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POLICY LIABILITIES (Tables)

9 Months Ended

Sep. 30, 2023

Schedule of Changes in Present Value of Expected Net Premiums and Expected Future Policy Benefits

The following tables present the changes in the present value of expected future net premiums and the present value of expected future policy benefits by reporting segment and disaggregated by product type. The present value of expected future net premiums and the present value of expected future policy benefits are presented gross of internal and external reinsurance.


	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
Present value of expected future net premiums:
Balance at December 31, 2022	$	19,298	$	16,714	$	7,485	$	1,256	$	2,534	$	1,635	$	4,486	$	1,220	$	211	$	724	$	110
Beginning balance at original discount rate	18,221		16,195		7,284		1,242		2,760		1,775		5,050		1,365		231		799		118
Effect of changes in cash flow assumptions	(166)		(473)		44		(12)		(16)		(51)		(494)		(142)		(9)		61		(9)
Effect of actual variances from expected experience	(261)		(90)		(34)		(9)		(44)		(6)		(154)		(48)		(13)		(9)		2
Adjusted beginning of period balance	17,794		15,632		7,294		1,221		2,700		1,718		4,402		1,175		209		851		111
Issuances	770		285		267		19		256		293		397		203		31		137		76
Interest accrual	312		255		94		15		77		46		137		34		6		23		4
Net premiums collected (1)	(1,182)		(959)		(778)		(85)		(356)		(292)		(440)		(187)		(30)		(101)		(12)
Foreign currency translation	(2,023)		(1,767)		(798)		(137)		0		0		0		0		0		0		0
Other	(1)		(1)		0		0		(5)		(6)		(5)		(3)		1		1		8
Ending balance at original discount rate	15,670		13,445		6,079		1,033		2,672		1,759		4,491		1,222		217		911		187
Effect of changes in discount rate assumptions	823		449		171		9		(283)		(162)		(630)		(150)		(23)		(105)		(15)
Balance at September 30, 2023	$	16,493	$	13,894	$	6,250	$	1,042	$	2,389	$	1,597	$	3,861	$	1,072	$	194	$	806	$	172
Present value of expected future policy benefits:
Balance at December 31, 2022	$	54,766	$	27,419	$	31,954	$	5,582	$	3,098	$	2,445	$	11,489	$	2,074	$	488	$	1,526	$	622
Beginning balance at original discount rate	47,677		27,566		32,800		5,940		3,391		2,636		12,846		2,300		532		1,778		624
Effect of changes in cash flow assumptions	(148)		(510)		66		(27)		(11)		(59)		(592)		(194)		(14)		72		(13)
Effect of actual variances from expected experience	(314)		(102)		(43)		(7)		(61)		(21)		(188)		(68)		(17)		(12)		2
Adjusted beginning of period balance	47,215		26,954		32,823		5,906		3,319		2,556		12,066		2,038		501		1,838		613
Issuances	787		295		272		24		265		305		408		211		33		140		76
Interest accrual	1,116		461		472		76		95		72		396		64		15		50		24
Benefit payments	(2,245)		(883)		(1,090)		(154)		(340)		(349)		(668)		(207)		(44)		(81)		(35)
Foreign currency translation	(5,327)		(3,064)		(3,681)		(664)		0		0		0		0		0		0		0
Other	0		0		0		0		0		0		1		0		3		5		9
Ending balance at original discount rate	41,546		23,763		28,796		5,188		3,339		2,584		12,203		2,106		508		1,952		687
Effect of changes in discount rate assumptions	5,663		(170)		(868)		(332)		(375)		(233)		(1,743)		(259)		(58)		(344)		(35)
Balance at September 30, 2023	47,209		23,593		27,928		4,856		2,964		2,351		10,460		1,847		450		1,608		652
Net liability for future policy benefits	30,716		9,699		21,678		3,814		575		754		6,599		775		256		802		480
Less: reinsurance recoverable	1,952		1,422		0		0		0		0		0		0		0		11		0
Net liability for future policy benefits after reinsurance recoverable	$	28,764	$	8,277	$	21,678	$	3,814	$	575	$	754	$	6,599	$	775	$	256	$	791	$	480

(1) Net premiums collected represent the portion of gross premiums collected from policyholders that is used to fund expected future benefit payments.


	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
Present value of expected future net premiums:
Balance at December 31, 2021	$	25,893	$	21,174	$	10,847	$	1,586	$	3,283	$	1,862	$	6,023	$	1,467	$	264	$	834	$	153
Beginning balance at original discount rate	22,470		18,681		10,064		1,461		2,999		1,760		5,391		1,380		241		780		135
Effect of changes in cash flow assumptions	(639)		317		(494)		25		(52)		5		(38)		42		10		(1)		(12)
Effect of actual variances from expected experience	(284)		61		(81)		(10)		(152)		(43)		(421)		(111)		(20)		(16)		6
Adjusted beginning of period balance	21,547		19,059		9,489		1,476		2,795		1,722		4,932		1,311		231		763		129
Issuances	947		639		221		62		355		384		537		273		33		146		0
Interest accrual	459		364		146		22		105		57		193		45		9		27		5
Net premiums collected (1)	(1,734)		(1,376)		(1,229)		(123)		(496)		(382)		(612)		(261)		(42)		(131)		(17)
Foreign currency translation	(2,997)		(2,488)		(1,343)		(195)		0		0		0		0		0		0		0
Other	(1)		(3)		0		0		1		(6)		0		(3)		0		(6)		1
Ending balance at original discount rate	18,221		16,195		7,284		1,242		2,760		1,775		5,050		1,365		231		799		118
Effect of changes in discount rate assumptions	1,077		519		201		14		(226)		(140)		(564)		(145)		(20)		(75)		(8)
Balance at December 31, 2022	$	19,298	$	16,714	$	7,485	$	1,256	$	2,534	$	1,635	$	4,486	$	1,220	$	211	$	724	$	110
Present value of expected future policy benefits:
Balance at December 31, 2021	$	72,747	$	36,021	$	42,720	$	7,322	$	3,949	$	2,871	$	15,388	$	2,552	$	616	$	1,843	$	837
Beginning balance at original discount rate	56,807		31,398		39,002		6,787		3,594		2,670		13,079		2,300		549		1,694		645
Effect of changes in cash flow assumptions	(721)		352		(550)		96		(70)		5		(43)		40		13		(1)		(15)
Effect of actual variances from expected experience	(333)		83		(91)		(10)		(177)		(48)		(465)		(130)		(23)		(21)		7
Adjusted beginning of period balance	55,753		31,833		38,361		6,873		3,347		2,627		12,571		2,210		539		1,672		637
Issuances	960		646		222		68		364		397		550		282		34		149		0
Interest accrual	1,599		642		670		106		128		94		539		85		21		62		32
Benefit payments	(3,050)		(1,375)		(1,248)		(202)		(456)		(483)		(823)		(277)		(62)		(103)		(45)
Foreign currency translation	(7,585)		(4,180)		(5,205)		(905)		0		0		0		0		0		0		0
Other	0		0		0		0		8		1		9		0		0		(2)		0
Ending balance at original discount rate	47,677		27,566		32,800		5,940		3,391		2,636		12,846		2,300		532		1,778		624
Effect of changes in discount rate assumptions	7,089		(147)		(846)		(358)		(293)		(191)		(1,357)		(226)		(44)		(252)		(2)
Balance at December 31, 2022	54,766		27,419		31,954		5,582		3,098		2,445		11,489		2,074		488		1,526		622
Net liability for future policy benefits	35,468		10,705		24,469		4,326		564		810		7,003		854		277		802		512
Less: reinsurance recoverable	0		1,579		0		0		0		0		0		0		0		9		0
Net liability for future policy benefits after reinsurance recoverable	$	35,468	$	9,126	$	24,469	$	4,326	$	564	$	810	$	7,003	$	854	$	277	$	793	$	512

(1) Net premiums collected represent the portion of gross premiums collected from policyholders that is used to fund expected future benefit payments.

Schedule of Weighted-Average Interest Rate and Liability for Future Policy Benefit

The following tables present the weighted-average interest rates and weighted-average liability duration (calculated using the original discount rate) by reporting segment and disaggregated by product type.


	September 30, 2023
	Aflac Japan				Aflac U.S.
	Cancer	Medical and Other Health	Life Insurance	Other	Accident	Disability	Critical Care	Hospital Indemnity	Dental/Vision	Life Insurance	Other
Weighted-average interest, original discount rate (1)	3.9 %	2.6 %	2.1 %	1.8 %	3.9 %	4.2 %	4.6 %	4.4 %	4.3 %	3.7 %	5.4 %
Weighted-average interest, current discount rate (1)	1.8 %	2.3 %	1.7 %	2.0 %	5.4 %	5.4 %	5.4 %	5.4 %	5.4 %	5.4 %	5.4 %
Weighted-average liability duration (years)	13.1	25.2	16.4	17.5	8.3	5.5	11.3	9.3	8.0	13.9	9.5

(1) The weighted-average interest rates are calculated using the reserve balances as the weights. No adjustments were made to observable market information.


	December 31, 2022
	Aflac Japan				Aflac U.S.
	Cancer	Medical and Other Health	Life Insurance	Other	Accident	Disability	Critical Care	Hospital Indemnity	Dental/Vision	Life Insurance	Other
Weighted-average interest, original discount rate (1)	4.1 %	2.6 %	2.1 %	1.8 %	3.8 %	4.2 %	4.6 %	4.4 %	4.3 %	3.7 %	5.4 %
Weighted-average interest, current discount rate (1)	1.6 %	2.2 %	1.6 %	1.9 %	4.8 %	4.7 %	4.8 %	4.8 %	4.8 %	4.8 %	4.8 %
Weighted-average liability duration (years)	13.7	26.9	17.3	18.2	8.5	5.6	12.0	9.4	8.1	13.1	9.6

(1) The weighted-average interest rates are calculated using the reserve balances as the weights. No adjustments were made to observable market information.

Reconciliation of Future Policy Benefits

The following table presents a reconciliation of the disaggregated rollforwards above to the ending future policy benefits presented in the consolidated balance sheets. The deferred profit liability for limited-payment contracts and the deferred profit liability for reinsurance is presented together with the liability for future policy benefits in the consolidated balance sheets and has been included as a reconciling item in the table below.


(In millions)	September 30, 2023			December 31, 2022
Balances included in future policy benefits rollforward:
Aflac Japan
Cancer		$	30,716		$	35,468
Medical and other health		9,699			10,705
Life insurance		21,678			24,469
Other		3,814			4,326
Aflac U.S.
Accident		575			564
Disability		754			810
Critical care		6,599			7,003
Hospital indemnity		775			854
Dental/vision		256			277
Life insurance		802			802
Other		480			512
Corporate and other		2,375			686
Deferred profit liability - limited-payment contracts		1,669			1,740
Deferred profit liability - reinsurance		590			692
Intercompany eliminations (1)		(2,334)			(667)
Total		$	78,448		$	88,241

(1) Elimination entry necessary due to the internal reinsurance transaction with Aflac Re and to recapture a portion of policy liabilities ceded externally as a result of the reinsurance retrocession transaction. See Note 8 for additional details.

Summary of Net Earned Premiums Recognized

The following table summarizes the amount of net earned premiums recognized in the consolidated statements of earnings by reporting segment and disaggregated by product type.


	Three Months Ended September 30,				Nine Months Ended September 30,
(In millions)	2023		2022		2023		2022
Net earned premiums:
Aflac Japan
Cancer	$	1,004	$	1,106	$	3,154	$	3,640
Medical and other health	640		690		2,018		2,253
Life insurance	371		377		1,183		1,360
Other	38		39		113		124
Aflac U.S.
Accident	320		324		973		990
Disability	315		293		941		882
Critical care	436		434		1,317		1,319
Hospital indemnity	180		178		547		546
Dental/vision	53		50		160		148
Life insurance	122		99		351		297
Other	13		9		31		29
Corporate and other	83		35		258		112
Reinsurance ceded	(99)		(99)		(309)		(321)
Total	$	3,476	$	3,535	$	10,737	$	11,379

Summary of Interest Expense Related to Insurance Contracts Recognized

The following table summarizes the amount of interest expense related to insurance contracts recognized in total benefits and claims, net in the consolidated statements of earnings by reporting segment and disaggregated by product type.


	Three Months Ended September 30,				Nine Months Ended September 30,
(In millions)	2023		2022		2023		2022
Interest expense:
Aflac Japan
Cancer	$	243	$	242	$	804	$	868
Medical and other health	63		59		206		210
Life insurance	115		112		378		397
Other	19		18		61		63
Aflac U.S.
Accident	6		6		18		18
Disability	8		9		26		27
Critical care	86		87		259		259
Hospital indemnity	10		11		30		31
Dental/vision	3		3		9		10
Life insurance	8		9		27		26
Other	7		7		20		20

Total	$	568	$	563	$	1,838	$	1,929

Summary of Undiscounted and Discounted Expected Future Gross Premiums and Future Benefits and Expenses

The following tables summarize the amount of undiscounted expected future gross premiums and expected future benefits and expenses and discounted (discounted at the current period discount rate) expected future gross premiums and expected future benefits and expenses by reporting segment and disaggregated by product type. Future gross premiums represent the expected amount of future premiums to be received. For limited-payment policies, the premiums are collected over a shorter period than the policy term over which benefits are provided. As a result, once the policy reaches premium paid-up status, the future gross premiums can be significantly less than the future benefit payments. Further, benefits and expenses are generally greater in the later years of a policy. These are the primary factors that result in future gross premiums lower than future benefit and expense payments for certain lines of business of the Company.


	September 30, 2023						December 31, 2022
(In millions)	Gross Premiums			Benefits and Expenses			Gross Premiums			Benefits and Expenses
Undiscounted expected future gross premiums and expected future benefits and expenses:
Aflac Japan
Cancer		$	73,299		$	82,368		$	75,529		$	84,246
Medical and other health		48,031			49,223			50,720			50,778
Life insurance		15,926			52,692			16,946			53,271
Other		2,223			9,249			2,322			9,433
Aflac U.S.
Accident		9,246			4,595			9,481			4,636
Disability		5,800			3,215			5,858			3,267
Critical care		20,099			20,748			21,069			22,113
Hospital indemnity		5,005			3,058			5,164			3,338
Dental/vision		1,168			726			1,208			759
Life insurance		2,692			3,208			2,375			2,787
Other		509			1,251			333			1,147
Total		$	183,998		$	230,333		$	191,005		$	235,775


	September 30, 2023						December 31, 2022
(In millions)	Gross Premiums			Benefits and Expenses			Gross Premiums			Benefits and Expenses
Discounted expected future gross premiums and expected future benefits and expenses:
Aflac Japan
Cancer		$	45,569		$	47,209		$	53,278		$	54,766
Medical and other health		29,117			23,593			34,693			27,419
Life insurance		10,780			27,928			12,951			31,954
Other		1,438			4,856			1,697			5,582
Aflac U.S.
Accident		6,144			2,964			6,510			3,098
Disability		4,319			2,351			4,468			2,445
Critical care		11,752			10,460			12,659			11,489
Hospital indemnity		3,301			1,847			3,483			2,074
Dental/vision		768			450			821			488
Life insurance		1,797			1,608			1,663			1,526
Other		316			652			228			622
Total		$	115,301		$	123,918		$	132,451		$	141,463

Schedule of Changes in Other Policyholders' Funds

The following table presents the changes in other policyholders’ funds.


(In millions)	September 30, 2023		December 31, 2022
Other policyholders' funds:
Fixed annuities account balance, beginning of period (1)	$	6,423	$	7,410
Premiums received	90		150
Transfers from WAYS conversions	162		214
Surrenders and withdrawals	(40)		(52)
Benefit payments	(296)		(367)
Interest credited	37		57
Foreign currency translation and other	(724)		(989)
Fixed annuities account balance, end of period	5,652		6,423
Other deposit type reserves	232		220
Total	$	5,884	$	6,643

(1) Aflac Japan fixed annuities

Schedule of Other Policyholders' Funds by Guaranteed Crediting Rates

The following table presents other policyholders’ funds balances by range of guaranteed crediting rates.

September 30, 2023

December 31, 2022

(In millions)

Range of Guaranteed Minimum Crediting Rates (2)

At Guaranteed Minimum

Cash Surrender Value

Range of Guaranteed Minimum Crediting Rates (2)

At Guaranteed Minimum

Cash Surrender Value

Fixed annuities (1)

0.5% - 2.3%

$5,652

$5,564

0.5% - 2.3%

$6,423

$6,326

(1) Aflac Japan fixed annuities

(2) Weighted-average crediting rate of 1.5% at September 30, 2023 and December 31, 2022.