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INVESTMENTS (Tables)

12 Months Ended

Dec. 31, 2015

Schedule Of Net Investment Income

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



(In millions)	2015						2014						2013
Fixed-maturity securities		$	3,094					$	3,249					$	3,210
Perpetual securities		114						141						153
Equity securities and other		18						7						7
Short-term investments and cash equivalents		4						2						1
Gross investment income		3,230						3,399						3,371
Less investment expenses		95						80						78
Net investment income		$	3,135					$	3,319					$	3,293

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.



	2015
(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		$	17,293					$	1,862					$	0					$	19,155
Municipalities		128						9						0						137
Mortgage- and asset-backed securities		322						33						0						355
Public utilities		1,400						210						10						1,600
Sovereign and supranational		791						180						0						971
Banks/financial institutions		2,321						325						105						2,541
Other corporate		3,337						448						33						3,752
Total yen-denominated		25,592						3,067						148						28,511
Dollar-denominated:
U.S. government and agencies		110						11						0						121
Municipalities		926						151						6						1,071
Mortgage- and asset-backed securities		200						27						0						227
Public utilities		5,464						636						221						5,879
Sovereign and supranational		331						105						0						436
Banks/financial institutions		2,865						634						21						3,478
Other corporate		25,154						1,774						1,302						25,626
Total dollar-denominated		35,050						3,338						1,550						36,838
Total fixed maturities		60,642						6,405						1,698						65,349
Perpetual securities:
Yen-denominated:
Banks/financial institutions		1,581						143						93						1,631
Other corporate		183						22						0						205
Dollar-denominated:
Banks/financial institutions		77						35						1						111
Total perpetual securities		1,841						200						94						1,947
Equity securities:
Yen-denominated		472						19						4						487
Dollar-denominated		8						3						0						11
Total equity securities		480						22						4						498
Total securities available for sale		$	62,963					$	6,627					$	1,796					$	67,794



	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:
Yen-denominated		10						7						0						17
Dollar-denominated		9						2						0						11
Total equity securities		19						9						0						28
Total securities available for sale		$	60,844					$	8,136					$	710					$	68,270

Held-to-maturity Securities



	2015
(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		$	20,004					$	3,387					$	0					$	23,391
Municipalities		341						74						0						415
Mortgage- and asset-backed securities		36						2						0						38
Public utilities		3,092						205						94						3,203
Sovereign and supranational		2,555						182						26						2,711
Banks/financial institutions		4,431						168						53						4,546
Other corporate		3,000						260						44						3,216
Total yen-denominated		33,459						4,278						217						37,520
Total securities held to maturity		$	33,459					$	4,278					$	217					$	37,520



	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

Investments Classified by Contractual Maturity Date

The contractual maturities of our investments in fixed maturities at December 31, 2015, 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		$	130					$	142					$	23					$	24
Due after one year through five years		2,617						2,984						648						709
Due after five years through 10 years		11,543						11,642						2,105						2,177
Due after 10 years		33,608						37,112						9,049						9,569
Mortgage- and asset-backed securities		372						424						35						43
Total fixed maturities available for sale		$	48,270					$	52,304					$	11,860					$	12,522
Held to maturity:
Due in one year or less		316						320						0						0
Due after one year through five years		1,692						1,775						0						0
Due after five years through 10 years		1,613						1,732						0						0
Due after 10 years		29,802						33,655						0						0
Mortgage- and asset-backed securities		36						38						0						0
Total fixed maturities held to maturity		$	33,459					$	37,520					$	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, 2015, were as follows:



	Aflac Japan												Aflac U.S.
(In millions)	Amortized Cost						Fair Value						Amortized Cost						Fair Value
Due in one year or less		$	301					$	282					$	0					$	0
Due after one year through five years		292						315						0						0
Due after 10 years		1,209						1,293						39						57
Total perpetual securities available for sale		$	1,802					$	1,890					$	39					$	57

Investment Exposures Exceeding 10 Percent Shareholders Equity

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



	2015						2014
(In millions)	Credit Rating		Amortized Cost		Fair Value		Credit Rating		Amortized Cost		Fair Value
Japan National Government⁽¹⁾	A		$36,859		$42,025		A		$37,021		$41,878

⁽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:



	2015											2014
	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		$	9,617					10	%				$	10,627					11	%
Fair value		10,565						10					11,683						11
Perpetual securities:
Upper Tier II:
Amortized cost		$	1,217					1	%				$	1,554					2	%
Fair value		1,265						1					1,645						1
Tier I:
Amortized cost		441						0					703						1
Fair value		477						0					793						1
Total:
Amortized cost		$	11,275					11	%				$	12,884					14	%
Fair value		12,307						11					14,121						13

Gain (Loss) on Investments

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



(In millions)	2015				2014				2013
Realized investment gains (losses) on securities:
Fixed maturities:
Available for sale:
Gross gains from sales	$	224			$	192			$	316
Gross losses from sales	(8		)		(12		)		(87		)
Net gains (losses) from redemptions	52				34				34
Other-than-temporary impairment losses	(152		)		(31		)		(128		)
Held to maturity:
Net gains (losses) from redemptions	0				1				0
Total fixed maturities	116				184				135
Perpetual securities:
Available for sale:
Gross losses from sales	0				0				(1		)
Net gains (losses) from redemptions	35				0				0
Other-than-temporary impairment losses	0				0				(70		)
Total perpetual securities	35				0				(71		)
Equity securities:
Other-than-temporary impairment losses	(1		)		0				(1		)
Total equity securities	(1		)		0				(1		)
Derivatives and other:
Derivative gains (losses)	(10		)		31				326
Other	0				0				10
Total derivatives and other	(10		)		31				336
Total realized investment gains (losses)	$	140			$	215			$	399

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)	2015				2014				2013
Perpetual securities	$	0			$	0			$	70
Corporate bonds	17				31				102
Bank/financial institution bonds	135				0				0
Sovereign and supranational	0				0				26
Equity securities	1				0				1
Total other-than-temporary impairment losses realized ⁽¹⁾	$	153			$	31			$	199

Unrealized Gain (Loss) on Investments

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



(In millions)	2015						2014						2013
Changes in unrealized gains (losses):
Fixed maturities:
Available for sale		$	(2,481	)				$	5,629					$	(2,281	)
Transferred to held to maturity		0						(10		)				(9		)
Perpetual securities:
Available for sale		(123		)				269						(129		)
Equity securities		9						5						1
Total change in unrealized gains (losses)		$	(2,595	)				$	5,893					$	(2,418	)

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)	2015						2014
Unrealized gains (losses) on securities available for sale		$	4,831					$	7,426
Deferred income taxes		(1,845		)				(2,754		)
Shareholders’ equity, unrealized gains (losses) on investment securities		$	2,986					$	4,672

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.



	2015
	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		$	80					$	6					$	80					$	6					$	0					$	0
Public utilities:
Dollar-denominated		2,127						221						1,689						132						438						89
Yen-denominated		1,487						104						1,062						73						425						31
Sovereign and supranational:
Yen-denominated		580						26						385						13						195						13
Banks/financial institutions:
Dollar-denominated		366						21						348						11						18						10
Yen-denominated		2,350						158						1,147						14						1,203						144
Other corporate:
Dollar-denominated		13,430						1,302						11,068						770						2,362						532
Yen-denominated		1,151						77						343						5						808						72
Total fixed maturities		21,571						1,915						16,122						1,024						5,449						891
Perpetual securities:
Dollar-denominated		6						1						0						0						6						1
Yen-denominated		645						93						216						12						429						81
Total perpetual securities		651						94						216						12						435						82
Equity securities:
Yen-denominated		191						4						191						4						0						0
Total equity securities		191						4						191						4						0						0
Total		$	22,413					$	2,013					$	16,529					$	1,040					$	5,884					$	973



	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

Investments in Unrealized Loss Position

The following table provides more information on our unrealized loss position on fixed maturities and perpetual securities as of December 31.



	2015												2014
(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:
Public utilities		16	%			16	%			93	%			13	%			7	%			100	%
Sovereign and supranational		3				1				100				3				2				100
Banks/financial institutions		12				9				59				14				33				31
Other corporate		66				69				86				65				47				88
Total fixed maturities		97	%			95	%							95	%			89	%
Perpetual securities		3				5				100				5				11				100
Total		100	%			100	%							100	%			100	%

Securities Lending Transactions Accounted for as Secured Borrowings

Details of our securities lending activities as of December 31 were as follows:



Securities Lending Transactions Accounted for as Secured Borrowings
2015
Remaining Contractual Maturity of the Agreements
(In millions)	Overnight and Continuous⁽¹⁾				Up to 30 days					Total
Securities lending transactions:
Japan government and agencies	$	0			$	499				$	499
Public utilities	108				0					108
Banks/financial institutions	13				0					13
Other corporate	321				0					321
Total borrowings	$	442			$	499				$	941
Gross amount of recognized liabilities for securities lending transactions										$	941
Amounts related to agreements not included in offsetting disclosure in Note 4										$	0

⁽¹⁾These securities are pledged as collateral under our U.S. securities lending program and can be called at our discretion; therefore, they are classified as Overnight and Continuous.



Securities Lending Transactions Accounted for as Secured Borrowings
2014
Remaining Contractual Maturity of the Agreements
(In millions)	Overnight and Continuous⁽¹⁾				Up to 30 days					Total
Securities lending transactions:
Japan government and agencies	$	0			$	1,720				$	1,720
Public utilities	80				0					80
Sovereign and supranational	1				0					1
Banks/financial institutions	64				0					64
Other corporate	328				0					328
Total borrowings	$	473			$	1,720				$	2,193
Gross amount of recognized liabilities for securities lending transactions										$	2,193
Amounts related to agreements not included in offsetting disclosure in Note 4										$	0

⁽¹⁾These securities are pledged as collateral under our U.S. securities lending program and can be called at our discretion; therefore, they are classified as Overnight and Continuous.

Variable Interest Entity, Consolidated

Investments in Variable Interest Entities

The following table presents the cost or 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



	2015												2014
(In millions)	Cost or Amortized Cost						Fair Value						Cost or Amortized Cost						Fair Value
Assets:
Fixed maturities, available for sale		$	3,739					$	4,554					$	3,020					$	4,166
Perpetual securities, available for sale		255						228						405						429
Fixed maturities, held to maturity		0						0						83						84
Equity securities		363						363						0						0
Other assets		102						102						106						106
Total assets of consolidated VIEs		$	4,459					$	5,247					$	3,614					$	4,785
Liabilities:
Other liabilities		$	293					$	293					$	318					$	318
Total liabilities of consolidated VIEs		$	293					$	293					$	318					$	318

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



	2015												2014
(In millions)	Amortized Cost						Fair Value						Amortized Cost						Fair Value
Assets:
Fixed maturities, available for sale		$	5,536					$	6,027					$	6,104					$	6,937
Perpetual securities, available for sale		249						253						324						330
Fixed maturities, held to maturity		2,477						2,636						2,564						2,829
Total investments in VIEs not consolidated		$	8,262					$	8,916					$	8,992					$	10,096

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



			2015																		2014
(In millions)	Credit Rating		Amortized Cost						Fair Value						Unrealized Gain (Loss)						Amortized Cost						Fair Value						Unrealized Gain (Loss)
Upper Tier II:
	A			$	31					$	41					$	10					$	61					$	87					$	26
	BBB			1,023						993						(30		)				1,330						1,333						3
	BB or lower			163						231						68						163						225						62
Total Upper Tier II				1,217						1,265						48						1,554						1,645						91
Tier I:
	BBB			395						408						13						519						556						37
	BB or lower			46						69						23						184						237						53
Total Tier I				441						477						36						703						793						90
Other subordinated - non-banks:
	BB or lower			183						205						22						183						231						48
Total				$	1,841					$	1,947					$	106					$	2,440					$	2,669					$	229