XML 37 R22.htm IDEA: XBRL DOCUMENT

INVESTMENTS (Tables)

6 Months Ended

Jun. 30, 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.



	June 30, 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		$	27,020		$	3,262		$	396		$	29,886
Municipalities		305			26			14			317
Mortgage- and asset-backed securities		261			31			0			292
Public utilities		1,654			367			8			2,013
Sovereign and supranational		1,482			181			3			1,660
Banks/financial institutions		3,150			460			64			3,546
Other corporate		3,657			715			14			4,358
Total yen-denominated		37,529			5,042			499			42,072
U.S. dollar-denominated:
U.S. government and agencies		131			12			0			143
Municipalities		891			143			7			1,027
Mortgage- and asset-backed securities		175			13			0			188
Public utilities		5,263			770			42			5,991
Sovereign and supranational		326			88			0			414
Banks/financial institutions		2,684			573			7			3,250
Other corporate		24,959			2,267			554			26,672
Total U.S. dollar-denominated		34,429			3,866			610			37,685
Total fixed maturities		71,958			8,908			1,109			79,757
Perpetual securities:
Yen-denominated:
Banks/financial institutions		1,317			256			31			1,542
Other corporate		197			31			0			228
U.S. dollar-denominated:
Banks/financial institutions		46			27			0			73
Total perpetual securities		1,560			314			31			1,843
Equity securities:
Yen-denominated		668			86			5			749
U.S. dollar-denominated		621			47			14			654
Total equity securities		1,289			133			19			1,403
Total securities available for sale		$	74,807		$	9,355		$	1,159		$	83,003



	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



	June 30, 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		$	21,527		$	5,126		$	0		$	26,653
Municipalities		362			105			0			467
Mortgage- and asset-backed securities		29			1			0			30
Public utilities		3,329			450			0			3,779
Sovereign and supranational		1,537			304			0			1,841
Banks/financial institutions		3,119			218			15			3,322
Other corporate		2,710			505			0			3,215
Total yen-denominated		32,613			6,709			15			39,307
Total securities held to maturity		$	32,613		$	6,709		$	15		$	39,307



	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 June 30, 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		$	140		$	153		$	114		$	117
Due after one year through five years		4,639			4,905			639			685
Due after five years through 10 years		9,668			10,114			3,118			3,360
Due after 10 years		44,106			49,639			8,500			9,688
Mortgage- and asset-backed securities		304			346			40			42
Total fixed maturities available for sale		$	58,857		$	65,157		$	12,411		$	13,892
Held to maturity:
Due in one year or less		$	491		$	504		$	0		$	0
Due after one year through five years		929			981			0			0
Due after five years through 10 years		1,648			1,826			0			0
Due after 10 years		29,516			35,965			0			0
Mortgage- and asset-backed securities		29			31			0			0
Total fixed maturities held to maturity		$	32,613		$	39,307		$	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 June 30, 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		$	85		$	82		$	0		$	0
Due after one year through five years		197			229			0			0
Due after 10 years		1,239			1,473			39			59
Total perpetual securities available for sale		$	1,521		$	1,784		$	39		$	59

Investment Exposures Exceeding Ten Percent Shareholders Equity

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



	June 30, 2017			December 31, 2016
(In millions)	Credit Rating	Amortized Cost	Fair Value	Credit Rating	Amortized Cost	Fair Value
Japan National Government⁽¹⁾	A	$47,844	$55,723	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 June 30,								Six Months Ended June 30,
(In millions)	2017				2016				2017				2016
Realized investment gains (losses):
Fixed maturities:
Available for sale:
Gross gains from sales	$	5			$	6			$	17			$	8
Gross losses from sales⁽¹⁾	(16		)		(12		)		(31		)		(16		)
Net gains (losses) from redemptions	(9		)	⁽¹⁾	4				(37		)	⁽¹⁾	87
Other-than-temporary impairment losses	(3		)		(9		)	⁽¹⁾	(7		)		(21		)	⁽¹⁾
Total fixed maturities	(23		)		(11		)		(58		)		58
Perpetual securities:
Available for sale:
Net gains (losses) from redemptions	4				30				4				40
Other-than-temporary impairment losses	0				0				0				(2		)	⁽¹⁾
Total perpetual securities	4				30				4				38
Equity securities:
Gross gains from sales	23				2				48				5
Gross losses from sales	(2		)		(8		)	⁽¹⁾	(2		)		(11		)
Other-than-temporary impairment losses	(6		)		(24		)		(12		)		(24		)
Total equity securities	15				(30		)		34				(30		)
Derivatives and other:
Derivative gains (losses)	(51		)		(167		)		(103		)		(171		)
Foreign currency gains (losses)	(1		)		(45		)		(73		)		(89		)
Total derivatives and other	(52		)		(212		)		(176		)		(260		)
Total realized investment gains (losses)	$	(56	)		$	(223	)		$	(196	)		$	(194	)

⁽¹⁾Primarily driven by foreign exchange

Prior year foreign currency transaction gains and losses have been reclassified to conform to current-year reporting classifications

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)	June 30, 2017				December 31, 2016
Unrealized gains (losses) on securities available for sale		$	8,196			$	7,630
Deferred income taxes		(3,023		)		(2,825		)
Shareholders’ equity, unrealized gains (losses) on investment securities		$	5,173			$	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.



	June 30, 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		$	6,241		$	396		$	6,234		$	395		$	7		$	1
Municipalities:
U.S. dollar-denominated		45			7			0			0			45			7
Yen-denominated		128			14			116			11			12			3
Public utilities:
U.S. dollar-denominated		1,121			42			623			14			498			28
Yen-denominated		96			8			96			8			0			0
Sovereign and supranational:
Yen-denominated		42			3			42			3			0			0
Banks/financial institutions:
U.S. dollar-denominated		232			7			216			5			16			2
Yen-denominated		1,523			79			590			27			933			52
Other corporate:
U.S. dollar-denominated		8,252			554			4,772			155			3,480			399
Yen-denominated		169			14			132			13			37			1
Total fixed maturities		17,849			1,124			12,821			631			5,028			493
Perpetual securities:
Yen-denominated		429			31			0			0			429			31
Total perpetual securities		429			31			0			0			429			31
Equity securities:
U.S. dollar-denominated		268			14			255			11			13			3
Yen-denominated		99			5			80			3			19			2
Total equity securities		367			19			335			14			32			5
Total		$	18,645		$	1,174		$	13,156		$	645		$	5,489		$	529



	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)	June 30, 2017			December 31, 2016
Other investments:
Commercial mortgage loans		$	1,052		$	855
Middle market loans		578			319
Short-term investments		138			89
Policy loans		201			184
Other		47			3
Total other investments		$	2,016		$	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
June 30, 2017
Remaining Contractual Maturity of the Agreements
(In millions)	Overnight and Continuous⁽¹⁾		Up to 30 days		Total
Securities lending transactions:
Public utilities	$	63	$	0	$	63
Banks/financial institutions	38		0		38
Other corporate	556		0		556
Equity securities	6		0		6
Total borrowings	$	663	$	0	$	663
Gross amount of recognized liabilities for securities lending transactions					$	663
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



	June 30, 2017						December 31, 2016
(In millions)	Cost or Amortized Cost			Fair Value			Cost or Amortized Cost			Fair Value
Assets:
Fixed maturities, available for sale		$	4,149		$	5,059		$	4,168		$	4,982
Perpetual securities, available for sale		241			216			237			208
Equity securities		1,032			1,123			972			1,044
Other investments ⁽¹⁾		1,200			1,186			819			789
Other assets ⁽²⁾		142			142			127			127
Total assets of consolidated VIEs		$	6,764		$	7,726		$	6,323		$	7,150
Liabilities:
Other liabilities ⁽²⁾		$	133		$	133		$	146		$	146
Total liabilities of consolidated VIEs		$	133		$	133		$	146		$	146

⁽¹⁾ Consists of CMLs and MMLs

⁽²⁾ Consist entirely of derivatives

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



	June 30, 2017						December 31, 2016
(In millions)	Amortized Cost			Fair Value			Amortized Cost			Fair Value
Assets:
Fixed maturities, available for sale		$	4,832		$	5,433		$	4,729		$	5,261
Perpetual securities, available for sale		179			230			172			200
Fixed maturities, held to maturity		2,662			3,085			2,563			2,948
Other investments		47			48			1			1
Total investments in VIEs not consolidated		$	7,720		$	8,796		$	7,465		$	8,410