COMMITMENTS AND CONTINGENT LIABILITIES

9 Months Ended

Sep. 30, 2024

Commitments and Contingencies Disclosure [Abstract]

COMMITMENTS AND CONTINGENT LIABILITIES

COMMITMENTS AND CONTINGENT LIABILITIES

In the second quarter of 2024, the Company entered into an agreement with an information technology and data services company to provide cloud hosting services for the Company. As of September 30, 2024, the agreement has a remaining term of three years with an aggregate remaining cost of $58 million.

In the second quarter of 2024, the Company renewed an outsourcing agreement with a technology and consulting company that provides for mainframe computer operations, distributed mid-range server computer operations, and related support for Aflac Japan. As of September 30, 2024, the agreement has a remaining term of four years with an aggregate remaining cost of ¥45.6 billion ($320 million using the September 30, 2024 exchange rate).

In the second quarter of 2024, the Company entered into an outsourcing agreement with a management consulting and technology services company to provide policy administration services for Aflac Japan. As of September 30, 2024, the agreement has a remaining term of four years with an aggregate remaining cost of ¥6.8 billion ($48 million using the September 30, 2024 exchange rate).

The Company is a defendant in various lawsuits and receives various regulatory inquiries considered to be in the normal course of business. Members of the Company's senior legal and financial management teams review litigation and regulatory inquiries on a quarterly and annual basis. The final results of any litigation or regulatory inquiries cannot be predicted with certainty. Although some of this litigation is pending in states where large punitive damages, bearing little relation to the actual damages sustained by plaintiffs, have been awarded in recent years, the Company believes the outcome of pending litigation will not have a material adverse effect on its financial position, results of operations, or cash flows.

See Note 3 for details on certain investment commitments.

Guaranty Fund Assessments

The U.S. insurance industry has a policyholder protection system that is monitored and regulated by state insurance departments. These life and health insurance guaranty associations are state entities (in all 50 states as well as Puerto Rico and the District of Columbia) created to protect policyholders of an insolvent insurance company. All insurance companies (with limited exceptions) licensed to sell life or health insurance in a state must be members of that state’s guaranty association. Under state guaranty association laws, certain insurance companies can be assessed (up to prescribed limits) for certain obligations to the policyholders and claimants of impaired or insolvent insurance companies that write the same line or similar lines of business.

Guaranty fund assessments for the three- and nine-month periods ended September 30, 2024 and 2023 were immaterial.

For additional information regarding commitments and contingent liabilities, see Note 15 of the Notes to the Consolidated Financial Statements in the 2023 Annual Report.