SCHEDULE II CONDENSED FINANCIAL INFORMATION OF REGISTRANT

12 Months Ended

Dec. 31, 2017

Condensed Financial Information of Parent Company Only Disclosure [Abstract]

SCHEDULE II CONDENSED FINANCIAL INFORMATION OF REGISTRANT

SCHEDULE II

CONDENSED FINANCIAL INFORMATION OF REGISTRANT

Aflac Incorporated (Parent Only)

Condensed Statements of Earnings



	Years ended December 31,
(In millions)	2017				2016				2015
Revenues:
Management and service fees from subsidiaries⁽¹⁾		$	297			$	265			$	260
Net investment income		30				18				22
Interest from subsidiaries⁽¹⁾		5				5				6
Realized investment gains (losses)		67				84				86
Change in fair value of the cross-currency interest rate swaps		(68		)		(159		)		(53		)
Total revenues		331				213				321
Operating expenses:
Interest expense		197				213				231
Other operating expenses⁽²⁾		180				277				321
Total operating expenses		377				490				552
Earnings before income taxes and equity in earnings of subsidiaries		(46		)		(277		)		(231		)
Income tax expense (benefit)		(23		)		(102		)		(80		)
Earnings before equity in earnings of subsidiaries		(23		)		(175		)		(151		)
Equity in earnings of subsidiaries⁽¹⁾		4,627				2,834				2,684
Net earnings		$	4,604			$	2,659			$	2,533

⁽¹⁾Eliminated in consolidation

⁽²⁾Includes expense of $13 in 2017, $137 in 2016 and $230 in 2015 for the early extinguishment of debt

See the accompanying Notes to Condensed Financial Statements.

See the accompanying Report of Independent Registered Public Accounting Firm.

SCHEDULE II

CONDENSED FINANCIAL INFORMATION OF REGISTRANT

Aflac Incorporated (Parent Only)

Condensed Statements of Comprehensive Income (Loss)



	Years ended December 31,
(In millions)	2017			2016				2015
Net earnings		$	4,604		$	2,659			$	2,533
Other comprehensive income (loss) before income taxes:
Unrealized foreign currency translation gains (losses) during period		286			283				360
Unrealized gains (losses) on investment securities during period		1,733			2,799				(2,595		)
Unrealized gains (losses) on derivatives during period		1			3				0
Pension liability adjustment during period		9			(45		)		(20		)
Total other comprehensive income (loss) before income taxes		2,029			3,040				(2,255		)
Income tax expense (benefit) related to items of other comprehensive income (loss)		631			1,035				(901		)
Other comprehensive income (loss), net of income taxes		1,398			2,005				(1,354		)
Total comprehensive income (loss)		$	6,002		$	4,664			$	1,179

See the accompanying Notes to Condensed Financial Statements.

See the accompanying Report of Independent Registered Public Accounting Firm.

SCHEDULE II

CONDENSED FINANCIAL INFORMATION OF REGISTRANT

Aflac Incorporated (Parent Only)

Condensed Balance Sheets



	December 31,
(In millions, except for share and per-share amounts)	2017				2016
Assets:
Investments and cash:
Fixed maturity securities available for sale, at fair value (amortized cost $1,163 in 2017 and $483 in 2016)		$	1,213			$	496
Investments in subsidiaries⁽¹⁾		26,869				23,353
Other investments		51				3
Cash and cash equivalents		1,725				2,037
Total investments and cash		29,858				25,889
Due from subsidiaries⁽¹⁾		90				75
Income taxes receivable		121				103
Other assets		366				497
Total assets		$	30,435			$	26,564

Liabilities and shareholders' equity:
Liabilities:
Employee benefit plans		$	341			$	293
Notes payable		5,267				5,339
Other liabilities		229				450
Total liabilities		5,837				6,082
Shareholders' equity:
Common stock of $.10 par value. In thousands: authorized 1,900,000 shares in 2017 and 2016; issued 672,881 shares in 2017 and 671,249 shares in 2016		67				67
Additional paid-in capital		2,120				1,976
Retained earnings		29,895				25,981
Accumulated other comprehensive income (loss):
Unrealized foreign currency translation gains		(1,750		)		(1,983		)
Unrealized gains (losses) on investment securities		5,964				4,805
Unrealized gains (losses) on derivatives		(23		)		(24		)
Pension liability adjustment		(163		)		(168		)
Treasury stock, at average cost		(11,512		)		(10,172		)
Total shareholders' equity		24,598				20,482
Total liabilities and shareholders' equity		$	30,435			$	26,564

⁽¹⁾Eliminated in consolidation

See the accompanying Notes to Condensed Financial Statements.

See the accompanying Report of Independent Registered Public Accounting Firm.

SCHEDULE II

CONDENSED FINANCIAL INFORMATION OF REGISTRANT

Aflac Incorporated (Parent Only)

Condensed Statements of Cash Flows



	Years ended December 31,
(In millions)	2017				2016					2015
Cash flows from operating activities:
Net earnings		$	4,604			$	2,659				$	2,533
Adjustments to reconcile net earnings to net cash provided from operating activities:
Equity in earnings of subsidiaries⁽¹⁾		(4,627		)		(2,834		)			(2,684		)
Cash dividends received from subsidiaries		2,001				2,020					2,393
Other, net		(46		)		294			⁽²⁾		155			⁽²⁾
Net cash provided (used) by operating activities		1,932				2,139					2,397
Cash flows from investing activities:
Fixed maturity securities sold		263				225					121
Fixed maturity securities purchased		(329		)		(229		)			(202		)
Other investments sold (purchased)		(47		)		6					14
Settlement of derivatives		223				0					147
Additional capitalization of subsidiaries⁽¹⁾		(69		)		(36		)			(43		)
Other, net		(218		)		(25		)			0
Net cash provided (used) by investing activities		(177		)		(59		)			37
Cash flows from financing activities:
Purchases of treasury stock		(1,351		)		(1,422		)			(1,315		)
Proceeds from borrowings		1,040				986					998
Principal payments under debt obligations		(1,161		)		(621		)			(1,272		)
Dividends paid to shareholders		(661		)		(658		)			(656		)
Treasury stock reissued		33				46					36
Proceeds from exercise of stock options		38				36					47
Net change in amount due to/from subsidiaries⁽¹⁾		(5		)		(6		)			43
Other, net		0				(125		)	⁽²⁾		(232		)	⁽²⁾
Net cash provided (used) by financing activities		(2,067		)		(1,764		)			(2,351		)
Net change in cash and cash equivalents		(312		)		316					83
Cash and cash equivalents, beginning of period		2,037				1,721					1,638
Cash and cash equivalents, end of period		$	1,725			$	2,037				$	1,721

⁽¹⁾Eliminated in consolidation

⁽²⁾Operating activities excludes and financing activities includes a cash outflow of $137 in 2016 and $230 in 2015 for the payments associated with the early extinguishment of debt

See the accompanying Notes to Condensed Financial Statements.

See the accompanying Report of Independent Registered Public Accounting Firm.

(A) Notes Payable

A summary of notes payable as of December 31 follows:



(In millions)	2017				2016
2.65% senior notes paid February 2017		$	0			$	649
2.40% senior notes due March 2020		548				547
4.00% senior notes due February 2022		348				348
3.625% senior notes due June 2023		697				696
3.625% senior notes due November 2024		745				745
3.25% senior notes due March 2025		446				445
2.875% senior notes due October 2026		297				298
6.90% senior notes due December 2039		220				220
6.45% senior notes due August 2040		254				254
4.00% senior notes due October 2046		394				394
5.50% subordinated debentures due September 2052		0		⁽¹⁾		486
Yen-denominated senior notes and subordinated debentures:
.932% senior notes due January 2027 (principal amount 60.0 billion yen)		528				0
2.108% subordinated debentures due October 2047 (principal amount 60.0 billion yen)		526				0
Yen-denominated loans:
Variable interest rate loan due September 2021 (.32% in 2017 and .31% in 2016, principal amount 5.0 billion yen)		44				43
Variable interest rate loan due September 2023 (.47% in 2017 and .46% in 2016, principal amount 25.0 billion yen)		220				214
Total notes payable		$	5,267			$	5,339

⁽¹⁾Redeemed in November 2017

Amounts in the table above are reported net of debt issuance costs and issuance premiums or discounts, if applicable, that are being amortized over the life of the notes.

In January 2017, the Parent Company issued 60.0 billion yen of senior notes through a U.S. public debt offering. The notes bear interest at a fixed rate of .932% per annum, payable semi-annually, and have a 10-year maturity. These notes may only be redeemed before maturity, in whole but not in part, upon the occurrence of certain changes affecting U.S. taxation, as specified in the indenture governing the terms of the issuance.

In February 2017, the Parent Company extinguished $650 million of its 2.65% senior notes upon their maturity.

In October 2017, the Parent Company issued 60.0 billion yen of subordinated debentures through a U.S. public debt offering. The debentures bear interest at an initial rate of 2.108% per annum through October 22, 2027, or earlier redemption. Thereafter, the rate of the interest of the debentures will be reset every five years at a rate of interest equal to the then-current JPY 5-year Swap Offered Rate plus 205 basis points. The debentures are payable semi-annually in arrears and have a 30-year maturity. The debentures are redeemable (i) at any time, in whole but not in part, upon the occurrence of certain tax events or certain rating agency events, as specified in the indenture governing the terms of the debentures or (ii) on or after October 23, 2027, in whole or in part, at a redemption price equal to their principal amount plus accrued and unpaid interest to, but excluding, the date of redemption. In November 2017, the Parent Company used a portion of net proceeds from the October 2017 issuance of subordinated debentures to redeem $500 million of the Parent Company's 5.50% subordinated debentures due 2052.

The aggregate contractual maturities of notes payable during each of the years after December 31, 2017, are as follows:



(In millions)
2018	$	0
2019	0
2020	550
2021	44
2022	350
Thereafter	4,364
Total	$	5,308

For further information regarding notes payable, see Note 9 of the Notes to the Consolidated Financial Statements.

(B) Derivatives

At December 31, 2017, the Parent Company's outstanding freestanding derivative contracts were swaps associated with its notes payable, consisting of cross-currency interest rate swaps, also referred to as foreign currency swaps, associated with the Parent Company's senior notes due in March 2020, February 2022, June 2023, November 2024 and March 2025. The Parent Company does not use derivative financial instruments for trading purposes, nor does it engage in leveraged derivative transactions. For further information regarding these derivatives, see Notes 1, 4 and 9 of the Notes to the Consolidated Financial Statements.

The Parent Company and its eligible U.S. subsidiaries file a consolidated U.S. federal income tax return. Income tax liabilities or benefits are recorded by each principal subsidiary based upon separate return calculations, and any difference between the consolidated provision and the aggregate amounts recorded by the subsidiaries is reflected in the Parent Company financial statements. For further information on income taxes, see Note 10 of the Notes to the Consolidated Financial Statements.

(D) Dividend Restrictions

See Note 13 of the Notes to the Consolidated Financial Statements for information regarding dividend restrictions.

(E) Supplemental Disclosures of Cash Flow Information



(In millions)	2017			2016			2015
Interest paid		$	195		$	209		$	235
Noncash financing activities:
Treasury stock issued for shareholder dividend reinvestment		29			26			26

- Definition

The entire disclosure for condensed financial information, including the financial position, cash flows, and the results of operations of the registrant (parent company) as of the same dates or for the same periods for which audited consolidated financial statements are being presented. Alternatively, the details of this disclosure can be reported by the specific parent company taxonomy elements, indicating the appropriate date and period contexts in an instance document.

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