INVESTMENTS (Tables)

3 Months Ended

Mar. 31, 2012

Securities Available For Sale And Held To Maturity

The amortized cost for our investments in debt and perpetual securities, the cost for equity securities and the fair values of these investments are shown in the following tables.



	March 31, 2012
(In millions)	Cost or Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
Securities available for sale, carried at fair value:
Fixed maturities:
Yen-denominated:
Japan government and agencies	$	10,007	$	604	$	0	$	10,611
Mortgage- and asset-backed securities	846		37		1		882
Public utilities	3,933		65		220		3,778
Sovereign and supranational	1,612		69		19		1,662
Banks/financial institutions	4,163		202		287		4,078
Other corporate	5,998		165		359		5,804
Total yen-denominated	26,559		1,142		886		26,815
Dollar-denominated:
U.S. government and agencies	100		18		0		118
Municipalities	1,061		110		8		1,163
Mortgage- and asset-backed securities	307		75		0		382
Public utilities	3,130		452		25		3,557
Sovereign and supranational	454		93		4		543
Banks/financial institutions	3,410		266		45		3,631
Other corporate	9,116		1,249		52		10,313
Total dollar-denominated	17,578		2,263		134		19,707
Total fixed maturities	44,137		3,405		1,020		46,522
Perpetual securities:
Yen-denominated:
Banks/financial institutions	4,879		110		301		4,688
Other corporate	326		25		0		351
Dollar-denominated:
Banks/financial institutions	317		13		17		313
Total perpetual securities	5,522		148		318		5,352
Equity securities	21		4		0		25
Total securities available for sale	$	49,680	$	3,557	$	1,338	$	51,899



	March 31, 2012
(In millions)	Cost or Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
Securities held to maturity, carried at amortized cost:
Fixed maturities:
Yen-denominated:
Japan government and agencies	$	22,783	$	287	$	3	$	23,067
Municipalities	522		31		3		550
Mortgage- and asset-backed securities	117		4		0		121
Public utilities	5,189		175		157		5,207
Sovereign and supranational	3,970		149		166		3,953
Banks/financial institutions	11,559		174		855		10,878
Other corporate	4,694		148		174		4,668
Total yen-denominated	48,834		968		1,358		48,444
Total securities held to maturity	$	48,834	$	968	$	1,358	$	48,444



	December 31, 2011
(In millions)	Cost or Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
Securities available for sale, carried at fair value:
Fixed maturities:
Yen-denominated:
Japan government and agencies	$	11,108	$	670	$	0	$	11,778
Mortgage- and asset-backed securities	912		43		1		954
Public utilities	3,850		59		226		3,683
Sovereign and supranational	1,704		87		16		1,775
Banks/financial institutions	4,312		74		359		4,027
Other corporate	6,213		120		459		5,874
Total yen-denominated	28,099		1,053		1,061		28,091
Dollar-denominated:
U.S. government and agencies	31		4		0		35
Municipalities	1,060		107		8		1,159
Mortgage- and asset-backed securities	310		74		0		384
Public utilities	3,052		517		27		3,542
Sovereign and supranational	449		89		5		533
Banks/financial institutions	3,324		223		121		3,426
Other corporate	9,031		1,433		62		10,402
Total dollar-denominated	17,257		2,447		223		19,481
Total fixed maturities	45,356		3,500		1,284		47,572
Perpetual securities:
Yen-denominated:
Banks/financial institutions	6,217		155		604		5,768
Other corporate	344		17		0		361
Dollar-denominated:
Banks/financial institutions	336		3		29		310
Total perpetual securities	6,897		175		633		6,439
Equity securities	22		4		1		25
Total securities available for sale	$	52,275	$	3,679	$	1,918	$	54,036



	December 31, 2011
(In millions)	Cost or Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
Securities held to maturity, carried at amortized cost:
Fixed maturities:
Yen-denominated:
Japan government and agencies	$	18,775	$	297	$	1	$	19,071
Municipalities	553		35		4		584
Mortgage- and asset-backed securities	129		5		0		134
Public utilities	5,615		188		166		5,637
Sovereign and supranational	4,200		148		183		4,165
Banks/financial institutions	12,389		170		1,079		11,480
Other corporate	5,348		149		185		5,312
Total yen-denominated	47,009		992		1,618		46,383
Total securities held to maturity	$	47,009	$	992	$	1,618	$	46,383

Investments Classified by Contractual Maturity Date

The contractual maturities of our investments in fixed maturities at March 31, 2012, were as follows:



	Aflac Japan				Aflac U.S.
(In millions)	Amortized Cost		Fair Value		Amortized Cost		Fair Value
Available for sale:
Due in one year or less	$	2,123	$	2,168	$	13	$	13
Due after one year through five years	2,223		2,330		358		387
Due after five years through 10 years	3,940		4,201		894		1,036
Due after 10 years	25,754		26,463		7,559		8,523
Mortgage- and asset-backed securities	1,108		1,209		45		56
Total fixed maturities available for sale	$	35,148	$	36,371	$	8,869	$	10,015
Held to maturity:
Due in one year or less	$	460	$	463	$	0	$	0
Due after one year through five years	1,085		1,161		0		0
Due after five years through 10 years	3,226		3,544		0		0
Due after 10 years	43,946		43,155		0		0
Mortgage- and asset-backed securities	117		121		0		0
Total fixed maturities held to maturity	$	48,834	$	48,444	$	0	$	0

Economic Maturities of Investments in Perpetual Securities

The economic maturities of our investments in perpetual securities, which were all reported as available for sale at March 31, 2012, were as follows:



	Aflac Japan				Aflac U.S.
(In millions)	Amortized Cost		Fair Value		Amortized Cost		Fair Value
Due in one year or less	$	304	$	308	$	0	$	0
Due after one year through five years	1,167		1,223		5		5
Due after five years through 10 years	521		551		0		0
Due after 10 years	3,353		3,089		172		176
Total perpetual securities available for sale	$	5,345	$	5,171	$	177	$	181

Bank and Financial Institution Investments

Our total investments in the bank and financial institution sector, including those classified as perpetual securities, were as follows:



	March 31, 2012						December 31, 2011
	Total Investments in Banks and Financial Institutions Sector (in millions)			Percentage of Total Investment Portfolio			Total Investments in Banks and Financial Institutions Sector (in millions)			Percentage of Total Investment Portfolio
Fixed maturities:
Amortized cost		$	19,132		19	%		$	20,025		20	%
Fair value		18,587			19			18,933			19
Perpetual securities:
Upper Tier II:
Amortized cost		$	3,251		3	%		$	4,285		5	%
Fair value		3,193			3			4,244			4
Tier I:
Amortized cost		1,945			2			2,268			2
Fair value		1,808			2			1,834			2
Total:
Amortized cost		$	24,328		24	%		$	26,578		27	%
Fair value		23,588			24			25,011			25

Gain (Loss) on Investments

Information regarding pretax realized gains and losses from investments is as follows:



	Three Months Ended March 31,
(In millions)	2012			2011
Realized investment gains (losses) on securities:
Fixed maturities:
Available for sale:
Gross gains from sales	$	14		$	26
Gross losses from sales	(1		)	(187		)
Net gains (losses) from redemptions	0			7
Other-than-temporary impairment losses	(63		)	(404		)
Total fixed maturities	(50		)	(558		)
Perpetual securities:
Available for sale:
Gross gains from sales	70			6
Gross losses from sales	(65		)	(2		)
Net gains (losses) from redemptions	60			0
Other-than-temporary impairment losses	(140		)	0
Total perpetual securities	(75		)	4
Equity securities:
Other-than-temporary impairment losses	0			(1		)
Total equity securities	0			(1		)
Derivatives and other:
Derivative gains (losses)	80			(30		)
Other	0			6
Total derivatives and other	80			(24		)
Total realized investment gains (losses)	$	(45	)	$	(579	)

Other Than Temporary Impairment Losses on Investment Securities

The following table details our pretax other-than-temporary impairment losses by investment category that resulted from our impairment evaluation process.



	Three Months Ended March 31,
(In millions)	2012			2011
Perpetual securities	$	140		$	0
Corporate bonds	63			397
Mortgage- and asset-backed securities	0			6
Municipalities	0			1
Equity securities	0			1
Total other-than-temporary impairment losses realized	$	203	⁽¹⁾	$	405	⁽²⁾

⁽¹⁾Includes $28 for credit-related impairments and $175 from change in intent to sell securities

⁽²⁾Consisted completely of credit-related impairments

Net Effect on Shareholders' Equity of Unrealized Gains and Losses from Investment Securities

The net effect on shareholders’ equity of unrealized gains and losses from investment securities was as follows:



(In millions)	March 31, 2012			December 31, 2011
Unrealized gains (losses) on securities available for sale	$	2,219		$	1,761
Unamortized unrealized gains on securities transferred to held to maturity	29			34
Deferred income taxes	(800		)	(652		)
Shareholders’ equity, unrealized gains (losses) on investment securities	$	1,448		$	1,143

Investments Gross Unrealized Loss Aging

The following tables show the fair value and gross unrealized losses of our available-for-sale and held-to-maturity investments, aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position.



	March 31, 2012
	Total				Less than 12 months				12 months or longer
(In millions)	Fair Value		Unrealized Losses		Fair Value		Unrealized Losses		Fair Value		Unrealized Losses
Fixed maturities:
Japan government and agencies:
Yen-denominated	$	3,674	$	3	$	3,597	$	2	$	77	$	1
Municipalities:
Dollar-denominated	60		8		29		1		31		7
Yen-denominated	58		3		0		0		58		3
Mortgage- and asset- backed securities:
Yen-denominated	143		1		0		0		143		1
Public utilities:
Dollar-denominated	439		25		284		11		155		14
Yen-denominated	4,779		377		2,094		131		2,685		246
Sovereign and supranational:
Dollar-denominated	68		4		17		0		51		4
Yen-denominated	2,589		185		592		17		1,997		168
Banks/financial institutions:
Dollar-denominated	593		45		219		9		374		36
Yen-denominated	9,247		1,142		926		11		8,321		1,131
Other corporate:
Dollar-denominated	1,286		52		1,112		28		174		24
Yen-denominated	5,523		533		1,606		69		3,917		464
Total fixed maturities	28,459		2,378		10,476		279		17,983		2,099
Perpetual securities:
Dollar-denominated	116		17		60		0		56		17
Yen-denominated	2,036		301		619		42		1,417		259
Total perpetual securities	2,152		318		679		42		1,473		276
Equity securities	4		0		2		0		2		0
Total	$	30,615	$	2,696	$	11,157	$	321	$	19,458	$	2,375



	December 31, 2011
	Total				Less than 12 months				12 months or longer
(In millions)	Fair Value		Unrealized Losses		Fair Value		Unrealized Losses		Fair Value		Unrealized Losses
Fixed maturities:
Japan government and agencies:
Yen-denominated	$	940	$	1	$	859	$	1	$	81	$	0
Municipalities:
Dollar-denominated	54		8		22		1		32		7
Yen-denominated	60		4		0		0		60		4
Mortgage- and asset- backed securities:
Yen-denominated	151		1		0		0		151		1
Public utilities:
Dollar-denominated	295		27		110		3		185		24
Yen-denominated	4,995		392		2,404		141		2,591		251
Sovereign and supranational:
Dollar-denominated	66		5		34		2		32		3
Yen-denominated	2,349		199		749		62		1,600		137
Banks/financial institutions:
Dollar-denominated	770		121		391		56		379		65
Yen-denominated	10,175		1,438		1,639		46		8,536		1,392
Other corporate:
Dollar-denominated	834		62		639		27		195		35
Yen-denominated	6,106		644		2,523		110		3,583		534
Total fixed maturities	26,795		2,902		9,370		449		17,425		2,453
Perpetual securities:
Dollar-denominated	217		29		109		4		108		25
Yen-denominated	2,290		604		630		69		1,660		535
Total perpetual securities	2,507		633		739		73		1,768		560
Equity securities	8		1		6		1		2		0
Total	$	29,310	$	3,536	$	10,115	$	523	$	19,195	$	3,013

Bank and Financial Institution Investments in Unrealized Loss Position

The table reflects those securities in that sector that were in an unrealized loss position as a percentage of our total investment portfolio in an unrealized loss position and their respective unrealized losses as a percentage of total unrealized losses.



	March 31, 2012						December 31, 2011
	Percentage of Total Investments in an Unrealized Loss Position			Percentage of Total Unrealized Losses			Percentage of Total Investments in an Unrealized Loss Position			Percentage of Total Unrealized Losses
Fixed maturities		32	%		44	%		37	%		44	%
Perpetual securities:
Upper Tier II		4			5			4			6
Tier I		3			6			5			12
Total perpetual securities		7			11			9			18
Total		39	%		55	%		46	%		62	%

Investments in Variable Interest Entities

The following table details our investments in VIEs.

Investments in Variable Interest Entities



	March 31, 2012				December 31, 2011
(In millions)	Amortized Cost		Fair Value		Amortized Cost		Fair Value
VIEs:
VIEs consolidated	$	6,545	$	6,940	$	6,997	$	7,206
VIEs not consolidated	12,795		12,832		13,753		13,714
Total VIEs	$	19,340	$	19,772	$	20,750	$	20,920

Securities Lending

The following table presents our security loans outstanding and the corresponding collateral held:



(In millions)	March 31, 2012		December 31, 2011
Security loans outstanding, fair value	$	188	$	812
Cash collateral on loaned securities	193		838

Perpetual Securities

Schedule of Available-for-sale Securities Reconciliation

Details of our holdings of perpetual securities were as follows:

Perpetual Securities



		March 31, 2012							December 31, 2011
(In millions)	Credit Rating	Amortized Cost		Fair Value		Unrealized Gain (Loss)			Amortized Cost		Fair Value		Unrealized Gain (Loss)
Upper Tier II:
	AA	$	80	$	81	$	1		$	196	$	204	$	8
	A	530		544		14			2,108		2,046		(62		)
	BBB	2,641		2,569		(72		)	1,791		1,804		13
	BB or lower	0		0		0			190		190		0
Total Upper Tier II		3,251		3,194		(57		)	4,285		4,244		(41		)
Tier I:
	A	60		60		0			0		0		0
	BBB	1,350		1,238		(112		)	1,684		1,417		(267		)
	BB or lower	535		509		(26		)	584		417		(167		)
Total Tier I		1,945		1,807		(138		)	2,268		1,834		(434		)
Other subordinated - non-banks	BBB	326		351		25			344		361		17
Total		$	5,522	$	5,352	$	(170	)	$	6,897	$	6,439	$	(458	)