BUSINESS SEGMENT INFORMATION

3 Months Ended

Mar. 31, 2020

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 net 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 March 31,
(In millions)	2020			2019
Revenues:
Aflac Japan:
Net earned premiums	$	3,150		$	3,180
Adjusted net investment income ^(1),(2)	642			610
Other income	11			12
Total adjusted revenue Aflac Japan	3,803			3,802
Aflac U.S.:
Net earned premiums	1,483			1,461
Net investment income	177			177
Other income	27			2
Total adjusted revenue Aflac U.S.	1,687			1,640
Corporate and other ⁽³⁾	104			95
Total adjusted revenues	5,594			5,537
Net investment gains (losses) ^(1),(2),(3)	(432		)	120
Total revenues	$	5,162		$	5,657

⁽¹⁾Amortized hedge costs of $55 and $62 for the three-month periods ended March 31, 2020, and 2019, respectively, related to certain foreign currency exposure management strategies have been reclassified from net 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 $(6) and $(7) for the three-month periods ended March 31, 2020 and 2019, respectively, have been reclassified from net investment gains (losses) and included in adjusted earnings as a component of net investment income.

⁽³⁾ Amortized hedge income of $29 and $20 for the three-month periods ended March 31, 2020, and 2019, respectively, related to certain foreign currency exposure management strategies has been reclassified from net investment gains (losses) and reported as an increase to net investment income when analyzing operations.



	Three Months Ended March 31,
(In millions)	2020			2019
Pretax adjusted earnings:
Aflac Japan ^(1),(2)	$	855		$	834
Aflac U.S.	326			323
Corporate and other ^(3),(4)	2			(18		)
Pretax adjusted earnings ⁽⁵⁾	1,183			1,139
Net investment gains (losses) ^{(1),(2),(3),(4)}	(448		)	103
Other income (loss)	(15		)	0
Total earnings before income taxes	$	720		$	1,242
Income taxes applicable to pretax adjusted earnings	$	301		$	291
Effect of foreign currency translation on after-tax adjusted earnings	9			(8		)

⁽¹⁾Amortizedhedge costs of $55 and $62 for the three-month periods ended March 31, 2020, and 2019, respectively, related to certain foreign currency exposure management strategies have been reclassified from net investment gains (losses) and reported as a deduction from net investment income when analyzing operations.

⁽³⁾ Amortized hedge income of $29 and $20 for the three-month periods ended March 31, 2020, and 2019, respectively, related to certain foreign currency exposure management strategies has been reclassified from net investment gains (losses) and reported as an increase in net investment income when analyzing operations.

⁽⁴⁾A gain of $16 and $17 for the three-month periods ended March 31, 2020, and 2019, respectively, related to the interest rate component of the change in fair value of foreign currency swaps on notes payable has been reclassified from net investment gains (losses) and included in adjusted earnings when analyzing operations.

⁽⁵⁾Includes $33 for the three-month periods ended March 31, 2020, and 2019, respectively, of interest expense on debt.

Assets were as follows:



(In millions)	March 31, 2020			December 31, 2019
Assets:
Aflac Japan		$	126,955		$	127,523
Aflac U.S.		20,526			20,945
Corporate and other		4,135			4,300
Total assets		$	151,616		$	152,768