Annual Report 2017
Year Ended March 31, 2017

Asahi Mutual Life Insurance Company

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

2. Medium-term Business Plan……………………………………………………… 4

3. Business Overview……………………………………………………… 5

4. Business Overview for Fiscal Year 2016 (Non-consolidated)…………………………………………………………… 6
Business Performance (Annualized Premiums) … 6
Fundamental Proﬁt ………………………………… 7
Financial Soundness ……………………………… 8
Capital Base ………………………………………… 8
Results of Operations ……………………………… 9
Assets, Liabilities and Net Assets …………………10
Investments (General Account) ……………………11

5. Governance Structure………………………………………………………13
Corporate Governance ……………………………13
Board of Representative Policyholders ……………14
Basic Policy on the Internal Control Structure ……14
Protecting Customer Information …………………14
Promoting Compliance ……………………………14
Risk Management Structure ………………………15
Ofﬁcers (as of July 4, 2017) …………………………16

6. Consolidated Financial Statements………………………………………………………17

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

8. Company Overview (as of March 31, 2017)………………………………………………………64

1

1. Message from the President

Aiming to becontinuously chosen
by our customers asa trusted company
Thank you for your continued support for Asahi
Life.
Since I have been elected President in April
2017, I have been working my hardest to meet the
expectations of all our policyholders and plan tocontinue to do so in the coming years.
During the fiscal year ended March 31, 2017
(fiscal year 2016), the Japanese economy was able
to sustain a gradual recovery because of the Bankof Japanʼs ongoing monetary easing policies as wellas the improvement in employment and income
conditions. Overseas, the U.S. economy continued
to grow steadily, but due to a sluggish growth inemerging countries such as China, the growth of
the world economy remained moderate.
Amid these conditions, Asahi Life continued towork on the three revolutionary themes publishedin our medium-term (fiscal years started April 1,2015 and ending March 31, 2018) business plan,“SHINKA (progress)-Challenging the Future”. These
themes aim to help us achieve our corporate vision,“Asahi Life: a company that ʻloves its customersʼ andwhich supports each individualʼs ʻlivingʼ”,●SHINKA (progress) in our business model to meetthe diverse needs of our customers●SHINKA (progress) in our organization and way
of working to become a company that loves its
customers●SHINKA (progress) in our financial soundness to
support our customers throughout their lives

2

Asahi Mutual Life Insurance Company Annual Report 2017

In terms of our companyʼs insurance businessperformance in fiscal year 2016, annualized
premiums from new policies and annualized
premiums from policies in force for third sector
products, upon which we focus, have steadily
developed, which can be accounted to the strong
sales of new products such as dementia insurance.
This development can be seen in both the sales
representative and independent agency channels.
As a result, we are proud to say that we haveachieved our strategic objective in the medium-termbusiness plan, a strong sales growth of protectiontype products through the independent agency
channels (*1), one year ahead of schedule. This
follows our achievement of reversing annualized
premiums from policies in force for protection-type
products (*2) from the sales representative channel
in the fiscal year ended March 31, 2016 (fiscal year2015), which is also one of our strategic objectives.
In terms of earnings, while fundamental profit
was down from fiscal year 2015, our ordinary profit
increased compared to that from the same period.
In terms of financial soundness, our solvency
margin ratio improved compared to that in fiscal
year 2015.
(*1) 2.5 times growth of annualized premiums from new policies
for protection-type products (¥4 billion) compared to thosein the fiscal year ended March 31, 2015 (fiscal year 2014).
(*2) Protection-type products are the total of death protection
and third sector products (e.g. medical insurance andnursing care insurance).

The fiscal year ending March 31, 2018 (fiscal
year 2017) marks the final year of our mediumterm business plan. To actualize our corporate
vision, we will take the below actions with utmost
consideration of the viewpoint of our customers.
[Development of Progressive Products through
Careful and Thorough Marketing]Asahi Life will continue to focus on threestrategic markets, namely, the senior, female andmanagement personnel markets. As such, we want
to develop a more customer-oriented approachby conducting careful and thorough marketing
activities to gain a deep understanding of therespective needs of each of the three markets.
With respect to senior market, we aim to be theindustry leader in terms of the number of policies inforce (*3) in the nursing care insurance sector. We
will do this by proposing “Anshin Kaigo”, a nursing
care insurance, and “Anshin Kaigo with Dementia
Insurance”, for our senior customers.
For our female customers, we will develop abrand behind the concept of supporting women to“live life well, being who you are” as well as continue
to press forward in proposing “Yasashisa (kindness)Plus”. Further, we will also work to meet the needsof working women through our sales of “Shunyu(income) Support Insurance” and “Policy Riders for
Mental Illness”, both of which we started offering in
April 2017.
Moreover, for our management personnel
customers, we will continue to provide the highlyacclaimed “Prime Stage”, a nursing care term
insurance, for corporate customers.
(*3) The number of policies in force for nursing care insurance forcustomers of 40 years of age and older.

[Customer Service Quality Improvement]
Asahi Life has established its “Strategy to
Improve Customer Service” and promotes simpler
and quicker sign-up procedures based on this.
This will specifically involve introducing a system
in January 2018 that will automatically read a doctorʼs
medical certificate and determine the payment ofbenefits to customers in order to expedite benefit

payment operations. Furthermore, in January 2019,
we will introduce another system through whichclaims for benefits as well as procedures such as
requests for beneficiary changes can be dealt withon a portable device (tablet) carried by our sales
representatives.
We have also been considering to utilize big
data and artificial intelligence (AI) in providing new
products and services to our customers.
[Establishment of a Multi-channel Structure that
Optimizes Access to Customers]
Asahi Life will strive to build an industry-leading
top-quality sales representative structure that truly
helps our customers by combining the specialized
knowledge and service level that they demand withthe strengths of face-to-face consulting.
Regarding our independent agency channels, wewill not only be strengthening sales through existing
channels such as walk-in insurance shops andtelemarketing, which we are currently expanding,but also engage in the development of newchannels. Moreover, we also plan to strengthen thesales support structure for tax accountant agencies,
which we have been working to actively expand
since fiscal year 2016.
In addition to these efforts, we will commit
to the pursuit of our three revolutionary themes
by working towards improving our organizationand operations with utmost consideration of the
viewpoint of customers and strengthening ourfinancial soundness.
March 2018 will mark the 130th year since ourfounding. Through the solid implementation of
our medium-term business plan, we aim to be ourcustomersʼ continuous choice as a trusted company.
We look forward to receiving your continued
support.

Hiroki Kimura
President and Representative Director

Message from the President

32. Medium-term Business Plan
In April 2015, Asahi Life announced its medium-term business plan, “SHINKA-Challenging the Future”,
covering three fiscal years ending March 31, 2018, and established a corporate vision. Under this vision,
we are taking actions with utmost consideration of the viewpoint of our customers such that we will be theircontinuous choice as a trusted company.
* “Shinka” which means both “true value” and “progress” in Japanese, implies demonstrating our “true value” through “progress” in ourbusiness model and way of working.

Corporate Vision“Asahi Life: a company that ‘loves its customers’ andwhich supports each individual’s ‘living’”We aim to be continuously chosen by our customers as a trusted company and one that demonstrates ourtrue value in supporting our customers’ living. We will do this by taking their viewpoints into utmost
consideration in everything that we do and by being a company that loves its customers.

Three revolutionary themes to achieve our corporate vision
Theme

1

Progress in our business model

to meet the diverse needs of our customers

・Develop progressive products through careful and thorough marketing
・Rapidly improve customer service quality
・Establish a multi-channel structure that optimizes access to customers

Theme

2

Progress in our organization and way of working

to become a company that loves its customers

・Create mechanisms to encourage business improvement in terms of thecustomers’ viewpoint
・Shift resources to more customer-facing roles
・Encourage the activities of diverse personnel that can bring about changes

Theme

3

Progress in our financial soundness

to support our customers throughout their lives

・Secure and expand asset management revenues and continue to improve
management efficiency
・Strengthen financial soundness and establish a more sophisticatedenterprise risk management structure

4

Asahi Mutual Life Insurance Company Annual Report 2017

3. Business Overview
Overview
Asahi Life was established in 1888 as the second
modern life insurance company in Japan under thename Teikoku Life Insurance Company (Teikoku
Seimei Hoken Kabushiki Gaisha). We became amutual company and changed our name to Asahi
Mutual Life Insurance Company (Asahi Seimei
Hoken Sogo Gaisha) in 1947.
Our core business is life insurance for individuals
in Japan, with a specific strategic focus on offering
protection-type products, including medical andnursing care products which we believe can provide
stable profits despite financial market fluctuations.
We have been enhancing and aim to further enhance
our financial soundness through the accumulationof surplus and recapitalization measures. As of
March 31, 2017, we had non-consolidated solvency
margin ratios of 742.7 percent, and an insurer
financial strength ratings of BB+ (Stable Outlook)from Fitch and BB (Stable Outlook) from R&I.

Products
Asahi Life offers a variety of individual life insurance
products, with a focus on protection-type products
including medical and nursing care products,
aimed at serving its customersʼ financial needs,
and continually reviews, updates and expands its
product offerings to respond to the needs of its
customers while maintaining its focus on individuallife insurance.

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

Sales Channels
To optimize access to its customers, Asahi Life
operates a multi-channel sales structure utilizing thesales representative channel and the independentagency channels to provide retail products to its
customers.
Our sales representatives, who provide face-to-facecustomer service, comprise our most significant
distribution channel. As of March 31, 2017, weemployed a total of 12,122 sales representatives.
As of April 1, 2017, we had 625 sales offices locatedthroughout Japan.
Our sales representatives engage in customized
consulting at the time of taking out a policy inorder to meet the diverse needs and lifestyles ofcustomers, as well as regular after-sales service
including the regular provision of information
tailored to changes in the life-cycle of the customer.
In order to continue to be chosen by our customers
as a trusted company, we work to grow highquality sales representatives who not only haveknowledge of life insurance products, but are also
knowledgeable in various financial instruments,social insurance, tax and other related matters.
Although we continuously strengthen our sales
representative channel, we also have been
diversifying our distribution channel by utilizing
independent agencies, such as walk-in insurance
shops, telemarketing and tax accountants.

Business Overview

54. Business Overview for Fiscal Year 2016 (Non-consolidated)
Business Performance (Annualized Premiums)
ll New Policies for Individual Insurance/Individual Annuities
Years ended March 31
New policies
Third sector products(Billions of Yen)

2016

2017

Year-over-year

29.9

34.1

114.0%

21.2

26.6

125.2%

ll Surrendered and Lapsed Policies for Individual Insurance/Individual Annuities
Years ended March 31(Billions of Yen)

2016

2017

Surrendered and lapsed policies

21.1

20.8

98.3%

Surrender and lapse ratio

3.90%

3.87%

(0.03pts)ll Policies in Force for Individual Insurance/Individual Annuities
As of March 31
Policies in force
Third sector products(Billions of Yen)

2016

2017

538.9

535.9

99.4%

183.6

197.8

107.7%

ll New Policies for Protection-type Products
Years ended March 31

Year-over-year

Year-over-year(Billions of Yen)
2016

2017

Year-over-year

26.4

31.3

118.7%

Sales representative channel

23.9

27.3

114.4%

Independent agency channels

2.5

4.0

159.0%

New policies

ll Policies in Force for Protection-type Products
As of March 31(Billions of Yen)
2016

2017

Year-over-year

301.7

311.2

103.2%

Sales representative channel

296.9

303.2

102.1%

Independent agency channels

4.8

8.0

166.5%

Policies in force

Note:
1. All entries are on an annualized premium basis.
Annualized premiums from new policies, surrendered and lapsed policies, and policies in force are as follows.
- Annualized premiums are calculated by multiplying factors according to the premium payment method (for single premium contracts,
the amount is calculated by dividing the premium by the coverage period).
- Third sector is the total of premiums from third sector products and premiums from policy riders allotted to third sector protection,such as with accidents, illness, nursing care etc.
2. Surrender and lapse ratio is calculated by dividing the annualized premiums from surrendered and lapsed policies (surrender + lapse+ reduction - revival) by annualized premiums from policies in force as of the end of the previous fiscal year. Year-over-year column
indicates the change from the previous fiscal year.
3. Protection-type products are the total of death protection and third sector products.

6

Asahi Mutual Life Insurance Company Annual Report 2017

Annualized premiums from new policies (newpolicies and net increase by conversion) grew to114.0% of the previous fiscal year. Among these,
third sector products grew significantly to 125.2% of
the previous fiscal year.
Annualized premiums from surrendered andlapsed policies (surrender + lapse + reduction- revival) this fiscal year ended at 98.3% of theprevious fiscal year.

Annualized premiums from policies in force
resulted to 99.4% of the previous fiscal year. Amongthese, third sector products were at 107.7% of theprevious fiscal year.
Annualized premiums from policies in force
for protection-type products, on which Asahi Lifefocuses, grew to 103.2% of the previous fiscal year,with the upward trend successfully maintained.

Annualized Premiums from New Policies

Annualized Premiums from Policies in Force(Billions of Yen)

(Billions of Yen)

40

600

35
30
25
20

34.1

23.5

15
10
5
0

29.9

31.5

15.4

16.0

2013

2014

2015

400

565.1

552.4

544.2

300

25.1

15.8

500

21.2

2016

26.6

538.9

535.9

200
100
0

2017

167.3

170.2

174.3

183.6

197.8

2013

2014

2015

2016

2017

Individual Insurance and Individual Annuities

Individual Insurance and Individual Annuities

Third Sector Products

Third Sector Products(Years ended March 31)(As of March 31)

Fundamental Profit(Billions of Yen)
Years ended March 31

2016

2017

Year-over-year

Fundamental profit

25.9

22.0

(3.8)

Expense margins

8.6

4.4

(4.2)

Mortality and morbidity gains

82.2

79.8

(2.4)

Negative spread amount(65.0)(62.1)+2.8

Note: Negative spread amount is displayed as a negative value.

Despite improvement in the negative spreadamount, fundamental profit was ¥22.0 billion forthe year ended March 31, 2017. This resulted
mainly from a reduction in expense margins whichis consequently brought about by the increasein operating expenses accompanying sales
performance growth.

Fundamental Profit(Billions of Yen)
30
25
20
15

26.2

26.9

27.6

25.9

10

22.0

5
0

2013

2014

2015

Fundamental Profit

2016

2017

(Years ended March 31)

Business Overview for Fiscal Year 2016 (Non-consolidated)

7

Financial Soundnessll Net Unrealized Gains/Losses on Securities (with fair value, general account)
Net unrealized gains on securities were ¥464.7 billion as of March 31, 2017.
As of March 31(Billions of Yen)

2016

2017

Year-over-year

578.8

464.7

(114.0)

Domestic stocks

64.9

111.8

+46.9

Domestic bonds

466.8

345.8

(121.0)Foreign securities

46.0

3.6

(42.4)

Other securities

(4.2)

(0.3)

+3.9

2016

2017

Year-over-year

691.5%

742.7%+51.2pts

Securitiesll Solvency Margin Ratio
As of March 31
Solvency margin ratio

The solvency margin ratio was 742.7% as of March
31, 2017.

Solvency Margin Ratio
(%)
800

742.7
667.7

700
569.0

600
500
400

691.5

495.8

2013

2014

2015

Solvency Margin Ratio

2016

2017
(As of March 31)

ll Adjusted Net Assets
Adjusted net assets were ¥930.4 billion as of March 31, 2017.
(Billions of Yen)
As of March 31
Adjusted net assets

2016

2017

Year-over-year

996.2

930.4

(65.8)

Capital BaseFoundation funds, which are the counterpartsof paid-in capital for joint stock corporations,serve as the primary source of capital for Japanesemutual companies. Unlike paid-in capital, however,foundation funds have a stated maturity and accrue
interest payment obligations. If the principal
amount of the foundation funds is repaid by
insurance companies out of their net assets, theamounts repaid are carried in the capital portionof the balance sheet as reserve for redemption of

8

Asahi Mutual Life Insurance Company Annual Report 2017

foundation funds. As of March 31, 2017, the balanceof foundation funds was ¥126.0 billion and theamount of reserve for redemption of foundation
funds was ¥131.0 billion, respectively.
Additionally, we have also worked on strengthening
our financial soundness by accumulating internal
reserves and raising funds in the form of subordinateddebt which, while accounted for as a liability, function
largely like capital.

Results of Operations
ll Statements of Income
Years ended March 31(Billions of Yen)
2016

2017

Year-over-year

652.7

679.9

104.2%

401.4

383.7

95.6%

383.5

365.3

95.3%

128.0

161.2

126.0%

114.3

111.1

97.2%

4.5

40.3

895.5%

123.1

134.9

109.6%

101.0

114.5

113.3%

637.8

641.0

100.5%

466.7

463.8

99.4%

Claims

137.1

135.2

98.6%

Annuities

121.9

128.6

105.5%

Surrender benefits

107.1

94.2

87.9%

Investment expenses:

37.4

41.7

111.4%

Losses on sales of securities

10.3

11.0

106.5%

Losses on valuation of securities

1.6

0.0

1.0%

Operating expenses

97.9

101.4

103.6%

Other ordinary expenses

35.6

33.9

95.2%

Ordinary profit

14.8

38.9

263.3%

Extraordinary gains:

10.4

1.2

11.9%

Gains on disposal of fixed assets

0.5

1.2

219.7%

Reversal of reserve for price fluctuation

9.9

-

-

1.2

5.3

431.4%

Losses on disposal of fixed assets

0.3

1.6

483.6%

Impairment losses

0.9

1.3

147.3%

Provision for reserve for price fluctuation

-

2.0

-

Surplus before income taxes

24.0

34.8

145.0%

Total income taxes

6.4

5.6

86.4%

Net surplus

17.5

29.2

166.7%

Ordinary income:Premium and other income:Insurance premiums from individual insurance andindividual annuities
Investment income:Interest, dividends and other income
Gains on sales of securities
Other ordinary income:Reversal of policy reserves
Ordinary expenses:
Claims and other payments:

Extraordinary losses:

Ordinary income increased by ¥27.2 billion to¥679.9 billion (104.2% of the previous fiscal year)
for the year ended March 31, 2017. Among this,premium and other income decreased by ¥17.7
billion to ¥383.7 billion (95.6% of the previous fiscal
year) which can be mainly accounted to suspensionof sales of single premium saving-type products.
Investment income increased by ¥33.2 billion to¥161.2 billion (126.0% of the previous fiscal year)
primarily because of an increase in gains on sales of
securities. Other ordinary income increased by ¥11.7
billion to ¥134.9 billion (109.6% of the previous fiscal
year). This was primarily attributable to the increase

in reversal of policy reserves by ¥13.4 billion to ¥114.5
billion (113.3% of the previous fiscal year).
Ordinary expenses increased by ¥3.1 billion to¥641.0 billion (100.5% of the previous fiscal year) for theyear ended March 31, 2017. Among this, claims andother payments decreased by ¥2.9 billion to ¥463.8
billion (99.4% of the previous fiscal year) mainly due toa reduction in surrender benefits. Investment expenses
increased by ¥4.2 billion to ¥41.7 billion (111.4% of theprevious fiscal year). Operating expenses increased by¥3.5 billion to ¥101.4 billion (103.6% of the previous
fiscal year) mainly due to an increase in expenditures
accompanying growth in sales performance.

Business Overview for Fiscal Year 2016 (Non-consolidated)

9

As a result, ordinary profit increased by ¥24.1
billion to ¥38.9 billion (263.3% of the previous fiscal
year) for the year ended March 31, 2017.
Extraordinary gains decreased by ¥9.2 billion
to ¥1.2 billion (11.9% of the previous fiscal year),and extraordinary losses increased by ¥4.1 billion
to ¥5.3 billion (431.4% of the previous fiscal year).

Total income taxes decreased by ¥0.8 billion to ¥5.6
billion (86.4% of the previous fiscal year).
As a result of the above factors, net surplus
increased by ¥11.7 billion to ¥29.2 billion (166.7% of
the previous fiscal year) for the year ended March
31, 2017.

Assets, Liabilities and Net Assets
ll Selected Assets Data
As of March 31(Billions of Yen)
2016

2017

Year-over-year

5,524.1

5,398.2(125.9)Cash, deposits and call loans

213.6

154.1

(59.5)

Monetary claims bought

41.9

33.2

(8.7)

4,138.5

4,152.3＋13.7

Domestic bonds

2,903.2

2,902.1(1.1)

Domestic stocks

249.2

293.8

＋44.6

Foreign securities

914.6

878.8

(35.7)

Loans

620.9

557.7

(63.2)

Tangible fixed assets

417.7

406.1

(11.6)

Deferred tax assets

22.7

22.7

(0.0)

Others

68.5

71.9

＋3.4

Total assets:

Securities:

ll Selected Liabilities/Net Assets Data
As of March 31

2016

2017

Year-over-year

5,195.0

5,039.2(155.8)4,887.3

4,768.3(118.9)4,814.6

4,700.1(114.5)

-

40.3

＋40.3

307.7

230.5

(77.2)

329.0

358.9

＋29.8

310.6

333.5

＋22.9

Foundation funds

126.0

126.0

-

Reserve for redemption of foundation funds

120.0

131.0

＋11.0

Surplus:

64.3

76.3

＋11.9

Reserve for future losses

0.2

0.2

＋0.0

Other surplus:

64.1

76.0

＋11.9

Reserve for fund redemption

35.5

36.0

＋0.5

Equalized reserve for dividends to policyholders

10.4

8.7

(1.7)

Unappropriated surplus (loss)

18.1

31.3

＋13.1

Total valuation and translation adjustments:

18.4

25.3

＋6.9

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

62.9

71.1

＋8.1

Land revaluation differences(44.5)(45.7)(1.2)

5,524.1

5,398.2(125.9)Total liabilities:
Policy reserves and other reserves:
Policy reserves
Bonds payable
OthersTotal net assets:
Total foundation funds and others:

Total liabilities and net assets

10(Billions of Yen)

Asahi Mutual Life Insurance Company Annual Report 2017

As of March 31, 2017, the amount of total assets
was ¥5,398.2 billion with securities accounting for¥4,152.3 billion, loans at ¥557.7 billion, and tangible
fixed assets at ¥406.1 billion. Among securities, theamount of domestic stocks increased mainly due to a
stock price increase. The amount of foreign securities
decreased because of a drop in the fair value of
foreign bonds reflecting a rise in US interest rates.
The amount of total liabilities was ¥5,039.2 billion,
and among this, policy reserves decreased by ¥114.5
billion to ¥4,700.1 billion mainly due to a reductionin policies in force of saving-type products.
The amount of total net assets was ¥358.9 billion,
among which total foundation funds and othersamounted to ¥333.5 billion, with total valuation andtranslation adjustments amounting to ¥25.3 billion.
Accompanying the redemption of foundation funds
totaling ¥11 billion in August 2016, the same amount
was transferred from reserve for fund redemption toreserve for redemption of foundation funds, while¥11.5 billion was newly set aside as reserve for fundredemption.

Investments (General Account)
Investment Environment
During the fiscal year ended March 31, 2017, theJapanese economy was able to sustain a gradual
recovery because of the Bank of Japanʼs ongoingmonetary easing policies as well as the improvement
in employment and income conditions. Overseas,
the U.S. economy continued to grow steadily, but
due to a sluggish growth in emerging countries
such as China, the growth of the world economy
remained moderate.
The yield on newly issued 10-year Japanese
Government Bonds (JGBs) transitioned fromnegative levels at the end of the previous fiscal
year to around 0% at the end of this fiscal year due
to the introduction of quantitative and qualitative
monetary easing with yield curve control by the

Bank of Japan in September 2016.
The Nikkei Stock Average increased from
¥16,758 at the end of previous fiscal year to ¥18,909
at the end of this fiscal year, due to heightened
expectations of business performance recovery
backed by the depreciation of the yen after the
U.S. presidential elections.
With regard to the foreign exchange rate, theyen has strengthened against the U.S. dollar, once
below ¥100, reflecting the result of the Britishreferendum in June 2016, but transitioned weakerdue to the rise in the U.S. interest rate after the U.S.
presidential election. As of the end of this fiscal
year, the yen was valued at ¥112 against the U.S.
dollar.

Investment Policy
Asahi Life structures its asset portfolio concentrating
on yen interest-bearing assets such as domestic
bonds and loans, taking into consideration theliability characteristics of insurance policies.
In addition, under the current prolonged low

domestic interest rate environment, we endeavors
to improve profitability through investments inrelatively higher yield products such as foreign
currency-denominated bonds while taking into
account foreign exchange risks.

Overview of Investment Performance
During the fiscal year ended March 31, 2017,
Asahi Life has increased the allocation of its
investments to relatively higher yielding assets
such as foreign currency-denominated bonds while
adequately managing foreign exchange risks.
On the other hand, considering the low domestic
interest rate environment, we limited the allocation
to yen interest bearing assets.
• For domestic bonds, we mainly purchased assets
with yield spreads such as corporate bonds, while
limiting the allocation to government bonds,
considering the low-interest rate environment.
• For loans, we limited the total amount of loans in
consideration of the low-interest rate environment.
• We kept the balance of domestic stocks unchanged
to keep the price fluctuation risk reduced.

• For foreign securities, we worked to improve
the yield through purchasing currencyhedged foreign currency-denominated bonds.
Additionally, we have increased the allocation
to alternative investments* with the aim todiversify investments and expand investment
opportunities.
• We made efforts to improve real estate
profitability by reviewing rent levels of rental realestate properties and improving operating rates.
* These are investment methods such as infra-funds, real estate
investment trusts or derivative financial instruments, which
are alternative investments to the traditional investment
assets such as stocks and bonds.

Business Overview for Fiscal Year 2016 (Non-consolidated)

11

Investment Composition Ratio
(%)
100
90
80
70
60
50

7.6

7.6
7.4

7.7
7.5

6.7
7.5

13.5

12.8

12.8

4.4
7.9
4.7

3.8
8.3
4.2

4.2

11.3
3.9

10.4
4.2

10.9

12.6

12.0

5.1

4.3

5.3

53.4

54.9

51.8

52.7

53.9

2013

2014

2016

2017

8.5

8.4

7.6

40
30
20
10
0

2015

(As of March 31)
OthersReal Estate

Loans

Foreign Stocks and Other Foreign Securities
Domestic Stocks

Foreign Bonds

Domestic Bonds

Interest, Dividends and Other Income(Billions of Yen)
140
120

113.0

117.4

118.3

6.0

114.3

111.1

5.7

8.7

7.9

100

16.8

16.4

16.4

16.2

3.3
16.4

80

16.9

15.5

14.3

12.9

10.2

60

21.8

24.2

27.1

26.9

27.2

5.9

5.2

5.5

6.2

6.1

45.7

47.0

46.9

45.8

47.7

2013

2014

2015

2016

2017

40
20
0

(Years ended March 31)

12

OthersRent Revenues on Real Estate

Interest on Loans

Interest and Dividend on Foreign Securities

Dividend on Domestic Stocks

Interest on Domestic Bonds

Asahi Mutual Life Insurance Company Annual Report 2017

5. Governance Structure
Corporate Governance
Basic Philosophy on Corporate Governance
Recognizing that the life insurance industry has animportant role in supporting the Japanese society
in cooperation with the social security system,
Asahi Life holds a basic management philosophyof “Sincere Service.” This is guided by the idea that
fulfilling our responsibility to our customers, society
and our employees is fundamental to our business.
Based on our management philosophy, we
work to maintain a strong cooperation with all of
our stakeholders and promote corporate social
responsibility-based management centered on thefollowing:- Engaging in business that prioritizes the
improvement of customer satisfaction- Co-existence with society through continued

engagement to create a prosperous society, and;- Improvement of employee satisfaction throughthe creation of a comfortable workplace that
fosters employees.
We are also making efforts to achieve effective
corporate governance in order to both maintainour financial soundness and make decisions in atransparent, fair, quick and decisive manner.
In December 2015, we established and released
our Basic Policy on Corporate Governance, which
set forth our basic philosophy on corporate
governance, the structure of our organization andoperating policy, with the aim of making explicit
the transparency and fairness of our corporate
governance.

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

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

Management Organization
Policyholders
Board of Representative
Policyholders

Board of Statutory Auditors

Conference with Customers

Board of Trustees
Board of Directors

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

Chief ActuaryManagement Meeting

Meetings
Committees

Governance Structure

13

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

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

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

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

Protecting Customer Information
Management System to Appropriately Protect Information Assets
Asahi Life keeps personal information related
to our customersʼ policies or health status, to theextent that is necessary for our business.
Recognizing that keeping such information
secure is a crucial management issue, we have not
only established a framework to protect customer
information, but also persistently promote the strict
implementation of such, in full consideration of therelevant laws and ordinances.
Furthermore, we have also formulated a Security
Policy to provide appropriate protection for ourcustomersʼ information. All employees perform
appropriate and strict information management
based on this policy to both fulfill our responsibility
towards our policyholders and the society, andfurther improve the credibility of our company.

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

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

Basic Policy/Compliance with Standards
Asahi Life has established the Basic Policy
on Compliance and Compliance Standards as
the primary guidelines to be observed by all
employees. These are made widely and thoroughly

14

Asahi Mutual Life Insurance Company Annual Report 2017

known through our Compliance Manual andrigorous training. All employees must conduct andare conducting business strictly in accordance withthese policy and standards.

Furthermore, we have also created theCompliance Program which includes a detailed
action plan. By implementing this action plan andmaking periodical reviews, we are doing our best
efforts to establish a higher level of complianceframework.

Organization/System
Asahi Life holds discussions on compliance,
one of the most crucial aspects of management,with our Compliance Committee. The Committee
is composed of our Company President as chair,
Management Meeting members and third-party

lawyers, who provide their expert opinions on specificsubject matters. Additionally, a department that
controls compliance, and which implements measures
to promote it throughout the company, has been
established to strengthen our pursuit of this issue.

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

In order to ensure the fulfillment of our long-term
obligations from our insurance policies, we value
risk management as one of our most importantmanagement issues and are working to further
improve and strengthen our risk management
structure.

Risk Management Structure
Asahi Lifeʼs Board of Directors has established a
Basic Policy on Risk Management. This is a corporatewide policy that aims to implement appropriate
risk management towards the achievement of ourmanagement objectives.
Within this Basic Policy, we have identified thevarious types and locations of risks faced by a life
insurance company, and with respect to each risk,
set down certain risk management methods andmanagement structures.
Further, with regard to each identified risk, wehave established policies, regulations and rules withrespect thereto.
Each risk management department in ourcompany works to control risk appropriately
through regular identification and reporting inaccordance to the Basic Policy as well as other rules
and regulations.
Furthermore, as the surrounding risks are notnecessarily independent in a way that one may affectanother, we have controlled this by establishing adepartment that manages risk at an enterprise level.
The status of our risk management is reported
to our Board of Directors and Management
Meeting, upon which, management decisions are
made. Moreover, the appropriateness of our risk
management structure is audited by our Internal
Audit Department.

Enterprise Risk Management
Asahi Life promotes Enterprise Risk Management,in order to secure financial soundness and improve
profitability through grasping the overall risks withrespect to the business as a whole. This also helps
us to implement countermeasures based on the
degree of importance of risks based on qualitativeand quantitative risk evaluation.
Additionally, we implement Own Risk andSolvency Assessment (ORSA), a process to evaluate
our management risks and own capital andpromote the integration of risk management withour business strategy.
With respect to qualitative risk evaluation, we
ascertain our risk profile and specify crucial risks tomanagement by identifying not only current but
also potential risks which are discovered throughour Control Self-Assessment (CSA) which we
conduct in each operational division. We also strive
to identify risks at an early stage and to reduce theserisks through measures such as warning analysis.
With respect to quantitative risk evaluation,
we evaluate the sufficiency of our own capital bycomparing the aggregate risk amount with ourmanagement strength such as our own capital. After
which, we can confirm the appropriateness of our asset/
liability strategy and risk/return strategy. Moreover, we
also quantitatively evaluate the sufficiency of our own
capital based on the economic value.

Governance Structure15

Asset Liability Management (ALM)
Asahi Life engages in asset liability management(ALM) that is guided by the asset and risk management
policies established by liability groups. Asahi Life
engages in asset liability management (ALM)
that is guided by the asset and risk management
policies established by liability groups. Theseliability groups are categorized according to thecharacteristics of insurance policies. Based on theasset and risk management policies, we confirm

the appropriateness of an investment. We structure
our asset portfolio concentrating on yen interestbearing assets such as domestic bonds and loans,taking into consideration the liability characteristics
of insurance policies. A portion of domestic bonds
are classified as policy-reserve-matching bonds,
which are valued at the amortized cost, with the aimof reducing the impact of interest rate fluctuation.

Officers (as of July 4, 2017)
Chairman of the Board and Representative Director

Director

Yoshiki Sato

Kazuko Ohya(1)President and Representative Director

Director

Hiroki Kimura

Takashi Tsukamoto(1)Representative Director and Senior Managing Executive Officer

Director

Masayuki Yamashita

Kenji Watanabe(1)Director and Managing Executive Officer

Standing Statutory Auditor

Kiyoshi Ikeda

Hiroyuki Somekawa

Director and Managing Executive Officer

Standing Statutory Auditor

Tatsuya Kikuchi

Hiroshi Hirosaka

Director and Managing Executive Officer

Statutory Auditor

Hiroshi Tatara

Junnosuke Furukawa(2)Director and Managing Executive Officer

Statutory Auditor

Yasuhiro Iguchi

Yukio Machida(2)Director and Executive Officer

Statutory Auditor

Yukihiro Fujioka

Tadayuki Seki(2)(1) Outside director(2) Outside statutory auditor

16

Asahi Mutual Life Insurance Company Annual Report 2017

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

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

2017¥

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

35,511122,000
33,2020
4,148,686
557,7612016¥

36,133
181,000
41,906
10
4,134,926
620,988

2017
$

316
1,087
295
0
36,9794,971

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

240,255
170,998
2,484
1,462
2,645
417,845

2,076
1,493
17
9
22
3,620

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

12,916
17,46330,38032
38,986–23,88917(578)
5,525,539

125
170
296
1
352
0
204
0
(4)
48,12227,3644,700,145
40,861
4,768,371
127
40,349139,189
37,75736,58018,091145,040,479¥¥

27,9504,814,646
44,7204,887,317
95–
216,138
42,39934,53018,56917
5,199,069$$

243
41,894364
42,502
1
359
1,240
336
326
161
0
44,928126,000
131,000
281
76,065
333,347

126,000
120,000
281
64,102
310,384

1,123
1,167
2
678
2,971

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

62,954(44,527)(2,420)16,00679
326,470
5,525,539

633
(407)
(3)
222
0
3,194
48,122¥$

Consolidated Financial Statements

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

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

2017¥

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

18

Asahi Mutual Life Insurance Company Annual Report 2017

¥

2016

383,776¥

2017

401,499$

3,420

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

114,094
4,510
2,080
7,063
–
127,749
127,443656,692

988
360
0
64
20
1,434
1,238
6,094

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

137,141
121,939
95,534
107,181
4,945
466,742

1,205
1,146
873
839
68
4,134

33
33

46
46

0
0

4,042
–
11,02516
11,264
325
0
5,500
9,561
–
41,737105,072
33,818644,469
39,2453,451
16
10,349
1,647
609
3,739
1
5,492
10,471
1,685
37,465
101,872
35,565641,692
14,999

36
–
98
0
100
2
0
49
85
–
372
936
301
5,744
349

1,243
–
1,243

566
9,910
10,476

11
–
11

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

338
905
–
–
1,243
24,232

14
11
18
3
47
313

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

676
5,939
6,616
17,61638
17,577

34
17
51
261
0
261

¥

$

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

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

2017
¥

¥

29,313

2016¥

17,616

2017
$

261

8,150
–
2,061
10,212(46,636)532
671(45,432)

72
–
18
91

39,494(27,854)352

3139,526¥38(27,816)$0352

Consolidated Financial Statements

19Consolidated Statements of Changes in Net Assets
Asahi Mutual Life Insurance Company and its Consolidated Subsidiaries
Millions of Yen
Foundation funds and others
For the year ended March 31, 2017

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

Reserve for
Total
Foundation redemption Reserve for Consolidated foundationof foundation revaluation
surplusfunds and
funds
funds
others¥ 126,000 ¥ 120,000 ¥281¥ 64,102¥ 310,384(1,767)

11,000(1,767)

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

22,963¥ 333,347(11,000)–
11,000¥ 126,000 ¥ 131,000 ¥Millions of Yen
Accumulated other comprehensive income

For the year ended March 31, 2017

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

20

Asahi Mutual Life Insurance Company Annual Report 2017

Net
Total
unrealized
NonAccumulatedLand
accumulated controlling
gains (losses)
remeasurements
on available- revaluation
otherinterestsof definedcomprehensive
for-saledifferences
benefit plansincomesecurities,
net of tax¥ 62,954¥ (44,527) ¥(2,420) ¥ 16,006¥

79

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

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

¥

(5)
8,971
(5)
31,93473 ¥ 358,404

Millions of U.S. Dollars
Foundation funds and others
Reserve for
Total
Foundation redemption Reserve for Consolidated foundation
surplusof foundation revaluation
funds and
funds
funds
othersFor the year ended March 31, 2017

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

$

1,123

$

1,069

$

2

$

571

$

98

98
(15)

(15)
98

(98)
(51)
261

(51)
261
(98)
11

(98)
11

$

–
1,123 $

98
1,167

–
2 $

$

106
678

2,766

$

204
2,971

Millions of U.S. Dollars
Accumulated other comprehensive income

For the year ended March 31, 2017

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

561

$

(396) $

(21) $

142$

0

Total net
assets

$

2,909
98
(15)

(51)
261
(98)
11

$

72
72
633

$

(11)
(11)
(407) $

18
18
(3) $

80
80
222

$

(0)
(0)
0 $

79
284
3,194

Consolidated Financial Statements

21Millions of Yen
Foundation funds and others
For the year ended March 31, 2016

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

Reserve for
Total
Foundation redemption Reserve for Consolidated foundation
surplusof foundation revaluation
funds and
funds
funds
others¥ 166,000

¥

– ¥

281

¥ 177,543¥ 343,825(1,940)80,000(1,940)80,000120,000(120,000)(7,638)17,577(120,000)(1,439)(40,000)
120,000¥ 126,000 ¥ 120,000¥(7,638)17,577(120,000)(1,439)–(113,441)(33,441)281 ¥ 64,102 ¥ 310,384

Millions of Yen
Accumulated other comprehensive income

For the year ended March 31, 2016

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

22

Asahi Mutual Life Insurance Company Annual Report 2017

Net
unrealized
Total
NonAccumulated
gains (losses)
Land
accumulated controlling
remeasurements
on available- revaluation
otherinterestsof defined
for-salecomprehensive
differences
benefit planssecurities,
incomenet of tax¥ 109,591 ¥ (46,499) ¥(3,092) ¥ 59,999¥

80

Total net
assets¥ 403,905
80,000(1,940)(7,638)17,577(120,000)(1,439)(46,636)
1,972(46,636)
1,972¥ 62,954 ¥ (44,527) ¥671(43,992)
671(43,992)(2,420) ¥ 16,006 ¥(1)(43,994)(1)(77,435)79 ¥ 326,470

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

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

2017
¥

¥

2016

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

¥

2017

24,232
5,492
9,151
905
(1,743)(101,089)46(2,080)(1,258)(9,910)(114,094)
9,172
609
3,451
3,739
(320)
(20)

$

313
49
88
11
(5)
(1,020)
0
(0)
(15)
18
(988)
(282)
100
36
2
(0)
(1)

(1,385)
31

(669)
60

(12)
0

520
7,296
(183,802)
116,136(3,957)(5,660)(185)(77,469)

332
4,124(169,870)
118,627(3,248)(5,701)(1,997)(62,189)

4
65(1,638)
1,035
(35)
(50)
(1)
(690)

(500)

(3,000)

(4)

9,198
9
(968,725)
993,520(66,526)
125,897(20,059)

17,837–(630,464)
533,844(111,197)
201,615
22,25981
0(8,634)
8,855
(592)
1,122
(178)

(53,610)
19,204(58,265)(7,447)
8,341(7,903)
12,19453,61084,50522,315(10,608)
5,478(7,963)
71,412

(477)
171
(519)
(66)
74
(70)
108

2,000
(30,000)
40,34911,000(11,000)(5,787)
(37)
(871)
5,652
(59,622)
217,133
157,51140,000––80,000(120,000)(7,638)(39)(838)(8,516)705
216,427
217,133

17
(267)
359
98
(98)
(51)
(0)
(7)
50
(531)
1,935
1,403

¥

$

Consolidated Financial Statements

23

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

I. Presentation of Consolidated Financial Statements
1. Basis of Presentation
The accompanying consolidated financial statements have been prepared from the accounts maintainedby Asahi Mutual Life Insurance Company (the “Company”) and its consolidated subsidiaries in accordancewith the provisions set forth in the Insurance Business Act of Japan and its related rules and regulations
applicable to the mutual life insurance industry and in conformity with accounting principles generally
accepted in Japan, which are different in certain respects from accounting principles generally accepted incountries and jurisdictions other than Japan.
In addition, the notes to the consolidated financial statements include information which is not required
under accounting principles generally accepted in Japan but is presented herein as additional information.
Amounts of less than one million yen have been eliminated. As a result, total amounts in yen shown herein
do not necessarily agree with the sum of the individual amounts.
In preparing the accompanying consolidated financial statements, certain reclassifications have been
made to the consolidated financial statements issued domestically in order to present them in a format
which is more familiar to readers outside Japan.

2. U.S. Dollar Amounts
The translations of yen amounts into U.S. dollar amounts are included solely for the convenience of thereader and have been made, as a matter of arithmetical computation only, at the rate of ¥112.19 = US$1.00,
the effective rate of exchange at the balance sheet date of March 31, 2017.
The translations should not be construed as representations that such yen amounts have been or could in
the future be, converted into U.S. dollars at that or any other rates.

3. Principles of Consolidation(1) Scope of consolidation
The consolidated subsidiaries for the years ended March 31, 2017 and 2016 are listed below:
Info Techno Asahi Co., Ltd.
Asahi Life Asset Management Co., Ltd.
Asahi Nvest Investment Advisory Co., Ltd.
The major unconsolidated subsidiary is Asahi Real Estate Management Co., Ltd.
Unconsolidated subsidiaries are excluded from the scope of consolidation, as each one of them issmall in terms of its total assets, amount of sales, net income for the year and surplus and is sufficiently
immaterial to reasonable judgment with regards to its impact on the financial position and results ofoperation of the Companyʼs group.
(2) Application of equity method
Unconsolidated subsidiaries and affiliates (such as Asahi Real Estate Management Co., Ltd, etc.) are
immaterial in terms of their impact on consolidated net income and surplus, and also immaterial as awhole, therefore, the equity method is not applied.
(3) Fiscal year-end of consolidated subsidiaries
The fiscal year-end of the consolidated subsidiaries is March 31.
(4) Amortization of goodwill
Goodwill is fully expensed as incurred.

24

Asahi Mutual Life Insurance Company Annual Report 2017

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

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

ii) Held-to-maturity debt securities are stated at amortized cost under the straight-line method, cost
being determined by the moving average method.
iii) Policy-reserve-matching bonds are stated at amortized cost under the straight-line method, cost
being determined by the moving average method in accordance with “Temporary Treatmentof Accounting and Auditing Concerning Policy-reserve-matching Bonds in Insurance Industry”(Industry Audit Committee Report No. 21 issued by the Japanese Institute of Certified Public
Accountants (“JICPA”)).
iv) Investments in unconsolidated subsidiaries and affiliates not accounted for under the equity
method are stated at cost.
v) Available-for-sale securities with fair market value are stated at fair market value based on themarket prices at the end of the fiscal year, except for domestic stocks, domestic exchange-tradedfunds, domestic listed real estate investment trusts, foreign exchange-traded funds for which hedge
accounting is not applied and foreign currency-denominated bonds for which hedge accounting
is not applied. Such securities are stated based on the average of the market value during thefinal month of the fiscal year. Costs of sales are determined by the moving average method. Net
unrealized gains or losses on these available-for-sale securities, net of taxes, are recorded as aseparate component of net assets.
Available-for-sale securities whose fair values are deemed extremely difficult to determine are statedat cost, cost being determined by the moving average method, except for public and corporate bonds
including foreign bonds, of which the difference between acquisition cost and face value is considered
to be an adjustment of interest. Such bonds are stated at amortized cost under the straight-line
method, cost being determined by the moving average method.
(2) Policy-reserve-matching bonds
The Company classifies bonds held with the aim of matching the duration to outstanding insurance
liabilities within the sub-groups (categorized by insurance type, investment policy and other factors)of individual life insurance and individual annuities as policy-reserve-matching bonds in accordancewith “Temporary Treatment of Accounting and Auditing Concerning Policy-reserve-matching Bonds
in Insurance Industry” (Industry Audit Committee Report No. 21 issued by the JICPA on November 16,2000).
Since the fiscal year starting from April 1, 2016, the Company changed its liability cash flow, which isthe premise of assessing the duration to outstanding insurance liabilities, from a “Term of future 25
years” to a “Term of future 30 years” for the sub-group including Individual life Insurance and Individual
Annuities (excluding Whole Life Insurance with variable interest rate accumulation, Accumulation
Insurance with variable interest rates and New Single Premium Individual Annuity effective on and after
April 2, 2012). This is for the purpose of gradually transitioning the Companyʼs investment portfolio toa liability-matching portfolio. This change did not have any effects on the consolidated balance sheet
and consolidated statement of income as of and for the year ended March 31, 2017.
(3) Valuation methods of derivative financial instruments
Derivative financial instruments are stated at fair market value.

Consolidated Financial Statements25

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

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

2017

¥

(6,525)2016¥(14,917)

2017

$

(58)

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

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

ii) For credit to borrowers who are not currently bankrupt but have a high risk of bankruptcy(hereinafter “not currently bankrupt borrowers”), the Company provides the amounts deemed asnecessary considering the borrowersʼ ability to pay, within the amounts after deductions of theamount expected to be collected through the disposal of collateral or the execution of guarantees.
iii) For credit to borrowers other than the above, the Company provides the amounts calculated bymultiplying the borrowersʼ balance by the actual ratio of bad debt losses on defaults during acertain past period.
All credit is assessed by the relevant departments in accordance with the Companyʼs standards ofself-assessment on credit quality. The results of the assessment are reviewed by the audit department,
which is independent of business-related divisions. Subsequently, allowance for possible loan losses isprovided based on the results of these assessments.

26

Asahi Mutual Life Insurance Company Annual Report 2017

For consolidated subsidiaries, the Company records the allowance amounts deemed necessary inaccordance mainly with the Companyʼs standards of self-assessment and write-offs and reserves on
credit quality.
For credit to legally bankrupt borrowers and substantially bankrupt borrowers, the amounts remaining
after deductions of collateral value or the amounts collectible through the execution of guarantees are
written-off directly from the borrowerʼs balance as the estimated uncollectible amounts. The amounts
written-off as of March 31, 2017 and 2016 were ¥215 million (US$1 million) and ¥219 million, respectively.
(8) Accounting for employeesʼ retirement benefits and method of amortizing retirement benefit expenses
Net defined benefit liabilities and assets are presented for the employeesʼ retirement benefits after
deducting pension plan assets from retirement benefit obligations, based on estimated amounts as of
the balance sheet date.
The Company uses the following methods of accounting in relation to retirement benefits.
■ The retirement benefit obligation is attributed to each period by the benefit formula method.
■ Actuarial differences are amortized under the straight-line method over a period of seven years,
which is shorter than the average remaining years of service of the eligible employees, starting fromthe following year.
■ Prior service cost is charged to income when incurred.
(9) Reserve for price fluctuation
Reserve for price fluctuation is calculated in accordance with Article 115 of the Insurance Business Act.
(10) Accounting for hedging activities
Hedging activities are accounted for in accordance with the “Accounting Standards for Financial
Instruments” (Accounting Standards Board of Japan (“ASBJ”) Statement No. 10).
The Company applies deferred hedge accounting and the exceptional accounting treatment (“Tokureishori”) for interest rate swaps used to hedge the cash flow volatility of certain loans.
The Company also applies fair value hedge accounting for hedging activities related to foreign exchange
rate fluctuation exposures on certain bonds and investment trusts denominated in foreign currencies.
The Company also applies designated hedge accounting (“Furiate-shori”) for currency swaps used
to hedge foreign exchange rate fluctuation exposures on the foreign currency-denominated bonds
issued by the Company.
The Company also applies designated hedge accounting (“Furiate-shori”) for the foreign currencydenominated transactions other than the above.
The effectiveness of a hedge is mostly assessed by a ratio analysis, comparing the fluctuations in thefair value or cash flows of hedged items and hedging instruments.
(11) Accounting for consumption taxes
The Company accounts for consumption tax and local consumption tax by the tax-exclusion method.
The consumption taxes on certain assets, which are not deductible from consumption taxes withheld
and that are stipulated to be deferred under the Corporation Tax Act of Japan are deferred as prepaid
expenses and amortized equally over five years.
Consumption taxes other than deferred consumption taxes are recognized as an expense when incurred.
(12) Policy reserves
Policy reserves are based on Article 116 of the Insurance Business Act and the premium reserve at theend of fiscal year is calculated by the following method:
In regard to the policies subject to the standard policy reserves, the method as prescribed by the Commissionerof Financial Services Agency (Japanese Ministry of Finance Public Notice No. 48, 1996) is applied.
In regard to the policies not subject to the standard policy reserves, the net level premium method is applied.

Consolidated Financial Statements27

(13) Software
Capitalized software for internal use owned by the Company and its subsidiaries (included in intangible
fixed assets in the consolidated balance sheets) is amortized using the straight-line method over theestimated useful lives.

2. Accounting Changes(1) Notes for the fiscal year ended March 31, 2017
ASBJ Guidance No. 26 “Implementation Guidance on Recoverability of Deferred Tax Assets” has been
applied since the fiscal year ended March 31, 2017.
(2) Notes for the fiscal year ended March 31, 2016
“Revised Accounting Standard for Business Combinations” (ASBJ Statement No. 21, September 13,
2013; hereafter the “Business Combinations Accounting Standard”), “Revised Accounting Standard
for Consolidated Financial Statements” (ASBJ Statement No. 22, September 13, 2013; hereafter the“Consolidation Accounting Standard”), and “Revised Accounting Standard for Business Divestitures”(ASBJ Statement No. 7, September 13, 2013; hereafter the “Business Divestitures Accounting Standard”)
have been applied from the beginning of the fiscal year ended March 31, 2016.
Under the revised accounting standards, the differences arising from changes in the Companyʼsownership interests in subsidiaries when the Company retains control are recorded in surplus, andacquisition-related costs are recorded as expenses for the fiscal year in which the costs are incurred.
For business combinations implemented on or after April 1, 2015, the accounting method has beenchanged to reflect adjustments to the allocated acquisition costs on the finalization of the provisional
accounting treatments in the consolidated financial statements for the fiscal year in which the businesscombination occurs. In addition, the presentation method of net surplus was changed and the accountname “minority interests” was changed to “non-controlling interests”. In the consolidated statementof cash flows for the fiscal year ended March 31, 2016, cash flows related to the acquisition or sale ofshares of subsidiaries that do not result in a change in the scope of consolidation are classified into
cash flows from financing activities, while cash flows related to expenses arising from the acquisitionof shares of subsidiaries that result in a change in the scope of consolidation or the acquisition or saleof shares of subsidiaries that do not result in a change in the scope of consolidation are classified into
cash flows from operating activities.
With respect to the application of the Accounting Standard regarding business combinations, thetransitional treatments prescribed in Article 58-2(4) of the Business Combinations Accounting Standard,
Article 44-5(4) of the Consolidation Accounting Standard and Article 57-4(4) of the Business Divestitures
Accounting Standard has been applied prospectively on and after April 1, 2015.
There was no impact on income/loss as a result of these changes.

3. Accounting Standards and Guidances Issued but Not Yet Effective
Notes for the fiscal year ended March 31, 2016
An accounting guidance issued by the fiscal year-end but not yet effective is “Implementation Guidance on
Recoverability of Deferred Tax Assets” (ASBJ Guidance No. 26), and the overview is as follows.
(i) Overview
The accounting treatment on recoverability of deferred tax assets still basically follows the frameworkof the “Auditing Treatment Regarding Judgment of the Recoverability of Deferred Tax Assets” outlinedin the Japanese Institute of Certified Public Accountants Industry Audit Committee Statement No.
66, i.e. a framework for estimating deferred tax assets by classifying entities into five categories andcalculating the amount according to those categories, but it has made necessary revisions on thefollowing treatments.
(a) Accounting treatments of entities not satisfying any of the category criteria from (Category 1) to(Category 5).
(b) Category criteria of (Category 2) and (Category 3).

28

Asahi Mutual Life Insurance Company Annual Report 2017

(c) Accounting treatments of unscheduled deductible temporary differences for entities in (Category2).
(d) Accounting treatments for reasonably estimated period for taxable income before temporary
differences for entities in (Category 3).
(e) Accounting treatments for entities satisfying the category criteria of (Category 4) and also falling in(Category 2) or (Category 3).
(ii) Schedule date of adoption
The above revisions are scheduled to be applied from the beginning of the fiscal year ending March
31, 2017.
(iii) Effects of application of the Accounting Standards and relevant regulations
The effects of the application are under assessment at the time of preparing these consolidated
financial statements.

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

Consolidated Financial Statements

29

The balance sheet amounts, fair values and the differences between them of major financial assets andliabilities as of March 31, 2017 and 2016 were as follows:
Millions of Yen
2017
As of March 31
Cash and deposits
Call loans
Monetary claims bought
Trading securities
Held-to-maturity debt securities
Policy-reserve-matching bonds
Available-for-sale securities
Securities
Trading securities
Held-to-maturity debt securities
Policy-reserve-matching bonds
Available-for-sale securities
Loans
Policy loans
Industrial and consumer loans
Total assets
Bonds payable
Loans payable
Total liabilities
Derivative financial instruments
Hedge accounting not applied
Hedge accounting applied

Balance Sheet
Amount¥Fair Value

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

¥

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

Difference
¥

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

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

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

Balance Sheet
Amount
$

316
1,087
295
–
295
–
–
35,939242
3,020
19,27013,405
4,971
513
4,458
42,611
359
864
1,224
59
11
47

Fair Value
$

316
1,087
328
–
328
–
–
39,275242
3,394
22,232
13,405
5,096
513
4,583
46,104
381
862
1,244
59
11
47

Difference
$

–
–
32
–
32
–
–
3,335
–
373
2,961
–
124
–
124
3,493
22
(2)
19
–
–
–

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

30

Asahi Mutual Life Insurance Company Annual Report 2017

Millions of Yen
2016
As of March 31
Cash and deposits
Call loans
Monetary claims bought
Trading securities
Held-to-maturity debt securities
Policy-reserve-matching bonds
Available-for-sale securities
Securities
Trading securities
Held-to-maturity debt securities
Policy-reserve-matching bonds
Available-for-sale securities
Loans
Policy loans
Industrial and consumer loans
Total assets
Loans payable
Total liabilities
Derivative financial instruments
Hedge accounting not applied
Hedge accounting applied

Balance Sheet
Amount¥36,133
181,000
41,906–
41,906––
4,015,742
27,615
369,795
2,236,439
1,381,892
620,988
68,813552,175
4,895,771
125,000
125,000
3,750
1,102
2,647

Fair Value¥

36,133
181,000
47,107–
47,107––
4,508,412
27,615423,587
2,675,317
1,381,892
640,660
68,813571,846
5,413,313
126,598
126,598
3,750
1,102
2,647

Difference
¥

–
–
5,200
–
5,200
–
–
492,670–
53,791
438,878–
19,671–
19,671
517,542
1,598
1,598
–
–
–

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

(1) Securities including deposits and monetary claims bought which are treated as securities based on“Accounting Standards for Financial Instruments” (ASBJ Statement No. 10)
As for available-for-sale securities of which market value is readily available, domestic stocks, domestic
exchange-traded funds, domestic listed real estate investment trusts, foreign exchange-traded funds
for which hedge accounting is not applied and foreign currency-denominated bonds for which hedge
accounting is not applied are stated at the average of the market value during the final month of
the fiscal year. Available-for-sale securities of which market value is readily available excluding thesecurities mentioned above are stated at the market value at the balance sheet date.
Other securities of which market value is readily available are stated at market value at the balance
sheet date.
Unlisted stocks and others of which market value is not readily available are not subject to fair value
disclosure and are therefore not included in the table above because it is regarded as extremely
difficult to determine their fair value.
The amounts of the unlisted stocks and others reported in the consolidated balance sheets were
¥116,627 million (US$1,039 million) and ¥119,184 million as of March 31, 2017 and 2016, respectively.
(2) Loans and loans payableAs credit exposure for policy loans without specific repayment periods is limited to the amount of
the cash surrender value, the Company and subsidiaries consider book value as fair value with theassumption that fair value approximates book value in light of factors such as projected repayment
period and interest terms.
As for industrial and consumer loans and loans payable, the fair value of loans is primarily stated at theoreticalprices calculated by discounting the future cash flows to the present value. The fair value of loans to legallybankrupt borrowers, substantially bankrupt borrowers and not currently bankrupt borrowers is stated at
the amounts by deducting estimated losses from the book value before direct write-offs.
(3) Bonds payable
The fair value of bonds payable is based on the market value, etc. as of March 31, 2017.

Consolidated Financial Statements31

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

5. Investments and Rental Properties
The Company holds investment and rental properties such as office buildings in Tokyo and other areas. The
carrying amounts and the fair values of investment and rental properties were ¥270,353 million (US$2,409
million) and ¥252,559 million (US$2,251 million) as of March 31, 2017 and ¥279,054 million and ¥254,884
million as of March 31, 2016, respectively. The fair value is mainly based on the value (including someadjustments using the reference prices) of real estate appraisal report prepared by the external real-estateappraiser in accordance with real estate appraisal standards.

6. Securities Lent under Lending Agreements
The amount of securities lent under lending agreements was ¥48,674 million as of March 31, 2016.

7. Loans Receivable
The total amounts of loans to bankrupt borrowers, delinquent loans, delinquent loans three or moremonths past due and restructured loans, which were included in loans, ¥1,166 million (US$10 million) and¥1,421 million as of March 31, 2017 and 2016, respectively.
i)

Loans to bankrupt borrowers were ¥0 million (US$0 million) and ¥0 million as of March 31, 2017 and2016, respectively.

ii) Delinquent loans were ¥1,015 million (US$9 million) and ¥1,180 million as of March 31, 2017 and2016, respectively.
iii) Delinquent loans three or more months past due were ¥112 million (US$1 million) and ¥189 million
as of March 31, 2017 and 2016, respectively.
iv) Restructured loans were ¥38 million (US$0 million) and ¥51 million as of March 31, 2017 and 2016,
respectively.
Loans to bankrupt borrowers represent loans, excluding the balances already written-off, which meet theconditions prescribed in Article 96 Paragraph 1 Items 3 and 4 of the Enforcement Regulations of the
Corporate Tax Act. Moreover, accruing interest on these loans is not recorded as income after determiningthat principal of or interest on these loans is unlikely to be collected due to the significant delay inrepayment of principal or interest payments or for other reasons.
Accruing interest on delinquent loans is not recorded as income due to the same reasons as describedabove, and delinquent loans exclude loans to bankrupt borrowers and loans for which interest payments
have been suspended and rescheduled to assist and support the borrowers in the restructuring of theirbusinesses.
Delinquent loans three or more months past due are loans for which interest payments or repayments ofprincipal are delinquent for three months or more from the due dates under the terms of the related loan
agreements, excluding those loans classified as loans to bankrupt borrowers and delinquent loans.
Restructured loans are loans for which certain concessions favorable to borrowers, such as interest
reduction or exemptions, rescheduling of due dates of principal or interest payments, waivers of claim
or other terms, have been negotiated for the purpose of assisting and supporting the borrowers in the
restructuring of their businesses. This category excludes loans classified as loans to bankrupt borrowers,
delinquent loans and delinquent loans three or more months past due.
The direct write-offs related to loans decreased the amounts of loans to bankrupt borrowers describedabove by ¥22 million (US$0 million) and ¥23 million as of March 31, 2017 and 2016, respectively.

32

Asahi Mutual Life Insurance Company Annual Report 2017

In addition, the direct write-offs related to loans decreased delinquent loans described above by ¥193
million (US$1 million) and ¥196 million as of March 31, 2017 and 2016, respectively.

8. Accumulated Depreciation of Tangible Fixed Assets
Accumulated depreciation of tangible fixed assets totaled ¥277,959 million (US$2,477 million) and ¥275,650
million as of March 31, 2017 and 2016, respectively.

9. Separate Accounts
Total assets in separate accounts provided for in Article 118 of the Insurance Business Act were ¥29,199
million (US$260 million) and ¥28,910 million as of March 31, 2017 and 2016, respectively. The amounts ofseparate account liabilities were the same as separate account assets.

10. Receivables from/Payables to Directors and Audit Board Members
There were no receivables from directors and audit board members as of March 31, 2017 and 2016,
respectively. The total amounts of payables to directors and audit board members were ¥20 million (US$0
million) and ¥20 million as of March 31, 2017 and 2016, respectively.

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

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

2017
¥

¥

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

2016
¥

¥

2017

48,434
1,940
5,701
102
56
44,720

$

$

398
15
50
0
0
364

12. Stocks of Unconsolidated Subsidiaries and Affiliates
The amounts of stocks of unconsolidated subsidiaries and affiliates the Company held as of March 31, 2017and 2016 were ¥604 million (US$5 million) and ¥604 million, respectively.

13. Pledged Assets
Assets pledged as collateral as of March 31, 2017 and 2016 were securities in the amount of ¥3,748 million(US$33 million) and ¥10,683 million, respectively.

14. Redemption of Foundation Funds(1) Notes for the fiscal year ended March 31, 2017
Accompanying the redemption of foundation funds totaling ¥11,000 million (US$98 million), in
accordance with Article 56 of the Insurance Business Act, the Company transferred the same amountfrom reserve for fund redemption to reserve for redemption of foundation funds.
(2) Notes for the fiscal year ended March 31, 2016
Accompanying the redemption of foundation funds totaling ¥120,000 million, in accordance with
Article 56 of the Insurance Business Act, the Company transferred the same amount from reserve forfund redemption to reserve for redemption of foundation funds.

Consolidated Financial Statements33

15. Additional Foundation Funds(1) Notes for the fiscal year ended March 31, 2017
In accordance with Article 60 of the Insurance Business Act, the Company raised additional foundation
funds totaling ¥11,000 million (US$98 million).
(2) Notes for the fiscal year ended March 31, 2016
In accordance with Article 60 of the Insurance Business Act, the Company raised additional foundation
funds totaling ¥80,000 million. Furthermore the Company carried out financing of additional
subordinated loans totaling ¥40,000 million.

16. Assets with Rights to Sell
The Company has the legal right to sell or collateralize securities borrowed under loan agreements. The
market values of these assets that were not sold or mortgaged as of March 31, 2017 and 2016 were ¥8,295
million (US$73 million) and ¥4,235 million, respectively. No assets were mortgaged as of March 31, 2017and 2016.

17. Commitment LineAs of March 31, 2017 and 2016, there were unused commitment line agreements under which the Company
is the lender of ¥3,500 million (US$31 million) and ¥3,500 million, respectively.

18. Subordinated Bonds
As of March 31, 2017, bonds payable are subordinated bonds, for which the repayments are subordinatedto other obligations.

19. Subordinated Loans
As of March 31, 2017 and 2016, other liabilities included subordinated loans of ¥97,000 million (US$864
million) and ¥125,000 million, respectively, for which the repayments are subordinated to other obligations.

20. Contributions to Policyholders Protection Corporation
The estimated future contributions to the Life Insurance Policyholders Protection Corporation of Japan
under Article 259 of the Insurance Business Act as of March 31, 2017 and 2016 were ¥10,391 million (US$92
million) and ¥11,546 million, respectively. These contributions are charged as operating expenses in thefiscal years in which they are paid.

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

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

34

Asahi Mutual Life Insurance Company Annual Report 2017

2017
¥

¥

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

2016¥¥

70,34327,47242,871
18,981
23,889

2017
$

$

558
185
372
168
204

Major components of deferred tax assets/liabilities were as follows:
Millions of
U.S. Dollars

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

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

2016
¥

2017

11,848
9,633
8,653
8,141
9,326
11,66618,023

$

93
90
75
74
65
57

18,218160(2) The statutory tax rates were 28.1% and 28.7% for the years ended March 31, 2017 and 2016. The main
factors causing the differences between the statutory tax rates and the actual effective tax rates after
considering deferred taxes were as follows:
For the years ended March 31

2017

Change of valuation allowance for deferred tax assets
Interest on foundation funds
Impact from a change in the tax rate

2016(7.9)%(4.5)%–

1.3%(7.9)%
4.5%(3) From the end of the year ended March 31, 2016, the statutory tax rate used to measure deferred
tax assets and liabilities recoverable during the period within two years was changed from 28.7% to28.1%, and the statutory tax rate used to measure deferred tax assets and liabilities recoverable after
two years was changed from 28.7% to 27.9% in accordance with the “Act for Partial Amendment of
the Income Tax Act” (Act No. 15 in 2016) and the “Act for Partial Amendment of the Local Tax Act”
(Act No. 13 in 2016).
Due to this change, as of March 31, 2016, deferred tax assets of the Company in the consolidated balance
sheet decreased by ¥583 million, deferred tax liabilities for land revaluation in the consolidated balance
sheet decreased by ¥532 million, and deferred income taxes of the Company in the consolidated
statement of income increased by ¥1,098 million.

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

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

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

2017

2016

2017

¥

49,674
2,045
497
(248)
(5,199)¥51,489
2,201
515
1,009
(5,541)

$

442
18
4
(2)
(46)

¥

46,769¥49,674$416

Consolidated Financial Statements

35ii) Reconciliation of beginning and ending balance of pension plan assets
Millions of
U.S. Dollars

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

2017
¥

¥

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

2016
¥

2017

6,851
79
346
195
(198)
7,275

¥

$

64
0
15
1
(1)
80

$

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

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

2017¥

46,769(9,024)

2016¥

37,74537,757(11)¥

37,745

2017

49,674(7,275)

$

416
(80)

42,39942,399–¥42,399

336
336
(0)
$

336

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

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

2017

2016

2017

¥

2,045
497
(68)
904
6

¥

2,201
515
(79)
1,636
6

$

18
4
(0)
8
0

¥

3,386

¥

4,280

$

30

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

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

36

Asahi Mutual Life Insurance Company Annual Report 2017

2017
¥
¥

2,854
6
2,860

2016
¥
¥

2017
972
6
979

$
$

25
0
25

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

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

2017
¥

2016
481
19
501

¥

¥

2017

3,335
26
3,362

¥

$

4
0
4

$

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

2017

Stocks
Bonds
Others
Total

2016

53%
11%
36%
100%

43%
12%
45%
100%

viii) Method for determining the expected long-term rate of return
To determine the expected long-term rate of return on pension plan assets, the Company takes into
account the present and future allocation of pension plan assets, and the present and expected
future long-term rate of return on the diverse range of assets that makes up the pension assets.
ix) Underlying actuarial assumptions
The main underlying actuarial assumptions were as follows:
As of March 31

2017

Discount rate
Expected long-term rate of return on pension plan assets
Defined benefit corporate pension plans

2016

1.0%
0.9%
1.6%

1.0%
1.1%
1.9%

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

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

2017¥

25,787
2,727
11,875

2016
¥

2017

3,320
712
477

$

229
24
105

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

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

2017
¥

24
184
10,816

2016
¥

2017

111
5,649
4,589

$

0
1
96

Consolidated Financial Statements

37

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

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

2017
¥

2016
11
5

¥

2017

1,629
18

$

0
0

Losses on trading securities were losses on sales of ¥16 million for the fiscal year ended March 31, 2016.
Losses on derivative financial instruments included net valuation losses of ¥121 million (US$1 million) andgains of ¥620 million for the fiscal years ended March 31, 2017 and 2016, respectively.

2. Impairment Losses of Fixed Assets
For the years ended March 31, 2017 and 2016, impairment losses of fixed assets by the Company were as
follows:(1) Method of grouping
Real estate and other assets used for insurance business operations are classified as one asset groupas a whole. Other assets such as real estate for rent and unused real estate are classified as one groupindividually.
(2) Background information on recognizing the impairment losses
As the profitability of certain real estate for rent dropped down significantly due to a decrease in thelevel of rental income and a declining trend in the market prices of land, the Company reduced thebook values of such real estate for rent and unused real estate to their recoverable amounts. The writedowns were recognized as impairment losses and included in the extraordinary losses.
(3) Asset groups for which impairment losses were recognized and losses by classification of fixed assets
Millions of Yen

Millions of
U.S. Dollars

2017

2017

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

¥

¥

357
418
775

$

3
3
6

403
154
557

3
1
4

760
572
1,333

6
5
11

$

* The disclosure for the fiscal year ended March 31, 2016 has been omitted since this is considered immaterial.

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

38

Asahi Mutual Life Insurance Company Annual Report 2017

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

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

2017

¥

¥

2016

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

¥

2017

(68,715)
9,015(59,699)
13,062

$

86
(34)
52
20

8,150

(46,636)

72

–
–
–
–
–

–
–
–
532
532

–
–
–
–
–

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

(663)
1,642
979
(307)
671
(45,432)

17
8
25
(7)
18
91

¥

$

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

Consolidated Financial Statements

39

Ernst & Young ShinNihon LLC
Hibiya Kokusai Bldg.
2-2-3 Uchisaiwai-cho, Chiyoda-ku
Tokyo, Japan 100-0011

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

Independent Auditor’s Report
The Board of Directors
Asahi Mutual Life Insurance Company
We have audited the accompanying consolidated financial statements of Asahi Mutual Life Insurance Company
and its consolidated subsidiaries, which comprise the consolidated balance sheets as of March 31, 2017and 2016,
and the consolidated statements of income, comprehensive income, changes in net assets, and cash flows for theyears then ended and a summary of significant accounting policies and other explanatory information, allexpressed in Japanese yen.
Management’s Responsibility for the Consolidated Financial Statements
Management is responsible for the preparation and fair presentation of these consolidated financial statementsin accordance with the Insurance Business Act and related rules and regulations applicable to the mutual life
insurance industry and accounting principles generally accepted in Japan, and for designing and operating suchinternal control as management determines is necessary to enable the preparation and fair presentation of theconsolidated financial statements that are free from material misstatement, whether due to fraud or error.
Auditor’s Responsibility
Our responsibility is to express an opinion on these consolidated financial statements based on our audits. We
conducted our audits in accordance with auditing standards generally accepted in Japan. Those standards requirethat we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial
statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the
consolidated financial statements. The procedures selected depend on the auditor’s judgment, including theassessment of the risks of material misstatement of the consolidated financial statements, whether due to fraud
or error. The purpose of an audit of the consolidated financial statements is not to express an opinion on theeffectiveness of the entity’s internal control, but in making these risk assessments the auditor considers internal
controls relevant to the entity’s preparation and fair presentation of the consolidated financial statements in orderto design audit procedures that are appropriate in the circumstances. An audit also includes evaluating theappropriateness of accounting policies used and the reasonableness of accounting estimates made bymanagement, as well as evaluating the overall presentation of the consolidated financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit
opinion.
OpinionIn our opinion, the consolidated financial statements referred to above present fairly, in all material respects, theconsolidated financial position of Asahi Mutual Life Insurance Company and its consolidated subsidiaries as ofMarch 31, 2017and 2016, and their consolidated financial performance and cash flows for the years then endedin accordance with the Insurance Business Act and related rules and regulations applicable to the mutual life
insurance industry and accounting principles generally accepted in Japan.
Convenience Translation
We have reviewed the translation of these consolidated financial statements into U.S. dollars, presented for theconvenience of readers, and, in our opinion, the accompanying consolidated financial statements have been
properly translated on the basis described in Note 2.

May 17, 2017
Tokyo, Japan

A member firm of Ernst & Young Global Limited

40

Asahi Mutual Life Insurance Company Annual Report 2017

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

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

2017¥

Call loans
Monetary claims bought
Securities:
National government bonds
Local government bonds
Corporate bonds
Domestic stocks
Foreign securities
Other securities
Loans:
Policy loans
Industrial and consumer loans
Tangible fixed assets:
Land
Buildings
Lease assets
Construction in progress
Other tangible fixed assets
Intangible fixed assets:
Software
Other intangible fixed assets
Reinsurance receivables
Other assets:
Accounts receivable
Prepaid expenses
Accrued income
Money on deposit
Derivative financial instruments
Cash collateral paid for financial instruments
Suspense payments
Other assets
Deferred tax assets
Customers' liabilities under acceptances and guarantees
Allowance for possible loan losses
Total assets¥

260
31,84032,100122,000
33,202

2016

¥

2017

277
32,39332,670
181,000
41,906

$

2
283
286
1,087
295

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

2,067,291
47,714788,290249,233
914,609
71,417
4,138,558

17,197
497
8,173
2,619
7,833
690
37,011

57,577500,184
557,761

68,813552,175
620,988

513
4,458
4,971

232,995
167,527
2,015
1,033
2,531
406,105240,255
170,985
2,484
1,462
2,602
417,790

2,076
1,493
17
9
22
3,619

14,647
18,87433,521
194

13,46817,27530,744
32

130
168
298
1

3,307
3,046
17,040
3,423
8,005
2,482
194
1,218
38,71922,72514(487)
5,398,207

7,120
2,648
17,539
3,467
6,742
–
257
523
38,29922,74417(578)
5,524,175

29
27
151
30
71
22
1
10
345
202
0
(4)
48,116¥$

Non-consolidated Financial Statements

41Millions of
U.S. Dollars

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

2017

¥

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

42

Asahi Mutual Life Insurance Company Annual Report 2017

¥

2016

27,3644,700,145
40,861
4,768,371
127
40,349¥2017

27,9504,814,646
44,7204,887,317
95
–

$

243
41,894364
42,502
1
359–
97,000
1,435
5,143
8,053
192
364
18,171
1,382
4,190
2,015
240
238
138,429
37,30736,58018,09114
5,039,270

53,610125,000
53
4,696
7,711
71
336
17,913
2,992
–
2,472
237
373
215,470
39,09634,53018,56917
5,195,098

–
864
12
45
71
1
3
161
12
37
17
2
2
1,233
332
326
161
0
44,917126,000
131,000
281

126,000
120,000
281

1,123
1,167
2

242

219

2

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

35,500
10,485
18,16364,14964,368
310,650

320
77
279
678
680
2,973

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

62,953(44,527)
18,426
329,077
5,524,175

633
(407)
225
3,199
48,116¥$

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

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

2017

¥

2016

383,514262
383,776¥

2017

401,41386
401,499

$

3,418
2
3,420

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

83,211
12,900
16,249
1,982
114,345
4,510
2,080
7,088
–
128,024

743
91
146
9
991
360
0
64
20
1,437

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

17,4171,251
1,743
101,089
1,675
123,178
652,702

146
15
5
1,020
14
1,202
6,061

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

137,141
121,939
95,534
107,181
4,708
236
466,742

1,205
1,146
873
839
65
3
4,134

33
33

46
46

0
0

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

3,451
16
10,349
1,647
609
3,739
1
5,492
10,471
1,685
37,46597,950

36
–
98
0
100
2
0
49
85
–
372
904

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

18,263
6,957
9,393
1,074
35,688637,893
14,808

137
65
90
9
302
5,713
347

Non-consolidated Financial Statements

43Millions of
U.S. Dollars

Millions of Yen
For the years ended March 31

2017

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

44

Asahi Mutual Life Insurance Company Annual Report 2017

¥

2016

2017

1,243
–
1,243

566
9,910
10,476

11
–
11

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

337
905
–
–
1,242
24,041

14
11
18
3
47
310

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

551
5,937
6,489
17,552

33
16
49
260

¥

$

Non-consolidated Statements of Changes in Net Assets
Asahi Mutual Life Insurance Company
Millions of Yen
Foundation funds and others
Surplus
For the year ended
March 31, 2017

Beginning balance

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

281 ¥

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

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

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

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

1,235

1,235

(11,500)(1,767)

1,767
1,235

–
281 ¥

(1,767)23
500(1,767) 13,189
11,94422,944242 ¥ 36,000 ¥ 8,718 ¥ 31,353 ¥ 76,313 ¥333,595

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

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

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

Land revaluationdifferences

Total valuationand translation
adjustments

Total net assets

¥

¥

¥

¥

62,953(44,527)

18,426

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

1,235

¥

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

¥

6,915
6,915
25,341¥

6,915
29,859358,937

Non-consolidated Financial Statements

45

Millions of U.S. Dollars
Foundation funds and others
Surplus
For the year ended
March 31, 2017

Beginning balance

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

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

1,123 $

1,069 $

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

1 $Other surplus

316 $

93 $

161 $

573 $

98

2,768
98

(15)
(0)

0
98

(15)

(98)

(98)
(51)
260

(51)
260

(51)
260
(98)

11

11

11

117
279 $

106
680 $

(98)
102

(102)
(15)

–
1,123 $

98
1,167 $

–
2 $

0
2 $

(15)

4
320 $

(15)
77 $

15

204
2,973

Millions of U.S. Dollars
Valuation and translation adjustments
For the year ended
March 31, 2017

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

46

Asahi Mutual Life Insurance Company Annual Report 2017

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

Land revaluationdifferences

Total valuationand translation
adjustments

Total net assets

$

$

$

$

561

(396)

164

2,933
98
(15)

(51)
260
(98)

11

$

72
72
633

$

(11)
(11)
(407)

$

61
61
225

$

61
266
3,199

Millions of Yen
Foundation funds and others
Surplus
For the year ended
March 31, 2016

Beginning balance

Reserve forredemption Reserve
Foundation
Reserve
of
for
funds
foundation revaluation for future
lossesfunds¥ 166,000 ¥–¥Changes in the fiscal year:
80,000Issuance of foundation funds
Additions to reserve for dividends topolicyholders
Additions to reserve for future losses
Additions to reserve for redemptionof foundation funds
120,000
Payment of interest on foundation
funds
Net surplus
Redemption of foundation funds(120,000)
Additions to reserve for fundredemption
Reversal of equalized reserve fordividends to policyholders
Reversal of land revaluationdifferences
Net changes, excluding foundation
funds and others(40,000) 120,000
Net changes in the fiscal year
Ending balance¥ 126,000 ¥ 120,000 ¥

281 ¥

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

179 ¥ 152,000 ¥

6,915 ¥ 18,740 ¥ 177,835 ¥ 344,117
80,000(1,940)(40)

40(120,000)(1,940)(120,000)(7,638)17,552

3,500(7,638)17,552(7,638)17,552(120,000)(1,439)(1,439)(3,500)3,570(3,570)(1,439)–281 ¥(1,940)40 (116,500)
3,570(576) (113,466) (33,466)
219 ¥ 35,500 ¥ 10,485 ¥ 18,163 ¥ 64,368 ¥ 310,650

Millions of Yen
Valuation and translation adjustments
For the year ended
March 31, 2016

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

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

Land revaluationdifferences

Total valuationand translation
adjustments

Total net assets

¥

¥

¥

¥

109,589(46,499)

63,090407,207
80,000(1,940)(7,638)17,552(120,000)(1,439)¥(46,635)(46,635)
62,953

¥

1,972
1,972
(44,527)¥(44,663)(44,663)
18,426¥(44,663)(78,130)
329,077

Non-consolidated Financial Statements

47

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

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

48

Asahi Mutual Life Insurance Company Annual Report 2017

2017
¥

¥

31,353––31,353
20,603
1,519
19,08324
5,499
13,56012,600960
10,7502016¥¥

18,1631,767
1,767
19,931
19,077
1,767
17,31023
5,787
11,50011,500
–
853

2017
$

$

279
–
–
279
183
13
170
0
49
120
112
8
95

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

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

2. U.S. Dollar Amounts
The translations of yen amounts into U.S. dollar amounts are included solely for the convenience of thereader and have been made, as a matter of arithmetical computation only, at the rate of ¥112.19 = US$1.00,
the effective rate of exchange at the balance sheet date of March 31, 2017.
The translations should not be construed as representations that such yen amounts have been or could in
the future be, converted into U.S. dollars at that or any other rate.

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

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

ii) Held-to-maturity debt securities are stated at amortized cost under the straight-line method, cost
being determined by the moving average method.
iii) Policy-reserve-matching bonds are stated at amortized cost under the straight-line method, cost being
determined by the moving average method in accordance with “Temporary Treatment of Accounting
and Auditing Concerning Policy-reserve-matching Bonds in Insurance Industry” (Industry Audit
Committee Report No. 21 issued by the Japanese Institute of Certified Public Accountants (“JICPA”)).
iv) Investments in subsidiaries and affiliates are stated at cost.
v) Available-for-sale securities with fair market value are stated at fair market value based on themarket prices at the end of the fiscal year, except for domestic stocks, domestic exchange-tradedfunds, domestic listed real estate investment trusts, foreign exchange-traded funds for which hedge
accounting is not applied and foreign currency-denominated bonds for which hedge accounting
is not applied. Such securities are stated based on the average of the market value during thefinal month of the fiscal year. Costs of sales are determined by the moving average method. Net
unrealized gains or losses on these available-for-sale securities, net of taxes, are recorded as aseparate component of net assets.

Non-consolidated Financial Statements

49

Available-for-sale securities whose fair values are deemed extremely difficult to determine are statedat cost, cost being determined by the moving average method, except for public and corporate bonds
including foreign bonds, of which the difference between acquisition cost and face value is considered
to be an adjustment of interest. Such bonds are stated at amortized cost under the straight-line
method, cost being determined by the moving average method.
(2) Policy-reserve-matching bonds
The Company classifies bonds held with the aim of matching the duration to outstanding insurance
liabilities within the sub-groups (categorized by insurance type, investment policy and other factors)of individual life insurance and individual annuities as policy-reserve-matching bonds in accordancewith “Temporary Treatment of Accounting and Auditing Concerning Policy-reserve-matching Bonds
in Insurance Industry” (Industry Audit Committee Report No. 21 issued by the JICPA on November 16,2000).
Since the fiscal year starting from April 1, 2016, the Company changed its liability cash flow, which isthe premise of assessing the duration to outstanding insurance liabilities, from a “Term of future 25
years” to a “Term of future 30 years” for the sub-group including Individual life Insurance and Individual
Annuities (excluding Whole Life Insurance with variable interest rate accumulation, Accumulation
Insurance with variable interest rates and New Single Premium Individual Annuity effective on and after
April 2, 2012). This is for the purpose of gradually transitioning the Companyʼs investment portfolio toa liability-matching portfolio. This change did not have any effects on the non-consolidated balance
sheet and non-consolidated statement of income as of and for the year ended March 31, 2017.
(3) Valuation methods of derivative financial instruments
Derivative financial instruments are stated at fair market value.
(4) Revaluation of land
The Company revalued the land for business purposes based on the Act on Revaluation of Land (ActNo. 34 promulgated on March 31, 1998). The difference between fair value and book value resulting
from the revaluation, net of related taxes, is recorded as land revaluation differences as a separate
component of net assets and the related tax is recorded as deferred tax liabilities for revaluation.
■ Date of revaluation: March 31, 2001
■ Method of revaluation as prescribed for in Article 3, Paragraph 3 of the said Act:The calculation is based on the publicly announced appraisal value with certain adjustments set forthin Article 2, Item 1 of the Enforcement Ordinance of the Act on Revaluation of Land (Government
Ordinance No. 119 promulgated on March 31, 1998) or the appraisal value set forth in Article 2, Item
5 of the said Ordinance with certain reasonable adjustments.
Millions of
U.S. Dollars

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

2017

¥

(6,525)2016¥(14,917)

2017

$

(58)

(5) Depreciation of tangible fixed assets
Depreciation of the Companyʼs tangible fixed assets is calculated by the following methods.
■ Tangible fixed assets (excluding lease assets): Declining-balance method
However, buildings are depreciated using the straight-line method.
■ Lease assets related to finance lease transactions that do not transfer ownership: Straight-line
method over the lease term with no residual value(6) Foreign currency translation
Foreign currency-denominated assets and liabilities are translated into Japanese yen at the effective
exchange rate prevailing at the balance sheet date, except for foreign exchange-traded funds for50

Asahi Mutual Life Insurance Company Annual Report 2017

which hedge accounting is not applied and foreign currency-denominated bonds for which hedge
accounting is not applied categorized as available-for-sale securities with fair market value. Suchsecurities are translated into Japanese yen at the average of the effective exchange rate during thefinal month of the fiscal year.
(7) Allowance for possible loan losses
Allowance for possible loan losses is provided in accordance with the Companyʼs standards of selfassessment and write-offs and reserves on credit quality:i)

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

ii) For credit to borrowers who are not currently bankrupt but have a high risk of bankruptcy(hereinafter “not currently bankrupt borrowers”), the Company provides the amounts deemed asnecessary considering the borrowersʼ ability to pay, within the amounts after deductions of theamount expected to be collected through the disposal of collateral or the execution of guarantees.
iii) For credit to borrowers other than the above, the Company provides the amounts calculated bymultiplying the borrowersʼ balance by the actual ratio of bad debt losses on defaults during acertain past period.
All credit is assessed by the relevant departments in accordance with the Companyʼs standards ofself-assessment on credit quality. The results of the assessment are reviewed by the audit department,
which is independent of business-related divisions. Subsequently, allowance for possible loan losses isprovided based on the results of these assessments.
For credit to legally bankrupt borrowers and substantially bankrupt borrowers, the amounts remaining
after deductions of collateral value or the amounts collectible through the execution of guarantees are
written-off directly from the borrowerʼs balance as the estimated uncollectible amounts. The amounts
written-off as of March 31, 2017 and 2016 were ¥215 million (US$1 million) and ¥219 million, respectively.
(8) Accounting for employeesʼ retirement benefits and method of amortizing retirement benefit expenses
Reserve for employeesʼ retirement benefits is presented for the employeesʼ retirement benefits basedon projected benefit obligation and pension plan assets at the balance sheet date.
The Company uses the following methods of accounting in relation to retirement benefits.
■ The retirement benefit obligation is attributed to each period by the benefit formula method.
■ Actuarial differences are amortized under the straight-line method over a period of seven years,
which is shorter than the average remaining years of service of the eligible employees, starting fromthe following year.
■ Prior service cost is charged to income when incurred.
(9) Reserve for price fluctuation
Reserve for price fluctuation is calculated in accordance with Article 115 of the Insurance Business Act.
(10) Accounting for hedging activities
Hedging activities are accounted for in accordance with the “Accounting Standards for Financial
Instruments” (Accounting Standards Board of Japan (“ASBJ”) Statement No. 10).
The Company applies deferred hedge accounting and the exceptional accounting treatment (“Tokureishori”) for interest rate swaps used to hedge the cash flow volatility of certain loans.
The Company also applies fair value hedge accounting for hedging activities related to foreign exchange
rate fluctuation exposures on certain bonds and investment trusts denominated in foreign currencies.
The Company also applies designated hedge accounting (“Furiate-shori”) for currency swaps used
to hedge foreign exchange rate fluctuation exposures on the foreign currency-denominated bonds
issued by the Company.

Non-consolidated Financial Statements

51

The Company also applies designated hedge accounting (“Furiate-shori”) for the foreign currencydenominated transactions other than the above.
The effectiveness of a hedge is mostly assessed by a ratio analysis, comparing the fluctuations in thefair value or cash flows of hedged items and hedging instruments.
(11) Accounting for consumption taxes
The Company accounts for consumption tax and local consumption tax by the tax-exclusion method.
The consumption taxes on certain assets, which are not deductible from consumption taxes withheld
and that are stipulated to be deferred under the Corporation Tax Act of Japan are deferred as prepaid
expenses and amortized equally over five years.
Consumption taxes other than deferred consumption taxes are recognized as an expense when incurred.
(12) Policy reserves
Policy reserves are based on Article 116 of the Insurance Business Act and the premium reserve at theend of fiscal year is calculated by the following method:
In regard to the policies subject to the standard policy reserves, the method as prescribed by the Commissionerof Financial Services Agency (Japanese Ministry of Finance Public Notice No. 48, 1996) is applied.
In regard to the policies not subject to the standard policy reserves, the net level premium method is applied.
(13) Software
Capitalized software for internal use owned by the Company is amortized using the straight-line
method over the estimated useful lives.

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

3. Accounting Standards and Guidances Issued but Not Yet Effective
Notes for the fiscal year ended March 31, 2016
An accounting guidance issued by the fiscal year-end but not yet effective is “Implementation Guidance on
Recoverability of Deferred Tax Assets” (ASBJ Guidance No. 26), and the overview is as follows.
(i) Overview
The accounting treatment on recoverability of deferred tax assets still basically follows the frameworkof the “Auditing Treatment Regarding Judgment of the Recoverability of Deferred Tax Assets” outlinedin the Japanese Institute of Certified Public Accountants Industry Audit Committee Statement No.
66, i.e. a framework for estimating deferred tax assets by classifying entities into five categories andcalculating the amount according to those categories, but it has made necessary revisions on thefollowing treatments.
(a) Accounting treatments of entities not satisfying any of the category criteria from (Category 1) to(Category 5).
(b) Category criteria of (Category 2) and (Category 3).
(c) Accounting treatments of unscheduled deductible temporary differences for entities in (Category2).
(d) Accounting treatments for reasonably estimated period for taxable income before temporary
differences for entities in (Category 3).
(e) Accounting treatments for entities satisfying the category criteria of (Category 4) and also falling in(Category 2) or (Category 3).
(ii) Schedule date of adoption

52

Asahi Mutual Life Insurance Company Annual Report 2017

The above revisions are scheduled to be applied from the beginning of the fiscal year ending March
31, 2017.
(iii) Effects of application of the Accounting Standards and relevant regulations
The effects of the application are under assessment at the time of preparing these consolidated
financial statements.

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

Non-consolidated Financial Statements

53

The balance sheet amounts, fair values and the differences between them of major financial assets andliabilities as of March 31, 2017 and 2016 were as follows:
Millions of Yen
2017
As of March 31
Cash and deposits
Call loans
Monetary claims bought
Trading securities
Held-to-maturity debt securities
Policy-reserve-matching bonds
Available-for-sale securities
Securities
Trading securities
Held-to-maturity debt securities
Policy-reserve-matching bonds
Available-for-sale securities
Loans
Policy loans
Industrial and consumer loans
Total assets
Bonds payable
Loans payable
Total liabilities
Derivative financial instruments
Hedge accounting not applied
Hedge accounting applied

Balance Sheet
Amount¥Fair Value

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

¥

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

Difference
¥

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

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

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

Balance Sheet
Amount
$

286
1,087
295
–
295
–
–
35,932242
3,013
19,27013,405
4,971
513
4,458
42,573
359
864
1,224
59
11
47

Fair Value
$

286
1,087
328
–
328
–
–
39,267242
3,387
22,232
13,405
5,096
513
4,583
46,066
381
862
1,244
59
11
47

Difference
$

–
–
32
–
32
–
–
3,335
–
373
2,961
–
124
–
124
3,493
22
(2)
19
–
–
–

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

54

Asahi Mutual Life Insurance Company Annual Report 2017

Millions of Yen
2016
As of March 31
Cash and deposits
Call loans
Monetary claims bought
Trading securities
Held-to-maturity debt securities
Policy-reserve-matching bonds
Available-for-sale securities
Securities
Trading securities
Held-to-maturity debt securities
Policy-reserve-matching bonds
Available-for-sale securities
Loans
Policy loans
Industrial and consumer loans
Total assets
Loans payable
Total liabilities
Derivative financial instruments
Hedge accounting not applied
Hedge accounting applied

Balance Sheet
Amount¥32,670
181,000
41,906–
41,906––
4,014,885
27,615368,9812,236,439
1,381,849
620,988
68,813552,175
4,891,451
125,000
125,000
3,750
1,102
2,647

Fair Value¥

Difference

32,670
181,000
47,107–
47,107––
4,507,543
27,615
422,762
2,675,317
1,381,849
640,660
68,813571,846
5,408,982
126,598
126,598
3,750
1,102
2,647

¥

–
–
5,200
–
5,200
–
–
492,658–
53,780438,878–
19,671–
19,671
517,531
1,598
1,598
–
–
–

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

(1) Securities including deposits and monetary claims bought which are treated as securities based on“Accounting Standards for Financial Instruments” (ASBJ Statement No. 10)
As for available-for-sale securities of which market value is readily available, domestic stocks, domestic
exchange-traded funds, domestic listed real estate investment trusts, foreign exchange-traded funds
for which hedge accounting is not applied and foreign currency-denominated bonds for which hedge
accounting is not applied are stated at the average of the market value during the final month of
the fiscal year. Available-for-sale securities of which market value is readily available excluding thesecurities mentioned above are stated at the market value at the balance sheet date.
Other securities of which market value is readily available are stated at market value at the balance
sheet date.
Unlisted stocks and others of which market value is not readily available are not subject to fair value
disclosure and are therefore not included in the table above because it is regarded as extremely
difficult to determine their fair value.
The amounts of the unlisted stocks and others reported in the non-consolidated balance sheets were¥121,116 million (US$1,079 million) and ¥123,673 million as of March 31, 2017 and 2016, respectively.
(2) Loans and loans payableAs credit exposure for policy loans without specific repayment periods is limited to the amount of the
cash surrender value, the Company considers book value as fair value with the assumption that fairvalue approximates book value in light of factors such as projected repayment period and interest
terms.
As for industrial and consumer loans and loans payable, the fair value of loans is primarily stated attheoretical prices calculated by discounting the future cash flows to the present value. The fair valueof loans to legally bankrupt borrowers, substantially bankrupt borrowers and not currently bankrupt
borrowers is stated at the amounts by deducting estimated losses from the book value before direct
write-offs.

Non-consolidated Financial Statements55

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

5. Investments and Rental Properties
The Company holds investment and rental properties such as office buildings in Tokyo and other areas. The
carrying amounts and the fair values of investment and rental properties were ¥271,407 million (US$2,419
million) and ¥253,384 million (US$2,258 million) as of March 31, 2017 and ¥280,134 million and ¥255,709
million as of March 31, 2016, respectively. The fair value is mainly based on the value (including someadjustments using the reference prices) of real estate appraisal report prepared by the external real-estateappraiser in accordance with real estate appraisal standards.

6. Securities Lent under Lending Agreements
The amount of securities lent under lending agreements was ¥48,674 million as of March 31, 2016.

7. Loans Receivable
The total amounts of loans to bankrupt borrowers, delinquent loans, delinquent loans three or moremonths past due and restructured loans, which were included in loans, were ¥1,166 million (US$10 million)and ¥1,421 million as of March 31, 2017 and 2016, respectively.
i)

Loans to bankrupt borrowers were ¥0 million (US$0 million) and ¥0 million as of March 31, 2017 and2016, respectively.

ii) Delinquent loans were ¥1,015 million (US$9 million) and ¥1,180 million as of March 31, 2017 and2016, respectively.
iii) Delinquent loans three or more months past due were ¥112 million (US$1 million) and ¥189 million
as of March 31, 2017 and 2016, respectively.
iv) Restructured loans were ¥38 million (US$0 million) and ¥51 million as of March 31, 2017 and 2016,
respectively.
Loans to bankrupt borrowers represent loans, excluding the balances already written-off, which meet theconditions prescribed in Article 96 Paragraph 1 Items 3 and 4 of the Enforcement Regulations of the
Corporate Tax Act. Moreover, accruing interest on these loans is not recorded as income after determiningthat principal of or interest on these loans is unlikely to be collected due to the significant delay inrepayment of principal or interest payments or for other reasons.
Accruing interest on delinquent loans is not recorded as income due to the same reasons as described above,and delinquent loans exclude loans to bankrupt borrowers and loans for which interest payments have beensuspended and rescheduled to assist and support the borrowers in the restructuring of their businesses.
Delinquent loans three or more months past due are loans for which interest payments or repayments ofprincipal are delinquent for three months or more from the due dates under the terms of the related loan
agreements, excluding those loans classified as loans to bankrupt borrowers and delinquent loans.
Restructured loans are loans for which certain concessions favorable to borrowers, such as interest
reduction or exemptions, rescheduling of due dates of principal or interest payments, waivers of claim
or other terms, have been negotiated for the purpose of assisting and supporting the borrowers in the
restructuring of their businesses. This category excludes loans classified as loans to bankrupt borrowers,
delinquent loans and delinquent loans three or more months past due.

56

Asahi Mutual Life Insurance Company Annual Report 2017

The direct write-offs related to loans decreased the amounts of loans to bankrupt borrowers describedabove by ¥22 million (US$0 million) and ¥23 million as of March 31, 2017 and 2016, respectively.
In addition, the direct write-offs related to loans decreased delinquent loans described above by ¥193
million (US$1 million) and ¥196 million as of March 31, 2017 and 2016, respectively.

8. Accumulated Depreciation of Tangible Fixed Assets
Accumulated depreciation of tangible fixed assets totaled ¥277,798 million (US$2,476 million) and ¥275,451
million as of March 31, 2017 and 2016, respectively.

9. Separate Accounts
Total assets in separate accounts provided for in Article 118 of the Insurance Business Act were ¥29,199
million (US$260 million) and ¥28,910 million as of March 31, 2017 and 2016, respectively. The amounts ofseparate account liabilities were the same as separate account assets.

10. Receivables from/Payables to Subsidiaries
The total amounts of receivables from/payables to subsidiaries were ¥275 million (US$2 million) and ¥1,948
million (US$17 million) as of March 31, 2017 and ¥263 million and ¥1,737 million as of March 31, 2016,
respectively.

11. Receivables from/Payables to Directors and Audit Board Members
There were no receivables from directors and audit board members as of March 31, 2017 and 2016. The
total amounts of payables to directors and audit board members were ¥20 million (US$0 million) and ¥20
million as of March 31, 2017 and 2016, respectively.

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

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

2017
¥

¥

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

2016
¥

2017

69,18927,466
41,723
18,97822,744

¥

$

555
185
370
167
202

$

Major components of deferred tax assets/liabilities were as follows:
Millions of
U.S. Dollars

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

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

2016
¥

2017

10,926
9,633
8,653
8,141
9,323
11,666
18,218

$

92
90
75
74
65
57
160

Non-consolidated Financial Statements57

(2) The statutory tax rates were 28.1% and 28.7% for the years ended March 31, 2017 and 2016,
respectively. The main factors causing the differences between the statutory tax rates and the actual
effective tax rates after considering deferred taxes were as follows:
For the years ended March 31

2017

Change of valuation allowance for deferred tax assets
Interest on foundation funds
Impact from a change in the tax rate

2016(7.9)%(4.5)%–

1.3%(8.0)%
4.5%(3) From the end of the year ended March 31, 2016, the statutory tax rate used to measure deferred
tax assets and liabilities recoverable during the period within two years was changed from 28.7% to28.1% and the statutory tax rates used to measure deferred tax assets and liabilities recoverable after
two years was changed from 28.7% to 27.9% in accordance with the “Act for Partial Amendment of
the Income Tax Act” (Act No. 15 in 2016) and the “Act for Partial Amendment of the Local Tax Act”
(Act No. 13 in 2016).
Due to this change, as of March 31, 2016, deferred tax assets decreased by ¥576 million, deferred
tax liabilities for land revaluation decreased by ¥532 million, and deferred income taxes increased by¥1,092 million.

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

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

2017
¥

¥

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

2016¥¥

48,434
1,940
5,701
102
56
44,720

2017
$

$

398
15
50
0
0
364

14. Stocks of Subsidiaries and Affiliates
The amounts of stocks of subsidiaries and affiliates the Company held as of March 31, 2017 and 2016 were
¥5,093 million (US$45 million) and ¥5,093 million, respectively.

15. Pledged Assets
Assets pledged as collateral as of March 31, 2017 and 2016 were securities in the amount of ¥3,748 million(US$33 million) and ¥10,683 million, respectively.

16. Policy Reserves for the Reinsurance Contracts
Policy reserves for the reinsurance contracts provided in accordance with Article 71 Paragraph 1 of the
Enforcement Regulation of the Insurance Business Act (hereinafter “policy reserves for ceded reinsurance”)
were ¥130 million (US$1 million) and ¥84 million as of March 31, 2017 and 2016, respectively.

17. Adjustment to Redemption of Foundation Funds and Appropriation of Net Surplus
The total amounts of adjustment to redemption of foundation funds and appropriation of net surplus
defined in Article 30 Paragraph 2 of the Enforcement Regulation of the Insurance Business Act were¥71,386 million (US$636 million) and ¥63,235 million as of March 31, 2017 and 2016, respectively.

58

Asahi Mutual Life Insurance Company Annual Report 201718. Redemption of Foundation Funds(1) Notes for the fiscal year ended March 31, 2017
Accompanying the redemption of foundation funds totaling ¥11,000 million (US$98 million), in
accordance with Article 56 of the Insurance Business Act, the Company transferred the same amountfrom reserve for fund redemption to reserve for redemption of foundation funds.
(2) Notes for the fiscal year ended March 31, 2016
Accompanying the redemption of foundation funds totaling ¥120,000 million, in accordance with
Article 56 of the Insurance Business Act, the Company transferred the same amount from reserve forfund redemption to reserve for redemption of foundation funds.

19. Additional Foundation Funds(1) Notes for the fiscal year ended March 31, 2017
In accordance with Article 60 of the Insurance Business Act, the Company raised additional foundation
funds totaling ¥11,000 million (US$98 million).
(2) Notes for the fiscal year ended March 31, 2016
In accordance with Article 60 of the Insurance Business Act, the Company raised additional foundation
funds totaling ¥80,000 million. Furthermore the Company carried out financing of additional
subordinated loans totaling ¥40,000 million.

20. Assets with Rights to Sell
The Company has the legal right to sell or collateralize securities borrowed under loan agreements.
The market values of these assets that were not sold or mortgaged as of March 31, 2017 and 2016 were
¥8,295 million (US$73 million) and ¥4,235 million, respectively. No assets were mortgaged as of March 31,2017 and 2016.

21. Commitment LineAs of March 31, 2017 and 2016, there were unused commitment line agreements under which the Company
is the lender of ¥3,500 million (US$31 million) and ¥3,500 million, respectively.

22. Subordinated Bonds
As of March 31, 2017, bonds payable are subordinated bonds, for which the repayments are subordinatedto other obligations.

23. Subordinated Loans
As of March 31, 2017 and 2016, other liabilities included subordinated loans of ¥97,000 million (US$864
million) and ¥125,000 million, respectively, for which the repayments are subordinated to other obligations.

24. Contributions to Policyholders Protection Corporation
The estimated future contributions to the Life Insurance Policyholders Protection Corporation of Japan
under Article 259 of the Insurance Business Act as of March 31, 2017 and 2016 were ¥10,391 million (US$92
million) and ¥11,546 million, respectively. These contributions are charged as operating expenses in thefiscal years in which they are paid.

Non-consolidated Financial Statements5925. Reserve for Employeesʼ Retirement Benefits(1) Summary of retirement benefit plans
As defined benefit plan, the Company has defined benefit corporate pension plans, which are fundedtype, and lump-sum retirement allowance plans which are non-funded type but resulted in funded type
due to setting of employee pension trust.
(2) Defined benefit plani)

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

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

2017

2016

2017

¥

49,209
1,990
492
(251)
(5,190)¥51,075
2,152
510
1,005
(5,535)

$

438
17
4
(2)
(46)

¥

46,250¥49,209$412ii) Reconciliation of beginning and ending balance of pension plan assets
Millions of
U.S. Dollars

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

2017
¥

¥

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

2016
¥

6,445
71
360
131
(191)
6,816

¥

2017
$

60
0
15
1
(1)
75

$

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

Millions of Yen
As of March 31
a. Funded plan retirement benefit obligationb. Pension plan assets
c. a + b
d. Unrecognized actuarial differences
e. Reserve for employeesʼ retirement benefits

2017
¥

¥

46,250(8,493)37,757(449)
37,307

2016¥

49,209(6,816)42,392(3,296)39,096

¥

2017
$

412
(75)
336
(4)
332

$

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

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

60

Asahi Mutual Life Insurance Company Annual Report 2017

2017

2016

2017

¥

1,990
492
(58)
897

¥

2,152
510
(71)
1,630

$

17
4
(0)
8

¥

3,321

¥

4,222

$

29

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

2017

Stocks
Bonds
Others
Total

2016

54%
7%
39%
100%

44%
8%
48%
100%

vi) Method for determining the expected long-term rate of return
To determine the expected long-term rate of return on pension plan assets, the Company takes into
account the present and future allocation of pension plan assets, and the present and expected
future long-term rate of return on the diverse range of assets that makes up the pension assets.
vii) Underlying actuarial assumptions
The main underlying actuarial assumptions were as follows:
As of March 31

2017

Discount rate
Expected long-term rate of return on pension plan assets
Defined benefit corporate pension plans

2016

1.0%
0.9%
1.6%

1.0%
1.1%
1.9%

III. Notes to Non-consolidated Statements of Income
1. Transactions with Subsidiaries
The total amounts of revenues and expenditures in connection with subsidiaries were ¥431 million (US$3
million) and ¥9,990 million (US$89 million) for the fiscal year ended March 31, 2017 and ¥203 million and¥10,279 million for the fiscal year ended March 31, 2016, respectively.

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

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

2017
¥

2016

25,787
2,725
11,875

¥

2017

3,320
712
477

$

229
24
105

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

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

2017
¥

2016

24
184
10,816

¥

2017

111
5,649
4,589

$

0
1
96

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

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

2017
¥

2016
11
5

¥

2017

1,629
18

$

0
0

Non-consolidated Financial Statements

61

Losses on trading securities were losses on sales of ¥16 million for the fiscal year ended March 2016.
Losses on derivative financial instruments included net valuation losses of ¥121 million (US$1 million) andgains of ¥620 million for the fiscal years ended March 31, 2017 and 2016, respectively.

3. Policy Reserves for the Reinsurance Contracts
Provisions of policy reserves for ceded reinsurance considered in calculating reversal of policy reserves forthe fiscal years ended March 31, 2017 and 2016 were ¥46 million (US$0 million) and ¥26 million, respectively.

4. Impairment Losses of Fixed Assets
For the fiscal years ended March 31, 2017 and 2016, impairment losses of fixed assets by the Company
were as follows:(1) Method of grouping
Real estate and other assets used for insurance business operations are classified as one asset groupas a whole. Other assets such as real estate for rent and unused real estate are classified as one groupindividually.
(2) Background information on recognizing the impairment losses
As the profitability of certain real estate for rent dropped down significantly due to a decrease in thelevel of rental income and a declining trend in the market prices of land, the Company reduced thebook values of such real estate for rent and unused real estate to their recoverable amounts. The writedowns were recognized as impairment losses and included in the extraordinary losses.
(3) Asset groups for which impairment losses were recognized and losses by classification of fixed assets
Millions of Yen

Millions of
U.S. Dollars

2017

2017

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

¥

¥

357
418
775

$

3
3
6

403
154
557

3
1
4

760
572
1,333

6
5
11

$

* The disclosures for the fiscal year ended March 31, 2016 has been omitted since this is considered immaterial.

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

62

Asahi Mutual Life Insurance Company Annual Report 2017

Ernst & Young ShinNihon LLC
Hibiya Kokusai Bldg.
2-2-3 Uchisaiwai-cho, Chiyoda-ku
Tokyo, Japan 100-0011

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

Independent Auditor’s Report
The Board of Directors
Asahi Mutual Life Insurance Company
We have audited the accompanying non-consolidated financial statements of Asahi Mutual Life Insurance
Company, which comprise the non-consolidated balance sheets as of March 31, 2017and 2016, and the nonconsolidated statements of income, changes in net assets, and non-consolidated statements of proposed
appropriation of surplus(loss) for the years then ended and a summary of significant accounting policies, otherexplanatory information, and supplementary schedule, all expressed in Japanese yen.
Management’s Responsibility for the Non-consolidated Financial Statements
Management is responsible for the preparation and fair presentation of these non-consolidated financial
statements in accordance with the Insurance Business Act and related rules and regulations applicable to themutual life insurance industry and accounting principles generally accepted in Japan, and for designing andoperating such internal control as management determines is necessary to enable the preparation and fairpresentation of the non-consolidated financial statements that are free from material misstatement, whether due
to fraud or error.
Auditor’s Responsibility
Our responsibility is to express an opinion on these non-consolidated financial statements based on our audits.
We conducted our audits in accordance with auditing standards generally accepted in Japan. Those standards
require that we plan and perform the audit to obtain reasonable assurance about whether the non-consolidated
financial statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the nonconsolidated financial statements. The procedures selected depend on the auditor’s judgment, including theassessment of the risks of material misstatement of the non-consolidated financial statements, whether due tofraud or error. The purpose of an audit of the non-consolidated financial statements is not to express an opinion
on the effectiveness of the entity’s internal control, but in making these risk assessments the auditor considers
internal controls relevant to the entity’s preparation and fair presentation of the non-consolidated financial
statements in order to design audit procedures that are appropriate in the circumstances. An audit also includes
evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates madeby management, as well as evaluating the overall presentation of the non-consolidated financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit
opinion.
OpinionIn our opinion, the non-consolidated financial statements referred to above present fairly, in all material respects,
the non-consolidated financial position of Asahi Mutual Life Insurance Company as of March 31, 2017and 2016,
and its non-consolidated financial performance for the years then ended in accordance with the Insurance
Business Act and related rules and regulations applicable to the mutual life insurance industry and accounting
principles generally accepted in Japan.
Convenience Translation
We have reviewed the translation of these non-consolidated financial statements into U.S. dollars, presented forthe convenience of readers, and, in our opinion, the accompanying non-consolidated financial statements havebeen properly translated on the basis described in Note 2.

May 17, 2017
Tokyo, Japan

A member firm of Ernst & Young Global Limited

Non-consolidated Financial Statements

63

8. Company Overview (as of March 31, 2017)

Tokyo Head Office

Tama Head OfficeName:

Asahi Mutual Life Insurance Company

Founded:March 1, 1888

Total Assets:

5.3982 trillion yen

Offices:

58 branches; 625 sales offices (as of April 1, 2017)

Employees:

16,449 (staff: 4,327; sales representatives: 12,122)

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

64

Daitabashi Office

Asahi Mutual Life Insurance Company Annual Report 2017