Financial Section

Financial Review
Indicators Showing the Main Results over the Last Five Fiscal Years
Summary of Operations
Accounting Concepts
1. Financial statements
2. Details of assets and liabilities
3. Income and loss details
4. Information about fair values, etc.

34

Japan Earthquake Reinsurance Co., Ltd. Annual Report 2013

Financial review
Business development, results, etc.
During fiscal 2012, the Japanese economy showed signs of a gradual recovery, mainly reflecting the demand
for reconstruction projects in the aftermath of the 2011 Great East Japan Earthquake. However, the Japanese
economy still continued to face uncertain conditions, given the slowdown in the global economy due to the European debt problem, the drop in exports resulting from the worsening relationship between Japan and China,
and other negative factors. Despite this environment, with the recent recovery in the US economy, along with theweaker yen and higher stock prices reflecting expectations for positive developments as a result of the monetaryeasing policy in Japan, the economy began to show signs of bottoming out.
Both premiums as well as the number of earthquake insurance policies continued to increase during the fiscal
year under review, just as they did in the previous fiscal year, due to the growing interest in earthquake insurance
as security against earthquakes. Meanwhile, the amount of earthquake insurance payouts declined significantly
from the previous fiscal year, as insurance payouts for the 2011 Great East Japan Earthquake peaked.
Regarding asset management, earnings from investments have declined markedly year on year, reflecting theincreasing redemption of bonds with high yields amid the trend of declining interest rates.
In this environment, during fiscal 2012, the first year of our third medium-term business plan, in light of ourexperience from the 2011 Great East Japan Earthquake we have steadily implemented measures—mainly in response to massive earthquakes or consecutive earthquakes—and have reviewed and developed a structure thatwill allow our operations to continue even if our headquarters is stricken by a disaster. In particular, to ensure thecontinuity of our operations if our headquarters is afflicted by a disaster, we have comprehensively upgraded oursystem infrastructure in preparation for the imminent inland earthquake expected to strike the Tokyo metropolitan area, and the system is now fully operational.
Summary of earthquake insurance results① Net premiums written and net claims paid
In the fiscal year under review, due to the increase in
the number of earthquake insurance contracts, net
premiums written amounted to 92.9 billion yen (up11.1% year on year).
Meanwhile, net claims paid came to 31.6 billion yen(down 83.9% year on year), mainly reflecting the effectsof the 2011 Great East Japan Earthquake.
② Risk reserves and underwriting reserves
Risk reserves added amounted to 48.0 billion yen (up9.4% year on year), which is the total of net premiums
written of 45.0 billion yen, given by deducting assumed
reinsurance commissions from net premiums written,
and a profit of 3.0 billion yen from investments.
Risk reserves at the end of the fiscal year under review were 352.8 billion yen (up 6.4% year on year),reflecting the reversal of the provision for outstanding
claims of 9.9 billion yen to risk reserves and drawing
from risk reserves in the past year of net claims paidof 31.6 billion yen, loss adjustment expenses of 4.8
billion yen, and advertising and publicity expenses of
0.2 billion yen.
Underwriting reserves at the end of the fiscal year under review totaled 461.4 billion yen (up 7.1% year onyear), after adding unearned premium reserves andrepayment reserves to the risk reserves.
In fiscal 2011, the amount of risk reserves provided
fell short of the 0.2 billion yen that should have been
provided, due to excessive income tax payments. As
a result, in the fiscal under review, we claimed for acorrection and issued a restatement by increasing thebalance of risk reserves and accounts receivable at the
beginning of the term by 0.2 billion yen based on theestimated refund.
③ Risk reserves of direct insurance companies
The risk reserves of direct insurance companies re-corded as entrusted reserves were 68.7 billion yen for
the fiscal year under review (up 9.5% year on year),obtained by adding net premiums written and profit
from investments of 6.6 billion yen (down 59.9% year
on year), reversing the publicity expenses of 0.7 billion yen.
Outline of investments
Medium- to long-term domestic interest rates trended lower due to the escalation of the European debt
problem and the delayed recovery of the US economy.
Long-term interest rates declined sharply in the second half of the fiscal year under review, given growing
expectations for a stronger monetary easing policy after the new administration that was instated in December asked the Bank of Japan to increase its monetaryeasing.
The yen fell noticeably against both the dollar and theeuro, reflecting the deterioration of Japan’s current account balance and expectations for the Bank of Japan
to commence a significant monetary easing policy. As
a result, the yen has depreciated approximately 12 yen
against the dollar and approximately 11 yen against
the euro from its rates at the end of the previous fiscal year.
In these circumstances, we invested in assets with the
top priority placed on safety and liquidity, followed byprofitability. As a result, pre-tax profits from investments amounted to 3.3 billion yen in the business account and 0.6 billion yen in the entrusted reserves account. Consequently, investment assets at the end of
the year under review stood at 524.0 billion yen.
Profit and loss for the fiscal year under review(Capital account)
Net income was 4 million yen after calculating interestand dividend income in the capital account and otheritems.

Japan Earthquake Reinsurance Co., Ltd. Annual Report 201335

Indicators showing the main resultsover the last five fiscal years(Yen in millions)Fiscal Year

Division

2008

2009

2010

2011

2012

Net premiums written
Percentage change over the previous term

67,126
4.8%

72,225
7.6%

71,532(1.0%)

83,671
17.0%

92,996
11.1%

Ordinary income
Percentage change over the previous term

84,993
4.6%

99,46417.0%

175,903
76.9%

286,81263.1%

110,370(61.5%)

Ordinary expenses
Percentage change over the previous term

84,792
4.3%

98,512
16.2%

174,91377.6%

286,723
63.9%

110,176(61.6%)

Ordinary profit
Percentage change over the previous term

200
1,108.8%

951
374.2%

990
4.1%

89
(91.0%)

193
117.5%Net income (loss)
Percentage change over the previous term

12
184.1%

5(58.9%)

3(30.2%)(5)(239.9%)

4
–

1,000
2 mil. shares

1,000
2 mil. shares

1,000
2 mil. shares

1,000
2 mil. shares

1,000
2 mil. shares

Common stock
Sum of shares issued
Net assets

1,617

1,633

1,634

1,631

1,633

Total assets

1,015,053

1,092,272

1,154,108

509,498

536,808

Underwriting reserves
Percentage change over the previous term

545,255
5.8%

585,820
7.4%

515,981(11.9%)

430,700(16.5%)

461,480
7.1%

Of the balance, risk reserves
Percentage change over the previous term

460,0816.0%

496,708
8.0%

424,401(14.6%)

331,499(21.9%)

352,830
6.4%

Loans
Percentage change over the previous term

–
–

–
–

–
–

–
–

–
–

Securities
Percentage change over the previous term

953,118
6.4%

1,006,947
5.6%

805,223(20.0%)

448,120(44.3%)

476,979
6.4%

Non-consolidated solvency-margin ratio

159.1%

161.6%

124.7%

120.8%

160.0%

Dividend propensity

–

–

–

–

–

No. of employees

28

26

25

26

27

Notes:
1. T
 o achieve the stricter application of risk measurement and meet other goals, laws and regulations associated with the calculation of the non-consolidated solvency-margin ratio have been revised since the end of fiscal 2011 (March 31, 2012). Order to specify divisions, provided for in Paragraph
2, Article 132, Insurance Business Law, our solvency-margin ratio is not supposed to be used as a criterion to enable the administrative authorities
to trigger an order for improvement. For details, see page 40 Conditions of non-consolidated solvency margin ratio.
2. T he figures for fiscal 2011 have been corrected by a retrospective restatement. The details are given in Note 8 for the balance sheet (page 42).

Summary of operations
Item: earthquake

q Indicators relating to insurance underwriting
1. Net premiums written(Yen in millions)

Division

Fiscal Year

2010

2011

2012

Premiums written

152,182

171,223

185,568

Return premiums

2,324

2,504

2,642

Assumed net premiums
written (A)149,634

168,676

182,895

Reinsurance premiums
ceded (B)78,10285,00589,899Net premiums written (A-B)

71,532

83,671

92,996

Notes:
1. R
 eturn premiums: Return premiums of receiving reinsurance.
2. A ssumed net premiums: Produced by deducting return premiums
from premiums written.
3. N
 et premiums written: Produced by deducting the reinsurance premiums ceded from the assumed net premiums written.

36

2. R
 ate of premiums written by domestic and overseas contracts
Division

Fiscal Year

2010

2011

2012

100%

100%

100%

Fiscal Year

2010

2011

2012

Assumed net claims paid (A)1,033

1,240,600

55,883–

1,043,975

24,276

1,033

196,625

31,607

Domestic contract

3. Net claims paid
(Yen in millions)

Division

Reinsurance claims
recovered (B)Net claims paid (A-B)

Notes:
1. A
 ssumed net claims paid: Produced by deducting surrender value
from ceded insurance claims paid.
2. N
 et claims paid: Produced by deducting reinsurance claims recoveredby ceded contract from assumed net claims paid.

Japan Earthquake Reinsurance Co., Ltd. Annual Report 2013

4. Net loss ratio, net expense ratio and their combined ratio(Yen in millions)

Division

Fiscal YearNet loss ratio

2010

2011

2012
2010

2011

2012

15

14

13

725
38,141

Rate of top fivereinsurers’ ceded
insurance premiums

81.9%

81.8%

81.9%

282.9%

39.2%

31,74035,67738,867 Insurance related operating,general and administrative
expenses503

551 Commissions and brokeragefees

31,23635,126Net expense ratio

44.4%

42.6%

41.8%

Combined ratio

46.2%

325.5%

81.0%

Notes:
1. Net loss ratio: (Net claims paid + loss adjustment expenses) / net
premiums written
2. Net expense ratio: (Commissions and brokerage fees + Insurance-related operating and general administrative expenses) / net premiums
written
3.	Combined ratio: Net loss ratio + net expense ratio

5. Rate of damage occurrence, the expenses ratio andrate of sum total before ceded insurance deduction
Not applicable
6. Changes in ordinary income or loss against a risein the loss rate
There are no changes in ordinary income or loss
in earthquake insurance because increases ininsurance payments are set off through the reversalof underwriting reserves in accordance of theprinciple of no loss and no profit.

Division

Fiscal Year

No. of reinsurersthat ceded insurance
contracts

1.8%

Underwriting expenses

8. No. of reinsurers that ceded insurance contracts andtop five reinsurers for ceded reinsurance premiums

Note:
The number of reinsurers that ceded insurance contracts is the number
who ceded treaty reinsurance contracts of 10 million or more yen.

9. Ratio of ceded insurance premiums by rating
Not applicable
10. Contractor dividend
Not applicable
11. Conditions at the end of the current fiscal year
(runoff result) of outstanding claims (estimatedamount) at the beginning of the term
Not applicable to earthquake insurance.
12. Amount of estimated final damages associatedwith the elapse of a period from the occurrenceof accidents
Not applicable to earthquake insurance.

7. Underwriting profit(Yen in millions)

Division

Fiscal Year

2010

2011

2012

Underwriting income

148,490

272,503106,333

Underwriting expenses

105,420

147,002271,872

Operating and generaladministrative expenses

503

551

725

Other income and expenses

(984)

(79)

(186)

–

–

–

Underwriting profit

Notes:
1. T he above operating, general and administrative expenses are thoserelating to the underwriting of insurances mentioned in the operating, general and administrative expenses in a statement of profits andlosses.
2. Other income and expenses are those equivalent to corporate taxes
mentioned in a statement of earthquake insurance profits and losses.
3. The figures for fiscal 2011 have been corrected by a retrospective restatement.

Japan Earthquake Reinsurance Co., Ltd. Annual Report 201337

w Investments
1. Investments policy	Because we have to pay a substantial amount ofclaims promptly in the event of a natural disastersuch as a major earthquake, we put in principle
the highest priority on safety and liquidity followedby profitability to increase risk reserves. The risk
management division is engaged in monitoring andcontrolling risks of all kinds, independently of thetransactions execution division.

3. A mount of interest and dividend received andinvestment assets yield (income yield)(Yen in millions)FiscalYear

2010
Yield (%)

Division

As of the end of
fiscal 2011

Percentage
distribution(%)

Division

Percentage
distribution(%)

Yield (%)

169

0.45

83

0.69

32

0.18

20

0.06

46

0.05

8

0.05

Monetaryreceivablesbought

–

–

–

–

–

–

50

0.40

–

–

–

–

15,734

1.55

6,983

1.43

4,549

0.96

Buildings

As of the end of
fiscal 2012

Yield (%)

Call loans

Securities(Yen in millions)

As of the end of
fiscal 2010

Year

2012

Deposits

Money trusts

2. Total assets and investments assets

2011

Total

–

–

–

–

–

–

15,975

1.46

7,113

1.20

4,589

0.90

Note:
Investment assets yield (income yield): indicator showing the result of investment assets from a point of income (interest and dividend income)(which has been disclosed)
The numerator is composed of interest and dividend income from investment assets while the denominator is an acquisition cost based assets.

Percentage
distribution(%)

Deposits

10,4090.9

17,1903.4

25,9384.8

Call loans

319,58627.7

30,105

5.9

21,137

3.9

Monetaryreceivablebought

–

–

–

–

–

–

Numerator = Interest and dividend income (including the amount equivalent to interest and dividend income of profit (or loss) from monetarytrust operation)
Denominator = Acquisition cost or depreciation based average balance

Money trusts

–

–

–

–

–

–

Securities

805,22369.8

448,12088.0

476,979

88.9

Buildings

37

0.0

35

0.0

33

0.0

Total ofinvestments 1,135,256
assets98.4

495,45097.3

524,088

97.6

Total assets 1,154,108

100.0

509,498

100.0

536,808

100.0

Note:
The figures for fiscal 2011 have been corrected by a retrospective restatement.

4. Asset management yield (realized yield)(Yen in millions)

Division

Amount ofnumerator

Deposits

169

2010
Amount ofdenominator
37,41283

2011
Amount ofdenominator
12,07432

2012
Amount ofdenominator
17,636

Call loans

20

35,1010.06

46

94,2170.05

818,067

–

–

–

–

–

–

–

–

–

(218)

12,604(1.73)

–

–

–

–

–

–

15,676

1,011,852

1.55

9,127

488,267

1.87

4,548

473,767

0.96

6,121

589,258

1.04

3,253

273,696

1.19

1,711

325,550

0.53

–

–

–

–

–

–

–

–

–

Foreign securities

9,898

419,477

2.36

5,874

214,570

2.74

2,837

148,217

1.91

Other securities

(343)

3,116

(11.01)

–

–

–

–

–

–

–

–

–

–

–

–

–

–

–

Fiscal Year

Monetary receivables bought
Money trusts
Securities
Public and corporate bonds
StocksLoans

Yield onworking
assets (%)
0.45

Amount ofnumerator

Yield onworking
assets (%)
0.69

Amount ofnumerator

Yield onworking
assets (%)
0.18
0.05

Buildings

–

40

–

–

37

–

–

35

–

Derivatives

17,035

–

–

8,358

–

–

(2,836)––

Others(19,572)––(10,599)

–

–

2,783

–

–

Total

13,112

1,097,011

1.20

7,016

594,596

1.18

4,536

509,507

0.89

Notes:
1. A
 sset management yield (realized yield): indicator to show the result of managing of assets from the point of contribution to the current profit andloss. The numerator is realized profit and loss while the denominator is an acquisition cost based assets.
Numerator = profit from asset management + investment income on savings premiums – expenses of assets management
Denominator = acquisition cost or writing-off cost based average balance
2. Profit and loss from derivatives principally involve foreign exchange forward contracts with the remainder primarily involving currency exchange of foreign
currency-denominated bonds. JER deals in foreign exchange forward contracts and other transactions for the purpose of hedging risks associated with foreign
currency-denominated bonds.

38

Japan Earthquake Reinsurance Co., Ltd. Annual Report 2013

5. Market-price based overall yield (for reference)(Yen in millions)

Division

Amount ofnumerator

Deposits

169

2010
Amount ofdenominator
37,41283

2011
Amount ofdenominator
12,07432

2012
Amount ofdenominator
17,636

Call loans

20

35,1010.06

46

94,2170.05

818,067

0.05

–

–

–

–

–

–

–

–

–

Money trusts(160)

12,546(1.28)

–

–

–

–

–

–

Securities

7,870

1,028,090

0.77

5,349

496,699

1.08

4,067

478,421

0.85

3,563

595,176

0.60

1,821

277,057

0.66

1,666

327,480

0.51

–

–

–

–

–

–

–

–

–

4,385

430,061

1.02

3,527

219,641

1.61

2,401

150,940

1.59

Fiscal Year

Monetary receivables bought

Public and corporate bonds
StocksForeign securities
Other securities

Yield onworking
assets (%)
0.45

Amount ofnumerator

Yield onworking
assets (%)
0.69

Amount ofnumerator

Yield onworking
assets (%)
0.18

(78)

2,852

(2.77)

–

–

–

–

–

–

Loans

–

–

–

–

–

–

–

–

–

Buildings

–

40

–

–

37

–

–

35

–

Derivatives

17,035

–

–

8,358

–

–

(2,836)––

Others(19,572)––(10,599)

–

–

2,783

–

–

Total

5,364

1,113,191

0.48

3,237

603,029

0.54

4,055

514,160

0.79

Notes:
1. M arket-price based overall yield: indicator showing the efficiency of operation on a market price basis. The numerator reflects realized profit and loss
and fluctuations in market price appraisal while the denominator is market-price based assets.
Numerator = (income from operated assets management + investment income on savings premium – expenses for assets management) + (after-tax
unrealized gain for the year – after-tax unrealized gain for previous year)* + fluctuation in deferred hedge profit and loss
Denominator = acquisition cost or write-off based average balance + after-tax unrealized gain for previous year of other securities + profit and loss
for the previous year related to securities for transaction* Based on the amount before tax effect deduction
2. P rofit and loss from derivatives principally involve foreign exchange forward contracts with the remainder primarily involving currency exchange of foreign
currency-denominated bonds. JER deals in foreign exchange forward contracts and other transactions for the purpose of hedging risks associated with foreign
currency-denominated bonds.

6. B alance, percentage distribution and yield of Foreign Loans & Investments(Yen in millions)



Year

As of the end of fiscal 2010

As of the end of fiscal 2011

As of the end of fiscal 2012

Percentage
distribution(%)

Percentage
distribution(%)

Percentage
distribution(%)

Division
Foreign currency denominatedForeign public and corporate bonds

152,723

48.4

55,43535.1

36,34728.2

162,901

51.6

102,638

64.9

92,49471.8

315,624100.0

158,073

100.0

128,842100.0

Yen denominatedForeign public and corporate bonds
Total
Yield on foreign loans & investments
Investment assets yield (income yield)

2.41%

2.19%

1.91%

Assets management (realized yield)

2.36%

2.74%

1.91%

Market-price based overall yield (for reference)

1.02%

1.61%

1.59%

Note:
Of the yield on foreign loans & investments, the investment assets yield was calculated in the same manner as 3., Amount of interest and dividend
received and yield on investment assets (income yield) in connection with the assets involving foreign investments.

Japan Earthquake Reinsurance Co., Ltd. Annual Report 201339

e Conditions of non-consolidated solvencymargin ratio(Yen in millions)



Year

As of theend offiscal 2011

As of theend offiscal 2012

336,786

357,917

1,615

1,619

Price fluctuation reserves

6

5

Risk reserves––

331,499352,830

–

–

3,390

3,184

Unrealized gain and loss included landholdings––

Surplus such as premium reserves––

Funding instruments with a debt-like nature––

Surplus such as premium reserves andfunding instruments with a debt-like naturethat are not included in the margin––

Items deductible

–

–

275

277

Division
Total amount of non-consolidated solvencymargin
Common stock, etc.

Catastrophe reserves
Reserves for ordinary bad debts
Unrealized gain / loss on available-for-salesecurities (excluded deductions for Tax(A) Consequences)

OthersTotal amount of non-consolidated risk√(R1 + R2)2 + (R3 + R4)2 + R5 + R6

(B)

557,215447,267

General underwriting risk (RI)––

Underwriting risk in third-area insurance
(R2)

–

–

Anticipated rate of return risk (R3)
Investment risk (R4)

(C)

–

–

9,839

10,497

Management risk (R5)10,925

8,769

Catastrophe risk (R6)

536,450

428,000

Non-consolidated solvency-margin ratio[(A) / { (B) x 1 / 2 }] x 100

120.8%

160.0%

Notes:
1. The amounts and figures above are calculated based on the provisionsof Article 86 and Article 87 of the Enforcement Rules of the Insurance
Business Act and the Ministry of Finance Official Notification No. 50
in 1996.
2. The figures for fiscal 2011 have been corrected by a retrospective restatement.

Non-consolidated solvency-margin ratio
The non-life insurance companies deposit reserves incase that they pay insurance money for any insurance
accident that occurred or refund depository insurance
at maturity. It is also necessary for them to maintaina satisfactory ability to make payments or solvency
even in case of unusual, unforeseeable risk, including
a huge disaster or sharp drop in price of such assets
as owned by them.
The rate of “Non-life insurance company’s ability tomake payments by owned assets and reserves (A in theabove table) over any risk unforeseeable (B in the abovetable)” is indicated as the non-consolidated solvencymargin ratio (C in the above table) which is calculated
according to the pertinent rules, including the Insurance Business Law.

40

[Unforeseeable risk] (Total of risks): Sum of 1–5
1. G eneral underwriting risk: risk associated with aninsurance accident rate that is higher than normallypredictable (other than the risk associated with ahuge disaster).
2. A
 nticipated ratio of return risk: the risk that may
arise for saving-type insurance if the actual yieldfrom operations is lower than it was when calculating depository insurance premiums.
3. Investment risk: management risk that might arise
when the value of assets owned including securities
changes in an unforeseeable manner.
4. M anagement risk: risk that might arise on business
management in an unforeseeable manner, otherthan 1–3 and 5.
5. C
 atastrophe risk: risk that might arise with a hugedisaster (such as the Great Kanto Earthquake)
which is normally unforeseeable.
Capability of payment by non-life insurance company
owned capital and reserves (total amount of non-consolidated solvency-margin) is the total of capital owned
by a non-life insurance company, various reserves (pricefluctuation reserve, catastrophe reserve, etc.), part of latent profit from land, and so on.
The solvency-margin ratio is one of the indicators used
when the administrative authorities check insurancecompanies to determine the soundness of management
for supervisory purposes. When the rate is 200% or
more, the insurance company is deemed satisfactory interms of its ability to make insurance and other payouts.
◎ JER has entered into a reinsurance contract with thegovernment of Japan for earthquake insurance in accordance with Law concerning Earthquake Insurance.
The law stipulates in addition that the government takes
responsibility for support and for lending funds for thepayment of insurance money. Because this is a form ofspecial business, JER’s solvency-margin ratio is not usable as a figure to enable the administrative authorities
to trigger an order for improvement, irrespective of theabove solvency-margin ratio, as provided for in Paragraph 4, Article 3, Order to specify the division statedin Paragraph 2, Article 132, Insurance Business Law.
Note: The article is as follows.
[In the event that an insurance company has entered into a reinsurance
contract with the government as stated in Paragraph 1, Article 3, Law
concerning Earthquake Insurance (law No. 73, 1966), any order to be issued according to the listed division in Section 1 of the Article applicableto the insurance company shall be issued in accordance with the list of
inapplicable division.]

Japan Earthquake Reinsurance Co., Ltd. Annual Report 2013

ACCOUNTING CONCEPTS(NET ASSETS)

q Financial statements(Yen in millions)2011(As of March
31, 2012)

2012(As of March
31, 2013)

Item

AmountAmountCommon stock

1,000

1,000

620

625



Fiscal Year

1. Balance sheets(ASSETS)

(Yen in millions)2011(As of March
31, 2012)

2012(As of March
31, 2013)

Item

AmountAmount Other legal reserve of retained earnings

Cash and deposits
Deposits

17,19017,19025,93825,938  Special reserves

1717  Special price fluctuation reserves3939  Retained earnings brought forward

563

567



Fiscal Year

Call loans

30,105

21,137

Securities
Government bonds
Corporate bonds
Foreign securities

448,120
248,634
41,411
158,073

476,979
328,071
20,065
128,842

Tangible fixed assets
Buildings Other tangible fixed assets

43
35
8

117
33
84

Intangible fixed assets
Software Other intangible fixed assets

175
175
0

232
231
1

13,787
9,671
394
1,563
52
26
2,051
28

12,316
9,962
223
1,155
50
287
608
28

Other assets Reinsurance balance receivable
Accounts receivable
Uncollected income
Deposits
Suspense payments
Derivatives
Cash collateral paid for financial instruments
Deferred tax assets
Total assets

75

86

509,498

536,808

Note:
The figures for fiscal 2011 have been corrected by a retrospective restatement.

(LIABILITIES)
(Yen in millions)Fiscal Year

Item

2011
(As of March
31, 2012)

2012(As of March
31, 2013)

AmountAmountUnderwriting funds
Outstanding claims
Underwriting reserves

445,595
14,895
430,700

466,407
4,927
461,480

Entrusted reserves

49,06555,127

Other liabilities
Reinsurance balance payable
Corporate taxes payable
Deposits payable
Accrued amounts payable
Derivatives

8,429
6,406
127
4
758
1,130

9,325
6,250
175
5
240
2,653

Reserve for retirement benefits

104

120

Reserve for directors’ retirement benefits

15

14

Reserve for bonus payments

19

21

Reserves under the special law
Reserve for price fluctuation

6
6

5
5

4,630

4,152

507,866

535,175

Net unrealized gains on available-for-salesecurities of earthquake insurance
Total liabilities

Note:
The figures for fiscal 2011 have been corrected by a retrospective restatement.

Retained earnings Legal reserve of retained earnings

Treasury Stock
Total shareholders’ equity
 et unrealized gains on available-for-saleNsecurities Total valuation and translation adjustments
Total net assets
Total liabilities and net assets

1

1

619

624

(5)

(5)

1,615

1,619

16

13

16

13

1,631

1,633

509,498

536,808

Note:
The figures for fiscal 2011 have been corrected by a retrospective restatement.

Notes for fiscal 2012
1. A
 ppraisal standards and method of securities, andmethod of indication(1) O f available-for-sale securities, those to which
the market price is applicable is appraised according to the market price at term end.
(2) O f available-for-sale securities, those to which
the market price is not applicable is appraised
based on cost or write-off cost price using themoving-average method.
(3) W ith respect to the unrealized gain of assets
corresponding to the underwriting reserves andentrusted reserves of earthquake insurance, theamount before tax effect deduction is shown as
an Net unrealized gains on other securities ofearthquake insurance in Liabilities, according to
the pertinent Enforcement Rules of Insurance
Business Act. For other unrealized gains, theamount after tax effect deduction is processed
entirely according to the direct capital injection
method and indicated in Shareholders’ Equity.
The calculation of the sales price is based on
the moving average method.
2. T he appraisal of derivatives is done on the basis ofmarket price.
3. A lthough depreciation of tangible fixed assets is calculated using the declining balance method, buildings (excluding equipment attached to buildings)
that were acquired on and after April 1, 1998 weredepreciated using the straight-line method.

Japan Earthquake Reinsurance Co., Ltd. Annual Report 201341

Changes in accounting policies, which are almost
indistinguishable from changes in accounting estimates:
In accordance with the revision of the Corporate Tax
Act of Japan, starting in the fiscal year under review, we have changed our depreciation method forthe property, plant and equipment we have acquiredsince April 1, 2012 to the method under the revised
act. The effect of this change on our financial statements is immaterial.
4. Softwarefor in-house use that is recorded as an intangible fixed asset is amortized using the straightline method over the usable life (five years).
5. T he conversion of foreign currency assets and liabilities
into Japanese currency is processed according to theaccounting standards for foreign currency transactions.
6. W
 riting standards of reserves(1) Reserve for bad debts
		Reserve for bad debts is written as follows
against losses from bad debts in accordancewith the self-appraisal standard of assets anddepreciation and reserve standards.
		In connection with claims against debtors who
have gone bankrupt legally and formally, including bankruptcy, special liquidation or disposition by suspension of business at a clearing
house, or debtors who are effectively bankrupt,
the rest of any of the claims deducting an estimated amount of disposable mortgage and adeductible amount by guarantee was appropriated for such reserves.
		In connection with the other claims, the rateof bad debts calculated according to past bad
debts and other factors is multiplied by theamount of claims to appropriate for reserves.
		In addition, all claims are written after the finance department appraises the assets, andthe result is audited by the management department independent of the finance department to appropriate the appraisal for reserves.
		There are no assets in the current term that are
to be appropriated for reserves and no reserveis required.
(2) Reserve for retirement benefits		For employees’ retirement and severance benefits, reserve is appropriated according to theretirement allowance liabilities at the end of
the term and the estimated amount of pension

42

assets. The retirement allowance liabilities iscalculated using a simple method on the basisof the allowance to be supplied at the end of
the term for any employee who retires for his/her own reasons.
(3) Reserve for directors’ retirement benefits		For reserve for directors’ retirement benefits, thebenefits to be paid at the end of the term arerecorded according to the relevant in-house rules.
(4) Reserve for bonus payments
		Reserve for bonus payments is calculated according to the standards for the estimated bonuses payable as of the end of the fiscal year
under review.
(5) Reserve for price fluctuation
		To prepare for a loss from price changes ofshares and others, reserve is appropriated according to Article 115, Insurance Business Law.
7. C
 hanges to presentation method
Cash collateral paid for financial instruments
submitted that were included under Other assets(sub-account) of Other assets in the previous fiscal year were independently presented in the fiscal
year under review by applying the appended form
for the Ordinance for Enforcement of the Insurance
Business Act (MOF Ordinance No. 5, 1996), which
was revised in accordance with the Cabinet Office
Ordinance for Partial Revision of the Ordinance for
Enforcement of the Banking Act, etc. (Cabinet Office Ordinance No. 11, March 28, 2013). Cash collateral paid for financial instruments submitted thatwere included under Other assets (sub-account) in
the previous fiscal year amounted to 28 million yen.
8. E rror correction
In the balance sheet for the previous fiscal year, theamount of Risk reserves, an item in Underwriting
reserves, was recorded as 223 million yen short of
the amount that should have been provided, due
to excessive income tax payments. The tax refund
related to interim payments was also recorded as
short the same amount in accounts receivable. As
a result, we claimed for a correction and issued arestatement by recording the estimated refund inaccounts receivable for the beginning of the term
and increasing the balance of underwriting reservesby 223 million yen.
There was no effect on retained earnings due to thecorrection.

Japan Earthquake Reinsurance Co., Ltd. Annual Report 2013

9. F
 inancial instruments and fair values of financial
instruments(1) S ituation of financial instruments
We carry out asset management in preparation forthe payment of reinsurance claims, primarily considering soundness—namely, low price fluctuation
risks, credit risks, and liquidity risks—and also
taking profitability into account.
As a result, our financial assets consist primarilyof domestic and foreign, high-rated, medium-termbonds. We regularly obtain and manage information on fair values and credit information in association with each risk.
Trading in derivatives principally involves foreignexchange forward contracts used to hedge therisks arising from possible changes in exchange
rates for bonds in foreign currencies and is kept
within the scope of actual demand.
(2) F air values of financial instruments
The table below shows the balance sheet amounts
and fair values of financial instruments and thedifferences between them as of March 31, 2013.
(Yen in millions)

Balancesheet
amountFair value

Difference(i) Cash and deposits

25,93825,938–(ii) Call loans

21,137

21,137–(iii) Securities
Available-for-sale securities

476,979

476,979–(2,044)(2,044)–(iv) Derivatives** Derivatives recorded in other assets and other liabilities.
Net claims and debts derived from derivatives represent the net amounts, and items
whose net balance becomes debts are stated in brackets.

Note: Methods for calculating the fair values of financial instruments(i) Cash and deposits
Fair values of cash and deposits are deemed equal to their carrying
values as their fair values and carrying values are similar.
(ii) Call loans
Call loans are settled in the short term, and their fair values are
therefore deemed equal to their carrying values.
(iii) Securities
In principle, the fair values of securities are based on their market
prices, which are reference prices in the trading statistics of theJapan Securities Dealers Association or market prices obtained
from outside vendors or brokers.
(iv) Derivatives
The fair values of derivatives are determined by prices offered bycorrespondent financial institutions.

premiums written and profit from operating theassets.
12. T he accumulated depreciation of tangible fixed assets is 162 million yen.
13. S ee below for a breakdown of outstanding claims.
(Yen in millions)

Outstanding claims (before the deduction ofoutstanding reinsurance claims)

7,672

Outstanding reinsurance claims related to theabove claims

2,744

Net outstanding claims

4,927

14. T
 otal deferred tax assets amount to 96 million yen,while total deferred tax liabilities come to 6 million yen. The amount deducted from deferred tax
assets as a valuation reserve is 4 million yen. The
breakdown of deferred tax assets reveals unpaid
business taxes of 26 million yen, unpaid special
local corporate tax of 19 million yen, reserve forretirement benefits of 37 million yen and reserve
for bonus payments of 7 million yen. The deferred
tax liabilities result primarily from unrealized gainsof 6 million yen on securities.
15. N
 et assets per share are 821.18 yen. The basis forthis calculation is that net assets are 1,633 million yen, net assets accrued from ordinary sharesare 1,633 million yen and the number of ordinary
shares at the end of the term is 1.988 million.
16. N
 o events that could significantly affect assets orincome or loss for the next fiscal years and beyond
have taken place since the last day of the fiscal
year under review.
17. E ach amount is rounded down to the nearest whole
unit.

10. T
 axes are included when preparing accounts for
consumption tax and other items.
11. R
 isk reserves contained in Underwriting reserves
have been deposited based on instructions for the
calculation of underwriting reserves by accumulating the amounts that result from subtracting anamount equivalent to corporate taxes from the net

Japan Earthquake Reinsurance Co., Ltd. Annual Report 201343

2. Statements of income(Yen in millions)

Fiscal Year

2011

2012

(from April 1, 2011
to March 31, 2012)(from April 1, 2012
to March 31, 2013)

Item

AmountOrdinary income

Notes for fiscal 2012
1. S ee below for a breakdown of net premiums written.
(Yen in millions)

Premiums written:

182,895

AmountReinsurance premiums ceded:

89,899286,812110,370

Net premiums written:

92,996

Underwriting income

272,503106,333   Net premiums written

83,671

92,996  Investment income on savings
premiums

3,528

3,369

  Reversal of outstanding claims

100,0239,967   Reversal of underwriting reserves

85,280–Investment income

14,3094,031   Interest and dividend income

7,113

4,589

   Gains on sales of securities

2,364

–

   Gains on derivatives

8,358

–

   Foreign exchange gains

–

2,809

   Other investment income

1

1(3,528)(3,369)–5  Transfer of profit from Investment
income on savings premiums
Other ordinary income
Ordinary expenses

2. S
 ee below for a breakdown of net claims paid.
(Yen in millions)

Claims paid:

55,883Claims recovered:

24,276

Net claims paid:

31,6073. S ee below for a breakdown of the provision of outstanding claims (figures in parentheses are the reversal of outstanding claims).
(Yen in millions)

Provision of outstanding claims(before the deduction of outstanding
reinsurance claims)(18,694)

286,723

110,176

271,872

105,420

Provision of outstanding reinsurance claims
related to the above claims(8,726)   Net claims paid

196,625

31,607

Net provision of outstanding claims(9,967)   Loss adjustment expenses

40,121

4,892  Commissions and brokerage fees

35,12638,141   Provision of underwriting reserves–

30,77910,821

2,865

220

0

–

2,836

10,553

–

48

27

1,074

1,273

2,954

617

Underwriting expenses

Investment expenses   Losses on sales of securities  Losses on derivatives   Foreign exchange losses   Other investment expenses Operating, general and administrative
expenses
Other ordinary expenses   Interest paid

2,954

617

Ordinary profit

89

193

Extraordinary income–0

Reversal of price fluctuation reserves
Extraordinary losses
Losses on disposal fixed assets
Provision of price fluctuation reserves

–

0

0

0

0

0

0

–

Income before taxes

88

194

Income taxes – current

97

199

Income taxes – deferred

(3)

(9)

Total income taxes

93

189

Net income (loss)

(5)

4

Note:
The figures for fiscal 2011 have been corrected by a retrospective restatement.

4. T he interest and dividend income are given below
by category:(Yen in millions)

Deposits:

32

Call loans:

8Interest on cash collateral andother financial instruments submitted:

0

Securities:

4,549

Total:

4,589

5. P aper profit/loss involved in the gains on derivatives
is a loss of 2,044 million yen.
6. Net
income per share is 2.14 yen.
T
 he basis for this calculation is such that net income is 4 million yen, net income accrued from ordinary shares is 4 million yen and the term average
No. of ordinary shares amount to 1.988 million.
7. T he legal effective tax rate at the end of the termis 33.33%, and the corporate tax burden after applying the tax effect is 97.81%. The difference is
explained by the following breakdown: the nondeductible amount of the taxable provision of risk
reserves is 101.10%, the amount of the write-off
carried from publicity expenses related to risk reserves is (36.92%).
8. E
 ach amount is rounded down to the nearest whole
unit.

44

Japan Earthquake Reinsurance Co., Ltd. Annual Report 2013

3. Statements of cash flow
(Yen in millions)

Fiscal Year

Item

2011

2012

(from April 1, 2011
to March 31, 2012)(from April 1, 2012
to March 31, 2013)

AmountAmountNotes
1. R elationship of cash and cash equivalents at theend of the year with the amounts mentioned in therelevant balance sheet item.
(Yen in millions)

Cash flow from operating activities
Net income before income taxes
Depreciation

312

194

(As of March
31, 2012)(As of March
31, 2013)
25,938

95

104

Increase (decrease) in outstanding
claims(100,023)(9,967)

Increase (decrease) in underwriting
reserves(85,280)

30,779Deposits of a depository periodof three months or longer(15,500)(11,000)

Increase (decrease) in entrusted
reserves(451,185)

6,061

Securities other than cash equivalent(448,120)(476,979)

Increase (decrease) in reserve forretirement benefits215

31,79536,075

Increase (decrease) in reserve fordirectors’ retirement benefits

(0)

(1)

Increase (decrease) in reserve forbonus payments

1

1

Increase (decrease) in reserve forprice fluctuation0(0)Interest and dividend income(7,113)(4,589)Losses (gains) on investment insecurities(2,143)0Foreign exchange losses (gains)(2,262)(8,518)Losses (gains) on tangible fixed
assets00Decrease (increase) in other assets(other than investment and financial
activities related)

2,119

(380)

Increase (decrease) in other liabilities(other than investment and financial
activities related)

534

Cash and deposits

17,190Call loans

30,105

21,137

Securities

448,120476,979

Cash and cash equivalents

2. C ash flow in investing activities includes cash flowfrom the investment assets operations in the insurance business.
4. Statement of Changes in Shareholders’ Equity(Yen in millions)

Fiscal Year

Item

2011

2012

(from April 1,
2011
to March 31,
2012)(from April 1,
2012
to March 31,
2013)

AmountAmountShareholder’s equity
Common stock(673)

Balance at the beginning of the period

1,000

1,000
–

Changes during the period

Others(3,955)2,974

Issuance of new stocks–    Subtotal(648,897)

16,001

Total changes

–

–

9,331

5,342

1,000

1,000

1

1
–

Interest and dividends received
Income taxes paid

Balance at the end of the period
Retained earnings

(828)

(160)

(640,394)

21,182(8,000)4,500

Changes during the period

Purchase of securities(237,033)(559,847)

Dividends of surplus–

Proceeds from sales and redemptionof securities

594,644538,680

Total changes

–

–

1

1

17

17

Net cash provided by operating activities
Net decrease (increase) in deposits

Others91–    Total investment assets activities

349,702(16,666)    Total operating activities and    investment assets activities(290,691)

4,516

Acquisition of tangible fixed assets

(4)

(87)

Others(4)(148)

Net cash provided by investing activities

Legal reserve of retained earnings
Balance at the beginning of the period

Cash flow from investing activities

349,693(16,902)

Cash flow in financing activities–– ffect of exchange rate changes on cashEand cash equivalents––

 et increase (decrease) in cash andNcash equivalents(290,700)

4,280

Cash and cash equivalents at the
beginning of the year

322,495

31,795

Cash and cash equivalents at the endof the year

31,79536,075

Balance at the end of the period
Other legal reserve of retained earnings
Special reserves
Balance at the beginning of the period
Changes during the period
Total changes
Balance at the end of the period

–
17

39

39

Special price fluctuation reserves
Balance at the beginning of the period
Changes during the period
Total changes
Balance at the end of the period

–

–

39

39

568

563

Retained earnings brought forward
Balance at the beginning of the periodNote:
The figures for fiscal 2011 have been corrected by a retrospective restatement.

–
17

Changes during the period
Dividends of surplus––

Net income (loss)(5)

4

Total changes
Balance at the end of the period

(5)

4

563

567

Japan Earthquake Reinsurance Co., Ltd. Annual Report 2013

45

(Yen in millions)

Fiscal Year

Item

2011

2012

(from April 1,
2011
to March 31,
2012)(from April 1,
2012
to March 31,
2013)

AmountAmount625

620

Notes:
1. M
 atters related to the types and total number of stocks outstanding and thetypes and number of treasury stock(Stock)Balance asof the endof fiscal
2011

Increase in
fiscal 2012

Decrease in
fiscal 2012

Balance asof the endof fiscal
2012

Ordinarystock

2,000,000––

2,000,000

Total

2,000,000––

2,000,000

Ordinarystock

11,400––11,400Total

11,400––11,400Total retained earnings
Balance at the beginning of the period
Changes during the period

Issuedstock

Dividends of surplus––

Net income (loss)(5)

4

Total changes

(5)

4

620

625

(5)

(5)

2. M
 atters related to stock options or own stock options
Not applicable

Disposal of treasury stock––

Total changes

–

–

3. M
 atters related to dividends
Not applicable

(5)

(5)

1,620

1,615

Balance at the end of the period
Treasury stock
Balance at the beginning of the period
Changes during the period

Balance at the end of the period
Total shareholders’ equity
Balance at the beginning of the period
Changes during the period

Treasurystock

5. Dividend per stock and total assets per employee(Yen in millions)
Division

2010

2011

2012

Issuance of new stocks––

Dividend per stock

Dividends of surplus––

Net income (loss) per stock

Net income (loss)(5)

4

Dividend propensity

–

–

–

Disposal of treasury stock––

Net assets per stock

821.81 yen

820.30 yen

821.18 yen

Total assets per employee

46,164

19,596

19,881

Total changes

(5)

4

1,615

1,619

14

16

Net changes other than shareholders’equity2(2)

Total changes

2

(2)

16

13

14

16

2

(2)

Balance at the end of the period
Valuation and translation adjustments
Net unrealized gains on available-for-salesecurities
Balance at the beginning of the period
Changes during the period

Balance at the end of the period

Balance at the beginning of the period
Changes during the period
Net changes other than shareholders’equityTotal changes

2

(2)

16

13

1,634

1,631

Issuance of new stocks––

Dividends of surplus––

Net income (loss)(5)

4

Disposal of treasury stock

Balance at the end of the period
Total net assets
Balance at the beginning of the period
Changes during the period––

Net changes other than shareholders’equity2(2)

Total changes

(3)

1

1,631

1,633

Balance at the end of the period

–

–

–

1.80 yen(2.52 yen)

2.14 yen

Notes:
1. N
 et income per share comes from net income / term average No. of stocks
2. T he number of treasury stock is deducted from producing information per stock
3. T he total assets per employee come from the total assets at the end of
the term / No. of employees at the end of the term.
4. T he figures for fiscal 2011 have been corrected by a retrospective restatement.

Total valuation and translation
adjustments

46

Fiscal Year

Japan Earthquake Reinsurance Co., Ltd. Annual Report 2013

5. Balance Current Maturity of securities by categoryw Details of assets and liabilities

As of the end of fiscal 2011
1.	Deposits(Yen in millions)
DivisionYear

As of the endof fiscal 2010

As of the endof fiscal 2011

As of the endof fiscal 2012

Deposits

10,40917,19025,938

Ordinary deposits

2,909

1,690

8,908

Time deposits

7,500

15,50017,0302.	Average balance and trading amount of commodity
securities
Not applicable
3.	Balance of securities by category and percentage
distribution(Yen in millions)



Year

As of the end of
fiscal 2010
Percentage
distribution(%)

Division
Government
bonds

As of the end of
fiscal 2011

414,095

As of the end of
fiscal 2012

Percentage
distribution(%)

51.4 248,634

Percentage
distribution(%)

55.5 328,071


5 over
up to
7
years

(Yen in millions)

7 over
up to
10
years

Division

Up to
1 year

1 overup to
3 years

3 overup to
5 years

Government
bonds

150,938

32,44323,374 16,351 24,495

Municipal
bonds

–

–

–

–

Corporatebonds

21,647

18,153

104

1,506

–

–

–

–

Foreignsecurities

45,19764,21936,307 12,350–– 158,073

Othersecurities

–

–

–

–

–

–

–

Loan
receivablein securities

–

–

–

–

–

–

–

59,786 30,208 24,495

1,031

448,120

StocksTotal

217,783 114,815

As of the end of fiscal 2012

68.8
Division–

Total

1,031 248,634
–

–

–

–

41,411–––
5 over
up to
7
years

Over
10
years

(Yen in millions)

7 over
up to
10
years

Up to
1 year

1 overup to
3 years

3 overup to
5 years

210,396

26,39245,992 27,203 18,085

Over
10
years

Total

Municipal
bonds

–

–

–

–

–

–

Corporatebonds

75,503

9.4

41,411

9.2

20,065

4.2

–

–

–

–

–

–

35.3 128,842

27.0

Municipal
bonds

–

–

–

–

–

–

–

Corporatebonds

17,655

2,410

–

–

–

–

20,065––

StocksForeignsecurities

315,624

39.2 158,073

Government
bonds

Other
securities

–

–

–

–

–

–

Loan
receivable insecurities

–

–

–

–

–

–

–

–

Foreignsecurities

39,581

48,224805,223100.0

448,120100.0

476,979

100.0

Other
securities–

Loan
receivablein securities

Total

Stocks

4. Yield on securities held(%)


Division

Fiscal Year

2010

2011

2012

0.95

0.83

0.53

–

–

–

2.41

2.19

1.91

–

–

–

1.55

1.43

0.96

1.04

1.19

0.53

–

–

–

Foreign securities

2.36

2.74

1.91

Other securities(11.01)

–

–

1.55

1.87

0.96

0.60

0.66

0.51

–

–

–

Foreign securities

1.02

1.61

1.59

Other securities(2.77)

–

–

Total

0.77

1.08

0.85

Total

– 328,071–––

28,613 12,422–– 128,842

–

–

–

–

–

–

–

–

–

–

–

–

–

267,633

77,02774,605 39,626 18,085–

476,979

Investment assets yield (income yield)
Public & corporate bonds
StocksForeign securities
Other securities
Total

Assets management yield (realized yield)
Public & corporate bonds
Stocks

Total

Market-price based overall yield (for reference)
Public & corporate bonds
Stocks

6.	Amount of stocks held by type of business
There are no stocks.
7.	Loans
There are no notes with the following items; amountof stocks held by type of business, balance current
maturity of loan by remaining life, balance ofloans by type of collateral secured, balance andpercentage distribution of loan by designated use,balance of loan by industry and its ratio to the total,and balance of amortization of loans.
8.	Risk management credits
Not applicable

Note:
Public & corporate bonds include government bonds, municipal bonds, andcorporate bonds.

Japan Earthquake Reinsurance Co., Ltd. Annual Report 201347

9.	Present conditions of loans involving trust withcontact for replacement of losses
Not applicable

16. Detailed listing of liability reserves

10. Self-appraisal of assets
We categorize assets in accordance with the level ofrisk associated with collection and the level of riskof a loss in the value by carrying out self-appraisal
and individually examining holding assets. There
were no category assets (II through IV categories)
as at the end of March 2013.

Balance asof the end of
fiscal 2010

11. Tangible fixed assets by category(Yen in millions)
DivisionYear

As of the endof fiscal 2010Land

As of the endof fiscal 2011––

As of the endof fiscal 2012–

for underwriting

–

–

–

for investment

–

–

–

Buildings

37

35

33

for underwriting

37

35

33

for investment

–

–

–

–

–

–

–

–

–

Construction in progressfor underwriting
for investment

–

–

–

Total of property

37

35

33

for underwriting

37

35

33

for investment

–

–

–

Other tangible fixed assets

14

8

84

Total

52

43

117

12. Unearned claims paid
Not applicable
13. Special accountNot applicable(Yen in millions)Year As of the endof fiscal 2010

As of the endof fiscal 2011

As of the endof fiscal 2012

Outstanding claims

114,918

14,895

4,927

Underwriting reserves

515,981430,700

461,480

Risk reserves

424,401

331,499352,830

Unearned premium
reserves

90,054

97,686

107,140

Repayment reserves

1,524

1,514

1,509

630,899445,595

466,407

Total(Yen in millions)
Division

–

–

–

–

Reserve for individual bad debts

–

–

–

–

Reserve for specificforeign securities

–

–

–

–

Reserve for retirement benefits

102

18

15

104

Reserve for directors’ retirement
benefits

15

4

4

15

Reserve for bonus
payments

17

19

17

19

Reserve for pricefluctuation
Total

5

0

–

6

141

41

37

146

As of the end of Fiscal 2012
(Yen in millions)
Division

Balance asof the end of
fiscal 2011

Balance
Decrease
as of the end of
in fiscal 2012fiscal 2012

Increase in
fiscal 2012

Reserve for ordinary
bad debts

–

–

–

–

Reserve for individual bad debts

–

–

–

–

Reserve for specificforeign securities

–

–

–

–

Reserve for retirement benefits

104

20

4

120

Reserve for directors’ retirement
benefits

15

4

5

14

Reserve for bonus
payments

19

21

19

21

Reserve for pricefluctuation

6

–

0

5

146

45

30

161

17. Detailed listing of shareholders’ equity
Please refer to the statement of changes in shareholders’ equity on page 45.

Note:
The figures for fiscal 2011 have been corrected by a retrospective restatement.

15. Level of underwriting reserves
There is no target contact.

48

Balance
Decrease
as of the end of
in fiscal 2011
fiscal 2011

Increase in
fiscal 2011

Reserve for ordinary
bad debts

Total

14.	Underwriting fundsDivision

As of the end of Fiscal 2011

Japan Earthquake Reinsurance Co., Ltd. Annual Report 2013

7. D
 epreciation expenses by category

e Income and loss details

As of the end of Fiscal 2011

1. Gains on sales of securities by category(Yen in millions)(Yen in millions)

Division

Fiscal Year

2010

2011

2012

Type of asset

Acquisition
cost

Government bonds

1,092

1,116

–

Foreign securities

408

1,247

–

Tangible fixed assets

1,501

2,364

–

Buildings

Total

for
underwriting

2. Losses on sales of securities by category(Yen in millions)

Division

Fiscal Year

Government bonds

2010

2011

920

Foreign securities
Total

2012

2

65

35

65.0

101

2

65

35

65.0

for
investment

–

–

–

–

–

Others

97

10

89

8

91.6

Total

199

13

155

43

78.1

–

638

75

0

Software

411

82

236

175

57.3

1,558

220

0

Other
intangible
fixed assets

0

0

0

0

95.6

Total

412

82

236

175

57.4

Grand total

611

95

391

219

64.1

(Yen in millions)Type of asset

5. Losses on disposal of fixed assets(Yen in millions)2010

Intangible fixed assets

As of the end of Fiscal 2012

4. Gains on disposal of fixed assets
Not applicable

Fiscal Year

101

145

3. Losses on valuation of securities
Not applicable

Division

Rate of
Deprecia- Aggregated Balance as
aggregatedtion indeprecia- the end ofdepreciafiscal 2011
tions
fiscal 2011
tions %

2011

2012

Tangible fixed assets
Buildings

Land

–

–

–

Buildings–––

Other tangible fixed assets

–

0

0

Total

–

0

0

6. Business expenses (inclusive of loss adjustment)

Rate of
Deprecia- Aggregated Balance as
Acquisition
aggregatedtion indeprecia- the end of
cost
depreciafiscal 2012tions
fiscal 2012
tions %
101

2

68

33

66.9

for
underwriting

101

2

68

33

66.9

for
investment

–

–

–

–

–

Others

179

10

94

84

52.9

Total

280

12

162

117

58.0

Intangible fixed assets(Yen in millions)

Software

558

91

327

231

58.7

2012

1

0

0

1

12.2

Personnel expenses

350

11,636

1,031

Other
intangible
fixed assets

Non personnel expenses

702

29,330

4,881

Total

560

91

328

232

58.5

Taxes

196

228

252

Grand total

841

104

490

350

58.3

Commissions and brokeragefees

31,23635,12638,141

Total

32,48576,32244,307

Division

Fiscal Year

2010

2011

Note:
Business expenses are the total of loss adjustment expense, operating,general and administrative expenses, commissions and brokerage fees
as shown in the income statement.

Japan Earthquake Reinsurance Co., Ltd. Annual Report 201349

3. Money trust
Not applicabler Information about fair values, etc.
1. Matters related to financial instruments
For matters related to the status of financial instruments and matters related to the fair values of financial instruments, please refer to Note 9 on thebalance sheet (page 43).

4. Derivative transactions(i) Derivative transactions to which hedge accounting is
not applied(a) Currency related
At the end of fiscal 2011
(Yen in millions)

2. Securities(i) Securities held for trading purposes
Not applicable

Contract amount

Over-the-counter transactions(ii) Securities to be held to maturity
Not applicable Forward foreign exchange contracts   Short positions    US dollar(iii) Available-for-sale securities
At the end of fiscal 2011
Division

Securities withacquisition costhigher than thatposted on thebalance sheet

Securities withacquisition cost
not higher thanthat posted on thebalance sheet

Type
Public &corporatebonds

Acquisitioncost    Euro(Yen in millions)Book value

194,534

196,554––

93,178

94,842

1,663

–

–

–

Subtotal

287,712291,396

3,683

Public &corporatebonds

93,58293,491

(90)

–

–

–

73,13563,231(9,903)

OthersStocksForeignsecurities
Others

Total

–

–

–

166,717

156,723(9,994)454,430

448,120(6,310)At the end of fiscal 2012

Securities withacquisition costhigher than thatposted on thebalance sheet

Securities withacquisition cost
not higher thanthat posted on thebalance sheet

Type
Public &corporatebonds(Yen in millions)

Acquisition
cost

Book value

199,878

201,819

1,941

–

–

–

98,536

101,028

2,492

StocksForeignsecurities
Others–Subtotal

298,414302,848

4,433

Public &corporatebonds

146,373

146,317(56)

Stocks–––30,46327,813(2,649)–––176,837

174,131(2,705)475,251476,979

1,727

Others

Total

(15)
979

963

963

Total

At the end of fiscal 2012

(Yen in millions)Contract amount

Appraisal
profit andloss

Marketprice

1 year or
longerones

Over-the-counter transactions Forward foreign exchange contracts   Short positions    US dollar

1,644

–

(328)

(328)

    Euro

30,272921(1,687)(1,687)(2,016)(2,016)

Total

Notes:
1. Currency related derivative transactions other than the above areomitted as there is no applicable item.
2. Calculating a market price: Foreign exchange rates depend on futuresquotations.

(b) Credit related
At the end of fiscal 2011

(Yen in millions)Contract amountType–

Subtotal(15)979

Difference–

Foreignsecurities

–
8,600

2,020

–

Subtotal

Division

Difference

394
53,410Type

StocksForeignsecurities

Appraisal
profit andloss

Marketprice

1 year or
longerones

Type

1 year or
longerones

Marketprice

Appraisal
profit and
loss

3,952

(42)

(42)

(42)

(42)

Over-the-counter transactions
Long position in credit
derivative transactions

3,952

Total

At the end of fiscal 2012

(Yen in millions)Contract amountType

1 year or
longerones

Marketprice

Appraisal
profit and
loss

–

(28)

(28)

(28)

(28)

Over-the-counter transactions
Long position in credit
derivative transactions
Total

4,346

Note:
Calculating a market price: Based on values presented by relationshipfinancial institution.

(iv) Available-for-sale securities sold at the term
(Yen in millions)Fiscal 201150

Fiscal 2012

Type

Sales
price

Total ofprofit on
sale

Total ofloss on
sale

Sales
price

Total ofprofit on
sale

Total ofloss on
sale

Total

273,998

2,364

220

100

–

0

(ii) Derivative transactions to which hedge accounting
is applied
Not applicable

Japan Earthquake Reinsurance Co., Ltd. Annual Report 2013