BUSINESS SEGMENT INFORMATION

6 Months Ended

Jun. 30, 2019

The Company consists of two reportable insurance business segments: Aflac Japan and Aflac U.S., both of which sell supplemental health and life insurance. In addition, operating business units that are not individually reportable and business activities, including reinsurance retrocession activities, not included in Aflac Japan or Aflac U.S. are included in Corporate and other.

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/income related to foreign currency exposure management strategies and net interest cash flows from derivatives associated with certain investment strategies. 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 reportable segment and Corporate and other, follows:



	Three Months Ended June 30,					Six Months Ended June 30,
(In millions)	2019			2018		2019		2018
Revenues:
Aflac Japan:
Net earned premiums	$	3,172		$	3,227	$	6,352	$	6,490
Net investment income, less amortized hedge costs	609			606		1,219		1,194
Other income	11			11		22		22
Total Aflac Japan	3,792			3,844		7,593		7,706
Aflac U.S.:
Net earned premiums	1,459			1,426		2,920		2,853
Net investment income	180			182		357		357
Other income	2			2		4		4
Total Aflac U.S.	1,641			1,610		3,281		3,214
Corporate and other	95			85		191		164
Total adjusted revenues	5,528			5,539		11,065		11,084
Realized investment gains (losses) ^(1),(2),(3)	(17		)	50		103		(30		)
Total revenues	$	5,511		$	5,589	$	11,168	$	11,054

⁽¹⁾Amortized hedge costs of $62 and $55 for the three-month periods and $124 and $110 for the six-month periods ended June 30, 2019, and 2018, respectively, related to certain foreign currency exposure management strategies have been reclassified from realized investment gains (losses) and reported as a deduction from net investment income when analyzing operations.

⁽²⁾ Amortized hedge income of $20 and $7 for the three-month periods and $40 and $9 for the six-month periods ended June 30, 2019, and 2018, respectively, related to certain foreign currency exposure management strategies has been reclassified from realized investment gains (losses) and reported as an increase to net investment income when analyzing operations.

⁽³⁾ Net interest cash flows from derivatives associated with certain investment strategies of $(7) for the three-month period and $(14) for the six-month period ended June 30, 2019 and an immaterial amount for the three- and six-month periods in 2018, respectively, have been reclassified from realized investment gains (losses) and included in adjusted earnings as a component of net investment income.



	Three Months Ended June 30,						Six Months Ended June 30,
(In millions)	2019			2018			2019			2018
Pretax earnings:
Aflac Japan	$	831		$	836		$	1,666		$	1,654
Aflac U.S.	338			340			661			677
Corporate and other	(26		)	(38		)	(45		)	(84		)
Pretax adjusted earnings	1,143			1,138			2,282			2,247
Realized investment gains (losses) ^{(1),(2),(3),(4)}	(34		)	35			70			(63		)
Other income (loss)	0			(42		)	(1		)	(70		)
Total earnings before income taxes	$	1,109		$	1,131		$	2,351		$	2,114
Income taxes applicable to pretax adjusted earnings	$	297		$	303		$	587		$	592
Effect of foreign currency translation on after-tax adjusted earnings	(4		)	7			(13		)	29

⁽¹⁾Amortizedhedge costs of $62 and $55 for the three-month periods and $124 and $110 for the six-month periods ended June 30, 2019, and 2018, respectively, related to certain foreign currency management strategies have been reclassified from realized investment gains (losses) and reported as a deduction from pretax adjusted earnings when analyzing operations.

⁽²⁾ Amortized hedge income of $20 and $7 for the three-month periods and $40 and $9 for the six-month periods ended June 30, 2019, and 2018, respectively, related to certain foreign currency management strategies has been reclassified from realized investment gains (losses) and reported as an increase in pretax adjusted earnings when analyzing operations.

⁽³⁾ Net interest cash flows from derivatives associated with certain investment strategies of $(7) for the three-month period and $(14) for the six-month period ended June 30, 2019 and and an immaterial amount for the three- and six-month periods in 2018, respectively, have been reclassified from realized investment gains (losses) and included in adjusted earnings as a component of net investment income.

⁽⁴⁾A gain of $17 for the three-month periods and $33 for the six-month periods ended June 30, 2019, and 2018, respectively, related to the interest rate component of the change in fair value of foreign currency swaps on notes payable have been reclassified from realized investment gains (losses) and included in adjusted earnings when analyzing operations

Assets were as follows:



(In millions)	June 30, 2019			December 31, 2018
Assets:
Aflac Japan		$	128,329		$	118,342
Aflac U.S.		20,881			19,100
Corporate and other		2,190			2,964
Total assets		$	151,400		$	140,406