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INVESTMENTS (Tables)

3 Months Ended

Mar. 31, 2014

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, 2014
(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		$	18,152		$	608		$	3		$	18,757
Mortgage- and asset-backed securities		444			33			0			477
Public utilities		2,223			96			24			2,295
Sovereign and supranational		937			125			0			1,062
Banks/financial institutions		2,926			235			218			2,943
Other corporate		4,051			184			163			4,072
Total yen-denominated		28,733			1,281			408			29,606
Dollar-denominated:
U.S. government and agencies		141			10			2			149
Municipalities		998			103			4			1,097
Mortgage- and asset-backed securities		169			20			0			189
Public utilities		5,156			577			102			5,631
Sovereign and supranational		396			86			0			482
Banks/financial institutions		3,340			526			17			3,849
Other corporate		22,392			1,611			725			23,278
Total dollar-denominated		32,592			2,933			850			34,675
Total fixed maturities		61,325			4,214			1,258			64,281
Perpetual securities:
Yen-denominated:
Banks/financial institutions		2,644			165			250			2,559
Other corporate		214			15			0			229
Dollar-denominated:
Banks/financial institutions		199			35			6			228
Total perpetual securities		3,057			215			256			3,016
Equity securities		17			5			1			21
Total securities available for sale		$	64,399		$	4,434		$	1,515		$	67,318



	December 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		$	14,936		$	431		$	33		$	15,334
Mortgage- and asset-backed securities		558			29			0			587
Public utilities		2,261			100			18			2,343
Sovereign and supranational		978			85			28			1,035
Banks/financial institutions		2,799			220			242			2,777
Other corporate		3,956			151			185			3,922
Total yen-denominated		25,488			1,016			506			25,998
Dollar-denominated:
U.S. government and agencies		92			10			4			98
Municipalities		992			71			12			1,051
Mortgage- and asset-backed securities		163			21			0			184
Public utilities		4,931			471			183			5,219
Sovereign and supranational		404			85			1			488
Banks/financial institutions		3,318			447			33			3,732
Other corporate		21,123			1,347			1,170			21,300
Total dollar-denominated		31,023			2,452			1,403			32,072
Total fixed maturities		56,511			3,468			1,909			58,070
Perpetual securities:
Yen-denominated:
Banks/financial institutions		2,582			151			217			2,516
Other corporate		209			0			0			209
Dollar-denominated:
Banks/financial institutions		196			35			9			222
Total perpetual securities		2,987			186			226			2,947
Equity securities		17			5			1			21
Total securities available for sale		$	59,515		$	3,659		$	2,136		$	61,038

Held-to-maturity Securities



	March 31, 2014
(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		$	23,461		$	1,668		$	0		$	25,129
Municipalities		409			46			0			455
Mortgage- and asset-backed securities		58			3			0			61
Public utilities		3,993			189			107			4,075
Sovereign and supranational		3,011			163			56			3,118
Banks/financial institutions		6,398			174			295			6,277
Other corporate		3,528			221			48			3,701
Total yen-denominated		40,858			2,464			506			42,816
Total securities held to maturity		$	40,858		$	2,464		$	506		$	42,816



	December 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		$	27,362		$	1,347		$	1		$	28,708
Municipalities		399			41			0			440
Mortgage- and asset-backed securities		58			3			0			61
Public utilities		3,900			150			122			3,928
Sovereign and supranational		2,941			171			72			3,040
Banks/financial institutions		6,310			146			328			6,128
Other corporate		3,445			183			87			3,541
Total yen-denominated		44,415			2,041			610			45,846
Total securities held to maturity		$	44,415		$	2,041		$	610		$	45,846

Investments Classified by Contractual Maturity Date

The contractual maturities of our investments in fixed maturities at March 31, 2014, 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		$	607		$	616		$	50		$	52
Due after one year through five years		1,819			1,953			565			662
Due after five years through 10 years		10,783			10,868			1,562			1,653
Due after 10 years		36,378			37,916			8,675			9,608
Mortgage- and asset-backed securities		509			553			38			47
Total fixed maturities available for sale		$	50,096		$	51,906		$	10,890		$	12,022
Held to maturity:
Due in one year or less		$	101		$	102		$	0		$	0
Due after one year through five years		1,605			1,756			0			0
Due after five years through 10 years		2,180			2,316			0			0
Due after 10 years		36,914			38,581			0			0
Mortgage- and asset-backed securities		58			61			0			0
Total fixed maturities held to maturity		$	40,858		$	42,816		$	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, 2014, were as follows:



	Aflac Japan						Aflac U.S.
(In millions)	Amortized Cost			Fair Value			Amortized Cost			Fair Value
Due in one year or less		$	291		$	275		$	0		$	0
Due after one year through five years		730			701			5			5
Due after five years through 10 years		214			229			0			0
Due after 10 years		1,718			1,698			99			108
Total perpetual securities available for sale		$	2,953		$	2,903		$	104		$	113

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, 2014						December 31, 2013
	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		$	12,664		12	%		$	12,427		12	%
Fair value		13,069			12			12,637			12
Perpetual securities:
Upper Tier II:
Amortized cost		$	1,967		2	%		$	1,920		2	%
Fair value		1,965			2			1,913			2
Tier I:
Amortized cost		876			1			858			1
Fair value		822			1			825			1
Total:
Amortized cost		$	15,507		15	%		$	15,205		15	%
Fair value		15,856			15			15,375			15

Gain (Loss) on Investments

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



	Three Months Ended March 31,
(In millions)	2014			2013
Realized investment gains (losses) on securities:
Fixed maturities:
Available for sale:
Gross gains from sales	$	35		$	119
Gross losses from sales	(1		)	(6		)
Net gains (losses) from redemptions	7			6
Other-than-temporary impairment losses	(3		)	(54		)
Total fixed maturities	38			65
Equity securities:
Other-than-temporary impairment losses	0			(1		)
Total equity securities	0			(1		)
Derivatives and other:
Derivative gains (losses)	(83		)	87
Other	(1		)	5
Total derivatives and other	(84		)	92
Total realized investment gains (losses)	$	(46	)	$	156

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)	2014		2013
Corporate bonds	$	3	$	38
Sovereign and supranational	0		16
Equity securities	0		1
Total other-than-temporary impairment losses realized ⁽¹⁾	$	3	$	55

⁽¹⁾Includes $0 and $1 for the three-month periods ended March 31, 2014 and 2013, respectively, for impairments due to severity and duration of decline in fair value and $3 and $54 for the three-month periods ended March 31, 2014 and 2013, respectively, from change in intent to sell securities

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, 2014				December 31, 2013
Unrealized gains (losses) on securities available for sale		$	2,919			$	1,523
Unamortized unrealized gains on securities transferred to held to maturity		10				11
Deferred income taxes		(985		)		(499		)
Shareholders’ equity, unrealized gains (losses) on investment securities		$	1,944			$	1,035

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, 2014
	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		$	1,014		$	3		$	1,009		$	3		$	5		$	0
Municipalities:
Dollar-denominated		91			4			70			2			21			2
Public utilities:
Dollar-denominated		1,700			102			1,342			70			358			32
Yen-denominated		1,959			131			1,119			47			840			84
Sovereign and supranational:
Dollar-denominated		13			0			13			0			0			0
Yen-denominated		887			56			358			2			529			54
Banks/financial institutions:
Dollar-denominated		381			17			283			11			98			6
Yen-denominated		4,665			513			1,187			28			3,478			485
Other corporate:
Dollar-denominated		11,291			725			7,334			371			3,957			354
Yen-denominated		2,685			211			598			24			2,087			187
U.S. government and agencies:
Dollar-denominated		88			2			88			2			0			0
Total fixed maturities		24,774			1,764			13,401			560			11,373			1,204
Perpetual securities:
Dollar-denominated		63			6			56			4			7			2
Yen-denominated		1,485			250			349			4			1,136			246
Total perpetual securities		1,548			256			405			8			1,143			248
Equity securities		5			1			5			0			0			1
Total		$	26,327		$	2,021		$	13,811		$	568		$	12,516		$	1,453



	December 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		$	8,869		$	34		$	8,869		$	34		$	0		$	0
Municipalities:
Dollar-denominated		177			12			145			8			32			4
Public utilities:
Dollar-denominated		2,023			183			1,740			143			283			40
Yen-denominated		2,519			140			1,816			54			703			86
Sovereign and supranational:
Dollar-denominated		12			1			12			1			0			0
Yen-denominated		1,152			100			791			34			361			66
Banks/financial institutions:
Dollar-denominated		547			33			454			23			93			10
Yen-denominated		4,533			570			2,322			107			2,211			463
Other corporate:
Dollar-denominated		11,588			1,170			8,504			733			3,084			437
Yen-denominated		3,372			272			2,296			152			1,076			120
U.S. government and agencies:
Dollar-denominated		36			4			36			4			0			0
Total fixed maturities		34,828			2,519			26,985			1,293			7,843			1,226
Perpetual securities:
Dollar-denominated		59			9			52			8			7			1
Yen-denominated		1,322			217			748			74			574			143
Total perpetual securities		1,381			226			800			82			581			144
Equity securities		5			1			5			1			0			0
Total		$	36,214		$	2,746		$	27,790		$	1,376		$	8,424		$	1,370

Investments in Unrealized Loss Position

The following table provides more information on our unrealized loss positions.



		March 31, 2014									December 31, 2013
(In millions)	Percentage of Total Investments in an Unrealized Loss Position			Percentage of Gross Unrealized Losses			Percentage of Gross Unrealized Losses for Investment Grade Securities			Percentage of Total Investments in an Unrealized Loss Position			Percentage of Gross Unrealized Losses			Percentage of Gross Unrealized Losses for Investment Grade Securities
Fixed Maturities:
Japan government and agencies		4	%		0	%		100	%		25	%		1	%		100	%
Public utilities		14			12			96			13			12			98
Sovereign and supranational		4			3			100			3			4			100
Banks/financial institutions		19			26			62			14			22			64
Other corporate		53			46			87			41			53			91
Total fixed maturities		94	%		87	%					96	%		92	%
Perpetual securities		6			13			91			4			8			90
Total		100	%		100	%					100	%		100	%

Securities Lending

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



(In millions)	March 31, 2014			December 31, 2013
Security loans outstanding, fair value		$	3,234		$	5,656
Cash collateral on loaned securities		3,313			5,820

Perpetual securities

Schedule of Available-for-sale Securities Reconciliation

Details of our holdings of perpetual securities were as follows:

Perpetual Securities



		March 31, 2014										December 31, 2013
(In millions)	Credit Rating	Amortized Cost			Fair Value			Unrealized Gain (Loss)				Amortized Cost			Fair Value			Unrealized Gain (Loss)
Upper Tier II:
	A		$	149		$	185		$	36			$	145		$	183		$	38
	BBB		1,601			1,582			(19		)		1,563			1,532			(31		)
	BB or lower		217			198			(19		)		212			198			(14		)
Total Upper Tier II			1,967			1,965			(2		)		1,920			1,913			(7		)
Tier I:
	BBB		764			696			(68		)		746			706			(40		)
	BB or lower		112			126			14				112			119			7
Total Tier I			876			822			(54		)		858			825			(33		)
Other subordinated - non-banks:	BB or lower		214			229			15				209			209			0
Total			$	3,057		$	3,016		$	(41	)		$	2,987		$	2,947		$	(40	)

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, 2014						December 31, 2013
(In millions)	Amortized Cost			Fair Value			Amortized Cost			Fair Value
Assets:
Fixed maturities, available for sale		$	3,896		$	4,662		$	4,109		$	4,843
Perpetual securities, available for sale		475			478			463			468
Fixed maturities, held to maturity		243			240			237			236
Other assets		107			107			106			106
Total assets of consolidated VIEs		$	4,721		$	5,487		$	4,915		$	5,653
Liabilities:
Other liabilities		$	194		$	194		$	207		$	207
Total liabilities of consolidated VIEs		$	194		$	194		$	207		$	207

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, 2014						December 31, 2013
(In millions)	Amortized Cost			Fair Value			Amortized Cost			Fair Value
Assets:
Fixed maturities, available for sale		$	6,824		$	7,191		$	6,724		$	6,916
Perpetual securities, available for sale		379			395			370			378
Fixed maturities, held to maturity		3,019			3,142			2,949			3,039
Total investments in VIEs not consolidated		$	10,222		$	10,728		$	10,043		$	10,333