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 June 30,					Six Months Ended June 30,
(In millions)	2018		2017			2018			2017
Revenues:
Aflac Japan:
Net earned premiums	$	3,227	$	3,222		$	6,490		$	6,416
Net investment income, less amortized hedge costs ⁽¹⁾	606		557			1,194			1,115
Other income	11		10			22			20
Total Aflac Japan	3,844		3,789			7,706			7,551
Aflac U.S.:
Net earned premiums	1,426		1,388			2,853			2,778
Net investment income	182		180			357			358
Other income	2		2			4			3
Total Aflac U.S.	1,610		1,570			3,214			3,139
Corporate and other ⁽²⁾	85		70			164			138
Total adjusted revenues	5,539		5,429			11,084			10,828
Realized investment gains (losses) ^(1),(2)	50		(1		)	(30		)	(91		)
Total revenues	$	5,589	$	5,428		$	11,054		$	10,737

⁽¹⁾Amortized hedge costs related to hedging U.S. dollar-denominated investments held in Aflac Japan were $55 and $56 for the three- month periods and $110 and $108 for the six-month periods ended June 30, 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 partially offset by derivatives entered into as part of corporate activities and resulted in a benefit of $7 for the three-month period and $9 for the six-month period ended June 30, 2018, respectively, which has been reclassified from realized investment gains (losses) and reported as an increase in net investment income when analyzing operations.



	Three Months Ended June 30,						Six Months Ended June 30,
(In millions)	2018			2017			2018			2017
Pretax earnings:
Aflac Japan ⁽¹⁾	$	836		$	791		$	1,654		$	1,560
Aflac U.S.	340			330			677			640
Corporate and other ⁽²⁾	(38		)	(48		)	(84		)	(100		)
Pretax adjusted earnings	1,138			1,073			2,247			2,100
Realized investment gains (losses) ^(1),(2),(3)	35			(19		)	(63		)	(128		)
Other income (loss)	(42		)	(9		)	(70		)	(28		)
Total earnings before income taxes	$	1,131		$	1,045		$	2,114		$	1,944
Income taxes applicable to pretax adjusted earnings	$	303		$	342		$	592		$	694
Effect of foreign currency translation on after-tax adjusted earnings	7			(9		)	29			(3		)

⁽¹⁾Amortizedhedge costs related to hedging U.S. dollar-denominated investments held in Aflac Japan were $55 and $56 for the three- month periods and $110 and $108 for the six-month periods ended June 30, 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.

⁽²⁾ Amortized hedge costs in Aflac Japan were partially offset by derivatives entered into as part of corporate activities and resulted in a benefit of $7 for the three-month period and $9 for the six-month period ended June 30, 2018 which has been reclassified from realized investment gains (losses) and reported as an increase in pretax adjusted earnings when analyzing operations.

⁽³⁾Excluding a gain of $17 and $20 for the three-month periods and $33 and $41 for the six-month periods ended June 30, 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)	June 30, 2018			December 31, 2017
Assets:
Aflac Japan		$	120,228		$	114,402
Aflac U.S.		19,588			19,893
Corporate and other		2,170			2,922
Total assets		$	141,986		$	137,217