BUSINESS SEGMENT AND FOREIGN INFORMATION

12 Months Ended

Dec. 31, 2016

Segment Reporting [Abstract]

BUSINESS SEGMENT INFORMATION

BUSINESS SEGMENT AND FOREIGN INFORMATION

The Company consists of two reportable insurance business segments: Aflac Japan and Aflac U.S., both of which sell supplemental health and life insurance. Operating business segments that are not individually reportable and business activities, including reinsurance retrocession activities, not included in Aflac Japan or Aflac U.S. are included in the "Other business segments" category.

We do not allocate corporate overhead expenses to business segments. Consistent with U.S. GAAP accounting guidance for segment reporting, we evaluate and manage our business segments using a financial performance measure called pretax operating earnings. Our definition of operating earnings includes interest cash flows associated with notes payable and excludes the following items from net earnings on an after-tax basis: realized investment gains/losses (securities transactions, impairments, and the impact of derivative and hedging activities), nonrecurring items and other non-operating income (loss). We then exclude income taxes related to operations to arrive at pretax operating earnings. Information regarding operations by segment for the years ended December 31 follows:

(In millions)	2016				2015					2014
Revenues:
Aflac Japan:
Net earned premiums
Cancer		$	5,639			$	4,933				$	5,596
Medical and other health		3,429				3,092					3,770
Life insurance		4,469				4,021					4,495
Net investment income		2,554				2,436					2,662
Other income		40				31					32
Total Aflac Japan		16,131				14,513					16,555
Aflac U.S.:
Net earned premiums:
Accident/disability		2,469				2,391					2,303
Cancer		1,299				1,293					1,279
Other health		1,415				1,395					1,371
Life insurance		271				268					258
Net investment income		703				678					645
Other income		10				8					3
Total Aflac U.S.		6,167				6,033					5,859
Other business segments		275				225					43
Total business segment revenues		22,573				20,771					22,457
Realized investment gains (losses) (1)		(208		)		55					171
Corporate		284				282					281
Intercompany eliminations		(199		)		(201		)			(248		)
Other non-operating income (loss)		109				(35		)	(2)		67
Total revenues		$	22,559			$	20,872				$	22,728

⁽¹⁾ Excluding a gain of $85 in both 2016 and 2015 and $44 in 2014 related to the interest rate component of the change in fair value of foreign currency swaps on notes payable which is classified as an operating gain when analyzing segment operations

⁽²⁾ Includes a loss of $20 related to the change in value of yen repatriation received in advance of settlement of certain foreign currency derivatives. The loss was offset by derivative gains included in realized investment gains (losses).

(In millions)	2016					2015					2014
Pretax earnings:
Aflac Japan		$	3,334				$	3,175				$	3,458
Aflac U.S.		1,208					1,101					1,073
Other business segments		18					14					(2		)
Total business segment pretax operating earnings		4,560					4,290					4,529
Interest expense, noninsurance operations		(128		)			(146		)			(198		)
Corporate and eliminations		(129		)			(71		)			(78		)
Pretax operating earnings		4,303					4,073					4,253
Realized investment gains (losses) (1)		(208		)			55					171
Other non-operating income (loss)		(28		)	(3)		(266		)	(2),(3)		67
Total earnings before income taxes		$	4,067				$	3,862				$	4,491
Income taxes applicable to pretax operating earnings		$	1,491				$	1,403				$	1,456
Effect of foreign currency translation on after-tax operating earnings		141					(198		)			(117		)

⁽¹⁾ Excluding a gain of $85 in both 2016 and 2015 and $44 in 2014 related to the interest rate component of the change in fair value of foreign currency swaps on notes payable which is classified as an operating gain when analyzing segment operations

⁽²⁾ Includes a loss of $20 related to the change in value of yen repatriation received in advance of settlement of certain foreign currency derivatives. This loss was offset by derivative gains included in realized investment gains (losses).

⁽³⁾ Includes expense of $137 in 2016 and $230 in 2015 for the payments associated with the early extinguishment of debt

Assets as of December 31 were as follows:

(In millions)	2016				2015				2014
Assets:
Aflac Japan		$	107,858			$	97,646			$	98,525
Aflac U.S.		19,453				18,537				18,383
Other business segments		270				188				128
Total business segment assets		127,581				116,371				117,036
Corporate		26,476				23,375				24,596
Intercompany eliminations		(24,238		)		(21,490		)		(21,905		)
Total assets		$	129,819			$	118,256			$	119,727

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

Yen-Translation Effects: The following table shows the yen/dollar exchange rates used for or during the periods ended December 31. Exchange effects were calculated using the same yen/dollar exchange rate for the current year as for each respective prior year.

	2016				2015				2014
Statements of Earnings:
Weighted-average yen/dollar exchange rate		108.70				120.99				105.46
Yen percent strengthening (weakening)		11.3		%		(12.8		)%		(7.5		)%
Exchange effect on pretax operating earnings (in millions)		$	218			$	(288	)		$	(180	)

	2016				2015
Balance Sheets:
Yen/dollar exchange rate at December 31		116.49				120.61
Yen percent strengthening (weakening)		3.54		%		(.05		)%
Exchange effect on total assets (in millions)		$	2,820			$	(36	)
Exchange effect on total liabilities (in millions)		3,109				(41		)

Transfers of funds from Aflac Japan: Aflac Japan makes payments to the Parent Company for management fees and to Aflac U.S. for allocated expenses and profit repatriations. Information on transfers for each of the years ended December 31 is shown below. See Note 13 for information concerning restrictions on transfers from Aflac Japan.

(In millions)	2016			2015			2014
Management fees		$	79		$	53		$	39
Allocated expenses		106			101			71
Profit repatriation		1,286			2,139			1,704
Total transfers from Aflac Japan		$	1,471		$	2,293		$	1,814

Property and Equipment: The costs of buildings, furniture and equipment are depreciated principally on a straight-line basis over their estimated useful lives (maximum of 50 years for buildings and 20 years for furniture and equipment). Expenditures for maintenance and repairs are expensed as incurred; expenditures for betterments are capitalized and depreciated. Classes of property and equipment as of December 31 were as follows:

(In millions)	2016			2015
Property and equipment:
Land		$	166		$	166
Buildings		421			400
Equipment and furniture		355			329
Total property and equipment		942			895
Less accumulated depreciation		509			468
Net property and equipment		$	433		$	427

Receivables: Receivables consist primarily of monthly insurance premiums due from individual policyholders or their employers for payroll deduction of premiums, net of an allowance for doubtful accounts. At December 31, 2016, $207 million, or 30.9% of total receivables, were related to Aflac Japan's operations, compared with $257 million, or 36.4%, at December 31, 2015.