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INVESTMENTS (Tables)

12 Months Ended

Dec. 31, 2012

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



(In millions)	2012			2011			2010
Fixed-maturity securities		$	3,248		$	3,026		$	2,695
Perpetual securities		253			274			328
Equity securities and other		17			5			4
Short-term investments and cash equivalents		2			4			6
Gross investment income		3,520			3,309			3,033
Less investment expenses		47			29			26
Net investment income		$	3,473		$	3,280		$	3,007

Available-for-sale Securities



	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

The amortized cost for our investments in debt and perpetual securities, the cost for equity securities and the fair values of these investments at December 31 are shown in the following tables.



	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		$	12,612		$	349		$	81		$	12,880
Mortgage- and asset-backed securities		746			40			1			785
Public utilities		3,608			116			72			3,652
Sovereign and supranational		1,404			71			0			1,475
Banks/financial institutions		3,455			233			180			3,508
Other corporate		5,656			241			153			5,744
Total yen-denominated		27,481			1,050			487			28,044
Dollar-denominated:
U.S. government and agencies		93			24			0			117
Municipalities		1,045			156			6			1,195
Mortgage- and asset-backed securities		188			58			0			246
Public utilities		4,204			658			17			4,845
Sovereign and supranational		476			123			2			597
Banks/financial institutions		3,626			506			6			4,126
Other corporate		16,300			1,878			95			18,083
Total dollar-denominated		25,932			3,403			126			29,209
Total fixed maturities		53,413			4,453			613			57,253
Perpetual securities:
Yen-denominated:
Banks/financial institutions		3,635			193			161			3,667
Other corporate		309			43			0			352
Dollar-denominated:
Banks/financial institutions		269			23			9			283
Total perpetual securities		4,213			259			170			4,302
Equity securities		20			4			1			23
Total securities available for sale		$	57,646		$	4,716		$	784		$	61,578

Held-to-maturity Securities



	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		$	32,043		$	356		$	67		$	32,332
Municipalities		492			30			2			520
Mortgage- and asset-backed securities		90			4			0			94
Public utilities		4,924			233			106			5,051
Sovereign and supranational		3,209			192			84			3,317
Banks/financial institutions		9,211			211			431			8,991
Other corporate		4,457			187			108			4,536
Total yen-denominated		54,426			1,213			798			54,841
Total securities held to maturity		$	54,426		$	1,213		$	798		$	54,841



	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 December 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		$	1,503		$	1,521		$	109		$	113
Due after one year through five years		2,195			2,300			292			330
Due after five years through 10 years		7,079			7,457			1,183			1,399
Due after 10 years		31,767			33,218			8,219			9,728
Mortgage- and asset-backed securities		892			976			43			55
Total fixed maturities available for sale		$	43,436		$	45,472		$	9,846		$	11,625
Held to maturity:
Due in one year or less		$	5,830		$	5,833		$	0		$	0
Due after one year through five years		679			736			0			0
Due after five years through 10 years		3,003			3,370			0			0
Due after 10 years		44,824			44,808			0			0
Mortgage- and asset-backed securities		90			94			0			0
Total fixed maturities held to maturity		$	54,426		$	54,841		$	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 December 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		$	289		$	292		$	0		$	0
Due after one year through five years		1,239			1,316			5			5
Due after five years through 10 years		309			352			0			0
Due after 10 years		2,212			2,167			159			170
Total perpetual securities available for sale		$	4,049		$	4,127		$	164		$	175

Investment Exposures Exceeding 10 Percent Shareholders Equity

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



	2012			2011
(In millions)	Credit Rating	Amortized Cost	Fair Value	Credit Rating	Amortized Cost	Fair Value
Japan National Government	AA	$44,081	$44,580	AA	$29,244	$30,145

Bank and Financial Institution Investments

Our total investments in the bank and financial institution sector as of December 31, including those classified as perpetual securities, were as follows:



	2012						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		$	16,292		14	%		$	20,025		20	%
Fair value		16,625			14			18,933			19
Perpetual securities:
Upper Tier II:
Amortized cost		$	2,825		3	%		$	4,285		5	%
Fair value		2,919			3			4,244			4
Tier I:
Amortized cost		1,079			1			2,268			2
Fair value		1,031			1			1,834			2
Total:
Amortized cost		$	20,196		18	%		$	26,578		27	%
Fair value		20,575			18			25,011			25

Gain (Loss) on Investments

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



(In millions)	2012			2011			2010
Realized investment gains (losses) on securities:
Fixed maturities:
Available for sale:
Gross gains from sales	$	427		$	992		$	117
Gross losses from sales	(48		)	(465		)	(212		)
Net gains (losses) from redemptions	2			69			1
Other-than-temporary impairment losses	(734		)	(1,335		)	(297		)
Held to maturity:
Net gains (losses) from redemptions	4			0			2
Total fixed maturities	(349		)	(739		)	(389		)
Perpetual securities:
Available for sale:
Gross gains from sales	127			102			133
Gross losses from sales	(98		)	(109		)	0
Net gains (losses) from redemptions	60			0			0
Other-than-temporary impairment losses	(243		)	(565		)	(160		)
Total perpetual securities	(154		)	(572		)	(27		)
Equity securities:
Gross losses from sales	0			0			(2		)
Other-than-temporary impairment losses	0			(1		)	(2		)
Total equity securities	0			(1		)	(4		)
Derivatives and other:
Derivative gains (losses)	151			(257		)	(1		)
Other	3			17			(1		)
Total derivatives and other	154			(240		)	(2		)
Total realized investment gains (losses)	$	(349	)	$	(1,552	)	$	(422	)

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 for the years ended December 31.



(In millions)	2012			2011			2010
Perpetual securities	$	243		$	565		$	160
Corporate bonds	345			1,316			285
Mortgage- and asset-backed securities	3			17			12
Municipalities	0			2			0
Sovereign and supranational	386			0			0
Equity securities	0			1			2
Total other-than-temporary impairment losses realized	$	977	⁽¹⁾	$	1,901	⁽¹⁾	$	459	⁽²⁾

⁽¹⁾Includes $597 and $1,286 for the years ended December 31, 2012 and 2011, respectively, for credit-related impairments;

$353 and $615 for the years ended December 31, 2012 and 2011, respectively, from change in intent to sell securities;

and $27 for the year ended December 31, 2012 for impairments due to severity and duration of decline in fair value

⁽²⁾Consisted completely of credit-related impairments

Unrealized Gain (Loss) on Investments

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



(In millions)	2012				2011				2010
Changes in unrealized gains (losses):
Fixed maturities:
Available for sale		$	1,624			$	1,963			$	1,105
Transferred to held to maturity		(14		)		(101		)		(12		)
Perpetual securities:
Available for sale		547				(143		)		(24		)
Equity securities		0				2				(1		)
Total change in unrealized gains (losses)		$	2,157			$	1,721			$	1,068

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 at December 31 was as follows:



(In millions)	2012				2011
Unrealized gains (losses) on securities available for sale		$	3,932			$	1,761
Unamortized unrealized gains on securities transferred to held to maturity		20				34
Deferred income taxes		(1,382		)		(652		)
Shareholders’ equity, unrealized gains (losses) on investment securities		$	2,570			$	1,143

Investments Gross Unrealized Loss Aging

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



	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		$	17,342		$	148		$	17,342		$	148		$	0		$	0
Municipalities:
Dollar-denominated		34			6			1			0			33			6
Yen-denominated		56			2			56			2			0			0
Mortgage- and asset- backed securities:
Dollar-denominated		10			0			10			0			0			0
Yen-denominated		136			1			0			0			136			1
Public utilities:
Dollar-denominated		736			17			736			17			0			0
Yen-denominated		3,920			178			1,339			31			2,581			147
Sovereign and supranational:
Dollar-denominated		31			2			0			0			31			2
Yen-denominated		1,244			84			507			13			737			71
Banks/financial institutions:
Dollar-denominated		276			6			180			3			96			3
Yen-denominated		6,918			611			1,935			28			4,983			583
Other corporate:
Dollar-denominated		4,534			95			4,404			86			130			9
Yen-denominated		4,013			261			1,635			40			2,378			221
Total fixed maturities		39,250			1,411			28,145			368			11,105			1,043
Perpetual securities:
Dollar-denominated		136			9			120			0			16			9
Yen-denominated		1,315			161			0			0			1,315			161
Total perpetual securities		1,451			170			120			0			1,331			170
Equity securities		6			1			3			0			3			1
Total		$	40,707		$	1,582		$	28,268		$	368		$	12,439		$	1,214



	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. The table also reflects the respective unrealized losses in this sector as a percentage of total unrealized losses in our investment portfolio at December 31.



	2012						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		18	%		39	%		37	%		44	%
Perpetual securities:
Upper Tier II		2			4			4			6
Tier I		2			7			5			12
Total perpetual securities		4			11			9			18
Total		22	%		50	%		46	%		62	%

Schedule of Investments [Line Items]

Securities Lending

The following table presents our security loans outstanding and the corresponding collateral held as of December 31:



(In millions)	2012			2011
Security loans outstanding, fair value		$	6,122		$	812
Cash collateral on loaned securities		6,277			838

Perpetual securities

Schedule of Investments [Line Items]

Schedule of Available-for-sale Securities Reconciliation

Details of our holdings of perpetual securities as of December 31 were as follows:

Perpetual Securities



		2012										2011
(In millions)	Credit Rating	Amortized Cost			Fair Value			Unrealized Gain (Loss)				Amortized Cost			Fair Value			Unrealized Gain (Loss)
Upper Tier II:
	AA		$	0		$	0		$	0			$	196		$	204		$	8
	A		460			488			28				2,108			2,046			(62		)
	BBB		2,077			2,129			52				1,791			1,804			13
	BB or lower		288			302			14				190			190			0
Total Upper Tier II			2,825			2,919			94				4,285			4,244			(41		)
Tier I:
	A		0			0			0				0			0			0
	BBB		966			904			(62		)		1,684			1,417			(267		)
	BB or lower		113			127			14				584			417			(167		)
Total Tier I			1,079			1,031			(48		)		2,268			1,834			(434		)
Other subordinated - non-banks	BBB		309			352			43				344			361			17
Total			$	4,213		$	4,302		$	89			$	6,897		$	6,439		$	(458	)

Variable Interest Entity, Consolidated

Schedule of Investments [Line Items]

Investments in Variable Interest Entities

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

Investments in Consolidated Variable Interest Entities



	2012						2011
(In millions)	Amortized Cost			Fair Value			Amortized Cost			Fair Value
Assets:
Fixed maturities, available for sale		$	5,058		$	5,787		$	4,822		$	5,350
Perpetual securities, available for sale		559			574			1,532			1,290
Fixed maturities, held to maturity		289			287			643			566
Other assets		191			191			375			375
Total assets of consolidated VIEs		$	6,097		$	6,839		$	7,372		$	7,581
Liabilities:
Other liabilities		$	399		$	399		$	531		$	531
Total liabilities of consolidated VIEs		$	399		$	399		$	531		$	531

Variable Interest Entity, Not Consolidated

Schedule of Investments [Line Items]

Investments in Variable Interest Entities

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

Investments in Variable Interest Entities Not Consolidated



	2012						2011
(In millions)	Amortized Cost			Fair Value			Amortized Cost			Fair Value
Assets:
Fixed maturities, available for sale		$	7,738		$	8,350		$	7,190		$	7,239
Perpetual securities, available for sale		736			751			1,315			1,364
Fixed maturities, held to maturity		3,829			3,922			5,248			5,111
Total investments in VIEs not consolidated		$	12,303		$	13,023		$	13,753		$	13,714