November 24, 2016

Financial Results for the Six Months Ended September 30, 2016
Fukoku Mutual Life Insurance Company (President: Yoshiteru Yoneyama) announces financial results
for the six months ended September 30, 2016.

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

P. 1

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

P. 3

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

P. 10

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

P. 11

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

P .12

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

P. 21

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

P. 22

8. Risk-monitored Loans･････････････････････････

P. 23

9. Solvency Margin Ratio･････････････････････････

P. 24

10. Status of Separate Account･････････････････････････

P. 25

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

P. 32

Attached: Supplementary Materials for the Six Months Ended September 30, 2016

Fukoku Mutual Life Insurance Company

Financial Summary for the Six Months Ended September 30, 2016
1. Business Highlights(1) Policies in Force, New Policies and Surrendered and Lapsed Policies(i) Policies in Force
As of March 31, 2016
Number of policies

As of September 30, 2016
Amount(Thousands)(Thousands)(100 millions of yen)

3,109

Individual insurance

Number of policies

234,174

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

100.8

233,016

99.5
98.6

3,135

715

27,833707

98.8

27,452

3,825

262,008

3,842

100.4

260,468

99.4

Group insurance－

169,723－－

171,554101.1

Group annuities－

21,189－－21,519101.6

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
Six months ended
September 30, 2015

Number of policies

Amount(Thousands)(100 millions of yen)177

Individual insurance

New business

Net increase by
conversion

AmountAmount(100 millions of yen)

8,145(100 millions of yen)

7,477

668

15

531

541

(9)

192

8,677

8,018

658

Group insurance

－

178

178

－

Group annuities

－

30

30

－

Individual annuities
Subtotal

Total
Six months ended
September 30, 2016

Number of policies(Thousands)

AmountChanges(%, YoY)

Net increase by
conversion

New business(100 millionsof yen)Amount(100 millions ofyen)

Changes(%, YoY)

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

Individual insurance

196

110.7

7,677

94.2

7,189

96.2

487

Individual annuities

10

70.4

411

77.4

419

77.5

(8)

－

206

107.5

8,088

93.2

7,609

94.9

479

72.8

Group insurance

－

－

55

30.9

55

30.9

－

－

Group annuities

－

－

14

46.9

14

46.9

－

－

Subtotal

72.9

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)
Six months ended
September 30, 2015

Six months ended
September 30, 2016
Changes(%, YoY)

Amount of surrender and lapse(100 millions of yen)

6,725

6,445

95.8

Surrender and lapse ratio (%)

2.53

2.46

(0.07)

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 except percentage)

As of March 31, 2016

As of September 30, 2016
Changes(%, Pre-FYE)

Individual insurance

2,748

2,756

100.3

Individual annuities

1,322

1,322

100.0

Total

4,071

4,079

100.2

1,075

1,084

100.9

Medical coverage and living benefits(ii) New Policies(100 millions of yen except percentage)

Six months ended September 30, 2015

Six months ended September 30, 2016
Changes(%, Pre-FYE)

Individual insurance

99

100

101.3

Individual annuities

18

13

73.1

Total

118

114

96.9

34

39

113.3

Medical coverage and living benefits

Notes: 1. Annualized premiums are calculated by using coefficients based on the premium payment method. (For single premium
contracts, the amount is calculated by dividing the premium by the coverage period.)
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.
3. New policies include net increase by conversion.

(3) Selected Items of Statements of Operations(100 millions of yen except percentage)

Six months ended September 30, 2015

Six months ended September 30, 2016
Changes(%, Pre-FYE)

Premium and other income
Investment income
Claims and other payments

3,131

3,237

103.4

888

990

111.6

3,298

2,639

80.0

Investment expenses

231

438

189.7

Ordinary profits

496

378

76.4

(4) Total Assets(100 millions of yen except percentage)

As of March 31, 2016

As of September 30, 2016
Changes(%, Pre-FYE)

Total assets

64,8982

64,37999.2

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 September 30, 2016

% of total

Amount4.9 %
0.0

323,781784% of total

5.1 %
0.0

87,793

1.4

29,1030.5

5,017,719

78.3

5,073,281

79.7

2,659,186

41.5

2,692,697

42.3

Domestic stocks

570,386

8.9

561,450

8.8Foreign securities

1,700,012

26.5

1,715,263

26.9

Foreign bonds

1,505,637

23.5

1,517,051

23.8

194,374

3.0

198,211

3.1

Foreign stocks and other securities
Other securities

88,134

1.4

103,870

1.6

693,68010.8

649,817

10.2

Policy loans

61,4371.0

60,742

1.0

Ordinary loans

Loans

632,2429.9

589,075

9.3

Real estate

212,879

3.3

213,611

3.4

Others87,3091.4

78,2801.2

Allowance for possible loan losses(1,850)( 0.0)(1,768)( 0.0)

6,410,750

100.0

6,366,891

100.0

1,875,134

29.2

1,934,979

30.4

Total
Foreign currency denominated assets(2) Changes (Increase/Decrease) in Assets(Millions of yen)Six months ended September 30, 2015

Cash, deposits, call loans(96,912)Six months ended September 30, 2016

11,375

Monetary claims bought

(28)

(29)

Money held in trust(584)(58,689)(7,011)

55,561

Domestic bonds(143,667)

33,510

Domestic stocks(55,280)(8,936)

Foreign securities

189,270

15,250Foreign bonds

224,390

11,413Foreign stocks and other securities(35,119)

3,836

2,665

15,736(29,696)(43,862)

Securities

Other securities
Loans
Policy loans

(948)

(695)

Ordinary loans(28,747)(43,167)

Real estate(11,391)

731

Others

16,462(9,029)Allowance for possible loan losses
Total
Foreign currency denominated assets

3

(0)

82

(129,162)(43,859)

311,61259,845

Fukoku Mutual Life Insurance Company

(3) Investment Income(Millions of yen)Six months ended
September 30, 2015

Interest, dividends and other income

Six months ended
September 30, 2016

66,35962,832

13

10Interest and dividends from securities

52,62550,012

Interest from loans

6,893

5,875

Income from real estate for rent

6,705

6,871

Other interest and dividends

121

62

22,293

6,241

Gains on sales of domestic bonds

18,310

5,915

Gains on sales of domestic stocks

674

301

Gains on sales of foreign securities

Interest from deposits

Gains on sales of securities

3,308

24

Gain on derivative instruments, net－

29,914

Reversal of allowance for possible loan losses

－

81

177

22

88,82999,091Other investment income
Total(4) Investment Expenses(Millions of yen)Six months ended
September 30, 2015

Interest expenses

Six months ended
September 30, 2016

2,389

1,918

Losses on money held in trust, net

556

1,896

Losses on trading securities, net

2,064

24,395Losses on sales of securities

3,343

150

Losses on sales of domestic stocks

845

149

Losses on sales of foreign securities

2,497

0

－

174

－

174

Losses on derivative instruments, net

4,803

－

Foreign exchange losses, net

2,322

9,351

Provision for allowance for possible loan losses

19－

Depreciation of real estate for rent and other assets

2,148

2,122

Other investment expenses

2,851

2,679

Total

20,49842,686

Losses on valuation of securities
Losses on valuation of foreign securities(5) Net Investment Income
Six months ended
September 30, 2015

Net investment income

68,331

4(Millions of yen)Six months ended
September 30, 2016

56,405

Fukoku Mutual Life Insurance Company

(6) 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 September 30, 2016

319,809

Net valuation gains/losses
included in the statementof operations

Carrying value on
the balance sheet(36,617)

227,091(27,226)

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

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

As of March 31, 2016

As of September 30, 2016

Gains/losses

Book value

Fair value

768,786

936,313

167,526

167,526

Domestic bonds

740,989

906,313

165,323

Foreign bonds

27,79730,000

Monetary claims bought－

Negotiable certificate of deposits
OthersGains/losses

Book value

Fair value－

762,421930,464

168,043

168,043－

165,323－739,544905,601

166,057

166,057

－

2,202

2,202

－

22,87624,863

1,986

1,986

－

－

－

－

－

－

－

－

－

－

－

－

－

－

－

－

－

－

－

－

－

－

－

－

－

－

－

－

－

－

1,074,535

1,280,612

206,077

206,077－

1,038,589

1,244,749

206,159

206,474314

Domestic bonds

1,044,436

1,250,268

205,832

205,832－

1,021,290

1,227,283

205,992

206,307314

Foreign bonds

30,09830,343

244

244

－

17,29917,466

166

166

－

1,433

1,140

(293)

1

294

1,557

1,076

(480)

－

480
40,927

Gains
Held-to-maturity debt securities

Policy-reserve-matching bonds

Investments in subsidiaries and affiliates
Available-for-sale securities

Losses

Gains

Losses2,419,858

2,889,888

470,029487,293

17,2632,624,803

3,022,332

397,528

438,456

Domestic bonds

735,758

822,51386,75487,055300

799,393

886,516

87,122

88,706

1,583

Domestic stocks

291,475

528,697

237,221244,234

7,012

304,123

519,831

215,708

225,966

10,257

Foreign securities

1,326,814

1,458,914

132,099

139,958

7,858

1,437,619

1,519,887

82,268

108,686

26,418Foreign bonds

1,157,841

1,265,973

108,131

111,8813,750

1,251,024

1,323,233

72,20989,903

17,694

168,972

192,941

23,96828,077

4,108

186,595

196,654

10,05918,7838,723

65,80979,763

13,953

16,044

2,091

83,667

96,096

12,42815,097

2,668

Money held in trust

－

－

－

－

－

－

－

－

－

－

Monetary claims bought

－

－

－

－

－

－

－

－

－

－

Negotiable certificate of deposits

－

－

－

－

－

－

－

－

－

－

Others

－

－

－

－

－

－

－

－

－

－

4,264,614

5,107,954

843,340

860,898

17,5584,427,371

5,198,623

771,251

812,974

41,723

Domestic bonds

2,521,184

2,979,095

457,910458,211300

2,560,228

3,019,401

459,173

461,071

1,898

Domestic stocks

291,475

528,697

237,221244,234

7,012

304,123

519,831

215,708

225,966

10,257

Foreign securities

1,386,144

1,520,398

134,254

142,407

8,153

1,479,352

1,563,293

83,940110,839

26,898Foreign bonds

1,215,738

1,326,317

110,578

114,3283,750

1,291,200

1,365,562

74,362

92,056

17,694

170,406

194,081

23,67528,078

4,403

188,152

197,730

9,578

18,7839,204

65,80979,763

13,953

16,044

2,091

83,667

96,096

12,42815,097

2,668

Money held in trust

－

－

－

－

－

－

－

－

－

－

Monetary claims bought

－

－

－

－

－

－

－

－

－

－

Negotiable certificate of deposits

－

－

－

－

－

－

－

－

－

－

Others

－

－

－

－

－

－

－

－

－

－

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 September 30, 2016

Held-to-maturity debt securities－－

Unlisted foreign bonds－－

Others－－－－Investments in subsidiaries and affiliates

35,56035,495

Available-for-sale securities

14,49913,896

6,127

6,122

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

Unlisted foreign bonds

－

－

8,371

7,774

50,06049,392

Policy-reserve-matching bonds

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

Others
Total

5

Fukoku Mutual Life Insurance Company

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

As of March 31, 2016

Money held in trust

Carrying
value onthe balance
sheet

Fair value

87,79387,793As of September 30, 2016

Gains/losses

－

Gains

Losses－－Carrying
value onthe balance
sheet

Fair value

Gains/losses

29,103

29,103

Gains

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

As of March 31, 2016
Net valuation gains/losses
included in the statementsof operations

Carrying value on
the balance sheet
Money held in trust
for trading purpose

As of September 30, 2016

86,793

Net valuation gains/losses
included in the statementsof operations

Carrying value on
the balance sheet(0)28,103(80)* Money held in trust classified as held-to-maturity, policy-reserve-matching and available-for-sale(Millions of yen)

As of March 31, 2016
Book value

As of September 30, 2016

Gains/losses

Fair value

Book value

Gains

Losses

Gains

Losses

－

－

－

－

－

－

－

－

－

－

－

Money held in trust
for held-to-maturity

－

－

－

－

－

－

－

Money held in trust forpolicy-reserve-matching

－

－

－

－

－

－

Money held in trust
for available-for-sale

－

－

－

－

－

－

6

Gains/losses

Fair value

Fukoku 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 September 30, 2016

Currencyrelated

Stockrelated

Bondrelated

Others18,823

Total－

10,767(79)－－

Hedge accounting not applied(1,157)

1,794

－

0

－

637

Total

(1,157)

12,562(79)

0－11,325Hedge accounting applied

10,688

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 ¥10,767 million, stock-related losses of ¥79 million as of
September 30, 2016) 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 value

As of September 30, 2016

Fair
value

Notional amount/contract value

Gains(losses)Over 1 year

Fair
value

Gains
(losses)Over 1 year

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
191

Total(972) [

－

－

－

－

－

64

(1,157)

－ ]

－

－ ]
320,000

1,164 ]

－
－

－

－ ]

[

－

－ ]
－

－ ]

[

－ [

120,000

1,222 ]

(972)

(1,157)

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 value

As of September 30, 2016

Fair
value

Notional amount/contract value

Gains(losses)Over 1 year

Fair
value

Gains
(losses)Over 1 year

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

1,375,442
1,128,269
81,92676,33941,782
47,124

－
－
－
－
－
－

1,357,681
1,109,234
80,87076,87142,49048,215

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

1,207,658
996,478
73,88258,484
42,62136,192

－
－
－
－
－
－

1,195,096
986,765
71,96258,04042,17936,14812,562
9,712
1,919
443
442
43

－
－

－
－

－
－

－
－

505
505

－
－

505
505

(0)
(0)

Total

17,76012,562

Notes: 1. Forward exchange rates are used for exchange rates as of September 30, 2016.
Notes: 2. Regarding assets and liabilities which are denominated in foreign currencies but have fixed settlement in yen under currency forward contracts
Notes: 2. and are reported in yen amounts in the balance sheet, those currency forward contracts are excluded from the table above.

7

Fukoku Mutual Life Insurance Company

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

As of March 31, 2016
Notional amount/contract value

As of September 30, 2016

Fair valueOver 1 year

Notional amount/contract value

Gains(losses)

Fair valueOver 1 year

Gains(losses)Over-the-counter transactions
Yen stock forward contract
Sold

823

823

557

265

517

517

597

(79)

Bought

－

－

－

－

－

－

－

－

Total

265

(79)

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

As of March 31, 2016
Notional amount/contract value

As of September 30, 2016

Fair valueOver 1 year

Notional amount/contract value

Gains(losses)

Fair valueOver 1 year

Gains(losses)

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

151,300

(231)

－

－

－

－

－

－

－

－

－

－

－

－

38,343－38,32418

34,520－34,519

0

－

－

－

－

－

－

－

－

Foreign bond futures
Sold
Bought
Total

(212)

8

0

Fukoku Mutual Life Insurance Company

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

As of March 31, 2016
Carrying value on
the balance sheet
125,312Fair value
233,848

As of September 30, 2016
Carrying value on
the balance sheet

Gains(losses)

125,289

108,535

Fair value
234,025

Gains(losses)
108,736

Notes: 1. As of September 30, 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, 2016.
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.

9

Fukoku Mutual Life Insurance Company

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

As of September 30, 2016

Cash and deposits

114,182

125,097

Call loans

200,000

200,000

Assets:Monetary claims bought
Money held in trust
Securities

813

784

87,793

29,103

5,091,762

5,140,807[1,881,618][1,863,264][Local government bonds][142,336][145,174][Corporate bonds][663,209][713,052][Government bonds][Stocks][Foreign securities][594,312][581,535][1,722,110][1,733,883]

693,680

649,817

Loans
Policy loans

61,43760,742

Ordinary loans

632,242

589,075

Tangible fixed assets

218,565

219,140

Intangible fixed assets

16,09318,716

Reinsurance receivables
Other assets

144

29

68,631

56,209Lease investment assets

767

750

Rest of the other asset

67,86355,458

Allowance for possible loan losses
Total assets

Liabilities:
Policy reserves(1,850)(1,768)6,489,815

6,437,938

As of March 31, 2016

As of September 30, 2016

5,555,450

5,600,876

Reserve for outstanding claims
Policy reserve

20,71918,0585,484,362

5,515,065

50,36867,752

Reserve for dividends to policyholders
Reinsurance payables

133

152

Subordinated bonds

141,935

141,935

Other liabilities

43,65345,687

Corporate income tax payable

891

7,197

Asset retirement obligations

3,351

3,383

Rest of the other liabilities
Reserve for employees' retirement benefits

39,41035,10626,08325,698Reserve for price fluctuation of securities

68,28869,895

Deferred tax liabilities

33,050

9,316

Deferred tax liabilities for revaluation reserve for land

14,274

14,268

Total liabilities

5,882,868

5,907,829

Net assets:
Foundation funds

30,00010,000

Accumulated foundation funds redeemed

86,000106,000

Reserve for revaluation
Surplus
Legal reserve for future losses
Other surplus

112

112

148,284

123,660

2,742

2,849

145,542

120,811

Reserve for redemption of foundation funds

18,0004,000

Reserve for dividend allowances

20,00020,000

Accumulated fund for price fluctuation
Reserve for advanced depreciation ofreal estate for tax purpose

41,00041,000

266

257

－

100

Reserve for special account foradvanced depreciation of real estate for tax purpose
Other reserves
Unappropriated surplus
Total foundation funds, surplus and others
Net unrealized gains (losses) on
available-for-sale securities, net of tax
Revaluation reserve for land, net of tax
Total valuation and translation adjustments
Total net assets
Total liabilities and net assets

767

767

65,50954,686

264,397239,772

338,421286,220

4,128

4,115

342,549

290,335

606,947

530,1086,489,815

6,437,938

10

Fukoku Mutual Life Insurance Company

4. Non-consolidated Statements of Operations(Millions of yen)Six months ended
September 30, 2015

Six months ended
September 30, 2016

Ordinary revenues:
Premium and other income

313,128

323,700[Premium income][313,014][323,632]

88,82999,091[Interest, dividends and other income][66,359][62,832][Gains on sales of securities][22,293][6,241][－][29,914]

Investment income[Gains on derivative instruments, net]

53,665

6,428[Reversal of reserve for outstanding claims][1,987][2,660][Reversal of policy reserve][47,187][－]455,623

429,221

Other ordinary revenues

Total ordinary revenues
Ordinary expenses:

329,857

263,967[Claims][84,623][64,344][Annuities][104,847][88,463][Benefits][55,307][51,671][Surrenders][66,494][42,916][Other payments][18,355][16,324]

Claims and other payments

24

30,717

Provision for policy reserve－

30,702

Provision for interest on reserve for dividends to policyholders

24

15

Investment expenses

23,102

43,825[Interest expenses][2,389][1,918][Losses on money held in trust, net]

[556]

[1,896][Losses on trading securities, net]

[2,064][24,395][Losses on sales of securities][3,343][150][Losses on valuation of securities][－][4,803][174][Losses on derivative instruments, net]
[Losses on separate accounts, net]

[2,604][－][1,138]Operating expenses

42,87443,337

Other ordinary expenses

10,148

9,489

Total ordinary expenses

406,006

391,338

Ordinary profits

49,61637,883

Gains on disposal of fixed assets

1,356

2

Gain on contribution of securities to retirement benefit trust

7,913

－

－

42

9,270

45

138

24

Provision for policy reserve and others

Extraordinary gains:

Others extraordinary gains
Total extraordinary gains
Extraordinary losses:
Losses on disposal of fixed assets

208

31

1,411

1,607

Total extraordinary losses

1,757

1,662

Surplus before income taxes

57,12836,265

9,474

8,789

Impairment losses
Provision for reserve for price fluctuation of securities

Income taxes：
Current
Deferred
Total income taxes
Net surplus for the period

11

1,792

(3,438)

11,2675,350

45,86130,914

Fukoku Mutual Life Insurance Company

5. Non-consolidated Statements of Changes in Net Assets[For the six months ended September 30, 2015](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

UnappropriatedTotal surplus
surplus767

Total
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)

45,86145,86145,861(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

－

－

58

58

58

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－(23,362)

8,904

8,904

30,00086,000112

2,742

18,00020,00041,000266

767

69,678152,453

268,565

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

45,861

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

58

Net changes, excluding foundation funds,
surplus and others(75,176)

(0)

(57)

(75,234)(75,234)

Total changes in the current period(75,176)

(0)

(57)

(75,234)(66,329)

Balance at the end of the current period

359,060

03,836

362,896

631,462

12

Fukoku Mutual Life Insurance Company

[For the six months ended September 30, 2016](Millions of yen)Foundation funds, surplus and others
Surplus
Other surplus
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
purposeBalance at the beginning of the current period

30,00086,000112

2,742

18,00020,00041,000

266

－

Other
reserves

UnappropriatedTotal surplus
surplus767

Total
foundation
funds,
surplus andothers65,509148,284

264,397(35,236)(35,236)(35,236)(106)－

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

20,000

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

(316)

(316)

(316)

30,91430,91430,914(20,000)(20,000)

Additions to reserve for redemption offoundation funds

6,000

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

(2)

－

－

11

－

－

(6,000)Additions to reserve for advanced
depreciation of real estate for tax purpose

2

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

－

－

13

13

13

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

20,000－106(14,000)

－

－

(8)

100

－

(10,822)(24,624)(24,624)

Balance at the end of the current period

10,000106,000

112

2,849

4,000

20,00041,000

257

100

767

54,686123,660

239,772

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

30,914

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

13

Net changes, excluding foundation funds,
surplus and others(52,200)(13)(52,214)(52,214)

Total changes in the current period(52,200)(13)(52,214)(76,838)

Balance at the end of the current period

286,220

4,115

290,335

530,108

13

Fukoku Mutual Life Insurance Company

Notes to the Non-consolidated Financial Statements
I.

Presentation of the Non-consolidated Financial Statements

1. The accompanying non-consolidated financial statements have been prepared from the accounts maintained by
Fukoku Mutual Life Insurance Company (the “Company”) in accordance with the provisions set forth in the
Insurance Business Law of Japan and its related rules and regulations and in conformity with accounting principles
generally accepted 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, total in yen shown herein do notnecessarily agree with the sum of the individual amounts.

II. Notes to 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 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 values are stated at fair market values based on the market
prices at the balance sheet date. 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 differences between acquisition costs and face values are 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 for business purposes based on the Law for Revaluation of Land (Law No.34
promulgated on March 31, 1998). The differences between fair values and book values resulting from therevaluation, net of related taxes, are recorded as revaluation reserve for land as a separate component of net
assets and the related tax is recorded as deferred tax liabilities for revaluation reserve for land.
 Date of revaluation: March 31, 2002
 Method of revaluation as prescribed for in Article 3 Paragraph 3 of the said Law:
Calculation is based on the appraisal value for property tax set forth in Article 2 item 3 of the Enforcement
Ordinance of the Law for Revaluation of Land (Government Ordinance No.119 promulgated on March 31,
1998) and the road rate set forth in Article 2 item 4 of the said Ordinance with certain reasonable adjustments.
(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 without residual value
14

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) Foreign currency denominated assets and liabilities, 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 of
September 30, 2016 was ¥247 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 of securities is calculated in accordance with Article 115 of the Insurance
Business Law.
(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 “Investment expenses”, which is calculated by deducting an amount equivalent to the interest
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 foreign currency denominated bonds and against the risk of price fluctuationin 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 foreign currency denominated bonds
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 gains or losses and unrecognized prior service costs related to employees’
retirement benefits is different from the methods used for these items in the consolidated financial statements.

15

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 Law, are deferred as prepaid expenses and amortized equally over five years.
Consumption taxes other than deferred consumption taxes are recognized as an expense when incurred.
(13) Policy reserve is based on Article 116 of the Insurance Business Law, 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 Law,
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. Furthermore, for certain hospitalization riders with surgery
benefits and long-term hospitalization benefits, the Company funded additional policy reserves. At the balance
sheet date, the balance of these policy reserves was ¥45,172 million.
At the end of the fiscal year ended March 31, 2017, 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. At the balance sheet date, the balance of these policy reserves was ¥31,842 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 six months ended September
30, 2016. Accordingly, the method of depreciation was changed from the declining-balance method to the straightline 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 ¥14 million.

16

Fukoku Mutual Life Insurance Company

3. The carrying amounts, fair values and their related differences of major financial assets and liabilities in the generalaccount as of September 30, 2016 were as follows:
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.......................
Investments in subsidiaries and affiliates........
Available-for-sale securities.............................
Total securities.................................................
Loans:
Policy loans......................................................
Ordinary loans.................................................
Total loans........................................................
Assets total..........................................................
Subordinated bonds*1.........................................
Liabilities total…..................................................
Derivative instruments*2:
Hedge accounting not applied.........................
Hedge accounting applied……........................
Total derivative instruments.............................

¥

123,781
123,781200,000

Fair value(Millions of yen)
Difference¥¥

123,781
123,781200,000

―
―
―

784
784

852
852

67
67

28,103
28,103

28,103
28,103――

198,988762,421
1,038,589
1,557
3,022,332
5,023,888

198,988930,464
1,244,749
1,076
3,022,332
5,397,611―
168,043
206,159(480 )―
373,72260,742
589,075
649,817
6,026,375
141,935
141,935

60,742
622,371
683,113
6,433,461
153,821
153,821(0 )33,29533,295407,086
11,886
11,886637
10,688
11,325637
10,688
11,325

―
―
―

¥

¥

¥

*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 ¥35,495 million, ¥6,122 million, and ¥7,774 million as of
September 30, 2016, 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 that17

Fukoku Mutual Life Insurance Company

the loans are limited to the amount of cash surrender values. Therefore, the book values are used as the fairvalues of policy loans.
The fair values of floating interest rate loans among the ordinary loans and monetary claims bought
treated as loans approximate the book values because the market interest rates are reflected in future cash flows
in a short period. Therefore, the fair values of floating interest rate loans and monetary claims bought treated asloans are based on their book values. The fair values of fixed interest rate loans are measured by discounting thefuture cash flows to the present values.
The fair values of loans receivable from legally bankrupt borrowers, substantially bankrupt borrowers andnot currently bankrupt borrowers and monetary claims bought treated as loans are computed by deducting theamount of the allowance for doubtful accounts from the book values before direct write-offs.
(4) Subordinated bonds:
Subordinated bonds issued by the Company are stated at 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. Notes related to the fair value of investment and rental properties are omitted as no significant change has occurredsince the previous fiscal year-end.
5. The amount of securities lent under lending agreements was ¥15,467 million as of September 30, 2016.
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 ¥1,180 million as of September 30, 2016;i) The balance of credits to bankrupt borrowers was ¥204 million as of September 30, 2016.
ii) The balance of delinquent loans was ¥975 million as of September 30, 2016.
iii) There was no balance of delinquent loans past 3 months or more and restructured loans as of September 30,
2016.
The direct write-offs related to loans decreased credits to bankrupt borrowers described above by ¥247 million as of
September 30, 2016.
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
Law. 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 of principal or interest payment, waiver of claim or other terms, have been
negotiated for the purpose of assisting and supporting the borrowers in the restructuring of their business. This
category excludes loans classified as credits to bankrupt borrowers, delinquent loans and delinquent loans past 3
months or more.
7. Accumulated depreciation of tangible fixed assets totalled to ¥155,613 million as of September 30, 2016.
8. Total assets in separate accounts provided for in Article 118 of the Insurance Business Law were ¥71,046 million as
of September 30, 2016. The amounts of separate account liabilities were the same as separate account assets.

18

Fukoku Mutual Life Insurance Company

9. Changes in reserve for dividends to policyholders for the six months ended September 30, 2016 were as follows:(Millions of yen)

Balance at the beginning of the current period………...................................
Transfer from surplus in previous period..................................................
Dividends paid in the current period.........................................................
Increase in interest...................................................................................
Balance at the end of the current period........................................................

¥ 50,368
35,236(17,868)
15¥ 67,752

10. The amount of stocks of subsidiaries was ¥37,053 million as of September 30, 2016.
11. Assets pledged as collateral as of September 30, 2016 were ¥30,345 million of securities and ¥1,417 million of bankdeposits. Secured debts as of September 30, 2016, were ¥4,945 million.
12. Reserve for outstanding claims for the reinsurance contracts provided in accordance with Article 71 Paragraph 1 of
the Enforcement Regulation of the Insurance Business Law (hereinafter called “reserve for outstanding claims forceded reinsurance”) was ¥3 million as of September 30, 2016.
Policy reserve for the reinsurance contracts provided in accordance with Article 71 Paragraph 1 of the
Enforcement Regulation of the Insurance Business Law (hereinafter called “policy reserve for ceded reinsurance”)
was ¥29 million as of September 30, 2016.
13. 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 Law.
14. There were unused commitment line agreements under which the Company is the lender of ¥12,000 million as of
September 30, 2016.
15. Repayments of subordinated bonds are subordinated to other obligations.
On October 21, 2016, the Company issued ¥50,000 million in new subordinated bonds.
16. The future contribution to the Life Insurance Policyholders Protection Corporation of Japan under Article 259 of the
Insurance Business Law was estimated at ¥9,406 million as of September 30, 2016.
The contribution was charged as operating expenses in the year in which it was paid.
17. The “Implementation Guidance on Recoverability of Deferred Tax Assets” (ASBJ Guidance No. 26, March 28,2016) has been applied from the six months ended September 30, 2016.

19

Fukoku Mutual Life Insurance Company

III. Notes to Statements of Operations
1. Major items of gains on sales of securities for the six months ended September 30, 2016 were as follows:(Millions of yen)Domestic bonds..........................................................................................

¥ 5,915

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

301

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

24

2. Major items of losses on sales of securities for the six months ended September 30, 2016 were as follows:(Millions of yen)Domestic stocks and others......................................................................

¥

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

149
0

3. Major items of losses on valuation of securities for the six months ended September 30, 2016 were as follows:(Millions of yen)

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

¥

174

4. For the six months ended September 30, 2016, reversal of reserve for outstanding claims for ceded reinsurance
considered in calculation of reversal of reserve for outstanding claims was ¥12 million, and reversal of policy
reserve for ceded reinsurance considered in calculation of provision for policy reserve was ¥0 million.

5. Breakdown of interest, dividends and other income for the six months ended September 30, 2016 was as follows:(Millions of yen)Interest on deposits ................................................................................

¥

10

Interest and dividends on securities .......................................................

50,012

Interest on loans ....................................................................................

5,875

Income from real estate for rent ............................................................

6,871

Other interest and dividends ..................................................................

62

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

¥ 62,832

20

Fukoku Mutual Life Insurance Company

6. Breakdown of Ordinary Profits (Fundamental Profit)(Millions of yen)Six months ended
September 30, 2015

Six months ended
September 30, 2016

45,01940,731

22,29336,155

Gains on money held in trust, net－－

Gains on trading securities, net－－

22,293

6,241

Gains on derivative instruments, net－

29,914Foreign exchange gains, net

－

－

A

Fundamental profit
Capital gains

Gains on sales of securities－－

18,00839,153Losses on money held in trust, net

657

1,973

Losses on trading securities, net

6,882

27,504Losses on sales of securities

3,343

150

Other capital gains
Capital losses－

174

Losses on derivative instruments, net

4,803

－

Foreign exchange losses, net

2,322

9,351

－

－

B

4,284

(2,998)A+B

49,30437,733

366

149

－

－

366

143

Reversal for specific allowance for possible loan losses－

5

Others－－

Losses on valuation of securities

Other capital losses
Net capital gains (losses)
Fundamental profit plus net capital gains (losses)
Non-recurring gains
Reinsurance income
Reversal of contingency reserve

54－

Reinsurance premiums－－

Provision for contingency reserve－－

Provision for specific allowance for possible loan losses

54－

Allowance for specified overseas loans－－

Write-off of loans－－

Others

－

－

C

312

149

A+B+C

49,61637,883

Non-recurring losses

Non-recurring gains (losses)
Ordinary profits

Notes: 1. The following amounts in respect of gains / losses from money held in trust have been excluded from capitalgains / losses and included in fundamental profit due to their income nature (being interest and dividend income):¥100 million in respect of the six months ended September 30, 2015 and ¥77 million
in respect of the six months ended September 30, 2016.
2. The following amounts in respect of gains / losses from trading securities have been excluded from capital gains/ losses and included in fundamental profit due to their income nature (being interest and dividend income):¥4,818 million in respect of the six months ended September 30, 2015 and ¥3,108 million in respect of
the six months ended September 30, 2016.

21

Fukoku Mutual Life Insurance Company

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

As of March 31, 2016

As of September 30, 2016

Claims against bankrupt and quasi-bankrupt obligors

260

218

Claims with collection risk

736

967

Claims for special attention

－

－

996

1,186

[0.14%][0.18%]

714,152

667,164

715,149

668,350

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.
2. Claims with collection risk are loans to obligors (other than bankrupt and quasi-bankrupt obligors) withdeteriorated financial condition and results of operations from which it is unlikely that the principal and interest on
the loans will be recovered.
3. Claims for special attention are loans on which principal and/or interest are past due for three months or more andloans with a 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.
4. Claims against normal obligors are all other loans.

22

Fukoku Mutual Life Insurance Company

8. Risk-monitored Loans(Millions of yen)

As of March 31, 2016

As of September 30, 2016

Credits to bankrupt borrowers

217

204

Delinquent loans

773

975

Delinquent loans past three months or more－－

Restructured loans

－

－

Total

990

1,180

[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 ¥247 million as of September 30, 2016.
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.
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 andsupport the borrowers in the restructuring of their business.
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.
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.

23

Fukoku Mutual Life Insurance Company

9. Solvency Margin Ratio(Millions of yen)

As ofMarch 31, 2016

Total solvency margin

(A)

As of
September 30, 2016

1,374,588

1,313,042

Foundation funds and surplus

226,683

220,057

Reserve for price fluctuation of securities

68,28869,895

Contingency reserve

150,573

150,429

1,251

1,175

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

423,026

357,775

Net unrealized gains on real estate × 85%

105,577

106,908

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

236,087

237,748

Qualifying subordinated debt

141,935

141,935－－(19,000)(19,000)

40,165

46,117

207,983

219,180

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
Others( R1  R8 )2  R2  R3  R7   R4
2

Total amount of risk

(B)

Insurance risk

R1

24,61624,295

3rd sector insurance risk

R8

9,577

9,642

Assumed investment yield risk

R2

33,48133,220

Minimum guarantee risk

R7

0

0

Investment risk

R3

166,913

178,344

Business risk

R4

4,691

4,910

1,321.8%

1,198.1%

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 ofNotes: 1. the Insurance Business Law and Ministry of Finance No. 50, 1996.
2. "Deductible items" represent the capital increase to the subsidiary, Fukokushinrai Life Insurance Co., Ltd.
3. "Minimum guarantee risk" is calculated by standard method.

24

Fukoku Mutual Life Insurance Company

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

As of March 31, 2016

As of September 30, 2016

AmountAmountIndividual variable insurance－－

Individual variable annuities

67

43

Group annuities

78,99771,003

Total

79,06571,046(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 September 30, 2016

Number ofpolicies

AmountNumber ofpolicies

AmountIndividual variable annuities

23

64

15

38

Total

23

64

15

38

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

As of March 31, 2016

As of September 30, 2016

AmountPercentage

AmountPercentage

Cash, deposits, call loans

26

39.1%

15

36.3%

Securities

41

60.9%

27

63.7%

Domestic bonds

－

－

－

－

Domestic stocks

－

－

－

－

Foreign securities

－

－

－

－

Foreign bonds

－

－

－

－

Foreign stocks and other securities

－

－

－

－

41

60.9%

27

63.7%

Loans

－

－

－

－

Others－－－－Allowance for possible loan losses

－

－

－

－

Total

67

100.0%

43

100.0%

Other securities

25

Fukoku Mutual Life Insurance Company

(iii) Investment Income and Expenses of Separate Account for Individual Variable Annuities(Millions of yen)Six months ended September 30, 2015

Six months ended September 30, 2016

AmountAmountInterest, dividends and other income

142

Gains on sales of securities－－

Gains on valuation of securities

17

6

Gains on redemption of securities－－

Gains on derivative instruments－－

Foreign exchange gains, net－－

Other investment income

00

Losses on sales of securities－－

Losses on valuation of securities

32

10

Losses on redemption of securities－－

Losses on derivative instruments－－

Foreign exchange losses, net－－

Other investment expenses－－

Net investment income

(0)

(0)

(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 September 30, 2016

Carrying value onbalance sheet

Net valuation
gains/losses
included in thestatementsof operations

Carrying value onbalance sheet

Net valuation
gains/losses
included in thestatementsof operations

41

(22)

27

(3)

Trading securities

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

26

Fukoku Mutual Life Insurance Company

(reference) Fair Value Information on Securities (Total of General Account and Separate Account)
Net Valuation Gains/Losses on Trading Securities(Millions of yen)

As of March 31, 2016
Net valuation gains/losses
included in the statementof operations

Carrying value on
the balance sheet

Trading securities

As of September 30, 2016

393,852

Net valuation gains/losses
included in the statementof operations

Carrying value on
the balance sheet(43,873)294,618(30,079)

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 September 30, 2016

Gains/losses

Fair value

Gains

Book value

Fair value

Gains/losses

Losses

Gains

Losses768,786

936,313

167,526

167,526－

762,421930,464

168,043

168,043－

Domestic bonds

740,989

906,313

165,323

165,323－739,544905,601

166,057

166,057－

Foreign bonds

27,79730,000

2,202

2,202

－

22,87624,863

1,986

1,986

－

Monetary claims bought

－

－

－

－

－

－

－

－

－

－

Negotiable certificate of deposits

－

－

－

－

－

－

－

－

－

－

Others

－

－

－

－

－

－

－

－

－

－

1,074,535

1,280,612

206,077

206,077－

1,038,589

1,244,749

206,159

206,474314

Domestic bonds

1,044,436

1,250,268

205,832

205,832－

1,021,290

1,227,283

205,992

206,307314

Foreign bonds

30,09830,343

244

244

－

17,29917,466

166

166

－

1,433

1,140

(293)

1

294

1,557

1,076

(480)

－

480
40,927

Held-to-maturity debt securities

Policy-reserve-matching bonds

Investments in subsidiaries and affiliates
Available-for-sale securities

2,419,858

2,889,888

470,029487,293

17,2632,624,803

3,022,332

397,528

438,456

Domestic bonds

735,758

822,51386,75487,055300

799,393

886,516

87,122

88,706

1,583

Domestic stocks

291,475

528,697

237,221244,234

7,012

304,123

519,831

215,708

225,966

10,257

Foreign securities

1,326,814

1,458,914

132,099

139,958

7,858

1,437,619

1,519,887

82,268

108,686

26,418Foreign bonds

1,157,841

1,265,973

108,131

111,8813,750

1,251,024

1,323,233

72,20989,903

17,694

168,972

192,941

23,96828,077

4,108

186,595

196,654

10,05918,7838,723

65,80979,763

13,953

16,044

2,091

83,667

96,096

12,42815,097

2,668

Money held in trust

－

－

－

－

－

－

－

－

－

－

Monetary claims bought

－

－

－

－

－

－

－

－

－

－

Negotiable certificate of deposits

－

－

－

－

－

－

－

－

－

－

Others

－

－

－

－

－

－

－

－

－

－

4,264,614

5,107,954

843,340

860,898

17,5584,427,371

5,198,623

771,251

812,974

41,723

Domestic bonds

2,521,184

2,979,095

457,910458,211300

2,560,228

3,019,401

459,173

461,071

1,898

Domestic stocks

291,475

528,697

237,221244,234

7,012

304,123

519,831

215,708

225,966

10,257

Foreign securities

1,386,144

1,520,398

134,254

142,407

8,153

1,479,352

1,563,293

83,940110,839

26,898Foreign bonds

1,215,738

1,326,317

110,578

114,3283,750

1,291,200

1,365,562

74,362

92,056

17,694

170,406

194,081

23,67528,078

4,403

188,152

197,730

9,578

18,7839,204

65,80979,763

13,953

16,044

2,091

83,667

96,096

12,42815,097

2,668

Money held in trust

－

－

－

－

－

－

－

－

－

－

Monetary claims bought

－

－

－

－

－

－

－

－

－

－

Negotiable certificate of deposits

－

－

－

－

－

－

－

－

－

－

Others

－

－

－

－

－

－

－

－

－

－

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 September 30, 2016

Differences

Carrying
value on the Fair valuebalance sheet

Differences

768,786

936,313

167,526

762,421930,464

168,043

Domestic bonds

740,989

906,313

165,323739,544905,601

166,057

Foreign bonds

27,79730,0002,202

22,87624,863

1,986

Money 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

－

－

－

－

－

－

Money claims bought

－

－

－

－

－

－

Negotiable certificate of deposits

－

－

－

－

－

－

Others

－

－

－

－

－

－

27

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 September 30, 2016

Differences

Carrying
value on the Fair valuebalance sheet

Differences

1,064,535

1,270,612

206,077

1,026,490

1,232,964

206,474

Domestic bonds

1,044,436

1,250,268

205,832

1,009,191

1,215,498

206,307

Foreign bonds

20,09820,343244

17,29917,466

166

－

－

－

－

－

－

10,00010,000－12,09911,784(314)

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

－

－

－

12,09911,784(314)

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 September 30, 2016

Book value

Carrying
value on thebalance sheet

Differences

Book value

Carrying
value on thebalance sheet

Differences

438,456

2,161,431

2,648,724

487,2932,028,014

2,466,471

Domestic bonds

707,189794,245

87,055

739,774

828,480

88,706

Domestic stocks

245,523

489,757

244,234

241,485

467,451

225,966

Foreign securities

1,166,940

1,306,899

139,958

1,009,132

1,117,819

108,686

Foreign bonds

1,028,891

1,140,772

111,881914,873

1,004,777

89,903Foreign stocks

138,049

166,126

28,077

94,259113,042

18,783

41,77857,822

16,04437,622

52,71915,097

Money held in trust

－

－

－

－

－

－

Money claims bought

－

－

－

－

－

－

Negotiable certificate of deposits

－

－

－

－

－

－

Others

－

－

－

－

－

－
(40,927)

Other securities

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

258,426

241,163(17,263)596,789555,861

Domestic bonds

28,56828,268(300)

59,61958,036(1,583)

Domestic stocks

45,95238,939(7,012)

62,63752,380(10,257)

Foreign securities

159,873

152,014(7,858)428,486

402,068(26,418)

Foreign bonds

128,950

125,200(3,750)336,150

318,456(17,694)

Foreign stocks

30,922

26,814(4,108)92,33583,612(8,723)24,031

21,940(2,091)

46,04543,376(2,668)

Money held in trust

－

－

－

－

－

－

Money 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 ofSeptember 30, 2016－－

Unlisted foreign bonds－－

Others－－

Held-to-maturity bonds－－

Investments in subsidiaries and affiliates

35,56035,495

Available-for-sale securities

14,49913,896

6,127

6,122

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

Unlisted foreign bonds

－

－

8,371

7,774

50,06049,392

Policy-reserve-matching bonds

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

Others
Total

28

Fukoku Mutual Life Insurance Company

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

As of March 31, 2016

Currencyrelated

Stockrelated

Bondrelated

OthersTotal－

18,558265－－

Hedge accounting not applied

(972)

(799)

－

(212)

－

(1,983)

Total

(972)

17,759

265

(212)

－

16,840Hedge accounting applied

Interestrelated

As of September 30, 2016

Currencyrelated

Stockrelated

Bondrelated

Others18,823

Total－

10,767(79)－－

Hedge accounting not applied(1,157)

1,792

－

0

－

635

Total

(1,157)

12,560(79)

0－11,323Hedge accounting applied

10,688

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 ¥10,767 million, stock-related losses of ¥79 million as of
September 30, 2016) 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 value

As of September 30, 2016

Fair
value

Notional amount/contract value

Gains(losses)Over 1 year

Fair
value

Gains
(losses)Over 1 year

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) [

－

－

－

－

－

64

(1,157)

－ ]

－

－ ]
320,000

1,164 ]

－
－

－

－ ]
300,000

－ [

－

－
[

－

－ ]

120,000

1,222 ]

(972)

(1,157)

Note: Figures in [ ] are option premium which are included in balance sheet.
・ Currency-related Transactions(Millions of yen)
As of March 31, 2016
Notional amount/contract value

As of September 30, 2016

Fair
value

Gains
(losses)

Notional amount/contract valueOver 1 year
Over-the-counter transactions
Currency forward contracts
Sold
US dollar
British Pound
Australian dollar
Canadian dollar
Euro
Danish krone
Swiss franc
Swedish krona
Hong Kong dollar
Singapore dollar
BoughtAustralian dollar
Euro

Fair
value

Gains
(losses)Over 1 year

331,876
192,187
34,101
36,92932,45136,197
－
－
8
－
－

－
－
－
－
－
－
－
－
－
－
－

332,676
191,366
34,10037,48532,992
36,724
－
－
8
－
－

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

223,268
116,799
29,611
26,492
25,57824,768
6
4
2
2
2

－
－
－
－
－
－
－
－
－
－
－

221,476
116,052
28,83526,54025,33924,689
6
4
2
2
2

1,792
746
776
(48)
239
79
(0)
0
(0)
(0)
(0)

100
－
100

－
－
－

101
－
101

1
－
1
(799)

505
505
－

－
－
－

505
505
－

(0)
(0)
－
1,792

Total
Notes: 1. Forward exchange rates are used for exchange rates as of September 30, 2016.

29

Fukoku Mutual Life Insurance Company

・ Stock-related Transactions
No ending balance as of March 31, 2016 and September 30, 2016.

・ Bond-related Transactions(Millions of yen)
As of September 30, 2016

As of March 31, 2016
Notional amount/contract value

Fair value

Gains(losses)

Notional amount/contract valueOver 1 year

Fair value

Gains(losses)Over 1 year

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

151,300

(231)

－

－

－

－

－

－

－

－

－

－

－

－

38,343－38,32418

34,520－34,519

0

－

－

－

－

－

－

－

－

Foreign bond futures
Sold
Bought

Total

(212)

30

0

Fukoku Mutual Life Insurance Company

(iii) Hedge Accounting Applied・ Interest-related Transactions
No ending balance as of March 31, 2016 and September 30, 2016
・ 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

1,045,083－(US dollar)

936,723－(British Pound)

47,937－(Euro)

40,849(Canadian dollar)(Australian dollar)

Sold

Fair value
hedge
methodAs of September 30, 2016

BoughtFair
value

Over 1 year
Foreigncurrency1,026,525 denominatedbonds
918,504

984,764－

973,996

879,901－

870,937

46,88344,302－

43,159－40,86233,805－33,441

9,359

－

9,527

17,054－

16,851

10,213－

10,748

9,700

－

9,607

－

－

－

－

－

－

Total
Notes 1. Forward exchange rates are used for exchange rates as of September 30, 2016.
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 September 30, 2016
Fair
value

Over 1 year

Domestic
stocksDomestic
stocks

Sold

823

823

557

517

517

597

Bought

－

－

－

－

－

－

Total

・ Bond-related Transactions
No ending balance as of March 31, 2016 and September 30, 2016.

31

Fukoku Mutual Life Insurance Company

11. Status of the Company, Subsidiaries and Affiliates(1) Selected Financial Data
(100 millions of yen)Six months ended
September 30, 2015

Six months ended
September 30, 2016

Ordinary revenues

5,054

5,044

Ordinary profits

506

395

Net surplus attributable to the parent company

460

314

Comprehensive income

(286)

(202)

As of
March 31, 2016

Total assets
Solvency margin ratio

As of
September 30, 2016

83,306

83,164

1,341.5%

1,218.9%(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.

32

Fukoku Mutual Life Insurance Company

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

As of September 30, 2016

Assets:Cash and deposits

172,049

180,919

Call loans

200,000

200,000

813

784

Monetary claims bought
Money held in trust

87,793

29,1036,859,234

6,948,226

Loans

697,056

653,192

Tangible fixed assets

218,974

219,540

Intangible fixed assets

20,941

23,251

2

1Securities

Agency receivables
Reinsurance receivables
Other assets

144

29

75,30862,996－

12

Net defined benefit asset
Deferred tax assets
Allowance for possible loan losses
Total assets

137

137

(1,851)(1,768)8,330,606

8,316,428

As of March 31, 2016

As of September 30, 2016

Liabilities:
Policy reserves
Reserve for outstanding claims
Policy reserve
Reserve for dividends to policyholders
Reserve for dividends to policyholders (subsidiary)
Agency payables

7,361,627

7,444,901

23,003

20,325

7,287,604

7,356,281

50,36867,752

650

543

480

199

Reinsurance payables

146

182

Subordinated bonds

141,935

141,935

Other liabilities

45,94047,715Net defined benefit liabilities

40,64939,107

Reserve for price fluctuation of securities

77,28979,078Deferred tax liabilities

30,837

7,433

Deferred tax liabilities for revaluation reserve for land

14,274

14,268

7,713,180

7,774,823

Foundation funds

30,00010,000

Accumulated foundation funds redeemed

86,000106,000

Total liabilities
Net assets:

Reserve for revaluation

112

112

Consolidated surplus

151,251

127,170

Total foundation funds, surplus and others

267,363

243,282

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

349,884

297,762

Revaluation reserve for land, net of tax

4,128

4,115

Foreign currency translation adjustment

(115)

(589)

Accumulated remeasurements of defined benefit plans(10,414)(9,611)

Total accumulated other comprehensive income

343,482291,676

6,578

6,645

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

33

617,425541,604

8,330,606

8,316,428

Fukoku Mutual Life Insurance Company

(4) Consolidated Statements of Operations and Comprehensive Income[Consolidated Statements of Operations](Millions of yen)Six months ended
September 30, 2015

Six months ended
September 30, 2016

Ordinary revenues:
Premium and other income

398,230

385,780

Investment income

100,634

111,743[Interest, dividends and other income][78,141][74,807][Gains on sales of securities][22,320][6,922][29,914]

Other ordinary revenues

[－]
6,610

[Reversal of reserve for outstanding claims][1,615][2,678]505,474

504,406

Claims and other payments

361,682

293,525[Claims][86,859][66,647][Annuities][105,386][89,096][Benefits][60,468][57,447][Surrenders][90,262][63,595][Other payments][18,396][16,406]

Provision for policy reserve and others

10,574

68,691

Provision for policy reserve

10,54968,676

Provision for interest on reserve for dividends to policyholders

24

15

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

22,48643,242[Interest expenses][2,394][1,921][Gains on derivative instruments, net]

Total ordinary revenues

6,881

Ordinary expenses:[Losses on money held in trust, net]

[556]

[1,896][Losses on trading securities, net]

[2,064][24,395][Losess on sales of securities][3,343][150][Losses on valuation of securities][174][Losses on derivative instruments, net][－]
[4,803][Losses on separate accounts, net]

[2,604][－][1,138]Operating expenses

48,61048,778Other ordinary expenses

11,457

10,641

Total ordinary expenses

454,811464,879

Ordinary profits

50,662

39,526Extraordinary gains:
Gains on disposal of fixed assets

1,356

2

Gain on contribution of securities to retirement benefit trust

7,913

Others extraordinary gains

－
9,270

－
42

Total extraordinary gains

45

Extraordinary losses:
Losses on disposal of fixed assets

138

25

Impairment losses

208

31

Provision for reserve for price fluctuation of securities

1,583

1,789

Total extraordinary losses

1,930

1,846

Provision for reserve for dividends to policyholders (subsidiary)
Surplus before income taxes

239

225

57,76237,499

Income taxes:
Current

9,920

9,384

Deferred

1,719(3,453)

Total income taxes

11,6405,930

Net surplus

46,122

31,569Net surplus attributable to non-controlling interests
Net surplus attributable to the parent company

34

71

141

46,05031,427

Fukoku Mutual Life Insurance Company

(4) Consolidated Statements of Operations and Comprehensive Income (Continued)[Consolidated Statement of Comprehensive Income](Millions of yen)Six months ended
September 30, 2015

Six months ended
September 30, 2016

Net surplus

46,122

31,569Other comprehensive income(74,734)(51,782)

Net unrealized gains (losses) on available-for-sale securities, net of tax(75,093)(52,111)

Deferred valuation gains (losses) under hedge accounting, net of tax(0)－

Revaluation reserve for land, net of tax

0－Foreign currency translation adjustments

57

(473)

Remeasurements of defined benefit plan, net of tax

300

803

Comprehensive income(28,612)(20,213)Comprehensive income attributable to the parent company(28,694)(20,365)

82

152

Comprehensive income attributable to non-controlling interests

35

Fukoku Mutual Life Insurance Company

(5) Consolidated Statements of Cash Flows(Millions of yen)Six months ended
September 30, 2015

Six months ended
September 30, 2016

Cash flows from operating activities:

57,762
2,148
3,690
208
381
(7,913)(1,615)
10,549
24
0
239
0
(739)
1,583
(78,141)(8,948)2,394
2,324(1,222)
4,591(12,681)
85,707(3,022)(18,390)(381)(18,334)
32,896

Surplus before income taxes
Depreciation of real estate for rent and other assets
Depreciation
Impairment losses
Amortization of goodwill(Gains) Losses on contribution of securities to retirement benefit trust
Increase (Decrease) in reserve for outstanding claims
Increase (Decrease) in policy reserve
Interest on accumulated dividends to policyholders
Interest on accumulated dividends to policyholders (subsidiary)
Provision for reserve for dividends to policyholders (subsidiary)
Increase (Decrease) in allowance for possible loan losses
Increase (Decrease) in net defined benefit liabilities
Increase (Decrease) in reserve for price fluctuation of securities
Interest, dividends and other income(Gains) Losses on securities, net
Interest expenses
Foreign exchange (gains) losses, net(Gains) Losses on tangible fixed assets, net
OthersSubtotalInterest, dividends and other income received
Interest paid
Dividends to policyholders paid
Dividends to policyholders paid (subsidiary)Corporate income tax (paid) refunded
Net cash provided by (used in) operating activities (a)37,499
2,122
3,731
31
381
－
(2,678)68,676
15
0
225
(83)
(438)
1,789
(74,807)(9,081)
1,921
9,347
21
3,998
42,67281,369(1,906)(17,868)(333)(2,118)101,814

Cash flows from investing activities:

(13)
28

(Increase) Decrease 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 payment 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－(624,289)
462,730(32,306)
57,356(15,516)(1,974)(153,985)(121,088) ] [(2,552)
10,784(1,376)(147,129)196
29
56,658(522,166)
219,883(21,448)
61,135
145,119(2,148)(62,740)
39,074 ](4,018)11(5,296)(72,044)

Cash flows from financing activities:

62,065(40,326)

Financing of subordinated bonds
Redemption of subordinated bonds

－
(316)
(13)
(271)
21,137(155)(93,251)
339,246

Redemption of foundation funds
Interest payment for foundation funds
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 period
Increase (decrease) in cash and cash equivalents resulting from change of scope of consolidation
Cash and cash equivalents at the end of the period

36－
245,995－－(20,000)
(316)
(85)
(250)
(20,652)
169
9,287
370,45870
379,816

Fukoku Mutual Life Insurance Company

(6) Consolidated Statements of Changes in Net Assets[For the six months ended September 30, 2015](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)

46,05046,05058

58

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

－

－

－

9,093

9,093

30,00086,000112

155,036

271,148

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

440,10903,894

Foreigncurrencytranslation
adjustments

(52)

Total
Accumulated
accumulated
remeasurements ofotherdefined benefit
comprehensive
plansincome(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

46,050

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

58(75,103)

(0)

(57)

57

300

(74,802)68(74,734)

Total changes in the current period(75,103)

(0)

(57)

57

300

(74,802)68(65,640)

Balance at the end of the current period

365,006

0

3,836

5

(2,699)366,148

5,644

642,941

37

Fukoku Mutual Life Insurance Company

[For the six months ended September 30, 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

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)

31,42731,427(20,000)(20,000)

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

Reversal of revaluation reserve
for land, net of tax

13

13

Change of scope of consolidation

30

30

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

20,000－(24,081)(24,081)

Balance at the end of the current period

10,000106,000

112

127,170

243,282

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

31,427

Redemption of foundation funds(20,000)

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

Reversal of revaluation reserve
for land, net of tax

13

Change of scope of consolidation

30

Net changes, excluding foundation
funds, surplus and others(52,122)

(13)

(473)

803

(51,806)

66(51,740)

Total changes in the current period(52,122)

(13)

(473)

803

(51,806)

66(75,821)

Balance at the end of the current period

297,762

4,115

(589)

(9,611)

291,676

6,645

541,604

38

Fukoku Mutual Life Insurance Company

Notes to the Consolidated Financial Statements
I.

Presentation of the Consolidated Financial Statements

1. 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, total in yen shown herein do notnecessarily agree with the sum of the individual amounts.

2. (1) Consolidated subsidiaries as of September 30, 2016 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 six
months ended September 30, 2016 due to its significance.
Major unconsolidated subsidiary is Fukoku Business Service Company Limited.
Five subsidiaries are excluded from the scope of consolidation, as each one of them is small in its total assets,
amount of sales, net surplus for the period and surplus and are sufficiently insignificant to reasonable judgementon their impact on the financial position and results of operation of the Company's group.
(2) 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 six months ended September 30, 2016.
(3) Among the subsidiaries to be consolidated, interim closing date of overseas subsidiaries is June 30. For the
preparation of consolidated financial statements, financial statements as of that date are used and concerning
any important transaction taking place in between June 30 and September 30, necessary adjustments forconsolidation are made.

II. Notes to 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 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 values are stated at fair market values based on the market
prices at the balance sheet date. 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.
39

Fukoku Mutual Life Insurance Company

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 differences between acquisition costs and face values are 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 for business purposes based on the Law for Revaluation of Land (Law No.34
promulgated on March 31, 1998). The differences between fair values and book values resulting from therevaluation, net of related taxes, are recorded as revaluation reserve for land as a separate component of net
assets and the related tax is recorded as deferred tax liabilities for revaluation reserve for land.
 Date of revaluation: March 31, 2002
 Method of revaluation as prescribed for in Article 3 Paragraph 3 of the said Law:
Calculation is based on the appraisal value for property tax set forth in Article 2 item 3 of the Enforcement
Ordinance of the Law for Revaluation of Land (Government Ordinance No.119 promulgated on March 31,
1998) and the road rate set forth in Article 2 item 4 of the said Ordinance with certain reasonable adjustments.
(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 without residual value
Other tangible fixed assets acquired for ¥100,000 or more but less than ¥200,000 are depreciated equally overthree years.
(5) Foreign currency denominated assets and liabilities, except for investments in unconsolidated subsidiaries andaffiliates, are translated into Japanese yen at the effective exchange rate prevailing at the balance sheet date.
Investments in unconsolidated subsidiaries and affiliates are translated into Japanese yen at the exchange rate on
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 of
September 30, 2016 was ¥247 million.
(7) Net defined benefit liabilities, supposed to be incurred as of September 30, 2016, are presented for theemployees' retirement benefits after deducting pension plan assets from retirement benefit obligations, based on
estimated amounts as of the balance sheet date.
40

Fukoku Mutual Life Insurance Company

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 of securities is calculated in accordance with Article 115 of the Insurance
Business Law.
(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 “Investment expenses”, which is calculated by deducting an amount equivalent to the interest
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 foreign currency denominated bonds and against the risk of price fluctuationin 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 foreign currency denominated bonds
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 Law, are deferred as prepaid expenses and amortized equally over five years.
Consumption taxes other than deferred consumption taxes are recognized as an expense when incurred.
(12) Policy reserve is based on Article 116 of the Insurance Business Law, 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 Law,
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. Furthermore, for certain hospitalization riders with surgery
benefits and long-term hospitalization benefits, the Company funded additional policy reserves. At the balance
sheet date, the balance of these policy reserves was ¥45,172 million.
At the end of the fiscal year ended March 31, 2017, 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. At the balance sheet date, the balance of these policy reserves was ¥31,842 million.
(13) Intangible fixed assets are amortized as follows:i) Software for internal use is amortized based on a straight-line method over the estimated useful lives.
ii) Lease assets are amortized based on a 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).

41

Fukoku Mutual Life Insurance Company

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 six months ended September
30, 2016. Accordingly, the method of depreciation was changed from the declining-balance method to the straightline 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 ¥14 million.

3. The carrying amounts, fair values and their related differences of major financial assets and liabilities as of
September 30, 2016 were as follows:
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.............................

¥

179,603179,603
200,000

Fair value(Millions of yen)
Difference¥¥

179,603179,603
200,000

―
―
―

784
784

852
852

67
67

28,103
28,103

28,103
28,103――

198,988
1,232,390
2,114,890
3,320,079
6,866,348

198,988
1,521,630
2,429,389
3,320,079
7,470,087―
289,240
314,498―
603,738

64,117589,075
653,192
7,928,033
141,935
141,935

64,117622,371
686,4888,565,135
153,821
153,821(0 )33,29533,295637,102
11,886
11,886637
10,688
11,325637
10,688
11,325

―
―
―

¥

¥

¥

*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, ¥6,122 million, and ¥7,774 million
as of September 30, 2016, respectively.
42

Fukoku Mutual Life Insurance Company

(3) The fair values of policy loans are deemed to approximate book values, considering estimated repayment period
and interest rate conditions since their repayment deadlines have not been set up due to the characteristics thatthe loans are limited to the amount of cash surrender values. Therefore, the book values are used as the fairvalues of policy loans.
The fair values of floating interest rate loans among the ordinary loans and monetary claims bought
treated as loans approximate the book values because the market interest rates are reflected in future cash flows
in a short period. Therefore, the fair values of floating interest rate loans and monetary claims bought treated asloans are based on their book values. The fair values of fixed interest rate loans are measured by discounting thefuture cash flows to the present values.
The fair values of loans receivable from legally bankrupt borrowers, substantially bankrupt borrowers andnot currently bankrupt borrowers and monetary claims bought treated as loans are computed by deducting theamount of the allowance for doubtful accounts from the book values before direct write-offs.
(4) 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. Notes related to the fair value of investment and rental properties are omitted as no significant change has occurredsince the previous fiscal year-end.

5. The amount of securities lent under lending agreements was ¥15,467 million as of September 30, 2016.

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 ¥1,189 million as of September 30, 2016;i) The balance of credits to bankrupt borrowers was ¥213 million as of September 30, 2016.
ii) The balance of delinquent loans was ¥975 million as of September 30, 2016.
iii) There was no balance of delinquent loans past 3 months or more and restructured loans as of September 30,
2016.
The direct write-offs related to loans decreased credits to bankrupt borrowers described above by ¥247 million as of
September 30, 2016.
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
Law. 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 of principal or interest payment, waiver of claim or other terms, have been
negotiated for the purpose of assisting and supporting the borrowers in the restructuring of their business. This
category excludes loans classified as credits to bankrupt borrowers, delinquent loans and delinquent loans past 3
months or more.

7. Accumulated depreciation of tangible fixed assets totalled to ¥156,070 million as of September 30, 2016.
8. Total assets in separate accounts provided for in Article 118 of the Insurance Business Law were ¥71,046 million as
of September 30, 2016. The amounts of separate account liabilities were the same as separate account assets.
43

Fukoku Mutual Life Insurance Company

9. Changes in reserve for dividends to policyholders for the six months ended September 30, 2016 were as follows:(Millions of yen)

Balance at the beginning of the current period………...................................
Transfer from surplus in previous period..................................................
Dividends paid in the current period.........................................................
Increase in interest...................................................................................
Balance at the end of the current period........................................................

¥ 50,368
35,236(17,868)
15¥ 67,752

10. Changes in reserve for dividends to policyholders (Fukokushinrai Life Insurance Co., Ltd.) for the six months ended
September 30, 2016 were as follows:(Millions of yen)

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

¥ 650

Dividends paid in the current period.........................................................

(333)

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

0

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

225

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

¥ 543

11. The amount of stocks of unconsolidated subsidiaries was ¥454 million as of September 30, 2016.

12. Assets pledged as collateral as of September 30, 2016 were ¥30,345 million of securities and ¥1,417 million of bankdeposits. Secured debts as of September 30, 2016 were ¥4,945 million.

13. Reserve for outstanding claims for the reinsurance contracts provided in accordance with Article 71 Paragraph 1 of
the Enforcement Regulation of the Insurance Business Law (hereinafter called “reserve for outstanding claims forceded reinsurance”) was ¥3 million as of September 30, 2016.
Policy reserve for the reinsurance contracts provided in accordance with Article 71 Paragraph 1 of the
Enforcement Regulation of the Insurance Business Law (hereinafter called “policy reserve for ceded reinsurance”)
was ¥50 million as of September 30, 2016.

14. 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 Law.

15. There were unused commitment line agreements under which the Company is the lender of ¥2,000 million as of
September 30, 2016.

16. Repayments of subordinated bonds are subordinated to other obligations.
On October 21, 2016, the Company issued ¥50,000 million in new subordinated bonds.

17. The future contribution to the Life Insurance Policyholders Protection Corporation of Japan under Article 259 of the
Insurance Business Law was estimated at ¥11,474 million as of September 30, 2016.
The contribution was charged as operating expenses in the year in which it was paid.
18. The “Implementation Guidance on Recoverability of Deferred Tax Assets” (ASBJ Guidance No. 26, March 28,2016) has been applied from the six months ended September 30, 2016.

44

Fukoku Mutual Life Insurance Company

III. Notes to Statements of Operations
1. For the six months ended September 30, 2016, reversal of reserve for outstanding claims for ceded reinsurance
considered in calculation of reversal of reserve for outstanding claims was ¥12 million, and reversal of policy
reserve for ceded reinsurance considered in calculation of provision for policy reserve was ¥0 million.

IV. Notes to Statements of Cash Flows
1. Cash and cash equivalents as of September 30, 2016 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 September 30, 2016 were as follows:(Millions of yen)

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

¥ 180,919

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

200,000

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

784

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

(100 )

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

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

(784 )Cash and cash equivalents...................................................................................

¥ 379,816

45

Fukoku Mutual Life Insurance Company

R
R895763142(7) Status of Insurance Claims Paying Ability of the Company and Insurance Subsidiaries(Millions of yen)
As ofMarch 31, 2016

Total solvency margin

(A)

As of
September 30, 2016

1,417,685

1,359,038

Foundation funds and surplus

234,905229,225

Reserve for price fluctuation of securities

77,28979,078Contingency reserve

152,554

152,470

－

－

1,251

1,175

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

437,678

372,518

Net unrealized gains on real estate × 85%

105,577

106,908

Sum of unrecognized actuarial differences and unrecognized prior service cost

(14,465)(13,349)

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

238,473240,211

Qualifying subordinated debt

141,935

141,935

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－－

42,48548,864

211,354

222,977

Catastrophe loss reserve
Allowance for possible loan losses

OthersTotal amount of risk

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

(B)

2

Insurance risk

R1

25,16424,850General insurance risk

R5

－

－

Catastrophe risk

R6

－

－

3rd sector insurance risk

R8

9,690

9,752

Small amount and short-term insurance risk

R9

－

－

Assumed investment yield risk

R2

33,872

33,614

Minimum guarantee risk

R7

0

0

Investment risk

R3

169,750

181,603

Business risk

R4

4,769

4,996

1,341.5%

1,218.9%

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 Law
Notes: 1. and Notification of the Financial Services Agency No.23,2011.
Notes: 2. "Minimum guarantee risk" is calculated by standard method.

46

Fukoku Mutual Life Insurance Company