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INVESTMENTS (Tables)

3 Months Ended

Mar. 31, 2013

Mar. 31, 2012

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, 2013
(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		$	12,035		$	748		$	0		$	12,783
Mortgage- and asset-backed securities		671			44			1			714
Public utilities		2,928			116			53			2,991
Sovereign and supranational		1,120			61			7			1,174
Banks/financial institutions		2,952			183			236			2,899
Other corporate		4,892			189			256			4,825
Total yen-denominated		24,598			1,341			553			25,386
Dollar-denominated:
U.S. government and agencies		95			16			0			111
Municipalities		1,018			149			6			1,161
Mortgage- and asset-backed securities		182			58			0			240
Public utilities		4,581			609			31			5,159
Sovereign and supranational		468			112			2			578
Banks/financial institutions		3,578			502			8			4,072
Other corporate		18,259			1,581			271			19,569
Total dollar-denominated		28,181			3,027			318			30,890
Total fixed maturities		52,779			4,368			871			56,276
Perpetual securities:
Yen-denominated:
Banks/financial institutions		3,080			73			525			2,628
Other corporate		285			0			67			218
Dollar-denominated:
Banks/financial institutions		268			25			6			287
Total perpetual securities		3,633			98			598			3,133
Equity securities		18			6			0			24
Total securities available for sale		$	56,430		$	4,472		$	1,469		$	59,433



	December 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		$	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



	March 31, 2013
(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		$	24,606		$	2,154		$	0		$	26,760
Municipalities		452			65			0			517
Mortgage- and asset-backed securities		77			4			0			81
Public utilities		4,532			202			222			4,512
Sovereign and supranational		2,953			220			100			3,073
Banks/financial institutions		8,480			163			690			7,953
Other corporate		4,104			249			202			4,151
Total yen-denominated		45,204			3,057			1,214			47,047
Total securities held to maturity		$	45,204		$	3,057		$	1,214		$	47,047



	December 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		$	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

Investments Classified by Contractual Maturity Date

The contractual maturities of our investments in fixed maturities at March 31, 2013, 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		$	715		$	724		$	107		$	110
Due after one year through five years		1,963			2,065			316			359
Due after five years through 10 years		8,295			8,615			1,336			1,548
Due after 10 years		30,805			32,172			8,245			9,562
Mortgage- and asset-backed securities		813			903			40			51
Total fixed maturities available for sale		$	42,591		$	44,479		$	10,044		$	11,630
Held to maturity:
Due in one year or less		$	321		$	322		$	0		$	0
Due after one year through five years		624			672			0			0
Due after five years through 10 years		2,924			3,127			0			0
Due after 10 years		41,258			42,845			0			0
Mortgage- and asset-backed securities		77			81			0			0
Total fixed maturities held to maturity		$	45,204		$	47,047		$	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, 2013, were as follows:



	Aflac Japan						Aflac U.S.
(In millions)	Amortized Cost			Fair Value			Amortized Cost			Fair Value
Due in one year or less		$	0		$	0		$	0		$	0
Due after one year through five years		1,147			968			5			5
Due after five years through 10 years		285			218			0			0
Due after 10 years		2,037			1,771			159			171
Total perpetual securities available for sale		$	3,469		$	2,957		$	164		$	176

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, 2013						December 31, 2012
	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		$	15,010		15	%		$	16,292		14	%
Fair value		14,924			14			16,625			14
Perpetual securities:
Upper Tier II:
Amortized cost		$	2,340		2	%		$	2,825		3	%
Fair value		2,059			2			2,919			3
Tier I:
Amortized cost		1,008			1			1,079			1
Fair value		856			1			1,031			1
Total:
Amortized cost		$	18,358		18	%		$	20,196		18	%
Fair value		17,839			17			20,575			18

Gain (Loss) on Investments

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



	Three Months Ended March 31,
(In millions)	2013				2012
Realized investment gains (losses) on securities:
Fixed maturities:
Available for sale:
Gross gains from sales		$	119			$	14
Gross losses from sales		(6		)		(1		)
Net gains (losses) from redemptions		6				0
Other-than-temporary impairment losses		(54		)		(63		)
Held to maturity:
Net gains (losses) from redemptions		0				0
Total fixed maturities		65				(50		)
Perpetual securities:
Available for sale:
Gross gains from sales		0				70
Gross losses from sales		0				(65		)
Net gains (losses) from redemptions		0				60
Other-than-temporary impairment losses		0				(140		)
Total perpetual securities		0				(75		)
Equity securities:
Other-than-temporary impairment losses		(1		)		0
Total equity securities		(1		)		0
Derivatives and other:
Derivative gains (losses)		87				80
Other		5				0
Total derivatives and other		92				80
Total realized investment gains (losses)		$	156			$	(45	)

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)	2013			2012
Perpetual securities	$	0		$	140
Corporate bonds	38			63
Sovereign and supranational	16			0
Equity securities	1			0
Total other-than-temporary impairment losses realized	$	55	⁽¹⁾	$	203	⁽¹⁾

⁽¹⁾Includes $0 and $28 for the three-month periods ended March 31, 2013 and 2012, respectively, for credit-related impairments; $54 and $175 for the three-month periods ended March 31, 2013 and 2012, respectively, from change in intent to sell securities; and $1 for the three-month period ended March 31, 2013 for impairments due to severity and duration of decline in fair value

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, 2013				December 31, 2012
Unrealized gains (losses) on securities available for sale		$	3,003			$	3,932
Unamortized unrealized gains on securities transferred to held to maturity		17				20
Deferred income taxes		(1,039		)		(1,382		)
Shareholders’ equity, unrealized gains (losses) on investment securities		$	1,981			$	2,570

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.



	March 31, 2013
	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		$	5		$	0		$	5		$	0		$	0		$	0
Municipalities:
Dollar-denominated		34			6			0			0			34			6
Mortgage- and asset- backed securities:
Dollar-denominated		9			0			9			0			0			0
Yen-denominated		125			1			0			0			125			1
Public utilities:
Dollar-denominated		1,154			31			1,144			31			10			0
Yen-denominated		3,052			275			1,779			120			1,273			155
Sovereign and supranational:
Dollar-denominated		33			2			0			0			33			2
Yen-denominated		903			107			515			17			388			90
Banks/financial institutions:
Dollar-denominated		347			8			318			7			29			1
Yen-denominated		6,537			926			3,178			171			3,359			755
Other corporate:
Dollar-denominated		7,478			271			7,350			263			128			8
Yen-denominated		4,847			458			3,509			265			1,338			193
Total fixed maturities		24,524			2,085			17,807			874			6,717			1,211
Perpetual securities:
Dollar-denominated		18			6			0			0			18			6
Yen-denominated		2,045			592			1,349			325			696			267
Total perpetual securities		2,063			598			1,349			325			714			273
Equity securities		1			0			0			0			1			0
Total		$	26,588		$	2,683		$	19,156		$	1,199		$	7,432		$	1,484



	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

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.



	March 31, 2013						December 31, 2012
	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		26	%		35	%		18	%		39	%
Perpetual securities:
Upper Tier II		5			13			2			4
Tier I		2			7			2			7
Total perpetual securities		7			20			4			11
Total		33	%		55	%		22	%		50	%

Securities Lending

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



(In millions)	March 31, 2013			December 31, 2012
Security loans outstanding, fair value		$	202		$	6,122
Cash collateral on loaned securities		207			6,277

The balance of our security loans outstanding was significantly lower at March 31, 2013, compared with that at December 31, 2012, due to the conclusion of a six-month securities lending program that began in the third quarter of 2012. For this particular securities lending program, we invested the cash collateral in JGBs with maturities that corresponded with the conclusion of the program.

Perpetual Securities

Schedule of Available-for-sale Securities Reconciliation

Details of our holdings of perpetual securities were as follows:

Perpetual Securities



		March 31, 2013										December 31, 2012
(In millions)	Credit Rating	Amortized Cost			Fair Value			Unrealized Gain (Loss)				Amortized Cost			Fair Value			Unrealized Gain (Loss)
Upper Tier II:
	A		$	164		$	181		$	17			$	460		$	488		$	28
	BBB		1,911			1,684			(227		)		2,077			2,129			52
	BB or lower		265			194			(71		)		288			302			14
Total Upper Tier II			2,340			2,059			(281		)		2,825			2,919			94
Tier I:
	BBB		835			669			(166		)		966			904			(62		)
	BB or lower		173			187			14				113			127			14
Total Tier I			1,008			856			(152		)		1,079			1,031			(48		)
Other subordinated - non-banks	BBB		285			218			(67		)		309			352			43
Total			$	3,633		$	3,133		$	(500	)		$	4,213		$	4,302		$	89

Variable Interest Entity, Consolidated

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.

Investments in Consolidated Variable Interest Entities



	March 31, 2013						December 31, 2012
(In millions)	Amortized Cost			Fair Value			Amortized Cost			Fair Value
Assets:
Fixed maturities, available for sale		$	4,721		$	5,377		$	5,058		$	5,787
Perpetual securities, available for sale		520			455			559			574
Fixed maturities, held to maturity		266			259			289			287
Other assets		158			158			191			191
Total assets of consolidated VIEs		$	5,665		$	6,249		$	6,097		$	6,839
Liabilities:
Other liabilities		$	371		$	371		$	399		$	399
Total liabilities of consolidated VIEs		$	371		$	371		$	399		$	399

Variable Interest Entity, Not Consolidated

Investments in Variable Interest Entities

VIEs-Not Consolidated

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

Investments in Variable Interest Entities Not Consolidated



	March 31, 2013						December 31, 2012
(In millions)	Amortized Cost			Fair Value			Amortized Cost			Fair Value
Assets:
Fixed maturities, available for sale		$	6,907		$	7,287		$	7,738		$	8,350
Perpetual securities, available for sale		413			392			736			751
Fixed maturities, held to maturity		3,521			3,522			3,829			3,922
Total investments in VIEs not consolidated		$	10,841		$	11,201		$	12,303		$	13,023