November 28, 2014

Financial Results for the Six Months Ended September 30, 2014
Fukoku Mutual Life Insurance Company (President: Yoshiteru Yoneyama) announces financial results
for the six months ended September 30, 2014.

[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.23

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

P.24

8. Risk-monitored Loans…………………

P.24

9. Solvency Margin Ratio…………………

P.25

10. Status of Separate Account…………………

P.26

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

P.33

Attached: Supplementary Materials for the Six Months Ended September 30, 2014

1. Business Highlights(1) Policies in Force, New Policies and Surrendered and Lapsed Policies(i) Policies in Force
As of March 31, 2014
Number of policies

As of September 30, 2014
Amount(Thousands)(100 millions of yen)

3,044

Individual insurance

Number of policies

Amount(Thousands)

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

3,050

100.2

239,09098.8

242,084758

29,487746

98.5

29,072

98.6

3,802

271,572

3,797

99.9

268,16398.7

Group insurance－

165,468－－

166,863100.8

Group annuities－

20,305－－

20,499101.0

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 for an annuity for whichannuity payments have not yet commenced and (b) the amount of policy reserve for an annuity for which payments have commenced.
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, 2013

New business

Net increase by
conversion

Number of policies

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

Individual insurance

176

7,988

8,020

Individual annuities

7

251

260

(9)

183

8,239

8,280

(41)

Group insurance

－

78

78

－

Group annuities

－

0

0

－

Subtotal

Total
Six months ended
September 30, 2014

Number of policies(Thousands)

AmountChanges(%, YoY)(100 millionsof yen)Changes(%, YoY)(32)

New business

Net increase by
conversion

AmountAmount(100 millions of yen)(100 millions of yen)

Individual insurance

172

98.0

7,641

95.7

7,108

Individual annuities

9

127.1

334

133.3

343

533
(8)
524

182

99.2

7,976

96.8

7,451

Group insurance

－

－

35

45.3

35

－

Group annuities

－

－

0

0.7

0

－

Subtotal

Notes: 1. Number of new policies is the sum of new business and policies after conversion.

2. Amount of new policies for individual annuities, both new business and net increase by conversion, is equal to the funds to be held at the time annuity
payments are to commence.
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, 2013

Six months ended
September 30, 2014
Changes(%, YoY)

Amount of surrender and lapse(100 millions of yen)

7,777

7,360

94.6

Surrender and lapse ratio (%)

2.79

2.71

(0.08)

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 are 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 ofMarch 31, 2014

As of
September 30, 2014
Changes(%, Pre-FYE)

Individual insurance

2,750

2,737

99.5

Individual annuities

1,326

1,323

99.8

Total

4,077

4,060

99.6

1,061

1,062

100.1

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

Six months ended
September 30, 2013

Six months ended
September 30, 2014
Changes(%, Pre-FYE)

Individual insurance

95

89

94.1

Individual annuities

11

14

123.2

Total

106

103

92.7

38

34

89.3

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, 2013

Six months ended
September 30, 2014
Changes(%, Pre-FYE)

Premium and other income

3,291

3,027

92.0

Investment income

1,033

945

91.5

Claims and other payments

2,657

2,528

95.1

Investment expenses

230

184

80.0

Ordinary profits

548

507

92.6

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

As ofMarch 31, 2014

As of
September 30, 2014
Changes(%, Pre-FYE)

Total assets

62,147-2-

63,634

102.4

Fukoku Mutual Life Insurance Company

2. Investment Results of General Account Assets(1) Asset Composition(Millions of yen)
As ofMarch 31, 2014
AmountCash, deposits, call loans

As ofSeptember 30, 2014

Percentage

183,333

3.0

Monetary claims bought

1,011

Money held in trust

31,981

Securities
Domestic bonds

AmountPercentage

159,941

2.5

0.0

925

0.0

0.5

33,3050.5

4,798,502

78.2

5,008,023

79.8

2,876,176

46.9

2,881,545

45.9

Domestic stocks

482,308

7.9

550,4648.8

Foreign securities

1,365,396

22.3

1,502,394

23.9

Foreign bonds

1,109,910

18.1

1,231,566

19.6

255,485

4.2

270,827

4.3

Foreign stocks and other securities
Other securities
Loans

74,621

1.2

73,6191.2

835,860

13.6

777,252

12.4

Policy loans

65,206

1.1

64,593

1.0

Ordinary loans

770,65412.6

712,658

11.3

Real estate

228,183

3.7

225,589

3.6

Others56,9030.9

75,979

1.2

Allowance for possible loan losses
Total
Foreign currency denominated assets(2,281)( 0.0)(2,066)(0.0)

6,133,495

100.0

6,278,950

100.0

1,302,072

21.2

1,472,975

23.5(2) Changes (Increase/Decrease) in Assets(Millions of yen)Six months ended
September 30, 2013
Cash, deposits, call loans
Monetary claims bought
Money held in trust
Securities

Six months ended
September 30, 2014

34,386(23,392)

(69)

(85)

(275)

1,324

174,616

209,520

Domestic bonds(77,783)

5,368

Domestic stocks

43,921

68,156

Foreign securities

199,554

136,998

Foreign bonds

193,234

121,655

6,319

15,342

8,924(1,001)

Foreign stocks and other securities
Other securities
Loans(50,860)(58,608)

Policy loans

(684)

(613)

Ordinary loans(50,176)(57,995)(39,611)(2,594)

7,781

19,075212

215

126,180

145,455

239,355

170,902

Real estate
OthersAllowance for possible loan losses
Total
Foreign currency denominated assets-3-

Fukoku Mutual Life Insurance Company

(3) Investment Income

Interest, dividends and other income
Interest from deposits
Interest and dividends from securities
Interest from loans
Income from real estate for rent
Other interest and dividends
Gains on traiding account securities
Gains from money held in trust, net
Gains from trading securities, net
Gains on sales of securities
Gains on sales of domestic bonds
Gains on sales of domestic stocks
Gains on sales of foreign securities
OthersGains on redemption of securities
Gains from derivative instruments, net
Foreign exchange gains, net
Reversal of allowance for possible loan losses
Other investment income
Total(Millions of yen)Six months ended
Six months ended
September 30, 2013 September 30, 2014
60,28566,4943
2
43,821
51,278
8,772
8,191
7,578
6,891
109
131
－
－
1,374
－
4,200
16,14931,775
4,990
17,241
3,023
11,662
1,230
2,429
735
442
－
－
－
－
－
460
528
212
－
209
26
96,931
89,776(4) Investment Expenses

Interest expenses
Losses on trading account securities
Losses from money held in trust, net
Losses from trading securities, net
Losses on sales of securities
Losses on sales of domestic bonds
Losses on sales of domestic stocks
Losses on sales of foreign securities
Others
Losses on valuation of securities
Losses on valuation of domestic bonds
Losses on valuation of domestic stocks
Losses on valuation of foreign securities
Other losses on valuation of securities
Losses on redemption of securities
Losses from derivative instruments, net
Foreign exchange losses, net
Provision for allowance for possible loan losses
Write-off of loans
Depreciation of real estate for rent and other assets
Other investment expenses
Total

Six months ended
September 30, 2013
1,460
－
213
－
5,202
32
2,312
2,857
－
52
－
52
－
－
－
11,056
－
38
－
2,509
2,565
23,098(Millions of yen)Six months ended
September 30, 2014
2,160
－
－
－
167
0
63
103
－
111
－
－
111
－
－
11,014
－
－
－
2,413
2,607
18,474Six months ended
September 30, 2013
73,833(Millions of yen)Six months ended
September 30, 2014
71,301(5) Net Investment Income

Net investment income-4-

Fukoku Mutual Life Insurance Company

(6) Net Valuation Gains/Losses on Trading Securities(Millions of yen)
As of March 31, 2014
Net valuation gains/losses
included in the statementof operations

Carrying value on
the balance sheet
Trading securities

As of September 30, 2014

302,041

Net valuation gains/losses
included in the statementof operations

Carrying value on
the balance sheet

7,200

316,669

11,509Note: 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, 2014

As of September 30, 2014

Gains/losses

Book value

Fair value

843,433

922,909

79,476

79,476

Domestic bonds

768,744845,557

76,813Foreign bonds

74,68977,352

Monetary claims bought－

Negotiable certificate of deposits
OthersGains/losses

Book value

Fair value－

816,384

910,740

94,356

94,356－76,813－

741,590

833,390

91,80091,800

－

2,662

2,662

－

74,794

77,349

2,555

2,555

－

－

－

－

－

－

－

－

－

－

－

－

－

－

－

－

－

－

－

－

－

－

－

－

－

－

－

－

－

－

1,210,016

1,294,587

84,57084,798227

1,227,469

1,330,756

103,287

103,293

6

Domestic bonds

1,190,715

1,275,012

84,29784,522224

1,190,970

1,293,960

102,989

102,989－

Foreign bonds

19,301

19,575

273

276

2

36,49836,795

297

303

6

1,393

1,096

(296)

－

296

1,433

1,191

(241)

2

244

Gains
Held-to-maturity debt securities

Policy-reserve-matching bonds

Investments in subsidiaries and affiliates
Available-for-sale securities

Losses

Gains

Losses

2,046,003

2,421,417

375,414379,801

4,387

2,151,386

2,625,767

474,380

476,647

2,267

Domestic bonds

815,104

886,899

71,794

72,132

337

833,715

913,541

79,82579,992

166

Domestic stocks

269,792

439,094

169,301

171,769

2,467

277,689

507,388229,698

230,684

985

Foreign securities

905,773

1,028,769

122,996

124,501

1,505

990,600

1,140,746

150,145

151,260

1,115

Foreign bonds

690,428

774,677

84,24985,3981,149

769,991

871,352

101,361

102,168

807

Foreign stocks and other securities

215,345

254,092

38,746

39,102355

220,609269,394

48,78449,092

307

55,332

66,653

11,321

11,39776

49,38164,091

14,70914,709－

Money held in trust

－

－

－

－

－

－

－

－

－

－

Monetary claims bought

－

－

－

－

－

－

－

－

－

－

Negotiable certificate of deposits

－

－

－

－

－

－

－

－

－

－

Others

－

－

－

－

－

－

－

－

－

－

4,100,846

4,640,011

539,164544,075

4,911

4,196,674

4,868,456

671,781674,299

2,517

Domestic bonds

2,774,564

3,007,469

232,904

233,467562

2,766,276

3,040,893

274,616

274,783

166

Domestic stocks

269,792

439,094

169,301

171,769

2,467

277,689

507,388229,698

230,684

985

Foreign securities

1,001,157

1,126,794

125,636

127,440

1,804

1,103,327

1,256,083

152,756

154,122

1,365

Foreign bonds

784,419

871,604

87,18588,3371,152

881,284

985,497104,213105,027

813

Foreign stocks and other securities

216,738

255,189

38,45039,102652

222,042

270,585

48,54249,094551

55,332

66,653

11,321

11,39776

49,38164,091

14,70914,709－

Money held in trust

－

－

－

－

－

－

－

－

－

－

Monetary claims bought

－

－

－

－

－

－

－

－

－

－

Negotiable certificate of deposits

－

－

－

－

－

－

－

－

－

－

Others

－

－

－

－

－

－

－

－

－

－

Other securities

Total

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
Septermber 30, 2014

As ofMarch 31, 2014

－
－
－
－

－
－
－
－

Investments in subsidiaries and affiliates

35,56035,560Available-for-sale securities

15,620
7,653
－
－
7,967
51,181

17,043
7,515
－
－
9,528
52,604

Held-to-maturity debt securities
Unlisted foreign bonds
Others
Policy-reserve-matching bonds

Unlisted domestic stocks (except over-the-counter stocks)
Unlisted foreign stocks (except over-the-counter stocks)
Unlisted foreign bonds
Others
Total-5-

Fukoku Mutual Life Insurance Company

(8) Fair Value Information on Money Held in Trust(Millions of yen)
As of March 31, 2014
Carrying
value onbalancesheetsMoney held in trust

31,981

As of September 30, 2014

Gains/losses
Fair value

31,981

Gains－

Losses－－Carrying
value onbalancesheets33,305

Gains/losses
Fair value

33,305

Gains－

Losses－－* Money held in trust for trading purpose(Millions of yen)
As of March 31, 2014
Net valuation gains/losses
included in the statementsof operations

Carrying value onbalance sheets
Money held in trust
for trading purpose

As of September 30, 2014－

30,981

Net valuation gains/losses
included in the statementsof operations

Carrying value onbalance sheets
32,305505* Money held in trust classified as held-to-maturity, policy-reserve-matching and available-for-sale(Millions of yen)
As of Septermber 30, 2014

As of March 31, 2014
Book value Fair value

Gains/losses
Gains

LossesBook value Fair value

Gains/losses
Gains

LossesMoney held in trust
for held-to-maturity

－

－

－

－

－

－

－

－

－

－

Money held in trust
for policy-reserve-matching

－

－

－

－

－

－

－

－

－

－

Money held in trust
for available-for-sale

－

－

－

－

－

－

－

－

－

－

-6-

Fukoku Mutual Life Insurance Company

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

As of March 31, 2014
Hedge accounting applied
Hedge accounting not applied
Total

3
(18)
(14)
Interestrelated

As of September 30, 2014
Hedge accounting applied
Hedge accounting not applied
Total

2
(392)
(390)

Currencyrelated(2,427)(2,119)(4,546)

Stockrelated

Currencyrelated(14,000)(2,095)(16,096)

Stockrelated

Bondrelated

－
(152)
(152)

Others－370
370
Bondrelated

－
－
－

－
－
－
Others

－
104
104

Total

－
－
－

(2,423)(1,920)(4,343)
Total(13,998)(2,383)(16,382)

Note: Gains and losses from applying fair value hedge accounting (currency- related, losses of ¥2,427 million as of March 31, 2014
and losses of ¥14,000 million as of September 30, 2014) included in gains and losses with hedge accounting applied, and gains andlosses with hedge accounting not applied are reported in the statements of operations.

(Millions of yen)
As of September 30, 2014(ii) Interest-related Transactions
As of March 31, 2014
Notional amount/contract value

Fair
value

Over
1 yearOver-the-counter transactions
Yen interest rate swap contracts
Receipt fixed, payment floating
Payment fixed, receipt floating
Yen interest rate swaption contracts
Sold
Receipt fixed, payment floating

290
－

[
Payment fixed, receipt floating[
BoughtReceipt fixed, payment floating[
Payment fixed, receipt floating
[

170
－

－
－ ]
－
－ ]

－

－
－ ]
100,000
89 ]－Notional amount/contract value

Gains(losses)

3
－

3
－

－

－ [

－
－

－ [

－

－ [

－
70

Total

Fair
value

Over
1 year(18) [

187
－

127
－

－
－ ]
－
－ ]

－

－
－ ]
300,000
525 ]

－

Gains
(losses)

2
－

2
－

－

－

－

－

－

－

132

(392)

－

100,000

(14)

(390)

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

(reference) Interest rate swap contracts by contractual maturity dates(Millions of yen)
As of September 30, 2014

As of March 31, 2014
Yen interest rate swap contracts
1 year or
shorter
Notional amount (receipts fixed, payments floating)

Average fixed rate (receipt)
Average floating rate (payment)
Notional amount (receipts floating, payments fixed)

Average floating rate (receipt)
Average fixed rate (payment)

120
2.12%
1.11%
－
－
－

Over
1 year to
3 years
170
2.47%
1.11%
－
－
－

－
－
－

60
2.12%
1.10%

Over
1 year to
3 years
127
2.47%
1.10%

－
－
－

－
－
－

－
－
－

Over
3 years

1 year or
shorter-7-Over
3 years
－
－
－
－
－
－

Fukoku Mutual Life Insurance Company

(iii) Currency-related Transactions
As of March 31, 2014
Notional amount/contract value
Fair
value
Over
1 yearOver-the-counter transactions
Currency forward contracts
Sold
US dollar
Euro
British Pound
Australian dollar
Canadian dollar
Singapore dollar
BoughtUS dollar

575,950
354,098
101,850
33,915
51,14934,936－－－

Currency Options
Sold
Calls
[
Puts
[
Bought
Calls
[
Puts
[
US dollar[－ 580,474－ 355,881－ 102,236－ 34,240－ 52,730－ 35,385
－
－
－
－
－
－

－
－]
－
－ ]

－

－
－ ]
9,800
23 ]
9,800
23 ]

－

－

Gains
(losses)(4,523)(1,782)(386)(325)(1,580)
(448)
－
－
－

－ [

－
－

－ [

－

－ [

－
0

(23) [－
0Total(23) [(Millions of yen)
As of September 30, 2014
Notional amount/contract value
Fair
Gains
value
(losses)Over
1 year698,416
448,013
127,662
61,911
34,62026,19215200
200－ 714,498－ 463,674－ 128,025－ 62,130－ 34,194－ 26,457
15
－
200
－
200
－

－
－ ]
－
－ ]

－

－
－ ]
15,80024 ]15,80024 ]－(16,082)(15,660)
(363)
(218)
425
(264)
(0)
0
0

－

－

－

－

－

－

9

(14)

9

(14)

－

－
－

(4,546)(16,096)

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

(iv) Stock-related Transactions
As of March 31, 2014
Notional amount/contract value
Gains
Fair value(losses)Over
1 yearExchange-traded transactions
Yen stock index options
Sold
Calls
[
Puts
[
Bought
Calls
[
Puts
[

－
－ ]
－
－ ]

－

－
－ ]
10,687
306 ]

－

－

－ [

－
－

－ [

－

－ [

－
153

(152) [

(Millions of yen)
As of September 30, 2014
Notional amount/contract value
Gains
Fair value(losses)Over
1 year

－
－ ]
－
－ ]

－

－
－ ]
－
－ ]

－

－

－

－

－

－

－

－

－

－

－

(152)

－

As of March 31, 2014
Notional amount/contract value
Gains
Fair value(losses)Over
1 year(Millions of yen)
As of September 30, 2014
Notional amount/contract value
Gains
Fair value(losses)Over
1 year

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

(v) Bond-related Transactions

Exchange-traded transactions
Yen bond futures
Sold
Bought144,825－－ 144,620
－
－

205
－

145,715－－ 145,840
－
－

(125)
－

Foreign bond futures
Sold
Bought27,492
－

－
－

165
－

36,031
－

－
－

229
－

27,327
－

Total

370

-8-

35,801－

104

Fukoku Mutual Life Insurance Company

(reference) Fair Value of Real Estate ( Land and Leaseholds)(millions of yen)
As of March 31, 2014
Carrying value on
Fair value
the balance sheets
132,914223,067

Gains(losses)
90,152As of September 30, 2014
Carrying value on
Fair value
the balance sheets
132,819
223,369

Gains(losses)
90,550Notes: 1. As of September 30, 2014, fair value is based on the appraisal value by the real-estate appraiser, the appraisal value for property tax
and the road rate as of January 1, 2014.
2. As of March 31, 2014, fair value is based on the appraisal value by the real-estate appraiser, the appraisal value for property tax as ofJanuary 1, 2014 and the road rate as of January 1, 2013.

-9-

Fukoku Mutual Life Insurance Company

3. Non-consolidated Balance Sheets(Millions of yen)
As of March 31, 2014

As of Septermber 30, 2014

Assets:Cash and deposits

34,76831,906

Call loans

148,700

128,100

Monetary claims bought

1,011

925

Money held in trust

31,98133,305

Securities

4,877,141

5,090,208[2,097,463][2,087,188][Local government bonds][157,102][156,394][Corporate bonds][654,161][670,327][Stocks][504,442][575,169][1,389,208][1,527,403]

835,860

777,252[Government bonds][Foreign securities]
Loans
Policy loans

65,20664,593

Ordinary loans

770,654712,658

Tangible fixed assets

232,115

229,367

Intangible fixed assets

10,827

10,096

Reinsurance receivables
Other assets
Lease investment assets
Other assets
Allowance for possible loan losses
Total assets

78

20

44,59264,370835

818

43,75763,552(2,281)(2,066)

6,214,796

6,363,487

As of March 31, 2014

Liabilities:
Policy reserves

As of September 30, 2014

5,412,622

Reserve for outstanding claims
Policy reserve
Reserve for dividends to policyholders
Reinsurance payables

5,453,045

23,067

18,861

5,338,547

5,368,166

51,00766,01798

115

Subordinated bonds

122,346

121,518

Other liabilities

53,524

61,326

Corporate income tax payable

11,945

8,857

Asset retirement obligations

2,951

2,981

Other liabilities

38,62849,486

Reserve for employees' retirement benefits

43,11247,005Reserve for price fluctuation of securities

44,01645,271

Deferred tax liabilities

29,24558,384

Deferred tax liabilities for revaluation reserve for land

15,92915,9135,720,895

5,802,581

Net assets:
Foundation funds

35,00030,000

Accumulated foundation funds redeemed

71,00086,000Total liabilities

Reserve for revaluation
Surplus
Legal reserve for future losses

112

112

124,780

113,260

2,485

2,582

122,294

110,678

Reserve for redemption of foundation funds

18,00012,000Reserve for dividend allowances

3,895

3,895

Accumulated fund for price fluctuation

21,00031,000Reserve for advanced depreciation of real estate for tax purpose

3,969

262

Other surplus

Other reserves

767

767

74,66262,752

Total foundation funds, surplus and others

230,892

229,372

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

259,861

328,366

Unappropriated surplus

Deferred valuation gains (losses) under hedge accounting

2

1

3,144

3,165

Total valuation and translation adjustments

263,008

331,533

Total net assets

493,900

560,906

6,214,796

6,363,487

Revaluation reserve for land, net of tax

Total liabilities and net assets- 10 -

Fukoku Mutual Life Insurance Company

4. Non-consolidated Statements of Operations(Millions of yen)Six months ended

Six months ended

September 30, 2013

Septermber 30, 2014

Ordinary revenues:
Premium and other income

329,176

302,779[Premium income][329,129][302,736]

103,327

94,569[Interest, dividends and other income][60,285][66,494][Gains from money held in trust, net][－]

[1,374][Gains from trading securities, net]

[4,200][16,149][Gains on sales of securities][31,775][4,990][Gains from separate accounts, net]

[6,395][4,792]

Investment income

Other ordinary revenues

7,202

8,701

[1,632][4,205]439,706

406,049

265,799

252,884[Claims][89,011][66,404][Annuities][63,621][76,452][Benefits][62,661][57,604][Surrenders][38,433][38,172][Other payments][11,893][14,044]

42,806

29,64942,76829,61938

30

Investment expenses

23,09818,474[Interest expenses][1,460][2,160]

[213]

[－]

[5,202]

[167]

[52]

[111]

[11,056][11,014]

Operating expenses

43,132

43,324

Other ordinary expenditures

10,036

10,935

Total ordinary expenditures

384,874

355,269

Ordinary profits

54,83250,780Extraordinary gains:
Gains on disposal of fixed assets

2,001

4

Total extraordinary gains

2,001

4

Extraordinary losses:
Losses on disposal of fixed assets[Reversal of reserve for outstanding claims]
Total ordinary revenues
Ordinary expenditures:
Claims and other payments

Provision for policy reserve and others
Provision for policy reserve
Interest on accumulated dividends to policyholders[Losses from money held in trust, net]
[Losses on sales of securities][Losses on valuation of securities][Losses from derivative instruments, net]

7,070

26

Impairment losses

1,605

95

Provision for reserve for price fluctuation of securities

1,185

1,255

Total extraordinary losses

9,861

1,376

Surplus before income taxes

46,972

49,407

12,845

10,263(1,668)127

11,176

10,39035,79539,016

Income taxes:
Current
Deferred
Total income taxes
Net surplus for the period- 11 -

Fukoku Mutual Life Insurance Company

5. Non-consolidated Statements of Changes in Net Assets[For the six months ended September 30, 2013](Millions of yen)Foundation funds, surplus and others
Surplus
Other surplus

Balance at the beginning ofcurrent period

Foundation
funds

Accumulated
foundation
funds
redeemed

35,00071,000Reserve forReserve for Legal reserve Reserve foradvanced
Reserve for Accumulated
revaluation
for future
redemption
depreciation
dividend
fund
for
price
lossesof foundationof real estate
allowances
fluctuation
funds
for tax
purpose

112

2,399

9,000

3,895

11,000

4,114

Total
surplusTotal
foundation
funds,
surplus andothersOther
reserves

Unappropriatedsurplus

767

71,084102,260

208,372(27,762)(27,762)(27,762)

(86)

－

－

(621)

(621)

(621)

35,79535,79535,795(9,000)－－(10,000)

－

－

144

－

－

256

256

256

Changes in the current period
Additions to reserve fordividends to policyholders
Additions to legal reserve for
future losses
Payment of interest on
foundation funds
Net surplus for the current
periodAdditons to reserve forredemption of foundation funds
Additions to accumulated fundfor price fluctuation
Reversal of reserve foradvanced depreciation of realestate for tax purpose
Reversal of revaluation reserve
for landNet changes, excluding
foundation funds, surplus andothersTotal changes in the current
periodBalance at the end of current
period86

9,000
10,000
(144)

－

－

－

86

9,000

－

10,000(144)－(11,273)

7,667

7,667

35,00071,000112

2,485

18,0003,895

21,0003,969

767

59,810109,928

216,040

Valuation and translation adjustments
Net unrealized
Deferred
gains (losses)
valuation
on availablegains
for-sale(losses)securities, net under hedgeof taxaccounting
Balance at the beginning ofcurrent period

215,885

62

Revaluation
Total
reserve for valuation andland, net oftranslationtax
adjustments

3,421

219,370

Total
net assets

427,742

Changes in the current period
Additions to reserve fordividends to policyholders
Additions to legal reserve for
future losses
Payment of interest on
foundation funds
Net surplus for the current
periodAdditons to reserve forredemption of foundation funds
Additions to accumulated fundfor price fluctuation
Reversal of reserve foradvanced depreciation of realestate for tax purpose
Reversal of revaluation reserve
for landNet changes, excluding
foundation funds, surplus andothersTotal changes in the current
periodBalance at the end of current
period(27,762)－(621)
35,795－－－256
12,047

(48)

(256)

11,743

11,743

12,047

(48)

(256)

11,743

19,411

227,933

14

3,165

231,113447,154- 12 -

Fukoku Mutual Life Insurance Company

[For the six months ended September 30, 2014](Millions of yen)Foundation funds, surplus and others
Surplus
Other surplus

Balance at the beginning ofcurrent period
Cumulative effect of changes
in accounting policies
Restated balance

Foundation
funds

Accumulated
foundation
funds
redeemed

35,00071,00035,00071,000Reserve forReserve for Legal reserve Reserve foradvanced
Reserve for Accumulated
revaluation
for future
redemption
depreciation
dividend
fund for pricelossesof foundationof real estate
allowances
fluctuation
funds
for tax
purpose

112

2,485

112

2,485

18,00018,000

3,895

3,895

21,00021,000Total
surplusTotal
foundation
funds,
surplus andothersOther
reserves

Unappropriatedsurplus767

74,662

124,780

230,892(3,297)(3,297)(3,297)71,365

121,482

227,595－

10,000(31,595)(31,595)(31,595)

(97)

－

－

－

15,000

(621)

(621)

(621)

39,01639,01639,016－(15,000)－－(15,000)(15,000)(10,000)

－

－

0

(0)

－

－

(3,707)

3,707

－

－

(21)

(21)

(21)

3,969

3,969

767

Changes in the current period
Financing of additionalfoundation funds
Additions to reserve fordividends to policyholders
Additions to legal reserve for
future losses
Additions to accumulated
fundation funds redeemed
Payment of interest on
foundation funds
Net surplus for the current
periodRedemption of foundation
funds

10,00097
15,000(15,000)

Additions to reserve forredemption of foundation funds

9,000

Reversal of reserve forredemption of foundation funds
Additions to accumulated fundfor price fluctuation
Additions to reserve foradvanced depreciation of realestate for tax purpose
Reversal of reserve foradvanced depreciation of realestate for tax purpose
Reversal of revaluation reserve
for landNet changes, excluding
foundation funds, surplus andothersTotal changes in the current
periodBalance at the end of current
period(15,000)(9,000)10,000(5,000)15,000－97(6,000)－10,000(3,707)－(8,612)(8,222)

1,777

30,00086,000112

2,582

12,0003,895

31,000262

767

62,752

113,260

229,372

Valuation and translation adjustments
Net unrealized
Deferred
gains (losses)
valuation
on availablegains
for-sale(losses)securities, net under hedgeof taxaccounting
Balance at the beginning ofcurrent period
Cumulative effect of changes
in accounting policies
Restated balance

Revaluation
Total
reserve for valuation andland, net oftranslationtax
adjustments

Total
net assets

259,861

2

3,144

263,008

493,900

259,861

2

3,144

263,008

490,603(3,297)

Changes in the current period
Financing of additionalfoundation funds
Additions to reserve fordividends to policyholders
Additions to legal reserve for
future losses
Additions to accumulated
fundation funds redeemed
Payment of interest on
foundation funds
Net surplus for the current
periodRedemption of foundation
funds
Additions to reserve forredemption of foundation funds
Reversal of reserve forredemption of foundation funds
Additions to accumulated fundfor price fluctuation
Additions to reserve foradvanced depreciation of realestate for tax purpose
Reversal of reserve foradvanced depreciation of realestate for tax purpose
Reversal of revaluation reserve
for landNet changes, excluding
foundation funds, surplus andothersTotal changes in the current
periodBalance at the end of current
period10,000(31,595)－
15,000(621)
39,016(15,000)－(15,000)－－－(21)
68,504(1)

21

68,524

68,52468,504(1)

21

68,52470,302

328,366

1

3,165

331,533

560,906- 13 -

Fukoku Mutual Life Insurance Company

Notes to the Non-consolidated Financial Statements
I. Presentation of the Non-consolidated Financial Statements
1. Basis of Presentation
The accompanying non-consolidated financial statements have been prepared from the accounts
maintained by Fukoku Mutual Life Insurance Company (the “Company”) in accordance with 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 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 eliminated. As a result, total in yen shown herein
do not necessarily agree with the sum of the individual amounts.

II. Notes to Balance Sheets
1. Significant Accounting Policies(1) Valuation Methods of Securities
The valuation of securities, including bank deposits and monetary claims bought which are equivalent
to securities, and securities managed as trust assets in money held in trust, is as follows:i)

Trading securities are stated at fair market value. Costs of their sales are determined by themoving average method.

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 inInsurance Industry” (Industry Audit Committee Report No.21 issued by the Japanese Instituteof Certified Public Accountants on November 16, 2000).

iv)

Investments in subsidiaries and affiliates are stated at cost, cost being determined by themoving average method.

v)

Available-for-sale securities with fair market values are stated at fair market value based on
the market prices at the balance sheet date. Costs of their sales are determined by themoving 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 fair market values are deemed extremely difficult toobtain are stated at cost, cost being determined by the moving average method, except for
public and corporate bonds including foreign bonds, of which the difference between
acquisition cost and face value is considered to be an adjustment of interest. Such bonds arestated at amortized cost under the straight-line method, cost being determined by the moving
average method.

(2) Valuation Methods of Derivative Instruments
Derivative instruments are stated at fair market value.
(3) Revaluation of Land
The Company revalued the land for business purposes based on the Law for Revaluation of Land (Law
No.34 promulgated on March 31, 1998). The difference between fair value and book value resulting
from the revaluation, net of related taxes, is recorded as revaluation reserve for land as a separate- 14 -

Fukoku Mutual Life Insurance Company

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
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 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 the lease term without residual value
Other tangible fixed assets acquired for ¥100,000 or more but less than ¥200,000 are depreciatedequally over three years.
(5) Foreign Currency Translation
Foreign currency denominated assets and liabilities, except for investments in subsidiaries andaffiliates, are translated 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
Allowance for possible loan losses is provided in accordance with the Company’s standards of selfassessment and write-offs and reserves on credit quality:i)

For the credits of borrowers who are legally bankrupt such as being in the proceedings ofbankruptcy or civil rehabilitation (hereinafter called “legally bankrupt borrowers”) and who aresubstantially bankrupt (hereinafter called “substantially bankrupt borrowers”), the Company
provides the remaining amount of credits after the direct write-off described below and the
deductions of the amount expected to be collected through the disposal of collateral or the
execution of guarantees.

ii)

For the credits of borrowers who are not currently bankrupt but have a high possibility ofbankruptcy (hereinafter called “not currently bankrupt borrowers”), the Company provides theamounts deemed as necessary considering the borrowers’ ability to pay, within the amounts
after deductions of the amount expected to be collected through the disposal of collateral or
the execution of guarantees.

iii)

For the credits of borrowers other than the above, the Company provides the amounts
calculated by multiplying the borrowers’ balance by the actual ratio of bad debt losses on
defaults during a certain past period.

All credits are assessed by the relevant departments in accordance with the Company’s standards ofself-assessment 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 are provided based on 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 ofguarantees is written-off directly from the borrower’s balance as the estimated uncollectible amounts.
The amount written-off as of September 30, 2014 was ¥268 million.

- 15 -

Fukoku Mutual Life Insurance Company

(7) Reserve for Employees’ Retirement Benefits and Method of Amortizing Retirement Benefit
Expenses
Reserve for employees' retirement benefits is presented for the employees' retirement benefits basedon projected benefit obligations and pension plan assets at the balance sheet date.
The Company uses the following methods for amortizing retirement benefit obligations andretirement benefit expenses:
 Method for allocation of projected retirement benefits .....................

Benefit formulabasis
 Amortization period of actuarial differences .........................................
10 years
 Amortization period of prior service cost ..............................................
10 years(8) Reserve for Price Fluctuation of Securities
Reserve for price fluctuation of securities is calculated in accordance with Article 115 of the Insurance
Business Law.
(9) Lease Transactions as a Lessee
Finance lease transactions that do not transfer ownership to the lessee whose commencement day
was on or before March 31, 2008 continued to be accounted for in a manner similar to accounting
treatment for ordinary rental transactions.
(10) Lease Transactions as a Lessor
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 thelease transactions is recorded in “other investment expenses”, which is calculated by deducting anamount equivalent to the interest allocated over the lease term from the lease fee received.
(11) Accounting for Hedge Activities
Hedge accounting is based on “Accounting Standards for Financial Instruments” (ASBJ Statement
No.10 issued by the Accounting Standards Board of Japan on August 11, 2006).
For the foreign currency forward contracts against the exchange rate fluctuations in the value of
foreign currency-denominated bonds classified as available-for-sale securities, which qualify for hedge
accounting because of high correlation and effectiveness between the hedging instruments and thehedged items, valuation gains and losses on the foreign currency forward contracts are recorded in thestatements of operations.
For the interest rate swaps against the interest rate fluctuations regarding loans, which qualify forhedge accounting because of high correlation and effectiveness between the hedging instruments andthe hedged items, valuation gains and losses on the interest rate swaps are deferred until the maturityof the hedged transactions.
The Company applies foreign currency swap appropriated treatment as a hedge for the foreignexchange fluctuation risk associated with foreign currency denominated bonds issued by the Company.
For judging the effectiveness of hedge used, ratio analysis of comparing the fluctuations in the fairvalue or cash flows of hedged items and hedging instruments is mostly applied.
(12) Accounting for Employees’ Retirement Benefits
Accounting of unrecognized actuarial differences and unrecognized prior service costs related to
employees' retirement benefits is different to the methods used for these items in the interim
consolidated financial statements.

- 16 -

Fukoku Mutual Life Insurance Company

(13) Accounting for Consumption Taxes
The Company accounts for consumption taxes by the tax-exclusion method. The consumption taxes oncertain assets, which are not deductible from consumption taxes withheld and that are stipulated to bedeferred under the Tax Law, are deferred as prepaid expenses and amortized equally over five years.
Consumption taxes other than deferred consumption taxes are recognized as an expense whenincurred.
(14) Policy Reserve
Policy reserve is based on Article 116 of the Insurance Business Law, and the premium reserve iscalculated by the following method:
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.
In regard to the policies not subject to the standard policy reserve, the net level premium method isapplied.
Based on the provision of paragraph 5, Article 69 of the Enforcement Regulation of the Insurance
Business Law, certain individual annuity insurance policies, certain hospitalization riders with surgery
benefits and long-term hospitalization benefits, and non-participating educational insurance havefunded policy reserves included.
(15) Amortization Method for Software
The software for internal use recorded in “intangible fixed assets” is amortized based on straight-line
method over the estimated useful lives.
(16) Deferred Assets
Discount on bonds is amortized equally over the period for which interest on bonds is fixed. This
amount is deducted from bonds.
(17) Policy-reserve-matching Bonds
Of the bonds corresponding to the sub-groups of individual insurance, annuities and group annuities
which are set by insurance types and investment policies, the bonds that are held to match the durationof liabilities are classified as policy-reserve-matching bonds in accordance with “Temporary Treatmentof Accounting and Auditing Concerning Policy-reserve-matching Bonds in the Insurance Industry”(Industry Audit Committee Report No.21 issued by the Japanese Institute of Certified Public
Accountants on November 16, 2000).
2. Accounting changes and error corrections and its implementation
In accordance with “Accounting Standard for Retirement Benefits” (ASBJ Statement No. 26, May 17,2012) and “Guidance on Accounting Standard for Retirement Benefits” (ASBJ Guidance No. 25, May
17, 2012), effective from the six months ended September 30, 2014, the Company changed its method
for allocation of projected retirement benefits from the straight-line basis to the benefit formula basis. In
addition, the Company changed its method for determining the discount rate from the discount rate
based on the average period until the estimated payment date of retirement benefits to the method thatuses the single weighted average discount rate reflecting the estimated payment period for retirement
benefits and the estimated amount for each period.
As a result of these changes, compared with the previous method, at the beginning of the six
months ended September 30, 2014, surplus decreased by ¥3,297 million. Ordinary profits and surplus
before income taxes for the six months ended September 30, 2014 increased by ¥19 million.

- 17 -

Fukoku Mutual Life Insurance Company

3. Financial Instruments
The carrying amounts, fair values and their related differences of major financial assets and liabilities
as of September 30, 2014 were as follows:
Carrying
amountFair value

Difference(Millions of yen)

Cash and deposits: ..................................................
Cash and deposits not treated as securities¥
31,841
Total cash and deposits
31,841
Call loans .................................................................
128,100
Monetary claims bought:
Claims treated as loans .......................................
925
Total monetary claims bought ..............................
925
Money held in trust:
Trading securities .................................................
32,305
Total money held in trust ......................................
32,305
Securities:
Trading securities .................................................
284,363
Held-to-maturity debt securities ...........................
816,384
Policy-reserve-matching bonds ...........................
1,227,469
Investments in subsidiaries and affiliates ............
1,433
Available-for-sale securities .................................
2,625,767
Total securities .....................................................
4,955,418
Loans:
Policy loans ..........................................................
64,593
Ordinary loans .....................................................
712,658
Total loans ............................................................
777,252
Assets total
5,925,843
1
Subordinated bonds*
121,518
Liabilities total
121,518
2
Derivative instruments* :Hedge accounting not applied .............................
(2,383 )Hedge accounting applied ...................................
(13,998 )Total derivative instruments ................................. ¥ (16,382 )¥¥

31,841
31,841
128,100

―
―
―

¥

969
969

43
43

32,30532,305――284,363910,740
1,330,756
1,191
2,625,767
5,152,820―
94,356103,287(241 )―
197,401

64,593734,833
799,426
6,145,462
128,095
128,095(0 )22,174
22,174
219,619
6,577
6,577

(2,383 )(13,998 )(16,382 )

―
―
―

¥

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

(1) Cash, deposits (excluding financial instruments treated as securities based on “AccountingStandards 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
approximate book values due to their short maturities.
(2) Securities including deposits and monetary claims bought which are treated as securities based on“Accounting Standards 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 price at the balance
sheet date. The fair values of other securities without the quoted market price are based on theprices reasonably calculated such as the prices offered by the information vendors or counterparty
financial institutions.

- 18 -

Fukoku Mutual Life Insurance Company

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, are excluded from above securities. The carrying amounts of investments in
subsidiaries and affiliates, unlisted stocks and investments in partnerships as of September 30,
2014 were ¥35,560 million, ¥7,515 million and ¥9,528 million, respectively.
(3) Loans and monetary claims bought treated as loans:
The fair values of policy loans are deemed to approximate book values, considering estimatedrepayment period and interest rate conditions since their repayment deadline have not been set up
due to the characteristics that the loan is limited to the amount of cash surrender values. Therefore,
the book values are used as the fair values of policy loans.
The fair values of floating interest rate loans among the ordinary loans and monetary claimsbought treated as loans approximate the book values because the market interest rates arereflected in future cash flows in a short period. Therefore, the fair values of floating interest rateloans and monetary claims bought treated as loans are based on their book values. The fairvalues of fixed interest rate loans are measured by discounting the future cash flows to the present
values.
The fair values of loans receivable from legally bankrupt borrowers, substantially bankrupt
borrowers and not currently bankrupt borrowers and monetary claims bought treated as loans arecomputed by deducting the amount 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 value.
(5) Derivative instruments:i)

The fair values of the futures and options traded at the exchange are measured at thesettlement price of the exchange.
ii) The fair values of options and swaps traded over the counter are based on the quoted prices
offered by counterparty financial institutions.
iii) The fair values of foreign currency forward contracts are determined based on the spot
exchange rate and forward contract rate.

4. Investment and Rental Property
Notes related to the fair value of investment and rental properties are omitted as no significant change
has occurred since the previous fiscal year-end.
5. Securities Lent under Lending Agreements
The amount of securities lent under lending agreements was ¥47,702 million as of September 30, 2014.

6. Loans Receivable
The amounts of credits to bankrupt borrowers, delinquent loans and restructured loans, which were
included in loans, were ¥225 million, ¥794 million and ¥377 million, respectively and their total amountwas ¥1,396 million as of September 30, 2014. There was no balance of delinquent loans past 3 months
or more as of September 30, 2014.
The direct write-offs of loans led to a decrease in credits to bankrupt borrowers of ¥248 million as
of September 30, 2014.
Credits to bankrupt borrowers represent loans, excluding the balances already written-off, whichmeet the conditions prescribed in Article 96 Paragraph 1 Item 3 and 4 of the Enforcement Regulationsof the Corporate Tax Law. Moreover, accruing interest on 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 of principal or interest payment or for some other reasons.

- 19 -

Fukoku Mutual Life Insurance Company

Delinquent loans are credits whose accruing interest is not recorded as income due to the same
reasons as described above, and exclude credits to bankrupt borrowers and loans for which interest
payments have been suspended and rescheduled to assist and support the borrowers in the
restructuring of their business.
Delinquent loans past 3 months or more are loans for which interest payment or repayment ofprincipal are delinquent for 3 months or more from the due date under the terms of the related loan
agreements, excluding those loans classified as credits to bankrupt borrowers and delinquent loans.
Restructured loans are loans for which certain concessions favorable to borrowers, such as
interest reduction or exemptions, rescheduling of due date of principal or interest payment, waiver ofclaim 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
Accumulated depreciation of tangible fixed assets totaled to ¥147,221 million as of September 30,
2014.
8. Separate Accounts
Total assets in separate accounts provided for in Article 118 of the Insurance Business Law were
¥85,896 million as of September 30, 2014. The amount of separate account liabilities was the same as
separate account assets.
9. Reserve for Dividends to Policyholders
Changes in reserve for dividends to policyholders for the six months ended September 30, 2014 wereas follows:(Millions of yen)
Balance at the beginning of current period .................
Transfer from surplus in previous fiscal year ..............
Dividends paid in the current period ...........................
Increase in interest .....................................................
Balance at the end of current period ..........................

¥ 51,007
31,595(16,617)30¥ 66,017

10. Stocks of Subsidiaries
The amount of stocks of subsidiaries the Company held as of September 30, 2014 was ¥36,994 million.
11. Pledged Assets and Secured Debts
Assets pledged as collateral as of September 30, 2014 were ¥31,546 million of securities and ¥931
million of bank deposits. Secured debts as of September 30, 2014 were ¥4,769 million.
12. Policy Reserves for the Reinsurance Contracts
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 “reservefor outstanding claims for ceded reinsurance”) was ¥2 million as of September 30, 2014.
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 forceded reinsurance”) was ¥30 million as of September 30, 2014.

- 20 -

Fukoku Mutual Life Insurance Company

13. Additional Foundation Funds
The Company raised additional foundation funds of ¥10,000 million during the six months ended
September 30, 2014 in accordance with Article 60 of the Insurance Business Law.

14. Redemption of Foundation Funds
In the six months ended September 30, 2014, in connection with the redemption of foundation funds of¥15,000 million, the Company reversed the reserve for redemption of foundation funds and provided
the equivalent amount for accumulated foundation funds redeemed in accordance with Article 56 of the
Insurance Business Law.
15. Commitment LineAs of September 30, 2014, there were unused commitment line agreements under which the Company
is the lender of ¥10,872 million.
16. Subordinated Bonds
Repayments of subordinated bonds are subordinated to other obligations.
17. Contribution to Policyholders Protection Corporation
The future contribution to the Life Insurance Policyholders Protection Corporation of Japan under
Article 259 of the Insurance Business Law was estimated at ¥10,372 million as of September 30, 2014.
The contribution was charged as operating expenses in the year in which it was paid.

- 21 -

Fukoku Mutual Life Insurance Company

III. Notes to Statements of Operations
1. Gains on Sales of Securities
Major items of gains on sales of securities for the six months ended September 30, 2014 were as
follows:(Millions of yen)Domestic bonds ..........................................................................
Domestic stocks and others........................................................
Foreign securities .......................................................................

¥ 3,0231,230
735

2. Losses on Sales of Securities
Major items of losses on sales of securities for the six months ended September 30, 2014 were as
follows:(Millions of yen)Domestic bonds ..........................................................................
Domestic stocks and others........................................................
Foreign securities .......................................................................

¥

0
63
103

3. Losses on Valuation of Securities
Major items of losses on valuation of securities for the six months ended September 30, 2014 were as
follows:(Millions of yen)
Foreign securities .......................................................................

¥ 111

4. Policy Reserves for the Reinsurance Contracts
For the six months ended September 30, 2014, reversal of reserve for outstanding claims for ceded
reinsurance considered in calculation of reversal of reserve for outstanding claims was ¥1 million andprovision for policy reserve for ceded reinsurance considered in calculation of provision for policy
reserve was ¥0 million.
5. Interest, Dividends and Other Income
Breakdown of interest, dividends and other income for the six months ended September 30, 2014 was
as follows:(Millions of yen)Interest on deposits ....................................................................
Interest and dividends on securities ...........................................
Interest on loans .........................................................................
Income from real estate for rent .................................................
Other interest and dividends .......................................................
Total ............................................................................................

- 22 -¥
2
51,278
8,191
6,891
131
¥66,494

Fukoku Mutual Life Insurance Company

6. Breakdown of Ordinary Profits (Fundamental Profit)(Millions of yen)Six months ended
Six months ended
Septermber 30, 2013 Septermber 30, 2014

A

39,596

43,634

Capital gains
Gains from money held in trust, net
Gains from trading securities, net
Gains on sales of securities
Gains from derivative instruments, net
Foreign exchange gains, net
Other capital gains
Capital losses
Losses from money held in trust, net
Losses from trading securities, net
Losses on sales of securities
Losses on valuation of securities
Losses from derivative instruments, net
Foreign exchange losses, net
Other capital losses
Net capital gains (losses)
B
Fundamental profit plus net capital gains (losses)
A+B
Non-recurring gains
Reinsurance income
Reversal of contingency reserve
Reversal for specific allowannce for possible loan losses
Other non-recurring gains
Non-recurring losses
Reinsurance premiums
Provision for contingency reserve
Provision for specific allowance for possible loan losses
Allowance for specified overseas loans
Write-off of loans
Other non-recurring losses
Non-recurring gains (losses)
C
Ordinary profits
A+B+C

32,236－－
31,775－460－
16,700
317
72
5,202
52
11,056－－
15,535
55,132
－
－
－
－
－
299
－
57
241
－
－
－
(299)
54,832

18,536
1,261
11,755
4,990
－
528
－
11,293－－167
111
11,014－－
7,242
50,877
7
－
－
7
－
104
－
104
－
－
－
－
(97)
50,780Fundamental profit

Notes: 1. The following amounts in respect of gains / losses from money held in trust have been excluded from capital gains / losses andincluded in fundamental profit due to their income nature (being interest and dividend income): ¥104 million in respect of the six
months ended September 30, 2013 and ¥112 million in respect of the six months ended September 30, 2014.
Notes: 2. The following amounts in respect of gains / losses from trading securities have been excluded from capital gains / losses andincluded in fundamental profit due to the their income nature (being interest and dividend income): ¥4,273 million in respect of
the six months ended September 30, 2013 and ¥4,394 million in respect of the six months ended September 30, 2014.

- 23 -

Fukoku Mutual Life Insurance Company

7. Disclosed Claims Based on Categories of Obligors(Millions of yen)
As of
September 30, 2014

As ofMarch 31, 2014
Claims against bankrupt and quasi-bankrupt obligors
Claims with collection risk
Claims for special attention
Subtotal[Percentage of total]
Claims against normal obligors
Total

216
732
660
1,609
[0.18%]
910,205
911,815

239
786
377
1,403
[0.17%]
827,531
828,934

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) with deteriorated 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 and loans witha concessionary interest rate, as well as loans with renegotiated conditions in favour of the borrower, including renegotiatedschedule and/or waivers, in each case, other than the loans described in note 1 or 2 above.
4. Claims against normal obligors are all other loans.

8. Risk-monitored Loans(Millions of yen)
As of
September 30, 2014

As ofMarch 31, 2014
Credits to bankrupt borrowers
Delinquent loans
Delinquent loans past three months or more
Restructured loans
Total[Percentage of total loans]

195
747
－
660
1,602
[0.19%]

225
794
－
377
1,396
[0.18%]

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 balance as
the estimated uncollectible amounts. The amounts written-off related to credits to bankrupt borrowers were ¥248 million as of
September 30, 2014, and ¥251 million as of March 31, 2014.
2. Credits to bankrupt borrowers represent loans which are subject to bankruptcy, corporate reorganisation or rehabilitation or othersimilar, 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 and support 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 for threemonths or more from the due date under the terms of the related loan agreements, excluding those loans classified as credits
to bankrupt borrowers and delinquent loans.
5. Restructured loans are loans for which certain concessions favorable to borrowers, such as interest reduction or exemptions,
rescheduling of due date of principal or interest payment, waiver of claim or other terms, have been negotiated for the purpose of
assisting and supporting the borrowers in the restructuring of their business. This category excludes loans classified as credits tobankrupt borrowers, delinquent loans and delinquent loans past three months or more.

- 24 -

Fukoku Mutual Life Insurance Company

9. Solvency Margin Ratio(Millions of yen)

As ofMarch 31, 2014
Total solvency margin

(A)

As of
September 30, 2014

1,109,068

1,226,165

Foundation funds and surplus

196,835

211,692

Reserve for price fluctuation of securities

44,01645,271

Contingency reserve

110,291

110,396

1,594

1,389

Net unrealized gains on available-for-sale securities x 90%

337,872

426,942Net unrealized gains on real estate x 85%

90,71993,087

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

193,088

195,102

Qualifying subordinated debt

122,346

121,518－－

Deductible items(19,000)(19,000)

Others31,30339,765

201,663

217,158

Allowance for possible loan losses

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

Total amount of risk

( R1  R8 )2  R2  R3  R7   R4
2

(B)

Insurance risk

R1

26,371

25,9533rd sector insurance risk

R8

9,631

9,591

Assumed investment yield risk

R2

35,88435,924

Minimum guarantee risk

R7

0

0

Investment risk

R3

157,866

173,339

Business risk

R4

4,595

4,896

1,099.9%

1,129.2%

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

Notes: 1. Above figures are calculated based on Articles 86 and 87 of the Enforcement Regulations of the Insurance Business Insurance Law andNotification No. 50 of the Ministry of Finance, 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.

- 25 -

Fukoku Mutual Life Insurance Company

10. Status of Separate Account(1) Separate Account Assets by Products
As of March 31, 2014

(Millions of yen)
As of September 30, 2014

AmountAmountIndividual variable insurance－－

Individual variable annuities

272

167

Group annuities

82,40885,729Total

82,68085,896(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)
As of September 30, 2014

As of March 31, 2014
NumberAmountNumberAmountIndividual variable annuities

81

265

51

164

Total

81

265

51

164

(ii) Breakdown of Separate Account Assets for Individual Variable Annuities(Millions of yen)
As of March 31, 2014
AmountAs of September 30, 2014

Percentage

AmountPercentage

Cash, deposits, call loans

131

48.2

62

37.2

Securities

141

51.8

105

62.8

Domestic bonds

－

－

－

－

Domestic stocks

－

－

－

－

Foreign securities

－

－

－

－

Foreign bonds

－

－

－

－

Foreign stocks and other securities

－

－

－

－

141

51.8

105

62.8

Loans

－

－

－

－

Others－－－－Allowance for possible loan losses

－

－

－

－

272

100.0

167

100.0

Other securities

Total- 26 -

Fukoku Mutual Life Insurance Company

(iii) Investment Income and Expenses of Separate Account for Individual Variable Annuities(Millions of yen)Six months ended
Six months ended
September 30, 2013
September 30, 2014
AmountAmountInterest, dividends and other income
3111
Gains on sales of securities－－
Gains on valuation of securities
43
23
Gains on redemption of securities－－
Gains from derivative instruments－－
Foreign exchange gains, net－－
Other investment income
0－
Losses on sales of securities－－
Losses on valuation of securities
41
27
Losses on redemption of securities－－
Losses from derivative instruments－－
Foreign exchange losses, net－－
Other investment expenses－－
Net investment income
337(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 September 30, 2014

As of March 31, 2014

Trading securities

Carrying value onbalance sheets

Net valuation
gains/losses
included in thestatementsof operations

Carrying valueonbalance sheets

141

(11)

105

Net valuation
gains/losses
included in thestatementsof operations(3)

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

- 27 -

Fukoku Mutual Life Insurance Company

(reference) Fair Value Information on Securities (Total of General Account and Separate Account)
Net Valuation Gains/Losses on Trading Securities(Millions of yen)
As of March 31, 2014
Net valuation gains/losses
included in the statementof operations

Carrying value onbalance sheet
Trading securities

As of September 30, 2014

380,680

Carrying value onbalance sheet

10,324

Net valuation gains/losses
included in the statementof operations

398,854

13,839Note: 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, 2014
Book value
Held-to-maturity debt securities
Domestic bonds
Foreign bonds
Monetary claims bought
Negotiable certificate of deposits
Others
Policy-reserve-matching bonds
Domestic bonds
Foreign bonds
Investments in subsidiaries and affiliates
Available-for-sale securities
Domestic bonds
Domestic stocks
Foreign securities
Foreign bonds
Foreign stocks and other securities
Other securities
Money held in trust
Monetary claims bought
Negotiable certificate of deposits
Others
Total
Domestic bonds
Domestic stocks
Foreign securities
Foreign bonds
Foreign stocks and other securities
Other securities
Money held in trust
Monetary claims bought
Negotiable certificate of deposits
Others843,433
768,744
74,689－－－1,210,016
1,190,715
19,301
1,393
2,046,003
815,104
269,792
905,773
690,428
215,345
55,332－－－－
4,100,846
2,774,564
269,792
1,001,157
784,419
216,738
55,332－－－－

Gains/losses

Fair value
922,909845,557
77,352－－－
1,294,587
1,275,012
19,5751,096
2,421,417
886,899
439,094
1,028,769
774,677
254,092
66,653－－－－4,640,011
3,007,469
439,094
1,126,794
871,604
255,189
66,653－－－－As of September 30, 2014

Gains
79,47676,813
2,662－－－
84,79884,522276－
379,801
72,132
171,769
124,501
85,398
39,102
11,397－－－－544,075
233,467
171,769
127,440
88,337
39,102
11,397－－－－

79,47676,813
2,662－－－
84,57084,297273(296)
375,414
71,794
169,301
122,996
84,24938,746
11,321－－－－
539,164
232,904
169,301
125,636
87,18538,45011,321－－－－

Book value

Fair value

816,384
741,590
74,794－－－
1,227,469
1,190,970
36,4981,433
2,151,386
833,715
277,689
990,600
769,991
220,609
49,381－－－－
4,196,674
2,766,276
277,689
1,103,327
881,284
222,042
49,381－－－－

910,740
833,390
77,349－－－1,330,756
1,293,960
36,795
1,191
2,625,767
913,541
507,388
1,140,746
871,352
269,394
64,091－－－－
4,868,456
3,040,893
507,388
1,256,083
985,497
270,585
64,091－－－－

Gains/losses

Losses
－
－
－
－
－
－
227
224
2
296
4,387
337
2,467
1,505
1,149
355
76
－
－
－
－
4,911
562
2,467
1,804
1,152
652
76
－
－
－
－

94,35691,8002,555－－－
103,287
102,989297(241)
474,380
79,825
229,698
150,145
101,361
48,784
14,709－－－－671,781274,616
229,698
152,756
104,21348,542
14,709
－
－
－
－

Gains
94,35691,8002,555－－－
103,293
102,989303
2476,647
79,992
230,684
151,260
102,168
49,092
14,709－－－－674,299274,783
230,684
154,122
105,027
49,094
14,709－－－－LossesNote: 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 September 30, 2014

As of March 31, 2014

Securities whose fair value exceeds the carrying
value on the balance sheet
Domestic bonds
Foreign bonds
Money claims bought
Negotiable certificate of deposits
OthersSecurities whose fair value does not exceed thecarrying value on the balance sheet
Domestic bonds
Foreign bonds
Money claims bought
Negotiable certificate of deposits
OthersCarrying
value on thebalance
sheet

Fair value

Differences

Carrying
value on thebalance
sheet

Fair value

Differences

843,433

922,909

79,476816,384

910,740

94,356

768,744
74,689－－－845,557
77,352－－－

76,813
2,662－－－

741,590
74,794－－－

833,390
77,349－－－91,800
2,555
－
－
－

－

－

－

－

－

－

－
－
－
－
－

－
－
－
－
－

－
－
－
－
－

－
－
－
－
－

－
－
－
－
－

－
－
－
－
－

- 28 -

Fukoku Mutual Life Insurance Company

－
－
－
－
－
－
6
－
6
244
2,267
166
985
1,115
807
307
－
－
－
－
－
2,517
166
985
1,365
813
551
－
－
－
－
－

・ Policy-reserve-matching Bonds(Millions of yen)
As of September 30, 2014

As of March 31, 2014

Bonds whose fair value exceeds the carrying
value on the balance sheet
Domestic bonds
Foreign bonds
OthersBonds whose fair value does not exceed thecarrying value on the balance sheet
Domestic bonds
Foreign bonds
OthersCarrying
value on thebalance
sheet

Fair value

Differences

Carrying
value on thebalance
sheet

Fair value

Differences

1,205,007

1,289,805

84,7981,207,169

1,310,462

103,293

1,186,005
19,001－

1,270,527
19,277－84,522276－

1,190,970
16,198－1,293,960
16,502－102,989
303
－

5,009

4,782

(227)

20,30020,293

(6)

4,709
300
－

4,484
297
－

(224)
(2)
－

－
20,300－－20,293－－(6)－・ Available-for-sale Securities(Millions of yen)
As of September 30, 2014

As of March 31, 2014

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

Carrying
Carrying
value on thevalue on the
Differences Book value
Differencesbalancebalance
sheet
sheet

1,859,060

2,238,861

379,801

2,015,164

2,491,812

476,647

796,157
232,850
780,763581,574
199,188
49,288－－－－868,289404,620905,265
666,973
238,291
60,686－－－－

72,132
171,769
124,501
85,398
39,102
11,397－－－－

813,700
262,868
889,214688,245
200,968
49,381－－－－

893,693493,552
1,040,475
790,414250,060
64,091－－－－

79,992
230,684
151,260
102,168
49,092
14,709－－－－186,942

182,555(4,387)

136,222

133,955(2,267)

18,94736,941125,009108,853
16,156
6,043
－
－
－
－

18,60934,474
123,504
107,703
15,800
5,967
－
－
－
－

(337)
(2,467)(1,505)(1,149)
(355)
(76)
－
－
－
－

20,015
14,821
101,386
81,745
19,640－－－－－19,848
13,835100,271
80,937
19,333
－
－
－
－
－

(166)
(985)
(1,115)
(807)
(307)
－
－
－
－
－

* Book value of securities whose market value are deemed extremely difficult to obtain are as follows:
As of March 31, 2014－－－－
35,56015,620
7,653
－
－
7,967
51,181

Held-to-maturity bonds
Unlisted foreign bonds
Others
Policy-reserve-matching bonds
Investments in subsidiaries and affiliates
Available-for-sale securities
Unlisted domestic stocks (except over-the-counter stocks)
Unlisted foreign stocks (except over-the-counter stocks)
Unlisted foreign bonds
OthersTotal- 29 -(Millions of yen)
As of September 30,
2014
－
－
－
－
35,56017,043
7,515
－
－
9,528
52,604

Fukoku Mutual Life Insurance Company

(reference) Fair Value Information on Derivative Instruments (Total of General Account and Separate(i) Gains and Losses on Derivatives(Millions of yen)Interestrelated
3
(18)
(14)
Interestrelated
2
(392)
(390)

As of March 31, 2014
Hedge accounting applied
Hedge accounting not applied
Total
As of September 30, 2014
Hedge accounting applied
Hedge accounting not applied
Total

Currencyrelated(2,427)(2,119)(4,546)
Currencyrelated(14,000)(2,096)(16,097)

Stockrelated
－
(152)
(152)
Stockrelated－－－

Bondrelated
－
370
370
Bondrelated
－
104
104

Others

Total

－
－
－

(2,423)(1,920)(4,343)

Others

Total

－
－
－

(13,998)(2,384)(16,383)

Note: Gains and losses from applying fair value hedge accounting (currency- related, losses of ¥2,427 million as of March 31, 2014 andlosses of ¥14,000 million as of September 30, 2014) included in gains and losses with hedge accounting applied, and gains andlosses 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 September 30, 2014

As of March 31, 2014
Notional amount/contract valueOver
1 yearOver-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
[

Fair
value

－
－ ]
－
－ ]

－

－
－ ]
100,000
89 ]

－

Gains
(losses)

－

－[

－
－

－[

－

－[

－
70

Total

(18) [

Notional amount/contract valueOver
1 year

Fair
value

－
－ ]
－
－ ]

－

－
－ ]
300,000
525 ]

－

Gains
(losses)

－

－

－

－

－

－

132

(392)

－

100,000

(18)

(392)

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

- 30 -

Fukoku Mutual Life Insurance Company

・ Currency-related Transactions
As of March 31, 2014
Notional amount/contract value
Fair
Gains
value
(losses)Over
1 yearOver-the-counter transactions
Currency forward contracts
Sold
Euro
US dollar
Canadian dollar
Australian dollar
British Pound
Sinapore dollar
Swiss franc
BoughtUS dollar
Euro

211,168
61,87458,32534,93637,32418,708－－9－
9

Currency Options
Sold
Calls
[
Puts
[
Bought
Calls
[
Puts
[
US dollar[－ 213,264－ 61,883－ 58,658－ 35,385－ 38,449－ 18,838
－
－
－
－
9
－
－
－
9
－

－
－ ]
－
－ ]

－

－
－ ]
9,800
23 ]
9,800
23 ]

－

－

(2,096)
(8)
(333)
(448)
(1,175)
(130)
－
－
0
－
0

－ [

－
－

－ [

－

－ [

－
0

(23) [－
0Total(23) [(Millions of yen)
As of September 30, 2014
Notional amount/contract value
Fair
Gains
value
(losses)Over
1 year235,730
88,58378,00826,20522,73820,177
15
1
200
200
－

－ 237,812－ 88,502－ 80,032－ 26,469－ 22,341－ 20,448
15
－
1
－
200
－
200
－
－
－

－
－ ]
－
－ ]

－

－
－ ]
15,80024 ]15,80024 ]－(2,082)81(2,024)
(264)
396
(271)
(0)
0
0
0
－

－

－

－

－

－

－

9

(14)

9

(14)

－

－
－

(2,119)(2,096)

As of March 31, 2014
Notional amount/contract value
Gains
Fair value(losses)Over
1 year(Millions of yen)
As of September 30, 2014
Notional amount/contract value
Gains
Fair value(losses)Over
1 yearNotes: 1. Figures in [ ] are option premiums which are included in balance sheet.
2. Forward exchange rates are used for exchange rates as of the end of period.

・ Stock-related Transactions

Exchange-traded transactions
Yen stock index options
Sold
Calls
[
Puts
[
Bought
Calls
[
Puts
[

－
－ ]
－
－ ]

－

－
－ ]
10,687
306 ]

－

－

－ [

－
－

－ [

－

－ [

－
153

(152) [

－
－ ]
－
－ ]

－

－
－ ]
－
－ ]

－

－

－

－

－

－

－

－

－

－

－

(152)

－

As of March 31, 2014
Notional amount/contract value
Gains
Fair value(losses)Over
1 year(Millions of yen)
As of September 30, 2014
Notional amount/contract value
Gains
Fair value(losses)Over
1 year

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

・ Bond-related Transactions

Exchange-traded transactions
Yen bond futures
Sold
Bought144,825－－ 144,620
－
－

205
－

145,715－－ 145,840
－
－

(125)
－

Foreign bond futures
Sold
Bought27,492
－

－
－

165
－

36,031
－

－
－

229
－

27,327
－

Total

370

- 31 -

35,801－

104

Fukoku Mutual Life Insurance Company

(iii) Hedge Accounting Applied・ Interest-related Transactions[As of March 31, 2014](Millions of yen)

Method ofhedge accounting
Deferral hedge
methodHedging instruments
Yen interest rate swap contracts

Hedged items

Notional amount / contract value

Fair valueOver 1 year

Loans

Receipt fixed, payment floating

290

170

3

Payment fixed, receipt floating

－

－

－

Total
* Interest rate swap contracts by contractual maturity dates(Millions of yen)
1 year or shorter

Over 1 year to 3 years

Over 3 years

120

170

－

Average fixed rate (receipt)

2.12%

2.47%

－

Average floating rate (payment)

1.11%

1.11%

－

－

－

－

Average floating rate (receipt)

－

－

－

Average fixed rate (payment)

－

－

－

Notional amount (receipts fixed, payments floating)

Notional amount (receipts floating, payments fixed)[As of September 30, 2014](Millions of yen)

Method ofhedge accounting
Deferral hedge
methodHedging instruments
Yen interest rate swap contracts

Hedged items

Notional amount / contract value

Fair valueOver 1 year

Loans

Receipt fixed, payment floating

187

127

2

Payment fixed, receipt floating

－

－

－

Total
* Interest rate swap contracts by contractual maturity dates(Millions of yen)
1 year or shorter

Over 1 year to 3 years

Over 3 years

60

127

－

Average fixed rate (receipt)

2.12%

2.47%

－

Average floating rate (payment)

1.10%

1.10%

－

－

－

－

Average floating rate (receipt)

－

－

－

Average fixed rate (payment)

－

－

－

Notional amount (receipts fixed, payments floating)

Notional amount (receipts floating, payments fixed)

・ Currency-related Transactions[As of March 31, 2014](Millions of yen)

Method ofhedge accounting
Fair value hedge
methodHedging instruments
Currency forward contracts

Hedged items

Notional amount / contract value

Fair Value

Over 1 year

Foreigncurrencydenominatedbonds

364,791－

367,218

295,783－

297,232

39,976－40,353

British pound

15,206－

15,401

Australian dollar

13,825－

14,231

－

－

－

Sold
US dollar
Euro

BoughtTotal[As of September 30, 2014](Millions of yen)

Method ofhedge accounting
Fair value hedge
methodHedging instruments
Currency forward contracts

Hedged items

Notional amount / contract value

Fair Value

Over 1 year

Foreigncurrencydenominatedbonds

462,941－

476,941

370,171－

383,80941,751－

41,698Euro

39,127－

39,572Australian dollar

11,890－11,860

－

－

－

Sold
US dollar
British pound

BoughtTotal
Notes 1. Forward exchange rates are used for exchange rates as of the end of fiscal year.

2. Regarding assets and liabilities which are denominated in foreign currencies but have fixed settlement in yen under currency forward
contracts and are reported in yen amounts in the balance sheet, those currency forward contracts are excluded from the table above.

・ Stock-related Transactions
No ending balance as of March 31, 2014 and September 30, 2014.

・ Bond-related Transactions
No ending balance as of March 31, 2014 and September 30, 2014.

- 32 -

Fukoku Mutual Life Insurance Company

11. Status of the Company, Subsidiaries and Affiliates(1) Selected Financial Data

(Millions of yen)Six months ended
September 30, 2013

Six months ended
September 30, 2014

Ordinary revenues

486,743

493,244

Ordinary profits

57,59652,123

Net surplus for the period

37,01939,402Comprehensive income

48,117

109,450

As ofMarch 31, 2014

As of
September 30, 2014

Total assets

7,817,668

8,018,858

Solvency margin ratio

1,120.0%

1151.5%(2) Scope of consolidation and application of equity method
Number of consolidated subsidiaries: 5
Number of unconsolidated subsidiaries accounted for under the equity method: 0
Number of affiliates accounted for under the equity method: 0- 33 -

Fukoku Mutual Life Insurance Company

(3) Consolidated Balance Sheets(Millions of yen)
As of March 31, 2014

As of September 30, 2014

Assets:Cash and deposits

91,021

89,615

Call loans

148,700

128,100

Monetary claims bought

1,011

925

Money held in trust

31,98133,305

Securities

6,406,927

6,671,738

Loans

839,244780,651

Tangible fixed assets

232,492

229,727

Intangible fixed assets

16,36915,083

Agency receivables

1

1

Reinsurance receivables

94

22

Other assets

51,065

71,100

Deferred tax assets

1,041

653

Allowance for possible loan losses(2,281)(2,066)

7,817,668

8,018,858

Total assets

As of March 31, 2014

As of September 30, 2014

Liabilities:
Policy reserves

6,995,343

Reserve for outstanding claims

7,085,888

25,17021,082

6,918,429

6,998,185

51,00766,017735

602

Agency payables

339

382

Reinsurance payables

113

129

Subordinated bonds

122,346

121,518

Other liabilities

57,03665,328Net defined benefit liabilities

48,84052,391

Reserve for price fluctuation of securities

50,32551,742

Deferred tax liabilities
Deferred tax liabilities for revaluation reserve for land

27,502
15,92956,750Total liabilities

7,317,778

7,450,044

Net assets:
Foundation funds

35,00030,000

Accumulated foundation funds redeemed

71,00086,000112

112

Consolidated surplus

126,584

115,450

Total foundation funds, surplus and others

232,696

231,562

Net unrealized gains (losses) on available-for-sale securities, net of tax
Deferred valuation gains (losses) under hedge accounting

263,161

332,758

Policy reserve
Reserve for dividends to policyholders
Reserve for dividends to policyholders (subsidiary)

Reserve for revaluation

Revaluation reserve for land, net of tax
Foreign currency translation adjustment
Accumulated remeasurements of defined benefit plans
Total accumulated other comprehensive income

15,913

2

1

3,144

3,165

(261)

(299)

(3,918)(3,675)

262,127

331,950

Minority interests

5,066

5,300

Total net assets

499,890568,814

7,817,668

8,018,858

Total liabilities and net assets- 34 -

Fukoku Mutual Life Insurance Company

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

Ordinary revenues:
Premium and other income
Investment income[Interest, dividends and other income][Gains from money held in trust, net]
[Gains from trading securities, net]
[Gains on sales of securities][Gains from separate accounts, net]
Other ordinary revenues[Reversal of reserve for outstanding claims]
Total ordinary revenues
Ordinary expenditures:
Claims and other payments[Claims][Annuities][Benefits][Surrenders][Other payments]
Provision for policy reserve and others
Provision for policy reserve
Interest on accumulated dividends to policyholders
Interest on accumulated dividends to policyholders (subsidiary)
Investment expenses[Interest expenses][Losses from money held in trust, net]
[Losses on sales of securities][Losses on valuation of securities][Losses from derivative instruments, net]
Operating expenses
Other ordinary expenditures
Total ordinary expenditures
Ordinary profits
Extraordinary gains:
Gains on disposal of fixed assets
Total extraordinary gains
Extraordinary losses:
Losses on disposal of fixed assets
Impairment losses
Provision for reserve for price fluctuation of securities
Total extraordinary losses
Provision for reserve for dividends to policyholders (subsidiary)
Surplus before income taxes
Income taxes:
Current
Deferred
Total income taxes
Net surplus before minority interests
Minority interests
Net surplus for the period- 35 -

Six months ended
September 30, 2013

Six months ended
September 30, 2014

363,388
115,807[71,606][－][4,200][32,933][6,395]
7,547[1,628]486,743

378,115
106,261[78,048][1,374][16,149][5,133][4,792]
8,867[4,088]493,244287,384[90,264][63,822][66,834][54,228][11,975]
60,78660,74838
022,613[1,472][213][5,202][52][11,056]
47,42910,932
429,147
57,596

282,511[68,473][76,800][62,534][60,323][14,094]
79,78779,75630
017,934[2,169]

2,001
2,001

4
4

7,071
1,605
1,335
10,012
256
49,329

26
95
1,416
1,538
267
50,322

13,883(1,774)
12,10837,220201
37,01910,855(28)
10,82639,496
94
39,402

[－]
[167]
[111]
[11,014]
48,691
12,194441,120
52,123

Fukoku Mutual Life Insurance Company

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

Net surplus before minority interests
Other comprehensive income
Net unrealized gains (losses) on available-for-sale securities, net of tax
Deferred valuation gains (losses) under hedge accounting
Foreign currency translation adjustment
Remeasurements of defined benefit plans, net of tax
Comprehensive income
Comprehensive income attributable to parent company
Comprehensive income attributable to minority interests- 36 -

Six months ended
September 30, 2013

Six months ended
September 30, 2014

37,22010,897
10,784(48)
161

39,496
69,95469,750(1)(38)
243
109,450
109,203
246－
48,11748,07146

Fukoku Mutual Life Insurance Company

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

Cash flows from operating activities:
Surplus before income taxes
Depreciation of real estate for rent and other assets
Depreciation
Impairment losses
Amortization of goodwill
Increase (Decrease) in reserve for outstanding claims
Increase (Decrease) in policy reserve
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 reserve for employees' retirement benefits
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
Interest expenses
Foreign exchange (gains) losses, net(Gains) Losses on tangible fixed assets
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 (I)Cash flows from investing activities:(Increase) Decrease in deposits
Proceeds from sales and redemption of monetary claims bought
Payments for increase in money held in trust
Proceeds from decrease in money held in trust
Payments for purchase of securities
Proceeds from sales and redemption of securities
Payments for additions to loans
Proceeds from collections of loans
Proceeds and payments from settlement of derivatives,net
OthersSubtotal (IIa)(I+IIa)Payments for purchase of tangible fixed assets
Proceeds from sales of tangible fixed assets
Payments for purchase of intangible fixed assets
Net cash provided by (used in) investing activities
Cash flows from financing activities:
Financing of subordinated bonds
Financing of additional foundation funds
Redemption of foundation funds
Interest payment for foundation funds
Dividends paid to minority 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
Cash and cash equivalents at the end of the period- 37 -

Six months ended
September 30, 2013

Six months ended
September 30, 2014

49,329
2,509
3,541
1,605
381
(1,628)60,748
38
0
256
(212)
(1,040)－1,335(71,606)(27,005)
1,472
(461)
4,994
(3,427)
20,83179,773(2,215)(14,685)(374)(10,101)
73,22750,322
2,413
3,455
95
381
(4,088)79,756
30
0
267
(215)
－
(860)
1,416
(78,048)(16,156)
2,169
(528)
10
(1,676)38,74485,402(3,100)(16,617)(399)(14,280)
89,749(298)
68(2,000)1,999(646,053)
521,367(31,044)
76,630(11,775)(8,301)(99,408)(26,180)(733)
30,364(1,018)(70,795)

(110)
85
－
－
(388,484)
253,098(15,272)
69,758(10,687)(12,551)(104,163)(14,414)
(717)
58
(900)
(105,723)

49,870
－
－
(621)
(12)
(402)
48,833358
51,624
142,596
194,220－
10,000(15,000)
(621)
(12)
(366)
(6,000)(135)(22,110)238,373
216,263

Fukoku Mutual Life Insurance Company

(6) Consolidated Statements of Changes in Net Assets[For the six months ended September 30, 2013]
Foundation
funds
Balance at the beginning of current
period35,000(Millions of yen)Foundation funds, surplus and others
Accumulated
Total foundation
foundation Reserve for Consolidated
funds, surplus
funds
revaluation
surplusand others
redeemed

71,000112

102,904

209,016Additions to reserve for dividends
to policyholders
Payment of interest on foundation
funds(27,762)(27,762)

(621)

(621)

Net surplus for the current period

37,01937,019

Reversal of revaluation reserve forland
Net changes, excluding
foundation funds, surplus andothers256

256

Changes in the current period

Total changes in the current period

－

－

－

8,891

8,891

Balance at the end of current period

35,00071,000112

111,795

217,907

Accumulated other comprehensive income
Net unrealized
DeferredTotal
gains (losses)
valuation Revaluation
Foreign
Accumulated
accumulated
on availablegains
reserve forcurrency remeasurementsotherfor-sale(losses)land, net of translationof definedcomprehensive
securities, net under hedge
tax
adjustment
benefit plansincomeof taxaccounting
Balance at the beginning of current
period219,719

62

3,421

(635)

－

222,569

Minority
interests

Total net
assets

4,916

436,502

Changes in the current period
Additions to reserve for dividends
to policyholders
Payment of interest on foundation
funds(27,762)

Net surplus for the current period

37,019

Reversal of revaluation reserve forland
Net changes, excluding
foundation funds, surplus andothers256(621)

10,938

(48)

(256)

161

－

10,79634

10,830Total changes in the current period

10,938

(48)

(256)

161

－

10,79634

19,721

Balance at the end of current period

230,658

14

3,165

(473)

－

233,365

4,950

456,223- 38 -

Fukoku Mutual Life Insurance Company

[For the six months ended September 30, 2014](Millions of yen)Foundation funds, surplus and others
Foundation
funds
Balance at the beginning of current
periodCumulative effect of changes inaccounting policies
Restated balance

35,00035,000

Accumulated
Total foundation
foundation Reserve for Consolidated
funds, surplus
funds
revaluation
surplusand others
redeemed

71,00071,000112

112

126,584

232,696(3,297)(3,297)

123,286

229,399

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

10,00010,000(31,595)
15,000(31,595)
15,000

Payment of interest on foundation
funds

(621)

(621)

Net surplus for the current period

39,40239,402

Redemption of foundation funds(15,000)(15,000)

Reversal of reserve forredemption of foundation funds(15,000)(15,000)

(21)

(21)

Reversal of revaluation reserve forland
Net changes, excluding
foundation funds, surplus andothersTotal changes in the current period(5,000)15,000－(7,836)

2,163

Balance at the end of current period

30,00086,000

112

115,450

231,562

Accumulated other comprehensive income
Net unrealized
DeferredTotal
gains (losses)
valuation Revaluation
Foreign
Accumulated
accumulated
on availablegains
reserve forcurrency remeasurementsotherfor-sale(losses)land, net of translationof definedcomprehensive
securities, net under hedge
tax
adjustment
benefit plansincomeof taxaccounting
Balance at the beginning of current
periodCumulative effect of changes inaccounting policies
Restated balance

263,161

2

3,144

(261)

(3,918)262,127

Minority
interests

Total net
assets5,066

499,890(3,297)263,161

2

3,144

(261)

(3,918)262,127

5,066

496,593

Changes in the current period
Financing of additional foundation
funds
Additions to reserve for dividends
to policyholders
Addtions to accumulated
foundation funds redeemed
Payment of interest on foundation
funds

10,000(31,595)
15,000(621)

Net surplus for the current period

39,402

Redemption of foundation funds(15,000)

Reversal of reserve forredemption of foundation funds
Reversal of revaluation reserve forland
Net changes, excluding
foundation funds, surplus andothers(15,000)(21)
69,597

(1)

21

(38)

243

69,822

234

70,057

Total changes in the current period

69,597

(1)

21

(38)

243

69,822234

72,220

Balance at the end of current period

332,758

1

3,165

(299)

(3,675)331,950

5,300

568,814- 39 -

Fukoku Mutual Life Insurance Company

Notes to the Consolidated Financial Statements
I. Presentation of the Consolidated Financial Statements
1. Basis of Presentation
The accompanying consolidated financial statements have been prepared from the accounts
maintained by Fukoku Mutual Life Insurance Company (the “Company”) and its consolidated
subsidiaries in accordance with the provisions set forth in the Insurance Business Law of Japan and its
related rules and regulations and in conformity with accounting principles generally accepted in Japan,
which are different in certain respects from accounting principles generally accepted in countries andjurisdictions other than Japan.
In addition, the notes to the consolidated financial statements include information which is not
required under accounting principles generally accepted in Japan but is presented herein as additional
information.
Amounts of less than one million yen have been eliminated. As a result, total in yen shown herein
do not necessarily agree with the sum of the individual amounts.
2. Principles of Consolidation(1) Scope of Consolidation
Consolidated subsidiaries as of September 30, 2014 are listed below:
Fukoku Capital Management, Inc.
Fukokushinrai Life Insurance Company, Ltd.
Fukoku Information Systems Co., Ltd.
Fukoku Life International (U.K.) Ltd.
Fukoku Life International (America) Inc.
Major unconsolidated subsidiary is Fukoku Seimei Building Company Limited.
Eight 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 is sufficiently insignificant
to reasonable judgement on its impact on the financial position and results of operation of theCompany's group.
(2) Application of Equity Method
Unconsolidated subsidiaries (such as Fukoku Seimei Building Company Limited, etc.) are insignificant
in their impact on net surplus and surplus, and also immaterial as a whole, therefore, application ofequity method is withheld.
There are no affiliates for the six months ended September 30, 2014.
(3) Interim Closing Date of Consolidated Subsidiaries
Among the subsidiaries to be consolidated, the interim closing date of overseas subsidiaries is June
30. For the preparation of consolidated financial statements, financial statements as of that date areused and concerning any important transaction taking place in between June 30 and the September
30, necessary adjustments for consolidation are made.

- 40 -

Fukoku Mutual Life Insurance Company

II. Notes to Balance Sheets
1. Significant Accounting Policies(1) Valuation Methods of Securities
The valuation of securities, including bank deposits and monetary claims bought which are equivalent
to securities, and securities managed as trust assets in money held in trust, is as follows:i)

Trading securities are stated at fair market value. Costs of their sales are determined by themoving average method.

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 inInsurance Industry” (Industry Audit Committee Report No.21 issued by the Japanese Instituteof Certified Public Accountants on November 16, 2000).

iv)

Investments in unconsolidated subsidiaries and affiliates which are not accounted for underthe equity method are stated at cost, cost being determined by the moving average method.

v)

Available-for-sale securities with fair market value are stated at fair market value based on
the market prices at the balance sheet date. Costs of their sales are determined by themoving 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 fair market values are deemed extremely difficult toobtain are stated at cost, cost being determined by the moving average method, except for
public and corporate bonds including foreign bonds, of which the difference between
acquisition cost and face value is considered to be an adjustment of interest. Such bonds arestated at amortized cost under the straight-line method, cost being determined by the moving
average method.

(2) Valuation Methods of Derivative Instruments
Derivative instruments are stated at fair market value.
(3) Revaluation of Land
The Company revalued the land for business purposes based on the Law for Revaluation of Land
(Law No.34 promulgated on March 31, 1998). The difference between fair value and book value
resulting from the revaluation, net of related taxes, is recorded as revaluation reserve for land as aseparate component of net assets and the related tax is recorded as deferred tax liabilities forrevaluation reserve for land.
 Date of revaluation: March 31, 2002
 Method of revaluation as prescribed for in Article 3 Paragraph 3 of the said Law:
Calculation is based on the appraisal value for property tax set forth in Article 2 item 3 of the
Enforcement Ordinance of the Law for Revaluation of Land (Government Ordinance No.119
promulgated on March 31, 1998) and the road rate set forth in Article 2 item 4 of the said
Ordinance with certain reasonable adjustments.
(4) Depreciation of Tangible Fixed Assets
Depreciation of the Company’s tangible fixed assets is calculated by the following methods.
 Tangible fixed assets (excluding lease assets):Declining-balance method
However, buildings (excluding building attachments and structures) acquired on or after April 1, 1998
are depreciated using Straight-line method.

- 41 -

Fukoku Mutual Life Insurance Company

 Lease assets related to finance lease transactions that do not transfer ownership: Straight-line
method over the lease term without residual value
Other tangible fixed assets acquired for ¥100,000 or more but less than ¥200,000 are depreciatedequally over three years.
(5) Foreign Currency Translation
Foreign currency denominated assets and liabilities, except for investment in unconsolidated
subsidiaries and affiliates, are translated into Japanese yen at the effective exchange rate prevailing at
the balance sheet date. Investment in unconsolidated subsidiaries and affiliates are translated into
Japanese yen at the exchange rate prevailing at the time of acquisition.
(6) Allowance for Possible Loan Losses
Allowance for possible loan losses is provided in accordance with the Company’s standards of selfassessment and write-offs and reserves on credit quality:i)

For the credits of borrowers who are legally bankrupt such as being in the proceedings ofbankruptcy or civil rehabilitation (hereinafter called “legally bankrupt borrowers”) and who aresubstantially bankrupt (hereinafter called “substantially bankrupt borrowers”), the Company
provides the remaining amount of credits after the direct write-off described below and the
deductions of the amount expected to be collected through the disposal of collateral or the
execution of guarantees.

ii)

For the credits of borrowers who are not currently bankrupt but have a high possibility ofbankruptcy (hereinafter called “not currently bankrupt borrowers”), the Company provides theamounts deemed as necessary considering the borrowers’ ability to pay, within the amounts
after deductions of the amount expected to be collected through the disposal of collateral or
the execution of guarantees.

iii)

For the credits of borrowers other than the above, the Company provides the amounts
calculated by multiplying the borrowers’ balance by the actual ratio of bad debt losses on
defaults during a certain past period.

All credits are assessed by the relevant departments in accordance with the Company’s standards ofself-assessment 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 are provided based on 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 ofguarantees is written-off directly from the borrower’s balance as the estimated uncollectible amounts.
The amount written-off as of September 30, 2014 was ¥268 million.
(7) Accounting of Employees’ Retirement Benefits
Reserve for employees' retirement benefits is presented for the employees' retirement benefits basedon projected benefit obligations and pension plan assets at the balance sheet date.
The Company uses the following methods of accounting in relation to retirement benefits.
 Method for allocation of projected retirement benefits .....................

Benefit formulabasis
 Amortization period of actuarial differences .........................................
10 years
 Amortization period of prior service cost ..............................................
10 years(8) Reserve for Price Fluctuation of Securities
Reserve for price fluctuation of securities is calculated in accordance with Article 115 of the Insurance
Business Law.

- 42 -

Fukoku Mutual Life Insurance Company

(9) Lease Transactions as a Lessee
Finance lease transactions that do not transfer ownership to the lessee whose commencement day
was on or before March 31, 2008 continued to be accounted for in a manner similar to accounting
treatment for ordinary rental transactions.

(10) Lease Transactions as a Lessor
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 thelease transactions is recorded in “other investment expenses,” which is calculated by deducting anamount equivalent to the interest allocated over the lease term from the lease fee received.
(11) Accounting for Hedge Activities
Hedge accounting is based on “Accounting Standards for Financial Instruments” (ASBJ Statement
No.10 issued by the Accounting Standards Board of Japan on August 11, 2006).
For the foreign currency forward contracts against the exchange rate fluctuations in the value of
foreign currency-denominated bonds classified as available-for-sale securities, which qualify for hedge
accounting because of high correlation and effectiveness between the hedging instruments and thehedged items, valuation gains and losses on the foreign currency forward contracts are recorded in
the statements of operations.
For the interest rate swaps against the interest rate fluctuations regarding loans, which qualify forhedge accounting because of high correlation and effectiveness between the hedging instruments andthe hedged items, valuation gains and losses on the interest rate swaps are deferred until the maturityof the hedged transactions.
The Company applies foreign currency swap appropriated treatment as a hedge for the foreignexchange fluctuation risk associated with foreign currency denominated bonds issued by the Company.
For judging the effectiveness of hedge used, ratio analysis of comparing the fluctuations in the fairvalue or cash flows of hedged items and hedging instruments is mostly applied.
(12) Accounting for Consumption Taxes
The Company accounts for consumption taxes by the tax-exclusion method. The consumption taxes
on certain assets, which are not deductible from consumption taxes withheld and that are stipulated to
be deferred under the Tax Law, are deferred as prepaid expenses and amortized equally over five
years. Consumption taxes other than deferred consumption taxes are recognized as an expense whenincurred.
(13) Policy Reserve
Policy reserve is based on Article 116 of the Insurance Business Law, and the premium reserve iscalculated by the following method:
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.
In regard to the policies not subject to the standard policy reserve, the net level premium method
is applied.
Based on the provision of paragraph 5, Article 69 of the Enforcement Regulation of the Insurance
Business Law, the Company's certain individual annuity insurance policies, certain hospitalizationriders with surgery benefits and long-term hospitalization benefits, and non-participating educational
insurance have funded policy reserves included.

(14) Amortization Method for Intangible Fixed Assets
Intangible fixed assets are amortized as follows:i)

Software- 43 -

Fukoku Mutual Life Insurance Company

Software for internal use is amortized based on a straight-line method over the estimateduseful lives.
ii) Lease assets
Lease assets are amortized based on a straight-line method over the lease terms.
(15) Deferred Assets
Discount on bonds is amortized equally over the period for which interest on bonds is fixed. This
amount is deducted from bonds.

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

2. Accounting Changes and Error Corrections and Its Implementation
In accordance with "Accounting Standard for Retirement Benefits” (ASBJ Statement No. 26, May 17,2012) and “Guidance on Accounting Standard for Retirement Benefits” (ASBJ Guidance No. 25, May
17, 2012), effective from the six months ended September 30, 2014, the Company changed its
method for allocation of projected retirement benefits from the straight-line basis to the benefit formulabasis. In addition, the Company changed its method for determining the discount rate from thediscount rate based on the average period until the estimated payment date of retirement benefits tothe method that uses the single weighted average discount rate reflecting the estimated payment
period for retirement benefits and the estimated amount for each period.
As a result of these changes, compared with the previous method, at the beginning of the six
months ended September 30, 2014, surplus decreased by ¥3,297 million. Ordinary profits and surplus
before income taxes for the six months ended September 30, 2014 increased by ¥19 million.
3. Financial Instruments
The carrying amounts, fair values and their related differences of major financial assets and liabilities
as of September 30, 2014 were as follows:
Carrying
amountFair value

Difference(Millions of yen)

Cash and deposits: ..................................................
Cash and deposits not treated as securities¥
89,549Total cash and deposits
89,549Call loans .................................................................
128,100
Monetary claims bought:
Claims treated as loans .......................................
925
Total monetary claims bought ..............................
925
Money held in trust:
Trading securities .................................................
32,305
Total money held in trust ......................................
32,305
Securities:
Trading securities .................................................
284,363
Held-to-maturity debt securities ...........................
1,259,341
Policy-reserve-matching bonds ...........................
2,103,491- 44 -¥

89,54989,549128,100

¥

―
―
―

969
969

43
43

32,30532,305――284,363
1,398,910
2,275,514―
139,568
172,022

Fukoku Mutual Life Insurance Company

Investments in subsidiaries and affiliates
Available-for-sale securities .................................
Total securities .....................................................
Loans:
Policy loans ..........................................................
Ordinary loans .....................................................
Total loans ............................................................
Assets total
1
Subordinated bonds*
Liabilities total
2
Derivative instruments* :Hedge accounting not applied .............................
Hedge accounting applied ...................................
Total derivative instruments .................................

40
2,924,752
6,571,989

42
2,924,752
6,883,583

2―
311,593

67,993
712,658
780,651
7,603,522
121,518
121,518

67,993734,833
802,826
7,937,334
128,095
128,095(0 )22,174
22,174
333,812
6,577
6,577

(2,383 )(2,383 )―(13,998 )(13,998 )―¥ (16,382 ) ¥ (16,382 )¥―2*1 The fair value of derivative instruments that are currency swaps under designated hedge accounting is
included in the fair value of subordinated bonds because it is accounted for as an integral part of thesubordinated 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 “AccountingStandards 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
approximate book values due to their short maturities.
(2) Securities including deposits and monetary claims bought which are treated as securities basedon “Accounting Standards 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 price at the balance
sheet date. The fair values of other securities without the quoted market price are based on theprices 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 inpartnerships whereby partnership assets consist of unlisted stocks whose fair values are deemed
extremely difficult to obtain, are excluded from above securities. The carrying amounts ofinvestments in unconsolidated subsidiaries and affiliates, unlisted stocks and investments inpartnerships as of September 30, 2014 were ¥519 million, ¥7,515 million and ¥9,528 million,
respectively.
(3) Loans and monetary claims bought treated as loans:
The fair values of policy loans are deemed to approximate book values, considering estimatedrepayment period and interest rate conditions since their repayment deadline have not been set
up due to the characteristics that the loan is limited to the amount of cash surrender values.
Therefore, the book values are used as the fair values of policy loans.
The fair values of floating interest rate loans among the ordinary loans and monetary claimsbought treated as loans approximate the book values because the market interest rates arereflected in future cash flows in a short period. Therefore, the fair values of floating interest rateloans and monetary claims bought treated as loans are based on their book values. The fairvalues of fixed interest rate loans are measured by discounting the future cash flows to thepresent values.
The fair values of loans receivable from legally bankrupt borrowers, substantially bankrupt
borrowers and not currently bankrupt borrowers and monetary claims bought treated as loans arecomputed by deducting the amount of the allowance for doubtful accounts from the book values
before direct write-offs.

- 45 -

Fukoku Mutual Life Insurance Company

(4) Subordinated bonds:
Subordinated bonds issued by the Company are stated at fair market value.
(5) Derivative instruments:i) The fair values of the futures and options traded at the exchange are measured at thesettlement price of the exchange.
ii) The fair values of options and swaps traded over the counter are based on the quoted prices
offered by counterparty financial institutions.
iii) The fair values of foreign currency forward contracts are determined based on the spot
exchange rate and forward contract rate.
4. Investment and Rental Property
Notes related to the fair value of investment and rental properties are omitted as no significant change
has occurred since the previous fiscal year-end.
5. Securities Lent under Lending Agreements
The amount of securities lent under lending agreements was ¥47,702 million as of September 30,
2014.
6. Loans Receivable
The amounts of credits to bankrupt borrowers, delinquent loans and restructured loans, which were
included in loans, were ¥229 million, ¥794 million and ¥377 million, respectively and their total
amounts were ¥1,401 million as of September 30, 2014. There was no balance of delinquent loans
past 3 months or more as of September 30, 2014.
The direct write-offs of loans led to a decrease in credit to bankrupt borrowers of ¥248 million as
of September 30, 2014.
Credits to bankrupt borrowers represent loans, excluding the balances already written-off, whichmeet the conditions prescribed in Article 96 Paragraph 1 Item 3 and 4 of the Enforcement Regulationsof the Corporate Tax Law. Moreover, accruing interest on 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 of principal or interest payment or for some other reasons.
Delinquent loans are credits whose accruing interest is not recorded as income due to the same
reasons as described above, and exclude credits to bankrupt borrowers and loans for which interest
payments have been suspended and rescheduled to assist and support the borrowers in the
restructuring of their business.
Delinquent loans past 3 months or more are loans for which interest payment or repayment ofprincipal are delinquent for 3 months or more from the due date under the terms of the related loan
agreements, excluding those loans classified as credits to bankrupt borrowers and delinquent loans.
Restructured loans are loans for which certain concessions favorable to borrowers, such as
interest reduction or exemptions, rescheduling of due date of principal or interest payment, waiver ofclaim 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
Accumulated depreciation of tangible fixed assets totaled to ¥147,591 million as of September 30,
2014.

- 46 -

Fukoku Mutual Life Insurance Company

8. Separate Accounts
Total assets in separate accounts provided for in Article 118 of the Insurance Business Law were
¥85,896 million as of September 30, 2014. The amount of separate account liabilities was the same as
separate account assets.
9. Reserve for Dividends to Policyholders
Changes in reserve for dividends to policyholders for the six months ended September 30, 2014 wereas follows:(Millions of yen)
Balance at the beginning of current period ................................
Transfer from surplus in previous fiscal year .............................
Dividends paid in the current period ..........................................
Increase in interest ....................................................................
Balance at the end of current period .........................................

¥ 51,007
31,595(16,617)30¥ 66,017

10. Reserve for Dividends to Policyholders (Fukokushinrai Life Insurance Company, Ltd.)
Changes in reserve for dividends to policyholders for the six months ended September 30, 2014 wereas follows:(Millions of yen)
Balance at the beginning of current period ................................
Dividends paid in the current period ..........................................
Increase in interest ....................................................................
Provision for reserve for dividends to policyholders ..................
Balance at the end of current period .........................................

¥ 735
(399)
0
267
¥ 602

11. Stocks of Unconsolidated Subsidiaries
The amount of stocks of unconsolidated subsidiaries the Company held as of September 30, 2014was ¥560 million.
12. Pledged Assets and Secured Debts
Assets pledged as collateral as of September 30, 2014 were ¥31,546 million of securities and ¥931
million of deposits. Secured debts as of September 30, 2014 were ¥4,769 million.
13. Policy Reserves for the Reinsurance Contracts
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 for ceded reinsurance”) was ¥2 million as of September 30, 2014.
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 forceded reinsurance”) was ¥48 million as of September 30, 2014.

14. Additional Foundation Funds
The Company raised additional foundation funds of ¥10,000 million during the six months ended
September 30, 2014 in accordance with Article 60 of the Insurance Business Law.

- 47 -

Fukoku Mutual Life Insurance Company

15. Redemption of Foundation Funds
In the six months ended September 30, 2014, in connection with the redemption of foundation funds of¥15,000 million, the Company reversed the reserve for redemption of foundation funds and provided
the equivalent amount for accumulated foundation funds redeemed in accordance with Article 56 of
the Insurance Business Law.

16. Commitment LineAs of September 30, 2014, there were unused commitment line agreements under which theCompany is the lender of ¥872 million.

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

18. Contribution to Policyholders Protection Corporation
The future contribution to the Life Insurance Policyholders Protection Corporation of Japan under
Article 259 of the Insurance Business Law was estimated at ¥12,395 million as of September 30, 2014.
The contribution was charged as operating expenses in the year in which it was paid.

- 48 -

Fukoku Mutual Life Insurance Company

III. Notes to Statements of Operations
1. Policy Reserves for the Reinsurance Contracts
For the six months ended September 30, 2014, reversal of reserve for outstanding claims for ceded
reinsurance considered in calculation of reversal of reserve for outstanding claims was ¥1 million andreversal of policy reserve for ceded reinsurance considered in calculation of provision for policy
reserve was ¥1 million.

IV.Notes to Statements of Cash Flows
1. Scope of Cash and Cash Equivalents
Cash and cash equivalents as of September 30, 2014 consist of "Cash," "Deposits in transfer
account," "Current deposits," "Ordinary deposits," "Notice deposits," "Time deposits maturing within 3months of the date of acquisition," "Foreign currency deposits maturing within 3 months of the date ofacquisition," "Negotiable certificate of deposits maturing within 3 months of the date of acquisition,""Call loans" and "Monetary claims bought maturing within 3 months of the date of acquisition."
2. Reconciliations of Cash and Cash Equivalents
Reconciliations of cash and cash equivalents in the consolidated statements of cash flows to theconsolidated balance sheets accounts as of September 30, 2014 were as follows:(Millions of yen)
Cash and deposits ..............................................................................................
Call loans ............................................................................................................
Monetary claims bought ......................................................................................
Time deposits maturing over 3 months of the date of acquisition ......................
Foreign currency deposits maturing over 3 months of the date of acquisition ...
Monetary claims bought maturing over 3 months of the date of acquisition ......
Cash and cash equivalents.................................................................................

- 49 -¥ 89,615
128,100
925(300 )(1,151 )(925 )¥ 216,263

Fukoku Mutual Life Insurance Company

(5) Consolidated Solvency Margin Ratio(Millions of yen)

As ofMarch 31, 2014
Total solvency margin

(A)

As of
September 30,
2014

1,143,749

1,264,453

Common stock and others

201,167

217,065

Reserve for price fluctuation of securities

50,32551,742

Contingency reserve

112,094

112,274

－

－

1,594

1,389

Net unrealized gains on available - for - sale securities x 90%

343,140

433,824

Net unrealized gains on real estate x 85%

90,71993,087

Sum of unrecognized actuarial differences and unrecognized prior service cost

(5,661)(5,309)

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

195,290

197,331

Qualifying subordinated debt

122,346

121,518

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－－

32,732

41,530204,232

219,603

Catastrophe loss reserve
Allowance for possible loan losses

OthersTotal amount of risk ( ( R1 2  R5 2  R8  R9 ) 2  ( R2  R3  R7 ) 2  R4  R6

(B)

Insurance risk

R1

26,983

26,570General insurance risk

R5

－

－

Catastrophe risk

R6

－

－

3rd sector insurance risk

R8

9,748

9,707

Small amount and short-term insurance risk

R9

－

－

Assumed investment yield risk

R236,26036,305

Minimum guarantee risk

R7

0

0

Investment risk

R3

159,903

175,253

Business risk

R4

4,657

4,956

1,120.0%

1,151.5%

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

Notes: 1. Above figures are calculated based on Articles 86-2 and 88 of the Enforcement Regulations of the Insurance Business Law andNotification of the Financial Services Agency No. 23, 2011.
Notes: 2. "Minimum guarantee risk" is calculated by standard method.

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Fukoku Mutual Life Insurance Company