第一生命ホールディングス（8750） – Supplementary Materials for the Fiscal Year Ended March 31, 2022 (The Dai-ichi Life Insurance Company, Limited)

[Unofficial Translation] May 12, 2022 Seiji Inagaki President and Representative Director Dai-ichi Life Holdings, Inc. Code: 8750 (TSE Prime section) Supplementary Materials for the Fiscal Year Ended March 31, 2022 (The Dai-ichi Life Insurance Company, Limited) – 0 – T he Dai-ichi Life Insurance Company, Limited [Contents]Financial Summary for the Fiscal Year Ended March 31, 20221.Business Highlights………P.12.Policies in Force as of March 31, 2022 by Benefit………P.23.Investment of General Account Assets………P.34.Unaudited Balance Sheet………P.125.Unaudited Statement of Earnings………P.136.Unaudited Statement of Changes in Net Assets………P.147.Breakdown of Ordinary Profit (Fundamental Profit)………P.368.Disclosed Claims Based on Categories of Obligors………P.379.Solvency Margin Ratio………P.3810.Status of Separate Account for the Fiscal Year Ended March 31, 2022………P.3911.Consolidated Financial Summary………P.43Attached: Supplementary Materials for the Fiscal Year Ended March 31, 2022.For further information please contact: Please note that this is an unofficial translation of the original disclosure in Japanese.May 12, 2022Financial Results for the Fiscal Year Ended March 31, 2022TEL: +81-(0)50-3780-6930 Corporate Planning Dept.,The Dai-ichi Life Insurance Company, LimitedThe Dai-ichi Life Insurance Company, Limited (the ”Company”; President: Seiji Inagaki) announces itsfinancial results for the fiscal year ended March 31, 2022.- 1 – T he Dai-ichi Life Insurance Company, Limited 1. Business Highlights(1) Annualized Net PremiumPolicies in Force(billions of yen)As of March 31, 2021As of March 31, 2022% of March 31, 2020 total% of March 31, 2021 totalIndividual insurance1,538.297.9 1,514.098.4 Individual annuities538.799.9 538.6100.0 Total2,076.998.4 2,052.798.8 Medical and survival benefits696.8100.3 708.8101.7 New Policies(billions of yen)As of March 31, 2021As of March 31, 2022% of March 31, 2020 total% of March 31, 2021 totalIndividual insurance51.869.9 63.8123.1 Individual annuities9.763.1 10.7110.1 Total61.668.7 74.5121.0 Medical and survival benefits36.767.0 48.2131.6 Note: 1.Annualized net premium is calculated by using multipliers for various premium payment terms to the premium per payment. In single premiumcontracts, the amount is calculated by dividing the premium by the duration of the policy. 2.Annualized net premium for medical and survival benefits includes (a) premium related to medical benefits such as hospitalization and surgerybenefits, (b) premium related to survival benefits such as specific illness and nursing benefits, and (c) premium related to premium waiver benefits, in which disability cause is excluded but causes such as specific illness and nursing care are included. 3.New policies include net increase by conversion. (2) Sum Insured of Policies in Force and New PoliciesPolicies in ForceAmount(thousands)% of March 31, 2020total(billions of yen)% of March 31, 2020totalIndividual insurance20,274109.783,664.393.4Individual annuities2,093100.111,012.698.3Individual insurance and annuities22,367108.794,676.993.9Group insurance- – 50,842.5103.6Group annuities- – 6,446.9102.6Amount(thousands)% of March 31, 2021total(billions of yen)% of March 31, 2021totalIndividual insurance21,642106.877,641.992.8Individual annuities2,103100.510,833.998.4Individual insurance and annuities23,746106.288,475.993.5Group insurance- – 50,043.598.4Group annuities- – 6,169.995.7Note: 1.Policy amount in force of individual annuities is equal to (a) the funds to be held at the time annuity payments are to commence for an annuity for which payment has not yet commenced, and (b) the amount of policy reserve for an annuity for which payments have commenced. 2.Policy amount in force of group annuities is equal to the amount of outstanding corresponding policy reserve.3.For products covered by multiple insurance agreements after April 2018, the number of policies for each product is shown as one.New PoliciesAmount(thousands)% of March 31, 2020total(billions of yen)New BusinessNet increase byconversion% of March 31, 2020totalIndividual insurance3,24270.1126.31,509.0(1,382.6)14.9Individual annuities6954.9251.9254.6(2.7)58.3Individual insurance and annuities3,31169.7378.31,763.6(1,385.3)29.5Group insurance- 190.8190.860.2Group annuities- 0.10.1285.8Amount(thousands)% of March 31, 2021total(billions of yen)New BusinessNet increase byconversion% of March 31, 2021totalIndividual insurance3,842118.5(257.1)1,418.1(1,675.2)- Individual annuities84123.0280.3284.7(4.4)111.3Individual insurance and annuities3,927118.623.21,702.9(1,679.7)6.1Group insurance- 204.1204.1107.0Group annuities- 0.00.038.2Note: 1.Number of new policies is the sum of new business and policies after conversion. 2.Amount of new policies for individual annuities, both new business and net increase by conversion, is equal to the funds to be held at the time annuity payments are to commence.3.Amount of new policies for group annuities is equal to the initial premium payment. 4.For products covered by multiple insurance agreements after April 2018, the number of policies for each product is shown as one.As of March 31, 2021As of March 31, 2022Number of policies Number of policies Number of policiesNumber of policiesYear ended March 31, 2021Year ended March 31, 2022 – 2 – T he Dai-ichi Life Insurance Company, Limited 2. Policies in Force as of March 31, 2022 by BenefitIndividual insurance (I)Individual annuities (II)Group insurance (III)Total (I+II+III)Number(thousands)Amount(billions of yen)Number(thousands)Amount(billions of yen)Number(thousands)Amount(billions of yen)Number(thousands)Amount(billions of yen)Death benefitsgeneral20,73867,957.2－ 0.024,61450,038.645,353117,995.8accidental[ 1,764][ 7,424.8][ 962][ 442.3][ 2,656][ 1,384.7][ 5,382][ 9,251.9]others[ 0][ 0.0]－ － [ 64][ 54.2][ 64][ 54.2]Survival benefits9049,684.72,10310,833.964.83,01420,523.5Hospitalization benefitsaccidental[ 8,251][ 45.8][ 38][ 0.1][ 1,316][ 0.7][ 9,605][ 46.8]illness[ 8,238][ 45.8][ 38][ 0.1][ 0][ 0.0][ 8,278][ 46.0]others[ 2,983][ 17.0][ 29][ 0.1][ 74][ 0.1][ 3,088][ 17.3]Injury benefits[ 5,162]－ [ 52]－ [ 2,468]－ [ 7,683]－ Surgery benefits[ 8,497]－ [ 38]－ － － [ 8,536]－ Group annuities (IV)Financial insurance (V)Financial annuities (VI)Total (IV+V+VI)Number(thousands)Amount(billions of yen)Number(thousands)Amount(billions of yen)Number(thousands)Amount(billions of yen)Number(thousands)Amount(billions of yen)Survival benefits7,4376,169.958254.83270.77,5276,495.5 Medical care insuranceGroup disabilityNumber(thousands)Amount(billions of yen)Number(thousands)Amount(billions of yen)Hospitalization benefits4301.1110.7Note:1.Figures in [ ] show numbers and amounts of additional benefits and of benefits to be paid from riders.2.Numbers of group insurance, group annuities, financial insurance, financial annuities, medical care insurance and group disability show the numbersof insureds. 3.Amounts in ‘Survival benefits’ show the sum of (a) the funds to be held at the time annuity payments are to commence for an annuity for which payment has not yet commenced, and (b) the amount of policy reserve for an annuity for which payments have commenced for individual annuities, group insurance (annuity riders) and financial annuities. The amounts in ‘Survival benefits’ show the amount of outstanding corresponding policyreserve for group annuities, financial insurance and others.4.Amounts in ‘Hospitalization benefits’ show the amount of hospitalization benefit to be paid per day. 5.Amount in ‘Hospitalization benefits’ for medical care insurance shows the daily amount to be paid for hospitalization from illness. 6.Amount in group disability insurance shows the amount of disability benefits paid per month. 7.For others (such as underwritten reinsurance, etc.) the number of insureds and amount of policies were 2,726 thousand and 25,545.0 billion yen, respectively. Disability benefits 3.Investment of General Account Assets in Fiscal 2021 (1) Investment Status of Assets in Fiscal 2021 ①Operational environment In fiscal 2021, the Japanese economy got reversal against the recession in fiscal 2020, but the recovery speed remained moderate due to COVID-19 pandemic and the voluntary restraint. Although in third quarter, when the spread of infection settled down for a moment, domestic demand recovered strongly, since the beginning of 2022, consumption dropped again due to drastic increasing infected people with the Omicron COVID-19 variant. And in overseas market, the U.S. economy recovered as employment statistics and income improved in the environment which had prolonged supply constraints and rising prices put downward pressure on the economy. On the other hand, the growth of the Chinese economy slowed down from the downturn in the real estate market and the curtailment of economic activities under the Zero-COVID policy. Amid these economic conditions, the operational environment was as follows. Yields on 10-year JGBs continued to be controlled at around 0% as the Bank of Japan held its accommodative monetary policy. However, overseas interest rates have risen sharply because central banks of each country have tightened their monetary policies since the beginning of the year, and domestic interest rates followed them. Yield on ten-year government bonds: April 1, 2021 March 31, 2022 0.090% 0.210% The Nikkei 225 Stock Average experienced a moderate decline in fiscal 2021 as the corporate growth slowed due to the COVID-19 and soaring resource prices. It temporarily recovered to the 30,000yen level in the summer with the expectation of a new government, and exceeded the highest level in 31 years. Nikkei 225 Stock Average: TOPIX: April 1, 2021 March 31, 2022 April 1, 2021 March 31, 2022 29,178 27,821 1,954 1,946 The JPY/USD rate continued to depreciate toward the latter half of the fiscal year due to the widening of the interest rates’ difference between Japan and the U.S., against the backdrop of the Federal Reserve Board’s (FRB) tightening monetary policy. The JPY/EUR remained broadly unchanged as the European Central Bank (ECB) maintained its accommodative stance. Toward the end of the fiscal year, the JPY depreciation was strengthened by the rise in global interest rates, therefore the JPY/EUR rate rose. JPY /USD: JPY/EUR: April 1, 2021 March 31 2022 April 1, 2021 March 31, 2022 ¥110.71 ¥122.39 ¥129.80 ¥136.70 – 3 – T he Dai-ichi Life Insurance Company, Limited ②Investment Performance Overview With regard to asset management in fiscal 2021, the Company kept to take the investment strategy that was to invest mainly in fixed income assets, such as public and corporate bonds, based on our risk -taking policy and medium-to long-term asset management policy. In particular, from the perspective of ensuring financial soundness against fluctuations in financial markets and improving capital efficiency, it sold stocks and increased the amount of policy-reserve-matching bonds, mainly super-long-term government bonds to reduce market-related risks such as interest rates and stocks. With regard to risk weighted assets such as foreign securities, the Company flexibly and rapidly allocated funds keeping an eye on to market trends. Furthermore, it promoted investments and loans in infrastructure, alternative assets and real assets aimed at improving the profitability of the portfolio and diversifying investments. Operational status Increase For the reduction of interest rate risk, policy-reserve-matching bonds, mainly super-long-term bonds were increased. With regard to credit risk assets such as corporate bonds and securitized products, the overall amount was increased due to the strengthening of selection based on credit spreads commensurate with risk and the diversification of issues. Rem ained flat The amount was mostly remained flat new loans offset by existing loans redemption . New loans were implemented to earn the excess returns commensurate with credit risk and the fair spread compared with corporate bond market. Decrease The domestic stocks were sold to promote the reduction of market risk associated with stockholdings. On the other hand, in order to improve the profitability of our portfolio, investments to sector and companies expected mid-long term growth, were implemented based on our due diligence. , Decrease The amount was decreased as a result followed by selling in consideration of market trends related interest rates and foreign exchange rates in Japan and overseas. Improving investment efficiency was worked by diversifying bond types and currencies to improve investment efficiency. Decrease The amount was decreased as a result followed by flexible fund allocation keeping an eye on market trends. In addition, our fund managers and investment styles, region were strengthened diversification by utilizing in-house management and external management companies. Increase The balance increased due to new acquisitions of properties and others. In addition to investing in high-quality offices, in order to diversify applications, we sought to improve the profitability and the soundness of our portfolio by promoting investments in new properties, such as housing, commerce, and logistics, and by replacing properties based on occupancy status, regional characteristics, and age. Assets Bonds and debentures Loans receivable Domestic stocks Foreign bonds and debentures Foreign Stocks Real estate (NOTE)Changes in each asset are based on the balance sheet value – 4 – T he Dai-ichi Life Insurance Company, Limited Investment income was decreased by JPY 23.6 billion year on year to JPY 1.2056 trillion, as the decrease in interest and dividend income and gain on sales of securities. Investment expense decreased by JPY 46.4 billion year on year to JPY 361.6 billion, as improvements in derivative transaction losses and foreign exchange losses outweighed increasing in losses on sales of securities. As a result, net investment income in the general account increased by JPY 22.8 billion year on year to JPY 843.9 billion. ③Investment Outlook in Fiscal 2022 In fiscal 2022, the Japanese economy is expected to increase resilience due to the progress of vaccination and the government’s demand stimulus measure, although there is still a high degree of uncertainty by the unpredictable spread of COVID-19. However, expected global supply constraints and rising resource prices, deterioration in corporate earnings and a contraction in household disposable income, economic growth is expected to remain moderate. Although the U.S. economy has continued to grow strongly, the Company expect to continue highly volatile operating environment to continue as monetary policy is likely to tighten rapidly. In addition, the Company believe that attention should continue to be paid to the increasing volatility of financial markets due to political events and geopolitical risks in each country. Domestic interest rates are forecast to remain at low levels for the foreseeable future as the Bank of Japan’s monetary easing policy is expected to continue amid a moderate pace of recovery in the Japanese economy. However, it is necessary to pay attention to the possibility that expectations for policy changes may increase in response to global monetary tightening and the situation in inflation. Domestic stocks are expected to be supported by the Bank of Japan’s monetary easing policy and the government’s economic stimulus measures. On the other hand, the Company should be mindful of the possibility that volatility will increase due to changes in each country monetary policy, a sharp rise in interest rates, political events in each country, and geopolitical risks. < Currency> As for the JPY/USD, it is anticipated developments that are influenced by developments in U.S. monetary policy and fiscal expansion. The Company expect that the USD will appreciate amid the acceleration of monetary tightening in the U.S. On the other hand, it is anticipated that the acceleration of monetary tightening by other countries following will work to depreciate the USD, and counteracts the trend as well. In addition, it is necessary to pay attention to the possibility that volatility will increase due to geopolitical risks, etc. With regard to the JPY/EUR, it is anticipated that the pace of economic recovery in the euro area will be relatively moderate, as in Japan, but it will be depended on the pace of recovery and trends in European Central Bank (ECB) monetary policy. However, it is necessary to pay attention to the possibility that volatility will be increased due to changes in the political situation in Europe. – 5 – T he Dai-ichi Life Insurance Company, Limited ④Asset Management Policy for Fiscal 2022 With regard to the investment policy for fiscal 2022, the Company will continue to invest in portfolios centered on fixed income assets such as public and corporate bonds based on our risk -taking policy and medium-to long-term asset management policy. In addition, the Company will continue risk reduction efforts to ensure financial soundness against financial market fluctuations and improve capital efficiency. And to ensure profitability and strengthen the diversification of portfolio risks, the Company will actively invest in selective credit investments, investments and loans in the infrastructure sector, alternative assets and real assets. Investment policy Assets Bonds debentures and Increase Loans receivable Domestic stocks Decrease Stable management as a core asset of ALM will be maintained. Our policy is to reduce interest rate risk by adding policy reserve-matching bonds and implementing asset duration adjustments. In light of the current low interest rate environment, our policy is to actively engage in infrastructure-related and other investments from the perspective of improving investment efficiency within fixed income assets. Decrease While proactively respond to capital needs in growth areas will be maintained, the balance will be expected to decrease due to the impact of redemptions and other factors. In addition, the Bank’s policy is to engage in new lending by setting appropriate lending rates, while taking into account the analysis of borrowers’ credit risks and credit spread trends in the corporate bond market. The Company’s policy is to decrease the amount due to selling aimed to reduce market risk associated with stockholdings. However, the Company’s policy is to flexibly control the balance depending on the level of stock prices, while at the same time implementing reallocation to industries and brands and venture investments based on growth potential and other factors. Depending on interest rates and exchange rates Open foreign bonds will be flexibly allocated in accordance with risk tolerance and exchange rate trends. It will be also flexibly adjusted the amount of currency-hedged foreign bonds with taking into account interest rate differentials at home and abroad. Depending on the foreign stock price The Company’s policy is to accumulate alternative assets with the aim of securing profitability and diversifying the risk of its portfolio. However, the Company’s policy is to flexibly control the outstanding balance of foreign stocks, depending on the level of stock prices. It will be also worked to improve and stabilize the profitability of our portfolio while diversifying investment styles and geographically diversifying. Increase The Company’s policy is to increase the balance due to new acquisitions of properties and others. In order to diversify of building uses, the Company will promote investment in new properties such as residence, commerce, and logistics, and improve the profitability and soundness of our portfolio by replacing properties based on occupancy status, regional characteristics, construction age, and other factors. Foreign bonds debentures and Foreign Stocks Real estate – 6 – T he Dai-ichi Life Insurance Company, Limited – 7 – T he Dai-ichi Life Insurance Company, Limited (2) Investment Income (General account)(millions of yen)Year ended March 31, 2021Year ended March 31, 2022Amount%Amount%836,57168.1831,16368.9Interest from bank deposits1,6760.11,3750.1Interest and dividends from securities712,30857.9708,23758.7Interest from loans39,1323.238,8983.2Rental income73,7006.071,1555.9Other interest and dividends9,7540.811,4971.0—-4,8490.47950.1—-371,29730.2351,10629.1Gains on sale of domestic bonds79,5506.572,5956.0Gains on sale of domestic stocks147,41712.0168,29114.0Gains on sale of foreign securities142,54411.6108,8409.0Others1,7840.11,3780.115,3701.320,2071.7——–Reversal of reserve for possible loan losses—-Reversal of reserve for possible investment losses—-1,2020.12,4100.21,229,291100.01,205,684100.0(3) Investment Expense (General account)(millions of yen)Year ended March 31, 2021Year ended March 31, 2022Amount%Amount%12,3583.010,3752.9————125,32330.7221,59761.3Losses on sale of domestic bonds5560.122,4186.2Losses on sale of domestic stocks30,3827.436,52910.1Losses on sale of foreign securities89,60622.0162,20544.8Others4,7781.24430.11,2850.38,4792.3Losses on valuation of domestic bonds—-Losses on valuation of domestic stocks1,2800.34,9081.4Losses on valuation of foreign securities40.01,7500.5Others–1,8210.56,1751.53,5451.0172,87942.438,62710.731,5867.710,4952.91,8130.44,3931.22950.12470.1430.0410.013,1713.213,4393.743,21910.650,44213.9408,153100.0361,686100.0Depreciation of real estate for rent and othersOther investment expensesTotalLosses on redemption of securitiesDerivative transaction lossesForeign exchange lossesProvision for reserve for possible loan lossesProvision for reserve for possible investment lossesWrite-down of loansLosses on valuation of securitiesGains on redemption of securitiesDerivative transaction gainsForeign exchange gainsOther investment incomeTotalInterest expensesLosses on trading account securitiesLosses on money held in trustLosses on investments in trading securitiesLosses on sale of securitiesGains on sale of securitiesInterest and dividendsGains on trading account securitiesGains on money held in trustGains on investments in trading securities – 8 – T he Dai-ichi Life Insurance Company, Limited (4) Asset Composition(millions of yen)As of March 31, 2021As of March 31, 2022Carrying amount%Carrying amount%768,3522.0906,3622.4- – – – – – – – 252,1400.7239,8960.6- – – – 7,7160.012,1640.032,530,29385.931,697,68484.616,740,11344.217,402,78246.53,569,1099.43,292,7138.811,402,67730.110,143,48527.1Foreign bonds9,811,24025.98,620,15923.0Foreign stocks and other securities1,591,4364.21,523,3254.1818,3922.2858,7022.32,576,0646.82,569,1906.9292,0800.8269,5040.72,283,9836.02,299,6856.11,076,4942.81,120,6733.0766,2692.0829,9522.2- – – – 642,3151.7922,8732.5(2,358)(0.0)(6,501)(0.0)37,851,018100.037,462,344100.010,428,86827.69,520,91125.4Note: “Real estate” represents total amount of land, buildings and construction in progress.Cash, deposits, and call loansTrading account securitiesMoney held in trustSecurities repurchased under resale agreementsMonetary claims boughtDeposit paid for securities borrowing transactions SecuritiesDomestic bondsDomestic stocksForeign securitiesOther securitiesForeign currency-denominated assetsLoansPolicy loansOrdinary loansTotalReal estateDeferred tax assets OthersReserve for possible loan lossesReal estate for rent – 9 – T he Dai-ichi Life Insurance Company, Limited (5) Other Information on InvestmentsA. Rates of return (%)Year ended March 31, 2021Year ended March 31, 20220.030.05- – – – 1.580.88- – 16.567.932.602.67Domestic bonds2.072.01Domestic stocks10.6615.29Foreign securities2.192.02Foreign bonds1.511.03Foreign stocks and other securities7.597.951.501.36Ordinary loans1.161.004.594.082.362.41Foreign investments2.182.00value basis.2.”Foreign investments” include yen-denominated assets.B. Average daily balance(billions of yen)Year ended March 31, 2021Year ended March 31, 2022887.2771.8- – – – 233.9250.0- – 29.210.028,718.829,091.6Domestic bonds15,934.816,666.5Domestic stocks1,510.11,405.6Foreign securities10,596.610,144.5Foreign bonds9,407.68,690.0Foreign stocks and other securities1,188.91,454.5Loans2,572.32,576.6Ordinary loans2,261.82,295.9Real estate779.5790.9Total34,753.235,080.9Foreign investments11,309.710,910.2LoansReal estateTotalSecuritiesNote: 1.”Foreign investments” include yen-denominated assets.Note: 1.Rates of return above are calculated by dividing the net investment income included in ordinary profit by the average daily balance on a book Cash, deposits, and call loansSecurities repurchased under resale agreementsSecuritiesDeposit paid for securities borrowing transactionsMonetary claims boughtTrading account securitiesMoney held in trustCash, deposits, and call loansMoney held in trustMonetary claims boughtTrading account securitiesDeposit paid for securities borrowing transactionsSecurities repurchased under resale agreements- 10 – T he Dai-ichi Life Insurance Company, Limited C. Valuation gains and losses on trading securities(millions of yen)Carrying amount onthe balance sheetValuation gains(losses) included in thestatement of earningsCarrying amount onthe balance sheetValuation gains(losses) included in thestatement of earnings7,7162,99712,164540- – – – 7,7162,99712,164540D. Fair value information on securities (except for trading securities)(millions of yen)Book valueFair valueGains (losses)GainsLossesAs of March 31, 202147,22148,8961,6751,675- 47,22148,8961,6751,675- – – – – – 13,332,17115,520,0872,187,9152,270,21182,29513,251,16615,437,9842,186,8182,269,05482,23581,00582,1021,0971,15659343451108108- 15,646,36419,167,4613,521,0973,740,863219,7663,034,1483,441,726407,577409,8762,2981,407,1663,518,5312,111,3652,155,40744,04210,321,08511,290,708969,6221,122,671153,048Foreign bonds8,991,5819,730,234738,653877,549138,895Foreign stocks and other securities1,329,5041,560,473230,969245,12114,152566,586593,35726,77046,83920,068246,377252,1405,7626,06830671,00070,997(2)02Total29,026,10034,736,8975,710,7966,012,858302,06116,332,53518,928,6072,596,0712,680,60584,5331,407,1663,518,5312,111,3652,155,40744,04210,402,43411,373,262970,8281,123,936153,1089,072,5879,812,337739,750878,706138,9551,329,8471,560,924231,077245,23014,152566,586593,35726,77046,83920,068246,377252,1405,7626,06830671,00070,997(2)02As of March 31, 202247,52248,407884884- 47,52248,407884884- – – – – – 14,257,65915,739,2251,481,5661,785,121303,55414,188,05715,668,9801,480,9231,784,464303,54069,60270,24464265613343608265265- 14,107,74317,018,2582,910,5143,218,564308,0492,844,7433,167,202322,459334,38811,9281,288,0083,249,9961,961,9871,996,91234,9259,107,5779,698,712591,135843,919252,784Foreign bonds8,172,4268,550,557378,131598,593220,461Foreign stocks and other securities935,1511,148,155213,004245,32632,322549,207579,45330,24637,7147,468235,206239,8964,6895,62893983,00082,997(2)02Total28,413,26832,806,5004,393,2315,004,835611,60317,080,32318,884,5911,804,2682,119,737315,4691,288,0083,249,9961,961,9871,996,91234,9259,177,5229,769,566592,043844,841252,7988,242,0288,620,802378,774599,249220,475935,4941,148,763213,269245,59232,322549,207579,45330,24637,7147,468235,206239,8964,6895,62893983,00082,997(2)021. The table above includes assets which are considered appropriate to handle as securities as defined in the Financial Instruments and Exchange Act.2. Stocks and partnerships that do not have market value are excluded from this table. Partnerships are mainly anonymous partnership, investment partnerships, etc.They are not subject to market value disclosure of “Accounting Standards Application Guidelines for Market Value Calculation” (Corporate Accounting Standards Application Guideline No. 31, July 4, 2019)Domestic bondsOther securitiesForeign bondsDomestic bondsOther securitiesPolicy-reserve-matching bondsStocks of subsidiaries and affiliatesAvailable-for-sale securitiesDomestic stocksForeign securitiesDomestic bondsForeign bondsMonetary claims boughtDomestic bondsDomestic stocksCertificates of depositAs of March 31, 2022Held-to-maturity bondsTrading securitiesMoney held in trustAs of March 31, 2021Trading account securitiesNote:Monetary claims boughtForeign stocks and other securitiesForeign securitiesForeign bondsOther securitiesForeign securitiesForeign bondsForeign stocks and other securitiesMonetary claims boughtDomestic stocksPolicy-reserve-matching bondsDomestic bondsAvailable-for-sale securitiesForeign bondsStocks of subsidiaries and affiliatesCertificates of depositCertificates of depositDomestic bondsHeld-to-maturity bondsDomestic bondsForeign bondsCertificates of depositDomestic bondsDomestic stocksForeign securitiesOther securitiesMonetary claims bought – 11 – T he Dai-ichi Life Insurance Company, Limited * Carrying amounts of securities without quoted market prices are as follows:(millions of yen)As of March 31, 2021As of March 31, 2022 Stocks of subsidiaries and affiliated companies176,772198,792Available-for-sale securities131,401452,622Domestic stocks44,99337,160Foreign stocks27,1749,004Others59,232406,457Total308,173651,415Note: 1.The table above includes assets which are considered appropriate to handle as securities as defined in the Financial Instruments and Exchange Act.2.The amounts of foreign exchange valuation gains (losses) on foreign securities without quoted market prices and which are listedin the table above are as follows:loss of 1,841 million yen as of March 31, 2021 and gain of 32,119 million yen as of March 31, 2022.3.Partnerships are mainly anonymous partnership, investment partnerships, etc. They are not subject to market value disclosure of “Accounting Standards Application Guidelines for Market Value Calculation” (Corporate Accounting Standards Application Guideline No. 31, July 4, 2019).(6) Fair Value Information on Money Held in Trust(millions of yen)GainsLossesAs of March 31, 20217,7167,7163,2354,6771,442As of March 31, 202212,16412,1649732,1611,187Note: 1. Fair value in the table above is based on the valuation conducted by the fiduciary on a reasonable basis. 2. “Gains (losses)” include gains (losses) from derivative transactions within the trusts. ・The ending balance was zero for held-to-maturity bonds, policy-reserve-matching bonds and other money held in trustas of March 31, 2021 and March 31, 2022.Gains (losses)Fair valueCarrying amounton the balancesheet – 12 – T he Dai-ichi Life Insurance Company, Limited 4. Unaudited Balance Sheet(millions of yen)As of March 31,2021As of March 31,2022As of March 31,2021As of March 31,2022380,173441,99730,844,44330,131,727 0 0148,070184,665380,172441,99730,295,37429,533,839403,700479,900400,999413,222252,140239,8961,048170,4077,71612,164476,277368,71533,467,03632,740,8453,340,2494,371,36014,774,89515,553,9672,301,7622,954,780108,035106,309390,600470,6002,000,8521,873,08132,37247,3783,713,9003,444,33032,212120,64111,763,26310,610,94344,73646,3061,106,0891,152,2123913612,576,0642,569,19062,02563,338292,080269,50452,55449,8942,283,9832,299,685Differential account for futures trading-1071,086,1831,128,103356,963578,140758,555805,04441,33931,190315,778315,0785,1794,3305,1454,3422,0092,0672,1615501,1801,1764,5423,08716,9211,046119,457128,593Reserve for employees’ retirement benefits400,138398,32196,90198,64599892922,55629,94880080028,08456,701233,453250,453553,949845,706Deferred tax liabilities312,227115,45413,205175,75571,60670,65216,37618,42452,86145,745156,694151,259Total liabilities35,734,10535,924,56765,42278,252164,668190,00160,00060,00028-370,000320,00056,12084,30560,00060,00029,11939,875310,000260,0003,0383,268249,195251,559 49,277104,563249,195251,55952,86145,745Reserve for tax basis adjustments of real estate8,3557,870(2,358)(6,501)Reserve for specified business investment4949(627)(779)Retained earnings brought forward240,789243,639Total shareholders’ equity679,195631,5602,536,6082,130,413(3,501)(21,621)(22,026)16,6432,511,0802,125,4353,190,2762,756,99638,924,38138,681,563Total liabilities and net assets38,924,38138,681,563Total of valuation and translation adjustmentsTotal net assetsTotal assetsNet unrealized gains (losses) on securities, net of taxDeferred hedge gains (losses)Reserve for land revaluationReserve for possible loan lossesReserve for possible investment lossesOther assetsRetained earningsCustomers’ liabilities for acceptances and guaranteesOther retained earningsMargin money for futures trading Capital stockDifferential account for futures tradingCapital surplusDerivativesLegal capital surplusSuspense paymentOther capital surplusCollateral for financial productsDeferred tax liabilities for land revaluationPrepaid expensesAcceptances and guaranteesAccrued revenueOther intangible fixed assetsReserve for possible reimbursement of prescribed claimsReinsurance receivableReserve for price fluctuationsOther assetsOrdinary loansDeposits（NET ASSETS）SoftwareLandCollateral for financial instrumentsBuildingsLease liabilitiesLeased assetsAsset retirement obligationsConstruction in progressSuspense receiptOther tangible fixed assetsOther liabilitiesIntangible fixed assetsAccounts receivableLocal government bondsLong-term debt and other borrowingsCorporate bondsCorporate income tax payableTangible fixed assetsDerivativesStocksAccounts payable Foreign securitiesAccrued expensesOther securitiesUnearned revenueLoansDeposits receivedPolicy loansGuarantee deposits receivedSubordinated bondsSecuritiesOther liabilitiesGovernment bondsPayables under repurchase agreementsReserve for retirement benefits of directors, executive officers and corporate auditors（ASSETS）（LIABILITIES）Cash and depositsPolicy reserves and othersCashReserves for outstanding claimsBank depositsPolicy reservesCall loansReserve for policyholder dividendsMonetary claims boughtReinsurance payableMoney held in trust- 13 – T he Dai-ichi Life Insurance Company, Limited 5. Unaudited Statement of Earnings(millions of yen)3,811,7254,450,8722,285,4712,276,1342,275,6172,250,5579,85425,5771,357,1141,247,085836,571831,163Interest from bank deposits1,6761,375Interest and dividends from securities712,308708,237Interest from loans39,13238,898Rental income73,70071,155Other interest and dividends9,75411,497Gains on money held in trust4,849795Gains on sale of securities371,297351,10615,37020,2071,2022,410Gains on investments in separate accounts127,82341,401169,138927,652331426141,931133,530Transfer from policy reserves915761,534Reversal of reserve for employees’ retirement benefits-1,88525,96030,276ORDINARY EXPENSES3,437,9254,071,9522,364,6313,015,986616,314637,449486,953553,586378,685427,247392,747544,342110,789248,429379,140604,93028,89744,85920,67836,5958,2188,264408,153361,68612,35810,375125,323221,5971,2858,4796,1753,545Derivative transaction losses172,87938,62731,58610,4951,8134,393295247Write-down of loans4341Depreciation of real estate for rent and others13,17113,439Other investment expenses43,21950,442403,798410,237232,444239,183150,515154,87331,23631,02836,39339,6581,943- Other ordinary expenses12,35613,622ORDINARY PROFIT373,799378,920EXTRAORDINARY GAINS5,46910,4025,46910,402EXTRAORDINARY LOSSES27,55433,4256,81012,5062,5523,85018,00017,000Other extraordinary losses19068Provision for reserve for policyholder dividends77,50087,500Income before income taxes274,214268,397Corporate income taxes-current77,701102,283Corporate income taxes-deferred436(33,662)Total of corporate income taxes78,13868,621Net income196,075199,776Gains on disposal of fixed assetsLosses on disposal of fixed assetsImpairment losses on fixed assetsDepreciationLosses on sale of securitiesLosses on valuation of securitiesForeign exchange lossesClaim deposit paymentsLosses on redemption of securitiesProvision for reserve for possible loan lossesProvision for reserve for possible investment lossesOperating expensesOther ordinary expensesNational and local taxesProvision for reserve for employees’ retirement benefitsInterest expensesClaimsAnnuitiesBenefitsSurrender valuesOther refundsProvision for reserves for outstanding claimsProvision for policy reserves and othersProvision for interest on policyholder dividendsInvestment expensesOther investment incomeOther ordinary revenuesFund receipt for annuity rider of group insuranceFund receipt for claim deposit paymentProvision for reserve for price fluctuationsYear ended March 31, 2022Other ordinary revenuesBenefits and claimsCeding reinsurance commissionsReinsurance income Year endedMarch 31, 2021ORDINARY REVENUESPremium and other incomePremium incomeInvestment incomeInterest and dividendsGains on redemption of securities – 14 – T he Dai-ichi Life Insurance Company, Limited 6. Unaudited Statement of Changes in Net Assets Year ended March 31, 2021(millions of yen)Reserve for tax basisadjustments of realestateReserve forspecified businessinvestmentRetained earningsbrought forwardBalance at the beginning of the year60,00060,000310,000370,0004,947- 195,207Changes for the yearDividends (151,084)Net income 196,075Transfer to reserve for tax basis adjustments of real estate 3,418 (3,418)Transfer from reserve for tax basis adjustments of real estate (10) 10Transfer to reserve for specified business investment 49(49)Transfer from reserve for land revaluation 4,048Net changes of items other than shareholders’ equity Total changes for the year- – – – 3,4084945,581Balance at the end of the year60,00060,000310,000370,0008,35549240,789(millions of yen)RetainedearningsBalance at the beginning of the year200,155630,1551,916,41721,312(17,978)1,919,7522,549,907Changes for the yearDividends(151,084)(151,084) (151,084)Net income196,075196,075 196,075Transfer to reserve for tax basis adjustments of real estate- – – Transfer from reserve for tax basis adjustments of real estate- – – Transfer to reserve for specified business investment- – – Transfer from reserve for land revaluation4,0484,048 4,048Net changes of items other than shareholders’ equity 620,191(24,814)(4,048)591,328591,328Total changes for the year49,03949,039620,191(24,814)(4,048)591,328640,368Balance at the end of the year249,195679,1952,536,608(3,501)(22,026)2,511,0803,190,276Shareholders’ equityTotal net assetsTotalshareholders’equityNet unrealizedgains (losses)on securities,net of taxDeferredhedge gains(losses)Reserve for landrevaluationTotal of valuationand translationadjustmentsTotal retainedearningsValuation and translation adjustmentsShareholders’ equityCapital stockCapital surplusRetained earningsLegal capitalsurplusOther capitalsurplusTotal capitalsurplusOther retained earnings – 15 – T he Dai-ichi Life Insurance Company, Limited Year ended March 31, 2022(millions of yen)Reserve for tax basisadjustments of realestateReserve forspecified businessinvestmentRetained earningsbrought forwardBalance at the beginning of the year60,00060,000310,000370,0008,35549240,789Changes for the yearDividends (49,999)(49,999) (158,716)Net income 199,776Transfer to reserve for tax basis adjustments of real estate 27(27)Transfer from reserve for tax basis adjustments of real estate (512)512Transfer from reserve for land revaluation (38,695)Net changes of items other than shareholders’ equity Total changes for the year- – (49,999)(49,999)(485)- 2,849Balance at the end of the year60,00060,000260,000320,0007,87049243,639(millions of yen)RetainedearningsBalance at the beginning of the year249,195679,1952,536,608(3,501)(22,026)2,511,0803,190,276Changes for the yearDividends(158,716)(208,716) (208,716)Net income199,776199,776 199,776Transfer to reserve for tax basis adjustments of real estate- – – Transfer from reserve for tax basis adjustments of real estate- – – Transfer from reserve for land revaluation(38,695)(38,695) (38,695)Net changes of items other than shareholders’ equity (406,195)(18,119)38,669(385,644)(385,644)Total changes for the year2,364(47,635)(406,195)(18,119)38,669(385,644)(433,280)Balance at the end of the year251,559631,5602,130,413(21,621)16,6432,125,4352,756,996Shareholders’ equityCapital stockCapital surplusRetained earningsLegal capitalsurplusOther capitalsurplusTotal capitalsurplusOther retained earningsShareholders’ equityValuation and translation adjustmentsTotal net assetsTotalshareholders’equityNet unrealizedgains (losses)on securities,net of taxDeferredhedge gains(losses)Reserve for landrevaluationTotal of valuationand translationadjustmentsTotal retainedearningsI. NOTES TO THE UNAUDITED BALANCE SHEET AS OF MARCH 31, 2022 1. Valuation Methods of Securities Securities held by the Company including cash and deposits and monetary claims bought which are equivalent to marketable securities, and marketable securities managed as trust assets in money held in trust, are carried as explained below: The amortization of premiums and accretion of discounts is calculated by the straight-line method. (1) Trading Securities Trading securities are carried at fair value with cost determined by the moving average method. (2) Held-to-maturity Bonds Held-to-maturity bonds are stated at amortized cost determined by the moving average method. (3) Policy-reserve-matching Bonds (in accordance with the Industry Audit Committee Report No. 21 “Temporary Treatment of Accounting and Auditing Concerning Policy-reserve-matching Bonds in the Insurance Industry” issued by the Japanese Institute of Certified Public Accountants (JICPA)) Policy-reserve-matching bonds are stated at amortized cost determined by the moving average method. (4) Stocks of Subsidiaries and Affiliated Companies Stocks of subsidiaries and affiliated companies are stated at cost determined by the moving average method. (5) Available-for-sale Securities a) Available-for-sale Securities other than stocks with no market price, etc. Available-for-sale securities other than stocks with no market price, etc. are valued at fair value as of March 31, 2022 with cost determined by the moving average method. b) Stocks with no market price, etc. Stocks with no market price, etc. are valued at cost determined by the moving average method. Net unrealized gains or losses on these available-for-sale securities are presented as a separate component of net assets and not in the statement of earnings. 2. Risk Management Policy of Policy-reserve-matching Bonds The Company categorizes its insurance products into sub-groups by the attributes of each product and, in order to manage risks properly, formulates its policy on investments and resource allocation based on the balance of the sub -groups. Moreover, it periodically checks that the duration gap between policy-reserve-matching bonds and policy reserves stays within a certain range. The sub-groups of insurance products are: a) individual life insurance and annuities, b) non-participating single premium whole life insurance (without duty of medical disclosure), c) financial insurance and annuities, and d) group annuities with the exception of certain types. 3. Valuation Method of Derivative Transactions Derivative transactions are reported at fair value. – 16 – T he Dai-ichi Life Insurance Company, Limited Based on the “Act on Revaluation of Land” (Act No.34, March 31, 1998), land for business use was revalued. The difference between the fair value and book value resulting from the revaluation, net of related deferred taxes, is recorded as a reserve for land revaluation as a separate component of net assets and the related deferred tax liability is recorded as deferred tax liabilities for 4. Revaluation of Land land revaluation. (1) Date of revaluation: March 31, 2001 (2) Method stipulated in Article 3, Paragraph 3 of the Act on Revaluation of Land; The fair value was determined based on the appraisal value publicly announced for tax assessment purposes with certain reasonable adjustments in accordance with Articles 2-1 and 2-4 of the Order for Enforcement of the Act on Revaluation of Land (Publicly issue Cabinet Order No.119, March 31, 1998). 5. Depreciation of Depreciable Assets (1) Depreciation of Tangible Fixed Assets Excluding Leased Assets Depreciation of tangible fixed assets excluding leased assets is calculated by the declining balance method (the depreciation of buildings (other than facilities attached to buildings and structures that were acquired on or before March 31, 2016) is calculated by the straight-line method). Estimated useful lives of major assets are as follows: Buildings Other tangible fixed assets two to sixty years two to twenty years Tangible fixed assets other than land, buildings and leased assets that were acquired for ¥100,000 or more but less than ¥200,000 are depreciated at equal amounts over three years. With respect to tangible fixed assets that were acquired on or before March 31, 2007 and that were fully depreciated to their original depreciable limit, effective the fiscal year ended March 31, 2008, the remaining values are depreciated at equal amounts over five years from the following fiscal year of the year in which they reached the original depreciable limit. (2) Amortization of Intangible Fixed Assets Excluding Leased Assets The Company uses the straight-line method for amortization of intangible fixed assets excluding leased assets. Software for internal use is amortized by the straight-line method based on the estimated useful lives of five years. (3) Depreciation of Leased Assets Depreciation for leased assets with regard to finance leases whose ownership does not transfer to the lessees is computed under the straight-line method assuming zero salvage value and using the lease period as the useful life. (4) Accumulated Depreciation of Tangible Fixed Assets The amount of accumulated depreciation of tangible fixed assets as of March 31, 2022 was ¥ 615,892 million. 6. Translation of Assets and Liabilities Denominated in Foreign Currencies into Yen The Company translates foreign currency-denominated assets and liabilities (excluding stocks of its subsidiaries and affiliated companies) into yen at the prevailing exchange rates at the end of the year. Stocks of subsidiaries and affiliated companies are translated into yen at the exchange rates on the dates of acquisition. – 17 – T he Dai-ichi Life Insurance Company, Limited 7. Reserve for Possible Loan Losses assets. The reserve for possible loan losses is calculated based on the internal rules for self-assessment, write-offs, and reserves on For loans to and claims on obligors that have already experienced bankruptcy, reorganization, or other formal legal failure (hereinafter, “bankrupt obligors”) and loans to and claims on obligors that have suffered substantial business failure (here inafter, “substantially bankrupt obligors”), the reserve is calculated by deducting the estimated recoverable amount of the collateral or guarantees from the book value of the loans and claims after the direct write-off described below. For loans to and claims on obligors that have not yet suffered business failure but are considered highly likely to fail, the reserve is calculated taking into account a) the recoverable amount covered by the collateral or guarantees and b) an overall assessment of the obligor’s ability to repay. For other loans and claims, the reserve is calculated by multiplying the actual rate or other appropriate rate of losses from bad debts during a certain period in the past by the amount of the loans and claims. For all loans and claims, the relevant department in the Company performs an asset quality assessment based on the internal rules for self-assessment, and an independent audit department audits the result of the assessment. The above reserves are established based on the result of this assessment. For loans and claims to bankrupt and substantially bankrupt obligors, the unrecoverable amount is calculated by deducting the amount deemed recoverable from collateral or guarantees from the amount of the loans and claims and is directly written off from the amount of the loans and claims. The amount written off during the fiscal year ended March 31, 2022 was ¥ 1 million. For the reserve for employees’ retirement benefits, the amount is provided based on the projected benefit obligations and 8. Reserve for Employees’ Retirement Benefits pension assets as of March 31, 2022. (1) Allocation of Estimated Retirement Benefits benefit for the fiscal year ended March 31, 2022. Accounting treatment of retirement benefit obligations and retirement benefit expenses are as follows : In calculating the projected benefit obligations, the benefit formula basis is adopted to allocate estimated retirement (2) Amortization of Actuarial Differences and Past Service Cost Past Service Cost is amortized under the straight-line method over a certain period (seven years) within the employees’ average remaining service period. Actuarial differences are amortized under the straight-line method over a certain period (seven years) within the employees’ average remaining service period, starting from the following year. 9. Reserve for Possible Investment Losses In order to provide for future investment losses, a reserve for possible investment losses is established for stocks with no market price, etc. and ownership stakes in partnerships, etc. It is calculated based on the internal rules for self-assessment, write-offs, and reserves on assets. 10. Reserve for Retirement Benefits of Directors, Executive Officers and Corporate Auditors For the reserve for retirement benefits of directors, executive officers and corporate auditors, an estimated amount for future payment pursuant to the internal policies is provided. 11. Reserve for Possible Reimbursement of Prescribed Claims To prepare for the reimbursement of claims for which prescription periods had expired, an estimated amount for reserve for possible reimbursement of prescribed claims based on past reimbursement experience is provided. 12. Reserve for Price Fluctuations A reserve for price fluctuations is calculated based on the book value of stocks and other securities at the end of the year in accordance with the provisions of Article 115 of the Insurance Business Act. – 18 – T he Dai-ichi Life Insurance Company, Limited 13. Hedge Accounting (1) Hedge Accounting Hedging transactions are accounted for in accordance with the “Accounting Standards for Financial Instruments” (Accounting Standards Board of Japan (ASBJ) Statement No. 10). Primarily, i) special hedge accounting and the deferral hedge method for interest rate swaps are used for cash flow hedges of certain loans, government and corporate bonds, loans payable and bonds payable; ii) the currency allotment method and the deferral hedge method using foreign currency swaps and foreign currency forward contracts are used for cash flow hedges against exchange rate fluctuations in certain foreign currency-denominated bonds, loans, loans payable and bonds payable and certain foreign currency-denominated term deposits and stocks (forecasted transaction); iii) the fair value hedge method using currency options and foreign currency forward contracts is used for hedges against exchange rate fluctuations in the value of certain foreign currency -denominated bonds; iv) the deferral hedge method for bond over-the-counter options is used for hedges against interest rate fluctuations in certain foreign currency-denominated bonds; v) the deferral hedge method and fair value hedge method using equity options and equity forward contracts are used for hedges against price fluctuations in the value of certain domestic stocks and foreign currency-denominated stocks (forecasted transaction), and vi) the deferral hedge method using interest rate swaps is used for hedges against interest rate fluctuations in certain insurance liabilities, under the “Accounting and Auditing Treatment of Application of Accounting Standard for Financial Instruments to Insurance Operators” (Industry Audit Committee Report No. 26 issued by the JICPA). (2) Hedging Instruments and Hedged Items Hedging instruments Hedged items swaps swaps currency Interest rate …………………………… Foreign ……………………… Foreign currency forward contracts …………. Currency …………………………….. Bond options ………………. Equity ……………………………… Equity …………………….. over-the-counter contracts forward options options Loans, government and corporate bonds, loans payable, bonds payable, insurance liabilities Foreign currency-denominated bonds, foreign currency-denominated loans, loans currency-denominated foreign payable, foreign currency-denominated bonds payable Foreign currency-denominated bonds, currency-denominated foreign deposits, foreign currency-denominated stocks (forecasted transaction) term Foreign currency-denominated bonds Foreign currency-denominated bonds Domestic stocks, foreign currency-denominated stocks (forecasted transaction) Domestic stocks (3) Hedging Policies The Company conducts hedging transactions with regard to certain market risk and foreign currency risk of underlying assets to be hedged, in accordance with the internal investment policy and procedure guidelines. (4) Assessment of Hedge Effectiveness – 19 – T he Dai-ichi Life Insurance Company, Limited Hedge effectiveness is assessed primarily by a comparison of fluctuations in cash flows or fair value of hedged items to those of the hedging instruments. (Hedging relationships to which the “Treatment of Hedge Accounting for Financial Instruments that Reference LIBOR”) Among the above hedging relationships, the exceptional treatment prescribed in the “Treatment of Hedge Accounting for Financial Instruments that Reference LIBOR” (PITF No. 40, March 17, 2022) is applied to all hedging relationships included in the scope of the application of the said Treatment. The details of hedging relationships to which the Treatment is applied are as follows: Hedging method: the exceptional accrual method Hedging instruments: Interest-rate swaps Hedged items: Loans Type of hedging transactions: Transactions that fix cash flow 14. Calculation of National and Local Consumption Tax The Company accounts for national and local consumption tax by the tax-exclusion method. Deferred consumption tax included in non-recoverable consumption tax on certain assets is capitalized as a prepaid expense and amortized equally over five years in accordance with the Ordinance for Enforcement of the Corporation Tax Act, and such taxes other than deferred consumption tax are recognized as an expense when incurred. 15. Policy Reserve Policy reserves of the Company are established in accordance with Article 116 of the Insurance Business Act. Insurance premium reserves are calculated as stated in accordance with the methods stated in the statement of calculation procedures for policy reserves (Article 4, Paragraph 2, Item 4 of the Insurance Business Act) pursuant to Article 116, Paragraph 1 of the Insurance Business Act, for insurance contracts under which the insurer’s liability has started as of the end of the fiscal year, in preparation for the performance of future obligations under the insurance contracts. Of policy reserves, insurance premium reserves are calculated as stated in 1) and 2) below: (1) Reserves for policies subject to the standard policy reserve rules are calculated based on the methods stipulated by the Commissioner of Financial Services Agency (Notification of the Minister of Finance No. 48, 1996). (2) Reserves for other policies are established based on the net level premium method. If, through an estimation of future income based on most recent actual figures, the policy reserves set aside are found likely to be insufficient to cover the performance of future obligations, additional policy reserves need to be set aside in accordance with Article 69, Paragraph 5 of the Ordinance for Enforcement of the Insurance Business Act. Policy reserves include additional policy reserves for some whole life insurance policies in accordance with Article 69, Paragraph 5 of the Ordinance for Enforcement of the Insurance Business Act. Contingency reserves included in policy reserves are set aside in accordance with Article 69, Paragraph 1, Item 3 of the Ordinance for Enforcement of the Insurance Business Act to cover risks that may accrue in the future in order to ensure the performance of future obligations under insurance contracts. 16. Changes in Accounting Policies (ASBJ Statement No.30, July 4, 2019) and others. Effective the fiscal year ended March 31, 2022, the Company has applied “Accounting Standard for Fair Value Measurement” In accordance with the transitional treatment set forth in Item 19 of “Accounting standards for Fair Value Measurement” and Item 44-2 of “Accounting standard for Financial Instrument,” (ASBJ Statement No.10, July 4, 2019), the Company has applied new accounting policies since the beginning of the fiscal year ended March 31, 2022. As a result, in principle, while fair value of domestic stocks was previously determined based on the average market price over the month preceding the balance sheet date, – 20 – T he Dai-ichi Life Insurance Company, Limited from the end of the fiscal year ended March 31, 2022, fair value of domestic stocks is determined based on the market price as of the balance sheet date. Also, the Company has disclosed matters concerning fair value of financial instruments and breakdown by input level in 17. Fair Value of Financial Instruments and Matters concerning Fair Value of Financial Instruments and breakdown by input level. 17. F inancial Instruments and Others (1) Financial Instruments a) Policies in Utilizing Financial Instruments In an effort to manage investment assets in a manner appropriate to liabilities, which arise from the insurance policies underwritten, the company engages in asset liability management, or ALM, which considers the long -term balance between assets and liabilities to ensure stable returns. With this strategy, the Company holds fixed income investments, including bonds and loans, as the core of its asset portfolio. While placing its financial soundness first, the Company also holds stocks and foreign securities within its tolerable risk to enhance its profitability and facilitate diversification of investment risks. The Company uses derivatives primarily to hedge market risks associated with its existing asset portfolio and supplement its investment objectives, taking into account the exposure of underlying assets. With respect to financing, the Company has raised capital directly from the capital markets by issuing subordinated bonds as well as indirectly from banks in order to strengthen its capital base. To avoid impact from interest rate fluctuations, the Company utilizes derivative transactions in hedging some of such financial liabilities and adopts hedge accounting. b) Financial Instruments Used and Their Risks Securities included in financial assets of the Company, mainly stocks and bonds, are categorized by its investment objectives such as held-to-maturity securities, policy-reserve-matching securities and available-for-sale securities. Those securities are exposed to market fluctuation risk, credit risk and interest rate risk and some of the securities denominated in foreign currency are exposed to foreign currency risk. Also, loans are exposed to credit risk arising from the defaults of obligors. The Company might be exposed to liquidity risk in certain circumstances in which it cannot make timely payments of principal, interest or other amounts due to unpredictable cash outflows or is forced to raise capital with interest rates substantially higher than usual. Also, some of its loans payable and bonds payable which are floating interest rate based and denominated in foreign currency are exposed to interest rate risk and foreign currency risk. The Company utilizes i) interest rate swaps to hedge interest rate risk associated with certain of its loans receivable and payable, ii) equity forward contracts to hedge market fluctuation risks associated with domestic stocks, and iii) foreign currency forward contracts, currency options and foreign currency swaps to hedge foreign currency risks associated wit