Total changes in the current period
Balance at the end of the current period(7,413)

(20)

(318)

1,174

(6,578)2,024(4,553)(7,413)

(20)

(318)

1,174

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

342,470

4,107

(433)

(9,240)336,904

8,603

594,837

42

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 Law of Japan and its related rules and regulations and in conformity
with accounting principles generally accepted in Japan, which are different in certain respects from accounting
principles generally accepted in countries and jurisdictions other than Japan.
In addition, the notes to the consolidated financial statements include information which is not required 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, 2017 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.
Fukoku Life Investments Singapore Pte. Ltd. has been included in the scope of consolidation from the year ended
March 31, 2017 due to its significance.
Also, from the year ended March 31, 2017 the company has changed its fiscal year-end from March 31 to
December 31. Accordingly, the company’s business year for this year is a nine-month period, from April 1
through December 31.
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, 2017.
(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.

43

Fukoku Mutual Life Insurance Company

II. Notes to the Consolidated Balance Sheets
1. (1) The valuation of securities, including bank deposits and monetary claims bought which are equivalent 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 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.
44

Fukoku Mutual Life Insurance Company

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, 2017 was ¥1 million.
(7) Net defined benefit liabilities, supposed to be incurred as of March 31, 2017, 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.................................
• Amortization period of prior service cost..............................................

Benefit formula basis
10 years
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.
At the end of the fiscal year ended March 31, 2013, among individual annuity insurance policies with anassumed interest rate of 5.00% or higher, policies that have an annuity commencement date on or prior to March
31, 2013 (excluding wife’s annuity insurance additional rider), the Company reduced the assumed interest rate
to 1.00% and funded additional policy reserves. As of March 31, 2017, the balance of these policy reserves was¥42,748 million.
At the end of the fiscal year ended March 31, 2016, among individual annuity insurance policies with anassumed interest rate of 5.00% or higher, policies that have an annuity commencement date from April 1, 2013,45

Fukoku Mutual Life Insurance Company

through March 31, 2017 (excluding wife’s annuity insurance additional rider), the Company reduced theassumed interest rate of policy reserve to 1.00% and funded additional policy reserves. Furthermore, for certain
whole life insurance policies that include distribution of surplus every five years the Company funded additional
policy reserves. As of March 31, 2017, the balance of these policy reserves was ¥29,931 million.
(13) Intangible fixed assets are amortized as follows:i) Software for internal use is amortized based on the straight-line method over the estimated useful lives.
ii) Lease assets are amortized based on the straight-line method over the lease term.
(14) Of the bonds corresponding to the sub-groups of individual insurance and annuities which are set by insurance
types and investment policies, the bonds that are held to match the duration of liabilities are classified as 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. In line with a revision to the Corporation Tax Act, the Company adopted the “Practical Solution on a Change inDepreciation Method Due to Tax Reform 2016” (PITF No. 32, June 17, 2016) from the current fiscal year.
Accordingly, the method of depreciation was changed from the declining-balance method to the straight-line method
for facilities attached to buildings and structures acquired on or after April 1, 2016.
As a result, both ordinary profits and the surplus before income taxes increased by ¥100 million.
3. 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 the acceptable range of risk in order to enhance the profitability,
although yen-denominated interest bearing assets including debt securities such as Japanese government bonds andloans are the cores of the portfolios under the asset liability management. Derivatives are mainly used to hedge themarket risk regarding spot-priced assets and liabilities. Major financial instruments including securities, loans andderivatives 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, 2017 were as follows:

46

Fukoku Mutual Life Insurance Company

Carrying amount

Cash and deposits:
Cash and deposits not treated as securities…....
Total cash and deposits…..................................
Call loans
Monetary claims bought:
Claims treated as loans……..............................
Total monetary claims bought...............
Money held in trust:
Trading securities...............................................
Total money held in trust....................................
Securities:
Trading securities...............................................
Held-to-maturity debt securities.........................
Policy-reserve-matching bonds..........................
Available-for-sale securities...............................
Total securities...................................................
Loans:
Policy loans........................................................
Ordinary loans....................................................
Total loans..........................................................
Assets total.............................................................
Subordinated bonds*1.............................................
Liabilities total…....................................................
Derivative instruments*2:
Hedge accounting not applied............................
Hedge accounting applied……..........................
Total derivative instruments...............................

¥¥

135,088
135,088

Fair value¥

135,088
135,088(Millions of yen)
Difference¥–

193,000

193,000––

753
43,274
123,781753

808
43,274
123,781808

54
54

28,78728,78728,78728,787––179,246
1,235,331
2,067,059
3,552,958
7,034,595

179,246
1,475,486
2,314,447
3,552,958
7,522,139–
240,155
247,387–
487,543

62,625568,483
631,1098,023,334
191,935
191,935

62,625592,719
655,3448,535,168
199,659
199,659(0)24,23524,235
511,833
7,724
7,724

535
13,102
13,638535
13,102
13,638

¥

–
–
¥

–

*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, ¥6,109 million, and ¥17,418
million as of March 31, 2017, 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 as
47

Fukoku Mutual Life Insurance Company

loans 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.
4. 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 ¥171,021 million and ¥282,301 million as ofMarch 31, 2017, 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 ¥972 million as of March 31, 2017.
5. The amount of securities lent under lending agreements was ¥38,863 million as of March 31, 2017.
6. 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 ¥1,124 million as of March 31, 2017;i) The balance of credits to bankrupt borrowers was ¥239 million as of March 31, 2017.
ii) The balance of delinquent loans was ¥884 million as of March 31, 2017.
iii) There was no balance of delinquent loans past 3 months or more and restructured loans as ofMarch 31, 2017.
The direct write-offs related to loans decreased credits to bankrupt borrowers described above by ¥1 million as ofMarch 31, 2017.
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 payments 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.
7. Accumulated depreciation of tangible fixed assets were ¥159,372 million as of March 31, 2017.
8. Total assets in separate accounts provided for in Article 118 of the Insurance Business Act were ¥75,678 million asof March 31, 2017. The amounts of separate account liabilities were the same as separate account assets.
9. The total amounts of receivables from/payables to unconsolidated subsidiaries were ¥2,349 million and ¥117 million
as of March 31, 2017, respectively.
48

Fukoku Mutual Life Insurance Company

10. Deferred tax assets and deferred tax liabilities as of March 31, 2017 were ¥124,388 million and ¥136,125 million,
respectively. Valuation allowance for deferred tax assets was ¥4,343 million.
Major components of deferred tax assets were ¥74,052 million of policy reserves, ¥25,712 million of reservefor price fluctuation and ¥16,085 million of net defined benefit liability as of March 31, 2017.
Major component of deferred tax liabilities was ¥131,909 million of net unrealized gains on available-for-salesecurities as of March 31, 2017.
The statutory tax rate and the actual effective tax rate for the year ended March 31, 2017 were 28.2% and10.0%, respectively. The difference between the statutory tax rate and the actual effective tax rate was attributable
mainly to -23.3% of reserve for dividends to the policyholders.
11. Changes in reserve for dividends to policyholders for the year ended March 31, 2017 were as follows:(Millions of yen)

Balance at the beginning of the fiscal year……….............................................
Transfer from surplus in the previous fiscal year ..............................................
Dividend payments to policyholders during the fiscal year...............................
Increase in interest..............................................................................................
Balance at the end of the fiscal year...................................................................

¥ 50,368
35,236(34,695)
20¥ 50,929

12. Changes in reserve for dividends to policyholders (Fukokushinrai Life Insurance Co., Ltd.) for the year ended
March 31, 2017 were as follows:(Millions of yen)

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

¥ 650

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

(472)

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

0

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

419

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

¥ 598

13. The amount of stocks of unconsolidated subsidiaries was ¥454 million as of March 31, 2017.
14. Assets pledged as collateral as of March 31, 2017 were ¥27,012 million of securities and ¥1,688 million of bankdeposits. Secured debts as of March 31, 2017, were ¥4,974 million.
15. Reserve for outstanding claims for the reinsurance contracts provided in accordance with Article 71 Paragraph 1 of
the Enforcement Regulation of the Insurance Business Act (hereinafter called “reserve for outstanding claims forceded reinsurance”) was ¥5 million as of March 31, 2017.
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, 2017.
16. In line with the redemption of ¥20,000 million in foundation funds, the same amount of reserve for redemption offoundation funds is transferred to accumulated foundation funds redeemed in accordance with Article 56 of the
Insurance Business Act.
17. There were unused commitment line agreements under which the Company is the lender of ¥500 million as ofMarch 31, 2017.
18. Repayments of subordinated bonds are subordinated to other obligations.
19. The future contribution to the Life Insurance Policyholders Protection Corporation of Japan under Article 259 of the
Insurance Business Act was estimated at ¥11,474 million as of March 31, 2017.
The contribution is recognized as operating expenses when contributed.
20. Matters Related to Employees’ Retirement Benefits as of March 31, 2017
(1) Overview of Employees’ Retirement Benefit Plan

49

Fukoku Mutual Life Insurance Company

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.........................
Service cost...........................................................................................................
Interest cost...........................................................................................................
Actuarial differences occurred during the fiscal year...........................................
Retirement benefit payments................................................................................
Others....................................................................................................................
Retirement benefit obligation at the end of the fiscal year....................................

¥ 85,285
3,610
510
656
(4,591)(25)¥ 85,446

ii) Reconciliation of beginning and end of balance of pension plan assets(Millions of yen)

Pension plan assets at the beginning of the fiscal year..........................................
Expected return on pension plan assets.................................................................
Actuarial differences occurred during the fiscal year............................................
Contributions by the employer..............................................................................
Retirement benefit payments.................................................................................
Others....................................................................................................................

¥ 44,636
671
57
2,757
(1,401 )(0)

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

¥ 46,721

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........................................................
b. Pension plan assets............................................................................................
c. (a + b) ................................................................................................................
d. Unfunded plan retirement benefit obligation.....................................................

¥ 73,926(46,721 )27,205
11,519e. Net amount of liabilities and assets presented on the consolidatedbalance sheet.....................................................................................................

38,725f. Net defined benefit liabilities............................................................................
g. Net defined benefit assets..................................................................................

38,767(42 )h. Net amount of liabilities and assets presented on the consolidatedbalance sheet......................................................................................................

¥ 38,725

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

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

50¥ 3,610510(671 )
2,306
(76 )
0
¥ 5,680

Fukoku Mutual Life Insurance Company

v) Remeasurements of defined benefit plan
Remeasurements of defined benefit plan (before tax effects) comprised the following:(Millions of yen)Amortization of actuarial differences...................................................................
Amortization of prior service cost........................................................................
Total..........................................……....................................................................

¥ 1,707(76 )¥ 1,631vi) Accumulated remeasurements of defined benefit plan
Accumulated remeasurements of defined benefit plan (before tax effects) comprised the following:(Millions of yen)

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

¥ (13,156 )323¥ (12,833 )vii) Breakdown of pension plan assets
The breakdown of asset categories as a percentage of total pension plan assets is as follows:
Domestic stocks...................................................................................................
Life insurance general account.............................................................................
Domestic bonds.....................................................................................................
Foreign stocks.......................................................................................................
Foreign bonds........................................................................................................
Others.....................................................................................................................
Total.......................................................................................................................

46.0%
34.3%
8.0%
7.9%
2.7%
1.1%
100.0%

Within the total of pension assets, 37.1% of this amount is accounted for by the retirement benefit trust
established in relation to the retirement lump-sum payments plan for sales employees.
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.
i) Underlying actuarial assumptions
Main underlying actuarial assumptions as of March 31, 2017, were as follows:
Discount rate.........................................................................................................
Expected long-term rate of return on pension plan assets
Defined Benefit Plan.........................................................................................
Retirement benefit trust.....................................................................................

0.6%
2.5%
0.0%

(3) Defined Contribution Plan
The required contribution amount by the Company and its consolidated subsidiaries to the defined contribution
plan was ¥297million.
21. The “Implementation Guidance on Recoverability of Deferred Tax Assets” (ASBJ Guidance No. 26, March 28,2016) has been applied from the year ended March 31, 2017.

51

Fukoku Mutual Life Insurance Company

III. Notes to the Consolidated Statements of Operations
1. The total amounts of revenues and expenses in connection with unconsolidated subsidiaries were ¥75 million and¥2,202 million for the year ended March 31, 2017.

2. For the year ended March 31, 2017, reversal of reserve for outstanding claims for ceded reinsurance considered in
calculation of reversal of reserve for outstanding claims was ¥9 million, and provision of policy reserve for ceded
reinsurance considered in calculation of provision for policy reserve was ¥1 million.

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, 2017 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...............................................................
Reclassification adjustments..............................................................................
Before tax adjustments.....................................................................................
Tax effects.........................................................................................................
Net unrealized gains (losses) on available-for-sale securities, net of tax…….

¥ (13,419 )
797(12,621 )
4,853(7,768 )ii) Revaluation reserve for land, net of tax(Millions of yen)Amount incurred during the fiscal year..............................................................
Reclassification adjustments.............................................................................
Before tax adjustments....................................................................................
Tax effects.......................................................................................................
Revaluation reserve for land, net of tax..........................................................

¥–
–
–
0
0

iii) Foreign currency translation adjustments(Millions of yen)Amount incurred during the fiscal year..............................................................
Reclassification adjustments.............................................................................
Before tax adjustments....................................................................................
Tax effects.......................................................................................................
Foreign currency translation adjustments.......................................................

¥ (318 )–(318 )–(318 )

iv) Remeasurements of defined benefit plans, net of tax(Millions of yen)Amount incurred during the fiscal year..............................................................
Reclassification adjustments.............................................................................
Before tax adjustments....................................................................................
Tax effects.......................................................................................................
Remeasurements of defined benefit plans, net of tax.....................................

¥ (599 )
2,230
1,631
(456 )
1,174

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

¥ (6,912 )52

Fukoku Mutual Life Insurance Company

V. Notes to the Consolidated Statements of Cash Flows
1. Cash and cash equivalents as of March 31, 2017 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, 2017 were as follows:(Millions of yen)

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

¥ 136,494

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

193,000

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

753

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

(100 )

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

(1,157 )Monetary claims bought maturing over 3 months of the date of acquisition………..…

(753 )Cash and cash equivalents...............................................................................................

¥ 328,236

53

Fukoku Mutual Life Insurance Company

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

As of March 31, 2016

As of March 31, 2017

Credits to bankrupt borrowers

223

239

Delinquent loans

773

884

Delinquent loans past three months or more－－

Restructured loans

－

－

Total

997

1,124

[0.14%][0.18%][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 ¥247 million as ofMarch, 2016 and ¥1 million as of March 31, 2017.
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.

54

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, 2016

As ofMarch 31, 2017

1,417,685

1,488,469

Foundation funds and surplus

234,905

220,040

Reserve for price fluctuation

77,28991,827

Contingency reserve

152,554

173,088

－

－

1,251

1,213

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

437,678

427,019

Net unrealized gains on real estate × 85%

105,577

111,340

Sum of unrecognized actuarial differences and unrecognized prior service cost

(14,465)(12,833)

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

238,473

239,650

Qualifying subordinated debt

141,935

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－－

42,48545,187211,354

236,754

Total solvency margin(A)

Catastrophe loss reserve
General allowance for possible loan losses

OthersTotal amount of risk

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

2

2

2

(B)

Insurance risk

R1

25,16424,459General insurance risk

R5

－

－

Catastrophe risk

R6

－

－

3rd sector insurance risk

R8

9,690

9,851

Small amount and short-term insurance risk

R9

－

－

Assumed investment yield risk

R2

33,87233,225

Minimum guarantee risk

R7

0

0

Investment risk

R3

169,750

195,706

Business risk

R4

4,769

5,264

1,341.5%

1,257.3%

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

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.

55

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, 2016

As ofMarch 31, 201769,244

98,596

Foundation funds and surplus

36,87568,584

Reserve for price fluctuation

9,000

9,363

Contingency reserve

1,981

2,054

0

0

16,681

13,061

－

－

2,385

2,561

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

－

－

2,319

2,970

20,455

21,403

Total 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

570

527

3rd sector insurance risk

R8

112

110

Assumed investment yield risk

R2

391

389

Minimum guarantee risk

R7

－

－

Investment risk

R3

19,63820,572Business risk

R4

414

432

677.0%

921.3%

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

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.

56

Fukoku Mutual Life Insurance Company