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 "Corporate and other" category.

The Company does not allocate corporate overhead expenses to business segments. Consistent with U.S. GAAP accounting guidance for segment reporting, the Company evaluates and manages its business segments using a financial performance measure called pretax adjusted earnings. Adjusted earnings are adjusted revenues less benefits and adjusted expenses. The adjustments to both revenues and expenses account for certain items that cannot be predicted or that are outside management’s control. Adjusted revenues are U.S. GAAP total revenues excluding realized investment gains and losses, except for amortized hedge costs related to foreign currency denominated investments. Adjusted expenses are U.S. GAAP total acquisition and operating expenses including the impact of interest cash flows from derivatives associated with notes payable but excluding any nonrecurring or other items not associated with the normal course of the Company’s insurance operations and that do not reflect Aflac’s underlying business performance. The Company excludes income taxes related to operations to arrive at pretax adjusted earnings. Information regarding operations by segment follows:



	Three Months Ended March 31,
(In millions)	2018			2017
Revenues:
Aflac Japan:
Net earned premiums	$	3,263		$	3,194
Net investment income, less amortized hedge costs ⁽¹⁾	588			557
Other income	12			10
Total Aflac Japan	3,863			3,761
Aflac U.S.:
Net earned premiums	1,427			1,390
Net investment income	175			178
Other income	2			1
Total Aflac U.S.	1,604			1,569
Corporate and other ⁽²⁾	79			67
Total adjusted revenues	5,546			5,397
Realized investment gains (losses) ^(1),(2)	(82		)	(88		)
Total revenues	$	5,464		$	5,309

⁽¹⁾Amortized hedge costs related to hedging U.S. dollar-denominated investments held in Aflac Japan were $55 and $52 for the three-month periods ended March 31, 2018, and 2017, respectively, and have been reclassified from realized investment gains (losses) and reported as a deduction from net investment income when analyzing segment operations.

⁽²⁾ Amortized hedge costs in Aflac Japan were offset by derivatives entered into as part of corporate activities and resulted in a benefit of $2 for the three-month period ended March 31, 2018 which has been reclassified from realized investment gains (losses) and reported as an increase in net investment income when analyzing operations.



	Three Months Ended March 31,
(In millions)	2018			2017
Pretax earnings:
Aflac Japan ⁽¹⁾	$	818		$	769
Aflac U.S.	337			310
Corporate and other ⁽²⁾	(46		)	(52		)
Pretax adjusted earnings	1,109			1,027
Realized investment gains (losses) ^(1),(2),(3)	(98		)	(109		)
Other income (loss)	(29		)	(20		)
Total earnings before income taxes	$	982		$	898
Income taxes applicable to pretax adjusted earnings	$	289		$	351
Effect of foreign currency translation on after-tax adjusted earnings	21			5

⁽¹⁾Amortizedhedge costs related to hedging U.S. dollar-denominated investments held in Aflac Japan were $55 and $52 for the three-month periods ended March 31, 2018, and 2017, respectively, and have been reclassified from realized investment gains (losses) and reported as a deduction from pretax adjusted earnings when analyzing segment operations.

⁽³⁾Excluding a gain of $17 and $21 for the three-month periods ended March 31, 2018, and 2017, respectively, related to the interest rate component of the change in fair value of foreign currency swaps on notes payable which is included in adjusted earnings when analyzing segment operations

Assets were as follows:



(In millions)	March 31, 2018			December 31, 2017
Assets:
Aflac Japan		$	125,174		$	114,402
Aflac U.S.		19,706			19,893
Corporate and other		2,476			2,922
Total assets		$	147,356		$	137,217