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INVESTMENTS (Tables)

9 Months Ended

Sep. 30, 2017

The amortized cost for the Company's 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, 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		$	27,027		$	3,272		$	423		$	29,876
Municipalities		315			26			15			326
Mortgage- and asset-backed securities		248			29			0			277
Public utilities		1,643			369			7			2,005
Sovereign and supranational		1,428			190			3			1,615
Banks/financial institutions		3,307			494			59			3,742
Other corporate		3,811			771			25			4,557
Total yen-denominated		37,779			5,151			532			42,398
U.S. dollar-denominated:
U.S. government and agencies		150			12			0			162
Municipalities		818			148			0			966
Mortgage- and asset-backed securities		166			13			0			179
Public utilities		5,231			813			34			6,010
Sovereign and supranational		325			89			0			414
Banks/financial institutions		2,683			592			7			3,268
Other corporate		25,092			2,388			462			27,018
Total U.S. dollar-denominated		34,465			4,055			503			38,017
Total fixed maturities		72,244			9,206			1,035			80,415
Perpetual securities:
Yen-denominated:
Banks/financial institutions		1,308			277			32			1,553
Other corporate		195			41			0			236
U.S. dollar-denominated:
Banks/financial institutions		46			28			0			74
Total perpetual securities		1,549			346			32			1,863
Equity securities:
Yen-denominated		555			95			2			648
U.S. dollar-denominated		256			30			6			280
Total equity securities		811			125			8			928
Total securities available for sale		$	74,604		$	9,677		$	1,075		$	83,206



	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



	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



	September 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		$	21,385		$	5,070		$	0		$	26,455
Municipalities		359			104			0			463
Mortgage- and asset-backed securities		27			2			0			29
Public utilities		3,308			426			0			3,734
Sovereign and supranational		1,527			319			0			1,846
Banks/financial institutions		2,700			205			18			2,887
Other corporate		2,692			493			0			3,185
Total yen-denominated		31,998			6,619			18			38,599
Total securities held to maturity		$	31,998		$	6,619		$	18		$	38,599

Investments Classified by Contractual Maturity Date

The contractual maturities of the Company's investments in fixed maturities at September 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		$	175		$	181		$	53		$	54
Due after one year through five years		5,734			6,029			637			682
Due after five years through 10 years		9,078			9,668			3,253			3,529
Due after 10 years		43,860			49,502			8,443			9,698
Mortgage- and asset-backed securities		290			330			40			42
Total fixed maturities available for sale		$	59,137		$	65,710		$	12,426		$	14,005
Held to maturity:
Due in one year or less		$	488		$	497		$	0		$	0
Due after one year through five years		923			970			0			0
Due after five years through 10 years		1,638			1,810			0			0
Due after 10 years		28,922			35,293			0			0
Mortgage- and asset-backed securities		27			29			0			0
Total fixed maturities held to maturity		$	31,998		$	38,599		$	0		$	0

Economic Maturities of Investments in Perpetual Securities

The economic maturities of the Company's investments in perpetual securities, which were all reported as available for sale at September 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		$	84		$	85		$	0		$	0
Due after one year through five years		194			236			0			0
Due after 10 years		1,232			1,482			39			60
Total perpetual securities available for sale		$	1,510		$	1,803		$	39		$	60

Investment Exposures Exceeding Ten Percent Shareholders Equity

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



	September 30, 2017			December 31, 2016
(In millions)	Credit Rating	Amortized Cost	Fair Value	Credit Rating	Amortized Cost	Fair Value
Japan National Government⁽¹⁾	A	$47,637	$55,444	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 September 30,						Nine Months Ended September 30,
(In millions)	2017			2016			2017			2016
Realized investment gains (losses):
Fixed maturities:
Available for sale:
Gross gains from sales	$	10		$	2		$	27		$	10
Gross losses from sales	(8		)	(22		)	(38		)	(38		)
Net gains (losses) from redemptions	14			1			(24		)	88
Other-than-temporary impairment losses	(2		)	(1		)	(9		)	(23		)
Total fixed maturities	14			(20		)	(44		)	37
Perpetual securities:
Available for sale:
Net gains (losses) from redemptions	0			0			4			40
Other-than-temporary impairment losses	0			0			0			(2		)
Total perpetual securities	0			0			4			38
Equity securities:
Gross gains from sales	54			5			102			10
Gross losses from sales	(9		)	0			(11		)	(10		)
Other-than-temporary impairment losses	(6		)	(22		)	(18		)	(46		)
Total equity securities	39			(17		)	73			(46		)
Derivatives and other:
Derivative gains (losses)	(40		)	(107		)	(143		)	(278		)
Foreign currency gains (losses)	17			(20		)	(56		)	(109		)
Total derivatives and other	(23		)	(127		)	(199		)	(387		)
Total realized investment gains (losses)	$	30		$	(164	)	$	(166	)	$	(358	)

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)	September 30, 2017				December 31, 2016
Unrealized gains (losses) on securities available for sale		$	8,602			$	7,630
Deferred income taxes		(3,165		)		(2,825		)
Shareholders’ equity, unrealized gains (losses) on investment securities		$	5,437			$	4,805

Investments Gross Unrealized Loss Aging

The following tables show the fair values and gross unrealized losses of the Company's 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, 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		$	6,404		$	423		$	6,208		$	399		$	196		$	24
Municipalities:
Yen-denominated		152			15			62			3			90			12
Public utilities:
U.S. dollar-denominated		879			34			252			4			627			30
Yen-denominated		95			7			69			6			26			1
Sovereign and supranational:
Yen-denominated		352			3			352			3			0			0
Banks/financial institutions:
U.S. dollar-denominated		188			7			145			3			43			4
Yen-denominated		1,616			77			637			29			979			48
Other corporate:
U.S. dollar-denominated		7,886			462			2,803			52			5,083			410
Yen-denominated		424			25			386			24			38			1
Total fixed maturities		17,996			1,053			10,914			523			7,082			530
Perpetual securities:
Yen-denominated		340			32			0			0			340			32
Total perpetual securities		340			32			0			0			340			32
Equity securities:
U.S. dollar-denominated		58			6			50			5			8			1
Yen-denominated		72			2			67			1			5			1
Total equity securities		130			8			117			6			13			2
Total		$	18,466		$	1,093		$	11,031		$	529		$	7,435		$	564



	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)	September 30, 2017			December 31, 2016
Other investments:
Commercial mortgage loans		$	1,199		$	855
Middle market loans		798			319
Policy loans		207			184
Short-term investments		57			89
Other		97			3
Total other investments		$	2,358		$	1,450

Securities Lending Transactions Accounted for as Secured Borrowings

Details of the Company's securities lending activities were as follows:



Securities Lending Transactions Accounted for as Secured Borrowings
September 30, 2017
Remaining Contractual Maturity of the Agreements
(In millions)	Overnight and Continuous⁽¹⁾		Up to 30 days		Total
Securities lending transactions:
Public utilities	$	37	$	0	$	37
Banks/financial institutions	37		0		37
Other corporate	434		0		434
Equity securities	14		0		14
Total borrowings	$	522	$	0	$	522
Gross amount of recognized liabilities for securities lending transactions					$	522
Amounts related to agreements not included in offsetting disclosure in Note 4					$	0

⁽¹⁾These securities are pledged as collateral under the Company's U.S. securities lending program and can be called at its 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 the Company's U.S. securities lending program and can be called at its 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, 2017						December 31, 2016
(In millions)	Cost or Amortized Cost			Fair Value			Cost or Amortized Cost			Fair Value
Assets:
Fixed maturities, available for sale		$	4,274		$	5,224		$	4,168		$	4,982
Perpetual securities, available for sale		239			211			237			208
Equity securities		595			690			972			1,044
Other investments ⁽¹⁾		1,500			1,491			819			789
Other assets ⁽²⁾		148			148			127			127
Total assets of consolidated VIEs		$	6,756		$	7,764		$	6,323		$	7,150
Liabilities:
Other liabilities ⁽²⁾		$	132		$	132		$	146		$	146
Total liabilities of consolidated VIEs		$	132		$	132		$	146		$	146

⁽¹⁾ Consists of CMLs, MMLs, and alternative investments in limited partnerships

⁽²⁾ Consists 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 the Company's investment in VIEs not consolidated are reported.

Investments in Variable Interest Entities Not Consolidated



	September 30, 2017						December 31, 2016
(In millions)	Amortized Cost			Fair Value			Amortized Cost			Fair Value
Assets:
Fixed maturities, available for sale		$	4,766		$	5,439		$	4,729		$	5,261
Perpetual securities, available for sale		177			220			172			200
Fixed maturities, held to maturity		2,645			3,047			2,563			2,948
Other investments		50			50			1			1
Total investments in VIEs not consolidated		$	7,638		$	8,756		$	7,465		$	8,410