BUSINESS SEGMENT 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 amortized hedge costs related to foreign currency denominated investments, but excludes certain items that cannot be predicted or that are outside of management's control, such as realized investment gains and losses from securities transactions, impairments, change in loan loss reserves and certain derivative and foreign currency activities; nonrecurring items; and other non-operating income (loss) from net earnings. Nonrecurring and other non-operating items consist of infrequent events and activity not associated with the normal course of the Company’s insurance operations and do not reflect Aflac’s underlying business performance. We exclude income taxes related to operations to arrive at pretax operating earnings. Information regarding operations by segment follows:



	Three Months Ended June 30,						Six Months Ended June 30,
(In millions)	2017			2016			2017			2016
Revenues:
Aflac Japan:
Net earned premiums	$	3,222		$	3,402		$	6,416		$	6,581
Net investment income, less amortized hedge costs ⁽¹⁾	557			605			1,115			1,195
Other income	10			11			20			19
Total Aflac Japan	3,789			4,018			7,551			7,795
Aflac U.S.:
Net earned premiums	1,388			1,362			2,778			2,729
Net investment income	180			176			358			350
Other income	2			0			3			3
Total Aflac U.S.	1,570			1,538			3,139			3,082
Other business segments	72			68			144			136
Total business segment revenues	5,431			5,624			10,834			11,013
Corporate and eliminations	16			21			31			43
Total operating revenues	5,447			5,645			10,865			11,056
Realized investment gains (losses) ^{(1), (2), (3)}	(19		)	(208		)	(128		)	(168		)
Total revenues	$	5,428		$	5,437		$	10,737		$	10,888

⁽¹⁾Amortized hedge costs related to hedging U.S. dollar-denominated investments held in Aflac Japan were $56 and $37 for the three-month periods and $108 and $69 for the six-month periods ended June 30, 2017, and 2016, respectively, and have been reclassified from realized investment gains (losses) and reported as a deduction from net investment income when analyzing segment operations to conform to current year reporting.

⁽²⁾Excluding a gain of $20 and $21 for the three-month periods and $41 and $43 for the six-month periods ended June 30, 2017, and 2016, respectively, 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

⁽³⁾Prior year foreign currency transaction gains and losses have been reclassified from other non-operating income (loss) to realized investment gains (losses) to conform to current-year reporting classifications. These reclassifications had no impact on total revenues.



	Three Months Ended June 30,						Six Months Ended June 30,
(In millions)	2017			2016			2017			2016
Pretax earnings:
Aflac Japan ⁽¹⁾	$	791		$	802		$	1,560		$	1,608
Aflac U.S.	330			291			640			623
Other business segments	3			5			3			8
Total business segment pretax operating earnings	1,124			1,098			2,203			2,239
Interest expense, noninsurance operations	(30		)	(30		)	(59		)	(59		)
Corporate and eliminations	(21		)	(26		)	(44		)	(61		)
Pretax operating earnings	1,073			1,042			2,100			2,119
Realized investment gains (losses) ^{(1), (2), (3)}	(19		)	(208		)	(128		)	(168		)
Other non-operating income (loss)⁽³⁾	(9		)	0			(28		)	0
Total earnings before income taxes	$	1,045		$	834		$	1,944		$	1,951
Income taxes applicable to pretax operating earnings	$	342		$	359		$	694		$	731
Effect of foreign currency translation on after-tax operating earnings	(9		)	36			(3		)	49

⁽¹⁾Amortizedhedge costs related to hedging U.S. dollar-denominated investments held in Aflac Japan were $56 and $37 for the three-month periods and $108 and $69 for the six-month periods ended June 30, 2017, and 2016, respectively, and have been reclassified from realized investment gains (losses) and reported as a deduction from pretax operating earnings when analyzing segment operations to conform to current year reporting.

Assets were as follows:



(In millions)	June 30, 2017			December 31, 2016
Assets:
Aflac Japan		$	113,497		$	107,858
Aflac U.S.		19,996			19,453
Other business segments		471			270
Total business segment assets		133,964			127,581
Corporate and eliminations		1,430			2,238
Total assets		$	135,394		$	129,819