Investment EnvironmentAt the beginning of scal 2015, the yield on 10-year Japanese government bonds, which is the prime indicator of Japanese long-term interest rates, stood at 0.41%. Despite a temporary increasing in reaction to rising interest rates in Europe and the United States, the overall trend was downward, mainly because of continuing uncertainty about the outlook for the world economy following an economic slowdown in China and other factors. The Bank of Japan’s introduction of a negative interest rate policy triggered a sharp drop, and the yield ended the scal year at minus 0.05%. In the Japanese stock market, the Nikkei 225 Average started scal 2015 at ¥19,129.75. A weaker yen and strong corporate earnings drove an uptrend that took the average close to ¥21,000. However, a stock market slump in China triggered a global downtrend in stock prices. The Nikkei index subsequently rmed, in part because of a stock market upswing in the United States, and expectations of monetary easing in Japan and Europe. However, trends have weakened since the end of 2015 because of growing fears of a global economic slowdown resulting from the crude oil price decline and other factors, and the Nikkei was down to ¥16,758.67 by the end of scal 2015. At the start of scal 2015, the yen-dollar exchange rate stood at ¥120.13. Initially the yen remained weak because of rm trends in the U.S. economy. However, the Japanese currency subsequently began to strengthen in response to a combination of factors, including a global stock market slump triggered by a sharp decline in Chinese stock prices, fears of a global economic slowdown led by emerging market economies, and receding expectations of an early rise in the U.S. federal funds rate. By the end of scal 2015, the yen had reached ¥112.68 against the dollar.International InvestmentsIn its overseas investments, Zenkyoren pays extremely close attention to exchange risk, country risk and other risks, as we invest primarily in foreign-currency-denominated bonds and foreign equities, and in yen-denominated loans and bonds for foreign governments. Our subsidiaries in New York (ZAMA) and London (ZEL) undertake support activities related to securities investments, overseas investments, and so on.Reinsurance ActivitiesReinsurance is a contract for transferring a part of insurance liabilities assumed by a direct insurance company to domestic and overseas insurance companies. Zenkyoren utilizes reinsurance as one of the risk diversi cations in order to maintain sound business operation in case of natural catastrophic events. The reinsurance panels in Zenkyoren are stringently selected through consideration of their evaluation by the rating agencies and business performance. March 31, 2015March 31, 2016Long-term interest rate (10-year JGB yield)0.40%Minus 0.05%Stock market (Nikkei 225 Average)¥19,206.99¥16,758.67Foreign exchange rate (¥/$)¥120.17¥112.68JGB: Japanese government bond11Annual Report 2016


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