DEFERRED POLICY ACQUISITION COSTS

9 Months Ended

Sep. 30, 2023

DEFERRED POLICY ACQUISITION COSTSThe following tables present a rollforward of deferred policy acquisition costs by reporting segment and disaggregated by product type.


	September 30, 2023
	Aflac Japan								Aflac U.S.
(In millions)	Cancer		Medical and Other Health		Life Insurance		Other		Accident		Disability		Critical Care		Hospital Indemnity		Dental/Vision		Life Insurance		Other		Total
Deferred policy acquisition costs:
Balance at December 31, 2022	$	3,035	$	2,161	$	525	$	55	$	904	$	613	$	1,304	$	418	$	88	$	135	$	1	$	9,239
Capitalization	247		93		26		7		109		90		122		60		7		43		0		804
Amortization expense	(139)		(80)		(26)		(2)		(103)		(84)		(102)		(48)		(9)		(18)		3		(608)

Foreign currency translation and other	(352)		(244)		(58)		(7)		0		0		0		0		0		0		(3)		(664)
Balance at September 30, 2023	$	2,791	$	1,930	$	467	$	53	$	910	$	619	$	1,324	$	430	$	86	$	160	$	1	$	8,771


	December 31, 2022
	Aflac Japan								Aflac U.S.
(In millions)	Cancer		Medical and Other Health		Life Insurance		Other		Accident		Disability		Critical Care		Hospital Indemnity		Dental/Vision		Life Insurance		Other		Total
Deferred policy acquisition costs:
Balance at December 31, 2021	$	3,464	$	2,372	$	595	$	51	$	887	$	604	$	1,270	$	399	$	90	$	115	$	1	$	9,848
Capitalization	291		161		33		12		147		117		160		80		11		40		0		1,052
Amortization expense	(188)		(112)		(35)		(3)		(130)		(108)		(126)		(61)		(13)		(20)		4		(792)

Foreign currency translation and other	(532)		(260)		(68)		(5)		0		0		0		0		0		0		(4)		(869)
Balance at December 31, 2022	$	3,035	$	2,161	$	525	$	55	$	904	$	613	$	1,304	$	418	$	88	$	135	$	1	$	9,239

The Company uses the following constant level bases to amortize deferred policy acquisition costs:


Policy Type						Constant-level Basis
Life Products (U.S.)						Face Amount
Health Products (U.S.)						Number of Policies in Force
Health & Life Products (Japan)						Units in Force

Face amount is the stated dollar amount that the policy’s beneficiaries receive upon the death of the insured. For life and health products issued in Japan, the constant-level basis used is units in force, which is a proxy for face amount and insurance in force, respectively. Future DAC amortization is impacted by persistency.

There were no changes to the inputs or methods used to determine amortization amounts during the nine-month periods ended September 30, 2023 and 2022. The Company updated the assumptions used to determine amortization using the same assumptions as those used for measuring the liability for future policy benefits during the nine-month periods ended September 30, 2023 and 2022. The Company recognizes the effects of changes in assumptions prospectively over the remaining contract term as a revision of the future amortization pattern. See Note 1 for more information on deferred policy acquisition costs.