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INVESTMENTS (Tables)

3 Months Ended

Mar. 31, 2017

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, 2017
(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		$	26,311		$	3,203		$	366		$	29,148
Municipalities		281			26			12			295
Mortgage- and asset-backed securities		272			32			0			304
Public utilities		1,637			324			6			1,955
Sovereign and supranational		846			133			6			973
Banks/financial institutions		3,039			414			83			3,370
Other corporate		3,429			596			16			4,009
Total yen-denominated		35,815			4,728			489			40,054
U.S. dollar-denominated:
U.S. government and agencies		161			11			0			172
Municipalities		901			133			7			1,027
Mortgage- and asset-backed securities		184			16			0			200
Public utilities		5,296			669			77			5,888
Sovereign and supranational		326			87			0			413
Banks/financial institutions		2,680			513			18			3,175
Other corporate		24,898			1,972			722			26,148
Total U.S. dollar-denominated		34,446			3,401			824			37,023
Total fixed maturities		70,261			8,129			1,313			77,077
Perpetual securities:
Yen-denominated:
Banks/financial institutions		1,315			208			50			1,473
Other corporate		196			23			0			219
U.S. dollar-denominated:
Banks/financial institutions		52			26			0			78
Total perpetual securities		1,563			257			50			1,770
Equity securities:
Yen-denominated		668			63			10			721
U.S. dollar-denominated		584			55			11			628
Total equity securities		1,252			118			21			1,349
Total securities available for sale		$	73,076		$	8,504		$	1,384		$	80,196



	December 31, 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		$	22,857		$	3,359		$	160		$	26,056
Municipalities		246			29			8			267
Mortgage- and asset-backed securities		1,096			33			8			1,121
Public utilities		1,533			318			3			1,848
Sovereign and supranational		862			186			5			1,043
Banks/financial institutions		2,673			403			74			3,002
Other corporate		3,192			623			3			3,812
Total yen-denominated		32,459			4,951			261			37,149
U.S dollar-denominated:
U.S. government and agencies		148			10			0			158
Municipalities		894			142			8			1,028
Mortgage- and asset-backed securities		196			20			0			216
Public utilities		5,205			690			60			5,835
Sovereign and supranational		335			91			0			426
Banks/financial institutions		2,570			507			16			3,061
Other corporate		24,556			2,021			690			25,887
Total U.S. dollar-denominated		33,904			3,481			774			36,611
Total fixed maturities		66,363			8,432			1,035			73,760
Perpetual securities:
Yen-denominated:
Banks/financial institutions		1,266			128			49			1,345
Other corporate		189			24			0			213
U.S. dollar-denominated:
Banks/financial institutions		51			24			0			75
Total perpetual securities		1,506			176			49			1,633
Equity securities:
Yen-denominated		624			83			2			705
U.S. dollar-denominated		579			31			6			604
Total equity securities		1,203			114			8			1,309
Total securities available for sale		$	69,072		$	8,722		$	1,092		$	76,702

Held-to-maturity Securities



	March 31, 2017
(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		$	21,493		$	5,114		$	0		$	26,607
Municipalities		363			104			0			467
Mortgage- and asset-backed securities		30			2			0			32
Public utilities		3,324			376			7			3,693
Sovereign and supranational		2,702			307			0			3,009
Banks/financial institutions		3,650			204			24			3,830
Other corporate		2,839			446			0			3,285
Total yen-denominated		34,401			6,553			31			40,923
Total securities held to maturity		$	34,401		$	6,553		$	31		$	40,923



	December 31, 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		$	20,702		$	5,338		$	0		$	26,040
Municipalities		350			107			0			457
Mortgage- and asset-backed securities		30			2			0			32
Public utilities		3,201			358			23			3,536
Sovereign and supranational		2,602			283			8			2,877
Banks/financial institutions		3,731			195			26			3,900
Other corporate		2,734			452			7			3,179
Total yen-denominated		33,350			6,735			64			40,021
Total securities held to maturity		$	33,350		$	6,735		$	64		$	40,021

Investments Classified by Contractual Maturity Date

The contractual maturities of our investments in fixed maturities at March 31, 2017, 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		$	145		$	161		$	74		$	77
Due after one year through five years		3,561			3,788			664			716
Due after five years through 10 years		9,846			10,093			3,128			3,324
Due after 10 years		43,392			48,447			8,462			9,421
Mortgage- and asset-backed securities		316			361			43			47
Total fixed maturities available for sale		$	57,260		$	62,850		$	12,371		$	13,585
Held to maturity:
Due after one year through five years		$	2,086		$	2,193		$	0		$	0
Due after five years through 10 years		1,645			1,813			0			0
Due after 10 years		30,640			36,884			0			0
Mortgage- and asset-backed securities		30			33			0			0
Total fixed maturities held to maturity		$	34,401		$	40,923		$	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, 2017, were as follows:



	Aflac Japan						Aflac U.S.
(In millions)	Amortized Cost			Fair Value			Amortized Cost			Fair Value
Due in one year or less		$	90		$	87		$	0		$	0
Due after one year through five years		196			219			0			0
Due after 10 years		1,238			1,407			39			57
Total perpetual securities available for sale		$	1,524		$	1,713		$	39		$	57

Investment Exposures Exceeding Ten Percent Shareholders Equity

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



	March 31, 2017			December 31, 2016
(In millions)	Credit Rating	Amortized Cost	Fair Value	Credit Rating	Amortized Cost	Fair Value
Japan National Government⁽¹⁾	A	$47,131	$54,971	A	$42,931	$51,345

⁽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 March 31,
(In millions)	2017			2016
Realized investment gains (losses):
Fixed maturities:
Available for sale:
Gross gains from sales	$	12		$	2
Gross losses from sales⁽¹⁾	(15		)	(4		)
Net gains (losses) from redemptions⁽¹⁾	(29		)	83
Other-than-temporary impairment losses⁽¹⁾	(4		)	(12		)
Total fixed maturities	(36		)	69
Perpetual securities:
Available for sale:
Net gains (losses) from redemptions	0			10			⁽¹⁾
Other-than-temporary impairment losses	0			(2		)	⁽¹⁾
Total perpetual securities	0			8
Equity securities:
Net gains (losses) from redemptions	25			0
Other-than-temporary impairment losses	(6		)	0
Total equity securities	19			0
Derivatives and other:
Derivative gains (losses)	(52		)	(4		)
Foreign currency gains (losses)	(71		)	(43		)
Total derivatives and other	(123		)	(47		)
Total realized investment gains (losses)	$	(140	)	$	30

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, 2017				December 31, 2016
Unrealized gains (losses) on securities available for sale		$	7,120			$	7,630
Deferred income taxes		(2,646		)		(2,825		)
Shareholders’ equity, unrealized gains (losses) on investment securities		$	4,474			$	4,805

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, 2017
	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		$	5,940		$	366		$	5,940		$	366		$	0		$	0
Municipalities:
U.S. dollar-denominated		45			7			0			0			45			7
Yen-denominated		132			12			132			12			0			0
Public utilities:
U.S. dollar-denominated		1,642			77			1,124			37			518			40
Yen-denominated		325			13			127			6			198			7
Sovereign and supranational:
Yen-denominated		39			6			39			6			0			0
Banks/financial institutions:
U.S. dollar-denominated		390			18			309			6			81			12
Yen-denominated		1,531			107			646			34			885			73
Other corporate:
U.S. dollar-denominated		10,690			722			7,046			272			3,644			450
Yen-denominated		415			16			415			16			0			0
Total fixed maturities		21,149			1,344			15,778			755			5,371			589
Perpetual securities:
Yen-denominated		409			50			0			0			409			50
Total perpetual securities		409			50			0			0			409			50
Equity securities:
U.S. dollar-denominated		131			11			117			8			14			3
Yen-denominated		208			10			172			5			36			5
Total equity securities		339			21			289			13			50			8
Total		$	21,897		$	1,415		$	16,067		$	768		$	5,830		$	647



	December 31, 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		$	3,958		$	160		$	3,958		$	160		$	0		$	0
Municipalities:
U.S. dollar-denominated		44			8			0			0			44			8
Yen-denominated		105			8			105			8			0			0
Mortgage- and asset- backed securities:
Yen-denominated		713			8			713			8			0			0
Public utilities:
U.S. dollar-denominated		1,265			60			790			32			475			28
Yen-denominated		635			26			347			14			288			12
Sovereign and supranational:
Yen-denominated		244			13			38			5			206			8
Banks/financial institutions:
U.S. dollar-denominated		268			16			238			10			30			6
Yen-denominated		1,521			100			636			19			885			81
Other corporate:
U.S. dollar-denominated		10,462			690			7,252			346			3,210			344
Yen-denominated		321			10			321			10			0			0
Total fixed maturities		19,536			1,099			14,398			612			5,138			487
Perpetual securities:
Yen-denominated		479			49			85			1			394			48
Total perpetual securities		479			49			85			1			394			48
Equity securities:
U.S. dollar-denominated		211			6			211			6			0			0
Yen-denominated		49			2			49			2			0			0
Total equity securities		260			8			260			8			0			0
Total		$	20,275		$	1,156		$	14,743		$	621		$	5,532		$	535

Other Investments

The table below reflects the composition of the carrying value for other investments as of the periods presented.



(In millions)	March 31, 2017			December 31, 2016
Other investments:
Commercial mortgage loans		$	870		$	855
Middle market loans		439			319
Short-term investments		141			89
Policy loans		197			184
Other		54			3
Total other investments		$	1,701		$	1,450

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
March 31, 2017
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	$	885	$	885
Public utilities	87		0		87
Banks/financial institutions	38		0		38
Other corporate	472		0		472
Total borrowings	$	597	$	885	$	1,482
Gross amount of recognized liabilities for securities lending transactions					$	1,482
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, 2016
Remaining Contractual Maturity of the Agreements
(In millions)	Overnight and Continuous⁽¹⁾		Up to 30 days		Total
Securities lending transactions:
Public utilities	$	62	$	0	$	62
Banks/financial institutions	34		0		34
Other corporate	430		0		430
Total borrowings	$	526	$	0	$	526
Gross amount of recognized liabilities for securities lending transactions					$	526
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



	March 31, 2017						December 31, 2016
(In millions)	Cost or Amortized Cost			Fair Value			Cost or Amortized Cost			Fair Value
Assets:
Fixed maturities, available for sale		$	4,143		$	4,964		$	4,168		$	4,982
Perpetual securities, available for sale		246			215			237			208
Equity securities		1,013			1,078			972			1,044
Other investments ⁽¹⁾		926			906			819			789
Other assets ⁽²⁾		146			146			127			127
Total assets of consolidated VIEs		$	6,474		$	7,309		$	6,323		$	7,150
Liabilities:
Other liabilities ⁽²⁾		$	125		$	125		$	146		$	146
Total liabilities of consolidated VIEs		$	125		$	125		$	146		$	146

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, 2017						December 31, 2016
(In millions)	Amortized Cost			Fair Value			Amortized Cost			Fair Value
Assets:
Fixed maturities, available for sale		$	4,823		$	5,354		$	4,729		$	5,261
Perpetual securities, available for sale		178			230			172			200
Fixed maturities, held to maturity		2,660			3,039			2,563			2,948
Other investments		52			52			1			1
Total investments in VIEs not consolidated		$	7,713		$	8,675		$	7,465		$	8,410