(State or other jurisdiction | (Commission | (IRS Employer | ||
of incorporation) | File Number) | Identification No.) | ||
(Address of principal executive offices) | (Zip Code) |
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) | ||
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) | ||
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) | ||
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||
Exhibit Number | Exhibit Title or Description | |||
Press release of Aflac Incorporated dated February 4, 2020 | ||||
104 | Cover Page Interactive Data File (the cover page XBRL tags are embedded within the Inline XBRL document) |
Aflac Incorporated | ||||
February 4, 2020 | /s/ June Howard | |||
(June Howard) | ||||
Senior Vice President, Financial Services | ||||
Chief Accounting Officer |
AFLAC INCORPORATED AND SUBSIDIARIES CONDENSED INCOME STATEMENT | |||||||||||
(UNAUDITED – IN MILLIONS, EXCEPT FOR SHARE AND PER-SHARE AMOUNTS) | |||||||||||
THREE MONTHS ENDED DECEMBER 31, | 2019 | 2018 | % Change | ||||||||
Total revenues | $ | 5,603 | $ | 5,126 | 9.3 | % | |||||
Benefits and claims, net | 2,985 | 2,925 | 2.1 | ||||||||
Total acquisition and operating expenses | 1,560 | 1,479 | 5.5 | ||||||||
Earnings before income taxes | 1,058 | 722 | 46.5 | ||||||||
Income taxes | 276 | 197 | |||||||||
Net earnings | $ | 782 | $ | 525 | 49.0 | % | |||||
Net earnings per share – basic | $ | 1.07 | $ | 0.69 | 55.1 | % | |||||
Net earnings per share – diluted | 1.06 | 0.69 | 53.6 | ||||||||
Shares used to compute earnings per share (000): | |||||||||||
Basic | 733,358 | 760,037 | (3.5 | )% | |||||||
Diluted | 737,463 | 765,103 | (3.6 | ) | |||||||
Dividends paid per share | $ | 0.27 | $ | 0.26 | 3.8 | % |
AFLAC INCORPORATED AND SUBSIDIARIES CONDENSED INCOME STATEMENT | |||||||||||
(UNAUDITED – IN MILLIONS, EXCEPT FOR SHARE AND PER-SHARE AMOUNTS) | |||||||||||
TWELVE MONTHS ENDED DECEMBER 31, | 2019 | 2018 | % Change | ||||||||
Total revenues | $ | 22,307 | $ | 21,758 | 2.5 | % | |||||
Benefits and claims, net | 11,942 | 12,000 | (0.5 | ) | |||||||
Total acquisition and operating expenses | 5,920 | 5,775 | 2.5 | ||||||||
Earnings before income taxes | 4,445 | 3,983 | 11.6 | ||||||||
Income taxes | 1,141 | 1,063 | |||||||||
Net earnings | $ | 3,304 | $ | 2,920 | 13.2 | % | |||||
Net earnings per share – basic | $ | 4.45 | $ | 3.79 | 17.4 | % | |||||
Net earnings per share – diluted | 4.43 | 3.77 | 17.5 | ||||||||
Shares used to compute earnings per share (000): | |||||||||||
Basic | 742,414 | 769,588 | (3.5 | )% | |||||||
Diluted | 746,430 | 774,650 | (3.6 | ) | |||||||
Dividends paid per share | $ | 1.08 | $ | 1.04 | 3.8 | % |
AFLAC INCORPORATED AND SUBSIDIARIES CONDENSED BALANCE SHEET | |||||||||||
(UNAUDITED – IN MILLIONS, EXCEPT FOR SHARE AMOUNTS) | |||||||||||
DECEMBER 31, | 2019 | 2018 | % Change | ||||||||
Assets: | |||||||||||
Total investments and cash | $ | 138,091 | $ | 126,243 | 9.4 | % | |||||
Deferred policy acquisition costs | 10,128 | 9,875 | 2.6 | ||||||||
Other assets | 4,549 | 4,288 | 6.1 | ||||||||
Total assets | $ | 152,768 | $ | 140,406 | 8.8 | % | |||||
Liabilities and shareholders’ equity: | |||||||||||
Policy liabilities | $ | 106,554 | $ | 103,188 | 3.3 | % | |||||
Notes payable and lease obligations | 6,569 | 5,778 | 13.7 | ||||||||
Other liabilities | 10,686 | 7,978 | 33.9 | ||||||||
Shareholders’ equity | 28,959 | 23,462 | 23.4 | ||||||||
Total liabilities and shareholders’ equity | $ | 152,768 | $ | 140,406 | 8.8 | % | |||||
Shares outstanding at end of period (000) | 726,793 | 755,286 | (3.8 | )% |
• | 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 the company's underlying business performance. The most comparable U.S. GAAP measure is net earnings. |
• | Adjusted earnings per share (basic or diluted) are the adjusted earnings for the period divided by the weighted average outstanding shares (basic or diluted) for the period presented. The most comparable U.S. GAAP measure is net earnings per share. |
• | Adjusted return on equity excluding foreign currency impact is calculated using adjusted earnings excluding the impact of the yen/dollar exchange rate, as reconciled with total U.S. GAAP net earnings, divided by average shareholders’ equity, excluding AOCI. The most comparable U.S. GAAP financial measure is return on average equity (ROE) as determined using net earnings and average total shareholders’ equity. |
• | Amortized hedge costs/income represent costs/income incurred or recognized in using foreign currency forward contracts to hedge certain foreign exchange risks in the company's Japan segment (costs) or in the Corporate and Other segment (income). These amortized hedge costs/income are derived from the difference between the foreign currency spot rate at time of trade inception and the contractual foreign currency forward rate, recognized on a straight line basis over the term of the hedge. There is no comparable U.S. GAAP financial measure for amortized hedge costs/income. |
• | Adjusted book value is the U.S. GAAP book value (representing total shareholders' equity), less AOCI as recorded on the U.S. GAAP balance sheet. The company considers adjusted book value important as it excludes AOCI, which fluctuates due to market movements that are outside management's control. |
• | Adjusted book value per share is the adjusted book value at the period end divided by the outstanding common shares at the period end. The most comparable U.S. GAAP measure is total book value per share. |
RECONCILIATION OF NET EARNINGS TO ADJUSTED EARNINGS1 | |||||||||||
(UNAUDITED – IN MILLIONS, EXCEPT FOR PER-SHARE AMOUNTS) | |||||||||||
THREE MONTHS ENDED DECEMBER 31, | 2019 | 2018 | % Change | ||||||||
Net earnings | $ | 782 | $ | 525 | 49.0 | % | |||||
Items impacting net earnings: | |||||||||||
Realized investment (gains) losses | (34 | ) | 322 | ||||||||
Other and non-recurring (income) loss | — | 2 | |||||||||
Income tax (benefit) expense on items excluded from adjusted earnings | 12 | (77 | ) | ||||||||
Tax reform adjustment 4 | (4 | ) | 7 | ||||||||
Adjusted earnings | 756 | 779 | (3.0 | )% | |||||||
Current period foreign currency impact 2 | (13 | ) | N/A | ||||||||
Adjusted earnings excluding current period foreign currency impact 3 | $ | 744 | $ | 779 | (4.5 | )% | |||||
Net earnings per diluted share | $ | 1.06 | $ | 0.69 | 53.6 | % | |||||
Items impacting net earnings: | |||||||||||
Realized investment (gains) losses | (0.05 | ) | 0.42 | ||||||||
Other and non-recurring (income) loss | — | — | |||||||||
Income tax (benefit) expense on items excluded from adjusted earnings | 0.02 | (0.10 | ) | ||||||||
Tax reform adjustment 4 | (0.01 | ) | 0.01 | ||||||||
Adjusted earnings per diluted share | 1.03 | 1.02 | 1.0 | % | |||||||
Current period foreign currency impact 2 | (0.02 | ) | N/A | ||||||||
Adjusted earnings per diluted share excluding current period foreign currency impact 3 | $ | 1.01 | $ | 1.02 | (1.0 | )% |
1 | Amounts may not foot due to rounding. |
2 | Prior period foreign currency impact reflected as “N/A” to isolate change for current period only. |
3 | Amounts excluding current period foreign currency impact are computed using the average yen/dollar exchange rate for the comparable prior-year period, which eliminates fluctuations driven solely by yen-to-dollar currency rate changes. |
4 | The impact of Tax Reform was adjusted in 2018 for return-to-provision adjustments, various amended returns filed by the company, and final true-ups of deferred tax liabilities. Further impacts were recorded in 2019 as a result of additional guidance released by the IRS. |
RECONCILIATION OF NET EARNINGS TO ADJUSTED EARNINGS1 | |||||||||||
(UNAUDITED – IN MILLIONS, EXCEPT FOR PER-SHARE AMOUNTS) | |||||||||||
TWELVE MONTHS ENDED DECEMBER 31, | 2019 | 2018 | % Change | ||||||||
Net earnings | $ | 3,304 | $ | 2,920 | 13.2 | % | |||||
Items impacting net earnings: | |||||||||||
Realized investment (gains) losses | 15 | 297 | |||||||||
Other and non-recurring (income) loss | 1 | 75 | |||||||||
Income tax (benefit) expense on items excluded from adjusted earnings | (3 | ) | (83 | ) | |||||||
Tax reform adjustment 4 | (4 | ) | 18 | ||||||||
Adjusted earnings | 3,314 | 3,226 | 2.7 | % | |||||||
Current period foreign currency impact 2 | (15 | ) | N/A | ||||||||
Adjusted earnings excluding current period foreign currency impact 3 | $ | 3,299 | $ | 3,226 | 2.3 | % | |||||
Net earnings per diluted share | $ | 4.43 | $ | 3.77 | 17.5 | % | |||||
Items impacting net earnings: | |||||||||||
Realized investment (gains) losses | 0.02 | 0.38 | |||||||||
Other and non-recurring (income) loss | — | 0.10 | |||||||||
Income tax (benefit) expense on items excluded from adjusted earnings | — | (0.11 | ) | ||||||||
Tax reform adjustment 4 | (0.01 | ) | 0.02 | ||||||||
Adjusted earnings per diluted share | 4.44 | 4.16 | 6.7 | % | |||||||
Current period foreign currency impact 2 | (0.02 | ) | N/A | ||||||||
Adjusted earnings per diluted share excluding current period foreign currency impact 3 | $ | 4.42 | $ | 4.16 | 6.3 | % |
1 | Amounts may not foot due to rounding. |
2 | Prior period foreign currency impact reflected as “N/A” to isolate change for current period only. |
3 | Amounts excluding current period foreign currency impact are computed using the average yen/dollar exchange rate for the comparable prior-year period, which eliminates fluctuations driven solely by yen-to-dollar currency rate changes. |
4 | The impact of Tax Reform was adjusted in 2018 for return-to-provision adjustments, various amended returns filed by the company, and final true-ups of deferred tax liabilities. Further impacts were recorded in 2019 as a result of additional guidance released by the IRS. |
RECONCILIATION OF U.S. GAAP BOOK VALUE TO ADJUSTED BOOK VALUE 1 | |||||||||||
(UNAUDITED - IN MILLIONS, EXCEPT FOR SHARE AND PER-SHARE AMOUNTS) | |||||||||||
DECEMBER 31, | 2019 | 2018 | % Change | ||||||||
U.S. GAAP book value | $ | 28,959 | $ | 23,462 | |||||||
Less: | |||||||||||
Unrealized foreign currency translation gains (losses) | (1,623 | ) | (1,847 | ) | |||||||
Unrealized gains (losses) on securities and derivatives | 8,515 | 4,210 | |||||||||
Pension liability adjustment | (277 | ) | (212 | ) | |||||||
Total AOCI | 6,615 | 2,151 | |||||||||
Adjusted book value 2 | $ | 22,344 | $ | 21,311 | |||||||
Add: | |||||||||||
Unrealized foreign currency translation gains (losses) | (1,623 | ) | (1,847 | ) | |||||||
Adjusted book value including unrealized foreign currency translation gains (losses) 3 | $ | 20,721 | $ | 19,464 | |||||||
Number of outstanding shares at end of period (000) | 726,793 | 755,286 | |||||||||
U.S. GAAP book value per common share | $ | 39.84 | $ | 31.06 | 28.3 | % | |||||
Less: | |||||||||||
Unrealized foreign currency translation gains (losses) per common share | (2.23 | ) | (2.45 | ) | |||||||
Unrealized gains (losses) on securities and derivatives per common share | 11.72 | 5.57 | |||||||||
Pension liability adjustment per common share | (0.38 | ) | (0.28 | ) | |||||||
Total AOCI per common share | 9.10 | 2.85 | |||||||||
Adjusted book value per common share 4 | $ | 30.74 | $ | 28.22 | 8.9 | % | |||||
Add: | |||||||||||
Unrealized foreign currency translation gains (losses) per common share | (2.23 | ) | (2.45 | ) | |||||||
Adjusted book value including foreign currency translation gains (losses) per common share 3 | $ | 28.51 | $ | 25.77 | 10.6 | % |
1 | Amounts may not foot due to rounding. |
2 | Adjusted book value is the U.S. GAAP book value (representing total shareholder's equity), excluding AOCI (as recorded on the U.S. GAAP balance sheet). |
3 | Adjusted book value including unrealized foreign currency translation gains (losses) is adjusted book value plus unrealized foreign currency translation gains (losses). |
RECONCILIATION OF U.S. GAAP RETURN ON EQUITY (ROE) TO ADJUSTED ROE 1 | ||||||
(EXCLUDING IMPACT OF FOREIGN CURRENCY) | ||||||
THREE MONTHS ENDED DECEMBER 31, | 2019 | 2018 | ||||
Net earnings - U.S. GAAP ROE 2 | 10.7 | % | 9.0 | % | ||
Impact of excluding unrealized foreign currency translation gains (losses) | (0.7 | ) | (0.9 | ) | ||
Impact of excluding unrealized gains (losses) on securities and derivatives | 4.2 | 1.9 | ||||
Impact of excluding pension liability adjustment | (0.1 | ) | (0.1 | ) | ||
Impact of excluding AOCI | 3.3 | 0.9 | ||||
U.S. GAAP ROE - less AOCI | 14.0 | 9.9 | ||||
Differences between adjusted earnings and net earnings 3 | (0.5 | ) | 4.8 | |||
Adjusted ROE - reported | 13.6 | 14.6 | ||||
Less: Impact of foreign currency 4 | 0.2 | N/A | ||||
Adjusted ROE, excluding impact of foreign currency | 13.4 | 14.6 |
1 | Amounts presented may not foot due to rounding. |
2 | U.S. GAAP ROE is calculated by dividing net earnings (annualized) by average shareholders' equity. |
3 | See separate reconciliation of net income to adjusted earnings. |
4 | Impact of foreign currency is calculated by restating all yen components of the income statement to the weighted average yen rate for the comparable prior year period. The impact is the difference of the restated adjusted earnings compared to reported adjusted earnings. For comparative purposes, only current period income is restated using the weighted average prior period exchange rate, which eliminates the foreign currency impact for the current period. This allows for equal comparison of this financial measure. |
RECONCILIATION OF U.S. GAAP RETURN ON EQUITY (ROE) TO ADJUSTED ROE 1 | ||||||
(EXCLUDING IMPACT OF FOREIGN CURRENCY) | ||||||
TWELVE MONTHS ENDED DECEMBER 31, | 2019 | 2018 | ||||
Net earnings - U.S. GAAP ROE 2 | 12.6 | % | 12.2 | % | ||
Impact of excluding unrealized foreign currency translation gains (losses) | (1.0 | ) | (1.0 | ) | ||
Impact of excluding unrealized gains (losses) on securities and derivatives | 3.6 | 3.0 | ||||
Impact of excluding pension liability adjustment | (0.1 | ) | (0.1 | ) | ||
Impact of excluding AOCI | 2.5 | 1.8 | ||||
U.S. GAAP ROE - less AOCI | 15.1 | 13.9 | ||||
Differences between adjusted earnings and net earnings 3 | — | 1.5 | ||||
Adjusted ROE - reported | 15.2 | 15.4 | ||||
Less: Impact of foreign currency 4 | 0.1 | N/A | ||||
Adjusted ROE, excluding impact of foreign currency | 15.1 | 15.4 |
1 | Amounts presented may not foot due to rounding. |
2 | U.S. GAAP ROE is calculated by dividing net earnings (annualized) by average shareholders' equity. |
3 | See separate reconciliation of net income to adjusted earnings. |
4 | Impact of foreign currency is calculated by restating all yen components of the income statement to the weighted average yen rate for the comparable prior year period. The impact is the difference of the restated adjusted earnings compared to reported adjusted earnings. For comparative purposes, only current period income is restated using the weighted average prior period exchange rate, which eliminates the foreign currency impact for the current period. This allows for equal comparison of this financial measure. |
EFFECT OF FOREIGN CURRENCY ON ADJUSTED RESULTS1 | ||||||
(SELECTED PERCENTAGE CHANGES, UNAUDITED) | ||||||
THREE MONTHS ENDED DECEMBER 31, 2019 | Including Currency Changes | Excluding Currency Changes2 | ||||
Net premium income 3 | 1.7 | % | (0.9 | )% | ||
Net investment income 4 | 2.9 | 1.5 | ||||
Total benefits and expenses | 3.2 | 0.5 | ||||
Adjusted earnings | (3.0 | ) | (4.5 | ) | ||
Adjusted earnings per diluted share | 1.0 | (1.0 | ) |
1 | Refer to previously defined adjusted earnings and adjusted earnings per diluted share. |
2 | Amounts excluding currency changes were determined using the same yen/dollar exchange rate for the current period as the comparable period in the prior year, which eliminates dollar-based fluctuations driven solely from currency rate changes. |
3 | Net of reinsurance |
4 | Less amortized hedge costs/income on foreign investments |
EFFECT OF FOREIGN CURRENCY ON ADJUSTED RESULTS1 | ||||||
(SELECTED PERCENTAGE CHANGES, UNAUDITED) | ||||||
TWELVE MONTHS ENDED DECEMBER 31, 2019 | Including Currency Changes | Excluding Currency Changes2 | ||||
Net premium income 3 | 0.6 | % | (0.3 | )% | ||
Net investment income 4 | 4.7 | 4.1 | ||||
Total benefits and expenses | 0.9 | 0.0 | ||||
Adjusted earnings | 2.7 | 2.3 | ||||
Adjusted earnings per diluted share | 6.7 | 6.3 |
1 | Refer to previously defined adjusted earnings and adjusted earnings per diluted share. |
2 | Amounts excluding currency changes were determined using the same yen/dollar exchange rate for the current period as the comparable period in the prior year, which eliminates dollar-based fluctuations driven solely from currency rate changes. |
3 | Net of reinsurance |
4 | Less amortized hedge costs/income on foreign investments |
2020 ADJUSTED EARNINGS PER SHARE1 SCENARIOS2 | ||||||||||||||
Weighted-Average Yen/Dollar Exchange Rate | Adjusted Earnings Per Diluted Share | Foreign Currency Impact | ||||||||||||
100 | $ 4.46 | - | $ 4.66 | $ 0.18 | ||||||||||
105 | 4.39 | - | 4.59 | 0.09 | ||||||||||
110 | 4.30 | - | 4.50 | — | ||||||||||
115 | 4.23 | - | 4.43 | (0.07) | ||||||||||
120 | 4.16 | - | 4.36 | (0.14) |
1 | A non-U.S. GAAP financial measure, adjusted earnings per share (basic or diluted) are the adjusted earnings for the period divided by the weighted average outstanding shares (basic or diluted) for the period presented. In reliance on the “unreasonable efforts” exception in Item 10(e)(1)(i)(B) of SEC Regulation S-K, a quantitative reconciliation to the most comparable U.S. GAAP measure is not provided for this financial measure. Forward-looking information with regard to the most comparable U.S. GAAP financial measure, earnings per share, is not available without unreasonable effort. This is due to the unpredictable and uncontrollable nature of these reconciling items, which would require an unreasonable effort to forecast and we believe would result in such a broad range of projected values that would not be meaningful to investors. For this reason, we believe that the probable significance of such information is low. |
2 | Table recasts all quarters to the average exchange rate. |
• | events related to the ongoing Japan Post investigation |
• | difficult conditions in global capital markets and the economy |
• | exposure to significant interest rate risk |
• | concentration of business in Japan |
• | foreign currency fluctuations in the yen/dollar exchange rate |
• | limited availability of acceptable yen-denominated investments |
• | U.S. tax audit risk related to conversion of the Japan branch to a subsidiary |
• | deviations in actual experience from pricing and reserving assumptions |
• | ability to continue to develop and implement improvements in information technology systems |
• | competitive environment and ability to anticipate and respond to market trends |
• | ability to protect the Aflac brand and the Company's reputation |
• | ability to attract and retain qualified sales associates, brokers, employees, and distribution partners |
• | interruption in telecommunication, information technology and other operational systems, or a failure to maintain the security, confidentiality or privacy of sensitive data residing on such systems |
• | failure to comply with restrictions on patient privacy and information security |
• | extensive regulation and changes in law or regulation by governmental authorities |
• | tax rates applicable to the Company may change |
• | defaults and credit downgrades of investments |
• | decline in creditworthiness of other financial institutions |
• | significant valuation judgments in determination of amount of impairments taken on the Company's investments |
• | subsidiaries' ability to pay dividends to the Parent Company |
• | decreases in the Company's financial strength or debt ratings |
• | inherent limitations to risk management policies and procedures |
• | concentration of the Company's investments in any particular single-issuer or sector |
• | differing judgments applied to investment valuations |
• | ability to effectively manage key executive succession |
• | catastrophic events including, but not necessarily limited to, epidemics, pandemics, tornadoes, hurricanes, earthquakes, tsunamis, war or other military action, terrorism or other acts of violence, and damage incidental to such events |
• | changes in accounting standards |
• | increased expenses and reduced profitability resulting from changes in assumptions for pension and other postretirement benefit plans |
• | level and outcome of litigation |
• | allegations or determinations of worker misclassification in the United States |
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Document and Entity Information Document |
Feb. 04, 2020 |
---|---|
Entity Central Index Key | 0000004977 |
Document Type | 8-K |
Document Period End Date | Feb. 04, 2020 |
Entity Registrant Name | Aflac Incorporated |
Entity Incorporation, State or Country Code | GA |
Entity File Number | 001-07434 |
Entity Tax Identification Number | 58-1167100 |
Entity Address, Address Line One | 1932 Wynnton Road |
Entity Address, City or Town | Columbus |
Written Communications | false |
Entity Address, State or Province | GA |
Entity Address, Postal Zip Code | 31999 |
City Area Code | 706 |
Local Phone Number | 323.3431 |
Soliciting Material | false |
Pre-commencement Tender Offer | false |
Pre-commencement Issuer Tender Offer | false |
Entity Emerging Growth Company | false |
Amendment Flag | false |
NEW YORK STOCK EXCHANGE, INC. [Member] | |
Title of 12(b) Security | Common Stock, $.10 Par Value |
Trading Symbol | AFL |
Security Exchange Name | NYSE |
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