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INVESTMENTS (Tables)

9 Months Ended

Sep. 30, 2016



	December 31, 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

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.



	September 30, 2016
(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		$	22,563		$	4,700		$	23		$	27,240
Municipalities		223			44			2			265
Mortgage- and asset-backed securities		969			45			3			1,011
Public utilities		1,667			371			0			2,038
Sovereign and supranational		943			205			0			1,148
Banks/financial institutions		2,752			411			99			3,064
Other corporate		4,072			686			43			4,715
Total yen-denominated		33,189			6,462			170			39,481
Dollar-denominated:
U.S. government and agencies		150			16			0			166
Municipalities		929			162			3			1,088
Mortgage- and asset-backed securities		202			15			0			217
Public utilities		5,721			804			54			6,471
Sovereign and supranational		355			95			0			450
Banks/financial institutions		2,754			537			11			3,280
Other corporate		27,629			2,424			679			29,374
Total dollar-denominated		37,740			4,053			747			41,046
Total fixed maturities		70,929			10,515			917			80,527
Perpetual securities:
Yen-denominated:
Banks/financial institutions		1,679			138			126			1,691
Other corporate		218			8			0			226
Dollar-denominated:
Banks/financial institutions		53			24			0			77
Total perpetual securities		1,950			170			126			1,994
Equity securities:
Yen-denominated		724			32			42			714
Dollar-denominated		545			28			9			564
Total equity securities		1,269			60			51			1,278
Total securities available for sale		$	74,148		$	10,745		$	1,094		$	83,799

Held-to-maturity Securities



	December 31, 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



	September 30, 2016
(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		$	23,852		$	7,241		$	0		$	31,093
Municipalities		404			145			0			549
Mortgage- and asset-backed securities		37			2			0			39
Public utilities		3,687			525			14			4,198
Sovereign and supranational		2,998			402			6			3,394
Banks/financial institutions		4,544			271			25			4,790
Other corporate		3,250			634			10			3,874
Total yen-denominated		38,772			9,220			55			47,937
Total securities held to maturity		$	38,772		$	9,220		$	55		$	47,937

Investments Classified by Contractual Maturity Date

The contractual maturities of our investments in fixed maturities at September 30, 2016, 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		$	393		$	403		$	88		$	91
Due after one year through five years		3,808			3,882			686			754
Due after five years through 10 years		12,340			12,616			2,644			2,900
Due after 10 years		40,610			47,945			8,700			10,191
Mortgage- and asset-backed securities		1,025			1,076			34			40
Total fixed maturities available for sale		$	58,176		$	65,922		$	12,152		$	13,976
Held to maturity:
Due after one year through five years		$	2,314		$	2,454		$	0		$	0
Due after five years through 10 years		1,825			2,030			0			0
Due after 10 years		34,596			43,414			0			0
Mortgage- and asset-backed securities		37			39			0			0
Total fixed maturities held to maturity		$	38,772		$	47,937		$	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 September 30, 2016, were as follows:



	Aflac Japan						Aflac U.S.
(In millions)	Amortized Cost			Fair Value			Amortized Cost			Fair Value
Due in one year or less		$	154		$	117		$	0		$	0
Due after one year through five years		384			409			0			0
Due after 10 years		1,373			1,411			39			57
Total perpetual securities available for sale		$	1,911		$	1,937		$	39		$	57

Investment Exposures Exceeding Ten Percent Shareholders Equity

Investment exposures that individually exceeded 10% of shareholders' equity as of September 30, 2016 and December 31, 2015 were as follows:



	September 30, 2016			December 31, 2015
(In millions)	Credit Rating	Amortized Cost	Fair Value	Credit Rating	Amortized Cost	Fair Value
Japan National Government⁽¹⁾	A	$45,808	$57,547	A	$36,859	$42,025

⁽¹⁾Japan Government Bonds (JGBs) or JGB-backed securities

Gain (Loss) on Investments

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



	Three Months Ended September 30,								Nine Months Ended September 30,
(In millions)	2016				2015				2016				2015
Realized investment gains (losses):
Fixed maturities:
Available for sale:
Gross gains from sales	$	2			$	20		⁽¹⁾	$	10			$	124
Gross losses from sales	(20		)	⁽¹⁾	(6		)		(36		)	⁽¹⁾	(6		)
Net gains (losses) from redemptions	(4		)	⁽¹⁾	12			⁽¹⁾	74			⁽¹⁾	38
Other-than-temporary impairment losses	(1		)	⁽¹⁾	(136		)		(22		)	⁽¹⁾	(142		)
Total fixed maturities	(23		)		(110		)		26				14
Perpetual securities:
Available for sale:
Net gains (losses) from redemptions	0				0				40				30
Other-than-temporary impairment losses	0				0				(2		)		0
Total perpetual securities	0				0				38				30
Equity securities:
Gross gains from sales	5				0				10				0
Gross losses from sales	0				0				(11		)		0
Other-than-temporary impairment losses	(21		)		(1		)		(45		)		(1		)
Total equity securities	(16		)		(1		)		(46		)		(1		)
Derivatives and other:
Derivative gains (losses)	(107		)		(3		)		(278		)		(17		)
Total derivatives and other	(107		)		(3		)		(278		)		(17		)
Total realized investment gains (losses)	$	(146	)		$	(114	)		$	(260	)		$	26

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 September 30,				Nine Months Ended September 30,
(In millions)	2016		2015		2016		2015
Perpetual securities	$	0	$	0	$	2	$	0
Corporate bonds	1		5		22		7
Bank/financial institution bonds	0		131		0		135
Equity securities	21		1		45		1
Total other-than-temporary impairment losses realized ⁽¹⁾	$	22	$	137	$	69	$	143

⁽¹⁾Includes $22 and $6 for the three-month periods and $69 and $12 for the nine-month periods ended September 30, 2016 and 2015, respectively, from change in intent to sell securities or change in intent to hold securities until recovery; and $131 for the three- and nine-month periods ended September 30, 2015, for credit-related impairments

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)	September 30, 2016				December 31, 2015
Unrealized gains (losses) on securities available for sale		$	9,651			$	4,831
Deferred income taxes		(3,531		)		(1,845		)
Shareholders’ equity, unrealized gains (losses) on investment securities		$	6,120			$	2,986

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.



	September 30, 2016
	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		$	689		$	23		$	689		$	23		$	0		$	0
Municipalities:
Dollar-denominated		50			3			0			0			50			3
Yen-denominated		62			2			62			2			0			0
Mortgage- and asset- backed securities:
Yen-denominated		413			3			413			3			0			0
Public utilities:
Dollar-denominated		1,199			54			448			13			751			41
Yen-denominated		648			14			313			3			335			11
Sovereign and supranational:
Yen-denominated		242			6			0			0			242			6
Banks/financial institutions:
Dollar-denominated		150			11			85			4			65			7
Yen-denominated		1,415			124			324			4			1,091			120
Other corporate:
Dollar-denominated		7,752			679			4,058			236			3,694			443
Yen-denominated		897			53			364			13			533			40
Total fixed maturities		13,517			972			6,756			301			6,761			671
Perpetual securities:
Yen-denominated		630			126			97			1			533			125
Total perpetual securities		630			126			97			1			533			125
Equity securities:
Dollar-denominated		183			9			183			9			0			0
Yen-denominated		382			42			382			42			0			0
Total equity securities		565			51			565			51			0			0
Total		$	14,712		$	1,149		$	7,418		$	353		$	7,294		$	796



	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

Investments in Unrealized Loss Position

The following table provides more information on our unrealized loss position on fixed maturities, perpetual securities and equity securities.



		September 30, 2016									December 31, 2015
(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		4	%		2	%		100	%		0	%		0	%		0	%
Municipalities		1			1			100			0			0			0
Mortgage- and asset- backed securities		3			0			100			0			0			0
Public utilities		12			6			88			16			16			93
Sovereign and supranational		2			1			100			3			1			100
Banks/financial institutions		11			12			38			12			9			59
Other corporate		59			63			47			66			69			86
Total fixed maturities		92			85						97			95
Perpetual securities		4			11			100			3			5			100
Equity securities		4			4						0			0
Total		100	%		100	%					100	%		100	%

Securities Lending Transactions Accounted for as Secured Borrowings

Details of our securities lending activities were as follows:



Securities Lending Transactions Accounted for as Secured Borrowings
September 30, 2016
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	$	598	$	598
Public utilities	93		0		93
Banks/financial institutions	29		0		29
Other corporate	333		0		333
Total borrowings	$	455	$	598	$	1,053
Gross amount of recognized liabilities for securities lending transactions					$	1,053
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
December 31, 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.

Variable Interest Entity, Consolidated

Investments in Variable Interest Entities

VIEs - Consolidated

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.

Investments in Consolidated Variable Interest Entities



	September 30, 2016						December 31, 2015
(In millions)	Cost or Amortized Cost			Fair Value			Cost or Amortized Cost			Fair Value
Assets:
Fixed maturities, available for sale		$	4,870		$	5,494		$	3,739		$	4,554
Perpetual securities, available for sale		273			219			255			228
Equity securities		1,036			1,014			363			363
Other investments		489			494			0			0
Other assets		168			168			102			102
Total assets of consolidated VIEs		$	6,836		$	7,389		$	4,459		$	5,247
Liabilities:
Other liabilities		$	124		$	124		$	293		$	293
Total liabilities of consolidated VIEs		$	124		$	124		$	293		$	293

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



	September 30, 2016						December 31, 2015
(In millions)	Amortized Cost			Fair Value			Amortized Cost			Fair Value
Assets:
Fixed maturities, available for sale		$	5,241		$	5,814		$	4,731		$	5,093
Perpetual securities, available for sale		297			312			249			253
Fixed maturities, held to maturity		2,953			3,489			2,477			2,636
Total investments in VIEs not consolidated		$	8,491		$	9,615		$	7,457		$	7,982

Prior-year amounts have been adjusted for the adoption of accounting guidance on January 1, 2016 related to consolidations.