INVESTMENTS (Tables)

12 Months Ended

Dec. 31, 2014

Schedule Of Net Investment Income

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

(In millions)	2014			2013			2012
Fixed-maturity securities		$	3,249		$	3,210		$	3,248
Perpetual securities		141			153			253
Equity securities and other		7			7			17
Short-term investments and cash equivalents		2			1			2
Gross investment income		3,399			3,371			3,520
Less investment expenses		80			78			47
Net investment income		$	3,319		$	3,293		$	3,473

Available-for-sale Securities

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.

	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		$	17,341		$	1,740		$	0		$	19,081
Municipalities		88			9			0			97
Mortgage- and asset-backed securities		351			35			0			386
Public utilities		1,691			226			5			1,912
Sovereign and supranational		799			163			0			962
Banks/financial institutions		2,752			325			189			2,888
Other corporate		3,479			531			48			3,962
Total yen-denominated		26,501			3,029			242			29,288
Dollar-denominated:
U.S. government and agencies		100			17			0			117
Municipalities		961			201			2			1,160
Mortgage- and asset-backed securities		185			31			0			216
Public utilities		5,061			960			36			5,985
Sovereign and supranational		343			111			0			454
Banks/financial institutions		2,943			775			8			3,710
Other corporate		22,291			2,682			330			24,643
Total dollar-denominated		31,884			4,777			376			36,285
Total fixed maturities		58,385			7,806			618			65,573
Perpetual securities:
Yen-denominated:
Banks/financial institutions		2,132			223			92			2,263
Other corporate		183			48			0			231
Dollar-denominated:
Banks/financial institutions		125			50			0			175
Total perpetual securities		2,440			321			92			2,669
Equity securities		19			9			0			28
Total securities available for sale		$	60,844		$	8,136		$	710		$	68,270

	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

	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		$	20,023		$	3,195		$	0		$	23,218
Municipalities		346			71			0			417
Mortgage- and asset-backed securities		43			3			0			46
Public utilities		3,342			281			20			3,603
Sovereign and supranational		2,556			272			14			2,814
Banks/financial institutions		4,932			231			78			5,085
Other corporate		3,000			326			12			3,314
Total yen-denominated		34,242			4,379			124			38,497
Total securities held to maturity		$	34,242		$	4,379		$	124		$	38,497

	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 December 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		$	369		$	390		$	65		$	69
Due after one year through five years		1,519			1,771			628			724
Due after five years through 10 years		10,351			10,979			1,472			1,561
Due after 10 years		34,018			38,595			9,103			10,540
Mortgage- and asset-backed securities		405			461			36			46
Total fixed maturities available for sale		$	46,662		$	52,196		$	11,304		$	12,940
Held to maturity:
Due after one year through five years		1,520			1,631			0			0
Due after five years through 10 years		1,937			2,130			0			0
Due after 10 years		30,742			34,690			0			0
Mortgage- and asset-backed securities		43			46			0			0
Total fixed maturities held to maturity		$	34,242		$	38,497		$	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, 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		$	306		$	300		$	5		$	5
Due after one year through five years		624			674			0			0
Due after 10 years		1,466			1,635			39			55
Total perpetual securities available for sale		$	2,396		$	2,609		$	44		$	60

Investment Exposures Exceeding 10 Percent Shareholders Equity

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

	2014			2013
(In millions)	Credit Rating	Amortized Cost	Fair Value	Credit Rating	Amortized Cost	Fair Value
Japan National Government(1)	A	$37,021	$41,878	AA	$41,924	$43,619

⁽¹⁾JGBs or JGB-backed securities

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:

	2014						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		$	10,627		11	%		$	12,427		12	%
Fair value		11,683			11			12,637			12
Perpetual securities:
Upper Tier II:
Amortized cost		$	1,554		2	%		$	1,920		2	%
Fair value		1,645			1			1,913			2
Tier I:
Amortized cost		703			1			858			1
Fair value		793			1			825			1
Total:
Amortized cost		$	12,884		14	%		$	15,205		15	%
Fair value		14,121			13			15,375			15

Gain (Loss) on Investments

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

(In millions)	2014			2013			2012
Realized investment gains (losses) on securities:
Fixed maturities:
Available for sale:
Gross gains from sales	$	192		$	316		$	427
Gross losses from sales	(12		)	(87		)	(48		)
Net gains (losses) from redemptions	34			34			2
Other-than-temporary impairment losses	(31		)	(128		)	(734		)
Held to maturity:
Net gains (losses) from redemptions	1			0			4
Total fixed maturities	184			135			(349		)
Perpetual securities:
Available for sale:
Gross gains from sales	0			0			127
Gross losses from sales	0			(1		)	(98		)
Net gains (losses) from redemptions	0			0			60
Other-than-temporary impairment losses	0			(70		)	(243		)
Total perpetual securities	0			(71		)	(154		)
Equity securities:
Other-than-temporary impairment losses	0			(1		)	0
Total equity securities	0			(1		)	0
Derivatives and other:
Derivative gains (losses)	31			326			151
Other	0			10			3
Total derivatives and other	31			336			154
Total realized investment gains (losses)	$	215		$	399		$	(349	)

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)	2014		2013		2012
Perpetual securities	$	0	$	70	$	243
Corporate bonds	31		102		345
Mortgage- and asset-backed securities	0		0		3
Sovereign and supranational	0		26		386
Equity securities	0		1		0
Total other-than-temporary impairment losses realized (1)	$	31	$	199	$	977

⁽¹⁾ Includes $45 and $597 for the years ended December 31, 2013 and 2012, respectively, for credit-related impairments;

$26 and $27 for the years ended December 31, 2013 and 2012, respectively, for impairments due to severity and duration

of decline in fair value; and $31, $128 and $353 for the years ended December 31, 2014, 2013 and 2012, respectively, from change

in intent to sell securities

Unrealized Gain (Loss) on Investments

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

(In millions)	2014				2013				2012
Changes in unrealized gains (losses):
Fixed maturities:
Available for sale		$	5,629			$	(2,281	)		$	1,624
Transferred to held to maturity		(10		)		(9		)		(14		)
Perpetual securities:
Available for sale		269				(129		)		547
Equity securities		5				1				0
Total change in unrealized gains (losses)		$	5,893			$	(2,418	)		$	2,157

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)	2014				2013
Unrealized gains (losses) on securities available for sale		$	7,426			$	1,523
Unamortized unrealized gains on securities transferred to held to maturity		0				11
Deferred income taxes		(2,754		)		(499		)
Shareholders’ equity, unrealized gains (losses) on investment securities		$	4,672			$	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 at December 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:
Municipalities:
Dollar-denominated		75			2			53			1			22			1
Public utilities:
Dollar-denominated		1,001			36			164			7			837			29
Yen-denominated		805			25			98			1			707			24
Sovereign and supranational:
Yen-denominated		359			14			0			0			359			14
Banks/financial institutions:
Dollar-denominated		205			8			53			5			152			3
Yen-denominated		1,828			267			166			0			1,662			267
Other corporate:
Dollar-denominated		8,072			330			1,901			62			6,171			268
Yen-denominated		1,151			60			122			2			1,029			58
Total fixed maturities		13,496			742			2,557			78			10,939			664
Perpetual securities:
Yen-denominated		783			92			194			5			589			87
Total perpetual securities		783			92			194			5			589			87
Total		$	14,279		$	834		$	2,751		$	83		$	11,528		$	751

	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 position as of December 31.

	2014									2013
(In millions)	Investments  in an Unrealized Loss Position			Gross Unrealized Losses			Gross Unrealized Losses that are Investment Grade			Investments  in an Unrealized Loss Position			Gross Unrealized Losses			Gross Unrealized Losses that are Investment Grade
Fixed Maturities:
Japan government    and agencies		0	%		0	%		0	%		25	%		1	%		100	%
Public utilities		13			7			100			13			12			98
Sovereign and    supranational		3			2			100			3			4			100
Banks/financial    institutions		14			33			31			14			22			64
Other corporate		65			47			88			41			53			91
Total fixed    maturities		95	%		89	%					96	%		92	%
Perpetual securities		5			11			100			4			8			90
Total		100	%		100	%					100	%		100	%

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 as of December 31.

Investments in Consolidated Variable Interest Entities

	2014						2013
(In millions)	Amortized Cost			Fair Value			Amortized Cost			Fair Value
Assets:
Fixed maturities, available for sale		$	3,020		$	4,166		$	4,109		$	4,843
Perpetual securities, available for sale		405			429			463			468
Fixed maturities, held to maturity		83			84			237			236
Other assets		106			106			106			106
Total assets of consolidated VIEs		$	3,614		$	4,785		$	4,915		$	5,653
Liabilities:
Other liabilities		$	318		$	318		$	207		$	207
Total liabilities of consolidated VIEs		$	318		$	318		$	207		$	207

Variable Interest Entity, Not Consolidated

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

	2014						2013
(In millions)	Amortized Cost			Fair Value			Amortized Cost			Fair Value
Assets:
Fixed maturities, available for sale		$	6,104		$	6,937		$	6,724		$	6,916
Perpetual securities, available for sale		324			330			370			378
Fixed maturities, held to maturity		2,564			2,829			2,949			3,039
Total investments in VIEs not consolidated		$	8,992		$	10,096		$	10,043		$	10,333

Perpetual securities

Schedule of Available-for-sale Securities Reconciliation

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

Perpetual Securities

		2014									2013
(In millions)	Credit Rating	Amortized Cost			Fair Value			Unrealized Gain (Loss)			Amortized Cost			Fair Value			Unrealized Gain (Loss)
Upper Tier II:
	A		$	61		$	87		$	26		$	145		$	183		$	38
	BBB		1,330			1,333			3			1,563			1,532			(31		)
	BB or lower		163			225			62			212			198			(14		)
Total Upper Tier II			1,554			1,645			91			1,920			1,913			(7		)
Tier I:
	BBB		519			556			37			746			706			(40		)
	BB or lower		184			237			53			112			119			7
Total Tier I			703			793			90			858			825			(33		)
Other subordinated - non-banks:
	BB or lower		183			231			48			209			209			0
Total			$	2,440		$	2,669		$	229		$	2,987		$	2,947		$	(40	)