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SCHEDULE II CONDENSED FINANCIAL INFORMATION OF REGISTRANT
 12 Months Ended
Dec. 31, 2018
Condensed Financial Information 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)
2018
    
2017
    
2016
Revenues:
 
 
 
    
 
 
 
    
 
 
 
   Management and service fees from subsidiaries(1)
 
$
190

 
    
 
$
297

 
    
 
$
265

 
   Net investment income
 
69

 
    
 
30

 
    
 
18

 
   Interest from subsidiaries(1)
 
4

 
    
 
5

 
    
 
5

 
   Realized investment gains (losses)
 
90

 
    
 
67

 
    
 
84

 
   Change in fair value of the cross-currency interest rate swaps
 
(106
)
 
    
 
(68
)
 
    
 
(159
)
 
     Total revenues
 
247

 
    
 
331

 
    
 
213

 
Operating expenses:
 
 
 
    
 
 
 
    
 
 
 
   Interest expense
 
188

 
    
 
197

 
    
 
213

 
   Other operating expenses(2)
 
225

 
    
 
180

 
    
 
277

 
     Total operating expenses
 
413

 
    
 
377

 
    
 
490

 
   Earnings before income taxes and equity in earnings of
subsidiaries
 
(166
)
 
    
 
(46
)
 
    
 
(277
)
 
Income tax expense (benefit)
 
(12
)
 
    
 
(23
)
 
    
 
(102
)
 
   Earnings before equity in earnings of subsidiaries
 
(154
)
 
    
 
(23
)
 
    
 
(175
)
 
Equity in earnings of subsidiaries(1)
 
3,074

 
    
 
4,627

 
    
 
2,834

 
     Net earnings
 
$
2,920

 
    
 
$
4,604

 
    
 
$
2,659

 
(1)Eliminated in consolidation
(2)Includes expense of $13 in 2017 and $137 in 2016 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)
2018
 
2017
 
2016
Net earnings
 
$
2,920

 
 
 
$
4,604

 
 
 
$
2,659

 
Other comprehensive income (loss) before income taxes:
 
 
 
 
 
 
 
 
 
 
 
Unrealized foreign currency translation gains (losses) during period
 
232

 
 
 
286

 
 
 
283

 
Unrealized gains (losses) on fixed maturity securities during period (1)
 
(3,109
)
 
 
 
1,733

 
 
 
2,799

 
Unrealized gains (losses) on derivatives during period
 
2

 
 
 
1

 
 
 
3

 
Pension liability adjustment during period
 
(25
)
 
 
 
9

 
 
 
(45
)
 
Total other comprehensive income (loss) before
income taxes
 
(2,900
)
 
 
 
2,029

 
 
 
3,040

 
Income tax expense (benefit) related to items of other comprehensive
income (loss)
 
(797
)
 
 
 
631

 
 
 
1,035

 
Other comprehensive income (loss), net of income taxes
 
(2,103
)
 
 
 
1,398

 
 
 
2,005

 
Total comprehensive income (loss)
 
$
817

 
 
 
$
6,002

 
 
 
$
4,664

 

(1) See Note 1 of Notes to the Consolidated Financial Statements for the adoption of accounting guidance on January 1, 2018 related to financial instruments.
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)
2018
 
2017
Assets:
 
 
 
 
 
 
 
Investments and cash:
 
 
 
 
 
 
 
Fixed maturity securities available for sale, at fair value
(amortized cost $1,209 in 2018 and $1,163 in 2017)
 
$
1,222

 
 
 
$
1,213

 
Investments in subsidiaries(1)
 
26,230

 
 
 
26,869

 
Other investments
 
21

 
 
 
51

 
Cash and cash equivalents
 
1,767

 
 
 
1,725

 
Total investments and cash
 
29,240

 
 
 
29,858

 
Due from subsidiaries(1)
 
98

 
 
 
90

 
Income taxes receivable
 
176

 
 
 
121

 
Other assets
 
390

 
 
 
366

 
Total assets
 
$
29,904

 
 
 
$
30,435

 
 
 
 
 
 
 
 
 
Liabilities and shareholders' equity:
 
 
 
 
 
 
 
Liabilities:
 
 
 
 
 
 
 
Employee benefit plans
 
$
310

 
 
 
$
341

 
Notes payable
 
5,765

 
 
 
5,267

 
Other liabilities
 
367

 
 
 
229

 
Total liabilities
 
6,442

 
 
 
5,837

 
Shareholders' equity:
 
 
 
 
 
 
 
Common stock of $.10 par value. In thousands: authorized 1,900,000 shares in 2018 and 2017; issued 1,347,540 shares in 2018 and 1,345,762 shares in 2017
 
135

 
 
 
135

 
Additional paid-in capital
 
2,177

 
 
 
2,052

 
Retained earnings
 
31,788

 
 
 
29,895

 
Accumulated other comprehensive income (loss):
 
 
 
 
 
 
 
Unrealized foreign currency translation gains (losses)
 
(1,847
)
 
 
 
(1,750
)
 
Unrealized gains (losses) on fixed maturity securities (2)
 
4,234

 
 
 
5,964

 
Unrealized gains (losses) on derivatives
 
(24
)
 
 
 
(23
)
 
Pension liability adjustment
 
(212
)
 
 
 
(163
)
 
Treasury stock, at average cost
 
(12,789
)
 
 
 
(11,512
)
 
Total shareholders' equity
 
23,462

 
 
 
24,598

 
Total liabilities and shareholders' equity
 
$
29,904

 
 
 
$
30,435

 

(1)Eliminated in consolidation
(2) See Note 1 of the Notes to the Consolidated Financial Statements for the adoption of accounting guidance on January 1, 2018 related to financial instruments.
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)
2018
 
2017
 
2016
Cash flows from operating activities:
 
 
 
 
 
 
 
 
 
 
 
Net earnings
 
$
2,920

 
 
 
$
4,604

 
 
 
$
2,659

 
Adjustments to reconcile net earnings to net cash provided from
operating activities:
 
 
 
 
 
 
 
 
 
 
 
              Equity in earnings of subsidiaries(1)
 
(3,074
)
 
 
 
(4,627
)
 
 
 
(2,834
)
 
 Cash dividends received from subsidiaries
 
1,820

 
 
 
2,001

 
 
 
2,020

 
 Other, net
 
99

 
 
 
(46
)
 
 
 
294

(2) 
Net cash provided (used) by operating activities
 
1,765

 
 
 
1,932

 
 
 
2,139

 
Cash flows from investing activities:
 
 
 
 
 
 
 
 
 
 
 
Fixed maturity securities sold
 
207

 
 
 
263

 
 
 
225

 
Fixed maturity securities purchased
 
(254
)
 
 
 
(329
)
 
 
 
(229
)
 
Other investments sold (purchased)
 
31

 
 
 
(47
)
 
 
 
6

 
Settlement of derivatives
 
(2
)
 
 
 
223

 
 
 
0

 
Additional capitalization of subsidiaries(1)
 
(62
)
 
 
 
(69
)
 
 
 
(36
)
 
Other, net
 
(107
)
 
 
 
(218
)
 
 
 
(25
)
 
Net cash provided (used) by investing activities
 
(187
)
 
 
 
(177
)
 
 
 
(59
)
 
Cash flows from financing activities:
 
 
 
 
 
 
 
 
 
 
 
Purchases of treasury stock
 
(1,301
)
 
 
 
(1,351
)
 
 
 
(1,422
)
 
Proceeds from borrowings
 
1,020

 
 
 
1,040

 
 
 
986

 
Principal payments under debt obligations
 
(550
)
 
 
 
(1,161
)
 
 
 
(621
)
 
Dividends paid to shareholders
 
(793
)
 
 
 
(661
)
 
 
 
(658
)
 
Treasury stock reissued
 
58

 
 
 
33

 
 
 
46

 
Proceeds from exercise of stock options
 
34

 
 
 
38

 
 
 
36

 
       Net change in amount due to/from subsidiaries(1)
 
(4
)
 
 
 
(5
)
 
 
 
(6
)
 
Other, net
 
0

 
 
 
0

 
 
 
(125
)
(2) 
Net cash provided (used) by financing activities
 
(1,536
)
 
 
 
(2,067
)
 
 
 
(1,764
)
 
Net change in cash and cash equivalents
 
42

 
 
 
(312
)
 
 
 
316

 
Cash and cash equivalents, beginning of period
 
1,725

 
 
 
2,037

 
 
 
1,721

 
Cash and cash equivalents, end of period
 
$
1,767

 
 
 
$
1,725

 
 
 
$
2,037

 

(1)Eliminated in consolidation
(2)Operating activities excludes and financing activities includes a cash outflow of $137 in 2016 for the payment 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)
2018
 
2017
2.40% senior notes paid November 2018
 
$
0

 
 
 
$
548

 
4.00% senior notes due February 2022
 
348

 
 
 
348

 
3.625% senior notes due June 2023
 
698

 
 
 
697

 
3.625% senior notes due November 2024
 
746

 
 
 
745

 
3.25% senior notes due March 2025
 
447

 
 
 
446

 
2.875% senior notes due October 2026
 
297

 
 
 
297

 
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

 
4.750% senior notes due January 2049
 
540

 
 
 
0

 
Yen-denominated senior notes and subordinated debentures:
 
 
 
 
 
 
 
.932% senior notes due January 2027 (principal amount 60.0 billion yen)
 
538

  
  
 
528

  
1.159% senior notes due October 2030 (principal amount 29.3 billion yen)
 
262

 
 
 
0

 
1.488% senior notes due October 2033 (principal amount 15.2 billion yen)
 
136

 
 
 
0

 
1.750% senior notes due October 2038 (principal amount 8.9 billion yen)
 
79

 
 
 
0

 
2.108% subordinated debentures due October 2047 (principal amount 60.0 billion yen)
 
536

 
 
 
526

 
Yen-denominated loans:
 
 
 
 
 
 
 
Variable interest rate loan due September 2021 (.32% in 2018 and 2017, principal amount 5.0 billion yen)
 
45

 
 
 
44

 
Variable interest rate loan due September 2023 (.47% in 2018 and 2017, principal amount 25.0 billion yen)
 
225

 
 
 
220

 
Total notes payable
 
$
5,765

  
  
 
$
5,267

  

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 October 2018, the Parent Company issued $550 million of senior notes through a U.S. public debt offering. The notes bear interest at a fixed rate of 4.750% per annum, payable semi-annually, and have a 30-year maturity. These notes are redeemable at the Parent Company's option in whole at any time or in part from time to time at a redemption price equal to the greater of: (i) the aggregate principal amount of the notes to be redeemed or (ii) the amount equal to the sum of the present values of the remaining scheduled payments for principal of and interest on the notes to be redeemed, not including any portion of the payments of interest accrued as of such redemption date, discounted to such redemption date on a semiannual basis at the yield to maturity for a United States Treasury security with a maturity comparable to the remaining term of the notes, plus 25 basis points, plus in each case, accrued and unpaid interest on the principal amount of the notes to be redeemed to, but excluding, such redemption date. In November 2018, the Parent Company used the net proceeds from the October 2018 issuance of senior notes to redeem $550 million of the Parent Company's 2.40% senior notes due in 2020.

In October 2018, the Parent Company issued three series of senior notes totaling 53.4 billion yen through a public debt offering under its U.S. shelf registration statement. The first series, which totaled 29.3 billion yen, bears interest at a fixed rate of 1.159% per annum, payable semi-annually, and has a 12-year maturity. The second series, which totaled 15.2 billion yen, bears interest at a fixed rate of 1.488% per annum, payable semi-annually, and has a 15-year maturity.
The third series, which totaled 8.9 billion yen, bears interest at a fixed rate of 1.750% per annum, payable semi-annually, and has a 20-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.

The aggregate contractual maturities of notes payable during each of the years after December 31, 2018, are as follows:
(In millions)
 
 
2019
$
0

 
2020
0

 
2021
45

 
2022
350

 
2023
925

 
Thereafter
4,493

 
Total
$
5,813

 

For further information regarding notes payable, see Note 9 of the Notes to the Consolidated Financial Statements.(B) DerivativesAt December 31, 2018, 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 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.(C) Income TaxesThe 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)
2018
 
2017
 
2016
Interest paid
 
$
179

 
 
 
$
195

 
 
 
$
209

 
Noncash financing activities:
 
 
 
 
 
 
 
 
 
 
 
Treasury stock issued for shareholder dividend reinvestment
 
8

 
 
 
29

 
 
 
26