Ⓒ1976, 2019 SANRIO CO., LTD.
APPROVAL NO. G602492

ＡＮＮＵＡＬ ＲＥＰＯＲＴ
２０１９
YEAR ENDED MARCH 31, 2019

FUKOKU MUTUAL LIFE INSURANCE COMPANY

Contents
Financial Highlights (Non-consolidated) .......................... 1
Message from the President ............................................... 2
Management Principles of Fukoku Life ........................... 3
Review of Operations (Non-consolidated)
Overview ............................................................................ 4
Business Performance in FY 2018 ................................ 5
Investment Performance in Fiscal 2018
(General Account) ........................................................... 7
Investment Policies for Fiscal 2019.............................. 8
Business Management System ........................................... 9
Corporate Social Responsibility (CSR) ............................. 10
Non-consolidated Financial Statements ........................... 12
Consolidated Financial Statements .................................. 32
Corporate Organization ....................................................... 57
Corporate Information ........................................................... 58

Financial Highlights (Non-consolidated)2018
As of March 31,

2019

2019
Millions of
U.S. dollars

Millions of yen

Life insurance in force ...................................................................

¥42,507,060¥42,466,826$382,618

Total assets ....................................................................................
Securities ..................................................................................
Loans ........................................................................................
Tangible fixed assets ...............................................................
Total liabilities ................................................................................
Policy reserves .........................................................................
Subordinated bonds .................................................................
Total net assets..............................................................................

6,626,609
5,458,790
593,734
218,549
6,035,126
5,650,879
191,935
591,482

6,684,576
5,567,876
561,138
216,974
6,087,901
5,692,082
191,935
596,674

60,22650,165
5,055
1,954
54,85051,284
1,729
5,375

Total ordinary revenues .................................................................
Premium and other income ......................................................
Investment income ..................................................................
Total ordinary expenses .................................................................
Net surplus for the year .................................................................

749,706
567,210
173,641
693,237
40,868718,300
525,605
183,473
664,984
36,834

6,471
4,735
1,653
5,991
331

Solvency margin ratio (%)
Employees

1,081.2
12,654

1,189.7
12,689——For the years ended March 31,

Notes 1. U.S. dollar amounts are converted from yen, for convenience only, at the rate of U.S.$1=¥110.99, the rate of exchange on March 31, 2019.
2. Yen and U.S. dollar amounts are rounded down to the nearest million yen or million dollars.

FUKOKU MUTUAL LIFE INSURANCE COMPANY

1

Message from the President
I would like to begin by offering my sincere gratitude to all our
stakeholders for your continued support of Fukoku Mutual Life
Insurance Company.
This, our annual report issued in 2019, explains our
performance based on the financial results achieved in fiscal
2018 (ended March 31, 2019), and our efforts to adhere tocustomer-centered values. We hope the report helps increase
your understanding of the Company.
Looking Back over the Past Year
The Japanese economy continued its modest recovery during
the first half of fiscal 2018, with indications of a standstill in
the recovery visible in the second half of the fiscal year. In
financial and capital markets, initially the trend was toward agenerally weaker yen and higher stock prices. But, starting in
October, instabilities—including growing concern about the
future prospects of the global economy—caused stock prices
to plummet, although markets gradually stabilized toward theend of the fiscal year. At the same time, there were changes inthe environment surrounding the life insurance industry. These
included further population declines, due to falling birthrates,
and an aging population. In addition, advances in technologies,
such as AI and fintech, intensified the need for a response to
the changes.
We made an effort to meet the increasingly diverse
customer needs through launching Anshin Care Double (nursing
care annuity rider [dementia supplement] 2018) as a new
rider added to our core product Mirai no Tobira in October,and Medical HOPE medical insurance for corporations andorganizations (new group medical insurance) in the same month.
In this environment, the combined fundamental profitof Fukoku Mutual Life Insurance Company and subsidiary
Fukokushinrai Life Insurance Co., Ltd. amounted to ¥91.2 billion,
the sixth consecutive year profits had been in the ¥90.0 billion
range. Further, our consolidated solvency margin ratio, anindicator of financial soundness, has remained high at 1,236.4%.
Life insurance involves a spirit of mutual assistance, inwhich policyholders comprise an insurance group and help
each other, with insurance premiums received by policyholders
provided as insurance payouts to customers who need them.
In fiscal 2018, along with Fukokushinrai Life, we paid a total of¥436.1 billion in insurance claims, pensions, and benefits. We
will continue to be prompt to pay insurance claims at any time.
Customer-centered Values
As a mutual company, we work to ensure that our management
and employees maintain customer-centered values in all
aspects of business and operations. The customer-centeredvalues, which we endeavor to make a starting point fromwhich to build new ideas and plan new activities, embody ourphilosophy of putting ourselves in our customers’ shoes andcreating services and experiences that only we can offer.
To this end, we are working to develop human resourcesthat can put our customer-centered approach into practicein accordance with our basic policy for human resource
development, which provides the foundation for our philosophy
regarding personnel development.
With regard to initiatives based on our customer-centeredbusiness management policy announced in June 2017, we areengaged in ongoing improvements and disclose the results ofthese efforts each fiscal year.
Centenary Project
In November 2018, Fukoku Life commemorated 95 years since
our founding, and we are now working on our centenary projectbased on a concept, called THE MUTUAL, that imagines Fukoku
Life as we approach 100 years in business.
The concept refers to the next generation of mutual
assistance that will evolve over the coming 100 years, aswell as our aim to be an organization embodying true mutual
assistance by deepening our connection to, and mutual support
for, each and every person involved in Fukoku Life.
Our centenary project will explore and communicate nextgeneration mutual assistance through encounters with a variety
2

FUKOKU MUTUAL LIFE INSURANCE COMPANY

Yoshiteru Yoneyama
Presidentof people and values. And, by broadening our circle, we aim tobecome a company that, with a smile, is able to empathizewith everyone involved in Fukoku Life as we approach our100th anniversary.
Medium-term Management Plan
With the appreciation of quality over quantity in our DNA,
Fukoku Life conducted a medium-term management plan(fiscal 2016 to fiscal 2018) based on the goal of becoming themost valued company through true differentiation. Although
we are only halfway to realizing this goal, we have increased
customer numbers since the plan’s launch and, according
to external research, have improved our industry ranking forcustomer satisfaction.
Under our new medium-term management plan (fiscal
2019 to fiscal 2021), we will continue to pursue the goal
announced in our previous medium-term management plan, as
well as establish a virtuous cycle for sustainable growth. We
will link improvements in employee satisfaction and customer
satisfaction, while engaging in initiatives connected with ourcore theme of achieving our long-term vision of becoming thenumber one Company in terms of customer satisfaction within
the next 10 years.
Improving Financial Soundness, Dividend Payouts
To maintain financial soundness regardless of the operating
environment, we are working to strengthen our capital. Ourbasic policy for strengthening capital is to accumulate internal
reserves, which are the source of net surplus, in combination
with external financing, including the raising of foundation
funds and the issuing of subordinated bonds. In fiscal 2018,
we built up additional reserves, as well as increased both ourcontingency and price fluctuation reserves.
In terms of policyholder dividends, we strive to increase
them in line with the expectations of our policyholders.
Anticipating an increase in health-mindedness, since fiscal
2005 we have offered a dividend (healthy dividend) to medical
insurance policyholders with no hospitalization benefit payouts.
In fiscal 2018, we increased this dividend, marking the seventh
consecutive year we had raised personal insurance dividends.
Our Mission as a Mutual Company
Since our establishment in 1923, we have taken the form of amutual company. Our mission as a mutual company is to provide
customers with effective reductions in insurance premiums
through dividend payouts, and to be able to pay out insurance
claims at any time. We will continue to carry out this mission.
We look forward to your continued support and cooperation.

Yoshiteru Yoneyama
PresidentManagement Principles of Fukoku Life

ValuesOur Customer-Centered Values
Possessing customer-centered values means creating and providing distinctive services andexperiences that provide true peace of mind to customers based on the assumption that all employees
treat customers as they themselves would like to be treated.

Management
Philosophy

ValuesCode of
Conduct

Business
Policies

Management Philosophy
Fukoku Life will continue adhering to its original management philosophy ofprotecting the interests of policyholders and contributing to society.
In addition, we will continue to help our employees achieve personal fulfillment.
To protect the interests of ourpolicyholders

To contribute to society

Code of Conduct

To help our employees achieve
personal fulfillment

Business Policies

A customer-centered code of conduct to bereflected in the attitudes of all executives andemployees as they carry out their daily business.

1. Foster personnel with customer-centered values

We believe that having customer-centeredvalues requires us to do the following:

2. Reinforce how sales representatives structure activities

To provide customers with peace of mind, foster confident
and proud employees who have the ability to adopt acustomer’s perspective.

v Remember the importance of teamwork

To ensure meticulous service to customers, reinforce thestructure according to which sales personnel conduct face-toface sales activities.

v Deserve the trust of each and every customer

3. Attain a net increase in the number of policyholders

v Work with enthusiastic and pridev Apply common sense in our workv Emphasize the importance of life insurancev Overcome every difficultyv Create a friendly work environment

To earn the trust of a growing number of customers,
strengthen insurance product presentation design, provision,and follow-up services to meet customer needs.

4. Enhance business efficiency

To achieve stable growth, improve the efficiency of theCompany’s wide range of business activities.

FUKOKU MUTUAL LIFE INSURANCE COMPANY

3

Review of Operations (Non-consolidated)

Overview
Based on our management philosophy, which aims to protect
the interests of our policyholders, contribute to society andhelp our employees achieve personal fulfillment, all Fukoku
Life executives and employees strove to manage and conductbusiness with customer-centered values as the starting point
for all our ideas and actions, creating and providing distinctive
services and experiences while always treating customers theway they themselves would like to be treated.
Additionally, in accordance with our basic human resources
policy, we focused on developing human resources thatmeet our three requirements of self-motivation, creativity andaltruism in an effort to train personnel capable of implementing
our customer-centered values.
In addition, operating in a low-interest-rate environmentthat appears likely to continue, we have continued striving
to develop and sell products that meet customers’ changing
needs, offer increasingly sophisticated asset investment andpromote enterprise risk management (ERM).
Centenary Project
We celebrated the 95th year since our founding in November
2018. We launched our centenary project based on THE
MUTUAL, a conceptual image of Fukoku Life as it welcomesits 100th anniversary in five years. THE MUTUAL represents
mutual assistance that has been developed to meet thestandards and requirements of the next 100 years. Additionally,
it represents our determination to establish organizations that
embody true mutual assistance, which involves deepening the
support-based relationships we have with all individuals thatshare a connection with us.
As part of the project, our employees will search forexamples of THE MUTUAL throughout Japan, participatingin FIND THE MUTUAL activities that entail spreading theseexamples through posters (advertisements), Facebook,
websites and other means. A total of 62 branch offices in 47
prefectures will collaborate as Fukoku Life employees playa central role in searching for and sharing examples of whatdefines next-generation mutual assistance, thereby greatly
expanding Fukoku Life’s circle of mutual understanding.
Furthermore, actor Takumi Saitoh has taken on the role ofambassador for the project and will share THE MUTUAL withothers through his own words and experience.
Medium-term Management Plan
Our philosophy of quality over quantity is what makes up ourDNA, and we consistently work to distinguish our management
while emphasizing quality. In the medium-term management
plan that ended on March 31, 2019, all vision was to become
the most highly regarded company among all consumers
through true differentiation. Working to bring ourselves closer
to achieving this vision, we engaged in efforts aimed at
establishing a virtuous cycle of sustainable growth and raisingboth the quality of operational processes and the awareness of
all employees.
It is true that we are still only halfway toward achieving
our vision of becoming the most valued company among all
consumers through true differentiation. However, since weadopted this vision in the fiscal year ended March 31, 2017,
we have increased our customer numbers and raised our
position in industrial customer satisfaction rankings in studies
conducted by external research companies. On the other
hand, we will engage in initiatives based on two key themesthat we continue to regard important issues under the new
medium-term management plan that begins in the fiscal year
ending on March 31, 2020. The first theme is the constructionof a virtuous cycle of sustainable growth that links employee
satisfaction (ES) with customer satisfaction (CS). The second
theme involves enhancing our sales staff and consulting
capabilities, which will allow us to focus on face-to-face sales.
Under this next medium-term management plan, we
will pursue initiatives aimed at achieving our long-term

4

FUKOKU MUTUAL LIFE INSURANCE COMPANY

management vision, an ideal that involves us becoming the life
insurance with the highest degree of customer satisfaction.
Spreading and Implementing Customer-Centered Values
We are working to spread and implement customer-centeredvalues based on “Our Customer-Centered Values,” principles ofaction that express the attitudes and approaches of our executives
and employees as they engage in daily business operations.
We are implementing customer-centered value training
activities targeting all employees in an effort to encourageawareness and consciousness that enables them to ground theirefforts in customer-centered values. We have reaffirmed thatthese activities will function as a starting point for a wide varietyof corporate activities that require all contributing participants toplace utmost importance on customer-centered values.
Offering Responsible and Optimal Insurance Products andServices that Meet Customer Needs
We are promoting the construction of a highly flexible productscheme that allows customers to secure just the amount ofcoverage that is necessary to meet their individual needs. At
the center of these efforts is “Mirai no Tobira,” a core productthat enables customers to establish coverage, without agreeing
to base policies, through the free combination of special riders.
In October, we launched Anshin Care Double (Lifelong
nursing care annuity special rider [addition-type rider for casesof dementia]), a new special rider that can be attached to “Mirai
no Tobira.” Through this special rider, we have enabled reliable
coverage of long-term nursing expenses and establishedgenerous support for victims of dementia.
Enhancing the Information We Provide to Customers
We work to ensure that customers can select insurance
products based on correct information by releasing a variety of
appropriate booklets and brochures in addition to our productpamphlet, including “The Perfect Way to Think about Security”
and serial publications that share morbidity and disease
information that is relevant to our insurance products.
Developing Human Resources That Can Implement
Customer-Centered Values
By further spreading our founding philosophy, we are working
to develop human resources that are capable of implementing
customer-centered values. Additionally, our president continued
to hold regular round-table meetings through which he directly
communicated his ideas regarding customer-centered values.
These meetings provided an environment in which participants
could once again consider what customer-centered value-based
activities they were capable of performing.
In an effort to further implement consulting based on
customer inclinations, we also worked to develop customer
advisors that could take charge of face-to-face sales byencouraging them to become qualified financial planners or
acquire other certifications.
Furthermore, we conducted human resource development
based on an awareness of diversity to create a working
environment that allows active contribution from female
employees while also accommodating a diverse range of otherhuman resources.
Overseas BusinessWe have three asset management subsidiaries, Fukoku LifeInternational (U.K.) Ltd., Fukoku Life International (America) Inc.
and Fukoku Life Investments Singapore Pte. Ltd. The subsidiaryin Singapore also has a research function for financial markets
and insurance markets in Asian countries.
By enhancing our global asset management system,
we will be able to maintain sufficient investment returns wellinto the future. At the same time, we will raise our level ofsophistication in asset management through the cultivation ofhuman resources well-versed in global financial markets andasset management business.

Business Performance in FY 2018
Life Insurance in Force
At fiscal year-end, life insurance in force, which comprises
individual life insurance, individual annuities, and groupinsurance, amounted to ¥42,466.8 billion, down 0.1% comparedwith the previous fiscal year-end. Within this amount, life
insurance for individuals declined 0.7%, to ¥22,608.0 billion,
individual annuities decreased 4.4%, to ¥2,552.3 billion. The
year-end balance of life insurance in force for groups increased
1.4%, to ¥17,306.4 billion.
Group annuities in force (policy reserve) rose 0.4%, to¥2,189.0 billion.
Annualized Premiums for New Policies and Policies in ForceIn the year under review, annualized premiums for new policies
decreased 1.4% compared with the previous fiscal year, to¥15.2 billion. Within this amount, individual insurance was down
1.5%, to ¥14.6 billion, and individual annuities up 0.1%, to ¥0.6
billion. Annualized premiums from medical insurance and living
benefit insurance decreased 3.4%, to ¥7.4 billion.
Annualized premiums for policies in force fell 2.0%, ¥396.4
billion. Within this amount, individual insurance decreased 0.8%,
to ¥272.4 billion, and individual annuities declined 4.3%, ¥124.0
billion. Annualized premiums from medical insurance and living
benefit insurance increased 1.2%, to ¥112.0 billion.

Renewal Type Single Premium Whole Life” launched in October
2018. Within this amount, annualized premiums from medical
insurance and living benefit insurance decreased 3.0%, or ¥0.2
billion, to ¥7.6 billion.
At fiscal year-end, annualized premiums for policies in force
decreased 1.8%, or ¥10.2 billion, to ¥559.0 billion. Annualized
premiums from medical insurance and living benefit insurance
were up 1.2%, or ¥1.3 billion, to ¥113.8 billion.
The total value of premium and other income fell 3.3%, or¥19.7 billion, to ¥577.4 billion.
Assets, Liabilities, and Net Assets
The outstanding balance of non-consolidated total assets,
including separate accounts, increased 0.9%, or ¥57.9 billion,
to ¥6,684.5 billion. Within this amount, general account assets
rose 1.1%, to ¥6,612.9 billion.
The year-end balance of securities stood at ¥5,567.8 billion,
an increase of ¥109.0 billion, or 2.0%, compared with theprevious fiscal year-end.
Total liabilities increased 0.9%, or ¥52.7 billion, to¥6,087.9 billion.
Net assets amounted to ¥596.6 billion, up 0.9% comparedwith the previous fiscal year-end.
On a consolidated basis, total assets rose 0.3%, to ¥8,514.7
billion, and net assets increased 1.1%, to ¥613.1 billion.

Premium Income and Payments
In the year under review, premium and other income decreased
7.3% compared with the previous fiscal year, to ¥525.6 billion.
Meanwhile, claims and other payments, which represent
the total of payments under insurance policies, fell 6.6%, to¥467.9 billion.
Performance of Fukoku Life Group (Fukoku Life and
Fukokushinrai Life Insurance)
Annualized premiums for new policies of the Fukoku Life Group,
including Fukokushinrai Life Insurance, rose 9.6% year on
year, or ¥1.5 billion, to ¥17.8 billion. This increase was due tofavorable sales of Fukokushinrai Life Insurance “Interest Rate
Life insurance in force

Premium and other income(¥ trillions)(¥ billions)

43.2

43.1

43.1

16.6

16.9

17.1

2.8

2.7

23.6

23.4

FY2014

‘15

643.1

42.4

42.5

17.0

17.3

2.7

2.6

2.5

23.1

22.7

22.6

‘16

‘17

‘18

618.0

FY2014 ‘15

574.4

567.2

525.6

‘16

‘17

‘18

Group insurance
Individual annuities
Individual life insurance

FUKOKU MUTUAL LIFE INSURANCE COMPANY

5

Review of Operations (Non-consolidated)

Strengthening Our Capital Base
The basic policy we apply when strengthening our capital baseentails timely external procurement and places paramountimportance on maintaining an adequate balance between thepayment of dividends and the accumulation of net surplus.

Solvency Margin
Fukoku Life’s solvency margin ratio at fiscal year-end rose 108.5
percentage points to 1,189.7%, far above 200%, which is one
standard for measuring soundness.
Ratings
Fukoku Life relies on three neutral and unbiased ratingorganizations to provide an objective assessment of theCompany’s ability to meet insurance payments. As of July
1, 2019, we have received ratings of AA- from Rating andInvestment Information, A from Standard & Poor’s and A2
from Moody’s. These ratings represent strong evaluations of
the Company’s soundness and profitability. Going forward, we
will continue striving to maintain and further improve our highfinancial ratings.

Dividends
We are working to provide dividends based on customer
expectations. Accordingly, we aim to effectively reduce
insurance premium burdens by issuing dividends according tototal payment of insurance claims and benefits. When settlingaccounts for the fiscal year ended March 31, 2019, we raised
dividends issued to medical insurance policyholders who have
not received hospitalization benefits (healthy dividends). With
this action, fiscal 2018 became the seventh consecutive year inwhich we raised personal insurance dividends.

Total assets

Net assets

Solvency margin ratio(¥ billions)(¥ billions)(%)

6,611.9

6,489.8

6,565.6

6,626.6

6,684.5

1,321.8

697.7
606.9

FY2014

6

‘15

‘16

‘17

FUKOKU MUTUAL LIFE INSURANCE COMPANY‘18

FY2014

‘15

583.1

591.4

596.6

‘16

‘17

‘18

1,214.8

1,169.3

FY2014

1,189.7
1,081.2

‘15

‘16

‘17

‘18

Investment Performance in Fiscal 2018 (General Account)
Overview
In fiscal 2018, ended March 31, 2019, the Japanese economy
gradually recovered during the first half but was impacted byslowing global economic growth caused by factors such as trade
friction between the US and China in the second half, resulting
in weaknesses in exports and production that brought recovery
to a standstill. Performance in global economies was strong
overall during the first half, driven primarily by favorable resultsin the US, thanks in part to large-scale tax cuts. However, global
economic growth was hindered during the second half due tothe rising sense of economic slowdown in China caused in partby trade friction with the US and sluggish growth in Europe due
to slowing exports. Under these conditions, the Federal Reserve
Board (FRB) worked to normalize its monetary policies, raisinginterest rates in June, September and December, while theEuropean Central Bank (ECB) ended its policy of quantitativeeasing in December. However, both organizations have impliedthat they would leave policy interest rates unchanged during
2019, indicating a shift to a more cautious stance concerning
the normalization of monetary policy. In Japan, the Bank ofJapan (BOJ) implemented forward guidance at the end of July,requiring the maintenance of short- and long-term interest rates
at their current levels, while prospects for the achievement of
its 2% price stability target remained murky. BOJ additionallyresolved to allow wide fluctuations in long-term interest rates.
With regard to our asset management, we conducted
restructuring within an environment of prolonged ultralowinterest rates with the goal of strengthening initiatives aimed atmaintaining stable profitability through appropriate risk-taking.
We consolidated our control over corporate loans and domestic
and overseas corporate bond investments to enhance credit
investment in terms of risk and return. Furthermore, in response
our rising share of assets denominated in foreign currencies, we
are working to ensure proper control of foreign exchange raterisks by establishing a specialized group targeting more flexible
and efficient hedging operations.
As for bond investment, which form the core of asset
management, we continued to reduce investment in yendenominated bonds and allocated funds to foreign currency
denominated bonds as domestic interest rates remained ultra
low. With regard to foreign currency denominated bonds, we
increased unhedged foreign currency denominated bonds during
the first half, focusing primarily on those denominated in U.S.
dollars, which have relatively high interest rates, while observing
General account assets(¥ billions)
6,530.2

6,410.7

6,489.9

6,544.2

6,612.9

Breakdown of general account assets (Fiscal year ended March 31, 2019)(¥ billions)

Others74.3 (1.1%)
Real estate
212.5 (3.2%)
Cash and deposits,
and others
265.4 (4.0%)
Other securities
114.3 (1.7%)

FY2014

‘15

‘16

‘17

‘18

carefully trends in the foreign exchange market. However, we
held back on the accumulation of unhedged foreign currency
denominated bonds during the second half, as the outlook of
the financial and capital market became more uncertain while
investing in euro-denominated hedged bonds with low currency
hedging costs. We also worked to reduce foreign exchange risk
by converting our unhedged positions into hedged positions.
In terms of domestic stocks, we sold a portion of stocks withunrealized gains that increased significantly in accordance with
our rebalancing plan, which we formulated in response to anincreased share caused by rising stock prices.
As a signatory to the U.N. Principles for Responsible
Investment (PRI), we are actively conducting ESG investment
and financing aimed at establishing sustainable societies while
ensuring profitability. These activities included investment inbonds such as targeting the reduction of poverty in developing
countries and financing for renewable energy projects.
As part of our stewardship activities, we held “purposedriven engagement dialogue” with major investee companies.
During these engagement dialogue, we aimed to achieve
understanding regarding strategies from a medium- to longterm perspectives while making proposals aimed at improving
corporate value. Within the Stewardship Committee, which
is chaired by a member from outside of the company,
we discussed issues such as the status concerning theimplementation of these engagement dialogues and theexercising of voting rights. At the same time, worked to further
improve the effectiveness of stewardship activities throughdiscussions covering all of our activities.
In addition to these initiatives, we are striving to strengthen
investment capability as an institutional investor by dispatchingsome of our employees to external asset managers, primarily
including Payden & Rygel. We are also actively working todevelop our employees who have global perspectives and canpractice advanced asset management.
Investment income increased ¥15.4 billion (9.2%) year on
year to ¥182.5 billion, due primarily to an increase in gain on
sales of securities caused by selling domestic stocks associatedwith our rebalancing efforts. The total interest, dividends andother income within this figure increased ¥0.5 billion (0.4%) year
on year to ¥155.4 billion including that from trading securities,
reaching the highest level since 1992. This increase wasprimarily due to higher interest from foreign bonds caused byaccumulating those bonds despite a decrease in dividends from

Foreign securities
1,930.6 (29.2%)
Domestic stocks
672.5 (10.2%)

Ordinary loans
504.8 (7.6%)

Loans
561.1
(8.5%)

Policy loans
56.3 (0.9%)

Securities
5,499.5 (83.2%)

Domestic bonds
2,782.0 (42.1%)

Total: ¥ 6,612.9 billion

Note: This total includes cash and deposits, call loans,monetary claims bought and money held in trust.

FUKOKU MUTUAL LIFE INSURANCE COMPANY

7

converting our unhedged positions into hedged positions.
Under these conditions, foreign bonds rose ¥180.0 billion(12.5%) year on year to ¥1,614.4 billion, due primarily to anincrease in the balance of foreign bonds and an increase inmarket value caused by lower overseas interest rates and theweakening of the yen against the U.S. dollar. Foreign stocks
and other securities increased ¥36.7 billion (13.1%) year on
year to ¥316.1 billion, primarily due to investing in American andEuropean corporate bond funds managed by sophisticated asset
managers we have partnership and an accumulation of stocks
in American and European companies that are expected to highdividend yields.
Domestic Stocks
Domestic stocks fell ¥68.2 billion (9.2%) year on year to¥672.5 billion, mainly due to the sale of a portion of stocks withunrealized gains that increased significantly in accordance with
our rebalancing plan and falling stock prices.
Ordinary Loans
Loans dropped ¥31.7 billion (5.9%) year on year to ¥504.8
billion, due to tight profitability conditions caused by ultra lowinterest rates.

foreign stocks and other securities.
Investment expenses rose ¥8.9 billion (22.6%) year on
year to ¥48.5 billion, due to loss on sales of securities primarily
associated with foreign bonds.
As a result, net investment income rose ¥6.4 billion (5.1%)
year on year to ¥133.9 billion.
Domestic Bonds
Domestic bonds fell ¥36.6 billion (1.3%) year on year to¥2,782.0 billion as we curtailed investment in response toongoing low domestic interest rates.
Foreign Securities
With regard to foreign bonds, we increased unhedged foreign
currency denominated bonds during the first half, focusing
primarily on those denominated in U.S. dollars, which haverelatively high interest rates, while observing trends in theforeign exchange market. However, we held back on theaccumulation of unhedged foreign currency denominatedbonds during the second half, as the prospect of the financial
and capital market became more uncertain while investing in
euro-denominated hedged bonds with low currency hedging
costs. We also worked to reduce foreign exchange risk by
Domestic bonds

Domestic stocks

Foreign securities

Loans

Real estate(¥ billions)(¥ billions)(¥ billions)(¥ billions)(¥ billions)

1,930.6
2,856.1
2,659.1

2,843.5 2,818.6 2,782.0

740.8
1,583.7

672.5

656.5

641.0

1,700.0 1,702.6 1,713.8

‘16

‘17

‘18

FY2014 ‘15

627.7

‘16

212.8

214.4

213.6

212.5

FY2014 ‘15

‘16

‘17

‘18

693.6

570.3

FY2014 ‘15

223.7

763.9

‘17

‘18

FY2014 ‘15

◆

‘16

‘17

‘18

FY2014 ‘15

‘16

593.7

‘17

561.1

‘18

Investment Policies for Fiscal 2019

Investment Environment
In fiscal 2019, ending March 31, 2020, we project that the
global economy will be able to avoid a downturn thanks torelaxed monetary policy stances from world major central
banks. However, we project that growth will continue to slow
due to trade friction between the U.S. and China and sluggish
IT-related demand. We expect ongoing trends of weakness
in the Japanese economy, caused by continuously slumping
exports and slowing growth in capital investment due to
growing uncertainty going forward. Under these economic

conditions, we project that long-term interest rates will besusceptible to downward pressure based on uncertainty andexpectation regarding additional monetary easing by BOJ.
Growth in stock prices is expected to be sluggish due tostagnant corporate earnings caused by trade friction between
the U.S. and China and a strong yen. In terms of foreignexchange rate, we expect the value of the yen against the U.S.
dollar to remain within a certain range but also acknowledge
the likelihood that the yen rate will be susceptible to upward
pressure caused by economic uncertainty.

Domestic Bonds
Our policy is to continue to curtail investment in government
bonds and accumulate corporate bonds with relatively highyields while watching carefully interest rate environment.

Foreign Securities
Our policy is to increase foreign currency bonds, focusing
primarily on hedged foreign currency denominated bonds. We
will accumulate excellent foreign stocks selectively in terms ofrisk and return.

Domestic Stocks
We will accumulate stocks selectively that will provide
stable dividends.

8

FUKOKU MUTUAL LIFE INSURANCE COMPANY

Business Management System
Corporate Governance Enhancement Initiatives
We have formulated a Basic Policy on Corporate Governanceto foster an understanding of our perspective to enhance
corporate governance. We publicize this policy, along with our
Corporate Governance Report.
Basic Approach to Corporate GovernanceOur mutual company’s insurance business is a business of
our policyholders that have entrusted the management of
this business to us. No matter the circumstances, we must
survive as a life insurance company to continue fulfilling our
responsibility of reliably paying insurance claims and benefits.
To this end, we will establish a corporate governance system
based on this fundamental policy in an effort to stabilize andensure the stability our business while providing policyholders
with peace of mind.
Establishment of Management Control Measures
The Board of Directors makes important business decisions andmonitors business execution. The two external directors bringan outside perspective to the deliberations of the board. In
April 2009, Fukoku Life introduced an executive officer system.
Under this system, we have separated and strengthened
decision-making and business execution functions, with theBoard of Directors fulfilling decision-making and supervisory
functions. The Board of Full-Time Directors, comprising thepresident and executive officer and other titled executive
officers, deliberates important business execution policy
for the Company. Meanwhile, various committees havebeen established beneath the Board of Directors in an effort
to strengthen internal controls.
Members of the Audit & Supervisory Board attend
meetings of the Board of Directors, the Board of Full-Time
Directors and other important boards, auditing the executionof operations by directors. The internal audit department
performs internal audits, verifies the appropriateness ofcorporate operations and strives to ensure the soundness ofbusiness operations.
Enhancement of Internal Control System
We are a mutual company that operates a highly public life
insurance business with the goal of protecting the livelihoods ofpolicyholders. As such, we have established a “Basic Internal
Control System Policy” aimed at ensuring the suitability of
our operations, with the ultimate goal of achieving sound andappropriate management. Based on this policy, we are working
to enhance our internal control systems, which include our risk
management and compliance systems.
Enterprise risk management (ERM)
Life insurance is a “promise” to pay insurance claims andbenefits in the event of an unforeseen emergency, a lifetime
commitment to customers that can even span generations.
Events may occur, such as drastic changes in theeconomic environment or other catastrophes, during the many
months and years in which we accompany customers on
their life journey. When this happens, the role of life insurancecompanies becomes even more important.
Only after keeping this promise with unwavering
reliability regardless of the circumstances can customers
enjoy peace of mind. To maintain this reliability into the future,
Fukoku Life promotes enterprise risk management (ERM) for
overall management of a diverse range of complicated risks
from a strategic perspective based on the recognition thateach executive officer and employee is responsible for risk
management commensurate with their position.
At Fukoku Life, the Board of Directors has established
the Risk Management Committee to perform enterprise risk
management (ERM). Several subcommittees have been
established under the Risk Management Committee to manage

the various risks that arise in business operations, and to conduct
asset and liability management (ALM). The Risk Management
Committee consolidates and evaluates these risks at thecorporate level, and considers the appropriate level of acceptablerisk and risk response. Furthermore, the Risk Management
Committee has established a specialized risk management
committee to help enhance enterprise risk management.
Full-time directors are members of the Risk Management
Committee, which is chaired by the president. Other directors
chair subcommittees, creating a risk management structurethat is led by top management.
The specialized risk management committee is central
to understanding the Group’s overall risk management
situation. At Fukokushinrai Life Insurance, the Company’s
Risk Management Committee secretariat and the secretariats
of various subcommittees directly monitor the management
status of risks under their jurisdiction.
Furthermore, the audit department veriﬁes that the risk
management system is functioning effectively.
Compliance System
As members of the community, all executives and employees
undergo ongoing training in compliance-related matters so thatthey not only observe laws and regulations, but also comply
with protocols and social conventions. This training is also
aimed at enhancing the spirit of compliance. To this end, as
well as improving and reinforcing the compliance system, wehold hands-on compliance training on an ongoing basis.
However, we recognize that even the most robust of
systems cannot guarantee the complete elimination of improper
conduct. We believe that it is important to detect any improper
conduct early, deal with it swiftly and appropriately, and makeconstant improvements and work to rectify the situation in orderto prevent a recurrence. Accordingly, we believe that continuous
improvement and correction are important.
The Compliance Committee, comprising full-time directors
and other executives and chaired by the president, has theBoard of Directors’ mandate to deliberate matters related
to compliance promotion and to promote compliance. The
Compliance Control Department serves as secretariat for thiscommittee. Furthermore, the chief compliance officer andcompliance officers are stationed at headquarters to perform
regular compliance checks.
Protection of Personal Information
As an insurance company that is trusted by its customers,
Fukoku Life recognizes the handling of personal information asa topmost priority. Accordingly, we take great care in handlingpersonal information. We comply with the Act on the Protectionof Personal Information, which came into force in September
2015, as well as other related legislation and guidelines, andwe will continue endeavoring to appropriately handle andprotect personal information going forward. The Company has
also formulated its own privacy policy, which describes its
policy on the protection of personal information, and a basic
policy on the handling of specific personal information. In
these ways, we work to appropriately manage the important
personal information entrusted to us by our customers. We also
strive to respond swiftly and appropriately to any questions,consultations or requests from customers with regard to
personal information.
As rules for managing personal information appropriately,
we have formulated Regulations on the Handling of Personal
Information and Regulations on the Handling of Corporate
Customers’ Information. In addition, we appropriately manage
information by conducting spot checks on the status of
personal information and other safety management measures
by subcontractors.

FUKOKU MUTUAL LIFE INSURANCE COMPANY

9Corporate Social Responsibility (CSR)

Contribution to Society
In accordance with the highly public nature of the life insurance business, Fukoku Life believes that the soundmanagement of its business is its first priority in terms of fulfilling its corporate social responsibility (CSR).
Furthermore, we believe that the Company should engage proactively in a range of social contribution activities
aimed at helping to build a better society.
Fukoku Life Concerts
This activity began in fiscal 1989 with a Fukoku Salon Concert,held in the lobby of our headquarters building in Uchisaiwaicho.
Fukoku Life holds Visiting Concerts, which are heldat schools and institutions for people with disabilities,
enabling them to enjoy genuine classical music performed byprofessional musicians. We also hold Charity Concerts, which
are held as a community benefit event and on which Fukoku
Life executives collaborate in fund-raising. These concerts areheld in cooperation with the regions where they are held.

・Visiting Concerts
Begun in fiscal 2002, Visiting Concerts are performed byCharity Concert musicians who visit schools and institutions forpeople with disabilities in communities where Charity Concerts
are also being held.

Smile Gallery

Hello Kitty Hospital Visit Program
Under this program, Fukoku Life’s brand mascot Hello Kitty—
which is a popular character worldwide—makes visits tochildren’s hospitals and pediatric wards to support hospitalized
children and their families. Commemorative photos with Hello
Kitty are taken, placed in frames that are handmade at Fukoku
Life and given to children as presents.
Activities to Support Reconstruction in Disaster-Affected
Areas

Visiting Concert

・Charity Concerts
In fiscal 1993, we began holding free-admission Charity
Concerts, which also raise funds through the cooperationof charity donations by customers at concert venues. The
funds raised in this manner are contributed to social welfare
councils and other community organizations, thereby assisting
communities’ social welfare.
From their start in fiscal 2002 through March 31, 2019,
Visiting Concerts had been held in 244 locations, while Charity
Concerts had been held 290 times from their beginning in 1993
through the end of the fiscal year.
Smile Gallery
To support the creation of art by children with disabilities, in the
shopping mall located in the second-floor basement of our head
office building in Uchisaiwaicho, we operate the Smile Gallery.
In this gallery, we display artworks by students of specialeducation schools from around Japan. This activity began in
fiscal 2002 as an offshoot of the Visiting Concerts, which visit
special-education schools.
We also use the artworks provided to create calendars,
which we distribute to employees and customers.
10

FUKOKU MUTUAL LIFE INSURANCE COMPANY

・Disaster-Area Visits and Support Concerts, Visiting
Concerts in Disaster-Affected Areas
It will still be some time before recovery following the Great
East Japan Earthquake is complete. To cheer on the recovery,
Fukoku Life continues to hold disaster-area events and Support
Concerts, as well as Visiting Concerts in disaster-affected areas.
We are conducting these activities in the three prefectures
affected by the earthquake: Fukushima, Miyagi and Iwate.
A portion of the donations received from Charity Concerts
are donated to areas affected by the Great East Japan
Earthquake and the Kumamoto earthquakes.
In fiscal 2018, Visiting Concerts in disaster-affected areas
were held at 11 schools and Support Concerts were held at
Sendai branch office, Fukushima branch office and Kumamoto
branch office.

・Events to Sell Specialty Products from Disaster-Affected
Regions
At an open space in the first basement floor of our headquarters
in Uchisaiwaicho and in the first-floor entrance lobby at our
Chiba New Town headquarters, we hold events to sell specialty
products from the three prefectures affected by the Great East
Japan Earthquake: Fukushima, Miyagi and Iwate, as well as
Kumamoto, which was damaged in the Kumamoto Earthquake.
We receive substantial cooperation for events to sell
specialty products from disaster-affected regions from people
outside the Company, as well as from within the organization.

Environmental Protection Initiatives
・Flora Preservation
Since fiscal 2006, we have been conducting the Fukoku Life
(Inochi) Forest project, mainly as a measure to counter damage
from bamboo. This forest provides a venue for participation in andhands-on experience of environmental preservation activities.
Currently, a growing number of forests in Japan arebeing left to grow unchecked due to the lack of people willingto take over forestry businesses. One particular problem is
uncontrolled groves of Moso bamboo, which invades theforests needed to absorb CO 2 —a greenhouse gas—as well
as farmland. Due to the shallowness of its roots, bamboo canmake ground slippery and contribute to topsoil erosion. It canalso devastate mountainous forests and cause landslides.
Measures are therefore needed to counter this “bamboo
damage,” to protect the environment and respond to disaster.
In the Fukoku Life (Inochi) Forest project, Company
executives and employees take part in cutting away bamboo
forests in order to protect mountainous forest land owned by
the Company. In addition to forest regeneration, this thinningalso aims to restore the bamboo forests themselves to health.
These activities are mainly carried out by Company volunteers

Flora Preservation

organized as the Usami Club. In fiscal 2018, these activities
were conducted 10 times, with 113 executives and employees
and their family members participating as volunteers.
Other Activities

・Art Promotion
Fukoku Life is a sponsor of the MET: Live in High Definition
series of screenings by the New York Metropolitan Opera(MET), which are distributed by Shochiku Co., Ltd. By giving
members of the general public the opportunity to see some of
the finest opera performances in the world, we help promote
the arts and culture.
・Lobby Sales EventsThe lobby sales events at Visit & Charity Concerts sponsoredby our Uchisaiwaicho and Chiba New Town headquarters have
led to regular bakery shop sales events operated by institutions
for people with disabilities. The Company's employees
participate as sales staff at these traveling events. Thus weprovide a sales location and cooperate in institutions' activities.
At the same time, through this participation we promote better
understanding within the Company of people with disabilities.

MET Live Viewing 2018–2019
Cilea–Adriana lecouvreur© Vincent Peters/Metropolitan Opera

Communication with Society

Our Customer Advisors gather feedback directly from
customers and strive to offer better services, which
we believe to be most the most effective means ofadvertising and communication. We also provide
information through various advertising and public
relations activities to deepen communication between
customers and Customer Advisors and encourage abetter understanding of the Company.
・Alliance with Sanrio
The Hello Kitty character, owned by Sanrio Co., Ltd., has
attained worldwide popularity. Fukoku Life has adopted thiswidely loved character as its brand mascot, and features Hello
Kitty in many communications media, including Fukoku Life
posters and brochures, and in video on our website.
In fiscal 2014, we created an original Gotochi Kitty
character (“Gotochi” referring to a specific region), which weuse in numerous situations to evoke an even greater sense of
closeness with customers.
We also provide the Sanrio Character Boat Ride as afriendly-company attraction at Sanrio Puroland and Harmonyland.

© ’13, ’19 SANRIO S/D · G© ’76, ’90, ’96, ’99, ’01, ’10, ’19 SANRIO APPROVAL No.P11092415

・Providing Information
Fukoku Life publishes a variety of materials for its stakeholders.
Publications that provide information on the Company’sbusiness activities include the Japanese-language annual
disclosure report. “Disclosure” (and abridged versions
thereof), booklets written for policyholders, and this Englishlanguage annual report. Our diverse lineup of public relations
and advertising activities include the production of a variety of
publications as needed, in order to strengthen the channels ofcommunication between the Company, its policyholders, and its
many other customers.

FUKOKU MUTUAL LIFE INSURANCE COMPANY

11

Non-consolidated Financial Statements
Non-consolidated Balance Sheets
Fukoku Mutual Life Insurance Company
As of March 31, 2018 and 2019

As of March 31,

2018

2019

Millions of yen

Assets:Cash and deposits:
Cash …………………………………………………………………………………
Bank deposits ………………………………………………………………………
Call loans ………………………………………………………………………………
Monetary claims bought ……………………………………………………………
Money held in trust ……………………………………………………………………
Securities:
Government bonds …………………………………………………………………
Local government bonds …………………………………………………………
Corporate bonds ……………………………………………………………………
Stocks ………………………………………………………………………………
Foreign securities …………………………………………………………………
Other securities ……………………………………………………………………
Loans:
Policy loans …………………………………………………………………………
Ordinary loans ………………………………………………………………………
Tangible fixed assets:
Land …………………………………………………………………………………
Buildings ……………………………………………………………………………
Lease assets ………………………………………………………………………
Construction in progress …………………………………………………………
Other tangible fixed assets ………………………………………………………
Intangible fixed assets:
Software ……………………………………………………………………………
Other intangible fixed assets ……………………………………………………
Reinsurance receivables ……………………………………………………………
Other assets:
Accounts receivable ………………………………………………………………
Prepaid expenses …………………………………………………………………
Accrued income ……………………………………………………………………
Deposits ……………………………………………………………………………
Differential account for futures trading …………………………………………
Derivatives …………………………………………………………………………
Suspense payments ………………………………………………………………
Lease investment assets …………………………………………………………
Rest of the other asset ……………………………………………………………
Allowance for possible loan losses …………………………………………………
Total assets……………………………………………………………………………
12

FUKOKU MUTUAL LIFE INSURANCE COMPANY

2019
Millions of
U.S. dollars¥166
66,093
66,260176,000
443
31,502¥172
66,59966,771
176,000
299
23,850$2,030,971
114,036
702,661
768,000
1,735,580
107,540
5,458,790

2,030,510
102,277
670,914696,181
1,953,608
114,384
5,567,876

18,294
921
6,044
6,272
17,601
1,030
50,16557,181
536,553593,734

56,332504,806
561,138

507
4,548
5,055

125,278
86,343
1,565
2,052
3,309
218,549

125,180
84,441
1,241
2,933
3,177
216,974

1,127
760
11
26
28
1,954

21,651
2,049
23,701
167

20,891
1,410
22,301
119

188
12
200
1

7,268
2,055
28,5702,281
98
12,190
2,373
700
3,968
59,508(2,049)¥6,626,609

5,558
1,987
29,898
2,195
—
4,302
3,145
666
3,585
51,341(2,096)¥6,684,576

50
17
269
19
—
38
28
6
32
462
(18)
$60,226

1
600
601
1,585
2
214

As of March 31,

2018

2019

2019
Millions of
U.S. dollars

Millions of yen

Liabilities:

Policy reserves:
Reserve for outstanding claims ………………………………………………
Policy reserve ……………………………………………………………………
Reserve for dividends to policyholders ………………………………………
Reinsurance payables ………………………………………………………………
Subordinated bonds …………………………………………………………………
Other liabilities:
Corporate income tax payable …………………………………………………
Accounts payable …………………………………………………………………
Accrued expenses ………………………………………………………………
Unearned income …………………………………………………………………
Deposits received …………………………………………………………………
Guarantee deposits received ……………………………………………………
Derivatives …………………………………………………………………………
Cash collateral received for financial instruments …………………………
Asset retirement obligations ……………………………………………………
Suspense receipts ………………………………………………………………
Reserve for employees' retirement benefits ……………………………………
Reserve for price fluctuation ………………………………………………………
Deferred tax liabilities ………………………………………………………………
Deferred tax liabilities for land revaluation ………………………………………
Total liabilities ………………………………………………………………………

¥ 19,295
5,578,187
53,3955,650,879
56
191,935¥ 20,322
5,613,583
58,176
5,692,082
55
191,935$ 183
50,577524
51,284
0
1,729

2,445
2,381
10,834369
5,756
14,087
3,052
2,712
3,088
1,336
46,06625,417
95,798
10,733
14,241
6,035,126

4,422
2,561
10,802381
5,987
14,041
7,641
1,051
2,892
1,596
51,377
24,517111,279
2,429
14,225
6,087,901

39
23
97
3
53
126
68
9
26
14
462
220
1,002
21
128
54,85010,000106,000
112

10,000106,000
112

90
955
1

2,954

3,071

27

6,000
20,00041,0008,000
20,00041,000

72
180
369

255
767
64,561
132,584
135,538
251,650

210
767
60,633
130,611
133,682249,794

1
6
546
1,176
1,204
2,250

335,658
4,173
339,831591,482¥6,626,609

342,748
4,132
346,880
596,674¥6,684,576

3,088
37
3,125
5,375
$60,226

Net assets:

Foundation funds ……………………………………………………………………
Accumulated foundation funds redeemed ………………………………………
Reserve for revaluation ……………………………………………………………
Surplus:
Legal reserve for future losses …………………………………………………
Other surplus:
Reserve for redemption of foundation funds ……………………………
Reserve for dividend allowances ……………………………………………
Accumulated fund for price fluctuation ……………………………………
Reserve for advanced depreciation ofreal estate for tax purpose …………………………………………………
Other reserves …………………………………………………………………
Unappropriated surplus ………………………………………………………

Total foundation funds, surplus and others ……………………………………
Net unrealized gains (losses) on
available-for-sale securities, net of tax …………………………………………
Revaluation reserve for land, net of tax ……………………………………………
Total valuation and translation adjustments…………………………………………
Total net assets………………………………………………………………………
Total liabilities and net assets………………………………………………………
See notes to the non-consolidated financial statements.

FUKOKU MUTUAL LIFE INSURANCE COMPANY

13

Non-consolidated Statements of Operations
Fukoku Mutual Life Insurance Company
For the years ended March 31, 2018 and 2019Year ended March 31,

2018

2019

Millions of yen

Ordinary revenues:
Premium and other income:Premium income …………………………………………………………………
Reinsurance income ………………………………………………………………
Investment income:Interest, dividends and other income:Interest on deposits ……………………………………………………………
Interest and dividends on securities …………………………………………
Interest on loans …………………………………………………………………
Income from real estate for rent ………………………………………………
Other interest and dividends …………………………………………………
Gains on money held in trust, net ………………………………………………
Gains on trading securities, net……………………………………………………
Gains on sales of securities ………………………………………………………
Other investment income …………………………………………………………
Gains on separate accounts, net …………………………………………………
Other ordinary revenues:
Fund receipt from annuity rider …………………………………………………
Proceeds from deferred insurance ………………………………………………
Reversal of reserve for outstanding claims ……………………………………
Reversal of reserve for employees' retirement benefits ………………………
Others ………………………………………………………………………………
Total ordinary revenues ……………………………………………………………
Ordinary expenses:
Claims and other payments:
Claims ………………………………………………………………………………
Annuities ……………………………………………………………………………
Benefits ……………………………………………………………………………
Surrenders …………………………………………………………………………
Other payments ……………………………………………………………………
Reinsurance premiums ……………………………………………………………
Provision of policy reserve and others:
Provision of reserve for outstanding claims……………………………………
Provision of policy reserve ………………………………………………………
Provision of interest portion of reserve for dividends to policyholders ………

14

FUKOKU MUTUAL LIFE INSURANCE COMPANY

2019
Millions of
U.S. dollars¥566,924
286
567,210¥525,407
198
525,605$4,733
1
4,735

22
124,480
10,054
14,541
120
149,219
1,769—
15,280819
6,553
173,64135
126,834
9,329
14,876
114
151,190—
3,276
27,729315
962
183,473

0
1,142
84
134
1
1,362
—
29
249
2
8
1,653

1,150
3,854
237
371
3,240
8,854
749,706

730
4,771
—
898
2,820
9,220
718,300

6
42
—
8
25
83
6,471

126,371
166,137
106,399
73,651
28,357
264
501,181

104,702160,900
111,533
63,78726,754239
467,917

943
1,449
1,004
574
241
2
4,215

—
44,64312¥ 44,655

1,026
35,39512¥ 36,434

9
318
0
$ 328

Year ended March 31,

2018

2019

Millions of yen

Investment expenses:
Interest expenses …………………………………………………………………
Losses on money held in trust, net ………………………………………………
Losses on trading securities, net …………………………………………………
Losses on sales of securities ……………………………………………………
Losses on valuation of securities …………………………………………………
Losses on derivative instruments, net …………………………………………
Foreign exchange losses, net ……………………………………………………
Provision of allowance for possible loan losses…………………………………
Depreciation of real estate for rent and other assets …………………………
Other investment expenses ………………………………………………………

Operating expenses……………………………………………………………………
Other ordinary expenses:
Deferred annuity payments ………………………………………………………
Taxes …………………………………………………………………………………
Depreciation ………………………………………………………………………
Others ………………………………………………………………………………
Total ordinary expenses ……………………………………………………………
Ordinary profits ………………………………………………………………………
Extraordinary gains:
Gains on disposal of fixed assets …………………………………………………
Others………………………………………………………………………………
Total extraordinary gains……………………………………………………………
Extraordinary losses:
Losses on disposal of fixed assets ………………………………………………
Impairment losses …………………………………………………………………
Provision of reserve for price fluctuation ………………………………………
Losses on advanced depreciation of real estate for tax purpose……………
Total extraordinary losses…………………………………………………………
Surplus before income taxes ………………………………………………………
Income taxes:
Current ………………………………………………………………………………
Deferred ……………………………………………………………………………
Total income taxes …………………………………………………………………
Net surplus for the year ……………………………………………………………

¥

4,216
—
1,498
4,977
0
225
16,013
279
4,271
8,158
39,64088,477¥2019
Millions of
U.S. dollars

3,864
371
—
11,61039
5,875
13,396
88
4,165
9,186
48,59990,655

$

34
3
—
104
0
52
120
0
37
82
437
816

5,488
6,216
6,677
899
19,282
693,237
56,469

5,595
6,220
8,615
945
21,377
664,984
53,315

50
56
77
8
192
5,991
480

288
—
288

3
60
63

0
0
0

547
141
13,334
3
14,02542,731142
228
15,481—
15,851
37,527

1
2
139
—
142
338

11,374(9,511)
1,862¥ 40,868

11,752(11,059)693¥ 36,834

105
(99)
6
$ 331

See notes to the non-consolidated financial statements.

FUKOKU MUTUAL LIFE INSURANCE COMPANY

15

Non-consolidated Statements of Changes in Net Assets
Fukoku Mutual Life Insurance Company
For the years ended March 31, 2018 and 2019

Millions of yen
Foundation funds, surplus and others
Surplus
Other surplus

For the year ended March 31, 2018

Accumulated
foundation
Reserve forFoundation
funds
funds
redeemed revaluation

Balance at the beginning of the
fiscal year�������������������������������������� ¥10,000 ¥106,000

¥112

Legal
reservefor future
lossesReserve forredemptionoffoundation
funds

Reserve for
special acReserve forcount foradvancedadvanced
Reserve for Accumulated depreciation of depreciation offund for price real estate for real estate fordividend
allowances
fluctuation
tax purpose
tax purpose¥2,849¥4,000¥20,000¥41,000

¥257

¥100

Other
reserves¥767

UnappropriatedsurplusTotal
foundation funds,
surplus andothersTotal
surplus¥60,453 ¥129,427 ¥245,539

Changes in the fiscal year
Additions to reserve for dividends
to policyholders�������
Additions to legal reserve for
future losses��������

105(34,592)(34,592)(34,592)

(105)

—

—

Payment of interest on foundation
funds�����������

(100)

(100)

(100)

Net surplus for the fiscal year��

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

—

—

1

—

—

100

—

—

(65)

(65)

(65)

4,107

6,110

6,110

Additions to reserve for redemptionof foundation funds������

2,000

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

(1)

Reversal of reserve for special
account for advanced
depreciation of real estate fortax purpose���������

(100)

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

—

—

105

2,000

—

—

(1)

(100)

—

Balance at the end of the fiscal year��� ¥10,000 ¥106,000¥112¥2,954¥6,000¥20,000¥41,000

¥255

—

¥767

Total changes in the fiscal year��—¥64,561 ¥135,538 ¥251,650

Millions of yen
Valuation and translation adjustments

For the year ended March 31, 2018

Balance at the beginning of the fiscal year��������������

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

Revaluation reserve forland, net of tax

Total valuation andtranslation adjustments

Total
net assets¥333,545¥4,107¥337,652¥583,192

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

(34,592)

Additions to legal reserve for future losses�������������

—Payment of interest on foundation funds��������������

(100)

Net surplus for the fiscal year������������������

40,868Additions to reserve for redemption of foundation funds�������

—

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

—

Reversal of reserve for special account for advanced depreciation of realestate for tax purpose���������������������

—

Reversal of revaluation reserve for land, net of tax���������

(65)

Net changes, excluding foundation funds, surplus and others�����

2,113

65

2,178

2,178

Total changes in the fiscal year�������������������

2,113

65

2,178

8,289

Balance at the end of the fiscal year�����������������

¥335,658¥4,173¥339,831¥591,482

16

FUKOKU MUTUAL LIFE INSURANCE COMPANY

Millions of yen
Foundation funds, surplus and others
Surplus
Other surplus

Accumulated
foundation
Reserve forfunds
revaluation
redeemed

Legal
reservefor future
lossesReserve forredemptionoffoundation
funds

Reserve fordividend
allowances

Accumulated
fund for pricefluctuation

Reserve foradvanceddepreciation ofreal estate fortax purpose

Other
reserves

UnappropriatedsurplusTotal
surplusTotal
foundation
funds, surplus
and others¥106,000¥2,954¥6,000¥20,000¥41,000

¥255

¥767

¥64,561¥135,538¥251,650(38,630)(38,630)(38,630)

(117)

—

—

Payment of interest on foundation
funds�����������

(100)

(100)

(100)

Net surplus for the fiscal year��

36,83436,83436,834(2,000)

—

—

45

—

—

41

41

41

For the year ended March 31, 2019

Foundation
funds

Balance at the beginning of the fiscal
year������������������������������������������������ ¥10,000¥112

Changes in the fiscal year
Additions to reserve for dividends
to policyholders�������
Additions to legal reserve for
future losses��������

117

Additions to reserve for redemptionof foundation funds������

2,000

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

(45)

Reversal of revaluation reserve forland, net of tax�������
Net changes, excluding foundation
funds, surplus and others���

—

—

—

117

2,000

—

—

(45)

—

(3,927)(1,855)(1,855)

Balance at the end of the fiscal year���� ¥10,000¥106,000¥112¥3,071¥8,000¥20,000¥41,000

¥210

¥767

¥60,633¥133,682¥249,794

Total changes in the fiscal year��

Millions of yen
Valuation and translation adjustments

For the year ended March 31, 2019

Balance at the beginning of the fiscal year��������������

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

Revaluation reserve forland, net of tax

Total valuation andtranslation adjustments

Total
net assets¥335,658¥4,173¥339,831¥591,482

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

(38,630)

Additions to legal reserve for future losses�������������

—Payment of interest on foundation funds��������������

(100)

Net surplus for the fiscal year������������������

36,834

Additions to reserve for redemption of foundation funds�������

—

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

—

Reversal of revaluation reserve for land, net of tax���������

41

Net changes, excluding foundation funds, surplus and others�����

7,089

(41)

7,048

7,048

Total changes in the fiscal year�������������������

7,089

(41)

7,048

5,192

Balance at the end of the fiscal year�����������������

¥342,748¥4,132¥346,880¥596,674

FUKOKU MUTUAL LIFE INSURANCE COMPANY

17

Millions of U.S. dollars
Foundation funds, surplus and others
Surplus
Other surplus

Accumulated
foundation
Reserve forfunds
revaluation
redeemed

Legal
reservefor future
lossesReserve forredemptionoffoundation
funds

Reserve fordividend
allowances

Accumulated
fund for pricefluctuation

Reserve foradvanceddepreciation ofreal estate fortax purpose

Other
reserves

$26

$54

$180

$369

$2

$6

UnappropriatedsurplusTotal
surplusTotal
foundation
funds, surplus
and others$581$1,221$2,267

(348)

(348)

(348)

(1)

—

—

Payment of interest on foundation
funds�����������

(0)

(0)

(0)

Net surplus for the fiscal year��

331

331

331

(18)

—

—

0

—

—

0

0

0

For the year ended March 31, 2019

Balance at the beginning of the fiscal
year������������������������������������������������

Foundation
funds

$90

$955

$1

Changes in the fiscal year
Additions to reserve for dividends
to policyholders�������
Additions to legal reserve for
future losses��������

1

Additions to reserve for redemptionof foundation funds������

18

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

(0)

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

—

—

—

1

18

—

—

(0)

—

(35)

(16)

(16)

Balance at the end of the fiscal year����

$90

$955

$1

$27

$72

$180

$369

$1

$6

$546

$1,204$2,250Millions of U.S. dollars
Valuation and translation adjustments

For the year ended March 31, 2019

Balance at the beginning of the fiscal year��������������

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

Revaluation reserve forland, net of tax

Total valuation andtranslation adjustments

Total
net assets$3,024$37$3,061$5,329Changes in the fiscal year
Additions to reserve for dividends to policyholders���������

(348)

Additions to legal reserve for future losses�������������

—Payment of interest on foundation funds��������������

(0)

Net surplus for the fiscal year������������������

331

Additions to reserve for redemption of foundation funds�������

—

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

—

Reversal of revaluation reserve for land, net of tax���������

0

Net changes, excluding foundation funds, surplus and others�����

63

(0)

63

63

Total changes in the fiscal year�������������������

63

(0)

63

46

Balance at the end of the fiscal year�����������������

$3,088$37$3,125$5,37518

FUKOKU MUTUAL LIFE INSURANCE COMPANYNon-consolidated Proposed Appropriations of Surplus
Fukoku Mutual Life Insurance Company
For the years ended March 31, 2018 and 2019Year ended March 31,

2018

2019

2019
Millions of
U.S. dollars

Millions of yen¥64,561¥60,633

$546

45

1

0

45

1

0

64,606

60,635546

38,63034,671

312

Legal reserve for future losses …………………………………………………

117

105

0

Interest payment for foundation funds …………………………………………

100

100

0

2,000

2,000

18

2,000

2,000

18

2,217

2,205

19

Total appropriation of surplus……………………………………………………

40,84836,876

332

Unappropriated surplus carried forward…………………………………………

¥23,758¥23,758$214

Unappropriated surplus
Reversal of voluntary surplus reserve:
Reversal of reserve for advanced depreciationof real estate for tax purpose…………………………………………………… 

Total……………………………………………………………………………………
Appropriation of surplus
Reserve for dividends to policyholders……………………………………………
Net surplus:

Voluntary surplus reserve
Reserve for redemption of foundation funds…………………………………

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

FUKOKU MUTUAL LIFE INSURANCE COMPANY

19

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 havebeen prepared from the accounts maintained by Fukoku MutualLife Insurance Company (the “Company”) in accordance withthe provisions set forth in the Insurance Business Act of Japanand its related rules and regulations and in conformity withaccounting principles generally accepted in Japan, which are
different in certain respects from accounting principles generally
accepted in countries and jurisdictions other than Japan.
In addition, the notes to the non-consolidated financial
statements include information which is not required underaccounting principles generally accepted in Japan but ispresented herein as additional information.
Amounts of less than one million yen have been rounded
down. As a result, the totals do not add up.
The translations of yen amounts into U.S. dollar amounts
are included solely for the convenience of the reader and havebeen made, as a matter of arithmetical computation only, at therate of ¥110.99 = US$1.00, the effective rate of exchange at thebalance sheet date of March 31, 2019. The translations should
not be construed as representations that such yen amounts
have been or could in the future be, converted into U.S. dollars
at that or any other rates.

II. Notes to the Non-consolidated Balance Sheets
1. (1) The valuation of securities, including bank deposits andmonetary claims bought which are equivalent to securities,
and securities managed as trust assets in money held in
trust, is as follows:i.	Trading securities are stated at fair market value.
Costs of their sales are determined by the moving
average method.
ii.	Held-to-maturity debt securities are stated at amortizedcost under the straight-line method, cost being
determined by the moving average method.
iii.	Policy-reserve-matching bonds are stated atamortized 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 ofCertified Public Accountants on November 16, 2000).
iv.	Investments in subsidiaries and affiliates are statedat cost, cost being determined by the moving
average method.
v.	Available-for-sale securities with fair market value
are stated at fair market value based on the market
prices at the end of the fiscal year. Costs of their sales
are determined by the moving average method. Net
unrealized gains or losses on these available-for-salesecurities, net of taxes, are recorded as a separate

20

FUKOKU MUTUAL LIFE INSURANCE COMPANY

component of net assets.
vi.	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 costand face value is considered to be an adjustment ofinterest. Such bonds are stated at amortized cost under
the straight-line method, cost being determined by themoving average method.
(2) Derivative instruments are stated at fair market value.
(3) T he Company revalued the land used in the operations basedon the Act for Revaluation of Land (Act No.34 promulgatedon March 31, 1998). The difference between fair value andbook value resulting from the revaluation, net of related
taxes, is recorded as revaluation reserve for land as aseparate component of net assets and the related tax isrecorded as deferred tax liabilities for land revaluation.
• Date of revaluation: March 31, 2002•M
 ethod 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 Ordinanceof the Act for Revaluation of Land (Government OrdinanceNo.119 promulgated on March 31, 1998) and the roadrate set forth in Article 2 item 4 of the said Ordinance withcertain reasonable adjustments.
(4) D epreciation of tangible fixed assets is calculated by thefollowing methods.
•T angible fixed assets (excluding lease assets): Decliningbalance 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.
•L ease 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 over three years.
(5) A ssets 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) A llowance for possible loan losses is provided in accordancewith the Company’s standards of self-assessment and writeoffs 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”), theCompany provides the remaining amount of credits after
the direct write-off described below and the deductions of
the amount expected to be collected through the disposalof 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 as necessary
considering the borrowers’ ability to pay, within theamounts after deductions of the amount expected tobe collected through the disposal of collateral or the
execution of guarantees.
iii.	For the credits of borrowers other than the above, theCompany provides the amounts calculated by multiplying
the borrowers’ balance by the actual ratio of bad debt
losses on defaults during a certain past period.
All credits are assessed by the relevant departmentsin accordance with the Company’s standards of selfassessment on credit quality. The results of the assessment
are reviewed by the audit department, which is independentof business-related divisions. Subsequently, the allowancefor possible loan losses is provided based on the results ofthese assessments.
For the credits of legally bankrupt borrowers andsubstantially bankrupt borrowers, the amounts remaining
after deductions of collateral value or the amounts
collectible through the execution of guarantees are writtenoff directly from the borrowers’ balances as the estimateduncollectible amounts. The amount written-off as of March
31, 2018 and 2019 were ¥1 million and ¥1 million (US$9thousand), respectively.
(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 foramortizing retirement benefit obligations and retirement
benefit expenses:• Method for allocation of projected retirement benefits................Benefit formula basis• Amortization period of actuarial gains and losses...10 years• Amortization period of prior service cost................10 years(8) Reserve for price fluctuation is calculated in accordance with
Article 115 of the Insurance Business Act.
(9) As for the finance lease transactions where the Company
is a lessor, the lease fee is recorded in “Interest, dividends
and other income” at the time of receiving lease fee. The

corresponding cost of the lease transactions is recorded
in “Other investment expenses”, which is calculated bydeducting an amount equivalent to the interest allocated overthe lease term from the lease fee received.
(10) H edge accounting is based on “Accounting Standards for
Financial Instruments” (ASBJ Statement No. 10, March 10,2008). The Company applies a fair value hedge accounting
as a hedge against the risk of foreign exchange fluctuationin relation to bonds denominated in foreign currencies andagainst the risk of price fluctuation in relation to domestic
stocks, and a designated hedge accounting (“Furiate
shori”) for foreign currency swaps as a hedge against therisk of foreign exchange fluctuation in relation to bonds
denominated in foreign currencies issued by the Company.
For assessing the effectiveness of hedge used, ratio
analysis of comparing the fluctuations in the fair value orcash flows of hedged items and hedging instruments ismainly applied.
(11) A ccounting of unrecognized actuarial differences andunrecognized prior service costs related to employees’
retirement benefits is different to the methods used forthese items in the consolidated financial statements.
(12) T he 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 other thandeferred consumption taxes are recognized as an expense
when incurred.
(13) P olicy reserve is based on Article 116 of the Insurance
Business Act, and the premium reserve is calculated by thefollowing method:i. In regard to the policies subject to the standard policy
reserve, the method as prescribed by the Commissionerof Financial Services Agency (Ministry of FinanceOrdinance No. 48, 1996) is applied.
ii.	In regard to the policies not subject to the standard
policy reserve, the net level premium method is applied.
Based on the provision of Article 69, paragraph 5, of the
Enforcement Regulation of the Insurance Business Act,
the Company includes additional funded policy reserves
as follows.
Among individual annuity insurance policies with anassumed interest rate of 5.00% or higher, policies that havean annuity commencement date on or prior to March 31,2018 (excluding wife’s annuity insurance additional rider),the Company reduced the assumed interest rate to 1.00%
and funded additional policy reserves. As of March 31, 2018,
the balance of these policy reserves was ¥73,222 million.

FUKOKU MUTUAL LIFE INSURANCE COMPANY

21

The Company also funded additional policy reserves
for certain individual annuity insurance policies, whole
life insurance policies that include distribution of surplus
every five years and highly advanced medical riders. As of
March 31, 2018, the balance of these policy reserves was¥5,628 million.
Of the above, the amount funded as of March 31,2018 was ¥13,574 million. As a result, compared to theamount without this additional funding, provision of policy
reserve increased ¥13,574 million, while ordinary profit andsurplus before income taxes decreased ¥13,574 million.
Among individual annuity insurance policies with anassumed interest rate of 5.00% or higher, for policies thathave begun paying annuities (excluding wife’s annuity
insurance additional rider), the Company reduced theassumed interest rate to 1.00% and funded additional policy
reserves. As of March 31, 2019, the balance of these policy
reserves was ¥73,836 million (US$665 million).
The Company also funded additional policy reserves
for certain individual annuity insurance policies, whole life
insurance policies that include distribution of surplus every
five years, new cancer riders and highly advanced medical
riders. As of March 31, 2019, the balance of these policy
reserves was ¥13,391 million (US$120 million).
(14) The software for internal use is amortized based on straightline 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 matchthe duration of liabilities are classified as policy-reservematching bonds in accordance with “Temporary Treatmentof Accounting and Auditing Concerning Policy-reservematching Bonds in Insurance Industry” (Industry Audit
Committee Report No. 21 issued by the Japanese Instituteof Certified Public Accountants on November 16, 2000).
2. Asset management of the general accounts other than theseparate accounts stipulated in Article 118 Paragraph 1 ofthe Insurance Business Act is conducted on the principle
of prudent and profitable investments, considering public
and social responsibilities of the insurance business. Basedon this policy, the Company allocates the fund, securing
its liquidity, from the medium-to-long term viewpoints.
The Company is diversifying investments in assets suchas foreign securities, stocks and real estates within theacceptable range of risks in order to enhance the profitability,
although yen-denominated interest bearing assets including
debt securities such as Japanese government bonds andloans are the cores of the portfolios under the asset liability
management. Derivatives are mainly used to hedge themarket risk regarding spot-priced assets and liabilities.
Major financial instruments including securities, loans and

22

FUKOKU MUTUAL LIFE INSURANCE COMPANY

derivatives are exposed to market risk and credit risk.
The Company manages its asset management risk by
establishing internal control systems including various rules
pursuant to the “Three Basic Rules related to Enterprise
Risk Management” established by the Board of Directors.
Specifically, the Company eliminates excessive risk deviatingfrom the basic principle and secures the safety of theassets by utilizing control functions of the Financial andInvestment Risk Management Department towards the asset
management sections, monitoring the status of market risk
and credit risk periodically on a daily or monthly basis. In
addition, the Company quantifies the market risk and credit
risk using value-at-risk (VaR) method in order to control thepossible maximum losses which may arise from the holding
assets within a certain range of risk buffers.
The carrying amounts, fair values and their relateddifferences of major financial assets and liabilities in thegeneral account were as follows:(1) C ash, deposits (excluding financial instruments treated as
securities based on “Accounting Standards for Financial
Instruments” (ASBJ Statement No.10, March 10, 2008)) andcall loans:
The fair values of cash, deposits and call loans are based on
their book values since fair values approximate book values
due to their short maturities.
(2) S ecurities including deposits and monetary claims bought
which are treated as securities based on “AccountingStandards for Financial Instruments” (ASBJ Statement
No.10, March 10, 2008) 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 fairvalues of other securities without the quoted market prices
are based on the prices reasonably calculated such as theprices offered by the information vendors or counterparty
financial institutions.
Investments in subsidiaries and affiliates, unlisted
stocks and investments in partnerships whereby partnershipassets consist of unlisted stocks whose fair values are
deemed extremely difficult to obtain, are excluded fromabove securities. The carrying amounts of investments in
subsidiaries and affiliates, unlisted stocks and investmentsin partnerships were ¥64,837 million, ¥5,697 million, and¥23,609 million as of March 31, 2018, and ¥64,787 million(US$583 million), ¥5,696 million (US$51 million), and ¥27,318
million (US$246 million) as of March 31, 2019, respectively.
(3) L oans and monetary claims bought treated as loans:
The fair values of policy loans are deemed to approximatebook values, considering estimated repayment period andinterest rate conditions since their repayment deadlines havenot been set up due to the characteristics that the loans areAs of March 31,

2018
Millions of yen
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�������������������������������������������������

¥¥64,46264,462
176,000

Fair value¥

64,46264,462
176,000

Difference

¥

—
—
—

443
443

474
474

30
30

30,50230,50230,50230,502——

149,265
758,872
973,736
3,404,811
5,286,686

149,265
897,574
1,134,148
3,404,811
5,585,800—
138,702160,412—299,11457,181
536,553593,734
6,151,829
191,935
191,935

57,181
558,957
616,138
6,473,379
200,774
200,774(0)22,404
22,404
321,549
8,839
8,839

(534)
9,672
9,138

(534)
9,672
9,138

—
—
—

¥

¥

As of March 31,

2019

2019

Millions of yen

Millions of U.S. dollars

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�������������������������������������������������

¥¥65,28265,282
176,000

Fair value¥

65,28265,282
176,000

Difference

¥

—
—
—

Carrying amount

$

588
588
1,585

Fair value

Difference

$

$

588
588
1,585

—
—
—

299
299

319
319

20
20

2
2

2
2

0
0

22,85022,85022,85022,850

—
—

205
205

205
205

—
—

97,110759,519938,273
3,606,817
5,401,721

97,110899,819
1,111,124
3,606,817
5,714,871—
140,300
172,850—
313,150

874
6,843
8,453
32,496
48,668874
8,107
10,01132,49651,489

—
1,264
1,557
—
2,821

56,332504,806
561,138
6,227,291
191,935
191,935

56,331
530,223586,555
6,565,879
198,912
198,912(0)25,41725,416
338,588
6,977
6,977

507
4,548
5,055
56,106
1,729
1,729

507
4,777
5,284
59,157
1,792
1,792

(0)
229
229
3,050
62
62

(107)
(3,230)(3,338)(107)(3,230)(3,338)

—
—
—

(0)
(29)
(30)

(0)
(29)
(30)

—
—
—

¥

¥

$

$

$

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

FUKOKU MUTUAL LIFE INSURANCE COMPANY

23

limited to the amount of cash surrender values. Therefore,
the book values are used as the fair values of policy loans.
The fair values of floating interest rate loans among theordinary 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 andmonetary claims bought treated as loans are based on theirbook values. The fair values of fixed interest rate loans
are measured by discounting the future cash flows to thepresent 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 the amount 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 fairmarket values.
(5) Derivative instruments:i.	The fair values of the futures and options traded at
the exchange are measured at the settlement price ofthe exchange.
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 and forward
contract rate.
3. The Company holds investment and rental properties suchas office buildings in Tokyo and other areas. The carrying
amounts and the fair values of investment and rental
properties were ¥172,740 million and ¥295,454 million as ofMarch 31, 2018, and ¥172,520 million (US$1,554 million) and¥314,115 million (US$2,830 million) as of March 31, 2019,respectively. The fair value is mainly based on the value
calculated by the Company in accordance with real estateappraisal standards which includes some adjustments using
the reference prices.
The amount corresponding to asset retirement
obligations included in the carrying amount of investment andrental properties were ¥841 million as of March 31, 2018, and¥697 million (US$6 million) as of March 31, 2019, respectively.
4. The amounts of securities lent under lending agreements
were ¥254,467 million and ¥299,194 million (US$2,695
million) as of March 31, 2018 and 2019, respectively.
5. The total amounts of credits to bankrupt borrowers,
delinquent loans, delinquent loans past 3 months or more

24

FUKOKU MUTUAL LIFE INSURANCE COMPANY

and restructured loans, which were included in loans, were
¥1,033 million as of March 31, 2018, and ¥940 million (US$8
million) as of March 31, 2019, respectively;i.	The balances of credits to bankrupt borrowers were ¥168
million and ¥157 million (US$1 million) as of March 31,2018 and 2019, respectively.
ii.	The balances of delinquent loans were ¥865 million and¥782 million (US$7 million) as of March 31, 2018 and2019, respectively.
iii.	There were no balances of delinquent loans past 3
months or more and restructured loans as of March 31,2018 and 2019.
The direct write-offs related to loans decreased credits tobankrupt borrowers described above by ¥1 million as ofMarch 31, 2018, and ¥1 million (US$9 thousand) as of March
31, 2019, respectively.
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 interest on
these loans is unlikely to be collected due to the significant
delay in repayment of principal or interest payment or forsome 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 been suspended
and rescheduled to assist and support the borrowers in the
restructuring of their business.
Delinquent loans past 3 months or more are loans
for which interest payments or repayments of principal
are delinquent for 3 months or more from the due dateunder the terms of the related loan agreements, excluding
those loans classified as credits to bankrupt borrowers anddelinquent loans.
Restructured loans are loans for which certain
concessions favorable to borrowers, such as interest
reduction or exemption, rescheduling of due date forrepayments 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 restructuringof their business. This category excludes loans classified
as credits to bankrupt borrowers, delinquent loans anddelinquent loans past 3 months or more.
6. A
 ccumulated depreciation of tangible fixed assets were
¥163,520 million and ¥167,181 million (US$1,506 million) as
of March 31, 2018 and 2019, respectively.
7. Total assets in separate accounts provided for in Article
118 of the Insurance Business Act were ¥82,347 millionand ¥71,585 million (US$644 million) as of March 31, 2018and 2019, respectively. The amounts of separate accountliabilities were the same as separate account assets.
8. The total amounts of receivables from/payables to subsidiaries
were ¥2,466 million and ¥1,687 million as of March 31, 2018,and ¥3,204 million (US$28 million) and ¥1,837 million (US$16
million) as of March 31, 2019, respectively.
9. Deferred tax assets and deferred tax liabilities as of March
31, 2018 were ¥127,044 million and ¥133,230 million,
respectively. Valuation allowance for deferred tax assets was¥4,547 million.
Major components of deferred tax assets were ¥79,506
million of policy reserves, ¥26,823 million of reserve for pricefluctuation and ¥12,343 million of reserve for employees’
retirement benefits as of March 31, 2018.
Major component of deferred tax liabilities was ¥128,972
million of net unrealized gains on available-for- sale securities
as of March 31, 2018.
The statutory tax rate and the actual effective tax rate
for the year ended March 31, 2018 were 28.2% and 4.4%,

respectively. The difference between the statutory tax rate
and the actual effective tax rate was attributable mainly to-25.5% of reserve for dividends to the policyholders.
Deferred tax assets and deferred tax liabilities as ofMarch 31, 2019 were ¥137,650 million (US$1,240 million)and ¥135,958 million (US$1,224 million), respectively.
Valuation allowance for deferred tax assets was ¥4,121
million (US$37 million).
Major components of deferred tax assets were ¥86,377
million (US$778 million) of policy reserves, ¥31,158 million(US$280 million) of reserve for price fluctuation and ¥12,091
million (US$108 million) of reserve for employees’ retirement
benefits as of March 31, 2019.
Major component of deferred tax liabilities was ¥131,712
million (US$1,186 million) of net unrealized gains on availablefor-sale securities as of March 31, 2019.
The statutory tax rate and the actual effective tax rate
for the year ended March 31, 2019 were 28.0% and 1.8%,
respectively. The difference between the statutory tax rate
and the actual effective tax rate was attributable mainly to-25.9% of reserve for dividends to the policyholders.

10. Changes in reserve for dividends to policyholders were as follows:Year ended March 31,

2018

2019

Millions of yen

Balance at the beginning of the fiscal year������������������������������������������������������������

¥50,929

2019
Millions of
U.S. dollars¥53,395$481

Transfer from surplus in the previous fiscal year���������������������������������������������������

34,592

38,630348

Dividend payments to policyholders during the fiscal year�������������������������������������

(32,138)(33,862)(305)

Increase in interest������������������������������������������������������������������������������������������������

12

12

0

Balance at the end of the fiscal year���������������������������������������������������������������������

¥53,395¥58,176

$524

11. T
 he amount of stocks of subsidiaries were ¥64,837 millionand ¥64,787 million (US$583 million) as of March 31, 2018and 2019, respectively.
12. Assets pledged as collateral as of March 31, 2018 were¥25,447 million of securities and ¥1,378 million of bankdeposits. Secured debts as of March 31, 2018, were
¥5,174 million.
Assets pledged as collateral as of March 31, 2019were ¥17,839 million (US$160 million) of securities and¥744 million (US$6 million) of bank deposits. Secured debts
as of March 31, 2019, were ¥5,387 million (US$48 million).
13. R
 eserve 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”) were ¥10 million and ¥2 million (US$22
thousand) as of March 31, 2018 and 2019, respectively.
Policy reserve for the reinsurance contracts provided inaccordance with Article 71 Paragraph 1 of the Enforcement
Regulation of the Insurance Business Act (hereinafter called“policy reserve for ceded reinsurance”) were ¥31 millionand ¥30 million (US$271 thousand) as of March 31, 2018and 2019, respectively.
14. The total amounts of adjustment items for redemption offoundation funds and appropriation of net surplus definedin Article 30 Paragraph 2 of the Enforcement Regulationof the Insurance Business Act were ¥339,944 million and¥346,992 million (US$3,126 million) as of March 31, 2018and 2019, respectively.
15. T here were unused commitment line agreements under

FUKOKU MUTUAL LIFE INSURANCE COMPANY

25

which the Company is the lender of ¥2,490 million and¥5,994 million (US$54 million) as of March 31, 2018 and2019, respectively.
16. Repayments of subordinated bonds are subordinated toother obligations.

17. T he future contribution to the Life Insurance Policyholders
Protection Corporation of Japan under Article 259 of the
Insurance Business Act was estimated at ¥8,972 millionand ¥8,506 million (US$76 million) as of March 31, 2018 and2019, respectively.
The contribution is recognized as operating expenses
when contributed.

18. Matters Related to Employees’ Retirement Benefits(1) Overview of Employees’ Retirement Benefit Plan
As for a defined benefit plan for office-based employees, the Company has a defined benefit corporate pension plan andretirement lump-sum payments. As for a defined contribution plan for these employees, the Company also has a defined
contribution pension plan.
As for a defined benefit plan for sales employees, the Company has retirement lump-sum payments.
The Company places a retirement benefit trust in relation to the retirement lump-sum grant plan for sales employees.
The simplified method for calculating retirement benefit obligation is applied to a portion of the Company’s retirement lump-sum
grant plans.

(2) Defined Benefit Plan
i. Reconciliation of beginning and end of balance of retirement benefit obligation

As of March 31,

2018

2019

2019
Millions of
U.S. dollars

Millions of yen

Retirement benefit obligation at the beginning of the fiscal year��������������������������

¥85,277¥86,201$776

Service cost�����������������������������������������������������������������������������������������������������������

3,493

3,552

32

Interest cost����������������������������������������������������������������������������������������������������������

511

516

4

Actuarial differences occurred during the fiscal year���������������������������������������������

1,232

1,080

9

Retirement benefit payments��������������������������������������������������������������������������������

(4,313)(4,289)(38)

Retirement benefit obligation at the end of the fiscal year�����������������������������������

¥86,201¥87,060$784

ii. Reconciliation of beginning and end of balance of pension plan assets
As of March 31,

2018

2019

Millions of yen

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

2019
Millions of
U.S. dollars¥46,654¥52,372$471

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

732

972

8

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

3,386

145

1

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

2,679

2,693

24

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

(1,080)(1,304)(11)

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

¥52,372¥54,880$494

26

FUKOKU MUTUAL LIFE INSURANCE COMPANY

iii. Reconciliation of retirement benefit obligation and pension plan assets with reserve for employees’ retirement benefits presented
on the non-consolidated balance sheet
As of March 31,

2018

2019

2019
Millions of
U.S. dollars

Millions of yen

a. Funded plan retirement benefit obligation........................................................

¥74,783¥75,659$681

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

(52,372)(54,880)(494)

c. (a + b)................................................................................................................

22,41020,778187

d. Unfunded plan retirement benefit obligation....................................................

11,417

11,401102

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

(8,657)(7,833)(70)

f . Unrecognized prior service cost....................................................................

247

171

1

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

¥25,417¥24,517$220

iv. Breakdown of retirement benefit gains and losses

As of March 31,

2018

2019

2019
Millions of
U.S. dollars

Millions of yen

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

¥3,493¥3,552$32

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

511

516

4

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

(732)

(972)

(8)

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

2,345

1,759

15

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

(76)

(76)

(0)

Retirement benefit expenses related to defined benefit plan..............................

¥5,541¥4,779$43v. Breakdown of pension plan assets
The breakdown of asset categories as a percentage of total pension plan assets were as follows:

As of March 31,

2018

2019

Domestic stocks...................................................................................................

47.7%

44.3%

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

32.9%

33.3%

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

7.5%

9.6%

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

7.8%

7.7%

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

2.7%

3.0%

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

1.4%

2.1%

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

100.0%

100.0%

Within the total of pension assets as of March 31, 2019, 37.4% of this amount is accounted for by the retirement benefit trust
established in relation to the retirement lump-sum payments plan for sales employees.

vi. Method for setting the expected long-term rate of return
To set the expected long-term rate of return on pension plan assets, the Company takes into account the present and future
allocation of pension plan assets, and the present and expected future long-term rate of return on a variety of assets that makes
up the pension assets.

FUKOKU MUTUAL LIFE INSURANCE COMPANY

27

vii. Underlying actuarial assumptions
Main underlying actuarial assumptions were as follows:

As of March 31,

2018

2019

0.6%

0.6%

Defined benefit corporate pension plan............................................................

2.5%

3.0%

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

0.0%

0.0%

Discount rate........................................................................................................
Expected long-term rate of return on pension plan assets(3) Defined Contribution Plan
The required contribution amounts by the Company to the defined contribution plan were ¥213 million and ¥215 million (US$1
million) as of March 31, 2018 and 2019, respectively.

III. Notes to the Non-consolidated Statements of Operations
1. The total amounts of revenues and expenses in connection with subsidiaries were ¥780 million and ¥8,586 million for the year ended
March 31, 2018, and ¥871 million (US$7 million) and ¥8,823 million (US$79 million) for the year ended March 31, 2019, respectively.

2. Major items of gains on sales of securities were as follows:Year ended March 31,

2018

2019

2019
Millions ofMillions of yen

U.S. dollars

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

¥4,903¥ 1,424$ 12

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

1,798

24,393219

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

¥8,578¥ 1,911$ 17

3. Major items of losses on sales of securities were as follows:Year ended March 31,

2018

2019

2019
Millions ofMillions of yen

U.S. dollars

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

¥ 391¥1,582$14

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

1,095

2,563

23

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

¥3,421¥7,464$67

4. Major items of losses on valuation of securities were as follows:Year ended March 31,

2018

2019

2019
Millions ofMillions of yen

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

28

FUKOKU MUTUAL LIFE INSURANCE COMPANY¥0U.S. dollars

¥39

$0

5. For the year ended March 31, 2018, in calculating the reversal of reserve for outstanding claims, a provision of reserves foroutstanding claims reinsured of ¥7 million was added. In calculating the provision of policy reserves, a provision of reserves forpolicy reserves reinsured of ¥0 million was deducted.
For the year ended March 31, 2019, in calculating the provision of reserve for outstanding claims, a reversal of reserves foroutstanding claims reinsured of ¥8 million (US$75 thousand) was added. In calculating the provision of policy reserves, a reversal ofreserves for policy reserves reinsured of ¥1 million (US$11 thousand) was added.

6. Major items of (losses) gains on trading securities were as follows:Year ended March 31,

2018

2019

2019
Millions ofMillions of yen

U.S. dollars

Interest, dividends and other income.................................................................

¥ 5,647¥ 4,225$ 38

Gains on redemption of trading securities..........................................................

—

3,400

30

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

¥(7,938)¥(4,530)$(40)

7. Gains on money held in trust for the year ended March 31, 2018 included valuation gains of ¥0 million.
Losses on money held in trust for the year ended March 31, 2019 included valuation gains of ¥0 million (US$0 thousand).
8. Losses on derivative instruments for the year ended March 31, 2018 included valuation losses of ¥454 million.
Losses on derivative instruments for the year ended March 31, 2019 included valuation gains of ¥124 million (US$1 million).

FUKOKU MUTUAL LIFE INSURANCE COMPANY

29

Report of Independent Auditors

30

FUKOKU MUTUAL LIFE INSURANCE COMPANY

FUKOKU MUTUAL LIFE INSURANCE COMPANY

31

Consolidated Financial Statements
Consolidated Balance Sheets
Fukoku Mutual Life Insurance Company and consolidated subsidiaries
As of March 31, 2018 and 2019

As of March 31,

2018

2019

2019
Millions of
U.S. dollars

Millions of yen

Assets:Cash and deposits.............................................................................................

¥ 157,703¥ 153,017$ 1,378

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

176,000

176,000

1,585

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

443

299

2

Money held in trust...........................................................................................

31,502

23,850214

Securities...........................................................................................................

7,203,196

7,287,916

65,662Loans.................................................................................................................

597,285564,778

5,088

Land..............................................................................................................

125,278

125,180

1,127

Buildings.......................................................................................................

86,54884,624762

Lease assets.................................................................................................

1,565

1,241

11

Construction in progress..............................................................................

2,052

2,933

26

Other tangible fixed assets...........................................................................

3,450

3,413

30

218,895

217,393

1,958

24,64323,169208

Tangible fixed assets:

Intangible fixed assets:
Software.......................................................................................................
Goodwill........................................................................................................

37

—

—

Lease assets.................................................................................................

11,226

9,532

85

Other intangible fixed assets........................................................................

2,148

1,553

13

38,05634,254308

Agency receivables............................................................................................

0

1

0

Reinsurance receivables....................................................................................

221

173

1

Other assets......................................................................................................

67,341

58,813529

Net defined benefit asset..................................................................................

107

177

1

Deferred tax assets...........................................................................................

166

185

1

Allowance for possible loan losses....................................................................

(2,049)(2,096)(18)

Total assets.......................................................................................................

¥8,488,872¥8,514,764$76,716

32

FUKOKU MUTUAL LIFE INSURANCE COMPANYAs of March 31,

2018

2019

2019
Millions of
U.S. dollars

Millions of yen

Liabilities:
Policy reserves:
Reserve for outstanding claims....................................................................

¥

22,166¥

24,584$221

Policy reserve...............................................................................................

7,391,773

7,393,634

66,615Reserve for dividends to policyholders.........................................................

53,39558,176524

Reserve for dividends to policyholders (subsidiary)......................................

539

465

4

7,467,875

7,476,860

67,365

Agency payables................................................................................................

70

117

1

Reinsurance payables........................................................................................

75

88

0

Subordinated bonds...........................................................................................

191,935

191,935

1,729

Other liabilities...................................................................................................

59,50962,838566

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

34,01932,470292

Reserve for price fluctuation.............................................................................

105,521

121,357

1,093

Deferred tax liabilities........................................................................................

8,875

1,743

15

Deferred tax liabilities for land revaluation.........................................................

14,241

14,225128

Total liabilities..................................................................................................

7,882,122

7,901,637

71,192

Foundation funds...............................................................................................

10,00010,00090

Accumulated foundation funds redeemed........................................................

106,000

106,000

955

Net assets:

Reserve for revaluation......................................................................................

112

112

1

Consolidated surplus.........................................................................................

139,621

137,669

1,240

Total foundation funds, surplus and others..................................................

255,733

253,7812,286

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

344,585

352,453

3,175

Revaluation reserve for land, net of tax.............................................................

4,173

4,132

37

Foreign currency translation adjustment...........................................................

(377)

(496)

(4)

Accumulated remeasurements of defined benefit plans..................................

(6,055)(5,517)(49)

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

342,326

350,571

3,158

Non-controlling interests...................................................................................

8,690

8,774

79

Total net assets................................................................................................

606,750

613,127

5,524

Total liabilities and net assets.........................................................................

¥ 8,488,872¥ 8,514,764$ 76,716

FUKOKU MUTUAL LIFE INSURANCE COMPANY

33

Consolidated Statements of Operations
Fukoku Mutual Life Insurance Company and consolidated subsidiaries
For the years ended March 31, 2018 and 2019Year ended March 31,

2018

2019

Millions of
U.S. dollars

Millions of yen

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..........................................................................
Other investment income.............................................................................
Gains on separate accounts, net..................................................................
Other ordinary revenues....................................................................................
Total ordinary revenues..................................................................................
Ordinary expenses:
Claims and other payments:
Claims...........................................................................................................
Annuities.......................................................................................................
Benefits........................................................................................................
Surrenders....................................................................................................
Other payments............................................................................................
Provision of policy reserve and others:
Provision of reserve for outstanding claims.................................................
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.......................................................................
Provision of allowance for possible loan losses...........................................
Depreciation of real estate for rent and other assets...................................
Other investment expenses.........................................................................
Operating expenses..........................................................................................
Other ordinary expenses...................................................................................
Total ordinary expenses..................................................................................
Ordinary profits................................................................................................

34

FUKOKU MUTUAL LIFE INSURANCE COMPANY

2019¥ 597,178¥ 577,450$5,202

173,481
1,769—
16,780811
6,553
199,395
9,890
806,464

174,763—3,276
29,281
315
962
208,598
10,685
796,734

1,574
—
29
263
2
8
1,879
96
7,178

132,639
167,565
119,468
113,367
28,840561,881

110,872
200,064
125,198
101,023
27,231
564,389

998
1,802
1,128
910
245
5,085

—
26,588
12

2,418
1,860
12

21
16
0

0
26,600

0
4,291

0
38

4,232
—
1,498
4,977
0
225
16,012
280
4,271
6,781
38,27898,72522,623
748,109¥ 58,354

3,892
371
—
11,61039
5,875
13,397
88
4,165
7,829
47,271
99,232
26,362
741,547¥ 55,187

35
3
—
104
0
52
120
0
37
70
425
894
237
6,681
$ 497

Year ended March 31,

2018

2019

2019
Millions of
U.S. dollars

Millions of yen

Extraordinary gains:
Gains on disposal of fixed assets.................................................................

¥

288

¥

3

$

0

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

—

60

0

Total extraordinary gains................................................................................

288

63

0

Losses on disposal of fixed assets...............................................................

552

213

1

Impairment losses........................................................................................

141

228

2

Provision of reserve for price fluctuation......................................................

13,693

15,836142

Losses on advanced depreciation of real estate for tax purpose.................

3

—

—

14,39016,278146

Provision of reserve for dividends to policyholders (subsidiary)................

336

337

3

Surplus before income taxes..........................................................................

43,916

38,635348

Current..........................................................................................................

12,377

12,345

111

Deferred.......................................................................................................

(9,722)(10,450)(94)

Total income taxes...........................................................................................

2,655

1,895

17

Net surplus.......................................................................................................

41,261

36,739331

Extraordinary losses:

Total extraordinary losses

Income taxes:

Net surplus attributable to non-controlling interests...................................

100

1

0

Net surplus attributable to the parent company...........................................

¥41,161¥36,738$331

Consolidated Statements of Comprehensive Income
Fukoku Mutual Life Insurance Company and consolidated subsidiaries
For the years ended March 31, 2018 and 2019Year ended March 31,

2018

2019

Millions of
U.S. dollars

Millions of yen

Net surplus........................................................................................................

2019¥41,261¥36,739$ 331

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

2,115

7,957

71

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

56

(119)

(1)

Remeasurements of defined benefit plan, net of tax...................................

3,184

538

4

5,356

8,376

75

Comprehensive income attributable to the parent company.......................

46,51845,024405

Comprehensive income attributable to non-controlling interests.................

100

92

0

¥46,618¥45,116$ 406

Other comprehensive income:Comprehensive income:

FUKOKU MUTUAL LIFE INSURANCE COMPANY

35

Consolidated Statements of Cash Flows
Fukoku Mutual Life Insurance Company and consolidated subsidiaries
For the years ended March 31, 2018 and 2019Year ended March 31,

2018

2019

Millions of yen

Cash flows from operating activities:
Surplus before income taxes........................................................................
Depreciation of real estate for rent and other assets...................................
Depreciation.................................................................................................
Impairment losses........................................................................................
Amortization of goodwill...............................................................................
Increase (decrease) in reserve for outstanding claims.................................
Increase (decrease) in policy reserve...........................................................
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) on securities, net..................................................................
Interest expenses.........................................................................................
Foreign exchange losses (gains), net...........................................................
Losses (gains) on tangible fixed assets, net.................................................
Decrease (increase) in agency receivable.....................................................
Decrease (increase) in reinsurance receivable.............................................
Decrease (increase) in other assets except frominvesting and financing activities................................................................
Increase (decrease) in agency payable.........................................................
Increase (decrease) in reinsurance payable..................................................
Increase (decrease) in other liabilities except frominvesting and financing activities................................................................
Others...........................................................................................................
Subtotal...................................................................................................
Interest, dividends and other income received............................................
Interest expenses paid.................................................................................
Dividends to policyholders paid....................................................................
Dividends to policyholders paid (subsidiary).................................................
Corporate income tax (paid) refunded..........................................................
Net cash provided by (used in) operating activities (a)............................
Cash flows from investing activities:
Net decrease (increase) in deposits.............................................................
Proceeds from sales and redemption of monetary claims bought...............
Increase in money held in trust....................................................................
Decrease in money held in trust...................................................................
Payments for purchase of securities............................................................
Proceeds from sales and redemption of securities......................................
Payments for additions to loans...................................................................
Proceeds from collections of loans..............................................................
Proceeds from and payments for settlements of derivatives, net...............
Others...........................................................................................................
Subtotal (b)..............................................................................................
(a + b)......................................................................................................

36

FUKOKU MUTUAL LIFE INSURANCE COMPANY

2019
Millions of
U.S. dollars¥ 43,916
4,271
8,830
141
763
(56)
26,58812¥ 38,635
4,165
12,147
228
37
2,418
1,860
12

0
336
273
(390)
13,693(173,481)(18,402)
4,232
16,012
(63)
3
(20)

0
337
46
(870)
15,836(174,763)(15,622)
3,892
13,397
145
(1)
47

0
3
0
(7)
142
(1,574)
(140)
35
120
1
(0)
0

(1,875)
(28)
(4)

(878)
47
13

(7)
0
0

1,642
17,202(56,403)
180,718(4,491)(32,138)(395)(14,492)
72,798915
18,544(79,406)
178,314(3,866)(33,862)(412)(10,790)
49,976

8
167
(715)
1,606
(34)
(305)
(3)
(97)
450

225
271
(8,800)8,800(916,556)
821,149(83,642)
108,673
22,930(5,897)(52,845)¥ 19,952

138
144(2,000)9,263(644,228)
607,481(89,212)113,336(28,014)(6,735)(39,825)¥ 10,151

1
1
(18)
83
(5,804)
5,473
(803)
1,021
(252)
(60)
(358)
$
91

$

348
37
109
2
0
21
16
0

Year ended March 31,

2018

2019

2019
Millions of
U.S. dollars

Millions of yen

Payments for purchase of tangible fixed assets...........................................

¥ (7,376)¥ (6,398)

Proceeds from sales of tangible fixed assets..............................................

551

95

$

(57)
0

Payments for purchase of intangible fixed assets........................................

(6,479)(5,119)(46)

Net cash provided by (used in) investing activities..................................

(66,150)(51,247)(461)

Proceeds from issuance of subordinated bonds..........................................

30,000——Cash flows from financing activities:
Redemption of subordinated bonds.............................................................

(30,000)——

Payment of interest on foundation funds.....................................................

(100)

(100)

(0)

Dividends paid to non-controlling interests..................................................

(13)

(7)

(0)

Payments for lease obligations.....................................................................

(1,526)(2,915)(26)

Net cash provided by (used in) financing activities..................................

(1,641)(3,023)(27)

Effect of exchange rate changes on cash and cash equivalents.................

(643)

(180)

(1)

Net increase (decrease) in cash and cash equivalents.................................

4,363(4,475)(40)

Cash and cash equivalents at the beginning of the fiscal year....................

328,236

332,5992,996

Cash and cash equivalents at the end of the fiscal year..............................

¥ 332,599¥ 328,124$2,956

FUKOKU MUTUAL LIFE INSURANCE COMPANY

37

Consolidated Statements of Changes in Net Assets
Fukoku Mutual Life Insurance Company and consolidated subsidiaries
For the years ended March 31, 2018 and 2019

Millions of yen
Foundation funds, surplus and others

Foundation funds

Accumulated
foundation funds
redeemed¥10,000¥106,000

Consolidated surplus

Total foundation funds,
surplus and others¥133,217¥249,329

Additions to reserve for dividends to policyholders�������������

(34,592)(34,592)

Payment of interest on foundation funds����������������������������

(100)

(100)

Net surplus attributable to the parent company
for the fiscal year���������������������������������������������������������������

41,161

41,161

Reversal of revaluation reserve for land, net of tax�������������

(65)

(65)

For the year ended March 31, 2018
Balance at the beginning of the fiscal year������������������������������

Reserve for revaluation¥112

Changes in the fiscal year

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

—

—

—

6,403

6,403

Balance at the end of the fiscal year���������������������������������������

¥10,000¥106,000¥112¥139,621¥255,733

Millions of yen
Accumulated other comprehensive income

For the year ended March 31, 2018
Balance at the beginning of the fiscal year��������

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

Revaluation
reserve for land,
net of tax¥342,470¥4,107

Foreign currencytranslation
adjustments¥(433)

Accumulated
remeasurementsof defined
benefit plans

Total accumulated
othercomprehensive
incomeNon-controllinginterests

Total net assets¥(9,240)¥336,904¥8,603¥594,837

Changes in the fiscal year
Additions to reserve for dividends topolicyholders������������������������������������������������

(34,592)

Payment of interest on foundation funds������

(100)

Net surplus attributable to the parent
company for the fiscal year�������������������������

41,161

Reversal of revaluation reserve for land,
net of tax�����������������������������������������������������

(65)

Net changes, excluding foundation funds,
surplus and others���������������������������������������

2,115

65

56

3,184

5,422

86

5,508

Total changes in the fiscal year��������������������������

2,115

65

56

3,184

5,422

86

11,912

Balance at the end of the fiscal year�����������������

¥344,585¥4,173¥(377)¥(6,055)¥342,326¥8,690¥606,750

38

FUKOKU MUTUAL LIFE INSURANCE COMPANY

Millions of yen
Foundation funds, surplus and others

Foundation funds

Accumulated
foundation funds
redeemed¥10,000¥106,000

Consolidated surplus

Total foundation funds,
surplus and others¥139,621¥255,733

Additions to reserve for dividends to policyholders�������������

(38,630)(38,630)

Payment of interest on foundation funds����������������������������

(100)

(100)

Net surplus attributable to the parent company
for the fiscal year���������������������������������������������������������������

36,73836,738

Reversal of revaluation reserve for land, net of tax�������������

41

41

For the year ended March 31, 2019
Balance at the beginning of the fiscal year������������������������������

Reserve for revaluation¥112

Changes in the fiscal year

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

—

—

—

(1,951)(1,951)

Balance at the end of the fiscal year���������������������������������������

¥10,000¥106,000¥112¥137,669¥253,781

Millions of yen
Accumulated other comprehensive income

For the year ended March 31, 2019
Balance at the beginning of the fiscal year��������

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

Revaluation
reserve for land,
net of tax¥344,585¥4,173Foreign currencytranslation
adjustments¥(377)

Accumulated
remeasurementsof defined
benefit plans

Total accumulated
othercomprehensive
incomeNon-controllinginterests

Total net assets¥(6,055)¥342,326¥8,690¥606,750

Changes in the fiscal year
Additions to reserve for dividends topolicyholders������������������������������������������������

(38,630)

Payment of interest on foundation funds������

(100)

Net surplus attributable to the parent
company for the fiscal year�������������������������

36,738

Reversal of revaluation reserve for land,
net of tax�����������������������������������������������������

41

Net changes, excluding foundation funds,
surplus and others���������������������������������������

7,867

(41)

(119)

538

8,244

84

8,329

Total changes in the fiscal year��������������������������

7,867

(41)

(119)

538

8,244

84

6,377

Balance at the end of the fiscal year�����������������

¥352,453¥4,132¥(496)¥(5,517)¥350,571¥8,774¥613,127

FUKOKU MUTUAL LIFE INSURANCE COMPANY

39

Millions of U.S. dollars
Foundation funds, surplus and others

Foundation funds

Accumulated
foundation funds
redeemed

$90

$955

Consolidated surplus

Total foundation funds,
surplus and others$1,257$2,304

Additions to reserve for dividends to policyholders�������������

(348)

(348)

Payment of interest on foundation funds����������������������������

(0)

(0)

Net surplus attributable to the parent company
for the fiscal year���������������������������������������������������������������

331

331

Reversal of revaluation reserve for land, net of tax�������������

00

For the year ended March 31, 2019
Balance at the beginning of the fiscal year������������������������������

Reserve for revaluation$1

Changes in the fiscal year

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

—

—

—

(17)

(17)

Balance at the end of the fiscal year���������������������������������������

$90

$955

$1

$1,240$2,286

Millions of U.S. dollars
Accumulated other comprehensive income

For the year ended March 31, 2019
Balance at the beginning of the fiscal year��������

Net unrealized
gains (losses) on
available-for-salesecurities,
net of tax$3,104

Revaluation
reserve for land,
net of tax$37

Foreign currencytranslation
adjustments$(3)

Accumulated
remeasurementsof defined
benefit plans$(54)

Total accumulated
othercomprehensive
income$3,084Non-controllinginterests$78

Total net assets$5,466

Changes in the fiscal year
Additions to reserve for dividends topolicyholders������������������������������������������������

(348)

Payment of interest on foundation funds������

(0)

Net surplus attributable to the parent
company for the fiscal year�������������������������

331

Reversal of revaluation reserve for land,
net of tax�����������������������������������������������������

0

Net changes, excluding foundation funds,
surplus and others���������������������������������������

70

(0)

(1)

4

74

0

75

Total changes in the fiscal year��������������������������

70

(0)

(1)

4

74

0

57

Balance at the end of the fiscal year�����������������

$3,175

$37

$(4)

$(49)

$3,158$79$5,52440

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 havebeen prepared from the accounts maintained by Fukoku MutualLife Insurance Company (the “Company”) and its consolidated
subsidiaries 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 consolidated financial
statements include information which is not required underaccounting principles generally accepted in Japan but ispresented herein as additional information.
Amounts of less than one million yen have been rounded
down. As a result, the totals do not add up.
The translations of yen amounts into U.S. dollar amounts
are included solely for the convenience of the reader and havebeen made, as a matter of arithmetical computation only, at therate of ¥110.99 = US$1.00, the effective rate of exchange at thebalance sheet date of March 31, 2019. The translations should
not be construed as representations that such yen amounts
have been or could in the future be, converted into U.S. dollars
at that or any other rates.

(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 a whole,
therefore, application of equity method is not applied.
There are no affiliates for the year ended March 31,2018 and 2019.
(3) Fiscal Year of Consolidated Subsidiaries
Among the subsidiaries to be consolidated, fiscal year-endof overseas subsidiaries is December 31. For the preparationof consolidated financial statements, financial statements
as of that date are used and concerning any importanttransaction taking place in between December 31 andthe consolidated closing date, necessary adjustments forconsolidation are made.
(4) Amortization of Goodwill
Goodwill is amortized by the straight-line method over a
period of 10 years and in case of the immaterial amount of
goodwill, such amount is fully charged to operating expenses
when incurred.

2. Principles of Consolidation(1) Scope of Consolidation
Consolidated subsidiaries as of March 31, 2018 and 2019 arelisted 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.
Four 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 andare sufficiently insignificant to reasonable judgement on theirimpact on the financial position and results of operation of
the Company’s group.

FUKOKU MUTUAL LIFE INSURANCE COMPANY

41

II. Notes to the Consolidated Balance Sheets
1. (1) The valuation of securities, including bank deposits andmonetary claims bought which are equivalent to securities,
and securities managed as trust assets in money held in
trust, is as follows:i. Trading securities are stated at fair market value.
Costs of their sales are determined by the moving
average method.
ii. Held-to-maturity debt securities are stated at amortizedcost under the straight-line method, cost being
determined by the moving average method.
iii. Policy-reserve-matching bonds are stated atamortized 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 ofCertified Public Accountants on November 16, 2000).
iv. Investments in unconsolidated subsidiaries andaffiliates which are not accounted for under the equity
method are stated at cost, cost being determined by
the moving average method.
v. Available-for-sale securities with fair market value
are stated at fair market value based on the market
prices at the end of the fiscal year. Costs of their sales
are determined by the moving average method. Net
unrealized gains or losses on these available-for-salesecurities, net of taxes, are recorded as a separate
component of net assets.
vi. 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 determinedby the moving average method.
(2) Derivative instruments are stated at fair market value.
(3) The Company revalued the land used in the operations basedon the Act for Revaluation of Land (Act No.34 promulgatedon March 31, 1998). The difference between fair value andbook value resulting from the revaluation, net of related
taxes, is recorded as revaluation reserve for land as aseparate component of net assets and the related tax isrecorded 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

42

FUKOKU MUTUAL LIFE INSURANCE COMPANYof the Act for Revaluation of Land (Government OrdinanceNo.119 promulgated on March 31, 1998) and the roadrate set forth in Article 2 item 4 of the said Ordinance withcertain reasonable adjustments.
(4) D epreciation of the Company’s tangible fixed assets is
calculated by the following methods.
•T angible fixed assets (excluding lease assets): Decliningbalance 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.
•L ease 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) A ssets and liabilities denominated in foreign currencies,
except for investments in unconsolidated subsidiaries
and affiliates, are translated into Japanese yen at theeffective exchange rate prevailing at the balance sheet date.
Investments in unconsolidated subsidiaries and affiliates aretranslated into Japanese yen at the exchange rate on thedate of acquisition.
(6) A llowance for possible loan losses for the Company
is provided in accordance with the standards of selfassessment and write-offs and reserves on credit quality:i. F or 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”), theCompany provides the remaining amount of credits after
the direct write-off described below and the deductions of
the amount expected to be collected through the disposalof collateral or the execution of guarantees.
ii. F or 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 as necessary
considering the borrowers’ ability to pay, within theamounts after deductions of the amount expected to becollected through the disposal of collateral or the executionof guarantees.
iii. F or the credits of borrowers other than the above, theCompany provides the amounts calculated by multiplying
the borrowers’ balance by the actual ratio of bad debt
losses on defaults during a certain past period.
All credits are assessed by the relevant departmentsin accordance with the Company’s standards of self-assessment on credit quality. The results of the assessment
are reviewed by the audit department, which is independentof business-related divisions. Subsequently, the allowancefor possible loan losses is provided based on the results ofthese assessments.
For the credits of legally bankrupt borrowers andsubstantially bankrupt borrowers, the amounts remaining
after deductions of collateral value or the amounts
collectible through the execution of guarantees are writtenoff directly from the borrowers’ balances as the estimateduncollectible amounts. The amount written-off as of March
31, 2018 and 2019 were ¥1 million and ¥1 million (US$9thousand), respectively.
(7) Net defined benefit liability, which is provided for
employees’ retirement benefits, is calculated by deducting
the amount of pension assets from the amount of retirement
benefit obligations incurred as of the balance sheet datebased on the projected retirement benefits as of the current
fiscal year end.
The Company uses the following methods of accounting
in relation to retirement benefits:• Method for allocation of projected retirement benefits.....Benefit formula basis• Amortization period of actuarial gains and losses...10 years• Amortization period of prior service cost.................10 years(8) Reserve for price fluctuation is calculated in accordance with
Article 115 of the Insurance Business Act.
(9) As for the finance lease transactions where the Company
is a lessor, the lease fee is recorded in “Interest, dividends
and other income” at the time of receiving lease fee. The
corresponding cost of the lease transactions is recorded
in “Other investment expenses”, which is calculated bydeducting an amount equivalent to the interest allocated overthe lease term from the lease fee received.
(10) Hedge accounting is based on “Accounting Standards for
Financial Instruments” (ASBJ Statement No. 10, March 10,2008). The Company applies a fair value hedge accounting
as a hedge against the risk of foreign exchange fluctuationin relation to bonds denominated in foreign currencies andagainst the risk of price fluctuation in relation to domestic
stocks, and a designated hedge accounting (“Furiate
shori”) for foreign currency swaps as a hedge against therisk of foreign exchange fluctuation in relation to bonds
denominated in foreign currencies issued by the Company.
For assessing the effectiveness of hedge used, ratio
analysis of comparing the fluctuations in the fair value orcash flows of hedged items and hedging instruments ismainly applied.

(11) T he 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 other thandeferred consumption taxes are recognized as an expense
when incurred.
(12) P olicy reserve is based on Article 116 of the Insurance
Business Act, and the premium reserve is calculated by thefollowing method:i. In regard to the policies subject to the standard policy
reserve, the method as prescribed by the Commissionerof Financial Services Agency (Ministry of FinanceOrdinance No. 48, 1996) is applied.
ii. In regard to the policies not subject to the standard policy
reserve, the net level premium method is applied.
Based on the provision of Article 69, paragraph 5, of the
Enforcement Regulation of the Insurance Business Act,
the Company includes additional funded policy reserves
as follows.
Among individual annuity insurance policies with anassumed interest rate of 5.00% or higher, policies that havean annuity commencement date on or prior to March 31,2018 (excluding wife’s annuity insurance additional rider),the Company reduced the assumed interest rate to 1.00%
and funded additional policy reserves. As of March 31, 2018,
the balance of these policy reserves was ¥73,222 million.
The Company also funded additional policy reserves
for certain individual annuity insurance policies, whole
life insurance policies that include distribution of surplus
every five years and highly advanced medical riders. As of
March 31, 2018, the balance of these policy reserves was¥5,628 million.
Of the above, the amount funded as of March 31,2018 was ¥13,574 million. As a result, compared to theamount without this additional funding, provision of policy
reserve increased ¥13,574 million, while ordinary profit andsurplus before income taxes decreased ¥13,574 million.
Among individual annuity insurance policies with anassumed interest rate of 5.00% or higher, for policies thathave begun paying annuities (excluding wife’s annuity
insurance additional rider), the Company reduced theassumed interest rate to 1.00% and funded additional policy
reserves. As of March 31, 2019, the balance of these policy
reserves was ¥73,836 million (US$665 million).
The Company also funded additional policy reserves
for certain individual annuity insurance policies, whole life
insurance policies that include distribution of surplus every
five years, new cancer riders and highly advanced medical
riders. As of March 31, 2019, the balance of these policy
reserves was ¥13,391 million (US$120 million).

FUKOKU MUTUAL LIFE INSURANCE COMPANY

43

(13) Intangible fixed assets are amortized as follows:i. Software for internal use is amortized based on thestraight-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 by the Company in accordancewith “Temporary Treatment of Accounting and Auditing
Concerning Policy-reserve-matching Bonds in Insurance
Industry” (Industry Audit Committee Report No. 21 issued
by the Japanese Institute of Certified Public Accountants on
November 16, 2000).
2. Asset management of the general accounts other than theseparate accounts stipulated in Article 118 Paragraph 1 ofthe Insurance Business Act is conducted on the principle
of prudent and profitable investments by the Company,
considering public and social responsibilities of the insurance
business. Based on this policy, the Company allocates thefund, securing its liquidity, from the medium-to-long term
viewpoints. The Company is diversifying investments inassets such as foreign securities, stocks and real estates
within the acceptable range of risk in order to enhance
the profitability, although yen-denominated interest
bearing assets including debt securities such as Japanese
government bonds and loans are the cores of the portfolios
under the asset liability management. Derivatives aremainly used to hedge the market risk regarding spot-priced
assets and liabilities. Major financial instruments including
securities, loans and derivatives are exposed to market risk
and credit risk.
The Company manages its asset management risk by
establishing internal control systems including various rules
pursuant to the “Three Basic Rules related to Enterprise
Risk Management” established by the Board of Directors.
Specifically, the Company eliminates excessive risk deviatingfrom the basic principle and secures the safety of theassets by utilizing control functions of the Financial andInvestment Risk Management Department towards the asset
management sections, monitoring the status of market risk
and credit risk periodically on a daily or monthly basis. In
addition, the Company quantifies the market risk and credit
risk using value-at-risk (VaR) method in order to control thepossible maximum losses which may arise from the holding
assets within a certain range of risk buffers.
The carrying amounts, fair values and their relateddifferences of major financial assets and liabilities in thegeneral account were as follows:

44

FUKOKU MUTUAL LIFE INSURANCE COMPANY(1) C ash, deposits (excluding financial instruments treated as
securities based on “Accounting Standards for Financial
Instruments” (ASBJ Statement No.10, March 10, 2008)) andcall 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) S ecurities including deposits and monetary claims bought
which are treated as securities based on “AccountingStandards for Financial Instruments” (ASBJ Statement
No.10, March 10, 2008) 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 fairvalues of other securities without the quoted market prices
are based on the prices reasonably calculated such as theprices offered by the information vendors or counterparty
financial institutions.
Investments in unconsolidated subsidiaries andaffiliates, 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 and affiliates,
unlisted stocks and investments in partnerships were ¥454
million, ¥5,697 million, and ¥23,609 million as of March 31,2018 and ¥404 million (US$3 million), ¥5,696 million (US$51
million), and ¥27,318 million (US$246 million) as of March 31,
2019, respectively.
(3) L oans and monetary claims bought treated as loans:
The fair values of policy loans are deemed to approximatebook values, considering estimated repayment period andinterest rate conditions since their repayment deadlines havenot been set up due to the characteristics that the loans arelimited to the amount of cash surrender values. Therefore,
the book values are used as the fair values of policy loans.
The fair values of floating interest rate loans among theordinary 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 andmonetary claims bought treated as loans are based on theirbook values. The fair values of fixed interest rate loans
are measured by discounting the future cash flows to thepresent 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 the amount of
the allowance for possible loan losses from the book values
before direct write-offs.

As of March 31,

2018
Millions of yen
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�����������������������������������������������

¥¥155,905
155,905
176,000

Fair value¥

155,905
155,905
176,000

Difference

¥

—
—
—

443
443

474
474

30
30

30,50230,50230,50230,502——

149,265
1,237,461
2,011,805
3,696,942
7,095,474

149,265
1,475,318
2,254,443
3,696,942
7,575,970—
237,857
242,638—
480,495

60,732536,553597,285
8,055,612
191,935
191,935

60,732558,957
619,6908,558,543
200,774
200,774(0)22,404
22,404502,930
8,839
8,839

(534)
9,672
9,138

(534)
9,672
9,138

—
—
—

¥

¥

As of March 31,

2019

2019

Millions of yen

Millions of U.S. dollars

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�����������������������������������������������

¥¥151,527
151,527
176,000

Fair value¥

151,527
151,527
176,000

Difference¥

Carrying amount

Fair value

Difference———$ 1,365
1,365
1,585

$ 1,365
1,365
1,585

$

—
—
—

299
299

319
319

20
20

2
2

2
2

0
0

22,85022,85022,85022,850

—
—

205
205

205
205

—
—

97,1101,256,418
1,923,187
3,909,427
7,186,144

97,1101,505,773
2,174,682
3,909,427
7,686,993—
249,355
251,494—
500,849874
11,32017,32735,22364,745874
13,566
19,59335,223
69,258

—
2,246
2,265
—
4,512

59,972504,806
564,778
8,101,599
191,935
191,935

59,971
530,223590,195
8,627,886
198,912
198,912(0)25,41725,416526,286
6,977
6,977

540
4,548
5,088
72,993
1,729
1,729

540
4,777
5,317
77,735
1,792
1,792

(0)
229
229
4,741
62
62

(107)
(3,230)(3,338)(107)(3,230)(3,338)

—
—
—

(0)
(29)
(30)

(0)
(29)
(30)

—
—
—

¥

¥

$

$

$

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

FUKOKU MUTUAL LIFE INSURANCE COMPANY

45

(4) Subordinated bonds:
Subordinated bonds issued by the Company are stated at fairmarket values.
(5) Derivative instruments:
i. The fair values of the futures and options traded at
the exchange are measured at the settlement price ofthe exchange.
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 and forward
contract rate.
3. T he Company holds investment and rental properties suchas office buildings in Tokyo and other areas. The carrying
amounts and the fair values of investment and rental
properties were ¥171,415 million and ¥294,210 million as ofMarch 31, 2018 and ¥171,231 million (US$1,542 million) and¥312,797 million (US$2,818 million) as of March 31, 2019,respectively. The fair value is mainly based on the value
calculated by the Company in accordance with real estateappraisal standards which includes some adjustments using
the reference prices.
The amount corresponding to asset retirement
obligations included in the carrying amount of investment
and rental properties were ¥839 million and ¥695 million(US$6 million) as of March 31, 2018 and 2019, respectively.
4. T he amount of securities lent under lending agreements were¥254,467 million and ¥299,194 million (US$2,695 million) as
of March 31, 2018 and 2019, respectively.
5. T he total amounts of credits to bankrupt borrowers,
delinquent loans, delinquent loans past 3 months or more
and restructured loans, which were included in loans, were
¥1,045 million and ¥954 million (US$8 million) as of March 31,2018 and 2019, respectively;i. The balances of credits to bankrupt borrowers were ¥180
million and ¥172 million (US$1 million) as of March 31,2018 and 2019, respectively.
ii. The balances of delinquent loans were ¥865 million and¥782 million (US$7 million) as of March 31, 2018 and2019, respectively.
iii. There were no balances of delinquent loans past 3 months
or more and restructured loans as of March 31, 2018 and2019, respectively.
The direct write-offs related to loans decreased credits tobankrupt borrowers described above by ¥1 million and ¥1 million(US$9 thousand) as of March 31, 2018 and 2019, respectively.
Credits to bankrupt borrowers represent loans,
excluding the balances already written-off, which meet theconditions prescribed in Article 96 Paragraph 1 item 3 and46

FUKOKU MUTUAL LIFE INSURANCE COMPANY

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 interest on
these loans is unlikely to be collected due to the significant
delay in repayment of principal or interest payment or forsome 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 been suspended
and rescheduled to assist and support the borrowers in the
restructuring of their business.
Delinquent loans past 3 months or more are loans
for which interest payments or repayments of principal
are delinquent for 3 months or more from the due dateunder the terms of the related loan agreements, excluding
those loans classified as credits to bankrupt borrowers anddelinquent loans.
Restructured loans are loans for which certain
concessions favorable to borrowers, such as interest
reduction or exemption, rescheduling of due date forrepayments 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 restructuringof their business. This category excludes loans classified
as credits to bankrupt borrowers, delinquent loans anddelinquent loans past 3 months or more.
6. A
 ccumulated depreciation of tangible fixed assets were
¥164,086 million and ¥167,799 million (US$1,511 million) as
of March 31, 2018 and 2019, respectively.
7. Total assets in separate accounts provided for in Article
118 of the Insurance Business Act were ¥82,347 millionand ¥71,585 million (US$644 million) as of March 31, 2018and 2019, respectively. The amounts of separate accountliabilities were the same as separate account assets.
8. The total amounts of receivables from/payables tounconsolidated subsidiaries were ¥2,338 million and ¥110
million as of March 31, 2018 and ¥3,093 million (US$27
million) and ¥36 million (US$327 thousand) as of March 31,
2019, respectively.
9. Deferred tax assets and deferred tax liabilities as of March
31, 2018 were ¥133,323 million and ¥137,309 million,
respectively. Valuation allowance for deferred tax assets was¥4,723 million.
Major components of deferred tax assets were ¥80,174
million of policy reserves, ¥29,546 million of reserve for pricefluctuation and ¥14,756 million of net defined benefit liability
as of March 31, 2018.
Major component of deferred tax liabilities was ¥132,998
million of net unrealized gains on availablefor-sale securities

as of March 31, 2018.
The statutory tax rate and the actual effective tax rate
for the year ended March 31, 2018 were 28.2% and 6.0%,
respectively. The difference between the statutory tax rate
and the actual effective tax rate was attributable mainly to-24.8% of reserve for dividends to the policyholders.
Deferred tax assets and deferred tax liabilities as ofMarch 31, 2019 were ¥143,826 million (US$1,295 million)and ¥141,111 million (US$1,271 million), respectively.
Valuation allowance for deferred tax assets was ¥4,274
million (US$38 million).
Major components of deferred tax assets were ¥87,060

million (US$784 million) of policy reserves, ¥33,980 million(US$306 million) of reserve for price fluctuation and ¥14,325
million (US$129 million) of net defined benefit liability as ofMarch 31, 2019.
Major component of deferred tax liabilities was ¥136,073
million (US$1,225 million) of net unrealized gains on availablefor-sale securities as of March 31, 2019.
The statutory tax rate and the actual effective tax rate
for the year ended March 31, 2019 were 28.0% and 4.9%,
respectively. The difference between the statutory tax rate
and the actual effective tax rate was attributable mainly to-25.1% of reserve for dividends to the policyholders.

10. Changes in reserve for dividends to policyholders were as follows:Year ended March 31,

2018

2019

2019
Millions of
U.S. dollars

Millions of yen

Balance at the beginning of the fiscal year����������������������������������������������������������

¥50,929¥53,395$481

Transfer from surplus in the previous fiscal year�������������������������������������������������

34,592

38,630348

Dividend payments to policyholders during the fiscal year���������������������������������

(32,138)(33,862)(305)

Increase in interest����������������������������������������������������������������������������������������������

12

12

0

Balance at the end of the fiscal year�������������������������������������������������������������������

¥53,395¥58,176$524

11. Changes in reserve for dividends to policyholders (Fukokushinrai Life Insurance Co., Ltd.) were as follows:Year ended March 31,

2018

2019

2019
Millions of
U.S. dollars

Millions of yen

Balance at the beginning of the fiscal year����������������������������������������������������������

¥598

¥539

$4

Dividend payments to policyholders during the fiscal year���������������������������������

(395)

(412)

(3)

Increase in interest����������������������������������������������������������������������������������������������

0

0

0

Provision for reserve for dividends to policyholders��������������������������������������������

336

337

3

Balance at the end of the fiscal year�������������������������������������������������������������������

¥539

¥465

$4

12. The amount of stocks of unconsolidated subsidiaries were¥454 million and ¥404 million (US$3 million) as of March 31,2018 and 2019, respectively.
13. Assets pledged as collateral as of March 31, 2018 were¥25,447 million of securities and ¥1,378 million of bankdeposits. Secured debts as of March 31, 2018, were
¥5,174 million.
Assets pledged as collateral as of March 31, 2019 were
¥17,839 million (US$160 million) of securities and ¥744
million (US$6 million) of bank deposits. Secured debts as ofMarch 31, 2019, were ¥5,387 million (US$48 million).

14. R
 eserve 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 for ceded
reinsurance”) were ¥10 million and ¥70 million (US$632
thousand) as of March 31, 2018 and 2019, respectively.
Policy reserve for the reinsurance contracts provided inaccordance with Article 71 Paragraph 1 of the Enforcement
Regulation of the Insurance Business Act (hereinafter called“policy reserve for ceded reinsurance”) were ¥53 million and¥54 million (US$489 thousand) as of March 31, 2018 and2019, respectively.

FUKOKU MUTUAL LIFE INSURANCE COMPANY

47

15. There were unused commitment line agreements underwhich the Company is the lender of ¥2,490 million and¥5,994 million (US$54 million) as of March 31, 2018 and2019, respectively.
16. Repayments of subordinated bonds are subordinated toother obligations.

17. T he future contribution to the Life Insurance Policyholders
Protection Corporation of Japan under Article 259 of the
Insurance Business Act was estimated at ¥11,039 millionand ¥10,530 million (US$94 million) as of March 31, 2018and 2019, respectively.
The contribution is recognized as operating expenses
when contributed.

18. Matters Related to Employees’ Retirement Benefits(1) Overview of Employees’ Retirement Benefit Plan
As for a defined benefit plan for office-based employees, the Company and its consolidated subsidiaries have a defined benefit
corporate pension plan and retirement lump-sum payments. As for a defined contribution plan for these employees, the Company
also has a defined contribution pension plan.
As for a defined benefit plan for sales employees, the Company has retirement lump-sum payments.
The Company places a retirement benefit trust in relation to the retirement lump-sum grant plan for sales employees.
The simplified method for calculating retirement benefit obligation is applied to a portion of the Company and someconsolidated subsidiaries’ retirement lump-sum grant plans.

(2) Defined Benefit Plani. Reconciliation of beginning and end of balance of retirement benefit obligation

As of March 31,

2018

2019

2019
Millions of
U.S. dollars

Millions of yen

Retirement benefit obligation at the beginning of the fiscal year������������������������

¥85,446¥86,420$778

Service cost���������������������������������������������������������������������������������������������������������

3,548

3,667

33

Interest cost��������������������������������������������������������������������������������������������������������

511

516

4

Actuarial differences occurred during the fiscal year�������������������������������������������

1,232

1,080

9

Retirement benefit payments������������������������������������������������������������������������������

(4,317)(4,301)(38)

Retirement benefit obligation at the end of the fiscal year���������������������������������

¥86,420¥87,382$787

ii. Reconciliation of beginning and end of balance of pension plan assets

As of March 31,

2018

2019

Millions of
U.S. dollars

Millions of yen

Pension plan assets at the beginning of the fiscal year���������������������������������������

2019¥46,721¥52,509$473

Expected return on pension plan assets�������������������������������������������������������������

732

972

8

Actuarial differences occurred during the fiscal year�������������������������������������������

3,386

145

1

Contributions by the employer����������������������������������������������������������������������������

2,750

2,768

24

Retirement benefit payments������������������������������������������������������������������������������

(1,081)(1,306)(11)

Others������������������������������������������������������������������������������������������������������������������

0

1

0

Pension plan assets at the end of the fiscal year������������������������������������������������

¥52,509¥55,090$496

48

FUKOKU MUTUAL LIFE INSURANCE COMPANY

iii. Reconciliation of retirement benefit obligation and pension plan assets with net defined benefit liabilities and assets presented on
the consolidated balance sheets
As of March 31,

2018

2019

2019
Millions of
U.S. dollars

Millions of yen

a. Funded plan retirement benefit obligation�������������������������������������������������������

¥74,811¥75,691$681

b. Pension plan assets�����������������������������������������������������������������������������������������

(52,509)(55,090)(496)

c. (a + b) ��������������������������������������������������������������������������������������������������������������

22,302

20,601

185

d. Unfunded plan retirement benefit obligation���������������������������������������������������

11,608

11,691105e. Net amount of liabilities and assets presented on the consolidatedbalance sheet����������������������������������������������������������������������������������������������

33,91132,292290

f. Net defined benefit liabilities���������������������������������������������������������������������������

34,01932,470292

g. Net defined benefit assets������������������������������������������������������������������������������

(107)

(177)

(1)

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

¥33,911¥32,292$290

iv. Breakdown of retirement benefit gains and losses

As of March 31,

2018

2019

2019
Millions of
U.S. dollars

Millions of yen

Service cost���������������������������������������������������������������������������������������������������������

¥3,548¥3,667

Interest cost��������������������������������������������������������������������������������������������������������

511

516

4

Expected return on pension plan assets�������������������������������������������������������������

(732)

(972)

(8)

Amortization of actuarial differences�������������������������������������������������������������������

2,345

1,759

15

Amortization of prior service cost������������������������������������������������������������������������

(76)

(76)

(0)

Others������������������������������������������������������������������������������������������������������������������

(0)

(1)

(0)

Retirement benefit expenses related to defined benefit plan�����������������������������

¥5,595¥4,892$44

v. Remeasurements of defined benefit plan
Remeasurements of defined benefit plan (before tax effects) comprised the following:

As of March 31,

2018

2019

¥4,4992019
Millions of
U.S. dollars

Millions of yen

Amortization of actuarial differences�������������������������������������������������������������������

$33

¥823

$7

Amortization of prior service cost������������������������������������������������������������������������

(76)

(76)

(0)

Total���������������������������������������������������������������������������������������������������������������������

¥4,422¥747$6

vi. Accumulated remeasurements of defined benefit plan
Accumulated remeasurements of defined benefit plan (before tax effects) comprised the following:
As of March 31,

2018

2019

2019
Millions of
U.S. dollars

Millions of yen

Unrecognized actuarial differences���������������������������������������������������������������������

¥(8,657)¥(7,833)

Unrecognized prior service cost��������������������������������������������������������������������������

247

171

1

Total���������������������������������������������������������������������������������������������������������������������

¥(8,410)¥(7,662)

$(69)

$(70)

FUKOKU MUTUAL LIFE INSURANCE COMPANY

49

vii. Breakdown of pension plan assets
The breakdown of asset categories as a percentage of total pension plan assets were as follows:

As of March 31,

2018

2019

Domestic stocks���������������������������������������������������������������������������������������������������������������������

47.6%

44.1%

Life insurance general account�����������������������������������������������������������������������������������������������

33.0%

33.5%

Domestic bonds���������������������������������������������������������������������������������������������������������������������

7.5%

9.6%

Foreign stocks������������������������������������������������������������������������������������������������������������������������

7.8%

7.7%

Foreign bonds�������������������������������������������������������������������������������������������������������������������������

2.7%

3.0%

Others�������������������������������������������������������������������������������������������������������������������������������������

1.4%

2.1%

Total����������������������������������������������������������������������������������������������������������������������������������������

100.0%

100.0%

Within the total of pension assets as of March 31, 2019, 37.3% of this amount is accounted for by the retirement benefit trust
established in relation to the retirement lump-sum payments plan for sales employees.
viii. Method for setting the expected long-term rate of return
To set the expected long-term rate of return on pension plan assets, the Company takes into account the present and future
allocation of pension plan assets, and the present and expected future long-term rate of return on a variety of assets that makes
up the pension assets.
ix. Underlying actuarial assumptions
Main underlying actuarial assumptions were as follows:

As of March 31,

2018

2019

0.6%

0.6%

Defined benefit corporate pension plan����������������������������������������������������������������������������

2.5%

3.0%

Retirement benefit trust����������������������������������������������������������������������������������������������������

0.0%

0.0%

Discount rate��������������������������������������������������������������������������������������������������������������������������
Expected long-term rate of return on pension plan assets(3) Defined Contribution Plan
The required contribution amounts by the Company and its consolidated subsidiaries to the defined contribution plan were ¥318
million and ¥324 million (US$2 million) as of March 31, 2018 and 2019, respectively.

III. Notes to the Consolidated Statements of Operations
1. The total amounts of revenues and expenses in connection with unconsolidated subsidiaries were ¥95 million and ¥2,027 million forthe year ended March 31, 2018 and ¥83 million (US$756 thousand) and ¥1,806 million (US$16 million) for the year ended March 31,
2019, respectively.
2. For the year ended March 31, 2018, in calculating the reversal of reserve for outstanding claims, a provision of reserves foroutstanding claims reinsured of ¥5 million was added. In calculating the provision of policy reserves, a reversal of reserves for policy
reserves reinsured of ¥0 million was added.
For the year ended March 31, 2019, in calculating the provision of reserve for outstanding claims, a provision of reserves foroutstanding claims reinsured of ¥59 million (US$533 thousand) was deducted. In calculating the provision of policy reserves, aprovision of reserves for policy reserves reinsured of ¥0 million (US$8 thousand) was deducted.

50

FUKOKU MUTUAL LIFE INSURANCE COMPANY

IV. Notes to the Consolidated Statements of Comprehensive Income
1. Other Comprehensive Income
The reclassification adjustments and tax effect amounts related to other comprehensive income were as follows:i. Net unrealized gains (losses) on available-for-sale securities, net of tax

Year ended March 31,

2018

2019

2019
Millions of
U.S. dollars

Millions of yen

Amount incurred during the fiscal year���������������������������������������������������������������������

¥ 20,802¥ 34,935$314

Reclassification adjustments������������������������������������������������������������������������������������

(17,598)(23,903)(215)

Before tax adjustments����������������������������������������������������������������������������������������

3,204

11,032

99

Tax effects������������������������������������������������������������������������������������������������������������

(1,088)(3,074)(27)

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

¥ 2,115¥ 7,957$71

ii. Foreign currency translation adjustments

Year ended March 31,

2018

2019

2019
Millions of
U.S. dollars

Millions of yen

Amount incurred during the fiscal year���������������������������������������������������������������������

¥56¥(119)$(1)

Reclassification adjustments������������������������������������������������������������������������������������

—

—

—

Before tax adjustments����������������������������������������������������������������������������������������

56

(119)

(1)

Tax effects������������������������������������������������������������������������������������������������������������

—

—

—

Foreign currency translation adjustments������������������������������������������������������������

¥56¥(119)$(1)

iii. Remeasurements of defined benefit plans, net of tax

Year ended March 31,

2018

2019

2019
Millions of
U.S. dollars

Millions of yen

Amount incurred during the fiscal year���������������������������������������������������������������������

¥2,153¥ (935)$ (8)Reclassification adjustments������������������������������������������������������������������������������������

2,269

1,683

15

Before tax adjustments����������������������������������������������������������������������������������������

4,422

747

6

Tax effects������������������������������������������������������������������������������������������������������������

(1,238)

(209)

(1)

Remeasurements of defined benefit plans, net of tax�����������������������������������������

3,184

538

4

Total other comprehensive income��������������������������������������������������������������������������

¥5,356¥ 8,376$ 75

FUKOKU MUTUAL LIFE INSURANCE COMPANY

51

V. Notes to the Consolidated Statements of Cash Flows
1. Cash and cash equivalents as of March 31, 2018 and 2019 consist of “Cash,” “Deposits in transfer account,” “Current deposits,”“Ordinary deposits,” “Notice deposits,” “Time deposits maturing within 3 months of the date of acquisition,” “Foreign currency
deposits maturing within 3 months of the date of acquisition,” “Negotiable certificate of deposits maturing within 3 months of thedate of acquisition,” “Call loans” and “Monetary claims bought 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 consolidated balance sheet accounts
were as follows:Year ended March 31,

2018

2019

2019
Millions of
U.S. dollars

Millions of yen

Cash and deposits����������������������������������������������������������������������������������������������������

¥157,703¥153,017$1,378Call loans������������������������������������������������������������������������������������������������������������������

176,000

176,000

1,585

Monetary claims bought.������������������������������������������������������������������������������������������

443

299

2

Time deposits maturing over 3 months of the date of acquisition���������������������������

(100)

(100)

(0)

Foreign currency deposits maturing over 3 months of the date ofacquisition���������������������������������������������������������������������������������������������������������������

(1,003)

(792)

(7)

Monetary claims bought maturing over 3 months of the date ofacquisition���������������������������������������������������������������������������������������������������������������

(443)

(299)

(2)

Cash and cash equivalents���������������������������������������������������������������������������������������

¥332,599¥328,124$2,95652

FUKOKU MUTUAL LIFE INSURANCE COMPANY

Management’s Report on Internal Control over Financial Reporting

1. Matters relating to the basic framework of internal control over financial reporting
Yoshiteru Yoneyama, President of Fukoku Mutual Life Insurance Company (the Company), is responsible for the designand operation of internal control over financial reporting for the Company’s financial statements, namely, consolidatedbalance sheet and the related consolidated statements of operations, comprehensive income, cash flows, changes
in net assets and a summary of significant accounting policies and other explanatory information for the year ended
March 31, 2019, prepared in accordance with Article 110 Paragraph 2 of the Insurance Business Act. The Company
designs and operates its internal control over financial reporting in accordance with the basic framework of internal
control set forth in the Standards and Practice Standards for Management Assessment and Audit concerning Internal
Control Over Financial Reporting (Council Opinions) issued by the Business Accounting Council of the Financial Service
Agency of Japan.
Internal control aims at achieving the objectives to a reasonable extent with the organized and integrated function ofindividual components of internal control as a whole. Therefore, internal control over financial reporting cannot always
ensure the prevention or detection of misstatements in the presentation of financial reporting.
2. Matters relating to the scope of assessment, the basis date of assessment and the assessment procedures
The Company performed an assessment of internal control over financial reporting for its consolidated financial
statements as of the end of the fiscal year, March 31, 2019 in accordance with generally accepted assessment
standards in Japan for internal control over financial reporting.
In the assessment of internal control over financial reporting, the Company first assessed internal controls that havea material impact on overall consolidated financial reporting (company-level controls) and, based on the results, theCompany selected the business processes to be assessed. In assessing those business processes, the Company
analyzed selected business processes, identified a key control that would have a material impact on the reliabilityof financial reporting, and assessed the establishment and operation with regard to the key control. The Company
assessed the effectiveness of internal control by the aforementioned procedures.
For the Company and its consolidated subsidiaries, the Company determined the scope of assessment of internal
control over financial reporting from the perspective of their materiality to the reliability of financial reporting. The
materiality to the reliability of financial reporting is determined in light of their degree of quantitative and qualitative
impact. The Company rationally determined the scope of assessment of internal controls incorporated into businessprocesses (process-level controls) based on the results of assessment of company-level controls regarding theCompany and one consolidated subsidiary. Other than those indicated above, five consolidated subsidiaries were
determined to be immaterial from quantitative and qualitative perspectives. Consequently, they are excluded from thescope of assessment of company-level controls.
With respect to the scope of assessment of process-level controls, the locations or business units were selected
in descending order of ordinary revenues (after elimination of inter-company transactions) in the previous fiscal year
until their combined amount reached about two-thirds of consolidated ordinary revenues. As a result, two companies(the Company and its consolidated subsidiary) were selected as significant locations or business units. At selectedsignificant locations and business units, business processes related to accounting items that were closely associatedwith the company's business objectives, including securities, ordinary loans and policy reserves, as well as premiumand other income and claims and other payments, which have a material impact on the calculation of policy reserves,
were determined to be within the scope of assessment. Furthermore, at selected significant locations and business
units and any other locations and business units, added to the scope of assessment were business processes relating
to important accounting items that have a high possibility of material misstatements and involve estimates andjudgments, and business processes relating to businesses or operations dealing with high-risk transactions.
3. Matters relating to the results of the assessment
As a result of performing the assessment, the Company concluded that the design and operation of internal control
over financial reporting for the Company were effective as of March 31, 2019.
4. Supplementary information
Not applicable
5. Other special information
Not applicable
			
			
			
			

May 17, 2019
Yoshiteru Yoneyama
President

Fukoku Mutual Life Insurance Company

FUKOKU MUTUAL LIFE INSURANCE COMPANY

53

Report of Independent Auditors

54

FUKOKU MUTUAL LIFE INSURANCE COMPANY

FUKOKU MUTUAL LIFE INSURANCE COMPANY

55

Corporate Organization

Domestic Offices (As of April 1, 2019)
Branch Offices
62
Field Offices
464

Secretarial Div.
Strategic Planning Dept.
Compliance Control Dept.

Employees (As of March 31, 2019)
Office Staff
2,871
Sales Representatives 9,818

Corporate Risk Management Dept.
Credit Analysis Div.
General Affairs Dept.
Independent Auditors

Audit & Supervisory
Board

Personnel Dept.
Market Planning Dept.
Retail Management Dept.
Sales Administration Dept.

Audit & Supervisory
Board Members' OfficeMarket Developing Dept.
Strategic Market Promotion Dept.
Pension Consulting Dept.

Board of Representative
Members of Policyholders

Board of Directors

Customer Service Headquarters
Corporate Customer Service Dept.
Individual Customer Service Dept.

Nomination Committee of
Candidates for
Representative Members

Secretariat for Nomination
Committee of Candidates for
Representative Members

Chief Actuary

Underwriting and Medical Dept.
Claims Dept.

Human Resourse
Development
Headquarters

Policy Administration Dept.
Policy Service Dept.
Operation and System Planning Dept.

Board of Full-time Directors

Claim Inspection Div.
Securities Investment Dept.
Loans Dept.

Council

Separate Accounts Management Div.
Securities Administrative Dept.
Investment Planning Dept.
Real Estate Dept.
Accounting Dept.
Actuarial Dept.
Internal Auditing Dept.
Affiliated Business Dept.
Committee for Editing History of the Company
Branch Offices

FUKOKU MUTUAL LIFE INSURANCE COMPANY

57

Corporate Information

Directors, Audit & Supervisory
Board Members and Executive
Officers

President and Chief Executive Officer

Managing Executive Officer

Yoshiteru Yoneyama*

Osamu Suzuki

Deputy President and Executive Officer

Executive Officer

Toshihide Fujiwara

Chikashi Ichikawa

Director and Senior Managing Executive Officer

Executive Officer

Yuuki Sakurai

Takeshi Oomori

Director and Senior Managing Executive Officer

Executive Officer

Toshikatsu Hayashi

Chikao Arita

Director

Executive Officer

Hiroto Yoshimura**

Ichiro Yamada

Director

Executive Officer

Masanori Yanagi**

Takeshi Kondou

Director and Executive Officer

Executive Officer

Yasuyuki Kitamura

Naoki Sunamoto

Director and Executive Officer

Executive Officer

Takehiko Watabe

Naoyuki Asami

Director and Executive Officer

Executive Officer

Keiichi Kurota

Hideaki Shigematsu

Director and Executive Officer

Executive Officer

Naoyuki Torii

Mitsuhiro Hoshino

Audit & Supervisory Board Member

Executive Officer

Yoshizumi Nezu***

Hirotaka Kurihara

Audit & Supervisory Board Member*Representative Director

Yoshikazu Sashida*****External Directors***External Audit & Supervisory Board Member

Audit & Supervisory Board Member

Kyohei Takahashi***
Audit & Supervisory Board Member (Standing)

Kei Yoshizawa
Audit & Supervisory Board Member (Standing)

Shinji Nakao

58

FUKOKU MUTUAL LIFE INSURANCE COMPANY(As of July 2, 2019)

Directory

Fukoku Mutual Life Insurance Company (head office)2-2, Uchisaiwaicho 2-chome, Chiyoda-ku, Tokyo 100-0011, Japan
Phone: 81-3-3508-1101
Facsimile: 81-3-3591-6446
Fukoku Life International (U.K.) Ltd.
3rd Floor, Baltic Exchange, 38 St. Mary Axe, London, EC3A 8EX, U.K.
Phone: 44-20-7283-1331
Facsimile: 44-20-7626-7096
Fukoku Life International (America) Inc.
Times Square Tower, 7 Times Square, 35th Floor, New York, NY 10036, U.S.A.
Phone: 1-212-221-7760
Facsimile: 1-212-221-7794
Fukoku Life Investments Singapore Pte. Ltd.
80 Robinson Road #16-04 Singapore 068898
Phone: 65-6220-8308
Facsimile: 65-6220-8736

Fukoku Life International (U.K.) Ltd.
From left: J. Doran, K. Sato, E. Noma,
T. Keevil and T. Shintani

Fukoku Life International (America) Inc.
From left: A. Chang, T. Hirai, T. Yamamoto,S. Lester and M. Xu

Fukoku Life Investments Singapore Pte. Ltd.
From left: H. Itoh, I. Chan, J. Nishimaki,
M. Wan and Y. Maeda

FUKOKU MUTUAL LIFE INSURANCE COMPANY

59

▲ Tokyo Head Office▲ Osaka Fukoku Mutual Life Insurance Building▲ Sapporo Fukokuseimei Koshiyama Building

60

FUKOKU MUTUAL LIFE INSURANCE COMPANY

P-B10202