10-K

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K

ANNUAL REPORT PURSUANT TO SECTION 13 OR 15 (d)
OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended December 31, 2003
Commission file no. 1-7434

AFLAC INCORPORATED

(Exact name of Registrant as specified in its charter)

GEORGIA	58-1167100
(State or other jurisdiction of	(I.R.S. Employer Identification No.)
incorporation or organization)
1932 Wynnton Road, Columbus, Georgia	31999
(Address of principal executive offices)	(Zip Code)

706-323-3431

(Registrant's telephone number, including area code)

SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT:

Title of Each Class	Name of Each Exchange on Which Registered
Common Stock, $.10 Par Value		New York Stock Exchange
		Pacific Exchange
		Tokyo Stock Exchange

SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT:    NONE

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes   X         No         .

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (Section 229.405 of this chapter) is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.         

Indicate by check mark whether the registrant is an accelerated filer (as defined in Exchange Act Rule 12b-2) Yes   X   No      

The aggregate market value of the voting stock held by non-affiliates of the registrant as of June 30, 2003 was $15,408,858,733.
The number of shares of the registrant's Common Stock outstanding at March 3, 2004, with $.10 par value, was 510,929,955.

DOCUMENTS INCORPORATED BY REFERENCE

PART I	Item 1	Exhibit 13 - pages 13-3 to 13-33 (Management's Discussion and Analysis of Financial Condition and Results of Operations (MD&A)), pages 13-47 to 13-62 (Notes 2 and 3 of the Notes to the Consolidated Financial Statements), and pages 13-72 to 13-74 (Note 9 of the Notes to the Consolidated Financial Statements). The applicable portions of the Company's Annual Report to Shareholders for the year ended December 31, 2003, are included in Exhibit 13.
	Item 2	Exhibit 13 - page 13-80 (Note 12 of the Notes to the Consolidated Financial Statements)
PART II	Item 5	Exhibit 13 - pages 13-1, 13-2 and 13-72 to 13-74 (Note 9 of the Notes to the Consolidated Financial Statements)
	Item 7	Exhibit 13 - pages 13-3 to 13-33
	Item 7A	Exhibit 13 - pages 13-8 and 13-16 to 13-19
	Item 8	Exhibit 13 - pages 13-34 to 13-82
PART III	Item 10	Incorporated by reference from the definitive Proxy Statement for the Annual Meeting of Shareholders to be held May 3, 2004 (the Proxy Statement)
	Item 11	Incorporated by reference from the Proxy Statement
	Item 12	Incorporated by reference from the Proxy Statement
	Item 13	Incorporated by reference from the Proxy Statement
	Item 14	Incorporated by reference from the Proxy Statement

i

	AFLAC Incorporated
	Annual Report on Form 10-K
	For the Year Ended December 31, 2003
	Table of Contents
		Page
PART I
Item 1.	Business	I-1
Item 2.	Properties	I-15
Item 3.	Legal Proceedings	I-16
Item 4.	Submission of Matters to a Vote of Security Holders	I-17
Item 4A.	Executive Officers of the Company	I-17
PART II
Item 5.	Market for Company's Common Equity and Related Shareholder Matters	II-1
Item 6.	Selected Financial Data	II-1
Item 7.	Management's Discussion and Analysis of Financial Condition and Results of Operations	II-2
Item 7A.	Quantitative and Qualitative Disclosures About Market Risk	II-2
Item 8.	Financial Statements and Supplementary Data	II-2
Item 9.	Changes in and Disagreements with Accountants on Accounting and Financial Disclosure	II-3
Item 9A.	Controls and Procedures	II-3
PART III
Item 10.	Directors and Executive Officers of the Company	III-1
Item 11.	Executive Compensation	III-1
Item 12.	Security Ownership of Certain Beneficial Owners and Management and Related Shareholder Matters	III-1
Item 13.	Certain Relationships and Related Transactions	III-2
Item 14.	Principal Accounting Fees and Services	III-2
PART IV
Item 15.	Exhibits, Financial Statement Schedules and Reports on Form 8-K	IV-1

ii

PART I

ITEM 1.  BUSINESS

     AFLAC Incorporated qualifies as an accelerated filer within the meaning of Exchange Act Rule 12b-2. Our internet address is aflac.com. We make available, free of charge on our Web site, our annual report on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and amendments thereto as soon as reasonably practicable after those forms have been electronically filed with or furnished to the Securities and Exchange Commission.

General Description

     AFLAC Incorporated was incorporated in 1973 under the laws of the state of Georgia. AFLAC Incorporated (the Parent Company) is a general business holding company and acts as a management company, overseeing the operations of its subsidiaries by providing management services and making capital available. Its principal business is supplemental health and life insurance, which is marketed and administered primarily through its subsidiary, American Family Life Assurance Company of Columbus (AFLAC). AFLAC operates in the United States (AFLAC U.S.) and as a branch in Japan (AFLAC Japan).

     Most of our insurance policies are individually underwritten and marketed at worksites through independent agents, with premiums paid by the employee. We believe AFLAC is the world's leading writer of individually issued policies marketed at worksites. We continue to diversify our product offerings in both Japan and the United States. AFLAC Japan sells cancer plans, care plans, general medical expense plans, medical/sickness riders to our cancer plan, a living benefit life plan, and an accident plan. AFLAC U.S. sells cancer plans and various types of health insurance, including accident and disability, fixed-benefit dental, personal sickness and hospital indemnity, hospital intensive care, long-term care, and short-term disability plans. We also offer several life insurance plans in Japan and the United States.

     We are authorized to conduct insurance business in all 50 states, the District of Columbia, several U.S. territories and foreign countries. Our only significant foreign operation is AFLAC Japan, which accounted for 74% of the Company's total revenues in 2003, 75% in 2002 and 78% in 2001. The percentage of total assets attributable to AFLAC Japan was 84% at both December 31, 2003 and 2002.

I-1

Results of Operations

     The following table presents an analysis of net earnings and net earnings per diluted share, as well as items impacting those performance measures, for the years ended December 31:

Analysis of Net Earnings
		In Millions									Per Diluted Share
			2003			2002			2001			2003			2002			2001
Net earnings		$	795		$	821		$	687		$	1.52		$	1.55		$	1.28
Items impacting net earnings, net of tax:
	Realized investment gains (losses)		(191	)		(15	)		(34	)		(.37	)		(.03	)		(.06	)
	Change in fair value of interest rate
	component of cross-currency swaps		(3	)		37			1			-			.07			-
	Japanese policyholder protection fund		-			(26	)		-			-			(.05	)		-
	Foreign currency translation*		33			(10	)		(37	)		.06			(.02	)		(.07	)
*Translation effect of AFLAC Japan segment and Parent Company interest expense

     Realized Investment Gains and Losses: Our investment strategy is to invest in fixed-income securities in order to provide a reliable stream of investment income, which is one of the drivers of the company's profitability. We do not purchase securities with the intent of generating capital gains or losses. However, investment gains and losses may be realized as a result of changes in the financial markets and the creditworthiness of specific issuers of fixed-maturity securities. The realization of investment gains and losses is independent of the underwriting and administration of our insurance products, which are the principal drivers of our profitability.

     Cross-Currency Swaps: We entered into cross-currency swap agreements to effectively convert our dollar-denominated senior debt obligation, which matures in 2009, into a yen-denominated obligation. The effect of issuing fixed-rate, dollar-denominated debt and swapping it into fixed-rate, yen-denominated debt has the same economic impact on AFLAC as if we had issued straight yen-denominated debt of a like amount. The accounting treatment for cross-currency swaps is different from issuing yen-denominated (Samurai) notes. SFAS No. 133, Accounting for Derivative Instruments and Hedging Activities, requires that the change in the fair value of the interest rate component of the cross-currency swap be reflected in the income statement. The change in fair value is determined by relative dollar and yen interest rates and has no cash impact on our results of operations. Additionally, we have the ability to retain the cross-currency swaps until their maturity. At maturity, the swaps' fair value and their initial contract fair value will be equal and the cumulative impact of gains and losses from the changes in fair value of the interest component will be zero. The amounts are reported in other income in the Consolidated Statements of Earnings.

     Nonrecurring Items: In December 2002, the members of the Life Insurance Policyholder Protection Corporation approved the Financial Services Agency's (FSA) proposal, which required the industry to contribute an additional 78 billion yen (approximately $728 million using the December 31, 2003 exchange rate) to Japan's policyholder protection fund. Our estimated share of the assessment decreased 2002 pretax earnings by $40 million (after-tax, $26 million or $.05 per diluted share). This charge is included in acquisition and operating expenses in the Consolidated Statement of Earnings.

I-2

     For information on our results of operations and financial information by segment, see Exhibit 13, pages 13-3 to 13-33 (Management's Discussion and Analysis of Financial Condition and Results of Operations (MD&A)), pages 13-47 to 13-50 (Note 2 of the Notes to the Consolidated Financial Statements) and page 13-80 (Note 12 of the Notes to the Consolidated Financial Statements), which are incorporated herein by reference.

Foreign Currency Translation

     AFLAC Japan's premiums and most of its investment income are received in yen. Claims and expenses are paid in yen, and we primarily purchase yen-denominated assets to support yen-denominated policy liabilities. These and other yen-denominated financial statement items are translated into dollars for financial reporting purposes. We translate AFLAC Japan's income statement from yen into dollars using an average exchange rate for the reporting period, and we translate its balance sheet using an end-of-period exchange rate. However, it is important to distinguish between translating and converting foreign currency. Except for a limited number of transactions, we do not actually convert yen into dollars.

     Due to the relative size of AFLAC Japan, fluctuations in the yen/dollar exchange rate can have a significant effect on our reported results. In periods when the yen weakens, translating yen into dollars causes fewer dollars to be reported. When the yen strengthens, translating yen into dollars causes more dollars to be reported. Consequently, yen weakening has the effect of suppressing current period results in relation to the comparable prior period, while yen strengthening has the effect of magnifying current period results in relation to the comparable prior period. As a result, we view foreign currency translation as a financial reporting issue for AFLAC and not an economic event to our company or shareholders. Because the effect of translating yen into dollars distorts the rate of growth of our operations, management evaluates AFLAC's financial performance excluding the impact of foreign currency translation.

     The yen/dollar exchange rate as of December 31, 2003 was 107.13, compared with 119.90 as of December 31, 2002. Weighted-average yen/dollar exchange rates were 115.95 in 2003, 125.15 in 2002 and 121.54 in 2001. We report currency translation adjustments in accumulated other comprehensive income and the realized currency exchange gains and losses resulting from transactions in earnings. In 2003, the effect of currency translation increased total assets by $4.2 billion, increased total liabilities by $4.2 billion and increased net earnings by $7 million.

     For further information regarding the effect of currency fluctuations on our business, see Exhibit 13, page 13-8 (Foreign Currency Translation section of MD&A), Exhibit 13, pages 13-16 to 13-18 (Currency Risk section of MD&A), Exhibit 13, pages 13-27 to 13-28 (Notes Payable section of MD&A) and pages 13-47 to 13-50 (Note 2 of the Notes to the Consolidated Financial Statements), which are incorporated herein by reference.

I-3

Insurance Premiums

The growth of earned premiums is directly affected by the change in premiums in force and by the change in weighted-average yen/dollar exchange rates. Consolidated earned premiums were $9.9 billion in 2003, $8.6 billion in 2002 and $8.1 billion in 2001. The following table sets forth the changes in annualized premiums in force for AFLAC's insurance business for the years ended December 31:

(In millions)			2003			2002			2001
Annualized premiums in force, beginning of year		$	9,634		$	8,167		$	8,314
	New sales, including conversions		2,175			1,937			1,674
	Change in unprocessed new sales		(95	)		(126	)		(64	)
	Premiums lapsed and surrendered		(1,272	)		(1,076	)		(939	)
	Other		127			120			50
	Foreign currency translation adjustment		877			612			(868	)
Annualized premiums in force, end of year		$	11,446		$	9,634		$	8,167

Insurance - Japan

     AFLAC Japan earned premium income by major product categories is included in Note 2 of the Notes to the Consolidated Financial Statements, Exhibit 13, page 13-48. We translate annualized premiums in force into dollars at the respective end-of-period exchange rates. Changes in annualized premiums in force are translated at weighted-average exchange rates. The following table presents the changes in annualized premiums in force for AFLAC Japan for the years ended December 31:

			In Dollars								In Yen
(In millions of dollars and billions of yen)			2003			2002			2001		2003		2002		2001
Annualized premiums in force,
beginning of year		$	6,960		$	5,928		$	6,452		834		782		740
	New sales, including conversions		1,047			867			755		121		108		92
	Change in unprocessed new sales		(95	)		(126	)		(64	)	(10	)	(16	)	(8	)
	Premiums lapsed and surrendered		(453	)		(385	)		(342	)	(53	)	(48	)	(41	)
	Other		67			64			(5	)	8		8		(1	)
	Foreign currency translation adjustment		877			612			(868	)	-		-		-
Annualized premiums in force,
end of year		$	8,403		$	6,960		$	5,928		900		834		782

     Our persistency has declined slightly during the three-year period ended December 31, 2003, mainly due to the depressed economic conditions in Japan and the increasing block of directly-issued business, which is generally less persistent than payroll business in Japan. Total new annualized premium sales in yen were: 121.2 billion yen in 2003, up 11.9%; 108.3 billion yen in 2002, up 17.9%; and 91.9 billion yen in 2001, down 7.9%. The increases in annualized premiums in force in yen of 7.9% in 2003, 6.7% in 2002 and 5.6% in 2001, reflect the high persistency of AFLAC Japan's business and the sales of new policies. For further information regarding the Japanese economy and its effect on our operations, see Exhibit 13, page 13-14, which is incorporated herein by reference.

I-4

Insurance - U.S.

     AFLAC U.S. earned premium income by major product categories is summarized in Note 2 of the Notes to the Consolidated Financial Statements in Exhibit 13, page 13-48. The following table sets forth the changes in annualized premiums in force for AFLAC U.S. insurance for the years ended December 31.

(In millions)			2003			2002			2001
Annualized premiums in force, beginning of year		$	2,674		$	2,239		$	1,862
	New sales, including conversions		1,128			1,070			919
	Premiums lapsed		(819	)		(691	)		(597	)
	Other		60			56			55
Annualized premiums in force, end of year		$	3,043		$	2,674		$	2,239

     Total new annualized premium sales were: $1.1 billion in 2003, up 5.4%; $1.1 billion in 2002, up 16.4%; and $919 million in 2001, up 29.1%. The increases in annualized premiums in force of 13.8% in 2003, 19.5% in 2002 and 20.3% in 2001 were favorably affected by increased sales at the worksite primarily through cafeteria plans and a slight improvement in the persistency of several products.

Insurance Products - Japan

     AFLAC Japan's insurance products are designed to help consumers pay for medical and nonmedical costs that are not reimbursed under Japan's national health insurance system.

     In 2002, we introduced EVER, a whole life fixed-benefit medical product that was developed to address consumer interest in whole-life medical insurance as a result of health care legislation that increased out-of-pocket costs for most Japanese consumers in April 2003. Stand-alone medical products accounted for 28% of total sales in 2003 and 18% in 2002. We believe that EVER will continue to be a popular product and a solid contributor to sales.

     We also introduced a whole life version of our Rider MAX product in 2002. Conversions to the new whole life version of Rider MAX, which provides accident and medical/sickness benefits, favorably impacted total sales in both 2003 and 2002, with the larger impact occurring in 2002. For policy conversions, new annualized premium sales include only the incremental annualized premium amount over the original term policy. Rider MAX accounted for 27% of total sales in 2003, 31% in 2002 and 25% in 2001. We believe that sales contributions from conversions will continue to have less of an effect on total new annualized premium sales in future periods.

     The cancer life insurance plans we offer in Japan provide a fixed daily benefit for hospitalization and outpatient services related to cancer and a lump-sum benefit upon initial diagnosis of internal cancer. The plans differ from the AFLAC U.S. cancer plans (described below) in that the Japanese policies also provide death benefits and many have cash surrender values. We estimate that approximately 22% of the premiums earned from all cancer life plans are associated with these benefits. Cancer life sales accounted for 27% of total sales in 2003, 33% in 2002 and 51% in 2001.

I-5

     The ordinary life products that we offer in Japan provide death benefits and may include cash surrender values. These products are available as stand-alone policies and riders. Life production accounted for 13% of sales in 2003, compared with 13% in 2002 and 15% in 2001.

     We also offer a living benefit life plan and accident and care policies in Japan. Mainly sold as a rider, the living benefit life plan is a life insurance product that provides lump-sum benefits when policyholders experience either heart attack or stroke. Our accident insurance policy provides benefits for inpatient and outpatient treatment and surgery due to accidents. Our care insurance provides periodic benefits to those who become bedridden, demented, or seriously disabled due to illness or accident. These products individually accounted for less than 5% of total new annualized premium sales in the three-year period ended December 31, 2003.

Insurance Products - U.S.

     We design our U.S. insurance products to provide supplemental coverage for people who already have major medical or primary insurance coverage. Our health insurance plans are guaranteed-renewable for the lifetime of the policyholder (to age 70 for short-term disability policies). We cannot cancel guaranteed-renewable coverage, but we can increase premium rates on existing and future policies by class of policy in response to higher than originally expected claims experience (subject to federal and state loss-ratio guidelines) on a uniform, nondiscriminatory basis. Any premium rate increases are subject to state regulatory approval. With the exception of our Medicare supplement product, which is a closed block of business, we have had minimal rate increase activity in the last five years.

     AFLAC U.S. offers an accident and disability policy to protect against losses resulting from accidents. The accident portion of the policy includes lump-sum benefits for accidental death, dismemberment and specific injuries as well as fixed benefits for hospital confinement. Optional disability riders are also available. Short-term disability policies provide disability benefits with a variety of elimination period/benefit period options. The longest such benefit period offered is two years. During 2003, we began introducing revised versions of our accident and disability products throughout the United States. Accident/disability coverage continued to be our best-selling product category, accounting for 51% of total sales in 2003, 51% in 2002 and 52% in 2001.

     Our U.S. cancer plans are designed to provide insurance benefits for medical and nonmedical costs that are generally not reimbursed by major medical insurance. During 2003, we also began introducing a revised version of our cancer product. Benefits include a first-occurrence benefit that pays an initial amount when internal cancer is first diagnosed, a fixed amount for each day an insured is hospitalized for cancer treatment, and benefits for medical, radiation, chemotherapy, surgery and a "wellness" benefit applicable toward certain diagnostic tests. Cancer expense insurance accounted for 20% of total sales in 2003, 21% in 2002 and 24% in 2001.

     In 2002, we introduced a personal sickness indemnity plan, which provides a fixed daily benefit for hospitalization due to sickness and physician services for accident or sickness. Our hospital indemnity product provides a fixed daily benefit for hospitalization due to accident or sickness. Our hospital indemnity product category, which includes these plans, contributed 11% of total sales in 2003, 10% in 2002 and 6% in 2001.

     We also offer a series of fixed-benefit dental policies, providing various levels of benefits for dental procedures, including check-ups and cleanings. Plan features include a renewal guarantee, no deductible and a choice of dentist. The policies are portable and pay regardless of other insurance. Our dental insurance generated 7% of total sales in 2003, 2002 and 2001.

I-6

     AFLAC U.S. offers term and whole life policies sold through payroll deduction at the worksite and various term and whole life policies on a direct basis. We also offer other health insurance products including qualified and non-qualified long-term care plans, a hospital intensive care policy, and a specified health event policy. These products individually contributed less than 5% of total sales in each of 2003, 2002 and 2001.

Distribution - Japan

     Our largest distribution channel is the "corporate agency" system. Affiliated corporate agencies contributed 37% of total new annualized premium sales in both 2003 and 2002, and 41% in 2001. Affiliated corporate agencies are formed when companies establish subsidiary businesses to sell our products to their employees, suppliers and customers. These agencies help us reach employees at 93% of the companies listed on the Tokyo Stock Exchange.

     We also sell our products through independent corporate agencies and individual agencies that are not affiliated with large companies. Agents' activities are primarily limited to insurance sales, with customer service support provided by our main office in Tokyo and 89 offices throughout Japan.

     As of December 31, 2003, there were approximately 14,640 agencies in Japan with more than 64,900 licensed agents, compared with approximately 12,050 agencies and 58,100 licensed agents a year ago. We believe that new agencies will continue to be attracted to AFLAC Japan's high commissions, superior products, customer service and brand image.

     We have also been utilizing our marketing alliance with Dai-ichi Mutual Life Insurance Co. (Dai-ichi Life) to improve our reach in Japan through Dai-ichi Life's sales force of 48,000 people. Sales of AFLAC products by Dai-ichi Life commenced in April 2001. Dai-ichi Life sold 305,600 of our cancer life policies in 2003, compared with 359,500 policies in 2002 and 265,200 policies in 2001. Contributions to total new annualized premium sales were 10% in 2003, 11% in 2002 and 2001.

Distribution - U.S.

     Our U.S. sales force comprises independent sales agents who are licensed to sell accident and health insurance. Many are also licensed to sell life insurance. Most agents' efforts are directed toward selling supplemental health insurance at the worksite. The average number of U.S. agents actively producing business on a monthly basis during 2003 was 17,200, compared with 15,800 in 2002 and 13,000 in 2001.

     During 2003, we took several steps to enhance our distribution system by expanding the field management network that supports our sales force. For further information regarding changes in our U.S. distribution system, see Exhibit 13, page 13-15 (AFLAC U.S. Sales section of MD&A), which is incorporated herein by reference.

     Agents' activities are principally limited to sales. Administrative personnel in Columbus, Georgia; Albany, New York; and Omaha, Nebraska, handle policyholder service functions, including issuance of policies, premium collection, payment notices and claims. Agents are paid commissions based on first and renewal-year premiums from their sales of insurance products. State, regional and district sales coordinators are also independent agents and are compensated by override commissions and bonuses.

I-7

     We have concentrated on marketing our products at the worksite. This method offers policies to individuals through common media such as employment, trade and other associations. This manner of marketing is distinct from the "group" insurance sales approach, as our primary method of enrollment results from the individual insured being directly contacted by the sales associate. Policies are individually underwritten, with premiums generally paid by the employee. Additionally, AFLAC policies are portable, meaning that individuals may retain their full insurance coverage upon separation from employment or such affiliation, generally at the same premium. A major portion of premiums on such sales are collected through payroll deduction or other forms of centralized billings. Worksite-marketing enables the agency force to reach a greater number of prospective policyholders and lowers distribution costs, compared with individually marketed business.

     Another valuable marketing and sales tool is the flexible benefits program, or cafeteria plan, which allows an employee to pay for many of AFLAC's products using pretax dollars. These programs help achieve increased penetration, as agents are required to present the program to all employees in a payroll account.

     In 2003, AFLAC U.S. collected premiums were $2.6 billion, 8.2% of which was collected in Texas, 7.0% in Florida and 6.0% in California. Collected premiums in all other states were individually less than 5% of AFLAC U.S. premiums.

Competition - Japan

     In 1974, AFLAC became the second foreign (non-Japanese) life insurance company to gain direct access to the Japanese insurance market by obtaining an operating license. Through 1981, we were the only company in Japan authorized to sell a cancer life insurance policy. In January 2001, Japan's insurance market was deregulated, and we experienced an increase in the number of companies selling products that compete with our policies. However, based on our growth of premiums in force, producing agents and customer accounts, we do not believe that our market position has been significantly impacted by increased competition as a result of deregulation. Furthermore, we believe the continued development and maintenance of operating efficiencies will allow us to offer affordable products at a better value to consumers.

     AFLAC has had substantial success selling cancer life policies in Japan, with 14.0 million cancer life policies in force as of December 31, 2003. We believe we will remain a leading provider of cancer life insurance coverage in Japan, principally due to our long experience in the market, low-cost operations, unique marketing system (see Distribution - Japan above) and product expertise developed in the United States.

Competition - U.S.

     There are approximately 2,000 life and accident and health insurance companies operating in the United States. We compete against several insurers on a national basis plus other insurers regionally. We believe that our policies and premium rates as well as the commissions paid to our sales agents are competitive with those offered by other companies providing similar types of insurance. However, we believe that our U.S. business is distinct from our competitors because of our product focus, distribution system, and name awareness. For most of the other companies that sell supplemental insurance, it represents a secondary business. For us, it is our only business and allows us to focus on exploring new product opportunities while also enhancing our existing products. By doing so, we believe we offer the best value in the market. We also believe that our growing distribution system of independent sales associates expands our business opportunities, while our advertising c ampaigns have increased our name awareness and branding efforts.

I-8

     Private insurers and voluntary and cooperative plans, such as Blue Cross and Blue Shield, provide insurance for meeting basic hospitalization and medical expenses. Much of this insurance is sold on a group basis. The federal and state governments also pay substantial costs of medical treatment through Medicare and Medicaid programs. Such major medical insurance generally covers a substantial amount of the medical (but not nonmedical) expenses incurred by an insured as a result of accident and disability, cancer or other major illnesses. AFLAC's policies are designed to provide coverage that is supplemental to that provided by major medical insurance and may also be used to defray nonmedical expenses. Thus, we compete only indirectly with major medical insurers. However, the scope of major medical coverage offered by other insurers does represent a potential limitation on the market for our products. Accordingly, expansion of coverage by other insurers, or governmental pr ograms, could adversely affect our business opportunities. Conversely, any reduction of coverage, such as increased deductibles and co-payments, by other insurers or governmental programs could favorably affect our business opportunities.

Investments and Investment Results

     The following table shows an analysis of investment securities as of December 31:

			AFLAC Japan				AFLAC U.S.
(In millions)				2003		2002		2003			2002
Securities available for sale, at fair value:
	Fixed maturities		$	21,098	$	18,036	$	5,397	*	$	4,623	*
	Perpetual debentures			3,122		2,569		228			161
	Equity securities			37		136		36			122
		Total available for sale		24,257		20,741		5,661			4,906
Securities held to maturity, at amortized cost:
	Fixed maturities			8,736		8,394		15			-
	Perpetual debentures			4,297		3,700		-			-
		Total held to maturity		13,033		12,094		15			-
		Total investment securities	$	37,290	$	32,835	$	5,676		$	4,906
*Includes securities held by the Parent Company of $39 in 2003 and $207 in 2002

     Net investment income was $1.8 billion in 2003 and $1.6 billion in both 2002 and 2001. Net investment income has been relatively flat during the last three years primarily as a result of low available investment yields for new money in both Japan and the United States. In particular, Japan's life insurance industry has contended with low investment yields for a number of years. Based on financial results determined in accordance with the Japanese Financial Services Agency (FSA) requirements for the fiscal year ended March 31, 2003, AFLAC Japan had the highest portfolio yield among all of Japan's life insurers with assets in excess of 2 trillion yen for 2003, 2002 and 2001. AFLAC Japan earned this distinction while maintaining a debt security portfolio in which 97.2% and 97.9% of the securities were classified as investment grade as of December 31, 2003 and 2002, respectively.

     For information on the composition of our investment portfolio and investment results, see Exhibit 13, pages 13-13 to 13-14, 13-15, 13-20 to 13-27, and 13-30 to 13-31 (discussions relating to investments, balance sheet and cash flow) and pages 13-51 to 13-64 (Notes 3 and 4 of the Notes to the Consolidated Financial Statements), which are incorporated herein by reference.

I-9

Investments - Japan

     Yen-denominated debt securities accounted for 93% of AFLAC Japan's total debt securities as of December 31, 2003 and 93% of AFLAC Japan's total debt securities as of December 31, 2002. The following table presents the composition, based on cost or amortized cost, of total investments and cash for AFLAC Japan ($35.5 billion in 2003 and $31.0 billion in 2002) as of December 31:

			2003		2002
Debt securities:
	Government and guaranteed		20.1	%	19.8	%
	Municipalities		.2		.2
	Public utilities		10.4		11.5
	Banks/financial institutions		38.0		36.7
	Other corporate		29.7		27.7
		Total debt securities	98.4		95.9
Equity securities			.1		.5
Cash and cash equivalents			1.5		3.6
			100.0	%	100.0	%

     Funds available for investment include cash flows from operations and funds generated from bond swaps, maturities and redemptions. AFLAC Japan purchased debt security investments totaling approximately 535.1 billion yen in 2003 ($4.6 billion using the 2003 weighted-average exchange rate), 564.8 billion yen in 2002 ($4.5 billion using the 2002 weighted-average exchange rate) and 444.6 billion yen in 2001 ($3.7 billion using the 2001 weighted-average exchange rate). In 2003, 87.5% of the total yen-denominated purchases represented new money invested at an average yield of 3.20% to support our operational needs. Shorter-dated investments used to manage cash flow needs represented 8.9% of yen-denominated purchases and bond swap activity accounted for the remaining 3.6% of yen-denominated purchases. Dollar-denominated new money, which represented 90.2% of total dollar-denominated purchases, was invested at an average yield of 6.26%. Dollar-denominated bond swaps accounted for the remaining 9.8% of total dollar-denominated purchases. In 2002, 67.4% of the total yen-denominated purchases represented new money invested at an average yield of 3.65% to support our operational needs. Bond swap activity accounted for 21.0% of yen-denominated purchases and shorter-dated investments used to manage cash flow needs represented the remaining 11.6% of yen-denominated purchases. Dollar-denominated new money, which accounted for 58.5% of total dollar-denominated purchases, was invested at an average yield of 7.39%. Dollar-denominated bond swaps accounted for the remaining 41.5% of total dollar-denominated purchases. In 2001, 84.9% of the total yen-denominated purchases represented new money invested at an average yield of 3.58% to support our operational needs. Bond swap activity represented the remaining 15.1% of yen-denominated purchases. Dollar-denominated new money, which accounted for 59.3% of total dollar-denominated purchases, was invested at an average yield of 7.69%. Dollar-de nominated bond swaps represented the remaining 40.7% of dollar-denominated purchases.

     We use specific criteria to judge the credit quality of both existing and prospective investments. Furthermore, we use several methods to monitor these criteria, including credit rating services and internal credit analysis. All of AFLAC Japan's securities have ratings from either a nationally recognized security rating organization or the Securities Valuation Office (SVO) of the National Association of Insurance Commissioners (NAIC).

I-10

     The percentage distribution by credit rating of AFLAC Japan's purchases of debt securities for the years ended December 31, at amortized cost, was as follows:

	2003		2002
AAA	2.5	%	.2	%
AA	20.6		22.7
A	31.6		49.7
BBB	45.3		27.4
	100.0	%	100.0	%

     The percentage distribution of AFLAC Japan's debt securities, at amortized cost and fair value, by credit rating was as follows:

	December 31, 2003				December 31, 2002
	Amortized		Fair		Amortized		Fair
	Cost		Value		Cost		Value
AAA	2.4	%	2.6	%	2.3	%	2.5	%
AA	34.2		37.1		38.0		41.9
A	31.6		31.1		34.7		33.7
BBB	29.0		27.0		22.9		20.3
BB or lower	2.8		2.2		2.1		1.6
	100.0	%	100.0	%	100.0	%	100.0	%

Investments - U.S.

     The following table presents the composition, based on cost or amortized cost, of total investments and cash for AFLAC U.S. ($5.3 billion in 2003 and $4.6 billion in 2002) as of December 31:

			2003		2002
Debt securities:
	Government		1.5	%	.4	%
	Municipalities		.8		.4
	Mortgage-backed securities		3.2		.4
	Public utilities		10.7		11.6
	Sovereign and supranational		4.3		3.5
	Banks/financial institutions		40.2		36.6
	Other corporate		35.0		41.8
		Total debt securities	95.7		94.7
Equity securities			-		2.6
Cash and cash equivalents			4.3		2.7
			100.0	%	100.0	%

I-11

     Funds available for investment include cash flows from operations and funds generated from bond swaps, maturities and redemptions. Purchases of investments by AFLAC U.S. were approximately $1.8 billion in 2003, $1.2 billion in 2002 and $1.6 billion in 2001. In 2003, of the total available funds, 96.1% was invested in corporate fixed-maturity securities at an average yield of 6.53% and 3.9% was invested in U.S. government or agency securities at an average yield of 5.37%. AFLAC U.S. invested 92.6% in corporate fixed-maturity securities in 2002 at an average yield of 7.58% and 1.0% in U.S. government or government agency securities at an average yield of 6.01%. In 2003 and 2002, we directed more funds to the corporate fixed-maturity security market due to the low yields available on U.S. government and government agency securities. AFLAC U.S. invested 93.9% in corporate fixed-maturity securities in 2001 at an average yield of 7.78% and .6% in U.S. government or government agency securities at an average yield of 6.32%.

     We use specific criteria to judge the credit quality of both existing and prospective investments. Furthermore, we use several methods to monitor these criteria, including credit rating services and internal credit analysis. All of AFLAC's U.S. securities have ratings from either a nationally recognized security rating organization or the SVO of the NAIC.

     The percentage distribution by credit rating of AFLAC's U.S. purchases of debt securities for the years ended December 31, at amortized cost, was as follows:

	2003		2002
AAA	25.4	%	1.9	%
AA	12.0		10.4
A	34.5		42.5
BBB	28.1		45.2
	100.0	%	100.0	%

     The percentage distribution of debt securities for AFLAC U.S., at amortized cost and fair value, by credit rating was as follows:

	December 31, 2003				December 31, 2002
	Amortized		Fair		Amortized		Fair
	Cost		Value		Cost		Value
AAA	7.4	%	6.8	%	2.8	%	2.9	%
AA	9.4		9.5		11.5		12.0
A	49.6		50.2		50.4		51.9
BBB	30.4		30.5		31.7		30.7
BB or lower	3.2		3.0		3.6		2.5
	100.0	%	100.0	%	100.0	%	100.0	%

I-12

Regulation - Japan

     A portion of AFLAC Japan's annual earnings, as determined on a Japanese statutory accounting basis, can be transferred (repatriated) each year to AFLAC U.S. after complying with solvency margin provisions and satisfying various conditions imposed by Japanese regulatory authorities for protecting policyholders. Payments are also made from AFLAC Japan to the Parent Company for management fees and to AFLAC U.S. for allocated expenses. Repatriated profits represent a portion of the after-tax earnings reported to the FSA on a March 31 fiscal year basis. Japanese regulatory basis earnings are determined using accounting principles that differ materially from accounting principles generally accepted in the United States of America (GAAP). Under Japanese statutory accounting practices, premium income is recognized on a cash basis, policy acquisition costs are charged off immediately, policy benefit and claim reserving methods and assumptions are different, policyholder protection fund obligations are not accrued, and deferred income tax liabilities are recognized on a different basis.

     The FSA maintains its own solvency standards, a version of U.S. risk-based capital requirements, which are used by regulators in Japan to monitor the financial strength of insurance companies. AFLAC Japan's solvency margin continues to significantly exceed regulatory minimums. The FSA may not allow transfers of funds if the transfers would cause AFLAC Japan to lack sufficient financial strength for the protection of policyholders. We do not expect these requirements to adversely affect the funds available for remittances of earnings and payments of allocated expenses and management fees.

     AFLAC Japan files annual reports and financial statements for the Japanese insurance operations based on a March 31 year end, prepared in accordance with Japanese regulatory accounting practices prescribed or permitted by the FSA. Also, financial and other affairs of AFLAC Japan are subject to examination by the FSA. Reconciliations of AFLAC Japan net assets on a GAAP basis to net assets determined on a Japanese regulatory accounting basis as of December 31 were as follows:

(In millions)		2003			2002
Net assets on GAAP basis		$	4,635		$	4,787
Elimination of deferred policy acquisition costs			(3,440	)		(2,868	)
Adjustment to income tax liabilities			1,212			1,068
Adjustment to policy liabilities			709			921
Adjustment of unrealized gains and other adjustments
	to carrying value of debt securities		(524	)		(754	)
Elimination of policyholder protection fund liability			265			227
Reduction in premiums receivable			(119	)		(111	)
Other, net			(104	)		(25	)
	Net assets on Japanese regulatory accounting basis	$	2,634		$	3,245

     In 1998, the Japanese government established the Life Insurance Policyholders Protection Corporation (LIPPC). For further information regarding the policyholder protection fund, see Exhibit 13, page 13-50, Note 2 of the Notes to the Consolidated Financial Statements.

I-13

     For additional information regarding AFLAC Japan's operations and regulations, see Exhibit 13, pages 13-10 to 13-14 (AFLAC Japan section of MD&A) and pages 13-47 to 13-50 and 13-72 to 13-74 (Notes 2 and 9 of Notes to the Consolidated Financial Statements), which are incorporated herein by reference. Our branch in Japan is also subject to regulation and supervision in the United States as described below.

Regulation - U.S.

     The Parent Company and its insurance subsidiaries are subject to state regulations in the United States as an insurance holding company system. Such regulations generally provide that transactions between companies within the holding company system must be fair and equitable. In addition, transfer of assets among such affiliated companies, certain dividend payments from insurance subsidiaries and material transactions between companies within the system are subject to prior notice to, or approval by, state regulatory authorities.

     AFLAC, in common with all U.S. insurance companies, is subject to regulation and supervision in the jurisdictions in which they do business. In general, the insurance laws of the various jurisdictions establish supervisory agencies with broad administrative powers relating to, among other things: granting and revoking licenses to transact business, regulating trade practices, licensing agents, prior approval of forms of policies and premium rate increases, standards of solvency and maintenance of specified policy benefit reserves and minimum loss ratio requirements, capital for the protection of policyholders, limitations on dividends to shareholders, the nature of and limitations on investments, deposits of securities for the benefit of policyholders, filing of financial statements prepared in accordance with statutory insurance accounting practices prescribed or permitted by regulatory authorities, and periodic examinations of the market conduct, financial, and other affai rs of insurance companies.

     The NAIC revised and codified statutory accounting principles to promote standardization throughout the industry. We adopted these new accounting principles effective January 1, 2001. The NAIC also has various ongoing initiatives relating to insurance products, investments, revisions to the risk-based capital formula and other actuarial and accounting matters.

     The NAIC uses a risk-based capital formula relating to insurance risk, business risk, asset risk and interest rate risk to facilitate identification by insurance regulators of inadequately capitalized insurance companies based upon the types and mixtures of risks inherent in the insurer's operations. The formulas for determining the amount of risk-based capital specify various weighting factors that are applied to financial balances or various levels of activity based on the perceived degree of risk. Regulatory compliance is determined by a ratio of the company's regulatory total adjusted capital to its authorized control level risk-based capital as defined by the NAIC. Companies below specific trigger points or ratios are classified within certain levels, each of which requires specified corrective action. The levels are company action, regulatory action, authorized control and mandatory control. AFLAC's NAIC risk-based capital ratio remains high and reflects a very str ong capital and surplus position.

     Under insurance guaranty association laws in most U.S. states, insurance companies doing business in those states can be assessed for policyholder losses up to prescribed limits that are incurred by insolvent companies with similar lines of business. Such assessments have not been material to us in the past. We believe that future assessments relating to companies in the United States currently involved in insolvency proceedings will not materially impact the consolidated financial statements.

I-14

     For further information concerning AFLAC U.S. operations, regulation and dividend restrictions, see Exhibit 13, pages 13-14 to 13-15 (AFLAC U.S. section of MD&A) and pages 13-47 to 13-50 and 13-72 to 13-74 (Notes 2 and 9 of the Notes to the Consolidated Financial Statements), which are incorporated herein by reference.

Policy Liabilities - Japan and U.S.

     The reserves for policy liabilities reported in the financial statements have been computed in accordance with GAAP. These reserves differ from those reflected in the various regulatory financial statements filed by AFLAC and AFLAC Japan. Such differences arise from the use of different mortality, morbidity, interest and lapse assumptions, and actuarial reserving methods as required by regulatory authorities in the U.S. and Japan.

Employees

     AFLAC Japan had 2,803 full-time employees as of December 31, 2003. AFLAC U.S. had 3,383 full-time employees as of December 31, 2003. We consider our employee relations to be excellent.

Other Operations

     Our other operations include the Parent Company and a printing subsidiary. These operations had 287 full-time employees as of December 31, 2003. We consider our relations with these employees to be excellent. For additional information on our other operations, see Exhibit 13, page 13-16 (Other Operations section of MD&A), which is incorporated herein by reference.

Forward-Looking Information

     This report includes certain forward-looking information that is based on current expectations and is subject to a number of risks and uncertainties. For details on forward-looking information, see Exhibit 13, page 13-33, which is incorporated herein by reference.

ITEM 2.  PROPERTIES

     AFLAC owns land and buildings that comprise two primary campuses located in Columbus, Georgia. The first campus, located on approximately 54 acres of land, includes buildings that serve as our worldwide headquarters and house administrative support functions for our U.S. operations. The approximate square footage of the buildings on this campus is 600,000 square feet. The second campus, located on approximately 104 acres of land, includes a building with approximately 270,000 square feet that provides additional support functions for our U.S. operations. AFLAC also leases administrative office space in Albany, New York, and Omaha, Nebraska.

     In Tokyo, Japan, AFLAC owns an administrative office building and a training facility with approximately 344,000 square feet. AFLAC also leases additional office space in Tokyo along with regional sales offices located throughout the country.

I-15

ITEM 3.  LEGAL PROCEEDINGS

     We are a defendant in various lawsuits considered to be in the normal course of business. 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 against other companies, including insurers, in recent years. Although the final results of any litigation cannot be predicted with certainty, we believe the outcome of pending litigation will not have a material adverse effect on our financial position, results of operations, or cash flows.

I-16

ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

     There were no matters submitted to the security holders for a vote during the quarter ended December 31, 2003.

ITEM 4A.  EXECUTIVE OFFICERS OF THE COMPANY

NAME	PRINCIPAL OCCUPATION (*)		AGE
Daniel P. Amos	Chairman, AFLAC Incorporated and AFLAC since		52
		May 2001; Chief Executive Officer, AFLAC Incorporated and AFLAC; President, AFLAC; President AFLAC Incorporated until May 2001; Director, Southern Company, Atlanta, GA; Director, Synovus Financial Corp., Columbus, GA
Kriss Cloninger III	President, AFLAC Incorporated since May 2001; Executive		56
		Vice President, AFLAC Incorporated until May 2001; Chief Financial Officer, AFLAC Incorporated and AFLAC; Executive Vice President, AFLAC; Treasurer, AFLAC Incorporated; Director, Tupperware Corporation, Orlando, FL
Kermitt L. Cox	Senior Vice President, Corporate Actuary, AFLAC since January		60
		2000; Senior Vice President, Assistant Corporate Actuary until December 1999
Kenneth S. Janke Jr.	Senior Vice President, Investor Relations, AFLAC		45
		Incorporated
Bradley S. Jones	Senior Vice President, Director of Sales, AFLAC since		45
		October 2003; Vice President, Agency Director, Northeast Territory, AFLAC from January 2000 until October 2003; Vice President, Director of Marketing, AFLAC New York from December 1999 until October 2003; State Sales Coordinator, AFLAC until December 1999
Akitoshi Kan	Executive Vice President, Internal Operations, AFLAC,		56
		since January 2000; Deputy Chief Financial Officer, AFLAC Incorporated from April 1999 until September 2000; Executive Vice President, AFLAC International until December 1999; Executive Vice President, AFLAC Japan, Deputy Chief Financial Officer, AFLAC, Senior Vice President, AFLAC Japan, Accounting, Information Systems, ABC and Legal Affairs until March 1999
Joseph P. Kuechenmeister	Senior Vice President, Director of Marketing, AFLAC		62
		since October 2003; Senior Vice President, Director of Sales and Marketing, AFLAC until October 2003

I-17

Charles D. Lake II	President, AFLAC Japan since January 2003; Deputy President,		42
		AFLAC Japan from July 2001 until December 2002; Senior Vice President, AFLAC Japan, General Counsel, Legal and Compliance from January 2001 until June 2001; Vice President and Counsel, AFLAC Japan from June 1999 until December 2000; Vice President and Counsel, AFLAC International, Inc. from February 1999 until August 2000; Senior Vice President and General Counsel, AFLAC International, Inc. from September 2000 until June 2001; Attorney at Law, Dewey Ballantine LLP, Washington, D.C. until January 1999
Joey M. Loudermilk	Executive Vice President, General Counsel and Corporate		50
		Secretary, AFLAC Incorporated and AFLAC; Director, Legal and Governmental Relations, AFLAC, since October 2000; Senior Vice President, General Counsel and Corporate Secretary, AFLAC Incorporated and AFLAC; Director, Legal and Governmental Relations, AFLAC, until October 2000
Hidefumi Matsui	Chairman, AFLAC Japan since January 2003; President, AFLAC		59
		Japan until December 2002
Allan O'Bryant	President of AFLAC International, Inc., since September 2000;		45
		Chairman, aflacdirect.com since July 2002; Deputy Chief Financial Officer, AFLAC Incorporated since September 2000; President, aflacdirect.com from May 2000 until July 2002; Senior Vice President, AFLAC International, Inc. from September 1999 until September 2000; Senior Vice President, AFLAC Japan from March 2000 until September 2000; Vice President, AFLAC International, Inc. until September 1999; Vice President, AFLAC Japan from January 1999 until March 2000
Ralph A. Rogers Jr.	Senior Vice President, Financial Services, AFLAC		55
		Incorporated and AFLAC since September 2000; Chief Accounting Officer, AFLAC Incorporated and AFLAC since January 2002; Treasurer, AFLAC since March 2002; Senior Vice President, Financial Resources, UnumProvident and predecessors until September 2000
Joseph W. Smith Jr.	Senior Vice President, Chief Investment Officer,		50
		AFLAC

I-18

Kathelen V. Spencer	Executive Vice President, Deputy Legal Counsel, AFLAC		46
		Incorporated and AFLAC since December 2001; Senior Vice President, Deputy Legal Counsel, AFLAC Incorporated and AFLAC until November 2001; Director of Corporate Communications, AFLAC Incorporated; Assistant Secretary, AFLAC; President, AFLAC Foundation
Atsushi Yagai	Executive Vice President, Director of Marketing and Sales,		40
		AFLAC Japan since January 2004; First Senior Vice President; Director of Marketing and Sales, AFLAC Japan from January 2002 until January 2004; Senior Vice President; Director of Marketing and Sales, AFLAC Japan from September 2001 until December 2001; President and Representative Director, Barilla Japan until August 2001
(*) Unless specifically noted, the respective executive officer has held the occupation(s) set forth in the table for at least the last five years. Each executive officer is appointed annually by the board of directors and serves until his or her successor is chosen and qualified, or until his or her death, resignation or removal.

I-19

PART II

ITEM 5.	MARKET FOR THE COMPANY'S COMMON EQUITY AND
	RELATED SHAREHOLDER MATTERS

     Pursuant to General Instruction G to Form 10-K, Item 5 is incorporated by reference from the Company's 2003 Annual Report to Shareholders, pages 1, 62 to 63 (Note 9 of the Notes to the Consolidated Financial Statements), and 68. This information is included herein as Exhibit 13, pages 13-1, 13-2, and 13-72 to 13-74 (Note 9 of the Notes to the Consolidated Financial Statements).

ITEM 6. SELECTED FINANCIAL DATA

AFLAC Incorporated and Subsidiaries
(In millions, except for share and per-share amounts)
For the Year				2003			2002			2001			2000			1999
Revenues:
	Premiums, principally
	supplemental health insurance		$	9,921		$	8,595		$	8,061		$	8,222		$	7,264
	Net investment income			1,787			1,614			1,550			1,550			1,369
	Realized investment gains (losses)			(301	)		(14	)		(31	)		(102	)		(13	)
	Other income			40			62			18			33			20
		Total revenues		11,447			10,257			9,598			9,703			8,640
Benefits and expenses:
	Benefits and claims			7,529			6,589			6,303			6,601			5,885
	Expenses			2,693			2,409			2,214			2,090			1,977
		Total benefits and expenses		10,222			8,998			8,517			8,691			7,862
		Pretax earnings		1,225			1,259			1,081			1,012			778
Income taxes				430			438			394			325			207
		Net earnings	$	795		$	821	(1)	$	687		$	687	(2)	$	571	(3)
Per Common Share
Net earnings (basic)			$	1.55		$	1.59	(1)	$	1.31		$	1.30	(2)	$	1.07	(3)
Net earnings (diluted)				1.52			1.55	(1)		1.28			1.26	(2)		1.04	(3)
Cash dividends				.30			.23			.193			.167			.147
Common shares used for
basic EPS (In thousands)				513,220			517,541			525,098			530,607			531,737
Common shares used for
diluted EPS (In thousands)				522,138			528,326			537,383			544,906			550,845
(1) Includes a charge of $26 ($.05 per basic and diluted share) for the policyholder protection fund in 2002 in Japan (2) Includes a benefit of $99 ($.19 per basic share, $.18 per diluted share) from the termination of a retirement liability (3) Includes gain of $67 ($.13 per basic share, $.12 per diluted share) due to a reduction in deferred tax liabilities from a tax rate cut in Japan and a charge of $41 ($.08 per basic share, $.07 per diluted share) for the policyholder protection fund in 1999 in Japan

(continued)

II-1

AFLAC Incorporated and Subsidiaries
(In millions)
At Year-end				2003		2002		2001		2000		1999
Assets:
	Investments and cash		$	44,051	$	39,147	$	32,792	$	32,167	$	32,024
	Other			6,913		5,911		5,068		5,064		5,017
		Total assets	$	50,964	$	45,058	$	37,860	$	37,231	$	37,041
Liabilities and shareholders' equity:
	Policy liabilities		$	39,240	$	32,726	$	27,592	$	28,565	$	29,604
	Notes payable			1,409		1,312		1,207		1,079		1,018
	Income taxes			2,189		2,364		2,091		1,894		1,511
	Other liabilities			1,480		2,262		1,545		999		1,040
	Shareholders' equity			6,646		6,394		5,425		4,694		3,868
		Total liabilities and
		shareholders' equity	$	50,964	$	45,058	$	37,860	$	37,231	$	37,041
Supplemental Data
Yen/dollar exchange rate at
year-end (yen)				107.13		119.90		131.95		114.75		102.40
Weighted-average yen/dollar
exchange rate (yen)				115.95		125.15		121.54		107.83		113.96

ITEM 7.	MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
	CONDITION AND RESULTS OF OPERATIONS

     Pursuant to General Instruction G to Form 10-K, Item 7 is incorporated by reference from the Company's 2003 Annual Report to Shareholders, pages 24 to 42. This information is included herein as Exhibit 13, pages 13-3 to 13-33.

ITEM 7A.	QUANTITATIVE AND QUALITATIVE DISCLOSURES
	ABOUT MARKET RISK

     Pursuant to General Instruction G to Form 10-K, Item 7A is incorporated by reference from the Company's 2003 Annual Report to Shareholders, pages 27 and 32 to 34. This information is included herein as Exhibit 13, pages 13-8 and 13-16 to 13-19.

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

     Pursuant to General Instruction G to Form 10-K, Item 8 is incorporated by reference from the Company's 2003 Annual Report to Shareholders, pages 43 to 66 and 67 to 68. This information is included herein as Exhibit 13, pages 13-34 to 13-82.

II-2

ITEM 9.	CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
	ACCOUNTING AND FINANCIAL DISCLOSURE

     There have been no changes in, or disagreements with, accountants on accounting and financial disclosure matters during the years ended December 31, 2003 and 2002.

ITEM 9A. CONTROLS AND PROCEDURES

     (a)  Evaluation of Disclosure Controls and Procedures. The Company's management, with the participation of the Company's Chief Executive Officer and Chief Financial Officer, has evaluated the effectiveness of the Company's disclosure controls and procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the "Exchange Act")) as of the end of the period covered by this report. Based on such evaluation, the Company's Chief Executive Officer and Chief Financial Officer have concluded that, as of the end of such period, the Company's disclosure controls and procedures are effective.

     (b)  Internal Control Over Financial Reporting. There have not been any changes in the Company's internal control over financial reporting (as such term is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during the annual period to which this report relates that have materially affected, or are reasonably likely to materially affect, the Company's internal control over financial reporting.

II-3

PART III

     Pursuant to General Instruction G to Form 10-K, Items 10 through 13 are incorporated by reference from the Company's definitive Proxy Statement relating to the Company's 2004 Annual Meeting of Shareholders, which will be filed with the Securities and Exchange Commission on or about March 15, 2004, pursuant to Regulation 14A under the Securities Exchange Act of 1934 (the Exchange Act).

		Refer to the Information Contained in the Proxy Statement under Captions (filed electronically)	Refer to Printed Proxy Statement Pages
ITEM 10.	DIRECTORS AND EXECUTIVE OFFICERS OF THE COMPANY      Executive Officers -        see Part I, Item 4A herein	1. Election of Directors; Section 16(a) Beneficial Owner-    ship Reporting Compliance; Audit Committee; Audit Committee Report; The Corporate Governance    Committee; Code of Ethics	5 - 11
ITEM 11.	EXECUTIVE COMPENSATION	Directors' Compensation; Compensation Committee Report; Summary Compensation Table; Stock Performance Graph; Retirement Plans for Key Executives; Defined Benefit Pension Plan; Employment Agreements and Termination of Employment Arrangements; Option Grants in 2003; Aggregated Option Exercises in 2003 and Option Values as of December 31, 2003; Compensation Committee Interlocks and Insider Participation	12 - 24
ITEM 12.	SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS	Voting Securities and Principal    Holders Thereof; 1. Election of Directors; Equity Compensation Plan    Information; Certain Executive Officers	3 - 8, 32

III-1

ITEM 13.	CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS	Certain Transactions and Relationships	25
ITEM 14.	PRINCIPAL ACCOUNTING FEES AND SERVICES	3. Ratification of Appointment    of Independent Auditors	32 - 33

III-2

PART IV

ITEM 15.	EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS
	ON FORM 8-K

(a)	1.	FINANCIAL STATEMENTS					Page(s)
		Included in Part II, Item 8, of this report and incorporated by reference to the following pages of Exhibit 13:
			AFLAC Incorporated and Subsidiaries:
				Consolidated Statements of Earnings for each of the years in the			13-34 to 13-35
				three-year period ended December 31, 2003
				Consolidated Balance Sheets as of December 31, 2003 and 2002			13-36 to 13-37
				Consolidated Statements of Shareholders' Equity for each of the			13-38
				years in the three-year period ended December 31, 2003
				Consolidated Statements of Cash Flows for each of the years			13-39 to 13-40
				in the three-year period ended December 31, 2003
				Consolidated Statements of Comprehensive Income for each			13-41
				of the years in the three-year period ended December 31, 2003
				Notes to the Consolidated Financial Statements			13-42 to 13-80
				Independent Auditors' Report			13-81
				Unaudited Consolidated Quarterly Financial Data			13-82
	2.	FINANCIAL STATEMENT SCHEDULES
		Included in Part IV of this report:
			Independent Auditors' Report on Financial Statement Schedules				IV-5
			Schedule II		-	Condensed Financial Information of Registrant	IV-6 to IV-11
						as of December 31, 2003 and 2002, and for each
						of the years in the three-year period ended
						December 31, 2003
			Schedule III		-	Supplementary Insurance Information for each	IV-12
						of the years in the three-year period ended
						December 31, 2003
			Schedule IV		-	Reinsurance for each of the years in the	IV-13
						three-year period ended December 31, 2003

     Schedules other than those listed above are omitted because they are not required, are not material, are not applicable, or the required information is shown in the financial statements or notes thereto.

IV-1

3.	EXHIBITS
	3.0		-	Articles of Incorporation, as amended - incorporated by reference from Form 10-Q for June 30, 2000, Commission file number 1-7434, Accession No. 0000004977-00-000038, Exhibit 3.0.
	3.1		-	Bylaws of the Corporation, as amended.
	4.0		-	There are no long-term debt instruments in which the total amount of securities authorized exceeds 10% of the total assets of AFLAC Incorporated and its subsidiaries on a consolidated basis. We agree to furnish a copy of any long-term debt instruments to the Securities and Exchange Commission upon request.
	10.0	*	-	American Family Corporation Stock Option Plan (1985) - incorporated by reference from Registration Statement No. 33-44720 on Form S-8 with respect to the AFLAC Incorporated (Formerly American Family Corporation) Incentive Stock Option Plan (1982) and Stock Option Plan (1985).
	10.1	*	-	AFLAC Incorporated Amended 1985 Stock Option Plan - incorporated by reference from the 1994 Shareholders' Proxy Statement, Commission file number 1-7434, Accession No. 0000004977-94-000003, Exhibit A.
	10.2	*	-	AFLAC Incorporated Amended 1985 Stock Option Plan, as amended August 8, 1995 - incorporated by reference from Form 10-Q for September 30, 1995, Commission file number 1-7434, Accession No. 0000004977-95-000023, Exhibit 10.
	10.3	*	-	American Family Corporation Retirement Plan for Senior Officers, as amended and restated October 1, 1989 - incorporated by reference from 1993 Form 10-K, Commission file number 1-7434, Accession No. 0000004977-94-000006, Exhibit 10.2.
	10.4	*	-	AFLAC Incorporated Supplemental Executive Retirement Plan, as amended.
	10.5	*	-	AFLAC Incorporated Employment Agreement with Daniel P. Amos, dated August 1, 1993 - incorporated by reference from 1993 Form 10-K, Commission file number 1-7434, Accession No. 0000004977-94-000006, Exhibit 10.4.
	10.6	*	-	AFLAC Incorporated Employment Agreement with Charles D. Lake, II, dated January 1, 2002.
	10.7	*	-	AFLAC Incorporated Employment Agreement with Kriss Cloninger, III, dated February 14, 1992, and as amended November 12, 1993 - incorporated by reference from 1993 Form 10-K, Commission file number 1-7434, Accession No. 0000004977-94-000006, Exhibit 10.6.
	10.8	*	-	AFLAC Incorporated 1997 Stock Option Plan, incorporated by reference from the 1997 Shareholders' Proxy Statement, Commission file number 1-7434, Accession No. 0000004977-97-000007, Appendix B.
	10.9	*	-	AFLAC Incorporated Executive Deferred Compensation Plan, effective January 1, 1999 - incorporated by reference from Form S-8 Registration Statement No. 333-69333, Accession No. 0000004977-98-00024, Exhibit 4.
	10.10	*	-	AFLAC Incorporated Amended and Restated Management Incentive Plan, effective January 1, 1999 - incorporated by reference from the 2003 Shareholders' Proxy Statement, Commission file number 1-7434, Accession No. 0000004977-03-000088, Exhibit A.
	10.11	*	-	AFLAC Incorporated Retirement Agreement with E. Stephen Purdom, dated February 15, 2000 - incorporated by reference from 2000 Form 10-K, Commission file number 1-7434, Accession No. 0000004977-01-500045, Exhibit 10.13.
	10.12	*	-	AFLAC Incorporated Employment Agreement with Hidefumi Matsui, dated January 1, 1995 - incorporated by reference from 1994 Form 10-K, Commission file number 1-7434, Accession No. 0000004977-01-000006, Exhibit 10.8.

IV-2

	10.13	*	-	1999 AFLAC Associate Stock Bonus Plan, as amended, dated February 11, 2003, - incorporated by reference from 2002 Form 10-K, Commission file number 1-7434, Accession No. 0000004977-03-000098, Exhibit 99.2.
	11.0		-	Statement regarding the computation of per-share earnings for the Registrant.
	12.0		-	Statement regarding the computation of ratio of earnings to fixed charges for the Registrant.
	13.0		-	Selected information from the AFLAC Incorporated Annual Report to Shareholders for 2003.
	14.0		-	Code of Ethics for Chief Financial and Senior Executive Officers.
	21.0		-	Subsidiaries.
	23.0		-	Consent of independent auditor, KPMG LLP, to Form S-8 Registration Statement No. 33-44720 with respect to the AFLAC Incorporated (Formerly American Family Corporation) Incentive Stock Option Plan (1982) and Stock Option Plan (1985).
			-	Consent of independent auditor, KPMG LLP, to Form S-8 Registration Statement No. 333-01243 with respect to the AFLAC Incorporated Amended 1985 Stock Option Plan.
			-	Consent of independent auditor, KPMG LLP, to Form S-8 Registration Statement No. 33-41552 with respect to the AFLAC Incorporated 401(k) Retirement Plan.
			-	Consent of independent auditor, KPMG LLP, to Form S-3 Registration Statement No. 33-64535 with respect to the AFL Stock Plan.
			-	Consent of independent auditor, KPMG LLP, to Form S-8 Registration Statement No. 333-27883 with respect to the AFLAC Incorporated 1997 Stock Option Plan.
			-	Consent of independent auditor, KPMG LLP, to Form S-8 Registration Statement No. 333-69333 with respect to the AFLAC Incorporated Executive Deferred Compensation Plan.
	31.1			Certification of CEO dated March 10, 2004, required by Rule 13a-14(a) or Rule 15d-14(a) of the Securities Exchange Act of 1934.
	31.2			Certification of CFO dated March 10, 2004, required by Rule 13a-14(a) or Rule 15d-14(a) of the Securities Exchange Act of 1934.
	32.0		-	Certification of CEO and CFO dated March 10, 2004, pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
*Management contract or compensatory plan or agreement.

2. REPORTS ON FORM 8-K

     During the three months ended December 31, 2003, the following Current Reports on Form 8-K, were either filed with or furnished to the Securities and Exchange Commission:

October 17, 2003	-	AFLAC Incorporated announced a new director, Douglas W. Johnson, was elected to their board of directors.
October 22, 2003	-	AFLAC Incorporated reported its third quarter results.
October 22, 2003	-	AFLAC Incorporated provided Third Quarter Report to Shareholders.
October 30, 2003	-	AFLAC Incorporated provided revised press release and Third Quarter Report to Shareholders reflecting a reclassification between two line items within shareholders' equity as of September 30, 2003.
December 10, 2003	-	AFLAC Incorporated announced it was reviewing its investment in Parmalat Finanziaria SpA following the dairy company's credit rating downgrade.
December 18, 2003	-	AFLAC Incorporated announced that it sold its investment in Parmalat Finanziaria SpA.

IV-3

(c)	EXHIBITS FILED WITH CURRENT FORM 10-K
		3.1		-	Bylaws of the Corporation, as amended.
		10.4	*	-	AFLAC Incorporated Supplemental Executive Retirement Plan, as amended.
		10.6	*	-	AFLAC Incorporated Employment Agreement with Charles D. Lake, II, dated January 1, 2002.
		11.0		-	Statement regarding the computation of per-share earnings for the Registrant.
		12.0		-	Statement regarding the computation of ratio of earnings to fixed charges for the Registrant.
		13.0		-	Selected information from the AFLAC Incorporated Annual Report to Shareholders for 2003.
		14.0		-	Code of Ethics for Chief Executive and Senior Financial Officers.
		21.0		-	Subsidiaries.
		23.0		-	Consent of independent auditor, KPMG LLP, to Form S-8 Registration Statement No. 33-44720 with respect to the AFLAC Incorporated (Formerly American Family Corporation) Incentive Stock Option Plan (1982) and Stock Option Plan (1985).
				-	Consent of independent auditor, KPMG LLP, to Form S-8 Registration Statement No. 333-01243 with respect to the AFLAC Incorporated Amended 1985 Stock Option Plan.
				-	Consent of independent auditor, KPMG LLP, to Form S-8 Registration Statement No. 33-41552 with respect to the AFLAC Incorporated 401(k) Retirement Plan.
				-	Consent of independent auditor, KPMG LLP, to Form S-3 Registration Statement No. 33-64535 with respect to the AFL Stock Plan.
				-	Consent of independent auditor, KPMG LLP, to Form S-8 Registration Statement No. 333-27883 with respect to the AFLAC Incorporated 1997 Stock Option Plan.
				-	Consent of independent auditor, KPMG LLP, to Form S-8 Registration Statement No. 333-69333 with respect to the AFLAC Incorporated Executive Deferred Compensation Plan.
		31.1		-	Certification of CEO dated March 10, 2004, required by Rule 13a-14(a) or Rule 15d-14(a) of the Securities Exchange Act of 1934.
		31.2		-	Certification of CFO dated March 10, 2004, required by Rule 13a-14(a) or Rule 15d-14(a) of the Securities Exchange Act of 1934.
		32.0		-	Certification of CEO and CFO dated March 10, 2004, pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
*Management contract or compensatory plan or agreement.

IV-4

INDEPENDENT AUDITORS' REPORT ON FINANCIAL STATEMENT SCHEDULES





The shareholders and board of directors of AFLAC Incorporated:



Under date of February 2, 2004, we reported on the consolidated balance sheets of AFLAC Incorporated and subsidiaries as of December 31, 2003, and 2002, and the related consolidated statements of earnings, shareholders' equity, cash flows, and comprehensive income for each of the years in the three-year period ended December 31, 2003, as contained in the 2003 annual report to shareholders. These consolidated financial statements and our report thereon are incorporated by reference in the annual report on Form 10-K for the year 2003. In connection with our audits of the aforementioned consolidated financial statements, we also audited the related financial statement schedules as listed in Item 15. These financial statement schedules are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statement schedules based on our audits.

In our opinion, such financial statement schedules, when considered in relation to the basic consolidated financial statements taken as a whole, present fairly, in all material respects, the information set forth therein.

KPMG LLP

Atlanta, Georgia
February 2, 2004

IV-5

SCHEDULE II
CONDENSED FINANCIAL INFORMATION OF REGISTRANT

Condensed Balance Sheets
AFLAC Incorporated (Parent Only)
				December 31,
(In millions, except for share and per-share amounts)				2003			2002
Assets:
Investments and cash:
	Fixed maturity securities available for sale, at fair value
	(amortized cost $39 in 2003 and $208 in 2002)		$	39		$	207
	Investments in subsidiaries*			7,952			7,526
	Other investments			21			20
	Cash and cash equivalents			203			76
		Total investments and cash		8,215			7,829
Due from subsidiaries*				80			82
Other assets				44			58
		Total assets	$	8,339		$	7,969
Liabilities and Shareholders' Equity:
Liabilities:
	Notes payable		$	1,383		$	1,283
	Employee and beneficiary benefit plans			140			135
	Income taxes			103			98
	Other liabilities			67			59
		Total liabilities		1,693			1,575
Shareholders' Equity:
	Common stock of $.10 par value - in thousands:
	Authorized 1,000,000 shares; issued 651,554 shares in
	2003 and 648,618 shares in 2002			65			65
	Additional paid-in capital			417			371
	Retained earnings			5,885			5,244
	Accumulated other comprehensive income:
	Unrealized foreign currency translation gains			213			222
	Unrealized gains on investment securities			2,316			2,416
	Minimum pension liability adjustment			(36	)		(8	)
	Treasury stock, at average cost			(2,214	)		(1,916	)
		Total shareholders' equity		6,646			6,394
		Total liabilities and shareholders' equity	$	8,339		$	7,969
*Eliminated in consolidation.
See the accompanying Notes to Condensed Financial Statements.
See the accompanying Independent Auditors' Report.

IV-6

SCHEDULE II
CONDENSED FINANCIAL INFORMATION OF REGISTRANT

Condensed Statements of Earnings
AFLAC Incorporated (Parent Only)
				Years ended December 31,
(In millions)				2003			2002			2001
Revenues:
	Dividends from subsidiaries*		$	412		$	358		$	204
	Management and service fees from subsidiaries*			37			34			25
	Investment income			4			6			12
	Interest from subsidiaries*			6			5			2
	Realized investment losses			-			(1	)		(29	)
	Change in fair value of the interest rate component
	of the cross-currency swaps			(3	)		37			1
	Other income (loss)			-			14			(8	)
		Total revenues		456			453			207
Operating expenses:
	Interest expense			19			16			16
	Other operating expenses			48			56			46
		Total operating expenses		67			72			62
	Earnings before income taxes and equity in
	undistributed earnings of subsidiaries			389			381			145
Income tax expense (benefit):
	Current			10			7			12
	Deferred			(3	)		1			-
		Total income taxes		7			8			12
	Earnings before equity in undistributed
	earnings of subsidiaries			382			373			133
Equity in undistributed earnings of subsidiaries*				413			448			554
		Net earnings	$	795		$	821		$	687
*Eliminated in consolidation.
See the accompanying Notes to Condensed Financial Statements.
See the accompanying Independent Auditors' Report.

IV-7

SCHEDULE II
CONDENSED FINANCIAL INFORMATION OF REGISTRANT

Condensed Statements of Cash Flows
AFLAC Incorporated (Parent Only)
					Years ended December 31,
(In millions)					2003			2002			2001
Cash flows from operating activities:
	Net earnings			$	795		$	821		$	687
	Adjustments to reconcile net earnings to net cash
	provided from operating activities:
		Equity in undistributed earnings of subsidiaries*			(413	)		(448	)		(554	)
		Other, net			(8	)		(8	)		63
			Net cash provided by operating activities		374			365			196
Cash flows from investing activities:
	Fixed maturity securities sold				169			278			332
	Fixed maturity securities purchased				-			(242	)		(314	)
	Other investments acquired				(10	)		(12	)		(3	)
	Other, net				-			-			(19	)
			Net cash provided (used) by investing activities		159			24			(4	)
Cash flows from financing activities:
	Proceeds from borrowings				-			254			333
	Principal payments under debt obligations				-			(221	)		(103	)
	Dividends paid to shareholders				(146	)		(112	)		(95	)
	Net change in amount due to/from subsidiaries*				1			(16	)		(29	)
	Purchases of treasury stock				(343	)		(346	)		(350	)
	Treasury stock reissued				64			57			55
	Proceeds from exercise of stock options				18			11			10
	Other, net				-			(1	)		25
			Net cash used by financing activities		(406	)		(374	)		(154	)
			Net change in cash and cash equivalents		127			15			38
Cash and cash equivalents, beginning of year					76			61			23
Cash and cash equivalents, end of year				$	203		$	76		$	61
*Eliminated in consolidation.
See the accompanying Notes to Condensed Financial Statements.
See the accompanying Independent Auditors' Report.

IV-8

SCHEDULE II
CONDENSED FINANCIAL INFORMATION OF REGISTRANT

Condensed Statements of Comprehensive Income
AFLAC Incorporated (Parent Only)
					Years ended December 31,
(In millions)					2003			2002			2001
Net earnings				$	795		$	821		$	687
Other comprehensive income before income taxes:
	Foreign currency translation adjustments:
		Change in unrealized foreign currency translation
		gains (losses) during year - parent only			(153	)		(118	)		164
		Equity in change in unrealized foreign currency
		translation gains (losses) of subsidiaries during year			32			46			(45	)
	Unrealized gains (losses) on investment securities:
		Unrealized holding gains (losses) arising during
		the year - parent only			-			(1	)		-
		Equity in unrealized gains (losses) on investment
		securities held by subsidiaries			(604	)		764			509
		Equity in reclassification adjustment for realized
		(gains) losses of subsidiaries included in net earnings			301			13			3
	Minimum pension liability adjustment during year				(40	)		(8	)		-
			Other comprehensive income (loss) before income taxes		(464	)		696			631
	Income tax expense (benefit) related to items of other
	comprehensive income				(327	)		157			207
			Other comprehensive income (loss)		(137	)		539			424
			Total comprehensive income	$	658		$	1,360		$	1,111
See the accompanying Notes to Condensed Financial Statements.
See the accompanying Independent Auditors' Report.

IV-9

SCHEDULE II
CONDENSED FINANCIAL INFORMATION OF REGISTRANT

Notes to Condensed Financial Statements
AFLAC Incorporated (Parent Only)

     The accompanying condensed financial statements should be read in conjunction with the consolidated financial statements and notes thereto of AFLAC Incorporated and Subsidiaries (see Part II - Item 8).

(A)  Notes Payable

     A summary of notes payable as of December 31 follows:

(In millions)				2003		2002
6.50% senior notes due April 2009 (principal amount $450)			$	449	$	449
Yen-denominated Samurai notes:
	1.55% notes due October 2005 (principal amount 30 billion yen)			280		250
	.87% notes due June 2006 (principal amount 40 billion yen)			373		334
	.96% notes due June 2007 (principal amount 30 billion yen)			280		250
		Total notes payable	$	1,383	$	1,283

     The aggregate contractual maturities of the notes payable for each of the years after December 31, 2003, are as follows:

(In millions)
2005	$	280
2006		373
2007		280
2009		450

     For further information regarding notes payable, see Exhibit 13, page 13-66 (Note 6 of the Notes to the Consolidated Financial Statements).

(B)  Derivatives

     We have only limited activity with derivative financial instruments. We do not use them for trading purposes nor do we engage in leveraged derivative transactions. The Parent Company has contracts for cross-currency swaps related to its senior notes payable. For further information regarding these derivatives, see Exhibit 13, page 13-42 and 13-63 (Notes 1 and 4 of the Notes to the Consolidated Financial Statements).

IV-10

(C)  Income Taxes

     The 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 Exhibit 13, page 13-67 (Note 7 of the Notes to the Consolidated Financial Statements).

(D)  Dividend Restrictions

     See Exhibit 13, page 13-72 (Note 9 of the Notes to the Consolidated Financial Statements) for information regarding dividend restrictions.

(E)  Supplemental Disclosures of Cash Flow Information

(In millions)		2003		2002		2001
Interest paid		$	17	$	16	$	16
Impairment losses on investments*			-		1		29
Noncash financing activities:
	Treasury shares issued for shareholder dividend reinvestment		8		7		6
*For the year ended December 31, 2001, the Parent Company recognized pretax impairment losses of approximately $29 million. These losses were primarily attributable to a pretax impairment loss of $28 million related to investments in two human resource service companies.

IV-11

SCHEDULE III
AFLAC INCORPORATED AND SUBSIDIARIES

Supplementary Insurance Information
Years Ended December 31,
(In millions)			Deferred Policy Acquisi-tion Costs		Future Policy Benefits & Unpaid Policy Claims		Unearned Premiums		Other Policy-holders' Funds		Premium Revenue		Net Invest-ment Income		Benefits and Claims		Amortiza-tion of Deferred Policy Acquisi-tion Costs		Other Operating Expenses			Premiums Written
2003:
	AFLAC Japan		$	3,440	$	34,134	$	413	$	959	$	7,326	$	1,421	$	5,943	$	255	$	1,427		$	7,369
	AFLAC U.S.			1,604		3,569		103		62		2,595		362		1,586		209		720			2,603
	All other			-		-		-		-		-		4		-		-		82			-
		Total	$	5,044	$	37,703	$	516	$	1,021	$	9,921	$	1,787	$	7,529	$	464	$	2,229		$	9,972
2002:
	AFLAC Japan		$	2,868	$	28,411	$	330	$	706	$	6,374	$	1,276	$	5,230	$	209	$	1,273		$	6,481
	AFLAC U.S.			1,410		3,139		98		42		2,221		331		1,359		176		624			2,224
	All other			-		-		-		-		-		7		-		-		127	(1)		-
		Total	$	4,277	$	31,550	$	428	$	748	$	8,595	$	1,614	$	6,589	$	385	$	2,024		$	8,705
2001:
	AFLAC Japan		$	2,470	$	23,969	$	257	$	484	$	6,217	$	1,234	$	5,170	$	178	$	1,281		$	6,270
	AFLAC U.S.			1,175		2,752		95		35		1,844		303		1,133		150		528			1,847
	All other			-		-		-		-		-		13		-		-		77			-
		Total	$	3,645	$	26,721	$	352	$	519	$	8,061	$	1,550	$	6,303	$	328	$	1,886		$	8,117
See the accompanying Independent Auditor's Report
(1) Includes a charge of $40 for the policyholder protection fund in Japan

IV-12

SCHEDULE IV
AFLAC INCORPORATED AND SUBSIDIARIES

Reinsurance
Years Ended December 31,
(In millions)				Gross Amount		Ceded to other companies		Assumed from other companies		Net Amount		Percentage of amount assumed to net
2003:
	Life insurance in force			$	69,582	$	1,459	$	-	$	68,123	-	%
	Premiums:
		Health insurance		$	9,052	$	-	$	-	$	9,052	-
		Life insurance			876		7		-		869	-
			Total earned premiums	$	9,928		7		-	$	9,921	-
2002:
	Life insurance in force			$	56,680	$	1,205	$	-	$	55,475	-
	Premiums:
		Health insurance		$	7,839	$	-	$	-	$	7,839	-
		Life insurance			761		5		-		756	-
			Total earned premiums	$	8,600	$	5	$	-	$	8,595	-
2001:
	Life insurance in force			$	46,610	$	563	$	-	$	46,047	-
	Premiums:
		Health insurance		$	7,366	$	-	$	-	$	7,366	-
		Life insurance			697		2		-		695	-
			Total earned premiums	$	8,063	$	2	$	-	$	8,061	-
See the accompanying Independent Auditors' Report.

IV-13

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

		AFLAC Incorporated
Date:	March 10, 2004	By	/s/ Daniel P. Amos
			(Daniel P. Amos)
			Chief Executive Officer,
			Chairman of the Board of Directors

Pursuant to the requirements of the Securities Exchange Act of 1934, this Report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated.

/s/ Kriss Cloninger III	President, Chief Financial Officer,	March 10, 2004
(Kriss Cloninger III)	Treasurer and Director
/s/ Ralph A. Rogers Jr.	Senior Vice President, Financial	March 10, 2004
(Ralph A. Rogers Jr.)	Services, Chief Accounting Officer

IV-14

/s/  J. Shelby Amos II	Director	March 10, 2004
(J. Shelby Amos II)
/s/  Michael H. Armacost	Director	March 10, 2004
(Michael H. Armacost)
/s/  Joe Frank Harris	Director	March 10, 2004
(Joe Frank Harris)
/s/  Elizabeth J. Hudson	Director	March 10, 2004
(Elizabeth J. Hudson)
/s/  Kenneth S. Janke Sr.	Director	March 10, 2004
(Kenneth S. Janke Sr.)
/s/  Douglas W. Johnson	Director	March 10, 2004
(Douglas W. Johnson)
/s/  Robert B. Johnson	Director	March 10, 2004
(Robert B. Johnson)
	Director	March 10, 2004
(Charles B. Knapp)
	Director	March 10, 2004
(Hidefumi Matsui)
/s/  Nobuhiro Mori	Director	March 10, 2004
(Nobuhiro Mori)
/s/  E. Stephen Purdom	Director	March 10, 2004
(E. Stephen Purdom)
/s/  Barbara K. Rimer	Director	March 10, 2004
(Barbara K. Rimer)

IV-15

/s/  Marvin R. Schuster	Director	March 10, 2004
(Marvin R. Schuster)
/s/  Glenn Vaughn Jr.	Director	March 10, 2004
(Glenn Vaughn Jr.)
/s/  Robert L. Wright	Director	March 10, 2004
(Robert L. Wright)

IV-16

EXHIBITS

3.0		-	Articles of Incorporation, as amended - incorporated by reference from Form 10-Q for June 30, 2000, Commission file number 1-7434, Accession No. 0000004977-00-000038, Exhibit 3.0.
3.1		-	Bylaws of the Corporation, as amended.
4.0		-	There are no long-term debt instruments in which the total amount of securities authorized exceeds 10% of the total assets of AFLAC Incorporated and its subsidiaries on a consolidated basis. We agree to furnish a copy of any long-term debt instruments to the Securities and Exchange Commission upon request.
10.0	*	-	American Family Corporation Stock Option Plan (1985) - incorporated by reference from Registration Statement No. 33-44720 on Form S-8 with respect to the AFLAC Incorporated (Formerly American Family Corporation) Incentive Stock Option Plan (1982) and Stock Option Plan (1985).
10.1	*	-	AFLAC Incorporated Amended 1985 Stock Option Plan - incorporated by reference from the 1994 Shareholders' Proxy Statement, Commission file number 1-7434, Accession No. 0000004977-94-000003, Exhibit A.
10.2	*	-	AFLAC Incorporated Amended 1985 Stock Option Plan, as amended August 8, 1995 - incorporated by reference from Form 10-Q for September 30, 1995, Commission file number 1-7434, Accession No. 0000004977-95-000023, Exhibit 10.
10.3	*	-	American Family Corporation Retirement Plan for Senior Officers, as amended and restated October 1, 1989 - incorporated by reference from 1993 Form 10-K, Commission file number 1-7434, Accession No. 0000004977-94-000006, Exhibit 10.2.
10.4	*	-	AFLAC Incorporated Supplemental Executive Retirement Plan, as amended.
10.5	*	-	AFLAC Incorporated Employment Agreement with Daniel P. Amos, dated August 1, 1993 - incorporated by reference from 1993 Form 10-K, Commission file number 1-7434, Accession No. 0000004977-94-000006, Exhibit 10.4.
10.6	*	-	AFLAC Incorporated Employment Agreement with Charles D. Lake, II, dated January 1, 2002.
10.7	*	-	AFLAC Incorporated Employment Agreement with Kriss Cloninger, III, dated February 14, 1992, and as amended November 12, 1993 - incorporated by reference from 1993 Form 10-K, Commission file number 1-7434, Accession No. 0000004977-94-000006, Exhibit 10.6.
10.8	*	-	AFLAC Incorporated 1997 Stock Option Plan, incorporated by reference from the 1997 Shareholders' Proxy Statement, Commission file number 1-7434, Accession No. 0000004977-97-000007, Appendix B.
10.9	*	-	AFLAC Incorporated Executive Deferred Compensation Plan, effective January 1, 1999 - incorporated by reference from Form S-8 Registration Statement No. 333-69333, Accession No. 0000004977-98-00024, Exhibit 4.
10.10	*	-	AFLAC Incorporated Amended and Restated Management Incentive Plan, effective January 1, 1999 - incorporated by reference from the 2003 Shareholders' Proxy Statement, Commission file number 1-7434, Accession No. 0000004977-03-000088, Exhibit A.
10.11	*	-	AFLAC Incorporated Retirement Agreement with E. Stephen Purdom, dated February 15, 2000 - incorporated by reference from 2000 Form 10-K, Commission file number 1-7434, Accession No. 0000004977-01-500045, Exhibit 10.13.

IV-17

	10.12	*	-	AFLAC Incorporated Employment Agreement with Hidefumi Matsui, dated January 1, 1995 - incorporated by reference from 1994 Form 10-K, Commission file number 1-7434, Accession No. 0000004977-95-000006, Exhibit 10.8.
	10.13	*	-	1999 AFLAC Associate Stock Bonus Plan, as amended, dated February 11, 2003, - incorporated by reference from 2002 Form 10-K, Commission file number 1-7434, Accession No. 0000004977-03-000098, Exhibit 99.2.
	11.0		-	Statement regarding the computation of per-share earnings for the Registrant.
	12.0		-	Statement regarding the computation of ratio of earnings to fixed charges for the Registrant.
	13.0		-	Selected information from the AFLAC Incorporated Annual Report to Shareholders for 2002.
	14.0		-	Code of Ethics for Chief Executive and Senior Financial Officers.
	21.0		-	Subsidiaries.
	23.0		-	Consent of independent auditor, KPMG LLP, to Form S-8 Registration Statement No. 33-44720 with respect to the AFLAC Incorporated (Formerly American Family Corporation) Incentive Stock Option Plan (1982) and Stock Option Plan (1985).
			-	Consent of independent auditor, KPMG LLP, to Form S-8 Registration Statement No. 333-01243 with respect to the AFLAC Incorporated Amended 1985 Stock Option Plan.
			-	Consent of independent auditor, KPMG LLP, to Form S-8 Registration Statement No. 33-41552 with respect to the AFLAC Incorporated 401(k) Retirement Plan.
			-	Consent of independent auditor, KPMG LLP, to Form S-3 Registration Statement No. 33-64535 with respect to the AFL Stock Plan.
			-	Consent of independent auditor, KPMG LLP, to Form S-8 Registration Statement No. 333-27883 with respect to the AFLAC Incorporated 1997 Stock Option Plan.
			-	Consent of independent auditor, KPMG LLP, to Form S-8 Registration Statement No. 333-69333 with respect to the AFLAC Incorporated Executive Deferred Compensation Plan.
	31.1		-	Certification of CEO dated March 10, 2004, required by Rule 13a-14(a) or Rule 15d-14(a) of the Securities Exchange Act of 1934.
	31.2		-	Certification of CFO dated March 10, 2004, required by Rule 13a-14(a) or Rule 15d-14(a) of the Securities Exchange Act of 1934.
	32.0		-	Certification of CEO and CFO dated March 10, 2004, pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
*Management contract or compensatory plan or agreement.

IV-18

EXHIBITS FILED WITH CURRENT FORM 10-K

	3.1		-	Bylaws of the Corporation, as amended.
	10.4	*	-	AFLAC Incorporated Supplemental Executive Retirement Plan, as amended.
	10.6	*	-	AFLAC Incorporated Employment Agreement with Charles D. Lake, II, dated January 1, 2002.
	11.0		-	Statement regarding the computation of per-share earnings for the Registrant.
	12.0		-	Statement regarding the computation of ratio of earnings to fixed charges for the Registrant.
	13.0		-	Selected information from the AFLAC Incorporated Annual Report to Shareholders for 2003.
	14.0		-	Code of Ethics for Chief Executive and Senior Financial Officers.
	21.0		-	Subsidiaries.
	23.0		-	Consent of independent auditor, KPMG LLP, to Form S-8 Registration Statement No. 33-44720 with respect to the AFLAC Incorporated (Formerly American Family Corporation) Incentive Stock Option Plan (1982) and Stock Option Plan (1985).
			-	Consent of independent auditor, KPMG LLP, to Form S-8 Registration Statement No. 333-01243 with respect to the AFLAC Incorporated Amended 1985 Stock Option Plan.
			-	Consent of independent auditor, KPMG LLP, to Form S-8 Registration Statement No. 33-41552 with respect to the AFLAC Incorporated 401(k) Retirement Plan.
			-	Consent of independent auditor, KPMG LLP, to Form S-3 Registration Statement No. 33-64535 with respect to the AFL Stock Plan.
			-	Consent of independent auditor, KPMG LLP, to Form S-8 Registration Statement No. 333-27883 with respect to the AFLAC Incorporated 1997 Stock Option Plan.
			-	Consent of independent auditor, KPMG LLP, to Form S-8 Registration Statement No. 333-69333 with respect to the AFLAC Incorporated Executive Deferred Compensation Plan.
	31.1		-	Certification of CEO dated March 10, 2004, required by Rule 13a-14(a) or Rule 15d-14(a) of the Securities Exchange Act of 1934.
	31.2		-	Certification of CFO dated March 10, 2004, required by Rule 13a-14(a) or Rule 15d-14(a) of the Securities Exchange Act of 1934.
	32.0		-	Certification of CEO and CFO dated March 10, 2004, pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
*Management contract or compensatory plan or agreement.

IV-19

EX-3

AFLAC Incorporated Form 10-K

EXHIBIT 3.1

Amended and Restated Bylaws

of

AFLAC Incorporated
(As of February 10, 2004)

ARTICLE I
OFFICES

          Section 1. Registered Office. The registered office shall be in the State of Georgia, County of Muscogee.

          Section 2. Other Offices. The Corporation may also have offices at such other places both within and without the State of Georgia as the Board of Directors may from time to time determine and the business of the Corporation may require or make desirable.

ARTICLE II
SHAREHOLDERS' MEETINGS

          Section 1. Annual Meetings.

(a) The annual meeting of the shareholders of the Corporation shall be held at the principal office of the Corporation or at such other place in the United States as may be determined by the Board of Directors, on the first Monday in May of each calendar year (or on the next succeeding business day if said first Monday in May is a legal holiday in any year) or at such other time and date as shall be determined by the Board of Directors, for the purpose of electing directors and transacting such other business as may properly be brought before the meeting.

(b) No business may be transacted at an annual meeting of shareholders, other than business that is either (i) specified in the notice of meeting (or any supplement thereto) given by or at the direction of the Board of Directors (or any duly authorized committee thereof), (ii) otherwise properly brought before the annual meeting by or at the direction of the Board of Directors (or any duly authorized committee thereof) or (iii) otherwise properly brought before the annual meeting by any shareholder of the Corporation (A) who is a shareholder of record on the date of the giving of the notice provided for in this Section 1 and on the record date for the determination of shareholders entitled to vote at such annual meeting and (B) who complies with the notice procedures set forth in this Section 1.

(c) In addition to any other applicable requirements, for business to be properly brought before an annual meeting by a shareholder, such shareholder must have given timely notice thereof in proper written form to the Secretary of the Corporation, which notice is not withdrawn by such shareholder at or prior to such annual meeting.

EXH 3.1-1

(d) To be timely, a shareholder's notice to the Secretary must be delivered to or mailed and received at the principal executive offices of the Corporation not less than ninety (90) days nor more than one hundred-twenty (120) days prior to the anniversary date of the immediately preceding annual meeting of shareholders; provided, however, that in the event that the annual meeting is called for a date that is not within twenty-five (25) days before or after such anniversary date, notice by the shareholder in order to be timely must be so received not later than the close of business on the tenth (10^th) day following the day on which such notice of the date of the annual meeting was mailed or such public disclosure of the date of the annual meeting was made, whichever first occurs.

(e) To be in proper written form, a shareholder's notice to the Secretary must set forth as to each matter such shareholder proposes to bring before the annual meeting (i) a brief description of the business desired to be brought before the annual meeting and the reasons for conducting such business at the annual meeting, (ii) the name and record address of such shareholder, (iii) the class and number of shares of capital stock of the Corporation which are owned beneficially or of record by such shareholder, (iv) a description of all arrangements or understandings between such shareholder and any other person or persons (including their names) in connection with the proposal of such business by such shareholder and any material interest of such shareholder in such business and (v) a representation that such shareholder intends to appear in person or by proxy at the annual meeting to bring such business before the meeting.

(f) No business shall be conducted at the annual meeting of shareholders except business brought before the annual meeting in accordance with the procedures set forth in this Section 1, provided, however, that, once business has been properly brought before the annual meeting in accordance with such procedures, nothing in this Section 1 shall be deemed to preclude discussion by any shareholder of any such business. If the Chairman of an annual meeting determines that business was not properly brought before the annual meeting in accordance with the foregoing procedures, the Chairman shall declare to the meeting that the business was not properly brought before the meeting and such business shall not be transacted.

          Section 2. Special Meetings. Special meetings of the shareholders shall be held at the principal office of the Corporation or at such other place in the United States as may be designated in the notice of said meetings, upon call of the Chairman of the Board of Directors or the Chief Executive Officer and shall be called by the President or the Secretary when so directed by the Board of Directors or at the request in writing of the holders of shares representing all of the votes entitled to be cast by the holders of all the issued and outstanding capital stock of the Corporation entitled to vote thereat. Any such request shall state the purpose for which the meeting is to be called.

          Section 3. Notice of Meetings. Notice of every meeting of shareholders, stating the place, date and hour of the meeting, shall be given to each shareholder of record entitled to vote at such meeting not less than 10 nor more than 60 days before the date of the meeting. If mailed, such notice shall be deemed to be delivered when deposited in the United States mail with postage thereon prepaid addressed to the shareholder at his address as it appears on the Corporation' s record of shareholders. Attendance of a shareholder at a meeting of shareholders shall constitute a waiver of objection to: (a) lack of notice or defective notice of such meeting unless the shareholder at the beginning of the meeting, objects to holding the meeting or transacting business at the meeting, and (b) consideration of a particular matter at the meeting which is not within the purpose or purposes described in the meeting notice, unless the shareholder o bjects to considering the matter when it is presented. Notice need not be given to any shareholder who signs a waiver of notice, in person or by proxy, either before or after the meeting.

EXH 3.1-2

          Section 4. Quorum. The holders of shares representing a majority of the votes entitled to be cast by the holders of all the issued and outstanding stock of the Corporation entitled to vote thereat, present in person or represented by proxy, shall constitute a quorum for the transaction of business at all meetings of the shareholders except as otherwise provided by statute, by the Articles of Incorporation, or by these Bylaws. If a quorum is not present or represented at any meeting of the shareholders, the holders of shares representing a majority of the votes entitled to be cast by those present in person or represented by proxy may adjourn the meeting from time to time, without notice other than announcement at the meeting, until a quorum shall be present or represented. At such adjourned meeting at which a quorum shall be present or represented, any business may be transacted which might have been transacted at the meeting as originally notified. If after the adjournment a new record date is fixed for the adjourned meeting, a notice of the adjourned meeting shall be given to each shareholder of record entitled to vote at the meeting.

          Section 5. Voting. When a quorum is present at any meeting, the vote of the holders of stock representing a majority of the voting power, as defined in the Articles of Incorporation, present in person or represented by proxy shall decide any question brought before such meeting, unless the question is one upon which by express provision of law or of the Articles of Incorporation, a different vote is required, in which case such express provision shall govern and control the decision of the question. Each shareholder shall at every meeting of the shareholders be entitled to vote, as defined, in person or by proxy for each share of the capital stock having voting power registered in his name on the books of the Corporation, but no proxy shall be voted or acted upon after 11 months from its date, unless otherwise provided in the proxy.

          Section 6. Consent of Shareholders. Any action required or permitted to be taken at any meeting of the shareholders may be taken without a meeting if all of the shareholders entitled to vote on the action consent thereto in writing, setting forth the action so taken, and signing and delivering such consent to the Secretary of the Corporation. Such consent shall have the same force and effect as a unanimous vote of shareholders.

          Section 7. List of Shareholders. The Corporation shall keep at its registered office or principal place of business, or at the office of its transfer agent or registrar, a record of its shareholders, giving their names and addresses and the number, class and series, if any, of the shares held by each. The officer who has charge of the stock transfer books of the Corporation shall prepare and make, before every meeting of shareholders or any adjournment thereof, a complete list of the shareholders entitled to vote at the meeting or any adjournment thereof, arranged in alphabetical order, with the address of and the number and class and series, if any, of shares held by each. The list shall be produced and kept open at the time and place of the meeting and shall be subject to inspection by any shareholder during the whole time of the meeting for the purposes thereof. The said list may be the Corporation's regular record of shareho lders if it is arranged in alphabetical order or contains an alphabetical index and otherwise conforms with the requirements specified by law.

ARTICLE III
DIRECTORS

          Section 1. Powers. The property, affairs and business of the Corporation shall be managed and directed by its Board of Directors, which may exercise all powers of the Corporation and do all lawful acts and things which are not by law, by the Articles of Incorporation or by these Bylaws directed or required to be exercised or done by the shareholders.

EXH 3.1-3

          Section 2. Number, Election and Term.

(a) The number of Directors which shall constitute the whole Board shall be not less than three (3) or more than twenty-five (25). The specific number of Directors within such range shall be fixed or changed from time to time by a majority of the Board of Directors then in office. A decrease in the number of Directors shall not have the effect of shortening the term of any incumbent director.

Except as otherwise provided in these Bylaws shareholders shall elect Directors by a vote of not less than a plurality of the votes present in person or represented by proxy at the meeting. Each Director elected shall hold office until his successor is elected and qualified or until his earlier resignation, removal from office or death. Directors shall be natural persons between the ages of 21 and 70 years, inclusive; provided, however, that any Directors who were elected to the Board for the first time before April 27, 1992, and who are subsequently re-elected shall be natural persons between the ages of 21 and 75 years, inclusive. Directors need not be residents of the State of Georgia or shareholders of the Corporation.

(b) Only persons who are nominated in accordance with the following procedures shall be eligible for election as directors of the Corporation. Nominations of persons for election to the Board of Directors may be made at any annual meeting of shareholders (i) by or at the direction of the Board of Directors (or any duly authorized committee thereof) or (ii) by any shareholder of the Corporation (A) who is a shareholder of record on the date of the giving of the notice provided for in this Section 2 and on the record date for the determination of shareholders entitled to vote at such annual meeting and (B) who complies with the notice procedures set forth in this Section 2.

(c) In addition to any other applicable requirements, for a nomination to be made by a shareholder, such shareholder must have given timely notice thereof in proper written form to the Secretary of the Corporation.

(d) To be timely, a shareholder's notice to the Secretary must be delivered to or mailed and received at the principal executive offices of the Corporation not less than ninety (90) days nor more than one hundred-twenty (120) days prior to the anniversary date of the immediately preceding annual meeting of shareholders; provided, however, that in the event that the annual meeting is called for a date that is not within twenty-five (25) days before or after such anniversary date, notice by the shareholder in order to be timely must be so received not later than the close of business on the tenth (10^th) day following the day on which such notice of the date of the annual meeting was mailed or such public disclosure of the date of the annual meeting was made, whichever first occurs.

(e) To be in proper written form, a shareholder's notice to the Secretary must set forth (i) as to each person whom the shareholder proposes to nominate for election as a director (A) the name, age, business address and residence address of the person, (B) the principal occupation or employment of the person, (C) the number of shares of capital stock of the Corporation which are owned beneficially or of record by the person and (D) any other information relating to the person that would be required to be disclosed in a proxy statement or other filings required to be made in connection with solicitations of proxies for election of directors pursuant to Section 14 of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), and the rules and regulations promulgated thereunder; and (ii) as to the shareholder giving the notice (A) the name and record address of such shareholder, (B) the number of shares of capital stock of the (Corporation which are owned beneficially or of record by such shareho lder, (C) a description of all arrangements or understandings between such shareholder and each proposed nominee and any other

EXH 3.1-4

person or persons (including their names) pursuant to which the nomination(s) are to be made by such shareholder, (D) a representation that such shareholder intends to appear in person or by proxy at the meeting to nominate the persons named in its notice and (E) any other information relating to such shareholder that would be required to be disclosed in a proxy statement or other filings required to be made in connection with solicitations of proxies for election of directors pursuant to Section 14 of the Exchange Act and the rules and regulations promulgated thereunder. Such notice must be accompanied by a written consent of each proposed nominee to being named as a nominee and to serve as a director if elected.

(f) No person shall be eligible for election as a director of the Corporation unless nominated in accordance with the procedures set forth in this Section 2. If the Chairman of the annual meeting determines that a nomination was not made in accordance with the foregoing procedures, the Chairman shall declare to the meeting that the nomination was defective and such defective nomination shall be disregarded.

          Section 3. Resignation. Any director who shall miss three or more regular meetings of the Board of Directors within any twelve month period, whether or not the meetings missed are consecutive, shall be deemed to have automatically resigned as a director, provided that the automatic resignation may be waived by resolution adopted by a majority vote of the remaining directors with the written consent of the resigned director, in which event said director shall remain on the Board.

          Section 4. Vacancies. Vacancies on the Board of Directors, including vacancies resulting from any increase in the number of directors constituting the Board of Directors, but not including vacancies resulting from removal from office by the shareholders (except as provided in Section 9 of this Article III), may be filled by the shareholders, by the Board of Directors, or by the affirmative vote of a majority of the directors remaining in office, though less than a quorum, or by a sole remaining director, and a director so chosen shall hold office until the next annual election and until his successor is duly elected and qualified unless sooner displaced. If there are no directors in office, then vacancies shall be filled through election by the shareholders. Vacancies on any committee of the Board of Directors, including vacancies resulting from any increase in the number of directors constituting such committee, may be filled b y the Board of Directors, or by the affirmative vote of a majority of the directors remaining in office, though less than a quorum, or by a sole remaining director, and a director so chosen shall hold office until the his successor is duly appointed by the Board of Directors unless sooner displaced.

          Section 5. Meetings and Notice. The Board of Directors of the Corporation and any committee thereof may hold meetings, both regular and special, either within or without the State of Georgia. Regular meetings of the Board of Directors or any committee thereof may be held without notice at such time and place as shall from time to time be determined by resolution of the Board or such committee, respectively. Special meetings of the Board may be called by the Chairman of the Board or Chief Executive Officer or by any two directors on one day's oral, telegraphic or written notice duly given or served on each director personally, or three days' notice deposited, first class postage prepaid, in the United Sates mail. Special meetings of any committee of the Board may be called by the chairman of such committee, if there be one, the Chief Executive Officer, or by any director serving on such committee, on one day's oral, telegraphic or written notice duly given or served on each member of such committee personally, or three days' notice deposited, first class postage prepaid, in the United Sates mail. Such notice shall state a reasonable time, date and place of meeting of the Board or the committee, but the purpose need not be stated therein. Notice need not be given to any director who signs a waiver of notice either before or after the meeting. Attendance of a director at a meeting shall constitute a waiver of notice of such meeting except when the director states, at the beginning of the meeting (or promptly upon his arrival), any such objection or objections to holding the meeting or the transaction of business at the meeting and does not subsequently vote for or assent to action taken at the meeting.

EXH 3.1-5

          Section 6. Quorum. At all meetings of the Board or any committee thereof, a majority of directors in office or a majority of the directors constituting such committee, as the case may be, immediately before the meeting begins shall constitute a quorum for the transaction of business, and the act of a majority of the directors or committee members present at any meeting at which there is a quorum shall be the act of the Board or such committee, as applicable, except as may be otherwise specifically provided by law, by the Articles of Incorporation, by the rules and regulations of any securities exchange or quotation system on which the Corporation's securities are listed or quoted for trading, or by these Bylaws. If a quorum shall not be present at any meeting of the Board or any committee thereof, the directors present thereat may adjourn the meeting from time to time, without notice other than announcement at the meeting, until a quorum shall be present.

          Section 7. Consent of Directors. Unless otherwise restricted by the Articles of Incorporation or these Bylaws, any action required or permitted to be taken at any meeting of the Board of Directors or of any committee thereof may be taken without a meeting, if all members of the Board or committee, as the case may be, consent thereto in writing, setting forth the action so taken, and the writing or writings are filed with the minutes of the proceedings of the Board or committee. Such consent shall have the same force and effect as a unanimous vote of the Board or committee.

          Section 8. Committees. The Board of Directors may by resolution passed by a majority of the whole Board, designate from among its members one or more committees, each committee to consist of one or more directors. The Board may designate one or more directors as alternate members of any committee, who may replace any absent member at any meeting of such committee. Each member of a committee must meet the requirements for membership, if any, imposed by applicable law and the rules and regulations of any securities exchange or quotation system on which the securities of the Corporation are listed or quoted for trading. Any such committee, to the extent allowed by law and provided in the resolution establishing such committee, shall have and may exercise all of the authority of the Board of Directors in the management of the business and affairs of the Corporation, except that it shall have no authority with respect to (1) amendi ng the Articles of Incorporation or these Bylaws; (2) adopting a plan of merger or consolidation; (3) the sale, lease, exchange or the disposition of all or substantially all the property and assets of the Corporation; and (4) a voluntary dissolution of the Corporation or a revocation thereof. Such committee or committees shall have such name or names as may be determined from time to time by resolution adopted by the Board of Directors. A majority of each committee may determine its action and may fix the time and places of its meetings, unless otherwise provided by the Board of Directors. Each committee shall keep regular minutes of its meetings and report the same to the Board of Directors when required. Notwithstanding anything to the contrary contained in this Article III, the resolution of the Board of Directors establishing any committee of the Board and/or the charter of any such committee may establish requirements or procedures relating to the governance and/or operation of such committee that are different from, or in addition to, those set forth in these Bylaws and, to the extent that there is any inconsistency between these Bylaws and any such resolution or charter, the terms of such resolution or charter shall be controlling.

          Section 9. Removal of Directors. At any shareholders' meeting with respect to which notice of such purpose has been given, any director may be removed from office, with or without cause, by the vote of the holders of a majority of the stock having voting power and entitled to vote for the election of directors, and his successor may be elected at the same or any subsequent meeting of shareholders, or by the Board as permitted by law. Any director serving on a committee of the Board of Directors may be removed from such committee at any time by the Board of Directors.

EXH 3.1-6

          Section 10. Compensation of Directors. Directors shall be entitled to such reasonable compensation for their services as directors or members of any committee of the Board as shall be fixed from time to time by resolution adopted by the Board, and shall also be entitled to reimbursement for any reasonable expenses incurred in attending any meeting of the Board or any such committee.

          Section 11. Executive Committee. The Executive Committee will consist of at least five directors, including the Chief Executive Officer, the Deputy Chief Executive Officer, the Chairman of the Board of Directors, the Vice Chairman of the Board of Directors, the President, and such number of other directors as the Board of Directors may from time to time determine. The Executive Committee shall have and may exercise, during the intervals between meetings of the Board of Directors, all of the powers of the Board of Directors which may be lawfully delegated. Meetings of the Executive Committee shall be held at such times and places to be determined by the Chairman of the Executive Committee. At all meetings of the Executive Committee, a majority of the members thereof shall constitute a quorum. The Executive Committee may make rules for the conduct of its business and may appoint such committees and assistants as it may deem nece ssary. The Chief Executive Officer (or another member of the Executive Committee chosen by him) shall be the Chairman of the Executive Committee. During the intervals between meetings of the Executive Committee, the Chief Executive Officer shall possess and may exercise such of the powers vested in the Executive Committee as from time to time may be lawfully conferred upon him by resolution of the Board of Directors or the Executive Committee.

ARTICLE IV
OFFICERS

          Section 1. Name and Number. The officers of the Corporation, who shall be chosen by the Board of Directors are as follows: Chief Executive Officer, Deputy Chief Executive Officer, Chairman of the Board of Directors, Vice Chairman of the Board of Directors, President, Executive Vice President, Secretary, Assistant Secretary, Treasurer, and Assistant Treasurer. The Board of Directors may appoint additional specially designated vice presidents, assistant secretaries and assistant treasurers. Any number of offices, except the offices of President and Secretary, may be held by the same person. The Board of Directors may appoint such other officers and agents as it shall deem necessary who shall hold their offices for such terms and shall exercise such powers and perform such duties as shall be determined from time to time by the Board. The Board may, in its discretion, leave any of the above offices vacant for any length of time. < /P>

          Section 2. Compensation. The salaries of all officers set forth in Section 1 of this Article IV shall be fixed by the Board of Directors or a committee or officer appointed by the Board. Salary payments made to an officer of the Corporation that shall be disallowed in whole or in part as a deductible expense by the Corporation for Federal Income Tax purposes shall be reimbursed by such officer to the Corporation to the full extent of the disallowance. It shall be the duty of the Board of Directors to enforce payments of each such amount disallowed.

          Section 3. Term of Office. Unless otherwise provided by resolution of the Board of Directors, the principal officers shall serve until their successors shall have been chosen and qualified, or until their death, resignation or removal as provided by these Bylaws.

          Section 4. Removal. Any officer may be removed from office at any time, with or without cause, by the Board of Directors.

EXH 3.1-7

          Section 5. Vacancies. Any vacancy in an office resulting from any cause may be filled by the Board of Directors.

          Section 6. Powers and Duties. Except as hereinafter provided, the officers of the Corporation shall each have such powers and duties as generally pertain to their respective offices, as well as such powers and duties as from time to time may be conferred by the Board of Directors to the extent consistent with these Bylaws.

(a) Chief Executive Officer. The Chief Executive Officer shall keep the Board of Directors fully informed, and shall make a statement of the affairs of the Corporation at the annual meeting of the shareholders. He shall have the general superintendence and direction of all the other officers of the Corporation and of the agents, independent contractors and employees thereof and to see that their respective duties are properly performed. He shall, for and on behalf of the Corporation, exercise the voting powers of all stock of other companies owned by the Corporation. He may sign and execute all authorized bonds, notes, drafts, checks, acceptances or other obligations, reinsurance contracts and other contracts in the name of the Corporation. He shall operate and conduct the business and affairs of the corporation according to the orders and resolutions of the Board of Directors, and according to his own discretion whenever and wherever such discretion is not expressly limited by such orders and resolutions. He shall have the power to sue and be sued, complain and defend, in all courts, and to participate and bind the Corporation in any judicial, administrative, arbitrative, settlement or other action, litigation or proceeding. All officers may be removed with or without cause at any time by the Chief Executive Officer whenever the Chief Executive Officer, in his absolute discretion, shall consider that the best interests of the Corporation will be served thereby.

(b) Deputy Chief Executive Officer. In the absence of the Chief Executive Officer, or in the event of his temporary disability or inability to act, or in the event the Chief Executive Officer expressly so directs, the Deputy Chief Executive Officer shall perform the duties of Chief Executive Officer, and when so acting shall have all the powers of and be subject to all the restrictions upon the Chief Executive Officer. Upon the death, permanent disability, or resignation of the Chief Executive Officer, the Deputy Chief Executive Officer shall become Chief Executive Officer and shall succeed to such duties and powers subject to such restrictions. In the event the office of Vice Chairman shall become vacant for any reason, the Deputy Chief Executive Officer shall, in addition to his then current duties, become Vice Chairman and shall succeed to the duties and powers of such office. The Deputy Chief Executive Officer shall do and perform such other duties as may from time to time be assigned to hi m by the Board of Directors or by the Chief Executive Officer.

(c) Chairman of the Board of Directors. The Chairman of the Board of Directors shall preside at all meetings of the Directors and shareholders and shall perform such other duties as may be assigned by the Board of Directors.

(d) Vice Chairman of the Board of Directors. In the absence of the Chairman of the Board of Directors, or in the event of his inability to act, the Vice Chairman of the Board of Directors shall perform the duties of the Chairman of the Board of Directors, and when so acting, shall have all the powers of and be subject to all the restrictions upon the Chairman of the Board of Directors. Upon the death, permanent disability, or resignation of the Chairman of the Board of Directors, the Vice Chairman shall become the Chairman of the Board and shall succeed to such duties and powers subject to such restrictions. The Vice Chairman of the Board of Directors shall do and perform such other duties as may from time to time be assigned to him by the Board of Directors or by the Chairman of the Board.

EXH 3.1-8

(e) President. The President shall keep the Board of Directors fully informed. He may sign and execute all authorized bonds, contracts, notes, drafts, checks, acceptances or other obligations in the name of the Corporation, and with the Secretary he may sign all certificates of shares in the capital stock of the Corporation. The President shall do and perform such other duties as may from time to time be assigned to him by the Board of Directors or by the Chief Executive Officer.

(f) Executive Vice-President. In the absence of the President or in the event of his inability or refusal to act, the Executive Vice-President (or in the event there be more than one Executive Vice-President, the Executive Vice-Presidents in the order designated, or in the absence of any designation, then in the order of their election) shall perform the duties of the President, and when so acting, shall have all the powers of and be subject to all the restrictions upon the President. The Executive Vice-Presidents shall perform such other duties and have such other powers as the Board of Directors may from time to time prescribe.

(g) Secretary. The Secretary shall attend all meetings of the Board of Directors and all meetings of the Shareholders and record all the proceedings of the meetings of the Corporation and of the Board of Directors in a book to be kept for that purpose and shall perform like duties for the standing committees when required. He shall give, or cause to be given, notice of all meetings of the shareholders and special meetings of the Board of Directors, and shall perform such other duties as may be prescribed by the Board of Directors or Chief Executive Officer, under whose supervision he shall be. He shall have custody of the corporate seal of the Corporation and he, or an assistant secretary, shall have authority to affix the same to any instrument requiring it and when so affixed, it may be attested by his signature or by the signature of such assistant secretary. The Board of Directors may give general authority to any other officer to affix the seal of the Corporation and to attest the affixing by his signature.

(h) Assistant Secretary. The Assistant Secretary, or if there be more than one, the assistant secretaries in the order determined by the Board of Directors (of if there be no such determination, then in the order of their election), shall, in the absence of the Secretary or in the event of his inability or refusal to act, perform the duties and exercise the powers of the Secretary and shall perform such other duties and have such other powers as the Board of Directors may from time to time prescribe.

(i) Treasurer. The Treasurer shall have the custody of the corporate funds and securities and shall keep full and accurate accounts of receipts and disbursements in books belonging to the Corporation and shall deposit all monies and other valuable effects in the name and to the credit of the Corporation in such depositories as may be designated by the Board of Directors. He shall disburse the funds of the Corporation as may be ordered by the Board of Directors, taking proper vouchers for such disbursements, and shall render regular meetings, or when the Board of Directors so requires, an account of all his transactions as Treasurer and of the financial condition of the Corporation. If required by the Board of Directors, he shall give the Corporation a bond (which shall be renewed every six years) in such sum and with such surety or sureties as shall be satisfactory to the Board of Directors for the faithful performance of the duties of his office and for the restoration to the Corporation, in ca se of his death, resignation, retirement or removal from office, of all books, papers, vouchers, money and other property of whatever kind in his possession or under his control belonging to the Corporation.

(j) Assistant Treasurer. The Assistant Treasurer, or if there shall be more than one, the assistant treasurers in the order determined by the Board of Directors (or if there be no such determination, then in the order of their election), shall, in the absence of the Treasurer or in the event of his inability or refusal to act, perform the duties and exercise the powers of the Treasurer and shall perform such other duties and have such other powers as the Board of Directors may from time to time prescribe.

EXH 3.1-9

(k) For purposes of this Section 6, "disability" shall mean the significant impairment, resulting from any physical or mental condition, of the Chief Executive Officer's ability to perform his duties, for a period of six or more consecutive months.

          Section 7. Voting Securities of Corporation. Unless otherwise ordered by the Board of Directors, the Chief Executive Officer shall have full power and authority on behalf of the Corporation to attend and to act and vote at any meetings of security holders of corporations in which the Corporation may hold securities, and at such meetings shall possess and may exercise any and all rights and powers incident to the ownership of such securities which the Corporation might have possessed and exercised if it had been present. The Board of Directors by resolution from time to time may confer like powers upon any other person or persons.

ARTICLE V
CERTIFICATES OF STOCK

          Section 1. Certificated or Uncertificated Shares.

(a) The shares of the Corporation's stock shall be evidenced by certificates for shares of stock in such form as the Board of Directors may from time to time prescribe, provided that the Board of Directors may authorize the issue of some or all of the shares of any or all of the Corporation's classes or series of stock without certificates. Any such authorization shall not affect shares already represented by a certificate until the certificate is surrendered to the Corporation. Except as expressly provided by law, there shall be no differences in the rights and obligations of shareholders based on whether or not their shares are represented by certificates.

(b) In the case of uncertificated shares, within a reasonable time after the issuance or transfer thereof, the Corporation shall send the shareholder a written information statement containing: (i) the name of the Corporation and a statement that the Corporation is organized under the laws of the State of Georgia; (ii) the name of the person to whom the uncertificated shares have been issued or transferred; (iii) the number and class of shares, and the designation of the series, if any, to which the information statement relates; and (iv) if applicable, a statement as to the existence of any restrictions on transfer or registration of transfer of the shares. The information statement shall also contain the following statement: "This information statement is merely a record of the rights of the addressee as of the time of its issuance. Delivery of this information statement, by itself, confers no right on the recipient. This information statement is neither a negotiable instrument nor a securit y."

          Section 2. Lost Certificates. The Board of Directors may direct that a new certificate or, in the event that the Board of Directors has authorized the issuance of shares of the relevant class or series of stock without certificates, an information statement described in Section 1(b) of this Article be issued in place of any certificate theretofore issued by the Corporation and alleged to have been lost, stolen or destroyed, upon the making of an affidavit of that fact by the person claiming the certificate of stock to be lost, stolen or destroyed. When authorizing such issue of a new certificate or, in the case of uncertificated shares, an information statement, the Board of Directors may, in its discretion and as a condition precedent to the issuance thereof, require the owner of such lost, stolen or destroyed certificate, or his legal representative, to advertise the same in such manner as it shall require and/or to give the Co rporation a bond in such sum as it may direct as indemnity against any claim that may be made against the Corporation with respect to the certificate alleged to have been lost, stolen or destroyed.

EXH 3.1-10

          Section 3. Transfers of Stock.

(a) Transfers of shares of the capital stock of the Corporation shall be made only on the books of the Corporation by the record holder thereof, or by his duly authorized attorney, or with a transfer clerk or transfer agent appointed as in Section 5 of this Article, and in the case of certificated shares, only on surrender of the certificate or certificates representing such shares, properly endorsed or accompanied by a duly executed stock transfer power and the payment of all taxes thereon. Upon receipt of proper transfer instructions from the record holder of uncertificated shares of stock, which may be in the form of a properly endorsed information statement described in Section 1(b), and the payment of all taxes thereon, such uncertificated shares shall be cancelled and issuance of new equivalent shares shall be made to the person entitled thereto and the transaction shall be recorded in the books of the Corporation.

(b) The Corporation shall be entitled to recognize the exclusive right of a person registered on its books as the owner of shares to receive dividends, and to vote as such owner, and for all other purposes, and shall not be bound to recognize any equitable or other claim to or interest in such share or shares on the part of any other person, whether or not it shall have express or other notice thereof, except as otherwise provided by law.

(c) Certificated shares of capital stock may be transferred by delivery of the certificates thereof, accompanied either by an assignment in writing on the back of the certificates or by separate stock power to sell, assign and transfer the same, signed by the record holder thereof, or by his duly authorized attorney in fact. Uncertificated shares of capital stock may be transferred by delivery of written instructions, which may be in the form of a properly endorsed information statement described in Section 1(b), or by separate stock power to sell, assign and transfer the same, signed by the record holder thereof, or by his duly authorized attorney in fact, or by electronic transfer instructions from the broker authorized by the record holder or by his duly authorized attorney in fact. No transfer of certificated or uncertificated shares shall affect the right of the Corporation to pay any dividend upon the stock to the holder of record as the holder in fact thereof for all purposes, and no transfer sh all be valid, except between the parties thereto, until such transfer shall have been made upon the books of the Corporation as herein provided.

(d) The Board may, from time to time, make such additional rules and regulations as it may deem expedient, not inconsistent with these Bylaws or the Articles of Incorporation, concerning the issue, transfer, and registration of certificates for shares or uncertificated shares of the capital stock of the Corporation.

EXH 3.1-11

          Section 4. Record Date. In order that the Corporation may determine the shareholders entitled to notice of or to vote at any meeting of shareholders or any adjournment thereof, or to demand a special meeting, or to express consent to corporate action in writing without a meeting, or entitled to receive payment of any dividend or other distribution or allotment of any rights, or entitled to exercise any rights in respect of any change, conversion or exchange of stock or for the proposal of any other lawful action, the Board of Directors may fix, in advance, a record date, which shall not be more than 70 days and,. in case of a meeting of shareholders, not less than 10 days prior to the date on which the particular action requiring such determination of shareholders is to be taken. If no record date is fixed by the Board for the determination of shareholders entitled to notice of and to vote at any meeting of shareholders, the reco rd date shall be at the close of business on the day next receding the day on which the notice is given, or, if notice is waived, at the close of business on the day next preceding the day on which the meeting is held. If no record date is fixed for other purposes, the record date shall be at the close of business on the day next preceding the day on which the Board of Directors adopts the resolution relating thereto. A determination of Shareholders of record entitled to notice of or to vote at a meeting of shareholders shall apply to any adjournment of the meeting unless the Board of Directors shall fix a new record date for the adjourned meeting, which it shall do if the meeting is adjourned to a date more than 120 days after the date fixed for the original meeting.

          Section 5. Transfer Agent and Registrar. The Board of Directors may appoint one or more transfer agents or one or more transfer clerks and one or more registrars, and may require all certificates of stock to bear the signature or signatures of any of them.

ARTICLE VI
GENERAL PROVISIONS

          Section 1. Dividends. Dividends upon the capital stock of the Corporation, subject to the provisions of the Articles of Incorporation, if any, may be declared by the Board of Directors at any regular or special meeting, pursuant to law. Dividends may be paid in cash, in property, or in shares of the Corporation's capital stock, subject to the provisions of the Articles of Incorporation and applicable law. Before payment of any dividend, there may be set aside out of any funds of the Corporation available for dividends such sum or sums as the directors from time to time, in their absolute discretion, think proper as a reserve or reserves to meet contingencies, or for equalizing dividends, or for repairing or maintaining any property of the Corporation, or for such other purpose as the directors shall think conducive to the interest of the Corporation, and the directors may modify or abolish any such reserve in the manner in which it was created.

          Section 2. Fiscal Year. The fiscal year of the Corporation shall be fixed by resolution of the Board of Directors.

          Section 3. Seal. The corporate seal shall have inscribed thereon the name of the Corporation, the year of its organization and the words "Corporate Seal" and "Georgia." The seal may be used by causing it or a facsimile thereof to be impressed or affixed or reproduced or otherwise. In the event it is inconvenient to use such a seal at any time, the signature of the Corporation followed by the word "Seal" enclosed in parentheses shall be deemed the seal of the Corporation.

EXH 3.1-12

          Section 4. Annual Statements. Not later than four months after the close of each fiscal year, and in any case prior to the next annual meeting of shareholders, the Corporation shall prepare:

(a) A balance sheet showing in reasonable detail the financial condition of the Corporation as of the close of its fiscal year, and

(b) A profit and loss statement showing the result of its operations during its fiscal year.

          Upon written request, the Corporation promptly shall mail to any shareholder of record a copy of the most recent such balance sheet and profit and loss statement.

          Section 5. Business Combinations With Interested Shareholders. All of the requirements and provisions of Article llA, Chapter 2, Title 14 of the Georgia Business Corporation Code of the Official Code of Georgia Annotated, or as the same may be amended or re-codified from time to time, shall apply to the Corporation.

          Section 6. Shareholders' Right to Inspect Records. To the extent such limitation is permitted by law, a shareholder owning two percent or less of the outstanding shares of the Corporation shall have no right to inspect or copy excerpts from minutes of any meeting of the Board of Directors, records of any action of a committee of the Board of Directors while acting in place of the Board of Directors on behalf of the Corporation, minutes of any meeting of the shareholders, records of action taken by the shareholders or the Board of Directors without a meeting, the accounting records of the Corporation, and the record of shareholders.

ARTICLE VII
INDEMNIFICATION OF DIRECTORS & OFFICERS

          Section 1. Indemnification. The Corporation shall indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action, suit or proceeding (including, but not limited to, any action, suit or proceeding by or in the right of the Corporation), whether civil, criminal, administrative or investigative, by reason of the fact that he is or was a director, advisory director, officer, employee or agent of the Corporation or is or was acting at the request of the Corporation, or who was serving as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise, and shall advance expenses to such person reasonably incurred in connection therewith, to the fullest extent permitted by the relevant provisions of the Georgia Business Corporation Code, as such law presently exists or hereafter may be amended.

          Section 2. Purchase of Insurance. The Board of Directors may authorize the Corporation to purchase and maintain insurance on behalf of any person who is or was a director, officer, employee or agent of the Corporation, or is or was serving at the request of the Corporation as a director, officer, partner, trustee, employee or agent of another corporation, partnership, joint venture, trust, employee benefit plan, or other enterprise against liability asserted against him or incurred by him in any such capacity or arising out of his status as such whether or not the Corporation would have the power to indemnify him against such liability under the provisions of this Article VII or the Georgia Business Corporation Code.

EXH 3.1-13

ARTICLE VIII
ADVISORY DIRECTORS

          The Board of Directors of the Corporation may at its annual meeting, or from time to time thereafter, appoint any individual to serve as a member of an Advisory Board of Directors of the Corporation. Any individual appointed to serve as a member of an Advisory Board of Directors of the Corporation shall be permitted to attend all meetings of the Board of Directors and may participate in any discussion thereat, but such individual may not vote at any meeting of the Board of Directors or be counted in determining a quorum for such meeting. It shall be the duty of members of the Advisory Board of Directors of the Corporation to advise and provide general policy advice to the Board of Directors of the Corporation at such times and places and in such groups and committees as may be determined from time to time by the Board of Directors, but such individual shall not have any responsibility or be subject to any liability imposed upon a director or in any manner otherwise deemed a director. The compensation paid to members of the Advisory Board of Directors shall be determined from time to time by the Board of Directors of the Corporation. Each member of the Advisory Board of Directors, except in the case of his earlier death, resignation, retirement, disqualification or removal, shall serve until the next succeeding annual meeting of the Board of Directors and thereafter until his successor shall have been appointed.

ARTICLE IX
EMERITUS DIRECTORS

          Any director of the Corporation who is not an officer or employee of the Corporation and who has served as a director in such capacity for five or more years and has attained fifty-five (55) years of age shall be eligible to be appointed as a director emeritus upon his retirement or resignation. A director emeritus shall be entitled to serve for a term equal to said director's length of service as a member of the Board of Directors. The director emeritus shall have the right to attend and participate in discussions of the business of the Corporation at regular and special meetings of the Board of Directors but shall not be entitled to vote on any matter. The director emeritus shall be a goodwill ambassador on behalf of the Corporation and shall hold himself or herself available at mutually convenient times for consultation with members of the Board and senior management of the Corporation concerning the business and affairs of the Corporation.

ARTICLE X
AMENDMENTS

          The Board of Directors shall have power to amend or repeal the Bylaws or adopt new Bylaws, but any Bylaws adopted by the Board of Directors may be altered, amended or repealed, and new Bylaws adopted, by the shareholders. The shareholders may prescribe that any Bylaw or Bylaws adopted by them shall not be altered, amended or repealed by the Board of Directors. Action by the shareholders with respect to Bylaws shall be taken by an affirmative vote of a majority of the voting power of all shares entitled to elect directors, and action by the directors with respect to Bylaws shall be taken by an affirmative vote of a majority of all directors then holding office.

EXH 3.1-14

EX-10.4

AFLAC Incorporated Form 10-K

EXHIBIT 10.4

AFLAC INCORPORATED
SUPPLEMENTAL EXECUTIVE
RETIREMENT PLAN

EXH 10.4

TABLE OF CONTENTS
				Page
ARTICLE I			DEFINITIONS	1
	1.1	Actuarial Equivalent		1
	1.2	Administrative Committee		1
	1.3	Affiliate		1
	1.4	Annual Compensation		2
	1.5	Annual Retirement Benefit		2
	1.6	Average Annual Compensation		2
	1.7	Benefit Commencement Date		2
	1.8	Board		2
	1.9	Cause		2
	1.10	Change in Control		3
	1.11	Code		3
	1.12	Company		3
	1.13	Compensation Committee		3
	1.14	Confidential Information		4
	1.15	Contiguous Consulting Agreement		4
	1.16	Delayed Early Retirement Date		4
	1.17	Disability or Disabled		4
	1.18	Early Retirement Date		4
	1.19	Effective Date		4
	1.20	Eligible Employee		4
	1.21	Employment Date		5
	1.22	ERISA		5
	1.23	Final Base Pay		5
	1.24	Good Reason		5
	1.25	Grandfathered Participant		6
	1.26	Joint and 50% Survivor Annuity		6
	1.27	Normal Retirement Date		6
	1.28	Participant		6
	1.29	Participation Date		6
	1.30	Pension Plan		6
	1.31	Pension Plan Benefit		7
	1.32	Plan		7
	1.33	Qualifying Termination		7
	1.34	Single Life Annuity		7
	1.35	Surviving Spouse		7
	1.36	Total Payments		7
	1.37	Trade Secret		7
	1.38	Year of Employment		7
	1.39	Year of Participation		8
ARTICLE II			ELIGIBILITY AND PARTICIPATION	8
	2.1	Selection of Participants		8
	2.2	Cessation of Participation		8
	2.3	Termination of Employment Before Early Retirement Date;
		Removal from Participation		8

EXH 10.4-i

ARTICLE III			BENEFITS	9
	3.1	Eligibility for Benefits		9
	3.2	Normal Retirement Benefit		9
	3.3	Delayed Early Retirement Benefit		10
	3.4	Early Retirement Benefit		10
	3.5	Reduced Early Retirement Benefit		11
	3.6	Payment of Annual Retirement Benefit		11
	3.7	Change in Control		11
	3.8	Noncompetition		13
	3.9	Confidential Information		13
	3.10	Death Benefit		13
ARTICLE IV			CLAIMS	13
	4.1	Claims		13
ARTICLE V			SOURCE OF FUNDS	14
	5.1	Source of Funds		14
ARTICLE VI			ADMINISTRATIVE AND COMPENSATION COMMITTEES	15
	6.1	Action of Administrative Committee		15
	6.2	Rights and Duties of Administrative Committee		15
	6.3	Rights and Duties of Compensation Committee		15
	6.4	Compensation, Indemnity and Liability		16
	6.5	Taxes		16
ARTICLE VII			AMENDMENT AND TERMINATION	16
	7.1	Amendments		16
	7.2	Termination of Plan		16
ARTICLE VIII			MISCELLANEOUS	17
	8.1	Taxation		17
	8.2	No Employment Contract		17
	8.3	Headings		17
	8.4	Gender and Number		17
	8.5	Successors		17
	8.6	Legal Expenses		17
	8.7	Assignment of Benefits		18
	8.8	Legally Incompetent		18
	8.9	Governing Law		18

EXH 10.4-ii

AFLAC INCORPORATED
SUPPLEMENTAL EXECUTIVE
RETIREMENT PLAN

     Effective as of the 1st day of January, 2001, AFLAC Incorporated, a corporation duly organized and existing under the laws of the State of Georgia (the "Company"), hereby amends and restates the AFLAC Incorporated Supplemental Executive Retirement Plan (the "Plan").

BACKGROUND AND PURPOSE

     A. PURPOSE. The primary purpose of the Plan is to provide supplemental retirement income to selected executives of the Company and its affiliated companies.

     B. TYPE OF PLAN. The Plan constitutes an unfunded, nonqualified deferred compensation plan that benefits certain designated employees who are within a select group of key management or highly compensated employees.

STATEMENT OF AGREEMENT

     To establish the Plan with the purposes and goals as hereinabove described, the Company hereby sets forth the terms and provisions as follows:

ARTICLE I
DEFINITIONS

     For purposes of the Plan, the following terms, when used with an initial capital letter, shall have the meaning set forth below unless a different meaning plainly is required by the context.

     1.1 Actuarial Equivalent means an amount of equivalent value determined by applying the Unisex Pension 1984 Mortality Table and a 7% rate of interest; provided, consistent with the terms of Section 7.1, the Administrative Committee may, in its sole discretion from time to time, modify this rate of interest.

     1.2 Administrative Committee means the committee designated by the Compensation Committee to act on behalf of the Company to administer the Plan. If at any time the Compensation Committee has not designated an Administrative Committee, the Compensation Committee shall serve as the Administrative Committee. Subject to the limitation in Section 6.1 relating to decisions which affect solely their own benefits under the Plan, individuals who are management level employees and/or Participants may serve as members of the Administrative Committee.

     1.3 Affiliate means (i) any corporation or other entity that is required to be aggregated with the Company under Code Sections 414(b), (c), (m) or (o), and (ii) any other entity in which the Company has an ownership interest and which the Company designates as an Affiliate for purposes of the Plan.

EXH 10.4-1

     1.4 Annual Compensation means the amount actually paid to a Participant for services performed as an employee (but not as a consultant) during a relevant calendar year as wages, salaries for professional services, and cash bonuses. Annual Compensation for a relevant calendar year shall also include compensation (i) contributed by the Company on behalf of a Participant pursuant to a salary reduction agreement which is not includable in the gross income of the Participant under Code Sections 125, 402(a)(8) or 402(h), or (ii) deferred by the Company on behalf of a Participant pursuant to a salary reduction agreement under the AFLAC Incorporated Executive Deferred Compensation Plan.

     1.5 Annual Retirement Benefit means the annual amount payable to a retired Participant as determined pursuant to the terms of Article III.

     1.6 Average Annual Compensation means, for each Participant, the average of his Annual Compensation for the 3-consecutive-calendar year period in the final 10-consecutive-calendar year period of employment with the Company and its Affiliates that yields the highest average. For purposes hereof, the Participant's Annual Compensation for the calendar year in which the Participant terminates employment with the Company and all of its Affiliates shall be taken into account only if such termination occurs as of December 31 of such year.

     1.7 Benefit Commencement Date means the first day of the calendar month coinciding with or next following the date on which a Participant becomes entitled to receive or begin receiving an Annual Retirement Benefit under Section 3.2, 3.3, 3.4 or 3.5.

     1.8 Board means the Board of Directors of the Company.

     1.9 Cause means, in connection with a Participant's termination of employment and/or removal from participation in the Plan (whether by action of his employer or the Compensation Committee, or by the Participant's resignation for other than Good Reason in anticipation of such action for Cause to terminate his employment or participation) (i) the continued failure by the Participant to substantially perform the Participant's duties with the Company or an Affiliate of the Company (other than any such failure resulting from the Participant's incapacity due to physical or mental illness or any such actual or anticipated failure after a Participant gives a notice of termination of employment for Good Reason) after a written demand for substantial performance is delivered to the Participant by the Board, which demand specifically identifies the manner in which the Board believes that the Participant has not substantially performed the Participant's duties; (ii)&nbs p;the engaging by the Participant in conduct that is demonstrably and materially injurious to the Company or its subsidiaries, monetarily or otherwise; or (iii) the Participant's conviction of, or plea of guilty or no contest to, a felony or crime involving moral turpitude. Notwithstanding the foregoing, a termination for Cause shall not be deemed to have occurred under clause (i) or (ii) unless and until there shall have been delivered to the Participant a copy of a resolution duly adopted by the affirmative vote of a majority of the entire membership of the Board at a meeting of the Board called and held for such purpose (after reasonable notice to the Participant and an opportunity for him, together with his counsel, to be heard before the Board), finding that, in the good faith opinion of the Board, the Participant engaged in conduct set forth above and specifying the particulars thereof in detail.

EXH 10.4-2

     1.10 Change in Control means the occurrence of any of the following events:

          (a) Any Person is or becomes the beneficial owner, directly or indirectly, of securities of the Company representing 30% or more of the combined voting power of the Company's then outstanding securities; provided, for purposes of this subsection (a), securities acquired directly from the Company or its Affiliates shall not be taken into account as securities beneficially owned by such Person;

          (b) During any period of 2 consecutive years, individuals who at the beginning of such period constitute the Board and any new director (other than a director designated by a Person who has entered into an agreement with the Company to effect a transaction described in subsection (a), (c) or (d) hereof) whose election by the Board or nomination for election by the Company's shareholders was approved by a vote of at least two-thirds (2/3) of the directors then still in office who either were directors at the beginning of the period or whose election or nomination for election was previously so approved, cease for any reason to constitute a majority thereof;

          (c) The shareholders of the Company approve a merger or consolidation of the Company with any other corporation, other than (i) a merger or consolidation which would result in the voting securities of the Company outstanding immediately prior thereto continuing to represent (either by remaining outstanding or by being converted into voting securities of the surviving entity), in combination with the ownership of any trustee or other fiduciary holding securities under an employee benefit plan of the Company, at least 75% of the combined voting power of the voting securities of the Company or such surviving entity outstanding immediately after such merger or consolidation; or (ii) a merger or consolidation effected to implement a recapitalization of the Company (or similar transaction) in which no Person acquires more than 50% of the combined voting power of the Company's then outstanding securities; or

          (d) The shareholders of the Company approve a plan of complete liquidation of the Company or an agreement for the sale or disposition by the Company of all or substantially all the Company's assets.

     As used herein, the term "Person" shall have the meaning given in Section 3(a)(9) of the Securities Exchange Act of 1934, as modified and used in Sections 13(d) and 14(d) thereof; provided, a Person shall not include (i) the Company or any of its subsidiaries; (ii) a trustee or other fiduciary holding securities under an employee benefit plan of the Company or any of its subsidiaries; (iii) an underwriter temporarily holding securities pursuant to an offering of such securities; or (iv) a corporation owned, directly or indirectly, by the shareholders of the Company in substantially the same proportions as their ownership of stock of the Company.

     1.11 Code means the Internal Revenue Code of 1986, as amended.

     1.12 Company means AFLAC Incorporated, a Georgia corporation with its principal place of business in Columbus, Georgia.

     1.13 Compensation Committee means the Compensation Committee of the Board.

EXH 10.4-3

     1.14 Confidential Information means (i) all Trade Secrets; and (ii) any other information that is material to the Company and not generally available to the public, including, without limitation, information concerning the Company's methods and plans of operation, production processes, marketing and sales strategies, research and development, know-how, computer programming, style and design technology and plans, non-published product specifications, patent applications, product and raw material costs, pricing strategies, business plans, financial data, personnel records, suppliers and customers (whether or not such information constitutes a Trade Secret).

     1.15 Contiguous Consulting Agreement means a written consulting agreement between the Company (and/or an Affiliate) and a Participant that (i) commences immediately upon the Participant's termination of employment with the Company and all Affiliates, (ii) obligates the Participant to perform consulting services for the Company or an Affiliate for a specified period, and (iii) is approved by the Company's Chief Executive Officer or the Compensation Committee.

     1.16 Delayed Early Retirement Date means (i) for a Participant whose Participation Date occurred before August 11, 1992, the date the Participant attains age 60; and (ii) for a Participant whose Participation Date occurred on or after August 11, 1992, the latest of (A) the date the Participant attains age 60, (B) the date the Participant completes 15 Years of Employment, or (C) the date the Participant completes 5 consecutive Years of Participation (that is, for a Participant who has continuously been an active Participant in the Plan since his Participation Date, the 5th anniversary of such date).

     1.17 Disability or Disabled means that a Participant is, in the opinion of the Compensation Committee, wholly prevented from performing the duties assigned to such Participant by the Company or Affiliate employing such Participant, by reason of a medically determinable physical or mental impairment which can be expected to result in death or to be of long-continued and indefinite duration. In making such determination, the Compensation Committee, in its sole discretion, may require such medical proof as it deems necessary, including the certificate of one or more licensed physicians selected by the Compensation Committee. The decision of the Compensation Committee as to Disability shall be final and binding.

     1.18 Early Retirement Date means (i) for a Participant whose Participation Date occurred before August 11, 1992, the date the Participant attains age 55; and (ii) for a Participant whose Participation Date occurred on or after August 11, 1992, the latest of (A) the date the Participant attains age 55, (B) the date the Participant completes 15 Years of Employment, or (C) the date the Participant completes 5 consecutive Years of Participation (that is, for a Participant who has continuously been an active Participant in the Plan since his Participation Date, the 5th anniversary of such date).

     1.19 Effective Date means January 1, 2001, the date as of which this restatement shall be effective. (The Plan was initially effective on October 1, 1989 and previously restated effective as January 1, 1998.)

     1.20 Eligible Employee means an Employee who is a member of a select group of highly compensated or key management employees of the Company or an Affiliate.

EXH 10.4-4

     1.21 Employment Date means, with respect to an Eligible Employee, the date his employment with the Company or an Affiliate first commenced (whether or not he was an Eligible Employee on such date); provided, if an individual ceases to be an employee of the Company and all Affiliates for any reason and subsequently is reemployed by the Company and/or an Affiliate, his Employment Date shall be the date his employment recommences (unless the Compensation Committee designates an earlier date).

     1.22 ERISA means the Employee Retirement Income Security Act of 1974, as amended.

     1.23 Final Base Pay means the highest annual base salary (excluding bonuses) paid to a Participant during any of the 3 calendar years immediately preceding the calendar year in which the Participant terminates employment with the Company and all of its Affiliates.

     1.24 Good Reason means the occurrence after a Change in Control of any of the following circumstances, unless the Participant expressly consents to such circumstance in writing or, in the case of a circumstance described in subsection (a), (e) or (f) hereof, such circumstance is fully corrected prior to the date the Participant terminates employment:

          (a) The assignment to the Participant of any duties inconsistent with the position he held in the Company (or any subsidiary or Affiliate of the Company) immediately prior to the Change in Control, or a significant adverse alteration in the nature or status of his responsibilities from those in effect immediately prior to such change;

          (b) A reduction by the Company and all Affiliates in the Participant's annual base salary, or a reduction by the Company and all Affiliates in the Participant's total compensation, as in effect immediately prior to the Change in Control or as the same may be increased from time to time;

          (c) The relocation of the Company's principal executive offices to a location outside the Columbus, Georgia Metropolitan Area (or, if different, the metropolitan area in which such offices are located immediately prior to the Change in Control); or the Company's requiring the Participant to be based anywhere other than the Company's principal executive offices except for required travel on the Company's business to an extent substantially consistent with the Participant's business travel obligations immediately prior to the Change in Control;

          (d) The failure by the Company and all Affiliates to pay to the Participant any portion of his current compensation within 7 days of the date such compensation is due;

          (e) The failure by the Company and all Affiliates to continue in effect any compensation plan in which the Participant participates immediately prior to the Change in Control and which is material to the Participant's total compensation, unless an equitable arrangement (embodied in an ongoing substitute or alternative plan) has been made with respect to such plan; or the failure by the Company and all Affiliates to continue the Participant's participation therein (or in such substitute or alternative plan) on a basis not materially less favorable, both in terms of the amount of benefits provided and the level of the Participant's participation relative to other participants, as existed at the time of the Change in Control; or

EXH 10.4-5

          (f) The failure by the Company and all Affiliates to continue to provide the Participant with benefits substantially similar to those enjoyed by him under any of the Company's life insurance, medical, health and accident, or disability plans in which he was participating at the time of the Change in Control; the taking of any action by the Company or an Affiliate which would directly or indirectly materially reduce any of such benefits or deprive the Participant of any material fringe benefit enjoyed by him at the time of the Change in Control; or the failure by the Company and all Affiliates to provide the Participant with the number of paid vacation days to which he is entitled on the basis of years of service with the Company and all Affiliates in accordance with the Company's or Affiliate's normal vacation policy in effect at the time of the Change in Control.

     A Participant's right to terminate his employment for Good Reason shall not be affected by the Participant's incapacity due to physical or mental illness. The Participant's continued employment shall not constitute consent to, or a waiver of rights with respect to, any act or failure to act constituting Good Reason hereunder.

     1.25 Grandfathered Participant means a Participant who was an active Participant in the Plan on December 31, 1997.

     1.26 Joint and 50% Survivor Annuity means the Actuarial Equivalent of a Participant's Annual Retirement Benefit payable monthly during the Participant's lifetime (commencing as of his Benefit Commencement Date and ending with the payment due as of the first day of the month during which the Participant dies), with 50% of such monthly benefit amount continuing after his death (beginning as of the first day of the month following the month in which he dies) to his Surviving Spouse (if the Surviving Spouse survives the Participant) for such Surviving Spouse's remaining lifetime. Payments shall cease after the payment due on the first day of the month coinciding with or immediately preceding the later of the Participant's death or his Surviving Spouse's death.

     1.27 Normal Retirement Date means (i) for a Participant whose Participation Date occurred before August 11, 1992, the date the Participant attains age 65; and (ii) for a Participant whose Participation Date occurred on or after August 11, 1992, the latest of (A) the date the Participant attains age 65, (B) the date the Participant completes 15 Years of Employment, or (C) the date the Participant completes 5 consecutive Years of Participation (that is, for a Participant who has continuously been an active Participant in the Plan since his Participation Date, the 5th anniversary of such date).

     1.28 Participant means an active Participant or retired Participant who has a benefit payable under the Plan.

     1.29 Participation Date means, with respect to each Eligible Employee who is designated as a Participant, the date his participation in the Plan commences (see Section 2.1); provided, if an Eligible Employee ceases to be an active Participant for any reason and subsequently is again designated as a Participant, his Participation Date shall be the date his active participation recommences (unless the Compensation Committee designates an earlier date).

     1.30 Pension Plan means the AFLAC Incorporated Pension Plan, a defined benefit plan qualified under Code Section 401(a), as such plan may be amended from time to time.

EXH 10.4-6

     1.31 Pension Plan Benefit means the Actuarial Equivalent of a Participant's accrued benefit under the Pension Plan, calculated as if that benefit was payable annually for the life of the Participant commencing on the Participant's Benefit Commencement Date.

     1.32 Plan means the AFLAC Incorporated Supplemental Executive Retirement Plan, as contained herein and all amendments hereto. The Plan is intended to be an unfunded, nonqualified deferred compensation plan covering certain designated employees who are within a select group of key management or highly compensated employees.

     1.33 Qualifying Termination means a Participant's termination of employment with the Company and all Affiliates following a Change in Control, unless such termination of employment is (i) because of the Participant's death or Disability, (ii) by the Company or an Affiliate for Cause, or (iii) by the Participant other than for Good Reason.

     1.34 Single Life Annuity means the Actuarial Equivalent of a Participant's Annual Retirement Benefit payable monthly during the Participant's lifetime, commencing as of his Benefit Commencement Date and ending after the payment due on the first day of the month coinciding with or immediately preceding the date of his death.

     1.35 Surviving Spouse means, with respect to a Participant, the person who is treated as married to such Participant under the laws of the state in which the Participant resides. The determination of a Participant's Surviving Spouse shall be made as of the date of such Participant's termination of employment.

     1.36 Total Payments has the meaning as defined in Section 3.7(e).

     1.37 Trade Secret means information of or about the Company that would be considered a trade secret under Georgia law; namely, that information which (i) derives economic value, actual or potential, from not being generally known to, and not being readily ascertainable through proper means by, other persons who can obtain economic value from its disclosure or use; and (ii) is the subject of efforts that are reasonable under the circumstances to maintain its secrecy. Trade Secrets may include, but shall not be limited to, technical or nontechnical data, a formula, pattern, compilation, program, device, method, technique, drawing or process, financial data or plans, product plans, or a list of actual or potential customers or suppliers.

     1.38 Year of Employment means, with respect to an Eligible Employee, a 12-month period, beginning on his Employment Date or on any anniversary thereof, during which such Eligible Employee either (i) remains continuously employed by, or engaged to provide full-time service to, the Company and/or an Affiliate, or (ii) is subject to the terms of a Contiguous Consulting Agreement. If an individual ceases to be an employee or consultant of the Company and all Affiliates for any reason and subsequently is reemployed or reengaged by the Company and/or an Affiliate, his previously earned Years of Employment shall be taken into account only to the extent (if any) specified by the Compensation Committee.

EXH 10.4-7

     1.39 Year of Participation means, with respect to a Participant, a 12-month period, beginning on his Participation Date or on any anniversary thereof, during which such Participant continues to actively participate in, and to thereby accrue benefits under, the Plan. If an individual ceases to be a Participant for any reason and subsequently is readmitted to participation in the Plan, his previously earned Years of Participation shall be taken into account only to the extent (if any) specified by the Compensation Committee.

ARTICLE II
ELIGIBILITY AND PARTICIPATION

     2.1 Selection of Participants.

          The Compensation Committee, in its sole discretion, shall designate which Eligible Employees shall become Participants in the Plan and, for each such Eligible Employee, his Participation Date. The Administrative Committee then shall set forth the name of each Participant on Schedule A hereto. Notwithstanding anything herein to the contrary, all aspects of the selection of Participants shall be in the sole discretion of the Compensation Committee and regardless of title, duties or any other factors, there shall be no requirement whatsoever that any individual or group of individuals be allowed to participate herein.

     2.2 Cessation of Participation.

          Unless the Compensation Committee specifies otherwise, a Participant's active participation in the Plan shall cease at the time his employment with the Company and all Affiliates terminates for any reason (whether or not he enters into a Contiguous Consulting Agreement), such that he shall not accrue any additional benefit under the Plan. In addition, subject to Section 3.7(b), the Compensation Committee, in its sole discretion, may remove any Participant from participation in the Plan due to Cause. Any such removal shall be effective as of the later of (i) the date that the Compensation Committee has taken such action, or (ii) the effective date that the Compensation Committee specifies for such action. A Participant who remains entitled to benefits under the Plan after he terminates employment with the Company and its Affiliates shall remain a retired Participant as long as he is entitled to any portion of his benefits as described in the Plan. During the period a former employee, who completed at least 5 Years of Participation while an Eligible Employee, is subject to the terms of a Contiguous Consulting Agreement, he shall remain an active Participant potentially eligible pursuant to the terms of Section 3.5; provided, during such period, he shall not accrue any additional benefit under the Plan nor shall he earn any credits towards a Year of Participation.

     2.3 Termination of Employment Before Early Retirement Date; Removal from Participation.

          (a) Termination Before Early Retirement Date. Except as provided in Section 3.5 or 3.7, upon a Participant's termination of employment with the Company and all Affiliates before his Early Retirement Date, neither the Participant nor his Surviving Spouse (if any) shall be entitled to any benefit or payment under the Plan.

EXH 10.4-8

          (b) Removal from Participation. Notwithstanding anything herein to the contrary, if the Compensation Committee determines, in its sole discretion, that either (i) a Participant's employment or participation in the Plan was terminated by the Company, an Affiliate or the Compensation Committee for Cause, or (ii) the Participant resigned for other than Good Reason in anticipation of such action for Cause to terminate his employment or participation, then the Participant and/or his Surviving Spouse shall forfeit all rights and entitlements under the Plan. The decision of the Compensation Committee as to whether the Participant's discharge or removal was for Cause will be final and binding; provided, no dispute over the reason for such discharge shall affect the finality of the discharge of the Participant by the Company or Affiliate.

ARTICLE III
BENEFITS

     3.1 Eligibility for Benefits.

          Subject to the terms of Section 2.3, a Participant or Surviving Spouse shall be eligible to receive the amount, if any, determined in accordance with the terms of this Article.

     3.2 Normal Retirement Benefit.

          (a) General Formula. Upon a Participant's termination of employment with the Company and all Affiliates on or after his Normal Retirement Date for any reason other than Cause or death, the Participant shall be entitled to an Annual Retirement Benefit in an amount equal to the difference between the amount determined under subsection (a)(i) and the amount determined under subsection (a)(ii), as follows:

(i)	60% of the Participant's Average Annual Compensation; and
(ii)	the Participant's Pension Plan Benefit.

          (b) Grandfathered Benefits. Notwithstanding the terms of subsection (a) hereof, the Annual Retirement Benefit of any Grandfathered Participant who terminates employment on or after his Normal Retirement Date for any reason other than Cause or death shall be the greater of the amount determined under subsection (a) hereof or an amount equal to the difference between the amount determined under subsection (b)(i) and the amount determined under subsection (b)(ii), as follows:

(i)	65% of the Participant's Final Base Pay; and
(ii)	the Participant's Pension Plan Benefit.

EXH 10.4-9

     3.3 Delayed Early Retirement Benefit.

          (a) General Formula. Upon a Participant's termination of employment with the Company and all Affiliates on or after his Delayed Early Retirement Date but before his Normal Retirement Date for any reason other than Cause or death, the Participant shall be entitled to an Annual Retirement Benefit in an amount equal to the difference between the amount determined under subsection (a)(i) and the amount determined under subsection (a)(ii), as follows:

(i)	50% of the Participant's Average Annual Compensation; and
(ii)	the Participant's Pension Plan Benefit.

          (b) Grandfathered Benefits. Notwithstanding the terms of subsection (a), the Annual Retirement Benefit of any Grandfathered Participant who terminates employment on or after his Delayed Early Retirement Date but before his Normal Retirement Date for any reason other than Cause or death shall be the greater of the amount determined under subsection (a) hereof or an amount equal to the difference between the amount determined under subsection (b)(i) and the amount determined under subsection (b)(ii), as follows:

(i)	50% of the Participant's Final Base Pay; and
(ii)	the Participant's Pension Plan Benefit.

     3.4 Early Retirement Benefit.

          (a) General Formula. Upon a Participant's termination of employment with the Company and all Affiliates on or after his Early Retirement Date but before his Delayed Early Retirement Date for any reason other than Cause or death, the Participant shall be entitled to an Annual Retirement Benefit in an amount equal to the difference between the amount determined under subsection (a)(i) and the amount determined under subsection (a)(ii), as follows:

(i)	40% of the Participant's Average Annual Compensation; and
(ii)	the Participant's Pension Plan Benefit.

          (b) Grandfathered Benefits. Notwithstanding the terms of subsection (a), the Annual Retirement Benefit of any Grandfathered Participant who terminates employment on or after his Early Retirement Date but before his Delayed Early Retirement Date for any reason other than Cause or death shall be the greater of the amount determined under subsection (a) hereof or an amount equal to the difference between the amount determined under subsection (b)(i) and the amount determined under subsection (b)(ii), as follows:

(i)	50% of the Participant's Final Base Pay; and
(ii)	the Participant's Pension Plan Benefit.

EXH 10.4-10

     3.5 Reduced Early Retirement Benefit.

          Upon a Participant's attainment of his Early Retirement Date after his termination of employment but while he is subject to the terms of a Contiguous Consulting Agreement, the Participant shall be entitled to an Annual Retirement Benefit that is the product of (i) the Annual Retirement Benefit to which the Participant would have been entitled had he remained actively employed by the Company or an Affiliate as a Participant until his Early Retirement Date, and (ii) a fraction, (A) the numerator of which is the number of complete and partial 12-month periods of employment with the Company and its Affiliates completed by the Participant as of the date of his termination of employment, and (B) the denominator of which is the number of complete and partial 12-month periods between the Participant's first day of employment with the Company and its Affiliates and the Participant's Early Retirement Date.

     3.6 Payment of Annual Retirement Benefit.

          (a) Commencement. A Participant's Annual Retirement Benefit shall commence as soon as practicable after the Participant's Benefit Commencement Date.

          (b) Normal Form of Payment. Except as provided in subsection (c) hereof, a Participant's Annual Retirement Benefit shall be paid in the form of a Single Life Annuity, commencing on the Participant's Benefit Commencement Date.

          (c) Optional Form of Payment. A Participant may elect, not later than 6 months before his termination of employment with the Company and all Affiliates, to have his Annual Retirement Benefit paid in the form of a Joint and 50% Survivor Annuity, which shall be the Actuarial Equivalent of the Participant's Annual Retirement Benefit payable in the form of a Single Life Annuity. Notwithstanding any such election, if a Participant who has elected a Joint and 50% Survivor Annuity is not married on the date of his termination of employment, his benefit shall be paid in the form of a Single Life Annuity.

          (d) Cash Payments. All benefit payments hereunder shall be made in cash.

     3.7 Change in Control.

          (a) General. In the event of a Change in Control, the provisions of this Section shall apply to each Participant who was an active Participant in the Plan immediately preceding the date of the Change in Control.

          (b) Restriction on Changes. For a period of 3 years following a Change in Control, (i) no Participant may be removed from participation in the Plan pursuant to the terms of Section 2.2, and (ii) the Plan may not be terminated or amended in any manner which would adversely affect in any way the amount of, or the entitlement to, retirement benefits hereunder or remove a Participant from participation hereunder. Notwithstanding any other provisions of the Plan, the foregoing provisions of this subsection may not be amended following a Change in Control without the written consent of a majority in both number and interest of the Participants who are actively employed by the Company or any Affiliate, both immediately prior to the Change in Control and at the date of such amendment.

EXH 10.4-11

          (c) Termination Within Two Years of a Change in Control. If a Participant's employment with the Company and all Affiliates terminates during the 2-year period immediately following the Change in Control and such termination of employment constitutes a Qualifying Termination, the Company shall pay to the Participant, no later than the fifth day following the date of the Participant's Qualifying Termination, a lump-sum cash amount that is the Actuarial Equivalent (determined as of the date of the Qualifying Termination) of the Annual Retirement Benefit to which the Participant would have been entitled had he remained in the employ of the Company or an Affiliate as a Participant in the Plan (i) until he attained his Early Retirement Date, in the case of a Participant who had not yet attained his Early Retirement Date as of the date of his Qualifying Termination, (ii) until he had attained his Delayed Early Retirement Date, in the case of a Participant who had attained his Early Retirement Date but not his Delayed Early Retirement Date as of the date of the Qualifying Termination, or (iii) until he had attained his Normal Retirement Date, for a participant who had attained his Delayed Early Retirement Date but not his Normal Retirement Date as of the date of the Qualifying Termination.

          (d) Termination or Removal More than Two Years after a Change in Control. If after the 2-year period immediately following a Change in Control and before a Participant's Early Retirement Date (i) the Participant's employment with the Company and all Affiliates terminates and such termination constitutes a Qualifying Termination, or (ii) the Participant is removed from participation in the Plan (pursuant to the terms of Section 2.2 but subject to the terms of subsection (b) hereof), the Company shall pay to the Participant, no later than the fifth day following the date of the Participant's Qualifying Termination or removal from the Plan, a lump-sum cash amount that is the Actuarial Equivalent (determined as of the date of the Qualifying Termination or removal) of the product of (i) the Annual Retirement Benefit to which the Participant would have been entitled had he remained in the employ of the Company or an Affiliate as a Participant in the Plan until his Early Retirement Date, and (ii) a fraction, (A) the numerator of which is the number of complete and partial 12-month periods of employment with the Company and its Affiliates completed by the Participant as of the date of the Qualifying Termination or removal from participation, and (B) the denominator of which is the number of complete and partial 12-month periods between the Participant's first day of employment with the Company and its Affiliates and the Participant's Early Retirement Date.

          (E) Limitations on Payments. Notwithstanding any other provisions of the Plan, in the event that any payment or benefit received or to be received by a Participant in connection with a Change in Control or the termination of the Participant's employment, whether pursuant to the terms of the Plan or any other plan, arrangement or agreement with the Company or entity whose actions result in a Change in Control or any affiliate of the Company or such entity (all such payments and benefits, including the payments under this Section 3.7, being hereinafter called "Total Payments") would not be deductible (in whole or part) by the Company, an affiliate or entity making such payment or providing such benefit, as a result of Code Section 280G, then, to the extent necessary to make such portion of the Total Payments deductible (and after taking into account any reduction in the Total Payments made on account of Code Section 280G in such other plan, a rrangement or agreement), the payment described in this Section shall be reduced (if necessary, to zero). For purposes of this limitation (i) no portion of the Total Payments shall be taken into account which in the opinion of tax counsel selected by the Company's independent auditors and reasonably acceptable to the Participant does not constitute a "parachute payment" within the meaning of Code Section 280G(b)(2), including by reason of Code Section 280G(b)(4)(A); (ii) the payment under this Section shall be reduced only to the extent necessary so that the Total Payments are not subject to disallowance as deductions, in the opinion of the tax counsel referred to in clause (i); and (iii) the value of any non-cash benefit or any deferred payment or benefit included in the Total Payments shall be determined by the Company's independent auditors in accordance with the principles of Code Sections 280G(d)(3) and (4).

EXH 10.4-12

     3.8 Noncompetition.

          The payment of Annual Retirement Benefits to a Participant under the Plan shall immediately cease and be forfeited if the Participant, without the prior consent of the Board, directly or indirectly renders advisory or any other services to, or becomes employed by, or participates or engages in any business competitive with any of the business activities of the Company (or any subsidiary or Affiliate of the Company) in any states or foreign countries in which the Company or any of its subsidiaries or Affiliates do business. For purposes of this Section, "participates or engages" in means acting as an agent, consultant, representative, officer, director, member, independent contractor or employee; or as an owner, partner, limited partner, joint venturer, creditor or shareholder (except as a shareholder holding no more than a 1% interest in a publicly traded entity). As a condition to receiving or continuing to receive benefit payments hereunder, the Compensation Committee, in its sole discretion and at any time, may require any Participant to enter into a noncompete and/or nonsolicitation agreement with such terms and provisions as the Compensation Committee may dictate.

     3.9 Confidential Information.

          The payment of an Annual Retirement Benefit to a Participant under the Plan shall immediately cease and be forfeited if the Participant, at any time during or following the Participant's employment with the Company or its Affiliates, discloses any Confidential Information to any other person or entity (except employees of the Company and its Affiliates) without the prior written consent of the Board or Compensation Committee.

     3.10 Death Benefit.

          In the event a Participant dies after attaining his Early Retirement Date but before his Benefit Commencement Date, his Surviving Spouse (if any) shall be entitled to receive, commencing as of the first day of the month coinciding with or immediately following the date of the Participant's death, an annual survivor benefit in an amount determined as if the Participant had retired on the day immediately preceding his death and had elected to receive a Joint and 50% Survivor Annuity.

ARTICLE IV
CLAIMS

     4.1 Claims.

          (a) Initial Claim. Claims for benefits under the Plan may be filed in writing with the Compensation Committee. The Compensation Committee shall furnish to the claimant written notice of the disposition of a claim within 90 days after the application therefor is filed; provided, if special circumstances require an extension, the Compensation Committee may extend such 90-day period by up to an additional 90 days, by providing a notice of such extension to the claimant before the end of the initial 90-day period. In the event the claim is denied, the notice of the disposition of the claim shall provide the specific reasons for the denial, citations of the pertinent provisions of the Plan, and, where appropriate, an explanation as to how the claimant can perfect the claim and/or submit the claim for review.

EXH 10.4-13

          (b) Appeal. Any Participant or Surviving Spouse who has been denied a benefit shall be entitled, upon request to the Compensation Committee, to appeal the denial of his claim. The claimant (or his duly authorized representative) may review pertinent documents related to the Plan and in the Compensation Committee's possession in order to prepare the appeal. The request for review, together with a written statement of the claimant's position, must be filed with the Compensation Committee no later than 60 days after receipt of the written notification of denial of a claim provided for in subsection (a). The Compensation Committee's decision shall be made within 60 days following the filing of the request for review; provided, if special circumstances require an extension, the Compensation Committee may extend such 60-day period by up to an additional 60 days, by providing a notice of such extension to the claimant before the end of the i nitial 60-day period. If unfavorable, the notice of decision shall explain the reasons for denial and indicate the provisions of the Plan or other documents used to arrive at the decision.

          (c) Satisfaction of Claims. Any payment to a Participant or Surviving Spouse shall to the extent thereof be in full satisfaction of all claims hereunder against the Compensation Committee, the Company, and all Affiliates, any of which may require such Participant or Surviving Spouse as a condition to such payment to execute a receipt and release therefor in such form as shall be determined by the Compensation Committee. If receipt and release is required but the Participant or Surviving Spouse (as applicable) does not provide such receipt and release in a timely enough manner to permit a timely distribution in accordance with the general timing of distribution provisions in the Plan, the payment of any affected distribution(s) may be delayed until the Compensation Committee receives a proper receipt and release.

ARTICLE V
SOURCE OF FUNDS

     5.1 Source of Funds.

          (a) Allocation Among Affiliates. The obligation to pay benefits hereunder shall be the obligation of the Company and its Affiliates that participate in the Plan and whose employees are Participants entitled to benefits hereunder. The Compensation Committee shall allocate the total liability to pay benefits under the Plan among the Company and its Affiliates that participate in the Plan in such manner and amount as the Compensation Committee in its sole discretion deems appropriate.

          (b) General Creditors. Each of the Company and its Affiliates shall provide the benefits described in the Plan and allocable to such entity pursuant to the terms of subsection (a) hereof from its general assets. The Company's and Affiliates' obligations to pay benefits under the Plan constitute mere promises of the Company and its Affiliates to pay such benefits; and a Participant or Surviving Spouse shall be and remain no more than an unsecured, general creditor of the Company.

EXH 10.4-14

ARTICLE VI
ADMINISTRATIVE AND COMPENSATION COMMITTEES

     6.1 Action of Administrative Committee.

          Action of the Administrative Committee may be taken with or without a meeting of committee members; provided, action shall be taken only upon the vote or other affirmative expression of a majority of the committee members qualified to vote with respect to such action. If a member of the committee is a Participant or Surviving Spouse, he shall not participate in any decision which solely affects his own benefit under the Plan. For purposes of administering the Plan, the Administrative Committee shall choose a secretary who shall keep minutes of the committee's proceedings and all records and documents pertaining to the administration of the Plan. The secretary may execute any certificate or any other written direction on behalf of the Administrative Committee.

     6.2 Rights and Duties of Administrative Committee.

          The Administrative Committee shall administer the Plan and shall have all powers necessary to accomplish that purpose, including (but not limited to) the following:

          (a) To maintain all the necessary records of the administration of the Plan;

          (b) To maintain records regarding Participants' and Surviving Spouses' benefits hereunder;

          (c) To effect all disbursements approved by the Compensation Committee pursuant to the Plan;

          (d) To delegate to other individuals or entities from time to time the performance of any of its duties or responsibilities hereunder; and

          (e) To hire agents, accountants, actuaries, consultants and legal counsel to assist in operating and administering the Plan.

     6.3 Rights and Duties of Compensation Committee.

          The Compensation Committee shall have the exclusive right to construe and to interpret the Plan, to decide all questions of eligibility for benefits and to determine the amount of such benefits, and its decisions on such matters shall be final and conclusive on all parties. The Compensation Committee may establish rules for the regulation of the Plan as are not inconsistent with the terms hereof.

EXH 10.4-15

     6.4 Compensation, Indemnity and Liability.

          The Compensation Committee, the Administrative Committee and their members shall serve as such without bond and without compensation for services hereunder. All expenses of the Compensation Committee and the Administrative Committee shall be paid by the Company. No member of either committee shall be liable for any act or omission of any other member of the committee, nor for any act or omission on his own part, excepting his own willful misconduct. The Company shall indemnify and hold harmless the Compensation Committee, the Administrative Committee and each member thereof against any and all expenses and liabilities, including reasonable legal fees and expenses, arising out of his membership on the committee, excepting only expenses and liabilities arising out of his own willful misconduct.

     6.5 Taxes.

          If the whole or any part of any Participant's or Surviving Spouse's benefit hereunder shall become subject to any estate, inheritance, income or other tax which the Company or an Affiliate shall be required to pay or withhold, the Company and such Affiliate shall have the full power and authority to withhold and pay such tax out of any monies or other property in its hand for the account of the Participant or Surviving Spouse whose interests hereunder are so affected. Prior to making any payment, the Company and Affiliates may require such releases or other documents from any lawful taxing authority as they shall deem necessary.

ARTICLE VII
AMENDMENT AND TERMINATION

     7.1 Amendments.

          Subject to Section 3.7(b), the Board or the Compensation Committee may amend the Plan in whole or in part at any time and from time to time. An amendment to the Plan may modify its terms in any respect whatsoever; provided, the Board may not amend the Plan to decrease the level of benefits which a Participant or Surviving Spouse would be entitled to receive under Article III, if he terminated employment with the Company and all Affiliates on the later of (i) the date such amendment is adopted, or (ii) the date such amendment is effective.

     7.2 Termination of Plan.

          Subject to Section 3.7(b), the Board shall have the right to discontinue and terminate the Plan at any time, for any reason; provided, such discontinuance or termination shall not have the effect of decreasing the level of benefits which a Participant would be entitled to receive under Article III, if he terminated employment with the Company and all Affiliates on the later of (i) the date the resolution to terminate and discontinue the Plan is adopted, or (ii) the date the termination and discontinuance is effective. Termination and discontinuance of the Plan shall be binding on all Participants and Surviving Spouses.

EXH 10.4-16

ARTICLE VIII
MISCELLANEOUS

     8.1 Taxation.

          It is the intention of the Company and Affiliates that the benefits payable hereunder shall not be deductible by the Company or Affiliates nor taxable for federal income tax purposes to Participants or Surviving Spouses until such benefits are paid by the Company or Affiliates to such Participants or Surviving Spouses. When such benefits are so paid, it is the intention of the Company and Affiliates that they shall be deductible by the Company and Affiliates under Code Section 162.

     8.2 No Employment Contract.

          Nothing herein contained is intended to be nor shall be construed as constituting a contract arrangement between the Company or any Affiliate and any Participant to the effect that the Participant will be employed or engaged as a consultant by the Company or any Affiliate for any specific period of time.

     8.3 Headings.

          The headings of the various articles and sections in the Plan are solely for convenience and shall not be relied upon in construing any provisions hereof. Any reference to a section shall refer to a section of the Plan unless specified otherwise.

     8.4 Gender and Number.

          Use of any gender in the Plan will be deemed to include all genders when appropriate, and use of the singular number will be deemed to include the plural when appropriate, and vice versa in each instance.

     8.5 Successors.

          The Company and the Affiliates shall require any successor (whether direct or indirect, by purchase, merger, consolidation or otherwise) to all or substantially all of the business and/or assets of the Company and/or the Affiliates to expressly assume their obligations hereunder in the same manner and to the same extent that the Company and the Affiliates would be required to perform if no such succession had taken place.

     8.6 Legal Expenses.

          The Company shall pay or reimburse a Participant for all fees and disbursements of counsel, if any, incurred by the Participant in seeking to obtain or enforce any right or benefit provided by the Plan.

EXH 10.4-17

     8.7 Assignment of Benefits.

          The right of a Participant or any other person to receive payments under the Plan shall not be assigned, transferred, pledged or encumbered, except by will or by the laws of descent and distribution and then only to the extent permitted under the terms of the Plan.

     8.8 Legally Incompetent.

          The Administrative Committee, in its sole discretion, may direct that payment be made to an incompetent or disabled person, whether because of minority or mental or physical disability, to the guardian of such person or to the person having custody of such person, without further liability either on the part of the Company or the Affiliates for the amount of such payment to the person on whose account such payment is made.

     8.9 Governing Law.

          The Plan shall be construed, administered and governed in all respects in accordance with applicable federal law and, to the extent not preempted by federal law, in accordance with the laws of the State of Georgia. If any provisions of this instrument shall be held by a court of competent jurisdiction to be invalid or unenforceable, the remaining provisions hereof shall continue to be fully effective.

     IN WITNESS WHEREOF, the Company has caused the Plan to be executed by its duly authorized officer as of the day and year first above written.

AFLAC INCORPORATED
By:	/s/ Joey M. Loudermilk
Title:	Corporate Secretary

EXH 10.4-18

FIRST AMENDMENT TO THE AFLAC INCORPORATED
SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN
(as amended and restated effective January 1, 2001)

     This First Amendment to the AFLAC Incorporated Supplemental Executive Retirement Plan, as amended and restated effective January 1, 2001, is adopted by AFLAC Incorporated (the "Company"), effective as of September 1, 2002.

W I T N E S S E T H

     WHEREAS, the Company maintains the AFLAC Incorporated Supplemental Executive Retirement Plan (the "Plan") for the benefit of certain key management and highly compensated employees; and

     WHEREAS, pursuant to Section 7.1 of the Plan, the Compensation Committee of the Board of Directors of the Company (the "Committee") has the right to amend the Plan at any time; and

     WHEREAS, effective September 1, 2002, the Committee desires to amend the Plan to change the latest time as of which a participant may elect to receive his annual retirement benefit in the form of a joint and survivor annuity;

     NOW, THEREFORE, BE IT RESOLVED, that the Plan is hereby amended to read as follows:

	1.	Effective September 1, 2002, Section 3.6(c) of the Plan is hereby amended by deleting such
section in its entirety and substituting in lieu thereof the following:
		(c)	Optional Form of Payment. A Participant may elect, not later than 3 months before his
	termination of employment with the Company and all Affiliates, to have his Annual Retirement Benefit paid in the form of a Joint and 50% Survivor Annuity, which shall be the Actuarial Equivalent of the Participant's Annual Retirement Benefit payable in the form of a Single Life Annuity. Notwithstanding any such election, if a Participant who has elected a Joint and 50% Survivor Annuity is not married on the date of his termination of employment, his benefit shall be paid in the form of a Single Life Annuity.
	2.	Except as amended herein, the Plan shall continue in full force and effect.

     IN WITNESS WHEREOF, the Company has caused this First Amendment to the Plan to be executed on the date shown below, but effective as of September 1, 2002.

AFLAC INCORPORATED
By:	/s/ Daniel P. Amos
Date:	April 7, 2003

EXH 10.4-19

SECOND AMENDMENT TO THE AFLAC INCORPORATED
SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN
(as amended and restated effective January 1, 2001)

     This Second Amendment to the AFLAC Incorporated Supplemental Executive Retirement Plan, as amended and restated effective January 1, 2001, is adopted by AFLAC Incorporated (the "Company"), effective as of April 1, 2003.

W I T N E S S E T H:

     WHEREAS, the Company maintains the AFLAC Supplemental Executive Retirement Plan (the "Plan") for the benefit of certain key management and highly compensated employees; and

     WHEREAS, pursuant to Section 7.1 of the Plan, the Compensation Committee of the Board of Directors of the Company (the "Committee") has the right to amend the Plan at any time; and

     WHEREAS, the Committee desires to amend certain provisions of the Plan to provide (i) an additional approval process for Contiguous Consulting Agreements, (ii) a plan benefit for participants who terminate with at least 15 years of employment, and (iii) lump-sum distributions in certain circumstances;

     NOW, THEREFORE, BE IT RESOLVED, that the Plan is hereby amended as follows:

1.			Section 1.7 of the Plan is hereby amended by deleting said section in its entirety and by
substituting in lieu thereof the following:
			1.7		Benefit Commencement Date means (i) for purposes of Normal, Delayed, Early and
	Reduced Early Retirement Benefits, the first of the calendar month coinciding with or next following the date on which a Participant becomes entitled to receive or begin receiving an Annual Retirement Benefit under Section 3.2, 3.3, 3.4 or 3.5, respectively; and (ii) for purposes of a Participant's pre-retirement, termination benefit, as described in Section 3.5A, the date the Participant attains age 55.
2.			Section 1.15 of the Plan is hereby amended by deleting said section in its entirety and by
substituting in lieu thereof the following:
			1.5	Contiguous Consulting Agreement means a written consulting agreement between the
		Company (and/or an Affiliate) and a Participant that (i) commences immediately upon the Participant's termination of employment with the Company and all Affiliates, (ii) obligates the Participant to perform consulting services for the Company or an Affiliate for a specified period, and (iii) is approved by the Company's Chief Executive Officer (to the extent permitted by applicable law) or the Compensation Committee.

EXH 10.4-20

3.			Article III of the Plan is hereby amended by adding thereto, immediately after Section 3.5,
a new Section 3.5A as follows:
		3.5A		Termination.
				If a Participant's employment with the Company and all Affiliates terminates and
	any Contiguous Consulting Agreement ends, for a reason other than Cause or death, before he attains age 55 but after he has completed 15 Years of Employment, the Participant shall be entitled to an Annual Retirement Benefit in an amount equal to the difference between the amount determined under subsection (i) and the amount determined under subsection (ii), as follows:
				(i)		30% of the Participant's Average Annual Compensation; and
				(ii)	the Participant's Pension Plan Benefit.
4.		Section 3.6(b) of the Plan is hereby amended by deleting said section in its entirety and by
substituting in lieu thereof the following:
				(b)				Normal Form of Payment. Except as provided in subsection (c) or (d)
	hereof, a Participant's Annual Retirement Benefit shall be paid in the form of a Single Life Annuity, commencing on the Participant's Benefit Commencement Date.
5.		Section 3.6(d) is hereby amended by deleting said subsection in its entirety and by
substituting in lieu thereof the following:
				(d)			Single-Sum Payment. The Company's Chief Executive Officer (to the extent
	permitted by applicable law) or the Compensation Committee, in his or its sole discretion, may determine to pay a Participant's Annual Retirement Benefit in a single-sum payment rather then the normal form of payment or any optional form of payment the Participant may select; provided, in no event may a Participant elect a single-sum payment. The single-sum payment shall be the Actuarial Equivalent of the Participant's Annual Retirement Benefit expressed in the form of a Single Life Annuity.
6.		Section 3.6 is hereby amended by adding thereto, immediately following subsection (d)
thereof, subsection (e) [formerly subsection (d)] as follows:
				(e)					Cash Payments. All benefit payments hereunder shall be made in cash.
7.		Except as amended herein, the Plan shall continue in full force and effect.

     IN WITNESS WHEREOF, AFLAC Incorporated has caused this Second Amendment to the Plan to be executed on the date shown below, but effective as of April 1, 2003.

AFLAC INCORPORATED
By:	/s/ Daniel P. Amos
Date:	May 5, 2003

EXH 10.4-21

EX-10.6

AFLAC Incorporated Form 10-K

EXHIBIT 10.6

STATE OF GEORGIA,
COUNTY OF MUSCOGEE:

EMPLOYMENT AGREEMENT

     THIS AGREEMENT, made and entered into as of the 1st day of January, 2002, by and between AFLAC Incorporated, a Georgia corporation, hereinafter referred to as "Corporation," and CHARLES D. LAKE, II, hereinafter referred to as "Employee;"

W I T N E S S E T H    T H A T:

     WHEREAS, Corporation and Employee desire to enter into an Employment Agreement and to set forth the terms and conditions of Employee's employment as an executive employee by Corporation as its Deputy President of AFLAC Japan;

     NOW, THEREFORE, the parties, for and in consideration of the mutual covenants and agreements hereinafter contained, do contract and agree as follows, to-wit:

          1.  Purpose and employment. The purpose of this Agreement is to define the relationship between Corporation as an employer and Employee as an employee and Deputy President of AFLAC Japan. (This Agreement is further made in contemplation of Employee becoming President of AFLAC Japan in the future. Unless modified by the mutual consent of the parties hereto, this Agreement shall continue to govern the relationship between the parties in all respects.)

          2.  Duties. Employee agrees to provide executive management services as Deputy President of AFLAC Japan (or as President of AFLAC Japan if so designated) to Corporation and its subsidiaries and affiliates on a full-time and exclusive basis; provided, however, nothing shall preclude Employee from engaging in charitable and community affairs or managing his own or his family's personal investments.

          3.  Performance. Employee agrees to devote all necessary time and his best efforts in the performance of his duties on behalf of Corporation and its subsidiaries and affiliates.

          4.  Term. The term of employment under this Agreement shall begin January 1, 2002, and shall continue until December 31, 2007, unless extended or sooner terminated as hereinafter provided.

          5.  Base salary. For all the services rendered by Employee, Corporation shall pay Employee a base salary of Three Hundred Thousand Dollars ($300,000.00) per annum, said salary shall be payable in accordance with Corporation's normal payroll procedures. Said salary shall increase to Three Hundred Thirty-three Thousand Three Hundred and Thirty-three Dollars ($333,333.00) per annum effective January 2, 2003. Commencing in 2004, Employee's base salary may be increased annually during the term of this Agreement and any extensions hereof as determined by the Chief Executive Officer. Further, Employee shall be entitled to continue to receive an annual cost of living allowance as heretofore provided.

EXH 10.6-1

              Deferred compensation. The Corporation shall also provide Employee with a deferred compensation arrangement (which shall be in lieu of Employee's participation in the Corporation's Supplemental Executive Retirement Plan or AFLAC Japan's retirement program.) The Corporation shall contribute One Million Dollars ($1,000,000) to a deferred compensation account effective January 1, 2003. Employee shall vest in the market value of the deferred compensation account at twenty percent (20%) per year commencing December 31, 2003 (with the remainder vesting on December 31 each year until fully vested.)

          6.  Adjustments to base salary. Commencing in 2004, Corporation and Employee may, from time to time, reflect increases in Employee's base salary as provided for in Paragraph 5 by entering the change on the "Schedule of Compensation," as shown by the form attached hereto as Exhibit "A" and made a part hereof. If an increase in compensation is entered on said Schedule and duly signed by the proper officers of Corporation and by Employee, said entry shall constitute an amendment to this Employment Agreement as of the date of said entry and shall supersede the base salary provided for in Paragraph 5 and any other increases in Employee's base salary previously entered on said Schedule.

          7.  Management Incentive Plan. In addition to the base salary paid to Employee in accordance with Paragraph 5, Corporation shall, for each calendar year of Employee's employment by Corporation, beginning with the calendar year 2002, continue to pay Employee, as performance bonus compensation, an amount determined each year under Corporation's current Management Incentive Plan (short-term Incentive Program) with a target level based on at least sixty-five percent (65%) of base salary. For 2003, Employee's MIP target bonus shall be eighty-five (85%) percent of base pay. Nothing in this paragraph shall preclude Employee from receiving additional discretionary bonuses approved by the Chief Executive Officer or the Board.

           8.  Employee benefits. Employee shall be eligible to participate with other employees of the Corporation in all fringe benefit programs applicable to employees generally which may be authorized and adopted from time to time by the Board, including without limitation: a qualified pension plan, a profit sharing plan, a disability income or sick pay plan, a thrift and savings plan, an accident and health plan (including medical reimbursement and hospitalization and major medical benefits), and a group life insurance plan. While Employee resides outside of the United States, Employee shall participate in the AFLAC Compensation Program for Officers on Overseas Assignment, including reimbursement of apartment lease payments and participation in the Corporation's tax equalization program for expatriates, except to the extent otherwise provided for in this agreement. In addition, Corporation shall furnish to Employee such other "fri nge" or employee benefits as are provided to key executive employees of Corporation and such additional employee benefits which the Compensation Committee of the Board shall determine to be appropriate to Employee's duties and responsibilities including, without limitation, reimbursement of legal and accounting expenses incurred by Employee in connection with the preparation of his employment or other agreements with Corporation and any expenses for legal, accounting or financial services incurred by Employee in connection with his employment.

          9.  Stock option plans. Employee shall be awarded stock options to purchase Corporation's common stock under Corporation's Stock Option Plans equal to $2.5 million of fair market value of the Corporation's stock as established by the following procedures: The number of options will be determined based on the average of the high and low price of AFLAC Incorporated stock each day for the last ten business days of December 2002. As of December 31, 2002, (subject to approval by the Compensation Committee of the Board of Directors) Employee shall be granted the number of options determined using the ten-day average price. The strike price of the grant will be determined on December 31, 2002. Said options shall vest 20% at the end of each year of service for the five-year period ended December 31, 2007.

EXH 10.6-2

          10.  Working facilities and expenses. Employee shall be provided with an office, books, periodicals, stenographic and technical help, ground and air transportation, and such other facilities, equipment, supplies and services suitable to his position and adequate for the performance of his duties. The Corporation shall pay Employee's fees and dues in such social and country clubs, civic clubs and business societies and associations as shall be appropriate in facilitating Employee's job performance and in the best interest of Corporation. The Corporation shall also pay all appropriate business liability insurance and any business licenses and fees pertaining to the services rendered by Employee hereunder.

          Employee is encouraged and is expected, from time to time to incur reasonable expenses for promoting the business of Corporation, including expenses for social and civic club memberships and participation, entertainment, travel and other activities associated with Employee's duties. The cost of all such activities shall be the expenses of Corporation unless the Compensation Committee of the Board shall determine in advance that any such expense of Employee should be paid by Employee.

          11. Vacation. Employee shall continue to be entitled to his vacation time with pay during each calendar year in accordance with Corporation's vacation policy for senior executive employees. In addition, Employee shall be entitled to such holidays as Corporation shall recognize for its employees generally.

          12.  Sickness and total disability. Employee's absence from work because of sickness or accident (not resulting in Employee becoming "totally disabled," as that term is hereinafter defined) shall not result in any adjustment in Employee's compensation or other benefits under this Agreement.

          Should Employee become totally disabled as a result of sickness or accident and unable to adequately perform his regular duties prescribed under this Agreement, his base salary (which shall continue to be adjusted as provided for in Paragraph 5), together with incentive bonuses under the Corporation's Management Incentive Plan and his participation in Corporation's employee benefit programs and retirement plan shall continue without reduction except as hereinafter provided, during the continuance of such disability of a period not exceeding the earlier of (1) the end of the term of this Agreement or any extension hereof or (2) a period of one and one-half (1-1/2) years (547 calendar days) for each continuous disability. Payments pursuant to this paragraph 12 shall be reduced by any amounts paid to Employee during any such period of disability from time to time under any disability programs, plans or policies maintained by Corporation, its subsid iaries or affiliates.

          Should Employee's total disability continue for a period beyond the end of the term of this Agreement or in excess of 547 calendar days, this Agreement shall, at the end of such period which first occurs, be automatically terminated. If, however, prior to such time, Employee's total disability shall have ceased and he shall have resumed the adequate performance of his duties hereunder, this Agreement shall continue in full force and effect and Employee shall be entitled to continue his employment hereunder and to receive his full compensation and other benefits as though he had not been disabled; provided, however, unless Employee shall adequately perform his duties hereunder for a continuous period of at least sixty (60) calendar days following a period of total disability before Employee again becomes totally disabled, he shall not be entitled to start a new 547-day period under this paragraph, but instead may only continue under the remaining portion of the original 547-day period of total disability. In the event Employee shall not adequately perform his duties hereunder for a continuous period of at least sixty (60) calendar days following a period of total disability, the running of the original 547-day period shall cease during the time of Employee's adequate performance of his duties hereunder before Employee again becomes totally disabled.

EXH 10.6-3

          For the purpose of this Agreement, the term "totally disabled" or "total disability" shall mean Employee's inability to adequately perform his executive and management duties hereunder on account of accident or illness. It is understood that Employee's occasional sickness or other incapacity of short duration may not result in his being or becoming "totally disabled;" however, such illness or incapacity could constitute Employee's being or becoming "totally disabled" if such illness or incapacity is prolonged or recurring.

          13.  Termination of employment.

	A.  Termination by Corporation. The Corporation's Chief Executive Officer may terminate this
Agreement, at any time, with or without "good cause" ("good cause" being hereinafter defined), by giving at least sixty (60) days' written notice to Employee of its intention to terminate Employee's employment without "good cause" or at least five (5) days' written notice to Employee of its intention to terminate Employee's employment for "good cause;" provided, however, Corporation may, at its election, terminate Employee's actual employment (so that Employee no longer renders services on behalf of Corporation) at any time during said sixty (60) day or five (5) day period; and,
		(1) In the event such termination is for "good cause," Corporation shall be obligated only to:
	(a) pay Employee his base salary as provided for in Paragraph 5 of this Agreement up to the termination date stated in said written notice; provided, however, if Corporation does not elect to terminate Employee's employment during said five (5) day period, but Employee, after receiving such notice of termination from Corporation, elects to leave the employ of Corporation prior to the end of said five (5) day period without the approval of Corporation, then Corporation shall pay said base salary only up to the date on which Employee actually terminates his employment;
	(b) pay Employee any performance bonus due Employee under Paragraph 7 of this Agreement for the period ending on the termination date stated in said written notice or on such earlier date of Employee's actual termination of his employment prior to the end of said (5) day period if such termination is without the approval of Corporation. The amount of said bonus, if any, shall be calculated on a prorata basis, using the number of days Employee was actually employed during such period, and the amount so calculated shall be paid to Employee within a reasonable time after the end of Corporation's fiscal year in which written notice of Employee's termination is given;
	(c) continue to honor all fully vested stock options, subject to the terms thereof, granted to Employee prior to the termination date stated in said written notice or prior to such earlier date of Employee's actual termination of his employment prior to the end of said five (5) day period if such termination is without the approval of the Corporation;
	(d) continue to pay all of Employee's fringe and other employee benefits as provided for in this Agreement up to the termination date stated in said written notice or up to such earlier date of Employee's actual termination of his employment prior to the end of said five (5) day period if such termination is without the approval of the Corporation.
	(e) For purposes of this subparagraph (1) and paragraph 18 hereof, "good cause" shall mean: (i) the willful and deliberate failure of Employee to substantially perform his executive and management duties hereunder for a continuous period of more than sixty (60) days for reasons other than Employee's sickness, injury or disability; (ii) the willful and deliberate conduct by Employee which is intended by Employee to cause, and which does in fact result in substantial injury or damage to Corporation; or (iii) the conviction or plea of guilty by Employee of a felony crime involving moral turpitude.

EXH 10.6-4

		(2) In the event such termination is without "good cause," as defined in subparagraph (1)(e) of this
paragraph and, if applicable, subject to the terms of paragraph 18, Corporation shall be obligated to:
	(a) pay employee his base salary as provided for in paragraph 5 of this Agreement up to the end of the scheduled term of this Agreement;
	(b) pay employee his performance bonus compensation as provided for in paragraph 7 of this Agreement up to the end of the scheduled term of this Agreement;
	(c) continue to honor all stock options, subject to the terms thereof, granted to Employee prior to the termination date stated in said written notice, all of said options to be or become fully vested as of the termination date stated in said written notice;
	(d) continue to pay or provide to Employee all of the retirement, health, life and disability benefits, as are provided for in this Agreement or under any programs, plans or policies covering Employee at the time of any such notice of termination, up to the end of the scheduled term of this Agreement.
	B.  Termination by Employee. Employee may terminate this Agreement, at any time by giving at least
sixty (60) days' written notice to Corporation of his intention to terminate his employment;
		(1) in the event such termination by Employee shall be without "good reason" (as defined in paragraph 18 hereof) and with a bona fide intent to retire or to work or engage in a business or activity which is not in competition with Corporation or any of its subsidiaries or affiliates, Corporation shall be obligated to:
	(a) pay Employee his base salary due him under paragraph 5 of this Agreement up to the termination date stated in said written notice;
	(b) pay Employee any performance bonus compensation due him under paragraph 7 of this Agreement
for the period ending on the termination date stated in said written notice. The amount of such performance bonus, if any shall be calculated on a prorata basis, using the number of days Employee was actually employed by Corporation during such year of termination; and the amount so calculated shall be paid to Employee within a reasonable time after the end of Corporation's fiscal year in which Employee's notice of termination is given; continue to honor all stock options, subject to the terms thereof, granted to Employee which are fully vested prior to the termination date stated in said written notice.
		(2) In the event such termination by Employee shall be for "good reason" (as defined in paragraph
18 hereof), the Corporation shall be obligated to provide Employee with the payments, benefits and rights specified in subparagraphs A.(2)(a)-(c) of this paragraph 13 hereof.
		(3) In the event such termination by Employee shall be without "good reason" (as defined in
paragraph 18 hereof) and with the intention or purpose to work or invest, directly or indirectly, in a business or activity which is in competition, directly or indirectly, with Corporation or any of its subsidiaries or affiliates or, irrespective of Employee's intention at the time of his termination, if Employee shall violate his covenant not to compete under paragraph 15 or the requirements of paragraph 16, then Corporation shall not be obligated to make or provide any further payments or benefits to Employee under this Agreement except as herein provided in this subparagraph.

EXH 10.6-5

	(a) Subject to Corporation's rights under paragraphs 15 and 16, Corporation shall pay Employee his base salary due him under paragraph 5 of this Agreement up to the termination date stated in said written notice;
	(b) Subject to Corporation's rights under paragraphs 15 and 16 hereof, Corporation shall continue to honor all stock options, subject to the terms thereof, granted to Employee which are fully vested prior to the termination date stated in said written notice;
	C. Termination while disabled. If Employee is totally disabled at the time any such notice of
termination is given, then notwithstanding the provisions of this paragraph 13, Corporation shall nevertheless continue to pay Employee, as his sole compensation hereunder, the compensation and other benefits for the remaining period of Employee's total disability as provided for in paragraph 12 hereinabove. It is understood that in no event shall such disabled Employee be entitled to compensation under this paragraph 13 in addition to the continuation of his compensation under paragraph 12.
	D. Cooperation after notice of termination. Following any such notice of termination, Employee shall
fully cooperate with Corporation in all matters relating to the winding up of his pending work on behalf of Corporation and the orderly transfer of any such pending work to other employees of Corporation as may be designated by the Chief Executive Officer; and to that end, Corporation shall be entitled to such full-time or part-time services of Employee as Corporation may reasonably require during all or any part of the sixty (60) day period following any such notice of termination.

          14.  Death of Employee. In the event of Employee's death during the term of this agreement or any extension hereof, this Agreement shall terminate immediately, and Employee's estate shall be entitled to receive terminal pay in an amount equal to the amount of Employee's base salary and any performance bonus compensation actually paid by Corporation to Employee during the last thirty-six (36) months of his life, said terminal pay to be paid in thirty-six (36) equal monthly installments beginning on the first day of the month next following the month during which Employee's death occurs. Terminal pay as herein provided for in this paragraph shall be in addition to amounts otherwise receivable by Employee or his estate under this or any other agreements with Corporation or under any employee benefits or retirement plans established by Corporation and in which Employee is participating at the time of his death. In addition, Corporation shall honor all stock options, subject to the terms thereof, granted to Employee prior to his death and Employee or his Estate shall, if not otherwise vested, become fully vested in said options as of the date of Employee's death.

          15.  Agreement not to compete.

               It is specifically agreed that, in the event Employee shall voluntarily terminate his employment without "good reason" (as defined in Paragraph 18) or be terminated by Corporation for "good cause" (as defined in Paragraph 13) Employee shall not work for a period of two (2) years from the date of such termination, as a manager, officer, owner, partner or employee or render any services as a consultant or advisor or engage or invest, directly or indirectly, in any activity which is in competition with the business of the Corporation, its subsidiaries or affiliates within the United States or Japan. Provided, however it is agreed that Employee may invest in the publicly traded securities of any corporation, partnership or trust which is in competition with Corporation so long as such investment does not exceed three percent (3%) of such securities at any time. It is specifically agreed that if, after Employee's termination of employment, Employee engages in any such prohibited activity at any time during said two year period, Corporation shall, in addition to any other rights it may have under this contract and applicable law be entitled to injunctive relief or, if the Corporation shall so elect, (due to the difficulty of determining damages) be entitled to liquidated damages in the amount of One Million Dollars ($1,000,000) which Employee agrees to promptly pay to Corporation upon demand.

EXH 10.6-6

          16. Nondisclosure of trade secrets and confidential information. Employee agrees to protect the business interest of Corporation, its subsidiaries and affiliates, and not to disclose any trade secrets, confidential information or any organizational, operating, marketing, product design, or business know-how which Employee has access to or knowledge of as a result of his employment by Corporation. It is specifically agreed that if, at any time during the term of this Agreement and for a period of two (2) years after the date of employee's termination of employment with Corporation for any reason, Employee shall violate the provisions of this paragraph 16, Corporation shall, in addition to any rights it may have under this contract and applicable law, be entitled to liquidated damages of One Million Dollars ($1,000,000) which Employee agrees to promptly pay Corporation upon demand. It is understood and agreed that Corporation's re medies under this paragraph 16 shall be separate and in addition to the remedies provided to Corporation under paragraph 15 hereof. It is also understood and agreed that, notwithstanding the foregoing two (2) year period, Employee shall not use or disclose any written confidential information or any policyholder lists at any time or times hereafter, except in the performance of Employee's obligations to the Corporation.

          17. Right to acquire insurance. If Employee shall terminate his employment hereunder for any reason other than death, he may, at his election, acquire any insurance policies upon his life owned by the Corporation by giving written notice of his election to Corporation within ninety (90) days after his termination of employment. Such policies shall be transferred to the Employee upon his payment to Corporation of the then interpolated terminal reserve value of said insurance. In the event any policies transferred to Employee as herein provided shall not have an interpolated terminal reserve value, then the amount to be paid by Employee shall be its then fair market value.

          18.  Change in control.

	A. In general. In the event there is a Change in Control (as defined in this paragraph) of Corporation,
this Agreement shall, in order to help eliminate the uncertainties and concerns which may arise at such time, be automatically extended upon all of the same terms and provisions contained herein, for an additional period of three (3) years, beginning on the first day of the month during which such Change in Control shall occur.
	B. Notwithstanding the term of subparagraph A(2) and (B)(2) of Paragraph 13, and in lieu of the
obligations of the Corporation under such paragraph, if, after a Change in Control Employee's employment is terminated by Corporation without "good cause" (as defined in paragraph 13), or is terminated by Employee for "good reason" (as defined in paragraph 18), any such termination by Corporation to be made only in accordance with the requirements specified by paragraph 13.A, Employee shall be entitled to the following:
		(1) The Corporation shall pay Employee's full base salary to Employee through the date of
termination stated in Corporation's written notice required pursuant to paragraph 13.A hereof (hereinafter in this paragraph the "Termination Date") at the rate in effect on the date such notice is given and, additionally, shall pay Employee all compensation and benefits payable to Employee under the terms of any compensation or benefit plan, program or arrangement maintained by the Corporation during such period through the Termination Date.
		(2) The Corporation shall pay Employee all compensation and benefits due Employee under
Corporation's retirement, insurance and other compensation or benefit plans, programs of arrangements as such payments become due. The amount of such compensation and benefits shall be determined under, and paid in accordance with, Corporation's retirement, insurance and other compensation or benefit plans, programs and arrangements.

EXH 10.6-7

		(3) In lieu of any further salary payments to Employee for periods subsequent to the Termination
Date, the Corporation shall pay to Employee, immediately after the Termination Date, a lump sum severance payment, in cash, equal to three times the sum of (i) Employee's annual base salary in effect immediately prior to the Change in Control and (ii) the higher of the amount paid to Employee pursuant to the Corporation's Management Incentive Plan (or any successor plan thereto) for the year preceding the year in which the Termination Date occurs or paid in the year preceding the year in which the Change in Control occurs.
		(4) The Corporation shall pay to Employee, immediately after the Termination Date, a lump sum
amount, in cash, equal to a prorata portion (based on the number of days Employee is an employee during the year in which the Termination Date occurs) of the aggregate value of the maximum annual target amount of all contingent incentive compensation awards to Employee for all uncompleted periods under the Corporation's Management Incentive Plan (or successor plan thereto).
		(5) For a thirty-six (36) month period after the termination date, the Corporation shall provide
Employee with life, disability, accident and health insurance benefits substantially similar to an equal or greater in economic value than such benefits which Employee is receiving immediately prior to the Termination Date (without giving effect to any reduction in such benefits subsequent to a Change in Control which reduction in benefits would constitute "good reason" as defined in this paragraph). Benefits required to be provided to Employee pursuant to this subparagraph B(5) shall be reduced to the extent comparable benefits are actually received by or made available to Employee without cost during such thirty-six (36) month period and any such benefit actually received by Employee shall be reported to the Corporation by Employee.
	C. In addition to the payments provided for in subparagraph B of this paragraph 18, in the event that
after a Change in Control Employee's employment by the Corporation is terminated by the Corporation without "good cause" or by Employee for "good reason," the Corporation shall continue to honor all stock options granted to Employee (subject to the terms of such options) prior to the Termination Date, and all stock options granted to Employee prior to the Termination Date shall become fully vested and exercisable as of the Termination Date.

EXH 10.6-8

	D. Notwithstanding any other provisions of this Agreement in the event that any payment or benefit
received or to be received by Employee in connection with a Change in Control or the termination of Employee's employment (whether pursuant to the terms of this Agreement or any other plan, arrangement or agreement with the Corporation, any person whose actions result in a Change in Control or any person affiliated with the Corporation or such person) (all such payment and benefits being hereinafter called "Total Payments") would not be deductible (in whole or in part) by the Corporation, an affiliate or person making such payment or providing such benefit as a result of section 280G of the Internal Revenue Code of 1986 (the "Code") then, to the extent necessary to make such portion of the Total Payments deductible (and after taking into account any reduction in the Total Payment provided by reason of Section 280G of the Code in such other plan, arrangement or agreement), adjustments in such payments shall be made as follows: (1) the cash payments provided pursuant to subparagraph B(3) and B(4) of this p aragraph 18 shall first be reduced (if necessary, to zero), and (2) benefits provided under subparagraph B(5) of this paragraph 18 shall next be reduced. For purposes of this limitation (i) no portion of the Total Payments the receipt or enjoyment of which Employee shall have effectively waived in writing prior to the date of termination of employment shall be taken into account, (ii) no portion of the Total Payments shall be taken into account which in the opinion of tax counsel selected by the Corporation's independent auditors and reasonably acceptable to Employee does not constitute a "parachute payment" within the meaning of Section 280G(b) (2) of the Code, including by reason of Section 280G(b) (4) (A) of the Code, (iii) the payments and benefits be reduced only to the extent necessary so that the Total Payments (other than those referred to in clauses (i) or (ii) in their entirety constitute reasonable compensation for services actually rendered within the meaning of Section 280G(b) (4) (B) of the Co de or are otherwise not subject to disallowance as deductions, (iv) the value of any non-cash benefit or any deferred payment or benefit included in the Total Payments shall be determined by the Corporation's independent auditors in accordance with the principles of Section 280G(d) (3) (4) of the Code. In no event shall the Corporation's obligation to continue to honor all stock options granted to Employee prior to the Termination Date nor the vesting of stock options in accordance with Paragraph 18.C. hereof be affected by this Paragraph 18.D.
	E. Definitions.
		(1) "Beneficial Owner" has the meaning provided in Rule 13d-3 under the Exchange Act.
		(2) "Change in Control" means the occurrence of either (a), (b), (c) or (d), as hereinafter set forth:
	(a) any person is or becomes the Beneficial Owner, directly or indirectly, of securities of the Corporation (not including in the securities beneficially owned by such person any securities acquired directly from the Corporation, subsidiaries or its affiliates) representing 30% or more of the combined voting power of the Corporation's then outstanding securities; or
	(b) during any period of two consecutive years (not including any period prior to the execution of this Agreement), individuals who at the beginning of such period constitute the Board and any director (other than a director designated by a person who has entered into an agreement with the Corporation to effect a transaction described in clause (a), (c) or (d) of this subparagraph) whose election by the Board or nomination for election by the Corporation's stockholders was approved by a vote of at least two-thirds (2/3) of the members of the Board (or, if Board nominations are not voted on by the full Board, members of the Board Committee voting on such nominations) then still in office who either were members of the Board at the beginning of the period or whose election or nomination for elections was previously so approved, cease for any reason to constitute a majority of the Board; or

EXH 10.6-9

	(c) the shareholders of the Corporation approve a merger or consolidation of the Corporation with any other corporation, other than (i) a merger or consolidation which would result in the voting securities of the Corporation outstanding immediately prior thereto continuing to represent (either by remaining outstanding or by being converted into voting securities or the surviving trustee or other fiduciary holding securities under an employee benefit plan of the Corporation, at least 75% of the combined voting power of the voting securities of the Corporation or such surviving entity outstanding immediately after such merger or consolidation, or (ii) a merger or consolidation effected to implement a recapitalization of the Corporation (or similar transaction) in which no person acquires more than 30% of the combined voting power of the Corporation's then outstanding securities; or
	(d) the shareholders of the Corporation approve a plan of complete liquidation of the Corporation or an agreement for the sale or disposition by the Corporation of all or substantially all the Corporation's assets.
		(3) "Exchange Act" shall mean the Securities Exchange Act of 1934, as amended.
		(4) "Person" shall have the meaning given in Section 3(a)(9) of the Exchange Act, as modified and
used in Section 13(d) and 14(d) of the Exchange Act; however, a person shall not include (a) the Corporation or any of its subsidiaries, (b) a trustee or other fiduciary holding securities under an employee benefit plan of the corporation or any of its subsidiaries, (c) an underwriter temporarily holding securities pursuant to an offering of such securities, or (d) a corporation owned, directly or indirectly, by the stockholders of the Corporation in substantially the same proportions as their ownership of stock of the Corporation.
		(5) "Good reason" shall mean the termination of employment by Employee upon the occurrence of
any one or more of the following events:
	(a) Any breach by Corporation of the terms and conditions of this Agreement affecting Employee's salary and bonus compensation, any employee benefit, stock options or the loss of any of Employee's titles or positions with Corporation;
	(b) A significant diminution of Employee's duties and responsibilities;
	(c) the assignment to Employee of any duties inconsistent with or significantly different from his duties and responsibilities existing at the time of a Change in Control.
	(d) Any purported termination of Employee's employment by Corporation other than as permitted by this Agreement;
	(e) The relocation of Corporation's principal office to any place beyond twenty-five (25) miles from the current principal office of Corporation in Columbus, Georgia;
	(f) The failure of any successor to Corporation to expressly assume and agree to discharge Corporation's obligations to Employee under this Agreement as extended under this paragraph, in form and substance satisfactory to Employee.

EXH 10.6-10

F. Continuation of compensation and benefits. If Corporation shall attempt to terminate Employee's employment at any time after a change in Control and such termination is in good faith disputed by Employee, Corporation shall continue to pay Employee all of his compensation and benefits provided for in this Agreement until the dispute is finally resolved, either by mutual written agreement or by final judgment, order or decree of a court of competent jurisdiction.

          19.  No requirement to seek employment and no offset. Corporation agrees that, if Employee's employment is terminated by Corporation during the term of this Agreement or by Employee for "good reason" during the term of this Agreement, Employee is not required to seek other employment or attempt in any way to reduce the amounts payable to Employee by Corporation pursuant to the applicable terms of this Agreement; it being understood and agreed that the amount of any payment or benefit to Employee provided for hereunder shall not be reduced by any compensation or other benefits earned by Employee as a result of his employment by another employer or, after a Change in Control, by Corporation's attempt to offset any amount claimed to be owed by Employee to Corporation or otherwise.

          20.  Waiver of breach or violation not deemed continuing. The waiver by either party of a breach or violation of any provision of this Agreement shall not operate as or be construed to be a waiver of any subsequent breach hereof.

          21.  Notices. Any and all notices required or permitted to be given under this Agreement will be sufficient if furnished in writing, sent by registered or certified mail to his last known residence in the case of Employee or to its principal office in Columbus, Georgia, in the case of the Corporation.

          22.  Arbitration. Except for any dispute or matter arising after a Change in Control, as defined in paragraph 18, any dispute arising under this Agreement, to the maximum extent allowed by applicable law, shall be subject to arbitration and prior to commencing any court action, the parties agree that they shall arbitrate all controversies. The arbitration shall be pursuant to the terms of the Corporation's Employee Arbitration Program as provided in the Corporation's Employee Handbook, the provisions of which are incorporated herein by reference.

          23.  Governing Law. This Agreement shall be interpreted, construed and governed according to the laws of the State of Georgia.

          24.  Paragraph Headings. The paragraph headings contained in this Agreement are for convenience only and shall in no manner be construed as part of this Agreement.

          25.  Two originals. This Agreement is executed in two (2) originals, each of which shall be deemed an original and together shall constitute one and the same Agreement, with one original being delivered to each party hereto.

EXH 10.6-11

     IN WITNESS WHEREOF, Corporation has hereunto caused its name to be signed and its seal to be affixed by its duly authorized officers, and Employee has hereunto set his hand and seal, all being done in duplicate originals, with one original being delivered to each party as of the 1st day of January, 2002.

/s/ Charles D. Lake, II	(L.S.)		AFLAC INCORPORATED
CHARLES D. LAKE, II
EMPLOYEE		BY:	/s/ Kriss Cloninger, III
			KRISS CLONINGER, III
			PRESIDENT
		ATTEST:	/s/ Joey M. Loudermilk
			JOEY M. LOUDERMILK
			CORPORATE SECRETARY

EXH 10.6-12

EX-11

AFLAC Incorporated Form 10-K

EXHIBIT 11

AFLAC INCORPORATED AND SUBSIDIARIES
Computation of Earnings Per Share
Years Ended December 31,
		2003		2002			2001			2000			1999
Numerator (in millions):
	Basic: net earnings applicable
	to common stock	$	795	$	821		$	687		$	687		$	571
	Diluted: net earnings applicable
	to common stock	795		821			687			687			571
Denominator (in thousands):
	Average outstanding shares used
	in the computation of earnings
	per share - basic	513,220		517,541			525,098			530,607			531,737
	Average outstanding shares used
	in the computation of earnings
	per share - basic	513,220		517,541			525,098			530,607			531,737
	Dilutive effect of stock options	8,918		10,785			12,285			14,299			19,108
	Average outstanding shares used
	in the computation of earnings
	per share - diluted	522,138		528,326			537,383			544,906			550,845
Earnings per share:
	Basic	$	1.55	$		1.59	$		1.31	$		1.30	$		1.07
	Diluted	1.52		1.55			1.28			1.26			1.04

EXH 11-1

EX-12

AFLAC Incorporated Form 10-K

EXHIBIT 12

AFLAC INCORPORATED AND SUBSIDIARIES
Ratio of Earnings to Fixed Charges
Years Ended December 31,
(In thousands)				2003		2002		2001		2000		1999
Fixed charges:
	Interest expense		$	22,231	$	19,809	$	19,311	$	19,252	$	18,233
	Rental expense deemed interest			514		531		451		600		558
	Interest on investment-
	type contracts			3,893		2,534		1,286		127		2
		Total fixed charges	$	26,638	$	22,874	$	21,048	$	19,979	$	18,793
Earnings before income tax			$	1,225,112	$	1,259,118	$	1,080,535	$	1,012,494	$	778,367
Add back:
	Fixed charges			26,638		22,874		21,048		19,979		18,793
		Total earnings before income
		tax and fixed charges	$	1,251,750	$	1,281,992	$	1,101,583	$	1,032,473	$	797,160
		Earnings before income
		tax and fixed charges		47.0x		56.0x		52.3x		51.7x		42.4x

EXH 12-1

EX-13

AFLAC Incorporated Form 10-K

AFLAC Incorporated
Annual Report on Form 10-K
For the Year Ended December 31, 2003
Exhibit 13

Table of Contents

		Page
PART II
Item 5	MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED SHAREHOLDER MATTERS	13-1
Item 7.	MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS	13-3
Item 8.	FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA AFLAC Incorporated and Subsidiaries	13-34
	Consolidated Statements of Earnings for each of the years in the three-year period ended December 31, 2003	13-34
	Consolidated Balance Sheets at December 31, 2003 and 2002	13-36
	Consolidated Statements of Shareholders' Equity for each of the years in the three-year period ended December 31, 2003	13-38
	Consolidated Statements of Cash Flows for each of the years in the three-year period ended December 31, 2003	13-39
	Consolidated Statements of Comprehensive Income for each of the years in the three-year period ended December 31, 2003	13-41
	Notes to the Consolidated Financial Statements	13-42
	Independent Auditors' Report	13-81
	Unaudited Consolidated Quarterly Financial Data	13-82

EXH 13

AFLAC Incorporated Form 10-K EXH 13 Table of Contents

EXHIBIT 13

     The following information is contained in the 2003 Annual Report to Shareholders. The required information incorporated by reference to the preceding pages of this 2003 Form 10-K has been reproduced herein as Exhibit 13 for purposes of electronic filing of this Form 10-K.

PART II

ITEM 5.	MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED
	SHAREHOLDER MATTERS

Market Information

     Our common stock is principally traded on the New York Stock Exchange; it is also listed on the Pacific Stock Exchange and the Tokyo Stock Exchange.

     The quarterly high and low market prices for the Company's common stock, as reported on the principal exchange market, for the last two fiscal years ended December 31, 2003, were as follows:

Quarterly Common Stock Prices
		2003			High		Low
	4th Quarter			$	36.91	$	32.13
	3rd Quarter				32.74		29.83
	2nd Quarter				35.57		28.00
	1st Quarter				33.50		29.57
			2002		High		Low
	4th Quarter			$	33.45	$	28.78
	3rd Quarter				32.30		24.24
	2nd Quarter				33.15		28.15
	1st Quarter				29.72		23.10

Holders

	2003	2002
Number of common
shares outstanding	509,891,778	514,439,276
Approximate number of registered
common shareholders	78,579	73,887

EXH 13-1

AFLAC Incorporated Form 10-K EXH 13 Table of Contents

Dividends

	2003		2002
4th Quarter	$	.08	$	.06
3rd Quarter	.08		.06
2nd Quarter	.07		.06
1st Quarter	.07		.05

     We expect comparable dividends to continue to be paid in future periods. For information concerning dividend restrictions, see Management's Discussion and Analysis of Financial Condition, Capital Resources and Liquidity section, presented in this Exhibit 13 on pages 13-30 and 13-32, and Note 9 of the Notes to the Consolidated Financial Statements, also presented in this Exhibit 13 on pages 13-72 to 13-74.

Securities authorized for issuance under equity compensation plans

     Pursuant to General Instruction G to Form 10-K, this information is incorporated by reference from the Company's 2004 Proxy Statement, which will be filed with the Securities and Exchange Commission on or about March 15, 2004.

EXH 13-2

AFLAC Incorporated Form 10-K EXH 13 Table of Contents

ITEM 7.	MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
	CONDITION AND RESULTS OF OPERATIONS

     AFLAC Incorporated (the Parent Company) and its subsidiaries (the Company) primarily sell supplemental health and life insurance in the United States and Japan. The Company's insurance business is marketed and administered through American Family Life Assurance Company of Columbus (AFLAC), which operates in the United States (AFLAC U.S.) and as a branch in Japan (AFLAC Japan). Most of AFLAC's policies are individually underwritten and marketed at worksites through independent agents, with premiums paid by the employee. Our insurance operations in the United States and our branch in Japan service the two markets for our insurance business.

     Management's Discussion and Analysis of Financial Condition and Results of Operations (MD&A) is intended to inform the reader about matters affecting the financial condition and results of operations of AFLAC Incorporated and its subsidiaries for the three-year period ended December 31, 2003. As a result, the following discussion should be read in conjunction with the related consolidated financial statements and notes.

     This MD&A is divided into five primary sections. In the first section, we discuss our critical accounting estimates. We then follow with a discussion of the results of our operations on a consolidated basis and by segment. The third section presents an analysis of our financial condition as well as a discussion of market risks of financial instruments. In the Capital Resources and Liquidity section, we address the availability of capital and the sources and uses of cash. We then conclude by discussing risk factors that may impact our business in the Forward-Looking Information section.

Critical Accounting Estimates

     We prepare our financial statements in accordance with accounting principles generally accepted in the United States of America (GAAP). The estimates discussed below are critical to an understanding of AFLAC's results of operations and financial condition. The preparation and evaluation of these critical accounting estimates involve the use of various assumptions developed from management's analysis and judgments. The application of these critical accounting estimates determines the values at which 95% of our assets and 85% of our liabilities are reported and thus have a direct effect on net earnings and shareholders' equity. Subsequent experience or use of other assumptions could result in significantly different results.

Investments

     Our investments in debt and equity securities include both publicly issued and privately issued securities. For privately issued securities, we receive pricing data from external sources that take into account each security's credit quality and liquidity characteristics. We also routinely review our investments that have experienced declines in fair value to determine if the decline is other than temporary. These reviews are performed with consideration of the facts and circumstances of an issuer in accordance with the Securities and Exchange Commission (SEC) Staff Accounting Bulletin No. 59, Accounting for Non-Current Marketable Equity Securities; Statement of Financial Accounting Standards (SFAS) No. 115, Accounting for Certain Investments in Debt and Equity Securities; and related guidance. The identification of distressed investments, the determination of fair value if not publicly traded, and the assessment of whether a decline is other than temporary involve signifi cant management judgment and require evaluation of factors including but not limited to:

EXH 13-3

AFLAC Incorporated Form 10-K EXH 13 Table of Contents

• percentage decline in value and the length of time during which the decline has occurred,
• recoverability of principal and interest,
• market conditions,
• ability to hold the investment to maturity,
• a pattern of continuing operating losses of the issuer,
• rating agency actions that affect the issuer's credit status,
• adverse changes in the issuer's availability of production resources, revenue sources, technological conditions, and
• adverse changes in the issuer's economic, regulatory or political environment.

Deferred Policy Acquisition Costs and Policy Liabilities

     AFLAC products are generally long-duration fixed-benefit indemnity products. As such, our products are accounted for under the requirements of SFAS No. 60, Accounting and Reporting by Insurance Enterprises. We make estimates of certain factors that affect the profitability of our business in order to match expected policy benefits and expenses with expected policy premiums. These assumptions include persistency, morbidity, mortality, investment yields and expenses. If actual results mirror the assumptions used in establishing policy liabilities and the deferral and amortization of acquisition costs, profits will emerge as a level percentage of premium revenue. However, because actual results will vary from the assumptions, profits as a percentage of premium revenue will vary from year to year.

     We measure the adequacy of our policy reserves and recoverability of deferred policy acquisition costs (DAC) annually by performing gross premium valuations on our business. Our testing indicates that our insurance liabilities are adequate and that our DAC is recoverable.

Deferred Policy Acquisition Costs

     Under the requirements of SFAS No. 60, certain costs of acquiring new business are deferred and amortized over the policy's premium payment period in proportion to anticipated premium income. Future amortization of DAC is sensitive to our estimates of persistency, interest and future premium revenue at the time of policy issuance. However, the unamortized balance of DAC reflects the actual persistency to date. As presented in the following table, the ratio of DAC to annualized premium in force has been relatively stable for AFLAC U.S. and has trended down for AFLAC Japan over the last three years.

Deferred Policy Acquisition Cost Ratios
	AFLAC Japan						AFLAC U.S.
(In millions)	(In Yen)						(In Dollars)
	2003		2002		2001		2003		2002		2001
Deferred policy acquisition costs	368,535		343,845		325,960		1,604		1,410		1,181
Annualized premiums in force	900,251		834,424		782,249		3,043		2,674		2,238
Deferred policy acquisition costs as a
percentage of annualized premiums
in force	40.9	%	41.2	%	41.7	%	52.7	%	52.7	%	52.8	%

EXH 13-4

AFLAC Incorporated Form 10-K EXH 13 Table of Contents

Policy Liabilities

     Our policy liabilities, which are determined in accordance with SFAS No. 60 and Actuarial Standards of Practice, include two primary components: future policy benefits and unpaid policy claims, which account for 91% and 5% of total policy liabilities as of December 31, 2003, respectively.

     The future policy benefit liability provides for claims that will occur in the future and is generally calculated as the present value of future expected benefits to be incurred less the present value of future expected net benefit premiums. We calculate future policy benefits based on assumptions of morbidity, mortality, persistency and interest established at the time a policy is sold. The assumptions used in the calculations are closely related to those used in developing the gross premiums for a policy. As required by GAAP, we also include a provision for adverse deviation, which is intended to accommodate adverse fluctuations in actual experience.

     Unpaid policy claims include those claims that have been incurred and are in the process of payment as well as an estimate of those claims that have been incurred but have not yet been reported to us. We compute unpaid policy claims on an undiscounted basis using statistical analyses of historical claims payments, adjusted for current trends and changed conditions. Assumptions underlying the estimate of unpaid policy claims are updated regularly and incorporate our historical experience as well as other data that provides information regarding our outstanding liability.

     Claims incurred under AFLAC's policies are generally reported and paid in a relatively short timeframe. They are sensitive to frequency and severity of claims. They are not, however, subject to health care inflation, since benefits are based on a fixed indemnity. Our claims experience is primarily related to the demographics of our policyholders.

     In computing the estimate of the unpaid policy claim liability, we consider many factors including the benefits and amounts available under the policy, the volume and demographics of the policies exposed to claims, and internal business practices, such as incurred date assignment and current claim administrative practices. We monitor these conditions closely and make adjustments to the liability as actual experience emerges. Claim levels are generally stable from period to period, however, fluctuations in claim levels may occur. In calculating the unpaid policy claim liability, we do not calculate a range of estimates. However, if current period claims were to change by 1%, we would expect the unpaid policy claim liability to change by approximately $20 million.

     Our 2002 claims review indicated that we experienced a decline in the average number of hospital days associated with the typical cancer treatment period in Japan. We believe the average number of days declined primarily due to changes in financial incentives provided to hospitals by the government-sponsored health care system in Japan to shorten the average hospital stay. However, our claims statistics also indicated that the declines in the average number of days per hospitalization were generally offset by an increase in the frequency of hospitalizations associated with the treatment of cancer. This shift reduced current period claims and will increase future period claims.

EXH 13-5

AFLAC Incorporated Form 10-K EXH 13 Table of Contents

     In recognition of the results of our 2002 claims review, we modified our estimates of unpaid policy claims and future policy benefits. In 2002, we transferred $291 million from AFLAC Japan's unpaid policy claims to the liability for future policy benefits to reflect the anticipated decrease in the number of days per hospitalization for the current treatment period and the associated increase in the expected number of future hospitalizations. This transfer had no effect on net earnings.

     The following table presents an analysis of policy liabilities by segment and in total as of December 31:

Policy Liabilities
(In millions)				2003		2002
U.S. segment:
	Liability for future policy benefits		$	2,975	$	2,642
	Liability for unpaid policy claims			593		497
	Other policy liabilities			165		140
		Total U.S. policy liabilities		3,733		3,279
Japan segment:
	Liability for future policy benefits			32,612		27,154
	Liability for unpaid policy claims			1,521		1,255
	Other policy liabilities			1,373		1,037
		Total Japan policy liabilities		35,506		29,446
Total liability for future policy benefits				35,588		29,797
Total liability for unpaid policy claims				2,115		1,753
Total other policy liabilities				1,537		1,176
		Total policy liabilities	$	39,240	$	32,726

New Accounting Pronouncements

     During the last three years, the Financial Accounting Standards Board (FASB) has been active in soliciting comments and issuing statements, interpretations and exposure drafts on issues including derivatives, pensions, variable interest entities, special purpose entities, intangible assets, business combinations and equity-based compensation. For additional information on new accounting pronouncements and the impact, if any, on our financial position or results of operations, see Note 1 of the Notes to the Consolidated Financial Statements.

EXH 13-6

AFLAC Incorporated Form 10-K EXH 13 Table of Contents

Results of Operations

     The following table presents an analysis of net earnings and net earnings per diluted share as well as items impacting those performance measures for the years ended December 31:

Analysis of Net Earnings
		In Millions									Per Diluted Share
			2003			2002			2001			2003			2002			2001
Net earnings		$	795		$	821		$	687		$	1.52		$	1.55		$	1.28
Items impacting net earnings, net of tax:
	Realized investment gains (losses)		(191	)		(15	)		(34	)		(.37	)		(.03	)		(.06	)
	Change in fair value of interest rate
	component of cross-currency swaps		(3	)		37			1			-			.07			-
	Japanese policyholder protection fund		-			(26	)		-			-			(.05	)		-
	Foreign currency translation*		33			(10	)		(37	)		.06			(.02	)		(.07	)
*Translation effect on AFLAC Japan segment and Parent Company yen-denominated interest expense

Realized Investment Gains and Losses

     Our investment strategy is to invest in fixed-income securities in order to provide a reliable stream of investment income, which is one of the drivers of the company's profitability. We do not purchase securities with the intent of generating capital gains or losses. However, investment gains and losses may be realized as a result of changes in the financial markets and the creditworthiness of specific issuers of fixed-maturity securities. The realization of investment gains and losses is independent of the underwriting and administration of our insurance products, which are the principal drivers of our profitability.

     The large realized investment losses in 2003 related primarily to the sale of our investment in Parmalat. Following several credit ratings downgrades of its debt, we sold all of our holdings in Parmalat and realized a pretax loss of $257 million. We also sold our investment in Levi Strauss at a pretax loss of $38 million. These investment losses and other investment transactions in the normal course of business decreased pretax earnings by $301 million (after-tax, $191 million, or $.37 per diluted share).

     In 2002, we recognized pretax impairment losses of $58 million. These impairment losses were primarily related to the corporate debt security of a Japanese issuer and various equity securities we believe experienced other than temporary declines in fair value. These impairment losses and other investment transactions in the normal course of business decreased pretax earnings by $14 million (after-tax, $15 million, or $.03 per diluted share).

     In 2001, we recognized pretax impairment losses of $86 million. These impairment losses were primarily related to the corporate debt securities of a U.S. issuer and a European issuer, both of which experienced credit rating downgrades, and our investment in two human resource service companies. We also realized investment gains in connection with a change in the outside investment manager of a portion of our U.S. equity securities portfolio. These gains and impairment losses, when included with other investment transactions in the normal course of business, decreased pretax earnings by $31 million (after-tax, $34 million, or $.06 per diluted share).

EXH 13-7

AFLAC Incorporated Form 10-K EXH 13 Table of Contents

Cross-Currency Swaps

     We entered into cross-currency swap agreements to effectively convert our dollar-denominated senior debt obligation, which matures in 2009, into a yen-denominated obligation (see Notes 4 and 6 of the Notes to the Consolidated Financial Statements). The effect of issuing fixed-rate, dollar-denominated debt and swapping it into fixed-rate, yen-denominated debt has the same economic impact on AFLAC as if we had issued straight yen-denominated debt of a like amount. The accounting treatment for cross-currency swaps is different from issuing yen-denominated (Samurai) notes. SFAS No. 133, Accounting for Derivative Instruments and Hedging Activities, requires that the change in the fair value of the interest rate component of the cross-currency swap be reflected in the income statement. The change in fair value is determined by relative dollar and yen interest rates and has no cash impact on our results of operations. Additionally, we have the ability to retain the cross-curren cy swaps until their maturity. At maturity, the swaps' fair value and their initial contract fair value will be equal and the cumulative impact of gains and losses from the changes in fair value of the interest component will be zero. The amounts are reported in other income in the consolidated statements of earnings. (See Notes 1 and 4 of the Notes to the Consolidated Financial Statements.)

Nonrecurring Items

     In December 2002, the members of the Life Insurance Policyholder Protection Corporation approved the Financial Services Agency's (FSA) proposal, which required the industry to contribute an additional 78 billion yen (approximately $728 million using the December 31, 2003 exchange rate) to Japan's policyholder protection fund. Our estimated share of the assessment decreased 2002 net earnings by $26 million ($.05 per diluted share). This charge is included in acquisition and operating expenses in the consolidated statement of earnings.

Foreign Currency Translation

     AFLAC Japan's premiums and most of its investment income are received in yen. Claims and expenses are paid in yen, and we primarily purchase yen-denominated assets to support yen-denominated policy liabilities. These and other yen-denominated financial statement items are translated into dollars for financial reporting purposes. We translate AFLAC Japan's income statement from yen into dollars using an average exchange rate for the reporting period, and we translate its balance sheet using an end-of-period exchange rate. However, it is important to distinguish between translating and converting foreign currency. Except for a limited number of transactions, we do not actually convert yen into dollars.

     Due to the relative size of AFLAC Japan, fluctuations in the yen/dollar exchange rate can have a significant effect on our reported results. In periods when the yen weakens, translating yen into dollars causes fewer dollars to be reported. When the yen strengthens, translating yen into dollars causes more dollars to be reported. Consequently, yen weakening has the effect of suppressing current period results in relation to the comparable prior period, while yen strengthening has the effect of magnifying current period results in relation to the comparable prior period. As a result, we view foreign currency translation as a financial reporting issue for AFLAC and not an economic event to our company or shareholders. Because the effect of translating yen into dollars distorts the rate of growth of our operations, management evaluates AFLAC's financial performance excluding the impact of foreign currency translation.

EXH 13-8

AFLAC Incorporated Form 10-K EXH 13 Table of Contents

Income Taxes

     Our combined U.S. and Japanese effective income tax rates on net earnings were 35.1% in 2003, 34.8% in 2002 and 36.4% in 2001. Total income taxes were $430 million in 2003, compared with $438 million in 2002 and $394 million in 2001. Japanese income taxes on AFLAC Japan's results accounted for most of our income tax expense. See Note 7 of the Notes to the Consolidated Financial Statements for additional information on income taxes.

Earnings Projections

     To comply with the SEC's new reporting requirements, we were required to change the format that we use to communicate earnings guidance. Previously, we communicated earnings guidance on the basis of operating earnings per diluted share growth, excluding the effect of foreign currency translation. We now communicate earnings guidance based on net earnings per diluted share growth.

     Our guidance involves projections of net earnings. However, items that cannot be predicted or that are outside of management's control may have a significant impact on actual results. Therefore, our projections of net earnings include certain assumptions to reflect the limitations that are inherent in projections of net earnings.

     In the context of a forward-looking discussion, the impact of foreign currency translation on our results of operations is inherently unpredictable. Therefore, our projections of net earnings assume no impact from foreign currency translation for a given period in relation to the comparable prior period.

     Furthermore, as discussed previously, we do not purchase securities with the intent of generating capital gains or losses. Therefore, we do not attempt to predict realized investment gains and losses, which include impairment charges, as their ultimate realization will be the result of market conditions that may or may not be predictable. As a result, our projections of net earnings assume no realized investment gains or losses in future periods.

     Net earnings are also impacted by the change in the fair value of the interest rate component of our cross-currency swaps, which is determined based on relative dollar and yen interest rates. Similar to foreign currency exchange rates, yen and dollar interest rates are also inherently unpredictable. Consequently, our projections of net earnings assume no impact from the change in the fair value of the interest rate component of our cross-currency swaps.

     Finally, because nonrecurring items represent the financial impact of items that have not occurred within the past two years and are not expected to occur within the next two years, we do not attempt to predict their occurrence in future periods.

     Prior to the required change in disclosure requirements, our upwardly revised objective for 2003 had been to increase operating earnings per diluted share by 17%, excluding the impact of currency translation. The equivalent objective using our new earnings projection format would have been to increase net earnings per diluted share 17%, to $1.83, utilizing the assumptions discussed above. Based on 2003 net earnings per diluted share of $1.52, adjusted for realized investment losses (a loss of $.37 per diluted share), the change in the fair value of the interest rate component of cross-currency swaps (nil per diluted share) and foreign currency translation (a gain of $.06 per diluted share), we achieved our objective for the year.

EXH 13-9

AFLAC Incorporated Form 10-K EXH 13 Table of Contents

     Subject to the assumptions set forth above, our objective for 2004 is to achieve net earnings per diluted share of at least $2.21, an increase of 17%. If we achieve this objective, the following table shows the likely results for 2004 net earnings per diluted share, including the impact of foreign currency translation using various yen/dollar exchange rate scenarios.

     Our objective for 2005 is to increase net earnings per diluted share by 15%, on the basis described above.

2004 Net Earnings Per Share Scenarios*
Weighted-Average
Yen/dollar			Net Earnings per		% Growth		Yen Impact
Exchange Rate			Diluted Share		Over 2003		on EPS
100.00			$	2.38	25.9	%	$	.17
105.00				2.32	22.8			.11
110.00				2.27	20.1			.06
115.95		**		2.21	16.9			-
120.00				2.17	14.8			(.04	)
125.00				2.13	12.7			(.08	)
*Assumes: No realized investment gains/losses, no change in fair value of interest rate component of cross-currency swaps, and
	no nonrecurring items in 2004 and 2003; and no impact from currency translation in 2004
**Actual 2003 weighted-average exchange rate

INSURANCE OPERATIONS

     AFLAC's insurance business consists of two segments: AFLAC Japan and AFLAC U.S. GAAP financial reporting requires that an enterprise report financial and descriptive information about operating segments in its annual financial statements. Furthermore, these requirements direct a public business enterprise to report a measure of segment profit or loss, certain revenue and expense items, and segment assets. We measure and evaluate our insurance segments' financial performance using operating earnings on a pretax basis. We define segment operating earnings as the profits we derive from our operations before realized investment gains and losses, the change in the fair value of the interest rate component of cross-currency swaps, and nonrecurring items. We believe that an analysis of segment operating earnings is vitally important to an understanding of the underlying profitability drivers and trends of our insurance business. Furthermore, because a significant portion of ou r business is conducted in Japan, we believe it is equally important to understand the impact of translating Japanese yen into U.S. dollars.

AFLAC JAPAN

     AFLAC Japan, which operates as a branch of AFLAC, is the principal contributor to consolidated earnings. Based on financial results determined in accordance with FSA requirements for the six months ended September 30, 2003, AFLAC Japan ranked first in terms of individual insurance policies in force and 11th in terms of assets among all life insurance companies operating in Japan.

EXH 13-10

AFLAC Incorporated Form 10-K EXH 13 Table of Contents

AFLAC Japan Pretax Operating Earnings

     Changes in AFLAC Japan's pretax operating earnings and profit margins are primarily affected by investment yields, morbidity, mortality, persistency and expense levels. An ongoing shift in our product mix to products with lower loss ratios and favorable claim trends on some lines of business contributed to the decline in the benefit ratio. We expect the benefit ratio to continue to decline in future years primarily reflecting the shift to newer products and riders. Our persistency has declined only slightly over the last three years. The operating expense ratio has declined over the last two years. We expect the operating expense ratio to be relatively stable in the future. The expansion of the profit margins during the past three years was largely attributable to the declining benefit ratio, which is partially offset by the effect of low investment yields. Lower investment yields affect our profit margins by reducing the spread between investment yields and required i nterest on policy reserves related to our older blocks of policies in force (see table and discussion on page 13-19).

     The following table presents a summary of operating results for AFLAC Japan.

AFLAC Japan Summary of Operating Results
(In millions)			2003		2002		2001
Premium income		$	7,326	$	6,373	$	6,217
Net investment income			1,421		1,276		1,234
Other income			18		1		1
	Total operating revenues		8,765		7,650		7,452
Benefits and claims			5,943		5,231		5,170
Operating expenses			1,682		1,481		1,459
	Total benefits and expenses		7,625		6,712		6,629
	Pretax operating earnings*	$	1,140	$	938	$	823
Weighted-average yen/dollar exchange rates			115.95		125.15		121.54

		In Dollars									In Yen
Percentage changes over previous year:		2003			2002			2001			2003			2002			2001
	Premium income	15.0	%		2.5	%		(6.8	)%		6.4		%	5.5	%		5.1		%
	Net investment income	11.3			3.4			(2.2	)		3.1			6.5			10.5
	Total operating revenues	14.6			2.7			(6.1	)		6.1			5.6			5.9
	Pretax operating earnings*	21.6			13.9			6.7			12.6			17.4			20.6
Ratios to total revenues in dollars:				2003						2002						2001
	Benefits and claims			67.8			%			68.4		%				69.4		%
	Operating expenses			19.2						19.3						19.6
	Pretax operating earnings*			13.0						12.3						11.0
*See page 13-10 for our definition of segment operating earnings.

EXH 13-11

AFLAC Incorporated Form 10-K EXH 13 Table of Contents

     AFLAC Japan maintains a portfolio of dollar-denominated and reverse-dual currency securities (yen-denominated debt securities with dollar coupon payments). Dollar-denominated investment income from these assets accounted for approximately 29% of AFLAC Japan's investment income in each of the last three years. In years when the yen strengthens, translating AFLAC Japan's dollar-denominated investment income into yen lowers comparative rates of growth for net investment income, total operating revenues and pretax operating earnings in yen terms. In years when the yen weakens, translating dollar-denominated investment income into yen magnifies comparative rates of growth for net investment income, total operating revenues and pretax operating earnings in yen terms. The following table illustrates the effect of translating AFLAC Japan's dollar-denominated investment income and related items by comparing certain segment results with those that would have been reported ha d yen/dollar exchange rates remained unchanged from the previous year.

AFLAC Japan Percentage Changes Over Prior Year
(Yen Operating Results)
		Including Foreign						Excluding Foreign
		Currency Changes						Currency Changes**
		2003		2002		2001		2003		2002		2001
Net investment income		3.1	%	6.5	%	10.5	%	5.5	%	5.6	%	6.9	%
Total operating revenues		6.1		5.6		5.9		6.5		5.5		5.3
Pretax operating earnings*		12.6		17.4		20.6		15.8		16.1		15.2
*	See page 13-10 for our definition of segment operating earnings.
**	Amounts excluding foreign currency changes on dollar-denominated items were determined using the same yen/dollar exchange rate for the current year as each respective prior year.

AFLAC Japan Sales

     AFLAC Japan produced another year of better-than-expected total new annualized premium sales. Total new annualized premium sales were: $1.0 billion in 2003, up 20.8% from 2002; $867 million in 2002, up 14.8% from 2001; and $755 million in 2001, down 18.0% from 2000. These strong sales results reflect the continued popularity of our new stand-alone medical policy, EVER. Total new annualized premium sales in yen were: 121.2 billion yen in 2003, up 11.9% compared with 2002; 108.3 billion yen in 2002, up 17.9% compared with 2001; and 91.9 billion yen in 2001, down 7.9% compared with 2000. For 2004, our objective is to increase total new annualized premium sales by 5% to 10% in yen.

     The percentage increases in premium income reflect the growth of premiums in force. The increases in annualized premiums in force in yen of 7.9% in 2003, 6.7% in 2002, and 5.6% in 2001 reflect the high persistency of AFLAC Japan's business and the sales of new policies. Annualized premiums in force at December 31 were: 900.2 billion yen in 2003, 834.4 billion yen in 2002, and 782.2 billion yen in 2001. Annualized premiums in force, translated into dollars at respective year-end exchange rates were: $8.4 billion in 2003, $7.0 billion in 2002, and $5.9 billion in 2001.

EXH 13-12

AFLAC Incorporated Form 10-K EXH 13 Table of Contents

     AFLAC Japan's sales mix has been shifting during the last few years. During 2003, sales of EVER, a whole-life fixed-benefit medical product, which we introduced in early 2002, exceeded sales for Rider MAX. We believe consumer response to EVER has been favorably impacted by health care legislation that increased out-of-pocket costs for most Japanese consumers in April 2003. Stand-alone medical sales accounted for 28% of total sales in 2003, compared with 17% of total new annualized premium sales in 2002. We believe that EVER will continue to be a popular product and a solid contributor to sales.

     Rider MAX accounted for 27% of total sales in 2003, 31% in 2002, and 25% in 2001. After a difficult year in 2001, Rider MAX sales improved in 2002, primarily as a result of conversions from the original term policy to the newly introduced whole-life version. Conversions also impacted 2003 total sales results for Rider MAX but not as much as they did in 2002. Conversion activity accounted for approximately 24% of total Rider MAX sales in 2003, compared with 35% in 2002. For policy conversions, new annualized premium sales include only the incremental annualized premium amount over the original term policy. We expect that the effect of conversions on total new annualized sales will continue to decline in future periods.

     Cancer life sales accounted for 27% of total sales in 2003, 33% in 2002, and 51% in 2001. Life production accounted for 13% of total sales in both 2003 and 2002 and 15% in 2001.

     We continue to be pleased with the results of our marketing alliance with Dai-ichi Mutual Life Insurance Co., which formally began in April 2001. In 2003, Dai-ichi Life sold 305,600 of our cancer life policies, compared with 359,500 in 2002 and 265,200 in 2001. Dai-ichi Life sales of our cancer policies accounted for 10% of total new annualized premium sales in 2003 and 11% of total sales in both 2002 and 2001.

     We also continued to focus on the growth of our distribution system in Japan. During 2003, the number of licensed sales associates rose 12% to approximately 64,900, compared with 58,100 at December 31, 2002. The growth of licensed sales associates resulted from agency recruitment. In 2003, we recruited more than 4,000 agencies, which exceeded our goal of 3,500 agencies. We believe that new agencies and sales associates will continue to be attracted to AFLAC Japan's high commissions, superior products, customer service and brand image. Furthermore, we believe that these new agencies and associates will enable us to expand our reach even further within the Japanese market.

AFLAC Japan Investments

     Growth of investment income in yen is affected by available cash flow from operations, investment yields achievable on new investments, and the effect of yen/dollar exchange rates on dollar-denominated investment income.

     We purchased yen-denominated securities at an average yield of 3.20% in 2003, compared with 3.65% in 2002 and 3.58% in 2001. Including dollar-denominated investments, our blended new money yield was 3.61% in 2003, compared with 3.93% in 2002 and 3.86% in 2001. At December 31, 2003, the yield on AFLAC Japan's investment portfolio (including dollar-denominated investments) was 4.54%, compared with 4.73% in 2002 and 4.89% in 2001. Our return on average invested assets, net of investment expenses, was 4.50% in 2003, compared with 4.67% in 2002 and 4.81% in 2001.

EXH 13-13

AFLAC Incorporated Form 10-K EXH 13 Table of Contents

     AFLAC Japan has invested in privately issued securities to secure higher yields than Japanese government or other corporate bonds would have provided, while still adhering to prudent standards for credit quality. All of our privately issued securities are rated investment grade at the time of purchase. These securities are generally issued with standard, medium-term note documentation and have appropriate covenants.

Japanese Economy

     The economic situation in Japan exhibited signs of improvement during the last half of 2003. And while recent events appear to indicate that the foundation for a recovery is being laid, the time required for a full economic recovery remains uncertain.

AFLAC U.S.

AFLAC U.S. Pretax Operating Earnings

     Changes in AFLAC U.S. pretax operating earnings and profit margins are primarily affected by morbidity, mortality, persistency, investment yields and expense levels. The aggregate benefit ratio and our overall policy persistency have been relatively stable during the last three years. We expect the operating expense ratio, excluding discretionary advertising expenses, and the pretax operating profit margin to remain relatively level in 2004. The following table presents a summary of operating results for AFLAC U.S.

AFLAC U.S. Summary of Operating Results
(In millions)			2003			2002			2001
Premium income		$	2,594		$	2,221		$	1,844
Net investment income			362			331			303
Other income			9			9			8
	Total operating revenues		2,965			2,561			2,155
Benefits and claims			1,585			1,359			1,132
Operating expenses			929			800			678
	Total benefits and expenses		2,514			2,159			1,810
	Pretax operating earnings*	$	451		$	402		$	345
Percentage changes over previous year:
	Premium income		16.8	%		20.5	%		18.6	%
	Net investment income		9.3			9.2			9.6
	Total operating revenues		15.8			18.8			17.4
	Pretax operating earnings*		12.0			16.7			18.7
Ratios to total revenues:
	Benefits and claims		53.5	%		53.1	%		52.5	%
	Operating expenses		31.3			31.2			31.5
	Pretax operating earnings*		15.2			15.7			16.0
*See page 13-10 for our definition of segment operating earnings.

EXH 13-14

AFLAC Incorporated Form 10-K EXH 13 Table of Contents

AFLAC U.S. Sales

     Total new annualized premium sales were: $1.13 billion in 2003, up 5.4%; $1.07 billion in 2002, up 16.4%; and $919 million in 2001, up 29.1%. The percentage increases in premium income, as shown in the preceding table, reflect the growth of premiums in force. The increases in annualized premiums in force of 13.8% in 2003, 19.5% in 2002 and 20.3% in 2001 were favorably affected by increased sales at the worksite primarily through cafeteria plans and a slight improvement in the persistency of several products. Annualized premiums in force at December 31 were: $3.0 billion in 2003; $2.7 billion in 2002; and $2.2 billion in 2001.

     We were disappointed with our sales growth in 2003 and have taken several steps to improve future sales growth. Our actions primarily are centered on enhancing our distribution system by expanding the sales management infrastructure that supports our sales force. We increased the number of sales territories from five to seven and we also increased the number of state, regional and district sales coordinators. We anticipate additional coordinator expansion in the future.

     The percentage growth in newly recruited agents lagged during 2003, rising 2.2% over 2002 due primarily to our focus on expanding our state, regional and district sales coordinator base. The average number of associates producing business on a monthly basis increased 8.3% to 17,200, compared with 15,800 in 2002. We believe that the number of newly recruited agents and producing associates will improve in future periods as our newly promoted field management becomes more seasoned.

     Another aspect of our growth strategy is the enhancement of our product line. During 2003, we introduced new versions of our accident, cancer and short-term disability insurance policies throughout the United States. We believe these changes will benefit sales growth in future periods. Our objective for 2004 is to increase total new annualized premium sales by 10% to 12%.

     The sales mix of our products has remained relatively consistent during the last three years. Our best-selling category continued to be accident/disability coverage, which accounted for 51% of total sales in 2003 and 2002 and 52% in 2001. Cancer expense insurance was another solid contributor to sales, accounting for 20% of total sales in 2003, 21% in 2002 and 24% in 2001. Our hospital indemnity product category also contributed strongly to sales in 2003 as a result of the personal sickness indemnity plan we introduced in 2002. Hospital indemnity products accounted for 11% of total sales in 2003, 10% in 2002 and 6% in 2001. Additionally, fixed-benefit dental coverage continued to sell well, accounting for 7% of total sales in 2003, 2002 and 2001.

AFLAC U.S. Investments

     During 2003, available cash flow was invested at an average yield of 6.52%, compared with 7.58% during 2002 and 7.80% during 2001. At December 31, 2003, the yield on AFLAC's U.S. portfolio was 7.56%, compared with 7.98% in 2002 and 8.02% in 2001. The overall return on average invested assets, net of investment expenses, was 7.36% in 2003, compared with 7.56% in 2002 and 7.67% in 2001.

EXH 13-15

AFLAC Incorporated Form 10-K EXH 13 Table of Contents

Other Operations

     Corporate operating expenses consist primarily of personnel compensation, benefits, and facilities expenses. Corporate expenses, excluding investment income, were $47 million in 2003, $56 million in 2002 and $46 million in 2001. Investment income included in reported corporate expenses was $5 million in 2003, $7 million in 2002 and $13 million in 2001. The increase in corporate expenses in 2002 was primarily attributable to the Parent Company's share of the costs to dissolve a human resource service company in which it had invested.

Analysis of Financial Condition

     Our financial condition has remained strong in the functional currencies of our operations during the last two years. The yen/dollar exchange rate at the end of each period is used to translate yen-denominated balance sheet items to U.S. dollars for reporting purposes. The exchange rate at December 31, 2003, was 107.13 yen to one U.S. dollar, or 11.9% stronger than the December 31, 2002, exchange rate of 119.90. The stronger yen increased reported investments and cash by $3.7 billion, total assets by $4.2 billion, and total liabilities by $4.2 billion, compared with the amounts that would have been reported for 2003 if the exchange rate had remained unchanged from year-end 2002.

Market Risks of Financial Instruments

     Our financial instruments are exposed primarily to two types of market risks. They are currency risk and interest rate risk. During 2003, we liquidated the majority of our equity investments and therefore no longer consider equity price risk to be material.

Currency Risk

     The functional currency of AFLAC Japan's insurance operation is the Japanese yen. All of AFLAC Japan's premiums, claims and commissions are received or paid in yen as are most of its investment income and other expenses. Furthermore, most of AFLAC Japan's investments, cash and liabilities are yen-denominated. When yen-denominated securities mature or are sold, the proceeds are generally reinvested in yen-denominated securities. AFLAC Japan holds these yen-denominated assets to fund its yen-denominated policy obligations. In addition, AFLAC Incorporated has yen-denominated notes payable and cross-currency swaps related to its senior notes.

     Although we generally do not convert yen into dollars, we do translate financial statement amounts from yen into dollars for financial reporting purposes. Therefore, the translation of the reported amounts is affected by foreign currency fluctuations. We report unrealized foreign currency translation gains and losses in accumulated other comprehensive income.

     On a consolidated basis, we attempt to match yen-denominated assets to yen-denominated liabilities in order to minimize the exposure of our shareholders' equity to foreign currency translation fluctuations. We accomplish this by investing a portion of AFLAC Japan's investment portfolio in dollar-denominated securities (see Note 2 of the Notes to the Consolidated Financial Statements) and by the Parent Company's issuance of yen-denominated debt and use of cross-currency swaps (see Notes 4 and 6 of the Notes to the Consolidated Financial Statements). As a result, the effect of currency fluctuations on our net assets is mitigated.

EXH 13-16

AFLAC Incorporated Form 10-K EXH 13 Table of Contents

     At December 31, consolidated yen-denominated net assets were $291 million in 2003 and $991 million in 2002. AFLAC Japan's yen-denominated net assets were $1.7 billion at December 31, 2003, compared with $2.3 billion a year ago. AFLAC Incorporated's yen-denominated net liabilities were $1.5 billion at December 31, 2003, compared with $1.3 billion a year ago. The following table compares the dollar values of our yen-denominated assets and liabilities and our net yen-denominated asset exposure at selected exchange rates.

Dollar Value of Yen-Denominated Assets and Liabilities
at Selected Exchange Rates
(December 31)
(In millions)					2003									2002
Yen/dollar exchange rates					92.13			107.13*			122.13			104.90			119.90*			134.90
Yen-denominated
financial instruments:
	Assets:
		Securities available for sale:
		Fixed maturities		$	21,524		$	18,510		$	16,237		$	18,152		$	15,881		$	14,115
		Perpetual debentures			3,386			2,911			2,554			2,703			2,365			2,102
		Equity securities			43			37			32			155			136			121
		Securities held to maturity:
		Fixed maturities			10,158			8,737			7,663			9,594			8,394			7,460
		Perpetual debentures			4,996			4,297			3,769			4,229			3,700			3,289
		Cash and cash equivalents			700			602			528			1,260			1,102			979
		Other financial instruments			-			-			-			9			8			8
			Subtotal		40,807			35,094			30,783			36,102			31,586			28,074
	Liabilities:
		Notes payable			1,116			960			842			987			863			767
		Cross-currency swaps			603			519			455			529			463			412
		Obligation for Japanese
		policyholder protection fund			308			265			232			260			227			202
		Other financial instruments			6			5			5			-			-			-
			Subtotal		2,033			1,749			1,534			1,776			1,553			1,381
Net yen-denominated
financial instruments					38,774			33,345			29,249			34,326			30,033			26,693
Other yen-denominated assets					5,393			4,637			4,068			4,429			3,874			3,444
Other yen-denominated liabilities					(43,828	)		(37,691	)		(33,062	)		(37,622	)		(32,916	)		(29,256	)
Consolidated yen-denominated
net assets subject to foreign
currency fluctuation				$	339		$	291		$	255		$	1,133		$	991		$	881
*Actual year-end exchange rates

EXH 13-17

AFLAC Incorporated Form 10-K EXH 13 Table of Contents

     We are only exposed to economic currency risk when yen funds are actually converted into dollars. This primarily occurs when we transfer funds from AFLAC Japan to AFLAC U.S., which is done annually. The exchange rates prevailing at the time of transfer will differ from the exchange rates prevailing at the time the yen profits were earned. Generally, these repatriations have represented an amount less than 80% of AFLAC Japan's prior year FSA-based earnings. A portion of the repatriation may be used to service AFLAC Incorporated's yen-denominated notes payable and the remainder is converted into dollars.

Interest Rate Risk

     Our primary interest rate exposure is a result of the effect of changes in interest rates on the fair value of our investments in debt securities. We use modified duration analysis, which measures price percentage volatility, to estimate the sensitivity of our debt securities' fair values to interest rate changes. For example, if the current duration of a debt security is 10, then the fair value of that security will increase by approximately 10% if market interest rates decrease by 100 basis points, assuming all other factors remain constant. Likewise, the fair value of the debt security will decrease by approximately 10% if market interest rates increase by 100 basis points, assuming all other factors remain constant.

     The estimated effect of potential increases in interest rates on the fair values of our debt securities, notes payable, cross-currency swaps and our obligation for the Japanese policyholder protection fund follows:

Sensitivity of Fair Values of Financial Instruments
to Interest Rate Changes
(December 31)
				2003						2002
							+100					+100
				Market			Basis			Market		Basis
(In millions)				Value			Points			Value		Points
Debt securities:
	Fixed-maturity securities:
	Yen-denominated		$	27,757		$	25,103		$	24,480	$	22,075
	Dollar-denominated			8,001			7,336			6,778		6,261
	Perpetual debentures:
	Yen-denominated			7,323			6,616			5,960		5,361
	Dollar-denominated			438			416			365		345
		Total debt securities	$	43,519		$	39,471		$	37,583	$	34,042
Notes payable*			$	1,451		$	1,405		$	1,333	$	1,280
Cross-currency swaps assets/(liabilities)			$	(29	)	$	(25	)	$	25	$	27
Obligation for Japanese policyholder
protection fund			$	265		$	265		$	227	$	227
*Excludes capitalized lease obligations

EXH 13-18

AFLAC Incorporated Form 10-K EXH 13 Table of Contents

     Changes in the interest rate environment have contributed to significant unrealized gains on our debt securities. However, we do not expect to realize a majority of these unrealized gains because we have the intent and ability to hold these securities to maturity. Should significant amounts of unrealized losses occur because of increases in market yields, we would not expect to realize significant losses because we have the ability to hold such securities to maturity. For additional information on unrealized losses on debt securities, see Note 3 of the Notes to the Consolidated Financial Statements.

     We attempt to match the duration of our assets with the duration of our liabilities. For AFLAC Japan, the duration of policy benefits and related expenses to be paid in future years is longer than that of the related invested assets due to the unavailability of acceptable long-duration yen-denominated securities. The average duration of policy benefits and related expenses to be paid in future years was approximately 12 years in both 2003 and 2002. The average duration of the yen-denominated debt securities was approximately 11 years in 2003 and 10 years in 2002. The average duration of premiums to be received in the future was approximately nine years in both 2003 and 2002. The following table shows a comparison of average required interest rates for future policy benefits and investment yields, based on amortized cost, for the years ended December 31.

Comparison of Interest Rates for Future Policy Benefits
and Investment Yields
(Net of investment expenses)
		2003				2002				2001
		U.S.		Japan	*	U.S.		Japan	*	U.S.		Japan	*
Policies issued during year:
	Required interest on
	policy reserves	6.40	%	2.98	%	6.48	%	2.98	%	6.43	%	2.99	%
	New money yield on
	investments	6.46		3.14		7.52		3.59		7.73		3.51
Policies in force during year:
	Required interest on
	policy reserves	6.40		4.91		6.39		5.02		6.41		5.12
	Net investment yield	7.36		4.16		7.56		4.40		7.67		4.40
*Represents yen-denominated investments for AFLAC Japan that support policy obligations and therefore excludes    AFLAC Japan's dollar-denominated investments and related investment income

     Over the next two years, we have several yen-denominated securities that mature with yields in excess of AFLAC Japan's current net investment yield of 4.16%. These securities total $508 million at amortized cost and have an average yield of 5.13%. These maturities will contribute to a continued decline in our overall portfolio yield. Currently, when our debt securities mature, the proceeds may be reinvested at a yield below that of the interest required for the accretion of policy benefit liabilities on policies issued in earlier years. However, the investment yield on new investments has exceeded interest requirements on policies issued in recent years. Since 1994, premium rates on new business have been increased several times to help offset the lower available investment yields. Also in recent years, our strategy of developing and marketing riders as attachments to our older policies has helped offset the negative investment spread. And despite the negative investme nt spreads, adequate overall profit margins still exist in AFLAC Japan's aggregate block of business because of profits that have emerged from changes in mix of business and favorable experience from mortality, morbidity, and expenses.

EXH 13-19

AFLAC Incorporated Form 10-K EXH 13 Table of Contents

Investments and Cash

     Our investment philosophy is to maximize investment income while emphasizing liquidity, safety and quality. Our investment objective, subject to appropriate risk constraints, is to fund policyholder obligations and other liabilities in a manner that enhances shareholders' equity. We seek to meet this objective through a diversified portfolio of fixed-income investments that reflects the characteristics of the liabilities it supports.

     AFLAC invests primarily within the debt securities markets. Our investment activities expose us to credit risk, which is a consequence of extending credit and/or carrying investment positions. However, we continue to adhere to prudent standards for credit quality. We accomplish this by considering our product needs and the overall objectives of AFLAC Incorporated, in addition to credit risk. Our investment policy requires that all securities be rated investment grade at the time of purchase. In evaluating the initial rating, we look at the overall senior issuer rating, the explicit rating for the actual issue or the rating for the security class, and the appropriate NAIC designation from the Securities Valuation Office (SVO). In addition, we perform extensive internal credit reviews to ensure that we are consistent in applying rating criteria for all of our securities.

     The following table presents an analysis of investment securities by segment as of December 31:

				AFLAC Japan				AFLAC U.S.
(In millions)				2003		2002		2003			2002
Securities available for sale, at fair value:
	Fixed maturities		$	21,098	$	18,036	$	5,397	*	$	4,623	*
	Perpetual debentures			3,121		2,569		228			161
	Equity securities			37		136		36			122
		Total available for sale		24,256		20,741		5,661			4,906
Securities held to maturity, at amortized cost:
	Fixed maturities			8,736		8,394		16			-
	Perpetual debentures			4,297		3,700		-			-
		Total held to maturity		13,033		12,094		16			-
		Total investment securities	$	37,289	$	32,835	$	5,677		$	4,906
*Includes securities held by the parent company of $39 in 2003 and $207 in 2002

     The increase in investments and cash during 2003 reflected the effect of a stronger yen/dollar exchange rate and the substantial cash flows in the functional currencies of our operations. See Capital Resources and Liquidity on page 13-30 for additional information.

     We have investments in both publicly issued and privately issued securities. However, the status of issuance should not be viewed as an indicator of liquidity or as a limitation on the determination of fair value. The outstanding amount of a particular issuance, as well as the level of activity in a particular issuance and the state of the market, including credit events and the interest rate environment, affect liquidity regardless of type of issuance. We routinely assess the fair value of all of our investments. This process includes evaluating quotations provided by outside securities pricing sources and/or compiled using data provided by external debt and equity market sources, as described more fully in Note 3 of the Notes to the Consolidated Financial Statements.

EXH 13-20

AFLAC Incorporated Form 10-K EXH 13 Table of Contents

     The following table presents an analysis of investment securities by type of issuance as of December 31:

					2003				2002
				Amortized		Fair		Amortized		Fair
(In millions)				Cost		Value		Cost		Value
Publicly issued securities:
	Fixed maturities			$	14,858	$	17,307	$	13,627	$	16,194
	Perpetual debentures				36		40		22		25
	Equity securities				28		68		258		253
		Total publicly issued			14,922		17,415		13,907		16,472
Privately issued securities:
	Fixed maturities				17,579		18,451		14,189		15,064
	Perpetual debentures				7,542		7,721		6,436		6,301
	Equity securities				4		4		4		4
		Total privately issued			25,125		26,176		20,629		21,369
			Total investment securities	$	40,047	$	43,591	$	34,536	$	37,841

     Total privately issued securities accounted for 62.8%, at amortized cost, of total debt securities as of December 31, 2003, compared with 60.2% at December 31, 2002. Privately issued securities held by AFLAC Japan at amortized cost accounted for $23.3 billion, or 58.1%, and $19.3 billion, or 56.3%, of total debt securities at December 31, 2003 and 2002, respectively. Of the total privately issued securities, reverse-dual currency debt securities accounted for $6.5 billion, or 25.7%, of total privately issued securities as of December 31, 2003, compared with $4.7 billion, or 22.6%, at December 31, 2002. AFLAC Japan has invested in privately issued securities to secure higher yields than those available from Japanese government bonds. AFLAC Japan's investments in yen-denominated privately issued securities consist primarily of non-Japanese issuers, which helps reduce our exposure to Japanese corporate issuers. These non-Japanese issuers are willing to issue yen-denominated securities with longer maturities, thereby allowing us to improve our asset/liability matching and our overall investment returns. Most of our privately issued securities are issued under medium-term note programs and have standard documentation commensurate with credit ratings, except when internal credit analysis indicates that additional protective and/or event-risk covenants are required.

     We use specific criteria to judge the credit quality of both existing and prospective investments. Furthermore, we use several methods to monitor these criteria, including credit rating services and internal credit analysis. All of our securities have ratings from either a nationally recognized security rating organization (NRSRO) or the SVO of the NAIC. The percentage distribution by credit rating of our purchases of debt securities for the years ended December 31, at amortized cost, was as follows:

	2003		2002
AAA	9.0	%	1.7	%
AA	18.1		21.1
A	32.4		47.5
BBB	40.5		29.7
	100.0	%	100.0	%

EXH 13-21

AFLAC Incorporated Form 10-K EXH 13 Table of Contents

     The percentage distribution of our debt securities, at amortized cost and fair value, by credit rating was as follows:

	December 31, 2003				December 31, 2002
	Amortized		Fair		Amortized		Fair
	Cost		Value		Cost		Value
AAA	3.1	%	3.1	%	2.3	%	2.5	%
AA	31.0		33.5		34.6		38.3
A	33.9		33.6		36.8		36.0
BBB	29.2		27.4		24.0		21.5
BB or lower	2.8		2.4		2.3		1.7
	100.0	%	100.0	%	100.0	%	100.0	%

     The overall credit quality of our portfolio remained high in part because our investment policy prohibits us from purchasing below-investment-grade securities. However, our holdings of below-investment-grade securities have increased somewhat in recent years as the overall credit environment has deteriorated.

     In the event of a credit rating downgrade to below-investment-grade status, we do not automatically liquidate our position. However, if the security is in the held-to-maturity portfolio, we immediately transfer it to the available-for-sale portfolio so that the security's fair value and its unrealized gain/loss are reflected on the balance sheet.

     Once we designate a security as below-investment-grade, we begin a more intensive monitoring of the issuer. We do not automatically recognize an impairment for the difference between fair value and carrying value. Our investment management starts by reviewing its credit analysis. Included in this process are an evaluation of the issuer, its current credit posture and an assessment of the future prospects for the company. We then obtain fair value information from at least three independent pricing sources. Upon determining the fair value, we move our focus to an analysis of whether or not the decline in fair value, if any, is other than temporary. For securities with a carrying value in excess of fair value, investment management then reviews the issue based on our impairment policy to determine if the investment should be impaired and/or liquidated. The assessment of whether a decline is other than temporary requires significant management judgment and is discussed mo re fully in the Critical Accounting Estimates section on page 13-3.

EXH 13-22

AFLAC Incorporated Form 10-K EXH 13 Table of Contents

Securities classified as below investment grade as of December 31 were as follows:

Below-Investment-Grade Securities
			2003					2002
		Amortized			Fair			Amortized		Fair
(In millions)		Cost			Value			Cost		Value
Ahold Finance		$		348		$	294	$	*	$	*
KLM Royal Dutch Airlines				280			240		250		158
Royal and Sun Alliance Insurance				233			185		*		*
AMP Japan				56			65		*		*
Asahi Finance Limited				48			83		42		46
LeGrand				46			46		86		66
Tennessee Gas Pipeline				31			31		40		33
SB Treasury Co. LLC				28			32		*		*
Tyco International				18			21		*		*
Ikon, Inc.				16			20		*		*
Cerro Negro Finance				12			13		67		40
PDVSA Finance				9			9		32		25
BIL Asia Group				-			-		133		124
Levi Strauss & Co.				-			-		117		117
KDDI				-			-		22		21
Other				-			-		2		5
	Total	$		1,125		$	1,039	$	791	$	635
*Investment-grade at respective reporting date

     Occasionally a debt security will be split-rated. This occurs when one rating agency rates the security as investment grade while another rating agency rates the same security as below investment grade. As a result of the current credit environment, we changed our credit rating classification policy on split-rated securities during 2003. Prior to 2003, our practice was to report split-rated securities based on the higher credit rating. However, our current policy is to review each issue on a case-by-case basis to determine if a split-rated security should be classified as investment grade or below investment grade. Our review includes evaluating the SVO designation as well as current market pricing and other factors, such as the issuer's or security's inclusion on a credit rating downgrade watch list.

EXH 13-23

AFLAC Incorporated Form 10-K EXH 13 Table of Contents

     Split-rated securities as of December 31, 2003, represented 2.3% of total debt securities at amortized cost and were as follows:

Split-Rated Securities
		Amortized		Moody's	S&P	SVO	Investment Grade or
(In millions)		Cost		Rating	Rating	Class	Below Investment Grade
Sumitomo Bank	$		358	Baa1	BB+	2/P2	Investment Grade
Royal and Sun Alliance
Insurance			233	Ba2	BBB	3	Below Investment Grade
Sanwa Finance			103	Baa1	BB+	2/P2	Investment Grade
Fujitsu, Ltd.			69	Baa2	BB+	2	Investment Grade
AMP Japan			56	Ba3	BBB-	3	Below Investment Grade
SB Treasury Company LLC			28	Baa3	B+	P3	Below Investment Grade
Tyco International			18	Ba2	BBB-	3	Below Investment Grade
Fuji Finance			17	Baa1	BB+	2	Investment Grade
Ikon, Inc.			16	Ba1	BBB-	3	Below Investment Grade
Union Carbide Corp.			15	B1	BBB-	4/4Z	Investment Grade

     The following table presents an analysis of amortized cost, fair value and unrealized gains and losses for our investments in debt securities by investment-grade status as of December 31, 2003.

			Total		Total		Percent		Gross		Gross
			Amortized		Fair		of Fair		Unrealized		Unrealized
(In millions)			Cost		Value		Value		Gains		Losses
Available-for-sale securities:
	Investment-grade securities		$	25,841	$	28,805	66.2	%	$	3,461	$	496
	Below-investment-grade securities			1,125		1,039	2.4			59		145
Held-to-maturity securities:
	Investment-grade securities			13,048		13,675	31.4			858		232
		Total	$	40,014	$	43,519	100	%	$	4,378	$	873

     For an analysis of values and unrealized gains and losses for our investments in debt and equity securities as of December 31, 2003, presented by sector for debt securities, see Note 3 of the Notes to the Consolidated Financial Statements.

EXH 13-24

AFLAC Incorporated Form 10-K EXH 13 Table of Contents

     The following table presents an aging of securities in an unrealized loss position as of December 31, 2003.

Aging of Unrealized Losses
											Six months
			Total		Total		Less than six months				to 12 months					Over 12 months
			Amortized		Unrealized		Amortized		Unrealized		Amortized		Unrealized		Amortized		Unrealized
(In millions)			Cost		Loss		Cost		Loss		Cost		Loss		Cost		Loss
Available-for-sale
securities:
	Investment-grade
	securities		$	5,482	$	496	$	3,131	$	249	$	2,339	$	247	$	12	$	-
	Below-investment-
	grade securities			892		145		-		-		268		51		624		94
Held-to-maturity
securities:
	Investment-grade
	securities			3,694		232		2,193		105		1,289		108		212		19
		Total	$	10,068	$	873	$	5,324	$	354	$	3,896	$	406	$	848	$	113

     The following table presents a distribution of unrealized losses by magnitude as of December 31, 2003.

Percentage Decline from Amortized Cost
							Percentage of Decline
			Total		Total		Less than 20%				20% to 30%
		Amortized		Unrealized		Amortized		Unrealized		Amortized		Unrealized
(In millions)		Cost		Loss		Cost		Loss		Cost		Loss
Available-for-sale securities:
	Investment-grade securities	$	5,482	$	496	$	4,885	$	336	$	597	$	160
	Below-investment-
	grade securities		892		145		659		96		233		49
Held-to-maturity securities:
	Investment-grade securities		3,694		232		3,507		187		187		45
	Total	$	10,068	$	873	$	9,051	$	619	$	1,017	$	254

     The fair value of our investments in debt securities can fluctuate greatly as a result of changes in interest rates and foreign currency exchange rates. We believe that the declines in fair value noted above primarily resulted from changes in the interest rate and foreign currency environments rather than credit issues. Therefore, we believe that it would be inappropriate to recognize impairment charges for changes in fair value that we believe are temporary.

EXH 13-25

AFLAC Incorporated Form 10-K EXH 13 Table of Contents

     The following table presents the ten largest unrealized loss positions in our portfolio as of December 31, 2003.

	Credit	Amortized		Fair		Unrealized
(In millions)	Ratings	Cost		Value		Loss
Takefuji	BBB	$	737	$	578	$	159
Ahold Finance	BB		348		294		54
Investor AB	AA		280		229		51
Royal and Sun Alliance Insurance	BB		233		184		49
KBC Bancassurance	A		239		197		42
KLM Royal Dutch Airlines	B		280		240		40
CSAV	BBB		224		190		34
Unique Zurich	BBB		345		311		34
First Austrian Bank	A		420		387		33
United Mexican States	BBB		421		390		31

     Based on our evaluation and analysis of specific issuers in accordance with our impairment policy, we recognized the following impairment charges during the three-year period ended December 31, 2003.

(In millions)			2003		2002		2001
Fixed maturities		$	-	$	-	$	55
Perpetual debentures			-		37		-
Equity securities			1		21		31
	Total impairments	$	1	$	58	$	86

     Realized losses on debt securities by investment-grade status were as follows for the year ended December 31, 2003:

						Realized
(In millions)				Proceeds		Loss
Investment-grade securities, length of consecutive unrealized loss:
	Less than six months			$	121	$	8
	Six months to 12 months				21		1
	Over 12 months				11		1
		Subtotal			153		10
Below-investment-grade securities, length of consecutive unrealized loss:
	Less than six months				171		257
	Six months to 12 months				100		40
	Over 12 months				180		58
		Subtotal			451		355
			Total	$	604	$	365

EXH 13-26

AFLAC Incorporated Form 10-K EXH 13 Table of Contents

     As part of our investment activities, we have investments in variable interest entities (VIEs) and special purpose entities (SPEs). See Notes 1 and 3 of the Notes to the Consolidated Financial Statements for additional information.

     For the Japanese reporting fiscal year ended March 31, 2002, new Japanese accounting principles and regulatory requirements became effective that impact investment classifications and solvency margin ratios on a Japanese accounting basis as prescribed by the FSA. For additional information, see Notes 3 and 9 of the Notes to the Consolidated Financial Statements.

     Cash, cash equivalents and short-term investments totaled $1.1 billion, or 2.4% of total investments and cash, as of December 31, 2003, compared with $1.4 billion, or 3.5% of total investments and cash, at December 31, 2002. Mortgage loans on real estate and other long-term investments remained immaterial at both December 31, 2003 and 2002.

     For additional information concerning investments and fair values, including information on the maturities of our investments in fixed maturities and perpetual debentures presented by segment at cost and fair value, see Notes 3 and 4 of the Notes to the Consolidated Financial Statements.

Deferred Policy Acquisition Costs

     Deferred policy acquisition costs totaled $5.0 billion at December 31, 2003, an increase of $767 million, or 17.9% for the year. AFLAC Japan's deferred policy acquisition costs were $3.4 billion at December 31, 2003, an increase of $572 million, or 20.0% (7.2% increase in yen). The stronger yen at year-end increased reported deferred policy acquisition costs by $366 million. At December 31, 2003, deferred policy acquisition costs of AFLAC U.S. were $1.6 billion, an increase of $195 million, or 13.8%. The increase in deferred policy acquisition costs was primarily driven by increases in total new annualized premium sales.

Policy Liabilities

     Policy liabilities totaled $39.2 billion at December 31, 2003, an increase of $6.5 billion, or 19.9% for the year. AFLAC Japan's policy liabilities were $35.5 billion at December 31, 2003, an increase of $6.1 billion, or 20.6% (7.7% increase in yen). The stronger yen at year-end increased reported policy liabilities by $3.8 billion. At December 31, 2003, policy liabilities of AFLAC U.S. were $3.7 billion, an increase of $454 million, or 13.9%. The increase in policy liabilities is the result of the growth and aging of our in-force business.

Notes Payable

     The Parent Company has issued yen-denominated Samurai notes in Japan. In 2000, we issued 30 billion yen of Samurai notes (approximately $277 million), in 2001, we issued 40 billion yen (approximately $333 million) and in 2002, we issued 30 billion yen (approximately $254 million). All three issues are redeemable at our option at any time with a redemption price equal to the principal amount of the notes being redeemed plus a make-whole premium. Proceeds were used for various corporate purposes. For our yen-denominated loans, the principal amounts as stated in dollars fluctuate due to changes in the yen/dollar exchange rate.

EXH 13-27

AFLAC Incorporated Form 10-K EXH 13 Table of Contents

     In 1999, the Parent Company issued $450 million of senior notes with a 6.50% coupon, payable semiannually, due April 2009. The notes are redeemable at our option at any time at a redemption price equal to the principal amount of the notes being redeemed plus a make-whole premium. Proceeds were used for various corporate purposes. We entered into cross-currency swaps that effectively convert the dollar-denominated principal and interest of these notes into yen-denominated obligations. The notional amount of the cross-currency swaps is $450 million (55.6 billion yen) with a blended fixed interest rate of 1.67% payable in yen. At December 31, 2003, the fair value of the swaps was a liability of $29 million, compared with an asset of $25 million in 2002.

     We have designated the Parent Company's yen-denominated liabilities (Samurai notes payable and cross-currency swaps) as a hedge of our yen-denominated net assets, which constitutes our investment in AFLAC Japan. If the total of these yen-denominated liabilities is less than our investment in AFLAC Japan, the hedge is deemed to be effective and the related exchange effect is reported in the unrealized foreign currency component of our other comprehensive income. Should these yen-denominated liabilities exceed our investment in AFLAC Japan, the portion of the hedge that exceeds our investment would be deemed ineffective. In that case, GAAP requires the exchange effect on the ineffective portion to be reported in net earnings. We estimate that if the ineffective portion was $100 million, we would report a foreign exchange gain/loss of approximately $1 million for every one yen weakening/strengthening in the end-of-period yen/dollar exchange rate. At December 31, 2003 and 20 02, our hedge was effective. See Market Risks of Financial Instruments on page 13-16 for additional information.

     The ratio of debt to total capitalization (debt plus shareholders' equity, excluding the unrealized gains and losses on investment securities) was 24.6% as of December 31, 2003 and 24.8% as of December 31, 2002.

     The following table summarizes our major contractual obligations apart from those arising from our insurance product and investment purchase activities as of December 31, 2003.

Distribution of Payments by Period
				Less than		One to		Four to		After
(In millions)		Total		one year		three years		five years		five years
Long-term debt		$	1,383	$	-	$	653	$	280	$	450
Capitalized lease obligations			27		11		12		4		-
Operating lease obligations			117		41		33		17		26
Policyholder protection fund			265		19		52		55		139
	Total contractual obligations	$	1,792	$	71	$	750	$	356	$	615

Off-Balance Sheet Arrangements

     As of December 31, 2003, we had no material unconditional purchase obligations that were not recorded on the balance sheet. Additionally, we had no material letters of credit, standby letters of credit, guarantees or standby repurchase obligations.

Security Lending

     We use short-term security lending arrangements to increase investment income with minimal risk. For further information regarding such arrangements, see Note 3 of the Notes to the Consolidated Financial Statements.

EXH 13-28

AFLAC Incorporated Form 10-K EXH 13 Table of Contents

Defined Benefit Pension Plans

     AFLAC U.S. and AFLAC Japan have defined benefit pension plans that cover substantially all full-time employees. General market conditions and the actuarial assumptions used to value our plans' assets and liabilities have a significant impact on plan costs and the reported values of plan assets and liabilities. Generally, the plans are funded annually, with minimum contributions required by applicable regulations, including amortization of unfunded prior service cost. In light of the depressed U.S. interest rate environment, we lowered the discount rate used in valuing our U.S. plan from 7.0% to 6.5% during 2003 to more closely conform with prevailing rates. As a result of the lower discount rate, we recognized an additional minimum pension liability of $9 million during 2003.

     During 2003, we elected to return the substitutional portion of AFLAC Japan's pension plan to the government as allowed by the Japan Welfare Pension Insurance Law. We received government approval to complete the transfer in December 2003. For additional information on the transfer and our U.S. and Japanese plans, see Note 10 of the Notes to the Consolidated Financial Statements.

     At December 31, 2003, other liabilities included a liability for both plans in the amount of $65 million, compared with $39 million a year ago and shareholders' equity reflected a noncash charge of $17 million for the minimum pension liability associated with our U.S. plan and 2.9 billion yen ($27 million using the December 31, 2003 exchange rate) for the Japanese plan. In 2003 consolidated pension expense was $22 million, compared with $12 million in 2002. Pension expense for 2004 is expected to be approximately $9 million for the U.S. plan and 1.1 billion yen ($10 million using the December 31, 2003 exchange rate) for the Japanese plan. We expect to make cash contributions in 2004 of approximately $6 million for the U.S. plan.

Policyholder Protection Fund and State Guaranty Associations

     In 1998, the Japanese government established the Life Insurance Policyholders Protection Corporation (LIPPC). Funding by the life insurance industry is generally made over a ten-year period. We recognize charges for our estimated share of the industry's obligation once it is determinable. Due to their infrequency, we treat these charges as nonrecurring items. We review the estimated liability for policyholder protection fund contributions annually and report any adjustments in AFLAC Japan's operating earnings.

     In 2002, we received a formal proposal regarding additional funding for the LIPPC. The proposal, which was drafted by the FSA, extended the Japanese government's pledge to enact fiscal safety-net measures of up to 400 billion yen until March 2006, and required the industry to contribute an additional 78 billion yen to the LIPPC. These funds will be used to support policyholder obligations of failed life insurance companies. Despite our vote against the proposal, it passed when members of the LIPPC voted in 2002. As a result, we recorded an after-tax charge of $26 million, or $.05 per diluted share, for our estimated portion of the additional industry contribution. During 2003, the Japanese government and the insurance industry agreed to extend the time over which the industry's contribution to the LIPPC would be paid. As a result, we accrued an additional 2.4 billion yen, or $21 million, to reflect our revised estimate of required contributions.

     Under insurance guaranty association laws in most U.S. states, insurance companies doing business in those states can be assessed for policyholder losses up to prescribed limits that are incurred by insolvent companies with similar lines of business. Such assessments have not been material to us in the past. We believe that future assessments relating to companies in the United States currently involved in insolvency proceedings will not materially impact our financial position or results of operations.

EXH 13-29

AFLAC Incorporated Form 10-K EXH 13 Table of Contents

Capital Resources and Liquidity

     AFLAC continues to provide the primary sources of liquidity to the Parent Company through dividends and management fees. The Parent Company received dividends from AFLAC in the amount of $408 million in 2003, compared with $358 million in 2002 and $204 million in 2001. The increase in dividends resulted from management's decision to remove excess capital from Japan in an effort to achieve better investment returns in the United States. During 2003, AFLAC Japan paid $26 million to the Parent Company for management fees, compared with $25 million in 2002 and $20 million in 2001.

     The Parent Company also accesses debt security markets to provide additional sources of capital. Capital is primarily used to fund business expansion, capital expenditures and our share repurchase program. In 2002, we issued 30 billion yen of yen-denominated Samurai notes in Japan (approximately $254 million at that date). We received 40 billion yen (approximately $333 million at that date) in 2001 from the issuance of yen-denominated Samurai notes in Japan. In December 2003, we filed a shelf registration statement with Japanese regulatory authorities to issue up to 100 billion yen (approximately $933 million using the December 31, 2003 exchange rate) of yen-denominated Samurai notes in Japan. These securities will not be available to U.S. persons or entities. For additional information, see discussion on page 13-27 under notes payable.) We believe outside sources for additional debt and equity capital, if needed, will continue to be available.

     The principal sources of cash for our insurance operations are premiums and investment income. The primary uses of cash by our insurance operations are policy claims, commissions, operating expenses, income taxes and payments to the Parent Company for management fees and dividends. Both the sources and uses of cash are reasonably predictable.

     Our investment objectives provide for liquidity through the purchase of investment-grade debt securities. AFLAC insurance policies generally are not interest-sensitive and therefore are not subject to unexpected policyholder redemptions due to investment yield changes. Also, the majority of AFLAC's policies provide fixed-benefit amounts rather than reimbursement for actual medical costs and therefore generally are not subject to the risks of medical-cost inflation.

Consolidated Cash Flows

     We translate operating cash flows for AFLAC Japan's yen-denominated items into U.S. dollars using weighted-average exchange rates. In years when the yen weakens, translating yen into dollars causes fewer dollars to be reported. When the yen strengthens, translating yen into dollars causes more dollars to be reported. The following table summarizes consolidated cash flows by activity for the years ended December 31:

Consolidated Cash Flows by Activity
(For the years ended December 31)
(In millions)			2003			2002			2001
Operating activities		$	3,389		$	3,038		$	2,849
Investing activities			(3,500	)		(2,274	)		(2,473	)
Financing activities			(298	)		(320	)		(42	)
Exchange effect on cash and cash equivalents			82			83			(91	)
	Net change in cash and cash equivalents	$	(327	)	$	527		$	243

EXH 13-30

AFLAC Incorporated Form 10-K EXH 13 Table of Contents

Operating Activities

     In 2003 consolidated cash flow from operations increased 11.6% to $3.4 billion, compared with $3.0 billion in 2002 and $2.8 billion in 2001. Net cash flow from operations other than Japan increased 27.3% in 2003 to $663 million, compared with $521 million in 2002 and $470 million in 2001. Net cash flow from operations for AFLAC Japan increased 8.3% in 2003 to $2.7 billion, compared with $2.5 billion in 2002 and $2.4 billion in 2001. The increases in Japan cash flows in 2003 and 2002 were primarily attributable to the growth of our business. The stronger yen magnified the growth of AFLAC Japan's operating cash flow in 2003, while the weaker yen suppressed growth of AFLAC Japan's operating cash flow in 2002.

Investing Activities

     Operating cash flow is primarily used to purchase debt securities to meet future policy obligations. Consolidated cash flow used by investing activities increased 53.9% to $3.5 billion in 2003, compared with $2.3 billion in 2002 and $2.5 billion in 2001. AFLAC Japan accounted for 89% of the consolidated net cash used by investing activities in 2003, compared with 81% in 2002 and 83% in 2001.

     When market opportunities arise, we dispose of selected debt securities that are available for sale to improve future investment yields and/or improve the duration matching of our assets and liabilities. Therefore, dispositions before maturity can vary significantly from year to year. Dispositions before maturity ranged between 5% and 7% of the annual average investment portfolio of debt securities available for sale during the three years ended December 31, 2003.

     Net additions to property and equipment, including capitalized lease obligations, were $35 million in 2003, $33 million in 2002, and $62 million in 2001.

Financing Activities

     Consolidated cash used by financing activities was $298 million in 2003, $320 million in 2002 and $42 million in 2001. In 2002, we received net proceeds of $254 million in connection with the issuance in Japan of .96% Samurai notes due in 2007. We also paid in full, $221 million, our revolving credit agreement. In 2001, we received net proceeds of $333 million in connection with the issuance in Japan of .87% Samurai notes due in 2006. We also paid $103 million in connection with the scheduled maturity of our yen-denominated unsecured credit agreement. Treasury stock purchases were $343 million (10 million shares) in 2003, compared with $346 million (12 million shares) in 2002 and $350 million (12 million shares) in 2001. We issued treasury shares for certain AFLAC stock option exercises, additional stock purchases by shareholders in the dividend reinvestment plan and stock issued to sales associates.

     Dividends to shareholders in 2003 were $154 million ($146 million paid in cash; $8 million through issuance of treasury shares under the dividend reinvestment plan). Dividends to shareholders in 2002 were $119 million ($112 million paid in cash; $7 million through issuance of treasury shares under the dividend reinvestment plan). Dividends to shareholders in 2001 were $101 million ($95 million paid in cash; $6 million through issuance of treasury shares under the dividend reinvestment plan). The 2003 dividend of $.30 per share increased 30.4% over 2002. The 2002 dividend of $.23 per share increased 19.2% over 2001.

EXH 13-31

AFLAC Incorporated Form 10-K EXH 13 Table of Contents

Regulatory Restrictions

     AFLAC is domiciled in Nebraska and is subject to its regulations. The Nebraska insurance department imposes certain limitations and restrictions on payments of dividends, management fees, loans and advances by AFLAC to the Parent Company. The Nebraska insurance statutes require prior approval for dividend distributions that exceed the greater of the net gain 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. In addition, the Nebraska insurance department must approve service arrangements and other transactions within the affiliated group. These regulatory limitations are not expected to affect the level of management fees or dividends paid by AFLAC to the Parent Company. A life insurance company's statutory capital and surplus is determined according to rules prescribed by the National Association of Insurance Commission ers (NAIC), as modified by the insurance department in the insurance company's state of domicile. Statutory accounting rules are different from GAAP and are intended to emphasize policyholder protection and company solvency.

     The continued long-term growth of our business may require increases in the statutory capital and surplus of our insurance operations. AFLAC's insurance operations may secure additional statutory capital through various sources, such as internally generated statutory earnings or equity contributions by the Parent Company from funds generated through debt or equity offerings. The NAIC's risk-based capital formula is used by insurance regulators to facilitate identification of inadequately capitalized insurance companies. The formula evaluates insurance risk, business risk, asset risk and interest rate risk by weighing the types and mixtures of risks inherent in the insurer's operations. AFLAC's NAIC risk-based capital ratio remains high and reflects a very strong capital and surplus position. Currently, the NAIC has ongoing regulatory initiatives relating to revisions to the risk-based capital formula as well as numerous initiatives covering insurance products, investment s, and other actuarial and accounting matters. We believe that we will continue to maintain a strong risk-based capital ratio and statutory capital and surplus position in future periods.

     In addition to restrictions by U.S. insurance regulators, the FSA may not allow transfers of funds from AFLAC Japan if the transfers would cause AFLAC Japan to lack sufficient financial strength for the protection of policyholders. The FSA maintains its own solvency standards, a version of risk-based capital requirements. AFLAC Japan's solvency margin ratio significantly exceeds regulatory minimums. Payments are made from AFLAC Japan to the Parent Company for management fees (discussed above) and to AFLAC U.S. for allocated expenses and remittances of earnings. In 2003 and 2002, expenses allocated to AFLAC Japan were $22 million and were $24 million in 2001. During 2003, AFLAC Japan also remitted profits of $385 million (45.6 billion yen) to AFLAC U.S., compared with $383 million (45.3 billion yen) in 2002 and $185 million (23.0 billion yen) in 2001. For additional information on regulatory restrictions on dividends, profit transfers and other remittances, see Note 9 of the Notes to the Consolidated Financial Statements.

     For the Japanese reporting fiscal year ended March 31, 2002, AFLAC Japan adopted a new Japanese statutory accounting standard regarding fair value accounting for investments. Previously, debt securities were generally reported at amortized cost for FSA purposes. Under the new accounting standard, AFLAC Japan's debt securities have been classified as either available for sale or held to maturity, similar to GAAP investment classifications. Under this new regulatory accounting standard, the unrealized gains and losses on debt securities available for sale are reported in FSA capital and surplus and reflected in the solvency margin ratio. This new accounting standard may result in significant fluctuations in FSA equity, AFLAC Japan's solvency margin ratio and amounts available for annual profit repatriation.

EXH 13-32

AFLAC Incorporated Form 10-K EXH 13 Table of Contents

Rating Agencies

     AFLAC is rated "AA" by both Standard & Poor's and Fitch Ratings for financial strength. During 2002, Moody's upgraded AFLAC's financial strength rating from "Aa3" to "Aa2." A.M. Best assigned AFLAC an "A+, Superior" rating for financial strength and operating performance. AFLAC Incorporated's credit rating for senior debt is "A" by Standard & Poor's, "A+" by Fitch Ratings, and "A2" by Moody's.

Other

     For information regarding commitments and contingent liabilities, see Note 11 of the Notes to the Consolidated Financial Statements.

Forward-Looking Information

     The Private Securities Litigation Reform Act of 1995 provides a "safe harbor" to encourage companies to provide prospective information, so long as those informational statements are identified as forward-looking and are accompanied by meaningful cautionary statements identifying important factors that could cause actual results to differ materially from those discussed. We desire to take advantage of these provisions. This report contains cautionary statements identifying important factors that could cause actual results to differ materially from those projected in this discussion and analysis, and in any other statements made by company officials in oral discussions with the financial community and contained in documents filed with the Securities and Exchange Commission (SEC). Forward-looking statements are not based on historical information and relate to future operations, strategies, financial results or other developments. Furthermore, forward-looking informa tion is subject to numerous assumptions, risks, and uncertainties. In particular, statements containing words such as "expect," "anticipate," "believe," "goal," "objective," "may," "should," "estimate," "intends," "projects," or similar words as well as specific projections of future results, generally qualify as forward-looking. AFLAC undertakes no obligation to update such forward-looking statements.

     We caution readers that the following factors, in addition to other factors mentioned from time to time in our reports filed with the SEC, could cause actual results to differ materially from those contemplated by the forward-looking statements:

• legislative and regulatory developments,
• assessments for insurance company insolvencies,
• competitive conditions in the United States and Japan,
• new product development,
• ability to attract and retain qualified sales associates,
• ability to repatriate profits from Japan,
• changes in U.S. and/or Japanese tax laws or accounting requirements,
• credit and other risks associated with AFLAC's investment activities,
• significant changes in investment yield rates,
• fluctuations in foreign currency exchange rates,
• deviations in actual experience from pricing and reserving assumptions,
• level and outcome of litigation,
• downgrades in the company's credit rating,
• changes in rating agency policies or practices,
• subsidiary's ability to pay dividends to parent company, and
• general economic conditions in the United States and Japan.

EXH 13-33

AFLAC Incorporated Form 10-K EXH 13 Table of Contents

ITEM 8.  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

AFLAC Incorporated and Subsidiaries
Consolidated Statements of Earnings
Years Ended December 31,
(In millions, except for share and per-share amounts)					2003			2002			2001
Revenues:
	Premiums, principally supplemental health insurance			$	9,921		$	8,595		$	8,061
	Net investment income				1,787			1,614			1,550
	Realized investment gains (losses)				(301	)		(14	)		(31	)
	Other income				40			62			18
			Total revenues		11,447			10,257			9,598
Benefits and expenses:
	Benefits and claims				7,529			6,589			6,303
	Acquisition and operating expenses:
		Amortization of deferred policy acquisition costs			464			385			328
		Insurance commissions			1,146			1,037			1,006
		Insurance expenses			982			842			793
		Interest expense			22			20			19
		Japanese policyholder protection fund provision			-			40			-
		Other operating expenses			79			85			68
			Total acquisition and operating expenses		2,693			2,409			2,214
			Total benefits and expenses		10,222			8,998			8,517
			Earnings before income taxes		1,225			1,259			1,081
Income tax expense:
	Current				212			353			338
	Deferred				218			85			56
			Total income taxes		430			438			394
			Net earnings	$	795		$	821		$	687

(continued)

EXH 13-34

AFLAC Incorporated Form 10-K EXH 13 Table of Contents

AFLAC Incorporated and Subsidiaries
Consolidated Statements of Earnings (continued)
Years Ended December 31,
			2003		2002		2001
Net earnings per share:
	Basic	$	1.55	$	1.59	$	1.31
	Diluted		1.52		1.55		1.28
Common shares used in computing
earnings per share (In thousands):
	Basic		513,220		517,541		525,098
	Diluted		522,138		528,326		537,383
See the accompanying Notes to the Consolidated Financial Statements.

EXH 13-35

AFLAC Incorporated Form 10-K EXH 13 Table of Contents

AFLAC Incorporated and Subsidiaries
Consolidated Balance Sheets
December 31,
(In millions)					2003		2002
Assets:
	Investments and cash:
		Securities available for sale, at fair value:
		Fixed maturities (amortized cost $23,686 in 2003 and $19,423 in 2002)		$	26,495	$	22,659
		Perpetual debentures (amortized cost $3,280 in 2003 and $2,758 in 2002)			3,349		2,730
		Equity securities (cost $33 in 2003 and $262 in 2002)			73		258
		Securities held to maturity, at amortized cost:
		Fixed maturities (fair value $9,263 in 2003 and $8,599 in 2002)			8,752		8,394
		Perpetual debentures (fair value $4,412 in 2003 and $3,595 in 2002)			4,297		3,700
		Other investments			33		27
		Cash and cash equivalents			1,052		1,379
			Total investments and cash		44,051		39,147
	Receivables, primarily premiums				547		435
	Accrued investment income				456		414
	Deferred policy acquisition costs				5,044		4,277
	Property and equipment, at cost less accumulated depreciation				518		482
	Other				348		303
			Total assets	$	50,964	$	45,058

(continued)

EXH 13-36

AFLAC Incorporated Form 10-K EXH 13 Table of Contents

AFLAC Incorporated and Subsidiaries
Consolidated Balance Sheets (continued)
December 31,
(In millions, except for share and per-share amounts)					2003			2002
Liabilities and shareholders' equity:
Liabilities:
	Policy liabilities:
		Future policy benefits		$	35,588		$	29,797
		Unpaid policy claims			2,115			1,753
		Unearned premiums			516			428
		Other policyholders' funds			1,021			748
			Total policy liabilities		39,240			32,726
	Notes payable				1,409			1,312
	Income taxes				2,189			2,364
	Payables for security transactions				-			274
	Payables for return of cash collateral on loaned securities				374			1,049
	Other				1,106			939
Commitments and contingent liabilities (Notes 10 and 11)
			Total liabilities		44,318			38,664
Shareholders' equity:
	Common stock of $.10 par value. In thousands:
	authorized 1,000,000 shares; issued 651,554
	shares in 2003 and 648,618 shares in 2002				65			65
	Additional paid-in capital				417			371
	Retained earnings				5,885			5,244
	Accumulated other comprehensive income:
		Unrealized foreign currency translation gains			213			222
		Unrealized gains on investment securities			2,316			2,416
		Minimum pension liability adjustment			(36	)		(8	)
	Treasury stock, at average cost				(2,214	)		(1,916	)
			Total shareholders' equity		6,646			6,394
			Total liabilities and shareholders' equity	$	50,964		$	45,058
See the accompanying Notes to the Consolidated Financial Statements.

EXH 13-37

AFLAC Incorporated Form 10-K EXH 13 Table of Contents

AFLAC Incorporated and Subsidiaries
Consolidated Statements of Shareholders' Equity
Years Ended December 31,
(In millions, except for per-share amounts)					2003			2002			2001
Common stock:
	Balance, beginning of year			$	65		$	65		$	32
	Exercise of stock options				-			-			1
	Two-for-one stock split				-			-			32
		Balance, end of year			65			65			65
Additional paid-in capital:
	Balance, beginning of year				371			338			336
	Exercise of stock options, including income tax benefits				19			11			10
	Gain on treasury stock reissued				27			22			24
	Two-for-one stock split				-			-			(32	)
		Balance, end of year			417			371			338
Retained earnings:
	Balance, beginning of year				5,244			4,542			3,956
	Net earnings				795			821			687
	Dividends to shareholders ($.30 per share in 2003,
	$.23 per share in 2002, and $.193 in 2001)				(154	)		(119	)		(101	)
		Balance, end of year			5,885			5,244			4,542
Accumulated other comprehensive income:
	Balance, beginning of year				2,630			2,091			1,668
	Change in unrealized foreign currency translation
	gains (losses) during year, net of income taxes				(9	)		9			19
	Change in unrealized gains (losses) on investment
	securities during year, net of income taxes				(100	)		538			404
	Minimum pension liability adjustment during year, net
	of income taxes				(28	)		(8	)		-
		Balance, end of year			2,493			2,630			2,091
Treasury stock:
	Balance, beginning of year				(1,916	)		(1,611	)		(1,298	)
	Purchases of treasury stock				(343	)		(346	)		(350	)
	Cost of shares issued				45			41			37
			Balance, end of year		(2,214	)		(1,916	)		(1,611	)
			Total shareholders' equity	$	6,646		$	6,394		$	5,425
See the accompanying Notes to the Consolidated Financial Statements.

EXH 13-38

AFLAC Incorporated Form 10-K EXH 13 Table of Contents

AFLAC Incorporated and Subsidiaries
Consolidated Statements of Cash Flows
Years Ended December 31,
(In millions)						2003			2002			2001
Cash flows from operating activities:
	Net earnings				$	795		$	821		$	687
	Adjustments to reconcile net earnings to net
	cash provided by operating activities:
		Change in receivables and advance premiums				(86	)		(11	)		(44	)
		Increase in deferred policy acquisition costs				(408	)		(372	)		(325	)
		Increase in policy liabilities				2,641			2,385			2,380
		Change in income tax liabilities				83			67			46
		Realized investment losses				301			14			31
		Japanese policyholder protection fund provision				-			40			-
		Other, net				63			94			74
				Net cash provided by operating activities		3,389			3,038			2,849
Cash flows from investing activities:
	Proceeds from investments sold or matured:
		Securities available for sale:
			Fixed maturities sold			1,908			1,729			1,799
			Fixed maturities matured			1,458			1,188			700
			Equity securities and other			354			69			92
		Securities held to maturity:
			Fixed maturities matured or called			1			240			128
	Costs of investments acquired:
		Securities available for sale:
			Fixed maturities			(5,059	)		(3,057	)		(2,441	)
			Perpetual debentures			(288	)		-			(495	)
			Equity securities			(3	)		(130	)		(152	)
		Securities held to maturity:
			Fixed maturities			(947	)		(2,619	)		(2,040	)
			Perpetual debentures			(170	)		(136	)		(416	)
	Cash received as collateral on loaned securities, net					(727	)		485			416
	Additions to property and equipment, net					(21	)		(25	)		(45	)
	Other, net					(6	)		(18	)		(19	)
				Net cash used by investing activities	$	(3,500	)	$	(2,274	)	$	(2,473	)

(continued)

EXH 13-39

AFLAC Incorporated Form 10-K EXH 13 Table of Contents

AFLAC Incorporated and Subsidiaries
Consolidated Statements of Cash Flows (continued)
Years Ended December 31,
(In millions)				2003			2002			2001
Cash flows from financing activities:
	Proceeds from borrowings		$	-		$	254		$	333
	Principal payments under debt obligations			(20	)		(234	)		(116	)
	Change in investment-type contracts, net			159			74			138
	Dividends paid to shareholders			(146	)		(112	)		(95	)
	Purchases of treasury stock			(343	)		(346	)		(350	)
	Treasury stock reissued			33			35			38
	Other, net			19			9			10
		Net cash used by financing activities		(298	)		(320	)		(42	)
Effect of exchange rate changes on cash
	and cash equivalents			82			83			(91	)
		Net change in cash and cash equivalents		(327	)		527			243
Cash and cash equivalents, beginning of year				1,379			852			609
Cash and cash equivalents, end of year			$	1,052		$	1,379		$	852
Supplemental disclosures of cash flow
information - See Note 12
See the accompanying Notes to the Consolidated Financial Statements.

EXH 13-40

AFLAC Incorporated Form 10-K EXH 13 Table of Contents

AFLAC Incorporated and Subsidiaries
Consolidated Statements of Comprehensive Income
Years Ended December 31,
(In millions)					2003			2002			2001
Net earnings				$	795		$	821		$	687
Other comprehensive income before income taxes:
	Foreign currency translation adjustments:
		Change in unrealized foreign currency
		translation gains (losses) during year			(121	)		(72	)		119
	Unrealized gains (losses) on investment securities:
		Unrealized holding gains (losses) arising during year			(604	)		763			509
		Reclassification adjustment for realized (gains)
		losses included in net earnings			301			13			3
	Minimum pension liability adjustment during year				(40	)		(8	)		-
			Total other comprehensive income (loss)
			before income taxes		(464	)		696			631
	Income tax expense (benefit) related to items of
	other comprehensive income				(327	)		157			207
			Other comprehensive income (loss)
			net of income taxes		(137	)		539			424
			Total comprehensive income	$	658		$	1,360		$	1,111
See the accompanying Notes to the Consolidated Financial Statements.

EXH 13-41

AFLAC Incorporated Form 10-K EXH 13 Table of Contents

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

     Description of Business: AFLAC Incorporated (the Parent Company) and its subsidiaries (the Company) primarily sell supplemental health and life insurance in the United States and Japan. The Company's insurance operations are conducted through American Family Life Assurance Company of Columbus (AFLAC), which operates in the United States (AFLAC U.S.) and as a branch in Japan (AFLAC Japan). Most of AFLAC's policies are individually underwritten and marketed at worksites through independent agents, with premiums paid by the employee. AFLAC Japan, which conducts its insurance operations in Japanese yen, accounted for 74% of the Company's total revenues in 2003, 75% in 2002 and 78% in 2001, and 84% of total assets at both December 31, 2003 and 2002.

     Basis of Presentation: We prepare our financial statements in accordance with accounting principles generally accepted in the United States of America (GAAP). These principles are established primarily by the Financial Accounting Standards Board (FASB) and the American Institute of Certified Public Accountants. The preparation of financial statements in conformity with GAAP requires us to make estimates when recording transactions resulting from business operations based on currently available information. The most significant items on our balance sheet that involve a greater degree of accounting estimates and actuarial determinations subject to changes in the future are the valuation of investments, deferred policy acquisition costs, and liabilities for future policy benefits and unpaid policy claims. These accounting estimates and actuarial determinations are sensitive to market conditions, investment yields, mortality, morbidity, commission and other acquisitio n 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, we believe the amounts provided are adequate.

     Translation of Foreign Currencies: The functional currency of AFLAC Japan's insurance operations is the Japanese yen. We translate financial statement accounts that are maintained in foreign currencies into U.S. dollars as follows. Assets and liabilities denominated in foreign currencies 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 weighted-average exchange rates for the year. The resulting currency translation adjustments are reported in accumulated other comprehensive income. We include in earnings the realized currency exchange gains and losses resulting from transactions. Realized currency exchange gains and losses were immaterial during the three-year period ended December 31, 2003.

     AFLAC Japan maintains an investment portfolio of dollar-denominated securities on behalf of AFLAC U.S. The functional currency for these investments is the U.S. dollar. The related investment income and realized/unrealized investment gains and losses are also denominated in U.S. dollars.

     We have designated the cross-currency swaps and the yen-denominated notes payable held by the Parent Company as a hedge of our investment in AFLAC Japan (see the section in this note titled, "Derivatives"). Outstanding principal and related accrued interest on these items are translated into U.S. dollars at end-of-period exchange rates. Currency translation adjustments are included in accumulated other comprehensive income.

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AFLAC Incorporated Form 10-K EXH 13 Table of Contents

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

     Insurance premiums for health and life policies are recognized ratably as earned income over the premium payment periods of the policies. 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.

     The calculation of deferred policy acquisition costs and the liability for future policy benefits requires the use of estimates consistent with sound actuarial valuation techniques. For new policy issues, we review our actuarial assumptions and deferrable acquisition costs each year and revise them when necessary to more closely reflect recent experience and studies of actual acquisition costs. For policies in force, we evaluate deferred policy acquisition costs by major product groupings to determine that they are recoverable from future revenues. Any resulting adjustment is charged against net 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: Our debt securities include fixed-maturity securities and perpetual debentures, which are classified as either held to maturity or available for sale. Securities classified as held to maturity are securities that we have the ability and intent to hold to maturity or redemption and are carried at amortized cost. All other debt securities and our equity 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, or the purchase cost for equity securities, the excess is an unrealized gain; and if lower than cost, the difference is an unrealized loss.

     For the Japanese reporting fiscal year ended March 31, 2002, new Japanese accounting principles and regulations became effective that impacted investment classifications and solvency margin ratios on a Japanese accounting basis as prescribed by the Financial Services Agency. As a result of these new requirements, we re-evaluated AFLAC Japan's investment portfolio and our intent related to the holding period of certain investment securities. In order to minimize fluctuations in our Japanese solvency margin ratio, we made certain reclassifications of debt securities between the held-to-maturity and available-for-sale categories as of March 31, 2001 (see Note 3).

     The net unrealized gains and losses on securities available for sale, plus the unamortized unrealized gains and losses on debt securities transferred to the held-to-maturity portfolio, less related deferred income taxes, are included in accumulated other comprehensive income.

     Amortized cost of debt securities is based on our purchase price adjusted for accrual of discount, or amortization of premium. The amortized cost of debt securities we purchase at a discount will equal the face or par value at maturity. Debt securities that we purchase at a premium will have an amortized cost equal to 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.

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AFLAC Incorporated Form 10-K EXH 13 Table of Contents

     For the collateralized mortgage obligations (CMOs) held in our fixed-maturity securities portfolio, we recognize 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 CMO 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.

     We use 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.

     Our portfolio managers and credit research personnel routinely monitor and evaluate the difference between the cost and fair value of our investments. Additionally, credit analysis and/or credit rating issues related to specific investments may trigger more intensive monitoring to determine if a decline in market value is other than temporary. For investments with a market value below cost, the process includes evaluating the length of time and the extent to which cost exceeds market value, the prospects and financial condition of the issuer, and our evaluation for a potential recovery in market value, among other factors. This process is not exact and further requires consideration of risks such as credit risk, which to a certain extent can be controlled, and interest rate risk, which cannot be controlled. Therefore, if an investment's cost exceeds its market value solely due to changes in interest rates, impairment may not be appropriate. If, after monitoring and analy sis, management believes that a decline in fair value is other than temporary, we adjust the amortized cost of the security and report a realized loss in the consolidated statements of earnings.

     We lend fixed-maturity securities to financial institutions in short-term security lending transactions. These securities continue to be carried as investment assets on our balance sheet during the terms of the loans and are not reported as sales. We receive cash or other securities as collateral for such loans. For loans involving unrestricted cash collateral, the collateral is reported as an asset with a corresponding liability for the return of the collateral. For loans collateralized by securities, the collateral is not reported as an asset or liability.

     Deferred Policy Acquisition Costs: The 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 and persistency assumptions used for 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 direct and allocated policy issue, underwriting and marketing expenses. All of these costs vary with and are primarily related to the production of new business.

     Policy Liabilities: The liabilities for future policy benefits are computed by a net level premium method using estimated future investment yields, persistency and recognized morbidity and mortality tables modified to reflect our experience, including a provision for adverse deviation.

     Unpaid policy claims are estimates computed 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. We regularly adjust these estimates as new claims experience emerges and reflect the changes in operating results in the year such adjustments are made.

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AFLAC Incorporated Form 10-K EXH 13 Table of Contents

     Income Taxes: Income tax provisions are generally based on pretax earnings reported for financial statement purposes, which differ from those amounts used in preparing our 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 we expect the temporary differences to reverse.

     Derivatives: We have only limited activity with derivative financial instruments. We do not use them for trading purposes, nor do we engage in leveraged derivative transactions. At December 31, 2003, our only outstanding derivative contracts were cross-currency swaps related to our $450 million senior notes (see Notes 4 and 6).

     We document all relationships between hedging instruments and hedged items, as well as our risk-management objectives for undertaking various hedge transactions. This process includes linking derivatives that are designated as hedges to specific assets or liabilities on the balance sheet. We also assess, both at inception and on an ongoing basis, whether the derivatives and nonderivatives used in hedging activities are highly effective in offsetting changes in fair values of the hedged items. The assessment of hedge effectiveness determines the noncash accounting treatment of changes in fair value.

     We have designated our cross-currency swaps as a hedge of the foreign currency exposure of our investment in AFLAC Japan. We recognize the fair value of the cross-currency swaps as either assets or liabilities on the balance sheet. We report the changes in fair value of the foreign currency portion of our cross-currency swaps in other comprehensive income. Changes in the fair value of the interest rate component are reflected in other income in the consolidated statements of earnings.

     Policyholder Protection Fund and State Guaranty Association Assessments: In Japan, the government has required the insurance industry to contribute to a policyholder protection fund. We recognize a charge for our estimated share of the industry's obligation once it is determinable. We review the estimated liability for policyholder protection fund contributions on an annual basis and report any adjustments in AFLAC Japan's expenses.

     In the United States, each state has a guaranty association that supports insolvent insurers operating in those states. To date, our state guaranty association assessments have not been material.

     Employee Stock Options: We apply the recognition and measurement principles of APB Opinion No. 25, Accounting for Stock Issued to Employees, and related interpretations in accounting for our employee stock option plan, which is described more fully in Note 8. All options granted under our stock option plan have an exercise price equal to the market value of the underlying common stock on the date of grant. Therefore, no compensation expense is reflected in net earnings. The following table illustrates the effect on net earnings and earnings per share, assuming we had applied the fair value recognition provisions of Statement of Financial Accounting Standards (SFAS) No. 123, Accounting for Stock-Based Compensation.

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AFLAC Incorporated Form 10-K EXH 13 Table of Contents

(In millions, except for per-share amounts)		2003			2002			2001
Net earnings, as reported		$	795		$	821		$	687
Deduct compensation expense determined under a
fair value method, net of tax			(27	)		(36	)		(33	)
Pro forma net earnings		$	768		$	785		$	654
Earnings per share:
	Basic - as reported	$	1.55		$	1.59		$	1.31
	Basic - pro forma		1.50			1.52			1.25
	Diluted - as reported	$	1.52		$	1.55		$	1.28
	Diluted - pro forma		1.47			1.48			1.22

     Treasury Shares: Treasury shares we acquire are reflected as a reduction of shareholders' equity at cost, which is the market value at the time of the transaction. We use the weighted-average purchase cost to determine the cost of treasury shares that are reissued. We include any gains and losses in additional paid-in capital when treasury shares are reissued.

     Earnings Per Share: We compute basic earnings per share (EPS) by dividing net earnings by the weighted-average number of 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 stock options.

     New Accounting Pronouncements: In January 2003, the FASB issued Interpretation No. 46 (FIN 46), Consolidation of Variable Interest Entities, an interpretation of ARB (Accounting Research Bulletin) No. 51. This interpretation requires the consolidation of entities in which an enterprise absorbs a majority of the entity's expected losses, receives a majority of the expected residual gains, or both, as a result of ownership, contractual or other financial interests in the entity. In October 2003, the FASB delayed the effective date of FIN 46 for variable interest entities (VIEs) or potential VIEs created before February 2003. In December, the FASB issued a revised version of FIN 46, which delayed the effective date of FIN 46 for all VIEs until March 2004. FIN 46 and its various interpretations are not expected to have a material impact on our financial position or results of operations.

     In December 2002, the FASB issued SFAS No. 148, Accounting for Stock-Based Compensation - Transition and Disclosure. This standard, which amends the transition and disclosure issues associated with SFAS No. 123, became effective for years ending after December 15, 2002. The requirements of this standard do not impact our financial position or results of operations.

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AFLAC Incorporated Form 10-K EXH 13 Table of Contents

     During the last three years, the FASB has issued a number of accounting pronouncements with various effective dates: SFAS No. 141, Business Combinations; SFAS No. 142, Goodwill and Other Intangible Assets; SFAS No. 143, Accounting for Asset Retirement Obligations; SFAS No. 144, Accounting for the Impairment or Disposal of Long-Lived Assets; SFAS No. 145, Recision of FASB Statements No. 4, 44 and 64, Amendment of FASB Statement No. 13, and Technical Corrections; SFAS No. 146, Accounting for Costs Associated with Exit or Disposal Activities; SFAS No. 147, Acquisitions of Certain Financial Institutions - an Amendment of FASB Statements No. 72 and 144 and FASB Interpretation No. 9; SFAS No. 149, Amendment of Statement 133 on Derivative Instruments and Hedging Activities; SFAS No. 150, Accounting for Certain Financial Instruments with Characteristics of both Liabilities and Equity; and Interpretation No. 45, Guarantor's Accounting and Disclosure Requirements for Guarantees, Including Indirect Guarantees of Indebtedness of Others. These pronouncements do not have a material effect on our financial statements.

     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.

 2. FOREIGN AND BUSINESS SEGMENT INFORMATION

     The Company consists of two reportable insurance business segments: AFLAC Japan and AFLAC U.S. We sell supplemental health and life insurance through AFLAC Japan and AFLAC U.S. Most of our policies are individually underwritten and marketed at worksites through independent agents with premiums paid by the employee.

     Operating business segments that are not individually reportable are included in the "Other business segments" category. We do not allocate corporate overhead expenses to business segments. We evaluate our business segments using a financial performance measure called pretax operating earnings. Our definition of operating earnings as presented in this report excludes from net earnings the following items on an after-tax basis: realized investment gains/losses, the change in fair value of the interest rate component of cross-currency swaps, and the charge for the Japanese policyholder protection fund in 2002. We then exclude income taxes related to operations to arrive at pretax operating earnings. Information regarding operations by segment and lines of business for the years ended December 31 follows:

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AFLAC Incorporated Form 10-K EXH 13 Table of Contents

(In millions)					2003			2002			2001
Revenues:
AFLAC Japan:
	Earned premiums:
		Cancer life		$	4,864		$	4,492		$	4,508
		Other accident and health			1,687			1,201			1,075
		Life insurance			775			680			634
	Net investment income				1,421			1,276			1,234
	Other income				18			1			1
			Total AFLAC Japan		8,765			7,650			7,452
AFLAC U.S.:
	Earned premiums:
		Accident/disability			1,085			900			713
		Cancer expense			842			757			654
		Other health			574			487			416
		Life insurance			93			77			61
	Net investment income				362			331			303
	Other income				9			9			8
			Total AFLAC U.S.		2,965			2,561			2,155
	Other business segments				43			48			32
			Total business segments		11,773			10,259			9,639
	Realized investment gains (losses)				(301	)		(14	)		(31	)
	Corporate*				39			78			31
	Intercompany eliminations				(64	)		(66	)		(41	)
			Total revenues	$	11,447		$	10,257		$	9,598
*Includes investment income of $5 in 2003, $7 in 2002 and $13 in 2001. Also includes a loss of $3 in 2003, and gains of $37 in 2002 and $1 in 2001 related to the change in fair value of the interest rate component of the cross-currency swaps.

(In millions)				2003			2002			2001
Operating earnings:
	AFLAC Japan		$	1,140		$	938		$	823
	AFLAC U.S.			451			402			345
	Other business segments			(1	)		1			(8	)
		Total business segments		1,590			1,341			1,160
	Interest expense, noninsurance operations			(19	)		(16	)		(16	)
	Corporate and eliminations			(42	)		(49	)		(33	)
		Pretax operating earnings*		1,529			1,276			1,111
	Realized investment gains (losses)			(301	)		(14	)		(31	)
	Change in fair value of the interest rate component
	of the cross-currency swaps			(3	)		37			1
	Japanese policyholder protection fund provision			-			(40	)		-
		Total earnings before income taxes	$	1,225		$	1,259		$	1,081
*Income taxes applicable to pretax operating earnings were $540 in 2003, $452 in 2002 and $391 in 2001. The effect of foreign currency translation increased operating earnings by $33 in 2003, compared with decreases of $10 in 2002 and $37 in 2001.

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AFLAC Incorporated Form 10-K EXH 13 Table of Contents

     Assets as of December 31 were as follows:

(In millions)				2003			2002			2001
Assets:
	AFLAC Japan		$	42,654		$	37,983		$	31,729
	AFLAC U.S.			7,966			6,672			5,729
	Other business segments			57			62			43
		Total business segments		50,677			44,717			37,501
	Corporate			8,276			7,887			6,830
	Intercompany eliminations			(7,989	)		(7,546	)		(6,471	)
		Total assets	$	50,964		$	45,058		$	37,860

     Net additions to property and equipment, including capitalized lease obligations, were $35 million in 2003, $33 million in 2002 and $62 million in 2001. Total depreciation and amortization expense, which is included in insurance expenses in the consolidated statements of earnings, was $59 million in 2003, $60 million in 2002, and $37 million in 2001; AFLAC Japan accounted for $33 million in 2003, $29 million in 2002, and $21 million in 2001.

     Advertising expense is included in insurance expenses in the consolidated statements of earnings and was as follows for each of the three years ended December 31:

(In millions)				2003		2002		2001
Advertising expense:
	AFLAC Japan		$	59	$	48	$	60
	AFLAC U.S.			61		57		45
		Total advertising expense	$	120	$	105	$	105

     Receivables consisted primarily of monthly insurance premiums due from individual policyholders or their employers for payroll deduction of premiums. At December 31, 2003, $291 million, or 53.2% of total receivables were related to AFLAC Japan's operations, compared with $217 million, or 49.9%, at December 31, 2002.

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AFLAC Incorporated Form 10-K EXH 13 Table of Contents

     Yen-Translation Effects: The following table shows the yen/dollar exchange rates used for the three-year period ended December 31, 2003. The exchange effect on selected financial data was calculated using the same yen/dollar exchange rate for the current year as each respective prior year.

			2003			2002			2001
Balance Sheets:
	Yen/dollar exchange rate at December 31		107.13			119.90			131.95
	Yen percent strengthening (weakening)		11.9	%		10.1	%		(13.0	)%
	Exchange effect on total assets (billions)	$	4.2		$	3.2		$	(4.4	)
	Exchange effect on total liabilities (billions)		4.2			3.1			(4.3	)
Statements of Earnings:
	Weighted-average yen/dollar exchange rate		115.95			125.15			121.54
	Yen percent strengthening (weakening)		7.9	%		(2.9	)%		(11.3	)%
	Exchange effect on net earnings (millions)*	$	33		$	(10	)	$	(37	)
	Exchange effect on diluted net EPS*		.06			(.02	)		(.07	)
*Translation effect on AFLAC Japan segment and Parent Company yen-denominated interest expense

     AFLAC Japan owns U.S. dollar-denominated securities, which serve as an economic currency hedge of a portion of our investment in AFLAC Japan. We have designated the Parent Company's yen-denominated notes payable and cross-currency swaps as a hedge of our investment in AFLAC Japan. The dollar values of our yen-denominated net assets, which are subject to foreign currency translation fluctuations for financial reporting purposes, are summarized as follows at December 31 (translated at end-of-period exchange rates):

(In millions)			2003		2002
AFLAC Japan net assets		$	4,661	$	4,806
Less:
	AFLAC Japan dollar-denominated net assets		2,917		2,518
	Parent Company yen-denominated net liabilities		1,453		1,297
Consolidated yen-denominated net assets subject to
foreign currency translation fluctuations		$	291	$	991

     Remittances from AFLAC Japan: AFLAC Japan makes payments to the Parent Company for management fees and to AFLAC U.S. for allocated expenses and remittances of earnings. These payments totaled $433 million in 2003, $429 million in 2002 and $228 million in 2001. See Note 9 for information concerning restrictions on remittances from AFLAC Japan.

     Policyholder Protection Fund: In 2002, the Japanese Life Insurance Policyholder Protection Corporation (LIPPC) agreed to increase the life insurance industry's obligation to the Japanese policyholder protection fund. We recognized our estimated share of this additional obligation in 2002 and decreased pretax earnings by $40 million ($26 million after taxes, or $.05 per diluted share). During 2003, the Japanese government and the insurance industry agreed to extend the time over which the industry's contribution to the LIPPC would be paid. The total liability accrued for our obligations to the policyholder protection fund was $265 million (28.4 billion yen) at December 31, 2003, compared with $227 million (27.3 billion yen) a year ago. The obligation is expected to be payable in semi-annual installments through 2013.

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AFLAC Incorporated Form 10-K EXH 13 Table of Contents

 3. INVESTMENTS

     The amortized cost for debt securities, cost for equity securities and the fair values of these investments at December 31 are shown in the following table:

			2003
			Cost or		Gross		Gross
			Amortized		Unrealized		Unrealized		Fair
(In millions)			Cost		Gains		Losses		Value
Securities available for sale,
carried at fair value:
Fixed maturities:
Yen-denominated:
	Government and guaranteed		$	7,126	$	1,645	$	6	$	8,765
	Municipalities			8		-		-		8
	Mortgage-backed securities			42		1		-		43
	Public utilities			2,428		295		27		2,696
	Sovereign and supranational			723		111		1		833
	Banks/financial institutions			3,104		291		221		3,174
	Other corporate			3,023		174		207		2,990
		Total yen-denominated		16,454		2,517		462		18,509
Dollar-denominated:
	Government			104		7		1		110
	Municipalities			100		10		1		109
	Mortgage-backed securities			259		9		3		265
	Public utilities			798		87		1		884
	Sovereign and supranational			386		54		-		440
	Banks/financial institutions			2,527		267		7		2,787
	Other corporate			3,057		352		18		3,391
		Total dollar-denominated		7,231		786		31		7,986
		Total fixed maturities		23,685		3,303		493		26,495
Perpetual debentures:
Yen-denominated:
	Primarily banks/financial institutions			2,893		166		148		2,911
Dollar-denominated:
	Banks/financial institutions			387		51		-		438
		Total perpetual debentures		3,280		217		148		3,349
Equity securities				33		41		1		73
		Total securities available for sale	$	26,998	$	3,561	$	642	$	29,917

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			2003
			Cost or		Gross		Gross
			Amortized		Unrealized		Unrealized		Fair
(In millions)			Cost		Gains		Losses		Value
Securities held to maturity,
carried at amortized cost:
Fixed maturities:
Yen-denominated:
	Mortgage-backed securities		$	52	$	-	$	1	$	51
	Public utilities			1,065		29		38		1,056
	Sovereign and supranational			2,473		150		41		2,582
	Banks/financial institutions			2,298		222		37		2,483
	Other corporate			2,848		231		4		3,075
		Total yen-denominated		8,736		632		121		9,247
Dollar-denominated:
	Government			16		-		1		15
		Total dollar-denominated		16		-		1		15
		Total fixed maturities		8,752		632		122		9,262
Perpetual debentures:
Yen-denominated:
	Banks/financial institutions			4,297		225		110		4,412
		Total perpetual debentures		4,297		225		110		4,412
		Total securities held to maturity	$	13,049	$	857	$	232	$	13,674

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AFLAC Incorporated Form 10-K EXH 13 Table of Contents

			2002
			Cost or		Gross		Gross
			Amortized		Unrealized		Unrealized		Fair
(In millions)			Cost		Gains		Losses		Value
Securities available for sale,
carried at fair value:
Fixed maturities:
Yen-denominated:
	Government and guaranteed		$	6,088	$	1,860	$	-	$	7,948
	Municipalities			12		1		-		13
	Mortgage-backed securities			34		1		-		35
	Public utilities			2,433		379		-		2,812
	Sovereign and supranational			643		119		2		760
	Banks/financial institutions			2,202		348		23		2,527
	Other corporate			1,655		163		32		1,786
		Total yen-denominated		13,067		2,871		57		15,881
Dollar-denominated:
	Government			64		9		-		73
	Municipalities			70		9		-		79
	Mortgage-backed securities			105		10		-		115
	Public utilities			725		47		13		759
	Sovereign and supranational			262		30		5		287
	Banks/financial institutions			2,098		186		48		2,236
	Other corporate			3,032		305		108		3,229
		Total dollar-denominated		6,356		596		174		6,778
		Total fixed maturities		19,423		3,467		231		22,659
Perpetual debentures:
Yen-denominated:
	Primarily banks/financial institutions			2,427		120		183		2,364
Dollar-denominated:
	Banks/financial institutions			331		37		2		366
		Total perpetual debentures		2,758		157		185		2,730
Equity securities				262		28		32		258
		Total securities available for sale	$	22,443	$	3,652	$	448	$	25,647

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AFLAC Incorporated Form 10-K EXH 13 Table of Contents

			2002
			Cost or		Gross		Gross
			Amortized		Unrealized		Unrealized		Fair
(In millions)			Cost		Gains		Losses		Value
Securities held to maturity,
carried at amortized cost:
Fixed maturities:
Yen-denominated:
	Mortgage-backed securities		$	47	$	2	$	-	$	49
	Public utilities			956		56		26		986
	Sovereign and supranational			1,660		97		48		1,709
	Banks/financial institutions			2,401		223		101		2,523
	Other corporate			3,330		202		200		3,332
		Total yen-denominated		8,394		580		375		8,599
Perpetual debentures:
Yen-denominated:
	Banks/financial institutions			3,700		103		208		3,595
		Total perpetual debentures		3,700		103		208		3,595
		Total securities held to maturity	$	12,094	$	683	$	583	$	12,194

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

(In millions)			2003		2002		2001
Fixed-maturity securities		$	1,486	$	1,337	$	1,281
Perpetual debentures			314		289		277
Equity securities and other			2		3		2
Short-term investments and cash equivalents			6		5		9
	Gross investment income		1,808		1,634		1,569
Less investment expenses			21		20		19
	Net investment income	$	1,787	$	1,614	$	1,550

EXH 13-54

AFLAC Incorporated Form 10-K EXH 13 Table of Contents

     Investments in debt securities, which individually exceeded 10% of shareholders' equity as of December 31, were as follows:

		2003					2002
		Credit		Amortized		Fair	Credit		Amortized		Fair
(In millions)		Rating		Cost		Value	Rating		Cost		Value
Japan National Government		AA	$	7,051	$	8,691	AA	$	6,023	$	7,878
HSBC		A		938		1,069			*		*
The Israel Electric Corporation Ltd.**		A/BBB		932		941	A		719		764
Credit Suisse First Boston		A		826		847	A		767		745
Republic of Tunisia		BBB		776		789			*		*
Takefuji Corporation		BBB		737		578	A		676		733
HBOS PLC**		AA/A		697		716			*		*
*	Less than 10%
**	For this issuer, we own more than one security with different ratings

     Privately issued securities held by AFLAC Japan at amortized cost accounted for $23.3 billion, or 58.1%, and $19.3 billion, or 56.3%, of total debt securities at December 31, 2003 and 2002, respectively. Total privately issued securities, at amortized cost, accounted for $25.1 billion, or 62.8%, of our total debt securities as of December 31, 2003, compared with $20.6 billion, or 60.2%, at December 31, 2002. Of the total privately issued securities, reverse-dual currency debt securities (principal payments in yen, interest payments in dollars) accounted for $6.5 billion, or 25.7%, and $4.7 billion, or 22.6%, at amortized cost as of December 31, 2003 and 2002, respectively.

     At December 31, 2003, we owned debt securities that were rated below investment grade in the amount of $1.1 billion at amortized cost ($1.0 billion at fair value), or 2.8% of total debt securities, compared with $791 million at amortized cost ($635 million at fair value), or 2.3% of total debt securities in 2002. Each of the below-investment-grade securities was investment grade at the time of purchase and was subsequently downgraded by credit rating agencies. These securities are held in the available-for-sale portfolio.

     As of December 31, 2003, $154 million, at fair value, of AFLAC Japan's debt securities had been pledged to Japan's policyholder protection fund. At December 31, 2003, debt securities with a fair value of $10 million were on deposit with regulatory authorities in the United States, Japan and Hong Kong. We retain ownership of all securities on deposit and receive the related investment income.

EXH 13-55

AFLAC Incorporated Form 10-K EXH 13 Table of Contents

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

(In millions)						2003			2002			2001
Realized investment gains (losses) on securities:
	Debt securities:
		Available for sale:
			Gross gains from sales		$	72		$	97		$	66
			Gross losses from sales			(366	)		(47	)		(23	)
			Impairment losses			-			(37	)		(55	)
			Net gains from redemptions			8			-			1
				Total debt securities		(286	)		13			(11	)
	Equity securities:
		Gross gains from sales				19			8			29
		Gross losses from sales				(33	)		(14	)		(18	)
		Impairment losses				(1	)		(21	)		(31	)
				Total equity securities		(15	)		(27	)		(20	)
				Total realized investment losses	$	(301	)	$	(14	)	$	(31	)
Changes in unrealized gains (losses):
		Debt securities:
			Available for sale		$	(331	)	$	798		$	944
			Transferred to held to maturity			(16	)		11			(387	)
		Equity securities				44			(34	)		(46	)
				Change in unrealized gains (losses)	$	(303	)	$	775		$	511

     The large realized investment losses in 2003 related primarily to the sale of our investment in Parmalat. Following several credit ratings downgrades of its debt, we sold all of our holdings in Parmalat and realized a pretax loss of $257 million. We also sold our investment in Levi Strauss at a pretax loss of $38 million. These investment losses and other investment transactions in the normal course of business decreased pretax earnings by $301 million (after-tax, $191 million or $.37 per diluted share).

     In 2002, we recognized pretax impairment losses of $58 million. These impairment losses were related to the corporate debt security of a Japanese issuer ($37 million) and various equity securities we believe experienced other than temporary declines in fair value. These impairment losses and other investment transactions in the normal course of business decreased pretax earnings by $14 million (after-tax, $15 million or $.03 per diluted share).

     In 2001, we recognized pretax impairment losses of $86 million. These impairment losses were primarily related to the corporate debt securities of a U.S. issuer and a European issuer, both of which experienced credit rating downgrades. We also recognized pretax impairment losses on equity securities of $31 million, which included a $28 million loss related to our investment in two human resource service companies. In addition, we realized investment gains in connection with a change in the outside investment manager of a portion of our U.S. equity securities portfolio. These gains and impairment losses, when included with other investment transactions in the normal course of business, decreased pretax earnings by $31 million (after-tax, $34 million or $.06 per diluted share).

EXH 13-56

AFLAC Incorporated Form 10-K EXH 13 Table of Contents

     Fair values of debt securities and privately issued equity securities were determined using quotations provided by outside securities pricing sources and/or compiled using data provided by external debt and equity market sources. The data used in estimating fair value include credit spreads of comparably credit-rated securities and market quotations of securities with similar maturity and call structure characteristics. Fair values are then computed using standard industry models that provide pricing data based on a wide variety of inputs as noted above. The fair values provided by outside sources are reviewed internally for reasonableness. If a fair value appears unreasonable, the inputs are re-examined and the value is confirmed or revised. The fair values for publicly traded equity securities were determined using market quotations from the public exchange markets where the security is principally traded.

EXH 13-57

AFLAC Incorporated Form 10-K EXH 13 Table of Contents

     The fair value and unrealized loss for debt and equity securities in an unrealized loss position at December 31, 2003 were as follows:

			Total				Less than 12 months				12 months or longer
				Fair		Unrealized		Fair		Unrealized		Fair		Unrealized
(In millions)				Value		Losses		Value		Losses		Value		Losses
Fixed maturities:
Government and
guaranteed:
	Dollar-denominated		$	58	$	2	$	58	$	2	$	-	$	-
	Yen-denominated			583		6		583		6		-		-
Municipalities:
	Dollar-denominated			11		-		11		-		-		-
Mortgage-backed
securities:
	Dollar-denominated			53		2		53		2		-		-
	Yen-denominated			37		1		37		1		-		-
Public utilities:
	Dollar-denominated			63		2		63		2		-		-
	Yen-denominated			810		66		521		30		289		36
Sovereign and
supranational:
	Dollar-denominated			5		-		5		-		-		-
	Yen-denominated			635		42		635		42		-		-
Banks/financial
institutions and other
corporate:
	Dollar-denominated			197		7		197		7		-		-
	Yen-denominated			1,336		257		1,336		257		-		-
Other corporate:
	Dollar-denominated			536		20		480		19		56		1
	Yen-denominated			1,680		210		1,436		157		244		53
Perpetual debentures:
	Yen-denominated			3,189		258		2,701		182		488		76
		Total debt securities		9,193		873		8,116		707		1,077		166
Equity securities				4		-		1		-		3		-
		Total temporarily
		impaired securities	$	9,197	$	873	$	8,117	$	707	$	1,080	$	166

     The fair value of our investments in debt securities can fluctuate greatly as a result of changes in interest rates and foreign currency exchange rates. We believe that the declines in fair value noted above primarily resulted from changes in the interest rate and foreign currency environments rather than credit issues. Therefore, we believe that it would be inappropriate to recognize impairment charges for changes in fair value that we believe are temporary.

EXH 13-58

AFLAC Incorporated Form 10-K EXH 13 Table of Contents

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

(In millions)		2003			2002
Unrealized gains on securities available for sale	$	2,918		$	3,204
Unamortized unrealized gains on securities transferred to held to maturity		608			625
Deferred income taxes		(1,210	)		(1,413	)
Shareholders' equity, net unrealized gains on investment securities	$	2,316		$	2,416

     We attempt to match the duration of our assets with the duration of our liabilities. For AFLAC Japan, the duration of policy benefits and related expenses to be paid in future years is longer than that of the related investment assets due to the unavailability of acceptable yen-denominated long-duration securities. The average duration of policy benefits and related expenses to be paid in future years was approximately 12 years at both December 31, 2003 and December 31, 2002. The average duration of the yen-denominated debt securities was approximately 11 years at December 31, 2003 and 10 years at December 31, 2002. The average duration of premiums to be received in the future was approximately nine years on policies in force at both December 31, 2003 and December 31, 2002.

     Over the next two years, we have several yen-denominated securities that mature with yields in excess of AFLAC Japan's current net investment yield of 4.16%. These securities total $508 million at amortized cost and have an average yield of 5.13%. These maturities will contribute to a continued decline in our overall portfolio yield. Currently, when our debt securities mature, the proceeds may be reinvested at a yield below that of the interest required for the accretion of policy benefit liabilities on policies issued in earlier years. However, the investment yield on new investments has exceeded interest requirements on policies issued in recent years. Since 1994, premium rates on new business have been increased several times to help offset the lower available investment yields. Also in recent years, our strategy of developing and marketing riders as attachments to our older policies has helped offset the negative investment spread. In spite of the negative investme nt spreads, overall profit margins in AFLAC Japan's aggregate block of business are adequate because of profits that continue to emerge from changes in mix of business and favorable mortality, morbidity, and expenses.

EXH 13-59

AFLAC Incorporated Form 10-K EXH 13 Table of Contents

     The contractual maturities of our investments in fixed maturities at December 31, 2003, were as follows:

			AFLAC Japan				AFLAC U.S.
			Amortized		Fair		Amortized		Fair
(In millions)			Cost		Value		Cost		Value
Available for sale:
	Due in one year or less		$	594	$	605	$	98	$	100
	Due after one year through five years			1,479		1,661		131		147
	Due after five years through 10 years			5,433		6,911		496		567
	Due after 10 years			11,199		11,850		4,119		4,516
	U.S. mortgage-backed securities			69		71		67		67
		Total fixed maturities
		available for sale	$	18,774	$	21,098	$	4,911	$	5,397
Held to maturity:
	Due after one year through five years		$	52	$	55	$	-	$	-
	Due after five years through 10 years			1,650		1,861		-		-
	Due after 10 years			7,034		7,332		16		15
		Total fixed maturities held to maturity	$	8,736	$	9,248	$	16	$	15

     Expected maturities may differ from contractual maturities because some issuers have the right to call or prepay obligations with or without call or prepayment penalties.

EXH 13-60

AFLAC Incorporated Form 10-K EXH 13 Table of Contents

     In recent years we have purchased subordinated perpetual debenture securities. These securities are subordinated to other debt obligations of the issuer, but rank higher than equity securities. Although these securities have no contractual maturity, the interest coupons that were fixed at the issue date subsequently increase to a market interest rate plus 150 to 300 basis points and change to a variable interest rate basis, generally by the 25th year after issuance, thereby creating an economic maturity date. The economic maturities of our investments in perpetual debentures at December 31, 2003, were as follows:

			AFLAC Japan				AFLAC U.S.
			Amortized		Fair		Amortized		Fair
(In millions)			Cost		Value		Cost		Value
Available for sale:
	Due after one year through five years		$	542	$	631	$	55	$	65
	Due after five years through 10 years			63		101		-		-
	Due after 10 years through 15 years			560		571		-		-
	Due after 15 years			1,914		1,818		146		163
		Total perpetual debentures
		available for sale	$	3,079	$	3,121	$	201	$	228
Held to maturity:
	Due after one year through five years		$	148	$	158	$	-	$	-
	Due after five years through 10 years			1,111		1,205		-		-
	Due after 10 years through 15 years			1,518		1,543		-		-
	Due after 15 years			1,520		1,506		-		-
		Total perpetual debentures
		held to maturity	$	4,297	$	4,412	$	-	$	-

     As part of our investment activities, we own yen-denominated investments in variable interest entities (VIEs) totaling $1.5 billion at amortized cost, or $1.3 billion at fair value. We completed our review of these investments and concluded that we are the primary beneficiary. Therefore, we will consolidate our interests in accordance with FIN 46, Consolidation of Variable Interest Entities, effective March 31, 2004. The activities of these VIEs are limited to holding subordinated notes representing Tier 1 bank capital and utilizing the proceeds from the subordinated notes to service our investments therein. These VIEs are classified as available-for-sale fixed-maturity or perpetual securities in accordance with SFAS No. 115, Accounting for Certain Investments in Debt and Equity Securities. The consolidation of these investments will not impact our financial position or results of operations.

     We also own investments in fixed-maturity qualified special purpose entities (QSPEs). At December 31, 2003, available-for-sale QSPEs totaled $1.0 billion at fair value ($1.0 billion at amortized cost), compared with $678 million at fair value ($679 million at amortized cost) a year ago. At December 31, 2002, we had one held-to-maturity QSPE totaling $267 million at amortized cost ($230 million at fair value). We reclassified this QSPE to the available-for-sale portfolio in 2003 when it experienced a credit rating downgrade.

EXH 13-61

AFLAC Incorporated Form 10-K EXH 13 Table of Contents

     The underlying collateral assets of the QSPEs are yen-denominated securities, dollar-denominated securities or dollar-denominated securities that have been effectively transformed into yen-denominated assets through the use of currency and interest rate swaps. Each QSPE has a default trigger whereby default on any of the underlying notes would force dissolution of the QSPE, distribution of the underlying securities, and termination of the related swaps. We have no equity interests in any of the QSPEs, nor do we have control over these entities. Therefore, our loss exposure is limited to the cost of our investment.

     For the Japanese reporting fiscal year ended March 31, 2002, new Japanese accounting principles and regulations became effective that impact investment classifications and solvency margin ratios on a Japanese accounting basis. As a result of these new requirements, we reclassified debt securities with amortized cost of $1.8 billion from the held-to-maturity category to the available-for-sale category as of March 31, 2001. Included in accumulated other comprehensive income immediately prior to the transfer was an unamortized unrealized gain of $327 million related to these securities. This gain represented the remaining unamortized portion of a $1.1 billion unrealized gain that was established in 1998 when we reclassified $6.4 billion of debt securities from the available-for-sale category to the held-to-maturity category.

     We also reclassified debt securities with a fair value of $2.3 billion from the available-for-sale category to the held-to-maturity category as of March 31, 2001. The related unrealized gain of $118 million is being amortized from accumulated other comprehensive income to investment income over the remaining term of the securities. The related premium in the carrying value of the debt securities that was created when the reclassification occurred is also being amortized as an offsetting charge to investment income.

     We lend fixed-maturity securities to financial institutions in short-term security lending transactions. These securities continue to be carried as investment assets on our balance sheet during the term of the loans and are not reported as sales. We receive cash or other securities as collateral for such loans. These short-term security lending arrangements increase investment income with minimal risk. At December 31, 2003 and 2002, we had security loans outstanding with a fair value of $365 million and $1.0 billion, respectively, and we held cash in the amount of $374 million and $1.0 billion, respectively, as collateral for the loaned securities.

     Our security lending policy requires that the fair value of the securities received as collateral and cash received as collateral be 102% and 100% or more, respectively, of the fair value of the loaned securities.

EXH 13-62

AFLAC Incorporated Form 10-K EXH 13 Table of Contents

 4. FINANCIAL INSTRUMENTS

     The carrying values and estimated fair values of the Company's financial instruments as of December 31 were as follows:

			2003						2002
			Carrying			Fair			Carrying				Fair
(In millions)			Amount			Value			Amount				Value
Assets:
	Fixed-maturity securities	$		35,247	$		35,758	$		31,053		$		31,258
	Perpetual debentures			7,646			7,761			6,430				6,325
	Equity securities			73			73			258				258
Liabilities:
	Notes payable (excluding capitalized leases)			1,382			1,451			1,283				1,333
	Cross-currency swaps			29			29			(25	)			(25	)
	Obligation to Japanese policyholder
	protection fund			265			265			227				227

     The carrying amounts for cash and cash equivalents, receivables, accrued investment income, accounts payable, cash collateral and payables for security transactions approximated their fair values due to the short-term nature of these instruments. Consequently, such instruments are not included in the table presented above.

     The methods of determining the fair values of our investments in debt and equity securities are described in Note 3. The fair values for notes payable with fixed interest rates were obtained from an independent financial information service. The fair values for our cross-currency swaps are the expected amounts that we would receive or pay to terminate the swaps, taking into account current interest rates, foreign currency rates and the current creditworthiness of the swap counterparties. The fair value of the Japanese policyholder protection fund is our estimated share of the industry's obligation calculated on a pro rata basis by projecting our percentage of the industry's premiums and reserves and applying that percentage to the total industry obligation payable in future years.

     The preceding table excludes liabilities for future policy benefits of $35.6 billion and $29.8 billion at December 31, 2003 and 2002, respectively, as these liabilities are not considered financial instruments.

     As of December 31, 2003, we had outstanding cross-currency swap agreements related to the $450 million senior notes (see Note 6). We designated these cross-currency swaps as a hedge of the foreign currency exposure of our investment in AFLAC Japan. The notional amounts and terms of the swaps match the principal amount and terms of the senior notes.

     Our risk management objectives related to our cross-currency swaps are to minimize the exposure of our shareholders' equity to foreign currency translation fluctuations and to also reduce our interest expense by converting the dollar-denominated principal and interest on our senior notes into yen-denominated obligations. By entering into these cross-currency swaps, we have effectively converted the dollar-denominated principal and interest into yen-denominated obligations, thereby reducing our interest expense from 6.5% in dollars to 1.67% in yen. See Note 1 for information on the accounting policy for cross-currency swaps.

EXH 13-63

AFLAC Incorporated Form 10-K EXH 13 Table of Contents

     The components of the fair value of the cross-currency swaps were reflected as an asset or (liability) on the balance sheet as of December 31 as follows:

(In millions)		2003			2002
Interest rate component		$	36		$	38
Foreign currency component			(69	)		(18	)
Accrued interest component			4			5
	Total fair value of cross-currency swaps	$	(29	)	$	25

     The following is a reconciliation of the foreign currency component of the cross-currency swaps as included in accumulated other comprehensive income.

(In millions)	2003			2002			2001
Balance, beginning of year	$	(18	)	$	27		$	(34	)
Increase (decrease) in fair value of cross-currency swaps		(54	)		(8	)		62
Interest rate component not qualifying for hedge
accounting reclassified to net earnings		3			(37	)		(1	)
Balance, end of year	$	(69	)	$	(18	)	$	27

     We are exposed to credit risk in the event of nonperformance by counterparties to these contracts. The counterparties to our swap agreements are U.S. and Japanese financial institutions with the following credit ratings as of December 31:

(In millions)		2003					2002
Counterparty		Fair Value			Notional Amount		Fair Value		Notional Amount
Credit Rating		of Swaps			of Swaps		of Swaps		of Swaps
AA		$	(25	)	$	375	$	20	$	375
A			(4	)		75		5		75
	Total	$	(29	)	$	450	$	25	$	450

     We have also designated our yen-denominated notes payable (see Note 6) as hedges of the foreign currency exposure of our investment in AFLAC Japan.

 5. POLICY LIABILITIES

     Our policy liabilities primarily include future policy benefits and unpaid policy claims, which accounted for 91% and 5% of total policy liabilities at December 31, 2003, respectively. Future policy benefits represent claims that will occur in the future and are calculated as the present value of expected benefits to be paid less the present value of expected net premiums, including a provision for adverse deviation. These present values are determined at policy issuance. Unpaid policy claims include those claims that have occurred and are in the process of payment as well as an estimate of those claims that have occurred but have not yet been reported to us. We regularly review the adequacy of our policy liabilities in total and by component.

EXH 13-64

AFLAC Incorporated Form 10-K EXH 13 Table of Contents

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

					Liability Amounts					Interest Rates
			Policy Issue							Year of		In 20
(In millions)			Year		2003			2002		Issue		Years
Health insurance:
	Japan:		1999 - 2003	$		2,046	$		1,109		3.0%	3.0%
			1997 - 1999			2,249			1,842		3.5	3.5
			1995 - 1996			240			199		4.0	4.0
			1994 - 1996			3,318			2,780		4.5	4.5
			1985 - 1994			16,041			13,816		5.25 - 5.65	5.25 - 5.65
			1978 - 1986			4,352			3,848		6.5 - 6.75	5.5
			1974 - 1979			974			860		7.0	5.0
	U.S.:		1998 - 2003			587			433		7.0	7.0
			1988 - 2003			924			882		8.0	6.0
			1986 - 2003			1,099			965		6.0	6.0
			1985 - 1986			26			26		6.5	6.5
			1981 - 1986			235			240		7.0	5.5
			Other			39			41
Life insurance:
	Japan:		2001 - 2003			21			9		1.85	1.85
			1999 - 2003			496			275		3.0	3.0
			1997 - 1999			511			411		3.5	3.5
			1994 - 1996			838			695		4.0	4.0
			1985 - 1993			1,526			1,311		5.25 - 5.65	5.25 - 5.65
	U.S.:		1956 - 2003			66			55		4.0 - 6.0	4.0 - 6.0
		Total		$		35,588	$		29,797

     The weighted-average interest rates reflected in the consolidated statements of earnings for future policy benefits for Japanese policies were 4.9% in 2003, 5.0% in 2002, and 5.1% in 2001; and for U.S. policies, 6.4% in 2003, 2002 and 2001.

EXH 13-65

AFLAC Incorporated Form 10-K EXH 13 Table of Contents

     Changes in the liability for unpaid policy claims are summarized as follows for the years ended

December 31:

(In millions)			2003			2002			2001
Unpaid supplemental health claims, beginning of year			$	1,678		$	1,540		$	1,670
Add claims incurred during the year related to:
	Current year			4,237			3,642			3,454
	Prior years			(275	)		(354	)		(304	)
		Total incurred		3,962			3,288			3,150
Less claims paid during the year on claims incurred during:
	Current year			2,799			2,402			2,285
	Prior years			982			866			821
		Total paid		3,781			3,268			3,106
Effect of foreign exchange rate changes on unpaid claims				149			118			(174	)
Unpaid supplemental health claims, end of year				2,008			1,678			1,540
Unpaid life claims, end of year				7			75			75
		Total liability for unpaid policy claims	$	2,115		$	1,753		$	1,615

     Amounts shown for prior-year claims incurred during the year primarily result from actual claim settlements at less than the original estimates.

 6. NOTES PAYABLE

     A summary of notes payable as of December 31 follows:

(In millions)			2003		2002
6.50% senior notes due April 2009 (principal amount $450)			$	449	$	449
Yen-denominated Samurai notes:
	1.55% notes due October 2005 (principal amount 30 billion yen)			280		250
	.87% notes due June 2006 (principal amount 40 billion yen)			373		334
	.96% notes due June 2007 (principal amount 30 billion yen)			280		250
Obligations under capitalized leases, payable monthly through 2008,
secured by computer equipment in Japan				27		29
		Total notes payable	$	1,409	$	1,312

     The Parent Company has issued 100 billion yen of yen-denominated Samurai notes in Japan. These securities are not available to U.S. residents or entities. In 2000, we issued 30 billion yen (approximately $277 million at issuance); in 2001, we issued 40 billion yen (approximately $333 million at issuance); and in 2002, we issued 30 billion yen (approximately $254 million at issuance). All three issues are redeemable at our option at any time with a redemption price equal to the principal amount of the notes being redeemed plus a make-whole premium.

EXH 13-66

AFLAC Incorporated Form 10-K EXH 13 Table of Contents

     For our yen-denominated loans, the principal amount as stated in dollar terms will fluctuate from period to period as the yen/dollar exchange rate fluctuates. We have designated these yen-denominated notes payable as a hedge of the foreign currency exposure of our investment in AFLAC Japan.

     In 1999, we issued $450 million of 6.50% senior notes due April 2009. The notes are redeemable at our option at any time with a redemption price equal to the principal amount of the notes being redeemed plus a make-whole premium. We have entered into cross-currency swaps related to these notes (see Note 4).

     In December 2003, the Parent Company filed a shelf Registration Statement with Japanese regulatory authorities to issue up to 100 billion yen of yen-denominated Samurai notes in Japan. These securities will not be available to U.S. persons or entities.

     The aggregate contractual maturities of notes payable during each of the years after December 31, 2003, are as follows: 2004, $11 million; 2005, $287 million; 2006, $378 million; 2007, $283 million; 2008, $1 million; and 2009, $450 million.

     We were in compliance with all of the covenants of our notes payable at December 31, 2003. No events of default or defaults occurred during 2003 and 2002.

 7. INCOME TAXES

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

(In millions)			Japan			U.S.		Total
2003:
	Current		$	184		$	28	$	212
	Deferred			118			100		218
		Total income tax expense	$	302		$	128	$	430
2002:
	Current		$	327		$	26	$	353
	Deferred			(4	)		89		85
		Total income tax expense	$	323		$	115	$	438
2001:
	Current		$	313		$	25	$	338
	Deferred			(14	)		70		56
		Total income tax expense	$	299		$	95	$	394

EXH 13-67

AFLAC Incorporated Form 10-K EXH 13 Table of Contents

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

(In millions)		2003			2002			2001
Income taxes based on U.S. statutory rates		$	429		$	441		$	378
Utilization of foreign tax credit carryforwards			(18	)		(21	)		(21	)
Noninsurance losses generating no current tax benefit			-			-			12
Nondeductible expenses			5			12			11
Other, net			14			6			14
	Income tax expense	$	430		$	438		$	394

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

(In millions)			2003			2002			2001
Statements of earnings			$	430		$	438		$	394
Other comprehensive income:
	Changes in unrealized foreign currency translation gains			(112	)		(81	)		99
	Minimum pension liability adjustment			(12	)		-			-
	Unrealized gains on investment securities:
		Unrealized holding gains (losses) arising during the year		(313	)		239			110
		Reclassification adjustment for realized
		(gains) losses included in net earnings		110			(1	)		(2	)
		Total income tax expense (benefit) allocated to other
		comprehensive income		(327	)		157			207
Additional paid-in capital (exercise of stock options)				(1	)		(1	)		(1	)
		Total income taxes	$	102		$	594		$	600

     Changes in unrealized foreign currency translation gains/losses included a deferred income tax benefit of $111 million in 2003 and $80 million in 2002, compared with deferred income tax expense of $98 million in 2001, which represented Japanese income taxes on currency translation gains/losses that arose for Japanese tax purposes from the translation of AFLAC Japan's dollar-denominated investments into yen.

EXH 13-68

AFLAC Incorporated Form 10-K EXH 13 Table of Contents

     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)				2003		2002
Deferred income tax liabilities:
	Deferred policy acquisition costs			$	1,382	$	1,144
	Unrealized gains on investment securities				1,117		1,018
	Other basis differences in investment securities				70		275
	Premiums receivable				110		92
	Other				32		11
		Total deferred income tax liabilities			2,711		2,540
Deferred income tax assets:
	Policy benefit reserves				64		140
	Policyholder protection fund obligation				83		70
	Unfunded retirement benefits				37		35
	Other accrued expenses				63		66
	Tax credit carryforwards				128		128
	Policy and contract claims				71		36
	Difference in tax basis of investment in AFLAC Japan				205		49
	Unrealized exchange loss on yen-denominated notes payable				67		20
	Capital loss carryforwards				106		-
	Other				135		93
		Total gross deferred income tax assets			959		637
	Less valuation allowance				234		196
		Total deferred income tax assets			725		441
			Net deferred income tax liability		1,986		2,099
Current income tax liability					203		265
			Total income tax liability	$	2,189	$	2,364

     A valuation allowance is provided when it is more likely than not that deferred tax assets will not be realized. We have established valuation allowances primarily for alternative minimum tax credit and noninsurance loss carryforwards that exceed projected future offsets. Under U.S. income tax rules, only 35% of noninsurance losses can be offset against life insurance taxable income each year. During 2003, the valuation allowance for deferred tax assets increased by $38 million, compared with $70 million in 2002, due to changes in carryforwards of alternative minimum tax credits and noninsurance losses. For current U.S. income tax purposes, alternative minimum tax credit carryforwards of $128 million were available at December 31, 2003.

EXH 13-69

AFLAC Incorporated Form 10-K EXH 13 Table of Contents

 8. SHAREHOLDERS' EQUITY

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

(In thousands of shares)			2003		2002		2001
Common stock - issued:
	Balance, beginning of year		648,618		646,559		644,813
	Exercise of stock options		2,936		2,059		1,746
		Balance, end of year	651,554		648,618		646,559
Treasury stock:
	Balance, beginning of year		134,179		124,944		115,603
	Purchases of treasury stock:
		Open market	10,188		12,094		12,219
		Other	215		195		168
	Shares issued to AFL Stock Plan		(1,766	)	(1,776	)	(1,830	)
	Exercise of stock options		(1,154	)	(1,278	)	(1,216	)
		Balance, end of year	141,662		134,179		124,944
Shares outstanding, end of year			509,892		514,439		521,615

     Share Repurchase Program: As of December 31, 2003, we had approximately seven million shares available for purchase under the share repurchase program authorized by the board of directors in February 2002. In February 2004, the board of directors authorized the purchase of up to an additional 30 million shares of our common stock.

     Stock Split: In 2001, the board of directors declared a two-for-one stock split. Upon distribution of the split, we transferred $32 million from additional paid-in capital to common stock representing the par value of the new shares.

     Stock Options: The Company's stock option plan allows grants for both incentive stock options and non-qualifying stock options (NQSO) to employees and NQSO to members of the board of directors. The options have a term of 10 years. The exercise price is equal to the fair market value at the date of grant. The majority of our options generally vest after three years. At December 31, 2003, seven million shares were available for future grants.

     We use the intrinsic value method to value stock options in accordance with APB No. 25. Under this method, we do not recognize compensation cost for stock options because the exercise price is equal to the fair market value at the date of grant. See Note 1 for additional information regarding stock options.

EXH 13-70

AFLAC Incorporated Form 10-K EXH 13 Table of Contents

     The following table summarizes stock option activity:

				Weighted-Average
		Option		Exercise Price
(In thousands of shares)		Shares		Per Share
Outstanding at December 31, 2000		25,981		$	13.27
	Granted in 2001	2,442			28.29
	Canceled in 2001	(123	)		23.29
	Exercised in 2001	(3,043	)		6.89
Outstanding at December 31, 2001		25,257			15.44
	Granted in 2002	2,056			27.82
	Canceled in 2002	(77	)		26.33
	Exercised in 2002	(3,476	)		7.53
Outstanding at December 31, 2002		23,760			17.64
	Granted in 2003	2,324			31.70
	Canceled in 2003	(74	)		29.14
	Exercised in 2003	(4,374	)		8.96
Outstanding at December 31, 2003		21,636		$	20.87

(In thousands of shares)	2003	2002	2001
Shares exercisable, end of year	15,325	15,072	16,329

     The following table summarizes information about stock options outstanding at December 31, 2003:

(In thousands of shares)					Options Outstanding							Options Exercisable
							Wgtd.-Avg.		Weighted-					Weighted-
							Remaining		Average					Average
Range of					Number		Contractual		Exercise			Number		Exercise
Exercise Prices					Outstanding		Life (Yrs.)		Price			Exercisable		Price
$	4.92	-	$	7.92		2,394		1.99		$	7.70		2,394		$	7.70
	8.48	-		13.31		2,480		3.29			11.82		2,480			11.82
	13.66	-		15.05		2,862		4.35			14.85		2,862			14.85
	15.22	-		22.73		2,237		5.87			21.77		2,237			21.77
	22.84	-		23.23		3,798		6.44			23.22		3,798			23.22
	23.41	-		25.12		2,443		7.02			24.41		1,184			24.01
	25.13	-		30.38		2,192		7.31			28.84		331			27.77
	30.57	-		35.85		3,230		9.13			31.43		39			32.76
$	4.92	-	$	35.85		21,636		5.81		$	20.87		15,325		$	17.36

EXH 13-71

AFLAC Incorporated Form 10-K EXH 13 Table of Contents

     For the pro forma information presented in Note 1, the fair value of each option granted was estimated on the date of grant using the Black-Scholes multiple option approach with the following assumptions for options granted during the three-year period ended December 31, 2003.

	2003		2002		2001
Expected life from vesting date (years)	2.9 - 3.7		4.3 - 5.5		4.4 - 5.6
Dividend yield	.8	%	.8	%	.8	%
Expected volatility	26.1	%	31.9	%	32.4	%
Risk-free interest rate	4.5	%	5.0	%	5.0	%

     For the year ended December 31, 2003, there were approximately 304,400 weighted-average shares, compared with 987,900 in 2002 and 1,057,900 in 2001, for outstanding stock options that were not included in the calculation of weighted-average shares used in the computation of diluted earnings per share because the exercise price for these options was greater than the average market price during these periods.

     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.

 9. STATUTORY ACCOUNTING AND DIVIDEND RESTRICTIONS

     Our insurance subsidiary is required to report its results of operations and financial position to state insurance regulatory authorities on the basis of statutory accounting practices prescribed or permitted by such authorities. Our branch in Japan, AFLAC Japan, must report its results of operations and financial position to the Japanese Financial Services Agency (FSA) on a Japanese statutory accounting basis as prescribed by the FSA.

     As determined on a U.S. statutory accounting basis, AFLAC's net income was $742 million in 2003, $506 million in 2002 and $370 million in 2001. Capital and surplus was $2.4 billion and $2.1 billion at December 31, 2003 and 2002, respectively.

     Net assets of the insurance subsidiaries aggregated $7.9 billion at December 31, 2003, on a GAAP basis, compared with $7.5 billion a year ago. AFLAC Japan accounted for $4.6 billion, or 58.7%, of these net assets, compared with $4.8 billion, or 64.0% at December 31, 2002.

EXH 13-72

AFLAC Incorporated Form 10-K EXH 13 Table of Contents

     Reconciliations of AFLAC's net assets on a GAAP basis to capital and surplus determined on a U.S. statutory accounting basis as of December 31 were as follows:

(In millions)		2003			2002
Net assets on GAAP basis		$	7,899		$	7,481
Adjustment of carrying values of investments			(3,482	)		(3,831	)
Elimination of deferred policy acquisition costs			(4,978	)		(4,221	)
Adjustment to policy liabilities			1,049			769
Adjustment to deferred income taxes			2,247			2,336
Other, net			(382	)		(421	)
	Net assets on U.S. statutory accounting basis	$	2,353		$	2,113

     Capital and surplus (unaudited) of AFLAC Japan, based on Japanese statutory accounting practices, aggregated $2.6 billion and $3.2 billion at December 31, 2003 and 2002, respectively. Japanese statutory accounting practices differ in many respects from U.S. GAAP. Under Japanese statutory accounting practices, premium income is recognized on a cash basis, policy acquisition costs are charged off immediately, policy benefit and claim reserving methods and assumptions are different, policyholder protection fund obligations are not accrued, and deferred income tax liabilities are recognized on a different basis.

     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 undistributed earnings of our insurance subsidiary. Amounts available for dividends, management fees and other payments to the Parent Company by its insurance subsidiary 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. One of the primary considerations is that our insurance subsidiary must maintain adequate risk-based capital for U.S. regulatory authorities and adequate solvency margins for Japanese regulatory authorities. Also, the maximum amount of dividends that can be paid to shareholders by insurance companies domiciled in the state of Nebraska without prior approval of the directo r of insurance is the greater of the net gain 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. Dividend payments by AFLAC during 2004 in excess of $738 million would require such approval. Dividends paid by AFLAC during 2003 were $408 million.

     A portion of AFLAC Japan earnings, as determined on a Japanese statutory accounting basis, can 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 United States can 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 translations of AFLAC Japan's dollar-denominated investments into yen. AFLAC Japan remitted profits of $385 million, or 45.6 billion yen, to AFLAC U.S. during 2003, compared with $383 million, or 45.3 billion yen in 2002, and $185 million, or 23.0 billion yen in 2001. The 2001 profit repatriation was reduced as a result of our decision to retain earnings in Japan in order to enhance our solvency margin.

EXH 13-73

AFLAC Incorporated Form 10-K EXH 13 Table of Contents

     For the Japanese reporting fiscal year ended March 31, 2002, AFLAC Japan was required to adopt a new Japanese statutory accounting standard regarding fair value accounting for investments. Previously, investment securities were generally reported at amortized cost for FSA purposes. Under the new accounting standard, AFLAC Japan now classifies investment securities in either an available-for-sale category at fair value or a held-to-maturity category at amortized cost. Unrealized gains and losses on investment securities available for sale are reported in capital and surplus and reflected in solvency margin calculations. This new accounting standard may result in significant fluctuations in FSA equity, AFLAC Japan's solvency margin, and amounts available for annual profit repatriation.

 10. BENEFIT PLANS

     Our basic employee defined-benefit pension plans cover substantially all of our full-time employees. Pension plan assets of our U.S. and Japanese plans consist of diverse portfolios of debt and equity securities. At December 31, 2003, other liabilities included a liability for both plans in the amount of $65 million, compared with $39 million a year ago. The projected benefit obligation of both our U.S. and Japanese plans significantly exceeded the fair value of plan assets at December 31, 2003 and 2002. The underfunded status of the plans was primarily attributable to steadily increasing pension benefit obligations combined with depressed fair values for the assets of both plans as a result of general market conditions for investment securities during 2003 and 2002. During 2003, market conditions affecting the fair value of U.S. plan assets improved, resulting in a positive return in 2003. Under GAAP, a minimum pension liability is required when the unfunded actuarial present value of the accumulated benefit obligation exceeds plan assets and the accrued pension liability. The change in the minimum pension liability in our U.S. plan included in other comprehensive income was $9 million for the year ended December 31, 2003, compared with $8 million a year ago. The change in the minimum pension liability in the Japanese plan included in other comprehensive income was $27 million for the year ended December 31, 2003. There was no minimum pension liability in the Japanese plan included in other comprehensive income in the prior year.

EXH 13-74

AFLAC Incorporated Form 10-K EXH 13 Table of Contents

     The measurement date for performing the valuation of our U.S. plan is September 30. Reconciliations of the funded status of the basic employee defined-benefit pension plans with amounts recognized in the consolidated balance sheets as of December 31 were as follows:

			2003						2002
(In thousands)				Japan			U.S.			Japan			U.S.
Projected benefit obligation:
	Benefit obligation, beginning of year		$	91,305		$	89,040		$	69,194		$	79,047
	Service cost			8,538			5,078			5,491			3,901
	Interest cost			3,352			6,268			1,953			5,505
	Plan amendments			-			-			-			577
	Actuarial loss (gain)			30,627			12,699			8,542			1,583
	Benefits paid			(1,639	)		(2,046	)		(1,274	)		(1,573	)
	Effect of foreign exchange rate changes			12,447			-			7,399			-
	Benefit obligation transferred to government plan			(47,824	)		-			-			-
		Benefit obligation, end of year		96,806			111,039			91,305			89,040
Plan assets:
	Fair value of plan assets, beginning of year			45,746			45,829			39,419			48,761
	Actual return on plan assets			1,353			4,106			(2,792	)		(4,350	)
	Employer contribution			6,445			4,165			6,362			2,991
	Benefits paid			(1,639	)		(2,046	)		(1,274	)		(1,573	)
	Effect of foreign exchange rate changes			5,960			-			4,031			-
	Assets transferred to government plan			(26,719	)		-			-			-
		Fair value of plan assets, end of year		31,146			52,054			45,746			45,829
	Funded status			(65,660	)		(58,985	)		(45,559	)		(43,211	)
Unrecognized net actuarial loss (gain)				55,595			43,090			21,600			30,769
Unrecognized transition obligation (asset)				3,148			(232	)		3,012			(354	)
Unrecognized prior service cost				670			1,842			647			2,018
Adjustment for minimum pension liability				(27,189	)		(16,858	)		-			(8,080	)
Liability for accrued benefit cost			$	(33,436	)	$	(31,143	)	$	(20,300	)	$	(18,858	)
Accumulated benefit obligation			$	64,582		$	83,196		$	63,207		$	66,705

     Equity securities accounted for 59% of U.S. plan assets at December 31, 2003, compared with 54% a year ago. Equity securities for our U.S. plan included $2 million (4% of plan assets) of AFLAC Incorporated common stock at both December 31, 2003 and 2002. Fixed-income securities accounted for 28% of U.S. plan assets at December 31, 2003, compared with 25% a year ago. Cash and cash equivalents accounted for 13% in 2003, compared with 21% a year ago. Target asset allocations for U.S. plan assets are 55% to 60% equity securities, 35% to 40% fixed-income securities and 5% to 10% cash and cash equivalents.

EXH 13-75

AFLAC Incorporated Form 10-K EXH 13 Table of Contents

     The investment objective of our U.S. plan is to preserve the purchasing power of the plan's assets and earn a reasonable inflation adjusted rate of return over a long-term horizon. Furthermore, we seek to accomplish these objectives in a manner that allows for the adequate funding of plan benefits and expenses. In order to achieve these objectives, our 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 our strategy, we have established strict policies covering investment security quality, type and concentration. These policies prohibit investments in derivatives, precious metals, limited partnerships, real estate, venture capital, futures contracts, and foreign securities. We are also prohibited from trading on margin.

     We monitor U.S. plan asset performance results over a three to five year period utilizing shorter time frame performance measures to identify trends. We review investment performance and compliance with stated investment policies and practices on a quarterly basis. The specific three to five year investment objectives for the U.S. pension plan are to earn a total rate of return on equity securities which exceeds the rate of return for the Standard & Poor's 500 stock index and to earn a total rate of return on fixed-income securities which exceeds the Merrill Lynch one-to-ten year investment grade government/corporate bond index.

     Expected future benefits payments for the U.S. plan were as follows: 2004, $3 million; 2005, $3 million; 2006, $3 million; 2007, $3 million; 2008, $4 million; and 2009 through 2013, $25 million. We estimate that contributions to fund the plan will be approximately $6 million in 2004.

     Equity securities accounted for 35% of Japanese plan assets at December 31, 2003, compared with 50% a year ago. Fixed-income securities accounted for 65% of Japanese plan assets, compared with 50% a year ago.

     Our Japanese pension plan has two distinct components: the corporate portion and the substitutional portion. The corporate portion is based on a plan established by AFLAC Japan. The substitutional portion is based on the pay-related part of old-age pension benefits prescribed by the Japan Welfare Pension Insurance Law (JWPIL) and is similar to social security benefits in the United States. Benefits under the substitutional portion are calculated based on a standard remuneration schedule determined by the JWPIL. By maintaining the substitutional portion, AFLAC Japan was exempted from contributions to Japanese Pension Insurance (JPI).

     In 2001, the JWPIL was amended to allow employers to transfer the substitutional portion of employer pension plans back to the Japanese government. The transfer process takes place in four distinct phases. In phase one, an agreement of separation and transfer is obtained from covered employees and subsequent application is made to the Japanese government for the transfer. In phase two, the Japanese government either approves or denies the application. Upon receipt of approval, the employer is relieved of the pension obligation related to future employee service under the substitutional portion of the plan. The employer then resumes making contributions to JPI. In phase three, a second application is made to the Japanese government to relieve the employer of the pension obligation related to past employee service. In phase four, the Japanese government gives final approval for the separation. Upon receipt of approval, the employer is relieved of its obligation for pas t employee service under the substitutional portion. Plan assets related to the substitutional portion are then transferred to the JPI.

EXH 13-76

AFLAC Incorporated Form 10-K EXH 13 Table of Contents

     During 2003, we made the decision to separate the substitutional portion from the pension plan and transfer the obligation and related plan assets to the Japanese government. As of December 31, 2003, we had completed all four phases outlined above with the exception of the transfer of the related assets to the Japanese government. In January 2004, participants in the substitutional portion of the plan were notified by the Japanese government that it had assumed the liability for past and future service portions of the plan. However, as of December 31, 2003, we no longer had a pension obligation related to the substitutional plan. The Japanese government began making payments to plan participants effective December 1, 2003.

     In accordance with EITF 03-2, Accounting for the Transfer to the Japanese Government of the Substitutional Portion of Employee Pension Fund Liabilities, following transfer and acceptance of the substitutional plan assets, we will recognize a gain of $7 million in the first quarter of 2004. This gain comprises a settlement loss and related increase in the accrued pension liability in the amount of $17 million for the release of unrecognized losses related to the substitutional plan; a reduction in pension expense and related adjustment to the accrued pension liability in the amount of $15 million for the release of the accrued pension cost related to the substitutional plan; and a subsidy from the Japanese government in the amount of $9 million (other income) in connection with the completion of the transfer process.

     In the course of separating the substitutional plan from our pension plan, we updated our covered salary assumptions, and revised withdrawal and payment rate tables and service date information for the corporate portion of the plan to better reflect its provisions. These changes resulted in an actuarial loss of $26 million, which is included in the actuarial loss component of the Japanese plan benefit obligation as of December 31, 2003.

     The components of retirement expense and actuarial assumptions for the pension plans for the years ended December 31 were as follows:

			2003						2002						2001
(In thousands)			Japan			U.S.			Japan			U.S.			Japan			U.S.
Components of net periodic
benefit cost:
	Service cost		$	8,538		$	5,078		$	5,491		$	3,901		$	4,132		$	3,583
	Interest cost			3,352			6,268			1,953			5,505			1,784			5,072
	Expected return on plan assets			(1,258	)		(5,044	)		(1,176	)		(5,290	)		(1,152	)		(5,612	)
	Amortization of:
		Net actuarial loss		3,331			1,316			685			131			225			-
		Transition obligation (asset)		310			(122	)		290			(121	)		295			(122	)
		Prior service cost		75			175			71			175			72			138
	Net periodic benefit cost		$	14,348		$	7,671		$	7,314		$	4,301		$	5,356		$	3,059
Weighted-average actuarial
assumptions used in the
calculations:
	Discount rate - net
	periodic benefit cost			2.5	%		6.5	%		2.5	%		7.0	%		2.5	%		7.0	%
	Discount rate - benefit obligations			2.5			6.5			2.5			7.0			2.5			7.0
	Expected long-term return on
	plan assets			2.5			9.0			2.5			9.0			2.5			9.0
	Rate of compensation increase			3.5			4.0			3.5			4.0			3.5			4.0

EXH 13-77

AFLAC Incorporated Form 10-K EXH 13 Table of Contents

     We base the long-term rate of return on U.S. plan assets on the historical rates of return over the last 15 years and the expectation of similar returns over the long-term investment goals and objectives of U.S. plan assets.

     In addition to the benefit obligations for funded employee plans, we also maintain unfunded supplemental retirement plans for certain officers and beneficiaries. Retirement expense for the unfunded supplemental plans was $19 million in 2003, $13 million in 2002, and $15 million in 2001. The accrued retirement liability for the unfunded supplemental retirement plans at December 31, 2003 and 2002, was $180 million and $167 million, respectively. The actuarial present value of projected benefit obligations was $194 million and $172 million at December 31, 2003 and 2002, respectively. The assumptions used in the valuation of these plans were the same as for the funded plans.

     Reconciliations of the benefit obligation of the unfunded retiree medical program and other postretirement benefits for U.S. employees with amounts recognized in the accompanying consolidated balance sheets as of December 31 were as follows:

(In thousands)		2003			2002
Benefit obligation:
	Benefit obligation, beginning of year	$	18,060		$	15,010
	Service cost		681			423
	Interest cost		1,231			1,051
	Actuarial loss (gain)		1,763			2,722
	Benefits paid		(1,193	)		(1,146	)
Unfunded benefit obligation, end of year			20,542			18,060
Unrecognized net actuarial gain (loss)			(5,195	)		(3,714	)
Unrecognized prior service cost			(266	)		(291	)
	Accrued benefit cost	$	15,081		$	14,055

EXH 13-78

AFLAC Incorporated Form 10-K EXH 13 Table of Contents

     The components of expense for the retiree medical program and other postretirement benefits, along with actuarial assumptions, were as follows for the years ended December 31:

(In thousands)			2003			2002			2001
Service cost			$	681		$	423		$	522
Interest cost				1,231			1,051			1,020
Amortization of net (gain) loss				281			-			-
Amortization of prior service cost				26			25			25
		Net periodic benefit cost	$	2,219		$	1,499		$	1,567
Discount rate:
	Net periodic cost			6.5	%		7.0	%		7.0	%
	Benefit obligations			6.5			7.0			7.0
Effect of 1-percentage point increase in health
care cost trend rate:
	On total of service and interest cost components		$	2,331		$	183		$	168
	On postretirement benefit obligation			1,650			1,279			1,070
Effect of 1-percentage point decrease in health
care cost trend rate:
	On total of service and interest cost components			(1,886	)		(156	)		(143	)
	On postretirement benefit obligation			(1,437	)		(1,113	)		(919	)

     The projected health care cost trend rate used in 2003 was 11%, graded to 6% over six years.

     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 persistency of substantially all new insurance policies. The cost of this plan, which is included in deferred policy acquisition costs, amounted to $32 million in 2003, $30 million in 2002, and $24 million in 2001.

 11. COMMITMENTS AND CONTINGENT LIABILITIES

     We lease office space and equipment under various agreements that expire in various years through 2021. Future minimum lease payments due under non-cancelable operating leases at December 31, 2003, were as follows: 2004, $41 million; 2005, $20 million; 2006, $13 million; 2007, $9 million; and thereafter, $34 million.

     A portion of AFLAC Japan's administrative office building is located on leased land. Under the terms of the lease agreement, we are committed to purchase the leased land, at fair value, upon the demand of the owner. As of December 31, 2003, the estimated fair value of the leased land was 1.8 billion yen ($17 million using the year-end exchange rate).

     We are a defendant in various lawsuits considered to be in the normal course of business. 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 against other companies, including insurers, in recent years. Although the final results of any litigation cannot be predicted with certainty, we believe the outcome of pending litigation will not have a material adverse effect on our financial position, results of operations, or cash flows.

EXH 13-79

AFLAC Incorporated Form 10-K EXH 13 Table of Contents

 12. SUPPLEMENTARY INFORMATION

		2003	2002	2001
Weighted-average shares used in calculating
earnings per share (In thousands):
	Average outstanding shares used for
	calculating basic EPS	513,220	517,541	525,098
	Dilutive effect of stock options	8,918	10,785	12,285
	Average outstanding shares used for
	calculating diluted EPS	522,138	528,326	537,383

Other:
	Policy acquisition costs deferred
	during the year (In millions)	$	874		$	756		$	651
	Commissions deferred as a percentage of
	total acquisition costs deferred		76	%		74	%		71	%
	Personnel compensation and benefits as a
	percentage of insurance expenses		45	%		47	%		44	%

Supplemental disclosures of cash
flow information (In millions):
	Income taxes paid		$	333	$	363	$	347
	Interest paid			18		22		23
	Impairment losses included in realized
	investment losses			1		58		86
	Noncash financing activities:
		Capitalized lease obligations		14		8		17
		Treasury shares issued to AFL Stock Plan for:
		Shareholder dividend reinvestment		8		7		6
		Associates stock bonus		31		22		17

Property and equipment (In millions):
	Land	$	142	$	131	$	117
	Buildings		392		355		339
	Equipment		243		219		186
			777		705		642
	Less accumulated depreciation		259		223		186
	Net property and equipment	$	518	$	482	$	456

EXH 13-80

AFLAC Incorporated Form 10-K EXH 13 Table of Contents

Independent Auditors' Report

     The shareholders and board of directors of AFLAC Incorporated:

     We have audited the accompanying consolidated balance sheets of AFLAC Incorporated and subsidiaries as of December 31, 2003 and 2002, and the related consolidated statements of earnings, shareholders' equity, cash flows, and comprehensive income for each of the years in the three-year period ended December 31, 2003. These consolidated financial statements are the responsibility of the company's management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits.

     We conducted our audits in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

     In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of AFLAC Incorporated and subsidiaries at December 31, 2003 and 2002, and the results of their operations and their cash flows for each of the years in the three-year period ended December 31, 2003, in conformity with accounting principles generally accepted in the United States of America.

	KPMG LLP
Atlanta, Georgia
February 2, 2004

EXH 13-81

AFLAC Incorporated Form 10-K EXH 13 Table of Contents

Unaudited Consolidated Quarterly Financial Data

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

(In millions, except for per-share amounts)
			March 31,			June 30,			September 30,			December 31,
Three months ended,			2003			2003			2003			2003
Premium income			$	2,372		$	2,407		$	2,478		$	2,664
Net investment income				430			436			448			473
Realized investment gains (losses)				(7	)		(6	)		(4	)		(284	)
Other income (loss)				12			24			9			(6	)
	Total revenues			2,807			2,861			2,931			2,847
Total benefits and expenses				2,437			2,484			2,560			2,741
Earnings before income taxes				370			377			371			106
Total income tax				133			129			134			33
Net earnings			$	237		$	248		$	237		$	73
Net earnings per basic share			$	.46		$	.48		$	.46		$	.14
Net earnings per diluted share				.45			.48			.45			.14
			March 31,			June 30,			September 30,			December 31,
Three months ended,			2002			2002			2002			2002
Premium income			$	1,998		$	2,097		$	2,253		$	2,247
Net investment income				381			397			418			418
Realized investment gains (losses)				(8	)		(3	)		(3	)		-
Other income (loss)				-			22			39			1
		Total revenues		2,371			2,513			2,707			2,666
Total benefits and expenses				2,086			2,191			2,350			2,371
Earnings before income taxes				285			322			357			295
Total income tax				102			110			117			109
Net earnings			$	183		$	212		$	240		$	186
Net earnings per basic share			$	.35		$	.41		$	.46		$	.36
Net earnings per diluted share				.34			.40			.45			.35

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

EXH 13-82

EX-14

AFLAC Incorporated Form 10-K

EXHIBIT 14

CODE OF ETHICS FOR CHIEF EXECUTIVE
AND SENIOR FINANCIAL OFFICERS

This section of the Code sets forth the Company's Code of Ethics for the Chief Executive and Senior Financial Officers ("Code for Senior Officers"). The standards set forth in this section are applicable to all officers, directors, and employees, but have special relevance to the Chief Executive Officer, the Chief Financial Officer, and the Chief Accounting Officer ("Senior Officers"). ⁽¹⁾

Compliance with Laws, Rules and Regulations

Senior Officers and all officers, directors and employees are required to comply with the laws, rules and regulations that govern the conduct of our business. In addition, Senior Officers also have leadership responsibilities that include creating a culture of high ethical standards and commitment to compliance, maintaining a work environment that encourages employees to raise concerns, and promptly addressing employee compliance concerns.

Disclosures

It is Company policy to make full, fair, accurate, timely, and understandable disclosure in compliance with all applicable laws and regulations in all reports and documents that the Company files with, or submits to, the Securities and Exchange Commission and in all other public communications made by the Company. Senior Officers and all officers, directors, and employees are required to abide by Company standards, policies, and procedures designed to promote compliance with this policy.

Conflicts of Interest

Senior Officers are required to act in an honest and ethical manner, including the ethical handling of actual or apparent conflicts of interest between personal and professional relationships. Before making any investment, accepting any position or benefits, participating in any transaction or business arrangement, or otherwise acting in a manner that creates or appears to create a conflict of interest, Senior Officers must make full disclosure of all facts and circumstances to, and obtain the prior written approval of, the Audit Committee of the Board of Directors.

Reporting Violations and Accountability

Senior Officers must report any suspected violation of this Code for Senior Officers. The Chief Accounting Officer shall report any suspected violations to the Chief Financial Officer or the Chief Executive Officer. The Chief Financial Officer shall report any suspected violations to the Chief Executive Officer. If upon investigation of the facts and circumstances of the suspected violation it is determined that a violation has occurred, the Chief Executive Officer shall report the violation to the Audit Committee of the Board of Directors. Subject to applicable law, violations of this Code for Senior Officers may be subject to disciplinary action, up to and including discharge.

_____________________________________________

(1) This Code for Senior Officers is intended to satisfy the requirements of Section 406 of the Sarbanes-Oxley Act of 2002 and the SEC's regulations promulgated pursuant thereto. Amendments to the Code for Senior Officers will be disclosed as required by law or regulations.

EXH 14.1

EX-21

AFLAC Incorporated Form 10-K

EXHIBIT 21

AFLAC INCORPORATED

SUBSIDIARIES

     The following list sets forth the subsidiaries of AFLAC Incorporated:

Company	Jurisdiction
AFLAC Insurance Service Company, Ltd.	Japan
AFLAC Payment Service Company, Ltd.	Japan
aflacdirect.com, Ltd.	Japan
AFLAC International, Incorporated	Georgia
AFLAC Information Technology, Incorporated	Georgia
American Family Life Assurance Company of Columbus (AFLAC)	Nebraska
American Family Life Assurance Company of New York	New York
Communicorp, Incorporated	Georgia

     The above subsidiaries are 100% directly owned by AFLAC Incorporated, except:

-American Family Life Assurance Company of New York is 100% directly owned by AFLAC.

-AFLAC Insurance Service Company, Ltd. and AFLAC Payment Service Company, Ltd. are 100% directly owned by AFLAC International, Incorporated.

-aflacdirect.com, Ltd. is 78% owned by AFLAC International, Incorporated, the remaining 22% is held by a non-affiliated party.

EXH 21-1

EX-23

AFLAC Incorporated Form 10-K

EXHIBIT 23




KPMG LLP
Certified Public Accountants
303 Peachtree Street, N.E.
Suite 2000
Atlanta, GA 30308

INDEPENDENT AUDITORS' CONSENT

The Shareholders and The Board of Directors
AFLAC Incorporated:


We consent to incorporation by reference in Registration Statement No. 33-64535 on Form S-3; 33-41552, 33-44720, 333-01243, 333-69333 and 333-27883 on Form S-8 of AFLAC Incorporated of our report dated February 2, 2004, relating to the consolidated balance sheets of AFLAC Incorporated and Subsidiaries as of December 31, 2003 and 2002, and the related consolidated statements of earnings, shareholders' equity, cash flows and comprehensive income for each of the years in the three-year period ended December 31, 2003, which report appears in the December 31, 2003, annual report on Form 10-K of AFLAC Incorporated.

KPMG LLP

Atlanta, Georgia
March 10, 2004

EXH 23-1

EX-31.1

AFLAC Incorporated Form 10-K

EXHIBIT 31.1

Certifications

I, Daniel P. Amos, certify that:

1.  I have reviewed this annual report on Form 10-K of AFLAC Incorporated;

2.  Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.  Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.  The registrant's other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have:

a)  designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this annual report is being prepared;

b)  [intentionally omitted]

c)  evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

5.  The registrant's other certifying officers and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalent functions):

a)  all significant deficiencies and material weaknesses in the design or operation of internal controls over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

b)  any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal controls over financial reporting.

Date:   March 10, 2004	/s/ Daniel P. Amos
	Daniel P. Amos
	Chairman and Chief Executive Officer

EXH 31.1-1

EX-31.2

AFLAC Incorporated Form 10-K

EXHIBIT 31.2

Certifications

I, Kriss Cloninger III, certify that:

1.  I have reviewed this annual report on Form 10-K of AFLAC Incorporated;

2.  Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.  Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.  The registrant's other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have:

a)  designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this annual report is being prepared;

b)  [intentionally omitted]

c)  evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

5.  The registrant's other certifying officers and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalent functions):

a)  all significant deficiencies and material weaknesses in the design or operation of internal controls over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

b)  any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal controls over financial reporting.

Date:   March 10, 2004	/s/ Kriss Cloninger III
	Kriss Cloninger III
	President, Chief Financial Officer and Treasurer

EXH 31.2-1

EX-32

EXHIBIT 32

Certification of CEO and CFO Pursuant to
18 U.S.C. Section 1350,
as Adopted Pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002

In connection with the Annual Report on Form 10-K of AFLAC Incorporated (the "Company") for the annual period ended December 31, 2003 as filed with the Securities and Exchange Commission on the date hereof (the "Report"), Daniel P. Amos, as Chief Executive Officer of the Company, and Kriss Cloninger, III, as Chief Financial Officer of the Company, each hereby certifies, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to the best of his knowledge:

(1)	The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
(2)	The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

/s/ Daniel P. Amos
Name:	Daniel P. Amos
Title:	Chief Executive Officer
Date:	March 10, 2004

/s/ Kriss Cloninger III
Name:	Kriss Cloninger, III
Title:	Chief Financial Officer
Date:	March 10, 2004

EXH 32