November 24, 2017

Financial Results for the Six Months Ended September 30, 2017
Fukoku Mutual Life Insurance Company (President: Yoshiteru Yoneyama) announces
financial results for the six months ended September 30, 2017.

[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. 20

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

P. 21

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

P. 22

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

P. 23

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

P. 24

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

P. 30

Attached: Supplementary Materials for the Six Months Ended September 30, 2017

Fukoku Mutual Life Insurance Company

1. Business Highlights(1) Policies in Force, New Policies and Surrendered and Lapsed Policies(i) Policies in Force
As of March 31, 2017

As of September 30, 2017

Number of policies

Amount(Thousands)(100 millions of yen)

Number of policies(Thousands)

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

Individual insurance

3,171

231,606

3,175

100.1

229,801

99.2

Individual annuities

719

27,903703

97.8

27,27697.8
99.1

Subtotal

3,890

259,509

3,878

99.7

257,077

Group insurance－

171,515－－

168,87698.5

Group annuities－

21,567－－

21,726

100.7

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

(ii) New Policies
Total
Six months ended
September 30, 2016

Net increase by
conversion

New business

Number of policies

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

Individual insurance

196

7,677

7,189

487

Individual annuities

10

411

419

(8)

206

8,088

7,609

479

Group insurance

－

55

55

－

Group annuities

－

14

14

－

Subtotal

Total
Six months ended
September 30, 2017

Number of policies(Thousands)

AmountChanges(%, YoY)

Net increase by
conversion

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

Individual insurance

180

91.8

6,979

90.9

6,691

93.1

288

59.2

Individual annuities

3

28.4

90

22.1

97

23.3

(7)

－

Subtotal

183

88.6

7,070

87.4

6,789

89.2

281

58.7

Group insurance

－

－

315

573.7

315

573.7

－

－

Group annuities

－

－

158

1,121.0158

1,121.0－－

Notes:

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

(iii) Surrendered and Lapsed Policies (Individual Insurance and Individual Annuities)
Six months ended September 30, 2016

Six months ended September 30, 2017
Changes(%, YoY)

Amount of surrender and lapse(100 millions of yen)

6,445

6,334

98.3

Surrender and lapse ratio (%)

2.46

2.44

(0.02)

Notes:

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

1

Fukoku Mutual Life Insurance Company

(2) Annualized Premiums(i) Policies in Force(100 millions of yen, %)As of March 31, 2017

As of September 30, 2017
Changes(%, Pre-FYE)

Individual insurance

2,779

2,763

99.4

Individual annuities

1,343

1,320

98.3

Total

4,123

4,083

99.0

1,091

1,099

100.8

Medical coverage and living benefits(ii) New Policies(100 millions of yen, %)Six months ended September 30, 2016

Six months ended September 30, 2017
Changes(%, YoY)

Individual insurance

100

73

73.3

Individual annuities

13

2

20.0

Total

114

76

67.0

39

39

99.1

Medical coverage and living benefits

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

(3) Selected Items of Statements of Operations(100 millions of yen, %)Six months ended September 30, 2016

Six months ended September 30, 2017
Changes(%, YoY)

Premium and other income

3,237

Investment income

3,178

98.2

990

981

99.0

2,639

2,803

106.2

Investment expenses

438

259

59.2

Ordinary profits

378

483

127.7

Claims and other payments(4) Total Assets(100 millions of yen, %)As of March 31, 2017

As of September 30, 2017
Changes(%, Pre-FYE)

Total assets

65,6562

67,355

102.6

Fukoku Mutual Life Insurance Company

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

As of March 31, 2017

As of September 30, 2017

% of total

Amount% of total

AmountCash, deposits, call loans

236,274

Monetary claims bought

753

0.0

462

0.0

29,7870.5

30,783

0.5

Money held in trust
Securities

3.6 %258,147

3.9 %

5,297,476

81.6

5,482,742

82.4

Domestic bonds

2,843,537

43.8

2,872,867

43.2

Domestic stocks

656,59010.1

727,794

10.9

Foreign securities

1,702,602

26.2

1,779,853

26.7

Foreign bonds

1,445,002

22.3

1,498,803

22.5

257,599

4.0

281,050

4.2

94,7451.5

102,226

1.5

Foreign stocks and other securities
Other securities
Loans

627,7229.7

595,806

9.0

Policy loans

59,2380.9

58,906

0.9

Ordinary loans

568,4838.8

536,899

8.1

Real estate

214,4273.3

212,518

3.2

Others85,302

1.3

76,853

1.2

Allowance for possible loan losses(1,776)( 0.0)(1,843)(0.0)

6,489,968

100.0

6,655,471

100.0

1,966,868

30.3

2,096,983

31.5

Total
Foreign currency denominated assets

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

(2) Changes (Increase/Decrease) in Assets(Millions of yen)

As of March 31, 2017

As of September 30, 2017

AmountAmountCash, deposits, call loans

11,37521,872

Monetary claims bought

(29)

(291)

Money held in trust(58,689)

995

Securities

55,561

185,266

Domestic bonds

33,51029,330

Domestic stocks(8,936)

71,203Foreign securities

15,25077,251

Foreign bonds

11,41353,800Foreign stocks and other securities

3,836

23,451Other securities

15,736

7,480(43,862)(31,916)

Policy loans

(695)

(331)

Ordinary loans(43,167)(31,584)

Loans

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

731(1,908)(9,029)(8,449)82(67)(43,859)

165,50259,845130,115

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

3

Fukoku Mutual Life Insurance Company

(3) Investment Income(Millions of yen)Six months ended
September 30, 2016

Interest, dividends and other income

Six months ended
September 30, 201762,832

71,021

10

7Interest and dividends from securities

50,01258,645Interest from loans

5,875

5,135

Income from real estate for rent

6,871

7,171

Other interest and dividends

62

61

Gains on money held in trust, net

－

1,084

Gains on trading securities, net

－

8,311

6,241

12,062

Gains on sales of domestic bonds

5,915

4,621

Gains on sales of domestic stocks

301

1,208

Gains on sales of foreign securities

24

6,232

29,914－

Reversal of allowance for possible loan losses

81－

Other investment income

22

734

99,091

93,214

Interest from deposits

Gains on sales of securities

Gains on derivative instruments, net

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

Interest expenses

Six months ended
September 30, 2017

1,918

2,190

Losses on money held in trust, net

1,896

－

Losses on trading securities, net

24,395

－

150

1,800

Losses on sales of domestic stocks

149

535

Losses on sales of foreign securities

0

1,196

Other losses on sales of securities

－

68

174

－

174

－

－

10,143

9,351

6,298

－

67

Depreciation of real estate for rent and other assets

2,122

2,113

Other investment expenses

2,679

3,333

Total

42,68625,947

Losses on sales of securities

Losses on valuation of securities
Losses on valuation of foreign securities
Losses on derivative instruments, net
Foreign exchange losses, net
Provision of allowance for possible loan losses(5) Net Investment Income(Millions of yen)Six months ended
September 30, 2016

Net investment income

56,4054

Six months ended
September 30, 201767,267

Fukoku Mutual Life Insurance Company

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

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

Carrying value on
the balance sheet
Trading securities

As of September 30, 2017

208,034

Net valuation gains/losses
included in the statementof operations

Carrying value on
the balance sheet(17,796)

207,1964,440

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

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

As of March 31, 2017

As of September 30, 2017

Gains/losses
Book value

Gains/losses

Fair value
Gains

Book value

Fair value

Losses

Gains

Losses764,914908,680

143,766

143,766－

760,857

902,392

141,534

141,534－

Domestic bonds

739,830

882,479

142,649

142,649－

739,577

879,967

140,390

140,390－

Foreign bonds

25,084

26,201

1,116

1,116

－

21,28022,424

1,143

1,143

－

Monetary claims bought

－

－

－

－

－

－

－

－

－

－

Negotiable certificate of deposits

－

－

－

－

－

－

－

－

－

－

Others

－

－

－

－

－

－

－

－

－

－

1,008,212

1,166,744

158,531

161,427

2,895

982,130

1,138,999

156,869

159,738

2,869

1,002,413

1,160,832

158,418

161,313

2,895

978,030

1,134,819

156,788

159,657

2,869

5,799

5,912

113

113

－

4,099

4,180

81

81

－

－

－

－

－

－

－

－

－

－

－

2,796,789

3,256,735

459,945484,808

24,862

2,928,792

3,471,449

542,656

557,020

14,364

Domestic bonds

997,892

1,067,639

69,74674,152

4,405

1,057,042

1,126,449

69,406

71,9672,560

Domestic stocks

302,413587,201

284,787

289,0234,235

315,353

658,315

342,961

345,746

2,784

Foreign securities

1,426,510

1,516,052

89,542

104,688

15,146

1,484,116

1,595,548

111,432

119,333

7,901

1,207,319

1,268,525

61,20573,765

12,5591,254,584

1,324,820

70,23676,9606,724

219,190

247,527

28,33630,922

2,586

229,532

270,728

41,19542,372

1,176

69,97385,842

15,868

16,944

1,075

72,27991,13418,855

19,973

1,118

Money held in trust

－

－

－

－

－

－

－

－

－

－

Monetary claims bought

－

－

－

－

－

－

－

－

－

－

Negotiable certificate of deposits

－

－

－

－

－

－

－

－

－

－

Others

－

－

－

－

－

－

－

－

－

－

4,569,917

5,332,161

762,243790,001

27,757

4,671,781

5,512,840

841,059858,293

17,233

Domestic bonds

2,740,136

3,110,951

370,814378,1157,300

2,774,651

3,141,236

366,585

372,014

5,429

Domestic stocks

302,413587,201

284,787

289,0234,235

315,353

658,315

342,961

345,746

2,784

Foreign securities

1,457,394

1,548,166

90,772

105,918

15,146

1,509,496

1,622,153

112,657

120,558

7,901

Foreign bonds

1,238,203

1,300,639

62,43674,995

12,5591,279,964

1,351,425

71,461

78,185

6,724

219,190

247,527

28,33630,922

2,586

229,532

270,728

41,19542,372

1,176

69,97385,842

15,868

16,944

1,075

72,27991,13418,855

19,973

1,118

Money held in trust

－

－

－

－

－

－

－

－

－

－

Monetary claims bought

－

－

－

－

－

－

－

－

－

－

Negotiable certificate of deposits

－

－

－

－

－

－

－

－

－

－

Others

－

－

－

－

－

－

－

－

－

－

Held-to-maturity debt securities

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

Foreign bonds
Foreign stocks and other securities
Other securities

Total

Foreign stocks and other securities
Other securities

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

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

As of March 31, 2017

As of September 30, 2017－－

Unlisted foreign bonds－－

Others－－

Held-to-maturity debt securities－－

Investments in subsidiaries and affiliates

64,83764,837Available-for-sale securities

22,044

24,164

6,109

6,198

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

Unlisted foreign bonds－－

15,934

17,96686,88189,001

Policy-reserve-matching bonds

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

OthersTotal

Note: In this table, domestic and overseas investment partnerships are included in “Others” within “Available-for-sale securities.” However, unrealized gains on available-for-sale securities
Note: corresponding to these holdings by domestic and overseas investment partnerships (¥1,484 million as of March 31, 2017 and ¥1,891 million as of September 30, 2017) are included
Note: in their balance sheet carrying amounts.

5

Fukoku Mutual Life Insurance Company

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

As of March 31, 2017

Money held in trust

As of September 30, 2017

Gains/losses

Carrying valueon the balance
sheet

Fair value

29,78729,787

Gains－

Losses－－Gains/losses

Carrying valueon the balance
sheet

Fair value

30,78330,783

Gains－

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

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

As of September 30, 2017

Net valuation gains/losses includedin the statements of operations

28,787

Carrying valueon the balance sheet0

Net valuation gains/losses includedin the statements of operations

289,783

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

As of March 31, 2017

As of September 30, 2017

Gains/losses

Book value

Fair value

Money held in trust
for held-to-maturity

－

－

－

－

Money held in trust forpolicy-reserve-matching

－

－

－

Money held in trust
for available-for-sale

－

－

－

Gains/losses

Book value

Fair value

－

－

－

－

－

－

－

－

－

－

－

－

－

－

－

－

－

－

－

－

Gains

Losses6

Gains

LossesFukoku Mutual Life Insurance Company

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

As of March 31, 2017

Currencyrelated

Stockrelated

Bondrelated

OthersTotal－

13,542

(440)

－

－

Hedge accounting not applied

(500)

1,116

－

(80)

－

535

Total

(500)

14,659

(440)

(80)

－

13,638Hedge accounting applied

Interestrelated

As of September 30, 2017

Currencyrelated

Stockrelated

Bondrelated

Others13,102

Total－(16,853)

(555)

－

－

Hedge accounting not applied(587)(2,775)－223－(3,139)

Total

(587)

(19,628)

(555)

223

－

(20,548)

Hedge accounting applied(17,409)

Note: Gains and losses from applying fair value hedge accounting (currency- related, gains of ¥13,542 million, stock-related losses ofNote: ¥440 million as of March 31, 2017, and currency-related losses of ¥16,853 million, stock-related losses of ¥555 million as of
September 30, 2017) included in gains and losses with hedge accounting applied, and gains and losses with hedge accounting
not applied are reported in the statements of operations.

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

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

As of September 30, 2017

Fair
value

Gains
(losses)

Notional amount/contract valueOver 1 year

Fair
value

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

BoughtReceipt fixed,
payment floating
Payment fixed,
receipt floating

－

－

－

－ ]

[

－

－

－

－
320,000
[

－

－ [

－

－ [

－
160,000

692 ]

Total

(500) [

－

－

－

－

－

105

(587)

－ ]

－

－ ]
320,000

192

－
－

－

－ ]

[

－

－ ]
－

－ ]

[

－ [

160,000

692 ]

(500)

(587)

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

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

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

As of September 30, 2017

Fair
value

Gains
(losses)

Notional amount/contract valueOver 1 year

Fair
value

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

－
－
－
－
－
－

1,167,557
936,300
71,35948,16777,00834,721

14,65912,951
951
537
92
125

1,086,880
884,436
79,282
48,352
41,39833,411

－
－
－
－
－
－

1,106,509
899,862
80,552
49,428
43,10633,558(19,628)(15,426)(1,270)(1,075)(1,708)
(146)

－

－

－

－

－

－

－

－

Total

14,659(19,628)

Notes: 1. Forward exchange rates are used for exchange rates as of September 30, 2017.
Notes: 2. Regarding assets and liabilities which are denominated in foreign currencies but have fixed settlement in yen under currency forward contracts and are reported in yen amounts
in the balance sheet, those currency forward contracts are excluded from the table above.

7

Fukoku Mutual Life Insurance Company

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

As of March 31, 2017
Notional amount/contract value

As of September 30, 2017

Fair valueOver 1 year

Gains(losses)

Notional amount/contract value

Fair value

Gains(losses)Over 1 year

Over-the-counter transactions
Yen stock forward contract
Sold

517

517

958

(440)

1,153

1,153

1,709

(555)

Bought

－

－

－

－

－

－

－

－

Total

(440)

(555)

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

As of March 31, 2017
Notional amount/contract value

As of September 30, 2017

Fair valueOver 1 year

Gains(losses)

Notional amount/contract value

Fair value

Gains(losses)Over 1 year

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

24,063－

23,840

223

－

－

－

－

－

－

－

－

Total

(80)

8

223

Fukoku Mutual Life Insurance Company

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

As of March 31, 2017

As of September 30, 2017

Carrying value on
the balance sheet

Fair value

Gains(losses)

Carrying value on
the balance sheet

Fair value

Gains(losses)

125,278

241,184

115,905

124,981

241,321116,339

Notes: 1. As of September 30, 2017, fair value is based on the appraisal value by the real-estate appraiser, the appraisal value forproperty tax as of January 1, 2017 and the road rate as of January 1, 2017.
Notes: 2. As of March 31, 2017, fair value is based on the appraisal value by the real-estate appraiser, the appraisal value forproperty tax as of January 1, 2017 and the road rate as of January 1, 2016.

9

Fukoku Mutual Life Insurance Company

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

As of March 31, 2017

As of September 30, 2017

Assets:Cash and deposits

44,681

61,646

Call loans

193,000

198,000

Monetary claims bought
Money held in trust
Securities

753

462

29,78730,7835,369,678

5,560,512[2,015,161][2,021,921][Local government bonds][123,972][117,147][Corporate bonds][733,459][762,536][Domestic stocks][679,556][754,609][Foreign securities][1,722,752][1,802,044]

627,722595,806[Government bonds]

Loans
Policy loans

59,23858,906

Ordinary loans

568,483

536,899

Tangible fixed assets

219,515

217,848

Intangible fixed assets

22,052

23,785

Reinsurance receivables

200

67

60,032

48,492Other assets
Lease investment assets

734

717

Rest of the other asset

59,29847,775

Allowance for possible loan losses
Total assets(1,776)(1,843)6,565,647

6,735,561

As of March 31, 2017

Liabilities:
Policy reserves

5,604,007Reserve for outstanding claims
Policy reserve
Reserve for dividends to policyholders

As of September 30, 2017

5,634,565

19,53319,0525,533,544

5,546,261

50,92969,251

Reinsurance payables

62

73

Subordinated bonds

191,935

221,935

Other liabilities

44,797

66,244

Corporate income tax payable

4,733

6,819

Asset retirement obligations

3,250

3,216

Rest of the other liabilities

36,81256,208Reserve for employees' retirement benefits

25,78925,443

Reserve for price fluctuation

82,464

84,111

Deferred tax liabilities

19,13242,335

Deferred tax liabilities for land revaluation

14,265

14,2585,982,454

6,088,968

Total liabilities
Net assets:
Foundation funds

10,00010,000

Accumulated foundation funds redeemed

106,000

106,000

Reserve for revaluation
Surplus
Legal reserve for future losses
Other surplus

112

112

129,427

132,714

2,849

2,954

126,578

129,760

Reserve for redemption of foundation funds

4,000

6,000

Reserve for dividend allowances

20,00020,000

Accumulated fund for price fluctuation

41,00041,000Reserve for advanced depreciation of real estate for tax purpose

257

255

Reserve for special account for advanced depreciation of real estate for tax purpose
Other reserves

100

[－]
767

Unappropriated surplus
Total foundation funds, surplus and others

767
60,453

61,737245,539

248,827

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

333,545

393,572

4,107

4,193

Total valuation and translation adjustments

337,652

397,765

Total net assets
Total liabilities and net assets

10583,192

646,592

6,565,647

6,735,561

Fukoku Mutual Life Insurance Company

4. Non-consolidated Statements of Operations(Millions of yen)Six months ended September 30, 2016

Six months ended September 30, 2017

Ordinary revenues:
Premium and other income

323,700

317,834[Premium income][323,632][317,752]

Investment income

99,091

98,139[Interest, dividends and other income][62,832][71,021][Gains on money held in trust, net][－]

[1,084][Gains on trading securities, net]
[Gains on sales of securities][－][6,241][12,062][Gains on derivative instruments, net]

[29,914][Gains on separate accounts, net]

[8,311][－][4,924]

Other ordinary revenues

[－]
6,428

[Reversal of reserve for outstanding claims][2,660][480]

Total ordinary revenues

429,221420,732

Ordinary expenses:
Claims and other payments

263,967

280,394[Claims][64,344][85,851][Annuities][88,463][82,817][Benefits][51,671][50,449][Surrenders][42,916][45,413][Other payments][16,324][15,730]

Provision of policy reserve and others

30,717

12,722

Provision of policy reserve

30,702

12,716

Provision of interest portion of reserve for dividends to policyholders

4,758

15

5

Investment expenses

43,82525,947[Interest expenses][1,918][2,190][Losses on money held in trust, net]

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

[24,395][－][1,800][Losses on sales of securities][150][Losses on valuation of securities][174][Losses on derivative instruments, net]
[Foreign exchange losses, net][－]
[9,351][Losses on separate accounts, net]

[1,138]Operating expenses

43,337[－][10,143][6,298][－]44,069Other ordinary expenses

9,489

9,227

Total ordinary expenses

391,338

372,360

Ordinary profits

37,883

48,371

Extraordinary gains:
Gains on disposal of fixed assets

2

244

Others42

Total extraordinary gains

45

[－]
244

Extraordinary losses:
Losses on disposal of fixed assets

24

58

Impairment losses

31

140

Provision of reserve for price fluctuation

1,607

1,647

Losses on advanced depreciation of real estate for tax purpose
Total extraordinary losses

[－]
1,662

1,848

Surplus before income taxes

36,26546,767
8,596

3

Income taxes：
Current

8,789

Deferred(3,438)105

Total income taxes
Net surplus for the period

5,350

8,702

30,91438,065

11

Fukoku Mutual Life Insurance Company

5. Non-consolidated Statements of Changes in Net Assets[For the six months ended September 30, 2016](Millions of yen)Foundation funds, surplus and others
Surplus
Other surplus

Balance at the beginning of the current period

Foundation
funds

Accumulated
foundation
funds
redeemedReserve forrevaluation

30,00086,000112

Legal reserve Reserve forfor future
redemption oflossesfoundation
funds

2,742

18,000Reserve fordividend
allowances

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

Reserve for
specialaccount foradvanceddepreciationof real estate
for tax
purpose

Other
reserves

－

767

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

264,397(35,236)(35,236)(35,236)(106)－

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

106

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

20,000

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

(316)

(316)

(316)

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

Additons to reserve for redemption offoundation funds

6,000

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

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

2

(2)

－

－

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

(11)

11

－

－

(100)

－

－

13

13

13

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

100

Reversal of revaluation reserve
for land, net of tax
Net changes, excluding foundation funds,
surplus and others
Total changes in the current period(20,000)

20,000－106(14,000)

－

－

(8)

100

－

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

Balance at the end of the current period

10,000106,000

112

2,849

4,000

20,00041,000

257

100

767

54,686123,660

239,772

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

338,421

4,128

Total
valuation andtranslation
adjustments

Total
net assets

342,549

606,947

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

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

20,000(316)

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

30,914

Redemption of foundation funds(20,000)

Additons to reserve for redemption offoundation funds－

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

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

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

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

Reversal of revaluation reserve
for land, net of tax

13

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

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

Balance at the end of the current period

286,220

4,115

290,335

530,108

12

Fukoku Mutual Life Insurance Company

[For the six months ended September 30, 2017](Millions of yen)Foundation funds, surplus and others
Surplus
Other surplus

Balance at the beginning of the current period

Foundation
funds

Accumulated
foundation
funds
redeemedReserve forrevaluation

10,000106,000

112

Legal reserve Reserve forfor future
redemption oflossesfoundation
funds

2,849

4,000

Reserve fordividend
allowances

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

Reserve for
specialaccount foradvanceddepreciationof real estate
for tax
purpose

Other
reserves

100

767

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

129,427

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

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

105

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

2,000

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

Reversal of reserve for special accountfor advanced depreciation of real estate
for tax purpose(100)

Reversal of revaluation reserve
for land, net of tax

(105)

－

－

(100)

(100)

(100)

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

－

－

1

－

－

100

－

－

(85)

(85)

(85)

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

－

－

－

105

2,000

－

－

(1)

(100)

－

1,284

3,287

3,287

10,000106,000

112

2,954

6,000

20,00041,000

255

－

767

61,737

132,714

248,827

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

333,545

4,107

Total
valuation andtranslation
adjustments

Total
net assets

337,652

583,192

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

Additions to legal reserve for future losses(100)

Payment of interest on foundation funds

38,065Net surplus for the current period
Additons to reserve for redemption offoundation funds－

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

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

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

Net changes, excluding foundation funds,
surplus and others

60,027

85

60,11260,112

Total changes in the current period

60,027

85

60,112

63,399Balance at the end of the current period

393,572

4,193

397,765

646,592

13

Fukoku Mutual Life Insurance Company

Notes to the Non-consolidated Financial Statements
I.

Presentation of the Non-consolidated Financial Statements

1. Basis of presentation
The accompanying non-consolidated financial statements have been prepared from the accounts maintained by
Fukoku Mutual Life Insurance Company (the “Company”) in accordance with the provisions set forth in the
Insurance Business Act of Japan and its related rules and regulations and in conformity with accounting principles
generally accepted in Japan, which are different in certain respects from accounting principles generally accepted incountries and jurisdictions other than Japan.
In addition, the notes to the non-consolidated financial statements include information which is not required
under accounting principles generally accepted in Japan but is presented herein as additional information.
Amounts of less than one million yen have been rounded down. As a result, the totals do not add up.

II. Notes to the Non-consolidated Balance Sheets
1. (1) The valuation of securities, including bank deposits and monetary claims bought which are equivalent tosecurities, and securities managed as trust assets in money held in trust, is as follows:i) Trading securities are stated at fair market value. Costs of their sales are determined by the moving averagemethod.
ii) Held-to-maturity debt securities are stated at amortized cost under the straight-line method, cost being
determined by the moving average method.
iii) Policy-reserve-matching bonds are stated at amortized cost under the straight-line method, cost being
determined by the moving average method in accordance with “Temporary Treatment of Accounting and
Auditing Concerning Policy-reserve-matching Bonds in the Insurance Industry” (Industry Audit Committee
Report No.21 issued by the Japanese Institute of Certified Public Accountants on November 16, 2000).
iv) Investments in subsidiaries and affiliates are stated at cost, cost being determined by the moving averagemethod.
v) Available-for-sale securities with fair market value are stated at fair market value based on the market prices
at the end of the current period. Costs of their sales are determined by the moving average method. Net
unrealized gains or losses on these available-for-sale securities, net of taxes, are recorded as a separate
component of net assets.
Available-for-sale securities whose market value are deemed extremely difficult to obtain are stated at cost,
cost being determined by the moving average method, except for public and corporate bonds including
foreign bonds, of which the difference between acquisition cost and face value is considered to be an
adjustment of interest. Such bonds are stated at amortized cost under the straight-line method, cost being
determined by the moving average method.
(2) Derivative instruments are stated at fair market value.
(3) The Company revalued the land used in the operations based on the Act for Revaluation of Land (Act No.34
promulgated on March 31, 1998). The difference between fair value and book value resulting from therevaluation, net of related taxes, is recorded as revaluation reserve for land as a separate component of net
assets and the related tax is recorded as deferred tax liabilities for land revaluation.
• Date of revaluation: March 31, 2002
• Method of revaluation as prescribed for in Article 3 Paragraph 3 of the said Act:
Calculation is based on the appraisal value for property tax set forth in Article 2 item 3 of the Enforcement
Ordinance of the Act for Revaluation of Land (Government Ordinance No.119 promulgated on March 31,
1998) and the road rate set forth in Article 2 item 4 of the said Ordinance with certain reasonableadjustments.
(4) Depreciation of tangible fixed assets is calculated by the following methods.
• Tangible fixed assets (excluding lease assets):Declining-balance method
However, buildings (excluding building attachments and structures acquired on or before March 31, 2016)acquired on or after April 1, 1998 are depreciated using Straight-line method.
• Lease assets related to finance lease transactions that do not transfer ownership: Straight-line method over thelease term with no residual value.
Other tangible fixed assets acquired for ¥100,000 or more but less than ¥200,000 are depreciated equally overthree years.
14

Fukoku Mutual Life Insurance Company

(5) Assets and liabilities denominated in foreign currencies, except for investments in subsidiaries and affiliates, aretranslated into Japanese yen at the effective exchange rate prevailing at the balance sheet date. Investments in
subsidiaries and affiliates are translated into Japanese yen at the exchange rate on the date of acquisition.
(6) Allowance for possible loan losses is provided in accordance with the Company’s standards of self-assessment
and write-offs and reserves on credit quality:i) For the credits of borrowers who are legally bankrupt such as being in the proceedings of bankruptcy or civil
rehabilitation (hereinafter called “legally bankrupt borrowers”) and who are substantially bankrupt(hereinafter called “substantially bankrupt borrowers”), the Company provides the remaining amount ofcredits after the direct write-off described below and the deductions of the amount expected to be collected
through the disposal of collateral or the execution of guarantees.
ii) For the credits of borrowers who are not currently bankrupt but have a high possibility of bankruptcy(hereinafter called “not currently bankrupt borrowers”), the Company provides the amounts deemed asnecessary considering the borrowers’ ability to pay, within the amounts after deductions of the amount
expected to be collected through the disposal of collateral or the execution of guarantees.
iii) For the credits of borrowers other than the above, the Company provides the amounts calculated bymultiplying the borrowers’ balance by the actual ratio of bad debt losses on defaults during a certain past
period.
All credits are assessed by the relevant departments in accordance with the Company’s standards of selfassessment on credit quality. The results of the assessment are reviewed by the audit department, which is
independent of business-related divisions. Subsequently, the allowance for possible loan losses is provided basedon the results of these assessments.
For the credits of legally bankrupt borrowers and substantially bankrupt borrowers, the amounts remaining
after deductions of collateral value or the amounts collectible through the execution of guarantees are written-off
directly from the borrowers’ balances as the estimated uncollectible amounts. The amount written-off as of
September 30, 2017 was ¥1 million.
(7) Reserve for employees' retirement benefits is presented based on projected benefit obligations and pension plan
assets at the balance sheet date.
The Company uses the following methods for amortizing retirement benefit obligations and retirement
benefit expenses:• Method for allocation of projected retirement benefits ................
• Amortization period of actuarial gains and losses.........................
• Amortization period of prior service cost......................................

Benefit formula basis
10 years
10 years(8) Reserve for price fluctuation is calculated in accordance with Article 115 of the Insurance Business Act.
(9) As for the finance lease transactions where the Company is a lessor, the lease fee is recorded in “Interest,
dividends and other income” at the time of receiving lease fee. The corresponding cost of the lease transactions
is recorded in “Other investment expenses”, which is calculated by deducting an amount equivalent to theinterest allocated over the lease term from the lease fee received.
(10) Hedge accounting is based on "Accounting Standards for Financial Instruments" (ASBJ Statement No. 10,
August 11, 2006). The Company applies a fair value hedge accounting as a hedge against the risk of foreignexchange fluctuation in relation to bonds denominated in foreign currencies and against the risk of pricefluctuation in relation to domestic stocks, and a designated hedge accounting (“Furiate shori”) for foreign
currency swaps as a hedge against the risk of foreign exchange fluctuation in relation to bonds denominated inforeign currencies issued by the Company.
For assessing the effectiveness of hedge used, ratio analysis of comparing the fluctuations in the fair value
or cash flows of hedged items and hedging instruments is mainly applied.
(11) Accounting of unrecognized actuarial differences and unrecognized prior service costs related to employees’
retirement benefits is different to the methods used for these items in the consolidated financial statements.
(12) The Company accounts for consumption taxes by the tax-exclusion method. The consumption taxes on certain
assets, which are not deductible from consumption taxes withheld and that are stipulated to be deferred under
the Tax Act, are deferred as prepaid expenses and amortized equally over five years. Consumption taxes otherthan deferred consumption taxes are recognized as an expense when incurred.
(13) Policy reserve is based on Article 116 of the Insurance Business Act, and the premium reserve is calculated by
the following method:
15

Fukoku Mutual Life Insurance Company

i) In regard to the policies subject to the standard policy reserve, the method as prescribed by theCommissioner of Financial Services Agency (Ministry of Finance Ordinance No. 48, 1996) is applied.
ii) In regard to the policies not subject to the standard policy reserve, the net level premium method is applied.
Based on the provision of Article 69, paragraph 5, of the Enforcement Regulation of the Insurance Business Act,
the Company includes additional funded policy reserves as follows.
At the end of the fiscal year ended March 31, 2013, among individual annuity insurance policies with anassumed interest rate of 5.00% or higher, policies that have an annuity commencement date on or prior to March
31, 2013 (excluding wife’s annuity insurance additional rider), the Company reduced the assumed interest rate
to 1.00% and funded additional policy reserves. As of September 30, 2017, the balance of these policy reserves
was ¥40,723 million.
At the end of the fiscal year ended March 31, 2016, among individual annuity insurance policies with anassumed interest rate of 5.00% or higher, policies that have an annuity commencement date from April 1, 2013,
through March 31, 2017 (excluding wife’s annuity insurance additional rider), the Company reduced theassumed interest rate of policy reserve to 1.00% and funded additional policy reserves. Furthermore, for certain
whole life insurance policies that include distribution of surplus every five years the Company funded additional
policy reserves. As of September 30, 2017, the balance of these policy reserves was ¥28,363 million.
(14) The software for internal use is amortized based on straight-line method over the estimated useful lives.
(15) Of the bonds corresponding to the sub-groups of individual insurance and annuities which are set by insurance
types and investment policies, the bonds that are held to match the duration of liabilities are classified as policyreserve-matching bonds in accordance with “Temporary Treatment of Accounting and Auditing Concerning
Policy-reserve-matching Bonds in Insurance Industry” (Industry Audit Committee Report No. 21 issued by theJapanese Institute of Certified Public Accountants on November 16, 2000).
2. The carrying amounts, fair values and their related differences of major financial assets and liabilities in the generalaccount as of September 30, 2017 were as follows:
Carrying amount

Cash and deposits:
Cash and deposits not treated as securities……......
Total cash and deposits…........................................
Call loans
Monetary claims bought:
Claims treated as loans……....................................
Total monetary claims bought……….....................
Money held in trust:
Trading securities....................................................
Total money held in trust........................................
Securities:
Trading securities.....................................................
Held-to-maturity debt securities..............................
Policy-reserve-matching bonds...............................
Available-for-sale securities....................................
Total securities........................................................
Loans:
Policy loans.............................................................
Ordinary loans.........................................................
Total loans...............................................................
Assets total..................................................................
Subordinated bonds1...................................................
Liabilities total…........................................................
Derivative instruments2:
Hedge accounting not applied................................
Hedge accounting applied……...............................
Total derivative instruments....................................

Fair value(Millions of yen)
Differences

¥

–
–
–

¥60,147
60,147
198,000¥60,147
60,147
198,000

462
462

491
491

29
29

29,78329,78329,78329,783––

177,412760,857
982,130
3,471,449
5,391,849

177,412902,392
1,138,999
3,471,449
5,690,253–
141,534
156,869–
298,40358,906536,899595,806
6,276,048
221,935
221,935

58,906559,570
618,477
6,597,152
231,367
231,367(0 )
22,67022,670321,103
9,432
9,432

(3,139 )(17,409 )¥ (20,548 )(3,139 )(17,409 )¥ (20,548 )

¥

–
–
–

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

16

Fukoku Mutual Life Insurance Company

(1) Cash, deposits (excluding financial instruments treated as securities based on “Accounting Standards for
Financial Instruments” (ASBJ Statement No.10)) and call loans:
The fair values of cash, deposits and call loans are based on their book values since fair values approximatebook values due to their short maturities.
(2) Securities including deposits and monetary claims bought which are treated as securities based on “AccountingStandards for Financial Instruments” (ASBJ Statement No.10) and securities managed as trust assets in money
held in trust:
The fair values of marketable securities are measured at the quoted market prices at the balance sheet date. The
fair values of other securities without the quoted market prices are based on the prices reasonably calculated
such as the prices offered by the information vendors or counterparty financial institutions.
Investments in subsidiaries and affiliates, unlisted stocks and investments in partnerships whereby
partnership assets consist of unlisted stocks whose fair values are deemed extremely difficult to obtain, areexcluded from above securities. The carrying amounts of investments in subsidiaries and affiliates, unlisted
stocks and investments in partnerships were ¥64,837 million, ¥6,198 million, and ¥19,857 million as of
September 30, 2017, respectively.
(3) Loans and monetary claims bought treated as loans:
The fair values of policy loans are deemed to approximate book values, considering estimated repayment period
and interest rate conditions since their repayment deadlines have not been set up due to the characteristics thatthe loans are limited to the amount of cash surrender values. Therefore, the book values are used as the fairvalues of policy loans.
The fair values of floating interest rate loans among the ordinary loans and monetary claims bought
treated as loans approximate the book values because the market interest rates are reflected in future cash flows
in a short period. Therefore, the fair values of floating interest rate loans and monetary claims bought treated asloans are based on their book values. The fair values of fixed interest rate loans are measured by discounting thefuture cash flows to the present values.
The fair values of loans from legally bankrupt borrowers, substantially bankrupt borrowers and not
currently bankrupt borrowers and monetary claims bought treated as loans are computed by deducting theamount of the allowance for possible loan losses from the book values before direct write-offs.
(4) Subordinated bonds:
Subordinated bonds issued by the Company are stated at fair market values.
(5) Derivative instruments:i) The fair values of the futures and options traded at the exchange are measured at the settlement price of theexchange.
ii) The fair values of forward contracts, options and swaps traded over the counter are based on the quoted
prices offered by counterparty financial institutions.
iii) The fair values of foreign currency forward contracts are determined based on the spot exchange rate andforward contract rate.
3. Notes related to the fair value of investment and rental properties are omitted as no significant change has occurredsince the previous fiscal year-end.
4. The amount of securities lent under lending agreements was ¥154,686 million as of September 30, 2017.
5. The total amounts of credits to bankrupt borrowers, delinquent loans, delinquent loans past 3 months or more andrestructured loans, which were included in loans, was ¥1,252 million as of September 30, 2017;i) The balance of credits to bankrupt borrowers was ¥196 million as of September 30, 2017.
ii) The balance of delinquent loans was ¥1,055 million as of September 30, 2017.
iii) There was no balance of delinquent loans past 3 months or more and restructured loans as of
September 30, 2017.
The direct write-offs related to loans decreased credits to bankrupt borrowers described above by ¥1 million as of
September 30, 2017.
Credits to bankrupt borrowers represent loans, excluding the balances already written-off, which meet theconditions prescribed in Article 96 Paragraph 1 item 3 and 4 of the Enforcement Regulations of the Corporate Tax
Act. Moreover, accrued interest on these loans is not recorded as income after determining that principal of or
17

Fukoku Mutual Life Insurance Company

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 which accrued interest is not recorded as income due to the same reasons as
described above, and exclude credits to bankrupt borrowers and loans for which interest payments have beensuspended and rescheduled to assist and support the borrowers in the restructuring of their business.
Delinquent loans past 3 months or more are loans for which interest payments or repayments of principal aredelinquent for 3 months or more from the due date under the terms of the related loan agreements, excluding thoseloans classified as credits to bankrupt borrowers and delinquent loans.
Restructured loans are loans for which certain concessions favorable to borrowers, such as interest reduction
or exemption, rescheduling of due date for repayments of principal or interest payment, waiver of claim or otherterms, have been negotiated for the purpose of assisting and supporting the borrowers in the restructuring of theirbusiness. This category excludes loans classified as credits to bankrupt borrowers, delinquent loans and delinquentloans past 3 months or more.
6. Accumulated depreciation of tangible fixed assets were ¥161,092 million as of September 30, 2017.
7. Total assets in separate accounts provided for in Article 118 of the Insurance Business Act were ¥80,089 million as
of September 30, 2017. The amounts of separate account liabilities were the same as separate account assets.
8. Changes in reserve for dividends to policyholders for the six months ended September 30, 2017 were as follows:(Millions of yen)

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

¥ 50,929
34,592(16,276)5¥ 69,251

9. The amount of stocks of subsidiaries was ¥64,837 million as of September 30, 2017.
10. Assets pledged as collateral as of September 30, 2017 were ¥15,246 million of securities, ¥140 million of money
held in trust and ¥1,309 million of bank deposits. Secured debts as of September 30, 2017, were ¥5,122 million.
11. Reserve for outstanding claims for the reinsurance contracts provided in accordance with Article 71 Paragraph 1 of
the Enforcement Regulation of the Insurance Business Act (hereinafter called “reserve for outstanding claims forceded reinsurance”) was ¥19 million as of September 30, 2017.
Policy reserve for the reinsurance contracts provided in accordance with Article 71 Paragraph 1 of the
Enforcement Regulation of the Insurance Business Act (hereinafter called “policy reserve for ceded reinsurance”)
was ¥30 million as of September 30, 2017.
12. There were unused commitment line agreements under which the Company is the lender of ¥10,665 million as of
September 30, 2017.
13. Repayments of subordinated bonds are subordinated to other obligations.
On November 16, 2017, the Company redeemed ¥30,000 million advanced in subordinated bonds.
14. The future contribution to the Life Insurance Policyholders Protection Corporation of Japan under Article 259 of the
Insurance Business Act was estimated at ¥8,972 million as of September30, 2017.
The contribution is recognized as operating expenses when contributed.

18

Fukoku Mutual Life Insurance Company

III. Notes to the Non-consolidated Statements of Operations
1. Major items of gains on sales of securities for the six months ended September 30, 2017 were as follows:(Millions of yen)Domestic bonds....................................................................................................
Domestic stocks and others..................................................................................
Foreign securities..................................................................................................

¥4,621
1,208¥6,232

2. Major items of losses on sales of securities for the six months ended September 30, 2017 were as follows:(Millions of yen)Domestic stocks and others..................................................................................
Foreign securities.................................................................................................

¥535¥1,196

3. For the six months ended September 30, 2017, in calculating the reversal of reserve for outstanding claims, aprovision of reserves for outstanding claims reinsured of ¥16 million was added. In calculating the provision ofpolicy reserve, a reversal of reserves for policy reserves reinsured of ¥0 million was added.
4. Breakdown of interest, dividends and other income for the six months ended September 30, 2017 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.......................................................................................................................

19¥7
58,645
5,135
7,171
61
¥71,021

Fukoku Mutual Life Insurance Company

6. Breakdown of Ordinary Profits (Fundamental Profit)(Millions of yen)Six months ended
September 30, 2016

A

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

Six months ended
September 30, 2017

40,731

48,20636,155

18,412

－

974

－

5,374

Gains on sales of securities

6,241

12,062

Gains on derivative instruments, net

29,914－Foreign exchange gains, net－－

Other capital gains－－

39,153

18,242Losses on money held in trust, net

1,973

－

Losses on trading securities, net

27,504－Losses on sales of securities

150

1,800

Losses on valuation of securities

174

－

－

10,143

9,351

6,298

Gains on trading securities, net

Capital losses

Losses on derivative instruments, net
Foreign exchange losses, net

－

－

B

(2,998)169

A+B

37,733

48,375

149

6

－

－

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

143－

Reversal of specific allowance for possible loan losses

5

6

Others

－

－

－

10

Reversal of contingency reserve

Non-recurring losses
Reinsurance premiums－－

Provision for contingency reserve－

10

Provision of specific allowance for possible loan losses－－

Provision of allowance for specified overseas loans－－

Write-off of loans

－

－

－

－

C

149

(3)

A+B+C

37,883

48,371Others
Non-recurring gains (losses)
Ordinary profits

Notes: 1. The following amounts in respect of gains / losses on money held in trust have been excluded from capital gains / losses
and included in fundamental profit due to their income nature (being interest and dividend income): ¥77 million in respectof the six months ended September 30, 2016 and ¥110 million in respect of the six months ended September 30, 2017.
Notes: 2. The following amounts in respect of gains / losses on trading securities have been excluded from capital gains / losses
and included in fundamental profit due to their income nature (being interest and dividend income): ¥3,108 million in respectof the six months ended September 30, 2016 and ¥2,936 million in respect of the six months ended September 30, 2017.

20

Fukoku Mutual Life Insurance Company

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

As of March 31, 2017

As of September 30, 2017

Claims against bankrupt and quasi-bankrupt obligors

244

210

Claims with collection risk

878

1,049

Claims for special attention

－

－

1,123

1,260

[0.17%][0.17%]

668,392

752,151

669,516

753,411

Subtotal[Percentage of total]
Claims against normal obligors
Total

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

21

Fukoku Mutual Life Insurance Company

8. Risk-monitored Loans(Millions of yen)

As of March 31, 2017

As of September 30, 2017

Credits to bankrupt borrowers

230

196

Delinquent loans

884

1,055

Delinquent loans past three months or more－－

Restructured loans

－

－

1,115

1,252

[0.18%][0.21%]

Total[Percentage of total loans]

Notes: 1. For the credits of legally bankrupt borrowers and substantially bankrupt borrowers, the amounts remaining after deductions ofcollateral value or the amounts collectible through the execution of guarantees is written-off directly from the borrower’s balanceas the estimated uncollectible amounts. The amounts written-off related to credits to bankrupt borrowers were ¥1 million as of
September 30, 2016 and ¥1 million as of September 30, 2017.
Notes: 2. Credits to bankrupt borrowers represent loans which are subject to bankruptcy, corporate reorganization or rehabilitation orother similar, including but not limited to foreign, proceedings. Accruing interest of these loans is not recorded as income after
determining that principal of or interest on these loans is unlikely to be collected due to the significant delay in repayment ofprincipal or interest payment or for some other reasons.
Notes: 3. Delinquent loans are credits whose accruing interest is not recorded as income due to the same reasons as described in note 2
above, and exclude credits to bankrupt borrowers and loans for which interest payments have been suspended and rescheduled
to assist and support the borrowers in the restructuring of their business.
Notes: 4. Delinquent loans past three months or more are loans for which interest payment or repayment of principal are delinquent forthree months or more from the due date under the terms of the related loan agreements, excluding those loans classified as credits tobankrupt borrowers and delinquent loans.
Notes: 5. Restructured loans are loans for which certain concessions favorable to borrowers, such as interest reduction or exemptions,
rescheduling of due date of principal or interest payment, waiver of claim or other terms, have been negotiated for the purpose of
assisting and supporting the borrowers in the restructuring of their business. This category excludes loans classified as credits tobankrupt borrowers, delinquent loans and delinquent loans past three months or more.

22

Fukoku Mutual Life Insurance Company

9. Solvency Margin Ratio(Millions of yen)

As ofMarch 31, 2017

Total solvency margin

(A)

As of
September 30, 2017

1,414,023

1,554,014

Foundation funds and surplus

208,227

228,809

Reserve for price fluctuation

82,464

84,111

Contingency reserve

171,033

171,044

1,213

1,287

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

415,287

490,092

Net unrealized gains on real estate × 85%

111,340

113,736

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

237,089

238,410

Qualifying subordinated debt

191,935

221,935－－(46,783)(46,783)

42,21751,372

232,798

259,156

General allowance for possible loan losses

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

( R1  R8 )2  R2  R3  R7   R4
2

(B)

Insurance risk

R1

23,94923,4833rd sector insurance risk

R8

9,740

9,720

Assumed investment yield risk

R232,83532,908Minimum guarantee risk

R7

0

0

Investment risk

R3

192,279

218,374

Business risk

R4

5,176

5,689

1,214.8%

1,199.2%

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

Notes: 1. The figures above are calculated based on Articles 86 and 87 of the Enforcement Regulation of the Insurance Business Act
and Ministry of Finance No. 50, 1996.
Notes: 2. "Deductible items" represent the capital increase to the subsidiary, Fukokushinrai Life Insurance Co., Ltd.
Notes: 3. "Minimum guarantee risk" is calculated by standard method.

23

Fukoku Mutual Life Insurance Company

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

As of March 31, 2017

As of September 30, 2017

AmountAmountIndividual variable insurance－－

Individual variable annuities

39

38

Group annuities

75,63980,051

Total

75,67880,089(2) Individual Variable Insurance (Separate Account)
The Company has not sold the individual variable insurance.

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

As of March 31, 2017

As of September 30, 2017

Number ofpolicies

AmountNumber ofpolicies

AmountIndividual variable annuities

13

33

12

31

Total

13

33

12

31

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

As of March 31, 2017

As of September 30, 2017

AmountPercentage

AmountPercentage

Cash, deposits, call loans

10

27.3%

11

31.2%

Securities

28

72.7%

26

68.8%

Domestic bonds

－

－

－

－

Domestic stocks

－

－

－

－

Foreign securities

－

－

－

－

Foreign bonds

－

－

－

－

Foreign stocks and other securities

－

－

－

－

28

72.7%

26

68.8%

Loans

－

－

－

－

Others－－－－Allowance for possible loan losses

－

－

－

－

Total

39

100.0%

38

100.0%

Other securities

24

Fukoku Mutual Life Insurance Company

(iii) Investment Income and Expenses of Separate Account for Individual Variable Annuities(Millions of yen)Six months ended September 30, 2016

Six months ended September 30, 2017

AmountAmountInterest, dividends and other income

21

Gains on sales of securities－－

Gains on valuation of securities

68

Gains on redemption of securities－－

Gains on derivative instruments－－

Foreign exchange gains, net－－

Other investment income

0－

Losses on sales of securities－－

Losses on valuation of securities

10

8

Losses on redemption of securities－－

Losses on derivative instruments－－

Foreign exchange losses, net－－

Other investment expenses－－

Net investment income(0)1(iv) Fair Value Information on Securities in Separate Account for Individual Variable Annuities･ Net Valuation Gains/Losses on Trading Securities(Millions of yen)

As of March 31, 2017

As of September 30, 2017

Carrying value on
the balance sheet

Net valuation
gains/losses
included in thestatementsof operations

Carrying value on
the balance sheet

Net valuation
gains/losses
included in thestatementsof operations

28

(2)

26

0

Trading securities

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

25

Fukoku Mutual Life Insurance Company

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

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

Carrying value on
the balance sheet

Trading securities

As of September 30, 2017

280,236

Net valuation gains/losses
included in the statementof operations

Carrying value on
the balance sheet(16,953)284,965

7,989

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

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

As of March 31, 2017
Book value

As of September 30, 2017

Gains/losses

Fair value

Gains

Book value

Fair value

Gains/losses

Losses

Gains

Losses764,914908,680

143,766

143,766－

760,857

902,392

141,534

141,534－

Domestic bonds

739,830

882,479

142,649

142,649－

739,577

879,967

140,390

140,390－

Foreign bonds

25,084

26,201

1,116

1,116

－

21,28022,424

1,143

1,143

－

Monetary claims bought

－

－

－

－

－

－

－

－

－

－

Negotiable certificate of deposits

－

－

－

－

－

－

－

－

－

－

Others

－

－

－

－

－

－

－

－

－

－

1,008,212

1,166,744

158,531

161,427

2,895

982,130

1,138,999

156,869

159,738

2,869

1,002,413

1,160,832

158,418

161,313

2,895

978,030

1,134,819

156,788

159,657

2,869

5,799

5,912

113

113

－

4,099

4,180

81

81

－

－

－

－

－

－

－

－

－

－

－

2,796,789

3,256,735

459,945484,808

24,862

2,928,792

3,471,449

542,656

557,020

14,364

Domestic bonds

997,892

1,067,639

69,74674,152

4,405

1,057,042

1,126,449

69,406

71,9672,560

Domestic stocks

302,413587,201

284,787

289,0234,235

315,353

658,315

342,961

345,746

2,784

Foreign securities

1,426,510

1,516,052

89,542

104,688

15,146

1,484,116

1,595,548

111,432

119,333

7,901

Foreign bonds

1,207,319

1,268,525

61,20573,765

12,5591,254,584

1,324,820

70,23676,9606,724

219,190

247,527

28,33630,922

2,586

229,532

270,728

41,19542,372

1,176

69,97385,842

15,868

16,944

1,075

72,27991,13418,855

19,973

1,118

Money held in trust

－

－

－

－

－

－

－

－

－

－

Monetary claims bought

－

－

－

－

－

－

－

－

－

－

Negotiable certificate of deposits

－

－

－

－

－

－

－

－

－

－

Others

－

－

－

－

－

－

－

－

－

－

4,569,917

5,332,161

762,243790,001

27,757

4,671,781

5,512,840

841,059858,293

17,233

Domestic bonds

2,740,136

3,110,951

370,814378,1157,300

2,774,651

3,141,236

366,585

372,014

5,429

Domestic stocks

302,413587,201

284,787

289,0234,235

315,353

658,315

342,961

345,746

2,784

Foreign securities

1,457,394

1,548,166

90,772

105,918

15,146

1,509,496

1,622,153

112,657

120,558

7,901

Foreign bonds

1,238,203

1,300,639

62,43674,995

12,5591,279,964

1,351,425

71,461

78,185

6,724

219,190

247,527

28,33630,922

2,586

229,532

270,728

41,19542,372

1,176

69,97385,842

15,868

16,944

1,075

72,27991,13418,855

19,973

1,118

Money held in trust

－

－

－

－

－

－

－

－

－

－

Monetary claims bought

－

－

－

－

－

－

－

－

－

－

Negotiable certificate of deposits

－

－

－

－

－

－

－

－

－

－

Others

－

－

－

－

－

－

－

－

－

－

Held-to-maturity debt securities

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

Foreign stocks and other securities
Other securities

Total

Foreign stocks and other securities
Other securities

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

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

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

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

As of September 30, 2017

Differences

Carrying
value on the Fair valuebalance sheet

Differences

764,914908,680

143,766

760,857

902,392

141,534

Domestic bonds

739,830

882,479

142,649

739,577

879,967

140,390

Foreign bonds

25,084

26,201

1,116

21,28022,424

1,143

Monetary claims bought

－

－

－

－

－

－

Negotiable certificate of deposits

－

－

－

－

－

－

Others

－

－

－

－

－

－

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

－

－

－

－

－

－

Domestic bonds

－

－

－

－

－

－

Foreign bonds

－

－

－

－

－

－

Monetary claims bought

－

－

－

－

－

－

Negotiable certificate of deposits

－

－

－

－

－

－

Others

－

－

－

－

－

－

26

Fukoku Mutual Life Insurance Company

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

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

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

As of September 30, 2017

Differences

Carrying
value on the Fair valuebalance sheet

Differences

977,623

1,139,050

161,427

951,535

1,111,274

159,738

Domestic bonds

971,824

1,133,138

161,313

947,436

1,107,093

159,657

Foreign bonds

5,799

5,912

113

4,099

4,180

81

－

－

－

－

－

－

30,58927,694(2,895)30,59427,725(2,869)OthersBonds whose fair value does not exceed
the carrying value on the balance sheet
Domestic bonds

30,58927,694(2,895)30,59427,725(2,869)Foreign bonds

－

－

－

－

－

－

Others

－

－

－

－

－

－

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

As of March 31, 2017

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

As of September 30, 2017

Book value

Carrying
value on thebalance sheet

Differences

Book value

Carrying
value on thebalance sheet

Differences

557,020

2,097,492

2,582,300

484,8082,285,322

2,842,343

Domestic bonds

813,898

888,050

74,152875,117

947,084

71,967

Domestic stocks

260,158

549,181

289,023

274,032

619,778345,746

Foreign securities

964,556

1,069,245

104,688

1,077,796

1,197,129

119,333

Foreign bonds

800,165

873,930

73,765865,592

942,552

76,960Foreign stocks

164,391

195,31430,922

212,204

254,576

42,37258,87875,822

16,94458,37678,35019,973

Money held in trust

－

－

－

－

－

－

Monetary claims bought

－

－

－

－

－

－

Negotiable certificate of deposits

－

－

－

－

－

－

Others

－

－

－

－

－

－

Other securities

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

674,435(24,862)

643,470

629,105(14,364)

Domestic bonds

183,993

179,588(4,405)

181,925

179,365(2,560)

Domestic stocks

42,25438,019(4,235)41,321

38,536(2,784)Foreign securities

461,953446,807(15,146)

406,320

398,419(7,901)

Foreign bonds

407,154394,594(12,559)

388,992

382,267(6,724)Foreign stocks

54,79852,212(2,586)

17,32816,151(1,176)

11,095

10,019(1,075)

13,902

12,784(1,118)

Money held in trust

－

－

－

－

－

－

Monetary claims bought

－

－

－

－

－

－

Negotiable certificate of deposits

－

－

－

－

－

－

Others

－

－

－

－

－

－

Other securities

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

As of March 31, 2017

As of September 30, 2017－－

Unlisted foreign bonds－－

Others－－

Held-to-maturity bonds－－

Investments in subsidiaries and affiliates

64,83764,837Available-for-sale securities

22,044

24,164

6,109

6,198

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

Unlisted foreign bonds－－

15,934

17,96686,88189,001

Policy-reserve-matching bonds

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

OthersTotal

Note: In this table, domestic and overseas investment partnerships are included in “others” within “available-for-sale securities.” However, unrealized gains on available-for-sale securities
Note: corresponding to these holdings by domestic and overseas investment partnerships (¥1,484 million as of March 31, 2017 and ¥1,891 million as of September 30, 2017) are included
Note: in their balance sheet carrying amounts.

27

Fukoku Mutual Life Insurance Company

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

(Millions of yen)Interestrelated

Currencyrelated

Stockrelated

Bondrelated

OthersTotal－

13,542

(440)

－

－

Hedge accounting not applied

(500)

1,116

－

(80)

－

535

Total

(500)

14,659

(440)

(80)

－

13,638Interestrelated

Currencyrelated

Hedge accounting applied

As of September 30, 2017

Stockrelated

Bondrelated

Others13,102

Total－(16,853)

(555)

－

－

Hedge accounting not applied(587)(2,775)－223－(3,139)

Total

(587)

(19,628)

(555)

223

－

(20,548)

Hedge accounting applied(17,409)

Note: Gains and losses from applying fair value hedge accounting (currency- related, gains of ¥13,542 million, stock-related losses ofNote: ¥440 million as of March 31, 2017, and currency-related losses of ¥16,853 million, stock-related losses of ¥555 million as of
September 30, 2017) included in gains and losses with hedge accounting applied, and gains and losses with hedge accounting
not applied are reported in the statements of operations.

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

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

As of September 30, 2017

Fair
value

Notional amount/contract value

Gains(losses)Over 1 year

Fair
value

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

BoughtReceipt fixed,
payment floating
Payment fixed,
receipt floating

－
[

－
－

－
[

[

[

－

－]
－

－]

－

－

[

－

－

[

－
160,000
192

(500)

[

－

－

－

－

－

105

(587)

－]

－

－]
320,000

692 ]

－
－

－

－]
320,000

－

－

－
[

－

－]

160,000

692 ]

.
Total

(500)

(587)

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

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

As of September 30, 2017

Fair
value

Gains
(losses)

Notional amount/contract valueOver 1 year

Fair
value

Gains
(losses)

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

－
－
－
－
－
－

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

1,116
718
260
(157)
106
188

202,797
98,28533,367
27,59324,75018,798

－
－
－
－
－
－

205,572
99,641
33,52928,74924,731
18,921(2,775)(1,355)(161)(1,155)
19
(122)

－
－
－
－

－
－
－
－

－
－
－
－

－
－
－
－
1,116

167
105
61
1

－
－
－
－

167
105
61
1

(0)
(0)
0
(0)
(2,775)

Total
Notes: Forward exchange rates are used for exchange rates as of September 30, 2017.

[Stock-related Transactions]
No ending balance as of March 31, 2017 and September 30, 2017.

28

Fukoku Mutual Life Insurance Company

[Bond-related Transactions](Millions of yen)
As of September 30, 2017

As of March 31, 2017
Notional amount /contract value

Fair value

Notional amount /contract value

Gains(losses)Over 1 year

Fair value

Gains(losses)Over 1 year

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

24,063－

23,840

223

－

－

－

－

－

－

－

－

Total

(80)

223

(iii) Hedge Accounting Applied[Interest-related Transactions]
No ending balance as of March 31, 2017 and September 30, 2017
[Currency-related Transactions](Millions of yen)
As of March 31, 2017

Method ofhedge
accounting

Hedging instruments

Hedged items

Currency forward contracts

Foreigncurrencydenominatedbonds

Notional amount /contract value

Fair
value

Hedged items

Notional amount /contract valueOver 1 year

Fair
value

Over 1 year

966,610－953,067

US dollar

839,333－

Canadian dollar

44,327Euro

Foreigncurrencydenominatedbonds

884,249－

901,102827,099786,260－

800,331－

43,63645,914－47,02327,908－27,55929,608－30,562

British Pound

46,454－

46,20513,804－

14,357Australian dollar

8,586

－

8,567

8,661

－

8,827

－

－

－

－

－

－

Sold

Fair value
hedge
methodAs of September 30, 2017

BoughtTotal

Notes 1. Forward exchange rates are used for exchange rates as of September 30, 2017.
Notes 2. Regarding assets and liabilities which are denominated in foreign currencies but have fixed settlement in yen under currency forward
Notes 2. contracts and are reported in yen amounts in the balance sheet, those currency forward contracts are excluded from the table above.
[Stock-related Transactions](Millions of yen)
As of March 31, 2017

Method ofhedge
accounting

Hedging instruments

Notional amount /contract value

Fair
value

Hedged items

Notional amount /contract valueOver 1 year
Stock forward contracts

Fair value
hedge
methodHedged items

As of September 30, 2017
Fair
value

Over 1 year

Domestic
stocksDomestic
stocks

Sold

517

517

958

1,153

1,153

1,709

Bought

－

－

－

－

－

－

Total

[Bond-related Transactions]
No ending balance as of March 31, 2017 and September 30, 2017.

29

Fukoku Mutual Life Insurance Company

11. Status of the Company, Subsidiaries and Affiliates(1) Selected Financial Data
(100 millions of yen)Six months ended
September 30, 2016

Six months ended
September 30, 2017

Ordinary revenues

5,044

4,482

Ordinary profits

395

493

Net surplus attributable to the parent company

314

382

Comprehensive income

(202)

988

As of
March 31, 2017

Total assets
Solvency margin ratio

As of
September 30, 201784,32985,934

1,257.3%

1,241.8%(2) Scope of Consolidation and Application of Equity Method
Number of consolidated subsidiaries: 6
Number of unconsolidated subsidiaries accounted for under the equity method: 0
Number of affiliates accounted for under the equity method: 030

Fukoku Mutual Life Insurance Company

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

As of September 30, 2017

Assets:Cash and deposits

136,494

129,985

Call loans

193,000

198,000

753

462

Monetary claims bought
Money held in trust

29,78730,783

7,130,780

7,335,120

Loans

631,109599,263

Tangible fixed assets

219,873

218,180

Intangible fixed assets

26,32627,850

4

1

Securities

Agency receivables
Reinsurance receivables
Other assets

200

75

66,23755,3244275

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

153

188

(1,776)(1,843)8,432,988

8,593,469

As of March 31, 2017

As of September 30, 2017

Liabilities:
Policy reserves

7,438,936

Reserve for outstanding claims

7,460,031

22,22321,644

7,365,185

7,368,642

50,92969,251

598

493

Agency payables

98

70

Reinsurance payables

79

88

Subordinated bonds

191,935

221,935

Other liabilities

46,00667,542

Net defined benefit liabilities

38,76737,321

Reserve for price fluctuation

91,82793,657

Deferred tax liabilities

16,23339,563

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

Deferred tax liabilities for land revaluation

14,265

14,258

7,838,150

7,934,469

Foundation funds

10,00010,000

Accumulated foundation funds redeemed

106,000

106,000

112

112

Consolidated surplus

133,217

136,705

Total foundation funds, surplus and others

249,329

252,817

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

342,470

402,236

Revaluation reserve for land, net of tax

4,107

4,193

Foreign currency translation adjustment

(433)

(441)

Total liabilities
Net assets:

Reserve for revaluation

Accumulated remeasurements of defined benefit plans(9,240)(8,423)

Total accumulated other comprehensive income

336,904

397,564

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

31

8,603

8,618

594,837

659,000

8,432,988

8,593,469

Fukoku Mutual Life Insurance Company

(4) Consolidated Statements of Operations and Comprehensive Income[Consolidated Statements of Operations](Millions of yen)Six months ended September 30, 2016

Six months ended September 30, 2017

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

385,780
111,743[74,807][－][－][6,922][29,914][－]6,881[2,678]504,406

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

293,525[66,647][89,096][57,447][63,595][16,406]
68,691
68,67615
043,242[1,921][1,896][24,395]
[150]
[174]
[－]
[9,350][1,138]48,778
10,641
464,879
39,526

311,120[88,937][83,496][57,119][65,606][15,745]
3,463
3,457
5
0
25,283[2,190][－][－][1,800][－][10,143][6,299][－]48,935
10,051
398,854
49,359

2
42
45

244
[－]
244

25
31
1,789
[－]
1,846
225
37,499

58
140
1,829
3
2,031
174
47,3979,384(3,453)5,930
31,569141
31,427

9,080
(8)
9,072
38,32459
38,265

Ordinary expenses:
Claims and other payments[Claims][Annuities][Benefits][Surrenders][Other payments]
Provision of policy reserve and others
Provision of policy reserve
Provision of interest portion of reserve for dividends to policyholders
Provision of interest portion of reserve for dividends to policyholders (subsidiary)
Investment expenses[Interest expenses][Losses on money held in trust, net]
[Losses on trading securities, net]
[Losses on sales of securities][Losses on valuation of securities][Losses on derivative instruments, net]
[Foreign exchange losses, net]
[Losses on separate accounts, net]
Operating expenses
Other ordinary expenses
Total ordinary expenses
Ordinary profits
Extraordinary gains:
Gains on disposal of fixed assets
OthersTotal extraordinary gains
Extraordinary losses:
Losses on disposal of fixed assets
Impairment losses
Provision of reserve for price fluctuation
Losses on advanced depreciation of real estate for tax purpose
Total extraordinary losses
Provision of reserve for dividends to policyholders (subsidiary)
Surplus before income taxes
Income taxes：
Current
Deferred
Total income taxes
Net surplus
Net surplus attributable to non-controlling interests
Net surplus attributable to the parent company

32

Fukoku Mutual Life Insurance Company

(4) Consolidated Statements of Operations and Comprehensive Income (Continued)[Consolidated Statements of Comprehensive Income](Millions of yen)Six months ended September 30, 2016 Six months ended September 30, 2017

Net surplus

31,56938,324

Other comprehensive income(51,782)

60,544

Net unrealized gains (losses) on available-for-sale securities, net of tax(52,111)59,735

Foreign currency translation adjustments

(473)

(8)

Remeasurements of defined benefit plan, net of tax

803

816

Comprehensive income(20,213)98,868Comprehensive income attributable to the parent company(20,365)

98,84015228Comprehensive income attributable to non-controlling interests

33

Fukoku Mutual Life Insurance Company

(5) Consolidated Statements of Cash Flows(Millions of yen)Six months ended
September 30, 2016

Six months ended
September 30, 2017

Cash flows from operating activities:
Surplus before income taxes
Depreciation of real estate for rent and other assets
Depreciation
Impairment losses
Amortization of goodwill
Increase (decrease) in reserve for outstanding claims
Increase (decrease) in policy reserve
Provision of interest portion of reserve for dividends to policyholders
Provision of interest portion of reserve for dividends to policyholders (subsidiary)
Provision of reserve for dividends to policyholders (subsidiary)
Increase (decrease) in allowance for possible loan losses
Increase (decrease) in net defined benefit liabilities
Increase (decrease) in reserve for price fluctuation
Interest, dividends and other income
Losses (gains) related to securities, net
Interest expenses
Foreign exchange losses (gains), net
Losses (gains) related to tangible fixed assets, net
OthersSubtotalInterest, dividends and other income received
Interest expenses paid
Dividends to policyholders paid
Dividends to policyholders paid (subsidiary)Corporate income tax (paid) refunded
Net cash provided by (used in) operating activities (a)37,499
2,122
3,731
31
381
(2,678)68,676
15
0
225
(83)
(438)
1,789
(74,807)(9,081)
1,921
9,347
21
3,998
42,67281,369(1,906)(17,868)(333)(2,118)101,81447,397
2,113
3,432
140
381
(579)
3,457
5
0
174
67
(344)
1,829
(83,120)(14,510)
2,190
6,299
(220)
4,650
(26,634)
88,155(2,157)(16,276)(279)(6,861)35,946196
29[－]56,658(522,166)
219,883(21,448)
61,135
145,119(2,148)(62,740)
39,074 ] [(4,018)11(5,296)(72,044)14
253(8,800)8,833(433,376)
342,383(36,803)
64,9144,081(2,350)(60,848)(24,901) ](1,956)411(4,206)(66,598)[－](20,000)
(316)
(85)
(250)
(20,652)
169
9,287
370,458

30,000
[－]
(100)
(13)
(140)
29,745(609)(1,515)328,23670[－]

379,816

326,720

Cash flows from investing activities:
Net decrease (increase) in deposits
Proceeds from sales and redemption of monetary claims bought
Increase in money held in trust
Decrease in money held in trust
Payments for purchase of securities
Proceeds from sales and redemption of securities
Payments for additions to loans
Proceeds from collections of loans
Proceeds from and payments for settlements of derivatives, net
OthersSubtotal (b)[(a + b)
Payments for purchase of tangible fixed assets
Proceeds from sales of tangible fixed assets
Payments for purchase of intangible fixed assets
Net cash provided by (used in) investing activities
Cash flows from financing activities:
Proceeds from issuance of bonds
Redemption of foundation funds
Interest payment for foundation funds
Proceeds from share issuance to non-controlling shareholders
Payments for lease obligations
Net cash provided by (used in) financing activities
Effect of exchange rate changes on cash and cash equivalents
Net increase (decrease) in cash and cash equivalents
Cash and cash equivalents at the beginning of the period
Increase (decrease) in cash and cash equivalents
resulting from change in scope of consolidation
Cash and cash equivalents at the end of the period

34

Fukoku Mutual Life Insurance Company

(6) Consolidated Statements of Changes in Net Assets[For the six months ended September 30, 2016](Millions of yen)Foundation funds, surplus and others
Foundation
funds
Balance at the beginning of the current period

30,000

Accumulated
foundation funds
redeemed

86,000Reserve forrevaluation

Consolidated surplus

Total foundation
funds, surplus andothers151,251

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

112

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

20,00020,000

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

(316)

(316)

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

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

Reversal of revaluation reserve
for land, net of tax

13

13

Change of scope of consolidation

30

30

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

20,000－(24,081)(24,081)

Balance at the end of the current period

10,000106,000

112

127,170

243,282

Accumulated
remeasurements ofdefined benefit plans

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

Accumulated other comprehensive income

Balance at the beginning of the current period

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

Revaluation reserve
for land, net of tax

349,884

4,128

Foreign currencytranslation
adjustments(115)

Non-controllinginterests

6,578

Total net assets

617,425

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

Additions to accumulated foundation
funds redeemed

20,000(316)

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

31,427

Redemption of foundation funds(20,000)

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

Reversal of revaluation reserve
for land, net of tax

1330

Change of scope of consolidation
Net changes, excluding foundation funds,
surplus and others(52,122)

(13)

(473)

803

(51,806)

66(51,740)

Total changes in the current period(52,122)

(13)

(473)

803

(51,806)

66(75,821)

Balance at the end of the current period

297,762

4,115

(589)

(9,611)

291,676

6,645

541,604

35

Fukoku Mutual Life Insurance Company

[For the six months ended September 30, 2017](Millions of yen)Foundation funds, surplus and others
Accumulated
foundation funds
redeemed

Foundation
funds
Balance at the beginning of the current period

10,000106,000

Reserve forrevaluation

Consolidated surplus

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

112

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

(100)

(100)

38,26538,265(85)(85)

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

－

－

－

3,487

3,487

10,000106,000

112

136,705

252,817

Accumulated
remeasurements ofdefined benefit plans

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

Accumulated other comprehensive income

Balance at the beginning of the current period

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

Revaluation reserve
for land, net of tax

342,470

4,107

Foreign currencytranslation
adjustments(433)

Non-controllinginterests

8,603

Total net assets

594,837

Changes in the current period
Additions to reserve for dividends
to policyholders(34,592)(100)

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

38,265

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

Net changes, excluding foundation funds,
surplus and others

59,765

85

(8)

816

60,66014

60,675

Total changes in the current period

59,765

85

(8)

816

60,66014

64,162

Balance at the end of the current period

402,236

4,193

(441)

(8,423)

397,564

8,618

659,000

36

Fukoku Mutual Life Insurance Company

Notes to the Consolidated Financial Statements
I.

Presentation of the Consolidated Financial Statements

1. Basis of presentation
The accompanying consolidated financial statements have been prepared from the accounts maintained by Fukoku
Mutual Life Insurance Company (the “Company”) and its consolidated subsidiaries in accordance with theprovisions set forth in the Insurance Business Act of Japan and its related rules and regulations and in conformity
with accounting principles generally accepted in Japan, which are different in certain respects from accounting
principles generally accepted in countries and jurisdictions other than Japan.
In addition, the notes to the consolidated financial statements include information which is not required underaccounting principles generally accepted in Japan but is presented herein as additional information.
Amounts of less than one million yen have been rounded down. As a result, the totals do not add up.
2. Principles of consolidation(1) Scope of consolidation
Consolidated subsidiaries as of September 30, 2017 are listed below:
Fukoku Capital Management, Inc.
Fukokushinrai Life Insurance Co., Ltd.
Fukoku Information Systems Co., Ltd.
Fukoku Life International (U.K.) Ltd.
Fukoku Life International (America) Inc.
Fukoku Life Investments Singapore Pte. Ltd.
Major unconsolidated subsidiary is Fukoku Business Service Company Limited.
Five subsidiaries are excluded from the scope of consolidation, as each one of them is small in its total
assets, amount of sales, net surplus for the period and surplus and are sufficiently insignificant to reasonablejudgement on their impact on the financial position and results of operation of the Company's group.
(2) Application of equity method
Unconsolidated subsidiaries (such as Fukoku Business Service Company Limited, etc.) are insignificant in theirimpact on net surplus attributable to the parent company and consolidated surplus, and also immaterial as awhole, therefore, application of equity method is not applied.
There are no affiliates for the six months ended September 30, 2017.
(3) Interim closing dates of consolidated subsidiaries
Among the subsidiaries to be consolidated, fiscal year-end of overseas subsidiaries is June 30. For the
preparation of consolidated financial statements, financial statements as of that date are used and concerning any
important transaction taking place in between June 30 and the consolidated closing date, necessary adjustments
for consolidation are made.

II. Notes to the Consolidated Balance Sheets
1. (1) The valuation of securities, including bank deposits and monetary claims bought which are equivalent tosecurities, and securities managed as trust assets in money held in trust, is as follows:i) Trading securities are stated at fair market value. Costs of their sales are determined by the moving averagemethod.
ii) Held-to-maturity debt securities are stated at amortized cost under the straight-line method, cost being
determined by the moving average method.
iii) Policy-reserve-matching bonds are stated at amortized cost under the straight-line method, cost being
determined by the moving average method in accordance with “Temporary Treatment of Accounting and
Auditing Concerning Policy-reserve-matching Bonds in the Insurance Industry” (Industry Audit Committee
Report No.21 issued by the Japanese Institute of Certified Public Accountants on November 16, 2000).
iv) Investments in unconsolidated subsidiaries and affiliates which are not accounted for under the equity
method are stated at cost, cost being determined by the moving average method.
v) Available-for-sale securities with fair market value are stated at fair market value based on the market prices
at the balance sheet date. Costs of their sales are determined by the moving average method. Net unrealized
37

Fukoku Mutual Life Insurance Company

gains or losses on these available-for-sale securities, net of taxes, are recorded as a separate component of
net assets.
Available-for-sale securities whose market value are deemed extremely difficult to obtain are stated at cost,
cost being determined by the moving average method, except for public and corporate bonds including
foreign bonds, of which the difference between acquisition cost and face value is considered to be an
adjustment of interest. Such bonds are stated at amortized cost under the straight-line method, cost being
determined by the moving average method.
(2) Derivative instruments are stated at fair market value.
(3) The Company revalued the land used in the operations based on the Act for Revaluation of Land (Act No.34
promulgated on March 31, 1998). The difference between fair value and book value resulting from therevaluation, net of related taxes, is recorded as revaluation reserve for land as a separate component of net
assets and the related tax is recorded as deferred tax liabilities for land revaluation.
• Date of revaluation: March 31, 2002
• Method of revaluation as prescribed for in Article 3 Paragraph 3 of the said Act:
Calculation is based on the appraisal value for property tax set forth in Article 2 item 3 of the Enforcement
Ordinance of the Act for Revaluation of Land (Government Ordinance No.119 promulgated on March 31,
1998) and the road rate set forth in Article 2 item 4 of the said Ordinance with certain reasonableadjustments.
(4) Depreciation of the Company’s tangible fixed assets is calculated by the following methods.
• Tangible fixed assets (excluding lease assets):Declining-balance method
However, buildings (excluding building attachments and structures acquired on or before March 31, 2016)acquired on or after April 1, 1998 are depreciated using Straight-line method.
• Lease assets related to finance lease transactions that do not transfer ownership: Straight-line method over thelease term with no residual value.
Other tangible fixed assets acquired for ¥100,000 or more but less than ¥200,000 are depreciated equally overthree years.
(5) Assets and liabilities denominated in foreign currencies, except for investments in unconsolidated subsidiaries
and affiliates, are translated into Japanese yen at the effective exchange rate prevailing at the balance sheet date.
Investments in unconsolidated subsidiaries and affiliates are translated into Japanese yen at the exchange rate on
the date of acquisition.
(6) Allowance for possible loan losses for the Company is provided in accordance with the Company’s standards ofself-assessment and write-offs and reserves on credit quality:i) For the credits of borrowers who are legally bankrupt such as being in the proceedings of bankruptcy or civil
rehabilitation (hereinafter called “legally bankrupt borrowers”) and who are substantially bankrupt(hereinafter called “substantially bankrupt borrowers”), the Company provides the remaining amount ofcredits after the direct write-off described below and the deductions of the amount expected to be collected
through the disposal of collateral or the execution of guarantees.
ii) For the credits of borrowers who are not currently bankrupt but have a high possibility of bankruptcy(hereinafter called “not currently bankrupt borrowers”), the Company provides the amounts deemed asnecessary considering the borrowers’ ability to pay, within the amounts after deductions of the amount
expected to be collected through the disposal of collateral or the execution of guarantees.
iii) For the credits of borrowers other than the above, the Company provides the amounts calculated bymultiplying the borrowers’ balance by the actual ratio of bad debt losses on defaults during a certain past
period.
All credits are assessed by the relevant departments in accordance with the Company’s standards of selfassessment on credit quality. The results of the assessment are reviewed by the audit department, which is
independent of business-related divisions. Subsequently, the allowance for possible loan losses is provided basedon the results of these assessments.
For the credits of legally bankrupt borrowers and substantially bankrupt borrowers, the amounts
remaining after deductions of collateral value or the amounts collectible through the execution of guarantees are
written-off directly from the borrowers’ balances as the estimated uncollectible amounts. The amount written-off
as of September 30, 2017 was ¥1 million.
38

Fukoku Mutual Life Insurance Company

(7) Net defined benefit liabilities, supposed to be incurred as of September 30, 2017, are presented for theemployees' retirement benefits after deducting pension plan assets from retirement benefit obligations, based on
estimated amounts as of the balance sheet date.
The Company uses the following methods of accounting in relation to retirement benefits:• Method for allocation of projected retirement benefits ........................
• Amortization period of actuarial gains and losses.................................
• Amortization period of prior service cost..............................................

Benefit formula basis
10 years
10 years(8) Reserve for price fluctuation is calculated in accordance with Article 115 of the Insurance Business Act.
(9) As for the finance lease transactions where the Company is a lessor, the lease fee is recorded in “Interest,
dividends and other income” at the time of receiving lease fee. The corresponding cost of the lease transactions
is recorded in “Other investment expenses”, which is calculated by deducting an amount equivalent to theinterest allocated over the lease term from the lease fee received.
(10) Hedge accounting is based on "Accounting Standards for Financial Instruments" (ASBJ Statement No. 10,
August 11, 2006). The Company applies a fair value hedge accounting as a hedge against the risk of foreignexchange fluctuation in relation to bonds denominated in foreign currencies and against the risk of pricefluctuation in relation to domestic stocks, and a designated hedge accounting (“Furiate shori”) for foreign
currency swaps as a hedge against the risk of foreign exchange fluctuation in relation to bonds denominated inforeign currencies issued by the Company.
For assessing the effectiveness of hedge used, ratio analysis of comparing the fluctuations in the fair value
or cash flows of hedged items and hedging instruments is mainly applied.
(11) The Company accounts for consumption taxes by the tax-exclusion method. The consumption taxes on certain
assets, which are not deductible from consumption taxes withheld and that are stipulated to be deferred under
the Tax Act, are deferred as prepaid expenses and amortized equally over five years. Consumption taxes otherthan deferred consumption taxes are recognized as an expense when incurred.
(12) Policy reserve is based on Article 116 of the Insurance Business Act, and the premium reserve is calculated by
the following method:i) In regard to the policies subject to the standard policy reserve, the method as prescribed by theCommissioner of Financial Services Agency (Ministry of Finance Ordinance No. 48, 1996) is applied.
ii) In regard to the policies not subject to the standard policy reserve, the net level premium method is applied.
Based on the provision of Article 69, paragraph 5, of the Enforcement Regulation of the Insurance Business Act,
the Company includes additional funded policy reserves as follows.
At the end of the fiscal year ended March 31, 2013, among individual annuity insurance policies with anassumed interest rate of 5.00% or higher, policies that have an annuity commencement date on or prior to March
31, 2013 (excluding wife’s annuity insurance additional rider), the Company reduced the assumed interest rate
to 1.00% and funded additional policy reserves. As of September 30, 2017, the balance of these policy reserves
was ¥40,723 million.
At the end of the fiscal year ended March 31, 2016, among individual annuity insurance policies with anassumed interest rate of 5.00% or higher, policies that have an annuity commencement date from April 1, 2013,
through March 31, 2017 (excluding wife’s annuity insurance additional rider), the Company reduced theassumed interest rate of policy reserve to 1.00% and funded additional policy reserves. Furthermore, for certain
whole life insurance policies that include distribution of surplus every five years the Company funded additional
policy reserves. As of September 30, 2017, the balance of these policy reserves was ¥28,363 million.
(13) Intangible fixed assets are amortized as follows:i) Software for internal use is amortized based on the straight-line method over the estimated useful lives.
ii) Lease assets are amortized based on the straight-line method over the lease term.
(14) Of the bonds corresponding to the sub-groups of individual insurance and annuities which are set by insurance
types and investment policies, the bonds that are held to match the duration of liabilities are classified as policyreserve-matching bonds in accordance with “Temporary Treatment of Accounting and Auditing Concerning
Policy-reserve-matching Bonds in Insurance Industry” (Industry Audit Committee Report No. 21 issued by theJapanese Institute of Certified Public Accountants on November 16, 2000).

39

Fukoku Mutual Life Insurance Company

2. The carrying amounts, fair values and their related differences of major financial assets and liabilities in the generalaccount as of September 30, 2017 were as follows:
Carrying amount

Cash and deposits:
Cash and deposits not treated as securities…....
Total cash and deposits…..................................
Call loans
Monetary claims bought:
Claims treated as loans……..............................
Total monetary claims bought...............
Money held in trust:
Trading securities...............................................
Total money held in trust....................................
Securities:
Trading securities...............................................
Held-to-maturity debt securities.........................
Policy-reserve-matching bonds..........................
Available-for-sale securities...............................
Total securities...................................................
Loans:
Policy loans........................................................
Ordinary loans....................................................
Total loans..........................................................
Assets total.............................................................
Subordinated bonds1.............................................
Liabilities total…....................................................
Derivative instruments2:
Hedge accounting not applied............................
Hedge accounting applied……..........................
Total derivative instruments...............................

Fair value(Millions of yen)
Differences¥128,485
128,485
198,000¥128,485
128,485
198,000

¥ –
–
–

462
462

491
491

29
29

29,78329,78329,78329,783––

177,4121,237,795
2,038,500
3,777,132
7,230,839

177,4121,475,104
2,280,849
3,777,132
7,710,498–
237,309242,348–479,658

62,364
536,899599,263
8,186,835
221,935
221,935

62,363559,570
621,934
8,689,193
231,367
231,367(0)
22,67022,670502,358
9,432
9,432

(3,139)(17,409)¥ (20,548)(3,139)(17,409)¥ (20,548)––¥–

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

(1) Cash, deposits (excluding financial instruments treated as securities based on “Accounting Standards for
Financial Instruments” (ASBJ Statement No.10)) and call loans:
The fair values of cash, deposits and call loans are based on their book values since fair values approximatebook values due to their short maturities.
(2) Securities including deposits and monetary claims bought which are treated as securities based on “AccountingStandards for Financial Instruments” (ASBJ Statement No.10) and securities managed as trust assets in money
held in trust:
The fair values of marketable securities are measured at the quoted market prices at the balance sheet date. The
fair values of other securities without the quoted market prices are based on the prices reasonably calculated
such as the prices offered by the information vendors or counterparty financial institutions.
Investments in unconsolidated subsidiaries and affiliates, unlisted stocks and investments in partnerships
whereby partnership assets consist of unlisted stocks whose fair values are deemed extremely difficult to obtain,
are excluded from above securities. The carrying amounts of investments in unconsolidated subsidiaries andaffiliates, unlisted stocks and investments in partnerships were ¥454 million, ¥6,198 million, and ¥19,857
million as of September 30, 2017, respectively.
(3) Loans and monetary claims bought treated as loans:
The fair values of policy loans are deemed to approximate book values, considering estimated repayment period
and interest rate conditions since their repayment deadlines have not been set up due to the characteristics thatthe loans are limited to the amount of cash surrender values. Therefore, the book values are used as the fairvalues of policy loans.
40

Fukoku Mutual Life Insurance Company

The fair values of floating interest rate loans among the ordinary loans and monetary claims bought
treated as loans approximate the book values because the market interest rates are reflected in future cash flows
in a short period. Therefore, the fair values of floating interest rate loans and monetary claims bought treated asloans are based on their book values. The fair values of fixed interest rate loans are measured by discounting thefuture cash flows to the present values.
The fair values of loans from legally bankrupt borrowers, substantially bankrupt borrowers and not
currently bankrupt borrowers and monetary claims bought treated as loans are computed by deducting theamount of the allowance for possible loan losses from the book values before direct write-offs.
(4) Subordinated bonds:
Subordinated bonds issued by the Company are stated at fair market values.
(5) Derivative instruments:i) The fair values of the futures and options traded at the exchange are measured at the settlement price of theexchange.
ii) The fair values of forward contracts, options and swaps traded over the counter are based on the quoted
prices offered by counterparty financial institutions.
iii) The fair values of foreign currency forward contracts are determined based on the spot exchange rate andforward contract rate.
3. Notes related to the fair value of investment and rental properties are omitted as no significant change has occurredsince the previous fiscal year-end.
4. The amount of securities lent under lending agreements was ¥154,686 million as of September 30, 2017.
5. The total amounts of credits to bankrupt borrowers, delinquent loans, delinquent loans past 3 months or more andrestructured loans, which were included in loans, was ¥1,258 million as of September 30, 2017;i) The balance of credits to bankrupt borrowers was ¥202 million as of September 30, 2017.
ii) The balance of delinquent loans was ¥1,055 million as of September 30, 2017.
iii) There was no balance of delinquent loans past 3 months or more and restructured loans as of
September 30, 2017.
The direct write-offs related to loans decreased credits to bankrupt borrowers described above by ¥1 million as of
September 30, 2017.
Credits to bankrupt borrowers represent loans, excluding the balances already written-off, which meet theconditions prescribed in Article 96 Paragraph 1 item 3 and 4 of the Enforcement Regulations of the Corporate Tax
Act. Moreover, accrued interest on these loans is not recorded as income after determining that principal of orinterest on these loans is unlikely to be collected due to the significant delay in repayment of principal or interest
payment or for some other reasons.
Delinquent loans are credits which accrued interest is not recorded as income due to the same reasons as
described above, and exclude credits to bankrupt borrowers and loans for which interest payments have beensuspended and rescheduled to assist and support the borrowers in the restructuring of their business.
Delinquent loans past 3 months or more are loans for which interest payments or repayments of principal aredelinquent for 3 months or more from the due date under the terms of the related loan agreements, excluding thoseloans classified as credits to bankrupt borrowers and delinquent loans.
Restructured loans are loans for which certain concessions favorable to borrowers, such as interest reduction
or exemption, rescheduling of due date for repayment of principal or interest payment, waiver of claim or otherterms, have been negotiated for the purpose of assisting and supporting the borrowers in the restructuring of theirbusiness. This category excludes loans classified as credits to bankrupt borrowers, delinquent loans and delinquentloans past 3 months or more.
6. Accumulated depreciation of tangible fixed assets were ¥161,661 million as of September 30, 2017.
7. Total assets in separate accounts provided for in Article 118 of the Insurance Business Act were ¥80,089 million as
of September 30, 2017. The amounts of separate account liabilities were the same as separate account assets.

41

Fukoku Mutual Life Insurance Company

8. Changes in reserve for dividends to policyholders for the six months ended September 30, 2017 were as follows:(Millions of yen)

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

¥ 50,929
34,592(16,276)5¥ 69,251

9. Changes in reserve for dividends to policyholders (Fukokushinrai Life Insurance Co., Ltd.) for the six months ended
September 30, 2017 were as follows:(Millions of yen)

Balance at the beginning of the current period...................................................
Dividend payments to policyholders during the current period.........................
Increase in interest..............................................................................................
Provision of reserve for dividends to policyholders...........................................
Balance at the end of the current period.............................................................

¥598
(279)
0
174
¥493

10. The amount of stocks of unconsolidated subsidiaries was ¥454 million as of September 30, 2017.
11. Assets pledged as collateral as of September 30, 2017 were ¥15,246 million of securities, ¥140 million of money
held in trust and ¥1,309 million of bank deposits. Secured debts as of September 30, 2017, were ¥5,122 million.
12. Reserve for outstanding claims for the reinsurance contracts provided in accordance with Article 71 Paragraph 1 of
the Enforcement Regulation of the Insurance Business Act (hereinafter called “reserve for outstanding claims forceded reinsurance”) was ¥19 million as of September 30, 2017.
Policy reserve for the reinsurance contracts provided in accordance with Article 71 Paragraph 1 of the
Enforcement Regulation of the Insurance Business Act (hereinafter called “policy reserve for ceded reinsurance”)
was ¥50 million as of September 30, 2017.
13. There were unused commitment line agreements under which the Company is the lender of ¥665 million as of
September 30, 2017.
14. Repayments of subordinated bonds are subordinated to other obligations.
On November 16, 2017, the Company redeemed ¥30,000 million advanced in subordinated bonds.
15. The future contribution to the Life Insurance Policyholders Protection Corporation of Japan under Article 259 of
the Insurance Business Act was estimated at ¥11,039 million as of September 30, 2017.
The contribution is recognized as operating expenses when contributed.

42

Fukoku Mutual Life Insurance Company

III. Notes to the Consolidated Statements of Operations
1. For the six months ended September 30, 2017, in calculating the reversal of reserve for outstanding claims, aprovision of reserves for outstanding claims reinsured of ¥14 million was added. In calculating the provision ofpolicy reserve, a reversal of reserves for policy reserves reinsured of ¥3 million was added.

IV. Notes to the Consolidated Statements of Cash Flows
1. Cash and cash equivalents as of September 30, 2017 consist of "Cash," "Deposits in transfer account," "Current
deposits," "Ordinary deposits," "Notice deposits," "Time deposits maturing within 3 months of the date ofacquisition," "Foreign currency deposits maturing within 3 months of the date of acquisition," "Negotiablecertificate of deposits maturing within 3 months of the date of acquisition," "Call loans" and "Monetary claimsbought maturing within 3 months of the date of acquisition."

2. Reconciliations of cash and cash equivalents in the consolidated statements of cash flows to the consolidatedbalance sheet accounts as of September 30, 2017 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................................................................................................

43¥129,985
198,000
462(100)(1,164)(462)¥ 326,720

Fukoku Mutual Life Insurance Company

R
R895763142(7) Status of Insurance Claims Paying Ability of the Company and Insurance Subsidiaries(Millions of yen)

As ofMarch 31, 2017

As of
September 30, 2017

1,488,469

1,630,287

Foundation funds and surplus

220,040

241,177

Reserve for price fluctuation

91,82793,657

Contingency reserve

173,088

173,159

[－]

[－]

1,213

1,287

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

427,019

501,501

Net unrealized gains on real estate × 85%

111,340

113,736

Sum of unrecognized actuarial differences and unrecognized prior service cost

(12,833)(11,699)

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

239,650

240,980

Qualifying subordinated debt

191,935

221,935

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

[－]

[－]

Deductible items

[－]

[－]

45,18754,551

236,754

262,554

Total solvency margin(A)

Catastrophe loss reserve
General allowance for possible loan losses

OthersTotal amount of risk

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

2

2

2

(B)

Insurance risk

R1

24,45923,989General insurance risk

R5

[－]

[－]

Catastrophe risk

R6

[－]

[－]

3rd sector insurance risk

R8

9,851

9,830

Small amount and short-term insurance risk

R9

[－]

[－]

Assumed investment yield risk

R2

33,22533,296

Minimum guarantee risk

R7

0

0

Investment risk

R3

195,706

221,254

Business risk

R4

5,264

5,767

1,257.3%

1,241.8%

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

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

44

Fukoku Mutual Life Insurance Company