Annual Report

2018Year Ended March 31, 2018

Asahi Mutual Life Insurance Company

Contents
1. Message from the President……………………………………………………… 2

2. Review of the Previous Mid-term Management Plan “SHINKA”(FY 2015-2017)……………………………………………………… 3

3. New Mid-term Management Plan “TRY NEXT”……………………………………………………… 4

4. Business Overview……………………………………………………… 5

5. Business Overview for Fiscal Year 2017 (Non-consolidated)……………………………………………………… 6
Business Performance (Annualized Premiums) … 6
Financial Performance ……………………………… 8
Financial Soundness ……………………………… 9
Results of Operations ………………………………10
Assets, Liabilities and Net Assets …………………11
Investments (General Account) ……………………12

6. Governance Structure………………………………………………………13
Corporate Governance ……………………………13
Board of Representative Policyholders ……………14
Basic Policy on the Internal Control Structure ……14
Promoting Compliance ……………………………14
Protecting Customer Information …………………15
Risk Management Structure ………………………15
Ofﬁcers (as of July 3, 2018) …………………………16

7. Consolidated Financial Statements………………………………………………………17

8. Non-consolidated Financial Statements………………………………………………………41

9. Company Overview (as of March 31, 2018)………………………………………………………64

1

1. Message from the President

Aiming to be a company that
contributes to society and continues
to be customersʼ trusted choice
Thank you for your continued support for Asahi
Life.
Founded in 1888, Asahi Life operates according
to the basic management philosophy of “Sincere
Service,” and we have thrived due to the support ofour many customers. It is thanks to you that in March2018 we celebrated the 130th anniversary of our
founding.
We are deeply grateful to have had thisopportunity to spend these years with you.
In the fiscal year ended March 31, 2018 (fiscal year2017), Asahi Lifeʼs insurance business (annualized
premiums) saw growth in new policies forprotection-type products*, which are a focus of ourcompany, while in-force policies for protection-type
protects maintained their trend of a net increase.
Earnings were solid, as fundamental profit saw large
growth compared to the previous fiscal year. The
solvency margin ratio (an indicator of soundness)
also continued to improve.
Meanwhile, the decline of Japanʼs population andthe diversification of customer lifestyles and needs
are predicted to accelerate further in the next decadeand beyond. In this context, we believe that Asahi Life
must clearly perceive the potential for new insurance
needs stemming from the coming social changes,
such as the era of the 100-year lifespan, greater healthawareness, and increasing populations of working
women and singles, and we must work to further
demonstrate the value of our company to society.
* Protection-type products are the total of death protection
insurance and third-sector insurance such as medical insurance,
nursing care insurance, and non-participating group medical
insurance sold through the agency channels.

It is with this mindset that we launched our new midterm management plan “TRY NEXT” in April 2018. As
a company that “supports each and every individual
life,” we aim to increase our visibility by providing
distinctive, pioneering products and services andbeing “a company that contributes to society andcontinues to be customersʼ trusted choice”.
We look forward to receiving your continued
support.

Hiroki Kimura
President and Representative Director

2Asahi Mutual Life Insurance Company Annual Report 2018

2. Review of the Previous Mid-term Management Plan “SHINKA” (FY 2015-2017)
Although total customer volume (individual /corporate) did not meet our strategic targets, it is
growing steadily.
New and in-force policies for protection-type
products*, a focus of our company, are also seeing

steady growth and have met their strategic targets.
* Protection-type products are the total of death protection
insurance and third-sector insurance such as medical insurance,
nursing care insurance, and non-participating group medical
insurance sold through the agency channels.

Sales

Corporate vision

Strategic targets
Customerevaluations
Number ofcustomers

Target achievement status

Satisfaction according to thecustomer satisfaction survey

80% orhigherNumber of individual customers

2.55 million

Increase from 2.489 million at year-end FY 2014
to 2.518 million at year-end FY 2017

Number of corporate customers

43,000

Increase from approx. 34,000 at year-end FY
2014 to approx. 39,000 at year-end FY 2017

No. 1 in the industry for the most in-force
nursing care insurance policies*

Achieved in FY 2017
(approx. 562,000 in-force policies at year-end
FY 2017)

Determined via the FY 2018 survey

Note: Satisfaction in the FY 2017 survey was 73.3%

Sales
representative
Reverse the declining trend of in-force
channelannualized premiums for protection-type
products and achieve a positive trend
Independentagencychannels forindividual
customers

Achieved in FY 2015

2.5x growth in annualized premiums from newpolicies for protection-type products

Achieved in FY 2016

4x growth in annualized premiums from policies
Achieved in FY 2017
in force for protection-type products* In-house survey. “In-force nursing care insurance policies” refers to such policies for customers aged 40 and older.

■ Satisfaction according to the customer satisfaction survey
(%)
74

72
(%)
74

(%)

70.9

70
72

70.3

72
69.6

68
70

73.3

72.8

72.5

74

72.5

2013

70

2014
70.3

2015
70.9
70.9

72.8

72.5

2016

73.3 73.3

72.8

2017

2018

(Survey conducted in the fiscal years ended March 31)

70.3

Note: The survey
has been conducted based on responses to approximately 4,000 postcards (6,000 postcards prior to
69.6(Thousand)(Thousand) 69.6
fiscal years ended March 31, 2017) randomly sent to the Companyʼs customers.

2,520
68

68

2013

2014

2013

2015

2014

■ Number of individual customers
2,500(Thousand)(Thousand)
2,520 2,520
2,480
2,489

2015

2016

2016

2018

(As of March 31)

2017

2017

2018

2018

2017

2018

2017

2018

(Survey (Survey
conducted
in the fiscal
years
ended
conducted
in thefiscalyearsMarch
ended
March 31)
39 31)(Thousand)(Thousand)
39
39
33
34

2,511
2017 2,511

2016

2,480 2,480
2,489 2,489
2,460 2,460
2015

36

2,494

2,494 2,494

2016■ Number of corporate customers

2,518

2,511

2,518 2,518

2,500 2,500
2,460
2015

39
2016

2015

36
30

36

39

36
2015

38
2017 38

2016

33

33
34

34

30

30
2015

2015

(As of March(As of 31)
March 31)

38

36

36

2016

2016

39

2018

(As of March 31)

2017

2017

2018

2018

(As of March(As of 31)
March 31)

Review of the Previous Mid-term Management Plan “SHINKA”

3

3. New Mid-term Management Plan “TRY NEXT”“TRY NEXT – Realizing Growth and Shaping the Future” is Asahi Lifeʼs new three-year mid-term management
plan effective for the FY 2018-2020 period.

Corporate Vision
Asahi Life: a company that contributes to society
and continues to be customers’ trusted choice,supporting each and every individual life

Theme

1

:

Building upon Asahi
Life’s distinctiveness

Theme

2

(1) Working to establish an
unparalleled market presence innursing care insurance(2) Further promoting its
multi-channel distribution strategy(3) Developing new structures forapproaching customers

:

Theme

3

:

Improving profitability

Shaping the future(1) Reforms aimed at establishing a sales
representative structure that offers
the highest quality in the industry(2) Innovations in business operations
through the use of information andcommunications technology (ICT)(3) More sophisticated asset
management(1) Development of personnel for the
future(2) Development of products andservices utilizing ICT andstrengthening of digital marketing(3) Overseas business■ Strategic targets (The following have been set as targets for the FY 2020)
Number of customers

2.58 million individual customers
Approx. 43,000 corporate customers

Annualized premiums
from policies in force
for protection-type
products¥347.0 billion(+¥27.7 billion from FY 2017)
Of which, ¥283.0 billion is insurance for individual customers(+¥9.7 billion from FY 2017)

Nursing care insurance

4

98,000 new policies(Approx. +60,000 from FY 2017)(Approx. +3,000 from FY 2017)(+6% from FY 2017)

Target aimed at achieving “no. 1 in the industry” for the most new nursing care insurance policies

Asahi Mutual Life Insurance Company Annual Report 2018

4. Business Overview
Overview
Asahi Life was established in 1888 as the second
modern life insurance company in Japan under thename Teikoku Life Insurance Company (Teikoku
Seimei Hoken Kabushiki Gaisha). We became amutual company and changed our name to Asahi
Mutual Life Insurance Company (Asahi Seimei
Hoken Sogo Gaisha) in 1947.
Our core business is life insurance for individuals
in Japan, with a specific strategic focus on offering

protection-type products, including medical andnursing care products.
We have been improving our financial soundness
and aim to further improve it through the accumulationof surplus and recapitalization measures. As of March
31, 2018, we had non-consolidated solvency margin
ratio of 808.5 percent, and insurer financial strength
ratings of BB+ (Positive Outlook) from Fitch and BB(Stable Outlook) from R&I.

Products
Asahi Life offers a variety of individual life
insurance products, with a focus on protectiontype products including medical and nursing careproducts, aimed at serving its customersʼ financial
needs. We continually review, update, and expand
our product offerings to serve the needs of ourcustomers while maintaining our focus on individuallife insurance.

Our main products for individual customers are
flexible life insurance products named “Hokenou Plus” targeting male customers, and “Yasashisa
Plus” targeting female customers. Each productallows customers to mix and match from a portfolio
of insurance products to create a customized
insurance plan.

Sales Channel
To optimize access to its customers, Asahi Life
operates a multi-channel sales structure utilizing
its sales representative channel and independentagency channels to provide retail products to its
customers.
Our sales representatives, who provide face-toface customer service, comprise our most significant
distribution channel. As of March 31, 2018, weemployed a total of 11,696 sales representatives. As
of April 1, 2018, we had 607 sales offices locatedthroughout Japan.
Our sales representatives engage in customized
consulting when a policy is signed in order to meetthe diverse needs and lifestyles of customers,

and they also provide regular after-sales service
including the regular provision of information
tailored to changes in the life-cycle of the customer.
In order to contribute to society and continue to bechosen by customers as a trusted company, we work
to cultivate high-quality sales representatives who
not only have knowledge of life insurance products,
but are also knowledgeable in various financial
instruments, social insurance, tax, and other related
matters.
Although we continuously strengthen oursales representative channel, we also have been
diversifying our distribution channels by utilizing
independent agencies, such as walk-in insurance
shops, telemarketing, and tax accountants.

Business Overview

55. Business Overview for Fiscal Year 2017 (Non-consolidated)
Business Performance (Annualized Premiums)
ll New Policies for Individual Insurance/Individual Annuities
Annualized premiums from new policies ended at 94.1% of the previous
fiscal year.
Among these, third-sector products were at 80.8% of the previous fiscal year.
(Billions of Yen)
Years ended March 31

2016

New policies
Third-sector products

2017Year-overyear

2018

29.9

34.1

32.0

94.1%

21.2

26.6

21.5

80.8%

New policies(Billions of Yen)
35

32

29

29.9

34.1

32.0

2016

2017
2018
(Years ended March 31)

26

23

20

ll Surrendered and Lapsed Policies for Individual Insurance/Individual Annuities
Annualized premiums from surrendered and lapsed policies reached 102.1%of the previous fiscal year.

Surrendered and lapsed policies(Billions of Yen)
22

(Billions of Yen)
Years ended March 31

2016

2017

Year-overyear

2018

21

20

Surrendered and lapsed
policies

21.1

20.8

Surrender and lapse ratio

3.90%

3.87%

21.2

21.1

20.8

21.2

2016

2017
2018
(Years ended March 31)

102.1%

3.97% +0.10 points

19

18

ll Policies in Force for Individual Insurance/Individual Annuities
Annualized premiums from policies in force were at 99.3% relative to the endof the previous fiscal year.
Among these, third-sector products were at 104.3% relative to the end of theprevious fiscal year.

Policies in force(Billions of Yen)
540
530
520

(Billions of Yen)
As of March 31

2016

Policies in force
Third-sector products

6

Asahi Mutual Life Insurance Company Annual Report 2018

2017

2018

Year-overyear

538.9

535.9

532.4

99.3%

183.6

197.8

206.3

104.3%

510

538.9

535.9

532.4

2016

2017

2018
(As of March 31)

500
490
480
470

ll New Policies for Protection-type Products(Billions of Yen)
Years ended March 31
New policies
Sales representative
channel

2016

2017

26.4

Year-overyear

2018

31.3

31.7

101.0%

New policies(Billions of Yen)
32
29
26
23

23.9

Independent agency
channels for individual
customers

27.3

27.2

99.7%

26.4

31.3

31.7

2016

2017
2018
(Years ended March 31)

20
17

2.5

4.0

4.4

109.8%

14
11

ll Policies in Force for Protection-type Products
Annualized premiums from policies in force for protection-type products, on
which Asahi Life focuses, grew to 103.2% relative to the end of the previous
fiscal year, with the upward trend successfully maintained.
(Billions of Yen)
As of March 31
Policies in force
Sales representative
channel

2016

2017

2018

Policies in force(Billions of Yen)
330
320
310

Year-overyear

300
290

301.7

311.2

321.2

103.2%

296.9

303.2

310.0

102.3%

311.2

321.2

2016

2017

2018
(As of March 31)

280
270

Independent agency
channels for individual
customers

301.7

4.8

8.0

11.1

138.2%

Notes:
1. Surrendered and lapsed policies are measured as cancellation plus expiration and reduction less revival.
2. Protection-type products are the total of death protection insurance and third-sector insurance such as medical insurance, nursing careinsurance, and non-participating group medical insurance sold through the agency channels.

Business Overview for Fiscal Year 2017 (Non-consolidated)

7

Financial Performancell Fundamental Profit
Due to increases in mortality and morbidity gains resulting from declines
in death benefit payments and other payments, as well as improvement in
the negative spread amount, fundamental profit increased relative to theprevious fiscal year to ¥30.1 billion.
(Billions of Yen)
Years ended March 31

2016

2017

2018

Fundamental profit(Billions of Yen)
31
29
27
25

Year-overyear

23

19

Fundamental profit

25.9

22.0

30.1

+8.0

Expense margins

8.6

4.4

3.6

(0.7)

Mortality and morbidity
gains

82.2

79.8

84.2

+4.4

Negative spreadamount(65.0)(62.1)(57.7)

+4.4

25.9

21

30.1
22.0

17
15

2016

2017
2018
(Years ended March 31)

ll Ordinary Profit, Net Surplus
Ordinary profit

Ordinary profit was ¥37.5 billion, with a net surplus of ¥25.9 billion.
(Billions of Yen)
Years ended March 31

2016

2017

2018

Year-overyear

Ordinary profit

14.8

38.9

37.5

(1.4)

Net surplus

17.5

29.2

25.9

(3.2)

(Billions of Yen)
40
35
30

10

Asahi Mutual Life Insurance Company Annual Report 2018

37.5

20
15

8

38.9

25

14.8
2016

2017
2018
(Years ended March 31)

Financial Soundness
ll Solvency Margin Ratio
Solvency margin ratio

Solvency margin ratio increased 65.8 points relative to the end of theprevious fiscal year, raising it to 808.5%.
As of March 31
Solvency margin ratio

(%)
850

Year-overyear

2016

2017

2018

691.5%

742.7%

808.5% +65.8 points

800
750
700
650

691.5

742.7

808.5

2016

2017

2018
(As of March 31)

600
550
500

ll Adjusted Net Assets
Adjusted net assets were ¥988.2 billion, an increase of ¥57.7 billion relative
to the end of the previous fiscal year.
(Billions of Yen)
As of March 31
Adjusted net assets

2016
996.2

2017

2018

930.4

Year-overyear

988.2

+57.7

Adjusted net assets(Billions of Yen)
1,000

900

800

996.2

930.4

988.2

2016

2017

2018
(As of March 31)

700

600

500

ll Net Unrealized Gains/Losses on Securities (with fair value, general account)
Net unrealized gains on securities were ¥451.0 billion as of March 31, 2018.
(Billions of Yen)
As of March 31

2016

Securities

2017

2018

Year-over-year

578.8

464.7

451.0

(13.6)

Domestic stocks

64.9

111.8

152.1

+40.2

Domestic bonds

466.8

345.8

309.1

(36.6)

Foreign securities

46.0

3.6

(12.3)(16.0)

Other securities

(4.2)

(0.3)

(1.0)

(0.7)

ll Capital BaseFoundation funds, which are the counterpartsof paid-in capital for joint stock corporations,serve as the primary source of capital for Japanesemutual companies. Unlike paid-in capital, however,foundation funds have a stated maturity and accrue
interest payment obligations. If the principal amountof the foundation funds is repaid by insurancecompanies out of their net assets, the Insurance
Business Act requires that an amount equivalent to
the repayment be set aside in the net assets portionof the balance sheet as reserve for redemption offoundation funds. As of March 31, 2018, the balanceof foundation funds was ¥126.0 billion and theamount of reserve for redemption of foundation
funds was ¥131.0 billion, respectively.
Additionally, we have also worked on strengthening
our financial soundness by accumulating internal
reserves and raising funds in the form of subordinateddebt which, while accounted for as a liability, function
largely like capital.

Business Overview for Fiscal Year 2017 (Non-consolidated)

9

Results of Operations
ll Statements of Income
Years ended March 31

2017

2018

679.9

652.2

95.9%

383.7

384.9

100.3%

365.3

364.9

99.9%

161.2

166.5

103.3%

Interest, dividends and other income

111.1

109.9

98.9%

Gains on sales of securities

40.3

46.7

115.8%

134.9

100.6

74.6%

114.5

83.2

72.7%

641.0

614.6

95.9%

463.8

438.9

94.6%

Claims

135.2

124.8

92.3%

Annuities

128.6

129.8

100.9%

Benefits

97.9

82.2

84.0%

41.7

38.5

92.3%

Losses on sales of securities

11.0

2.2

20.7%

Losses on valuation of securities

0.0

0.1

889.5%

Operating expenses

101.4

102.3

100.9%

Other ordinary expenses

33.9

33.8

99.6%

Ordinary profit

38.9

37.5

96.3%

Extraordinary gains:

1.2

0.1

15.7%

1.2

0.1

15.7%

5.3

5.4

101.6%

Losses on disposal of fixed assets

1.6

1.5

94.1%

Impairment losses

1.3

1.7

133.4%

Provision for reserve for price fluctuation

2.0

2.1

103.9%

Surplus before income taxes

34.8

32.2

92.6%

Total income taxes

5.6

6.3

112.4%Net surplus

29.2

25.9

88.8%

Ordinary income:Premium and other income:Insurance premiums from individual insurance andindividual annuities
Investment income:

Other ordinary income:Reversal of policy reserves
Ordinary expenses:
Claims and other payments:

Investment expenses:

Gains on disposal of fixed assets
Extraordinary losses:

Ordinary income decreased to ¥652.2 billion(95.9% of the previous fiscal year) for the year ended
March 31, 2018. Within this category, premium andother income increased to ¥384.9 billion (100.3% of
the previous fiscal year). Investment income increasedto ¥166.5 billion (103.3% of the previous fiscal year)
primarily because of an increase in gains on salesof securities. Other ordinary income decreased to¥100.6 billion (74.6% of the previous fiscal year). Thiswas primarily attributable to the decrease in reversalof policy reserves to ¥83.2 billion (72.7% of theprevious fiscal year).

10(Billions of Yen)

Asahi Mutual Life Insurance Company Annual Report 2018

Year-over-year

Ordinary expenses decreased to ¥614.6 billion(95.9% of the previous fiscal year) for the year ended
March 31, 2018. Within this category, claims andother payments decreased to ¥438.9 billion (94.6%of the previous fiscal year). Investment expenses
decreased to ¥38.5 billion (92.3% of the previous
fiscal year) mainly due to lower losses on sales of
securities. Operating expenses increased to ¥102.3
billion (100.9% of the previous fiscal year).
As a result, ordinary profit decreased to ¥37.5
billion (96.3% of the previous fiscal year) for the year
ended March 31, 2018.

Extraordinary gains decreased to ¥0.1 billion (15.7%of the previous fiscal year), and extraordinary losses
increased to ¥5.4 billion (101.6% of the previous fiscal
year). Total income taxes totaled ¥6.3 billion.

As a result of the above factors, net surplus
decreased to ¥25.9 billion (88.8% of the previous
fiscal year) for the year ended March 31, 2018.

Assets, Liabilities and Net Assets
ll Selected Assets Data
As of March 31(Billions of Yen)
2017

2018

5,398.2

5,396.5(1.6)

Cash, deposits and call loans

154.1

195.6

＋41.5

Monetary claims bought

33.2

30.1

(3.0)

4,152.3

4,188.8＋36.5

Domestic bonds

2,902.1

2,852.5(49.6)

Domestic stocks

293.8

334.3

＋40.4

Foreign securities

878.8

926.8

＋48.0

Loans

557.7

484.1

(73.5)

Tangible fixed assets

406.1

401.0

(5.0)

Deferred tax assets

22.7

16.1

(6.5)

Others

71.9

80.4

＋8.5

Total assets:

Securities:

ll Selected Liabilities/Net Assets Data
As of March 31

Year-over-year(Billions of Yen)
2017

2018

5,039.2

5,008.4(30.8)

4,768.3

4,682.2(86.1)

4,700.1

4,616.9(83.2)

Bonds payable

40.3

40.3

-

Others

230.5

285.8

＋55.2

358.9

388.0

＋29.1

333.5

353.1

＋19.5

Foundation funds

126.0

126.0

-

Reserve for redemption of foundation funds

131.0

131.0

-

Surplus:

76.3

95.9

＋19.5

Reserve for future losses

0.2

0.2

＋0.0

Other surplus:

76.0

95.6

＋19.5

Reserve for fund redemption

36.0

48.6

＋12.6

Equalized reserve for dividends to policyholders

8.7

9.6

＋0.9

Unappropriated surplus (loss)

31.3

37.3

＋6.0

Total valuation and translation adjustments:

25.3

34.9

＋9.5

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

71.1

81.2

＋10.1

Land revaluation differences(45.7)(46.3)(0.6)

5,398.2

5,396.5(1.6)

Total liabilities:
Policy reserves and other reserves:
Policy reserves

Total net assets:
Total foundation funds and others:

Total liabilities and net assets

Year-over-year

Business Overview for Fiscal Year 2017 (Non-consolidated)11

As of March 31, 2018, the amount of total assets
was ¥5,396.5 billion with securities accounting for¥4,188.8 billion, loans at ¥484.1 billion, and tangible
fixed assets at ¥401.0 billion. In securities, wepartially reduced our balance of domestic bonds
and increased our balance of relatively higher-yieldforeign bonds.
The amount of total liabilities was ¥5,008.4 billion,

and among this, policy reserves decreased by ¥83.2
billion to ¥4,616.9 billion mainly due to a reductionin policies in force for savings-type products.
The amount of total net assets was ¥388.0 billion,
among which total foundation funds and othersamounted to ¥353.1 billion, with total valuation andtranslation adjustments amounting to ¥34.9 billion.

Investments (General Account)
Investment Environment
During the fiscal year ended March 31, 2018, theJapanese economy was able to sustain a gradual
recovery due to the Bank of Japanʼs ongoingmonetary easing policies as well as improvement in
employment and income conditions.
Overseas, the U.S. and European economies
continued to grow steadily, and growth in emerging
countries such as China began to show signs ofrecovery, resulting in a resumption of gradual
growth in the world overall.
The yield on newly issued 10-year Japanese
Government Bonds (JGBs), the benchmark forlong-term interest rates, remained around 0% due

to a resumption of quantitative and qualitative
monetary easing with yield curve controls by the
Bank of Japan.
The Nikkei Stock Average rose from ¥18,909 at
the end of previous fiscal year to ¥21,454 at the endof this fiscal year, due in part to higher corporate
profits throughout the economy.
The yen continued to strengthen against the U.S.
dollar in and after January due in part to concerns
regarding U.S. trade policy, moving from ¥112 at theend of previous fiscal year to ¥106 against the U.S.
dollar at the end of this fiscal year.

Investment Policy
Asahi Life structures its asset portfolio
concentrating on yen interest-bearing assets such as
domestic bonds and loans, taking into consideration
the liability characteristics of insurance policies.
We are working to improve investment earnings in
an environment of low domestic interest rates byinvesting in foreign currency-denominated bonds
and alternative investments*, which have relatively
higher yields, while still working to keep foreignexchange risk low.

In addition, we are working to improve theinvestment efficiency of assets under custody from
customers by promoting better corporate value andcontinuous growth in companies in which we invest
through proper voting and dialogue with thosecompanies, based on Japanʼs Stewardship Code.
* These are investment methods such as infra-funds, real estate
investment trusts, or hedge funds, which are alternative
investments to traditional investment assets such as stocks andbonds.

Overview of Investment Performance
In FY 2017, we limited allocations to yen interestbearing assets while focusing funding on currencyhedged, foreign currency-denominated bonds, aswell as on alternative investments.
For domestic bonds, we mainly purchased assets
with yield spreads such as corporate bonds, while
limiting the allocation to government bonds.
For loans, we attempted to limit our total amountof loans due to the low-interest rate environment.
We kept the balance of domestic stocks

12

Asahi Mutual Life Insurance Company Annual Report 2018

unchanged to control price fluctuation risk.
For foreign securities, we worked to improveyields by purchasing currency-hedged, foreign
currency-denominated bonds. Additionally, we haveincreased our balance of alternative investmentswith the aim of diversifying and expanding
investment opportunities.
We made an effort to improve real estate
profitability by reviewing rent levels of rental realestate properties and improving operating rates.

6. Governance Structure
Corporate Governance
Basic Philosophy on Corporate Governance
Recognizing that the life insurance industry plays
an important role in supporting Japanese society
in cooperation with the social security system,
Asahi Life holds a basic management philosophyof “Sincere Service.” This is guided by the ideathat fulfilling our responsibilities to our customers,society, and our employees is fundamental to ourbusiness.
Based on our basic management philosophy,
we work to maintain strong cooperation with allof our stakeholders and promote corporate social
responsibility-based management centered on thefollowing:- Engaging in business that prioritizes the
improvement of customer satisfaction- Co-existence with society through continued
engagement to create a prosperous society,and;- Improvement of employee satisfaction throughthe creation of a comfortable workplace that
fosters employees.
We are also making efforts to achieve effective
corporate governance in order to both maintainour financial soundness and make decisions in atransparent, fair, quick, and decisive manner.
In December 2015, we established and published
our Basic Policy on Corporate Governance, which
set forth our basic philosophy on corporate
governance and the structure of our organizationand operating policy, with the aim of making explicit
the transparency and fairness of our corporate
governance. In accordance with this Basic Policy,
we are working to achieve practical corporate
governance, sustained growth, and medium- tolong-term improvement in corporate value.

Overview of the Corporate Governance Structure
Asahi Life is a mutual company. A mutual company isa corporate structure in which individual policyholders(excluding holders of non-participating policies) may
directly participate in the management. Instead ofholding a General Meeting of Policyholders, we haveestablished a Board of Representative Policyholders.
This serves as the highest decision-making bodywhich consists of representatives elected fromamong our policyholders.

Additionally, in accordance with the institutional
design required by the Insurance Business Act, wehave opted to be a company with a Board of Statutory
Auditors. The Board of Directors makes decisions on
basic company management issues and supervises
the execution of the duties of the directors. While
the Statutory Auditors also supervise the executionof the duties of the directors, they do this as anindependent body entrusted by the policyholders.

Management Organization
Policyholders
Board of Representative
Policyholders

Board of Statutory Auditors

Conference with Customers

Board of Trustees
Board of Directors

Statutory Auditors
Nomination andCompensation Committee
Chief of Internal
Audit Department
Executive Officers' Meeting

Chief ActuaryManagement Meeting

Meetings
Committees

Governance Structure

13

Board of Representative Policyholders
Framework and Functions of the Board of Representative Policyholders
Asahi Life has adopted a mutual company
corporate structure that is only permitted for
insurance companies in Japan. While a General
Meeting of Policyholders serves as the highest
decision-making body in mutual companies,
we have established a Board of Representative
Policyholders, in accordance to the Insurance
Business Act, in place of holding a General Meetingof Policyholders. This board serves to represent our
2.02 million policyholders.
The main issues reported and resolutions madein the Board of Representative Policyholders are as
follows.

Reported issues:
Business reports,balance sheets,
statements of income,statements of changes in net assets,
operational reports specific to the mutualcompany structure
Resolutions:
Appropriation of surplus,
allotment of dividends to policyholders,changes in articles of incorporation,
appointment of nominating committee members
for representative policyholders,appointment of trustees,
appointment of directors/statutory auditors,
etc.

Basic Policy on the Internal Control Structure
Asahi Lifeʼs Board of Directors has establishedthe Basic Policy on the Internal Control Structure
to ensure appropriate operations. We continuously

strive to strengthen our compliance and risk
management structures in accordance with thisbasic policy.

Promoting Compliance
Asahi Life positions compliance with laws andordinances as one of the most critical issues ofmanagement, needed to conduct sound, transparent
and fair business as well as to maintain the trust of
our customers. We work to foster a corporate culturethat both promotes and emphasizes compliance.

All employees devote themselves to legallycompliant and appropriate business. We strive toprevent any illegal or inappropriate practices andwill also endeavor to make quick and appropriate
responses in the event that any illegal or inappropriate
business practices are encountered.

Basic Policy/Compliance with Standards
Asahi Life has established the Basic Policy on
Compliance and Compliance Standards as theprimary guidelines to be observed by all employees.
These are made widely and thoroughly known
among all executives and employees throughour Compliance Manual and rigorous training.
All employees must conduct and are conducting

business strictly in accordance with these policy andstandards.
Furthermore, we have also created theCompliance Program which includes a detailed
action plan. By implementing this action plan andmaking periodical reviews, we are attempting toestablish a more advanced compliance framework.

Organization/System
Asahi Life holds discussions on compliance with
the Compliance Committee. The Committee iscomposed of the Company President as chair, as
well as Management Meeting members and thirdparty lawyers. The Committee discusses compliance

14

Asahi Mutual Life Insurance Company Annual Report 2018

issues with the expert input of the third-party lawyers.
Additionally, a compliance control department
implements specific measures pertaining tocompliance.

Protecting Customer Information
Management System to Appropriately Protect Information Assets
Asahi Life maintains customersʼ personal
information related to their policies and health status
insofar that the information is needed for businesspurposes. Recognizing that keeping such customer
information secure is a crucial management issue, wehave established a framework to protect customer
information, personal information, and personallyidentifiable information. We strictly implement thatframework based on relevant laws and ordinances.
Furthermore, we have also formulated a Security
Policy to provide appropriate protection for ourcustomersʼ information. All employees perform
appropriate and strict information management
based on this policy to both fulfill our responsibility
towards our policyholders and the society, andfurther improve the credibility of our company.

Risk Management Structure
Overview
The environment surrounding life insurancecompanies is constantly changing. Against such a
backdrop, Asahi Life believes it is very importantto accurately ascertain various risks and to manage
them appropriately and strictly. Doing so helps tostabilize profits and boost financial health, which
eventually leads to increased corporate value.

In order to ensure the fulfillment of our longterm obligations with respect to our insurance
policies, we value risk management as one ofour most important management issues and areworking to further improve and strengthen our risk
management structure.

Risk Management Structure
Asahi Lifeʼs Board of Directors has established a
Basic Policy on Risk Management. This is a companywide policy that aims to implement appropriate
risk management towards the achievement of ourmanagement targets.
Within this Basic Policy, we have identified thevarious types and locations of risks faced by a life
insurance company, and with respect to each risk,
set down certain risk management methods andmanagement structures. Further, with regard toeach identified risk, we have established policies,
regulations, and rules with respect thereto.
Each risk management department in ourcompany works to control risk appropriately

through regular identification and reporting inaccordance to the Basic Policy as well as other rules
and regulations.
Furthermore, as the surrounding risks are notnecessarily independent in a way that one may affectanother, we have controlled this by establishing adepartment that manages risk at an enterprise level.
The status of our risk management is reported to
our Board of Directors and Management Meeting,upon which, management decisions are made.
Moreover, the appropriateness of our risk
management structure is audited by our Internal
Audit Department.

Enterprise Risk Management (ERM)
Asahi Life promotes Enterprise Risk Management(ERM) in order to secure financial soundness andimprove profitability through perception of overallrisk facing the company and management of thoserisks throughout the company. We implement
countermeasures as appropriate for the importanceof risks, where necessary, based on a risk appetite
policy that determines the amount and type of risk
we will take, with associated monitoring of whether
the risks we are taking are adhering to this policy.
Additionally, we implement the Own Risk andSolvency Assessment (ORSA), a process to evaluate

our management risks and own capital, and pursue
risk management that is integrated with ourbusiness strategy.
With respect to qualitative risk evaluation, we
ascertain our risk profile and specify crucial risks tomanagement by identifying not only current but
also potential risks which are discovered throughour Control Self-Assessment (CSA), which we
conduct in each operational division. We also strive
to identify risks at an early stage and to reduce theserisks through measures such as warning analysis.
With respect to quantitative risk evaluation,

Governance Structure15

we evaluate the sufficiency of our own capital(surplus) based on both accounting standards andeconomic value. We then use this data to confirm
the appropriateness of our asset/liability strategy
and risk/return strategy. Specifically, for economic

value-based evaluation, we monitor and manage
the sufficiency of current surplus against overall riskvolume (i.e. the Economic Solvency Ratio, ESR), andwe work to improve that ratio by setting ESR targets.

Asset Liability Management (ALM)
Asahi Life engages in asset liability management(ALM) that is guided by the asset and risk
management policies established by liability groups.
These liability groups are categorized according
to the characteristics of insurance policies. Basedon the asset and risk management policies, we
confirm the appropriateness of our investments.
We structure our asset portfolio concentrating on

yen interest-bearing assets such as domestic bonds
and loans, taking into consideration the adaptationof existing assets to the liability characteristics of
insurance policies. The majority of domestic bonds
are classified as policy-reserve-matching bonds,
which are valued at their amortized cost, with the aimof reducing the impact of interest rate fluctuation.

Officers (as of July 3, 2018)
Chairman of the Board and Representative Director

Director

Yoshiki Sato

Kazuko Ohya(1)President and Representative Director

Director

Hiroki Kimura

Takashi Tsukamoto(1)Director and Senior Managing Executive Officer

Director

Tatsuya Kikuchi

Kenji Watanabe(1)Director and Managing Executive Officer

Standing Statutory Auditor

Hiroshi Tatara

Hiroyuki Somekawa

Director and Managing Executive Officer

Standing Statutory Auditor

Yasuhiro Iguchi

Hiroshi Hirosaka

Director and Managing Executive Officer

Statutory Auditor

Yukihiro Fujioka

Yukio Machida(2)Director and Executive Officer

Statutory Auditor

Ryouichi Motoda

Tadayuki Seki(2)Director and Executive Officer

Statutory Auditor

Kenichiro Ishijima

Mitsuyoshi Shibata(2)(1) Outside director(2) Outside statutory auditor

16

Asahi Mutual Life Insurance Company Annual Report 2018

7. Consolidated Financial Statements
Consolidated Balance Sheets
Asahi Mutual Life Insurance Company and its Consolidated Subsidiaries
Millions of
U.S. Dollars

Millions of Yen
As of March 31
ASSETS:Cash and deposits
Call loans
Monetary claims bought
Securities
Loans
Tangible fixed assets:
Land
Buildings
Lease assets
Construction in progress
Other tangible fixed assets

2018¥

Intangible fixed assets:
Software
Other intangible fixed assets
Reinsurance receivables
Other assets
Net defined benefit assets
Deferred tax assets
Customersʼ liabilities under acceptances and guarantees
Allowance for possible loan losses
Total assets
LIABILITIES:Policy reserves and other reserves:
Reserve for outstanding claims
Policy reserves
Reserve for dividends to policyholders
Reinsurance payables
Bonds payable
Other liabilities
Net defined benefit liabilities
Reserve for price fluctuation
Deferred tax liabilities for land revaluation
Acceptances and guarantees
Total liabilities
NET ASSETS:
Foundation funds
Reserve for redemption of foundation funds
Reserve for revaluation
Consolidated surplus
Total foundation funds and others
Net unrealized gains (losses) on available-for-salesecurities, net of tax
Land revaluation differences
Accumulated remeasurements of defined benefit plans
Total accumulated other comprehensive income
Non-controlling interests
Total net assets
Total liabilities and net assets¥¥¥

36,143164,000
30,151
4,185,104
484,169

2017¥

35,511122,000
33,202
4,148,686
557,761

2018
$

340
1,543
283
39,392
4,557

230,913
162,593
3,946
1,134
2,473
401,061

232,995
167,538
2,015
1,033
2,575
406,159

2,173
1,530
37
10
23
3,775

20,691
13,04433,735812
46,632351
16,06210(394)
5,397,841

14,13019,15433,285
194
39,595
11
22,94714(487)
5,398,884

194
122
317
7
438
3
151
0
(3)
50,80728,3684,616,919
36,9594,682,246
311
40,349194,908
35,056
38,71017,76210
5,009,355¥¥

27,3644,700,145
40,861
4,768,371
127
40,349139,189
37,75736,58018,091145,040,479$$

267
43,457347
44,072
2
379
1,834
329
364
167
0
47,151126,000
131,000
281
95,832353,114126,000
131,000
281
76,065
333,347

1,185
1,233
2
902
3,323

81,293(46,380)377
35,29081
388,486
5,397,841

71,105(45,762)(358)
24,983
73358,404
5,398,884

765
(436)
3
332
0
3,656
50,807¥$

Consolidated Financial Statements

17Consolidated Statements of Income and Consolidated Statements ofComprehensive Income
Asahi Mutual Life Insurance Company and its Consolidated Subsidiaries[Consolidated Statements of Income]Millions of
U.S. Dollars

Millions of Yen
For the years ended March 31
Ordinary income:Premium and other income
Investment income:Interest, dividends and other income
Gains on sales of securities
Reversal of allowance for possible loan losses
Other investment income
Investment gains on separate accounts

2018¥

Other ordinary income
Total ordinary income
Ordinary expenses:
Claims and other payments:
ClaimsAnnuities
Benefits
Surrender benefits
Other payments
Provision for policy reserves and other reserves:
Provision for reserve for outstanding claims
Provision for interest on policyholders' dividend reserves
Investment expenses:
Interest expenses
Losses on sales of securities
Losses on valuation of securities
Losses on derivative financial instruments
Foreign exchange losses
Write-offs of loans
Depreciation of rental real estate and other assets
Other investment expenses
Operating expenses
Other ordinary expenses
Total ordinary expenses
Ordinary profit
Extraordinary gains:
Gains on disposal of fixed assets
Extraordinary losses:
Losses on disposal of fixed assets
Impairment losses
Provision for reserve for price fluctuation
Other extraordinary losses
Surplus before income taxes
Income taxes:
Current
Deferred
Total income taxes
Net surplus
Net surplus attributable to non-controlling interests
Net surplus attributable to the Parent Company

18

Asahi Mutual Life Insurance Company Annual Report 2018

¥

2017

384,953¥2018

383,776$

3,623

109,723
46,779
74
7,355
2,384
166,318
105,698
656,971

110,945
40,391
85
7,244
2,320
160,986
138,951
683,715

1,032
440
0
69
22
1,565
994
6,183

124,809
129,879
82,264
95,7106,302
438,966

135,234
128,659
97,962
94,226
7,725
463,808

1,174
1,222
774
900
59
4,131

1,003
4
1,008

–
33
33

9
0
9

4,449
2,285
145
13,891
2,530
1
5,596
9,641
38,542
106,653
33,712
618,883
38,088

4,042
11,02516
11,264
325
0
5,500
9,561
41,737105,072
33,818644,469
39,245

41
21
1
130
23
0
52
90
362
1,003
317
5,825
358

194
194

1,243
1,243

1
1

1,538
1,778
2,130
–
5,446
32,836

1,635
1,333
2,050
344
5,363
35,126

14
16
20
–
51
309

6,946
(318)
6,628
26,20739
26,168

3,859
1,952
5,812
29,31331
29,282

65
(2)
62
246
0
246

¥

$

[Consolidated Statements of Comprehensive Income]Millions of
U.S. Dollars

Millions of Yen
For the years ended March 31
Net surplus
Other comprehensive income:Net unrealized gains (losses) on available-for-salesecurities, net of tax
Remeasurements of defined benefit plans
Total other comprehensive income
Comprehensive income:Comprehensive income attributable to the Parent
Company
Comprehensive income attributable to non-controllinginterests
Total comprehensive income

2018
¥

¥

26,2072017¥

29,313

2018
$

246

10,188735
10,9248,150
2,061
10,21295
6102

37,09239,494349

39
37,132¥

31
39,526$0349

Consolidated Financial Statements

19Consolidated Statements of Changes in Net Assets
Asahi Mutual Life Insurance Company and its Consolidated Subsidiaries
Millions of Yen
Foundation funds and others
For the year ended March 31, 2018

Beginning balance
Changes in the fiscal year:
Additions to reserve for dividends to policyholders
Payment of interest on foundation funds
Net surplus attributable to the Parent Company
Reversal of land revaluation differences
Net changes, excluding foundation funds and others
Net changes in the fiscal year
Ending balance

Reserve for
Total
Foundation redemption Reserve for Consolidated foundationof foundation revaluation
surplusfunds and
funds
funds
others¥ 126,000 ¥ 131,000 ¥––¥ 126,000 ¥ 131,000 ¥281¥ 76,065¥ 333,347(1,519)(5,499)26,168617(1,519)(5,499)26,168617–
19,766281 ¥ 95,832

19,766¥ 353,114

Millions of Yen
Accumulated other comprehensive income

For the year ended March 31, 2018

Beginning balance
Changes in the fiscal year:
Additions to reserve for dividends topolicyholders
Payment of interest on foundation funds
Net surplus attributable to the Parent
Company
Reversal of land revaluation differences
Net changes, excluding foundation
funds and others
Net changes in the fiscal year
Ending balance

20

Asahi Mutual Life Insurance Company Annual Report 2018

Net
unrealized
Total
NonAccumulated accumulated
gains (losses)
Land
controlling
remeasurements
on available- revaluation of defined
otherinterests
for-saledifferences benefit plans comprehensive
securities,
incomenet of tax¥ 71,105¥ (45,762) ¥(358) ¥ 24,983¥

73

Total net
assets¥ 358,404(1,519)(5,499)26,168617
10,188
10,188¥ 81,293

(617)
(617)
¥ (46,380) ¥

735
735
377

10,306
10,306¥ 35,290

¥

7
7
81

10,31430,081¥ 388,486

Millions of U.S. Dollars
Foundation funds and others
Reserve for
Total
Foundation redemption Reserve for Consolidated foundationof foundation revaluation
surplusfunds and
funds
funds
othersFor the year ended March 31, 2018

Beginning balance
Changes in the fiscal year:
Additions to reserve for dividends to policyholders
Payment of interest on foundation funds
Net surplus attributable to the Parent Company
Reversal of land revaluation differences
Net changes, excluding foundation funds and others
Net changes in the fiscal year
Ending balance

$

1,185

$

1,233

$

2

$

715

$

(14)
(51)
246
5

$

–
1,185 $–
1,233 $

–
2 $

186
902

3,137
(14)
(51)
246
5

$

186
3,323

Millions of U.S. Dollars
Accumulated other comprehensive income

For the year ended March 31, 2018

Beginning balance
Changes in the fiscal year:
Additions to reserve for dividends topolicyholders
Payment of interest on foundation funds
Net surplus attributable to the Parent
Company
Reversal of land revaluation differences
Net changes, excluding foundation
funds and others
Net changes in the fiscal year
Ending balanceNet
unrealized
Total
NonAccumulated accumulated
gains (losses)
Land
controlling
remeasurements
on available- revaluation
otherof defined comprehensive interests
for-saledifferences benefit
plans
securities,
incomenet of tax
$

669

$

(430) $

(3) $

235

$

0

Total net
assets

$

3,373

(14)
(51)
246
5

$

95
95
765

$

(5)
(5)
(436) $

6
6
3

$

97
97
332

$

0
0
0

$

97
283
3,656

Consolidated Financial Statements

21Millions of Yen
Foundation funds and others
For the year ended March 31, 2017

Beginning balance
Changes in the fiscal year:
Issuance of foundation funds
Additions to reserve for dividends to policyholders
Additions to reserve for redemption of foundation
funds
Payment of interest on foundation funds
Net surplus attributable to the Parent Company
Redemption of foundation funds
Reversal of land revaluation differences
Net changes, excluding foundation funds and others
Net changes in the fiscal year
Ending balance

Reserve for
Total
Foundation redemption Reserve for Consolidated foundationof foundation revaluation
surplusfunds and
funds
funds
others¥ 126,000¥ 120,000¥

281¥ 64,102¥ 310,384(1,767)

11,000(1,767)

11,00011,000(11,000)(5,787)29,282
1,235(5,787)29,282(11,000)
1,235–
11,963281 ¥ 76,065

22,963¥ 333,347(11,000)–
11,000¥ 126,000 ¥ 131,000¥

Millions of Yen
Accumulated other comprehensive income

For the year ended March 31, 2017

Beginning balance
Changes in the fiscal year:
Issuance of foundation funds
Additions to reserve for dividends topolicyholders
Additions to reserve for redemption offoundation funds
Payment of interest on foundation funds
Net surplus attributable to the Parent
Company
Redemption of foundation funds
Reversal of land revaluation differences
Net changes, excluding foundation
funds and others
Net changes in the fiscal year
Ending balance

22

Asahi Mutual Life Insurance Company Annual Report 2018

Net
unrealized
Total
NonAccumulated accumulated
gains (losses)
Land
controlling
remeasurements
on available- revaluation of defined
otherinterests
for-saledifferences benefit plans comprehensive
securities,
incomenet of tax¥ 62,954¥ (44,527) ¥(2,420) ¥ 16,006¥

79

Total net
assets¥ 326,470
11,000(1,767)(5,787)29,282(11,000)
1,235
8,150
8,150
¥ 71,105(1,235)(1,235)¥ (45,762) ¥

2,061
8,976
2,061
8,976
(358) ¥ 24,983

¥

(5)
8,971
(5)
31,93473 ¥ 358,404

Consolidated Statements of Cash FlowsAsahi Mutual Life Insurance Company and its Consolidated Subsidiaries
Millions of
U.S. Dollars

Millions of Yen
For the years ended March 31
I. Cash flows from operating activities
Surplus before income taxes
Depreciation of rental real estate and other assets
Depreciation
Impairment losses
Increase (decrease) in reserve for outstanding claims
Increase (decrease) in policy reserves
Provision for interest on policyholders' dividend reserves
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(Gains) losses on securities(Gains) losses on derivative financial instruments
Interest expenses
Foreign exchange (gains) losses, net(Gains) losses on tangible fixed assets(Increase) decrease in reinsurance receivables(Increase) decrease in other assets except from investing
and financing activities
Increase (decrease) in reinsurance payables
Increase (decrease) in other liabilities except frominvesting and financing activities
Others, net
SubtotalInterest, dividends and other income received
Interest paid
Dividends to policyholders paid
Income taxes (paid) refunded
Net cash provided by (used in) operating activities
II. Cash flows from investing activities
Purchases of monetary claims bought
Proceeds from sales and redemptions of monetaryclaims bought
Proceeds from decreases in money held in trust
Purchases of securities
Proceeds from sales and redemptions of securities
Disbursements for loans
Proceeds from collections of loans
Proceeds from derivative financial instruments
Increase (decrease) in payables under securities
borrowing transactions①Total of investing activities[I+①]
Purchases of tangible fixed assets
Proceeds from sales of tangible fixed assets
Others, net
Net cash provided by (used in) investing activities
III. Cash flows from financing activities
Proceeds from debt borrowing
Redemption of debt borrowing
Proceeds from issuance of bonds
Proceeds from issuance of foundation funds
Redemption of foundation funds
Payment of interest on foundation funds
Dividends paid to non-controlling interests
Others, net
Net cash provided by (used in) financing activities
IV. Net increase (decrease) in cash and cash equivalents
V. Cash and cash equivalents at the beginning of the year
VI. Cash and cash equivalents at the end of the year

2018
¥

¥

2017

32,836
5,596
10,133
1,778
1,003(83,226)
4(74)(1,942)2,130(109,723)(46,733)
13,891
4,449
2,530
970
(617)

¥

2018

35,126
5,500
9,881
1,333
(585)
(114,500)33(85)(1,789)2,050(110,945)(31,669)
11,264
4,042
325
(84)
(161)

$

309
52
95
16
9
(783)
0
(0)
(18)
20
(1,032)
(439)
130
41
23
9
(5)

(903)
184

(1,385)
31

(8)
1

1,612
6,606
(159,491)
113,182(4,446)(5,426)(4,827)(61,010)520
7,296(183,802)
116,136(3,957)(5,660)(185)(77,469)15
62(1,501)
1,065
(41)
(51)
(45)
(574)

(500)

(500)

(4)

3,544
–
(643,165)
632,895(52,331)
120,479
17,6739,198
9(968,725)
993,520(66,526)
125,897(20,059)

33–(6,053)
5,957
(492)
1,134
166

44,967
123,564
62,554(6,603)
1,782(8,611)
110,132(53,610)
19,204(58,265)(7,447)
8,341(7,903)
12,194

423
1,163
588
(62)
16
(81)
1,036

–
–
–
–
–
(5,499)(31)(958)(6,490)42,631
157,511200,143

2,000(30,000)
40,34911,000(11,000)(5,787)
(37)
(871)
5,652
(59,622)
217,133
157,511

–
–
–
–
–
(51)
(0)
(9)
(61)
401
1,482
1,883

¥

$

Consolidated Financial Statements

23

Notes to Consolidated Financial Statements
Asahi Mutual Life Insurance Company and its Consolidated Subsidiaries

I. Presentation of Consolidated Financial Statements
1. Basis of Presentation
The accompanying consolidated financial statements have been prepared from the accounts maintainedby Asahi Mutual Life Insurance Company (the “Company”) and its consolidated subsidiaries in accordancewith the provisions set forth in the Insurance Business Act of Japan and its related rules and regulations
applicable to the mutual life insurance industry 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
under accounting principles generally accepted in Japan but is presented herein as additional information.
Amounts of less than one million yen have been eliminated. As a result, total amounts in yen shown herein
do not necessarily agree with the sum of the individual amounts.
The Insurance Business Act shall prescribe the disclosure of a single fiscal year. The Company provides
the disclosure of comparative financial information corresponding to each comparative fiscal year in thepresented financial statements for use by readers outside Japan.
In preparing the accompanying consolidated financial statements, certain reclassifications have been
made to the consolidated financial statements issued domestically in order to present them in a format
which is more familiar to readers outside Japan.

2. U.S. Dollar Amounts
The translations of yen amounts into U.S. dollar amounts are included solely for the convenience of thereader and have been made, as a matter of arithmetical computation only, at the rate of ¥106.24 = US$1.00,
the effective rate of exchange at the balance sheet date of March 31, 2018.
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.

3. Principles of Consolidation(1) Scope of consolidation
The consolidated subsidiaries as of March 31, 2018 and 2017 are listed below:
Info Techno Asahi Co., Ltd.
Asahi Life Asset Management Co., Ltd.
Asahi Nvest Investment Advisory Co., Ltd.
The major unconsolidated subsidiary is Asahi Real Estate Management Co., Ltd.
Unconsolidated subsidiaries are excluded from the scope of consolidation, as each one of them issmall in terms of its total assets, amount of sales, net income for the year and surplus and is sufficiently
immaterial to reasonable judgment with regards to its impact on the financial position and results ofoperation of the Companyʼs group.
(2) Application of equity method
Unconsolidated subsidiaries and affiliates (such as Asahi Real Estate Management Co., Ltd, etc.) are
immaterial in terms of their impact on consolidated net income and surplus, and also immaterial as awhole, therefore, the equity method is not applied.
(3) Fiscal year-end of consolidated subsidiaries
The fiscal year-end of the consolidated subsidiaries is March 31.

24

Asahi Mutual Life Insurance Company Annual Report 2018

(4) Amortization of goodwill
Goodwill is fully expensed as incurred.

II. Notes to Consolidated Balance Sheets
1. Significant Accounting Policies(1) Valuation methods of securities
The valuation of securities, including deposits and monetary claims bought which are equivalent tosecurities is as follows:i)

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

ii) Held-to-maturity debt securities are stated at amortized cost (straight-line method) determined by
the moving average method.
iii) Policy-reserve-matching bonds, which are in accordance with “Temporary Treatment of Accounting
and Auditing Concerning Policy-reserve-matching Bonds in Insurance Industry” (Industry Audit
Committee Report No. 21 issued by the Japanese Institute of Certified Public Accountants (“JICPA”)),
are stated at amortized cost (straight-line method) determined by the moving average method.
iv) Investments in unconsolidated subsidiaries and affiliates not accounted for under the equity
method are stated at cost.
v) Available-for-sale securities with fair market value except for the following are stated at fair market
value based on the market prices at the end of the fiscal year. Available-for-sale securities withfair market value, of which domestic stocks, domestic exchange-traded funds, domestic listed
real estate investment trusts, foreign exchange-traded funds for which hedge accounting is notapplied, foreign bond exchange-traded funds for which hedge accounting is not applied andforeign currency-denominated bonds for which hedge accounting is not applied, are stated atfair market value based on the average of the market prices during the final month of the fiscal
year. Costs of sales are determined by the moving average method. Available-for-sale securities
with extreme difficulty of measuring fair market value, of which public and corporate bonds
including foreign bonds with the difference between acquisition cost and face value recognized
as an adjustment of interest, are stated at amortized cost (straight-line method) determined by
the moving average method. The other securities are stated at cost determined by the moving
average method. Net unrealized gains or losses on these available-for-sale securities, net of tax,
are recorded as a separate component of net assets.
(2) Policy-reserve-matching bonds
The Company classifies bonds held with the aim of matching the duration to outstanding insurance
liabilities within the sub-groups (categorized by insurance type, investment policy and other factors)of individual life insurance and individual annuities as policy-reserve-matching bonds in accordancewith “Temporary Treatment of Accounting and Auditing Concerning Policy-reserve-matching Bonds inInsurance Industry” (Industry Audit Committee Report No. 21 issued by the JICPA on November 16, 2000).

Notes for the fiscal year ended March 31, 2017
Since the fiscal year starting from April 1, 2016, the Company changed its liability cash flow, which isthe premise of assessing the duration to outstanding insurance liabilities, from a “Term of future 25
years” to a “Term of future 30 years” for the sub-group including Individual life Insurance and Individual
Annuities (excluding Whole Life Insurance with variable interest rate accumulation, Accumulation
Insurance with variable interest rates and New Single Premium Individual Annuity effective on and after
April 2, 2012). This is for the purpose of gradually transitioning the Companyʼs investment portfolio toa liability-matching portfolio. This change did not have any effects on the consolidated balance sheet
and consolidated statement of income as of and for the year ended March 31, 2017.
(3) Valuation methods of derivative financial instruments
Derivative financial instruments are stated at fair market value.

Consolidated Financial Statements25

(4) Revaluation of land
The Company revalued the land for business purposes based on the Act on Revaluation of Land (ActNo. 34 promulgated on March 31, 1998). The difference between fair value and book value resulting
from the revaluation, net of related taxes, is recorded as land revaluation differences as a separate
component of net assets and the related tax is recorded as deferred tax liabilities for revaluation.
■ Date of revaluation: March 31, 2001
■ Method of revaluation as prescribed for in Article 3, Paragraph 3 of the said Act:The calculation is based on the publicly announced appraisal value with certain adjustments set forthin Article 2, Item 1 of the Enforcement Ordinance of the Act on Revaluation of Land (Government
Ordinance No. 119 promulgated on March 31, 1998) or the appraisal value determined by thereal-estate appraiser set forth in Article 2, Item 5 of the said Ordinance with certain reasonableadjustments.

Notes for the fiscal year ended March 31, 2017
Millions of Yen
As of March 31
Difference between the fair value of the revalued land at end of fiscal year
and its book value after revaluation based on Article 10 of said Act

2017¥(6,525)(5) Depreciation of tangible fixed assets
Depreciation of the Companyʼs tangible fixed assets is calculated by the following methods.
■ Tangible fixed assets (excluding lease assets): Declining-balance method
However, buildings are depreciated using the straight-line method.
■ Lease assets related to finance lease transactions that do not transfer ownership: Straight-line
method over the lease term with no residual value(6) Foreign currency translation
Foreign currency-denominated assets and liabilities (excluding the shares of unconsolidated
subsidiaries and affiliates) are translated into Japanese yen at the effective exchange rate prevailing at
the balance sheet date, except for foreign exchange-traded funds for which hedge accounting is notapplied, foreign bond exchange-traded funds for which hedge accounting is not applied and foreign
currency-denominated bonds for which hedge accounting is not applied categorized as available-forsale securities with fair market value. Such securities are translated into Japanese yen at the average ofthe effective exchange rate during the final month of the fiscal year.
(7) Allowance for possible loan losses
Allowance for possible loan losses is provided in accordance with the Companyʼs standards of selfassessment and write-offs and reserves on credit quality:i)

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

ii) For credit to borrowers who are not currently bankrupt but have a high risk of bankruptcy(hereinafter “not currently bankrupt borrowers”), the Company provides the amounts deemed
as necessary considering the borrowersʼ ability to pay, within the amounts after deductions of
the amount expected to be collected through the disposal of collateral or the execution ofguarantees.
iii) For credit to borrowers other than the above, the Company provides the amounts calculated bymultiplying the borrowersʼ balance by the actual ratio of bad debt losses on defaults during acertain past period.

26

Asahi Mutual Life Insurance Company Annual Report 2018

All credit is assessed by the relevant departments in accordance with the Companyʼs standards ofself-assessment on credit quality. The results of the assessment are reviewed by the audit department,
which is independent of business-related divisions. Subsequently, allowance for possible loan losses isprovided based on the results of these assessments.
For consolidated subsidiaries, the Company records the allowance amounts deemed necessary inaccordance mainly with the Companyʼs standards of self-assessment and write-offs and reserves on
credit quality.
For credit to legally bankrupt borrowers and substantially bankrupt borrowers, the amounts remaining
after deductions of collateral value or the amounts collectible through the execution of guarantees are
written-off directly from the borrowerʼs balance as the estimated uncollectible amounts. The amounts
written-off as of March 31, 2018 and 2017 were ¥60 million (US$0 million) and ¥215 million, respectively.
(8) Accounting for employeesʼ retirement benefits and method of amortizing retirement benefit expenses
Net defined benefit liabilities and assets are presented for the employeesʼ retirement benefits after
deducting pension plan assets from retirement benefit obligations, based on estimated amounts as of
the balance sheet date.
The Company uses the following methods of accounting in relation to retirement benefits.
■ The retirement benefit obligation is attributed to each period by the benefit formula method.
■ Actuarial differences are amortized under the straight-line method over a period of seven years
starting from the following year.
■ Prior service cost is charged to income when incurred.
(9) Reserve for price fluctuation
Reserve for price fluctuation is calculated in accordance with Article 115 of the Insurance Business Act.
(10) Accounting for hedging activities
Hedging activities are accounted for in accordance with the “Accounting Standards for Financial
Instruments” (Accounting Standards Board of Japan (“ASBJ”) Statement No. 10).
The Company applies deferred hedge accounting and the exceptional accounting treatment (“Tokureishori”) for interest rate swaps used to hedge the cash flow volatility of certain loans.
The Company also applies fair value hedge accounting for hedging activities related to foreignexchange rate fluctuation exposures on certain bonds and investment trusts denominated in foreign
currencies.
The Company also applies designated hedge accounting (“Furiate-shori”) for currency swaps used
to hedge foreign exchange rate fluctuation exposures on the foreign currency-denominated bonds
issued by the Company.
The Company also applies designated hedge accounting (“Furiate-shori”) for the foreign currencydenominated transactions other than the above.
The effectiveness of a hedge is mostly assessed by a ratio analysis, comparing the fluctuations in thefair value or cash flows of hedged items and hedging instruments.
(11) Accounting for consumption taxes
The Company and its subsidiaries account for consumption tax and local consumption tax by the
tax-exclusion method. The consumption taxes on certain assets, which are not deductible fromconsumption taxes withheld and that are stipulated to be deferred under the Corporation Tax Act ofJapan, are deferred as prepaid expenses and amortized equally over five years.
Consumption taxes other than deferred consumption taxes are recognized as an expense whenincurred.
(12) Policy reserves
Policy reserves are based on Article 116 of the Insurance Business Act and the premium reserve at the end of
fiscal year is calculated by the following method:

Consolidated Financial Statements27

In regard to the policies subject to the standard policy reserves, the method as prescribed by the Commissionerof Financial Services Agency (Japanese Ministry of Finance Public Notice No. 48, 1996) is applied.
In regard to the policies not subject to the standard policy reserves, the net level premium method is applied.
(13) Software
Capitalized software for internal use owned by the Company and its subsidiaries (included in intangible
fixed assets in the consolidated balance sheets) is amortized using the straight-line method over theestimated useful lives.

2. Accounting Changes
Notes for the fiscal year ended March 31, 2017
ASBJ Guidance No. 26 “Implementation Guidance on Recoverability of Deferred Tax Assets” has been
applied since the fiscal year ended March 31, 2017.

3. Financial Instruments
Asset management of the general accounts other than the separate accounts stipulated in Article 118,
Paragraph 1 of the Insurance Business Act is conducted based on the following principles.
■ For accumulation whole life with varying interest rates, accumulation insurance with varying interest
rates and new single premium individual annuities which have an effective date on or after April 2, 2012,
the Company mainly invests in domestic bonds, engaging in matching asset liability management,or Matching ALM, which aims at matching the duration to outstanding insurance liabilities to avoid
interest rate fluctuation risks.
■ For individual life insurance and individual annuities other than above, the Company holds yendenominated fixed income investments, including bonds and loans, as the core of its asset portfolio.
The Company also holds domestic stocks, foreign securities and real estate assets to enhance its
profitability.
Derivatives are mainly used to hedge market price fluctuation risk and exchange rate fluctuation risk
regarding securities and exchange rate fluctuation risk related to the foreign currency-denominated bonds
issued by the Company. As the major financial instruments, securities are exposed to market risk and credit
risk, loans are exposed to credit risk and exchange rate fluctuation risk, and derivatives are exposed tomarket risk and credit risk.
In administrating market risks, the following two methods are used. One is the quantitative risk managementof securities etc. using the Value at Risk (“VaR”) method and the other is the risk management by stress test
and sensitivity analysis which analyze the effect on the Companyʼs whole portfolio, simulating scenarios ofdeteriorating market environments. This is for the purpose of managing an appropriate asset allocation
within the ranges of acceptable risks.
In administrating credit risks, the Company quantifies the credit risks of entire portfolio through VaR
method and controls the amount of risks within an acceptable range. Furthermore, the Company assigns
in-house credit ratings to our borrowers in accordance with the creditworthiness of each borrower. Strict
credit research of each borrower before lending as well as following up on any changes of creditworthinessof each borrower after lending are implemented. Maximum limits of credit are set up for each borrowerin accordance with its credit risks to avoid the concentration of credit risks on specific corporations andspecific corporation groups. Through all these measures, the Company endeavors to develop high quality
portfolio.

28

Asahi Mutual Life Insurance Company Annual Report 2018

The balance sheet amounts, fair values and the differences between those of major financial assets andliabilities as of March 31, 2018 and 2017 were as follows:
Millions of Yen
2018
As of March 31
Cash and deposits
Call loans
Monetary claims bought
Trading securities
Held-to-maturity debt securities
Policy-reserve-matching bonds
Available-for-sale securities
Securities
Trading securities
Held-to-maturity debt securities
Policy-reserve-matching bonds
Available-for-sale securities
Loans
Policy loans
Industrial and consumer loans
Total assets
Bonds payable
Loans payable
Total liabilities
Derivative financial instruments
Hedge accounting not applied
Hedge accounting applied

Balance Sheet
Amount¥36,143164,000
30,151–30,151––
4,113,581
27,816324,3142,094,251
1,667,198
484,169
49,637434,532
4,828,046
40,34997,000137,349
9,980
1,811
8,169

Fair Value¥

36,143164,000
33,335–33,335––
4,457,878
27,816
365,006
2,397,856
1,667,198
494,561
49,637444,924
5,185,919
43,58596,768140,354
9,980
1,811
8,169

Difference
¥

–
–
3,184
–
3,184
–
–
344,297–
40,692
303,605–
10,391–
10,391
357,873
3,236
(231)
3,005
–
–
–

* Assets and liabilities generated by derivative financial instruments are offset and presented net. Net liabilities in total are presented
in parentheses.

Millions of Yen
2017
As of March 31
Cash and deposits
Call loans
Monetary claims bought
Trading securities
Held-to-maturity debt securities
Policy-reserve-matching bonds
Available-for-sale securities
Securities
Trading securities
Held-to-maturity debt securities
Policy-reserve-matching bonds
Available-for-sale securities
Loans
Policy loans
Industrial and consumer loans
Total assets
Bonds payable
Loans payable
Total liabilities
Derivative financial instruments
Hedge accounting not applied
Hedge accounting applied

Balance Sheet
Amount¥35,511122,000
33,202–
33,202––
4,032,059
27,242
338,885
2,161,957
1,503,974
557,761
57,577500,184
4,780,534
40,34997,000137,349
6,622
1,241
5,381

Fair Value¥

35,511122,000
36,880–36,880––4,406,304
27,242
380,8312,494,257
1,503,974
571,768
57,577514,191
5,172,465
42,85496,715
139,569
6,622
1,241
5,381

Difference
¥

–
–
3,677
–
3,677
–
–
374,245–
41,946332,299–
14,006–
14,006
391,930
2,505
(284)
2,220
–
–
–

* Assets and liabilities generated by derivative financial instruments are offset and presented net. Net liabilities in total are presented
in parentheses.

Consolidated Financial Statements

29Millions of U.S. Dollars
2018
As of March 31
Cash and deposits
Call loans
Monetary claims bought
Trading securities
Held-to-maturity debt securities
Policy-reserve-matching bonds
Available-for-sale securities
Securities
Trading securities
Held-to-maturity debt securities
Policy-reserve-matching bonds
Available-for-sale securities
Loans
Policy loans
Industrial and consumer loans
Total assets
Bonds payable
Loans payable
Total liabilities
Derivative financial instruments
Hedge accounting not applied
Hedge accounting applied

Balance Sheet
Amount
$

340
1,543
283
–
283
–
–
38,719261
3,052
19,712
15,692
4,557
467
4,090
45,444
379
913
1,292
93
17
76

Fair Value
$

340
1,543
313
–
313
–
–
41,960261
3,435
22,57015,692
4,655
467
4,187
48,813
410
910
1,321
93
17
76

Difference
$

–
–
29
–
29
–
–
3,240
–
383
2,857
–
97
–
97
3,368
30
(2)
28
–
–
–

* Assets and liabilities generated by derivative financial instruments are offset and presented net. Net liabilities in total are presented
in parentheses.

(1) Securities including deposits and monetary claims bought which are treated as securities based on“Accounting Standards for Financial Instruments” (ASBJ Statement No. 10)
As for available-for-sale securities of which market value is readily available, domestic stocks, domestic
exchange-traded funds, domestic listed real estate investment trusts, foreign exchange-traded funds
for which hedge accounting is not applied, foreign bond exchange-traded funds for which hedge
accounting is not applied and foreign currency-denominated bonds for which hedge accounting is notapplied are stated at the average of the market value during the final month of the fiscal year. Availablefor-sale securities of which market value is readily available excluding the securities mentioned above
are stated at the market value at the balance sheet date.
Other securities of which market value is readily available are stated at market value at the balance
sheet date.
Unlisted stocks and others of which market value is not readily available are not subject to fair value
disclosure and are therefore not included in the table above because it is regarded as extremely
difficult to determine their fair value.
The amounts of the unlisted stocks and others reported in the consolidated balance sheets were
¥71,523 million (US$673 million) and ¥116,627 million as of March 31, 2018 and 2017, respectively.
(2) Loans and loans payableAs credit exposure for policy loans without specific repayment periods is limited to the amount of
the cash surrender value, the Company and its subsidiaries consider book value as fair value with theassumption that fair value approximates book value in light of factors such as projected repayment
period and interest terms.
As for industrial and consumer loans and loans payable, the fair value of loans is primarily stated attheoretical prices calculated by discounting the future cash flows to the present value. The fair valueof loans to legally bankrupt borrowers, substantially bankrupt borrowers and not currently bankrupt
borrowers is stated at the amounts by deducting estimated losses from the book value before direct
write-offs.

30

Asahi Mutual Life Insurance Company Annual Report 2018

(3) Bonds payable
The fair values of bonds payable are based on the market values, etc. as of March 31, 2018 and 2017.
(4) Derivative financial instruments
The fair values of options traded over the counter are based on the quoted prices offered bycounterparty financial institutions.
The fair values of foreign currency forward contracts are stated at theoretical prices based on the TTM
at the balance sheet date.
Regarding the derivative transactions for which designated hedge accounting (“Furiate-shori”) ofcurrency swaps is applied, these fair values are included in bonds payable since they are treated
together with hedged bonds payable.

4. Investments and Rental Properties
The Company holds investment and rental properties such as office buildings in Tokyo and other areas. The
carrying amounts and the fair values of investment and rental properties were ¥267,163 million (US$2,514
million) and ¥264,669 million (US$2,491 million) as of March 31, 2018 and ¥270,353 million and ¥252,559
million as of March 31, 2017, respectively. The fair value is mainly based on the value (including someadjustments using the reference prices) of real estate appraisal report prepared by the external real-estateappraiser in accordance with real estate appraisal standards.

5. Securities Lent under Lending Agreements
The amount of securities lent under lending agreements was ¥121,177 million (US$1,140 million) as ofMarch 31, 2018.

6. Loans
The total amounts of loans to bankrupt borrowers, delinquent loans, delinquent loans three or moremonths past due and restructured loans, which were included in loans, were ¥906 million (US$8 million)and ¥1,166 million as of March 31, 2018 and 2017, respectively.
i)

Loans to bankrupt borrowers were ¥0 million (US$0 million) and ¥0 million as of March 31, 2018 and2017, respectively.

ii) Delinquent loans were ¥748 million (US$7 million) and ¥1,015 million as of March 31, 2018 and 2017,
respectively.
iii) Delinquent loans three or more months past due were ¥120 million (US$1 million) and ¥112 million
as of March 31, 2018 and 2017, respectively.
iv) Restructured loans were ¥36 million (US$0 million) and ¥38 million as of March 31, 2018 and 2017,
respectively.
Loans to bankrupt borrowers represent loans, excluding the balances already written-off, which meet theconditions prescribed in Article 96, Paragraph 1, Items 3 and 4 of the Enforcement Regulations of the
Corporate Tax Act. Moreover, accruing interest on these loans is not recorded as income after determiningthat principal of or interest on these loans is unlikely to be collected due to the significant delay inrepayment of principal or interest payments or for other reasons.
Accruing interest on delinquent loans is not recorded as income due to the same reasons as describedabove, and delinquent loans exclude loans to bankrupt borrowers and loans for which interest payments
have been suspended and rescheduled to assist and support the borrowers in the restructuring of theirbusinesses.
Delinquent loans three or more months past due are loans for which interest payments or repayments ofprincipal are delinquent for three months or more from the due dates under the terms of the related loan
agreements, excluding those loans classified as loans to bankrupt borrowers and delinquent loans.
Restructured loans are loans for which certain concessions favorable to borrowers, such as interest
reduction or exemptions, rescheduling of due dates of principal or interest payments, waivers of claim
or other terms, have been negotiated for the purpose of assisting and supporting the borrowers in theConsolidated Financial Statements

31

restructuring of their businesses. This category excludes loans classified as loans to bankrupt borrowers,
delinquent loans and delinquent loans three or more months past due.
The direct write-offs related to loans decreased the amounts of loans to bankrupt borrowers describedabove by ¥13 million (US$0 million) and ¥22 million as of March 31, 2018 and 2017, respectively.
In addition, the direct write-offs related to loans decreased delinquent loans described above by ¥46
million (US$0 million) and ¥193 million as of March 31, 2018 and 2017, respectively.

7. Accumulated Depreciation of Tangible Fixed Assets
Accumulated depreciation of tangible fixed assets totaled ¥279,695 million (US$2,632 million) and ¥277,959
million as of March 31, 2018 and 2017, respectively.

8. Separate Accounts
Total assets in separate accounts provided for in Article 118 of the Insurance Business Act were ¥29,382
million (US$276 million) and ¥29,199 million as of March 31, 2018 and 2017, respectively. The amounts ofseparate account liabilities were the same as separate account assets.

9. Receivables from/Payables to Directors and Audit Board Members
There were no receivables from directors and audit board members as of March 31, 2018 and 2017,
respectively. The total amounts of payables to directors and audit board members were ¥15 million (US$0
million) and ¥20 million as of March 31, 2018 and 2017, respectively.

10. Reserve for Dividends to Policyholders
Millions of
U.S. Dollars

Millions of Yen
For the years ended March 31
Balance at the beginning of the fiscal year
Transfer to reserve from surplus in the previous fiscal year
Dividends to policyholders paid out during the fiscal year
Increase in interest
Decrease in others
Balance at the end of the fiscal year

2018
¥

¥

40,861
1,519
5,426
58
53
36,9592017¥¥

44,720
1,767
5,660
65
31
40,861

2018
$

$

384
14
51
0
0
347

11. Stocks of Unconsolidated Subsidiaries and affiliates
The amounts of stocks of unconsolidated subsidiaries and affiliates the Company held as of March 31, 2018and 2017 were ¥574 million (US$5 million) and ¥604 million, respectively.

12. Pledged Assets
Assets pledged as collateral as of March 31, 2018 and 2017 were securities in the amount of ¥4,325 million(US$40 million) and ¥3,748 million, respectively.

13. Redemption of Foundation Funds
Notes for the fiscal year ended March 31, 2017
Accompanying the redemption of foundation funds totaling ¥11,000 million, in accordance with Article 56of the Insurance Business Act, the Company transferred the same amount from reserve for fund redemption
to reserve for redemption of foundation funds.

32

Asahi Mutual Life Insurance Company Annual Report 2018

14. Additional Foundation Funds
Notes for the fiscal year ended March 31, 2017
In accordance with Article 60 of the Insurance Business Act, the Company raised additional foundation
funds totaling ¥11,000 million.

15. Assets with Rights to Sell
The Company has the legal right to sell or collateralize securities borrowed under loan agreements.
The market values of these assets that were not sold or mortgaged as of March 31, 2018 and 2017 were¥73,317 million (US$690 million) and ¥8,295 million, respectively. No assets were mortgaged as of March
31, 2018 and 2017.

16. Commitment LineAs of March 31, 2018 and 2017, there were unused commitment line agreements under which the Company
is the lender of ¥4,101 million (US$38 million) and ¥3,500 million, respectively.

17. Subordinated Bonds
As of March 31, 2018 and 2017, bonds payable are subordinated bonds, for which the repayments aresubordinated to other obligations.

18. Subordinated Loans
As of March 31, 2018 and 2017, other liabilities included subordinated loans of ¥97,000 million (US$913
million) and ¥97,000 million, respectively, for which the repayments are subordinated to other obligations.

19. Contributions to Policyholders Protection Corporation
The estimated future contributions to the Life Insurance Policyholders Protection Corporation of Japan
under Article 259 of the Insurance Business Act as of March 31, 2018 and 2017 were ¥9,750 million (US$91
million) and ¥10,391 million, respectively. These contributions are charged as operating expenses in thefiscal years in which they are paid.

20. Deferred Taxes(1) Deferred tax assets/liabilities were recognized as follows:
Millions of
U.S. Dollars

Millions of Yen
As of March 31
Deferred tax assets
Valuation allowance for deferred tax assets
Subtotal
Deferred tax liabilities
Net deferred tax assets (liabilities)

2018
¥

¥

61,321
21,49439,827
23,765
16,062

2017
¥

¥

2018

62,62520,80941,816
18,86822,947

$

$

577
202
374
223
151

Consolidated Financial Statements

33

Major components of deferred tax assets/liabilities were as follows:
Millions of Yen
As of March 31
Deferred tax assets
Contingency reserve
Reserve for price fluctuation
Net defined benefit liabilities
Impairment losses
Losses on valuation of securities
Net unrealized losses on available-for-sale securities
Deferred tax liabilities
Net unrealized gains on available-for-sale securities2018¥

14,14010,800
9,780
8,526
5,546
3,988
22,605

Millions of Yen
As of March 31
Deferred tax assets
Net defined benefit liabilities
Reserve for price fluctuation
Impairment losses
Contingency reserve
Losses on valuation of securities
Tax loss carried forward
Deferred tax liabilities
Net unrealized gains on available-for-sale securities2017¥

10,538
10,205
8,422
8,392
7,309
6,497
18,023

Millions of
U.S. Dollars
As of March 31
Deferred tax assets
Contingency reserve
Reserve for price fluctuation
Net defined benefit liabilities
Impairment losses
Losses on valuation of securities
Net unrealized losses on available-for-sale securities
Deferred tax liabilities
Net unrealized gains on available-for-sale securities

2018
$

133
101
92
80
52
37
212

(2) The statutory tax rates were 28.1% and 28.1% for the fiscal years ended March 31, 2018 and 2017.
The main factors causing the differences between the statutory tax rates and the actual effective tax
rates after considering deferred taxes were as follows:
For the years ended March 31

Interest on foundation funds
Change of valuation allowance for deferred tax assets

34

Asahi Mutual Life Insurance Company Annual Report 20182018(4.7)%(3.7)%

2017(4.5)%(7.9)%

21. Accrued Retirement Benefits and Net Defined Benefit Liabilities(1) Summary of retirement benefit plans
As defined benefit plan, the Company and its consolidated subsidiaries have defined benefit corporate
pension plans, which are funded-type, and lump-sum retirement allowance plans which are non-fundedtype but resulted in funded type due to setting of employee pension trust.
(2) Defined benefit plani)

Reconciliation of beginning and ending balance of retirement benefit obligations
Millions of
U.S. Dollars

Millions of Yen
For the years ended March 31
Retirement benefit obligations at the beginning of
the current fiscal year
Service cost
Interest cost
Actuarial difference occurred during the fiscal year
Retirement benefit payments
Retirement benefit obligations at the end of the
fiscal year

2018

2017

2018

¥

46,769
2,029
468
1,473
(4,998)¥49,674
2,045
497
(248)
(5,199)

$

440
19
4
13
(47)

¥

45,743¥

46,769$430ii) Reconciliation of beginning and ending balance of pension plan assets
Millions of
U.S. Dollars

Millions of Yen
For the years ended March 31
Pension plan assets at the beginning of the fiscal
year
Expected return on pension plan assets
Actuarial difference occurred during the fiscal year
Contributions by the employer
Retirement benefit payments
Pension plan assets at the end of the fiscal year

2018
¥

¥

9,024
70
1,944
203
(204)
11,038

2017
¥

2018

7,275
68
1,700
196
(216)
9,024

¥

$

84
0
18
1
(1)
103

$

iii) Reconciliation of retirement benefit obligation and pension plan assets with net defined benefit
liabilities and assets presented on the consolidated balance sheets
Millions of
U.S. Dollars

Millions of Yen
As of March 31
a. Funded plan retirement benefit obligationb. Pension plan assets
c. Net amount of liabilities and assets presented on
the consolidated balance sheet
d. Net defined benefit liabilities
e. Net defined benefit assets
f. Net amount of liabilities and assets presented on
the consolidated balance sheet

2018¥45,743(11,038)2017¥

34,70435,056(351)¥

34,7042018

46,769(9,024)$37,74537,757(11)¥

37,745

430
(103)
326
329
(3)

$

326

Consolidated Financial Statements

35iv) Breakdown of retirement benefit expenses
Millions of
U.S. Dollars

Millions of Yen
For the years ended March 31
Service cost
Interest cost
Expected return on pension plan assets
Amortization of actuarial differences
Amortization of prior service cost
Retirement benefit expenses related to defined
benefit plan

2018

2017

2018

¥

2,029
468
(70)
545
6

¥

2,045
497
(68)
904
6

$

19
4
(0)
5
0

¥

2,979

¥

3,386

$

28

v) Breakdown of items included in other comprehensive income
The breakdown of items included in other comprehensive income (before tax effects) was asfollows:
Millions of
U.S. Dollars

Millions of Yen
For the years ended March 31
Amortization of actuarial differences
Amortization of prior service cost
Total

2018
¥
¥

2017

1,015
6
1,022

¥

2018

2,854
6
2,860

¥

$

9
0
9

$

vi) Breakdown of items included in accumulated other comprehensive income
The breakdown of items included in total accumulated other comprehensive income (before tax
effects) was as follows:
Millions of
U.S. Dollars

Millions of Yen
For the years ended March 31
Unrecognized actuarial differences
Unrecognized prior service cost
Total

2018
¥
¥

2017
(534)
13
(521)

¥

2018
481
19
501

¥

$

(5)
0
(4)

$

vii) Breakdown of main pension plan assets
The breakdown of main asset categories as a percentage of pension plan assets was as follows:
As of March 31
Stocks
Bonds
Others
Total

2018
60%
9%
31%
100%

2017
53%
11%
36%
100%

viii) Method for determining the expected long-term rate of return
To determine 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 the diverse range of assets that makes up the pension assets.
ix) Underlying actuarial assumptions
The main underlying actuarial assumptions were as follows:
As of March 31
Discount rate
Expected long-term rate of return on pension plan assets
Defined benefit corporate pension plans

36

Asahi Mutual Life Insurance Company Annual Report 2018

2018
1.0%
0.7%
1.7%

2017
1.0%
0.9%
1.6%

III. Notes to Consolidated Statements of Income
1. Investment Income and Expenses
The major components of gains on sales of securities were as follows:
Millions of
U.S. Dollars

Millions of Yen
For the years ended March 31
Domestic bonds
Domestic stocks and other securities
Foreign securities

2018
¥

2017

44,891
1,709
178

¥

2018

25,787
2,727
11,875

$

422
16
1

The major components of losses on sales of securities were as follows:
Millions of
U.S. Dollars

Millions of Yen
For the years ended March 31
Domestic bonds
Domestic stocks and other securities
Foreign securities

2018
¥

2017

549
487
1,249

¥

2018

24
184
10,816$5
4
11

The major components of losses on valuation of securities were as follows:
Millions of
U.S. Dollars

Millions of Yen
For the years ended March 31
Domestic stocks and other securities
Foreign securities

2018
¥

2017
49
96

¥

2018
11
5

$

0
0

Losses on derivative financial instruments included net valuation losses of ¥76 million (US$0 million) andlosses of ¥121 million for the fiscal years ended March 31, 2018 and 2017, respectively.

2. Impairment Losses of Fixed Assets
For the fiscal years ended March 31, 2018 and 2017, impairment losses of fixed assets by the Company
were as follows:(1) Method of grouping
Real estate and other assets used for insurance business operations are classified as one asset groupas a whole. Other assets such as real estate for rent and unused real estate are classified as one groupindividually.
(2) Background information on recognizing the impairment losses
As the profitability of certain real estate for rent dropped down significantly due to a decrease in thelevel of rental income and a declining trend in the market prices of land, the Company reduced thebook values of such real estate for rent and unused real estate to their recoverable amounts. The writedowns were recognized as impairment losses and included in the extraordinary losses.

Consolidated Financial Statements37

(3) Asset groups for which impairment losses were recognized and losses by classification of fixed assets
Millions of
U.S. Dollars

Millions of Yen
For the year ended March 31
Real estate for rent:
Land
Building
Total real estate for rent (i)Unused real estate:
Land
Building
Total unused real estate (ii)
Total:Land
Building
Total (i)+(ii)

2018
¥

¥

2017

518
699
1,217

¥

2018
357
418
775

$

4
6
11

369
191
560

403
154
557

3
1
5

888
890
1,778

760
572
1,333

8
8
16

¥

$

(4) Calculation method of recoverable amounts
The recoverable amounts of real estate for rent are determined at net realizable value or value in use.
The recoverable amounts for unused assets are net realizable value. Value in use is determined as
the estimated net future cash flows, reflecting the volatility risk, discounted at 3.6% and 3.6% for the
fiscal years ended March 31, 2018 and 2017, respectively. Net realizable value is calculated based on
the appraisal value in accordance with “Real Estate Appraisal Standards” or the publicly announced
appraisal value after deducting expected disposal costs.

38

Asahi Mutual Life Insurance Company Annual Report 2018

IV. Notes to Consolidated Statements of Comprehensive Income
Other Comprehensive Income
The reclassification adjustments and tax effect amounts related to other comprehensive income were as follows:
Millions of
U.S. Dollars

Millions of Yen
For the years ended March 31
Net unrealized gains on available-for-sale securities, net oftax
Amount incurred during the fiscal year
Reclassification adjustments
Before tax adjustment
Tax effects
Net unrealized gains on available-for-sale securities, netof taxAccumulated remeasurements of defined benefit plans
Amount incurred during the fiscal year
Reclassification adjustments
Before tax adjustment
Tax effects
Accumulated remeasurements of defined benefit plans
Total other comprehensive income

2018

¥

¥

18,028(1,251)
16,776(6,587)

2017

¥

2018

9,685
(3,823)
5,861
2,288

$

169
(11)
157
(62)

10,188

8,150

95

470
552
1,022
(286)
735
10,924

1,949
911
2,860
(799)
2,061
10,212

4
5
9
(2)
6
102

¥

$

V. Notes to Consolidated Statements of Cash Flows
Scope of Cash and Cash Equivalents
For the purpose of presenting the consolidated statements of cash flows, cash and cash equivalents arecomprised of cash on hand, demand deposits and all highly liquid short-term investments with a maturity of
three months or less when purchased, which are readily convertible into cash and present an insignificant riskof changes in value.

Consolidated Financial Statements

39

Ernst & Young ShinNihon LLC
Hibiya Mitsui Tower, Tokyo Midtown Hibiya
1-1-2 Yurakucho, Chiyoda-ku
Tokyo 100-0006, Japan

Tel: +81 3 3503 1100
Fax: +81 3 3503 1197
www.shinnihon.or.jp

Independent Auditor’s Report
The Board of Directors
Asahi Mutual Life Insurance Company
We have audited the accompanying consolidated financial statements of Asahi Mutual Life Insurance
Company and its consolidated subsidiaries, which comprise the consolidated balance sheets as of March
31, 2018 and 2017, and the consolidated statements of income, the consolidated statements ofcomprehensive income, the consolidated statements of changes in net assets, and the consolidated
statements of cash flows for the years then ended and a summary of significant accounting policies andother explanatory information, all expressed in Japanese yen.
Management’s Responsibility for the Consolidated Financial Statements
Management is responsible for the preparation and fair presentation of these consolidated financial
statements in accordance with the Insurance Business Act and related rules and regulations applicable tothe mutual life insurance industry and accounting principles generally accepted in Japan, and for designingand operating such internal control as management determines is necessary to enable the preparation andfair presentation of the consolidated financial statements that are free from material misstatement, whether
due to fraud or error.
Auditor’s Responsibility
Our responsibility is to express an opinion on these consolidated financial statements based on our audits.
We conducted our audits in accordance with auditing standards generally accepted in Japan. Thosestandards require that we plan and perform the audit to obtain reasonable assurance about whether the
consolidated financial statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in
the consolidated financial statements. The procedures selected depend on the auditor’s judgment, including
the assessment of the risks of material misstatement of the consolidated financial statements, whether due
to fraud or error. The purpose of an audit of the consolidated financial statements is not to express an
opinion on the effectiveness of the entity’s internal control, but in making these risk assessments the auditor
considers internal controls relevant to the entity’s preparation and fair presentation of the consolidated
financial statements in order to design audit procedures that are appropriate in the circumstances. An audit
also includes evaluating the appropriateness of accounting policies used and the reasonableness ofaccounting estimates made by management, as well as evaluating the overall presentation of theconsolidated financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our
audit opinion.
OpinionIn our opinion, the consolidated financial statements referred to above present fairly, in all material respects,
the consolidated financial position of Asahi Mutual Life Insurance Company and its consolidated
subsidiaries as of March 31, 2018 and 2017, and their consolidated financial performance and cash flows
for the years then ended in accordance with the Insurance Business Act and related rules and regulations
applicable to the mutual life insurance industry and accounting principles generally accepted in Japan.
Convenience Translation
We have reviewed the translation of these consolidated financial statements into U.S. dollars, presented
for the convenience of readers, and, in our opinion, the accompanying consolidated financial statements
have been properly translated on the basis described in Note 2.

May 16, 2018
Tokyo, Japan
A member firm of Ernst & Young Global Limited

40

Asahi Mutual Life Insurance Company Annual Report 2018

8. Non-consolidated Financial Statements
Non-consolidated Balance Sheets
Asahi Mutual Life Insurance Company
Millions of
U.S. Dollars

Millions of Yen
As of March 31
ASSETS:Cash and deposits:
Cash
Deposits

2018¥

Call loans
Monetary claims bought
Securities:
National government bonds
Local government bonds
Corporate bonds
Domestic stocks
Foreign securities
Other securities
Loans:
Policy loans
Industrial and consumer 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
Money on deposit
Derivative financial instruments
Cash collateral paid for financial instruments
Suspense payments
Other assets
Prepaid pension cost
Deferred tax assets
Customers' liabilities under acceptances and guarantees
Allowance for possible loan losses
Total assets¥

242
31,392
31,635
164,000
30,151

2017

¥

2018

260
31,84032,100122,000
33,202

$

2
295
297
1,543
283

1,866,902
48,785936,856
334,335
926,893
75,096
4,188,869

1,929,361
55,807916,978
293,841
878,872
77,487
4,152,349

17,572
459
8,818
3,146
8,724
706
39,42849,637434,532
484,169

57,577500,184
557,761

467
4,090
4,557

230,913
162,583
3,946
1,134
2,432
401,011

232,995
167,527
2,015
1,033
2,531
406,105

2,173
1,530
37
10
22
3,774

21,295
13,05934,355812

14,647
18,87433,521
194

200
122
323
7

4,029
3,418
17,1983,408
12,525
3,748
238
1,061
45,62970
16,18710(394)
5,396,507

3,307
3,046
17,040
3,423
8,005
2,482
194
1,218
38,719–22,72514(487)
5,398,207

37
32
161
32
117
35
2
9
429
0
152
0
(3)
50,795¥$

Non-consolidated Financial Statements

41Millions of
U.S. Dollars

Millions of Yen
As of March 31
LIABILITIES:Policy reserves and other reserves:
Reserve for outstanding claims
Policy reserves
Reserve for dividends to policyholders

2018

¥

Reinsurance payables
Bonds payable
Other liabilities:
Payables under securities borrowing transactions
Loans payable
Income taxes payable
Accounts payable
Accrued expenses
Deferred income
Deposits received
Guarantee deposits received
Derivative financial instruments
Cash collateral received for financial instruments
Lease obligations
Asset retirement obligations
Suspense receipts
Reserve for employees' retirement benefits
Reserve for price fluctuation
Deferred tax liabilities for land revaluation
Acceptances and guarantees
Total liabilities
NET ASSETS:
Foundation funds
Reserve for redemption of foundation funds
Reserve for revaluation
Surplus:Reserve for future losses
Other surplus:
Reserve for fund redemption
Equalized reserve for dividends to policyholders
Unappropriated surplus (loss)
Subtotal
Total foundation funds and others
Net unrealized gains (losses) on available–for–salesecurities, net of tax
Land revaluation differences
Total valuation and translation adjustments
Total net assets
Total liabilities and net assets

42

Asahi Mutual Life Insurance Company Annual Report 2018

¥

2017

28,3684,616,919
36,9594,682,246
311
40,349¥2018

27,3644,700,145
40,861
4,768,371
127
40,349$267
43,457347
44,072
2379

44,96797,000
3,321
6,869
8,889
184
454
17,433
2,544
7,630
3,946
243
171
193,656
35,36538,71017,762
10
5,008,412–
97,000
1,435
5,143
8,053
192
364
18,171
1,382
4,190
2,015
240
238
138,429
37,30736,58018,09114
5,039,270

423
913
31
64
83
1
4
164
23
71
37
2
1
1,822
332
364
167
0
47,142126,000
131,000
281

126,000
131,000
281

1,185
1,233
2

266

242

2

48,6009,678
37,356
95,63595,901
353,183

36,0008,718
31,35376,071
76,313
333,595

457
91
351
900
902
3,324

81,292(46,380)
34,912
388,095
5,396,507

71,104(45,762)
25,341
358,937
5,398,207

765
(436)
328
3,653
50,795¥$

Non-consolidated Statements of Income
Asahi Mutual Life Insurance Company
Millions of
U.S. Dollars

Millions of Yen
For the years ended March 31
Ordinary income:Premium and other income:Insurance premiums
Reinsurance revenue
Investment income:Interest, dividends and other income:Interest and dividends on securities
Interest on loans
Rent revenue from real estate
Other interest and dividends
Gains on sales of securities
Reversal of allowance for possible loan losses
Other investment income
Investment gains on separate accounts
Other ordinary income:Fund receipt from deposit of claims paid
Reversal of reserve for employees' retirement benefits
Reversal of reserve for outstanding claims
Reversal of policy reserves
Other ordinary income
Total ordinary income
Ordinary expenses:
Claims and other payments:
ClaimsAnnuities
Benefits
Surrender benefits
Other payments
Reinsurance premiums
Provision for policy reserves and other reserves:
Provision for reserve for outstanding claims
Provision for interest on policyholders' dividend reserves
Investment expenses:
Interest expenses
Losses on sales of securities
Losses on valuation of securities
Losses on derivative financial instruments
Foreign exchange losses
Write-offs of loans
Depreciation of rental real estate and other assets
Other investment expenses
Operating expenses
Other ordinary expenses:
Claim deposit payments
Taxes
Depreciation
Other ordinary expenses
Total ordinary expenses
Ordinary profit

2018

¥

2017

383,422
1,531
384,953¥2018

383,514262
383,776

$

3,609
14
3,623

84,322
8,371
16,354929
109,978
46,779
74
7,379
2,384
166,597

83,44910,250
16,485
1,013
111,199
40,389
85
7,268
2,320
161,263

793
78
153
8
1,035
440
0
69
22
1,568

13,793
1,942–
83,226
1,713
100,674
652,225

16,427
1,789
585
114,500
1,653
134,956
679,996

129
18
–
783
16
947
6,139

124,809
129,879
82,264
95,7105,656
645
438,966

135,234
128,659
97,962
94,2267,378
346
463,808

1,174
1,222
774
900
53
6
4,131

1,003
4
1,008

–
33
33

9
0
9

4,449
2,285
145
13,891
2,530
1
5,596
9,641
38,542
102,337

4,042
11,02516
11,264
326
0
5,500
9,561
41,737
101,452

41
21
1
130
23
0
52
90
362
963

14,767
7,405
10,354
1,299
33,827
614,681
37,543

15,456
7,293
10,126
1,101
33,977641,009
38,986

139
69
97
12
318
5,785
353

Non-consolidated Financial Statements

43Millions of
U.S. Dollars

Millions of Yen
For the years ended March 31

2018

Extraordinary gains:
Gains on disposal of fixed assets
Extraordinary losses:
Losses on disposal of fixed assets
Impairment losses
Provision for reserve for price fluctuation
Other extraordinary losses
Surplus before income taxes
Income taxes:
Current
Deferred
Total income taxes
Net surplus

44

Asahi Mutual Life Insurance Company Annual Report 2018

¥

2017

2018

194
194

1,243
1,243

1
1

1,538
1,778
2,130
–
5,446
32,291

1,633
1,333
2,050
344
5,361
34,869

14
16
20
–
51
303

6,680
(377)
6,303
25,988

3,777
1,828
5,605
29,263

62
(3)
59
244

¥

$

Non-consolidated Statements of Changes in Net Assets
Asahi Mutual Life Insurance Company
Millions of Yen
Foundation funds and others
Surplus
For the year ended
March 31, 2018

Beginning balance

Reserve forredemption Reserve
Foundation
Reserve
of
for
funds
foundation revaluation for future
lossesfunds¥126,000 ¥131,000 ¥Changes in the fiscal year:
Additions to reserve for dividends topolicyholders
Additions to reserve for future losses
Payment of interest on foundation
funds
Net surplus
Additions to reserve for fundredemption
Additions to equalized reserve fordividends to policyholders
Reversal of land revaluationdifferences
Net changes, excluding foundation
funds and others
Net changes in the fiscal year––
Ending balance¥126,000 ¥131,000 ¥

281 ¥

Total
foundation
Equalized
Total
funds andReserve
reserve for Unappropriated surplus
othersfor funddividends to surplus (loss)
redemption
policyholders
Other surplus

242 ¥ 36,000 ¥

8,718 ¥ 31,353 ¥ 76,313 ¥333,595

24

12,600(1,519)(24)(1,519)(1,519)(5,499)25,988(5,499)25,988(5,499)25,988617

617(12,600)
960

(960)
617

–
281 ¥

24
12,600266 ¥ 48,600 ¥

960
6,003
19,587
19,587
9,678 ¥ 37,356 ¥ 95,901 ¥353,183

Millions of Yen
Valuation and translation adjustments
For the year ended
March 31, 2018

Beginning balance
Changes in the fiscal year:
Additions to reserve for dividends topolicyholders
Additions to reserve for future losses
Payment of interest on foundation funds
Net surplus
Additions to reserve for fund redemption
Additions to equalized reserve for dividends topolicyholders
Reversal of land revaluation differences
Net changes, excluding foundation funds andothersNet changes in the fiscal year
Ending balance

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

Land revaluationdifferences

Total valuationand translation
adjustments

Total net assets

¥

¥

¥

¥

71,104(45,762)

25,341

358,937(1,519)(5,499)25,988617¥

10,188
10,18881,292

¥

(617)
(617)
(46,380)

¥

9,570
9,570
34,912¥

9,570
29,158388,095

Non-consolidated Financial Statements

45

Millions of U.S. Dollars
Foundation funds and others
Surplus
For the year ended
March 31, 2018

Beginning balance

Reserve forredemption Reserve
Foundation
Reserve
of
for
funds
foundation revaluation for future
lossesfunds$

Changes in the fiscal year:
Additions to reserve for dividends topolicyholders
Additions to reserve for future losses
Payment of interest on foundation
funds
Net surplus
Additions to reserve for fundredemption
Additions to equalized reserve fordividends to policyholders
Reversal of land revaluationdifferences
Net changes, excluding foundation
funds and others
Net changes in the fiscal year
Ending balance$

1,185 $

1,233 $

2 $Totalfoundation
Equalized
Total
funds andReserve
reserve for Unappropriated surplus
othersfor funddividends to surplus (loss)
redemption
policyholders

2 $Other surplus

338 $

82 $

0

118

295 $

718 $

(14)
(0)

(14)

(14)

(51)
244

(51)
244

(51)
244

5

5

5

56
351 $

184
902 $

(118)
9

–
1,185 $–
1,233 $

–
2 $

0
2 $

3,140

118
457 $

9
91 $

(9)

184
3,324

Millions of U.S. Dollars
Valuation and translation adjustments
For the year ended
March 31, 2018

Beginning balance
Changes in the fiscal year:
Additions to reserve for dividends topolicyholders
Additions to reserve for future losses
Payment of interest on foundation funds
Net surplus
Additions to reserve for fund redemption
Additions to equalized reserve for dividends topolicyholders
Reversal of land revaluation differences
Net changes, excluding foundation funds andothersNet changes in the fiscal year
Ending balance

46

Asahi Mutual Life Insurance Company Annual Report 2018

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

Land revaluationdifferences

Total valuationand translation
adjustments

Total net assets

$

$

$

$

669

(430)

238

3,378

(14)
(51)
244

5

$

95
95
765

$

(5)
(5)
(436)

$

90
90
328

$

90
274
3,653

Millions of Yen
Foundation funds and others
Surplus
For the year ended
March 31, 2017

Beginning balance

Reserve forredemption Reserve
Foundation
Reserve
of
for
funds
foundation revaluation for future
lossesfunds¥ 126,000 ¥ 120,000 ¥Changes in the fiscal year:
11,000Issuance of foundation funds
Additions to reserve for dividends topolicyholders
Additions to reserve for future losses
Additions to reserve for redemptionof foundation funds
11,000
Payment of interest on foundation
funds
Net surplus
Redemption of foundation funds(11,000)
Additions to reserve for fundredemption
Reversal of equalized reserve fordividends to policyholders
Reversal of land revaluationdifferences
Net changes, excluding foundation
funds and others
11,000Net changes in the fiscal year–
Ending balance¥ 126,000 ¥ 131,000 ¥

281 ¥

Total
foundation
Equalized
Total
funds andReserve
reserve for Unappropriated surplus
othersfor funddividends to surplus (loss)
redemption
policyholders
Other surplus

219 ¥ 35,500 ¥ 10,485 ¥ 18,163 ¥ 64,368 ¥ 310,650
11,000(1,767)(23)

23(1,767)(11,000)(11,000)(5,787)29,263

11,500(5,787)29,263(5,787)29,263(11,000)

1,235

1,235

(11,500)(1,767)

1,767
1,235

–
281 ¥

(1,767)23500
242 ¥ 36,000 ¥(1,767)
13,18911,94422,944
8,718 ¥ 31,353 ¥ 76,313 ¥ 333,595

Millions of Yen
Valuation and translation adjustments
For the year ended
March 31, 2017

Beginning balance
Changes in the fiscal year:
Issuance of foundation funds
Additions to reserve for dividends topolicyholders
Additions to reserve for future losses
Additions to reserve for redemption offoundation funds
Payment of interest on foundation funds
Net surplus
Redemption of foundation funds
Additions to reserve for fund redemption
Reversal of equalized reserve for dividends topolicyholders
Reversal of land revaluation differences
Net changes, excluding foundation funds andothersNet changes in the fiscal year
Ending balance

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

Land revaluationdifferences

Total valuationand translation
adjustments

Total net assets

¥

¥

¥

¥

62,953(44,527)

18,426

329,077
11,000(1,767)(5,787)29,263(11,000)

1,235

¥

8,150
8,150
71,104¥(1,235)(1,235)(45,762)

¥

6,915
6,915
25,341¥

6,915
29,859358,937

Non-consolidated Financial Statements

47

Non-consolidated Statements of Proposed Appropriation of Surplus(Loss)
Asahi Mutual Life Insurance Company
Millions of
U.S. Dollars

Millions of Yen
For the years ended March 31
Unappropriated surplus (loss)
Reversal of Voluntary surplus reserves:
Reversal of equalized reserve for dividends topolicyholders
Total
Appropriation of surplus (loss):Reserve for dividends to policyholders
Net surplus (loss):Reserve for future losses
Interest on foundation funds
Voluntary surplus reserves:
Reserve for fund redemption
Equalized reserve for dividends to policyholders
Surplus (loss) carried forward

48

Asahi Mutual Life Insurance Company Annual Report 2018

2018
¥

¥

37,356420
420
37,777
20,854
1,963
18,891
25
6,266
12,60012,600–16,922

2017¥¥

31,353––31,353
20,603
1,519
19,08324
5,499
13,56012,600960
10,750

2018
$

$

351
3
3
355
196
18
177
0
58
118
118
–
159

Notes to Non-consolidated Financial Statements
Asahi Mutual Life Insurance Company

I. Presentation of Non-consolidated Financial Statements
1. Basis of Presentation
The accompanying non-consolidated financial statements have been prepared from the accounts
maintained by Asahi Mutual Life Insurance Company (the “Company”) in accordance with the provisions
set forth in the Insurance Business Act of Japan and its related rules and regulations applicable to themutual life insurance industry and in conformity with accounting principles generally accepted in Japan,
which are different in certain respects from accounting principles generally accepted in countries andjurisdictions other than Japan.
In addition, the notes to the non-consolidated financial statements include information which is not required
under accounting principles generally accepted in Japan but is presented herein as additional information.
Amounts of less than one million yen have been eliminated. As a result, total amounts in yen shown herein
do not necessarily agree with the sum of the individual amounts.
The Insurance Business Act shall prescribe the disclosure of a single fiscal year. The Company provides
the disclosure of comparative financial information corresponding to each comparative fiscal year in thepresented financial statements for use by readers outside Japan.
In preparing the accompanying non-consolidated financial statements, certain reclassifications have been
made to the non-consolidated financial statements issued domestically in order to present them in aformat which is more familiar to readers outside Japan.

2. U.S. Dollar Amounts
The translations of yen amounts into U.S. dollar amounts are included solely for the convenience of thereader and have been made, as a matter of arithmetical computation only, at the rate of ¥106.24 = US$1.00,
the effective rate of exchange at the balance sheet date of March 31, 2018.
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 rate.

II. Notes to Non-consolidated Balance Sheets
1. Significant Accounting Policies(1) Valuation methods of securities
The valuation of securities, including deposits and monetary claims bought which are equivalent tosecurities is as follows:i)

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

ii) Held-to-maturity debt securities are stated at amortized cost (straight-line method) determined by
the moving average method.
iii) Policy-reserve-matching bonds, which are in accordance with “Temporary Treatment of Accounting
and Auditing Concerning Policy-reserve-matching Bonds in Insurance Industry” (Industry Audit
Committee Report No. 21 issued by the Japanese Institute of Certified Public Accountants (“JICPA”)),
are stated at amortized cost (straight-line method) determined by the moving average method.
iv) Investments in subsidiaries and affiliates are stated at cost.
v) Available-for-sale securities with fair market value except for the following are stated at fair market
value based on the market prices at the end of the fiscal year. Available-for-sale securities withfair market value, of which domestic stocks, domestic exchange-traded funds, domestic listed
real estate investment trusts, foreign exchange-traded funds for which hedge accounting is not

Non-consolidated Financial Statements

49

applied, foreign bond exchange-traded funds for which hedge accounting is not applied andforeign currency-denominated bonds for which hedge accounting is not applied, are stated atfair market value based on the average of the market prices during the final month of the fiscal
year. Costs of sales are determined by the moving average method. Available-for-sale securities
with extreme difficulty of measuring fair market value, of which public and corporate bonds
including foreign bonds with the difference between acquisition cost and face value recognized
as an adjustment of interest, are stated at amortized cost (straight-line method) determined by
the moving average method. The other securities are stated at cost determined by the moving
average method. Net unrealized gains or losses on these available-for-sale securities, net of tax,
are recorded as a separate component of net assets.
(2) Policy-reserve-matching bonds
The Company classifies bonds held with the aim of matching the duration to outstanding insurance
liabilities within the sub-groups (categorized by insurance type, investment policy and other factors)of individual life insurance and individual annuities as policy-reserve-matching bonds in accordancewith “Temporary Treatment of Accounting and Auditing Concerning Policy-reserve-matching Bonds inInsurance Industry” (Industry Audit Committee Report No. 21 issued by the JICPA on November 16, 2000).

Notes for the fiscal year ended March 31, 2017
Since the fiscal year starting from April 1, 2016, the Company changed its liability cash flow, which isthe premise of assessing the duration to outstanding insurance liabilities, from a “Term of future 25
years” to a “Term of future 30 years” for the sub-group including Individual life Insurance and Individual
Annuities (excluding Whole Life Insurance with variable interest rate accumulation, Accumulation
Insurance with variable interest rates and New Single Premium Individual Annuity effective on and after
April 2, 2012). This is for the purpose of gradually transitioning the Companyʼs investment portfolio toa liability-matching portfolio. This change did not have any effects on the non-consolidated balance
sheet and non-consolidated statement of income as of and for the year ended March 31, 2017.
(3) Valuation methods of derivative financial instruments
Derivative financial instruments are stated at fair market value.
(4) Revaluation of land
The Company revalued the land for business purposes based on the Act on Revaluation of Land (ActNo. 34 promulgated on March 31, 1998). The difference between fair value and book value resulting
from the revaluation, net of related taxes, is recorded as land revaluation differences as a separate
component of net assets and the related tax is recorded as deferred tax liabilities for revaluation.
■ Date of revaluation: March 31, 2001
■ Method of revaluation as prescribed for in Article 3, Paragraph 3 of the said Act:The calculation is based on the publicly announced appraisal value with certain adjustments set forthin Article 2, Item 1 of the Enforcement Ordinance of the Act on Revaluation of Land (Government
Ordinance No. 119 promulgated on March 31, 1998) or the appraisal value determined by thereal-estate appraiser set forth in Article 2, Item 5 of the said Ordinance with certain reasonableadjustments.

Notes for the fiscal year ended March 31, 2017
Millions of Yen
As of March 31
Difference between the fair value of the revalued land at end of fiscal year
and its book value after revaluation based on Article 10 of said Act

2017¥(6,525)(5) Depreciation of tangible fixed assets
Depreciation of the Companyʼs tangible fixed assets is calculated by the following methods.
■ Tangible fixed assets (excluding lease assets): Declining-balance method
However, buildings are depreciated using the straight-line method.

50

Asahi Mutual Life Insurance Company Annual Report 2018

■ Lease assets related to finance lease transactions that do not transfer ownership: Straight-line
method over the lease term with no residual value(6) Foreign currency translation
Foreign currency-denominated assets and liabilities are translated into Japanese yen at the effective
exchange rate prevailing at the balance sheet date, except for foreign exchange-traded funds for which
hedge accounting is not applied, foreign bond exchange-traded funds for which hedge accounting
is not applied and foreign currency-denominated bonds for which hedge accounting is not applied
categorized as available-for-sale securities with fair market value. Such securities are translated into
Japanese yen at the average of the effective exchange rate during the final month of the fiscal year.
(7) Allowance for possible loan losses
Allowance for possible loan losses is provided in accordance with the Companyʼs standards of selfassessment and write-offs and reserves on credit quality:i)

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

ii) For credit to borrowers who are not currently bankrupt but have a high risk of bankruptcy(hereinafter “not currently bankrupt borrowers”), the Company provides the amounts deemed asnecessary considering the borrowersʼ ability to pay, within the amounts after deductions of theamount expected to be collected through the disposal of collateral or the execution of guarantees.
iii) For credit to borrowers other than the above, the Company provides the amounts calculated bymultiplying the borrowersʼ balance by the actual ratio of bad debt losses on defaults during acertain past period.
All credit is assessed by the relevant departments in accordance with the Companyʼs standards ofself-assessment on credit quality. The results of the assessment are reviewed by the audit department,
which is independent of business-related divisions. Subsequently, allowance for possible loan losses isprovided based on the results of these assessments.
For credit to legally bankrupt borrowers and substantially bankrupt borrowers, the amounts remaining
after deductions of collateral value or the amounts collectible through the execution of guarantees
are written-off directly from the borrowerʼs balance as the estimated uncollectible amounts. The
amounts written-off as of March 31, 2018 and 2017 were ¥60 million (US$0 million) and ¥215 million,
respectively.
(8) Accounting for employeesʼ retirement benefits and method of amortizing retirement benefit expenses
Reserve for employeesʼ retirement benefits and prepaid pension cost are presented for the employeesʼ
retirement benefits based on projected benefit obligation and pension plan assets at the balance
sheet date.
The Company uses the following methods of accounting in relation to retirement benefits.
■ The retirement benefit obligation is attributed to each period by the benefit formula method.
■ Actuarial differences are amortized under the straight-line method over a period of seven years
starting from the following year.
■ Prior service cost is charged to income when incurred.
(9) Reserve for price fluctuation
Reserve for price fluctuation is calculated in accordance with Article 115 of the Insurance Business Act.
(10) Accounting for hedging activities
Hedging activities are accounted for in accordance with the “Accounting Standards for Financial
Instruments” (Accounting Standards Board of Japan (“ASBJ”) Statement No. 10).

Non-consolidated Financial Statements

51

The Company applies deferred hedge accounting and the exceptional accounting treatment (“Tokureishori”) for interest rate swaps used to hedge the cash flow volatility of certain loans.
The Company also applies fair value hedge accounting for hedging activities related to foreignexchange rate fluctuation exposures on certain bonds and investment trusts denominated in foreign
currencies.
The Company also applies designated hedge accounting (“Furiate-shori”) for currency swaps used
to hedge foreign exchange rate fluctuation exposures on the foreign currency-denominated bonds
issued by the Company.
The Company also applies designated hedge accounting (“Furiate-shori”) for the foreign currencydenominated transactions other than the above.
The effectiveness of a hedge is mostly assessed by a ratio analysis, comparing the fluctuations in thefair value or cash flows of hedged items and hedging instruments.
(11) Accounting for consumption taxes
The Company accounts for consumption tax and local consumption tax 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 Corporation Tax Act of Japan, are deferred as prepaid
expenses and amortized equally over five years.
Consumption taxes other than deferred consumption taxes are recognized as an expense whenincurred.
(12) Policy reserves
Policy reserves are based on Article 116 of the Insurance Business Act and the premium reserve at the end of
fiscal year is calculated by the following method:
In regard to the policies subject to the standard policy reserves, the method as prescribed by the Commissionerof Financial Services Agency (Japanese Ministry of Finance Public Notice No. 48, 1996) is applied.
In regard to the policies not subject to the standard policy reserves, the net level premium method is applied.
(13) Software
Capitalized software for internal use owned by the Company is amortized using the straight-line
method over the estimated useful lives.

2. Accounting Changes
Notes for the fiscal year ended March 31, 2017
ASBJ Guidance No. 26 “Implementation Guidance on Recoverability of Deferred Tax Assets” has been
applied since the fiscal year ended March 31, 2017.

3. Financial Instruments
Asset management of the general accounts other than the separate accounts stipulated in Article 118,
Paragraph 1 of the Insurance Business Act is conducted based on the following principles.
■ For accumulation whole life with varying interest rates, accumulation insurance with varying interest
rates and new single premium individual annuities which have an effective date on or after April 2, 2012,
the Company mainly invests in domestic bonds, engaging in matching asset liability management,or Matching ALM, which aims at matching the duration to outstanding insurance liabilities to avoid
interest rate fluctuation risks.
■ For individual life insurance and individual annuities other than above, the Company holds yendenominated fixed income investments, including bonds and loans, as the core of its asset portfolio.
The Company also holds domestic stocks, foreign securities and real estate assets to enhance its
profitability.
Derivatives are mainly used to hedge market price fluctuation risk and exchange rate fluctuation risk
regarding securities and exchange rate fluctuation risk related to the foreign currency-denominated bonds

52

Asahi Mutual Life Insurance Company Annual Report 2018

issued by the Company. As the major financial instruments, securities are exposed to market risk and credit
risk, loans are exposed to credit risk and exchange rate fluctuation risk, and derivatives are exposed tomarket risk and credit risk.
In administrating market risks, the following two methods are used. One is the quantitative risk managementof securities etc. using the Value at Risk (“VaR”) method and the other is the risk management by stress test
and sensitivity analysis which analyze the effect on the Companyʼs whole portfolio, simulating scenarios ofdeteriorating market environments. This is for the purpose of managing an appropriate asset allocation
within the ranges of acceptable risks.
In administrating credit risks, the Company quantifies the credit risks of entire portfolio through VaR
method and controls the amount of risks within an acceptable range. Furthermore, the Company assigns
in-house credit ratings to our borrowers in accordance with the creditworthiness of each borrower. Strict
credit research of each borrower before lending as well as following up on any changes of creditworthinessof each borrower after lending are implemented. Maximum limits of credit are set up for each borrowerin accordance with its credit risks to avoid the concentration of credit risks on specific corporations andspecific corporation groups. Through all these measures, the Company endeavors to develop high quality
portfolio.
The balance sheet amounts, fair values and the differences between those of major financial assets andliabilities as of March 31, 2018 and 2017 were as follows:
Millions of Yen
2018
As of March 31
Cash and deposits
Call loans
Monetary claims bought
Trading securities
Held-to-maturity debt securities
Policy-reserve-matching bonds
Available-for-sale securities
Securities
Trading securities
Held-to-maturity debt securities
Policy-reserve-matching bonds
Available-for-sale securities
Loans
Policy loans
Industrial and consumer loans
Total assets
Bonds payable
Loans payable
Total liabilities
Derivative financial instruments
Hedge accounting not applied
Hedge accounting applied

Balance Sheet
Amount¥31,635
164,000
30,151–30,151––
4,112,857
27,816323,610
2,094,251
1,667,178
484,169
49,637434,532
4,822,813
40,34997,000137,349
9,980
1,811
8,169

Fair Value¥

Difference

31,635
164,000
33,335–33,335––
4,457,152
27,816364,300
2,397,856
1,667,178
494,561
49,637444,924
5,180,685
43,58596,768140,354
9,980
1,811
8,169

¥

–
–
3,184
–
3,184
–
–
344,295–
40,690303,605–
10,391–
10,391
357,871
3,236
(231)
3,005
–
–
–

* Assets and liabilities generated by derivative financial instruments are offset and presented net. Net liabilities in total are presented
in parentheses.

Non-consolidated Financial Statements

53Millions of Yen
2017
As of March 31
Cash and deposits
Call loans
Monetary claims bought
Trading securities
Held-to-maturity debt securities
Policy-reserve-matching bonds
Available-for-sale securities
Securities
Trading securities
Held-to-maturity debt securities
Policy-reserve-matching bonds
Available-for-sale securities
Loans
Policy loans
Industrial and consumer loans
Total assets
Bonds payable
Loans payable
Total liabilities
Derivative financial instruments
Hedge accounting not applied
Hedge accounting applied

Balance Sheet
Amount¥Fair Value

32,100122,000
33,202–
33,202––
4,031,232
27,242
338,076
2,161,957
1,503,956
557,761
57,577500,184
4,776,297
40,34997,000137,349
6,622
1,241
5,381

¥

32,100122,000
36,880–36,880––4,405,471
27,242
380,015
2,494,257
1,503,956
571,768
57,577514,191
5,168,221
42,85496,715
139,569
6,622
1,241
5,381

Difference
¥

–
–
3,677
–
3,677
–
–
374,239–
41,939332,299–
14,006–
14,006
391,923
2,505
(284)
2,220
–
–
–

* Assets and liabilities generated by derivative financial instruments are offset and presented net. Net liabilities in total are presented
in parentheses.

Millions of U.S. Dollars
2018
As of March 31
Cash and deposits
Call loans
Monetary claims bought
Trading securities
Held-to-maturity debt securities
Policy-reserve-matching bonds
Available-for-sale securities
Securities
Trading securities
Held-to-maturity debt securities
Policy-reserve-matching bonds
Available-for-sale securities
Loans
Policy loans
Industrial and consumer loans
Total assets
Bonds payable
Loans payable
Total liabilities
Derivative financial instruments
Hedge accounting not applied
Hedge accounting applied

Balance Sheet
Amount
$

297
1,543
283
–
283
–
–
38,712261
3,046
19,712
15,692
4,557
467
4,090
45,395
379
913
1,292
93
17
76

Fair Value
$

297
1,543
313
–
313
–
–
41,953261
3,429
22,57015,692
4,655
467
4,187
48,763
410
910
1,321
93
17
76

Difference
$

–
–
29
–
29
–
–
3,240
–
383
2,857
–
97
–
97
3,368
30
(2)
28
–
–
–

* Assets and liabilities generated by derivative financial instruments are offset and presented net. Net liabilities in total are presented
in parentheses.

54

Asahi Mutual Life Insurance Company Annual Report 2018

(1) Securities including deposits and monetary claims bought which are treated as securities based on“Accounting Standards for Financial Instruments” (ASBJ Statement No. 10)
As for available-for-sale securities of which market value is readily available, domestic stocks, domestic
exchange-traded funds, domestic listed real estate investment trusts, foreign exchange-traded funds
for which hedge accounting is not applied, foreign bond exchange-traded funds for which hedge
accounting is not applied and foreign currency-denominated bonds for which hedge accounting is notapplied are stated at the average of the market value during the final month of the fiscal year. Availablefor-sale securities of which market value is readily available excluding the securities mentioned above
are stated at the market value at the balance sheet date.
Other securities of which market value is readily available are stated at market value at the balance
sheet date.
Unlisted stocks and others of which market value is not readily available are not subject to fair value
disclosure and are therefore not included in the table above because it is regarded as extremely
difficult to determine their fair value.
The amounts of the unlisted stocks and others reported in the non-consolidated balance sheets were¥76,012 million (US$715 million) and ¥121,116 million as of March 31, 2018 and 2017, respectively.
(2) Loans and loans payableAs credit exposure for policy loans without specific repayment periods is limited to the amount of the
cash surrender value, the Company considers book value as fair value with the assumption that fairvalue approximates book value in light of factors such as projected repayment period and interest
terms.
As for industrial and consumer loans and loans payable, the fair value of loans is primarily stated attheoretical prices calculated by discounting the future cash flows to the present value. The fair valueof loans to legally bankrupt borrowers, substantially bankrupt borrowers and not currently bankrupt
borrowers is stated at the amounts by deducting estimated losses from the book value before direct
write-offs.
(3) Bonds payable
The fair values of bonds payable are based on the market values, etc. as of March 31, 2018 and 2017.
(4) Derivative financial instruments
The fair values of options traded over the counter are based on the quoted prices offered bycounterparty financial institutions.
The fair values of foreign currency forward contracts are stated at theoretical prices based on the TTM
at the balance sheet date.
Regarding the derivative transactions for which designated hedge accounting (“Furiate-shori”) ofcurrency swaps is applied, these fair values are included in bonds payable since they are treated
together with hedged bonds payable.

4. Investments and Rental Properties
The Company holds investment and rental properties such as office buildings in Tokyo and other areas. The
carrying amounts and the fair values of investment and rental properties were ¥268,270 million (US$2,525
million) and ¥265,583 million (US$2,499 million) as of March 31, 2018 and ¥271,407 million and ¥253,384
million as of March 31, 2017, respectively. The fair value is mainly based on the value (including someadjustments using the reference prices) of real estate appraisal report prepared by the external real-estateappraiser in accordance with real estate appraisal standards.

5. Securities Lent under Lending Agreements
The amount of securities lent under lending agreements was ¥121,177 million (US$1,140 million) as ofMarch 31, 2018.

Non-consolidated Financial Statements55

6. Loans
The total amounts of loans to bankrupt borrowers, delinquent loans, delinquent loans three or moremonths past due and restructured loans, which were included in loans, were ¥906 million (US$8 million)and ¥1,166 million as of March 31, 2018 and 2017, respectively.
i)

Loans to bankrupt borrowers were ¥0 million (US$0 million) and ¥0 million as of March 31, 2018 and2017, respectively.

ii) Delinquent loans were ¥748 million (US$7 million) and ¥1,015 million as of March 31, 2018 and 2017,
respectively.
iii) Delinquent loans three or more months past due were ¥120 million (US$1 million) and ¥112 million
as of March 31, 2018 and 2017, respectively.
iv) Restructured loans were ¥36 million (US$0 million) and ¥38 million as of March 31, 2018 and 2017,
respectively.
Loans to bankrupt borrowers represent loans, excluding the balances already written-off, which meet theconditions prescribed in Article 96, Paragraph 1, Items 3 and 4 of the Enforcement Regulations of the
Corporate Tax Act. Moreover, accruing interest on these loans is not recorded as income after determiningthat principal of or interest on these loans is unlikely to be collected due to the significant delay inrepayment of principal or interest payments or for other reasons.
Accruing interest on delinquent loans is not recorded as income due to the same reasons as described above,and delinquent loans exclude loans to bankrupt borrowers and loans for which interest payments have beensuspended and rescheduled to assist and support the borrowers in the restructuring of their businesses.
Delinquent loans three or more months past due are loans for which interest payments or repayments ofprincipal are delinquent for three months or more from the due dates under the terms of the related loan
agreements, excluding those loans classified as loans to bankrupt borrowers and delinquent loans.
Restructured loans are loans for which certain concessions favorable to borrowers, such as interest
reduction or exemptions, rescheduling of due dates of principal or interest payments, waivers of claim
or other terms, have been negotiated for the purpose of assisting and supporting the borrowers in the
restructuring of their businesses. This category excludes loans classified as loans to bankrupt borrowers,
delinquent loans and delinquent loans three or more months past due.
The direct write-offs related to loans decreased the amounts of loans to bankrupt borrowers describedabove by ¥13 million (US$0 million) and ¥22 million as of March 31, 2018 and 2017, respectively.
In addition, the direct write-offs related to loans decreased delinquent loans described above by ¥46
million (US$0 million) and ¥193 million as of March 31, 2018 and 2017, respectively.

7. Accumulated Depreciation of Tangible Fixed Assets
Accumulated depreciation of tangible fixed assets totaled ¥279,518 million (US$2,631 million) and ¥277,798
million as of March 31, 2018 and 2017, respectively.

8. Separate Accounts
Total assets in separate accounts provided for in Article 118 of the Insurance Business Act were ¥29,382
million (US$276 million) and ¥29,199 million as of March 31, 2018 and 2017, respectively. The amounts ofseparate account liabilities were the same as separate account assets.

9. Receivables from/Payables to Subsidiaries
The total amounts of receivables from/payables to subsidiaries were ¥285 million (US$2 million) and ¥991
million (US$9 million) as of March 31, 2018 and ¥275 million and ¥1,948 million as of March 31, 2017, respectively.

10. Receivables from/Payables to Directors and Audit Board Members
There were no receivables from directors and audit board members as of March 31, 2018 and 2017. The
total amounts of payables to directors and audit board members were ¥15 million (US$0 million) and ¥20
million as of March 31, 2018 and 2017, respectively.

56

Asahi Mutual Life Insurance Company Annual Report 2018

11. Deferred Taxes(1) Deferred tax assets/liabilities were recognized as follows:
Millions of
U.S. Dollars

Millions of Yen
As of March 31
Deferred tax assets
Valuation allowance for deferred tax assets
Subtotal
Deferred tax liabilities
Net deferred tax assets (liabilities)

2018
¥

¥

61,21921,48839,73023,543
16,187

2017
¥

¥

2018

62,34020,803
41,537
18,811
22,725

$

576
202
373
221
152

$

Major components of deferred tax assets/liabilities were as follows:
Millions of Yen
As of March 31
Deferred tax assets
Contingency reserve
Reserve for price fluctuation
Reserve for employeesʼ retirement benefits
Impairment losses
Losses on valuation of securities
Net unrealized losses on available-for-sale securities
Deferred tax liabilities
Net unrealized gains on available-for-sale securities2018¥

14,14010,800
9,866
8,526
5,542
3,988
22,605

Millions of Yen
As of March 31
Deferred tax assets
Reserve for employeesʼ retirement benefits
Reserve for price fluctuation
Impairment losses
Contingency reserve
Losses on valuation of securities
Tax loss carried forward
Deferred tax liabilities
Net unrealized gains on available-for-sale securities2017¥

10,417
10,205
8,422
8,392
7,305
6,484
18,023

Millions of
U.S. Dollars
As of March 31
Deferred tax assets
Contingency reserve
Reserve for price fluctuation
Reserve for employeesʼ retirement benefits
Impairment losses
Losses on valuation of securities
Net unrealized losses on available-for-sale securities
Deferred tax liabilities
Net unrealized gains on available-for-sale securities

2018
$

133
101
92
80
52
37
212

(2) The statutory tax rates were 28.1% and 28.1% for the fiscal years ended March 31, 2018 and 2017,
respectively. The main factors causing the differences between the statutory tax rates and the actual
effective tax rates after considering deferred taxes were as follows:
For the years ended March 31

Interest on foundation funds
Change of valuation allowance for deferred tax assets

2018

2017

(4.8)%(3.8)%(4.5)%(7.9)%

Non-consolidated Financial Statements5712. Reserve for Dividends to Policyholders
Millions of
U.S. Dollars

Millions of Yen
For the years ended March 31
Balance at the beginning of the fiscal year
Transfer to reserve from surplus in the previous fiscal year
Dividends to policyholders paid out during the fiscal year
Increase in interest
Decrease in others
Balance at the end of the fiscal year

2018
¥

¥

40,861
1,519
5,426
58
53
36,9592017¥¥

44,720
1,767
5,660
65
31
40,861

2018
$

$

384
14
51
0
0
347

13. Stocks of Subsidiaries and Affiliates
The amounts of stocks of subsidiaries and affiliates the Company held as of March 31, 2018 and 2017 were
¥5,063 million (US$47 million) and ¥5,093 million, respectively.

14. Pledged Assets
Assets pledged as collateral as of March 31, 2018 and 2017 were securities in the amount of ¥4,325 million(US$40 million) and ¥3,748 million, respectively.

15. Policy Reserves for the Reinsurance Contracts
Policy reserves for the reinsurance contracts provided in accordance with Article 71, Paragraph 1 of the
Enforcement Regulation of the Insurance Business Act (hereinafter “policy reserves for ceded reinsurance”)
were ¥177 million (US$1 million) and ¥130 million as of March 31, 2018 and 2017, respectively.

16. Adjustment to Redemption of Foundation Funds and Appropriation of Net Surplus
The total amounts of adjustment to redemption of foundation funds and appropriation of net surplus
defined in Article 30, Paragraph 2 of the Enforcement Regulation of the Insurance Business Act were¥81,574 million (US$767 million) and ¥71,386 million as of March 31, 2018 and 2017, respectively.

17. Redemption of Foundation Funds
Notes for the fiscal year ended March 31, 2017
Accompanying the redemption of foundation funds totaling ¥11,000 million, in accordance with Article 56of the Insurance Business Act, the Company transferred the same amount from reserve for fund redemption
to reserve for redemption of foundation funds.

18. Additional Foundation Funds
Notes for the fiscal year ended March 31, 2017
In accordance with Article 60 of the Insurance Business Act, the Company raised additional foundation
funds totaling ¥11,000 million.

19. Assets with Rights to Sell
The Company has the legal right to sell or collateralize securities borrowed under loan agreements.
The market values of these assets that were not sold or mortgaged as of March 31, 2018 and 2017 were¥73,317 million (US$690 million) and ¥8,295 million, respectively. No assets were mortgaged as of March
31, 2018 and 2017.

20. Commitment LineAs of March 31, 2018 and 2017, there were unused commitment line agreements under which the Company
is the lender of ¥4,101 million (US$38 million) and ¥3,500 million, respectively.

58

Asahi Mutual Life Insurance Company Annual Report 2018

21. Subordinated Bonds
As of March 31, 2018 and 2017, bonds payable are subordinated bonds, for which the repayments aresubordinated to other obligations.

22. Subordinated Loans
As of March 31, 2018 and 2017, loans payable are subordinated loans, for which the repayments aresubordinated to other obligations.

23. Contributions to Policyholders Protection Corporation
The estimated future contributions to the Life Insurance Policyholders Protection Corporation of Japan
under Article 259 of the Insurance Business Act as of March 31, 2018 and 2017 were ¥9,750 million (US$91
million) and ¥10,391 million, respectively. These contributions are charged as operating expenses in thefiscal years in which they are paid.

24. Reserve for Employeesʼ Retirement Benefits(1) Summary of retirement benefit plans
As defined benefit plan, the Company has defined benefit corporate pension plans, which are fundedtype, and lump-sum retirement allowance plans which are non-funded type but resulted in funded type
due to setting of employee pension trust.
(2) Defined benefit plani)

Reconciliation of beginning and ending balance of retirement benefit obligations
Millions of
U.S. Dollars

Millions of Yen
For the years ended March 31
Retirement benefit obligations at the beginning of
the current fiscal year
Service cost
Interest cost
Actuarial difference occurred during the fiscal year
Retirement benefit payments
Retirement benefit obligations at the end of the
fiscal year

2018

2017

2018

¥

46,250
1,970
462
1,471
(4,986)¥49,209
1,990
492
(251)
(5,190)

$

435
18
4
13
(46)

¥

45,167¥

46,250$425ii) Reconciliation of beginning and ending balance of pension plan assets
Millions of
U.S. Dollars

Millions of Yen
For the years ended March 31
Pension plan assets at the beginning of the fiscal
year
Expected return on pension plan assets
Actuarial difference occurred during the fiscal year
Contributions by the employer
Retirement benefit payments
Pension plan assets at the end of the fiscal year

2018
¥

¥

8,493
60
1,928
129
(192)
10,418

2017
¥

¥

2018

6,816
58
1,697
127
(207)
8,493

$

$

79
0
18
1
(1)
98

Non-consolidated Financial Statements

59iii) Reconciliation of retirement benefit obligation and pension plan assets with reserve for employeesʼ
retirement benefits and prepaid pension cost presented on the non-consolidated balance sheets
Millions of
U.S. Dollars

Millions of Yen
As of March 31
a. Funded plan retirement benefit obligationb. Pension plan assets
c. a + b
d. Unrecognized actuarial differences
e. Net amount of liabilities and assets presented on
the non-consolidated balance sheet
f. Reserve for employeesʼ retirement benefits
g. Prepaid pension cost
h. Net amount of liabilities and assets presented on
the non-consolidated balance sheet

2018¥45,167(10,418)
34,749546

2017¥35,29535,365(70)¥

35,2952018

46,250(8,493)37,757
(449)

$

425
(98)
327
5

–
37,307
–
¥

–

332
332
(0)
$

332

iv) Breakdown of retirement benefit expenses
Millions of
U.S. Dollars

Millions of Yen
For the years ended March 31
Service cost
Interest cost
Expected return on pension plan assets
Amortization of actuarial differences
Retirement benefit expenses related to defined
benefit plan

2018

2017

2018

¥

1,970
462
(60)
538

¥

1,990
492
(58)
897

$

18
4
(0)
5

¥

2,910

¥

3,321

$

27

v) Breakdown of main pension plan assets
The breakdown of main asset categories as a percentage of pension plan assets was as follows:
As of March 31
Stocks
Bonds
Others
Total

2018
62%
6%
32%
100%

2017
54%
7%
39%
100%

vi) Method for determining the expected long-term rate of return
To determine 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 the diverse range of assets that makes up the pension assets.
vii) Underlying actuarial assumptions
The main underlying actuarial assumptions were as follows:
As of March 31
Discount rate
Expected long-term rate of return on pension plan assets
Defined benefit corporate pension plans

60

Asahi Mutual Life Insurance Company Annual Report 2018

2018
1.0%
0.7%
1.7%

2017
1.0%
0.9%
1.6%

III. Notes to Non-consolidated Statements of Income
1. Transactions with Subsidiaries
The total amounts of revenues and expenditures in connection with subsidiaries were ¥442 million (US$4
million) and ¥10,245 million (US$96 million) for the fiscal year ended March 31, 2018 and ¥431 million and¥9,990 million for the fiscal year ended March 31, 2017, respectively.

2. Investment Income and Expenses
The major components of gains on sales of securities were as follows:
Millions of
U.S. Dollars

Millions of Yen
For the years ended March 31
Domestic bonds
Domestic stocks and other securities
Foreign securities

2018
¥

2017

44,891
1,709
178

¥

2018

25,787
2,725
11,875

$

422
16
1

The major components of losses on sales of securities were as follows:
Millions of
U.S. Dollars

Millions of Yen
For the years ended March 31
Domestic bonds
Domestic stocks and other securities
Foreign securities

2018
¥

2017

549
487
1,249

¥

2018

24
184
10,816$5
4
11

The major components of losses on valuation of securities were as follows:
Millions of
U.S. Dollars

Millions of Yen
For the years ended March 31
Domestic stocks and other securities
Foreign securities

2018
¥

2017
49
96

¥

2018
11
5

$

0
0

Losses on derivative financial instruments included net valuation losses of ¥76 million (US$0 million) andlosses of ¥121 million for the fiscal years ended March 31, 2018 and 2017, respectively.

3. Policy Reserves for the Reinsurance Contracts
Provisions for policy reserves for ceded reinsurance considered in calculating reversal of policy reserves forthe fiscal years ended March 31, 2018 and 2017 were ¥47 million (US$0 million) and ¥46 million, respectively.

4. Impairment Losses of Fixed Assets
For the fiscal years ended March 31, 2018 and 2017, impairment losses of fixed assets by the Company
were as follows:(1) Method of grouping
Real estate and other assets used for insurance business operations are classified as one asset groupas a whole. Other assets such as real estate for rent and unused real estate are classified as one groupindividually.
(2) Background information on recognizing the impairment losses
As the profitability of certain real estate for rent dropped down significantly due to a decrease in thelevel of rental income and a declining trend in the market prices of land, the Company reduced thebook values of such real estate for rent and unused real estate to their recoverable amounts. The writedowns were recognized as impairment losses and included in the extraordinary losses.

Non-consolidated Financial Statements61

(3) Asset groups for which impairment losses were recognized and losses by classification of fixed assets
Millions of
U.S. Dollars

Millions of Yen
For the year ended March 31
Real estate for rent:
Land
Building
Total real estate for rent (i)Unused real estate:
Land
Building
Total unused real estate (ii)
Total:Land
Building
Total (i) + (ii)

2018
¥

¥

2017

518
699
1,217

¥

2018
357
418
775

$

4
6
11

369
191
560

403
154
557

3
1
5

888
890
1,778

760
572
1,333

8
8
16

¥

$

(4) Calculation method of recoverable amounts
The recoverable amounts of real estate for rent are determined at net realizable value or value in use.
The recoverable amounts for unused assets are net realizable value. Value in use is determined as
the estimated net future cash flows, reflecting the volatility risk, discounted at 3.6% and 3.6% for the
fiscal years ended March 31, 2018 and 2017, respectively. Net realizable value is calculated based on
the appraisal value in accordance with “Real Estate Appraisal Standards” or the publicly announced
appraisal value after deducting expected disposal costs.

62

Asahi Mutual Life Insurance Company Annual Report 2018

Ernst & Young ShinNihon LLC
Hibiya Mitsui Tower, Tokyo Midtown Hibiya
1-1-2 Yurakucho, Chiyoda-ku
Tokyo 100-0006, Japan

Tel: +81 3 3503 1100
Fax: +81 3 3503 1197
www.shinnihon.or.jp

Independent Auditor’s Report
The Board of Directors
Asahi Mutual Life Insurance Company
We have audited the accompanying non-consolidated financial statements of Asahi Mutual Life Insurance
Company, which comprise the non-consolidated balance sheets as of March 31, 2018 and 2017, and thenon-consolidated statements of income, the non-consolidated statements changes in net assets, and thenon-consolidated statements of proposed appropriation of surplus(loss) for the years then ended and asummary of significant accounting policies, other explanatory information, and supplementary schedule,
all expressed in Japanese yen.
Management’s Responsibility for the Non-consolidated Financial Statements
Management is responsible for the preparation and fair presentation of these non-consolidated financial
statements in accordance with the Insurance Business Act and related rules and regulations applicable tothe mutual life insurance industry and accounting principles generally accepted in Japan, and for designingand operating such internal control as management determines is necessary to enable the preparation andfair presentation of the non-consolidated financial statements that are free from material misstatement,
whether due to fraud or error.
Auditor’s Responsibility
Our responsibility is to express an opinion on these non-consolidated financial statements based on our
audits. We conducted our audits in accordance with auditing standards generally accepted in Japan. Thosestandards require that we plan and perform the audit to obtain reasonable assurance about whether the nonconsolidated financial statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in
the non-consolidated financial statements. The procedures selected depend on the auditor’s judgment,
including the assessment of the risks of material misstatement of the non-consolidated financial statements,
whether due to fraud or error. The purpose of an audit of the non-consolidated financial statements is not
to express an opinion on the effectiveness of the entity’s internal control, but in making these risk
assessments the auditor considers internal controls relevant to the entity’s preparation and fair presentationof the non-consolidated financial statements in order to design audit procedures that are appropriate in thecircumstances. An audit also includes evaluating the appropriateness of accounting policies used and thereasonableness of accounting estimates made by management, as well as evaluating the overall
presentation of the non-consolidated financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our
audit opinion.
OpinionIn our opinion, the non-consolidated financial statements referred to above present fairly, in all material
respects, the non-consolidated financial position of Asahi Mutual Life Insurance Company as of March 31,2018 and 2017, and its non-consolidated financial performance for the years then ended in accordance with
the Insurance Business Act and related rules and regulations applicable to the mutual life insurance industry
and accounting principles generally accepted in Japan.
Convenience Translation
We have reviewed the translation of these non-consolidated financial statements into U.S. dollars,presented for the convenience of readers, and, in our opinion, the accompanying non-consolidated financial
statements have been properly translated on the basis described in Note 2.

May 16, 2018
Tokyo, Japan
A member firm of Ernst & Young Global Limited

Non-consolidated Financial Statements

63

9. Company Overview (as of March 31, 2018)

Tokyo Head Office

Tama Head Office

Company Name:

Asahi Mutual Life Insurance Company

Founded:March 1, 1888

Total Assets:

5.3965 trillion yen

Number of Offices:

58 branches; 607 sales offices (as of April 1, 2018)

Number of Employees:

15,935 (staff: 4,239; sales representatives: 11,696)

Location of Tokyo Head Office:6-1, Otemachi 2-chome, Chiyoda-ku, Tokyo 100-8103, Japan
Tel: 81-3-6225-3111

64

Daitabashi Office

Asahi Mutual Life Insurance Company Annual Report 2018