BUSINESS SEGMENT INFORMATION

9 Months Ended

Sep. 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 September 30,					Nine Months Ended September 30,
(In millions)	2019			2018		2019		2018
Revenues:
Aflac Japan:
Net earned premiums	$	3,241		$	3,159	$	9,593	$	9,649
Net investment income, less amortized hedge costs ^(1),(2)	659			606		1,878		1,801
Other income	12			10		34		31
Total Aflac Japan	3,912			3,775		11,505		11,481
Aflac U.S.:
Net earned premiums	1,445			1,426		4,365		4,280
Net investment income	183			187		540		544
Other income	2			3		6		7
Total Aflac U.S.	1,630			1,616		4,911		4,831
Corporate and other ⁽³⁾	97			82		287		245
Total adjusted revenues	5,639			5,473		16,703		16,557
Realized investment gains (losses) ^(1),(2),(3)	(103		)	104		1		75
Total revenues	$	5,536		$	5,577	$	16,704	$	16,632

⁽¹⁾Amortized hedge costs of $66 and $59 for the three-month periods and $191 and $168 for the nine-month periods ended September 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⁾ Net interest cash flows from derivatives associated with certain investment strategies of $(4) for the three-month period and $(18) for the nine-month period ended September 30, 2019 and an immaterial amount for the three- and nine-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.

⁽³⁾ Amortized hedge income of $21 and $9 for the three-month periods and $61 and $18 for the nine-month periods ended September 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.



	Three Months Ended September 30,						Nine Months Ended September 30,
(In millions)	2019			2018			2019			2018
Pretax earnings:
Aflac Japan ^(1),(2)	$	838		$	756		$	2,504		$	2,411
Aflac U.S.	335			334			996			1,011
Corporate and other ^(3),(4)	(17		)	(29		)	(62		)	(113		)
Pretax adjusted earnings	1,156			1,061			3,438			3,309
Realized investment gains (losses) ^{(1),(2),(3),(4)}	(120		)	88			(49		)	25
Other income (loss)	0			(3		)	(1		)	(73		)
Total earnings before income taxes	$	1,036		$	1,146		$	3,388		$	3,261
Income taxes applicable to pretax adjusted earnings	$	293		$	270		$	880		$	862
Effect of foreign currency translation on after-tax adjusted earnings	15			(1		)	2			27

⁽¹⁾Amortizedhedge costs of $66 and $59 for the three-month periods and $191 and $168 for the nine-month periods ended September 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.

⁽³⁾ Amortized hedge income of $21 and $9 for the three-month periods and $61 and $18 for the nine-month periods ended September 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.

⁽⁴⁾A gain of $16 and $17 for the three-month periods ended September 30, 2019, and 2018, respectively and $50 for both nine-month periods ended September 30, 2019, and 2018, 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)	September 30, 2019			December 31, 2018
Assets:
Aflac Japan		$	129,178		$	118,342
Aflac U.S.		21,247			19,100
Corporate and other		3,712			2,964
Total assets		$	154,137		$	140,406