Document and Entity Information - USD ($)	12 Months Ended
Document and Entity Information - USD ($)	Dec. 31, 2019	Feb. 12, 2020	Jun. 28, 2019
Document Type	10-K
Document Annual Report	true
Document Period End Date	Dec. 31, 2019
Document Transition Report	false
Entity File Number	001-07434
Entity Registrant Name	Aflac Incorporated
Entity Incorporation, State or Country Code	GA
Entity Tax Identification Number	58-1167100
Entity Address, Address Line One	1932 Wynnton Road
Entity Address, City or Town	Columbus
Entity Address, State or Province	GA
Entity Address, Postal Zip Code	31999
City Area Code	706
Local Phone Number	323.3431
Entity Well-known Seasoned Issuer	Yes
Entity Voluntary Filers	No
Entity Current Reporting Status	Yes
Entity Interactive Data Current	Yes
Entity Filer Category	Large Accelerated Filer
Entity Small Business	false
Entity Emerging Growth Company	false
Entity Shell Company	false
Entity Public Float			$ 40,396,253,541
Entity Common Stock, Shares Outstanding		722,520,700
Amendment Flag	false
Entity Central Index Key	0000004977
Current Fiscal Year End Date	--12-31
Document Fiscal Period Focus	FY
Document Fiscal Year Focus	2019
Documents Incorporated by Reference	Certain information contained in the Notice and Proxy Statement for the Company’s 2020 Annual Meeting of Shareholders is incorporated by reference into Part III hereof.
NEW YORK STOCK EXCHANGE, INC.
Title of 12(b) Security	Common Stock, $.10 Par Value
Trading Symbol	AFL
Security Exchange Name	NYSE

Consolidated Statements of Earnings - USD ($)
shares in Thousands, $ in Millions

12 Months Ended

Dec. 31, 2019

Dec. 31, 2018

Dec. 31, 2017

Revenues:

Net premiums, principally supplemental health insurance

$ 18,780

$ 18,677

$ 18,531

Net investment income

3,578

3,442

3,220

Realized investment gains (losses):

Other-than-temporary impairment losses realized and loan loss reserves

(31)

(81)

(37)

Other gains (losses)

(104)

(349)

(114)

Total realized investment gains (losses)

(135)

(430)

(151)

Other income (loss)

84

69

67

Total revenues

22,307

21,758

21,667

Benefits and expenses:

Benefits and claims, net

11,942

12,000

12,181

Acquisition and operating expenses:

Amortization of deferred policy acquisition costs

1,282

1,245

1,132

Insurance commissions

1,321

1,320

1,316

Insurance and other expenses

3,089

2,988

2,780

^[1]

Interest expense

228

222

240

Total acquisition and operating expenses

5,920

5,775

5,468

Total benefits and expenses

17,862

17,775

17,649

Earnings before income taxes

4,445

3,983

4,018

Income Tax Expense:

Current

806

1,379

631

Deferred

335

(316)

(1,217)

Total income tax expense

1,141

1,063

(586)

Net earnings

$ 3,304

$ 2,920

$ 4,604

Net earnings per share:

Basic (in dollars per share)

$ 4.45

$ 3.79

$ 5.81

Diluted (in dollars per share)

$ 4.43

$ 3.77

$ 5.77

Weighted-average outstanding common shares used in computing earnings per share (In thousands):

Basic (in shares)

742,414

769,588

792,042

Diluted (in shares)

746,430

774,650

797,861

5.50% subordinated notes due September 2052

Expense on extinguishment of debt

$ 13

[1]	Includes expense of $13 in 2017 for the early extinguishment of debt

Consolidated Statements of Comprehensive Income (Loss) - USD ($) $ in Millions	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017
Statement of Comprehensive Income [Abstract]
Net earnings	$ 3,304	$ 2,920	$ 4,604
Other comprehensive income (loss) before income taxes:
Unrealized foreign currency translation gains (losses) during period	252	232	286
Unrealized gains (losses) on fixed maturity securities:
Unrealized holding gains (losses) on fixed maturity securities during period	5,870	(3,155)	1,731
Reclassification adjustment for realized (gains) losses on fixed maturity securities included in net earnings	(18)	46	2
Unrealized gains (losses) on derivatives during period	(12)	2	1
Pension liability adjustment during period	(85)	(25)	9
Total other comprehensive income (loss) before income taxes	6,007	(2,900)	2,029
Income tax expense (benefit) related to items of other comprehensive income (loss)	1,543	(797)	631
Other comprehensive income (loss), net of income taxes	4,464	(2,103)	1,398
Total comprehensive income (loss)	$ 7,768	$ 817	$ 6,002

Consolidated Balance Sheets - USD ($)
$ in Millions

Dec. 31, 2019

Dec. 31, 2018

Investments and cash:

Available for sale, fixed maturity securities

$ 91,262

$ 82,895

Held to maturity, fixed maturity securities

30,085

30,318

Equity securities

802

987

Commercial mortgage and other loans

9,569

6,919

Other investments

1,477

787

Cash and cash equivalents

4,896

4,337

Total investments and cash

138,091

126,243

Receivables

828

851

Accrued investment income

772

773

Deferred policy acquisition costs

10,128

9,875

Property and equipment, at cost less accumulated depreciation

^[1]

581

443

Other

2,368

2,221

Total assets

152,768

140,406

Policy liabilities:

Future policy benefits

90,335

86,368

Unpaid policy claims

4,659

4,584

Unearned premiums

4,243

5,090

Other policyholders' funds

7,317

7,146

Total policy liabilities

106,554

103,188

Income taxes

5,370

4,020

Payables for return of cash collateral on loaned securities

1,876

1,052

Notes payable and lease obligations

^[1]

6,569

5,778

Other

3,440

2,906

Total liabilities

123,809

116,944

Commitments and contingent liabilities (Note 15)

Shareholders' equity:

Common stock of $.10 par value. In thousands: authorized 1,900,000 shares in 2019 and 2018; issued 1,349,309 shares in 2019 and 1,347,540 shares in 2018

135

Additional paid-in capital

2,313

2,177

Retained earnings

34,291

31,788

Accumulated other comprehensive income (loss):

Unrealized foreign currency translation gains (losses)

(1,623)

(1,847)

Unrealized gains (losses) on fixed maturity securities

8,548

4,234

Unrealized gains (losses) on derivatives

(33)

(24)

Pension liability adjustment

(277)

(212)

Treasury stock, at average cost

(14,395)

(12,789)

Total shareholders' equity

28,959

23,462

Total liabilities and shareholders' equity

152,768

140,406

Consolidated Entity Excluding Variable Interest Entities (VIE)

Investments and cash:

Available for sale, fixed maturity securities

86,950

78,429

Variable Interest Entity, Consolidated

Investments and cash:

Available for sale, fixed maturity securities

4,312

4,466

Equity securities

0

160

Commercial mortgage and other loans

7,956

5,528

Other investments

^[2]

494

328

Policy liabilities:

Total liabilities

$ 126

$ 102

[1]	See Note 1 of the Notes to the Consolidated Financial Statements for the adoption of accounting guidance on January 1, 2019 related to leases.
[2]	Consists entirely of alternative investments in limited partnerships

Consolidated Balance Sheets (Parenthetical) - USD ($)
shares in Thousands, $ in Millions

Dec. 31, 2019

Dec. 31, 2018

Available for sale, fixed maturity securities, amortized cost

$ 79,371

$ 76,856

Held to maturity, fixed maturity securities, fair value

37,594

36,722

Commercial mortgage and other loans

9,569

6,919

Other investments

$ 1,477

$ 787

Common stock, par value (in dollars per share)

$ 0.10

Common stock, shares authorized (in shares)

1,900,000

Common stock, shares issued (in shares)

1,349,309

1,347,540

Asset derivatives

$ 482

$ 417

Liability derivatives

586

387

Variable Interest Entity, Consolidated

Available for sale, fixed maturity securities, amortized cost

3,308

3,849

Commercial mortgage and other loans

7,956

5,528

Other investments

^[1]

494

328

Asset derivatives

^[2]

169

182

Liability derivatives

^[2]

126

102

Consolidated Entity Excluding Variable Interest Entities (VIE)

Available for sale, fixed maturity securities, amortized cost

$ 76,063

$ 73,007

[1]	Consists entirely of alternative investments in limited partnerships
[2]	Consists entirely of derivatives

Consolidated Statements of Shareholders' Equity - USD ($) $ in Millions	Total	Common stock	Additional paid-in capital	Retained earnings	Accumulated other comprehensive income (loss)	Treasury stock
Balance, beginning of period at Dec. 31, 2016	$ 20,482	$ 135	$ 1,908	$ 25,981	$ 2,630	$ (10,172)
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net earnings	4,604	0	0	4,604	0	0
Unrealized foreign currency translation gains (losses) during period, net of income taxes	233	0	0	0	233	0
Unrealized gains (losses) on fixed maturity securities during the period, net of income taxes and reclassification adjustments	1,159	0	0	0	1,159	0
Unrealized gains (losses) on derivatives during period, net of income taxes	1	0	0	0	1	0
Pension liability adjustment during period, net of income taxes	5	0	0	0	5	0
Dividends to shareholders	(690)	0	0	(690)	0	0
Exercise of stock options	38	0	38	0	0	0
Share-based compensation	51	0	51	0	0	0
Purchases of treasury stock	(1,391)	0	0	0	0	(1,391)
Treasury stock reissued	106	0	55	0	0	51
Balance, end of period at Dec. 31, 2017	24,598	135	2,052	29,895	4,028	(11,512)
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net earnings	2,920	0	0	2,920	0	0
Unrealized foreign currency translation gains (losses) during period, net of income taxes	228	0	0	0	228	0
Unrealized gains (losses) on fixed maturity securities during the period, net of income taxes and reclassification adjustments	(2,316)	0	0	0	(2,316)	0
Unrealized gains (losses) on derivatives during period, net of income taxes	2	0	0	0	2	0
Pension liability adjustment during period, net of income taxes	(17)	0	0	0	(17)	0
Dividends to shareholders	(801)	0	0	(801)	0	0
Exercise of stock options	34	0	34	0	0	0
Share-based compensation	54	0	54	0	0	0
Purchases of treasury stock	(1,317)	0	0	0	0	(1,317)
Treasury stock reissued	77	0	37	0	0	40
Balance, end of period at Dec. 31, 2018	23,462	135	2,177	31,788	2,151	(12,789)
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Cumulative effect of change in accounting principle, net of income taxes	0	0	0	(226)	226	0
Net earnings	3,304	0	0	3,304	0	0
Unrealized foreign currency translation gains (losses) during period, net of income taxes	224	0	0	0	224	0
Unrealized gains (losses) on fixed maturity securities during the period, net of income taxes and reclassification adjustments	4,314	0	0	0	4,314	0
Unrealized gains (losses) on derivatives during period, net of income taxes	(9)	0	0	0	(9)	0
Pension liability adjustment during period, net of income taxes	(65)	0	0	0	(65)	0
Dividends to shareholders	(801)	0	0	(801)	0	0
Exercise of stock options	29	0	29	0	0	0
Share-based compensation	54	0	54	0	0	0
Purchases of treasury stock	(1,656)	0	0	0	0	(1,656)
Treasury stock reissued	103	0	53	0	0	50
Balance, end of period at Dec. 31, 2019	$ 28,959	$ 135	$ 2,313	$ 34,291	$ 6,615	$ (14,395)

Consolidated Statements of Shareholders' Equity (Parenthetical) - $ / shares	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017
Retained earnings
Dividends to shareholders (in dollars per share)	$ 1.08	$ 1.04	$ 0.87

Consolidated Statements of Cash Flows - USD ($) $ in Millions	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017
Cash flows from operating activities:
Net earnings	$ 3,304	$ 2,920	$ 4,604
Adjustments to reconcile net earnings to net cash provided by operating activities:
Change in receivables and advance premiums	(32)	(55)	(91)
Capitalization of deferred policy acquisition costs	(1,452)	(1,504)	(1,468)
Amortization of deferred policy acquisition costs	1,282	1,245	1,132
Increase in policy liabilities	2,104	2,343	2,890
Change in income tax liabilities	(244)	64	(1,240)
Realized investment (gains) losses	135	430	151
Other, net	358	571	150
Net cash provided (used) by operating activities	5,455	6,014	6,128
Proceeds from investments sold or matured:
Available-for-sale fixed maturity securities	5,284	7,888	4,680
Equity securities, FV-NI	650	429
Equity securities, available for sale			902
Held-to-maturity fixed maturity securities	622	1,670	2,212
Commercial mortgage and other loans	1,814	936	303
Costs of investments acquired:
Available for sale fixed maturity securities	(6,934)	(9,086)	(9,867)
Equity securities, FV-NI	(347)	(440)
Equity securities, available-for-sale			(446)
Commercial mortgage and other loans	(4,401)	(4,848)	(2,115)
Other investments, net	(653)	(414)	(206)
Settlement of derivatives, net	(9)	(241)	(621)
Cash received (pledged or returned) as collateral, net	926	348	(205)
Other, net	(123)	176	(68)
Net cash provided (used) by investing activities	(3,171)	(3,582)	(5,431)
Cash flows from financing activities:
Purchases of treasury stock	(1,627)	(1,301)	(1,351)
Proceeds from borrowings	615	1,020	1,040
Principal payments under debt obligations	0	(550)	(1,161)
Dividends paid to shareholders	(771)	(793)	(661)
Change in investment-type contracts, net	(1)	(31)	35
Treasury stock reissued	49	58	33
Other, net	22	(19)	0
Net cash provided (used) by financing activities	(1,713)	(1,616)	(2,065)
Effect of exchange rate changes on cash and cash equivalents	(12)	30	0
Net change in cash and cash equivalents	559	846	(1,368)
Cash and cash equivalents, beginning of period	4,337	3,491	4,859
Cash and cash equivalents, end of period	4,896	4,337	3,491
Supplemental disclosures of cash flow information:
Income taxes paid	1,384	998	780
Interest paid	190	181	196
Noncash interest	37	41	44
Impairment losses and loan loss reserves included in realized investment losses	31	81	37
Noncash financing activities:
Lease obligations	132	11	12
Associate stock bonus
Treasury stock issued for:
Treasury stock issued	15	7	29
Shareholder dividend reinvestment
Treasury stock issued for:
Treasury stock issued	30	8	29
Share-based compensation grants
Treasury stock issued for:
Treasury stock issued	$ 5	$ 2	$ 1

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

12 Months Ended

Dec. 31, 2019

Organization, Consolidation and Presentation of Financial Statements [Abstract]

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Description of Business

Aflac Incorporated (the Parent Company) and its subsidiaries (collectively, the Company) primarily sell supplemental health and life insurance in the United States (U.S.) and Japan. The Company's insurance business is marketed and administered through American Family Life Assurance Company of Columbus (Aflac) in the U.S. and, effective April 1, 2018, through Aflac Life Insurance Japan Ltd. (ALIJ) in Japan. Prior to April 1, 2018, the Company's insurance business was marketed in Japan as a branch of Aflac. The Company’s operations consist of two reportable business segments: Aflac U.S., which includes Aflac, and Aflac Japan, which includes ALIJ. American Family Life Assurance Company of New York (Aflac New York) is a wholly owned subsidiary of Aflac. Most of Aflac's policies are individually underwritten and marketed through independent agents. Additionally, Aflac U.S. markets and administers group products through Continental American Insurance Company (CAIC), branded as Aflac Group Insurance. The Company's insurance operations in the U.S. and Japan service the two markets for the Company's insurance business. Aflac Japan's revenues, including realized gains and losses on its investment portfolio, accounted for 69% of the Company's total revenues in 2019, compared with 70% in both 2018 and 2017. The percentage of the Company's total assets attributable to Aflac Japan was 83% at December 31, 2019, compared with 84% at December 31, 2018.

In November 2019, the Company acquired Argus Holdings, LLC and its subsidiary Argus Dental & Vision, Inc. (Argus), a benefits management organization and national network dental and vision company, which provides a platform for Aflac Dental and Vision. The Company paid $75 million at closing and made an additional commitment of up to $21 million in contingent consideration payable over three years based on the achievement by Argus of certain performance targets. Argus is an addition to the Aflac U.S. segment.

Basis of Presentation

The Company prepares its financial statements in accordance with U.S. generally accepted accounting principles (U.S. GAAP). These principles are established primarily by the Financial Accounting Standards Board (FASB). In these Notes to the Consolidated Financial Statements, references to U.S. GAAP issued by the FASB are derived from the FASB Accounting Standards Codification^TM (ASC). The preparation of financial statements in conformity with U.S. GAAP requires the Company to make estimates based on currently available information when recording transactions resulting from business operations. The most significant items on the Company's balance sheet that involve a greater degree of accounting estimates and actuarial determinations subject to changes in the future are the valuation of investments and derivatives, deferred policy acquisition costs (DAC), liabilities for future policy benefits and unpaid policy claims, and income taxes. These accounting estimates and actuarial determinations are sensitive to market conditions, investment yields, mortality, morbidity, commission and other acquisition expenses, and terminations by policyholders. As additional information becomes available, or actual amounts are determinable, the recorded estimates will be revised and reflected in operating results. Although some variability is inherent in these estimates, the Company believes the amounts provided are adequate.

The consolidated financial statements include the accounts of the Parent Company, its subsidiaries, and those entities required to be consolidated under applicable accounting standards. All material intercompany accounts and transactions have been eliminated.

Significant Accounting Policies

Foreign Currency Translation: The functional currency of Aflac Japan is the Japanese yen. The Company translates its yen-denominated financial statement accounts into U.S. dollars as follows. Assets and liabilities are translated at end-of-period exchange rates. Realized gains and losses on security transactions are translated at the exchange rate on the trade date of each transaction. Other revenues, expenses, and cash flows are translated using average exchange rates for the period. The resulting currency translation adjustments are reported in accumulated other comprehensive income. The Company includes in earnings the realized currency exchange gains and losses resulting from foreign currency transactions.

The Parent Company has designated a majority of its yen-denominated liabilities (notes payable and yen-denominated loans) as non-derivative hedges and from time-to-time may designate certain foreign currency forwards and options as derivative hedges of the foreign currency exposure of the Company's net investment in Aflac Japan. Outstanding principal and related accrued interest on these Parent Company liabilities and the fair value of these derivatives are translated into U.S. dollars at end-of-period exchange rates. Currency translation adjustments and changes in the fair value of these

derivatives are recorded as unrealized foreign currency translation gains (losses) in other comprehensive income and are included in accumulated other comprehensive income.

Insurance Revenue and Expense Recognition: Substantially all of the supplemental health and life insurance policies the Company issues are classified as long-duration contracts. The contract provisions generally cannot be changed or canceled during the contract period; however, the Company may adjust premiums for supplemental health policies issued in the U.S. within prescribed guidelines and with the approval of state insurance regulatory authorities.

Insurance premiums for most of the Company's health and life policies, including cancer, accident, hospital, critical illness, dental, vision, term life, whole life, long-term care and disability, are recognized as revenue over the premium-paying periods of the contracts when due from policyholders. When revenues are reported, the related amounts of benefits and expenses are charged against such revenues, so that profits are recognized in proportion to premium revenues during the period the policies are expected to remain in force. This association is accomplished by means of annual additions to the liability for future policy benefits and the deferral and subsequent amortization of policy acquisition costs.

Premiums from the Company's products with limited-pay features, including term life, whole life, WAYS, and child endowment, are collected over a significantly shorter period than the period over which benefits are provided. Premiums for these products are recognized as revenue over the premium-paying periods of the contracts when due from policyholders. Any gross premium in excess of the net premium is deferred and recorded in earnings, such that profits are recognized in a constant relationship with insurance in force. Benefits are recorded as an expense when they are incurred. A liability for future policy benefits is recorded when premiums are recognized using the net premium method.

At the policyholder's option, customers can also pay discounted advanced premiums for certain of the Company's products. Advanced premiums are deferred and recognized when due from policyholders over the regularly scheduled premium payment period.

The calculation of DAC and the liability for future policy benefits requires the use of estimates based on sound actuarial valuation techniques. For new policy issues, the Company reviews its actuarial assumptions and deferrable acquisition costs each year and revises them when necessary to more closely reflect recent experience and studies of actual acquisition costs. For policies in force, the Company evaluates DAC by major product groupings to determine that they are recoverable from future revenues, and any amounts determined not to be recoverable are charged against net earnings. The Company has not had any material charges to earnings for DAC that was determined not to be recoverable in any of the years presented in this Form 10-K.

Advertising expense is reported as incurred in insurance expenses in the consolidated statements of earnings.

Cash and Cash Equivalents: Cash and cash equivalents include cash on hand, money market instruments, and other debt instruments with a maturity of 90 days or less when purchased.

Investments: The Company's debt securities consist of fixed maturity securities, which are classified as either held to maturity or available for sale. Securities classified as held to maturity are securities that the Company has the ability and intent to hold to maturity or redemption and are carried at amortized cost. All other fixed maturity debt securities are classified as available for sale and are carried at fair value. If the fair value is higher than the amortized cost for debt securities, the excess is an unrealized gain, and if lower than cost, the difference is an unrealized loss. The net unrealized gains and losses on securities available for sale, less related deferred income taxes, are recorded through other comprehensive income and included in accumulated other comprehensive income.

Amortized cost of debt securities is based on the Company's purchase price adjusted for accrual of discount, or amortization of premium, and recognition of impairment charges, if any. The amortized cost of debt securities the Company purchases at a discount or premium will equal the face or par value at maturity or the call date, if applicable. Interest is reported as income when earned and is adjusted for amortization of any premium or discount.

The Company has investments in marketable equity securities which are carried at fair value. Changes in the fair value of equity securities are recorded in earnings as a component of realized investment gains and losses.

The Company has investments in variable interest entities (VIEs). Criteria for evaluating VIEs for consolidation focuses on identifying which enterprise has the power to direct the activities of a variable interest entity that most significantly impact the entity's economic performance and (1) the obligation to absorb losses of the entity or (2) the right to receive benefits from the entity. The Company is the primary beneficiary of certain VIEs, and therefore consolidates these entities in its financial statements. While the consolidated VIEs generally operate within a defined set of contractual terms, there are certain powers

that are retained by the Company that are considered significant in the conclusion that the Company is the primary beneficiary. These powers vary by structure but generally include the initial selection of the underlying collateral; the ability to obtain the underlying collateral in the event of default; and, the ability to appoint or dismiss key parties in the structure. In particular, the Company's powers surrounding the underlying collateral were considered to be the most significant powers because those most significantly impact the economics of the VIE. The Company has no obligation to provide any continuing financial support to any of the entities in which it is the primary beneficiary. The Company's maximum loss is limited to its original investment. Neither the Company nor any of its creditors have the ability to obtain the underlying collateral, nor does the Company have control over the instruments held in the VIEs, unless there is an event of default. For those entities where the Company is the primary beneficiary, the consolidated entity's assets are segregated on the balance sheet by the caption "consolidated variable interest entities," and consist of fixed maturity securities, equity securities, loan receivables, limited partnerships and derivative instruments.

For the mortgage- and asset-backed securities held in the Company's fixed maturity portfolio, the Company recognizes income using a constant effective yield, which is based on anticipated prepayments and the estimated economic life of the securities. When estimates of prepayments change, the effective yield is recalculated to reflect actual payments to date and anticipated future payments. The net investment in mortgage- and asset-backed securities is adjusted to the amount that would have existed had the new effective yield been applied at the time of acquisition. This adjustment is reflected in net investment income.

The Company uses the specific identification method to determine the gain or loss from securities transactions and report the realized gain or loss in the consolidated statements of earnings. Securities transactions are accounted for based on values as of the trade date of the transaction.

An investment in a fixed maturity security is impaired if the fair value falls below amortized cost. The Company regularly reviews its fixed maturity security investments portfolio for declines in fair value. The Company's fixed maturity security investments are evaluated for other-than-temporary impairment using its debt impairment model. The Company's debt impairment model focuses on the ultimate collection of the cash flows from its investments and whether the Company has the intent to sell or if it is more likely than not the Company would be required to sell the security prior to recovery of its amortized cost. The determination of the amount of impairments under this model is based upon the Company's periodic evaluation and assessment of known and inherent risks associated with the respective securities. Such evaluations and assessments are revised as conditions change and new information becomes available.

When determining the Company's intention to sell a security prior to recovery of its fair value to amortized cost, the Company evaluates facts and circumstances such as, but not limited to, future cash flow needs, decisions to reposition its security portfolio, and risk profile of individual investment holdings. The Company performs ongoing analyses of its liquidity needs, which includes cash flow testing of its policy liabilities, debt maturities, projected dividend payments, and other cash flow and liquidity needs.

The determination of whether an impairment in value of the Company's fixed maturity securities is other than temporary is based largely on the Company's evaluation of the issuer's creditworthiness. The Company must apply considerable judgment in determining the likelihood of its fixed maturity securities recovering in value. Factors that may influence this include the overall level of interest rates, credit spreads, the credit quality of the underlying issuer, and other factors. This process requires consideration of risks which can be controlled to a certain extent, such as credit risk, and risks which cannot be controlled, such as interest rate risk and foreign currency risk.

If, after monitoring and analyses, management believes that fair value will not recover to amortized cost, the Company recognizes an other-than-temporary impairment of the security. Once a security is considered to be other-than-temporarily impaired, the impairment loss is separated into two components: the portion of the impairment related to credit and the portion of the impairment related to factors other than credit. The Company recognizes a charge to earnings for the credit-related portion of other-than-temporary impairments. Impairments related to factors other than credit are charged to earnings in the event the Company intends to sell the security prior to the recovery of its amortized cost or if it is more likely than not that the Company would be required to dispose of the security prior to recovery of its amortized cost; otherwise, non-credit-related other-than-temporary impairments are charged to other comprehensive income.

The Company lends fixed maturity and public equity securities to financial institutions in short-term security-lending transactions. These securities continue to be carried as investment assets on the Company's balance sheet during the terms of the loans and are not reported as sales. The Company receives cash or other securities as collateral for such loans. For loans involving unrestricted cash or securities as collateral, the collateral is reported as an asset with a corresponding liability for the return of the collateral. For loans where the Company receives as collateral securities that the Company is not permitted to sell or repledge, the collateral is not reported as an asset.

Commercial mortgage and other loans include transitional real estate loans (TREs), commercial mortgage loans (CMLs) and middle market loans (MMLs). The Company's investments in TREs, CMLs, and MMLs are accounted for as loan receivables and are recorded at amortized cost on the acquisition date. The Company has the intent and ability to hold these loan receivables for the foreseeable future or until they mature and therefore, they are considered held for investment and are carried at amortized cost in the commercial mortgage and other loans line in its consolidated balance sheets. The amortized cost of the loan receivables reflects allowances for expected incurred losses estimated based on past events and current economic conditions as of each reporting date.

Other investments include policy loans, limited partnerships, and short-term investments with maturities at the time of purchase of one year or less, but greater than 90 days. Limited partnerships are accounted for using the equity method of accounting. Under the equity method of accounting, the Company reports its portion of partnership earnings as a component of net investment income in its consolidated statements of earnings. The underlying investments held by the Company’s limited partnerships primarily consist of private equity and real estate. Short-term investments are stated at amortized cost, which approximates fair value.

Derivatives and Hedging: Freestanding derivative instruments are reported in the consolidated balance sheet at fair value and are reported in other assets and other liabilities, with changes in value reported in earnings and/or other comprehensive income. These freestanding derivatives are foreign currency forwards, foreign currency options, foreign currency swaps, interest rate swaps, interest rate swaptions, and, in prior year periods, credit default swaps (CDSs). The Company does not use derivatives for trading purposes, nor does the Company engage in leveraged derivative transactions.

From time to time, the Company purchases certain investments that contain an embedded derivative. The Company assesses whether this embedded derivative is clearly and closely related to the asset that serves as its host contract. If the Company deems that the embedded derivative's terms are not clearly and closely related to the host contract, and a separate instrument with the same terms would qualify as a derivative instrument, the derivative is separated from that contract, held at fair value, and reported with the host instrument in the consolidated balance sheet, with changes in fair value reported in earnings. If the Company has elected the fair value option, the embedded derivative is not bifurcated, and the entire investment is held at fair value with changes in fair value reported in earnings.

See Note 5 for a discussion on how the Company determines the fair value of its derivatives. Accruals on derivatives are typically recorded in other assets or within other liabilities in the consolidated balance sheets.

To qualify for hedge accounting treatment, a derivative must be highly effective in mitigating the designated risk attributable to the hedged item. At the inception of hedging relationships the Company formally documents all relationships between hedging instruments and hedged items, as well as its risk-management objectives and strategies for undertaking the respective hedging relationship, and the methodology that will be used to assess the effectiveness of the hedge relationship at and subsequent to hedge inception. The Company documents the designation of each hedge as either (i) a hedge of the variability of cash flows to be received or paid related to a recognized asset or liability or the hedge of a forecasted transaction ("cash flow hedge"); (ii) a hedge of the estimated fair value of a recognized asset or liability ("fair value hedge"); or (iii) a hedge of a net investment in a foreign operation. The documentation process includes linking derivatives and non-derivative financial instruments that are designated as hedges to specific assets or groups of assets or liabilities in the statement of financial position or to specific forecasted transactions and defining the effectiveness testing methods to be used. At the hedge inception and on an ongoing quarterly basis, the Company also formally assesses whether the derivatives and non-derivative financial instruments used in hedging activities have been, and are expected to continue to be, highly effective in offsetting their designated risk. Hedge effectiveness is assessed using qualitative and quantitative methods. The assessment of hedge effectiveness determines the accounting treatment of changes in fair value.

For assessing hedge effectiveness, qualitative methods may include the comparison of critical terms of the derivative to the hedged item, and quantitative methods may include regression, dollar offset, or other statistical analysis of changes in fair value or cash flows associated with the hedge relationship.

For derivative instruments that are designated and qualify as cash flow hedges, the gain or loss on the derivative is reported as a component of other comprehensive income (loss) and reclassified into earnings in the same period or periods during which the hedged transaction affects earnings. In cash flow hedges, all components of each derivative's gain or loss are included in the assessment of hedge effectiveness.

For derivative instruments that are designated and qualify as fair value hedges, the gain or loss on the hedged item and the portion of the hedging instrument included in the assessment of effectiveness are recorded in the line item of the consolidated statements of earnings in which gain or loss on the hedged item is recorded. When assessing the effectiveness

of the Company's fair value hedges, the Company excludes the changes in fair value related to the difference between the spot and the forward rate on its foreign currency forwards and the time value of money of foreign exchange options and interest rate swaptions. For interest rate swaptions designated under fair value hedges of interest rate risk, the change in the time value of money is recognized in other comprehensive income (loss) and amortized into earnings (net investment income) over its legal term.

As discussed in Note 4, from time to time the Company designates net investment hedges of its net investment in Aflac Japan. The Company makes its net investment hedge designation at the beginning of each quarter. For derivative hedging instruments designated as net investment hedges, Aflac follows the spot-rate method. According to that method, the change in fair value of the hedging instrument due to fluctuations in the spot exchange rate is recorded in the unrealized foreign currency component of other comprehensive income and reclassified to earnings only when the hedged net investment is sold, or when a liquidation of the respective net investment in the foreign entity is substantially completed. If and when a sale or liquidation occurs, the changes in fair value of the derivative deferred in the unrealized foreign currency component of other comprehensive income will be released in the same income statement line item where the gain (loss) on the hedged net investment would be recorded upon sale. All other changes in fair value of the hedging instrument are considered the “excluded component” and are accounted for in realized investment gains (losses). Should these designated net investment hedge positions exceed the Company's net investment in Aflac Japan, the foreign exchange effect on the portion that exceeds its investment in Aflac Japan would be recognized in current earnings within realized investment gains (losses).

The Company discontinues hedge accounting prospectively when (1) it is determined that the derivative is no longer highly effective in offsetting changes in the estimated cash flows or fair value of a hedged item; (2) the derivative is de-designated as a hedging instrument; or (3) the derivative expires or is sold, terminated or exercised.

When hedge accounting is discontinued on a cash flow hedge or fair value hedge, the derivative is carried in the consolidated balance sheets at its estimated fair value, with changes in estimated fair value recognized in current period earnings. For discontinued cash flow hedges, including those where the derivative is sold, terminated or exercised, amounts previously deferred in other comprehensive income (loss) are reclassified into earnings when earnings are impacted by the cash flow of the hedged item.

If a derivative is not designated as an accounting hedge or its use in managing risk does not qualify for hedge accounting, changes in the estimated fair value of the derivative are generally reported within other gains (losses), which is a component of realized investment gains (losses). The fluctuations in estimated fair value of derivatives that have not been designated for hedge accounting can result in volatility in net earnings.

The Company receives and pledges cash or other securities as collateral on open derivative positions. Cash received as collateral is reported as an asset with a corresponding liability for the return of the collateral. Cash pledged as collateral is recorded as a reduction to cash, and a corresponding receivable is recognized for the return of the cash collateral. The Company generally can repledge or resell collateral obtained from counterparties, although the Company does not typically exercise such rights. Securities received as collateral are not recognized unless the Company was to exercise its right to sell that collateral or exercise remedies on that collateral upon a counterparty default. Securities that the Company has pledged as collateral continue to be carried as investment assets on its balance sheet.

Deferred Policy Acquisition Costs: Certain direct and incremental costs of acquiring new business are deferred and amortized with interest over the premium payment periods in proportion to the ratio of annual premium income to total anticipated premium income. Anticipated premium income is estimated by using the same mortality, persistency and interest assumptions used in computing liabilities for future policy benefits. In this manner, the related acquisition expenses are matched with revenues. Deferred costs include the excess of current-year commissions over ultimate renewal-year commissions and certain incremental direct policy issue, underwriting and sales expenses. All of these incremental costs are directly related to successful policy acquisition.

For some products, policyholders can elect to modify product benefits, features, rights or coverages by exchanging a contract for a new contract or by amendment, endorsement, or rider to a contract, or by the election of a feature or coverage within a contract. These transactions are known as internal replacements. The Company performs a two-stage analysis of the internal replacements to determine if the modification is substantive to the base policy. The stages of evaluation are as follows: 1) determine if the modification is integrated with the base policy, and 2) if it is integrated, determine if the resulting contract is substantially changed.

For internal replacement transactions where the resulting contract is substantially unchanged, the policy is accounted for as a continuation of the replaced contract. Unamortized deferred acquisition costs from the original policy continue to be amortized over the expected life of the new policy, and the costs of replacing the policy are accounted for as policy maintenance

costs and expensed as incurred. Examples include conversions of same age bands, certain family coverage changes, pricing era changes (decrease), and ordinary life becomes reduced paid-up and certain reinstatements.

An internal replacement transaction that results in a policy that is substantially changed is accounted for as an extinguishment of the original policy and the issuance of a new policy. Unamortized deferred acquisition costs on the original policy are immediately expensed, and the costs of acquiring the new policy are capitalized and amortized in accordance with the Company's accounting policies for deferred acquisition costs. Further, the policy reserves are evaluated based on the new policy features, and any change (up or down) necessary is recognized at the date of contract change/modification. Examples include conversions to higher age bands, certain family coverage changes, pricing era changes (increase), lapse & re-issue, certain reinstatements and certain other contract conversions.

Riders can be considered internal replacements that are either integrated or non-integrated resulting in either substantially changed or substantially unchanged treatment. Riders are evaluated based on the specific facts and circumstances of the rider and are considered an expansion of the existing benefits with additional premium required. Non-integrated riders to existing contracts do not change the Company's profit expectations for the related products and are treated as a new policy establishment for incremental coverage.

The Company measures the recoverability of DAC and the adequacy of its policy reserves annually by performing gross premium valuations on its business. (See the following discussion for further information regarding policy reserves.)

Policy Liabilities: Future policy benefits represent claims that are expected to occur in the future and are computed following a net level premium method using estimated future investment yields, persistency and recognized morbidity and mortality tables modified to reflect the Company's experience, including a provision for adverse deviation. These assumptions are generally established and considered locked at policy inception. These assumptions may only be unlocked in certain circumstances based on the results of periodic DAC recoverability and premium deficiency testing.

Unpaid policy claims are estimates computed primarily on an undiscounted basis using statistical analyses of historical claims experience adjusted for current trends and changed conditions. The ultimate liability may vary significantly from such estimates. The Company regularly adjusts these estimates as new claims experience emerges and reflects the changes in operating results in the year such adjustments are made.

Unearned premiums consist primarily of discounted advance premiums on deposit from policyholders in conjunction with their purchase of certain Aflac Japan limited-pay insurance products. These advanced premiums are deferred upon collection and recognized as premium revenue over the contractual premium payment period.

Other policyholders’ funds liability consists primarily of the fixed annuity line of business in Aflac Japan which has fixed benefits and premiums.

For internal replacements that are determined to not be substantially unchanged, policy liabilities related to the original policy that was replaced are immediately released, and policy liabilities are established for the new insurance contract; however, for internal replacements that are considered substantially unchanged, no changes to the reserves are recognized.

Reinsurance: The Company enters into reinsurance agreements with other companies in the normal course of business. For each reinsurance agreement, the Company determines if the agreement provides indemnification against loss or liability relating to insurance risk in accordance with applicable accounting standards. Reinsurance premiums and benefits paid or provided are accounted for on bases consistent with those used in accounting for the original policies issued and the terms of the reinsurance contracts. Premiums, benefits and DAC are reported net of insurance ceded.

Income Taxes: Income tax provisions are generally based on pretax earnings reported for financial statement purposes, which differ from those amounts used in preparing the Company's income tax returns. Deferred income taxes are recognized for temporary differences between the financial reporting basis and income tax basis of assets and liabilities, based on enacted tax laws and statutory tax rates applicable to the periods in which the Company expects the temporary differences to reverse. The Company records deferred tax assets for tax positions taken based on its assessment of whether the tax position is more likely than not to be sustained upon examination by taxing authorities. A valuation allowance is established for deferred tax assets when it is more likely than not that an amount will not be realized.

Policyholder Protection Corporation and State Guaranty Association Assessments: In Japan, the government has required the insurance industry to contribute to a policyholder protection corporation. The Company recognizes a charge for

its estimated share of the industry's obligation once it is determinable. The Company reviews the estimated liability for policyholder protection corporation contributions on an annual basis and reports any adjustments in Aflac Japan's expenses.

In the U.S., each state has a guaranty association that supports insolvent insurers operating in those states. The Company's policy is to accrue assessments when the entity for which the insolvency relates has met its state of domicile's statutory definition of insolvency, the amount of the loss is reasonably estimable and the related premium upon which the assessment is based is written. See Note 15 of the Notes to the Consolidated Financial Statements for further discussion of the guaranty fund assessments charged to the Company.

Treasury Stock: Treasury stock is reflected as a reduction of shareholders' equity at cost. The Company uses the weighted-average purchase cost to determine the cost of treasury stock that is reissued. The Company includes any gains and losses in additional paid-in capital when treasury stock is reissued.

Share-Based Compensation: The Company measures compensation cost related to its share-based payment transactions at fair value on the grant date, and the Company recognizes those costs in the financial statements over the vesting period during which the employee provides service in exchange for the award. The Company has formalized its entity-wide accounting policy election to estimate the number of awards that are expected to vest and the corresponding forfeitures.

Earnings Per Share: The Company computes basic earnings per share (EPS) by dividing net earnings by the weighted-average number of unrestricted shares outstanding for the period. Diluted EPS is computed by dividing net earnings by the weighted-average number of shares outstanding for the period plus the shares representing the dilutive effect of share-based awards.

Reclassifications: Certain reclassifications have been made to prior-year amounts to conform to current-year reporting classifications. These reclassifications had no impact on net earnings or total shareholders' equity.

New Accounting Pronouncements

Recently Adopted Accounting Pronouncements



Standard	Description	Date of Adoption	Effect on Financial Statements or Other Significant Matters
Accounting Standard Update (ASU) 2018-16 Derivatives and Hedging Inclusion of the Secured Overnight Financing Rate (SOFR) Overnight Index Swap (OIS) Rate as a Benchmark Interest Rate for Hedge Accounting Purposes	In October 2018, the FASB issued amendments to permit use of the Overnight Index Swap (OIS) rate based on the Secured Overnight Financing Rate (SOFR) as a U.S. benchmark interest rate for hedge accounting purposes under Topic 815 in addition to the Treasury obligations of the U.S. government (UST), the London Interbank Offered Rate (LIBOR) swap rate, the OIS rate based on the Fed Funds Effective Rate, and the Securities Industry and Financial Markets Association (SIFMA) Municipal Swap Rate.	Early adopted as of October 1, 2018	The adoption of this guidance did not have a significant impact on the Company’s financial position, results of operations or disclosures.
ASU 2018-15 Intangibles - Goodwill and Other - Internal-Use Software, Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract	In August 2018, the FASB issued amendments to align the requirements for capitalizing implementation costs incurred in a hosting arrangement that is a service contract with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software.	Early adopted as of January 1, 2019	The adoption of this guidance did not have a significant impact on the Company’s financial position, results of operations or disclosures.



Standard	Description	Date of Adoption	Effect on Financial Statements or Other Significant Matters
ASU 2018-14 Compensation - Retirement Benefits - Defined Benefit Plans - General, Disclosure Framework - Changes to the Disclosure Requirements for Defined Benefit Plans	In August 2018, the FASB issued amendments to modify the disclosure requirements for employers that sponsor defined benefit pension or other postretirement plans. Accordingly, six disclosures requirements were removed, two added and two clarified.	Early adopted as of December 31, 2019	The adoption of this guidance did not have a significant impact on the Company’s financial position, results of operations or disclosures.
ASU 2018-03 Technical Corrections and Improvements to Financial Instruments - Overall Recognition and Measurement of Financial Assets and Financial Liabilities	In February 2018, the FASB issued amendments to clarify certain aspects of the guidance issued in the original Financial Instruments - Overall - Recognition and Measurement pronouncement summarized below. Specifically, for entities who have chosen the measurement alternative approach for equity securities without readily determinable fair values, the amendments clarify that entities may change from a measurement alternative approach to a fair value method through an irrevocable election that would apply to a specific equity security and all identical or similar investments of the same issuer; entities should use an observable price at the date of the transaction rather than reporting date for the measurement alternative calculation; and insurance companies should use a prospective transition method when applying the measurement alternative.	Early adopted as of January 1, 2018	The adoption of this guidance did not have a significant impact on the Company’s financial position, results of operations, or disclosures.
ASU 2018-02 Income Statement - Reporting Comprehensive Income: Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income	In February 2018, the FASB issued amendments which allow a reclassification from accumulated other comprehensive income (AOCI) to retained earnings of the effects of the change in the U.S. federal income tax rate resulting from the Tax Cuts and Jobs Act (Tax Act) on the gross deferred tax amounts and the corresponding valuation allowances related to items remaining in AOCI. The amendments eliminate the stranded tax effects resulting from the Tax Act and also require certain disclosures about the reclassified tax effects.	Early adopted as of January 1, 2018	The amounts reclassified from AOCI to retained earnings include the income tax effects of the change in the federal corporate tax rate enacted by the Tax Act. The Company’s policy is to follow the portfolio approach for releasing income tax effects from AOCI. The adoption of this guidance resulted in an increase to beginning 2018 AOCI of $374 million with a corresponding decrease to beginning 2018 retained earnings as of January 1, 2018.
ASU 2017-12 Derivatives and Hedging: Targeted Improvements to Accounting for Hedging Activities	In August 2017, the FASB issued guidance which improves and simplifies the accounting rules around hedge accounting and creates more transparency around how economic results are presented in financial statements. Issues addressed in this new guidance include: 1) risk component hedging, 2) accounting for the hedged item in fair value hedges of interest rate risk, 3) recognition and presentation of the effects of hedging instruments, and 4) amounts excluded from the assessment of hedge effectiveness.	Early adopted as of October 1, 2018	The adoption of this guidance did not have a significant impact on the Company's financial position, results of operations, or disclosures.



Standard	Description	Date of Adoption	Effect on Financial Statements or Other Significant Matters
ASU 2017-09 Compensation - Stock Compensation: Scope of Modification Accounting	In May 2017, the FASB issued amendments to provide guidance clarifying when changes to the terms or conditions of a share-based payment award must be accounted for as modifications. An entity should apply modification accounting if the fair value, vesting conditions or classification of the award (as an equity instrument or liability instrument) changes as a result of the change in terms or conditions of the award.	January 1, 2018	The adoption of this guidance did not have a significant impact on the Company's financial position, results of operations, or disclosures.
ASU 2017-08 Receivables - Nonrefundable Fees and Other Costs: Premium Amortization on Purchased Callable Debt Securities	In March 2017, the FASB issued amendments to shorten the amortization period for certain callable debt securities held at a premium. Specifically, the amendments require the premium to be amortized to the earliest call date. The amendments do not require an accounting change for securities held at a discount.	Early adopted as of July 1, 2018	The adoption of this guidance did not have a significant impact on the Company’s financial position, results of operations, or disclosures.
ASU 2017-07 Compensation - Retirement Benefits: Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost	In March 2017, the FASB issued amendments requiring that an employer report the service cost component of net periodic pension cost and net periodic postretirement benefit cost in the same line item or items as other compensation costs arising from services rendered by the pertinent employees during the period. The other components of net periodic pension cost and net periodic postretirement benefit cost are required to be presented in the income statement separately from the service cost component and outside a subtotal of income from operations, if one is presented. If a separate line item or items are used to present the other components of net benefit cost, that line item or items must be appropriately described. If a separate line item or items are not used, the line item or items used in the income statement to present the other components of net benefit cost must be disclosed. The amendments in this update also allow only the service cost component to be eligible for capitalization when applicable.	January 1, 2018	The adoption of this guidance did not have a significant impact on the Company's financial position, results of operations, or disclosures.
ASU 2017-05 Other Income - Gains and Losses from the Derecognition of Nonfinancial Assets: Clarifying the Scope of Asset Derecognition Guidance and Accounting for Partial Sales of Nonfinancial Assets	In February 2017, the FASB issued amendments that clarify the scope and accounting guidance for the derecognition of a nonfinancial asset or a financial asset that meets the definition of an "in substance nonfinancial asset." The amendments define an "in substance nonfinancial asset" and provide additional accounting guidance for partial sales of nonfinancial assets.	January 1, 2018	The adoption of this guidance did not have a significant impact on the Company's financial position, results of operations, or disclosures.
ASU 2017-01 Business Combinations: Clarifying the Definition of a Business	In January 2017, the FASB issued amendments clarifying when a set of assets and activities is a business. The amendments provide a screen to exclude transactions where substantially all the fair value of the transferred set is concentrated in a single asset, or group of similar assets, from being evaluated as a business.	January 1, 2018	The adoption of this guidance did not have a significant impact on the Company's financial position, results of operations, or disclosures.



Standard	Description	Date of Adoption	Effect on Financial Statements or Other Significant Matters
ASU 2016-18 Statement of Cash Flows: Restricted Cash	In November 2016, the FASB issued amendments requiring that a statement of cash flows explain the change during the period in the total of cash, cash equivalents, and amounts generally described as restricted cash or restricted cash equivalents.	January 1, 2018	The adoption of this guidance did not have a significant impact on the Company's financial position, results of operations, statements of cash flows, or disclosures.
ASU 2016-17 Consolidation - Interests Held through Related Parties That Are under Common Control	In October 2016, the FASB issued amendments which clarify the consolidation guidance on how a reporting entity that is the single decision maker of a variable interest entity (VIE) should treat indirect interests in the entity held through related parties that are under common control with the reporting entity when determining whether it is the primary beneficiary of that VIE.	January 1, 2017	The adoption of this guidance did not have a significant impact on the Company's financial position, results of operations, or disclosures.
ASU 2016-16 Income Taxes: Intra-Entity Transfers of Assets Other Than Inventory	In October 2016, the FASB issued amendments that require an entity to recognize the income tax consequences of an intra-entity transfer of an asset other than inventory when the transfer occurs.	January 1, 2018	The adoption of this guidance did not have a significant impact on the Company's financial position, results of operations, or disclosures.
ASU 2016-15 Statement of Cash Flows: Classification of Certain Cash Receipts and Cash Payments	In August 2016, the FASB issued amendments that provide guidance on eight specific statement of cash flow classification issues, including distributions received from equity method investees.	January 1, 2018	The Company elected nature of distribution for distributions received from equity method investees. The adoption of this guidance did not have a significant impact on the Company's financial position, statement of cash flows, results of operations, or disclosures.
ASU 2016-09 Compensation - Stock Compensation: Improvements to Employee Share-Based Payment Accounting	In March 2016, the FASB issued amendments which simplify several aspects for share-based payment award transactions, including the income tax consequences, classification of awards as either liability or equity, classification of taxes paid on the statement of cash flows and treatment of forfeitures.	January 1, 2017	As a result of applying this requirement, the Company believes that recognition of excess tax benefits will increase volatility in its statement of operations and the Company made an entity-wide accounting policy election to estimate the number of awards that are expected to vest (consistent with the Company's prior policy), but the adoption of this guidance did not have a significant impact on the Company's financial position, results of operations, statements of cash flows, or disclosures.
ASU 2016-07 Investments - Equity Method and Joint Ventures - Simplifying the Transition to the Equity Method of Accounting	In March 2016, the FASB issued amendments which eliminate the requirement that when an investment qualifies for use of the equity method as a result of an increase in the level of ownership interest or degree of influence, an investor must adjust the investment, results of operations, and retained earnings retroactively on a step-by-step basis as if the equity method had been in effect during all previous periods that the investment had been held. Per the amendments, upon qualifying for the equity method of accounting, no retroactive adjustment of the investment is required.	January 1, 2017	The adoption of this guidance did not have a significant impact on the Company's financial position, results of operations, or disclosures.



Standard	Description	Date of Adoption	Effect on Financial Statements or Other Significant Matters
ASU 2016-06 Derivatives and Hedging - Contingent Put and Call Options in Debt Instruments	In March 2016, the FASB issued amendments which clarify what steps are required when assessing whether the economic characteristics and risks of call (put) options are clearly and closely related to the economic characteristics and risks of their debt hosts, which is one of the criteria for bifurcating an embedded derivative. Consequently, when a call (put) option is contingently exercisable, an entity does not have to assess whether the event that triggers the ability to exercise a call (put) option is related to interest rates or credit risks.	January 1, 2017	The adoption of this guidance did not have a significant impact on the Company's financial position, results of operations, or disclosures.
ASU 2016-05 Derivatives and Hedging - Effect of Derivative Contract Novations on Existing Hedge Accounting Relationships	In March 2016, the FASB issued amendments which clarify that a change in the counterparty to a derivative instrument that has been designated as the hedging instrument does not, in and of itself, require dedesignation of that hedging relationship provided that all other hedge accounting criteria remain intact.	January 1, 2017	The adoption of this guidance did not have a significant impact on the Company's financial position, results of operations, or disclosures.



Standard	Description	Date of Adoption	Effect on Financial Statements or Other Significant Matters
ASU 2016-02 Leases as clarified and amended by: ASU 2018-01, Leases: Land Easement Practical Expedient for Transition to Topic 842, ASU 2018-10, Codification Improvements to Topic 842, Leases, ASU 2018-11, Leases, Targeted Improvements, and ASU 2018-20, Leases: Narrow-Scope Improvements for Lessors	In February 2016, the FASB issued updated guidance for accounting for leases (“Leases Update”). Per the Leases Update, lessees are required to recognize all leases on the balance sheet with the exception of short-term leases. A lease liability will be recorded for the obligation of a lessee to make lease payments arising from a lease. Leases will be classified as finance or operating, with classification affecting the pattern and classification of expense recognition in the income statement. The Leases Update provided a number of optional practical expedients. The Company elected the "package of practical expedients," which permits the Company not to reassess under the new standard its prior conclusions about lease identification, lease classification and initial direct costs. Under the Leases Update, lessor accounting is largely unchanged. In January 2018, an amendment was issued to the Leases Update which provided an entity with the option to elect a transition practical expedient to not evaluate land easements that exist or expired before the entity's adoption of the Leases Update and that were not previously accounted for as leases. In July 2018, the FASB issued two amendments to the Leases Update which clarified, corrected errors in, or made minor improvements to the Leases Update and provided entities with an optional transition method to adopt the Leases Update by recording a cumulative-effect adjustment to beginning retained earnings. Additionally, the amendments provided lessors with a practical expedient to not separate nonlease components from associated lease components and instead account for those components as a single component under certain conditions. In December 2018, an amendment to the Leases Update was issued to clarify: 1) lessor accounting for all sales (and other similar) taxes; 2) the handling of certain lessor costs when the amount of those costs is not readily determinable; and 3) lessor allocation of certain variable payments to the lease and non-lease components.	January 1, 2019	The Company has operating and finance leases for office space and equipment. The Company elected the short-term lease exemption for all classes of leases which allows the Company to not recognize right-of-use assets and lease liabilities on the consolidated balance sheet and allows the Company to recognize the lease expense for short-term leases on a straight-line basis over the lease term. The Company elected the practical expedient to not separate lease and non-lease components and applied it to all classes of leases where the non-lease components are not significant. Some of the Company's leases include options to extend or terminate the lease and the lease terms may include such options when it is reasonably certain that the Company will exercise that option. Certain leases also include options to purchase the leased property. The leases within scope of the leases update increased the Company's right-of-use assets and lease liabilities recorded in its consolidated balance sheet by $134 million. As of January 1, 2019, the Company did not have land easements, but has elected the practical expedient as a safe harbor. The Company elected the optional transition method and as a safe harbor, the practical expedient provided to lessors. The Company has made an accounting policy election to exclude amounts collected from customers for all sales (and other similar) taxes from the transaction price. The adoption of the Leases Update and related amendments did not have a significant impact on the Company's financial position, results of operations, or disclosures.



Standard	Description	Date of Adoption	Effect on Financial Statements or Other Significant Matters
ASU 2016-01 Financial Instruments - Overall: Recognition and Measurement of Financial Assets and Financial Liabilities	In January 2016, the FASB issued guidance to address certain aspects of recognition, measurement, presentation, and disclosure of financial instruments. The main provisions of this guidance require certain equity investments to be measured at fair value with changes in fair value recognized in net earnings; separate presentation in other comprehensive income for changes in fair value of financial liabilities measured under the fair value option that are due to instrument-specific credit risk; and changes in disclosures associated with the fair value of financial instruments. The guidance also clarifies that entities should evaluate the need for a valuation allowance on a deferred tax asset (DTA) related to available-for-sale (AFS) securities in combination with the entity's other DTAs.	January 1, 2018	The Company recorded a cumulative effect adjustment with an increase to beginning 2018 retained earnings and a decrease to beginning 2018 AOCI of $148 million, net of taxes.

Accounting Pronouncements Pending Adoption



Standard	Description	Effect on Financial Statements or Other Significant Matters
ASU 2020-01 Clarifying the interactions between Topic 321, Topic 323, and Topic 815	In January 2020, the FASB issued amendments clarifying that an entity should consider observable transactions that require it to either apply or discontinue the equity method of accounting for the purposes of applying the measurement alternative in accordance with Topic 321 immediately before applying or upon discontinuing the equity method. In addition, the amendments clarify that for the purpose of applying certain derivative guidance in Topic 815, an entity should not consider whether, upon the settlement of the forward contract or exercise of the purchased option, individually or with existing investments, the underlying securities would be accounted for under the equity method in Topic 323 or the fair value option in accordance with the financial instruments guidance in Topic 825. An entity also would evaluate the remaining characteristics in Topic 815 to determine the accounting for those forward contracts and purchased options. The amendments are effective for public business entities for fiscal years beginning after December 15, 2020, and interim periods within those fiscal years. Early adoption is permitted.	The adoption of this guidance is not expected to have a significant impact on the Company's financial position, results of operations, or disclosures.



Standard	Description	Effect on Financial Statements or Other Significant Matters
ASU 2019-04 Codification Improvements to Topic 326, Financial Instruments - Credit Losses, Topic 815, Derivatives and Hedging, and Topic 825, Financial Instruments	In April 2019, the FASB issued Codification improvements to clarify and correct certain areas of guidance amended as part of ASU 2016-01, Financial Instruments - Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities; ASU 2016-13, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments; and ASU 2017-12, Derivative and Hedging (Topic 815): Targeted Improvements to Accounting for Hedging Activities. The most significant of these improvements to the Company was related to the Codification improvement to ASU 2017-12 and the clarification that a one-time reclassification of assets that are eligible to be hedged under the last-of-layer method (i.e., certain pre-payable securities) from held-to-maturity to available-for-sale is allowed under the new hedge accounting guidance and would not impact the Company’s ability to continue to classify other bonds as held-to-maturity. This clarification is effective for the Company beginning January 1, 2020, with early adoption permitted. If a reclassification is elected, it must be reflected as of the date of adoption of this update. The other amendments related to ASU 2017-12 and 2016-01 are either not significant, or were previously implemented as part of the related ASU adoptions. Applicable amendments related to ASU 2016-13 are discussed within the pending adoption of that update below.	The Company did not reclassify any assets from held-to-maturity to available-for-sale as part of its implementation of ASU 2017-12, and is therefore eligible to reclassify qualifying securities as a result of these clarifications. Effective on January 1, 2020, the Company anticipates the reclassification of approximately $6.9 billion (at amortized cost) of pre-payable fixed-maturity securities from the held-to-maturity to the available-for-sale category. This reclassification is expected to result in recording in accumulated other comprehensive income a net unrealized gain of approximately $800 million on an after-tax basis, based on the securities’ fair values on the reclassification date. The reclassification will impact the adoption of ASU 2016-13 which will be effective January 1, 2020 (see ASU 2016-13 below for additional details).
ASU 2018-17 Consolidation: Targeted Improvements to Related Party Guidance for Variable Interest Entities	In October 2018, the FASB issued targeted improvements which provide that indirect interests held through related parties under common control should be considered on a proportional basis for determining whether fees paid to decision makers and service providers are variable interests. The amendments are effective for public business entities for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2019. Early adoption is permitted.	The adoption of this guidance is not expected to have a significant impact on the Company’s financial position, results of operations or disclosures.
ASU 2018-13 Fair Value Measurement, Disclosure Framework - Changes to the Disclosure Requirements for Fair Value Measurement	In August 2018, the FASB issued amendments to the disclosure requirements on fair value measurements. The amendments remove, modify, and add certain disclosures. The amendments are effective for all entities for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2019. Early adoption is permitted. Further, an entity is permitted to early adopt any removed or modified disclosures upon issuance of this update and delay adoption of the additional disclosures until their effective date.	The adoption of this guidance is not expected to have a significant impact on the Company’s financial position, results of operations, or disclosures.



Standard	Description	Effect on Financial Statements or Other Significant Matters
ASU 2018-12 Financial Services - Insurance, Targeted Improvements to the Accounting for Long-Duration Contracts as clarified and amended by: ASU No. 2019-09, Financial Services Insurance (Topic 944)- Effective Date	In August 2018, the FASB issued amendments that will significantly change how insurers account for long-duration contracts. The amendments will change existing recognition, measurement, presentation, and disclosure requirements. Issues addressed in the new guidance include: 1) a requirement to review and, if there is a change, update assumptions for the liability for future policy benefits at least annually, and to update the discount rate assumption quarterly, 2) accounting for market risk benefits at fair value, 3) simplified amortization for deferred acquisition costs, and 4) enhanced financial statement presentation and disclosures. In November 2019, the FASB issued an amendment extending the effective date for public business entities that meet the definition of an SEC filer, excluding entities eligible to be small reporting companies as defined by the SEC, by one year. The amendments are now effective for the Company for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2021. Early application of the amendments is permitted.	The Company is thoroughly evaluating the impact of adoption and expects that the adoption will have a significant impact on the Company’s financial position, results of operations, and disclosures. The Company anticipates that the requirement to update assumptions for liability for future policy benefits will have a significant impact on its results of operations, systems, processes and controls while the requirement to update the discount rate will have a significant impact on its equity. The Company has no products with market risk benefits. The Company does not expect to early adopt the updated standard and has tentatively selected a modified retrospective transition method.
ASU 2017-04 Intangibles - Goodwill and Other: Simplifying the Test for Goodwill Impairment	In January 2017, the FASB issued amendments simplifying the subsequent measurement of goodwill. An entity, under this update, is no longer required to perform a hypothetical purchase price allocation to measure goodwill impairment. Instead, the entity should perform its annual or interim goodwill impairment test by comparing the fair value of a reporting unit with its carrying amount. The amendments are effective for public business entities that are SEC filers for annual or any interim goodwill impairment tests in fiscal years beginning after December 15, 2019. Early adoption is permitted for any goodwill impairment tests performed on testing dates after January 1, 2017.	The adoption of this guidance is not expected to have a significant impact on the Company's financial position, results of operations, or disclosures.



Standard	Description	Effect on Financial Statements or Other Significant Matters
ASU 2016-13 Financial Instruments - Credit Losses: Measurement of Credit Losses on Financial Instruments as clarified and amended by: ASU 2019-04, Codification Improvements to Topic 326, Financial Instruments - Credit Losses, Topic 815, Derivatives and Hedging, and Topic 825, Financial Instruments, ASU 2019-05, Financial Instruments - Credit Losses (Topic 326), Targeted Transition Relief and ASU 2019-11, Codification Improvements to Topic 326, Financial Instruments- Credit Losses	In June 2016, the FASB issued amendments that require a financial asset (or a group of financial assets) measured at amortized cost to be presented net of an allowance for credit losses (Credit Losses ASU) in order to reflect the amount expected to be collected on the financial asset(s). The measurement of expected credit losses is amended by replacing the incurred loss impairment methodology in current U.S. GAAP with a methodology that reflects expected credit losses and requires consideration of a broader range of reasonable and supportable information. Credit losses on available-for-sale debt securities will be measured in a manner similar to current U.S. GAAP; however, the amendments require that credit losses be presented as an allowance rather than as a write-down. Other amendments include changes to the balance sheet presentation and interest income recognition of purchased financial assets with a more-than-insignificant credit deterioration since origination (PCD financial assets). The Credit Losses ASU is effective for public companies for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years. Companies may early adopt this guidance as of the fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. The amendments will be adopted following a modified-retrospective approach resulting in a cumulative effect adjustment in retained earnings as of the beginning of the year of adoption. Two exceptions to this adoption method are for PCD financial assets and debt securities for which other-than-temporary impairment (OTTI) will have been recognized before the effective date. Loans purchased with credit deterioration accounted for under current U.S. GAAP as "purchased credit impaired" (PCI) financial assets will be classified as PCD financial assets at transition and PCD guidance will be applied prospectively. Debt securities that have experienced OTTI before the effective date will follow a prospective adoption method which allows an entity to maintain the same amortized cost basis before and after the effective date. In April 2019, the Credit Losses ASU was amended to allow entities to make a policy election about presentation and disclosure of accrued interest receivable and the related credit losses, whereby entities that write off uncollectible accrued interest receivable in a timely manner can make a policy election not to measure an allowance on the accrued interest receivable. Other amendments made within this Update clarify and address stakeholders’ specific issues about certain aspects of the Credit Losses ASU. In May 2019, the FASB granted a targeted transition relief by allowing to irrevocably elect the fair value option for certain financial assets previously measured at amortized cost. These amendments will be effective upon adoption of the Credit Losses ASU.	The Company has identified the following financial instruments in scope of the new guidance: certain fixed maturity securities, loans and loan receivables, reinsurance recoverable, as well as certain other receivable balances and off-balance sheet arrangements. The Company has concluded that of the held-to-maturity fixed maturity securities, Japanese government and agency securities and certain Japanese government-guaranteed mortgage backed securities meet the requirements for a zero-loss expectation and therefore will not be included in the current expected credit loss measurement process upon adoption of the new standard. The Company has substantially completed the review and validation of credit models, methodologies and inputs for all asset classes. The Company performed parallel runs during the second, third and fourth quarters and refined its estimation process with additional parallel testing throughout 2019. The Company has estimated the adoption-date net after-tax impact at a $56 million decrease to retained earnings. As noted above relative to ASU 2019-04, the Company is planning a one-time reclassification as of January 1, 2020 of approximately $6.9 billion (amortized cost as of December 31, 2019) of its eligible fixed-maturity securities from held-to-maturity to available-for-sale category. The aforementioned reclassification has been reflected in the expected impact estimate from adoption of ASU 2016-13. The Company plans to adopt this ASU on January 1, 2020.

Recent accounting guidance not discussed above is not applicable, did not have, or is not expected to have a material impact to the Company's business.

BUSINESS SEGMENT AND FOREIGN INFORMATION

12 Months Ended

Dec. 31, 2019

Segment Reporting [Abstract]

BUSINESS SEGMENT INFORMATION

BUSINESS SEGMENT AND FOREIGN INFORMATION

The Company consists of two reportable insurance business segments: Aflac Japan and Aflac U.S., both of which sell supplemental health and life insurance. In addition, operating business units that are not individually reportable and business activities, including reinsurance retrocession activities, not included in Aflac Japan or Aflac U.S. are included in Corporate and other.

The Company does not allocate corporate overhead expenses to business segments. Consistent with U.S. GAAP accounting guidance for segment reporting, the Company evaluates and manages its business segments using a financial performance measure called pretax adjusted earnings. Adjusted earnings are adjusted revenues less benefits and adjusted expenses. The adjustments to both revenues and expenses account for certain items that cannot be predicted or that are outside management’s control. Adjusted revenues are U.S. GAAP total revenues excluding realized investment gains and losses, except for amortized hedge costs/income related to foreign currency exposure management strategies and net interest cash flows from derivatives associated with certain investment strategies. Adjusted expenses are U.S. GAAP total acquisition and operating expenses including the impact of interest cash flows from derivatives associated with notes payable but excluding any nonrecurring or other items not associated with the normal course of the Company’s insurance operations and that do not reflect Aflac’s underlying business performance. The Company excludes income taxes related to operations to arrive at pretax adjusted earnings. Information regarding operations by reportable segment and Corporate and other for the years ended December 31 follows:



(In millions)	2019			2018				2017
Revenues:
Aflac Japan:
Net earned premiums:
Cancer		$	6,031		$	5,849			$	5,612
Medical and other health		3,582			3,516				3,379
Life insurance		3,159			3,397				3,761
Net investment income, less amortized hedge costs ^(1),(2)		2,496			2,403				2,235
Other income		45			41				41
Total Aflac Japan		15,313			15,206				15,028
Aflac U.S.:
Net earned premiums:
Accident/disability		2,665			2,611				2,537
Cancer		1,309			1,311				1,308
Other health		1,548			1,508				1,445
Life insurance		286			278				273
Net investment income		720			727				721
Other income		22			8				5
Total Aflac U.S.		6,550			6,443				6,289
Corporate and other ⁽³⁾		393			339				272
Total adjusted revenues		22,256			21,988				21,589
Realized investment gains (losses) ^(1),(2),(3)		51			(230		)		78
Total revenues		$	22,307		$	21,758			$	21,667

⁽¹⁾Amortized hedge costs of $257, $236 and $228 in 2019, 2018 and 2017, respectively, related to certain foreign currency exposure management strategies have been reclassified from realized investment gains (losses) and reported as a deduction from net investment income when analyzing operations.

⁽²⁾ Net interest cash flows from derivatives associated with certain investment strategies of $(17) in 2019 and an immaterial amount in 2018 have been reclassified from realized investment gains (losses) and included in adjusted earnings as a component of net investment income.

⁽³⁾Amortized hedge income of $89 in 2019 and $36 in 2018 related to certain foreign currency exposure management strategies has been reclassified from realized investment gains (losses) and reported as an increase to net investment income when analyzing operations.



(In millions)	2019				2018				2017
Pretax earnings:
Aflac Japan ^(1),(2)		$	3,261			$	3,208			$	3,054
Aflac U.S.		1,272				1,285				1,245
Corporate and other ^(3),(4)		(72		)		(139		)		(212		)
Pretax adjusted earnings ⁽⁵⁾		4,461				4,354				4,087
Realized investment gains (losses) ^{(1),(2),(3),(4)}		(15		)		(297		)		0
Other income (loss) ⁽⁶⁾		(1		)		(74		)		(69		)
Total earnings before income taxes		$	4,445			$	3,983			$	4,018
Income taxes applicable to pretax adjusted earnings		$	1,147			$	1,129			$	1,370
Effect of foreign currency translation on after-tax adjusted earnings		15				28				(41		)

⁽¹⁾Amortized hedge costs of $257, $236 and $228 in 2019, 2018 and 2017, respectively, related to certain foreign currency exposure management strategies have been reclassified from realized investment gains (losses) and reported as a deduction from net investment income when analyzing operations.

⁽²⁾ Net interest cash flows from derivatives associated with certain investment strategies of $(17) in 2019 and an immaterial amount in 2018 have been reclassified from realized investment gains (losses) and included in adjusted earnings as a component of net investment income.

⁽³⁾Amortized hedge income of $89 in 2019 and $36 in 2018 related to certain foreign currency exposure management strategies has been reclassified from realized investment gains (losses) and reported as an increase to net investment income when analyzing operations.

⁽⁴⁾A gain of $66 in 2019, $67 in 2018 and $77 in 2017, related to the interest rate component of the change in fair value of foreign currency swaps on notes payable have been reclassified from realized investment gains (losses) and included in adjusted earnings when analyzing operations.

⁽⁵⁾ Includes $135, $122 and $122 of interest expense on debt in 2019, 2018 and 2017

⁽⁶⁾ Includes expense of $13 in 2017 for the early extinguishment of debt

Assets as of December 31 were as follows:



(In millions)	2019			2018
Assets:
Aflac Japan		$	127,523		$	118,342
Aflac U.S.		20,945			19,100
Corporate and other		4,300			2,964
Total assets		$	152,768		$	140,406

Yen-Translation Effects: The following table shows the yen/dollar exchange rates used for or during the periods ended December 31. Exchange effects were calculated using the same yen/dollar exchange rate for the current year as for each respective prior year.



	2019				2018				2017
Statements of Earnings:
Weighted-average yen/dollar exchange rate ⁽¹⁾		109.07				110.39				112.16
Yen percent strengthening (weakening)		1.2		%		1.6		%		(3.1		)%
Exchange effect on pretax adjusted earnings (in millions)		$	20			$	38			$	(63	)



	2019				2018
Balance Sheets:
Yen/dollar exchange rate at December 31⁽¹⁾		109.56				111.00
Yen percent strengthening (weakening)		1.3		%		1.8		%
Exchange effect on total assets (in millions)		$	1,225			$	1,362
Exchange effect on total liabilities (in millions)		1,533				1,270

⁽¹⁾Rates are based on the published MUFG Bank, Ltd. telegraphic transfer middle rate (TTM)

Transfers of funds from Aflac Japan: Aflac Japan makes payments to the Parent Company for management fees, allocated expenses and remittances of earnings. Prior to the Aflac Japan branch conversion on April 1, 2018, Aflac Japan paid allocated expenses and profit remittances to Aflac U.S. Information on transfers for each of the years ended December 31 is shown below. See Note 13 for information concerning restrictions on transfers from Aflac Japan.



(In millions)	2019			2018			2017
Management fees		$	75		$	136		$	93
Allocated expenses		4			24			109
Profit remittances		2,070			808			1,150
Total transfers from Aflac Japan		$	2,149		$	968		$	1,352

Property and Equipment: The costs of buildings, furniture and equipment are depreciated principally on a straight-line basis over their estimated useful lives (maximum of 50 years for buildings and 20 years for furniture and equipment). Expenditures for maintenance and repairs are expensed as incurred; expenditures for betterments are capitalized and depreciated. Classes of property and equipment as of December 31 were as follows:



(In millions)	2019			2018
Property and equipment:
Land		$	168		$	168
Buildings		473			456
Equipment and furniture		549			400
Total property and equipment		1,190			1,024
Less accumulated depreciation		609			581
Net property and equipment		$	581		$	443

Receivables: Receivables consist primarily of monthly insurance premiums due from individual policyholders or their employers for payroll deduction of premiums, net of an allowance for doubtful accounts. At December 31, 2019, $258 million, or 31.2% of total receivables, were related to Aflac Japan's operations, compared with $334 million, or 39.2%, at December 31, 2018.

INVESTMENTS

12 Months Ended

Dec. 31, 2019

Investments [Abstract]

INVESTMENTS

Net Investment Income

The components of net investment income for the years ended December 31 were as follows:



(In millions)	2019			2018			2017
Fixed maturity securities		$	3,141		$	3,142		$	3,173
Equity securities		37			38			42
Commercial mortgage and other loans		468			333			86
Other investments		53			36			8
Short-term investments and cash equivalents		56			41			25
Gross investment income		3,755			3,590			3,334
Less investment expenses		177			148			114
Net investment income		$	3,578		$	3,442		$	3,220

Investment Holdings

The amortized cost for the Company's investments in fixed maturity securities, the cost for equity securities and the fair values of these investments at December 31 are shown in the following tables.



	2019
(In millions)	Cost or Amortized Cost			Gross Unrealized Gains			Gross Unrealized Losses			Fair Value
Securities available for sale, carried at fair value through other comprehensive income:
Fixed maturity securities:
Yen-denominated:
Japan government and agencies		$	30,929		$	5,169		$	0		$	36,098
Municipalities		516			116			3			629
Mortgage- and asset-backed securities		229			25			0			254
Public utilities		1,855			406			0			2,261
Sovereign and supranational		680			50			0			730
Banks/financial institutions		6,152			700			86			6,766
Other corporate		5,323			944			24			6,243
Total yen-denominated		45,684			7,410			113			52,981
U.S. dollar-denominated:
U.S. government and agencies		293			9			0			302
Municipalities		1,077			141			0			1,218
Mortgage- and asset-backed securities		149			7			0			156
Public utilities		3,804			725			10			4,519
Sovereign and supranational		239			73			0			312
Banks/financial institutions		2,879			646			4			3,521
Other corporate		25,246			3,255			248			28,253
Total U.S. dollar-denominated		33,687			4,856			262			38,281
Total securities available for sale		$	79,371		$	12,266		$	375		$	91,262



	2018
(In millions)	Cost or Amortized Cost			Gross Unrealized Gains			Gross Unrealized Losses			Fair Value
Securities available for sale, carried at fair value through other comprehensive income:
Fixed maturity securities:
Yen-denominated:
Japan government and agencies		$	30,637		$	3,700		$	140		$	34,197
Municipalities		385			32			9			408
Mortgage- and asset-backed securities		155			22			0			177
Public utilities		1,732			280			4			2,008
Sovereign and supranational		826			123			0			949
Banks/financial institutions		5,440			502			238			5,704
Other corporate		4,852			649			44			5,457
Total yen-denominated		44,027			5,308			435			48,900
U.S dollar-denominated:
U.S. government and agencies		137			9			1			145
Municipalities		1,343			120			8			1,455
Mortgage- and asset-backed securities		155			8			1			162
Public utilities		4,772			496			105			5,163
Sovereign and supranational		251			60			0			311
Banks/financial institutions		2,860			389			35			3,214
Other corporate		23,311			1,343			1,109			23,545
Total U.S. dollar-denominated		32,829			2,425			1,259			33,995
Total securities available for sale		$	76,856		$	7,733		$	1,694		$	82,895



	2019
(In millions)	Cost or Amortized Cost			Gross Unrealized Gains			Gross Unrealized Losses			Fair Value
Securities held to maturity, carried at amortized cost:
Fixed maturity securities:
Yen-denominated:
Japan government and agencies		$	22,241		$	6,050		$	0		$	28,291
Municipalities		821			262			0			1,083
Mortgage- and asset-backed securities		16			1			0			17
Public utilities		2,535			419			0			2,954
Sovereign and supranational		1,123			197			0			1,320
Banks/financial institutions		916			105			3			1,018
Other corporate		2,433			485			7			2,911
Total yen-denominated		30,085			7,519			10			37,594
Total securities held to maturity		$	30,085		$	7,519		$	10		$	37,594



	2018
(In millions)	Cost or Amortized Cost			Gross Unrealized Gains			Gross Unrealized Losses			Fair Value
Securities held to maturity, carried at amortized cost:
Fixed maturity securities:
Yen-denominated:
Japan government and agencies		$	21,712		$	5,326		$	0		$	27,038
Municipalities		359			110			0			469
Mortgage- and asset-backed securities		14			1			0			15
Public utilities		2,727			254			8			2,973
Sovereign and supranational		1,551			289			0			1,840
Banks/financial institutions		1,445			158			20			1,583
Other corporate		2,510			332			38			2,804
Total yen-denominated		30,318			6,470			66			36,722
Total securities held to maturity		$	30,318		$	6,470		$	66		$	36,722



	2019			2018
(In millions)	Fair Value			Fair Value
Equity securities, carried at fair value through net earnings:
Equity securities:
Yen-denominated		$	658		$	641
U.S. dollar-denominated		144			346
Total equity securities		$	802		$	987

The methods of determining the fair values of the Company's investments in fixed maturity securities and equity securities are described in Note 5.

During 2019 and 2018, the Company did not reclassify any investments from the held-to-maturity category to the available-for-sale category. During 2017, the Company reclassified three investments from the held-to-maturity category to the available-for-sale category as a result of the issuers' credit rating being downgraded to below investment grade. At the time of the transfer, the securities had an aggregate amortized cost of $773 million and an aggregate unrealized gain of $47 million.

Contractual and Economic Maturities

The contractual and economic maturities of the Company's investments in fixed maturity securities at December 31, 2019, were as follows:



(In millions)	Amortized Cost			Fair Value
Available for sale:
Due in one year or less		$	583		$	612
Due after one year through five years		7,933			8,122
Due after five years through 10 years		11,347			12,819
Due after 10 years		59,130			69,299
Mortgage- and asset-backed securities		378			410
Total fixed maturity securities available for sale		$	79,371		$	91,262
Held to maturity:
Due in one year or less		$	265		$	270
Due after one year through five years		1,227			1,330
Due after five years through 10 years		532			599
Due after 10 years		28,045			35,378
Mortgage- and asset-backed securities		16			17
Total fixed maturity securities held to maturity		$	30,085		$	37,594

Economic maturities are used for certain debt instruments with no stated maturity where the expected maturity date is based on the combination of features in the financial instrument such as the right to call or prepay obligations or changes in coupon rates.

Investment Concentrations

The Company's process for investing in credit-related investments begins with an independent approach to underwriting each issuer's fundamental credit quality. The Company evaluates independently those factors that it believes could influence an issuer's ability to make payments under the contractual terms of the Company's instruments. This includes a thorough analysis of a variety of items including the issuer's country of domicile (including political, legal, and financial considerations); the industry in which the issuer competes (with an analysis of industry structure, end-market dynamics, and regulation); company specific issues (such as management, assets, earnings, cash generation, and capital needs); and contractual provisions of the instrument (such as financial covenants and position in the capital structure). The Company further evaluates the investment considering broad business and portfolio management objectives, including asset/liability needs, portfolio diversification, and expected income.

Investment exposures that individually exceeded 10% of shareholders' equity as of December 31 were as follows:



	2019			2018
(In millions)	Credit Rating	Amortized Cost	Fair Value	Credit Rating	Amortized Cost	Fair Value
Japan National Government⁽¹⁾	A+	$51,726	$62,584	A+	$51,207	$59,945

⁽¹⁾Japan Government Bonds (JGBs) or JGB-backed securities

Realized Investment Gains and Losses

Information regarding pretax realized gains and losses from investments for the years ended December 31 follows:



(In millions)	2019			2018			2017
Realized investment gains (losses):
Fixed maturity securities:
Available for sale:
Gross gains from sales	$	115		$	101		$	51
Gross losses from sales	(68		)	(156		)	(68		)
Foreign currency gains (losses) on sales and redemptions	(16		)	73			(48		)
Other-than-temporary impairment losses	(13		)	(64		)	(7		)
Total fixed maturity securities	18			(46		)	(72		)
Equity securities	101			(131		)	71			⁽¹⁾
Loan receivables:
Loan loss reserves	(18		)	(19		)	(8		)
Total loan receivables	(18		)	(19		)	(8		)
Derivatives and other:
Derivative gains (losses)	(174		)	(224		)	(109		)
Foreign currency gains (losses)	(62		)	(10		)	(33		)
Total derivatives and other	(236		)	(234		)	(142		)
Total realized investment gains (losses)	$	(135	)	$	(430	)	$	(151	)

⁽¹⁾Includes impairments of $22 in 2017

The unrealized holding gains, net of losses, recorded as a component of realized investment gains and losses for the year ended December 31, 2019, that relates to equity securities still held at the December 31, 2019, reporting date was $64 million.

Unrealized Investment Gains and Losses

Information regarding changes in unrealized gains and losses from investments recorded in AOCI for the years ended December 31 follows:



(In millions)	2019			2018				2017
Changes in unrealized gains (losses):
Fixed maturity securities, available for sale		$	5,852		$	(3,142	)		$	1,657
Equity securities		0			0				71
Total change in unrealized gains (losses)		$	5,852		$	(3,142	)		$	1,728

Effect on Shareholders' Equity

The net effect on shareholders' equity of unrealized gains and losses from fixed maturity securities at December 31 was as follows:



(In millions)	2019				2018
Unrealized gains (losses) on securities available for sale		$	11,891			$	6,039
Deferred income taxes		(3,343		)		(1,805		)
Shareholders’ equity, unrealized gains (losses) on fixed maturity securities		$	8,548			$	4,234

Gross Unrealized Loss Aging

The following tables show the fair values and gross unrealized losses of the Company's available-for-sale and held-to-maturity investments that were in an unrealized loss position, aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position at December 31.



	2019
	Total						Less than 12 months						12 months or longer
(In millions)	Fair Value			Unrealized Losses			Fair Value			Unrealized Losses			Fair Value			Unrealized Losses
Fixed maturity securities:
Municipalities:
Yen-denominated		$	80		$	3		$	80		$	3		$	0		$	0
Public utilities:
U.S. dollar-denominated		306			10			69			2			237			8
Banks/financial institutions:
U.S. dollar-denominated		79			4			18			0			61			4
Yen-denominated		1,828			89			1,828			89			0			0
Other corporate:
U.S. dollar-denominated		4,261			248			792			53			3,469			195
Yen-denominated		636			31			636			31			0			0
Total		$	7,190		$	385		$	3,423		$	178		$	3,767		$	207



	2018
	Total						Less than 12 months						12 months or longer
(In millions)	Fair Value			Unrealized Losses			Fair Value			Unrealized Losses			Fair Value			Unrealized Losses
Fixed maturity securities:
U.S. government and agencies:
U.S. dollar-denominated		$	67		$	1		$	67		$	1		$	0		$	0
Japan government and agencies:
Yen-denominated		3,604			140			3,604			140			0			0
Municipalities:
U.S. dollar-denominated		515			8			515			8			0			0
Yen-denominated		148			9			148			9			0			0
Mortgage- and asset- backed securities:
U.S. dollar-denominated		74			1			74			1			0			0
Public utilities:
U.S. dollar-denominated		1,585			105			892			48			693			57
Yen-denominated		604			12			604			12			0			0
Banks/financial institutions:
U.S. dollar-denominated		625			35			340			19			285			16
Yen-denominated		3,057			258			3,057			258			0			0
Other corporate:
U.S. dollar-denominated		12,899			1,109			5,782			407			7,117			702
Yen-denominated		1,306			82			1,306			82			0			0
Total		$	24,484		$	1,760		$	16,389		$	985		$	8,095		$	775

Analysis of Securities in Unrealized Loss Positions

The unrealized losses on the Company's fixed maturity securities investments have been primarily related to general market changes in interest rates, foreign exchange rates, and/or the levels of credit spreads rather than specific concerns with the issuer's ability to pay interest and repay principal.

For any significant declines in fair value of its fixed maturity securities, the Company performs a more focused review of the related issuers' credit profile. For corporate issuers, the Company evaluates their assets, business profile including industry dynamics and competitive positioning, financial statements and other available financial data. For non-corporate issuers, the Company analyzes all sources of credit support, including issuer-specific factors. The Company utilizes information available in the public domain and, for certain private placement issuers, from consultations with the issuers directly. The Company also considers ratings from Nationally Recognized Statistical Rating Organizations (NRSROs), as well as the specific characteristics of the security it owns including seniority in the issuer's capital structure, covenant protections, or other relevant features. From these reviews, the Company evaluates the issuers' continued ability to service the Company's investment through payment of interest and principal.

Assuming no credit-related factors develop, unrealized gains and losses on fixed maturity securities are expected to diminish as investments near maturity. Based on its credit analysis, the Company believes that the issuers of its fixed maturity investments in the sectors shown in the table above have the ability to service their obligations to the Company.

Commercial Mortgage and Other Loans

The Company classifies its TREs, CMLs and MMLs as held-for-investment and includes them in the commercial mortgage and other loans line on the consolidated balance sheets. The Company carries them on the balance sheet at amortized cost less an estimated allowance for loan losses.

The table below reflects the composition of the carrying value for commercial mortgage and other loans by property type as of December 31.



(In millions)	2019					2018
	Amortized Cost			% of Total		Amortized Cost			% of Total
Commercial Mortgage and other loans
Transitional real estate loans:
Office	$	1,800		18.7	%	$	1,621		23.3	%
Retail	131			1.4		147			2.1
Apartments/Multi-Family	2,085			21.7		1,706			24.6
Industrial	256			2.7		250			3.6
Hospitality	1,036			10.8		531			7.6
Other	164			1.7		139			2.0
Total transitional real estate loans	5,472			57.0		4,394			63.2
Commercial mortgage loans:
Office	410			4.3		281			4.1
Retail	348			3.5		316			4.6
Apartments/Multi-Family	569			5.9		369			5.3
Industrial	383			4.0		99			1.4
Total commercial mortgage loans	1,710			17.7		1,065			15.4
Middle market loans	2,432			25.3		1,487			21.4
Total commercial mortgage and other loans	$	9,614		100.0	%	$	6,946		100.0	%
Allowance for Loan Losses	(45		)			(27		)
Total net commercial mortgage and other loans	$	9,569				$	6,919

Commercial mortgage and transitional real estate loans were secured by properties entirely within the U.S. (with the largest concentrations in California (20%), Texas (15%) and Florida (10%)). Middle market loans are issued only to companies domiciled within the U.S. and Canada.

Transitional Real Estate Loans

Transitional real estate loans are commercial mortgage loans that are typically relatively short-term floating rate instruments secured by a first lien on the property.These loans provide funding for properties undergoing a change in their physical characteristics and/or economic profile and do not typically require any principal repayment prior to the maturity date. This loan portfolio is generally considered to be investment grade. As of December 31, 2019, the Company had $875 million in outstanding commitments to fund transitional real estate loans. These commitments are contingent on the final underwriting and due diligence to be performed.

Commercial Mortgage Loans

Commercial mortgage loans are typically fixed rate loans on commercial real estate with partial repayment of principal over the life of the loan with the remaining outstanding principal being repaid upon maturity. This loan portfolio is generally considered higher quality investment grade loans. As of December 31, 2019, the Company had $27 million of outstanding commitments to fund commercial mortgage loans. These commitments are contingent on the final underwriting and due diligence to be performed.

Middle Market Loans

Middle market loans are typically first lien senior secured cash flow loans to small to mid-size companies for working capital, refinancing, acquisition, and recapitalization. These loans are generally considered to be below investment grade. The carrying value for middle market loans included $99 million and $56 million for a short term credit facility that is reflected in other liabilities on the consolidated balance sheets, as of December 31, 2019, and 2018, respectively.

As of December 31, 2019, the Company had commitments of approximately $502 million to fund potential future loan originations related to this investment program. These commitments are contingent upon the availability of middle market loans that meet the Company's underwriting criteria.

Allowance for Loan Losses

The Company's allowance for loan losses is established using both general and specific allowances. The general allowance is used for loans grouped by similar risk characteristics where a loan-specific or market-specific risk has not been identified, but for which the Company estimates probable incurred losses. The specific allowance is used on an individual loan basis when it is probable that a loss has been incurred. As of December 31, 2019, the Company had loan loss reserves of $6 million related to two specific middle market loans. There was no specific loan loss reserve as of December 31, 2018. The following table presents the rollforward of the Company's allowance for loan losses by portfolio segment during the year ended December 31.



(In millions)	Commercial Mortgage Loans				Transitional Real Estate Loans				Middle Market Loans				Total
Allowance for loan losses at December 31, 2018		$	(1	)		$	(17	)		$	(9	)		$	(27	)
Addition to (release of) allowance for credit losses		(2		)		(5		)		(11		)		(18		)
Allowance for loan losses at December 31, 2019		$	(3	)		$	(22	)		$	(20	)		$	(45	)

As of December 31, 2019 and 2018, the Company had no loans that were past due in regards to principal and/or interest payments. Additionally, the Company held no loans that were on nonaccrual status or considered impaired as of December 31, 2019 and 2018. The Company had no troubled debt restructurings during the years ended December 31, 2019 and 2018.

Credit Quality Indicators

The key credit quality indicators used by the Company in establishing the general and specific loan loss reserves, as well as in determining whether or not a loan should be impaired, include loan-to-value and debt service coverage ratios for CMLs and TREs and ratings for its middle market loan portfolio. Given that transitional real estate loans involve properties undergoing renovation or construction, loan-to-value provides the most insight on the credit risk of the property. Middle market loans generally have below-investment-grade ratings. The performance of the loans are monitored and reviewed periodically, but not less than quarterly.

The table below summarizes key credit quality information by carrying value for CMLs and TREs as of December 31.



	2019
(In millions)	Transitional Real Estate Loans		Commercial Mortgage Loans		Total
Loan-to-Value Ratio:
0%-59.99%	$	1,424	$	1,390	$	2,814
60%-69.99%	1,927		297		2,224
70%-79.99%	2,085		23		2,108
80% or greater	36		0		36
Total	$	5,472	$	1,710	$	7,182
Weighted Average Debt-Service Coverage Ratio			2.38



	2018
(In millions)	Transitional Real Estate Loans		Commercial Mortgage Loans		Total
Loan-to-Value Ratio:
0%-59.99%	$	819	$	877	$	1,696
60%-69.99%	1,681		165		1,846
70%-79.99%	1,558		23		1,581
80% or greater	336		0		336
Total	$	4,394	$	1,065	$	5,459
Weighted Average Debt-Service Coverage Ratio			2.45

Other Investments

The table below reflects the composition of the carrying value for other investments as of December 31.



(In millions)	2019			2018
Other investments:
Policy loans		$	250		$	232
Short-term investments ⁽¹⁾		628			152
Limited partnerships		569			377
Other		30			26
Total other investments		$	1,477		$	787

⁽¹⁾Includes securities lending collateral

As of December 31, 2019, the Company had $1.3 billion in outstanding commitments to fund alternative investments in limited partnerships.

Variable Interest Entities (VIEs)

As a condition of its involvement or investment in a VIE, the Company enters into certain protective rights and covenants that preclude changes in the structure of the VIE that would alter the creditworthiness of the Company's investment or its beneficial interest in the VIE.

For those VIEs other than certain unit trust structures, the Company's involvement is passive in nature. The Company has not, nor has it been, required to purchase any securities issued in the future by these VIEs.

The Company's ownership interest in VIEs is limited to holding the obligations issued by them. The Company has no direct or contingent obligations to fund the limited activities of these VIEs, nor does it have any direct or indirect financial guarantees related to the limited activities of these VIEs. The Company has not provided any assistance or any other type of financing support to any of the VIEs it invests in, nor does it have any intention to do so in the future. For those VIEs in

which the Company holds debt obligations, the weighted-average lives of the Company's notes are very similar to the underlying collateral held by these VIEs where applicable.

The Company's risk of loss related to its interests in any of its VIEs is limited to the carrying value of the related investments held in the VIE.

VIEs - Consolidated

The following table presents the cost or amortized cost, fair value and balance sheet caption in which the assets and liabilities of consolidated VIEs are reported as of December 31.

Investments in Consolidated Variable Interest Entities



	2019						2018
(In millions)	Cost or Amortized Cost			Fair Value			Cost or Amortized Cost			Fair Value
Assets:
Fixed maturity securities, available for sale		$	3,308		$	4,312		$	3,849		$	4,466
Equity securities		0			0			160			160
Commercial mortgage and other loans		7,956			8,015			5,528			5,506
Other investments ⁽¹⁾		494			494			328			328
Other assets ⁽²⁾		169			169			182			182
Total assets of consolidated VIEs		$	11,927		$	12,990		$	10,047		$	10,642
Liabilities:
Other liabilities ⁽²⁾		$	126		$	126		$	102		$	102
Total liabilities of consolidated VIEs		$	126		$	126		$	102		$	102

⁽¹⁾Consists entirely of alternative investments in limited partnerships

⁽²⁾Consists entirely of derivatives

The Company is substantively the only investor in the consolidated VIEs listed in the table above. As the sole investor in these VIEs, the Company has the power to direct the activities of a variable interest entity that most significantly impact the entity's economic performance and is therefore considered to be the primary beneficiary of the VIEs that it consolidates. The Company also participates in substantially all of the variability created by these VIEs. The activities of these VIEs are limited to holding invested assets and foreign currency swaps, as appropriate, and utilizing the cash flows from these securities to service its investment. Neither the Company nor any of its creditors are able to obtain the underlying collateral of the VIEs unless there is an event of default or other specified event. For those VIEs that contain a swap, the Company is not a direct counterparty to the swap contracts and has no control over them. The Company's loss exposure to these VIEs is limited to its original investment. The Company's consolidated VIEs do not rely on outside or ongoing sources of funding to support their activities beyond the underlying collateral and swap contracts, if applicable. With the exception of its investment in unit trust structures, the underlying collateral assets and funding of the Company's consolidated VIEs are generally static in nature.

Investments in Unit Trust Structures

The Company also utilizes unit trust structures in its Aflac Japan segment to invest in various asset classes. As the sole investor of these VIEs, the Company is required to consolidate these trusts under U.S. GAAP.

VIEs - Not Consolidated

The table below reflects the amortized cost, fair value and balance sheet caption in which the Company's investment in VIEs not consolidated are reported as of December 31.

Investments in Variable Interest Entities Not Consolidated



	2019						2018
(In millions)	Amortized Cost			Fair Value			Amortized Cost			Fair Value
Assets:
Fixed maturity securities, available for sale		$	4,129		$	4,884		$	4,575		$	4,982
Fixed maturity securities, held to maturity		1,848			2,236			2,007			2,254
Other investments ⁽¹⁾		75			74			49			49
Total investments in VIEs not consolidated		$	6,052		$	7,194		$	6,631		$	7,285

⁽¹⁾Consists entirely of alternative investments in limited partnerships

The Company holds alternative investments in limited partnerships that have been determined to be VIEs. These partnerships invest in private equity and structured investments. The Company’s maximum exposure to loss on these investments is limited to the amount of its investment. The Company is not the primary beneficiary of these VIEs and is therefore not required to consolidate them. The Company classifies these investments as Other investments in the consolidated balance sheets.

Certain investments in VIEs that the Company is not required to consolidate are investments that are in the form of debt obligations from the VIEs that are irrevocably and unconditionally guaranteed by their corporate parents or sponsors. These VIEs are the primary financing vehicles used by their corporate sponsors to raise financing in the capital markets. The variable interests created by these VIEs are principally or solely a result of the debt instruments issued by them. The Company does not have the power to direct the activities that most significantly impact the entity's economic performance, nor does it have the obligation to absorb losses of the entity or the right to receive benefits from the entity. As such, the Company is not the primary beneficiary of these VIEs and is therefore not required to consolidate them.

Securities Lending and Pledged Securities

The Company lends fixed maturity and public equity securities to financial institutions in short-term security-lending transactions. These short-term security-lending arrangements increase investment income with minimal risk. The Company receives cash or other securities as collateral for such loans. The Company's security lending policy requires that the fair value of the securities received as collateral be 102% or more of the fair value of the loaned securities and that unrestricted cash received as collateral be 100% or more of the fair value of the loaned securities. The securities loaned continue to be carried as investment assets on the Company's balance sheet during the terms of the loans and are not reported as sales. For loans involving unrestricted cash or securities as collateral, the collateral is reported as an asset with a corresponding liability for the return of the collateral. For loans where the Company receives as collateral securities that the Company is not permitted to sell or repledge, the collateral is not reflected on the consolidated financial statements.

Details of collateral by loaned security type and remaining maturity of the agreements as of December 31 were as follows:



Securities Lending Transactions Accounted for as Secured Borrowings
2019
Remaining Contractual Maturity of the Agreements
(In millions)	Overnight and Continuous⁽¹⁾		Up to 30 days		Greater than 90 days		Total
Securities lending transactions:
Fixed maturity securities:
Japan government and agencies	$	0	$	1,013	$	4,759	$	5,772
Public utilities	35		0		0		35
Sovereign and supranational	2		0		0		2
Banks/financial institutions	48		0		0		48
Other corporate	778		0		0		778
Equity securities	0		0		0		0
Total borrowings	$	863	$	1,013	$	4,759	$	6,635
Gross amount of recognized liabilities for securities lending transactions							$	1,876
Amounts related to agreements not included in offsetting disclosure in Note 4							$	4,759

⁽¹⁾The related loaned security, under the Company's Aflac U.S. securities lending program, can be returned to the Company at the transferee's discretion; therefore, they are classified as Overnight and Continuous.



Securities Lending Transactions Accounted for as Secured Borrowings
2018
Remaining Contractual Maturity of the Agreements
(In millions)	Overnight and Continuous⁽¹⁾		Up to 30 days		Greater than 90 days		Total
Securities lending transactions:
Fixed maturity securities:
Japan government and agencies	$	0	$	387	1,190		$	1,577
Municipalities	5		0		0		5
Public utilities	27		0		0		27
Banks/financial institutions	74		0		0		74
Other corporate	549		0		0		549
Equity securities	10		0		0		10
Total borrowings	$	665	$	387	$	1,190	$	2,242
Gross amount of recognized liabilities for securities lending transactions							$	1,052
Amounts related to agreements not included in offsetting disclosure in Note 4							$	1,190

⁽¹⁾The related loaned security, under the Company's Aflac U.S. securities lending program, can be returned to the Company at the transferee's discretion; therefore, they are classified as Overnight and Continuous

The Company did not have any repurchase agreements or repurchase-to-maturity transactions outstanding as of December 31, 2019 and 2018, respectively.

Certain fixed maturity securities can be pledged as collateral as part of derivative transactions, or pledged to support state deposit requirements on certain investment programs. For additional information regarding pledged securities related to derivative transactions, see Note 4.

At December 31, 2019, debt securities with a fair value of $18 million were on deposit with regulatory authorities in the U.S. (including U.S. territories). The Company retains ownership of all securities on deposit and receives the related investment income.

For general information regarding the Company's investment accounting policies, see Note 1.

DERIVATIVE INSTRUMENTS

12 Months Ended

Dec. 31, 2019

Derivative Instruments and Hedging Activities Disclosure [Abstract]

DERIVATIVE INSTRUMENTS

The Company's freestanding derivative financial instruments have historically consisted of:


•	foreign currency forwards and options used in hedging foreign exchange risk on U.S. dollar-denominated investments in Aflac Japan's portfolio


•	foreign currency forwards and options used to economically hedge certain portions of forecasted cash flows denominated in yen and hedge the Company's long term exposure to a weakening yen


•	cross-currency interest rate swaps, also referred to as foreign currency swaps, associated with certain senior notes and subordinated debentures


•	foreign currency swaps and, in prior periods, credit default swaps that are associated with investments in special-purpose entities, including VIEs where the Company is the primary beneficiary


•	interest rate swaps used to economically hedge interest rate fluctuations in certain variable-rate investments


•	interest rate swaptions used to hedge changes in the fair value associated with interest rate fluctuations for certain U.S. dollar-denominated available-for-sale fixed-maturity securities.

Some of the Company's derivatives are designated as cash flow hedges, fair value hedges or net investment hedges; however, other derivatives do not qualify for hedge accounting or the Company elects not to designate them as accounting hedges.

Derivative Types

Foreign currency forwards and options are executed for the Aflac Japan segment in order to hedge the currency risk on the carrying value of certain U.S. dollar-denominated investments. The average maturity of these forwards and options can change depending on factors such as market conditions and types of investments being held. In situations where the maturity of the forwards and options is shorter than the underlying investment being hedged, the Company may enter into new forwards and options near maturity of the existing derivative in order to continue hedging the underlying investment. In forward transactions, Aflac Japan agrees with another party to buy a fixed amount of yen and sell a corresponding amount of U.S. dollars at a specified future date. Aflac Japan also executes foreign currency option transactions in a collar strategy, where Aflac Japan agrees with another party to simultaneously purchase put options and sell call options. In the purchased put transactions, Aflac Japan obtains the option to buy a fixed amount of yen and sell a corresponding amount of U.S. dollars at a specified future date. In the sold call transaction, Aflac Japan agrees to sell a fixed amount of yen and buy a corresponding amount of U.S. dollars at a specified future date. The combination of purchasing the put option and selling the call option results in no net premium being paid (i.e. a costless or zero-cost collar). The foreign currency forwards and options are used in fair value hedging relationships to mitigate the foreign exchange risk associated with U.S. dollar-denominated investments supporting yen-denominated liabilities.

From time to time, the Company may also enter into foreign currency forwards and options to hedge the currency risk associated with the net investment in Aflac Japan. In these forward transactions, Aflac agrees with another party to buy a fixed amount of U.S. dollars and sell a corresponding amount of yen at a specified price at a specified future date. In the option transactions, the Company may use a combination of foreign currency options to protect expected future cash flows by simultaneously purchasing yen put options (options that protect against a weakening yen) and selling yen call options (options that limit participation in a strengthening yen). The combination of these two actions create a zero-cost collar.

The Company enters into foreign currency swaps pursuant to which it exchanges an initial principal amount in one currency for an initial principal amount of another currency, with an agreement to re-exchange the principal amounts at a future date. There may also be periodic exchanges of payments at specified intervals based on the agreed upon rates and notional amounts. Foreign currency swaps are used primarily in the consolidated VIEs in the Company's Aflac Japan portfolio to convert foreign-denominated cash flows to yen, the functional currency of Aflac Japan, in order to minimize cash flow fluctuations. The Company also uses foreign currency swaps to economically convert certain of its U.S. dollar-denominated senior note and subordinated debenture principal and interest obligations into yen-denominated obligations.

In order to reduce investment income volatility from its variable-rate investments, the Company enters into receive–fixed, pay–floating interest rate swaps. These derivatives are cleared and settled through a central clearinghouse.

Swaptions are used to mitigate the adverse impact resulting from significant changes in the fair value of U.S. dollar-denominated available-for-sale securities due to fluctuation in interest rates. In a payer swaption, the Company pays a premium to obtain the right, but not the obligation, to enter into a swap contract where it will pay a fixed rate and receive a floating rate. Interest rate swaption collars are combinations of two swaption positions. In order to maximize the efficiency of the collars while minimizing cost, a collar strategy is used whereby the Company purchases a long payer swaption (the Company purchases an option that allows it to enter into a swap where the Company will pay the fixed rate and receive the floating rate of the swap) and sells a short receiver swaption (the Company sells an option that provides the counterparty with the right to enter into a swap where the Company will receive the fixed rate and pay the floating rate of the swap). The combination of purchasing the long payer swaption and selling the short receiver swaption results in no net premium being paid (i.e. a costless or zero-cost collar).

Derivative Balance Sheet Classification

The table below summarizes the balance sheet classification of the Company's derivative fair value amounts, as well as the gross asset and liability fair value amounts, at December 31. The fair value amounts presented do not include income accruals. Derivative assets are included in “Other Assets,” while derivative liabilities are included in “Other Liabilities” within the Company’s Consolidated Balance Sheets. The notional amount of derivative contracts represents the basis upon which pay or receive amounts are calculated and are not reflective of exposure or credit risk.



	2019									2018
(In millions)				Asset Derivatives			Liability Derivatives						Asset Derivatives			Liability Derivatives
Hedge Designation/ Derivative Type	Notional Amount			Fair Value			Fair Value			Notional Amount			Fair Value			Fair Value
Cash flow hedges:
Foreign currency swaps - VIE		$	75		$	0		$	8		$	75		$	1		$	4
Total cash flow hedges		75			0			8			75			1			4
Fair value hedges:
Foreign currency forwards		964			0			38			2,086			0			34
Foreign currency options		11,573			0			5			9,070			3			1
Interest rate swaptions		243			0			0			500			0			1
Total fair value hedges		12,780			0			43			11,656			3			36
Net investment hedge:
Foreign currency forwards		4,952			72			2			0			0			0
Foreign currency options		2,000			0			0			0			0			0
Total net investment hedge		6,952			72			2			0			0			0
Non-qualifying strategies:
Foreign currency swaps		2,800			72			78			2,800			103			129
Foreign currency swaps - VIE		2,587			169			118			2,587			181			101
Foreign currency forwards		19,821			166			337			16,057			126			117
Foreign currency options		9,553			0			0			430			0			0
Interest rate swaps		7,120			3			0			4,750			3			0
Interest rate swaptions		7			0			0			0			0			0
Total non-qualifying strategies		41,888			410			533			26,624			413			347
Total derivatives		$	61,695		$	482		$	586		$	38,355		$	417		$	387

Cash Flow Hedges

For certain variable-rate U.S. dollar-denominated available-for-sale securities held by Aflac Japan via consolidated VIEs, foreign currency swaps are used to swap the USD variable rate interest and principal payments to fixed rate JPY interest and principal payments. The Company has designated foreign currency swaps as a hedge of the variability in cash flows of a forecasted transaction or of amounts to be received or paid related to a recognized asset (“cash flow” hedge). The remaining maximum length of time for which these cash flows are hedged is seven years. The derivatives in the Company's consolidated VIEs that are not designated as accounting hedges are discussed in the "non-qualifying strategies" section of this note.

Fair Value Hedges

The Company designates and accounts for certain foreign currency forwards, options, and interest rate swaptions as fair value hedges when they meet the requirements for hedge accounting. The Company recognizes gains and losses on these derivatives as well as the offsetting gain or loss on the related hedged items in current earnings.

Foreign currency forwards and options hedge the foreign currency exposure of certain U.S. dollar-denominated available-for-sale fixed-maturity investments held in Aflac Japan. The change in the fair value of the foreign currency forwards related to the changes in the difference between the spot rate and the forward price is excluded from the assessment of hedge effectiveness. The change in fair value of the foreign currency option related to the time value of the option is recognized in current earnings and is excluded from the assessment of hedge effectiveness.

Interest rate swaptions hedge the interest rate exposure of certain U.S. dollar-denominated available-for-sale securities held in Aflac Japan. For these hedging relationships, the Company excludes time value from the assessment of hedge effectiveness and recognizes changes in the intrinsic value of the swaptions in current earnings within net investment income. The change in the time value of the swaptions is recognized in other comprehensive income (loss) and amortized into earnings (net investment income) over its legal term.

The following table presents the gains and losses on derivatives and the related hedged items in fair value hedges for the years ended December 31.

Fair Value Hedging Relationships



(In millions)		Hedging Derivatives								Hedged Items
Hedging Derivatives	Hedged Items	Total Gains (Losses)			Gains (Losses) Excluded from Effectiveness Testing⁽¹⁾			Gains (Losses) Included in Effectiveness Testing⁽²⁾		Gains (Losses)⁽²⁾			Net Realized Gains (Losses) Recognized for Fair Value Hedge
2019:
Foreign currency forwards	Fixed maturity securities	$	(50	)	$	(64	)	$	14	$	(12	)	$	2
Foreign currency options	Fixed maturity securities	(7		)	(7		)	0		0			0
Interest rate swaptions	Fixed maturity securities	(9		)	(9		)	0		0			0
Total gains (losses)		$	(66	)	$	(80	)	$	14	$	(12	)	$	2
2018:
Foreign currency forwards	Fixed maturity securities	$	126		$	(104	)	$	230	$	(242	)	$	(12	)
Foreign currency options	Fixed maturity securities	4			4			0		0			0
Interest rate swaptions	Fixed maturity securities	(1		)	(1		)	0		0			0
Total gains (losses)		$	129		$	(101	)	$	230	$	(242	)	$	(12	)
2017:
Foreign currency forwards	Fixed maturity and equity securities	$	98		$	(202	)	$	300	$	(278	)	$	22
Foreign currency options	Fixed maturity securities	21			10			11		(10		)	1
Total gains (losses)		$	119		$	(192	)	$	311	$	(288	)	$	23

⁽¹⁾Gains (losses) excluded from effectiveness testing includes the forward point on foreign currency forwards and time value change on foreign currency options which are reported in the consolidated statement of earnings as realized investment gains (losses). It also includes the change in the fair value of the interest rate swaptions related to the time value of the swaptions which is recognized as a component of other comprehensive income (loss).

⁽²⁾ Gains and losses on foreign currency forwards and options and related hedged items are reported in the consolidated statement of earnings as realized investment gains (losses). For interest rate swaptions and related hedged items, gains and losses included in the hedge assessment, premium amortization and time value amortization while the hedge items are still outstanding are reported within net investment income. The time value gains and losses for interest rate swaptions when the related hedged items are redeemed are reported in realized investment gains and losses consistent with the impact of the hedged item. For the years ended December 31, 2019 and 2018, gains and losses included in the hedge assessment on interest rate swaptions and related hedged items were immaterial.

The following table shows the carrying amounts of assets designated and qualifying as hedged items in fair value hedges of interest rate risk and the related cumulative hedge adjustment included in the carrying amount as of December 31.



(In millions)	Carrying Amount of the Hedged Assets/(Liabilities)⁽¹⁾					Cumulative Amount of Fair Value Hedging Adjustment Included in the Carrying Amount of Hedged Assets/(Liabilities)
		2019		2018		2019		2018
Fixed maturity securities		$	4,633	$	6,593	$	256	$	294

⁽¹⁾The balance includes hedging adjustment on discontinued hedging relationships of $256 in 2019 and $294 in 2018.

The total notional amount of the Company's interest rate swaptions was $243 in 2019 and $500 in 2018. The hedging adjustment related to these derivatives was immaterial.

Net Investment Hedge

The Company's investment in Aflac Japan is affected by changes in the yen/dollar exchange rate. To mitigate this exposure, the Parent Company's yen-denominated liabilities (see Note 9) have been designated as non-derivative hedges.

Beginning in July 2019, certain foreign currency forwards and options were designated as derivative hedges of the foreign currency exposure of the Company's net investment in Aflac Japan. Prior to April 1, 2018, foreign currency forwards and options were also designated as derivative hedges of the foreign currency exposure of the Company's net investment in Aflac Japan.

The Company's net investment hedge was effective during the years ended December 31, 2019, 2018 and 2017.

Non-qualifying Strategies

For the Company's derivative instruments in consolidated VIEs that do not qualify for hedge accounting treatment, all changes in their fair value are reported in current period earnings within realized investment gains (losses). The amount of gain or loss recognized in earnings for the Company's VIEs is attributable to the derivatives in those investment structures. While the change in value of the swaps is recorded through current period earnings, the change in value of the available-for-sale fixed maturity securities associated with these swaps is recorded through other comprehensive income.

As of December 31, 2019, the Parent Company had cross-currency interest rate swap agreements related to its $350 million senior notes due February 2022, $700 million senior notes due June 2023, $750 million senior notes due November 2024 and $450 million senior notes due March 2025. Changes in the values of these swaps are recorded through current period earnings. For additional information regarding these swaps, see Note 9.

The Company uses foreign exchange forwards and options to economically mitigate the currency risk of some of its U.S. dollar-denominated loan receivables held within the Aflac Japan segment. These arrangements are not designated as accounting hedges, as the foreign currency remeasurement of the loan receivables impacts current period earnings, and generally offsets gains and losses from foreign exchange forwards within realized investment gains (losses). The Company also has certain foreign exchange forwards on U.S. dollar-denominated AFS securities where hedge accounting is not being applied.

Prior to July 2019, in order to economically mitigate currency risk of future yen dividends from Aflac Japan while lowering consolidated hedge costs associated with Aflac Japan's U.S. dollar investment hedging, the Parent Company entered into offsetting hedge positions using foreign exchange forwards. This activity is reported in the Corporate and other segment. As of July 1, 2019, the Parent Company designates these foreign exchange forward contracts as accounting hedges of its net investment in Aflac Japan.

The Company uses interest rate swaps to economically convert the variable rate investment income to a fixed rate on certain variable-rate investments.

Impact of Derivatives and Hedging Instruments

The following table summarizes the impact to realized investment gains (losses) and other comprehensive income (loss) from all derivatives and hedging instruments for the years ended December 31.



	2019													2018												2017
(In millions)	Net Investment Income ⁽¹⁾				Realized Investment Gains (Losses)					Other Comprehensive Income (Loss)⁽²⁾				Net Investment Income ⁽¹⁾			Realized Investment Gains (Losses)					Other Comprehensive Income (Loss)⁽²⁾				Net Investment Income ⁽¹⁾			Realized Investment Gains (Losses)					Other Comprehensive Income (Loss)⁽²⁾
Qualifying hedges:
Cash flow hedges:
Foreign currency swaps - VIE		$	(2	)		$	(1	)			$	(4	)		$	0		$	0				$	3			$	0		$	0				$	1
Total cash flow hedges		(2		)		(1		)	⁽³⁾		(4		)		0			0			⁽³⁾		3				0			0			⁽³⁾		1
Fair value hedges:
Foreign currency forwards ⁽³⁾						(62		)										(116		)										(180		)
Foreign currency options ⁽³⁾						(7		)										4												11
Interest rate swaptions ⁽³⁾		(1		)		0					(8		)		0			0					(1		)		0			0					0
Total fair value hedges		(1		)		(69		)			(8		)		0			(112		)			(1		)		0			(169		)			0
Net investment hedge:
Non-derivative hedging instruments						0					(24		)					0					(32		)					0					(15		)
Foreign currency forwards						10					83							0					0							0					(25		)
Foreign currency options						(4		)			0							0					(8		)					0					5
Total net investment hedge						6					59							0					(40		)					0					(35		)
Non-qualifying strategies:
Foreign currency swaps						90												(40		)										9
Foreign currency swaps - VIE						(68		)										60												44
Foreign currency forwards						(148		)										(135		)										8
Credit default swaps						0												0												(1		)
Interest rate swaps						17												3												0
Total non-qualifying strategies						(110		)										(112		)										60
Total		$	(3	)		$	(174	)			$	47			$	0		$	(224	)			$	(38	)		$	0		$	(109	)			$	(34	)

⁽¹⁾Cash flow hedge items and the change in the fair value of interest rate swaptions related to the time value of the swaptions in fair value hedges are recorded as unrealized gains (losses) on derivatives and net investment hedge items are recorded in the unrealized foreign currency translation gains (losses) line in the consolidated statement of comprehensive income (loss).

⁽²⁾ Impact of cash flow hedges reported as realized investment gains (losses) includes an immaterial amount of gains or losses reclassified from accumulated other comprehensive income (loss) into earnings. It also includes an immaterial amount excluded from effectiveness testing during the years ended December 31, 2019, 2018 and 2017, respectively.

⁽³⁾Impact shown net of effect of hedged items (see Fair Value Hedges section of this Note 4 for further detail)

As of December 31, 2019, deferred gains and losses on derivative instruments recorded in accumulated other comprehensive income that are expected to be reclassified to earnings during the next twelve months were immaterial.

Credit Risk Assumed through Derivatives

For the foreign currency and credit default swaps associated with the Company's VIE investments for which it is the primary beneficiary, the Company bears the risk of loss due to counterparty default even though it is not a direct counterparty to those contracts.

The Company is a direct counterparty to the foreign currency swaps that it has entered into in connection with certain of its senior notes and subordinated debentures; foreign currency forwards; and foreign currency options, and therefore the Company is exposed to credit risk in the event of nonperformance by the counterparties in those contracts. The risk of counterparty default for the Company's foreign currency swaps, certain foreign currency forwards, and foreign currency options is mitigated by collateral posting requirements that counterparties to those transactions must meet.

As of December 31, 2019, all of the Company's derivative agreement counterparties were investment grade.

The Company engages in over-the-counter (OTC) bilateral derivative transactions directly with unaffiliated third parties under International Swaps and Derivatives Association, Inc. (ISDA) agreements and other documentation. Most of the ISDA agreements also include Credit Support Annexes (CSAs) provisions, which generally provide for two-way collateral postings at the first dollar of exposure. The Company mitigates the risk that counterparties to transactions might be unable to fulfill their contractual obligations by monitoring counterparty credit exposure and collateral value while generally requiring that collateral be posted at the outset of the transaction. In addition, a significant portion of the derivative transactions have provisions that give the counterparty the right to terminate the transaction upon a downgrade of Aflac’s financial strength rating. The actual amount of payments that the Company could be required to make depends on market conditions, the fair value of outstanding affected transactions, and other factors prevailing at and after the time of the downgrade.

The Company also engages in OTC cleared derivative transactions through regulated central clearing counterparties. These positions are marked to market and margined on a daily basis (both initial margin and variation margin), and the Company has minimal exposure to credit-related losses in the event of nonperformance by counterparties to these derivatives.

Collateral posted by the Company to third parties for derivative transactions can generally be repledged or resold by the counterparties. The aggregate fair value of all derivative instruments with credit-risk-related contingent features that were in a net liability position by counterparty was approximately $301 million and $139 million as of December 31, 2019 and 2018, respectively. If the credit-risk-related contingent features underlying these agreements had been triggered on December 31, 2019, the Company estimates that it would be required to post a maximum of $46 million of additional collateral to these derivative counterparties. The Company is generally allowed to sell or repledge collateral obtained from its derivative counterparties, although it does not typically exercise such rights. (See the Offsetting tables below for collateral posted or received as of the reported balance sheet dates.)

Offsetting of Financial Instruments and Derivatives

Most of the Company's derivative instruments are subject to enforceable master netting arrangements that provide for the net settlement of all derivative contracts between the Parent Company or its subsidiaries and the respective counterparty in the event of default or upon the occurrence of certain termination events. Collateral support agreements with the master netting arrangements generally provide that the Company will receive or pledge financial collateral at the first dollar of exposure.

The Company has securities lending agreements with unaffiliated financial institutions that post collateral to the Company in return for the use of its fixed maturity and public equity securities (see Note 3). When the Company has entered into securities lending agreements with the same counterparty, the agreements generally provide for net settlement in the event of default by the counterparty. This right of set-off allows the Company to keep and apply collateral received if the counterparty failed to return the securities borrowed from the Company as contractually agreed. For additional information on the Company's accounting policy for securities lending, see Note 1.

The tables below summarize the Company's derivatives and securities lending transactions as of December 31, and as reflected in the tables, in accordance with U.S. GAAP, the Company's policy is to not offset these financial instruments in the Consolidated Balance Sheets.

Offsetting of Financial Assets and Derivative Assets



2019
										Gross Amounts Not Offset in Balance Sheet
(In millions)	Gross Amount of Recognized Assets			Gross Amount Offset in Balance Sheet			Net Amount of Assets Presented in Balance Sheet			Financial Instruments				Securities Collateral			Cash Collateral Received				Net Amount
Derivative assets:
Derivative assets subject to a master netting agreement or offsetting arrangement
OTC - bilateral		$	310		$	0		$	310		$	(190	)	$	(7	)		$	(113	)		$	0
OTC - cleared		3			0			3			0			0				0				3
Total derivative assets subject to a master netting agreement or offsetting arrangement		313			0			313			(190		)	(7		)		(113		)		3
Derivative assets not subject to a master netting agreement or offsetting arrangement
OTC - bilateral		169						169														169
Total derivative assets not subject to a master netting agreement or offsetting arrangement		169						169														169
Total derivative assets		482			0			482			(190		)	(7		)		(113		)		172
Securities lending and similar arrangements		1,860			0			1,860			0			0				(1,860		)		0
Total		$	2,342		$	0		$	2,342		$	(190	)	$	(7	)		$	(1,973	)		$	172



2018
										Gross Amounts Not Offset in Balance Sheet
(In millions)	Gross Amount of Recognized Assets			Gross Amount Offset in Balance Sheet			Net Amount of Assets Presented in Balance Sheet			Financial Instruments				Securities Collateral				Cash Collateral Received				Net Amount
Derivative assets:
Derivative assets subject to a master netting agreement or offsetting arrangement
OTC - bilateral		$	231		$	0		$	231		$	(152	)		$	(23	)		$	(55	)		$	1
OTC - cleared		3			0			3			0				0				(3		)		0
Total derivative assets subject to a master netting agreement or offsetting arrangement		234			0			234			(152		)		(23		)		(58		)		1
Derivative assets not subject to a master netting agreement or offsetting arrangement
OTC - bilateral		183						183															183
Total derivative assets not subject to a master netting agreement or offsetting arrangement		183						183															183
Total derivative assets		417			0			417			(152		)		(23		)		(58		)		184
Securities lending and similar arrangements		1,029			0			1,029			0				0				(1,029		)		0
Total		$	1,446		$	0		$	1,446		$	(152	)		$	(23	)		$	(1,087	)		$	184

Offsetting of Financial Liabilities and Derivative Liabilities



2019
										Gross Amounts Not Offset in Balance Sheet
(In millions)	Gross Amount of Recognized Liabilities			Gross Amount Offset in Balance Sheet			Net Amount of Liabilities Presented in Balance Sheet			Financial Instruments				Securities Collateral			Cash Collateral Pledged				Net Amount
Derivative liabilities:
Derivative liabilities subject to a master netting agreement or offsetting arrangement
OTC - bilateral		$	459		$	0		$	459		$	(190	)	$	(222	)		$	(32	)		$	15
OTC - cleared		1			0			1			0			0				(1		)		0
Total derivative liabilities subject to a master netting agreement or offsetting arrangement		460			0			460			(190		)	(222		)		(33		)		15
Derivative liabilities not subject to a master netting agreement or offsetting arrangement
OTC - bilateral		126						126														126
Total derivative liabilities not subject to a master netting agreement or offsetting arrangement		126						126														126
Total derivative liabilities		586			0			586			(190		)	(222		)		(33		)		141
Securities lending and similar arrangements		1,876			0			1,876			(1,860		)	0				0				16
Total		$	2,462		$	0		$	2,462		$	(2,050	)	$	(222	)		$	(33	)		$	157



2018
										Gross Amounts Not Offset in Balance Sheet
(In millions)	Gross Amount of Recognized Liabilities			Gross Amount Offset in Balance Sheet			Net Amount of Liabilities Presented in Balance Sheet			Financial Instruments				Securities Collateral			Cash Collateral Pledged				Net Amount
Derivative liabilities:
Derivative liabilities subject to a master netting agreement or offsetting arrangement
OTC - bilateral		$	285		$	0		$	285		$	(152	)	$	(37	)		$	(68	)		$	28
Total derivative liabilities subject to a master netting agreement or offsetting arrangement		285			0			285			(152		)	(37		)		(68		)		28
Derivative liabilities not subject to a master netting agreement or offsetting arrangement
OTC - bilateral		102						102														102
Total derivative liabilities not subject to a master netting agreement or offsetting arrangement		102						102														102
Total derivative liabilities		387			0			387			(152		)	(37		)		(68		)		130
Securities lending and similar arrangements		1,052			0			1,052			(1,029		)	0				0				23
Total		$	1,439		$	0		$	1,439		$	(1,181	)	$	(37	)		$	(68	)		$	153

For additional information on the Company's financial instruments, see the accompanying Notes 1, 3 and 5.

FAIR VALUE MEASUREMENTS

12 Months Ended

Dec. 31, 2019

Fair Value Disclosures [Abstract]

FAIR VALUE MEASUREMENTS

Fair Value Hierarchy

U.S. GAAP specifies a hierarchy of valuation techniques based on whether the inputs to those valuation techniques are observable or unobservable. These two types of inputs create three valuation hierarchy levels. Level 1 valuations reflect quoted market prices for identical assets or liabilities in active markets. Level 2 valuations reflect quoted market prices for similar assets or liabilities in an active market, quoted market prices for identical or similar assets or liabilities in non-active markets or model-derived valuations in which all significant valuation inputs are observable in active markets. Level 3 valuations reflect valuations in which one or more of the significant inputs are not observable in an active market.

The following tables present the fair value hierarchy levels of the Company's assets and liabilities that are measured and carried at fair value on a recurring basis as of December 31.



	2019
(In millions)	Quoted Prices in Active Markets for Identical Assets (Level 1)			Significant Observable Inputs (Level 2)			Significant Unobservable Inputs (Level 3)			Total Fair Value
Assets:
Securities available for sale, carried at fair value:
Fixed maturity securities:
Government and agencies		$	34,878		$	1,522		$	0		$	36,400
Municipalities		0			1,847			0			1,847
Mortgage- and asset-backed securities		0			232			178			410
Public utilities		0			6,556			224			6,780
Sovereign and supranational		0			1,042			0			1,042
Banks/financial institutions		0			10,264			23			10,287
Other corporate		0			34,234			262			34,496
Total fixed maturity securities		34,878			55,697			687			91,262
Equity securities		642			80			80			802
Other investments		628			0			0			628
Cash and cash equivalents		4,896			0			0			4,896
Other assets:
Foreign currency swaps		0			72			169			241
Foreign currency forwards		0			238			0			238
Interest rate swaps		0			3			0			3
Total other assets		0			313			169			482
Total assets		$	41,044		$	56,090		$	936		$	98,070
Liabilities:
Other liabilities:
Foreign currency swaps		$	0		$	78		$	126		$	204
Foreign currency forwards		0			377			0			377
Foreign currency options		0			5			0			5
Total liabilities		$	0		$	460		$	126		$	586



	2018
(In millions)	Quoted Prices in Active Markets for Identical Assets (Level 1)			Significant Observable Inputs (Level 2)			Significant Unobservable Inputs (Level 3)			Total Fair Value
Assets:
Securities available for sale, carried at fair value:
Fixed maturity securities:
Government and agencies		$	32,993		$	1,349		$	0		$	34,342
Municipalities		0			1,863			0			1,863
Mortgage- and asset-backed securities		0			162			177			339
Public utilities		0			7,062			109			7,171
Sovereign and supranational		0			1,260			0			1,260
Banks/financial institutions		0			8,895			23			8,918
Other corporate		0			28,789			213			29,002
Total fixed maturity securities		32,993			49,380			522			82,895
Equity securities		874			67			46			987
Other investments		152			0			0			152
Cash and cash equivalents		4,337			0			0			4,337
Other assets:
Foreign currency swaps		0			103			182			285
Foreign currency forwards		0			126			0			126
Foreign currency options		0			3			0			3
Interest rate swaps		0			3			0			3
Total other assets		0			235			182			417
Total assets		$	38,356		$	49,682		$	750		$	88,788
Liabilities:
Other liabilities:
Foreign currency swaps		$	0		$	132		$	102		$	234
Foreign currency forwards		0			151			0			151
Foreign currency options		0			1			0			1
Interest rate swaptions		0			1			0			1
Total liabilities		$	0		$	285		$	102		$	387

The following tables present the carrying amount and fair value categorized by fair value hierarchy level for the Company's financial instruments that are not carried at fair value as of December 31.



	2019
(In millions)	Carrying Value			Quoted Prices in Active Markets for Identical Assets (Level 1)			Significant Observable Inputs (Level 2)			Significant Unobservable Inputs (Level 3)			Total Fair Value
Assets:
Securities held to maturity, carried at amortized cost:
Fixed maturity securities:
Government and agencies		$	22,241		$	27,937		$	354		$	0		$	28,291
Municipalities		821			0			1,083			0			1,083
Mortgage and asset-backed securities		16			0			7			10			17
Public utilities		2,535			0			2,954			0			2,954
Sovereign and supranational		1,123			0			1,320			0			1,320
Banks/financial institutions		916			0			1,018			0			1,018
Other corporate		2,433			0			2,911			0			2,911
Commercial mortgage and other loans		9,569			0			0			9,648			9,648
Other investments⁽¹⁾		30			0			30			0			30
Total assets		$	39,684		$	27,937		$	9,677		$	9,658		$	47,272
Liabilities:
Other policyholders’ funds		$	7,317		$	0		$	0		$	7,234		$	7,234
Notes payable (excluding leases)		6,408			0			6,663			272			6,935
Total liabilities		$	13,725		$	0		$	6,663		$	7,506		$	14,169

⁽¹⁾ Excludes policy loans of $250 and equity method investments of $569, at carrying value



				2018
(In millions)	Carrying Value			Quoted Prices in Active Markets for Identical Assets (Level 1)			Significant Observable Inputs (Level 2)			Significant Unobservable Inputs (Level 3)			Total Fair Value
Assets:
Securities held to maturity, carried at amortized cost:
Fixed maturity securities:
Government and agencies		$	21,712		$	27,030		$	8		$	0		$	27,038
Municipalities		359			0			469			0			469
Mortgage and asset-backed securities		14			0			0			15			15
Public utilities		2,727			0			2,973			0			2,973
Sovereign and supranational		1,551			0			1,840			0			1,840
Banks/financial institutions		1,445			0			1,583			0			1,583
Other corporate		2,510			0			2,804			0			2,804
Commercial mortgage and other loans		6,919			0			0			6,893			6,893
Other investments ⁽¹⁾		26			0			26			0			26
Total assets		$	37,263		$	27,030		$	9,703		$	6,908		$	43,641
Liabilities:
Other policyholders’ funds		$	7,146		$	0		$	0		$	7,067		$	7,067
Notes payable (excluding leases)		5,765			0			5,606			270			5,876
Total liabilities		$	12,911		$	0		$	5,606		$	7,337		$	12,943

⁽¹⁾ Excludes policy loans of $232 and equity method investments of $377, at carrying value

Fair Value of Financial Instruments

Fixed maturity and equity securities

The Company determines the fair values of fixed maturity securities and public and privately-issued equity securities using the following approaches or techniques: price quotes and valuations from third party pricing vendors (including quoted market prices readily available from public exchange markets) and non-binding price quotes the Company obtains from outside brokers.

A third party pricing vendor has developed valuation models to determine fair values of privately issued securities to reflect the impact of the persistent economic environment and the changing regulatory framework. These models are discounted cash flow (DCF) valuation models, but also use information from related markets, specifically the CDS market to estimate expected cash flows. These models take into consideration any unique characteristics of the securities and make various adjustments to arrive at an appropriate issuer-specific loss adjusted credit curve. This credit curve is then used with the relevant recovery rates to estimate expected cash flows and modeling of additional features, including illiquidity adjustments, if necessary, to price the security by discounting those loss adjusted cash flows. In cases where a credit curve cannot be developed from the specific security features, the valuation methodology takes into consideration other market observable inputs, including:

1) the most appropriate comparable security(ies) of the issuer

2) issuer-specific CDS spreads

3) bonds or CDS spreads of comparable issuers with similar characteristics such as rating, geography, or sector

4) bond indices that are comparative in rating, industry, maturity and region.

The pricing data and market quotes the Company obtains from outside sources, including third party pricing services, are reviewed internally for reasonableness. If a fair value appears unreasonable, the Company will re-examine the inputs and assess the reasonableness of the pricing data with the vendor. Additionally, the Company may compare the inputs to

relevant market indices and other performance measurements. Based on management's analysis, the valuation is confirmed or may be revised if there is evidence of a more appropriate estimate of fair value based on available market data. The Company has performed verification of the inputs and calculations in any valuation models to confirm that the valuations represent reasonable estimates of fair value.

The fixed maturity securities classified as Level 3 consist of securities with limited or no observable valuation inputs. For Level 3 securities, the Company estimates the fair value of these securities by obtaining non-binding broker quotes from a limited number of brokers. These brokers base their quotes on a combination of their knowledge of the current pricing environment and market conditions. The Company considers these inputs to be unobservable. The Company also considers a variety of significant valuation inputs in the valuation process, including forward exchange rates, yen swap rates, dollar swap rates, interest rate volatilities, credit spread data on specific issuers, assumed default and default recovery rates, and certain probability assumptions. In obtaining these valuation inputs, the Company has determined that certain pricing assumptions and data used by its pricing sources are difficult to validate or corroborate by the market and/or appear to be internally developed rather than observed in or corroborated by the market. The use of these unobservable valuation inputs causes more subjectivity in the valuation process for these securities.

For the periods presented, the Company has not adjusted the quotes or prices it obtains from the pricing services and brokers it uses.

The following tables present the pricing sources for the fair values of the Company's fixed maturity and equity securities as of December 31.



	2019
(In millions)	Quoted Prices in Active Markets for Identical Assets (Level 1)			Significant Observable Inputs (Level 2)			Significant Unobservable Inputs (Level 3)			Total Fair Value
Securities available for sale, carried at fair value:
Fixed maturity securities:
Government and agencies:
Third party pricing vendor		$	34,878		$	1,522		$	0		$	36,400
Total government and agencies		34,878			1,522			0			36,400
Municipalities:
Third party pricing vendor		0			1,847			0			1,847
Total municipalities		0			1,847			0			1,847
Mortgage- and asset-backed securities:
Third party pricing vendor		0			232			0			232
Broker/other		0			0			178			178
Total mortgage- and asset-backed securities		0			232			178			410
Public utilities:
Third party pricing vendor		0			6,556			0			6,556
Broker/other		0			0			224			224
Total public utilities		0			6,556			224			6,780
Sovereign and supranational:
Third party pricing vendor		0			1,042			0			1,042
Total sovereign and supranational		0			1,042			0			1,042
Banks/financial institutions:
Third party pricing vendor		0			10,264			0			10,264
Broker/other		0			0			23			23
Total banks/financial institutions		0			10,264			23			10,287
Other corporate:
Third party pricing vendor		0			34,234			0			34,234
Broker/other		0			0			262			262
Total other corporate		0			34,234			262			34,496
Total securities available for sale		$	34,878		$	55,697		$	687		$	91,262
Equity securities, carried at fair value:
Third party pricing vendor		$	642		$	80		$	0		$	722
Broker/other		0			0			80			80
Total equity securities		$	642		$	80		$	80		$	802



	2019
(In millions)	Quoted Prices in Active Markets for Identical Assets (Level 1)			Significant Observable Inputs (Level 2)			Significant Unobservable Inputs (Level 3)			Total Fair Value
Securities held to maturity, carried at amortized cost:
Fixed maturity securities:
Government and agencies:
Third party pricing vendor		$	27,937		$	354		$	0		$	28,291
Total government and agencies		27,937			354			0			28,291
Municipalities:
Third party pricing vendor		0			1,083			0			1,083
Total municipalities		0			1,083			0			1,083
Mortgage- and asset-backed securities:
Third party pricing vendor		0			7			0			7
Broker/other		0			0			10			10
Total mortgage- and asset-backed securities		0			7			10			17
Public utilities:
Third party pricing vendor		0			2,954			0			2,954
Total public utilities		0			2,954			0			2,954
Sovereign and supranational:
Third party pricing vendor		0			1,320			0			1,320
Total sovereign and supranational		0			1,320			0			1,320
Banks/financial institutions:
Third party pricing vendor		0			1,018			0			1,018
Total banks/financial institutions		0			1,018			0			1,018
Other corporate:
Third party pricing vendor		0			2,911			0			2,911
Total other corporate		0			2,911			0			2,911
Total securities held to maturity		$	27,937		$	9,647		$	10		$	37,594



	2018
(In millions)	Quoted Prices in Active Markets for Identical Assets (Level 1)			Significant Observable Inputs (Level 2)			Significant Unobservable Inputs (Level 3)			Total Fair Value
Securities available for sale, carried at fair value:
Fixed maturity securities:
Government and agencies:
Third party pricing vendor		$	32,993		$	1,349		$	0		$	34,342
Total government and agencies		32,993			1,349			0			34,342
Municipalities:
Third party pricing vendor		0			1,863			0			1,863
Total municipalities		0			1,863			0			1,863
Mortgage- and asset-backed securities:
Third party pricing vendor		0			162			0			162
Broker/other		0			0			177			177
Total mortgage- and asset-backed securities		0			162			177			339
Public utilities:
Third party pricing vendor		0			7,062			0			7,062
Broker/other		0			0			109			109
Total public utilities		0			7,062			109			7,171
Sovereign and supranational:
Third party pricing vendor		0			1,260			0			1,260
Total sovereign and supranational		0			1,260			0			1,260
Banks/financial institutions:
Third party pricing vendor		0			8,895			0			8,895
Broker/other		0			0			23			23
Total banks/financial institutions		0			8,895			23			8,918
Other corporate:
Third party pricing vendor		0			28,789			0			28,789
Broker/other		0			0			213			213
Total other corporate		0			28,789			213			29,002
Total securities available for sale		$	32,993		$	49,380		$	522		$	82,895
Equity securities, carried at fair value:
Third party pricing vendor		$	874		$	67		$	0		$	941
Broker/other		0			0			46			46
Total equity securities		$	874		$	67		$	46		$	987



	2018
(In millions)	Quoted Prices in Active Markets for Identical Assets (Level 1)			Significant Observable Inputs (Level 2)			Significant Unobservable Inputs (Level 3)			Total Fair Value
Securities held to maturity, carried at amortized cost:
Fixed maturity securities:
Government and agencies:
Third party pricing vendor		$	27,030		$	8		$	0		$	27,038
Total government and agencies		27,030			8			0			27,038
Municipalities:
Third party pricing vendor		0			469			0			469
Total municipalities		0			469			0			469
Mortgage- and asset-backed securities:
Broker/other		0			0			15			15
Total mortgage- and asset-backed securities		0			0			15			15
Public utilities:
Third party pricing vendor		0			2,973			0			2,973
Total public utilities		0			2,973			0			2,973
Sovereign and supranational:
Third party pricing vendor		0			1,840			0			1,840
Total sovereign and supranational		0			1,840			0			1,840
Banks/financial institutions:
Third party pricing vendor		0			1,583			0			1,583
Total banks/financial institutions		0			1,583			0			1,583
Other corporate:
Third party pricing vendor		0			2,804			0			2,804
Total other corporate		0			2,804			0			2,804
Total securities held to maturity		$	27,030		$	9,677		$	15		$	36,722

The following is a discussion of the determination of fair value of the Company's remaining financial instruments.

Derivatives

The Company uses derivative instruments to manage the risk associated with certain assets. However, the derivative instrument may not be classified in the same fair value hierarchy level as the associated asset. The Company uses pricing models to determine the estimated fair value of derivatives. Inputs used to value derivatives include, but are not limited to, interest rates, credit spreads, foreign currency forward and spot rates, and interest volatility. The significant inputs to pricing derivatives are generally observable in the market or can be derived by observable market data. When these inputs are observable, the derivatives are classified as Level 2.

The fair values of the foreign currency forwards and options are based on observable market inputs, therefore they are classified as Level 2.

To determine the fair value of its interest rate derivatives, the Company uses inputs that are generally observable in the market or can be derived from observable market data. Interest rate swaps are cleared trades. In a cleared swap contract the clearinghouse provides benefits to the counterparties similar to contracts listed for investment traded on an exchange since it maintains a daily margin to mitigate counterparties credit risk. These derivatives are priced using observable inputs, accordingly, they are classified as Level 2. For its interest rate swaptions, the Company estimates their fair values using observable market data, including interest rate curves and volatilities. Their fair values are also classified as Level 2.

For derivatives associated with VIEs where the Company is the primary beneficiary, the Company is not the direct counterparty to the swap contracts. As a result, the fair value measurements incorporate the credit risk of the collateral associated with the VIE. The Company receives valuations from a third party pricing vendor for these derivatives. Based on

an analysis of these derivatives and a review of the methodology employed by the pricing vendor, the Company determined that due to the long duration of these swaps and the need to extrapolate from short-term observable data to derive and measure long-term inputs, certain inputs, assumptions and judgments are required to value future cash flows that cannot be corroborated by current inputs or current observable market data. As a result, the derivatives associated with the Company's consolidated VIEs are classified as Level 3 of the fair value hierarchy.

Commercial mortgage and other loans

Commercial mortgage and other loans include transitional real estate loans, commercial mortgage loans and middle market loans. The Company's loan receivables do not have readily determinable market prices and generally lack market liquidity. Fair values for loan receivables are determined based on the present value of expected future cash flows discounted at the applicable U.S. Treasury or London Interbank Offered Rate (LIBOR) yield plus an appropriate spread that considers other risk factors, such as credit and liquidity risk. These spreads are provided by the applicable asset managers based on their knowledge of the current loan pricing environment and market conditions. The spreads are a significant component of the pricing inputs and are generally considered unobservable. Therefore, these investments have been assigned a Level 3 within the fair value hierarchy.

Other investments

Other investments includes short-term investments that are measured at fair value where amortized cost approximates fair value.

Other policyholders' funds

The largest component of the other policyholders' funds liability is the Company's annuity line of business in Aflac Japan. The Company's annuities have fixed benefits and premiums. For this product, the Company estimates the fair value to be equal to the cash surrender value. This is analogous to the value paid to policyholders on the valuation date if they were to surrender their policy. The Company periodically checks the cash value against discounted cash flow projections for reasonableness. The Company considers its inputs for this valuation to be unobservable and have accordingly classified this valuation as Level 3.

Notes payable

The fair values of the Company's publicly issued notes payable are determined by utilizing available sources of observable inputs from third party pricing vendors and are classified as Level 2. The fair values of the Company's yen-denominated loans approximate their carrying values and are classified as Level 3.

Transfers between Hierarchy Levels and Level 3 Rollforward

There were no transfers between Level 1 and 2 for assets and liabilities that are measured and carried at fair value on a recurring basis for the years ended December 31, 2019 and 2018, respectively.

The following tables present the changes in fair value of the Company's investments and derivatives carried at fair value classified as Level 3 as of December 31.



2019
	Fixed Maturity Securities													Equity Securities		Derivatives⁽¹⁾
(In millions)	Mortgage- and Asset- Backed Securities		Public Utilities				Banks/ Financial Institutions			Other Corporate						Foreign Currency Swaps			Credit Default Swaps		Total
Balance, beginning of period	$	177	$	109			$	23		$	213			$	46	$	80		$	0	$	648
Realized investment gains (losses) included in earnings	0		0				0			(1		)		0		(33		)	0		(34		)
Unrealized gains (losses) included in other comprehensive income (loss)	1		6				1			8				0		(4		)	0		12
Purchases, issuances, sales and settlements:
Purchases	0		48				0			165				34		0			0		247
Issuances	0		0				0			0				0		0			0		0
Sales	0		(24		)		0			(17		)		0		0			0		(41		)
Settlements	0		(6		)		0			0				0		0			0		(6		)
Transfers into Level 3	0		116			⁽²⁾	0			26			⁽²⁾	0		0			0		142
Transfers out of Level 3	0		(25		)	⁽²⁾	(1		)	(132		)	^{(2), (3)}	0		0			0		(158		)
Balance, end of period	$	178	$	224			$	23		$	262			$	80	$	43		$	0	$	810
Changes in unrealized gains (losses) relating to Level 3 assets and liabilities still held at the end of the period included in earnings	$	0	$	0			$	0		$	0			$	0	$	(33	)	$	0	$	(33	)

⁽¹⁾Derivative assets and liabilities are presented net

⁽²⁾Transfer due to sector classification change

⁽³⁾ Transfer due to availability of observable market inputs



2018
	Fixed Maturity Securities										Equity Securities			Derivatives⁽¹⁾
(In millions)	Mortgage- and Asset- Backed Securities		Public Utilities		Banks/ Financial Institutions			Other Corporate						Foreign Currency Swaps		Credit Default Swaps			Total
Balance, beginning of period	$	175	$	68	$	25		$	146		$	16		$	22	$	1		$	453
Realized investment gains (losses) included in earnings	0		0		0			0			(1		)	54		(1		)	52
Unrealized gains (losses) included in other comprehensive income (loss)	2		1		(2		)	1			0			4		0			6
Purchases, issuances, sales and settlements:
Purchases	0		40		0			56			31			0		0			127
Issuances	0		0		0			0			0			0		0			0
Sales	0		0		0			0			0			0		0			0
Settlements	0		0		0			(6		)	0			0		0			(6		)
Transfers into Level 3	0		0		0			16			0			0		0			16
Transfers out of Level 3	0		0		0			0			0			0		0			0
Balance, end of period	$	177	$	109	$	23		$	213		$	46		$	80	$	0		$	648
Changes in unrealized gains (losses) relating to Level 3 assets and liabilities still held at the end of the period included in earnings	$	0	$	0	$	0		$	0		$	(1	)	$	54	$	(1	)	$	52

⁽¹⁾Derivative assets and liabilities are presented net

Level 3 Significant Unobservable Input Sensitivity

The following tables summarize the significant unobservable inputs used in the valuation of the Company's Level 3 investments and derivatives carried at fair value as of December 31. Included in the tables are the inputs or range of possible inputs that have an effect on the overall valuation of the financial instruments.

2019

(In millions)

Fair Value

Valuation Technique(s)

Unobservable Input

Range
(Weighted Average)

Assets:

Securities available for sale, carried at fair value:

Fixed maturity securities:

Mortgage- and asset-backed securities

$

178

Consensus pricing

Offered quotes

N/A

^(a)

Public utilities

224

Discounted cash flow

Credit spreads

N/A

^(a)

Banks/financial institutions

23

Consensus pricing

Offered quotes

N/A

^(a)

Other corporate

262

Discounted cash flow

Credit spreads

N/A

^(a)

Equity securities

80

Net asset value

Offered quotes

N/A

^(a)

Other assets:

Foreign currency swaps

106

Discounted cash flow

Interest rates (USD)

1.89% - 2.09%

^(b)

Interest rates (JPY)

.12% - .43%

^(c)

CDS spreads

10 - 100 bps

63

Discounted cash flow

Interest rates (USD)

1.89% - 2.09%

^(b)

Interest rates (JPY)

.12% - .43%

^(c)

Total assets

$

936

Liabilities:

Other liabilities:

Foreign currency swaps

$

118

Discounted cash flow

Interest rates (USD)

1.89% - 2.09%

^(b)

Interest rates (JPY)

.12% - .43%

^(c)

CDS spreads

13 - 159 bps

8

Discounted cash flow

Interest rates (USD)

1.89% - 2.09%

^(b)

Interest rates (JPY)

.12% - .43%

^(c)

Total liabilities

$

126

(a) N/A represents securities where the Company receives unadjusted broker quotes and for which there is no transparency into the providers' valuation techniques or unobservable inputs.

(b) Inputs derived from U.S. long-term rates to accommodate long maturity nature of the Company's swaps

(c) Inputs derived from Japan long-term rates to accommodate long maturity nature of the Company's swaps

2018

(In millions)

Fair Value

Valuation Technique(s)

Unobservable Input

Range
(Weighted Average)

Assets:

Securities available for sale, carried at fair value:

Fixed maturity securities:

Mortgage- and asset-backed securities

$

177

Consensus pricing

Offered quotes

N/A

^(a)

Public utilities

109

Discounted cash flow

Credit spreads

N/A

^(a)

Banks/financial institutions

23

Consensus pricing

Offered quotes

N/A

^(a)

Other corporate

213

Discounted cash flow

Credit spreads

N/A

^(a)

Equity securities

46

Net asset value

Offered quotes

N/A

^(a)

Other assets:

Foreign currency swaps

125

Discounted cash flow

Interest rates (USD)

2.75% - 2.84%

^(b)

Interest rates (JPY)

.18% - .71%

^(c)

CDS spreads

19 - 120 bps

57

Discounted cash flow

Interest rates (USD)

2.75% - 2.84%

^(b)

Interest rates (JPY)

.18% - .71%

^(c)

Total assets

$

750

Liabilities:

Other liabilities:

Foreign currency swaps

$

98

Discounted cash flow

Interest rates (USD)

2.75% - 2.84%

^(b)

Interest rates (JPY)

.18% - .71%

^(c)

CDS spreads

28 - 211 bps

4

Discounted cash flow

Interest rates (USD)

2.75% - 2.84%

^(b)

Interest rates (JPY)

.18% - .71%

^(c)

Total liabilities

$

102

(a) N/A represents securities where the Company receives unadjusted broker quotes and for which there is no transparency into the providers' valuation techniques or unobservable inputs.

(b) Inputs derived from U.S. long-term rates to accommodate long maturity nature of the Company's swaps

(c) Inputs derived from Japan long-term rates to accommodate long maturity nature of the Company's swaps

The following is a discussion of the significant unobservable inputs or valuation techniques used in determining the fair value of securities and derivatives classified as Level 3.

Net Asset Value

The Company holds certain unlisted equity securities whose fair value is derived based on the financial statements published by the investee. These securities do not trade on an active market and the valuations derived are dependent on the availability of timely financial reporting of the investee. Net asset value is an unobservable input in the determination of fair value of equity securities.

Offered Quotes

In circumstances where the Company's valuation model price is overridden because it implies a value that is not consistent with current market conditions, the Company will solicit bids from a limited number of brokers. The Company also receives unadjusted prices from brokers for its mortgage and asset-backed securities. These quotes are non-binding but are reflective of valuation best estimates at that particular point in time. Offered quotes are an unobservable input in the determination of fair value of mortgage- and asset-backed securities, certain banks/financial institutions, certain other corporate, and equity securities investments.

Interest Rates and CDS Spreads

The significant drivers of the valuation of the foreign exchange swaps are interest rates and CDS spreads. Some of the Company's swaps have long maturities that increase the sensitivity of the swaps to interest rate fluctuations. For the Company's foreign exchange or cross currency swaps that are in a net asset position, an increase in yen interest rates (all other factors held constant) will decrease the present value of the yen final settlement receivable (receive leg), thus decreasing the value of the swap as long as the derivative remains in a net asset position.

Foreign exchange swaps also have a lump-sum final settlement of foreign exchange principal amounts at the termination of the swap. Assuming all other factors are held constant, an increase in yen interest rates will decrease the receive leg and decrease the net value of the swap. Likewise, holding all other factors constant, an increase in U.S. dollar interest rates will increase the swap's net value due to the decrease in the present value of the dollar final settlement payable (pay leg).

The extinguisher feature in most of the Company's VIE swaps results in a cessation of cash flows and no further payments between the parties to the swap in the event of a default on the referenced or underlying collateral. To price this feature, the Company applies the survival probability of the referenced entity to the projected cash flows. The survival probability uses the CDS spreads and recovery rates to adjust the present value of the cash flows. For extinguisher swaps with positive values, an increase in CDS spreads decreases the likelihood of receiving the final exchange payments and reduces the value of the swap.

For additional information on the Company's investments and financial instruments, see the accompanying Notes 1, 3 and 4.

- Definition

The entire disclosure for the fair value of financial instruments (as defined), including financial assets and financial liabilities (collectively, as defined), and the measurements of those instruments as well as disclosures related to the fair value of non-financial assets and liabilities. Such disclosures about the financial instruments, assets, and liabilities would include: (1) the fair value of the required items together with their carrying amounts (as appropriate); (2) for items for which it is not practicable to estimate fair value, disclosure would include: (a) information pertinent to estimating fair value (including, carrying amount, effective interest rate, and maturity, and (b) the reasons why it is not practicable to estimate fair value; (3) significant concentrations of credit risk including: (a) information about the activity, region, or economic characteristics identifying a concentration, (b) the maximum amount of loss the entity is exposed to based on the gross fair value of the related item, (c) policy for requiring collateral or other security and information as to accessing such collateral or security, and (d) the nature and brief description of such collateral or security; (4) quantitative information about market risks and how such risks are managed; (5) for items measured on both a recurring and nonrecurring basis information regarding the inputs used to develop the fair value measurement; and (6) for items presented in the financial statement for which fair value measurement is elected: (a) information necessary to understand the reasons for the election, (b) discussion of the effect of fair value changes on earnings, (c) a description of [similar groups] items for which the election is made and the relation thereof to the balance sheet, the aggregate carrying value of items included in the balance sheet that are not eligible for the election; (7) all other required (as defined) and desired information.

+ References + Details

DEFERRED POLICY ACQUISITION COSTS AND INSURANCE EXPENSES

12 Months Ended

Dec. 31, 2019

Deferred Policy Acquisition Costs Disclosures [Abstract]

DEFERRED POLICY ACQUISITION COSTS AND INSURANCE EXPENSES

Consolidated policy acquisition costs deferred were $1.5 billion in 2019, 2018 and 2017. The following table presents a rollforward of deferred policy acquisition costs by segment for the years ended December 31.



	2019								2018
(In millions)	Japan				U.S.				Japan				U.S.
Deferred policy acquisition costs:
Balance, beginning of year		$	6,384			$	3,491			$	6,150			$	3,355
Capitalization		825				626				833				669
Amortization		(709		)		(573		)		(710		)		(534		)
Foreign currency translation and other		84				0				111				1
Balance, end of year		$	6,584			$	3,544			$	6,384			$	3,491

Commissions deferred as a percentage of total acquisition costs deferred were 74% in 2019, compared with 72% in both 2018 and 2017.

Personnel, compensation and benefit expenses as a percentage of insurance expenses were 57% in 2019, compared with 54% in 2018 and 56% in 2017. Advertising expense, which is included in insurance expenses in the consolidated statements of earnings, was as follows for the years ended December 31:



(In millions)	2019			2018			2017
Advertising expense:
Aflac Japan		$	101		$	108		$	100
Aflac U.S.		118			110			110
Total advertising expense		$	219		$	218		$	210

Depreciation and other amortization expenses, which are included in insurance expenses in the consolidated statements of earnings, were as follows for the years ended December 31:



(In millions)	2019			2018			2017
Depreciation expense		$	40		$	48		$	50
Other amortization expense		1			1			3
Total depreciation and other amortization expense		$	41		$	49		$	53

POLICY LIABILITIES

12 Months Ended

Dec. 31, 2019

Insurance Loss Reserves [Abstract]

POLICY LIABILITIES

Policy liabilities consist of future policy benefits, unpaid policy claims, unearned premiums, and other policyholders' funds, which accounted for 85%, 4%, 4% and 7% of total policy liabilities at December 31, 2019, respectively. The Company regularly reviews the adequacy of its policy liabilities in total and by component.

The liability for future policy benefits as of December 31 consisted of the following:



	Liability Amounts								Interest Rate Assumptions
(In millions)	2019				2018
Health insurance
Japan	$	50,941			$	49,496			0.6 - 6.75	%
U.S.	8,646				8,442				3.0 - 7.0
Intercompany eliminations	(532		)	⁽¹⁾	(583		)	⁽¹⁾	2.0
Life insurance
Japan	30,520				28,318				1.0 - 4.5
U.S.	760				695				2.5 - 6.0
Total	$	90,335			$	86,368

⁽¹⁾ Elimination entry necessary due to recapture of a portion of policy liabilities ceded externally, as a result of the reinsurance retrocession transaction as described in Note 8 of the Notes to the Consolidated Financial Statements

The weighted-average interest rates reflected in the consolidated statements of earnings for future policy benefits for Japanese policies were 3.2% in 2019, compared with 3.3% in 2018 and 3.4% in 2017; and for U.S. policies, 5.3% in 2019, compared with 5.3% in 2018 and 5.4% in 2017.

Changes in the liability for unpaid policy claims were as follows for the years ended December 31:



(In millions)	2019				2018				2017
Unpaid supplemental health claims, beginning of period		$	3,952			$	3,884			$	3,707
Less reinsurance recoverables		27				30				27
Net balance, beginning of period		3,925				3,854				3,680
Add claims incurred during the period related to:
Current year		7,216				7,101				6,979
Prior years		(552		)		(563		)		(518		)
Total incurred		6,664				6,538				6,461
Less claims paid during the period on claims incurred during:
Current year		4,715				4,612				4,530
Prior years		1,965				1,898				1,822
Total paid		6,680				6,510				6,352
Effect of foreign exchange rate changes on unpaid claims		29				43				65
Net balance, end of period		3,938				3,925				3,854
Add reinsurance recoverables		30				27				30
Unpaid supplemental health claims, end of period		3,968				3,952				3,884
Unpaid life claims, end of period		691				632				508
Total liability for unpaid policy claims		$	4,659			$	4,584			$	4,392

The incurred claims development related to prior years reflects favorable claims experience compared to previous estimates. The favorable claims development of $552 million for 2019 comprises approximately $395 million from Japan, which represents approximately 72% of the total. Excluding the impact of foreign exchange of a gain of approximately $5 million from December 31, 2018 to December 31, 2019, the favorable claims development in Japan would have been approximately $390 million, representing approximately 71% of the total.

The Company has experienced continued favorable claim trends in 2019 for its core health products in Japan. The Company's experience in Japan related to the average length of stay in the hospital for cancer treatment has shown continued decline in the current period. In addition, cancer treatment patterns in Japan are continuing to be influenced by significant advances in early-detection techniques and by the increased use of pathological diagnosis rather than clinical exams. Additionally, follow-up radiation and chemotherapy treatments are occurring more often on an outpatient basis. Such changes in treatment not only increase the quality of life and initial outcomes for the patients, but also decrease the average length of each hospital stay, resulting in favorable claims development.

As of December 31, 2019 and 2018, unearned premiums consisted primarily of discounted advance premiums on deposit. Discounted advance premiums are premiums on deposit from policyholders in conjunction with their purchase of certain Aflac Japan limited-pay insurance products. These advanced premiums are deferred upon collection and recognized as premium revenue over the contractual premium payment period. These advanced premiums represented 64% of the December 31, 2019 and 69% of the December 31, 2018 unearned premiums balances.

As of December 31, 2019 and 2018, the largest component of the other policyholders' funds liability was the Company's annuity line of business in Aflac Japan. The Company's annuities have fixed benefits and premiums. These annuities represented 97% of other policyholders' funds liability at December 31, 2019 and 2018.

REINSURANCE

12 Months Ended

Dec. 31, 2019

Reinsurance Disclosures [Abstract]

REINSURANCE

The Company periodically enters into fixed quota-share coinsurance agreements with other companies in the normal course of business. For each of its reinsurance agreements, the Company determines whether the agreement provides indemnification against loss or liability relating to insurance risk in accordance with applicable accounting standards. Reinsurance premiums and benefits paid or provided are accounted for on bases consistent with those used in accounting for the original policies issued and the terms of the reinsurance contracts. Premiums and benefits are reported net of insurance ceded.

The Company has recorded a deferred profit liability related to reinsurance transactions. The remaining deferred profit liability of $1.0 billion, as of December 31, 2019, is included in future policy benefits in the consolidated balance sheet and is being amortized into income over the expected lives of the policies. The Company has also recorded a reinsurance recoverable for reinsurance transactions, which is included in other assets in the consolidated balance sheet and had a remaining balance of $970 million and $941 million as of December 31, 2019 and 2018, respectively. The increase in the reinsurance recoverable balance was driven by two aggregating factors: yen strengthening and the growth in reserves related to the business that has been reinsured as the policies age. The spot yen/dollar exchange rate strengthened by approximately 1.3% and ceded reserves increased approximately 1.4% from December 31, 2018, to December 31, 2019.

The following table reconciles direct premium income and direct benefits and claims to net amounts after the effect of reinsurance for the years ended December 31.



(In millions)	2019				2018				2017
Direct premium income		$	19,122			$	19,018			$	18,875
Ceded to other companies:
Ceded Aflac Japan closed blocks		(478		)		(497		)		(515		)
Other		(69		)		(58		)		(51		)
Assumed from other companies:
Retrocession activities		200				208				216
Other		5				6				6
Net premium income		$	18,780			$	18,677			$	18,531

Direct benefits and claims		$	12,237			$	12,293			$	12,486
Ceded benefits and change in reserves for future benefits:
Ceded Aflac Japan closed blocks		(433		)		(450		)		(473		)
Eliminations		41				43				51
Other		(57		)		(44		)		(44		)
Assumed from other companies:
Retrocession activities		194				209				209
Eliminations		(41		)		(53		)		(51		)
Other		1				2				3
Benefits and claims, net		$	11,942			$	12,000			$	12,181

These reinsurance transactions are indemnity reinsurance that do not relieve the Company from its obligations to policyholders. In the event that the reinsurer is unable to meet their obligations, the Company remains liable for the reinsured claims.

As a part of its capital contingency plan, the Company entered into a committed reinsurance facility agreement on December 1, 2015 in the amount of approximately ¥110 billion of reserves. This reinsurance facility agreement was renewed in 2019 and is effective until December 31, 2020. There are also additional commitment periods of a one-year duration each of which are automatically extended unless notification is received from the reinsurer within 60 days prior to the expiration. The reinsurer can withdraw from the committed facility if Aflac‘s Standard and Poor's (S&P) rating drops below BBB-. As of December 31, 2019, the Company had not executed a reinsurance treaty under this committed reinsurance facility.

NOTES PAYABLE

12 Months Ended

Dec. 31, 2019

Debt Disclosure [Abstract]

NOTES PAYABLE

NOTES PAYABLE AND LEASE OBLIGATIONS

A summary of notes payable and lease obligations as of December 31 follows:



(In millions)	2019			2018
4.00% senior notes due February 2022 ⁽¹⁾		$	348		$	348
3.625% senior notes due June 2023		698			698
3.625% senior notes due November 2024		747			746
3.25% senior notes due March 2025		448			447
2.875% senior notes due October 2026		298			297
6.90% senior notes due December 2039		220			220
6.45% senior notes due August 2040		254			254
4.00% senior notes due October 2046		394			394
4.750% senior notes due January 2049		541			540
Yen-denominated senior notes and subordinated debentures:
.932% senior notes due January 2027 (principal amount ¥60.0 billion)		545			538
.500% senior notes due December 2029 (principal amount ¥12.6 billion)		114			0
1.159% senior notes due October 2030 (principal amount ¥29.3 billion)		266			262
.843% senior notes due December 2031 (principal amount ¥9.3 billion)		84			0
1.488% senior notes due October 2033 (principal amount ¥15.2 billion)		138			136
.934% senior notes due December 2034 (principal amount ¥9.8 billion)		88			0
1.750% senior notes due October 2038 (principal amount ¥8.9 billion)		81			79
1.122% senior notes due December 2039 (principal amount ¥6.3 billion)		57			0
2.108% subordinated debentures due October 2047 (principal amount ¥60.0 billion)		543			536
.963% subordinated bonds due April 2049 (principal amount ¥30.0 billion)		272			0
Yen-denominated loans:
Variable interest rate loan due September 2026 (.42% in 2019 and .32% in 2018, principal amount ¥5.0 billion)		45			45
Variable interest rate loan due September 2029 (.57% in 2019 and .47% in 2018, principal amount ¥25.0 billion)		227			225
Finance lease obligations payable through 2026		12			13
Operating lease obligations payable through 2049 ⁽²⁾		149			0
Total notes payable and lease obligations		$	6,569		$	5,778

⁽¹⁾ Redeemed in January 2020

⁽²⁾ See Note 1 of the Notes to the Consolidated Financial Statements for the adoption of accounting guidance on January 1, 2019 related to leases.

Amounts in the table above are reported net of debt issuance costs and issuance premiums or discounts, if applicable, that are being amortized over the life of the notes.

In December 2019, the Parent Company issued four series of senior notes totaling ¥38.0 billion through a public debt offering under its U.S. shelf registration statement. The first series, which totaled ¥12.6 billion, bears interest at a fixed rate of .500% per annum, payable semi-annually, and will mature in December 2029. The second series, which totaled ¥9.3 billion, bears interest at a fixed rate of .843% per annum, payable semi-annually, and will mature in December 2031. The third series, which totaled ¥9.8 billion, bears interest at a fixed rate of .934% per annum, payable semi-annually, and will mature in December 2034. The fourth series, which totaled ¥6.3 billion, bears interest at a fixed rate of 1.122% per annum, payable semi-annually, and will mature in December 2039. These notes may only be redeemed before maturity, in whole but not in part, upon the occurrence of certain changes affecting U.S. taxation, as specified in the indenture governing the terms of the issuance.

In September 2019, the Parent Company renewed a ¥30.0 billion senior term loan facility. The first tranche of the facility, which totaled ¥5.0 billion, bears interest at a rate per annum equal to the Tokyo interbank market rate (TIBOR), or alternate TIBOR, if applicable, plus the applicable TIBOR margin and will mature in September 2026. The applicable margin ranges between .30% and .70%, depending on the Parent Company's debt ratings as of the date of determination. The second tranche, which totaled ¥25.0 billion, bears interest at a rate per annum equal to the TIBOR, or alternate TIBOR, if applicable,

plus the applicable TIBOR margin and will mature in September 2029. The applicable margin ranges between .45% and 1.00%, depending on the Parent Company's debt ratings as of the date of determination.

In April 2019, ALIJ issued ¥30.0 billion (par value) of perpetual subordinated bonds. These bonds bear interest at a fixed rate of .963% per annum and then at six-month Euro Yen LIBOR plus an applicable spread on and after the day immediately following April 18, 2024. The bonds will be callable on each interest payment date on and after April 18, 2024. In November 2019, ALIJ amended the bonds to change their duration from perpetual to a stated maturity date of April 16, 2049 and to remove provisions that permitted ALIJ to defer payments of interest under certain circumstances.

In October 2018, the Parent Company issued $550 million of senior notes through a U.S. public debt offering. The notes bear interest at a fixed rate of 4.750% per annum, payable semi-annually, and will mature in January 2049. These notes are redeemable at the Parent Company's option in whole at any time or in part from time to time at a redemption price equal to the greater of: (i) the aggregate principal amount of the notes to be redeemed or (ii) the amount equal to the sum of the present values of the remaining scheduled payments for principal of and interest on the notes to be redeemed, not including any portion of the payments of interest accrued as of such redemption date, discounted to such redemption date on a semiannual basis at the yield to maturity for a U.S.Treasury security with a maturity comparable to the remaining term of the notes, plus 25 basis points, plus in each case, accrued and unpaid interest on the principal amount of the notes to be redeemed to, but excluding, such redemption date.

In October 2018, the Parent Company issued three series of senior notes totaling ¥53.4 billion through a public debt offering under its U.S. shelf registration statement. The first series, which totaled ¥29.3 billion, bears interest at a fixed rate of 1.159% per annum, payable semi-annually, and will mature in October 2030. The second series, which totaled ¥15.2 billion, bears interest at a fixed rate of 1.488% per annum, payable semi-annually, and will mature in October 2033. The third series, which totaled ¥8.9 billion, bears interest at a fixed rate of 1.750% per annum, payable semi-annually, and will mature in October 2038. These notes may only be redeemed before maturity, in whole but not in part, upon the occurrence of certain changes affecting U.S. taxation, as specified in the indenture governing the terms of the issuance.

In October 2017, the Parent Company issued ¥60.0 billion of subordinated debentures through a U.S. public debt offering. The debentures bear interest at an initial rate of 2.108% per annum through October 22, 2027, or earlier redemption. Thereafter, the rate of the interest of the debentures will be reset every five years at a rate of interest equal to the then-current JPY 5-year Swap Offered Rate plus 205 basis points. The debentures are payable semi-annually in arrears and will mature in October 2047. The debentures are redeemable (i) at any time, in whole but not in part, upon the occurrence of certain tax events or certain rating agency events, as specified in the indenture governing the terms of the debentures or (ii) on or after October 23, 2027, in whole or in part, at a redemption price equal to their principal amount plus accrued and unpaid interest to, but excluding, the date of redemption.

In January 2017, the Parent Company issued ¥60.0 billion of senior notes through a U.S. public debt offering. The notes bear interest at a fixed rate of .932% per annum, payable semi-annually, and will mature in January 2027. These notes may only be redeemed before maturity, in whole but not in part, upon the occurrence of certain changes affecting U.S. taxation, as specified in the indenture governing the terms of the issuance.

In September 2016, the Parent Company issued two series of senior notes totaling $700 million through a U.S. public debt offering. The first series, which totaled $300 million, bears interest at a fixed rate of 2.875% per annum, payable semi-annually and will mature in October 2026. The second series, which totaled $400 million, bears interest at a fixed rate of 4.00% per annum, payable semi-annually, and will mature in October 2046.

In March 2015, the Parent Company issued $450 million of senior notes through a U.S. public debt offering. The notes bear interest at a fixed rate of 3.25% per annum, payable semi-annually, and will mature in March 2025. The Parent Company entered into cross-currency swaps that convert the U.S. dollar-denominated principal and interest on the senior notes into yen-denominated obligations which results in lower nominal net interest rates on the debt. By entering into these cross-currency swaps, the Parent Company economically converted its $450 million liability into a ¥55.0 billion yen liability and reduced the interest rate on this debt from 3.25% in dollars to .82% in yen.

In November 2014, the Parent Company issued $750 million of senior notes through a U.S. public debt offering. The notes bear interest at a fixed rate of 3.625% per annum, payable semi-annually, and will mature in November 2024. These notes are redeemable at the Parent Company's option in whole at any time or in part from time to time at a redemption price equal to the greater of: (i) the aggregate principal amount of the notes to be redeemed or (ii) the amount equal to the sum of the present values of the remaining scheduled payments for principal of and interest on the notes to be redeemed, not including any portion of the payments of interest accrued as of such redemption date, discounted to such redemption date on a semiannual basis at the treasury rate plus 20 basis points, plus in each case, accrued and unpaid interest on the principal

amount of the notes to be redeemed to, but excluding, such redemption date. The Parent Company entered into cross-currency interest rate swaps to reduce interest expense by converting the U.S. dollar-denominated principal and interest on the senior notes it issued into yen-denominated obligations. By entering into the swaps, the Parent Company economically converted its $750 million liability into an ¥85.3 billion liability and reduced the interest rate on this debt from 3.625% in dollars to 1.00% in yen.

In June 2013, the Parent Company issued $700 million of senior notes through a U.S. public debt offering. The notes bear interest at a fixed rate of 3.625% per annum, payable semi-annually, and will mature in June 2023. These notes are redeemable at the Parent Company's option in whole at any time or in part from time to time at a redemption price equal to the greater of: (i) the aggregate principal amount of the notes to be redeemed or (ii) the amount equal to the sum of the present values of the remaining scheduled payments for principal of and interest on the notes to be redeemed, not including any portion of the payments of interest accrued as of such redemption date, discounted to such redemption date on a semiannual basis at the treasury rate plus 20 basis points, plus in each case, accrued and unpaid interest on the principal amount of the notes to be redeemed to, but excluding, such redemption date. The Parent Company had entered into cross-currency interest rate swaps to reduce interest expense by converting the U.S. dollar-denominated principal and interest on the senior notes it issued into yen-denominated obligations. By entering into these swaps, the Parent Company economically converted its $700 million liability into a ¥69.8 billion liability and reduced the interest rate on this debt from 3.625% in dollars to 1.50% in yen.

In February 2012, the Parent Company issued $350 million of senior notes through a U.S. public debt offering. The notes bear interest at a fixed rate of 4.00% per annum, payable semiannually, and will mature in February 2022. These notes are redeemable at the Parent Company's option in whole at any time or in part from time to time at a redemption price equal to the greater of: (i) the principal amount of the notes or (ii) the present value of the remaining scheduled payments of principal and interest to be redeemed, discounted to the redemption date, plus accrued and unpaid interest. The Parent Company entered into cross-currency interest rate swaps to reduce interest expense by converting the U.S. dollar-denominated principal and interest on the senior notes it issued into yen-denominated obligations. By entering into these swaps, the Parent Company economically converted its $350 million liability into a ¥27.0 billion liability and reduced the interest rate on this debt from 4.00% in dollars to 2.07% in yen.

In 2010 and 2009, the Parent Company issued senior notes through U.S. public debt offerings; the details of these notes are as follows. In August 2010, the Parent Company issued $450 million of senior notes that will mature in August 2040. In December 2009, the Parent Company issued $400 million of senior notes that will mature in December 2039. These senior notes pay interest semiannually and are redeemable at the Parent Company's option in whole at any time or in part from time to time at a redemption price equal to the greater of: (i) the principal amount of the notes or (ii) the present value of the remaining scheduled payments of principal and interest to be redeemed, discounted to the redemption date, plus accrued and unpaid interest. In December 2016, the Parent Company completed a tender offer in which it extinguished $176 million principal of its 6.90% senior notes due December 2039 and $193 million principal of its 6.45% senior notes due August 2040. The pretax loss due to the early redemption of these notes was $137 million.

For the Company's yen-denominated notes and loans, the principal amount as stated in dollar terms will fluctuate from period to period due to changes in the yen/dollar exchange rate. The Company has designated the majority of its yen-denominated notes payable as a nonderivative hedge of the foreign currency exposure of the Company's investment in Aflac Japan.

The aggregate contractual maturities of notes payable during each of the years after December 31, 2019, are as follows:



(In millions)	Total Notes Payable
2020		$	0
2021		0
2022		350
2023		700
2024		750
Thereafter		4,658
Total		$	6,458

The following table presents the contractual maturities and present value of lease liabilities as of December 31.



	2019
(In millions)	Operating Leases		Finance Leases		Total
2020	$	49	$	4	$	53
2021	37		3		40
2022	31		2		33
2023	10		2		12
2024	10		1		11
After 2024	22		0		22
Total lease payments	$	159	$	12	$	171
Less: Interest	10		0		10
Present value of lease liabilities	$	149	$	12	$	161

The following table presents the weighted average remaining lease term and weighted average discount rate for lease liabilities as of December 31.



	2019
Weighted average remaining lease term (years):
Operating leases	6.8
Finance leases	3.7

Weighted average discount rate:
Operating leases	2.1%
Finance leases	1.5%

Operating lease costs, included in insurance expenses in the consolidated statements of earnings, were $54 million, $73 million and $75 million for the years ended December 31, 2019, 2018 and 2017, respectively. Operating cash outflow for operating leases was $52 million for the year ended December 31, 2019.

A summary of the Company's lines of credit as of December 31, 2019 follows:



Borrower	Type	Original Term	Expiration Date	Capacity	Amount Outstanding	Interest Rate on Borrowed Amount	Maturity Period	Commitment Fee	Business Purpose
Aflac Incorporated and Aflac	uncommitted bilateral	364 days	December 18, 2020	$100 million	$0 million	The rate quoted by the bank and agreed upon at the time of borrowing	Up to 3 months	None	General corporate purposes
Aflac Incorporated	unsecured revolving	5 years	March 29, 2024, or the date commitments are terminated pursuant to an event of default	¥100.0 billion	¥0.0 billion	A rate per annum equal to (a) Tokyo interbank market rate (TIBOR) plus, the alternative applicable TIBOR margin during the availability period from the closing date to the commitment termination date or (b) the TIBOR rate offered by the agent to major banks in yen for the applicable period plus, the applicable alternative TIBOR margin during the term out period	No later than March 29, 2024	.30% to .50%, depending on the Parent Company's debt ratings as of the date of determination	General corporate purposes, including a capital contingency plan for the operations of the Parent Company
Aflac Incorporated and Aflac	unsecured revolving	5 years	November 18, 2024, or the date commitments are terminated pursuant to an event of default	$1.0 billion	$0.0 billion	A rate per annum equal to, at the Company's option, either, (a) the rate for Eurocurrency for deposits in the London interbank market for a period of one, two, three or six months (LIBOR) or (b) a base rate determined by reference to the highest of (1) the federal funds rate plus 1/2 of 1%, (2) the rate of interest in effect for such day as publicly announced from time to time by Mizuho as its “prime rate”, and (3) the LIBOR for a one month interest period in effect on such day (or if such day is not a business day, the immediately preceding business day) plus 1.00%, and in each case an applicable margin	No later than November 18, 2024	.085% to .225%, depending on the Parent Company's debt ratings as of the date of determination	General corporate purposes, including a capital contingency plan for the operations of the Parent Company
Aflac Incorporated and Aflac	uncommitted bilateral	None specified	None specified	$50 million	$0 million	A rate per annum equal to, at the Parent Company's option, either (a) a eurocurrency rate determined by reference to the agent's LIBOR for the interest period relevant to such borrowing or (b) the base rate determined by reference to the greater of (i) the prime rate as determined by the agent, and (ii) the sum of 0.50% and the federal funds rate for such day	Up to 3 months	None	General corporate purposes
Aflac⁽¹⁾	uncommitted revolving	364 days	November 30, 2020	$250 million	$0 million	USD three-month LIBOR plus 75 basis points per annum	3 months	None	General corporate purposes
Aflac Incorporated⁽¹⁾	uncommitted revolving	364 days	April 2, 2020	¥50.0 billion	¥0.0 billion	Three-month TIBOR plus 70 basis points per annum	3 months	None	General corporate purposes
Aflac Incorporated⁽¹⁾	uncommitted revolving	364 days	November 25, 2020	¥50.0 billion	¥0.0 billion	Three-month TIBOR plus 70 basis points per annum	3 months	None	General corporate purposes

⁽¹⁾ Intercompany credit agreement

The Parent Company was in compliance with all of the covenants of its notes payable and lines of credit at December 31, 2019. No events of default or defaults occurred during 2019 and 2018.

INCOME TAXES

12 Months Ended

Dec. 31, 2019

Income Tax Disclosure [Abstract]

INCOME TAXES

The components of income tax expense (benefit) applicable to pretax earnings for the years ended December 31 were as follows:



(In millions)	Foreign				U.S.				Total
2019:
Current		$	737			$	69			$	806
Deferred		183				152				335
Total income tax expense		$	920			$	221			$	1,141
2018:
Current		$	771			$	608			$	1,379
Deferred		93				(409		)		(316		)
Total income tax expense		$	864			$	199			$	1,063
2017:
Current		$	722			$	(91	)		$	631
Deferred		(24		)		(1,193		)		(1,217		)
Total income tax expense		$	698			$	(1,284	)		$	(586	)

The Japan income tax rate for the fiscal year 2017 was 28.2%. The rate was reduced to 28.0% for fiscal years 2018 and 2019.

For the U.S., the Tax Cuts and Jobs Act (Tax Act) was signed into law on December 22, 2017. Effective January 1, 2018, the Tax Act imposed a broad number of changes in tax law, including permanently reducing the U.S. federal statutory corporate income tax rate from 35% to 21%, eliminating or reducing certain deductions and credits and limiting the deductibility of interest expense and executive compensation.

In accordance with Staff Accounting Bulletin 118 (SAB 118) issued by the U.S. Securities and Exchange Commission in December 2017, the Company recorded provisional amounts for certain items for which the income tax accounting was not complete. As of the enactment date, the Company estimated provisional amounts for its deferred taxes, including related valuation allowance, resulting in a reduction of its DTAs by approximately $1.0 billion and its deferred tax liabilities (DTLs) by $2.9 billion, for a net DTL reduction of approximately $1.9 billion. The provisions of ASC 740-10, Income Taxes, require that the effects of changes in tax law on deferred taxes be recognized as a component of the income tax provision in the period the tax rate change was enacted. Therefore, the $1.9 billion provisional amount of net DTL reduction was recorded in the fourth quarter of 2017 as a reduction in the “Income tax expense, Deferred” line item of the Company’s consolidated statement of earnings.

In 2018, the Company recorded additional income tax expense of $.4 million resulting from a decrease in the SAB 118 provisional estimate related to Japan deferred tax balances. No further adjustment was made to the SAB 118 provisional estimate related to the valuation allowance. As of December 31, 2018, the Company has completed its accounting for the Tax Act in accordance with SAB 118.

Income tax expense in the accompanying statements of earnings varies from the amount computed by applying the expected U.S. tax rate of 21% in both 2019 and 2018 and 35% in 2017 to pretax earnings. The principal reasons for the differences and the related tax effects for the years ended December 31 were as follows:



(In millions)	2019				2018				2017
Income taxes based on U.S. statutory rates		$	933			$	836			$	1,406
Foreign rate differential		229				220				0
Write-down of U.S. deferred tax liabilities for tax reform change		0				0				(1,933		)
Utilization of foreign tax credit		(6		)		(3		)		(27		)
Nondeductible expenses		10				21				10
Other, net		(25		)		(11		)		(42		)
Income tax expense		$	1,141			$	1,063			$	(586	)

Total income tax expense for the years ended December 31 was allocated as follows:



(In millions)	2019				2018				2017
Statements of earnings		$	1,141			$	1,063			$	(586	)
Other comprehensive income (loss):
Unrealized foreign currency translation gains (losses) during period		27				10				52
Unrealized gains (losses) on investment securities:
Unrealized holding gains (losses) on investment securities during period		1,532				(787		)		575
Reclassification adjustment for realized (gains) losses on investment securities included in net earnings		5				(12		)		1
Unrealized gains (losses) on derivatives during period		(3		)		0				0
Pension liability adjustment during period		(18		)		(8		)		3
Total income tax expense (benefit) related to items of other comprehensive income (loss)		1,543				(797		)		631
Total income taxes		$	2,684			$	266			$	45

The income tax effects of the temporary differences that gave rise to deferred income tax assets and liabilities as of December 31 were as follows:



(In millions)	2019				2018
Deferred income tax liabilities:
Deferred policy acquisition costs		$	3,492			$	3,404
Unrealized gains and other basis differences on investments		4,485				1,307
Premiums receivable		152				149
Policy benefit reserves		3,442				3,828
Total deferred income tax liabilities		11,571				8,688
Deferred income tax assets:
Unfunded retirement benefits		8				8
Other accrued expenses		36				40
Policy and contract claims		781				775
Foreign currency loss on Aflac Japan		16				38
Deferred compensation		162				163
Capital loss carryforwards		34				5
Depreciation		164				119
Anticipatory foreign tax credit		5,487				4,040
Deferred foreign tax credit		605				591
Other		204				150
Total deferred income tax assets before valuation allowance		7,497				5,929
Valuation allowance		(1,340		)		(738		)
Total deferred income tax assets after valuation allowance		6,157				5,191
Net deferred income tax liability		5,414				3,497
Current income tax (asset) liability		(44		)		523
Total income tax liability		$	5,370			$	4,020

The application of U.S. GAAP requires the Company to evaluate the recoverability of deferred tax assets and establish a valuation allowance if necessary to reduce the deferred tax asset to an amount that is more likely than not expected to be realized. The Company has determined a $1,022 million valuation allowance against its anticipatory foreign tax credit is necessary. The anticipatory foreign tax credit represents the foreign tax credit the Company will generate from the reversal of Japan deferred tax liabilities in the future. The increase in the valuation allowance on the anticipatory foreign tax credit is due to an increase Japan's local country deferred tax inventory relative to the deferred tax inventory for Japan's U.S. tax obligation. The Company has also determined a $318 million valuation allowance against its deferred foreign tax credits is necessary. Deferred foreign tax credits are foreign tax credits generated in the current tax year by the Japanese life company, but are unable to be utilized until 2020 due to Japan's current tax year not closing until March 31, 2020. The valuation

allowance on the deferred foreign tax credit has increased due to the utilization of prior year credits as well as the recognition of the current year deferred foreign tax credit. Based upon a review of the Company's anticipated future taxable income, and including all other available evidence, both positive and negative, the Company's management has concluded that, notwithstanding the items noted above, it is more likely than not that all other deferred tax assets will be realized.

Under U.S. income tax rules, only 35% of non-life operating losses can be offset against life insurance taxable income each year. For current U.S. income tax purposes, as of December 31, 2019, there were non-life operating loss carryforwards of $99 million available to offset against future taxable income, of which $31 million expires in 2039, and $68 million does not expire. The Company has capital loss carryforwards of $161 million available to offset capital gains, of which $65 million expires in 2023 and $96 million expires in 2024.

The Company files federal income tax returns in the U.S. and Japan as well as state or prefecture income tax returns in various jurisdictions in the two countries. The Company is currently under audit by the IRS for the 2013-2016 amended federal income tax returns. There are currently no other open Federal, State, or local U.S. income tax audits. U.S. federal income tax returns for years before 2016 are no longer subject to examination. Japan corporate income tax returns for years before 2016 are no longer subject to examination. Management believes it has established adequate tax liabilities and final resolution of all open audits is not expected to have a material impact on the Company's consolidated financial statements.

A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows for the years ended December 31:



(In millions)	2019		2018
Balance, beginning of year	$	15	$	14
Additions for tax positions of prior years	2		1
Balance, end of year	$	17	$	15

Included in the balance of the liability for unrecognized tax benefits at December 31, 2019, are $15 million of tax positions for which the ultimate deductibility is highly certain, but for which there is uncertainty about the timing of such deductibility, compared with $14 million at December 31, 2018. Because of the impact of deferred tax accounting, other than interest and penalties, the disallowance of the shorter deductibility period would not affect the annual effective tax rate, but would accelerate the payment of cash to the taxing authority to an earlier period. The Company has accrued approximately $2 million as of December 31, 2019, for permanent uncertainties, which if reversed would not have a material effect on the annual effective rate.

The Company recognizes accrued interest and penalties related to unrecognized tax benefits in income tax expense. The Company recognized approximately $1 million in interest and penalties in 2019, 2018 and 2017, respectively. The Company has accrued approximately $2 million for the payment of interest and penalties as of December 31, 2019, compared with $2 million at December 31, 2018.

As of December 31, 2019, there were no material uncertain tax positions for which the total amounts of unrecognized tax benefits will significantly increase or decrease within the next 12 months.

SHAREHOLDERS' EQUITY

12 Months Ended

Dec. 31, 2019

Stockholders' Equity Note [Abstract]

SHAREHOLDERS' EQUITY

The following table is a reconciliation of the number of shares of the Company's common stock for the years ended December 31.



(In thousands of shares)	2019	2018	2017
Common stock - issued:
Balance, beginning of period	1,347,540	1,345,762	1,342,498
Exercise of stock options and issuance of restricted shares	1,769	1,778	3,264
Balance, end of period	1,349,309	1,347,540	1,345,762
Treasury stock:
Balance, beginning of period	592,254	564,852	530,877
Purchases of treasury stock:
Share repurchase program	31,994	28,949	35,510
Other	592	392	1,018
Dispositions of treasury stock:
Shares issued to AFL Stock Plan	(1,610)	(1,306)	(1,782)
Exercise of stock options	(418)	(519)	(734)
Other	(296)	(114)	(37)
Balance, end of period	622,516	592,254	564,852
Shares outstanding, end of period	726,793	755,286	780,910

Outstanding share-based awards are excluded from the calculation of weighted-average shares used in the computation of basic EPS. The following table presents the approximate number of share-based awards to purchase shares, on a weighted-average basis, that were considered to be anti-dilutive and were excluded from the calculation of diluted earnings per share at December 31:



(In thousands)	2019		2018		2017
Anti-dilutive share-based awards		6		44		510

The weighted-average shares used in calculating earnings per share for the years ended December 31 were as follows:



(In thousands of shares)	2019	2018	2017
Weighted-average outstanding shares used for calculating basic EPS	742,414	769,588	792,042
Dilutive effect of share-based awards	4,016	5,062	5,819
Weighted-average outstanding shares used for calculating diluted EPS	746,430	774,650	797,861

Share Repurchase Program: During 2019, the Company repurchased 32.0 million shares of its common stock in the open market for $1.6 billion. The Company repurchased 28.9 million shares for $1.3 billion in 2018 and 35.5 million shares for $1.4 billion in 2017. As of December 31, 2019, a remaining balance of 37.1 million shares of the Company's common stock was available for purchase under share repurchase authorizations by its board of directors.

Voting Rights: In accordance with the Parent Company's articles of incorporation, shares of common stock are generally entitled to one vote per share until they have been held by the same beneficial owner for a continuous period of 48 months, at which time they become entitled to 10 votes per share.

Reclassifications from Accumulated Other Comprehensive Income

The tables below are reconciliations of accumulated other comprehensive income by component for the years ended December 31.

Changes in Accumulated Other Comprehensive Income



2019
(In millions)	Unrealized Foreign Currency Translation Gains (Losses)				Unrealized Gains (Losses) on Investment Securities				Unrealized Gains (Losses) on Derivatives				Pension Liability Adjustment				Total
Balance, beginning of period		$	(1,847	)		$	4,234			$	(24	)		$	(212	)		$	2,151
Other comprehensive income (loss) before reclassification		224				4,327				(9		)		(76		)		4,466
Amounts reclassified from accumulated other comprehensive income (loss)		0				(13		)		0				11				(2		)
Net current-period other comprehensive income (loss)		224				4,314				(9		)		(65		)		4,464
Balance, end of period		$	(1,623	)		$	8,548			$	(33	)		$	(277	)		$	6,615

All amounts in the table above are net of tax.



2018
(In millions)	Unrealized Foreign Currency Translation Gains (Losses)				Unrealized Gains (Losses) on Investment Securities				Unrealized Gains (Losses) on Derivatives				Pension Liability Adjustment				Total
Balance, beginning of period		$	(1,750	)		$	5,964			$	(23	)		$	(163	)		$	4,028
Cumulative effect of change in accounting principle - financial instruments		0				(148		)		0				0				(148		)
Cumulative effect of change in accounting principle - tax effects from tax reform		(325		)		734				(3		)		(32		)		374
Other comprehensive income (loss) before reclassification		228				(2,350		)		2				(30		)		(2,150		)
Amounts reclassified from accumulated other comprehensive income (loss)		0				34				0				13				47
Net current-period other comprehensive income (loss)		228				(2,316		)		2				(17		)		(2,103		)
Balance, end of period		$	(1,847	)		$	4,234			$	(24	)		$	(212	)		$	2,151

All amounts in the table above are net of tax.



2017
(In millions)	Unrealized Foreign Currency Translation Gains (Losses)				Unrealized Gains (Losses) on Investment Securities			Unrealized Gains (Losses) on Derivatives				Pension Liability Adjustment				Total
Balance, beginning of period		$	(1,983	)		$	4,805		$	(24	)		$	(168	)		$	2,630
Other comprehensive income (loss) before reclassification		233				1,158			1				(6		)		1,386
Amounts reclassified from accumulated other comprehensive income (loss)		0				1			0				11				12
Net current-period other comprehensive income (loss)		233				1,159			1				5				1,398
Balance, end of period		$	(1,750	)		$	5,964		$	(23	)		$	(163	)		$	4,028

All amounts in the table above are net of tax.

For the year ended December 31, 2018, see Note 1 for discussion of the amounts reclassified between AOCI and retained earnings upon the adoption of new accounting pronouncements.

The tables below summarize the amounts reclassified from each component of accumulated other comprehensive income based on source for the years ended December 31.

Reclassifications Out of Accumulated Other Comprehensive Income



(In millions)	2019
Details about Accumulated Other Comprehensive Income Components	Amount Reclassified from Accumulated Other Comprehensive Income				Affected Line Item in the Statements of Earnings
Unrealized gains (losses) on available-for-sale securities		$	(13	)	Other-than-temporary impairment losses realized
		31			Other gains (losses)
		18			Total before tax
		(5		)	Tax (expense) or benefit⁽¹⁾
		$	13		Net of tax
Amortization of defined benefit pension items:
Actuarial gains (losses)		$	(15	)	Acquisition and operating expenses⁽²⁾
Prior service (cost) credit		0			Acquisition and operating expenses⁽²⁾
		4			Tax (expense) or benefit⁽¹⁾
		$	(11	)	Net of tax
Total reclassifications for the period		$	2		Net of tax

⁽¹⁾Based on 26% blended tax rate

⁽²⁾These accumulated other comprehensive income components are included in the computation of net periodic pension cost (see

Note 14 for additional details).



(In millions)	2018
Details about Accumulated Other Comprehensive Income Components	Amount Reclassified from Accumulated Other Comprehensive Income				Affected Line Item in the Statements of Earnings
Unrealized gains (losses) on available-for-sale securities		$	(63	)	Other-than-temporary impairment losses realized
		17			Other gains (losses)
		(46		)	Total before tax
		12			Tax (expense) or benefit⁽¹⁾
		$	(34	)	Net of tax
Amortization of defined benefit pension items:
Actuarial gains (losses)		$	(18	)	Acquisition and operating expenses⁽²⁾
Prior service (cost) credit		0			Acquisition and operating expenses⁽²⁾
		5			Tax (expense) or benefit⁽¹⁾
		$	(13	)	Net of tax
Total reclassifications for the period		$	(47	)	Net of tax

⁽¹⁾Based on 27% blended tax rate

⁽²⁾These accumulated other comprehensive income components are included in the computation of net periodic pension cost (see Note 14 for additional details).



(In millions)	2017
Details about Accumulated Other Comprehensive Income Components	Amount Reclassified from Accumulated Other Comprehensive Income				Affected Line Item in the Statements of Earnings
Unrealized gains (losses) on available-for-sale securities		$	(29	)	Other-than-temporary impairment losses realized
		27			Other gains (losses)
		(2		)	Total before tax
		1			Tax (expense) or benefit⁽¹⁾
		$	(1	)	Net of tax
Amortization of defined benefit pension items:
Actuarial gains (losses)		$	(17	)	Acquisition and operating expenses⁽²⁾
Prior service (cost) credit		0			Acquisition and operating expenses⁽²⁾
		6			Tax (expense) or benefit⁽¹⁾
		$	(11	)	Net of tax
Total reclassifications for the period		$	(12	)	Net of tax

⁽¹⁾Based on 35% tax rate

⁽²⁾These accumulated other comprehensive income components are included in the computation of net periodic pension cost (see Note 14 for additional details).

SHARE-BASED COMPENSATION

12 Months Ended

Dec. 31, 2019

Share-based Payment Arrangement [Abstract]

SHARE-BASED COMPENSATION

As of December 31, 2019, the Company has outstanding share-based awards under the Aflac Incorporated Long-Term Incentive Plan (the Plan). Share-based awards are designed to reward employees for their long-term contributions to the Company and provide incentives for them to remain with the Company. The number and frequency of share-based awards are based on competitive practices, operating results of the Company, government regulations, and other factors.

The Plan, as amended on February 14, 2017, allows for a maximum number of shares issuable over its term of 75 million shares including 38 million shares that may be awarded in respect of awards other than options or stock appreciation rights. If any awards granted under the Plan are forfeited or are terminated before being exercised or settled for any reason other than tax forfeiture, then the shares underlying the awards will again be available under the Plan.

The Plan allows awards to Company employees for incentive stock options (ISOs), non-qualifying stock options (NQSOs), restricted stock, restricted stock units, and stock appreciation rights. Non-employee directors are eligible for grants of NQSOs,

restricted stock, and stock appreciation rights. As of December 31, 2019, approximately 39.3 million shares were available for future grants under this plan. The ISOs and NQSOs have a term of 10 years, and the share-based awards generally vest upon time-based conditions or time and performance-based conditions. Time-based vesting generally occurs after three years. Performance-based vesting conditions generally include the attainment of goals related to Company financial performance. As of December 31, 2019, the only performance-based awards issued and outstanding were restricted stock awards and units.

Stock options and stock appreciation rights granted under the amended Plan have an exercise price of at least the fair market value of the underlying stock on the grant date and have an expiration date no later than 10 years from the grant date. Time-based restricted stock awards, restricted stock units and stock options granted after January 1, 2017 generally vest on a ratable basis over three years, and awards granted prior to the amendment vest on a three-year cliff basis. The Compensation Committee of the Board of Directors has the discretion to determine vesting schedules.

Share-based awards granted to U.S.-based grantees are settled with authorized but unissued Company stock, while those issued to Japan-based grantees are settled with treasury shares.

Summary of Share-Based Compensation Expense

Share-based compensation expense consists primarily of expenses for stock options, restricted stock awards (including performance based restricted stock awards), and restricted stock units granted to employees.

The following table presents the impact of the expense recognized in connection with share-based awards for the periods ended December 31.



(In millions, except for per-share amounts)	2019			2018			2017
Impact on earnings from continuing operations		$	59		$	57		$	51
Impact on earnings before income taxes		59			57			51
Impact on net earnings		46			45			35
Impact on net earnings per share:
Basic		$	.06		$	.06		$	.05
Diluted		.06			.06			.05

Stock Options

The following table summarizes stock option activity under the employee stock option plan.



(In thousands of shares)	Stock Option Shares			Weighted-Average Exercise Price Per Share
Outstanding at December 31, 2016		12,680			$	26.28
Granted in 2017		626			35.80
Canceled in 2017		(236	)		24.95
Exercised in 2017		(5,766	)		30.11
Outstanding at December 31, 2017		7,304			28.03
Granted in 2018		67			44.59
Canceled in 2018		(167	)		32.11
Exercised in 2018		(1,874	)		26.78
Outstanding at December 31, 2018		5,330			28.54
Granted in 2019		0			0.00
Canceled in 2019		(40	)		27.82
Exercised in 2019		(1,584	)		25.97
Outstanding at December 31, 2019		3,706			$	29.65



(In thousands of shares)	2019		2018		2017
Shares exercisable, end of year		3,553		3,917		4,208

The Company estimates the fair value of each stock option granted using the Black-Scholes-Merton multiple option approach. Expected volatility is based on historical periods generally commensurate with the estimated terms of the options. The Company uses historical data to estimate option exercise and termination patterns within the model. Separate groups of employees that have similar historical exercise patterns are stratified and considered separately for valuation purposes. The expected term of options granted is derived from the output of the Company's option model and represents the weighted-average period of time that options granted are expected to be outstanding. The Company bases the risk-free interest rate on the Treasury note rate with a term comparable to that of the estimated term of the options. There were no options granted in 2019. The weighted-average fair value of options at their grant date was $8.81 for 2018 compared with $7.64 in 2017. The following table presents the assumptions used in valuing options granted during the years ended December 31.



	2019			2018			2017
Expected term (years)		7.0			7.0			5.9
Expected volatility		18.0	%		22.0	%		26.0	%
Annual forfeiture rate		3.9			3.6			3.4
Risk-free interest rate		2.9			2.5			2.5
Dividend yield		2.2			2.4			2.5

The following table summarizes information about stock options outstanding and exercisable at December 31, 2019.



(In thousands of shares)						Options Outstanding							Options Exercisable
	Range of Exercise Prices Per Share					Stock Option Shares Outstanding		Wgtd.-Avg. Remaining Contractual Life (Yrs.)		Wgtd.-Avg. Exercise Price Per Share			Stock Option Shares Exercisable		Wgtd.-Avg. Exercise Price Per Share
	$	16.92	-	$	24.75		872		2.1		$	23.58		872		$	23.58
	24.79		-	28.97			919		3.8		28.49			919		28.49
	29.04		-	31.21			988		4.7		30.77			988		30.77
	31.22		-	36.21			778		6.5		34.31			626		34.02
	37.22		-	44.59			149		7.8		40.57			148		40.59
	$	16.92	-	$	44.59		3,706		4.4		$	29.65		3,553		$	29.40

The aggregate intrinsic value in the following table represents the total pretax intrinsic value, and is based on the difference between the exercise price of the stock options and the quoted closing common stock price of $52.90 as of December 31, 2019, for those awards that have an exercise price currently below the closing price. As of December 31, 2019, the aggregate intrinsic value of stock options outstanding was $86 million, with a weighted-average remaining term of 4.4 years. The total number of in-the-money stock options exercisable as of December 31, 2019, was 3.6 million. The aggregate intrinsic value of stock options exercisable at that same date was $84 million, with a weighted-average remaining term of 4.2 years.

The following table summarizes stock option activity during the years ended December 31.



(In millions)	2019			2018			2017
Total intrinsic value of options exercised		$	38		$	34		$	87
Cash received from options exercised		40			48			58
Tax benefit realized as a result of options exercised and restricted stock releases		34			25			74

Performance-Based Restricted Stock Awards and Units

Under the Plan, the Company grants selected executive officers performance-based restricted stock awards (PBRS) each February whose vesting is contingent upon meeting various performance goals. PBRS are generally granted at-the-money and contingently cliff vest over a period of three years, generally subject to continued employment. In February 2019, the Company granted 399 thousand performance-based stock awards, which are contingent on the achievement of the Company's financial performance metrics and its market-based conditions. On the date of grant, the Company estimated

the fair value of restricted stock awards with market-based conditions using a Monte Carlo simulation model. The model discounts the value of the stock at the assumed vesting date based on a risk-free interest rate. Based on estimates of actual performance versus the vesting thresholds, the calculated fair value percentage pay-out estimate will be updated each quarter. Actual performance, including modification for relative total shareholder return, may result in the ultimate award of 0% to 200% percent of the initial number of PBRS issued, with the potential for no award if company performance goals are not achieved during the three-year period. PBRS subject to accelerated vesting at the date of retirement eligibility is recognized over the implicit service period.

The Company also granted selected executive officers performance-based restricted stock units (PSUs) throughout the year whose vesting is contingent upon meeting various performance goals. PSUs are generally granted at-the-money and contingently cliff vest over a period of three years, generally subject to continued employment. In November 2019, the Company granted 46 thousand performance-based stock units, which are contingent on the achievement of certain Company determined metrics. Based on estimates of actual performance versus the vesting thresholds, the calculated fair value percentage pay-out estimate will be updated each quarter. Actual performance may result in the ultimate award of 0% to 200% percent of the initial number of PSUs issued, with the potential for no award if the Company determined metrics are not achieved during the three-year period. PSUs subject to accelerated vesting at the date of retirement eligibility is recognized over the implicit service period.

The Company uses third-party analyses to assist in developing the assumptions used in, as well as calibrating, a Monte Carlo simulation model. The Company is responsible for determining the assumptions used in estimating the fair value of its share-based payment awards.

Key assumptions used to value PBRS granted during 2019 follows:



(In millions)	2019
Expected volatility (based on Aflac Inc. and peer group historical daily stock price)		15.82	%
Expected life from grant date (years)		2.9
Risk-free interest rate (based on U.S. Treasury yields at the date of grant)		2.51	%

Restricted Stock Awards and Units

The value of restricted stock awards and restricted stock units is based on the fair market value of the Company's common stock at the date of grant. The following table summarizes restricted stock activity during the years ended December 31.



(In thousands of shares)	Shares			Weighted-Average Grant-Date Fair Value Per Share
Restricted stock at December 31, 2016		3,736			$	30.88
Granted in 2017		1,118			36.48
Canceled in 2017		(202	)		32.23
Vested in 2017		(1,018	)		31.09
Restricted stock at December 31, 2017		3,634			32.40
Granted in 2018		1,121			44.27
Canceled in 2018		(105	)		34.39
Vested in 2018		(1,243	)		31.64
Restricted stock at December 31, 2018		3,407			36.52
Granted in 2019		1,070			49.68
Canceled in 2019		(39	)		41.60
Vested in 2019		(1,865	)		32.73
Restricted stock at December 31, 2019		2,573			$	44.66

As of December 31, 2019, total compensation cost not yet recognized in the Company's financial statements related to restricted stock awards and restricted stock units was $60 million, of which $30 million (1.5 million shares) was related to restricted stock awards with a performance-based vesting condition. The Company expects to recognize these amounts over

a weighted-average period of approximately 1.1 years. There are no other contractual terms covering restricted stock awards once vested.

STATUTORY ACCOUNTING AND DIVIDEND RESTRICTIONS

12 Months Ended

Dec. 31, 2019

Insurance [Abstract]

STATUTORY ACCOUNTING AND DIVIDEND RESTRICTIONS

The Company's insurance subsidiaries are required to report their results of operations and financial position to insurance regulatory authorities on the basis of statutory accounting practices prescribed or permitted by such authorities. Statutory accounting practices primarily differ from U.S. GAAP by charging policy acquisition costs to expense as incurred, establishing future policy benefit liabilities using different actuarial assumptions as well as valuing investments and certain assets and accounting for deferred taxes on a different basis.

Aflac reports statutory financial statements that are prepared on the basis of accounting practices prescribed or permitted by the Nebraska Department of Insurance (NDOI). The NDOI recognizes statutory accounting principles and practices prescribed or permitted by the state of Nebraska for determining and reporting the financial condition and results of operations of an insurance company, and for determining a company's solvency under Nebraska insurance law. Statutory Accounting Principles (SAP) as detailed by the National Association of Insurance Commissioners' (NAIC) Accounting Practices and Procedures Manual has been adopted by the state of Nebraska as a component of those prescribed or permitted practices. Additionally, the Director of the NDOI has the right to permit other specific practices which deviate from prescribed practices. Prior to the Japan branch conversion on April 1, 2018, Aflac had been given explicit permission by the Director of the NDOI for two such permitted practices. On April 1, 2018, the Company entered into a series of transactions in order to complete the conversion of the Japan branch into a Japanese insurance corporation. As a result of the conversion, the permitted practices were no longer necessary, therefore they were canceled by the NDOI effective April 2, 2018. Aflac had no permitted practices as of December 31, 2019 and 2018.

Aflac's capital and surplus as determined by NAIC basis and Nebraska state basis was $2.1 billion and $2.6 billion as of December 31, 2019 and 2018, respectively. As of December 31, 2019, Aflac's capital and surplus significantly exceeded the required company action level capital and surplus of $.4 billion. As determined on a U.S. statutory accounting basis, Aflac's net income was $864 million in 2019, $1.3 billion in 2018 and $2.6 billion in 2017.

Aflac Japan must report its results of operations and financial position to the Japanese Financial Services Agency (FSA) on a Japanese regulatory accounting basis as prescribed by the FSA. Capital and surplus of Aflac Japan, based on Japanese regulatory accounting practices, was $7.8 billion at December 31, 2019, compared with $6.4 billion at December 31, 2018. Japanese regulatory accounting practices differ in many respects from U.S. GAAP. Under Japanese regulatory accounting practices, policy acquisition costs are expensed immediately; policy benefit and claim reserving methods and assumptions are different; premium income is recognized on a cash basis; different consolidation criteria apply to VIEs; reinsurance is recognized on a different basis; and investments can have a separate accounting classification and treatment referred to as policy reserve matching bonds (PRM).

The Parent Company depends on its subsidiaries for cash flow, primarily in the form of dividends and management fees. Consolidated retained earnings in the accompanying financial statements largely represent the undistributed earnings of the Company's insurance subsidiary. Amounts available for dividends, management fees and other payments to the Parent Company by its insurance subsidiaries may fluctuate due to different accounting methods required by regulatory authorities. These payments are also subject to various regulatory restrictions and approvals related to safeguarding the interests of insurance policyholders. Aflac must maintain adequate RBC for U.S. regulatory authorities, and Aflac Japan must maintain adequate solvency margins for Japanese regulatory authorities.

The maximum amount of dividends that can be paid to the Parent Company by Aflac and CAIC without prior approval of Nebraska's director of insurance is the greater of the net income from operations, which excludes net realized investment gains, for the previous year determined under statutory accounting principles, or 10% of statutory capital and surplus as of the previous year-end. Dividends declared by Aflac during 2020 in excess of $864 million would require such approval. Aflac declared dividends of $1.3 billion during 2019.

After the Japan branch conversion as of April 1, 2018, Aflac Japan is required to meet certain financial criteria as governed by Japanese corporate law in order to provide dividends to the Parent Company. Under these criteria, dividend capacity at Aflac Japan is basically defined as retained earnings excluding capital reserves, which represent equity generated by capital profits that are statutorily required in Japan, less net after-tax unrealized losses on available-for-sale securities based on the previous fiscal year-end. Prior to April 1, 2018, a portion of Aflac Japan earnings, as determined on a Japanese regulatory accounting basis, could be remitted each year to Aflac U.S. after complying with solvency margin provisions and satisfying various conditions imposed by Japanese regulatory authorities for protecting policyholders. Profit remittances to the U.S. could fluctuate due to changes in the amounts of Japanese regulatory earnings. Among other items, factors affecting regulatory

earnings include Japanese regulatory accounting practices and fluctuations in currency translation of Aflac Japan's U.S. dollar-denominated investments and related investment income into yen. Profits remitted by Aflac Japan to the Parent Company, after April 1, 2018, and to Aflac U.S., prior to April 1, 2018, were as follows for the years ended December 31:



	In Dollars									In Yen
(In millions of dollars and billions of yen)	2019			2018			2017			2019			2018			2017
Profit remittances		$	2,070		$	808		$	1,150		¥	225.2		¥	89.7		¥	129.3

BENEFIT PLANS

12 Months Ended

Dec. 31, 2019

Defined Benefit Plans and Other Postretirement Benefit Plans Disclosures [Abstract]

BENEFIT PLANS

Pension and Other Postretirement Plans

The Company has funded defined benefit plans in Japan and the U.S., however the U.S. plan was frozen to new participants effective October 1, 2013. The Company also maintains non-qualified, unfunded supplemental retirement plans that provide defined pension benefits in excess of limits imposed by federal tax law for certain Japanese, U.S. and former employees, however the U.S. plan was frozen to new participants effective January 1, 2015. U.S. employees who are not participants in the defined benefit plan receive a nonelective 401(k) employer contribution.

The Company provides certain health care benefits for eligible U.S. retired employees, their beneficiaries and covered dependents (other postretirement benefits). The health care plan is contributory and unfunded. Effective January 1, 2014, employees eligible for benefits included the following: (1) active employees whose age plus service, in years, equaled or exceeded 80 (rule of 80); (2) active employees who were age 55 or older and have met the 15 years of service requirement; (3) active employees who would meet the rule of 80 in the next five years; (4) active employees who were age 55 or older and who would meet the 15 years of service requirement within the next five years; and (5) current retirees. For certain employees and former employees, additional coverage is provided for all medical expenses for life.

Information with respect to the Company's benefit plans' assets and obligations as of December 31 was as follows:



	Pension Benefits																	Other
	Japan								U.S.									Postretirement Benefits
(In millions)	2019				2018				2019					2018				2019					2018
Projected benefit obligation:
Benefit obligation, beginning of year		$	396			$	341			$	875				$	908			$	37				$	36
Service cost		22				19				23					27				0					0
Interest cost		7				7				20					31				1					1
Actuarial (gain) loss		17				35				163			⁽³⁾		(69		)		4					4
Benefits and expenses paid		(11		)		(11		)		(23		)			(22		)		(3		)			(4		)
Effect of foreign exchange rate changes		5				5				0					0				0					0
Benefit obligation, end of year		436				396				1,058					875				39					37

Plan assets:
Fair value of plan assets, beginning of year		289				270				465					448				0					0
Actual return on plan assets		24				(9		)		98					(30		)		0					0
Employer contributions		38				34				104					69				3					4
Benefits and expenses paid		(11		)		(11		)		(23		)			(22		)		(3		)			(4		)
Effect of foreign exchange rate changes		4				5				0					0				0					0
Fair value of plan assets, end of year		344				289				644					465				0					0
Funded status of the plans⁽¹⁾		$	(92	)		$	(107	)		$	(414	)			$	(410	)		$	(39	)			$	(37	)

Amounts recognized in accumulated other comprehensive income:
Net actuarial (gain) loss		$	92			$	95			$	259				$	174			$	12				$	9
Prior service (credit) cost		(2		)		(2		)		(4		)			(4		)		0					0
Total included in accumulated other comprehensive income		$	90			$	93			$	255				$	170			$	12				$	9
Accumulated benefit obligation		$	390			$	356			$	886				$	746			N/A			⁽²⁾		N/A			⁽²⁾

⁽¹⁾ Recognized in other liabilities in the consolidated balance sheets

⁽²⁾Not applicable

⁽³⁾Actuarial losses increased due to lower discount rates at the end of 2019. Also, additional funds were contributed to the U.S. funded defined benefit plan in 2019. The Company contributed $95 million in 2019 compared to $60 million in 2018.

Information for Pension Plans with an Accumulated Benefit Obligation in Excess of Plan Assets



	Pension Benefits
	Japan						U.S.
(In millions)	2019			2018			2019			2018
Accumulated benefit obligation		$	390		$	356		$	886		$	746
Fair value of plan assets		344			289			644			465

Information for Pension Plans with a Projected Benefit Obligation in Excess of Plan Assets



	Pension Benefits
	Japan ⁽¹⁾						U.S.⁽²⁾
(In millions)	2019			2018			2019			2018
Projected benefit obligation		$	436		$	396		$	1,058		$	875
Fair value of plan assets		344			289			644			465

⁽¹⁾ The net amount of projected benefit obligation and plan assets for the underfunded (including unfunded) Japan pension plan was $92 and $107 at December 31, 2019 and 2018, respectively, and was classified as liabilities on the statement of financial position.

⁽²⁾The net amount of projected benefit obligation and plan assets for the underfunded (including unfunded) U.S. pension plan was $414 and $410 at December 31, 2019 and 2018, respectively, and was classified as liabilities on the statement of financial position.

Information for other postretirement benefit plans with an accumulated postretirement benefit obligation in excess of plan assets has been disclosed in the note on “Obligations and Funded Status” because all the other postretirement benefit plans are unfunded or underfunded.



	Pension Benefits																	Other
	Japan									U.S.								Postretirement Benefits
	2019			2018			2017			2019			2018		2017			2019			2018			2017
Weighted-average actuarial assumptions:
Discount rate - net periodic benefit cost	1.25	%		1.25	%		1.25	%		4.25	%		3.75	%	4.25	%		4.25	%		3.75	%		4.25	%
Discount rate - benefit obligations	.75			1.25			1.25			3.25			4.25		3.75			3.25			4.25			3.75
Expected long-term return on plan assets	2.00			2.00			2.00			6.25			6.50		6.75			N/A		⁽¹⁾	N/A		⁽¹⁾	N/A		⁽¹⁾
Rate of compensation increase	N/A		⁽¹⁾	N/A		⁽¹⁾	N/A		⁽¹⁾	4.00			4.00		4.00			N/A		⁽¹⁾	N/A		⁽¹⁾	N/A		⁽¹⁾
Health care cost trend rates	N/A		⁽¹⁾	N/A		⁽¹⁾	N/A		⁽¹⁾	N/A		⁽¹⁾	N/A		N/A		⁽¹⁾	7.50		⁽²⁾	7.40		⁽²⁾	5.40		⁽²⁾

⁽¹⁾ Not applicable

⁽²⁾For the years 2019, 2018 and 2017, the health care cost trend rates are expected to trend down to 3.8% in 54 years, 4.1% in 61 years, and 4.5% in 77 years, respectively.

The Company determines its discount rate assumption for its pension retirement obligations based on indices for AA corporate bonds with an average duration of approximately 20 years for the Japan pension plans and 17 years for the U.S. pension plans, and determination of the U.S. pension plans discount rate utilizes the 85-year extrapolated yield curve. In Japan, participant salary and future salary increases are not factors in determining pension benefit cost or the related pension benefit obligation.

The Company bases its assumption for the long-term rate of return on assets on historical trends (10-year or longer historical rates of return for the Japanese plan assets and 15-year historical rates of return for the U.S. plan assets), expected future market movement, as well as the portfolio mix of securities in the asset portfolio including, but not limited to, style, class and equity and fixed income allocations. In addition, the Company's consulting actuaries evaluate its assumptions for long-term rates of return under Actuarial Standards of Practice (ASOP). Under the ASOP, the actual portfolio type, mix and class is modeled to determine a best estimate of the long-term rate of return. The Company in turn use those results to further validate its own assumptions.

Components of Net Periodic Benefit Cost

Pension and other postretirement benefit expenses are included in acquisition and operating expenses in the consolidated statements of earnings, which includes $8 million, $25 million and $35 million of other components of net periodic pension cost and postretirement costs (other than services costs) for the years ended December 31, 2019, 2018 and 2017, respectively. Total net periodic benefit cost includes the following components:



	Pension Benefits																								Other
		Japan											U.S.												Postretirement Benefits
(In millions)	2019				2018				2017				2019				2018				2017				2019			2018			2017
Service cost		$	22			$	19			$	20			$	23			$	27			$	24			$	0		$	0		$	0
Interest cost		7				7				6				20				31				40				1			1			1
Expected return on plan assets		(6		)		(6		)		(5		)		(29		)		(26		)		(24		)		0			0			0
Amortization of net actuarial loss		4				1				2				10				16				14				1			1			1
Net periodic (benefit) cost		$	27			$	21			$	23			$	24			$	48			$	54			$	2		$	2		$	2

Changes in Accumulated Other Comprehensive Income

The following table summarizes the amounts recognized in other comprehensive loss (income) for the years ended December 31:



	Pension Benefits																								Other
	Japan												U.S.												Postretirement Benefits
(In millions)	2019				2018				2017				2019				2018				2017				2019				2018				2017
Net actuarial loss (gain)		$	1			$	52			$	(21	)		$	95			$	(13	)		$	28			$	4			$	4			$	0
Amortization of net actuarial loss		(4		)		(1		)		(2		)		(10		)		(16		)		(14		)		(1		)		(1		)		(1		)
Total		$	(3	)		$	51			$	(23	)		$	85			$	(29	)		$	14			$	3			$	3			$	(1	)

No transition obligations arose during 2019.

Benefit Payments

The following table provides expected benefit payments, which reflect expected future service, as appropriate.



	Pension Benefits						Other
(In millions)	Japan			U.S.			Postretirement Benefits
2020		$	13		$	25		$	3
2021		12			27			4
2022		17			29			4
2023		14			30			4
2024		16			31			4
2025-2029		84			203			16

Funding

The Company plans to make contributions of $35 million to the Japanese funded defined benefit plan in 2020. The Company does not plan to make any contributions to the U.S. funded defined benefit plan in 2020. The Company funded additional contributions to the U.S. funded defined benefit plan in 2019. The funding policy for the Company's non-qualified supplemental defined benefit pension plans and other postretirement benefits plan is to contribute the amount of the benefit payments made during the year.

Plan Assets

The investment objective of the Company's Japanese and U.S. funded defined benefit plans is to preserve the purchasing power of the plan's assets and earn a reasonable inflation-adjusted rate of return over the long term. Furthermore, the Company seeks to accomplish these objectives in a manner that allows for the adequate funding of plan benefits and expenses. In order to achieve these objectives, the Company's goal is to maintain a conservative, well-diversified and balanced portfolio of high-quality equity, fixed-income and money market securities. As a part of its strategy, the Company has established strict policies covering quality, type and concentration of investment securities. For the Company's Japanese plan, these policies include limitations on investments in derivatives including futures, options and swaps, and low-liquidity investments such as real estate, venture capital investments, and privately issued securities. For the Company's U.S. plan, these policies prohibit investments in precious metals, limited partnerships, venture capital, and direct investments in real estate. The Company is also prohibited from trading on margin.

The plan fiduciaries for the Company's funded defined benefit plans have developed guidelines for asset allocations reflecting a percentage of total assets by asset class, which are reviewed on an annual basis. Asset allocation targets as of December 31, 2019 were as follows:



	Japan Pension			U.S. Pension
Domestic equities		5	%		40	%
International equities		20			20
Fixed income securities		66			40
Other		9			0
Total		100	%		100	%

The U.S. Pension Plan had $100 million in cash at December 31, 2019. The plan fiduciaries authorized investing a contribution made to the Plan in 2019 on a graduated basis over a period of time.

The following table presents the fair value of Aflac Japan's pension plan assets that are measured at fair value on a recurring basis as of December 31. All of these assets are classified as Level 2 in the fair value hierarchy.



(In millions)	2019			2018
Japan pension plan assets:
Equities:
Japanese equity securities		$	17		$	14
International equity securities		67			50
Fixed income securities:
Japanese bonds		20			34
International bonds		207			160
Insurance contracts		33			31
Total		$	344		$	289

The following table presents the fair value of Aflac U.S.'s pension plan assets that are measured at fair value on a recurring basis as of December 31. All of these assets are classified as Level 1 in the fair value hierarchy.



(In millions)	2019			2018
U.S. pension plan assets:
Mutual funds:
Large cap equity funds		$	179		$	120
Mid cap equity funds		22			17
Real estate equity funds		16			13
International equity funds		112			92
Fixed income bond funds		209			179
Aflac Incorporated common stock		6			5
Cash and cash equivalents		100			39
Total		$	644		$	465

The fair values of the Company's pension plan investments categorized as Level 1, consisting of mutual funds and common stock, are based on quoted market prices for identical securities traded in active markets that are readily and regularly available to the Company. The fair values of the Company's pension plan investments classified as Level 2 are based on quoted prices for similar assets in markets that are not active, other inputs that are observable, such as interest rates, yield curves, volatilities, prepayment speeds, loss severities, credit risks, and default rates, or other market-corroborated inputs.

401(k) Plan

The Company sponsors a 401(k) plan in which it matches a portion of U.S. employees' contributions. The plan provides for salary reduction contributions by employees and provides for matching contributions which, starting January 1, 2018, the Company increased to 100% of each employee's contributions which were not in excess of 4% of the employee's annual cash compensation as a result of tax reform. The Company also provides a nonelective contribution to the 401(k) plan of 2% of annual cash compensation for employees who opted out of the future benefits of the U.S. defined benefit plan and for new U.S. employees.

The 401(k) contributions by the Company, included in acquisition and operating expenses in the consolidated statements of earnings, were $18 million in both 2019 and 2018 and $15 million in 2017. The plan trustee held approximately 2.6 million shares of the Company's common stock for plan participants at December 31, 2019.

Stock Bonus Plan

Aflac U.S. maintains a stock bonus plan for eligible U.S. sales associates. Plan participants receive shares of Aflac Incorporated common stock based on their new annualized premium sales and their first-year persistency of substantially all new insurance policies. The cost of this plan, which was capitalized as deferred policy acquisition costs, amounted to $31 million in 2019, 2018 and 2017.

COMMITMENTS AND CONTINGENT LIABILITIES	12 Months Ended
COMMITMENTS AND CONTINGENT LIABILITIES	Dec. 31, 2019
Commitments and Contingencies Disclosure [Abstract]
COMMITMENTS AND CONTINGENT LIABILITIES	COMMITMENTS AND CONTINGENT LIABILITIES The Company has two outsourcing agreements with a technology and consulting corporation. The first agreement provides mainframe computer operations, distributed mid-range server computer operations, and related support for Aflac Japan. It has a remaining term of three years and an aggregate remaining cost of ¥26.7 billion ($244 million using the December 31, 2019, exchange rate). The second agreement provides application maintenance and development services for Aflac Japan. It has a remaining term of four years and an aggregate remaining cost of ¥6.6 billion ($61 million using the December 31, 2019, exchange rate). The Company has an outsourcing agreement with a management consulting and technology services company to provide application maintenance and development services for its Japanese operation. The agreement has a remaining term of two years with an aggregate remaining cost of ¥6.9 billion ($63 million using the December 31, 2019, exchange rate). The Company has two outsourcing agreements with information technology and data services companies to provide application maintenance and development services for its Japanese operation. The first agreement has a remaining term of three years with an aggregate remaining cost of ¥5.5 billion ($50 million using the December 31, 2019, exchange rate). The second agreement has a remaining term of three years with an aggregate remaining cost of ¥4.9 billion ($45 million using the December 31, 2019, exchange rate). The Company is a defendant in various lawsuits considered to be in the normal course of business. Members of the Company's senior legal and financial management teams review litigation on a quarterly and annual basis. The final results of any litigation cannot be predicted with certainty. Although some of this litigation is pending in states where large punitive damages, bearing little relation to the actual damages sustained by plaintiffs, have been awarded in recent years, the Company believes the outcome of pending litigation will not have a material adverse effect on its financial position, results of operations, or cash flows. See Note 3 of the Notes to the Consolidated Financial Statements for details on certain investment commitments. Guaranty Fund Assessments The U.S. insurance industry has a policyholder protection system that is monitored and regulated by state insurance departments. These life and health insurance guaranty associations are state entities (in all 50 states as well as Puerto Rico and the District of Columbia) created to protect policyholders of an insolvent insurance company. All insurance companies (with limited exceptions) licensed to sell life or health insurance in a state must be members of that state’s guaranty association. Under state guaranty association laws, certain insurance companies can be assessed (up to prescribed limits) for certain obligations to the policyholders and claimants of impaired or insolvent insurance companies that write the same line or similar lines of business. In 2009, the Pennsylvania Insurance Commissioner placed long-term care insurer Penn Treaty Network America Insurance Company and its subsidiary American Network Insurance Company (collectively referred to as Penn Treaty), neither of which is affiliated with Aflac, in rehabilitation and petitioned a state court for approval to liquidate Penn Treaty. A final order of liquidation was granted by a recognized judicial authority on March 1, 2017, and as a result, Penn Treaty is in the process of liquidation. The Company estimated and recognized the impact of its share of guaranty fund assessments resulting from the liquidation using a discounted rate of 4.25%. The Company recognized a discounted liability for the assessments of $62 million (undiscounted $94 million), offset by discounted premium tax credits of $48 million (undiscounted $74 million), for a net $14 million impact to net income in the quarter ended March 31, 2017. The Company paid a majority of these assessments by March 31, 2019. The Company used the cost estimate provided as of the liquidation date by the National Organization of Life and Health Guaranty Associations (NOLHGA) to calculate its estimated assessments and tax credits. Other guaranty fund assessments for the years ended December 31, 2019, 2018, and 2017 were immaterial.

SUBSEQUENT EVENTS	12 Months Ended
SUBSEQUENT EVENTS	Dec. 31, 2019
Subsequent Events [Abstract]
SUBSEQUENT EVENTS	SUBSEQUENT EVENTS In January 2020, the Parent Company used proceeds from senior notes issued in December 2019 to redeem $350 million of its 4.00% fixed-rate senior notes due February 2022.

UNAUDITED CONSOLIDATED QUARTERLY FINANCIAL DATA

12 Months Ended

Dec. 31, 2019

Quarterly Financial Information Disclosure [Abstract]

UNAUDITED CONSOLIDATED QUARTERLY FINANCIAL DATA

In management's opinion, the following quarterly financial information fairly presents the results of operations for such periods and is prepared on a basis consistent with the Company's annual audited financial statements.



(In millions, except for per-share amounts)	March 31, 2019				June 30, 2019				September 30, 2019				December 31, 2019
Net premium income		$	4,691			$	4,681			$	4,736			$	4,671
Net investment income		878				878				936				886
Realized investment gains (losses)		71				(66		)		(153		)		12
Other income (loss)		17				18				17				34
Total revenues		5,657				5,511				5,536				5,603
Total benefits and expenses		4,415				4,402				4,500				4,545
Earnings before income taxes		1,242				1,109				1,036				1,058
Total income tax		314				292				259				276
Net earnings		$	928			$	817			$	777			$	782
Net earnings per basic share		$	1.23			$	1.10			$	1.05			$	1.07
Net earnings per diluted share		1.23				1.09				1.04				1.06
Quarterly amounts may not agree in total to the corresponding annual amounts due to rounding.

(In millions, except for per-share amounts)	March 31, 2018				June 30, 2018				September 30, 2018				December 31, 2018
Net premium income		$	4,745			$	4,706			$	4,636			$	4,591
Net investment income		837				862				870				874
Realized investment gains (losses)		(134		)		3				56				(355		)
Other income (loss)		16				18				15				16
Total revenues		5,464				5,589				5,577				5,126
Total benefits and expenses		4,482				4,458				4,431				4,404
Earnings before income taxes		982				1,131				1,146				722
Total income tax		265				299				301				197
Net earnings		$	717			$	832			$	845			$	525
Net earnings per basic share		$	.92			$	1.08			$	1.10			$	.69
Net earnings per diluted share		.91				1.07				1.09				.69

Quarterly amounts may not agree in total to the corresponding annual amounts due to rounding.

SCHEDULE II CONDENSED FINANCIAL INFORMATION OF REGISTRANT

12 Months Ended

Dec. 31, 2019

Condensed Financial Information Disclosure [Abstract]

SCHEDULE II CONDENSED FINANCIAL INFORMATION OF REGISTRANT

CONDENSED FINANCIAL INFORMATION OF REGISTRANT

Aflac Incorporated (Parent Only)

Condensed Statements of Earnings



	Years ended December 31,
(In millions)	2019				2018				2017
Revenues:
Management and service fees from subsidiaries⁽¹⁾		$	151			$	190			$	297
Net investment income		77				69				30
Interest from subsidiaries⁽¹⁾		4				4				5
Realized investment gains (losses)		98				(16		)		(1		)
Total revenues		330				247				331
Operating expenses:
Interest expense		200				188				197
Other operating expenses⁽²⁾		221				225				180
Total operating expenses		421				413				377
Earnings before income taxes and equity in earnings of subsidiaries		(91		)		(166		)		(46		)
Income tax expense (benefit)		(22		)		(12		)		(23		)
Earnings before equity in earnings of subsidiaries		(69		)		(154		)		(23		)
Equity in earnings of subsidiaries⁽¹⁾		3,373				3,074				4,627
Net earnings		$	3,304			$	2,920			$	4,604

⁽¹⁾Eliminated in consolidation

⁽²⁾Includes expense of $13 in 2017 for the early extinguishment of debt

See the accompanying Notes to Condensed Financial Statements.

See the accompanying Report of Independent Registered Public Accounting Firm.

CONDENSED FINANCIAL INFORMATION OF REGISTRANT

Aflac Incorporated (Parent Only)

Condensed Statements of Comprehensive Income (Loss)



	Years ended December 31,
(In millions)	2019				2018				2017
Net earnings		$	3,304			$	2,920			$	4,604
Other comprehensive income (loss) before income taxes:
Unrealized foreign currency translation gains (losses) during period		252				232				286
Unrealized gains (losses) on fixed maturity securities during period		5,852				(3,109		)		1,733
Unrealized gains (losses) on derivatives during period		(12		)		2				1
Pension liability adjustment during period		(85		)		(25		)		9
Total other comprehensive income (loss) before income taxes		6,007				(2,900		)		2,029
Income tax expense (benefit) related to items of other comprehensive income (loss)		1,543				(797		)		631
Other comprehensive income (loss), net of income taxes		4,464				(2,103		)		1,398
Total comprehensive income (loss)		$	7,768			$	817			$	6,002

See the accompanying Notes to Condensed Financial Statements.

See the accompanying Report of Independent Registered Public Accounting Firm.

CONDENSED FINANCIAL INFORMATION OF REGISTRANT

Aflac Incorporated (Parent Only)

Condensed Balance Sheets



	December 31,
(In millions, except for share and per-share amounts)	2019				2018
Assets:
Investments and cash:
Fixed maturity securities available for sale, at fair value (amortized cost $1,506 in 2019 and $1,209 in 2018)		$	1,567			$	1,222
Investments in subsidiaries⁽¹⁾		30,744				26,230
Other investments		36				21
Cash and cash equivalents		2,508				1,767
Total investments and cash		34,855				29,240
Due from subsidiaries⁽¹⁾		170				98
Income taxes receivable		337				176
Other assets		405				390
Total assets		$	35,767			$	29,904
Liabilities and shareholders' equity:
Liabilities:
Employee benefit plans		$	323			$	310
Notes payable		6,136				5,765
Other liabilities		349				367
Total liabilities		6,808				6,442
Shareholders' equity:
Common stock of $.10 par value. In thousands: authorized 1,900,000 shares in 2019 and 2018; issued 1,349,309 shares in 2019 and 1,347,540 shares in 2018		135				135
Additional paid-in capital		2,313				2,177
Retained earnings		34,291				31,788
Accumulated other comprehensive income (loss):
Unrealized foreign currency translation gains (losses)		(1,623		)		(1,847		)
Unrealized gains (losses) on fixed maturity securities		8,548				4,234
Unrealized gains (losses) on derivatives		(33		)		(24		)
Pension liability adjustment		(277		)		(212		)
Treasury stock, at average cost		(14,395		)		(12,789		)
Total shareholders' equity		28,959				23,462
Total liabilities and shareholders' equity		$	35,767			$	29,904

⁽¹⁾Eliminated in consolidation

See the accompanying Notes to Condensed Financial Statements.

See the accompanying Report of Independent Registered Public Accounting Firm.

CONDENSED FINANCIAL INFORMATION OF REGISTRANT

Aflac Incorporated (Parent Only)

Condensed Statements of Cash Flows



	Years ended December 31,
(In millions)	2019				2018				2017
Cash flows from operating activities:
Net earnings		$	3,304			$	2,920			$	4,604
Adjustments to reconcile net earnings to net cash provided from operating activities:
Equity in earnings of subsidiaries⁽¹⁾		(3,373		)		(3,074		)		(4,627		)
Cash dividends received from subsidiaries		3,466				1,820				2,001
Other, net		(203		)		99				(46		)
Net cash provided (used) by operating activities		3,194				1,765				1,932
Cash flows from investing activities:
Fixed maturity securities sold		340				207				263
Fixed maturity securities purchased		(639		)		(254		)		(329		)
Other investments sold (purchased)		(16		)		31				(47		)
Settlement of derivatives		22				(2		)		223
Additional capitalization of subsidiaries⁽¹⁾		(214		)		(62		)		(69		)
Other, net		87				(107		)		(218		)
Net cash provided (used) by investing activities		(420		)		(187		)		(177		)
Cash flows from financing activities:
Purchases of treasury stock		(1,627		)		(1,301		)		(1,351		)
Proceeds from borrowings		347				1,020				1,040
Principal payments under debt obligations		0				(550		)		(1,161		)
Dividends paid to shareholders		(771		)		(793		)		(661		)
Treasury stock reissued		49				58				33
Proceeds from exercise of stock options		29				34				38
Net change in amount due to/from subsidiaries⁽¹⁾		(58		)		(4		)		(5		)
Other, net		(2		)		0				0
Net cash provided (used) by financing activities		(2,033		)		(1,536		)		(2,067		)
Net change in cash and cash equivalents		741				42				(312		)
Cash and cash equivalents, beginning of period		1,767				1,725				2,037
Cash and cash equivalents, end of period		$	2,508			$	1,767			$	1,725

⁽¹⁾Eliminated in consolidation

See the accompanying Notes to Condensed Financial Statements.

See the accompanying Report of Independent Registered Public Accounting Firm.

(A) Notes Payable

A summary of notes payable as of December 31 follows:



(In millions)	2019			2018
4.00% senior notes due February 2022 ⁽¹⁾		$	348		$	348
3.625% senior notes due June 2023		698			698
3.625% senior notes due November 2024		747			746
3.25% senior notes due March 2025		448			447
2.875% senior notes due October 2026		298			297
6.90% senior notes due December 2039		220			220
6.45% senior notes due August 2040		254			254
4.00% senior notes due October 2046		394			394
4.750% senior notes due January 2049		541			540
Yen-denominated senior notes and subordinated debentures:
.932% senior notes due January 2027 (principal amount ¥60.0 billion)		545			538
.500% senior notes due December 2029 (principal amount ¥12.6 billion)		114			0
1.159% senior notes due October 2030 (principal amount ¥29.3 billion)		266			262
.843% senior notes due December 2031 (principal amount ¥9.3 billion)		84			0
1.488% senior notes due October 2033 (principal amount ¥15.2 billion)		138			136
.934% senior notes due December 2034 (principal amount ¥9.8 billion)		88			0
1.750% senior notes due October 2038 (principal amount ¥8.9 billion)		81			79
1.122% senior notes due December 2039 (principal amount ¥6.3 billion)		57			0
2.108% subordinated debentures due October 2047 (principal amount ¥60.0 billion)		543			536
Yen-denominated loans:
Variable interest rate loan due September 2026 (.42% in 2019 and .32 in 2018, principal amount ¥5.0 billion)		45			45
Variable interest rate loan due September 2029 (.57% in 2019 and .47 in 2018, principal amount ¥25.0 billion)		227			225
Total notes payable		$	6,136		$	5,765

⁽¹⁾Redeemed in January 2020

Amounts in the table above are reported net of debt issuance costs and issuance premiums or discounts, if applicable, that are being amortized over the life of the notes.

In December 2019, the Parent Company issued four series of senior notes totaling ¥38.0 billion through a public debt offering under its U.S. shelf registration statement. The first series, which totaled ¥12.6 billion, bears interest at a fixed rate of .500% per annum, payable semi-annually, and will mature in December 2029. The second series, which totaled ¥9.3 billion, bears interest at a fixed rate of .843% per annum, payable semi-annually, and will mature in December 2031. The third series, which totaled ¥9.8 billion, bears interest at a fixed rate of .934% per annum, payable semi-annually, and will mature in December 2034. The fourth series, which totaled ¥6.3 billion, bears interest at a fixed rate of 1.122% per annum, payable semi-annually, and will mature in December 2039. These notes may only be redeemed before maturity, in whole but not in part, upon the occurrence of certain changes affecting U.S. taxation, as specified in the indenture governing the terms of the issuance.

In September 2019, the Parent Company renewed a ¥30.0 billion senior term loan facility. The first tranche of the facility, which totaled ¥5.0 billion, bears interest at a rate per annum equal to the Tokyo interbank market rate (TIBOR), or alternate TIBOR, if applicable, plus the applicable TIBOR margin and will mature in September 2026. The applicable margin ranges

between .30% and .70%, depending on the Parent Company's debt ratings as of the date of determination. The second tranche, which totaled ¥25.0 billion, bears interest at a rate per annum equal to the TIBOR, or alternate TIBOR, if applicable, plus the applicable TIBOR margin and will mature in September 2029. The applicable margin ranges between .45% and 1.00%, depending on the Parent Company's debt ratings as of the date of determination.

The aggregate contractual maturities of notes payable during each of the years after December 31, 2019, are as follows:



(In millions)
2020	$	0
2021	0
2022	350
2023	700
2024	750
Thereafter	4,386
Total	$	6,186

For further information regarding notes payable, see Note 9 of the Notes to the Consolidated Financial Statements.

(B) Derivatives

At December 31, 2019, the Parent Company's outstanding freestanding derivative contracts were swaps, foreign currency forwards and options. The swaps are associated with its notes payable, consisting of cross-currency interest rate swaps, also referred to as foreign currency swaps, associated with the Parent Company's senior notes due in February 2022, June 2023, November 2024 and March 2025. The foreign currency forwards and options are designated as derivative hedges of the foreign currency exposure of the Company's net investment in Aflac Japan. The Parent Company does not use derivative financial instruments for trading purposes, nor does it engage in leveraged derivative transactions. For further information regarding these derivatives, see Notes 1, 4 and 9 of the Notes to the Consolidated Financial Statements.

(C) Income Taxes

The Parent Company and its eligible U.S. subsidiaries file a consolidated U.S. federal income tax return. Income tax liabilities or benefits are recorded by each principal subsidiary based upon separate return calculations, and any difference between the consolidated provision and the aggregate amounts recorded by the subsidiaries is reflected in the Parent Company financial statements. For further information on income taxes, see Note 10 of the Notes to the Consolidated Financial Statements.

(D) Dividend Restrictions

See Note 13 of the Notes to the Consolidated Financial Statements for information regarding dividend restrictions.

(E) Supplemental Disclosures of Cash Flow Information



(In millions)	2019			2018			2017
Interest paid		$	189		$	179		$	195
Noncash financing activities:
Treasury stock issued for shareholder dividend reinvestment		30			8			29

SCHEDULE III SUPPLEMENTARY INSURANCE INFORMATION

12 Months Ended

Dec. 31, 2019

SEC Schedule, 12-16, Insurance Companies, Supplementary Insurance Information [Abstract]

SCHEDULE III SUPPLEMENTARY INSURANCE INFORMATION

SCHEDULE III

SUPPLEMENTARY INSURANCE INFORMATION

Aflac Incorporated and Subsidiaries

Years ended December 31,



(In millions)	Deferred Policy Acquisition Costs			Future Policy Benefits & Unpaid Policy Claims				Unearned Premiums				Other Policyholders' Funds
2019:
Aflac Japan		$	6,584		$	84,341			$	4,135			$	7,317
Aflac U.S.		3,544			11,184				111				0
All other		0			223				0				0
Intercompany eliminations		0			(754		)		(3		)		0
Total		$	10,128		$	94,994			$	4,243			$	7,317
2018:
Aflac Japan		$	6,384		$	80,672			$	4,977			$	7,145
Aflac U.S.		3,491			10,864				117				0
All other		0			183				0				1
Intercompany eliminations		0			(767		)		(4		)		0
Total		$	9,875		$	90,952			$	5,090			$	7,146

Segment amounts may not agree in total to the corresponding consolidated amounts due to rounding.

Years Ended December 31,



(In millions)	Net Premium Revenue		Net Investment Income			Benefits and Claims, net			Amortization of Deferred Policy Acquisition Costs			Other Operating Expenses			Premiums Written
2019:
Aflac Japan	$	12,772		$	2,753		$	8,877		$	709		$	2,465	$	12,367
Aflac U.S.	5,808			720			2,871			573			1,834		5,813
All other	200			105			194			0			339		0
Total	$	18,780		$	3,578		$	11,942		$	1,282		$	4,638	$	18,180
2018:
Aflac Japan	$	12,762		$	2,639		$	8,913		$	710		$	2,374	$	12,298
Aflac U.S.	5,708			727			2,887			534			1,736		5,707
All other	207			76			200			1			420		0
Total	$	18,677		$	3,442		$	12,000		$	1,245		$	4,530	$	18,005
2017:
Aflac Japan	$	12,752		$	2,463		$	9,087		$	630		$	2,257	$	12,092
Aflac U.S.	5,563			721			2,885			502			1,658		5,565
All other	216			36			209			0			421		0
Total	$	18,531		$	3,220		$	12,181		$	1,132		$	4,336	$	17,657

Segment amounts may not agree in total to the corresponding consolidated amounts due to rounding.

See the accompanying Report of Independent Registered Public Accounting Firm.

SCHEDULE IV REINSURANCE

12 Months Ended

Dec. 31, 2019

Reinsurance Disclosures [Abstract]

SCHEDULE IV REINSURANCE

SCHEDULE IV

REINSURANCE

Aflac Incorporated and Subsidiaries

Years Ended December 31,



(In millions)	Gross Amount		Ceded to Other Companies			Assumed from Other companies			Net Amount		Percentage of Amount Assumed to Net
2019:
Life insurance in force	$	146,585		$	6,592		$	0	$	139,993		0	%
Premiums:
Health insurance	$	15,657		$	527		$	205	$	15,335		1	%
Life insurance	3,465			20			0		3,445			0
Total earned premiums	$	19,122		$	547		$	205	$	18,780		1	%
2018:
Life insurance in force	$	151,457		$	4,702		$	0	$	146,755		0	%
Premiums:
Health insurance	$	15,330		$	541		$	214	$	15,003		1	%
Life insurance	3,688			14			0		3,674			0
Total earned premiums	$	19,018		$	555		$	214	$	18,677		1	%
2017:
Life insurance in force	$	152,502		$	4,121		$	0	$	148,381		0	%
Premiums:
Health insurance	$	14,829		$	554		$	222	$	14,497		1	%
Life insurance	4,046			12			0		4,034			0
Total earned premiums	$	18,875		$	566		$	222	$	18,531		1	%

Premiums by type may not agree in total to the corresponding consolidated amounts due to rounding.

See the accompanying Report of Independent Registered Public Accounting Firm.

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies)

12 Months Ended

Dec. 31, 2019

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Description of Business and Basis of Presentation

Description of Business

Aflac Incorporated (the Parent Company) and its subsidiaries (collectively, the Company) primarily sell supplemental health and life insurance in the United States (U.S.) and Japan. The Company's insurance business is marketed and administered through American Family Life Assurance Company of Columbus (Aflac) in the U.S. and, effective April 1, 2018, through Aflac Life Insurance Japan Ltd. (ALIJ) in Japan. Prior to April 1, 2018, the Company's insurance business was marketed in Japan as a branch of Aflac. The Company’s operations consist of two reportable business segments: Aflac U.S., which includes Aflac, and Aflac Japan, which includes ALIJ. American Family Life Assurance Company of New York (Aflac New York) is a wholly owned subsidiary of Aflac. Most of Aflac's policies are individually underwritten and marketed through independent agents. Additionally, Aflac U.S. markets and administers group products through Continental American Insurance Company (CAIC), branded as Aflac Group Insurance. The Company's insurance operations in the U.S. and Japan service the two markets for the Company's insurance business. Aflac Japan's revenues, including realized gains and losses on its investment portfolio, accounted for 69% of the Company's total revenues in 2019, compared with 70% in both 2018 and 2017. The percentage of the Company's total assets attributable to Aflac Japan was 83% at December 31, 2019, compared with 84% at December 31, 2018.

In November 2019, the Company acquired Argus Holdings, LLC and its subsidiary Argus Dental & Vision, Inc. (Argus), a benefits management organization and national network dental and vision company, which provides a platform for Aflac Dental and Vision. The Company paid $75 million at closing and made an additional commitment of up to $21 million in contingent consideration payable over three years based on the achievement by Argus of certain performance targets. Argus is an addition to the Aflac U.S. segment.

Basis of Presentation

The Company prepares its financial statements in accordance with U.S. generally accepted accounting principles (U.S. GAAP). These principles are established primarily by the Financial Accounting Standards Board (FASB). In these Notes to the Consolidated Financial Statements, references to U.S. GAAP issued by the FASB are derived from the FASB Accounting Standards Codification^TM (ASC). The preparation of financial statements in conformity with U.S. GAAP requires the Company to make estimates based on currently available information when recording transactions resulting from business operations. The most significant items on the Company's balance sheet that involve a greater degree of accounting estimates and actuarial determinations subject to changes in the future are the valuation of investments and derivatives, deferred policy acquisition costs (DAC), liabilities for future policy benefits and unpaid policy claims, and income taxes. These accounting estimates and actuarial determinations are sensitive to market conditions, investment yields, mortality, morbidity, commission and other acquisition expenses, and terminations by policyholders. As additional information becomes available, or actual amounts are determinable, the recorded estimates will be revised and reflected in operating results. Although some variability is inherent in these estimates, the Company believes the amounts provided are adequate.

The consolidated financial statements include the accounts of the Parent Company, its subsidiaries, and those entities required to be consolidated under applicable accounting standards. All material intercompany accounts and transactions have been eliminated.

Translation of Foreign Currencies

Foreign Currency Translation: The functional currency of Aflac Japan is the Japanese yen. The Company translates its yen-denominated financial statement accounts into U.S. dollars as follows. Assets and liabilities are translated at end-of-period exchange rates. Realized gains and losses on security transactions are translated at the exchange rate on the trade date of each transaction. Other revenues, expenses, and cash flows are translated using average exchange rates for the period. The resulting currency translation adjustments are reported in accumulated other comprehensive income. The Company includes in earnings the realized currency exchange gains and losses resulting from foreign currency transactions.

The Parent Company has designated a majority of its yen-denominated liabilities (notes payable and yen-denominated loans) as non-derivative hedges and from time-to-time may designate certain foreign currency forwards and options as derivative hedges of the foreign currency exposure of the Company's net investment in Aflac Japan. Outstanding principal and related accrued interest on these Parent Company liabilities and the fair value of these derivatives are translated into U.S. dollars at end-of-period exchange rates. Currency translation adjustments and changes in the fair value of these

derivatives are recorded as unrealized foreign currency translation gains (losses) in other comprehensive income and are included in accumulated other comprehensive income.

Insurance Revenue and Expense Recognition

Insurance Revenue and Expense Recognition: Substantially all of the supplemental health and life insurance policies the Company issues are classified as long-duration contracts. The contract provisions generally cannot be changed or canceled during the contract period; however, the Company may adjust premiums for supplemental health policies issued in the U.S. within prescribed guidelines and with the approval of state insurance regulatory authorities.

Insurance premiums for most of the Company's health and life policies, including cancer, accident, hospital, critical illness, dental, vision, term life, whole life, long-term care and disability, are recognized as revenue over the premium-paying periods of the contracts when due from policyholders. When revenues are reported, the related amounts of benefits and expenses are charged against such revenues, so that profits are recognized in proportion to premium revenues during the period the policies are expected to remain in force. This association is accomplished by means of annual additions to the liability for future policy benefits and the deferral and subsequent amortization of policy acquisition costs.

Premiums from the Company's products with limited-pay features, including term life, whole life, WAYS, and child endowment, are collected over a significantly shorter period than the period over which benefits are provided. Premiums for these products are recognized as revenue over the premium-paying periods of the contracts when due from policyholders. Any gross premium in excess of the net premium is deferred and recorded in earnings, such that profits are recognized in a constant relationship with insurance in force. Benefits are recorded as an expense when they are incurred. A liability for future policy benefits is recorded when premiums are recognized using the net premium method.

At the policyholder's option, customers can also pay discounted advanced premiums for certain of the Company's products. Advanced premiums are deferred and recognized when due from policyholders over the regularly scheduled premium payment period.

The calculation of DAC and the liability for future policy benefits requires the use of estimates based on sound actuarial valuation techniques. For new policy issues, the Company reviews its actuarial assumptions and deferrable acquisition costs each year and revises them when necessary to more closely reflect recent experience and studies of actual acquisition costs. For policies in force, the Company evaluates DAC by major product groupings to determine that they are recoverable from future revenues, and any amounts determined not to be recoverable are charged against net earnings. The Company has not had any material charges to earnings for DAC that was determined not to be recoverable in any of the years presented in this Form 10-K.

Advertising Cost, Policy, Expensed Advertising Cost

Advertising expense is reported as incurred in insurance expenses in the consolidated statements of earnings.

Cash and Cash Equivalents

Cash and Cash Equivalents: Cash and cash equivalents include cash on hand, money market instruments, and other debt instruments with a maturity of 90 days or less when purchased.

Investments