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.

28

Japan Earthquake Reinsurance Co., Ltd. Annual Report 2017

FINANCIAL REVIEWBusiness development, results, etc.
During fiscal 2016, the Japanese economy followed a moderate recovery path, with domestic demand remaining firmon improved employment conditions and growth in public investment, thanks to the monetary easing policy of the
Bank of Japan, in addition to benefits reaped by the export sector from the recovery of overseas economies.
Earthquake insurance premiums remained almost flat from the previous fiscal year, reflecting growing social interestin earthquake insurance in the wake of the Kumamoto Earthquakes that struck in April 2016 and the effect of lastminute demand associated with the hike of insurance premiums as a result of the revision of earthquake insurance
premiums in January 2017. These factors offset the negative impact of the reactionary fall after the last-minuteincrease in earthquake insurance policies associated with the revision of fire insurance in October 2015. Earthquake
insurance payouts and loss assessment expenses increased significantly from the previous fiscal year, mainly becauseof the Kumamoto Earthquakes.
Looking at asset management, earnings from investments fell below the level posted in the previous fiscal year, reflecting the advanced redemption of high-yield bonds amid a situation that remained difficult for new investments due tothe persistent ultra-low interest rate environment.
In fiscal 2016, we worked on a number of management measures as the second year of the fourth medium-termbusiness plan “Strengthening Arrangements for Earthquake Reinsurance Payouts,” as fiscal 2016 saw the milestoneof the 50th anniversary of the founding of JER and the establishment of the earthquake insurance system.
We pushed ahead with initiatives such as the development of an effective BCM to prepare for an inland earthquake in
the Tokyo metropolitan area, the most important issue of JER, the examination of the tenacity and merchantability ofthe earthquake insurance system, the information transmission and disclosure of JER and the earthquake insurance
system to facilitate the understanding and take up of earthquake insurance, the strengthening of information andtechnology governance and the consideration of the complete renewal of system infrastructure and the developmentof a new human resources system and skills development.
Summary of earthquake insurance results① Net premiums written and net claims paid
In the fiscal year under review, although premiums written
remained almost flat, net premiums written after deducting reinsurance premiums ceded declined to 114.1 billion
yen (down 6.5% year on year), the result of an increase inreinsurance premiums ceded to the government following
the revision of the reinsurance scheme of earthquake insurance in April and October 2016.
Meanwhile, net claims paid increased significantly to
220.9 billion yen (up 3,852.3% year on year), primarily
due to the Kumamoto Earthquakes.
② Risk reserves and underwriting reserves
Risk reserves added totaled 52.1 billion yen (down 3.2%
year on year), consisting of net premiums written of
51.8 billion yen, calculated by deducting assumed reinsurance commissions from net premiums written, andgains on investments of 0.2 billion yen.
Risk reserves at the end of the fiscal year under review
came to 278.8 billion yen (down 40.0% year on year) as
a result of the withdrawal from the reserves in the past
year of net claims paid of 220.9 billion yen as statedabove, loss assessment expenses of 14.1 billion yen, theprovision for outstanding claims of 2.4 billion yen andadvertising and publicity expenses of 0.3 billion yen.
Underwriting reserves at the end of the fiscal year underreview amounted to 456.7 billion yen (down 27.2% year
on year) as a result of the addition of unearned premium
reserves to the risk reserves stated above.
③ Risk reserves of direct insurance companies
A total of 4.5 billion yen (down 6.1% year on year),consisting of net premiums written and gains on investments, was added to the risk reserves of direct insurance companies recorded as entrusted reserves. The risk
reserves of direct insurance companies at the end of the

fiscal year under review came to 46.8 billion yen (down
40.0% year on year), the result of the withdrawal of reinsurance claims of 34.9 billion yen and advertising andpublicity expenses of 0.9 billion yen.
Outline of investments
The decline in domestic interest rates gained momentum in the wake of the introduction of the negative interest rate policy by the Bank of Japan. Subsequently,
the outlook for a further deepening of negative interest
rates faded, but the difficult investment environment remained, with the interest rate level of investment vehicles
of JER staying in negative territory in their maturities.
Looking at exchange rates, the yen gradually strengthened against the US dollar along with speculation thatthe interest rate hike in the US would be delayed. After
November, however, the yen weakened sharply against
the US dollar, reflecting growing expectations of thepolicies of the new U.S. administration. While the yen
initially appreciated against the euro, mainly due to political turbulence in Europe, the Japanese currency thengradually weakened, as the European economy began torecover.
In these circumstances, we invested in assets with toppriority placed on safety and liquidity, followed by profitability. As a result, pretax profits from investments
amounted to 0.2 billion yen in the business account and0.1 billion yen in the entrusted reserves account. Consequently, investment assets totaled 496.1 billion yen at
the end of the fiscal year under review.
Profit and loss for the fiscal year under review
As a result of adding and subtracting other items to andfrom interest and dividend income and subtracting income taxes and residential taxes, net income for the fiscal year under review came to 1 million yen.

Japan Earthquake Reinsurance Co., Ltd. Annual Report 2017

29

INDICATORS SHOWING THE MAIN RESULTS
OVER THE LAST FIVE FISCAL YEARS(Yen in millions)Fiscal Year

Division

2012

2013

2014

2015

2016

Net premiums written
Percentage change over the previous term

92,996
11.1%

92,248(0.8%)

108,99418.2%

121,986
11.9%

114,114(6.5%)Net claims paid
Percentage change over the previous term

31,607(83.9%)

15,010(52.5%)

9,563(36.3%)

5,589(41.6%)

220,905
3,852.3%

Ordinary income
Percentage change over the previous term

110,370(61.5%)

104,703(5.1%)

119,82214.4%

129,1077.7%

289,485
124.2%

Ordinary expenses
Percentage change over the previous term

110,176(61.6%)

104,509(5.1%)

119,81814.6%

129,1077.8%

289,487
124.2%

Ordinary profit (loss)
Percentage change over the previous term

193
117.5%

194
0.3%

3(98.2%)

0(98.4%)(1)(3,537.5%)

Net income (loss)
Percentage change over the previous term

4
–

(82)
(2,045.2%)

3
–

(0)
(115.6%)

1
–

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

1,633

1,544

1,543

1,542

1,542

Total assets

536,808

577,305

640,137

709,408

511,297

Underwriting reserves
Percentage change over the previous term

461,480
7.1%

499,2748.2%

556,727
11.5%

627,34512.7%

456,745(27.2%)Of the balance, risk reserves
Percentage change over the previous term

352,830
6.4%

378,0417.1%

417,05610.3%

464.584
11.4%

278,846(40.0%)

Loans
Percentage change over the previous term

–
–

–
–

–
–

–
–

–
–

Securities
Percentage change over the previous term

476,979
6.4%

525,161
10.1%

391,034(25.5%)

401,751
2.7%

234,580(41.6%)

Non-consolidated solvency-margin ratio

160.0%

344.9%

354.5%

392.1%

299.1%

Dividend propensity

–

–

–

–

–

No. of employees

27

26

29

28

26

Note:
JER’s solvency-margin ratio will not be used as a criterion for the administrative authorities’ order for improvement. For details, please refer to page 34.

SUMMARY OF OPERATIONS
q Indicators relating to insurance underwriting
Item: earthquake
1. Net premiums written(Yen in millions)

Division

Fiscal Year

2014

2015

2016

Premiums written

222,014245,353

247,441Return premiums

4,341

6,708

4,342

Assumed net premiums
written (A)217,661

238,645

243,099

Reinsurance premiums
ceded (B)108,666

116,659

128,984

Net premiums written (A – B)

108,994

121,986

114,114

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

30

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

Fiscal Year

Domestic contract

2014

2015

2016

100%

100%

100%

2014

2015

2016

13,287

8,214

388,527

3. Net claims paid
(Yen in millions)

Division

Fiscal Year

Assumed net claims paid (A)Reinsurance claims
recovered (B)

3,723

2,625

167,622Net claims paid (A – B)

9,563

5,589

220,905

Notes:
1. 
Assumed net claims paid: Produced by deducting surrender value
from ceded insurance claims paid
2. Net claims paid: Produced by deducting reinsurance claims recoveredfrom assumed net claims paid

Japan Earthquake Reinsurance Co., Ltd. Annual Report 2017

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

Division

Fiscal YearNet loss ratio

2014

2015

2016
2014

2015

2016

10

10

11

734
46,675Rate of top fivereinsurers’ ceded
insurance premiums

90.4%

91.5%

89.8%

5.3%

206.0%

44,026

46,60647,409 Insurance related operating,general and administrative
expenses

710

725 Commissions and brokeragefees

43,31545,880Net expense ratio

40.4%

38.2%

41.5%

Combined ratio

50.5%

43.5%

247.5%

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

10.1%

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

2014

2015

2016

Underwriting income

112,468

123,681284,934

Underwriting expenses

111,757

122,956

284,200

Operating and generaladministrative expenses

734

710

725

Other income and expenses

–

–

–

Underwriting profit

–

–

–

Notes:
1. The 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.

Japan Earthquake Reinsurance Co., Ltd. Annual Report 201731

w Investments
3. 
Amount of interest and dividend received andinvestment assets yield (income yield)

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.

(Yen in millions)FiscalYear

Percentage
distribution(%)

Division

Percentage
distribution
(%)

0.10

34

0.06

7

0.00

23

0.03

8

0.02

0

0.00

Monetaryreceivablesbought

15

0.10

144

0.08

3

0.02

Total

34,1195.3 189,215

26.7 260,534

51.0Call loans

84,898

13.3

4,668

0.7

1,040

0.2

Monetaryreceivablesbought

113,991

17.8

94,596

13.3––

Money trusts

–

–

–

–

–

–

Securities

391,03461.1

401,75156.6

234,580

45.9

Buildings

28

0.0

27

0.0

25

0.0

Total ofinvestments
assets624,07297.5

690,258

97.3

496,18197.0

Total assets

640,137

100.0

709,408

100.0

511,297

100.0

–

–

–

–

–

–

2,642

0.59

2,280

0.62

1,283

0.44

–

–

–

–

–

–

2,710

0.47

2,468

0.38

1,294

0.24

Note:
Investment assets yield (income yield): indicator showing the result of investment assets from a point of income (interest and dividend income)

Percentage
distribution(%)

Deposits

Yield (%)

28

Buildings

As of the end of
fiscal 2016

Yield (%)

Call loans

Securities

As of the end of
fiscal 20152016

Deposits

Money trusts(Yen in millions)

As of the end of
fiscal 2014

2015

Yield (%)

Division

2. Total assets and investments assets
Year

2014

The numerator is composed of interest and dividend income from investment assets while the denominator is an acquisition cost based assets.
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

4. Asset management yield (realized yield)(Yen in millions)2014

Fiscal Year

2015

2016

Division

Amount ofnumerator

Amount ofdenominator

Yield onworking
assets (%)

Amount ofnumerator

Amount ofdenominator

Yield onworking
assets (%)

Amount ofnumerator

Amount ofdenominator

Yield onworking
assets (%)

Deposits

28

29,8240.10

3460,1810.06

7

233,671

0.00

Call loans

23

77,0580.03

838,187

0.02

0

1,471

0.00

Monetary receivables bought

15

15,5130.10

144

184,504

0.08

320,157

0.02

–

–

–

–

–

–

–

–

–

2,642

450,256

0.59

2,475

368,634

0.67

1,419

294,061

0.48

791

312,6400.25

818

250,3820.33

662

251,126

0.26

–

–

–

–

–

–

–

–

–

1,850

137,615

1.34

1,657

118,251

1.40

757

42,934

1.76–

Money trusts
Securities
Public and corporate bonds
StocksForeign securities

–

–

–

–

–

–

–

–

Loans

Other securities

–

–

–

–

–

–

–

–

–

Buildings

–

31

–

–

28

–

–

27

–

Derivatives(6,447)

–

–

3,954

–

–

3,329

–

–

Others

6,153

–

–

(4,494)––(3,791)

–

–

Total

2,416

572,684

0.42

2,124

651,5360.33

968

549,3900.18

Notes:
1. Asset 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.

32

Japan Earthquake Reinsurance Co., Ltd. Annual Report 2017

5. Market-price based overall yield (for reference)(Yen in millions)2014

Fiscal Year

2015

2016

Division

Amount ofnumerator

Amount ofdenominator

Yield onworking
assets (%)

Amount ofnumerator

Amount ofdenominator

Yield onworking
assets (%)

Amount ofnumerator

Amount ofdenominator

Yield onworking
assets (%)

Deposits

28

29,8240.10

3460,1810.06

7

233,671

0.00

Call loans

23

77,0580.03

838,187

0.02

0

1,471

0.00

Monetary receivables bought

15

15,5130.10

144

184,504

0.08

320,157

0.02

–

–

–

–

–

–

–

–

–

3,030

453,264

0.67

2,800

372,0300.75

212

297,783

0.07

1,253

314,369

0.40

2,014

252,572

0.80

(227)

254,512(0.09)

–

–

–

–

–

–

–

–

–

1,777

138,895

1.28

786

119,458

0.66

439

43,270

1.01

Money trusts
Securities
Public and corporate bonds
StocksForeign securities

–

–

–

–

–

–

–

–

–

Loans

Other securities

–

–

–

–

–

–

–

–

–

Buildings

–

31

–

–

28

–

–

27

–

Derivatives(6,447)

–

–

3,954

–

–

3,329

–

–

Others

6,153

–

–

(4,494)––(3,791)

–

–

Total

2,804

575,693

0.49

2,449

654,932

0.37

(239)

553,111(0.04)

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 2014

As of the end of fiscal 2015

As of the end of fiscal 2016

Percentage
distribution(%)

Percentage
distribution(%)

Percentage
distribution(%)

Division
Foreign currency denominatedForeign public and corporate bonds

93,63864.876,404

69.8

14,91056.4

Yen denominatedForeign public and corporate bonds
Total

50,76335.2

33,11830.2

11,525

43.6

144,401

100.0

109,523100.0

26,435

100.0

Yield on foreign loans & investments
Investment assets yield (income yield)

1.34%

1.39%

1.45%

Assets management (realized yield)

1.34%

1.40%

1.76%

Market-price based overall yield (for reference)

1.28%

0.66%

1.01%

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 201733

e Informationonthenon-consolidated
solvency-margin ratio (the ratio that shows
the ability to pay out claims)(Yen in millions)Year
Division
Total amount of non-consolidated solvency-margin469,361

282,607

1,539

1,540

Price fluctuation reserves

6

2

Risk reserves––

464,584

278,846

Common stock, etc.

Catastrophe reserves
Reserves for ordinary bad debts

(A)

–

–

3,231

2,218

Unrealized gain and loss included land holdings––

Surplus such as premium reserves––

Funding instruments with a debt-like nature––

Surplus such as premium reserves and funding
instruments with a debt-like nature that are notincluded in the margin––

Items deductible––

Others––239,352

188,948

General underwriting risk (RI)––

Underwriting risk in third-area insurance (R2)––

Anticipated rate of return risk (R3)

–

–

9,958

7,343

Unrealized gain/loss on available-for-salesecurities / Deferred gain/loss on hedges

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

(B)

Investment risk (R4)(C)

As of theAs of theend ofend offiscal 2015 fiscal 2016

Management risk (R5)

4,693

3,704

Catastrophe risk (R6)

224,700

177,900

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

392.1%

299.1%

Note:
Amounts and other figures presented above are calculated on the basisof the provisions of Article 86 and Article 87 of the Enforcement Regulations for the Insurance Business Act and Notification No. 50 of the Ministry of Finance issued in 1996.

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.

34

[Unforeseeable risk] (Total of risks): Sum of 1–5
1. General underwriting risk: risk associated with aninsurance accident rate that is higher than normallypredictable (other than the risk associated with ahuge disaster).
2. Anticipated 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. Investment risk: management risk that might arise
when the value of assets owned including securities
changes in an unforeseeable manner.
4. Management risk: risk that might arise on business
management in an unforeseeable manner, otherthan 1–3 and 5.
5. Catastrophe 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 2017

ACCOUNTING CONCEPTS(NET ASSETS)

q Financial statements(Yen in millions)2015(As of March
31, 2016)

2016(As of March
31, 2017)

Item

AmountAmountCommon stock

1,000

1,000

544

546



Fiscal Year

1. Balance sheets(ASSETS)

(Yen in millions)2015(As of March
31, 2016)

2016(As of March
31, 2017)

Item

AmountAmount Other legal reserve of retained earnings

Cash and deposits
Deposits

189,215
189,215

260,534
260,534  Special reserves

17

17

Call loans

4,668

1,040

  Special price fluctuation reserves

39

39

Monetary receivables bought

94,596–  Retained earnings carried forward

487

488

401,751
93,82943,526
154,871
109,523

234,580
91,41924,257
92,467
26,435

Tangible fixed assets
Buildings Other tangible fixed assets

66
27
39

43
25
17

Intangible fixed assets
Software
Software in progress Other intangible fixed assets

151
150
–
1

227
173
52
1

Other assets Reinsurance accounts receivable
Uncollected income
Deposits
Suspense payments
Derivatives

18,957
12,357
1,227
46
45
5,280

14,87014,464
261
46
17
80

Total assets

709,408

511,297



Fiscal Year

Securities
Government bonds
Municipal bonds
Corporate bonds
Foreign securities(LIABILITIES)
(Yen in millions)Fiscal Year

Item

2015
(As of March
31, 2016)

2016(As of March
31, 2017)

AmountAmountUnderwriting funds
Outstanding claims
Underwriting reserves

628,497
1,152
627,345

460,327
3,581
456,745

Entrusted reserves

67,102

36,103

Other liabilities
Reinsurance accounts payable
Income taxes payable
Deposits payable
Accrued amounts payable
Derivatives

8,364
8,071
185
3
104
–

10,630
9,709
144
3
328
444

Reserve for retirement benefits

145

151

Reserve for directors’ retirement benefits

8

5

Reserve for bonus payments

21

22

Reserves under the special law
Reserve for price fluctuation

6
6

2
2

3,717

2,511

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

10

707,865

509,755

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

543

545

(5)

(5)

1,539

1,540

3

2

3

2

1,542

1,542

709,408

511,297

Notes for fiscal 2016
1. Matters relating to accounting policies are as follows.
(1)	Appraisal standards and method of securities
and method of indication are as follows.
(i)	Of available-for-sale securities, those to which
the market price is applicable is appraised according to the market price at term end.
(ii)	With respect to the unrealized gain of assets
corresponding to the underwriting reserves andentrusted reserves of earthquake insurance, theamount before tax effect deduction is shownas Net unrealized gains on other securities ofearthquake insurance in Liabilities on the form
attached to the 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) The appraisal of derivatives is done on the basisof market price.
(3) Although depreciation of tangible fixed assets
is calculated using the declining balance method, buildings (excluding equipment attached tobuildings) that were acquired on or after April 1,
1998 and equipment attached to buildings andstructures that were acquired on or after April
1, 2016 were depreciated using the straight-line
method.

Japan Earthquake Reinsurance Co., Ltd. Annual Report 2017

35

(4)

Software for in-house use that is recorded as
an intangible fixed asset is amortized using thestraight-line method over the estimated usable
life (five years).
(5) The conversion of foreign currency assets and liabilities into Japanese currency is processed according to the accounting standards for foreign
currency transactions.
(6)	Reserve for bad debts is written as follows against
losses from bad debts in accordance with theself-appraisal standard of assets and depreciation 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, ordebtors who are effectively bankrupt, the rest of
any of the claims deducting an estimated amountof disposable mortgage and a deductible amountby guarantee was appropriated for such reserves.
	
In connection with the other claims, the rate ofbad debts calculated according to past bad debts
and other factors is multiplied by the amount ofclaims to appropriate for reserves.
	In addition, all claims are written after the financedepartment appraises the assets, and the result
is audited by the planning and controller department independent of the finance department toappropriate the appraisal for reserves.
	
There are no assets in the current term that are
to be appropriated for reserves and no reserve isrequired.
(7) For employees’ retirement and severance benefits, reserve for retirement benefits is appropriated according to estimated retirement allowanceliabilities at the end of the term.
	Retirement allowance liabilities are calculated using a simple method on the basis of the allowance to be supplied at the end of the term for any
employee who retires for his/her own reasons.
(8) For reserve for directors’ retirement benefits, thebenefits to be paid at the end of the term arerecorded according to the relevant in-house rules.
(9) Reserve for bonus payments is calculated according to the standards for the estimated bonuses
payable as of the end of the fiscal year underreview.

36(10) To prepare for a loss from price changes ofshares and others, reserve for price fluctuation isappropriated according to Article 115, Insurance
Business Law.
2. Matters relating to changes, etc. in accounting policies
Associated with the amendment of the Corporation
Tax Act, the “Practical Solution on a change in depreciation method due to Tax Reform 2016” (Accounting Standard Board of Japan (ASBJ) Practical
Issues Task Force (PITF) No. 32, issued June 17,2016) is applied to the fiscal year under review, andthe depreciation method of equipment attached tobuildings and structures that were acquired on orafter April 1, 2016 has been changed from the declining balance method to the straight-line method.
This change will not have an impact on financial
statements for the fiscal year under review.
3. Financial instruments and fair values of financial
instruments(1) Situation of financial instruments
We mainly hold highly rated short- and mediumterm Japanese and foreign bonds and short-term
financial instruments in preparation for reinsurance payouts. We manage assets by attaching
top priority to liquidity and safety and giving
additional consideration to profitability. It is ourpolicy to engage in derivatives trading or forward
exchange contracts to reduce the market risks offoreign-currency receivables associated with exchange fluctuations, within the limits of actual
demand. In addition, we maintain an understanding of market risks, credit risks and liquidity risks
and manage current quotations and credit information on a regular basis in this regard.

Japan Earthquake Reinsurance Co., Ltd. Annual Report 2017

(2)Fair 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, 2017.
(Yen in millions)

Balancesheet
amountFair value

Difference(i) Cash and deposits

260,534

260,534

–

1,040

1,040

–

(iii) Securities
Available-for-sale securities

234,580

234,580–

Total assets(ii) Call loans

496,155

496,155–(iv) Derivatives* to which
hedge accounting is notapplied

(363)

(363)

–

Derivatives total

(363)

(363)

–

* 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
Cash and deposits are settled in the short term and their fair values
are based on 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
based on their carrying values as their fair values and carrying values are similar.
(iii) Securities
The fair values of securities are based on their market prices atterm end, 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.

4. Taxes are included when preparing accounts for
consumption tax and other items.
5. Risk 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
premiums written and profit from operating the assets.

7. See below for a breakdown of outstanding claims.
(Yen in millions)

Outstanding claims (before the deduction ofoutstanding reinsurance claims)

5,872

Outstanding reinsurance claims related to theabove claims

2,290

Net outstanding claims

3,581

8. Total deferred tax assets amount to 351 million yen,while total deferred tax liabilities come to 0 million
yen. Deferred tax assets are all deducted from thetotal amount for a valuation reserve.
A breakdown of deferred tax assets reveals tax loss
carried forward of 258 million yen, a reserve for retirement benefits of 42 million yen, unpaid businesstaxes of 28 million yen and unpaid special local corporate tax of 11 million yen. Deferred tax liabilities
resulted mainly from unrealized gains on securitiesof 0 million yen.
9. No event that could have a material impact on assets
or profits or losses in or after the next fiscal year
has arisen since the last day of the fiscal year underreview.
10. Net assets per share are 775.67 yen. The basis forthis calculation is that net assets are 1,542 million yen, net assets accrued from ordinary sharesare 1,542 million yen and the number of ordinary
shares at the end of the term is 1.988 million.
11. Additional information
The “Implementation Guidance on Recoverabilityof Deferred Tax Assets” (ASBJ Guidance No. 26,
issued March 28, 2016) is applied from the fiscal
year under review.
12. Each amount is rounded down to the nearest
whole unit.

6. The accumulated depreciation of tangible fixed assets is 185 million yen.

Japan Earthquake Reinsurance Co., Ltd. Annual Report 201737

2. Statements of income(Yen in millions)

Fiscal Year

2015

2016

(from April 1, 2015
to March 31, 2016)(from April 1, 2016
to March 31, 2017)

Item

AmountOrdinary income

Notes for fiscal 2016
1. See below for a breakdown of net premiums written.
(Yen in millions)

Premiums written:

243,099

AmountReinsurance premiums ceded:

128,984

129,107289,485

Net premiums written:

114,114

Underwriting income

123,681284,934   Net premiums written

121,986

114,114  Investment income on savings
premiums

1,198

220

  Reversal of outstanding claims

497

–

–

170,599

Investment income

5,424

4,550

   Interest and dividend income

2,468

1,294

  Reversal of policy reserve   Gains on sales of securities   Gains on derivatives   Other investment income  Transfer of investment income on
savings premiums
Other ordinary income
Ordinary expenses
Underwriting expenses   Net claims paid   Loss adjustment expenses  Commissions and brokerage fees  Provision of outstanding claims

194

147

3,954

3,329

4

0

(1,198)

(220)

1

0

129,107289,487

2,429

14,19046,67510  Foreign exchange losses

4,470

3,773

   Other investment expenses

28

19

1,394

1,345

257

138

257

138

Ordinary profit (loss)

0(1)

Extraordinary income–

3

Reversal of reserve for price fluctuation
Losses on disposal fixed assets

4,108

Net provision of outstanding claims

868
45,8803,803

Extraordinary losses(Yen in millions)

Provision of outstanding claims(before the deduction of outstanding
reinsurance claims)

1,679

–

Other ordinary expenses

3. See below for a breakdown of the provision of outstanding claims (figures in parentheses are the reversal of outstanding claims).

Provision of outstanding reinsurance claims
related to the above claims

4,498  Interest paid

220,905

284,200– Operating, general and administrative
expenses

167,622Net claims paid:

220,905

2,429

Investment expenses

388,527

Reinsurance claims recovered:

5,589

–

   Loss on sales of securities(Yen in millions)

Claims paid:

122,956

70,617   Provision of underwriting reserves

2. S ee below for a breakdown of net claims paid.

–

3

0

–

0

–

Provision of price fluctuation reserves

0–

Net income (loss) before income taxes(0)1

Income taxes

00

Total income taxes00

Net income (loss)(0)1

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

Deposits:

7

Call loans:0

Monetary receivables bought:

3

Securities:

1,283

Total:

1,294

5. Paper profit/loss involved in the gains on derivatives
is a loss of 363 million yen.
6. Net
income per share is 0.57 yen.
The basis for this calculation is such that net income is 1 million yen, net income accrued from
common stocks is 1 million yen and the term average number of common stocks amount to 1.988
million.
7. The legal effective tax rate at the end of the termis 28.24%, and the corporate tax burden after applying the tax effect is 20.21%. The difference is
explained by the following breakdown: valuation reserve 6,379.81%, the amount of the write-off carried from publicity expenses related to risk reserves(6,429.46%).
8. Each amount is rounded down to the nearest whole
unit.

38

Japan Earthquake Reinsurance Co., Ltd. Annual Report 2017

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

Fiscal Year

Item

2015

2016

(from April 1, 2015
to March 31, 2016)(from April 1, 2016
to March 31, 2017)

AmountAmountNotes for fiscal 2016
1. 
Relationship 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

(0)

1

82

88

Increase (decrease) in outstanding
claims

(497)

2,429

Increase (decrease) in underwriting
reserves

70,617

Increase (decrease) in entrusted
reserves(As of March
31, 2016)(As of March
31, 2017)

189,215

260,534

Call loans

4,668

1,040

Monetary receivables bought

94,596–(170,599)

Securities

401,751

234,580

4,089(30,999)

Deposits of a depository period
over three months(11,000)(14,000)

Increase (decrease) in reserve forretirement benefits

15

5

Monetary receivables bought other thancash equivalents(71,597)–

Increase (decrease) in reserve fordirectors’ retirement benefits

(13)

(3)

Securities other than cash equivalent(401,751)(234,580)

Cash and cash equivalents

205,882

247,574

Increase (decrease) in reserve forbonus payments(0)0Increase (decrease) in reserve forprice fluctuation

0(3)(2,468)(1,294)

Interest and dividend income
Losses (gains) on investment insecurities

(194)

(136)

Foreign exchange losses (gains)

5,723

3,865

Losses (gains) on tangible fixed
assets0–

Decrease (increase) in other assets(other than investment and financial
activities related)377(2,079)

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

311

1,862

Others(9,288)5,603   Subtotal

68,753(191,258)

4,211

3,009

Interest and dividends received
Income taxes paid
Net cash provided by operating activities–(0)72,965(188,249)–(3,000)(71,588)–

Cash and deposits

2. Cash flow in investing activities includes cash flowfrom the investment assets operations in the insurance business.

Cash flow from investing activities
Net decrease (increase) in cash anddeposits
Purchase of monetary receivablesboughtProceeds from sales and redemptionof monetary receivables bought

19,997

71,597Purchase of securities(217,876)(21,306)

Proceeds from sales and redemptionof securities

200,414

182,791    Total investment assets activities(69,052)

230,082

3,913

41,833    Total operating activities and   investment assets activities
Acquisition of tangible fixed assets

(1)

(0)

Others

(40)

(140)

(69,094)229,941

Cash flow in financing activities

Net cash provided by investing activities–– ffect of exchange rate changes on cashEand cash equivalents––

 et increase (decrease) in cash andNcash equivalents

3,870

41,692

Cash and cash equivalents at the
beginning of the year

202,011

205,882

Cash and cash equivalents at the endof the year

205,882

247,574

Japan Earthquake Reinsurance Co., Ltd. Annual Report 201739

4. Statement of Changes in Shareholders’ Equity
Fiscal 2015 (from April 1, 2015 to March 31, 2016)(Yen in millions)

Valuation andtranslation adjustments

Shareholder’s equity
Retained earnings
Commonstock

Legalreserve ofretainedearnings

1,000

1Balance at the
beginning of theperiodOther legal reserve of retained earnings
Specialreserves

Specialprice
fluctuation
reserves

Retainedearnings
carriedforwardTotal
retainedearnings

17

39

487

545

(0)

(0)

Treasury
stock

Total
shareholders’equity

(5)

Net
Total
unrealized
valuation
gains onandavailabletranslation
for-saleadjustments
securities

1,539

4

4

Total net
assets1,543

Changes during
the period
Net income(loss)(0)(0)

Net changes
other thanshareholders’equityTotal changes
Balance at theend of the period

1,000

1

17

39

(0)

(0)

487

544

(5)

(1)

(1)

(1)

(0)

(1)

(1)

(1)

1,539

3

3

1,542

Fiscal 2016 (from April 1, 2016 to March 31, 2017)(Yen in millions)

Valuation andtranslation adjustments

Shareholder’s equity
Retained earnings
Commonstock

Legalreserve ofretainedearnings

1,000

1Balance at the
beginning of theperiodOther legal reserve of retained earnings
Total
retainedearnings

Specialreserves

Specialprice
fluctuation
reserves

Retainedearnings
carriedforward

17

39

487

544

1

1

Treasury
stock

Total
shareholders’equity

(5)

Net
Total
unrealized
valuation
gains onandavailabletranslation
for-saleadjustments
securities

1,539

3

3

Total net
assets1,542

Changes during
the period
Net income(loss)

1

1

Net changes
other thanshareholders’equityTotal changes
Balance at theend of the period

1,000

1

17

39

1

1

488

546

Notes for fiscal 2016
1. Matters related to the types and total number ofstocks outstanding and the types and number oftreasury stock(Stock)Issuedstock
Treasury
stock

(1)

(1)

1

(1)

(1)

0

1,540

2

2

1,542

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

Fiscal Year

Dividend per share
Net income (loss) per share

2014

2015

2016

–

–

–

1.53 yen(0.23 yen)

0.57 yen

Balance asof the endof fiscal
2015

Increase in
fiscal 2016

Decrease in
fiscal 2016

Balance asof the endof fiscal
2016

Dividend propensity

–

–

–

Net assets per share

776.41 yen

775.61 yen

775.67 yen

22,07324,462

19,665

Ordinary stock

2,000,000––

2,000,000

Total

Notes:
1. Net income (loss) per share comes from net income (loss) / term average
number of shares
2. The number of treasury stock is deducted from producing information per share
3. The total assets per employee come from the total assets at the end of
the term / number of employees at the end of the term.

2,000,000––

2,000,000

Ordinary stock

11,400––11,400Total

11,400––11,400Total assets per employee

2. Each amount is rounded down to the nearest whole
unit.

40

(5)

(1)

Japan Earthquake Reinsurance Co., Ltd. Annual Report 2017

5. Balance Current Maturity of securities by category
As of the end of fiscal 2015

w Details of assets and liabilities(Yen in millions)

1.	Deposits(Yen in millions)Year
Division

As of the endof fiscal 2014

Deposits

As of the endof fiscal 2016

34,119189,215

260,534559

155,655

236,504

33,56033,56024,030Ordinary deposits
Time deposits

As of the endof fiscal 2015

2.	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 2014

As of the end of
fiscal 2015

Percentage
distribution(%)

Division

As of the end of
fiscal 2016

Percentage
distribution(%)

85,971

43,526–––– 154,871

–

–

–

–

–

–

Foreignsecurities

60,24549,278–––– 109,523

Othersecurities

–

–

–

–

–

–

–

– 9,398

401,751

StocksTotal

152,660 178,556

47,744 13,391

–

11.3

Corporatebonds

85,766

6,701

–

–

–

–

–

–

8,797

15,8381,800–

15.9 154,871

38.5

92,467

39.4

–

–

–

36.9 109,523

27.3

26,435––(Yen in millions)

898

62,170234,580–4,406

Corporate
bonds

–

–

18,951

10.3

100.0

68,900–

Municipal
bonds

24,257401,751

–

–

10.8

100.0

21,2205,835

43,526

391,034

22,305

Corporate
bonds

Total

93,82937,4580.7

Total

Municipal
bonds

Over
10
years

– 9,398

26,3952,891–

47,744 13,391

12,575

Municipal
bonds–

22,085Government
bonds

39.0

–

1,208

5 over
up to
7
years

91,419Other
securities

Governmentbonds

3 overup to
5 years

23.4

144,401

3 overup to
5 years

1 overup to
3 years

93,829Foreignsecurities

1 overup to
3 years

Up to
1 year

46.4

–

Up to
1 year

7 over
up to
10
years

As of the end of fiscal 2016

181,570–

Division

Percentage
distribution(%)

Government
bonds

Stocks5 over
up to
7
years

–
100.0

Division

StocksForeignsecurities
Other
securities

4. Yield on securities held

Total

–

–

–

–

126,090

53,341

40,1575,835

7 over
up to
10
years

Over
10
years

Total

– 9,155

91,419––24,257––

92,467

–

–

–

–

–

26,435–––– 9,155

234,580(%)

Division

Fiscal Year

2014

2015

2016

0.25

0.25

0.26

–

–

–

1.34

1.39

1.45

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

–

–

–

0.59

0.62

0.44

0.25

0.33

0.26

–

–

–

1.34

1.40

1.76

Assets management yield (realized yield)
Public & corporate bonds
StocksForeign securities
Other securities
Total

–

–

–

0.59

0.67

0.48

0.80

(0.09)

Market-price based overall yield (for reference)
Public & corporate bonds
StocksForeign securities
Other securities
Total

0.40
–

–

–

1.28

0.66

1.01

–

–

–

0.67

0.75

0.07

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 2017

41

9.	
Present conditions of loans involving trust withcontact for replacement of losses
Not applicable
10. Credits classified in accordance with debtor
classification
Not applicable
11. 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 of March 31, 2015.

(Yen in millions)
As of the endof fiscal 2014Land

As of the endof fiscal 2015

As of the endof fiscal 2016

–

–

–

for underwriting

–

–

–

for investment

–

–

–

Buildings

28

27

25

for underwriting

28

27

25

for investment

–

–

–

–

–

–

Construction in progressfor underwriting

–

–

–

for investment

–

–

–

Total of property

28

27

25

for underwriting

28

27

25

for investment

–

–

–

–

–

–

Other tangible fixed assets

62

39

17

Total

91

66

43

Leased assets(Yen in millions)
Division–––

Reserve for individual bad debts

–

–

–

–

Reserve for specificforeign securities

–

–

–

–

Reserve for retirement benefits

130

22

7

145

Reserve for directors’ retirement
benefits

22

4

17

8

Reserve for bonus
payments

21

21

21

21

Total

–

6

47

182

(Yen in millions)
Division

Balance asof the end of
fiscal 2015

Balance
Decrease
as of the end of
in fiscal 2016
fiscal 2016

Increase in
fiscal 2016

Reserve for ordinary
bad debts

–

–

–

–

Reserve for individual bad debts

–

–

–

–

Reserve for specificforeign securities

–

–

–

–

Reserve for retirement benefits

145

23

17

151

Reserve for directors’ retirement
benefits

8

4

7

5

Reserve for bonus
payments

21

22

21

22

Reserve for pricefluctuation

6

–

3

2

182

49

50

182

(Yen in millions)

As of the endof fiscal 2015

As of the endof fiscal 2016

Outstanding claims

1,650

1,152

3,581

Underwriting reserves

556,727

627,345456,745

Risk reserves

417,056

464,584

278,846

Unearned premium
reserves

139,671

162,760

177,899558,377

628,497

460,327

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

42

0
49

As of the end of fiscal 201615.	Underwriting funds

Total

5
180

18. Detailed listing of shareholders’ equity
Please refer to the statement of changes in shareholders’ equity on page 40.

14. Special accountNot applicableYear As of the end
Divisionof fiscal 2014

Balance
Decrease
as of the end of
in fiscal 2015
fiscal 2015

Increase in
fiscal 2015

–

Total

13. Unearned claims paid
Not applicable

Balance asof the end of
fiscal 2014

Reserve for ordinary
bad debts

Reserve for pricefluctuation

12. Tangible fixed assets by category
Year
Division

17. Detailed listing of liability reserves
As of the end of fiscal 2015

Japan Earthquake Reinsurance Co., Ltd. Annual Report 2017

7. D
 epreciation expenses by category
As of the end of fiscal 2015

e Income and loss details(Yen in millions)

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

Division

Fiscal Year

2014

2015

Type of asset

2016

Government bonds

–

181

2

Foreign securities

–

12

144

Total

–

194

147

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

Division

Fiscal Year

2014

2015

2016

Government bonds

–

–

–

Foreign securities

–

–

10

Total

–

–

10

3. Losses on valuation of securities
Not applicable

Rate of
Deprecia- Aggregated Balance as
Acquisition
aggregatedtion indeprecia- the end of
cost
depreciafiscal 2015
tions
fiscal 2015
tions %

Tangible fixed assets
Buildings

85

1

58

27

68.1

for
underwriting

85

1

58

27

68.1

for
investment

–

–

–

–

–

Other tangible
fixed assets

142

24

103

39

72.4

Total

228

25

161

66

70.8

Intangible fixed assets
Software

294

56

144

150

48.9

Other
intangible
fixed assets

1

–

–

1

–

Total

295

56

144

151

48.7

Grand total

524

82

305

218

58.3

As of the end of fiscal 2016

4. Gains on disposal of fixed assets
Not applicable(Yen in millions)Type of asset

5. Losses on disposal of fixed assets

Acquisition
cost(Yen in millions)

Division

Fiscal Year

2014

2015

Tangible fixed assets

2016

Land

–

–

–

Buildings–––

Other tangible fixed assets

0

0

–

Total

0

0

–

6. Business expenses (inclusive of loss adjustment)(Yen in millions)

Division

Fiscal Year

Personnel expenses
Non personnel expenses
Taxes

2014

2015

2016

417

404

3,311

2,037

1,527

11,914

293

331

310

Commissions and brokeragefees

43,31545,88046,675

Total

46,06348,144Rate of
Deprecia- Aggregated Balance as
aggregatedtion indeprecia- the end ofdepreciafiscal 2016
tions
fiscal 2016
tions %

62,211

Buildings

85

1

59

25

69.8

for
underwriting

85

1

59

25

69.8

for
investment

–

–

–

–

–

Other tangible
fixed assets

142

22

125

17

87.7

Total

228

23

185

43

81.0

Intangible fixed assets
Software

382

64

208

173

54.6

Software in
progress

52

–

–

52

–

Other
intangible
fixed assets

1

–

–

1

–

Total

436

64

208

227

47.8

Grand total

665

88

393

271

59.2

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 201743

(iv) Available-for-sale securities sold at the termr Information about fair values, etc.

(Yen in millions)Fiscal 2015

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 3 on thebalance sheet (page 36~37).
2. Securities(i) Securities held for trading purposes
Not applicable(Yen in millions)Type

Acquisition
cost

Book value

Difference

Public &corporatebonds

250,668

254,073

3,405

–

–

–

78,35883,798

5,440

–

–

–

Subtotal

329,026

337,872

8,846

Public &corporatebonds

38,17338,153(20)

StocksForeignsecurities
OthersSecurities whosecarrying amount
does not exceed
their cost

Stocks–––Foreignsecurities

26,301

25,724(576)

Others

94,596

94,596–

Subtotal

159,071

158,475(596)

488,098496,347

8,249

Total

Total ofgains onsale

Total oflosseson sale

Sales
price

Total ofgains onsale

Total oflosseson salePublic &corporatebonds

40,210

181

–

3,504

2

–

–

–

–

–
10

Stocks––Foreignsecurities

4,592

12

–

42,893

144

Others

–

–

–

–

–

–

44,802

194–

46,397147

10

3. Money trust
Not applicable(iii) Available-for-sale securities
As of the end of fiscal 2015

Securities whosecarrying amountexceeds their cost

Sales
price

Type

Total

(ii) Securities to be held to maturity
Not applicable

Division

Fiscal 2016

4. Derivative transactions(i) Derivative transactions to which hedge accounting is
not applied
Currency related
As of the end of fiscal 2015
(Yen in millions)Contract amount1 year or
longerones

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

60,484

–

4,148

4,148

   Euro20,366

–

1,132

1,132

5,280

5,280

Total

As of the end of fiscal 2016
(Yen in millions)Contract amount1 year or
longerones

Type

As of the end of fiscal 2016
(Yen in millions)

Division

Securities whosecarrying amountexceeds their costType

Acquisition
cost

Book value

Difference

Public &corporatebonds

186,891

189,396

2,505

–

–

–

20,503

21,275772

StocksForeignsecurities
OthersSecurities whosecarrying amount
does not exceed
their cost

–

–

–

Subtotal

207,394

210,672

3,278

Public &corporatebonds

18,757

18,747

(9)

–

–

–

5,252

5,159

(92)

–

–

–

24,00923,907(101)

231,404

234,580

3,176

StocksForeignsecurities
OthersSubtotal

Total

Marketprice

Appraisal
profit andloss

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

14,388

–

(363)

–

–

–

(363)
–

(363)

(363)

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 using forward exchange rate.

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

Note:
On the balance sheet, commercial paper treated as monetary receivablesbought is included in Other.

44

Appraisal
profit andloss

MarketpriceJapan Earthquake Reinsurance Co., Ltd. Annual Report 2017