10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

[ X ]  QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2010

or

[    ]  TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from                      to                     

Commission File Number:    001-07434

Aflac Incorporated

(Exact name of registrant as specified in its charter)

Georgia	58-1167100
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)
1932 Wynnton Road, Columbus, Georgia	31999
(Address of principal executive offices)	(ZIP Code)

706.323.3431

(Registrant’s telephone number, including area code)

(Former name, former address and former fiscal year, if changed since last report)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.            þ   Yes  ¨  No

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).                                                                                                                                                       þ   Yes    ¨  No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer  þ	Accelerated filer  ¨
Non-accelerated filer    ¨ (Do not check if a smaller reporting company)	Smaller reporting company ¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).                                                                                                                                                            ¨  Yes   þ  No

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.

Class	May 3, 2010
Common Stock, $.10 Par Value	469,563,139 shares

Aflac Incorporated and Subsidiaries

Quarterly Report on Form 10-Q

For the Quarter Ended March 31, 2010

Table of Contents

PART I.	FINANCIAL INFORMATION:	Page
Item 1.	Financial Statements
	Review by Independent Registered Public Accounting Firm	1
	Report of Independent Registered Public Accounting Firm	2
	Consolidated Statements of Earnings	3
	Three Months Ended March 31, 2010, and 2009
	Consolidated Balance Sheets	4
	March 31, 2010 and December 31, 2009
	Consolidated Statements of Shareholders’ Equity	6
	Three Months Ended March 31, 2010, and 2009
	Consolidated Statements of Cash Flows	7
	Three Months Ended March 31, 2010, and 2009
	Consolidated Statements of Comprehensive Income	9
	Three Months Ended March 31, 2010, and 2009
	Notes to the Consolidated Financial Statements	10
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	50
Item 3.	Quantitative and Qualitative Disclosures about Market Risk	83
Item 4.	Controls and Procedures	83
PART II.	OTHER INFORMATION:
Item 1A.	Risk Factors	84
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	86
Item 6.	Exhibits	87

Items other than those listed above are omitted because they are not required or are not applicable.

i

PART I. FINANCIAL INFORMATION

Item 1.  Financial Statements.

Review by Independent Registered Public Accounting Firm

The March 31, 2010, and 2009, consolidated financial statements included in this filing have been reviewed by KPMG LLP, an independent registered public accounting firm, in accordance with established professional standards and procedures for such a review.

The report of KPMG LLP commenting upon its review is included on the following page.

1

Report of Independent Registered Public Accounting Firm

The Shareholders and Board of Directors of Aflac Incorporated:

We have reviewed the consolidated balance sheet of Aflac Incorporated and subsidiaries as of March 31, 2010, and the related consolidated statements of earnings, shareholders’ equity, cash flows and comprehensive income for the three-month periods ended March 31, 2010 and 2009. These consolidated financial statements are the responsibility of the Company’s management.

We conducted our reviews in accordance with the standards of the Public Company Accounting Oversight Board (United States). A review of interim financial information consists principally of applying analytical procedures and making inquiries of persons responsible for financial and accounting matters. It is substantially less in scope than an audit conducted in accordance with the standards of the Public Company Accounting Oversight Board (United States), the objective of which is the expression of an opinion regarding the financial statements taken as a whole. Accordingly, we do not express such an opinion.

Based on our reviews, we are not aware of any material modifications that should be made to the consolidated financial statements referred to above for them to be in conformity with U.S. generally accepted accounting principles.

We have previously audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the accompanying consolidated balance sheet of Aflac Incorporated and subsidiaries as of December 31, 2009, and the related consolidated statements of earnings, shareholders’ equity, cash flows and comprehensive income for the year then ended (not presented herein); and in our report dated February 26, 2010, we expressed an unqualified opinion on those consolidated financial statements. In our opinion, the information set forth in the accompanying consolidated balance sheet as of December 31, 2009, is fairly stated, in all material respects, in relation to the consolidated balance sheet from which it has been derived.

Atlanta, Georgia

May 7, 2010

2

Aflac Incorporated and Subsidiaries

Consolidated Statements of Earnings

	Three Months Ended March 31,
(In millions, except for share and per-share amounts - Unaudited)	2010	2009
Revenues:
Premiums, principally supplemental health insurance	$    4,348	$    4,115
Net investment income	726	688
Realized investment gains (losses):
Other-than-temporary impairment losses:
Total other-than-temporary impairment losses	(42)	(238)
Other-than-temporary impairment losses recognized in other comprehensive income	0	4
Other-than-temporary impairment losses realized	(42)	(234)
Sales and redemptions	(21)	225
Derivative gains (losses)	17	0
Total realized investment gains (losses)	(46)	(9)
Other income	37	24
Total revenues	5,065	4,818
Benefits and expenses:
Benefits and claims	2,857	2,811
Acquisition and operating expenses:
Amortization of deferred policy acquisition costs	280	250
Insurance commissions	403	389
Insurance expenses	481	457
Interest expense	33	8
Other operating expenses	37	32
Total acquisition and operating expenses	1,234	1,136
Total benefits and expenses	4,091	3,947
Earnings before income taxes	974	871
Income taxes	338	302
Net earnings	$        636	$        569
Net earnings per share:
Basic	$       1.36	$       1.22
Diluted	1.35	1.22
Weighted-average outstanding common shares used in computing earnings per share (In thousands):
Basic	467,926	466,097
Diluted	472,450	467,132
Cash dividends per share	$         .28	$         .28

See the accompanying Notes to the Consolidated Financial Statements.

3

Aflac Incorporated and Subsidiaries

Consolidated Balance Sheets

(In millions)	March 31, 2010 (Unaudited)		December 31,     2009
Assets:
Investments and cash:
Securities available for sale, at fair value:
Fixed maturities (amortized cost $34,467 in 2010 and $37,633 in 2009)	$    33,992		$    36,781 (1)
Fixed maturities - consolidated variable interest entities (amortized cost $4,350 in 2010)	4,443		0  (1)
Perpetual securities (amortized cost $6,083 in 2010 and $7,554 in 2009)	6,218		7,263  (1)
Perpetual securities - consolidated variable interest entities (amortized cost $1,432 in 2010)	1,205		0  (1)
Equity securities (cost $21 in 2010 and $22 in 2009)	24		24
Securities held to maturity, at amortized cost:
Fixed maturities (fair value $25,031 in 2010 and $25,828 in 2009)	25,861		26,687 (1)
Fixed maturities - consolidated variable interest entities (fair value $457 in 2010)	538		0  (1)
Other investments	106		114
Cash and cash equivalents	1,611		2,323
Total investments and cash	73,998		73,192
Receivables	671		764
Accrued investment income	654		649
Deferred policy acquisition costs	8,522		8,533
Property and equipment, at cost less accumulated depreciation	583		593
Other	750	(2)	375
Total assets	$    85,178		$    84,106

⁽¹⁾ Due to the prospective application of accounting guidance adopted in 2010, consolidated fixed maturity and perpetual security variable interest entities (VIEs) are only disclosed separately in 2010.

⁽²⁾ Includes $292 of derivatives from consolidated VIEs

See the accompanying Notes to the Consolidated Financial Statements.

(continued)

4

Aflac Incorporated and Subsidiaries

Consolidated Balance Sheets (continued)

(In millions, except for share and per-share amounts)	March 31, 2010 (Unaudited)		December 31,     2009
Liabilities and shareholders’ equity:
Liabilities:
Policy liabilities:
Future policy benefits	$    61,530		$    61,501
Unpaid policy claims	3,298		3,270
Unearned premiums	937		926
Other policyholders’ funds	3,739		3,548
Total policy liabilities	69,504		69,245
Notes payable	2,584		2,599
Income taxes	1,629		1,653
Payables for return of cash collateral on loaned securities	486		483
Other	1,988	(3)	1,709
Commitments and contingent liabilities (Note 10)
Total liabilities	76,191		75,689
Shareholders’ equity:
Common stock of $.10 par value. In thousands: authorized 1,900,000 shares in 2010 and 2009; issued 661,799 shares in 2010 and 661,209 shares in 2009	66		66
Additional paid-in capital	1,248		1,228
Retained earnings	12,890		12,410
Accumulated other comprehensive income:
Unrealized foreign currency translation gains	412		776
Unrealized gains (losses) on investment securities:
Unrealized gains (losses) on securities not other-than-temporarily impaired	(197)		(621)
Unrealized gains (losses) on other-than-temporarily impaired securities	(8)		(16)
Unrealized gains (losses) on derivatives	(9)		(3)
Pension liability adjustment	(105)		(107)
Treasury stock, at average cost	(5,310)		(5,316)
Total shareholders’ equity	8,987		8,417
Total liabilities and shareholders’ equity	$    85,178		$    84,106

⁽³⁾ Includes $521 of derivatives from consolidated VIEs

See the accompanying Notes to the Consolidated Financial Statements.

5

Aflac Incorporated and Subsidiaries

Consolidated Statements of Shareholders’ Equity

	Three Months Ended March 31,
(In millions - Unaudited)	2010	2009
Common stock:
Balance, beginning of period	$            66	$            66
Balance, end of period	66	66
Additional paid-in capital:
Balance, beginning of period	1,228	1,184
Exercise of stock options	16	0
Share-based compensation	5	6
Gain (loss) on treasury stock reissued	(1)	0
Balance, end of period	1,248	1,190
Retained earnings:
Balance, beginning of period	12,410	11,306
Cumulative effect of change in accounting principle, net of income taxes	(25)	0
Net earnings	636	569
Dividends to shareholders	(131)	0
Balance, end of period	12,890	11,875
Accumulated other comprehensive income:
Balance, beginning of period	29	(582)
Unrealized foreign currency translation gains (losses) during period, net of income taxes:
Cumulative effect of change in accounting principle, net of income taxes	(320)	0
Change in unrealized foreign currency translation gains (losses) during period, net of income taxes	(44)	(255)
Unrealized gains (losses) on investment securities during period, net of income taxes and reclassification adjustments:
Cumulative effect of change in accounting principle, net of income taxes	180	0
Change in unrealized gains (losses) on investment securities not other-than-temporarily impaired, net of income taxes	244	(1,772)
Change in unrealized gains (losses) on other-than-temporarily impaired investment securities, net of income taxes	8	(3)
Unrealized gains (losses) on derivatives during period, net of income taxes	(6)	0
Pension liability adjustment during period, net of income taxes	2	4
Balance, end of period	93	(2,608)
Treasury stock:
Balance, beginning of period	(5,316)	(5,335)
Purchases of treasury stock	(4)	(2)
Cost of shares issued	10	13
Balance, end of period	(5,310)	(5,324)
Total shareholders’ equity	$        8,987	$        5,199

See the accompanying Notes to the Consolidated Financial Statements.

6

Aflac Incorporated and Subsidiaries

Consolidated Statements of Cash Flows

	Three Months Ended March 31,
(In millions - Unaudited)	2010	2009
Cash flows from operating activities:
Net earnings	$    636	$     569
Adjustments to reconcile net earnings to net cash provided by operating activities:
Change in receivables and advance premiums	235	257
Increase in deferred policy acquisition costs	(50)	(68)
Increase in policy liabilities	679	734
Change in income tax liabilities	(71)	187
Realized investment (gains) losses	46	12
Other, net	(197)	(42)
Net cash provided (used) by operating activities	1,278	1,649
Cash flows from investing activities:
Proceeds from investments sold or matured:
Securities available for sale:
Fixed maturities sold	712	3,575
Fixed maturities matured or called	150	1,087
Perpetual securities sold	54	0
Securities held to maturity:
Fixed maturities matured or called	1	103
Costs of investments acquired:
Securities available for sale:
Fixed maturities acquired	(2,593)	(3,615)
Securities held to maturity:
Fixed maturities acquired	(302)	(832)
Cash received as collateral on loaned securities, net	7	(1,582)
Other, net	2	(61)
Net cash provided (used) by investing activities	$(1,969)	$(1,325)

See the accompanying Notes to the Consolidated Financial Statements.

(continued)

7

Aflac Incorporated and Subsidiaries

Consolidated Statements of Cash Flows (continued)

	Three Months Ended March 31,
(In millions - Unaudited)	2010	2009
Cash flows from financing activities:
Purchases of treasury stock	$         (5)	$     (2)
Principal payments under debt obligations	(1)	(1)
Dividends paid to shareholders	(131)	(131)
Change in investment-type contracts, net	89	90
Treasury stock reissued	7	4
Other, net	18	(5)
Net cash provided (used) by financing activities	(23)	(45)
Effect of exchange rate changes on cash and cash equivalents	2	(24)
Net change in cash and cash equivalents	(712)	255
Cash and cash equivalents, beginning of period	2,323	941
Cash and cash equivalents, end of period	$    1,611	$1,196
Supplemental disclosures of cash flow information:
Income taxes paid	$       403	$   190
Interest paid	10	6
Impairment losses included in realized investment losses	42	234
Noncash financing activities:
Treasury stock issued for:
Associate stock bonus	0	6
Share-based compensation grants	2	3

See the accompanying Notes to the Consolidated Financial Statements.

8

Aflac Incorporated and Subsidiaries

Consolidated Statements of Comprehensive Income

	Three Months Ended March 31,
(In millions - Unaudited)	2010	2009
Net earnings	$    636	$       569
Other comprehensive income (loss) before income taxes:
Unrealized foreign currency translation gains (losses) during period	(18)	(109)
Unrealized gains (losses) on investment securities:
Unrealized holding gains (losses) on investment securities during period	323	(2,763)
Reclassification adjustment for realized (gains) losses on investment securities included in net earnings	63	12
Unrealized gains (losses) on derivatives during period	(10)	1
Pension liability adjustment during period	2	6
Total other comprehensive income (loss) before income taxes	360	(2,853)
Income tax expense (benefit) related to items of other comprehensive income (loss)	156	(827)
Other comprehensive income (loss), net of income taxes	204	(2,026)
Total comprehensive income (loss)	$    840	$  (1,457)

See the accompanying Notes to the Consolidated Financial Statements.

9

Aflac Incorporated and Subsidiaries

Notes to the Consolidated Financial Statements

(Interim period data – Unaudited)

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Description of Business

Aflac Incorporated (the Parent Company) and its subsidiaries (collectively, the Company) primarily sell supplemental health and life insurance in the United States and Japan. The Company’s insurance business is marketed and administered through American Family Life Assurance Company of Columbus (Aflac), which operates in the United States (Aflac U.S.) and as a branch in Japan (Aflac Japan). Most of Aflac’s policies are individually underwritten and marketed through independent agents. Aflac U.S. markets and administers group products through Continental American Insurance Company (CAIC). Our insurance operations in the United States and our branch in Japan service the two markets for our insurance business. Aflac Japan’s revenues, including realized gains and losses on its investment portfolio, accounted for 74% of the Company’s total revenues in both the three-month periods ended March 31, 2010, and 2009. The percentage of the Company’s total assets attributable to Aflac Japan was 85% at both March 31, 2010, and December 31, 2009.

Basis of Presentation

We prepare our financial statements in accordance with U.S. generally accepted accounting principles (GAAP). These principles are established primarily by the Financial Accounting Standards Board (FASB). In these Notes to the Consolidated Financial Statements, references to GAAP issued by the FASB are derived from the FASB Accounting Standards Codification^TM (ASC). The preparation of financial statements in conformity with GAAP requires us to make estimates when recording transactions resulting from business operations based on currently available information. The most significant items on our balance sheet that involve a greater degree of accounting estimates and actuarial determinations subject to changes in the future are the valuation of investments, deferred policy acquisition costs, liabilities for future policy benefits and unpaid policy claims, and income taxes. These accounting estimates and actuarial determinations are sensitive to market conditions, investment yields, mortality, morbidity, commission and other acquisition expenses, and terminations by policyholders. As additional information becomes available, or actual amounts are determinable, the recorded estimates will be revised and reflected in operating results. Although some variability is inherent in these estimates, we believe the amounts provided are adequate.

The consolidated financial statements include the accounts of the Parent Company, its subsidiaries and those entities required to be consolidated under applicable accounting standards. All material intercompany accounts and transactions have been eliminated.

In the opinion of management, the accompanying unaudited consolidated financial statements of the Company contain all adjustments, consisting of normal recurring accruals, which are necessary to fairly present the consolidated balance sheets as of March 31, 2010, and December 31, 2009, and the consolidated statements of earnings, shareholders’ equity, cash flows and comprehensive income for the three-month periods ended March 31, 2010, and 2009. Results of operations for interim periods are not necessarily indicative of results for the entire year. As a result, these financial statements should be read in conjunction with the financial statements and notes thereto included in our annual report to shareholders for the year ended December 31, 2009.

Significant Accounting Policies

As a result of accounting guidance adopted subsequent to December 31, 2009, we have updated our accounting policy for investments and derivatives and hedging. All other categories of significant accounting policies remain unchanged from our annual report to shareholders for the year ended December 31, 2009.

10

Investments:   Our debt securities consist of fixed-maturity securities, which are classified as either held to maturity or available for sale. Securities classified as held to maturity are securities that we have the ability and intent to hold to maturity or redemption and are carried at amortized cost. All other fixed-maturity debt securities, our perpetual securities and our equity securities are classified as available for sale and are carried at fair value. If the fair value is higher than the amortized cost for debt and perpetual securities, or the purchase cost for equity securities, the excess is an unrealized gain, and if lower than cost, the difference is an unrealized loss.

The net unrealized gains and losses on securities available for sale, plus the unamortized unrealized gains and losses on debt securities transferred to the held-to-maturity portfolio, less related deferred income taxes, are recorded through other comprehensive income and included in accumulated other comprehensive income.

Amortized cost of debt and perpetual securities is based on our purchase price adjusted for accrual of discount, or amortization of premium and recognition of impairment charges, if any. The amortized cost of debt and perpetual securities we purchase at a discount or premium will equal the face or par value at maturity or the call date, if applicable. Interest is reported as income when earned and is adjusted for amortization of any premium or discount.

We have investments in variable interest entities (VIEs) and qualified special purpose entities (QSPEs). In periods prior to 2010, VIEs were evaluated for consolidation based on the variable interest created by a VIE, and QSPEs were exempt from consolidation. Our investments in VIEs and QSPEs were accounted for as fixed-maturity or perpetual securities. The majority of our investments in VIEs and QSPEs were held in our available-for-sale portfolio.

Subsequent to the adoption of updated accounting guidance on VIEs and QSPEs in 2010, our accounting treatment for these investments changed. The concept of QSPEs was eliminated, and therefore, the former QSPEs are treated as normal VIEs and are evaluated for consolidation. We adopted the new criteria for evaluating VIEs for consolidation, which, instead of focusing on a quantitative approach, focuses on identifying which enterprise has the power to direct the activities of a variable interest entity that most significantly impact the entity’s economic performance and (1) the obligation to absorb losses of the entity or (2) the right to receive benefits from the entity. As a result of the application of this new guidance, we are the primary beneficiary of certain VIEs. While the VIEs generally operate within a defined set of documents, there are certain powers that are retained by us that are considered significant in our conclusion that we are the primary beneficiary. These powers vary by structure but generally include the initial selection of the underlying collateral or, for collateralized debt obligations (CDOs), the reference credits to include in the structure; the ability to obtain the underlying collateral in the event of default; and the ability to appoint or dismiss key parties in the structure. In particular, our powers surrounding the underlying collateral were the most significant powers since those most significantly impact the economics of the VIE. We have no obligation to provide any continuing financial support to any of the entities in which we are the primary beneficiary. Our maximum loss is limited to our original investment. We and any of our creditors have no ability to obtain the underlying collateral, and we have no control over the instruments in the VIEs, unless there is an event of default.

For those entities where we are the primary beneficiary, the assets consolidated are fixed-maturity securities, perpetual securities and derivative instruments. The calculation method of the yields on these investments did not change as a result of adoption of the new accounting guidance.

For the collateralized mortgage obligations (CMOs) held in our fixed-maturity securities portfolio, we recognize income using a constant effective yield, which is based on anticipated prepayments and the estimated economic life of the securities. When estimates of prepayments change, the effective yield is recalculated to reflect actual payments to date and anticipated future payments. The net investment in CMO securities is adjusted to the amount that would have existed had the new effective yield been applied at the time of acquisition. This adjustment is reflected in net investment income.

We use the specific identification method to determine the gain or loss from securities transactions and report the realized gain or loss in the consolidated statements of earnings.

11

Our credit analysts/research personnel routinely monitor and evaluate the difference between the amortized cost and fair value of our investments. Additionally, credit analysis and/or credit rating issues related to specific investments may trigger more intensive monitoring to determine if a decline in fair value is other than temporary. For investments with a fair value below amortized cost, the process includes evaluating, among other factors, the length of time and the extent to which amortized cost exceeds fair value, the financial condition, operations, credit and liquidity posture, and future prospects of the issuer as well as our intent or need to dispose of the security prior to a recovery of its fair value to amortized cost. This process is not exact and requires consideration of risks such as credit risk, which to a certain extent can be controlled, and interest rate risk, which cannot be controlled. Therefore, if an investment’s amortized cost exceeds its fair value solely due to changes in interest rates, impairment may not be appropriate.

In periods prior to 2009, if, after monitoring and analyses, management believed that a decline in fair value was other than temporary, we adjusted the amortized cost of the security to fair value and reported a realized loss in the consolidated statements of earnings. Subsequent to the adoption of updated accounting guidance on impairments in 2009, our accounting policy changed. If, after monitoring and analyses, management believes that fair value will not recover to amortized cost prior to the disposal of the security, we recognize an other-than-temporary impairment of the security. Once a security is considered to be other-than-temporarily impaired, the impairment loss is separated into two separate components: the portion of the impairment related to credit and the portion of the impairment related to factors other than credit. We automatically recognize a charge to earnings for the credit-related portion of other-than-temporary impairments. Impairments related to factors other than credit are charged to earnings in the event we intend to sell the security prior to the recovery of its amortized cost or if it is more likely than not that we would be required to dispose of the security prior to recovery of its amortized cost; otherwise, non-credit-related other-than-temporary impairments are charged to other comprehensive income.

We lend fixed-maturity securities to financial institutions in short-term security lending transactions. These securities continue to be carried as investment assets on our balance sheet during the terms of the loans and are not reported as sales. We receive cash or other securities as collateral for such loans. For loans involving unrestricted cash collateral, the collateral is reported as an asset with a corresponding liability for the return of the collateral. For loans collateralized by securities, the collateral is not reported as an asset or liability.

For further information regarding our investments, see Note 3.

Derivatives and Hedging:  We do not use derivatives for trading purposes, nor do we engage in leveraged derivative transactions.

Freestanding derivative instruments are reported in the consolidated statements of financial position at fair value and are reported in other assets and other liabilities, with changes in value reported in earnings. These freestanding derivatives are interest rate swaps, credit default swaps (CDSs) and/or foreign currency swaps. Interest rate and foreign currency swaps are used within VIEs to hedge the risk arising from interest rate and currency exchange risk, while the CDSs are used to increase the yield and improve the diversification of the portfolio.

From time to time, we purchase certain investments that contain an embedded derivative. We assess whether this embedded derivative is clearly and closely related to the asset that serves as its host contract. If we deem that the embedded derivative’s terms are not clearly and closely related to the host contract, and a separate instrument with the same terms would qualify as a derivative instrument, the derivative is separated from that contract, held at fair value and reported with the host instrument in the consolidated statements of financial position, with changes in fair value reported in earnings.

For those relationships where we seek hedge accounting, we document all relationships between hedging instruments and hedged items, as well as our risk-management objectives for undertaking various hedge transactions. This process includes linking derivatives and nonderivatives that are designated as hedges to specific assets or liabilities on the balance sheet. We also assess, both at inception and on an ongoing basis, whether the derivatives and nonderivatives used in hedging activities are highly effective in offsetting changes in fair values or cash flows of the hedged items. The assessment of hedge effectiveness determines the accounting treatment of noncash changes in fair value.

12

We have designated certain interest rate swaps as a hedge of the variability of the interest cash flows associated with our variable rate Uridashi notes. Changes in the fair value of these and any of our other derivatives that are designated and qualify as cash flow hedges are recorded in other comprehensive income as long as they are deemed effective. Any hedge ineffectiveness is recorded immediately in current period earnings as net realized investment gains and losses. Periodic derivative net coupon settlements are recorded in the line item of the consolidated statements of operations in which the cash flows of the hedged item are recorded. We include the fair value of these derivatives in either other assets or other liabilities on the balance sheet.

We have designated our yen-denominated Samurai and Uridashi notes and yen-denominated loans (see Note 6) as nonderivative hedges of the foreign currency exposure to our investment in Aflac Japan. At the beginning of each quarter, we make our net investment hedge designation. If the total of our designated yen-denominated liabilities is equal to or less than our net investment in Aflac Japan, the hedge is deemed to be effective and the related exchange effect is reported in the unrealized foreign currency component of other comprehensive income. Should these designated yen-denominated liabilities exceed our investment in Aflac Japan, the foreign exchange effect on the portion of the liabilities that exceeds our investment in Aflac Japan would be recognized in net earnings (other income). Until their expiration in April 2009, we designated our cross-currency swaps as a hedge of the foreign currency exposure of our investment in Aflac Japan. We included the fair value of the cross-currency swaps in either other assets or other liabilities on the balance sheet. We reported the changes in fair value of the foreign currency portion of our cross-currency swaps in other comprehensive income. Changes in the fair value of the interest rate component were reflected in other income in the consolidated statements of earnings.

Reclassifications: Certain reclassifications have been made to prior-year amounts to conform to current-year reporting classifications. These reclassifications had no impact on net earnings or total shareholders’ equity.

New Accounting Pronouncements

Recently Adopted Accounting Pronouncements

Fair value measurements and disclosures: In January 2010, the FASB issued amended accounting guidance on fair value disclosures. This guidance requires new disclosures about transfers in and out of fair value hierarchy Levels 1 and 2. We adopted this guidance as of January 1, 2010. The adoption did not have an impact on our financial position or results of operations.

Accounting for variable interest entities and transfers of financial assets: In June 2009, the FASB issued amended guidance on accounting for VIEs and transfers of financial assets. As discussed above, this guidance defines new criteria for determining the primary beneficiary of a VIE; increases the frequency of required reassessments to determine whether a company is the primary beneficiary of a VIE; eliminates the exemption for the consolidation of QSPEs; establishes conditions for reporting a transfer of a portion of a financial asset as a sale; modifies the financial asset derecognition criteria; and requires additional disclosures. We adopted the provisions of this guidance on January 1, 2010 prospectively. As a result, we were required to consolidate certain of the VIEs with which we are currently involved. We were not required to deconsolidate any VIEs on January 1, 2010.

Upon the initial consolidation of the VIEs on January 1, 2010, the assets, liabilities, and noncontrolling interests of the VIEs were recorded at their carrying values, which is the amounts at which the assets, liabilities, and noncontrolling interests would have been carried in the consolidated financial statements when we first met the conditions to be the primary beneficiary. For any of the VIEs that were required to be consolidated, we also considered whether any of the derivatives in these structures qualified on January 1, 2010, as a cash flow hedge of the changes in cash flows attributable to foreign currency and/or interest rate risk. Certain of the swaps did not qualify for hedge accounting since the swap had a fair value on January 1, 2010. Other swaps did not qualify for hedge accounting since they increased, rather than reduced, cash flow risk. See Note 4 for further discussion.

The impact of consolidating these VIEs as of January 1, 2010, includes three components. The first component is the valuation differences associated with the underlying securities and derivatives included in the VIE structures. Prior to the consolidation of these VIEs, we utilized a pricing model to value our beneficial interests and did not separately consider the fair value of the financial instruments included within the structures. The cumulative impact of these valuation adjustments was recorded in accumulated other comprehensive income or retained earnings depending on whether the valuation adjustment was associated with the underlying debt securities and whether the derivative qualified as a cash flow hedge.

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Another portion of the impact of consolidation was related to the currency translation adjustments that were previously recognized for our beneficial interests in the VIEs that were yen-denominated. Since some of the underlying assets in the VIEs are dollar-denominated, the previously recognized currency translation adjustment was reversed.

The final portion primarily relates to the fair value of CDSs included in the CDOs that had been designated as held to maturity. Under U.S. GAAP, these credit default swaps were recorded at fair value as a cumulative effect adjustment through retained earnings. The CDSs are not eligible for hedge accounting.

The following table summarizes the cumulative after-tax consolidation impact of adopting this new accounting guidance on January 1, 2010:

(In millions)	Accumulated Other Comprehensive Income	Retained Earnings	Total Shareholders’ Equity
Cumulative valuation adjustments	$     180	$        -	$     180
Currency translation adjustments	(320)	-	(320)
Swaps	-	(26)	(26)
Other	-	1	1
Total	$    (140)	$     (25)	$    (165)

For additional information concerning our investments in VIEs and derivatives, see Notes 3 and 4, respectively.

Accounting Pronouncements Pending Adoption

Fair value measurements and disclosures: In January 2010, the FASB issued amended accounting guidance on fair value disclosures. This guidance requires the activity in fair value hierarchy Level 3 for purchases, sales, issuances, and settlements to be reported on a gross, rather than net, basis. This guidance is effective for interim and annual periods beginning after December 15, 2010. We are in the process of assessing the impact of the adoption of this guidance on our financial position and results of operations.

Accounting for embedded credit derivatives: In March 2010, the FASB issued accounting guidance on embedded credit derivatives. This guidance clarifies the type of embedded credit derivative that is exempt from embedded derivative bifurcation requirements. This guidance is effective for interim periods beginning after June 15, 2010. We are in the process of assessing the impact of the adoption of this guidance on our financial position and results of operations.

Recent accounting guidance not discussed above is not applicable or did not have an impact to our business.

For additional information on new accounting pronouncements and their impact, if any, on our financial position or results of operations, see Note 1 of the Notes to the Consolidated Financial Statements in our annual report to shareholders for the year ended December 31, 2009.

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2. BUSINESS SEGMENT INFORMATION

The Company consists of two reportable insurance business segments: Aflac Japan and Aflac U.S., both of which sell supplemental health and life insurance.

Operating business segments that are not individually reportable are included in the “Other business segments” category. We do not allocate corporate overhead expenses to business segments. We evaluate and manage our business segments using a financial performance measure called pretax operating earnings. Our definition of operating earnings excludes the following items from net earnings on an after-tax basis: realized investment gains/losses, the impact from ASC 815 (“Derivatives and Hedging”), and nonrecurring items. We then exclude income taxes related to operations to arrive at pretax operating earnings. Information regarding operations by segment as follows:

	Three months Ended March 31,
(In millions)	2010		2009
Revenues:
Aflac Japan:
Earned premiums	$        3,206		$        3,012
Net investment income	593		560
Other income	28		7
Total Aflac Japan	3,827		3,579
Aflac U.S.:
Earned premiums	1,142		1,103
Net investment income	132		125
Other income	2		2
Total Aflac U.S.	1,276		1,230
Other business segments	12		11
Total business segments	5,115		4,820
Realized investment gains (losses)	(46	)	(9)
Corporate	52		35
Intercompany eliminations	(56	)	(28)
Total revenues	$        5,065		$        4,818

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	Three Months Ended March 31,
(In millions)	2010	2009
Pretax earnings:
Aflac Japan	$          821	$          681
Aflac U.S.	244	204
Other business segments	(1)	-
Total business segments	1,064	885
Interest expense, noninsurance operations	(31)	(7)
Corporate and eliminations	(13)	(9)
Pretax operating earnings	1,020	869
Realized investment gains (losses)	(46)	(9)
Impact from ASC 815	-	(5)
Gain on extinguishment of debt	-	16
Total earnings before income taxes	$          974	$          871
Income taxes applicable to pretax operating earnings	$          354	$          302
Effect of foreign currency translation on operating earnings	22	41
Assets were as follows:
(In millions)	March 31, 2010	December 31,     2009
Assets:
Aflac Japan	$      72,384	$      71,639
Aflac U.S.	12,198	11,779
Other business segments	145	142
Total business segments	84,727	83,560
Corporate	11,616	11,261
Intercompany eliminations	(11,165)	(10,715)
Total assets	$      85,178	$      84,106

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3. INVESTMENTS

Investment Holdings

The amortized cost for our investments in debt and perpetual securities, the cost for equity securities and the fair values of these investments are shown in the following tables.

	March 31, 2010
(In millions)	Cost or Amortized Cost	Gross Unrealized Gains	Gross Unrealized Losses	Fair   Value
Securities available for sale,   carried at fair value:
Fixed maturities:
Yen-denominated:
Japan government and agencies	$  12,308	$    375	$    123	$  12,560
Mortgage- and asset-backed   securities	1,097	11	16	1,092
Public utilities	2,252	116	105	2,263
Sovereign and supranational	825	28	90	763
Banks/financial institutions	4,073	109	660	3,522
Other corporate	4,991	117	534	4,574
Total yen-denominated	25,546	756	1,528	24,774
Dollar-denominated:
U.S. government and agencies	139	4	2	141
Municipalities	724	7	25	706
Mortgage- and asset-backed    securities(1)	693	73	57	709
Collateralized debt obligations	2	2	-	4
Public utilities	1,975	165	27	2,113
Sovereign and supranational	368	53	7	414
Banks/financial institutions	3,451	109	234	3,326
Other corporate	5,919	435	106	6,248
Total dollar-denominated	13,271	848	458	13,661
Total fixed maturities	38,817	1,604	1,986	38,435
Perpetual securities:
Yen-denominated:
Banks/financial institutions	6,808	437	552	6,693
Other corporate	288	30	-	318
Dollar-denominated:
Banks/financial institutions	419	41	48	412
Total perpetual securities	7,515	508	600	7,423
Equity securities	21	4	1	24
Total securities available for sale	$  46,353	$  2,116	$  2,587	$  45,882

⁽¹⁾ Includes $12 million of other-than-temporary non-credit-related losses

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	March 31, 2010
(In millions)	Cost or Amortized Cost	Gross Unrealized Gains	Gross Unrealized Losses	Fair   Value
Securities held to maturity,   carried at amortized cost:
Fixed maturities:
Yen-denominated:
Japan government and agencies	$      215	$      5	$         -	$      220
Municipalities	357	1	6	352
Mortgage- and asset-backed securities	165	2	7	160
Public utilities	5,395	153	154	5,394
Sovereign and supranational	4,203	143	160	4,186
Banks/financial institutions	11,655	133	1,033	10,755
Other corporate	4,409	135	123	4,421
Total yen-denominated	26,399	572	1,483	25,488
Total securities held to maturity	$  26,399	$  572	$  1,483	$  25,488

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	December 31, 2009
(In millions)	Cost or Amortized Cost	Gross Unrealized Gains	Gross Unrealized Losses	Fair   Value
Securities available for sale,   carried at fair value:
Fixed maturities:
Yen-denominated:
Japan government and agencies	$  11,710	$    405	$    174	$  11,941
Mortgage- and asset-backed   securities	549	13	-	562
Public utilities	2,284	145	79	2,350
Collateralized debt obligations	165	97	24	238
Sovereign and supranational	833	28	96	765
Banks/financial institutions	5,248	144	784	4,608
Other corporate	6,401	112	714	5,799
Total yen-denominated	27,190	944	1,871	26,263
Dollar-denominated:
U.S. government and agencies	221	3	7	217
Municipalities	519	4	28	495
Mortgage- and asset-backed    securities(1)	586	9	78	517
Collateralized debt obligations	24	7	2	29
Public utilities	1,587	123	42	1,668
Sovereign and supranational	353	48	9	392
Banks/financial institutions	2,668	75	259	2,484
Other corporate	4,485	339	108	4,716
Total dollar-denominated	10,443	608	533	10,518
Total fixed maturities	37,633	1,552	2,404	36,781
Perpetual securities:
Yen-denominated:
Banks/financial institutions	6,964	311	604	6,671
Other corporate	291	28	-	319
Dollar-denominated:
Banks/financial institutions	299	30	56	273
Total perpetual securities	7,554	369	660	7,263
Equity securities	22	4	2	24
Total securities available for sale	$  45,209	$  1,925	$  3,066	$  44,068

⁽¹⁾ Includes $25 of other-than-temporary non-credit-related losses

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	December 31, 2009
(In millions)	Cost or Amortized Cost	Gross Unrealized Gains	Gross Unrealized Losses	Fair   Value
Securities held to maturity,   carried at amortized cost:
Fixed maturities:
Yen-denominated:
Japan government and agencies	$      217	$     6	$         -	$      223
Municipalities	281	1	4	278
Mortgage- and asset-backed securities	167	2	6	163
Collateralized debt obligations	109	-	14	95
Public utilities	5,235	180	138	5,277
Sovereign and supranational	4,248	161	143	4,266
Banks/financial institutions	11,775	140	984	10,931
Other corporate	4,455	142	104	4,493
Total yen-denominated	26,487	632	1,393	25,726
Dollar-denominated:
Collateralized debt obligations	200	-	98	102
Total dollar-denominated	200	-	98	102
Total securities held to maturity	$  26,687	$  632	$  1,491	$  25,828

The methods of determining the fair values of our investments in debt securities, perpetual securities and equity securities are described in Note 5.

As discussed in Note 1, we adopted new accounting guidance for VIEs on January 1, 2010, that resulted in the consolidation of most of our investments in CDOs. As a result, these investments are no longer reported as a single investment. In addition, in conjunction with this change in accounting for VIEs, certain VIEs, totaling $309 million at amortized cost as of January 1, 2010, are no longer classified as held to maturity. The underlying collateral for these VIEs is classified as available for sale as of January 1, 2010.

During the first three months of 2010, we did not reclassify any investments from the held-to-maturity portfolio to the available-for-sale portfolio. During the first three months of 2009, we reclassified six investments from the held-to-maturity portfolio to the available-for-sale portfolio as a result of a significant decline in the issuers’ credit worthiness. At the time of transfer, the securities had an aggregate amortized cost of $497 million and an aggregate unrealized loss of $200 million.

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Contractual and Economic Maturities

The contractual maturities of our investments in fixed maturities at March 31, 2010, were as follows:
	Aflac Japan				Aflac U.S.
(In millions)	Amortized Cost		Fair Value		Amortized Cost		Fair   Value
Available for sale:
Due in one year or less	$	565	$	572	$	4	$	4
Due after one year through five years		5,339		5,753		264		297
Due after five years through 10 years		2,338		2,447		833		935
Due after 10 years		21,535		20,434		6,032		6,074
Mortgage- and asset-backed securities		1,330		1,390		460		412
Total fixed maturities available for sale	$	31,107	$	30,596	$	7,593	$	7,722
Held to maturity:
Due after one year through five years	$	1,468	$	1,524	$	-	$	-
Due after five years through 10 years		2,527		2,815		-		-
Due after 10 years		22,239		20,989		-		-
Mortgage- and asset-backed securities		165		160		-		-
Total fixed maturities held to maturity	$	26,399	$	25,488	$	-	$	-
At March 31, 2010, the Parent Company had a portfolio of investment-grade available-for-sale fixed-maturity securities totaling $117 million at both amortized cost and fair value, which is not included in the table above. Expected maturities may differ from contractual maturities because some issuers have the right to call or prepay obligations with or without call or prepayment penalties. The majority of our perpetual securities are subordinated to other debt obligations of the issuer, but rank higher than the issuer’s equity securities. Perpetual securities have characteristics of both debt and equity investments, along with unique features that create economic maturity dates for the securities. Although perpetual securities have no contractual maturity date, they have stated interest coupons that were fixed at their issuance and subsequently change to a floating short-term interest rate of 125 to more than 300 basis points above an appropriate market index, generally by the 25th year after issuance, thereby creating an economic maturity date. The economic maturities of our investments in perpetual securities, which were all reported as available for sale at March 31, 2010, were as follows:
	Aflac Japan				Aflac U.S.
(In millions)	Amortized Cost		Fair Value		Amortized Cost		Fair   Value
Due in one year or less	$	107	$	109	$	-	$	-
Due after one year through five years		1,049		1,156		-		-
Due after five years through 10 years		1,608		1,748		5		5
Due after 10 years through 15 years		-		-		-		-
Due after 15 years		4,512		4,164		234		241
Total perpetual securities available for sale	$	7,276	$	7,177	$	239	$	246

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Investment Concentrations

Our investment discipline begins with a top-down approach for each investment opportunity we consider. Consistent with that approach, we first approve each country in which we invest. In our approach to sovereign analysis, we consider the political, legal and financial context of the sovereign entity in which an issuer is domiciled and operates. Next we approve the issuer’s industry sector, including such factors as the stability of results and the importance of the sector to the overall economy. Specific credit names within approved countries and industry sectors are evaluated for their market position and specific strengths and potential weaknesses. Structures in which we invest are chosen for specific portfolio management purposes, including asset/liability management, portfolio diversification and net investment income.

Our largest investment industry sector concentration is banks and financial institutions. Within the countries we approve for investment opportunities, we primarily invest in financial institutions that are strategically crucial to each approved country’s economy. The bank and financial institution sector is a highly regulated industry and plays a strategic role in the global economy. We achieve some degree of diversification in the bank and financial institution sector through a geographically diverse universe of credit exposures. Within this sector, the more significant concentration of our credit risk by geographic region or country of issuer at March 31, 2010, based on amortized cost, was: Europe, excluding the United Kingdom (49%); United States (20%); United Kingdom (8%); Japan (8%); and other (15%).

As a result of the consolidation of additional VIEs as disclosed in Note 1, $120 million in additional perpetual securities were recognized since the securities were included in the former QSPE structures.

Our total investments in the bank and financial institution sector, including those classified as perpetual securities, were as follows:

	March 31, 2010			December 31, 2009
	Total Investments in Banks and Financial Institutions Sector (in millions)		Percentage of Total Investment Portfolio	Total Investments in Banks and Financial Institutions Sector (in millions)		Percentage of Total Investment     Portfolio
Debt Securities:
Amortized cost	$	19,179	26  %	$	19,691	28  %
Fair value		17,603	25		18,023	26
Perpetual Securities:
Upper Tier II:
Amortized cost	$	4,964	7  %	$	4,909	7  %
Fair value		5,139	7		4,938	7
Tier I:
Amortized cost		2,263	3		2,354	3
Fair value		1,966	3		2,006	3
Total:
Amortized cost	$	26,406	36  %	$	26,954	38  %
Fair value		24,708	35		24,967	36

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Realized Investment Gains and Losses

Information regarding pretax realized gains and losses from investments is as follows:

	Three Months Ended March 31,
(In millions)	2010		2009
Realized investment gains (losses) on securities:
Debt securities:
Available for sale:
Gross gains from sales	$	51	$	223
Gross losses from sales		(80)		(1)
Net gains (losses) from redemptions		-		1
Impairment losses		-		(169)
Total debt securities		(29)		54
Perpetual securities:
Available for sale:
Gross gains from sales		8		-
Impairment losses		(41)		(65)
Total perpetual securities		(33)		(65)
Equity securities:
Impairment losses		(1)		-
Total equity securities		(1)		-
Other assets:
Derivatives		17		-
Other long-term assets		-		2
Total other assets		17		2
Total realized investment gains (losses)	$	(46)	$	(9)

During the three-month period ended March 31, 2010, we realized pretax investment losses of $42 million ($27 million after-tax) as a result of the recognition of other-than-temporary impairment losses. We also realized pretax investment losses, net of gains, of $21 million ($14 million after-tax) from securities sold or redeemed in the normal course of business. We realized pretax investment gains of $17 million ($11 million after-tax) from valuing foreign currency, interest rate and credit default swaps related to certain VIEs that were required to be consolidated following the adoption of new accounting guidance effective January 1, 2010.

During the three-month period ended March 31, 2009, we realized total pretax investment losses of $234 million ($152 million after-tax) as a result of the recognition of other-than-temporary impairment losses. We also realized pretax investment gains, net of losses, of $225 million ($146 million after-tax) from a bond–swap program that took advantage of tax loss carryforwards and from securities sold or redeemed in the normal course of business.

Other-than-temporary Impairment

The fair value of our debt and perpetual security investments fluctuates based on changes in credit spreads in the global financial markets. Credit spreads are most impacted by market rates of interest, the general and specific credit environment and global market liquidity. We believe that fluctuations in the fair value of our investment securities related to changes in credit spreads have little bearing on whether our investment is ultimately recoverable. Therefore, we consider such declines in fair value to be temporary even in situations where an investment remains in an unrealized loss position for a year or more.

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However, in the course of our credit review process, we may determine that it is unlikely that we will recover our investment in an issuer due to factors specific to an individual issuer, as opposed to general changes in global credit spreads. In this event, we consider such a decline in the investment’s fair value, to the extent below the investment’s cost or amortized cost, to be an other-than-temporary impairment of the investment and write the investment down to its fair value. The determination of whether an impairment is other than temporary is subjective and involves the consideration of various factors and circumstances, which includes but is not limited to the following:

— issuer financial condition, including profitability and cash flows

— credit status of the issuer

— the issuer’s specific and general competitive environment

— published reports

— general economic environment

— regulatory, legislative and political environment

— the severity of the decline in fair value

— the length of time the fair value is below cost

— other factors as may become available from time to time

In addition to the usual investment risk associated with a debt instrument, our perpetual security holdings may be subject to the risk of nationalization of their issuers in connection with capital injections from an issuer’s sovereign government. We cannot be assured that such capital support will extend to all levels of an issuer’s capital structure. In addition, certain governments or regulators may consider imposing interest and principal payment restrictions on issuers of hybrid securities to preserve cash and build capital. In addition to the cash flow impact that additional deferrals would have on our portfolio, such deferrals could result in ratings downgrades of the affected securities, which in turn could impair the fair value of the securities and increase our regulatory capital requirements. We take factors such as these into account in our credit review process.

Another factor we consider in determining whether an impairment is other than temporary is an evaluation of our intent, need, or both to sell the security prior to its anticipated recovery in value. We perform ongoing analyses of our liquidity needs, which includes cash flow testing of our policy liabilities, debt maturities, projected dividend payments and other cash flow and liquidity needs. Our cash flow testing includes extensive duration matching of our investment portfolio and policy liabilities. Based on our analyses, we have concluded that we have sufficient excess cash flows to meet our liquidity needs without liquidating any of our investments prior to their maturity. In addition, provided that our credit review process results in a conclusion that we will collect all of our cash flows and recover our investment in an issuer, we generally do not sell investments prior to their maturity.

The majority of our investments are evaluated for other-than-temporary impairment using our debt impairment model. Our debt impairment model focuses on the ultimate collection of the cash flows from our investments. Our investments in perpetual securities that are rated below investment grade are evaluated for other-than-temporary impairment under our equity impairment model. Our equity impairment model focuses on the severity of a security’s decline in fair value coupled with the length of time the fair value of the security has been below amortized cost.

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The following table details our pretax other-than-temporary impairment losses by investment category.

	Three Months Ended     March 31,
(In millions)	2010		2009
Perpetual securities	$	41	$	65
Corporate bonds		-		50
Collateralized debt obligations		-		113
Collateralized mortgage obligations		-		6
Equity securities		1		-
Total other-than-temporary impairments	$	42	$	234

We apply the debt security impairment model to our perpetual securities provided there has been no evidence of deterioration in credit of the issuer, such as a downgrade of the rating of a perpetual security to below investment grade. During the three-month period ended March 31, 2010, the perpetual securities of two issuers we own were downgraded to below investment grade. As a result of these downgrades, we were required to evaluate these securities for other-than-temporary impairment using the equity security impairment model rather than the debt security impairment model. Use of the equity security model limits the forecasted recovery period that can be used in the impairment evaluation and, accordingly, affects both the recognition and measurement of other-than-temporary impairment losses. As a result of market conditions and the extent of changes in ratings on our perpetual securities, we recognized other-than-temporary impairment losses for perpetual securities being evaluated under our equity impairment model of $41 million ($27 million after-tax) during the three-month period ended March 31, 2010, compared with $65 million ($42 million after-tax) during the three-month period ended March 31, 2009.

During our review of certain CMOs during the three-month period ended March 31, 2009, we determined that a portion of the other-than-temporary impairment of the securities was credit-related. However, we concluded a portion of the reduction in fair value below amortized cost was due to non-credit factors, which we believe we will recover. As a result, we recognized an impairment charge in earnings for credit-related declines in value of $6 million ($4 million after-tax) during the three-month period ended March 31, 2009. We recorded an unrealized loss in other comprehensive income of $4 million ($3 million after-tax) during the three-month period ended March 31, 2009, for the portion of the other-than-temporary impairment of these securities resulting from non-credit factors. We did not recognize any impairments of the CMOs in the three-month period ended March 31, 2010.

The other-than-temporary impairment losses recognized in the first three months of 2009, of which a portion was transferred to other comprehensive income, related only to the other-than-temporary impairment of certain of our investments in CMOs. The other-than-temporary impairment charges related to credit and all other factors other than credit were determined using statistical modeling techniques. The model projects expected cash flows from the underlying mortgage pools assuming various economic recession scenarios including, more significantly, geographical and regional home data, housing valuations, prepayment speeds, and economic recession statistics. The following table summarizes cumulative credit-related impairment losses on securities still held at the end of the reporting period for which other-than-temporary losses have been recognized and only the amount related to credit loss was recognized in earnings.

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	Three Months Ended     March 31,
(In millions)	2010		2009
Cumulative credit loss impairments, beginning of period	$	24	$	-
Credit losses for which an other-than-temporary impairment was not previously recognized		-		6
Securities sold during period		(1)		-
Cumulative credit loss impairments, end of period	$	23	$	6

Unrealized Investment Gains and Losses

Effect on Shareholders’ Equity

The net effect on shareholders’ equity of unrealized gains and losses from investment securities were as follows:

(In millions)	March 31,   2010		December 31,   2009
Unrealized gains (losses) on securities available for sale	$	(471)	$	(1,141)
Unamortized unrealized gains on securities transferred to held to maturity		141		148
Deferred income taxes		125		356
Shareholders’ equity, net unrealized gains (losses) on investment securities	$	(205)	$	(637)

Gross Unrealized Loss Aging

The following tables show the fair value and gross unrealized losses, including the portion of other-than-temporary impairment recognized in accumulated other comprehensive income, of our available-for-sale and held-to-maturity investments, aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position.

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	March 31, 2010
	Total				Less than 12 months				12 months or longer
(In millions)	Fair     Value		Unrealized Losses		Fair     Value		Unrealized Losses		Fair     Value		Unrealized   Losses
Fixed maturities:
U.S. government and agencies:
Dollar-denominated	$	93	$	2	$	28	$	-	$	65	$	2
Japan government and agencies:
Yen-denominated		5,105		123		1,691		15		3,414		108
Municipalities:
Dollar-denominated		425		25		371		10		54		15
Yen-denominated		281		6		251		5		30		1
Mortgage- and asset- backed securities:
Dollar-denominated		266		57		51		1		215		56
Yen-denominated		600		23		582		16		18		7
Public utilities:
Dollar-denominated		602		27		375		11		227		16
Yen-denominated		3,793		259		1,131		73		2,662		186
Sovereign and supranational:
Dollar-denominated		95		7		13		-		82		7
Yen-denominated		2,683		250		705		18		1,978		232
Banks/financial institutions:
Dollar-denominated		1,675		234		521		31		1,154		203
Yen-denominated		9,971		1,693		484		108		9,487		1,585
Other corporate:
Dollar-denominated		1,810		106		1,032		35		778		71
Yen-denominated		4,971		657		1,069		47		3,902		610
Total fixed maturities		32,370		3,469		8,304		370		24,066		3,099
Perpetual securities:
Dollar-denominated		190		48		36		12		154		36
Yen-denominated		2,656		552		444		67		2,212		485
Total perpetual securities		2,846		600		480		79		2,366		521
Equity securities		6		1		4		-		2		1
Total	$	35,222	$	4,070	$	8,788	$	449	$	26,434	$	3,621

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	December 31, 2009
	Total				Less than 12 months				12 months or longer
(In millions)	Fair     Value		Unrealized Losses		Fair     Value		Unrealized Losses		Fair     Value		Unrealized   Losses
Fixed maturities:
U.S. government and agencies:
Dollar-denominated	$	175	$	7	$	112	$	3	$	63	$	4
Japan government and agencies:
Yen-denominated		5,760		174		5,456		153		304		21
Municipalities:
Dollar-denominated		378		28		322		11		56		17
Yen-denominated		223		4		223		4		-		-
Mortgage- and asset- backed securities:
Dollar-denominated		338		78		78		3		260		75
Yen-denominated		54		6		35		-		19		6
Collateralized debt obligations:(1)
Dollar-denominated		117		100		-		-		117		100
Yen-denominated		181		38		-		-		181		38
Public utilities:
Dollar-denominated		465		42		200		10		265		32
Yen-denominated		3,290		217		592		37		2,698		180
Sovereign and supranational:
Dollar-denominated		92		9		43		3		49		6
Yen-denominated		2,331		239		948		31		1,383		208
Banks/financial institutions:
Dollar-denominated		1,325		259		305		14		1,020		245
Yen-denominated		10,306		1,768		807		313		9,499		1,455
Other corporate:
Dollar-denominated		1,393		108		535		13		858		95
Yen-denominated		6,084		818		1,643		93		4,441		725
Total fixed maturities		32,512		3,895		11,299		688		21,213		3,207
Perpetual securities:
Dollar-denominated		181		56		-		-		181		56
Yen-denominated		3,117		604		373		28		2,744		576
Total perpetual securities		3,298		660		373		28		2,925		632
Equity securities		6		2		3		1		3		1
Total	$	35,816	$	4,557	$	11,675	$	717	$	24,141	$	3,840

⁽¹⁾ Beginning January 1, 2010, these investments are consolidated and are no longer reported as a single investment.

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Analysis of Securities in Unrealized Loss Positions

The unrealized losses on our investments have been primarily related to changes in interest rates, foreign exchange rates or the widening of credit spreads rather than specific issuer credit-related events. In addition, because we do not intend to sell and do not believe it is likely that we will be required to sell these investments before a recovery of fair value to amortized cost, we do not consider any of these investments to be other-than-temporarily impaired as of and for the three-month period ended March 31, 2010. The following summarizes our evaluation of investment categories with significant unrealized losses and securities that were rated below investment grade. All other investment categories with securities in an unrealized loss position that are not specifically discussed below were comprised of investment grade fixed maturities.

Municipalities and Mortgage- and Asset-Backed Securities

At March 31, 2010, 71% of securities in the municipalities sector and 46% of securities in the mortgage- and asset-backed securities sector in an unrealized loss position were investment grade, compared with 74% and 39%, respectively, at the end of 2009. We have determined that the majority of the unrealized losses on the investments in these sectors were caused by widening credit spreads. However, we have determined that the ability of the issuers to service our investments has not been compromised. Unrealized gains or losses related to prevailing interest rate environments are impacted by the remaining time to maturity of an investment. Assuming no credit-related factors develop, as investments near maturity the unrealized gains or losses can be expected to diminish.

Bank and Financial Institution Investments

The following table shows the composition of our investments in an unrealized loss position in the bank and financial institution sector by fixed maturity securities and perpetual securities. The table reflects those securities in that sector that were in an unrealized loss position as a percentage of our total investment portfolio in an unrealized loss position and their respective unrealized losses as a percentage of total unrealized losses.

	March 31, 2010		December 31, 2009
	Percentage of Total Investments in an Unrealized Loss Position	Percentage of Total Unrealized Losses	Percentage of Total Investments in an Unrealized Loss Position	Percentage of         Total         Unrealized          Losses
Fixed maturities	33  %	47  %	33  %	44  %
Perpetual securities:
Upper Tier II	4	5	5	5
Tier I	4	10	4	10
Total perpetual securities	8	15	9	15
Total	41  %	62  %	42  %	59  %

Throughout 2008 and during the first half of 2009, banks and financial institutions suffered significant write-downs of asset values which created capital pressure. Weakness in housing sectors in the UK, U.S. and Europe, along with declines in the values of structured investment securities, were significant causes. In the second half of 2009, the valuation of these assets improved. To reduce capital pressure, banks and other financial institutions have sought to enhance their capital positions in part through exchanges and tender offers. In addition, national governments in these regions have provided support in various forms, ranging from guarantees on new and existing debt to significant injections of capital. Should capital markets deteriorate, more of these banks and financial institutions may need various forms of government support. While it does not appear to be a preferred solution, some troubled banks and financial institutions may be nationalized. Few nationalizations have occurred to date, and the governments have generally stood behind the classes of investments that we own.

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As of March 31, 2010, 82% of our investments in the bank and financial institution sector in an unrealized loss position was investment grade, compared with 75% at December 31, 2009. We have determined that the majority of the unrealized losses on the investments in this sector were caused by widening credit spreads, the downturn in the global economic environment and, to a lesser extent, changes in foreign exchange rates. Unrealized gains or losses related to prevailing interest rate environments are impacted by the remaining time to maturity of an investment. Assuming no credit-related factors develop, as investments near maturity, the unrealized gains or losses can be expected to diminish. Based on our credit analysis, we believe that our investments in this sector have the ability to service their obligations to us.

Other Corporate Investments

As of March 31, 2010, 52% of the securities in the other corporate sector in an unrealized loss position was investment grade, compared with 58% at December 31, 2009. For any credit-related declines in market value, we perform a more focused review of the related issuer’s credit ratings, financial statements and other available financial data, timeliness of payment, competitive environment and any other significant data related to the issuer. From those reviews, we evaluate the issuers’ continued ability to service our investments. We have determined that the majority of the unrealized losses on the investments in the other corporate sector were caused by widening credit spreads. Also impacting the unrealized losses in this sector is the decline in creditworthiness of certain issuers in the other corporate sector. Based on our credit analysis, we believe that our investments in this sector have the ability to service their obligation to us.

Perpetual Securities

At March 31, 2010, 97% of our total investments in perpetual securities in an unrealized loss position was investment grade, compared with 92% at December 31, 2009. The majority of our investments in Upper Tier II and Tier I perpetual securities were in highly-rated global financial institutions. Upper Tier II securities have more debt-like characteristics than Tier I securities and are senior to Tier I securities, preferred stock, and common equity of the issuer. Conversely, Tier I securities have more equity-like characteristics, but are senior to the common equity of the issuer. They may also be senior to certain preferred shares, depending on the individual security, the issuer’s capital structure and the regulatory jurisdiction of the issuer.

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Details of our holdings of perpetual securities as of March 31, 2010, were as follows:

Perpetual Securities

(In millions)	Credit Rating	Amortized Cost		Fair Value		Unrealized   Gain (Loss)
Upper Tier II:
	AA	$	177	$	188	$	11
	A		3,226		3,270		44
	BBB		874		882		8
	BB		975		1,117		142
Total Upper Tier II			5,252		5,457		205
Tier I:
	A		569		447		(122)
	BBB		1,326		1,059		(267)
	BB or lower		368		460		92
Total Tier I			2,263		1,966		(297)
Total		$	7,515	$	7,423	$	(92)

With the exception of the Icelandic bank securities that we completely impaired in 2008 and our Lloyds Banking Group plc dollar-denominated Tier I perpetual securities (par value of $33 million at March 31, 2010), all of the perpetual securities we own were current on interest and principal payments at March 31, 2010. Based on amortized cost as of March 31, 2010, the geographic breakdown of our perpetual securities by issuer was as follows: European countries, excluding the United Kingdom (67%); the United Kingdom (14%); Japan (14%); and other (5%). To determine any credit-related declines in market value, we perform a more focused review of the related issuer’s credit ratings, financial statements and other available financial data, timeliness of payment, competitive environment and any other significant data related to the issuer. From those reviews, we evaluate the issuer’s continued ability to service our investment.

We have determined that the majority of our unrealized losses in the perpetual security category was principally due to widening credit spreads, largely as the result of the contraction of liquidity in the capital markets. Based on our reviews, we concluded that the ability of the issuers to service our investment has not been compromised by these factors. Unrealized gains or losses related to prevailing interest rate environments are impacted by the remaining time to maturity of an investment. Assuming no credit-related factors develop, as the investments near economic maturity, the unrealized gains or losses can be expected to diminish. Based on our credit analyses, we believe that our investments in this sector have the ability to service their obligation to us.

Qualified Special Purpose Entities (QSPEs) and Variable Interest Entities (VIEs)

As discussed in Note 1, effective January 1, 2010, we have consolidated all of the components of each former QSPE investment, including a debt or hybrid instrument and a corresponding derivative transaction (swap). In addition, new criteria for determining the primary beneficiary of a VIE that is effective January 1, 2010, has resulted in the consolidation of additional VIE investments. Under accounting guidance in effect at December 31, 2009, QSPEs were exempt from consolidation and VIEs were evaluated for consolidation using a quantitative approach.

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The following table details our investments in VIEs and former QSPEs.

Investments in Qualified Special Purpose Entities

and Variable Interest Entities

	March 31, 2010						December 31, 2009
(In millions)	Amortized Cost			Fair Value			Amortized Cost		Fair Value
QSPEs:
Total QSPEs	$	-		$	-		$	4,405	$	4,089
VIEs:
Consolidated:
Total VIEs consolidated	$	6,320	(1)	$	6,105	(1)	$	1,809	$	1,522
Not consolidated:
CDOs		2			4			498		464
Other		9,946			9,513			727		689
Total VIEs not consolidated		9,948			9,517			1,225		1,153
Total VIEs	$	16,268		$	15,622		$	3,034	$	2,675

⁽¹⁾Includes CDOs and former QSPEs consolidated beginning on January 1, 2010

QSPEs

The underlying collateral in the former QSPEs, which we began consolidating effective January 1, 2010, is structured as fixed-maturity or perpetual investments, which we have classified as available for sale. We are the only beneficial interest holder in the former QSPEs and our risk of loss over the life of these investments is limited to the amount of our original investment.

VIEs

As a condition to our involvement or investment in a VIE, we enter into certain protective rights and covenants that preclude changes in the structure of the VIE that would alter the creditworthiness of our investment or our beneficial interest in the VIE.

Our involvement with all of the VIEs in which we have an interest is passive in nature, and we are not the arranger of these entities. Except as relates to our review and evaluation of the structure of these VIEs in the normal course of our investment decision-making process, we have not been involved in establishing these entities. Further, we have not been nor are we required to purchase the securities issued in the future by any of these VIEs.

Our ownership interest in the VIEs is limited to holding the obligations issued by them. All of the VIEs in which we invest are static with respect to funding and have no ongoing forms of funding after the initial funding date. We have no direct or contingent obligations to fund the limited activities of these VIEs, nor do we have any direct or indirect financial guarantees related to the limited activities of these VIEs. We have not provided any assistance or any other type of financing support to any of the VIEs we invest in, nor do we have any intention to do so in the future. The weighted-average lives of our notes are very similar to the underlying collateral held by these VIEs where applicable.

Our risk of loss related to our interests in any of our VIEs is limited to our investment in the debt securities issued by them.

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VIEs-Consolidated

We are substantively the only investor in the consolidated VIEs listed in the table above. As the sole investor in these VIEs, we have the power to direct the activities of a variable interest entity that most significantly impact the entity’s economic performance and are therefore considered to be the primary beneficiary of the VIEs that we consolidate. We also participate in substantially all of the variability created by these VIEs. The activities of these VIEs are limited to holding debt securities and interest rate and/or foreign currency swaps, as appropriate, and utilizing the cash flows from these securities to service our investment. Neither we nor any of our creditors are able to obtain the underlying collateral of the VIEs unless there is an event of default. Further, we are not a direct counterparty to the swap contracts and have no control over them. Our loss exposure to these VIEs is limited to our original investment.

Prior to January 1, 2010, we had interests in VIEs that we were not required to consolidate as reflected in the above table. Included in the VIEs that we did not consolidate are CDOs issued through VIEs originated by third parties. These VIEs combine highly rated underlying assets as collateral for the CDOs with CDSs to produce an investment security that consists of multiple asset tranches with varying levels of subordination within the VIE. However, subsequent to the adoption of new criteria for determining the primary beneficiary of a VIE, we have consolidated the majority of these investments effective January 1, 2010.

The underlying collateral assets and funding of these VIEs are generally static in nature. These VIEs are limited to holding the underlying collateral and CDS contracts on specific corporate entities and utilizing the cash flows from the collateral and CDS contracts to service our investment therein. The underlying collateral and the reference corporate entities covered by the CDS contracts are all investment grade at the time of issuance. These VIEs do not rely on outside or ongoing sources of funding to support their activities beyond the underlying collateral and CDS contracts. We currently own only senior CDO tranches within these VIEs.

Consistent with our other debt and perpetual securities we own, we are exposed to credit losses within these CDOs that could result in principal losses to our investments. We have mitigated our risk of credit loss through the structure of the VIE, which contractually requires the subordinated tranches within these VIEs to absorb the majority of the expected losses from the underlying credit default swaps. Based on our statistical analysis models, each of the VIEs can sustain a reasonable number of defaults in the underlying CDS pools with no loss to our investment.

VIEs-Not Consolidated

The VIEs that we are not required to consolidate are investments that are limited to loans in the form of debt obligations from the VIEs that are irrevocably and unconditionally guaranteed by their corporate parents. These VIEs are the primary financing vehicle used by their corporate sponsors to raise financing in the international capital markets. The variable interests created by these VIEs are principally or solely a result of the debt instruments issued by them. We do not have the power to direct the activities that most significantly impact the entity’s economic performance, nor do we have (1) the obligation to absorb losses of the entity or (2) the right to receive benefits from the entity. As such, we are not the primary beneficiary of these VIEs and are therefore not required to consolidate them. The increase in the amounts disclosed for VIEs not consolidated of $8.4 billion ($8.7 billion at amortized cost) at March 31, 2010, compared with December 31, 2009, was due to a change in disclosure requirements that was effective January 1, 2010.

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Securities Lending

We lend fixed-maturity securities to financial institutions in short-term security-lending transactions. These short-term security-lending arrangements increase investment income with minimal risk. Our security lending policy requires that the fair value of the securities and/or cash received as collateral be 102% or more of the fair value of the loaned securities. The following table presents our security loans outstanding and the corresponding collateral held:

(In millions)	March 31, 2010	December 31,     2009
Security loans outstanding, fair value	$    474	$    467
Cash collateral on loaned securities	486	483

All security lending agreements are callable by us at any time.

For general information regarding our investment accounting policies, see Note 1.

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4.   DERIVATIVE INSTRUMENTS

We do not use derivative financial instruments for trading purposes, nor do we engage in leveraged derivative transactions. The majority of our freestanding derivatives are interest rate, foreign currency and credit default swaps that are associated with investments in special-purpose entities, including VIEs where we are the primary beneficiary. The remaining derivatives are interest rate swaps associated with our variable interest rate yen-denominated debt.

Derivative Types

Interest rate and credit default swaps involve the periodic exchange of cash flows with other parties, at specified intervals, calculated using agreed upon rates or other financial variables and notional principal amounts. Generally, no cash or principal payments are exchanged at the inception of the contract. Typically, at the time a swap is entered into, the cash flow streams exchanged by the counterparties are equal in value. Interest rate swaps are primarily used to convert interest receipts on floating-rate fixed maturity securities contracts to fixed rates. These derivatives are predominantly used to better match cash receipts from assets with cash disbursements required to fund liabilities.

Credit default swaps are used to assume credit risk related to an individual security or an index. These contracts entitle the consolidated VIE to receive a periodic fee in exchange for an obligation to compensate the derivative counterparty should the referenced security issuers experience a credit event, as defined in the contract. The consolidated VIE is also exposed to credit risk due to embedded derivatives associated with credit-linked notes.

Foreign currency swaps exchange an initial principal amount in two currencies, agreeing to re-exchange the currencies at a future date, at an agreed upon exchange rate. There may also be a periodic exchange of payments at specified intervals calculated using the agreed upon rates and exchanged principal amounts. Foreign currency swaps are used primarily in the consolidated VIEs in our Aflac Japan portfolio to convert foreign denominated cash flows related to certain investment receipts and liability payments to yen, the functional currency of Aflac Japan, in order to minimize cash flow fluctuations due to changes in non-yen currency rates.

Credit Risk Assumed through Derivatives

Our exposure to credit risk in the event of nonperformance by counterparties to our interest rate swaps associated with our variable interest rate Uridashi notes as of March 31, 2010, was immaterial. For the interest rate, foreign currency, and credit default swaps associated with our VIE investments for which we are the primary beneficiary, we do not bear the risk of loss for counterparty default. We are not a direct counterparty to those contracts.

The consolidated VIE enters into credit default swaps that assume credit risk from an asset pool in order to synthetically replicate investment transactions. The consolidated VIE will receive periodic payments based on an agreed upon rate and notional amount and will only make a payment by delivery of associated collateral, which consists of highly rated asset-backed securities, if there is a credit event. A credit event payment will typically be equal to the notional value of the swap contract less the value of the referenced obligations. A credit event is generally defined as a default on contractually obligated interest or principal payments or bankruptcy of the referenced entity. The credit default swaps in which the consolidated VIE assumes credit risk primarily reference investment grade baskets. The diversified portfolios of corporate issuers are established within sector concentration limits.

The following table presents the maximum potential risk, fair value, weighted-average years to maturity, and underlying referenced credit obligation type for credit derivatives as of March 31, 2010.

35

	Less than one year				One to three years				Three to five years				Greater than five years				Total
(In millions)	Maximum potential Risk		Estimated fair value		Maximum potential risk		Estimated fair value		Maximum potential risk		Estimated fair value		Maximum potential risk		Estimated fair value		Maximum potential risk		Estimated fair value
Index exposure:
Corporate bonds	$	-	$	-	$	-	$	-	$	(326)	$	(93)	$	(393)	$	(198)	$	(719)	$	(291)

Derivative Balance Sheet Classification

The table below summarizes the balance sheet classification of the Company’s derivative fair value amounts, as well as the gross asset and liability fair value amounts. The fair value amounts presented do not include income accruals. The notional amount of derivative contracts represents the basis upon which pay or receive amounts are calculated. Notional amounts are not reflective of credit risk.

	Net Derivatives				Asset     Derivatives		Liability     Derivatives
(In millions)	Notional         Amount		Fair Value		Fair Value		Fair Value
Hedge Designation/ Derivative Type	March 31, 2010		March 31, 2010		March 31, 2010		March 31, 2010
Cash flow hedges:
Interest rate swaps	$	215	$	(3)	$	-	$	(3)
Foreign currency swaps		375		86		86		-
Total cash flow hedges	$	590	$	83	$	86	$	(3)
Non-qualifying strategies:
Interest rate swaps	$	708	$	45	$	73	$	(28)
Foreign currency swaps		3,538		(66)		133		(199)
Credit default swaps		719		(291)		-		(291)
Total non-qualifying strategies	$	4,965	$	(312)	$	206	$	(518)
Total cash flow hedges and non-qualifying strategies	$	5,555	$	(229)	$	292	$	(521)
Balance Sheet Location
Other assets	$	1,821	$	292	$	292	$	-
Other liabilities		3,734		(521)		-		(521)
Total derivatives	$	5,555	$	(229)	$	292	$	(521)

Hedging

As part of the adoption of the new accounting requirements associated with VIEs, we considered whether the interest rate and/or foreign currency swaps in the consolidated VIEs would qualify for hedge accounting treatment on January 1, 2010. For those that qualified, the Company designated the derivative on January 1, 2010, as a hedge of the variability in cash flows of a forecasted transaction or of amounts to be received or paid related to a recognized asset (“cash flow” hedge). We expect to continue this hedging activity for a weighted-average period of approximately 19 years. The remaining derivatives that did not qualify for hedge accounting were designated on January 1, 2010, as held for other investment purposes (“non-qualifying strategies”).

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We have interest rate swap agreements related to the 20 billion yen variable interest rate Uridashi notes (see Note 5). By entering into these contracts, we have been able to lock in the interest rate at 1.52% in yen. We have designated these interest rate swaps as a hedge of the variability in our interest cash flows associated with the variable interest rate Uridashi notes. The notional amounts and terms of the swaps match the principal amount and terms of the variable interest rate Uridashi notes. The swaps had no value at inception. Changes in the fair value of the swap contracts are recorded in other comprehensive income so long as the hedge is deemed effective. Should any portion of the hedge be deemed ineffective, that value would be reported in net earnings. This hedge was effective during the three-month periods ended March 31, 2010, and 2009, therefore there was no impact on net earnings.

Hedge Documentation and Effectiveness Testing

To qualify for hedge accounting treatment, a derivative must be highly effective in mitigating the designated changes in cash flow of the hedged item. At hedge inception, the Company formally documents all relationships between hedging instruments and hedged items, as well as its risk-management objective and strategy for undertaking each hedge transaction. The documentation process includes linking derivatives that are designated as cash flow hedges to specific assets or liabilities on the statement of financial position or to specific forecasted transactions and defining the effectiveness and ineffectiveness testing methods to be used. The Company also formally assesses both at the hedge’s inception and ongoing on a quarterly basis, whether the derivatives that are used in hedging transactions have been and are expected to continue to be highly effective in offsetting changes in cash flows of hedged items. Hedge effectiveness is assessed using qualitative and quantitative methods. Qualitative methods may include the comparison of critical terms of the derivative to the hedged item. Quantitative methods include regression or other statistical analysis of changes in cash flows associated with the hedge relationship. Hedge ineffectiveness of the hedge relationships are measured each reporting period using the “Hypothetical Derivative Method.”

For derivative instruments that are designated and qualify as cash flow hedges, the effective portion of the gain or loss on the derivative is reported as a component of other comprehensive income and reclassified into earnings in the same period or periods during which the hedged transaction affects earnings. Gains and losses on the derivative representing hedge ineffectiveness are recognized in current earnings as a component of realized gains (losses). All components of each derivative’s gain or loss were included in the assessment of hedge effectiveness.

Discontinuance of Hedge Accounting

The Company discontinues hedge accounting prospectively when (1) it is determined that the derivative is no longer highly effective in offsetting changes in the cash flows of a hedged item; (2) the derivative is de-designated as a hedging instrument; or (3) the derivative expires or is sold, terminated or exercised.

When hedge accounting is discontinued on a cash-flow hedge, including those where the derivative is sold, terminated or exercised, amounts previously deferred in other comprehensive income are reclassified into earnings when earnings are impacted by the variability of the cash flow of the hedged item.

Cash Flow Hedges

The following table presents the components of the gain or loss on derivatives that qualify as cash flow hedges:

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Derivatives in Cash Flow Hedging Relationships

(In millions)	Gain (Loss) Recognized in Other Comprehensive Income on Derivative (Effective Portion)	Net Realized Investment Gains (Losses) Recognized in Income on Derivative (Ineffective Portion)
	Three Months Ended March 31, 2010	Three Months Ended March 31, 2010
Interest rate swaps	$                   1	$                   -
Foreign currency swaps	(11)	(3)
Total	$                (10)	$                 (3)

There was no gain or loss reclassified from accumulated other comprehensive income into earnings related to our cash flow hedges for the three-month period ended March 31, 2010. As of March 31, 2010, the before-tax deferred net gains on derivative instruments recorded in other comprehensive income that are expected to be reclassified to earnings during the next twelve months is immaterial.

Non-qualifying Strategies

The Company’s other derivative activities in VIEs do not receive hedge accounting treatment. Changes in the fair value for these derivative instruments are reported in current period earnings as net realized investment gains (losses). The following table presents the gain or loss recognized in income on non-qualifying strategies:

Non-qualifying Strategies

Gain (Loss) Recognized within Net Realized Investment Gains (Losses)

(In millions)	Three Months Ended         March 31, 2010
Interest rate swaps	$      (5)
Foreign currency swaps	4
Credit default swaps	21
Total	$      20

Nonderivative Hedges

We have designated a majority of the Parent Company’s yen-denominated Samurai and Uridashi notes and yen-denominated loans (see Note 6) as nonderivative hedges of the foreign currency exposure of our investment in Aflac Japan. Our net investment hedge was effective during the three-month periods ended March 31, 2010, and 2009; therefore, there was no impact on net earnings during those periods.

For additional information on our financial instruments, see the accompanying Notes 1, 3 and 5 and Notes 1, 3 and 4 of the Notes to the Consolidated Financial Statements in our annual report to shareholders for the year ended December 31, 2009.

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5.  FAIR VALUE MEASUREMENTS

We determine the fair values of our debt, derivative, perpetual and privately issued equity securities primarily using three pricing approaches or techniques: quoted market prices readily available from public exchange markets, a discounted cash flow (DCF) pricing model, and price quotes we obtain from outside brokers.

Our DCF pricing model utilizes various market inputs we obtain from both active and inactive markets. The estimated fair values developed by the DCF pricing models are most sensitive to prevailing credit spreads, the level of interest rates (yields) and interest rate volatility. Credit spreads are derived based on pricing data obtained from investment brokers and take into account the current yield curve, time to maturity and subordination levels for similar securities or classes of securities. We validate the reliability of the DCF pricing models periodically by using the models to price investments for which there are quoted market prices from active and inactive markets or, in the alternative, are quoted by our custodian for the same or similar securities.

The pricing data and market quotes we obtain from outside sources are reviewed internally for reasonableness. If a fair value appears unreasonable, the inputs are re-examined and the value is confirmed or revised.

In recent years, we have noted a continued reduction in the availability of pricing data from market sources. This decline is due largely to the contraction of liquidity in the global markets and a reduction in the overall number of sources to provide pricing data. As a result, we have noted that available pricing data has become more volatile. The reduction in available pricing sources coupled with the increase in price volatility has increased the degree of management judgment required in the final determination of fair values. We assess the reasonableness of the pricing data we receive by comparing it to relevant market indices and other performance measurements. The final pricing data used to determine fair values is based on management’s judgment.

Fair Value Hierarchy

GAAP specifies a hierarchy of valuation techniques based on whether the inputs to those valuation techniques are observable or unobservable. These two types of inputs create three valuation hierarchy levels. Level 1 valuations reflect quoted market prices for identical assets or liabilities in active markets. Level 2 valuations reflect quoted market prices for similar assets or liabilities in an active market, quoted market prices for identical or similar assets or liabilities in non-active markets or model-derived valuations in which all significant valuation inputs are observable in active markets. Level 3 valuations reflect valuations in which one or more of the significant valuation inputs are not observable in an active market. The vast majority of our financial instruments subject to the classification provisions of GAAP relate to our investment securities classified as securities available for sale in our investment portfolio. We determine the fair value of our securities available for sale using several sources or techniques based on the type and nature of the investment securities.

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The following tables present the fair value hierarchy levels of the Company’s assets and liabilities that are measured at fair value on a recurring basis.

	March 31, 2010
(In millions)	Level 1		Level 2		Level 3		Total
Assets:
Fixed maturities:
Government and agencies	$	12,020	$	681	$	-	$	12,701
Municipalities		-		706		-		706
Mortgage- and asset-backed securities		-		1,738		63		1,801
Public utilities		-		3,888		488		4,376
Collateralized debt obligations		-		-		4		4
Sovereign and supranational		-		879		298		1,177
Banks/financial institutions		-		5,745		1,103		6,848
Other corporate		-		9,569		1,253		10,822
Total fixed maturities		12,020		23,206		3,209		38,435
Perpetual securities:
Banks/financial institutions		-		5,410		1,695		7,105
Other corporate		-		318		-		318
Total perpetual securities		-		5,728		1,695		7,423
Equity securities		15		-		9		24
Other assets:
Interest rate swaps		-		73		-		73
Foreign currency swaps		-		219		-		219
Total other assets		-		292		-		292
Total assets	$	12,035	$	29,226	$	4,913	$	46,174
Liabilities:
Interest rate swaps	$	-	$	31	$	-	$	31
Foreign currency swaps		-		199		-		199
Credit default swaps		-		-		291		291
Total liabilities	$	-	$	230	$	291	$	521

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	December 31, 2009
(In millions)	Level 1		Level 2		Level 3		Total
Assets:
Fixed maturities:
Government and agencies	$	10,178	$	1,980	$	-	$	12,158
Municipalities		-		495		-		495
Mortgage- and asset-backed securities		-		1,017		62		1,079
Public utilities		35		3,486		497		4,018
Collateralized debt obligations(1)		-		-		267		267
Sovereign and supranational		-		864		293		1,157
Banks/financial institutions		-		5,852		1,240		7,092
Other corporate		13		9,254		1,248		10,515
Total fixed maturities		10,226		22,948		3,607		36,781
Perpetual securities:
Banks/financial institutions		-		5,503		1,441		6,944
Other corporate		-		319		-		319
Total perpetual securities		-		5,822		1,441		7,263
Equity securities		15		-		9		24
Total assets	$	10,241	$	28,770	$	5,057	$	44,068
Liabilities:
Interest rate swaps	$	-	$	3	$	-	$	3
Total liabilities	$	-	$	3	$	-	$	3

⁽¹⁾ Beginning January 1, 2010, the majority of these investments are consolidated and are no longer reported as a single investment.

Approximately 51% of our investments classified as Level 2 are valued by obtaining quoted market prices from our investment custodian. The custodian obtains price quotes from various pricing services that estimate fair values based on observable market transactions for similar investments in active markets, market transactions for the same investments in inactive markets or other observable market data where available.

The fair value of approximately 42% of our Level 2 investments is determined using our DCF pricing model. The significant valuation inputs to the DCF model are obtained from, or corroborated by, observable market sources from both active and inactive markets.

For the remaining Level 2 investments that are not quoted by our custodian and cannot be priced under the DCF pricing model, we obtain specific broker quotes from up to three outside securities brokers and generally use the average of the quotes to estimate the fair value of the securities.

We use derivative instruments to manage the risk associated with certain assets. However, the derivative instrument may not be classified with the same fair value hierarchy as the associated asset. Derivative instruments are reported in Level 2 of the fair value hierarchy.

The interest rate and foreign currency derivative instruments were priced by broker quotations using inputs that are observable in the market. Inputs used to value derivatives include, but are not limited to, interest rates, foreign currency forward and spot rates, credit spreads and correlations, and interest volatility. For any derivatives associated with any of our VIEs where we are the primary beneficiary, we are not the direct counterparty to the swap contracts. As a result, the fair value measurements provided by the broker incorporate the credit risk of the collateral associated with the VIE and counterparty credit risk. All other derivatives where we are the direct counterparty incorporate our credit risk along with counterparty credit risk in the valuation.

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The fair value of our interest rate swap contracts associated with our variable interest rate yen-denominated debt is based on the amount we would expect to receive or pay to terminate the swaps. The prices used to determine the value of the swaps are obtained from the respective swap counterparties and take into account current interest rates, duration, counterparty credit risk and our own credit rating.

The fixed maturities, perpetual securities and CDSs classified as Level 3 consist of securities for which there are limited or no observable valuation inputs. We estimate the fair value of these securities by obtaining broker quotes from a limited number of brokers. These brokers base their quotes on a combination of their knowledge of the current pricing environment and market flows. We consider these inputs unobservable. The equity securities classified in Level 3 are related to investments in Japanese businesses, each of which are insignificant and in the aggregate are immaterial. Because fair values for these investments are not readily available, we carry them at their original cost. We review each of these investments periodically and, in the event we determine that any are other-than-temporarily impaired, we write them down to their estimated fair value at that time.

Historically, we have not adjusted the quotes or prices we obtain from the brokers and pricing services we use.

The following tables present the changes in our available-for-sale investments and derivatives classified as Level 3.

	Three Months Ended March 31, 2010
(In millions)	Balance, Beginning of Period		Effect of Change in Accounting Principle (1)		Revised Balance, Beginning of Period		Realized Gains or Losses Included in Earnings		Unrealized Gains or Losses Included in Other Comprehensive Income		Purchases, Issuances, Sales, and Settlements		Transfers Into and/or Out of Level 3		Balance, End of Period		Change in Unrealized Gains (Losses) Still Held(2)
Fixed maturities:
Mortgage- and asset- backed securities	$	62	$	-	$	62	$	-	$	1	$	-	$	-	$	63	$	-
Public utilities		497		-		497		-		(9)		-		-		488		-
Collateralized debt obligations		267		(263)		4		-		-		-		-		4		-
Sovereign and supranational		293		-		293		-		5		-		-		298		-
Banks/financial institutions		1,240		-		1,240		5		33		(175)		-		1,103		-
Other corporate		1,248		-		1,248		-		5		-		-		1,253		-
Total fixed maturities		3,607		(263)		3,344		5		35		(175)		-		3,209		-
Perpetual Securities:
Bank/financial institutions		1,441		-		1,441		(17)		176		(54)		149		1,695		(25)
Total perpetual securities		1,441		-		1,441		(17)		176		(54)		149		1,695		(25)
Equity securities		9		-		9		-		-		-		-		9		-
Credit default swaps		-		(312)		(312)		21		-		-		-		(291)		21
Total	$	5,057	$	(575)	$	4,482	$	9	$	211	$	(229)	$	149	$	4,622	$	(4)

⁽¹⁾ Change in accounting for VIEs effective January 1, 2010. See Notes 1, 3 and 4 for additional information.

⁽²⁾ Represents the amount of total gains or losses for the period, included in earnings, attributable to the change in unrealized gains (losses) relating to assets classified as Level 3 that were still held at March 31, 2010

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	Three Months Ended March 31, 2009
(In millions)	Balance, Beginning of Period		Realized Gains or Losses Included in Earnings		Unrealized Gains or Losses Included in Other Comprehensive Income		Purchases, Issuances, Sales, and Settlements		Transfers Into and/ or Out of Level 3		Balance, End of Period		Change in Unrealized Gains (Losses) Still  Held(1)
Fixed maturities:
Mortgage- and asset-backed securities	$	35	$	-	$	(1)	$	-	$	-	$	34	$	-
Public utilities		502		-		(40)		-		-		462		-
Collateralized debt obligations(2)		19		(114)		147		-		22		74		(114)
Sovereign and supranational		260		-		(51)		-		-		209		-
Banks/financial institutions		876		-		(125)		-		88		839		-
Other corporate		898		-		(62)		-		200		1,036		-
Total fixed maturities		2,590		(114)		(132)		-		310		2,654		(114)
Perpetual securities:
Banks/financial institutions		412		-		(133)		-		357		636		-
Total perpetual securities		412		-		(133)		-		357		636		-
Equity securities		4		-		-		-		6		10		-
Total	$	3,006	$	(114)	$	(265)	$	-	$	673	$	3,300	$	(114)

⁽¹⁾ Represents the amount of total gains or losses for the period, included in earnings, attributable to the change in unrealized gains (losses) relating to assets classified as Level 3 that were still held at March 31, 2009

⁽²⁾ Beginning January 1, 2010, the majority of these investments are consolidated and are no longer reported as a single investment.

The inputs we receive from pricing brokers for forward exchange rates and the credit spreads for certain issuers, including liquidity risk, have become increasingly difficult for us to observe or corroborate in the markets for our investments in CDOs (prior to January 1, 2010), callable reverse-dual currency securities (RDCs), securities rated below investment grade, and to a lesser extent less liquid sinking fund securities. This has resulted in the transfer of affected fixed maturities available for sale from the Level 2 valuation category into the Level 3 valuation category.

As discussed in Notes 1 and 3, we adopted new accounting guidance on VIEs effective January 1, 2010, and as a result have consolidated certain VIE investments. Upon consolidation, the beneficial interest was derecognized and the underlying securities and derivatives were recognized. In many cases, the fair value hierarchy level differed between the original beneficial interest asset and the underlying securities that are now being recognized. In the Level 3 rollforward, we have separately disclosed the impact of consolidating these VIE investments that were previously categorized as Level 3 and now the underlying securities are Level 2. As noted in the Level 3 rollforward above, the CDSs which are separately recognized as a result of this change in accounting are reported as Level 3 investments. In addition, approximately $1.0 billion of Level 2 investments were reclassified upon the adoption of this guidance, and their underlying securities are being reported as Level 1 as of January 1, 2010.

During the first three months of 2010, we transferred investments totaling $149 million into Level 3 from Level 2 as a result of credit downgrades of the respective securities to below investment grade. During the year ended December 31, 2009, we transferred investments totaling $1.8 billion into Level 3 as a result of credit downgrades of the respective securities to below investment grade.

The significant valuation inputs that are used in the valuation process for the below-investment-grade, callable RDC and private placement investments classified as Level 3 include forward exchange rates, yen swap rates, dollar swap rates, interest rate volatilities, credit spread data on specific issuers, assumed default and default recovery rates, certain probability assumptions, and call option data.

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Some of these securities require the calculation of a theoretical forward exchange rate which is developed by using yen swap rates, U.S. dollar swap rates, interest rate volatilities, and spot exchange rates. The forward exchange rate is then used to convert all future dollar cash flows of the bond, where applicable, into yen cash flows. Additionally, credit spreads for the individual issuers are key valuation inputs of these securities. Finally, in pricing securities with a call option, the assumptions regarding interest rates in the U.S. and Japan are considered to be significant valuation inputs. Collectively, these valuation inputs, are included to estimate the fair values of these securities at each reporting date.

In obtaining the above valuation inputs, we have determined that certain pricing assumptions and data used by our pricing sources are becoming increasingly more difficult to validate or corroborate by the market and/or appear to be internally developed rather than observed in or corroborated by the market. The use of these unobservable valuation inputs causes more subjectivity in the valuation process for these securities and consequently, causes more volatility in their estimated fair values.

Fair Value of Financial Instruments

The carrying values and estimated fair values of the Company’s financial instruments were as follows:

	March 31, 2010				December 31, 2009
(In millions)	Carrying Value		Fair Value		Carrying Value		Fair Value
Assets:
Fixed-maturity securities	$	59,853	$	59,023	$	63,468	$	62,609
Fixed-maturity securities - consolidated variable interest entities		4,981		4,900		-		-
Perpetual securities		6,218		6,218		7,263		7,263
Perpetual securities - consolidated variable interest entities		1,205		1,205		-		-
Equity securities		24		24		24		24
Interest rate, foreign currency, and credit default swaps		292		292		-		-
Liabilities:
Notes payable (excluding capitalized leases)		2,578		2,754		2,593		2,683
Interest rate, foreign currency, and credit default swaps		521		521		3		3
Obligation to Japanese policyholder protection corporation		111		111		128		128

As mentioned previously, we determine the fair values of our debt, perpetual and privately issued equity securities, and our derivatives using three basic pricing approaches or techniques: quoted market prices readily available from public exchange markets, a DCF pricing model, and price quotes we obtain from outside brokers.

The fair values of notes payable with fixed interest rates were obtained from an independent financial information service. The fair value of the obligation to the Japanese policyholder protection corporation is our estimated share of the industry’s obligation calculated on a pro rata basis by projecting our percentage of the industry’s premiums and reserves and applying that percentage to the total industry obligation payable in future years.

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The carrying amounts for cash and cash equivalents, receivables, accrued investment income, accounts payable, cash collateral and payables for security transactions approximated their fair values due to the short-term nature of these instruments. Consequently, such instruments are not included in the above table. The preceding table also excludes liabilities for future policy benefits and unpaid policy claims as these liabilities are not financial instruments as defined by GAAP.

DCF Sensitivity

Our DCF pricing model utilizes various market inputs we obtain from both active and inactive markets. The estimated fair values developed by the DCF pricing models are most sensitive to prevailing credit spreads, the level of interest rates (yields) and interest rate volatility. Management believes that under normal market conditions, a movement of 50 basis points (bps) in the key assumptions used to estimate these fair values would be reasonably likely. Therefore, we selected a uniform magnitude of movement (50 bps) and provided both upward and downward movements in the assumptions. Since the changes in fair value are relatively linear, readers of these financial statements can make their own judgments as to the movement in interest rates and the change in fair value based upon this data. The following scenarios provide a view of the sensitivity of our securities priced by our DCF pricing model.

The fair values of our available-for-sale fixed-maturity and perpetual securities valued by our DCF pricing model totaled $12.2 billion at March 31, 2010. The estimated effect of potential changes in interest rates, credit spreads and interest rate volatility on these fair values as of such date is as follows:

Interest Rates			Credit Spreads			Interest Rate Volatility
Factor change	Change in fair value   (in millions)		Factor change	Change in fair value   (in millions)		Factor change	Change in fair value   (in millions)
+50 bps	$	(583)	+50 bps	$	(578)	+50 bps	$	(10)
-50 bps		626	-50 bps		621	-50 bps		2

The fair values of our held-to-maturity fixed-maturity securities valued by our DCF pricing model totaled $24.0 billion at March 31, 2010. The estimated effect of potential changes in interest rates, credit spreads and interest rate volatility on these fair values as of such date is as follows:

Interest Rates			Credit Spreads			Interest Rate Volatility
Factor change	Change in fair value   (in millions)		Factor change	Change in fair value   (in millions)		Factor change	Change in fair value   (in millions)
+50 bps	$	(1,591)	+50 bps	$	(1,477)	+50 bps	$	(447)
-50 bps		1,648	-50 bps		1,513	-50 bps		291

The two tables above illustrate the differences on the fair values of our investment portfolio among each of the inputs for interest rates, credit spreads and interest volatility. These differences are driven principally by the securities in our portfolio that have call features. These call features cause the fair values of the affected securities to react differently depending on the inputs used to price these securities.

For additional information on our investments and financial instruments, see the accompanying Notes 1, 3 and 4 and Notes 1, 3 and 4 of the Notes to the Consolidated Financial Statements in our annual report to shareholders for the year ended December 31, 2009.

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6. NOTES PAYABLE

A summary of notes payable follows:

(In millions)	March 31,   2010		December 31,   2009
8.50% senior notes due May 2019	$	850	$	850
6.90% senior notes due December 2039		396  (1)		396   (1)
Yen-denominated Uridashi notes:
1.52% notes due September 2011 (principal amount 15 billion yen)		161		163
2.26% notes due September 2016 (principal amount 8 billion yen)		86		87
Variable interest rate notes due September 2011 (.68% at March 2010, principal amount 20 billion yen)		215		217
Yen-denominated Samurai notes:
.71% notes due July 2010 (principal amount 39.4 billion yen)		423		428
1.87% notes due June 2012 (principal amount 26.6 billion yen)		286		289
Yen-denominated loans:
3.60% loan due July 2015 (principal amount 10 billion yen)		107		109
3.00% loan due August 2015 (principal amount 5 billion yen)		54		54
Capitalized lease obligations payable through 2015		6		6
Total notes payable	$	2,584	$	2,599

     ⁽¹⁾ $400 issuance net of a $4 underwriting discount that is being amortized over the life of the notes

We have no restrictive financial covenants related to our notes payable. We were in compliance with all of the covenants of our notes payable at March 31, 2010. No events of default or defaults occurred during the three months ended March 31, 2010.

For additional information, see Notes 4 and 7 of the Notes to the Consolidated Financial Statements in our annual report to shareholders for the year ended December 31, 2009.

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7. SHAREHOLDERS’ EQUITY

The following table is a reconciliation of the number of shares of the Company’s common stock for the three-month periods ended March 31.

(In thousands of shares)	2010		2009
Common stock - issued:
Balance, beginning of period	661,209		660,035
Exercise of stock options and issuance of restricted shares	590		391
Balance, end of period	661,799		660,426
Treasury stock:
Balance, beginning of period	192,641		193,420
Purchases of treasury stock:
Open market	-		-
Other	94		85
Dispositions of treasury stock:
Shares issued to AFL Stock Plan	-		(355	)
Exercise of stock options	(270	)	(13	)
Other	(88	)	(135	)
Balance, end of period	192,377		193,002
Shares outstanding, end of period	469,422		467,424

Outstanding share-based awards are excluded from the calculation of weighted-average shares used in the computation of basic earnings per share. The following table presents the approximate number of share-based awards to purchase shares, on a weighted-average basis, that were considered to be anti-dilutive and were excluded from the calculation of diluted earnings per share for the three-month periods ended March 31.

(In thousands)	2010	2009
Anti-dilutive share-based awards	2,450	15,367

As of March 31, 2010, a remaining balance of 32.4 million shares of our common stock was available for purchase under share repurchase authorizations by our board of directors. The 32.4 million shares were comprised of 2.4 million shares remaining from a board authorization in 2006 and 30.0 million shares remaining from an authorization by the board of directors in 2008.

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8. SHARE-BASED TRANSACTIONS

The Company has two long-term incentive compensation plans. The first plan, which expired in February 2007, is a stock option plan which allowed grants for incentive stock options (ISOs) to employees and non-qualifying stock options (NQSOs) to employees and non-employee directors. Options granted before the plan’s expiration date remain outstanding in accordance with their terms. The second long-term incentive plan allows awards to Company employees for ISOs, NQSOs, restricted stock, restricted stock units, and stock appreciation rights. Non-employee directors are eligible for grants of NQSOs, restricted stock, and stock appreciation rights. As of March 31, 2010, approximately 16.7 million shares were available for future grants under this plan, and the only performance-based awards issued and outstanding were restricted stock awards.

Share-based awards granted to U.S.-based grantees are settled with authorized but unissued Company stock, while those issued to Japan-based grantees are settled with treasury shares.

The following table provides information on stock options outstanding and exercisable at March 31, 2010.

	Stock Option Shares (in thousands)	Weighted-Average   Remaining Term (in years)	Aggregate Intrinsic Value   (in millions)	Weighted-Average   Exercise Price Per Share
Outstanding	16,777	5.4	$        270	$    38.79
Exercisable	12,769	4.3	213	37.82

We received cash from the exercise of stock options in the amount of $13.4 million during the first quarter of 2010, compared with $.4 million in the first quarter of 2009. The tax benefit realized as a result of stock option exercises and restricted stock releases was $11 million in the first quarter of 2010, compared with $2 million in the first quarter of 2009.

As of March 31, 2010, total compensation cost not yet recognized in our financial statements related to restricted-share-based awards was $32 million, of which $15 million (626 thousand shares) was related to restricted-share-based awards with a performance-based vesting condition. We expect to recognize these amounts over a weighted-average period of approximately two years. There are no other contractual terms covering restricted stock awards once vested.

For additional information on our long-term share-based compensation plans and the types of share-based awards, see Note 10 of the Notes to the Consolidated Financial Statements included in our annual report to shareholders for the year ended December 31, 2009.

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9. BENEFIT PLANS

Our basic employee defined-benefit pension plans cover substantially all of our full-time employees in the United States and Japan. The components of retirement expense for the Japanese and U.S. pension plans were as follows:

	Three Months Ended March 31,
	2010				2009
(In millions)	Japan		U.S.		Japan		U.S.
Components of net periodic benefit cost:
Service cost	$	3	$	3	$	3	$	2
Interest cost		1		3		1		3
Expected return on plan assets		(1)		(3)		(1)		(3)
Amortization of net actuarial loss		1		1		1		1
Net periodic benefit cost	$	4	$	4	$	4	$	3

During the three months ended March 31, 2010, Aflac Japan contributed approximately $4 million (using the March 31, 2010, exchange rate) to the Japanese pension plan, and Aflac U.S. did not make a contribution to the U.S. pension plan.

For additional information regarding our Japanese and U.S. benefit plans, see Note 12 of the Notes to the Consolidated Financial Statements in our annual report to shareholders for the year ended December 31, 2009.

10. COMMITMENTS AND CONTINGENT LIABILITIES

We are a defendant in various lawsuits considered to be in the normal course of business. Members of our senior legal and financial management teams review litigation on a quarterly and annual basis. The final results of any litigation 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, we believe the outcome of pending litigation will not have a material adverse effect on our financial position, results of operations, or cash flows.

11. SUBSEQUENT EVENTS

At March 31, 2010, we had Greek exposure of $1.3 billion, at amortized cost, available-for-sale fixed maturity investments comprised of $1.0 billion invested in Greek financial institutions and $280 million in Greek sovereign debt. Subsequent to March 31, 2010, the Greek financial institutions were downgraded to below investment grade. We continue to believe that these issuers have the ability to meet their obligations to us, and we have the intent to hold these investments to recovery in value. As a result, we have not recognized an other-than-temporary impairment for these investments as of March 31, 2010.

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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

FORWARD-LOOKING INFORMATION

The Private Securities Litigation Reform Act of 1995 provides a “safe harbor” to encourage companies to provide prospective information, so long as those informational statements are identified as forward-looking and are accompanied by meaningful cautionary statements identifying important factors that could cause actual results to differ materially from those included in the forward-looking statements. We desire to take advantage of these provisions. This report contains cautionary statements identifying important factors that could cause actual results to differ materially from those projected herein, and in any other statements made by Company officials in communications with the financial community and contained in documents filed with the Securities and Exchange Commission (SEC). Forward-looking statements are not based on historical information and relate to future operations, strategies, financial results or other developments. Furthermore, forward-looking information is subject to numerous assumptions, risks and uncertainties. In particular, statements containing words such as “expect,” “anticipate,” “believe,” “goal,” “objective,” “may,” “should,” “estimate,” “intends,” “projects,” “will,” “assumes,” “potential,” “target” or similar words as well as specific projections of future results, generally qualify as forward-looking. Aflac undertakes no obligation to update such forward-looking statements.

We caution readers that the following factors, in addition to other factors mentioned from time to time, could cause actual results to differ materially from those contemplated by the forward-looking statements:

— difficult conditions in global capital markets and the economy

— governmental actions for the purpose of stabilizing the financial markets

— defaults and downgrades in certain securities in our investment portfolio

— impairment of financial institutions

— credit and other risks associated with Aflac’s investment in perpetual securities

— differing judgments applied to investment valuations

— subjective determinations of amount of impairments taken on our investments

— limited availability of acceptable yen-denominated investments

— concentration of our investments in any particular sector

— concentration of business in Japan

— ongoing changes in our industry

— exposure to significant financial and capital markets risk

— fluctuations in foreign currency exchange rates

— significant changes in investment yield rates

— deviations in actual experience from pricing and reserving assumptions

— subsidiaries’ ability to pay dividends to the Parent Company

— changes in law or regulation by governmental authorities

— ability to attract and retain qualified sales associates and employees

— decreases in our financial strength or debt ratings

— ability to continue to develop and implement improvements in information technology systems

— changes in U.S. and/or Japanese accounting standards

— failure to comply with restrictions on patient privacy and information security

— level and outcome of litigation

— ability to effectively manage key executive succession

— catastrophic events

— failure of internal controls or corporate governance policies and procedures

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MD&A OVERVIEW

Management’s Discussion and Analysis of Financial Condition and Results of Operations (MD&A) is intended to inform the reader about matters affecting the financial condition and results of operations of Aflac Incorporated and its subsidiaries for the period from December 31, 2009, to March 31, 2010. As a result, the following discussion should be read in conjunction with the consolidated financial statements and notes that are included in our annual report to shareholders for the year ended December 31, 2009. This MD&A is divided into the following sections:

— Our Business

— Performance Highlights

— Critical Accounting Estimates

— Results of Operations, consolidated and by segment

— Analysis of Financial Condition, including discussion of market risks of financial instruments

— Capital Resources and Liquidity, including discussion of availability of capital and the sources and uses of cash

OUR BUSINESS

Aflac Incorporated (the Parent Company) and its subsidiaries (collectively, the Company) primarily sell supplemental health and life insurance in the United States and Japan. The Company’s insurance business is marketed and administered through American Family Life Assurance Company of Columbus (Aflac), which operates in the United States (Aflac U.S.) and as a branch in Japan (Aflac Japan). Most of Aflac’s policies are individually underwritten and marketed through independent agents. Aflac U.S. markets and administers group products through Continental American Insurance Company (CAIC). Our insurance operations in the United States and our branch in Japan service the two markets for our insurance business.

PERFORMANCE HIGHLIGHTS

Results for the first quarter of 2010 benefited from the stronger yen. Total revenues rose 5.1% to $5.1 billion, compared with $4.8 billion in the first quarter of 2009. Net earnings were $636 million, or $1.35 per diluted share, compared with $569 million, or $1.22 per share, in the first quarter of 2009.

We experienced net realized investment losses of $46 million in the first quarter of 2010, which included the recognition of other-than-temporary impairments of $42 million. During the first quarter of 2010, we had a $478 million decrease in gross unrealized losses on our available-for-sale debt and perpetual securities due primarily to improved fair values for many categories of investment securities.

CRITICAL ACCOUNTING ESTIMATES

We prepare our financial statements in accordance with U.S. generally accepted accounting principles (GAAP). These principles are established primarily by the Financial Accounting Standards Board (FASB). In this MD&A, references to GAAP issued by the FASB are derived from the FASB Accounting Standards Codification^TM (ASC). The preparation of financial statements in conformity with GAAP requires us to make estimates based on currently available information when recording transactions resulting from business operations. The estimates that we deem to be most critical to an understanding of Aflac’s results of operations and financial condition are those related to the valuation of investments, deferred policy acquisition costs, liabilities for future policy benefits and unpaid policy claims, and income taxes. The preparation and evaluation of these critical accounting estimates involve the use of various assumptions developed from management’s analyses and judgments. The application of these critical accounting estimates determines the values at which 94% of our assets and 87% of our liabilities are reported as of March 31, 2010, and thus has a direct effect on net earnings and shareholders’ equity. Subsequent experience or use of other assumptions could produce significantly different results.

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There have been no changes in the items that we have identified as critical accounting estimates during the three months ended March 31, 2010. For additional information, see the Critical Accounting Estimates section of MD&A included in our annual report to shareholders for the year ended December 31, 2009.

New Accounting Pronouncements

For information on new accounting pronouncements and the impact, if any, on our financial position or results of operations, see Note 1 of the Notes to the Consolidated Financial Statements.

RESULTS OF OPERATIONS

The following table is a presentation of items impacting net earnings and net earnings per diluted share for the three-month periods ended March 31.

Items Impacting Net Earnings
	In Millions				Per Diluted Share
	2010		2009		2010		2009
Net earnings	$	636	$	569	$	1.35	$	1.22
Items impacting net earnings, net of tax:
Realized investment gains (losses)		(30)		(6)		(.06)		(.01)
Impact from ASC 815		-		(3)		-		(.01)
Gain on extinguishment of debt		-		10		-		.02

Realized Investment Gains and Losses

Our investment strategy is to invest in investment-grade fixed-income securities to provide a reliable stream of investment income, which is one of the drivers of the Company’s profitability. This investment strategy aligns our assets with our liability structure, which our assets support. We do not purchase securities with the intent of generating capital gains or losses. However, investment gains and losses may be realized as a result of changes in the financial markets and the creditworthiness of specific issuers, tax planning strategies, and/or general portfolio maintenance and rebalancing. The realization of investment gains and losses is independent of the underwriting and administration of our insurance products, which are the principal drivers of our profitability.

During the three-month period ended March 31, 2010, we realized pretax investment losses of $42 million ($27 million after-tax) as a result of the recognition of other-than-temporary impairment losses. We realized pretax investment losses, net of gains, of $21 million ($14 million after-tax) from securities sold or redeemed in the normal course of business. We also realized pretax investment gains of $17 million ($11 million after-tax) from valuing foreign currency, interest rate and credit default swaps related to certain VIEs that were required to be consolidated following the adoption of new accounting guidance effective January 1, 2010.

During the three-month period ended March 31, 2009, we realized total pretax investment losses of $234 million ($152 million after-tax) as a result of the recognition of other-than-temporary impairment losses. We also realized pretax investment gains, net of losses, of $225 million ($146 million after-tax) from a bond–swap program that took advantage of tax loss carryforwards and from securities sold or redeemed in the normal course of business.

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The following table details our pretax impairment losses by investment category.

	Three Months Ended March  31,
(In millions)	2010		2009
Perpetual securities	$	41	$	65
Corporate bonds		-		50
Collateralized debt obligations		-		113
Collateralized mortgage obligations		-		6
Equity securities		1		-
Total other-than-temporary impairments	$	42	$	234

For additional information regarding realized investment gains and losses, see Notes 3 and 4 of the Notes to the Consolidated Financial Statements.

Impact from ASC 815

We had cross-currency interest rate swap agreements that economically converted our dollar-denominated senior notes, which matured in April 2009, into a yen-denominated obligation. Until April 2009, we designated the foreign currency component of these cross-currency swaps as a hedge of the foreign currency exposure of our investment in Aflac Japan. The effect of issuing fixed-rate, dollar-denominated debt and swapping it into fixed-rate, yen-denominated debt had the same economic impact on Aflac as if we had issued yen-denominated debt of a like amount. However, the accounting treatment for cross-currency swaps is different from issuing yen-denominated Samurai and Uridashi notes. ASC 815, “Derivatives and Hedging,” requires that the change in the fair value of the interest rate component of the cross-currency swaps, which does not qualify for hedge accounting, be reflected in net earnings. This change in fair value was determined by relative dollar and yen interest rates and had no cash impact on our results of operations. At maturity, the fair value equaled initial contract fair value, and the cumulative impact of gains and losses from the changes in fair value of the interest component was zero.

We have issued yen-denominated Samurai and Uridashi notes and have entered into two yen-denominated loans. We have designated a majority of these notes and loans as a hedge of our investment in Aflac Japan. If the value of these designated yen-denominated liabilities exceeds our investment in Aflac Japan, we would be required to recognize the foreign currency effect on the excess in net earnings. The foreign currency gain or loss on the excess liabilities would be included in the impact from ASC 815. Our net investment hedge was effective during the three-month periods ended March 31, 2010, and 2009; therefore, there was no impact on net earnings.

We have interest rate swap agreements related to the 20 billion yen variable interest rate Uridashi notes and have designated the swap agreements as a hedge of the variability of the debt cash flows. The notional amounts and terms of the swaps match the principal amount and terms of the variable interest rate Uridashi notes, and the swaps had no value at inception. GAAP requires that the change in the fair value of the swap contracts be recorded in other comprehensive income so long as the hedge is deemed effective. Any ineffectiveness would be recognized in net earnings and would be included in the impact from ASC 815. These hedges were effective during the three-month periods ended March 31, 2010, and 2009; therefore, there was no impact on net earnings.

For additional information, see the Impact from ASC 815 subsection of MD&A and Notes 4 and 7 of the Notes to the Consolidated Financial Statements in our annual report to shareholders for the year ended December 31, 2009.

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Debt Extinguishment

We did not extinguish any debt during the first quarter of 2010. During the first quarter of 2009, we extinguished portions of our yen-denominated Uridashi and Samurai debt by buying the notes on the open market. We realized a total gain from extinguishment of debt of 1.5 billion yen, or $15 million ($10 million after-tax), which we included in other income.

Foreign Currency Translation

Aflac Japan’s premiums and most of its investment income are received in yen. Claims and expenses are paid in yen, and we primarily purchase yen-denominated assets to support yen-denominated policy liabilities. These and other yen-denominated financial statement items are translated into dollars for financial reporting purposes. We translate Aflac Japan’s yen-denominated income statement into dollars using an average exchange rate for the reporting period, and we translate its yen-denominated balance sheet using the exchange rate at the end of the period. However, it is important to distinguish between translating and converting foreign currency. Except for a limited number of transactions, we do not actually convert yen into dollars.

Due to the size of Aflac Japan, where our functional currency is the Japanese yen, fluctuations in the yen/dollar exchange rate can have a significant effect on our reported results. In periods when the yen weakens, translating yen into dollars results in fewer dollars being reported. When the yen strengthens, translating yen into dollars results in more dollars being reported. Consequently, yen weakening has the effect of suppressing current period results in relation to the comparable prior period, while yen strengthening has the effect of magnifying current period results in relation to the comparable prior period. As a result, we view foreign currency translation as a financial reporting issue for Aflac and not an economic event to our Company or shareholders. Because changes in exchange rates distort the growth rates of our operations, management evaluates Aflac’s financial performance excluding the impact of foreign currency translation.

Income Taxes

Our combined U.S. and Japanese effective income tax rate on pretax earnings was 34.7% for the three-month periods ended March 31, 2010, and 2009.

Earnings Guidance

We communicate earnings guidance in this report based on the growth in net earnings per diluted share. However, certain items that cannot be predicted or that are outside of management’s control may have a significant impact on actual results. Therefore, our comparison of net earnings includes certain assumptions to reflect the limitations that are inherent in projections of net earnings. In comparing period-over-period results, we exclude the effect of realized investment gains and losses, the impact from ASC 815 and nonrecurring items. We also assume no impact from foreign currency translation on the Aflac Japan segment and the Parent Company’s yen-denominated interest expense for a given period in relation to the prior period.

Subject to the preceding assumptions, our objective for 2010 is to increase net earnings per diluted share by 9% to 12% over 2009. If the yen/dollar exchange rate averages 90 to 95, we would expect reported net earnings per diluted share to be in the range of $1.33 to $1.38 in the second quarter of 2010. Based on our stated objective for 2010, the following table shows the likely results for 2010 net earnings per diluted share, including the impact of foreign currency translation using various yen/dollar exchange rate scenarios.

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2010 Net Earnings Per Share (EPS) Scenarios(1)
Weighted-Average     Yen/Dollar     Exchange Rate	Net Earnings Per Diluted Share	% Growth          Over 2009		Yen Impact on EPS
85.00	$ 5.61  -  5.76	15.7  -	18.8 %		$    .33
90.00	5.41  -  5.56	11.5  -	14.6		.13
93.49 (2)	5.29  -  5.43	9.1  -	12.0		-
95.00	5.24  -  5.38	8.0  -	10.9		(.05)
100.00	5.08  -  5.22	4.7  -	7.6		(.21)

⁽¹⁾ Excludes realized investment gains/losses, impact from ASC 815 and nonrecurring items in 2010 and 2009

⁽²⁾ Actual 2009 weighted-average exchange rate

INSURANCE OPERATIONS

Aflac’s insurance business consists of two segments: Aflac Japan and Aflac U.S. Aflac Japan, which operates as a branch of Aflac, is the principal contributor to consolidated earnings. GAAP financial reporting requires that a company report financial and descriptive information about operating segments in its annual and interim period financial statements. Furthermore, we are required to report a measure of segment profit or loss, certain revenue and expense items, and segment assets.

We measure and evaluate our insurance segments’ financial performance using operating earnings on a pretax basis. We define segment operating earnings as the profits we derive from our operations before realized investment gains and losses, the impact from ASC 815, and nonrecurring items. We believe that an analysis of segment pretax operating earnings is vitally important to an understanding of the underlying profitability drivers and trends of our insurance business. Furthermore, because a significant portion of our business is conducted in Japan, we believe it is equally important to understand the impact of translating Japanese yen into U.S. dollars.

We evaluate our sales efforts using new annualized premium sales, an industry operating measure. Total new annualized premium sales, which include new sales and the incremental increase in premiums due to conversions, represent the premiums that we would collect over a 12-month period, assuming the policies remain in force. For Aflac Japan, total new annualized premium sales are determined by applications written during the reporting period. For Aflac U.S., total new annualized premium sales are determined by applications that are accepted during the reporting period. Premium income, or earned premiums, is a financial performance measure that reflects collected or due premiums that have been earned ratably on policies in force during the reporting period.

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AFLAC JAPAN SEGMENT

Aflac Japan Pretax Operating Earnings

Changes in Aflac Japan’s pretax operating earnings and profit margins are primarily affected by morbidity, mortality, expenses, persistency and investment yields. The following table presents a summary of operating results for Aflac Japan.

Aflac Japan Summary of Operating Results
	Three  Months Ended March 31,
(In millions)	2010		2009
Premium income	$	3,206	$	3,012
Net investment income:
Yen-denominated investment income		401		371
Dollar-denominated investment income		192		189
Net investment income		593		560
Other income		28		7
Total operating revenues		3,827		3,579
Benefits and claims		2,277		2,202
Operating expenses:
Amortization of deferred policy acquisition costs		143		124
Insurance commissions		271		267
Insurance and other expenses		315		305
Total operating expenses		729		696
Total benefits and expenses		3,006		2,898
Pretax operating earnings(1)	$	821	$	681
Weighted-average yen/dollar exchange rate		90.49		93.37

	In Dollars		In Yen
Percentage change over previous period:	2010	2009	2010	2009
Premium income	6.5  %	16.5  %	3.3  %	3.6  %
Net investment income	5.8	12.9	2.5	.5
Total operating revenues	6.9	16.2	3.6	3.3
Pretax operating earnings(1)	20.5	22.9	16.8	9.3

⁽¹⁾ See the Insurance Operations section of this MD&A for our definition of segment operating earnings.

The percentage increases in premium income reflect the growth of premiums in force. The increases in annualized premiums in force in yen of 3.6% in the first quarter of 2010 and 3.1% for the same period of 2009 reflect the high persistency of Aflac Japan’s business and the sales of new policies. Annualized premiums in force at March 31, 2010, were 1.21 trillion yen, compared with 1.17 trillion yen a year ago. Annualized premiums in force, translated into dollars at respective period-end exchange rates, were $13.0 billion at March 31, 2010, compared with $11.9 billion a year ago.

Aflac Japan maintains a portfolio of dollar-denominated and reverse-dual currency securities (yen-denominated debt securities with dollar coupon payments). Dollar-denominated investment income from these assets accounted for approximately 32% of Aflac Japan’s investment income in the first three months of 2010, compared with 34% a year ago. In periods when the yen strengthens in relation to the dollar, translating Aflac Japan’s dollar-denominated investment income into yen lowers growth rates for net investment income, total operating revenues, and pretax operating earnings in yen terms. In periods when the yen weakens, translating dollar-denominated investment income into yen magnifies growth rates for net investment income, total operating revenues, and pretax operating earnings in yen terms. On a constant currency basis, dollar-denominated investment income accounted for approximately 33% of Aflac Japan’s investment income during the first three months of 2010. The following table illustrates the effect of translating Aflac Japan’s dollar-denominated investment income and related items into yen by comparing certain segment results with those that would have been reported had yen/dollar exchange rates remained unchanged from the comparable period in the prior year.

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Aflac Japan Percentage Changes Over Previous Period

(Yen Operating Results)

Three Months Ended March 31,

	Including Foreign     Currency Changes		Excluding Foreign      Currency Changes(2)
	2010	2009	2010	2009
Net investment income	2.5  %	.5  %	3.5  %	4.6  %
Total operating revenues	3.6	3.3	3.4	3.7
Pretax operating earnings(1)	16.8	9.3	15.7	11.2

⁽¹⁾ See the Insurance Operations section of this MD&A for our definition of segment operating earnings.

⁽²⁾ Amounts excluding foreign currency changes on dollar-denominated items were determined using the same yen/dollar exchange rate for the current period as the comparable period in the prior year.

The following table presents a summary of operating ratios for Aflac Japan.

	Three Months Ended March 31,
Ratios to total revenues:	2010	2009
Benefits and claims	59.5  %	61.5  %
Operating expenses:
Amortization of deferred policy acquisition costs	3.7	3.5
Insurance commissions	7.1	7.5
Insurance and other expenses	8.3	8.5
Total operating expenses	19.1	19.5
Pretax operating earnings(1)	21.4	19.0

⁽¹⁾ See the Insurance Operations section of this MD&A for our definition of segment operating earnings.

The benefit ratio has declined over the past several years, reflecting the impact of newer products and riders with lower loss ratios. We have also experienced favorable claim trends in our major product lines. We expect the improvement in the benefit ratio to continue as we shift to newer products and riders and benefit from the impact of favorable claim trends. However, this improvement is partially offset by the effect of low investment yields, which impacts our profit margin by reducing the spread between investment yields and required interest on policy reserves. The operating expense ratio has decreased slightly in the first quarter of 2010, compared with the same period a year ago. We expect the operating expense ratio to remain relatively stable in 2010, compared to the prior year. Due to continued improvement in the benefit ratio, the pretax operating profit margin expanded in the three-month period ended March 31, 2010. We expect the improved benefit ratio to continue in 2010, resulting in a continued expansion of the profit margin for 2010.

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Aflac Japan Sales

The following table presents Aflac Japan’s total new annualized premium sales for the three-month periods ended March 31.

	In Dollars					In Yen
(In millions of dollars and billions of yen)	2010			2009		2010	2009
Total new annualized premium sales	$	334		$	293	30.3	27.5
Increase (decrease) over comparable period in prior year		14.1	%		11.0  %	10.0  %	(.4)  %

The following table details the contributions to total new annualized premium sales by major insurance product for the three-month periods ended March 31.

	2010		2009
Medical	37	%	34	%
Cancer	22		34
Ordinary life	35		23
Rider MAX	2		4
Other	4		5
Total	100	%	100	%

Medical insurance sales increased 21.4% during the first quarter of 2010, compared with the same period a year ago. This increase in sales primarily reflected the favorable consumer response to our revised EVER product, Aflac Japan’s market-leading medical product, which was introduced in August 2009. With continued cost pressure on Japan’s health care system, we expect the need for medical products will continue to rise in the future, and we remain encouraged about the outlook for the medical insurance market.

Cancer insurance sales were impacted by our focus on our new medical product and declined 29.4% during the first quarter of 2010, compared with the same period in 2009. Despite this decrease, we are convinced that the affordable cancer products Aflac Japan provides will continue to be an important part of our product portfolio.

Ordinary life product sales increased 64.4% during the first quarter of 2010, compared with the same period a year ago. The increase in our ordinary life products was driven by a favorable consumer response to our child endowment product that we introduced at the end of first quarter 2009. We believe that traditional life insurance products, like our child endowment plan, provide opportunities for us to sell our third sector cancer and medical products. For every 10 child endowment plans that were purchased in the first quarter of 2010, we sold two additional Aflac products to the same customers.

The sales of our supplemental health insurance products through the bank channel increased 206.6% during the first quarter of 2010, compared with the same period in 2009, and represented 10% of total new sales. At March 31, 2010, we had agreements with 352 banks to sell our products. We have significantly more selling agreements with banks than any of our competitors in Japan. We believe our long-standing and strong relationships within the Japanese banking sector, along with our strategic preparations, have proven to be an advantage as this channel opened up for our products.

We remain committed to selling through our traditional channels, which allows us to reach consumers through affiliated corporate agencies, independent corporate agencies and individual agencies. During the first quarter of 2010, we recruited approximately 1,200 new sales agencies, an increase of 15.0% over the same period a year ago. At March 31, 2010, Aflac Japan was represented by more than 19,500 sales agencies, or more than 110,800 licensed sales associates employed by those agencies.

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We believe that there is still a strong need for our products in Japan. Our objective for 2010 is for total new annualized premium sales to be flat to up 5% in Japan.

Aflac Japan Investments

Growth of investment income in yen is affected by available cash flow from operations, the timing of investing the cash flow, yields on new investments, and the effect of yen/dollar exchange rates on dollar-denominated investment income. Aflac Japan has invested in privately issued securities to secure higher yields than those available on Japanese government or other public corporate bonds, while still adhering to prudent standards for credit quality. All of our privately issued securities are rated investment grade at the time of purchase. These securities are generally issued with documentation consistent with standard medium-term note programs. In addition, many of these investments have protective covenants appropriate to the specific issuer, industry and country. These covenants often require the issuer to adhere to specific financial ratios and give priority to repayment of our investment under certain circumstances.

The following table presents the results of Aflac Japan’s investment activities for the three-month periods ended March 31.

	2010	2009
New money yield - yen only	2.46  %	3.87  %
New money yield - blended	2.67	4.36
Return on average invested assets, net of investment expenses	3.55	3.70

At March 31, 2010, the yield on Aflac Japan’s investment portfolio, including dollar-denominated investments, was 3.75%, compared with 3.87% a year ago. See Notes 3 and 5 of the Notes to the Consolidated Financial Statements and the Analysis of Financial Condition section of this MD&A for additional information on our investments.

Japanese Economy

Japan’s economic conditions have shown signs of improvement due to various policy measures taken in Japan and abroad; however, improvement is expected to continue only at a moderate pace. For additional information, see the Japanese Economy subsection of MD&A in our annual report to shareholders for the year ended December 31, 2009.

Japanese Regulatory Environment

We expect that our distribution system will continue to evolve in Japan. Regulatory changes that took effect in December 2007 enable banks to sell our third sector products to their customers. Our strong brand as the leading seller of cancer and medical insurance products in Japan and our many long-term relationships within the Japan banking sector place us in a strong position to sell through this channel.

The FSA maintains a solvency standard, which is used by Japanese regulators to monitor the financial strength of insurance companies. The FSA will apply a revised method of calculating the solvency margin ratio for life insurance companies as of the fiscal year-end 2011 (March 31, 2012) and requires the disclosure of the ratio as reference information for fiscal year-end 2010 (March 31, 2011). The FSA has stated that the revision would generally reduce life insurance companies’ solvency margin ratios to approximately half the level of those reported under the current calculation method. We do not expect our relative position within the industry to materially change.

In 2005, legislation aimed at privatizing Japan’s postal system (Japan Post) was enacted into law. The privatization laws split Japan Post into four entities that began operating in October 2007. In 2007, one of these entities selected Aflac Japan as its provider of cancer insurance to be sold through post offices, and, in 2008, we began selling cancer insurance. Japan Post has historically been a popular place for consumers to purchase insurance products. Currently, our products are being offered in approximately 1,000 post offices.

A bill on Japan Post reform has been introduced to the Japanese Diet for which debate is expected to commence in mid May 2010. The current Diet session is scheduled to end in June 2010 and, it is unclear whether there will be adequate time to debate the legislation for passage during the current session. Adding to this uncertainty is the fact that the current debate on postal reform is taking place in the context of complex political dynamics in Japan wherein the coalition government led by the Democratic Party of Japan is facing a July Upper House election. While Japan Post sales are not currently a significant part of Aflac Japan’s sales, it is not possible to predict with any degree of certainty what effect this legislation, if passed, will have on Aflac Japan’s business, financial condition, or results of operations.

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AFLAC U.S. SEGMENT

Aflac U.S. Pretax Operating Earnings

Changes in Aflac U.S. pretax operating earnings and profit margins are primarily affected by morbidity, mortality, expenses, persistency and investment yields. The following table presents a summary of operating results for Aflac U.S.

Aflac U.S. Summary of Operating Results

	Three Months ended March 31,
(In millions)	2010		2009
Premium income	$	1,142	$	1,103
Net investment income		132		125
Other income		2		2
Total operating revenues		1,276		1,230
Benefits and claims		580		609
Operating expenses:
Amortization of deferred policy acquisition costs		138		126
Insurance commissions		132		122
Insurance and other expenses		182		169
Total operating expenses		452		417
Total benefits and expenses		1,032		1,026
Pretax operating earnings(1)	$	244	$	204
Percentage change over previous period:	2010		2009
Premium income		3.5  %		5.0  %
Net investment income		5.6		1.4
Total operating revenues		3.7		4.7
Pretax operating earnings(1)		19.4		7.2

⁽¹⁾ See the Insurance Operations section of MD&A for our definition of segment operating earnings.

Annualized premiums in force increased 2.8% in the first quarter of 2010 and 4.4% for the same period of 2009. Annualized premiums in force at March 31, 2010, were $4.9 billion, compared with $4.7 billion a year ago.

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The following table presents a summary of operating ratios for Aflac U.S.

	Three Months Ended March 31,
Ratios to total revenues:	2010	2009
Benefits and claims	45.5  %	49.5  %
Operating expenses:
Amortization of deferred policy acquisition costs	10.8	10.3
Insurance commissions	10.3	9.9
Insurance and other expenses	14.3	13.7
Total operating expenses	35.4	33.9
Pretax operating earnings(1)	19.1	16.6

⁽¹⁾ See the Insurance Operations section of this MD&A for our definition of segment operating earnings.

The benefit ratio declined and amortization of deferred policy acquisition costs increased in the first quarter of 2010, compared with the same period a year ago, due primarily to the loss of a large payroll account and the release of the related policy reserves and deferred policy acquisition costs. Although the improvement in the benefit ratio was somewhat offset by an increase in operating expenses, the pretax operating profit margin improved during the first quarter of 2010, compared with the same period a year ago. Without the benefit of the payroll account termination mentioned above, the pretax operating profit margin would have been 16.0% in the first quarter of 2010. We expect the benefit and operating expense ratios to return to more normal levels in the remaining quarters of 2010, which will result in a modestly expanded profit margin for 2010.

Aflac U.S. Sales

Weak economic conditions continued to challenge Aflac’s sales results in the United States. The following table presents Aflac’s U.S. total new annualized premium sales for the three-month periods ended March 31.

(In millions)	2010			2009
Total new annualized premium sales	$	316		$	351
Increase (decrease) over comparable period in prior year		(10.0	)  %		(.6)  %

The first quarter of 2010 had five fewer production days than the first quarter of 2009, resulting in $16 million less sales comparatively. However, that impact was largely offset by $13 million of sales gained through CAIC in the first quarter of 2010.

The following table details the contributions to total new annualized premium sales by major insurance product category for the three-month periods ended March 31.

	2010	2009
Accident/disability	47  %	48  %
Cancer	16	18
Hospital indemnity	20	17
Life	6	7
Fixed-benefit dental	5	6
Other	6	4
Total	100  %	100  %

Total new annualized premium sales for accident/disability insurance, our leading product category, decreased 10% and cancer insurance sales decreased 17%, while our hospital indemnity insurance sales increased 4% in the first quarter of 2010, compared with the same period a year ago.

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One aspect of our U.S. sales strategy is our focus on growing and improving our U.S. sales force. We remain satisfied with our progress in the ongoing expansion of our U.S. sales force. We recruited 5,900 new sales associates in the first quarter of 2010, resulting in more than 74,500 licensed sales associates at March 31, 2010. Due to record recruiting in the first quarter of 2009, recruitment of new sales associates was down sharply in the first quarter of 2010, compared with the same period a year ago. However, compared with the fourth quarter of 2009, new agent recruitment was up 6.9%.

In 2009, we implemented our new Aflac for Brokers^SM initiative. Insurance brokers have been a historically underleveraged sales channel for Aflac, and we believe we can establish relationships that will complement, not compete with, our traditional distribution system. We have assembled a management team experienced in broker sales, and we are supporting this initiative with streamlined products, targeted broker-specific advertising campaigns, customized enrollment technology, and competitive compensation. Additionally, a new level of management was introduced in 2009 to deliver this initiative. Over 100 broker development coordinators have been hired to be single points of contact for brokers across the country. Broker development coordinators are responsible for building relationships with new brokers as well as strengthening relationships with our current brokers. These coordinators are assisted by a team of certified case managers whose role is to coordinate and manage the account enrollments for brokers.

Furthering our initiatives in the broker arena, we purchased CAIC in 2009. CAIC equips us with a platform for offering attractive voluntary group insurance products that are well-suited for distribution by insurance brokers at the worksite. CAIC is rated A+ (Superior) by A.M. Best. We believe that CAIC has the potential to benefit us in the U.S. market by helping us meet the product requests and needs of our field force when they pursue larger payroll accounts.

Broker sales increased 30.6% in the first quarter of 2010, compared with the same period a year ago. On a proforma basis in which CAIC sales were included in the first quarter results for both this year and last year, broker sales increased 5.9%.

We expect 2010 to be a challenging year from a sales perspective and look for sales to again decline in the second quarter of the year, followed by modest sales increases in the second half of 2010.

Aflac U.S. Investments

The following table presents the results of Aflac’s U.S. investment activities for the three-month periods ended March 31.

	2010	2009
New money yield	5.98 %	8.67 %
Return on average invested assets, net of investment expenses	6.49	6.80

The decrease in the U.S. new money yield reflects tightening credit spreads. At March 31, 2010, the portfolio yield on Aflac’s U.S. portfolio was 7.06%, compared with 7.19% a year ago. See Notes 3 and 5 of the Notes to the Consolidated Financial Statements and the Analysis of Financial Condition section of this MD&A for additional information on our investments.

U.S. Economy

Operating in the U.S. economy continues to be challenging. The weak economic environment has likely had an impact on some of our policyholders, potential customers and sales associates. Although we believe that the weakened U.S. economy has been a contributing factor to slower sales growth, we also believe our products remain affordable to the average American consumer. We believe that consumers’ underlying need for our U.S. product line remains strong, and that the United States remains a sizeable and attractive market for our products.

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U.S. Regulatory Environment

In March 2010, President Barack Obama signed the Patient Protection and Affordable Care Act (PPACA) to give Americans of all ages and income levels access to comprehensive major medical health insurance. The primary subject of the new legislation is major medical insurance, therefore the PPACA does not directly affect the design of our insurance products nor our sales model. Our experience with Japan’s national healthcare environment leads us to believe that the need for our products will only increase over the coming years.

ANALYSIS OF FINANCIAL CONDITION

Our financial condition has remained strong in the functional currencies of our operations. The yen/dollar exchange rate at the end of each period is used to translate yen-denominated balance sheet items to U.S. dollars for reporting purposes.

The following table demonstrates the effect of the change in the yen/dollar exchange rate by comparing select balance sheet items as reported at March 31, 2010, with the amounts that would have been reported had the exchange rate remained unchanged from December 31, 2009.

Impact of Foreign Exchange on Balance Sheet Items

(In millions)	As   Reported	Exchange                 Effect	Net of         Exchange Effect
Yen/dollar exchange rate(1)	93.04			92.10
Investments and cash	$              73,998	$            (599)	$	74,597
Deferred policy acquisition costs	8,522	(60)		8,582
Total assets	85,178	(673)		85,851
Policy liabilities	69,504	(636)		70,140
Total liabilities	76,191	(677)		76,868

  ⁽¹⁾ The exchange rate at March 31, 2010, was 93.04 yen to one dollar, or 1.0% weaker than the December 31, 2009, exchange rate of 92.10.

Market Risks of Financial Instruments

Our investment philosophy is to maximize investment income while emphasizing liquidity, safety and quality. Our investment objective, subject to appropriate risk constraints, is to fund policyholder obligations and other liabilities in a manner that enhances shareholders’ equity. We seek to achieve this objective through a diversified portfolio of fixed-income investments that reflects the characteristics of the liabilities it supports. Aflac invests primarily within the fixed income securities markets.

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The following table details investment securities by segment.

Investment Securities by Segment

	Aflac Japan		Aflac U.S.
(In millions)	March 31,     2010	December 31,     2009	March 31,     2010	December 31,     2009
Securities available for sale, at fair value:
Fixed maturities	$      30,596	$      29,952	$      7,722(1)	$      6,712  (1)
Perpetual securities	7,177	7,041	246	222
Equity securities	24	24	-	-
Total available for sale	37,797	37,017	7,968	6,934
Securities held to maturity, at amortized cost:
Fixed maturities	26,399	26,487	-	200
Total held to maturity	26,399	26,487	-	200
Total investment securities	$      64,196	$      63,504	$      7,968	$      7,134

⁽¹⁾ Excludes investment-grade, available-for-sale fixed-maturity securities held by the Parent Company of $117 in 2010 and 2009.

Because we invest in fixed-income securities, our financial instruments are exposed primarily to three types of market risks: currency risk, interest rate risk and credit risk.

Currency Risk

The functional currency of Aflac Japan’s insurance operations is the Japanese yen. All of Aflac Japan’s premiums, claims and commissions are received or paid in yen, as are most of its investment income and other expenses. Furthermore, most of Aflac Japan’s investments, cash and liabilities are yen-denominated. When yen-denominated securities mature or are sold, the proceeds are generally reinvested in yen-denominated securities. Aflac Japan holds these yen-denominated assets to fund its yen-denominated policy obligations. In addition, Aflac Incorporated has yen-denominated debt obligations.

Although we generally do not convert yen into dollars, we do translate financial statement amounts from yen into dollars for financial reporting purposes. Therefore, reported amounts are affected by foreign currency fluctuations. We report unrealized foreign currency translation gains and losses in accumulated other comprehensive income.

Aflac Japan maintains a portfolio of reverse-dual currency securities (yen-denominated debt securities with dollar coupon payments), which exposes Aflac to changes in foreign exchange rates. This foreign currency effect is accounted for as a component of unrealized gains or losses on available-for-sale securities in accumulated other comprehensive income. When the yen strengthens against the dollar, shareholders’ equity is negatively impacted and, conversely, when the yen weakens against the dollar, shareholders’ equity is positively impacted. Aflac Japan invests a portion of its assets in reverse-dual currency securities to provide a higher yield than those available on Japanese government or other public corporate bonds, while still adhering to prudent standards of credit quality. The yen/dollar exchange rate would have to strengthen to approximately 55 before the yield on these instruments would equal that of a comparable yen-denominated instrument.

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On a consolidated basis, we attempt to minimize the exposure of shareholders’ equity to foreign currency translation fluctuations. We accomplish this by investing a portion of Aflac Japan’s investment portfolio in dollar-denominated securities and by the Parent Company’s issuance of yen-denominated debt (for additional information, see the discussion under Hedging Activities as follows in this section of MD&A ). As a result, the effect of currency fluctuations on our net assets is reduced.

The following table demonstrates the effect of foreign currency fluctuations by presenting the dollar values of our yen-denominated assets and liabilities, and our consolidated yen-denominated net asset exposure at selected exchange rates.

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Dollar Value of Yen-Denominated Assets and Liabilities

at Selected Exchange Rates

(In millions)	March 31, 2010									December 31, 2009
Yen/dollar exchange rates		78.04			93.04	(1)		108.04			77.10		92.10	(1)		107.10
Yen-denominated financial instruments:
Assets:
Securities available for sale:
Fixed maturities	$	26,533		$	22,255		$	19,166		$	31,373	$	26,263		$	22,585
Fixed maturities - consolidated variable interest entities		3,003			2,519			2,169			-		-			-
Perpetual securities		7,054			5,917			5,095			8,350		6,990			6,011
Perpetual securities - consolidated variable interest entities		1,304			1,094			942			-		-			-
Equity securities		23			19			16			23		19			17
Securities held to maturity:
Fixed maturities		30,832			25,861			22,271			31,640		26,487			22,777
Fixed maturities - consolidated variable interest entities		641			538			463
Cash and cash equivalents		745			625			538			1,088		911			783
Other financial instruments		114			96			82			111		93			80
Subtotal		70,249			58,924			50,742			72,585		60,763			52,253
Liabilities:
Notes payable		1,596			1,338			1,153			1,616		1,353			1,163
Japanese policyholder protection corporation		132			111			96			153		128			110
Subtotal		1,728			1,449			1,249			1,769		1,481			1,273
Net yen-denominated financial instruments		68,521			57,475			49,493			70,816		59,282			50,980
Other yen-denominated assets		8,626			7,234			6,232			8,630		7,225			6,213
Other yen-denominated liabilities		77,364			64,891			55,882			77,327		64,733			55,667
Consolidated yen-denominated net assets (liabilities) subject to foreign currency fluctuation	$	(217	)	$	(182	)	$	(157	)	$	2,119	$	1,774		$	1,526

⁽¹⁾ Actual period-end exchange rate

The decline in yen-denominated financial instruments shown in the table above was the result of the consolidation of the underlying assets in certain VIEs on January 1, 2010. Prior to the adoption of this new accounting guidance, our beneficial interest in the VIE was a yen-denominated available-for-sale fixed maturity security. Upon consolidation, the original yen-denominated investment was derecognized and the underlying U.S. dollar-denominated fixed-maturity or perpetual securities and cross-currency swaps were recognized. While the combination of U.S. dollar-denominated investment and the cross-currency swap economically creates a yen-denominated investment, these investments will create foreign currency fluctuations. For additional information, see the Hedging Activities subsection of MD&A.

We are exposed to economic currency risk only when yen funds are actually converted into dollars. This primarily occurs when we repatriate funds from Aflac Japan to Aflac U.S., which is generally done annually. The exchange rates prevailing at the time of repatriation will differ from the exchange rates prevailing at the time the yen profits were earned. A portion of the repatriation may be used to service Aflac Incorporated’s yen-denominated notes payable with the remainder converted into dollars.

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Interest Rate Risk

Our primary interest rate exposure is to the impact of changes in interest rates on the fair value of our investments in debt and perpetual securities. We estimate that the reduction in the fair value of debt and perpetual securities we own resulting from a 100 basis point increase in market interest rates, based on our portfolios at March 31, 2010, and December 31, 2009, would be as follows:

(In millions)	March 31, 2010		December 31,       2009
Effect on yen-denominated debt and perpetual securities	$	(6,298)	$	(6,404)
Effect on dollar-denominated debt and perpetual securities		(1,262)		(974)
Effect on total debt and perpetual securities	$	(7,560)	$	(7,378)

There are various factors that affect the fair value of our investment in debt and perpetual securities. Included in those factors are changes in the prevailing interest rate environment. Changes in the interest rate environment directly affect the balance of unrealized gains or losses for a given period in relation to a prior period. Decreases in market yields generally improve the fair value of debt and perpetual securities while increases in market yields generally have a negative impact on the fair value of our debt and perpetual securities. However, we do not expect to realize a majority of any unrealized gains or losses because we have the intent and ability to hold such securities until a recovery of value, which may be maturity. For additional information on unrealized losses on debt and perpetual securities, see Note 3 of the Notes to the Consolidated Financial Statements.

We attempt to match the duration of our assets with the duration of our liabilities. Currently, when debt and perpetual securities we own mature, the proceeds may be reinvested at a yield below that of the interest required for the accretion of policy benefit liabilities on policies issued in earlier years. However, adding riders to our older policies has helped offset negative investment spreads on these policies. Overall, adequate profit margins exist in Aflac Japan’s aggregate block of business because of profits that have emerged from changes in the mix of business and favorable experience from mortality, morbidity and expenses.

We have entered into interest rate swap agreements related to the 20 billion yen variable interest rate Uridashi notes. These agreements effectively swap the variable interest rate Uridashi notes to fixed rate notes to mitigate our exposure to interest rate risk. For additional information, see the Interest Rate Risk subsection of MD&A in our annual report to shareholders for the year ended December 31, 2009.

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Credit Risk

Our investment activities expose us to credit risk, which is a consequence of extending credit and/or carrying investment positions. However, we continue to adhere to prudent standards for credit quality. We accomplish this by considering our product needs and overall corporate objectives, in addition to credit risk. In evaluating the initial rating, we look at the overall senior issuer rating, the explicit rating for the actual issue or the rating for the security class, and, where applicable, the appropriate designation from the Securities Valuation Office (SVO) of the National Association of Insurance Commissioners (NAIC). All of our securities have ratings from either a nationally recognized statistical rating organization or the SVO of the NAIC. In addition, we perform extensive internal credit reviews to ensure that we are consistent in applying rating criteria for all of our securities.

We use specific criteria to judge the credit quality of both existing and prospective investments. Furthermore, we use several methods to monitor these criteria, including credit rating services and internal credit analysis. The distributions by credit rating of our purchases of debt securities, based on acquisition cost, were as follows:

Composition of Purchases by Credit Rating

	Three Months Ended March 31, 2010	Twelve Months Ended December 31, 2009	Three Months Ended March 31, 2009
AAA	1.3 %	7.6 %	7.2 %
AA	55.1	58.9	80.1
A	40.9	31.4	10.1
BBB	2.7	2.1	2.6
Total	100.0 %	100.0 %	100.0 %

The increase in the percentage of debt securities purchased in the A rated category during the first quarter of 2010 was due to the attractive relative value these securities presented while still meeting our investment policy guidelines for liquidity, safety and quality. We did not purchase any perpetual securities during the periods presented in the table above.

The distributions of debt and perpetual securities we own, by credit rating, were as follows:

Composition by Credit Rating

	March 31, 2010		December 31, 2009
	Amortized     Cost	Fair     Value	Amortized     Cost	Fair        Value
AAA	3.9 %	4.1 %	3.3 %	3.4 %
AA	32.9	33.8	34.6	35.8
A	39.1	39.4	39.6	39.8
BBB	18.2	17.5	15.6	15.2
BB or lower	5.9	5.2	6.9	5.8
Total	100.0 %	100.0 %	100.0 %	100.0 %

At March 31, 2010, we had Greek exposure of $1.3 billion, at amortized cost, available-for-sale fixed maturity investments comprised of $1.0 billion invested in Greek financial institutions and $280 million in Greek sovereign debt. Subsequent to March 31, 2010, the Greek financial institutions were downgraded to below investment grade. We continue to believe that these issuers have the ability to meet their obligations to us, and we have the intent to hold these investments to recovery in value. As a result, we have not recognized an other-than-temporary impairment for these investments as of March 31, 2010.

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As of March 31, 2010, our direct and indirect exposure to securities in our investment portfolio that were guaranteed by third parties was immaterial both individually and in the aggregate.

Subordination Distribution

The majority of our total investments in debt and perpetual securities was senior debt as of March 31, 2010, and December 31, 2009. We also maintained investments in subordinated financial instruments that primarily consisted of Lower Tier II, Upper Tier II, and Tier I securities, listed in order of seniority. The Lower Tier II (LTII) securities are debt instruments with fixed maturities. Our Upper Tier II (UTII) and Tier I investments consisted of debt instruments with fixed maturities and perpetual securities, which have an economic maturity as opposed to a stated maturity.

The following table shows the subordination distribution of our debt and perpetual securities.

Subordination Distribution of Debt and Perpetual Securities
	March 31, 2010			December 31, 2009
(In millions)	Amortized Cost		Percentage of Total	Amortized Cost		Percentage   of Total
Senior notes	$	56,135	77.2  %	$	54,971	76.5  %
Subordinated securities:
Fixed maturities
(stated maturity date):
Lower Tier II		8,018	11.0		7,944	11.1
Upper Tier II		15	-		178	.2
Tier I(1)		575	.8		754	1.0
Surplus notes		336	.5		336	.5
Trust preferred - non-banks		85	.1		85	.1
Other subordinated - non-banks		52	.1		52	.1
Total fixed maturities		9,081	12.5		9,349	13.0
Perpetual securities   (economic maturity date):
Upper Tier II		5,252	7.2		5,200	7.2
Tier I		2,263	3.1		2,354	3.3
Total perpetual securities		7,515	10.3		7,554	10.5
Total debt and perpetual securities	$	72,731	100.0  %	$	71,874	100.0  %

⁽¹⁾ Includes trust preferred securities

Portfolio Composition

For information regarding the amortized cost for our investments in debt and perpetual securities, the cost for equity securities and the fair values of these investments, refer to Note 3 of the Notes to the Consolidated Financial Statements.

Investment Concentrations

See Note 3 of the Notes to the Consolidated Financial Statements for a discussion of our investment discipline and our largest investment industry sector concentration, banks and financial institutions.

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Our largest global investment exposures as of March 31, 2010, were as follows:

Largest Global Investment Positions
	Amortized Cost			% of	Ratings
(In millions)				Total	Seniority	Moody’s	S&P	Fitch
Government of Japan(1)	$	11,771	16.2  %		Senior	Aa2	AA	AA-
Israel Electric Corp.		881	1.2		Senior	Baa2	BBB	-
Republic of Tunisia		859	1.2		Senior	Baa2	BBB	BBB
HSBC Holdings PLC		744	1.0
HSBC Finance Corporation (formerly Household Finance)		563	.8		Senior	A3	A	AA-
Republic New York Corp.		11	-		LTII	A2	A+	AA-
HSBC Bank PLC (RAV Int’l. Ltd.)		120	.2		UTII	A3	A	A+
HSBC Holdings PLC		15	-		UTII	A1	A	AA-
HSBC Holdings PLC (HSBC Capital Funding LP)		35	-		Tier I	A3	A-	A+
Republic of South Africa		658	.9		Senior	A3	BBB+	BBB+
Lloyds Banking Group PLC		643	.9
Lloyds Banking Group PLC		7	-		Tier I	B3	CC	-
Lloyds Bank PLC		354	.5		LTII	Ba2	BB	BB
HBOS PLC		282	.4		UTII	Ba2	BB-	B+
Commerzbank AG		636	.9
Commerzbank AG		415	.6		LTII	A1	A-	A
Dresdner Bank AG (Dresdner Funding Trust IV)		166	.2		LTII	A1	A-	CCC
Dresdner Bank AG (Dresdner Funding Trust I)		55	.1		Tier I	Baa3	CCC	CCC
Bank of America Corp.		581	.8
Bank of America Corp. (includes Fleet Financial Group Inc., Nationsbank Corporation)		256	.4		LTII	A3	A-	A
Bank of America Corp. (NB Capital Trust, Bankamerica Instit-A)		18	-		Tier I	Baa3	BB	BB
Merrill Lynch & Co. Inc.		295	.4		Senior	A2	A	A+
Merrill Lynch & Co. Inc.		12	-		LTII	A3	A-	A
Mizuho Financial Group Inc.		558	.8
Mizuho Bank, Mizuho Finance Cayman & Aruba		558	.8		UTII	A2	A-	-
UniCredit SpA		548	.7
Unicredito Bank Austria		11	-		LTII	Aa3	AA+	-
Hypovereinsbank		215	.3		LTII	A2	A-	A
Hypovereinsbank (HVB Funding Trust I, III & IV)		322	.4		Tier I	Baa3	BBB	BBB
Sumitomo Mitsui Financial Group Inc.		537	.8
Sumitomo Mitsui Banking Corporation		107	.2		LTII	Aa3	A	A-
Sumitomo Mitsui Banking Corporation (SMBC International Finance)		430	.6		UTII	A1	A-	-
Commonwealth Bank of Australia		527	.7
Commonwealth Bank of Australia		215	.3		LTII	Aa2	AA-	AA-
Commonwealth Bank of Australia		215	.3		UTII	-	A+	-
Bankwest		97	.1		UTII	Aa2	AA-	-
BNP Paribas		484	.7
BNP Paribas		108	.1		Senior	Aa2	AA	AA
FORTIS (Fortis Bank SA-NV, Fortis Luxembourg Finance SA)		376	.6		UTII	A3	A	A
Bank of Tokyo-Mitsubishi UFJ Ltd.		484	.6
Bank of Tokyo-Mitsubishi UFJ Ltd. (BTMU Curacao Holdings NV)		484	.6		LTII	Aa3	A	A-
Erste Group Bank AG		462	.6
Erste Group Bank		108	.1		LTII	A1	A-	A-
Erste Group Bank (Erste Finance Jersey Ltd. 3 & 5)		354	.5		Tier I	Ba2	-	BBB-
Investcorp SA		448	.6
Investcorp Capital Limited		448	.6		Senior	Ba2	-	BB+
Citigroup Inc.		435	.6
Citigroup Inc. (includes Citigroup Global Markets Holdings Inc., Associates Corp.)		434	.6		Senior	A3	A	A+
Citigroup Inc. (Citicorp)		1	-		LTII	Baa1	A-	A
MetLife Inc.		434	.6
MetLife Inc.		165	.2		Senior	A3	A-	A-
Metropolitan Life Global Funding I		269	.4		Senior	Aa3	AA-	-
JP Morgan Chase & Co. (including Bear Stearns)		433	.6
JP Morgan Chase & Co. (including Bear Stearns Companies Inc.)		376	.6		Senior	Aa3	A+	AA-
JP Morgan Chase & Co. (FNBC)		29	-		Senior	Aa1	AA-	-
JP Morgan Chase & Co. (Bank One Corp.)		17	-		LTII	A1	A	A+
JP Morgan Chase & Co. (NBD Bank)		11	-		LTII	Aa2	A+	A+
National Grid PLC		430	.6
National Grid Gas PLC		215	.3		Senior	A3	A-	A
National Grid Electricity Transmission PLC		215	.3		Senior	A3	A-	A
Telecom Italia SpA		430	.6
Telecom Italia Finance SA		430	.6		Senior	Baa2	BBB	BBB
Total	$	22,983	31.6  %
Total debt and perpetual securities	$	72,731	100.0  %

⁽¹⁾ JGBs or JGB-backed securities

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As previously disclosed, we own long-dated debt instruments in support of our long-dated policyholder obligations. Included in our largest global investment holdings are legacy issues that date back many years. Additionally, the concentration of certain of our holdings of individual credit exposures has grown over time through merger and consolidation activity. Beginning in 2005, we have, as a general rule, limited our investment exposures to issuers to no more than 5% of total adjusted capital (TAC) on a statutory basis, with the exception of obligations of the Japan and U.S. governments. However, existing investment exposures that exceeded 5% of TAC at the time this rule was adopted or exposures that may exceed this threshold from time to time through merger and consolidation activity are not automatically reduced through sales of the issuers’ securities but rather are reduced over time consistent with our investment policy.

We have investments in both publicly and privately issued securities. The outstanding amount of a particular issuance, as well as the level of activity in a particular issuance and market conditions, including credit events and the interest rate environment, affect liquidity regardless of whether it is publicly or privately issued.

The following table details investment securities by type of issuance.

Investment Securities by Type of Issuance

	March 31, 2010				December 31, 2009
(In millions)	Amortized Cost		Fair    Value		Amortized Cost		Fair   Value
Publicly issued securities:
Fixed maturities	$	25,014	$	25,596	$	20,649	$	21,087
Perpetual securities		235		244		116		122
Equity securities		12		15		14		15
Total publicly issued		25,261		25,855		20,779		21,224
Privately issued securities:
Fixed maturities		40,202		38,327		43,671		41,522
Perpetual securities		7,280		7,179		7,438		7,141
Equity securities		9		9		8		9
Total privately issued		47,491		45,515		51,117		48,672
Total investment securities	$	72,752	$	71,370	$	71,896	$	69,896

The decline in privately issued securities was the result of the consolidation of certain VIE investments as of January 1, 2010. Upon consolidation, the beneficial interest in these privately issued VIEs was derecognized and the underlying publicly issued securities, or underlying collateral assets, were recognized. See Notes 1 and 3 of the Notes to the Consolidated Financial Statements for further discussion regarding these investments.

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The following table details our privately issued investment securities.

Privately Issued Securities

(Amortized cost, in millions)	March 31, 2010			December 31,             2009
Privately issued securities as a percentage of total debt and perpetual securities		65.3	%		71.1  %
Privately issued securities held by Aflac Japan	$	44,779		$	48,639
Privately issued securities held by Aflac Japan as a percentage of total debt and perpetual securities		61.6	%		67.7  %
Reverse-Dual Currency Securities (1)
(Amortized cost, in millions)	March 31, 2010			December 31,             2009
Privately issued reverse-dual currency securities	$	1,576		$	1,389
Private loan reverse-dual currency securities		9,516			12,681
Publicly issued collateral structured as reverse-dual currency securities (2)		2,662			-
Total privately issued reverse-dual currency securities	$	13,754		$	14,070
Reverse-dual currency securities as a percentage of total debt and perpetual securities		18.9	%		19.6  %

⁽¹⁾ Principal payments in yen and interest payments in dollars

⁽²⁾ Publicly issued securities held as collateral of former QSPEs

Aflac Japan has invested in privately issued securities to better match liability characteristics and secure higher yields than those available on Japanese government or other public corporate bonds. Aflac Japan’s investments in yen-denominated privately issued securities consist primarily of non-Japanese issuers and have longer maturities, thereby allowing us to improve our asset/liability matching and our overall investment returns. Most of our privately issued securities are issued under medium-term note programs and have standard documentation commensurate with credit ratings of the issuer, except when internal credit analysis indicates that additional protective and/or event-risk covenants are required.

Below-Investment-Grade and Split-Rated Securities

Debt and perpetual securities classified as below investment grade at March 31, 2010 and December 31, 2009, were generally reported as available for sale and carried at fair value. Each of the below-investment-grade securities was investment grade at the time of purchase and was subsequently downgraded by credit rating agencies. Below-investment-grade debt and perpetual securities represented 5.9% of total debt and perpetual securities at March 31, 2010, compared with 6.9% of total debt and perpetual securities at December 31, 2009, at amortized cost. The below-investment-grade securities were as follows:

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Below-Investment-Grade Securities

	March 31, 2010						December 31, 2009
(In millions)	Par Value		Amortized Cost		Fair Value		Par Value		Amortized Cost		Fair       Value
Lloyds Banking Group PLC (includes HBOS)(1)	$	897	$	643	$	699	$	896	$	597	$	612
Investcorp Capital Limited		448		448		220		452		452		223
Irish Life and Permanent PLC(1)		398		202		203		402		204		197
Takefuji Corporation		-		-		-		363		194		194
UPM-Kymmene		333		333		208		337		337		224
Royal Bank of Scotland(1)		327		133		245		329		134		132
Ford Motor Credit Company		322		322		307		326		326		302
Dexia SA (includes Dexia Bank Belgium and Dexia Overseas)(1)		322		231		234		326		233		233
Swedbank (Tier I only)(1)		311		262		271		152		117		119
CSAV (Tollo Shipping Co. S.A.)		258		258		146		261		261		135
Hella KG Hueck & Co.		236		236		148		239		238		148
KBC Group NV (includes KBL European Private Bankers S.A.)(1)		215		120		185		217		121		182
Morgan Stanley Aces 2008-6(3)		**		**		**		200		200		102
Aiful Corporation		171		171		85		175		175		74
BAWAG(1)		150		105		93		152		131		114
IKB Deutsche Industriebank		140		140		72		141		141		73
Various CWHL CMOs(2)		129		115		90		129		114		82
Terra 2008-01 A1(3)		**		**		**		109		109		86
Finance For Danish Industry		107		107		86		109		109		81
Morgan Stanley Aces 2007-38(3)		**		**		**		81		8		39
Investkredit Funding II Ltd.(1)		-		-		-		76		46		46
Morgan Stanley Aces 2006-31(3)		**		**		**		65		11		26
Eirles Two Limited 310 A(3)		**		**		**		54		20		28
Morgan Stanley Aces 2007-29(3)		**		**		**		54		12		28
Morgan Stanley Aces 2007-21(3)		**		**		**		54		4		31
May Department Stores Co.		53		58		53		53		58		50
Dresdner Funding Bank AG (part of Commerzbank) (Tier I only)		53		55		42		216		218		172
Various RFMSI CMOs(2)		48		40		35		47		40		34
DP World Ltd.		45		44		39		45		44		35
Rinker Materials Corp. (part of Cemex)		43		42		32		43		42		33
Various WFMBS CMOs(2)		39		32		26		52		44		38
First Industrial LP		37		40		29		37		40		27
Sprint Capital Corp.		23		24		21		23		24		21
Academica Charter Schools Finance LLC		22		24		15		22		24		15
Weyerhaeuser Co.		20		21		19		20		21		19
Terra CDO SPC LTD 2007-3 A1(3)		**		**		**		20		5		9
Bank of America Corp. (Tier I only)		18		18		18		18		18		18
MBIA Inc.		16		17		9		16		17		6
American General Capital II (part of AIG)		15		19		14		15		19		11
RAST 2005-A10 A5(2)		10		8		7		10		8		7
Morgan Stanley Aces 2006-23(3)		10		2		4		10		2		4
BOAMS 2007-1 1A30(2)		6		6		3		6		6		3
Allied Capital Corp.		5		5		5		12		12		11
CMSI 2007-5 1A3(2)		5		5		4		5		5		3
MSM 2007-1XS 2A4A(2)		5		3		3		5		3		3
LMT 2006-3 1A5(2)		4		3		1		4		3		1
America West Airlines		3		3		2		3		3		2
City of New Castle Pennsylvania		2		1		1		*		*		*
Regions Financial Corp.		1		1		1		*		*		*
Total	$	5,247	$	4,297	$	3,675	$	6,381	$	4,950	$	4,033

*Investment grade at respective reporting date

**Beginning January 1, 2010, these investments are consolidated and are no longer reported as a single investment.

⁽¹⁾Perpetual security

⁽²⁾Collateralized mortgage obligation

⁽³⁾Collateralized debt obligation

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Occasionally, a debt or perpetual security will be split rated. This occurs when one rating agency rates the security as investment grade while another rating agency rates the same security as below investment grade. Our policy is to review each issue on a case-by-case basis to determine if a split-rated security should be classified as investment grade or below investment grade. Our review includes evaluating the issuer’s credit position as well as current market pricing and other factors, such as the issuer’s or security’s inclusion on a credit rating downgrade watch list. Split-rated debt securities as of March 31, 2010, were as follows:

Split-Rated Securities⁽¹⁾

(In millions)	Amortized Cost		Moody’s Rating	S&P Rating	Fitch Rating	Investment-Grade Status
Erste Group Bank(2)	$	354	Ba2	-	BBB-	Investment Grade
SLM Corp.		353	Ba1	BBB-	BBB-	Investment Grade
Rohm & Haas Company		284	Ba1	BBB-	BBB	Investment Grade
Dexia Overseas Limited(2)		161	Baa1	B	A-	Investment Grade
Sparebanken Vest(2)		60	Ba1	BBB	-	Investment Grade
May Department Stores Co.		58	Ba2	BB	BBB-	Below Investment Grade
Dresdner Funding Bank AG (part of Commerzbank) (Tier I only)		55	Baa3	CCC	CCC	Below Investment Grade
Mead Corp.		36	Ba1	BBB	-	Investment Grade
Tennessee Gas Pipeline		31	Baa3	BB	BBB-	Investment Grade
Weyerhaeuser Co.		21	Ba1	BBB-	BB+	Below Investment Grade
Bank of America Corp. (Tier I only)		18	Baa3	BB	BB	Below Investment Grade
CHASE 2005-S3 A10(3)		18	Baa2	-	B	Investment Grade
Peco Energy Capital Trust IV		17	Baa1	BB+	BBB	Investment Grade
Transamerica Capital II		14	Baa3	BBB	BB	Investment Grade
America West Airlines(4)		11	Ba3	BBB-	-	Investment Grade
Keycorp Capital VII		7	Baa3	BB	BBB	Investment Grade
Resona Preferred Global Securities(2)		5	Ba2	BBB	-	Investment Grade
WFMBS 2006-3 A5(3)		5	Ba1	-	A	Investment Grade
Regions Financial Corp.		1	Ba1	BB+	BBB	Below Investment Grade
Total	$	1,509

⁽¹⁾ Split-rated securities represented 2.1% of total debt and perpetual securities at amortized cost at March 31, 2010.

⁽²⁾Perpetual security

⁽³⁾Collateralized mortgage obligation

⁽⁴⁾Separate securities from those reported in the Below-Investment-Grade Securities table from the same issuer

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Other-than-temporary Impairment

See Note 3 of the Notes to the Consolidated Financial Statements for a discussion of our impairment policy.

Unrealized Investment Gains and Losses

The following table provides details on amortized cost, fair value and unrealized gains and losses for our investments in debt and perpetual securities by investment-grade status as of March 31, 2010.

(In millions)	Total Amortized Cost		Total Fair Value		Percent of Fair Value		Gross Unrealized Gains		Gross         Unrealized         Losses
Available-for-sale securities:
Investment-grade securities	$	42,035	$	42,183	59.1	%	$	1,855	$	1,707
Below-investment-grade securities		4,297		3,675	5.2			257		879
Held-to-maturity securities:
Investment-grade securities		26,399		25,488	35.7			572		1,483
Total	$	72,731	$	71,346	100.0	%	$	2,684	$	4,069

The following table presents an aging of debt and perpetual securities in an unrealized loss position as of March 31, 2010.

Aging of Unrealized Losses

(In millions)	Total Amortized Cost	Total Unrealized Loss	Less Than Six Months		Six Months to Less than 12 Months		12 Months or Longer
			Amortized Cost	Unrealized Loss	Amortized Cost	Unrealized Loss	Amortized Cost	Unrealized     Loss
Available-for-sale securities:
Investment-grade securities	$  19,314	$  1,707	$  5,455	$  220	$     123	$      5	$  13,736	$  1,482
Below-investment-grade securities	2,802	879	224	18	161	86	2,417	775
Held-to-maturity securities:
Investment-grade securities	17,169	1,483	2,548	93	721	27	13,900	1,363
Total	$  39,285	$  4,069	$  8,227	$  331	$  1,005	$  118	$  30,053	$  3,620

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The following table presents a distribution of unrealized losses on debt and perpetual securities by magnitude as of March 31, 2010.

Percentage Decline From Amortized Cost
(In millions)	Total Amortized Cost	Total Unrealized Loss	Less than 20%		20% to 50%		Greater than 50%
			Amortized Cost	Unrealized Loss	Amortized Cost	Unrealized Loss	Amortized Cost	Unrealized   Loss
Available-for-sale securities:
Investment-grade securities	$  19,314	$  1,707	$  17,082	$  1,077	$  2,232	$     630	$        -	$        -
Below- investment- grade securities	2,802	879	926	84	1,309	495	567	300
Held-to-maturity securities:
Investment-grade securities	17,169	1,483	16,229	1,163	940	320	-	-
Total	$  39,285	$  4,069	$  34,237	$  2,324	$  4,481	$  1,445	$  567	$  300

The following table presents the 10 largest unrealized loss positions in our portfolio as of March 31, 2010.

(In millions)	Credit Rating	Amortized Cost	Fair Value	Unrealized     Loss
Investcorp SA	BB	$ 448	$ 220	$ (228)
SLM Corp.	BBB	353	193	(160)
Banco Espirito Santo	A	322	187	(135)
UPM-Kymmene	BB	333	208	(125)
Tollo Shipping Co. S.A.	B	258	146	(112)
Hella KG Hueck and Co.	BB	236	148	(88)
Aiful Corp.	CCC	171	85	(86)
Unicredito Italiano (includes HVB and Bank Austria)	BBB	548	465	(83)
Nordea Bank(1)	A	384	303	(81)
The Sultanate of Oman	A	376	298	(78)

⁽¹⁾ Perpetual security

Declines in fair value noted above resulted from changes in interest rates and credit spreads, yen/dollar exchange rates, and issuer credit status. However, we believe it would be inappropriate to recognize impairment charges because we believe the changes in fair value are temporary.

Investment Valuation and Cash

We estimate the fair values of our securities available for sale on a monthly basis. We monitor the estimated fair values obtained from our custodian and pricing brokers and those derived from our discounted cash flow pricing model for consistency from month to month, while considering current market conditions. We also periodically discuss with our custodian and pricing brokers the pricing techniques they use to monitor the consistency of their approach and periodically assess the appropriateness of the valuation level assigned to the values obtained from them. See Note 5 of the Notes to the Consolidated Financial Statements for the fair value hierarchy classification of our securities available for sale as of March 31, 2010.

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Cash, cash equivalents and short-term investments totaled $1.6 billion, or 2.2% of total investments and cash, as of March 31, 2010, compared with $2.3 billion, or 3.2%, at December 31, 2009. For a discussion of the factors causing the change in our cash balance, see the Operating Activities, Investing Activities and Financing Activities subsections of this MD&A.

For additional information concerning our investments, see Notes 3 and 5 of the Notes to the Consolidated Financial Statements.

Deferred Policy Acquisition Costs

The following table presents deferred policy acquisition costs by segment.

(In millions)	March 31, 2010	December 31, 2009	% Change
Aflac Japan	$                    5,854	$                      5,846	.1 %  (1)
Aflac U.S.	2,668	2,687	(.7)
Total	$                    8,522	$                      8,533	(.1) %

⁽¹⁾ Aflac Japan's deferred policy acquisition costs increased 1.2% in yen during the three months ended March 31, 2010.

The increase in Aflac Japan’s deferred policy acquisition costs was primarily driven by total new annualized premium sales.

Policy Liabilities

The following table presents policy liabilities by segment.

(In millions)	March 31, 2010	December 31, 2009	% Change
Aflac Japan	$            62,283	$            62,055	.4 %  (1)
Aflac U.S.	7,219	7,187	.4
Other	2	3	-
Total	$            69,504	$            69,245	.4 %

⁽¹⁾ Aflac Japan's policy liabilities increased 1.4% in yen during the three months ended March 31, 2010.

The increase in Aflac Japan’s policy liabilities was primarily the result of the growth and aging of our in-force business.

Notes Payable

Notes payable totaled $2.6 billion at March 31, 2010, and December 31, 2009. The ratio of debt to total capitalization (debt plus shareholders’ equity, excluding the unrealized gains and losses on investment securities and derivatives) was 21.9% as of March 31, 2010, compared with 22.3% at December 31, 2009. See Note 6 of the Notes to the Consolidated Financial Statements for additional information on our notes payable.

Benefit Plans

Aflac Japan and Aflac U.S. have various benefit plans. For additional information on our Japanese and U.S. plans, see Note 9 of the Notes to the Consolidated Financial Statements and Note 12 of the Notes to the Consolidated Financial Statements in our annual report to shareholders for the year ended December 31, 2009.

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Policyholder Protection Corporation

The Japanese insurance industry has a policyholder protection system that provides funds for the policyholders of insolvent insurers. On December 12, 2008, legislation was enacted extending the framework of the Life Insurance Policyholder Protection Corporation (LIPPC), which included government fiscal measures supporting the LIPPC through March 2012.

See the Policyholder Protection Corporation subsection of MD&A in our annual report to shareholders for the year ended December 31, 2009, for additional information.

Hedging Activities

We have limited hedging activities.

Our primary exposure to be hedged is our investment in Aflac Japan, which is affected by changes in the yen/dollar exchange rate. To mitigate this exposure, we have taken the following courses of action. First, Aflac Japan maintains a portfolio of dollar-denominated securities, which serve as an economic currency hedge of a portion of our investment in Aflac Japan. Second, we have designated a majority of the Parent Company’s yen-denominated liabilities (Samurai and Uridashi notes and yen-denominated loans) as a hedge of our investment in Aflac Japan. At the beginning of each quarter, we make our net investment hedge designation. If the total of our designated yen-denominated liabilities is equal to or less than our net investment in Aflac Japan, the hedge is deemed to be effective and the related exchange effect is reported in the unrealized foreign currency component of other comprehensive income. Should these designated yen-denominated liabilities exceed our investment in Aflac Japan, the foreign exchange effect on the portion of the liabilities that exceeds our investment in Aflac Japan would be recognized in net earnings (other income). We estimate that if our yen-denominated liabilities exceeded our investment in Aflac Japan by 10 billion yen, we would report a foreign exchange gain/loss of approximately $1 million for every one yen weakening/strengthening in the end-of-period yen/dollar exchange rate. Our net investment hedge was effective during the three-month periods ended March 31, 2010 and 2009, with yen-denominated assets exceeding yen-denominated liabilities by 163.7 billion yen as of January 1, 2010, and by 59.6 billion yen as of January 1, 2009, the respective dates of hedge designation. The yen net asset figure for the first quarter of 2010 differs from the yen-denominated net asset position as reflected in the Currency Risk subsection of MD&A. As disclosed in that subsection, the consolidation of the underlying assets in certain VIEs on January 1, 2010 required that we remove our yen-denominated investment in the VIE and recognize the underlying U.S. dollar-denominated fixed-maturity or perpetual securities and cross-currency swaps. While these U.S. dollar investments will create foreign currency fluctuations, the combination of U.S. dollar-denominated investment and the cross-currency swap economically creates a yen-denominated investment that qualifies for inclusion as a component of our investment in Aflac Japan. Since our net investment hedge was effective for the three-month periods ended March 31, 2010, and 2009, there was no impact on net earnings during those periods.

Effective January 1, 2010, as a result of the adoption of new accounting guidance and the corresponding consolidation of additional VIEs, we have freestanding derivative instruments that are reported in the consolidated statements of financial position at fair value and are reported in other assets and other liabilities. Several of these freestanding derivatives qualify for hedge accounting, including interest rate and foreign currency swaps. Interest rate and foreign currency swaps are used within VIEs to hedge the risk arising from interest rate and currency exchange risk, respectively. Changes in the fair value of a derivative that is designated and qualifies as a cash flow hedge are recorded in other comprehensive income. Any hedge ineffectiveness is recorded immediately in current period earnings as net realized investment gains and losses. While an immaterial amount of ineffectiveness was recorded during the first quarter of 2010, these hedging relationships were effective during the three-month period ended March 31, 2010. See Note 4 of the Notes to the Consolidated Financial Statements for additional information.

We have interest rate swap agreements related to the 20 billion yen variable interest rate Uridashi notes. By entering into these contracts, we have been able to lock in our interest rate at 1.52% in yen. We have designated these interest rate swaps as a hedge of the variability in our interest cash flows associated with the variable interest rate Uridashi notes. The notional amounts and terms of the swaps match the principal amount and terms of the variable interest rate Uridashi notes, and the swaps had no value at inception. GAAP requires that the change in the fair value of the swap contracts be recorded in other comprehensive income so long as the hedge is deemed effective. Any ineffectiveness is recognized in net earnings (other income). These hedges were effective during the three-month periods ended March 31, 2010, and 2009; therefore, there was no impact on net earnings. See Note 4 of the Notes to the Consolidated Financial Statements for additional information.

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Off-Balance Sheet Arrangements

As of March 31, 2010, we had no material letters of credit, standby letters of credit, guarantees or standby repurchase obligations. See Note 13 of the Notes to the Consolidated Financial Statements in our annual report to shareholders for the year ended December 31, 2009, for information on material unconditional purchase obligations that are not recorded on our balance sheet.

CAPITAL RESOURCES AND LIQUIDITY

Aflac provides the primary sources of liquidity to the Parent Company through dividends and management fees. The following table presents the amounts provided for the three-month periods ending March 31:

Liquidity Provided by Aflac to Parent Company

(In millions)	2010		2009
Management fees paid by Aflac	$	49	$	21

The primary uses of cash by the Parent Company are shareholder dividends, the repurchase of its common shares and interest on its outstanding indebtedness. The Parent Company’s sources and uses of cash are reasonably predictable and are not expected to change materially in the future. For additional information, see the Financing Activities subsection of this MD&A.

The Parent Company also accesses debt security markets to provide additional sources of capital. In March 2009, we filed a shelf registration statement with the SEC that allows us to issue an indefinite amount of senior and subordinated debt, in one or more series, from time to time through May 2012. We issued $850 million of senior notes in May 2009 and $400 million of senior notes in December 2009 under this registration statement. In November 2009, we filed an additional shelf registration statement with Japanese regulatory authorities that allows us to issue up to 100 billion yen of yen-denominated Samurai notes in Japan (approximately $1.1 billion, using the March 31, 2010, exchange rate) through November 2011. If issued, these Samurai notes would not be available to U.S. persons. We believe outside sources for additional debt and equity capital, if needed, will continue to be available. For additional information, see Note 6 of the Notes to the Consolidated Financial Statements.

The principal sources of cash for our insurance operations are premiums and investment income. The primary uses of cash by our insurance operations are policy claims, commissions, operating expenses, income taxes and payments to the Parent Company for management fees and dividends. Both the sources and uses of cash are reasonably predictable.

When making an investment decision, our first consideration is based on product needs. Our investment objectives provide for liquidity through the purchase of investment-grade debt securities. These objectives also take into account duration matching, and because of the long-term nature of our business, we have adequate time to react to changing cash flow needs.

As a result of policyholder aging, claims payments are expected to gradually increase over the life of a policy. Therefore, future policy benefit reserves are accumulated in the early years of a policy and are designed to help fund future claims payments. We expect our future cash flows from premiums and our investment portfolio to be sufficient to meet our cash needs for benefits and expenses.

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Consolidated Cash Flows

We translate cash flows for Aflac Japan’s yen-denominated items into U.S. dollars using weighted-average exchange rates. In periods when the yen weakens, translating yen into dollars causes fewer dollars to be reported. When the yen strengthens, translating yen into dollars causes more dollars to be reported. The following table summarizes consolidated cash flows by activity for the three-month periods ended March 31.

(In millions)	2010	2009
Operating activities	$    1,278	$      1,650
Investing activities	(1,969)	(1,325)
Financing activities	(23)	(45)
Exchange effect on cash and cash equivalents	2	(24)
Net change in cash and cash equivalents	$     (712)	$         256

Operating Activities

The following table summarizes operating cash flows by source for the three-month periods ended March 31.

(In millions)	2010	2009
Aflac Japan	$    1,080	$        1,233
Aflac U.S. and other operations	198	416
Total	$    1,278	$        1,649

Investing Activities

Operating cash flow is primarily used to purchase debt securities to meet future policy obligations. The following table summarizes investing cash flows by source for the three-month periods ended March 31.

(In millions)	2010	2009
Aflac Japan	$    (1,417)	$    (1,417)
Aflac U.S. and other operations	(552)	92
Total	$    (1,969)	$    (1,325)

Prudent portfolio management dictates that we attempt to match the duration of our assets with the duration of our liabilities. Currently, when our debt and perpetual securities mature, the proceeds may be reinvested at a yield below that required for the accretion of policy benefit liabilities on policies issued in earlier years. However, the long-term nature of our business and our strong cash flows provide us with the ability to minimize the effect of mismatched durations and/or yields identified by various asset adequacy analyses. When market opportunities arise, we dispose of selected debt and perpetual securities that are available for sale to improve the duration matching of our assets and liabilities, improve future investment yields, and/or rebalance our portfolio. As a result, dispositions before maturity can vary significantly from year to year. Dispositions before maturity were approximately 2% of the year-to-date average investment portfolio of debt and perpetual securities available for sale during the three-month period ended March 31, 2010, compared with 9% during the same period a year ago. The decrease in dispositions before maturity was due primarily to a bond-swap program that we executed in 2009 to generate investment gains to take advantage of tax loss carryforwards.

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Financing Activities

Consolidated cash used by financing activities was $23 million in the first three months of 2010, compared with $45 million for the same period of 2009. Cash returned to shareholders through dividends was $131 million during each of the three-month periods ended March 31, 2010 and 2009.

In July 2010, 39.4 billion yen (approximately $423 million using the March 31, 2010, exchange rate) of our Samurai notes will mature. We plan to use existing cash to pay off these notes.

We have no restrictive financial covenants related to our notes payable. We were in compliance with all of the covenants of our notes payable at March 31, 2010.

The following tables present a summary of treasury stock activity during the three-month periods ended March 31.

Treasury Stock Purchased
(In millions of dollars and thousands of shares)	2010		2009
Treasury stock purchases	$	5	$	2
Number of shares purchased		94		85
Treasury Stock Issued
(In millions of dollars and thousands of shares)	2010		2009
Stock issued from treasury	$	7	$	4
Number of shares issued		358		503

During the first three months of 2010, we did not repurchase shares of our common stock in the open market. As of March 31, 2010, a remaining balance of 32.4 million shares of our common stock was available for purchase under share repurchase authorizations by our board of directors. The 32.4 million shares available for purchase were comprised of 2.4 million shares remaining from an authorization from the board of directors in 2006 and 30.0 million shares from a board authorization in 2008. We will closely monitor global financial markets and our capital position before we commit to further share repurchases.

Cash dividends paid to shareholders were $.28 per share in the first quarter of 2010 and 2009. The following table presents the dividend activity for the three-month periods ended March 31.

(In millions)	2010		2009
Dividends paid in cash	$	131	$	131
Dividends previously declared		-		(131)(1)
Total dividends to shareholders	$	131	$	-

⁽¹⁾ Dividends paid in the first quarter of 2009 were recognized in the fourth quarter of 2008, the period in which they were declared.

In April 2010, the board of directors declared the second quarter cash dividend of $.28 per share. The dividend is payable on June 1, 2010, to shareholders of record at the close of business on May 19, 2010.

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Regulatory Restrictions

Aflac is domiciled in Nebraska and is subject to its regulations. A life insurance company’s statutory capital and surplus is determined according to rules prescribed by the NAIC, as modified by the insurance department in the insurance company’s state of domicile. Statutory accounting rules are different from GAAP and are intended to emphasize policyholder protection and company solvency. The continued long-term growth of our business may require increases in the statutory capital and surplus of our insurance operations. Aflac’s insurance operations may secure additional statutory capital through various sources, such as internally generated statutory earnings or equity contributions by the Parent Company from funds generated through debt or equity offerings. The NAIC’s risk-based capital (RBC) formula is used by insurance regulators to help identify inadequately capitalized insurance companies. The RBC formula quantifies insurance risk, business risk, asset risk and interest rate risk by weighing the types and mixtures of risks inherent in the insurer’s operations. Aflac’s company action level RBC ratio exceeded 525% as of March 31, 2010. Our RBC ratio remains high and reflects a strong capital and surplus position.

In addition to limitations and restrictions imposed by U.S. insurance regulators, Japan’s FSA may not allow profit repatriations from Aflac Japan if the transfers would cause Aflac Japan to lack sufficient financial strength for the protection of policyholders. The FSA maintains its own solvency standard. As of December 31, 2009, Aflac Japan’s solvency margin ratio of 885.5% significantly exceeded regulatory minimums. See the Japanese Regulatory Environment subsection of this MD&A for a discussion of upcoming changes to the calculation of the solvency margin ratio.

Payments are made from Aflac Japan to the Parent Company for management fees and to Aflac U.S. for allocated expenses and remittances of earnings. The following details Aflac Japan remittances for the three-month periods ended March 31.

Aflac Japan Remittances

(In millions of dollars)	2010	2009
Aflac Japan management fees paid to Parent Company	$        9	$        6
Expenses allocated to Aflac Japan	8	12

For additional information on regulatory restrictions on dividends, profit repatriations and other transfers, see Note 11 of the Notes to the Consolidated Financial Statements and the Regulatory Restrictions subsection of MD&A, both in our annual report to shareholders for the year ended December 31, 2009.

Rating Agencies

Aflac is rated AA- by S&P, Aa2 (Excellent) by Moody’s, and A+ (Superior) by A.M. Best for financial strength and AA- by R&I for insurance claims paying ability. Aflac Incorporated’s senior debt, Samurai notes, and Uridashi notes are rated A- by S&P, A2 by Moody’s and A by R&I. S&P and Moody’s have classified Aflac’s credit outlook as negative, consistent with their outlook on the insurance industry. A.M. Best and R&I have classified Aflac’s credit outlook as stable.

Other

For information regarding commitments and contingent liabilities, see Note 10 of the Notes to the Consolidated Financial Statements.

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Item 3. Quantitative and Qualitative Disclosures about Market Risk

The information required by Item 3 is incorporated by reference from the Market Risks of Financial Instruments subsection of MD&A in Part I, Item 2 of this report.

Item 4. Controls and Procedures

Disclosure Controls and Procedures

The Company’s management, with the participation of the Company’s Chief Executive Officer and Chief Financial Officer, has evaluated the effectiveness of the Company’s disclosure controls and procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) as of the end of the period covered by this quarterly report (the “Evaluation Date”). Based on such evaluation, the Company’s Chief Executive Officer and Chief Financial Officer have concluded that, as of the Evaluation Date, the Company’s disclosure controls and procedures are effective.

Changes in Internal Control Over Financial Reporting

There have not been any changes in the Company’s internal control over financial reporting (as such term is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during the first fiscal quarter of 2010 that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

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PART II. OTHER INFORMATION

Item IA. Risk Factors

The following should be read in conjunction with and supplements and amends the risk factors that may affect the Company’s business or operations described under “Risk Factors” in Part I, Item 1A. of our 2009 annual report on Form 10-K for the year ended December 31, 2009.

Extensive regulation and changes in legislation can impact profitability and growth.

Aflac’s insurance subsidiaries are subject to complex laws and regulations that are administered and enforced by a number of governmental authorities, including state insurance regulators, the SEC, the NAIC, the FSA and Ministry of Finance (MOF) in Japan, the U.S. Department of Justice, state attorneys general, and the Internal Revenue Service, each of which exercises a degree of interpretive latitude. Consequently, we are subject to the risk that compliance with any particular regulator’s or enforcement authority’s interpretation of a legal or regulatory issue may not result in compliance with another regulator’s or enforcement authority’s interpretation of the same issue, particularly when compliance is judged in hindsight. There is also a risk that any particular regulator’s or enforcement authority’s interpretation of a legal or regulatory issue may change over time to our detriment. In addition, changes in the overall legal or regulatory environment may, even absent any particular regulator’s or enforcement authority’s interpretation of an issue changing, cause us to change our views regarding the actions we need to take from a legal or regulatory risk management perspective, thus necessitating changes to our practices that may, in some cases, limit our ability to grow or otherwise negatively impact the profitability of our business.

The primary purpose of insurance company regulatory supervision is the protection of insurance policyholders, rather than investors. The extent of regulation varies, but generally is governed by state statutes in the United States and by the FSA and the MOF in Japan. These systems of supervision and regulation cover, among other things:

— standards of establishing and setting premium rates and the approval thereof

— standards of minimum capital requirements and solvency margins, including risk-based capital measures

— restrictions on, limitations on and required approval of certain transactions between our insurance subsidiaries and their affiliates, including management fee arrangements

— restrictions on the nature, quality and concentration of investments

— restrictions on the types of terms and conditions that we can include in the insurance policies offered by our primary insurance operations

— limitations on the amount of dividends that insurance subsidiaries can pay or foreign profits that can be repatriated

— the existence and licensing status of a company under circumstances where it is not writing new or renewal business

— certain required methods of accounting

— reserves for unearned premiums, losses and other purposes

— assignment of residual market business and potential assessments for the provision of funds necessary for the settlement of covered claims under certain policies provided by impaired, insolvent or failed insurance companies

— administrative practices requirements

— imposition of fines and other sanctions

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State insurance regulators and the NAIC regularly re-examine existing laws and regulations applicable to insurance companies and their products. Changes in these laws and regulations, or in interpretations thereof, could have a material adverse effect on our financial condition and results of operations.

Currently, the U.S. federal government does not directly regulate the business of insurance. However, federal legislation and administrative policies in several areas can significantly and adversely affect insurance companies. These areas include financial services reform legislation, securities regulation, pension regulation, privacy, tort reform legislation and taxation. Various forms of federal oversight and possible regulation of insurance have been proposed in Congress. These proposals include the Wall Street Reform and Consumer Protection Act, which would establish the “Federal Insurance Office” within the Department of Treasury to monitor the insurance industry, identify gaps in regulation of insurance that could contribute to a systemic crisis, and identify insurers that should be subject to stricter standards. Other proposals are pending in Congress that would permit an optional federal charter for insurers. The Obama administration has indicated that enactment of financial services reform is a legislative priority in 2010. Accordingly, it is possible that legislation to create federal oversight of insurance through an office in the Department of Treasury may be enacted, however, the chance of enactment of a federal insurance charter, while possible, appears to be less likely.

In addition, U.S. federal health care reform legislation (known as the Patient Protection and Affordable Care Act and the Health Care and Education Reconciliation Act of 2010) that was enacted in March 2010 includes major changes to the U.S. health care insurance marketplace. Among other changes, the reform legislation includes an individual medical insurance coverage mandate, provides for penalties on certain employers for failing to provide adequate coverage, creates health insurance exchanges, and addresses coverage and exclusions as well as medical loss ratios. The legislation also includes changes in government reimbursements and tax credits for individuals and employers and alters federal and state regulation of health insurers. These changes will be phased in over the next eight years. These changes are directed toward major medical health insurance coverage, which Aflac does not offer. Accordingly, our products are not subject to or covered under the major provisions of the new legislation. However, it is not possible to predict with any degree of certainty what impact this legislation, as currently adopted, or any future regulation, if adopted, will have on the Company’s U.S. business, financial condition, or results of operations.

Compliance with applicable laws and regulations is time consuming and personnel-intensive, and changes in these laws and regulations may materially increase our direct and indirect compliance and other expenses of doing business, thus having a material adverse effect on our financial condition and results of operations.

For additional risk factors, please refer to Item 1A of Part I of our annual report on Form 10-K for the year ended December 31, 2009.

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Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

Issuer Purchases of Equity Securities

During the first quarter of 2010, we repurchased shares of Aflac common stock as follows:

Period	Total     Number of     Shares      Purchased	Average     Price Paid     Per  Share		Total     Number     of Shares     Purchased     as Part of      Publicly     Announced     Plans or     Programs	Maximum       Number of       Shares that       May Yet Be       Purchased       Under the       Plans or       Programs
January 1 - January 31	-	$	-	-	32,370,254
February 1 - February 28	91,174		48.25	-	32,370,254
March 1 - March 31	1,609		51.82	-	32,370,254
Total	92,783  (2)	$	48.31	-	32,370,254  (1)

⁽¹⁾ The total remaining shares available for purchase at March 31, 2010, consisted of: (1) 2,370,254 shares related to a 30,000,000 share repurchase authorization by the board of directors announced in February 2006 and (2) 30,000,000 shares related to a 30,000,000 share repurchase authorization by the board announced in January 2008.

⁽²⁾ During the first quarter of 2010, 92,783 shares were purchased in connection with income tax withholding obligations related to the vesting of restricted-share-based awards during the period.

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Item 6. Exhibits

(a) EXHIBIT INDEX:

3.0	-	Articles of Incorporation, as amended – incorporated by reference from Form 10-Q for June 30, 2008, Exhibit 3.0 (File No. 001-07434).
3.1	-	Bylaws of the Corporation, as amended
4.1	-	Indenture, dated as of May 21, 2009, between Aflac Incorporated and The Bank of New York Mellon Trust Company, N.A., as trustee – incorporated by reference from Form 8-K dated May 21, 2009, Exhibit 4.1 (File No. 001-07434).
4.2	-	First Supplemental Indenture, dated as of May 21, 2009, between Aflac Incorporated and The Bank of New York Mellon Trust Company, N.A., as trustee (including form of 8.500% Senior Note due 2019) – incorporated by reference from Form 8-K dated May 21, 2009, Exhibit 4.2 (File No. 001-07434).
4.3	-	Second Supplemental Indenture, dated as of December 17, 2009, between Aflac Incorporated and The Bank of New York Mellon Trust Company, N.A., as trustee (including form of 6.900% Senior Note due 2039) – incorporated by reference from Form 8-K dated December 14, 2009, Exhibit 4.1 (File No. 001-07434).
10.0	-	American Family Corporation Retirement Plan for Senior Officers, as amended and restated October 1, 1989 – incorporated by reference from 1993 Form 10-K, Exhibit 10.2 (File No. 001-07434).
10.1	-	Amendment to American Family Corporation Retirement Plan for Senior Officers, dated December 8, 2008 – incorporated by reference from 2008 Form 10-K, Exhibit 10.1 (File No. 001-07434).
10.2	-	Aflac Incorporated Supplemental Executive Retirement Plan, as amended and restated January 1, 2009 – incorporated by reference from 2008 Form 10-K, Exhibit 10.5 (File No. 001-07434).
10.3	-	Aflac Incorporated Executive Deferred Compensation Plan, as amended and restated, effective January 1, 2009 – incorporated by reference from 2008 Form 10-K, Exhibit 10.9 (File No. 001-07434).
10.4	-	First Amendment to the Aflac Incorporated Executive Deferred Compensation Plan dated June 1, 2009 – incorporated by reference from Form 10-Q for June 30, 2009, Exhibit 10.4 (File No. 001-07434).
10.5	-	Aflac Incorporated Amended and Restated 2009 Management Incentive Plan – incorporated by reference from the 2008 Shareholders’ Proxy Statement, Appendix B (File No. 001-07434).
10.6	-	First Amendment to the Aflac Incorporated Amended and Restated 2009 Management Incentive Plan, dated December 19, 2008 – incorporated by reference from 2008 Form 10-K, Exhibit 10.11 (File No. 001-07434).
10.7	-	Aflac Incorporated Sales Incentive Plan – incorporated by reference from 2007 Form 10-K, Exhibit 10.8 (File No. 001-07434).
10.8	-	1999 Aflac Associate Stock Bonus Plan, as amended, dated February 11, 2003 – incorporated by reference from 2002 Form 10-K, Exhibit 99.2 (File No. 001-07434).
10.9	-	Aflac Incorporated 1997 Stock Option Plan – incorporated by reference from the 1997 Shareholders’ Proxy Statement, Appendix B (File No. 001-07434).
10.10	-	Form of Officer Stock Option Agreement (Non-Qualifying Stock Option) under the Aflac Incorporated 1997 Stock Option Plan – incorporated by reference from Form 8-K dated January 28, 2005, Exhibit 10.5 (File No. 001-07434).
10.11	-	Form of Officer Stock Option Agreement (Incentive Stock Option) under the Aflac Incorporated 1997 Stock Option Plan – incorporated by reference from Form 8-K dated January 28, 2005, Exhibit 10.6 (File No. 001-07434).

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10.12	-	Notice of grant of stock options and stock option agreement to officers under the Aflac Incorporated 1997 Stock Option Plan – incorporated by reference from Form 8-K dated January 28, 2005, Exhibit 10.7 (File No. 001-07434).
10.13	-	2004 Aflac Incorporated Long-Term Incentive Plan, dated May 3, 2004 – incorporated by reference from the 2004 Notice and Proxy Statement, Exhibit B (File No. 001-07434).
10.14	-	First Amendment to the 2004 Aflac Incorporated Long-Term Incentive Plan, dated May 2, 2005 – incorporated by reference from Form 10-Q for March 31, 2005, Exhibit 10.1 (File No. 001-07434).
10.15	-	Second Amendment to the 2004 Aflac Incorporated Long-Term Incentive Plan, dated February 14, 2006 – incorporated by reference from Form 10-Q for March 31, 2006, Exhibit 10.32 (File No. 001-07434).
10.16	-	Third Amendment to the 2004 Aflac Incorporated Long-Term Incentive Plan, dated December 19, 2008 – incorporated by reference from 2008 Form 10-K, Exhibit 10.21 (File No. 001-07434).
10.17	-	Form of Non-Employee Director Stock Option Agreement (NQSO) under the 2004 Aflac Incorporated Long-Term Incentive Plan – incorporated by reference from Form 8-K dated January 28, 2005, Exhibit 10.1 (File No. 001-07434).
10.18	-	Notice of grant of stock options to non-employee director under the 2004 Aflac Incorporated Long-Term Incentive Plan – incorporated by reference from Form 8-K dated January 28, 2005, Exhibit 10.2 (File No. 001-07434).
10.19	-	Form of Non-Employee Director Restricted Stock Award Agreement under the 2004 Aflac Incorporated Long-Term Incentive Plan – incorporated by reference from Form 8-K dated January 28, 2005, Exhibit 10.3 (File No. 001-07434).
10.20	-	Notice of restricted stock award to non-employee director under the 2004 Aflac Incorporated Long-Term Incentive Plan – incorporated by reference from Form 8-K dated January 28, 2005, Exhibit 10.4 (File No. 001-07434).
10.21	-	Form of Officer Restricted Stock Award Agreement under the 2004 Aflac Incorporated Long-Term Incentive Plan – incorporated by reference from Form 8-K dated February 7, 2005, Exhibit 10.1 (File No. 001-07434).
10.22	-	Notice of restricted stock award to officers under the 2004 Aflac Incorporated Long-Term Incentive Plan – incorporated by reference from Form 8-K dated February 7, 2005, Exhibit 10.2 (File No. 001-07434).
10.23	-	Form of Officer Stock Option Agreement (Non-Qualifying Stock Option) under the 2004 Aflac Incorporated Long-Term Incentive Plan – incorporated by reference from Form 8-K dated February 7, 2005, Exhibit 10.3 (File No. 001-07434).
10.24	-	Form of Officer Stock Option Agreement (Incentive Stock Option) under the 2004 Aflac Incorporated Long-Term Incentive Plan – incorporated by reference from Form 8-K dated February 7, 2005, Exhibit 10.4 (File No. 001-07434).
10.25	-	Notice of grant of stock options to officers under the 2004 Aflac Incorporated Long-Term Incentive Plan – incorporated by reference from Form 8-K dated February 7, 2005, Exhibit 10.5 (File No. 001-07434).
10.26		Aflac Incorporated Retirement Plan for Directors Emeritus, as amended and restated, dated February 9, 2010 – incorporated by reference from 2009 Form 10-K, Exhibit 10.26 (File No. 001-07434).
10.27	-	Aflac Incorporated Employment Agreement with Daniel P. Amos, dated August 1, 1993 – incorporated by reference from 1993 Form 10-K, Exhibit 10.4 (File No. 001-07434).
10.28	-	Amendment to Aflac Incorporated Employment Agreement with Daniel P. Amos, dated December 8, 2008 – incorporated by reference from 2008 Form 10-K, Exhibit 10.32 (File No. 001-07434).

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10.29	-	Aflac Incorporated Employment Agreement with Kriss Cloninger III, dated February 14, 1992, and as amended November 12, 1993 – incorporated by reference from 1993 Form 10-K, Exhibit 10.6 (File No. 001-07434).
10.30	-	Amendment to Aflac Incorporated Employment Agreement with Kriss Cloninger III, dated November 3, 2008 – incorporated by reference from 2008 Form 10-K, Exhibit 10.34 (File No. 001-07434).
10.31	-	Amendment to Aflac Incorporated Employment Agreement with Kriss Cloninger III, dated December 19, 2008 – incorporated by reference from 2008 Form 10-K, Exhibit 10.35 (File No. 001-07434).
10.32	-	Aflac Incorporated Employment Agreement with Paul S. Amos II, dated January 1, 2005 – incorporated by reference from Form 8-K dated February 7, 2005, Exhibit 10.2 (File No. 001-07434).
10.33	-	Amendment to Aflac Incorporated Employment Agreement with Paul S. Amos II, dated December 19, 2008 – incorporated by reference from 2008 Form 10-K, Exhibit 10.39 (File No. 001-07434).
10.34	-	Aflac Incorporated Employment Agreement with Joey Loudermilk, dated September 12, 1994 and as amended December 10, 2008 – incorporated by reference from 2008 Form 10-K, Exhibit 10.40 (File No. 001-07434).
10.35	-	Aflac Incorporated Employment Agreement with Tohru Tonoike, effective February 1, 2007 – incorporated by reference from 2008 Form 10-K, Exhibit 10.41 (File No. 001-07434).
10.36		Amendment to Aflac Incorporated Employment Agreement with Tohru Tonoike, dated February 9, 2010 – incorporated by reference from 2009 Form 10-K, Exhibit 10.36 (File No. 001-07434).
10.37	-	Aflac Retirement Agreement with E. Stephen Purdom, dated February 15, 2000 – incorporated by reference from 2000 Form 10-K, Exhibit 10.13 (File No. 001-07434).
11	-	Statement regarding the computation of per-share earnings for the Registrant.
12	-	Statement regarding the computation of ratio of earnings to fixed charges for the Registrant.
15	-	Letter from KPMG LLP regarding unaudited interim financial information.
31.1	-	Certification of CEO dated May 7, 2010, required by Rule 13a-14(a) or Rule 15d-14(a) of the Securities Exchange Act of 1934.
31.2	-	Certification of CFO dated May 7, 2010, required by Rule 13a-14(a) or Rule 15d-14(a) of the Securities Exchange Act of 1934.
32	-	Certification of CEO and CFO dated May 7, 2010, pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101.INS	-	XBRL Instance Document.[1]
101.SCH	-	XBRL Taxonomy Extension Schema.
101.CAL	-	XBRL Taxonomy Extension Calculation Linkbase.
101.DEF	-	XBRL Taxonomy Extension Definition Linkbase
101.LAB	-	XBRL Taxonomy Extension Label Linkbase.
101.PRE	-	XBRL Taxonomy Extension Presentation Linkbase.
[1]		Includes the following materials contained in this Quarterly Report on Form 10-Q for the period ended March 31, 2010, formatted in XBRL (eXtensible Business Reporting Language): (i) Consolidated Statements of Earnings, (ii) Consolidated Balance Sheets, (iii) Consolidated Statements of Shareholders’ Equity, (iv) Consolidated Statements of Cash Flows, (v) Consolidated Statements of Comprehensive Income, (vi) Notes to the Consolidated Financial Statements, which is tagged as blocks of text.

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

	Aflac Incorporated
May 7, 2010	/s/ Kriss Cloninger III
	(Kriss Cloninger III)
	President, Chief Financial Officer,
	Treasurer and Director
May 7, 2010	/s/ Ralph A. Rogers, Jr.
	(Ralph A. Rogers, Jr.)
	Senior Vice President, Financial Services;
	Chief Accounting Officer

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EX-3.1

Aflac Incorporated 1st Quarter 2010 Form 10-Q

EXHIBIT 3.1

Amended and Restated Bylaws

of

AFLAC Incorporated

(As of February 10, 2004)

ARTICLE I

OFFICES

Section 1. Registered Office. The registered office shall be in the State of Georgia, County of Muscogee.

Section 2. Other Offices. The Corporation may also have offices at such other places both within and without the State of Georgia as the Board of Directors may from time to time determine and the business of the Corporation may require or make desirable.

ARTICLE II

SHAREHOLDERS’ MEETINGS

Section 1. Annual Meetings.

(a) The annual meeting of the shareholders of the Corporation shall be held at the principal office of the Corporation or at such other place in the United States as may be determined by the Board of Directors, on the first Monday in May of each calendar year (or on the next succeeding business day if said first Monday in May is a legal holiday in any year) or at such other time and date as shall be determined by the Board of Directors, for the purpose of electing directors and transacting such other business as may properly be brought before the meeting.

(b) No business may be transacted at an annual meeting of shareholders, other than business that is either (i) specified in the notice of meeting (or any supplement thereto) given by or at the direction of the Board of Directors (or any duly authorized committee thereof), (ii) otherwise properly brought before the annual meeting by or at the direction of the Board of Directors (or any duly authorized committee thereof) or (iii) otherwise properly brought before the annual meeting by any shareholder of the Corporation (A) who is a shareholder of record on the date of the giving of the notice provided for in this Section 1 and on the record date for the determination of shareholders entitled to vote at such annual meeting and (B) who complies with the notice procedures set forth in this Section 1.

(c) In addition to any other applicable requirements, for business to be properly brought before an annual meeting by a shareholder, such shareholder must have given timely notice thereof in proper written form to the Secretary of the Corporation, which notice is not withdrawn by such shareholder at or prior to such annual meeting.

(d) To be timely, a shareholder’s notice to the Secretary must be delivered to or mailed and received at the principal executive offices of the Corporation not less than ninety (90) days nor more than one hundred-twenty (120) days prior to the anniversary date of the immediately preceding annual meeting of shareholders; provided, however, that in the event that the annual meeting is called for a date that is not within twenty-five (25) days before or after such anniversary date, notice by the shareholder in order to be timely must be so received not later than the close of business on the tenth (10^th) day following the day on which such notice of the date of the annual meeting was mailed or such public disclosure of the date of the annual meeting was made, whichever first occurs.

(e) To be in proper written form, a shareholder’s notice to the Secretary must set forth as to each matter such shareholder proposes to bring before the annual meeting (i) a brief description of the business desired to be brought before the annual meeting and the reasons for conducting such business at the annual meeting, (ii) the name and record address of such shareholder, (iii) the class and number of shares of capital stock of the Corporation which are owned beneficially or of record by such shareholder, (iv) a description of all arrangements or understandings between such shareholder and any other person or persons (including their names) in connection with the proposal of such business by such shareholder and any material interest of such shareholder in such business and (v) a representation that such shareholder intends to appear in person or by proxy at the annual meeting to bring such business before the meeting.

(f) No business shall be conducted at the annual meeting of shareholders except business brought before the annual meeting in accordance with the procedures set forth in this Section 1, provided, however, that, once business has been properly brought before the annual meeting in accordance with such procedures, nothing in this Section 1 shall be deemed to preclude discussion by any shareholder of any such business. If the Chairman of an annual meeting determines that business was not properly brought before the annual meeting in accordance with the foregoing procedures, the Chairman shall declare to the meeting that the business was not properly brought before the meeting and such business shall not be transacted.

Section 2. Special Meetings. Special meetings of the shareholders shall be held at the principal office of the Corporation or at such other place in the United States as may be designated in the notice of said meetings, upon call of the Chairman of the Board of Directors or the Chief Executive Officer and shall be called by the President or the Secretary when so directed by the Board of Directors or at the request in writing of the holders of shares representing all of the votes entitled to be cast by the holders of all the issued and outstanding capital stock of the Corporation entitled to vote thereat. Any such request shall state the purpose for which the meeting is to be called.

Section 3. Notice of Meetings. Notice of every meeting of shareholders, stating the place, date and hour of the meeting, shall be given to each shareholder of record entitled to vote at such meeting not less than 10 nor more than 60 days before the date of the meeting. If mailed, such notice shall be deemed to be delivered when deposited in the United States mail with postage thereon prepaid addressed to the shareholder at his address as it appears on the Corporation’ s record of shareholders. Attendance of a shareholder at a meeting of shareholders shall constitute a waiver of objection to: (a) lack of notice or defective notice of such meeting unless the shareholder at the beginning of the meeting, objects to holding the meeting or transacting business at the meeting, and (b) consideration of a particular matter at the meeting which is not within the purpose or purposes described in the meeting notice, unless the shareholder objects to considering the matter when it is presented. Notice need not be given to any shareholder who signs a waiver of notice, in person or by proxy, either before or after the meeting.

Section 4. Quorum. The holders of shares representing a majority of the votes entitled to be cast by the holders of all the issued and outstanding stock of the Corporation entitled to vote thereat, present in person or represented by proxy, shall constitute a quorum for the transaction of business at all meetings of the shareholders except as otherwise provided by statute, by the Articles of Incorporation, or by these Bylaws. If a quorum is not present or represented at any meeting of the shareholders, the holders of shares representing a majority of the votes entitled to be cast by those present in person or represented by proxy may adjourn the meeting from time to time, without notice other than announcement at the meeting, until a quorum shall be present or represented. At such adjourned meeting at which a quorum shall be present or represented, any business may be transacted which might have been transacted at the meeting as originally notified. If after the adjournment a new record date is fixed for the adjourned meeting, a notice of the adjourned meeting shall be given to each shareholder of record entitled to vote at the meeting.

Section 5. Voting. When a quorum is present at any meeting, the vote of the holders of stock representing a majority of the voting power, as defined in the Articles of Incorporation, present in person or represented by proxy shall decide any question brought before such meeting, unless the question is one upon which by express provision of law or of the Articles of Incorporation, a different vote is required, in which case such express provision shall govern and control the decision of the question. Each shareholder shall at every meeting of the shareholders be entitled to vote, as defined, in person or by proxy for each share of the capital stock having voting power registered in his name on the books of the Corporation, but no proxy shall be voted or acted upon after 11 months from its date, unless otherwise provided in the proxy.

Section 6. Consent of Shareholders. Any action required or permitted to be taken at any meeting of the shareholders may be taken without a meeting if all of the shareholders entitled to vote on the action consent thereto in writing, setting forth the action so taken, and signing and delivering such consent to the Secretary of the Corporation. Such consent shall have the same force and effect as a unanimous vote of shareholders.

Section 7. List of Shareholders. The Corporation shall keep at its registered office or principal place of business, or at the office of its transfer agent or registrar, a record of its shareholders, giving their names and addresses and the number, class and series, if any, of the shares held by each. The officer who has charge of the stock transfer books of the Corporation shall prepare and make, before every meeting of shareholders or any adjournment thereof, a complete list of the shareholders entitled to vote at the meeting or any adjournment thereof, arranged in alphabetical order, with the address of and the number and class and series, if any, of shares held by each. The list shall be produced and kept open at the time and place of the meeting and shall be subject to inspection by any shareholder during the whole time of the meeting for the purposes thereof. The said list may be the Corporation’s regular record of shareholders if it is arranged in alphabetical order or contains an alphabetical index and otherwise conforms with the requirements specified by law.

ARTICLE III

DIRECTORS

Section 1. Powers. The property, affairs and business of the Corporation shall be managed and directed by its Board of Directors, which may exercise all powers of the Corporation and do all lawful acts and things which are not by law, by the Articles of Incorporation or by these Bylaws directed or required to be exercised or done by the shareholders.

Section 2. Number, Election and Term.

(a) The number of Directors which shall constitute the whole Board shall be not less than three (3) or more than twenty-five (25). The specific number of Directors within such range shall be fixed or changed from time to time by a majority of the Board of Directors then in office. A decrease in the number of Directors shall not have the effect of shortening the term of any incumbent director. Except as otherwise provided in these Bylaws shareholders shall elect Directors by a vote of not less than a plurality of the votes present in person or represented by proxy at the meeting. Each Director elected shall hold office until his successor is elected and qualified or until his earlier resignation, removal from office or death. Directors shall be natural persons between the ages of 21 and 70 years, inclusive; provided, however, that any Directors who were elected to the Board for the first time before April 27, 1992, and who are subsequently re-elected shall be natural persons between the ages of 21 and 75 years, inclusive. Directors need not be residents of the State of Georgia or shareholders of the Corporation.

(b) Only persons who are nominated in accordance with the following procedures shall be eligible for election as directors of the Corporation. Nominations of persons for election to the Board of Directors may be made at any annual meeting of shareholders (i) by or at the direction of the Board of Directors (or any duly authorized committee thereof) or (ii) by any shareholder of the Corporation (A) who is a shareholder of record on the date of the giving of the notice provided for in this Section 2 and on the record date for the determination of shareholders entitled to vote at such annual meeting and (B) who complies with the notice procedures set forth in this Section 2.

(c) In addition to any other applicable requirements, for a nomination to be made by a shareholder, such shareholder must have given timely notice thereof in proper written form to the Secretary of the Corporation.

(d) To be timely, a shareholder’s notice to the Secretary must be delivered to or mailed and received at the principal executive offices of the Corporation not less than ninety (90) days nor more than one hundred-twenty (120) days prior to the anniversary date of the immediately preceding annual meeting of shareholders; provided, however, that in the event that the annual meeting is called for a date that is not within twenty-five (25) days before or after such anniversary date, notice by the shareholder in order to be timely must be so received not later than the close of business on the tenth (10^th) day following the day on which such notice of the date of the annual meeting was mailed or such public disclosure of the date of the annual meeting was made, whichever first occurs.

(e) To be in proper written form, a shareholder’s notice to the Secretary must set forth (i) as to each person whom the shareholder proposes to nominate for election as a director (A) the name, age, business address and residence address of the person, (B) the principal occupation or employment of the person, (C) the number of shares of capital stock of the Corporation which are owned beneficially or of record by the person and (D) any other information relating to the person that would be required to be disclosed in a proxy statement or other filings required to be made in connection with solicitations of proxies for election of directors pursuant to Section 14 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and the rules and regulations promulgated thereunder; and (ii) as to the shareholder giving the notice (A) the name and record address of such shareholder, (B) the number of shares of capital stock of the (Corporation which are owned beneficially or of record by such shareholder, (C) a description of all arrangements or understandings between such shareholder and each proposed nominee and any other person or persons (including their names) pursuant to which the nomination(s) are to be

made by such shareholder, (D) a representation that such shareholder intends to appear in person or by proxy at the meeting to nominate the persons named in its notice and (E) any other information relating to such shareholder that would be required to be disclosed in a proxy statement or other filings required to be made in connection with solicitations of proxies for election of directors pursuant to Section 14 of the Exchange Act and the rules and regulations promulgated thereunder. Such notice must be accompanied by a written consent of each proposed nominee to being named as a nominee and to serve as a director if elected.

(f) No person shall be eligible for election as a director of the Corporation unless nominated in accordance with the procedures set forth in this Section 2. If the Chairman of the annual meeting determines that a nomination was not made in accordance with the foregoing procedures, the Chairman shall declare to the meeting that the nomination was defective and such defective nomination shall be disregarded.

Section 3. Resignation. Any director who shall miss three or more regular meetings of the Board of Directors within any twelve month period, whether or not the meetings missed are consecutive, shall be deemed to have automatically resigned as a director, provided that the automatic resignation may be waived by resolution adopted by a majority vote of the remaining directors with the written consent of the resigned director, in which event said director shall remain on the Board.

Section 4. Vacancies. Vacancies on the Board of Directors, including vacancies resulting from any increase in the number of directors constituting the Board of Directors, but not including vacancies resulting from removal from office by the shareholders (except as provided in Section 9 of this Article III), may be filled by the shareholders, by the Board of Directors, or by the affirmative vote of a majority of the directors remaining in office, though less than a quorum, or by a sole remaining director, and a director so chosen shall hold office until the next annual election and until his successor is duly elected and qualified unless sooner displaced. If there are no directors in office, then vacancies shall be filled through election by the shareholders. Vacancies on any committee of the Board of Directors, including vacancies resulting from any increase in the number of directors constituting such committee, may be filled by the Board of Directors, or by the affirmative vote of a majority of the directors remaining in office, though less than a quorum, or by a sole remaining director, and a director so chosen shall hold office until the his successor is duly appointed by the Board of Directors unless sooner displaced.

Section 5. Meetings and Notice. The Board of Directors of the Corporation and any committee thereof may hold meetings, both regular and special, either within or without the State of Georgia. Regular meetings of the Board of Directors or any committee thereof may be held without notice at such time and place as shall from time to time be determined by resolution of the Board or such committee, respectively. Special meetings of the Board may be called by the Chairman of the Board or Chief Executive Officer or by any two directors on one day’s oral, telegraphic or written notice duly given or served on each director personally, or three days’ notice deposited, first class postage prepaid, in the United Sates mail. Special meetings of any committee of the Board may be called by the chairman of such committee, if there be one, the Chief Executive Officer, or by any director serving on such committee, on one day’s oral, telegraphic or written notice duly given or served on each member of such committee personally, or three days’ notice deposited, first class postage prepaid, in the United Sates mail. Such notice shall state a reasonable time, date and place of meeting of the Board or the committee, but the purpose need not be stated therein. Notice need not be given to any director who signs a waiver of notice either before or after the meeting. Attendance of a director at a meeting shall constitute a waiver of notice of such meeting except when the director states, at the beginning of the meeting (or promptly upon his arrival), any such objection or objections to holding the meeting or the transaction of business at the meeting and does not subsequently vote for or assent to action taken at the meeting.

Section 6. Quorum. At all meetings of the Board or any committee thereof, a majority of directors in office or a majority of the directors constituting such committee, as the case may be, immediately before the meeting begins shall constitute a quorum for the transaction of business, and the act of a majority of the directors or committee members present at any meeting at which there is a quorum shall be the act of the Board or such committee, as applicable, except as may be otherwise specifically provided by law, by the Articles of Incorporation, by the rules and regulations of any securities exchange or quotation system on which the Corporation’s securities are listed or quoted for trading, or by these Bylaws. If a quorum shall not be present at any meeting of the Board or any committee thereof, the directors present thereat may adjourn the meeting from time to time, without notice other than announcement at the meeting, until a quorum shall be present.

Section 7. Consent of Directors. Unless otherwise restricted by the Articles of Incorporation or these Bylaws, any action required or permitted to be taken at any meeting of the Board of Directors or of any committee thereof may be taken without a meeting, if all members of the Board or committee, as the case may be, consent thereto in writing, setting forth the action so taken, and the writing or writings are filed with the minutes of the proceedings of the Board or committee. Such consent shall have the same force and effect as a unanimous vote of the Board or committee.

Section 8. Committees. The Board of Directors may by resolution passed by a majority of the whole Board, designate from among its members one or more committees, each committee to consist of one or more directors. The Board may designate one or more directors as alternate members of any committee, who may replace any absent member at any meeting of such committee. Each member of a committee must meet the requirements for membership, if any, imposed by applicable law and the rules and regulations of any securities exchange or quotation system on which the securities of the Corporation are listed or quoted for trading. Any such committee, to the extent allowed by law and provided in the resolution establishing such committee, shall have and may exercise all of the authority of the Board of Directors in the management of the business and affairs of the Corporation, except that it shall have no authority with respect to (1) amending the Articles of Incorporation or these Bylaws; (2) adopting a plan of merger or consolidation; (3) the sale, lease, exchange or the disposition of all or substantially all the property and assets of the Corporation; and (4) a voluntary dissolution of the Corporation or a revocation thereof. Such committee or committees shall have such name or names as may be determined from time to time by resolution adopted by the Board of Directors. A majority of each committee may determine its action and may fix the time and places of its meetings, unless otherwise provided by the Board of Directors. Each committee shall keep regular minutes of its meetings and report the same to the Board of Directors when required. Notwithstanding anything to the contrary contained in this Article III, the resolution of the Board of Directors establishing any committee of the Board and/or the charter of any such committee may establish requirements or procedures relating to the governance and/or operation of such committee that are different from, or in addition to, those set forth in these Bylaws and, to the extent that there is any inconsistency between these Bylaws and any such resolution or charter, the terms of such resolution or charter shall be controlling.

Section 9. Removal of Directors. At any shareholders’ meeting with respect to which notice of such purpose has been given, any director may be removed from office, with or without cause, by the vote of the holders of a majority of the stock having voting power and entitled to vote for the election of directors, and his successor may be elected at the same or any subsequent meeting of shareholders, or by the Board as permitted by law. Any director serving on a committee of the Board of Directors may be removed from such committee at any time by the Board of Directors.

Section 10. Compensation of Directors. Directors shall be entitled to such reasonable compensation for their services as directors or members of any committee of the Board as shall be fixed from time to time by resolution adopted by the Board, and shall also be entitled to reimbursement for any reasonable expenses incurred in attending any meeting of the Board or any such committee.

Section 11. Executive Committee. The Executive Committee will consist of at least five directors, including the Chief Executive Officer, the Deputy Chief Executive Officer, the Chairman of the Board of Directors, the Vice Chairman of the Board of Directors, the President, and such number of other directors as the Board of Directors may from time to time determine. The Executive Committee shall have and may exercise, during the intervals between meetings of the Board of Directors, all of the powers of the Board of Directors which may be lawfully delegated. Meetings of the Executive Committee shall be held at such times and places to be determined by the Chairman of the Executive Committee. At all meetings of the Executive Committee, a majority of the members thereof shall constitute a quorum. The Executive Committee may make rules for the conduct of its business and may appoint such committees and assistants as it may deem necessary. The Chief Executive Officer (or another member of the Executive Committee chosen by him) shall be the Chairman of the Executive Committee. During the intervals between meetings of the Executive Committee, the Chief Executive Officer shall possess and may exercise such of the powers vested in the Executive Committee as from time to time may be lawfully conferred upon him by resolution of the Board of Directors or the Executive Committee.

ARTICLE IV

OFFICERS

Section 1. Name and Number. The officers of the Corporation, who shall be chosen by the Board of Directors are as follows: Chief Executive Officer, Deputy Chief Executive Officer, Chairman of the Board of Directors, Vice Chairman of the Board of Directors, President, Executive Vice President, Secretary, Assistant Secretary, Treasurer, and Assistant Treasurer. The Board of Directors may appoint additional specially designated vice presidents, assistant secretaries and assistant treasurers. Any number of offices, except the offices of President and Secretary, may be held by the same person. The Board of Directors may appoint such other officers and agents as it shall deem necessary who shall hold their offices for such terms and shall exercise such powers and perform such duties as shall be determined from time to time by the Board. The Board may, in its discretion, leave any of the above offices vacant for any length of time.

Section 2. Compensation. The salaries of all officers set forth in Section 1 of this Article IV shall be fixed by the Board of Directors or a committee or officer appointed by the Board. Salary payments made to an officer of the Corporation that shall be disallowed in whole or in part as a deductible expense by the Corporation for Federal Income Tax purposes shall be reimbursed by such officer to the Corporation to the full extent of the disallowance. It shall be the duty of the Board of Directors to enforce payments of each such amount disallowed.

Section 3. Term of Office. Unless otherwise provided by resolution of the Board of Directors, the principal officers shall serve until their successors shall have been chosen and qualified, or until their death, resignation or removal as provided by these Bylaws.

Section 4. Removal. Any officer may be removed from office at any time, with or without cause, by the Board of Directors.

Section 5. Vacancies. Any vacancy in an office resulting from any cause may be filled by the Board of Directors.

Section 6. Powers and Duties. Except as hereinafter provided, the officers of the Corporation shall each have such powers and duties as generally pertain to their respective offices, as well as such powers and duties as from time to time may be conferred by the Board of Directors to the extent consistent with these Bylaws.

(a) Chief Executive Officer. The Chief Executive Officer shall keep the Board of Directors fully informed, and shall make a statement of the affairs of the Corporation at the annual meeting of the shareholders. He shall have the general superintendence and direction of all the other officers of the Corporation and of the agents, independent contractors and employees thereof and to see that their respective duties are properly performed. He shall, for and on behalf of the Corporation, exercise the voting powers of all stock of other companies owned by the Corporation. He may sign and execute all authorized bonds, notes, drafts, checks, acceptances or other obligations, reinsurance contracts and other contracts in the name of the Corporation. He shall operate and conduct the business and affairs of the corporation according to the orders and resolutions of the Board of Directors, and according to his own discretion whenever and wherever such discretion is not expressly limited by such orders and resolutions. He shall have the power to sue and be sued, complain and defend, in all courts, and to participate and bind the Corporation in any judicial, administrative, arbitrative, settlement or other action, litigation or proceeding. All officers may be removed with or without cause at any time by the Chief Executive Officer whenever the Chief Executive Officer, in his absolute discretion, shall consider that the best interests of the Corporation will be served thereby.

(b) Deputy Chief Executive Officer. In the absence of the Chief Executive Officer, or in the event of his temporary disability or inability to act, or in the event the Chief Executive Officer expressly so directs, the Deputy Chief Executive Officer shall perform the duties of Chief Executive Officer, and when so acting shall have all the powers of and be subject to all the restrictions upon the Chief Executive Officer. Upon the death, permanent disability, or resignation of the Chief Executive Officer, the Deputy Chief Executive Officer shall become Chief Executive Officer and shall succeed to such duties and powers subject to such restrictions. In the event the office of Vice Chairman shall become vacant for any reason, the Deputy Chief Executive Officer shall, in addition to his then current duties, become Vice Chairman and shall succeed to the duties and powers of such office. The Deputy Chief Executive Officer shall do and perform such other duties as may from time to time be assigned to him by the Board of Directors or by the Chief Executive Officer.

(c) Chairman of the Board of Directors. The Chairman of the Board of Directors shall preside at all meetings of the Directors and shareholders and shall perform such other duties as may be assigned by the Board of Directors.

(d) Vice Chairman of the Board of Directors. In the absence of the Chairman of the Board of Directors, or in the event of his inability to act, the Vice Chairman of the Board of Directors shall perform the duties of the Chairman of the Board of Directors, and when so acting, shall have all the powers of and be subject to all the restrictions upon the Chairman of the Board of Directors. Upon the death, permanent disability, or resignation of the Chairman of the Board of Directors, the Vice Chairman shall become the Chairman of the Board and shall succeed to such duties and powers subject to such restrictions. The Vice Chairman of the Board of Directors shall do and perform such other duties as may from time to time be assigned to him by the Board of Directors or by the Chairman of the Board.

(e) President. The President shall keep the Board of Directors fully informed. He may sign and execute all authorized bonds, contracts, notes, drafts, checks, acceptances or other obligations in the name of the Corporation, and with the Secretary he may sign all certificates of shares in the capital stock of the Corporation. The President shall do and perform such other duties as may from time to time be assigned to him by the Board of Directors or by the Chief Executive Officer.

(f) Executive Vice-President. In the absence of the President or in the event of his inability or refusal to act, the Executive Vice-President (or in the event there be more than one Executive Vice-President, the Executive Vice-Presidents in the order designated, or in the absence of any designation, then in the order of their election) shall perform the duties of the President, and when so acting, shall have all the powers of and be subject to all the restrictions upon the President. The Executive Vice-Presidents shall perform such other duties and have such other powers as the Board of Directors may from time to time prescribe.

(g) Secretary. The Secretary shall attend all meetings of the Board of Directors and all meetings of the Shareholders and record all the proceedings of the meetings of the Corporation and of the Board of Directors in a book to be kept for that purpose and shall perform like duties for the standing committees when required. He shall give, or cause to be given, notice of all meetings of the shareholders and special meetings of the Board of Directors, and shall perform such other duties as may be prescribed by the Board of Directors or Chief Executive Officer, under whose supervision he shall be. He shall have custody of the corporate seal of the Corporation and he, or an assistant secretary, shall have authority to affix the same to any instrument requiring it and when so affixed, it may be attested by his signature or by the signature of such assistant secretary. The Board of Directors may give general authority to any other officer to affix the seal of the Corporation and to attest the affixing by his signature.

(h) Assistant Secretary. The Assistant Secretary, or if there be more than one, the assistant secretaries in the order determined by the Board of Directors (of if there be no such determination, then in the order of their election), shall, in the absence of the Secretary or in the event of his inability or refusal to act, perform the duties and exercise the powers of the Secretary and shall perform such other duties and have such other powers as the Board of Directors may from time to time prescribe.

(i) Treasurer. The Treasurer shall have the custody of the corporate funds and securities and shall keep full and accurate accounts of receipts and disbursements in books belonging to the Corporation and shall deposit all monies and other valuable effects in the name and to the credit of the Corporation in such depositories as may be designated by the Board of Directors. He shall disburse the funds of the Corporation as may be ordered by the Board of Directors, taking proper vouchers for such disbursements, and shall render regular meetings, or when the Board of Directors so requires, an account of all his transactions as Treasurer and of the financial condition of the Corporation. If required by the Board of Directors, he shall give the Corporation a bond (which shall be renewed every six years) in such sum and with such surety or sureties as shall be satisfactory to the Board of Directors for the faithful performance of the duties of his office and for the restoration to the Corporation, in case of his death, resignation, retirement or removal from office, of all books, papers, vouchers, money and other property of whatever kind in his possession or under his control belonging to the Corporation.

(j) Assistant Treasurer. The Assistant Treasurer, or if there shall be more than one, the assistant treasurers in the order determined by the Board of Directors (or if there be no such determination, then in the order of their election), shall, in the absence of the Treasurer or in the event of his inability or refusal to act, perform the duties and exercise the powers of the Treasurer and shall perform such other duties and have such other powers as the Board of Directors may from time to time prescribe.

(k) For purposes of this Section 6, “disability” shall mean the significant impairment, resulting from any physical or mental condition, of the Chief Executive Officer’s ability to perform his duties, for a period of six or more consecutive months.

Section 7. Voting Securities of Corporation. Unless otherwise ordered by the Board of Directors, the Chief Executive Officer shall have full power and authority on behalf of the Corporation to attend and to act and vote at any meetings of security holders of corporations in which the Corporation may hold securities, and at such meetings shall possess and may exercise any and all rights and powers incident to the ownership of such securities which the Corporation might have possessed and exercised if it had been present. The Board of Directors by resolution from time to time may confer like powers upon any other person or persons.

ARTICLE V

CERTIFICATES OF STOCK

Section 1. Certificated or Uncertificated Shares.

(a) The shares of the Corporation’s stock shall be evidenced by certificates for shares of stock in such form as the Board of Directors may from time to time prescribe, provided that the Board of Directors may authorize the issue of some or all of the shares of any or all of the Corporation’s classes or series of stock without certificates. Any such authorization shall not affect shares already represented by a certificate until the certificate is surrendered to the Corporation. Except as expressly provided by law, there shall be no differences in the rights and obligations of shareholders based on whether or not their shares are represented by certificates.

(b) In the case of uncertificated shares, within a reasonable time after the issuance or transfer thereof, the Corporation shall send the shareholder a written information statement containing: (i) the name of the Corporation and a statement that the Corporation is organized under the laws of the State of Georgia; (ii) the name of the person to whom the uncertificated shares have been issued or transferred; (iii) the number and class of shares, and the designation of the series, if any, to which the information statement relates; and (iv) if applicable, a statement as to the existence of any restrictions on transfer or registration of transfer of the shares. The information statement shall also contain the following statement: “This information statement is merely a record of the rights of the addressee as of the time of its issuance. Delivery of this information statement, by itself, confers no right on the recipient. This information statement is neither a negotiable instrument nor a security.”

Section 2. Lost Certificates. The Board of Directors may direct that a new certificate or, in the event that the Board of Directors has authorized the issuance of shares of the relevant class or series of stock without certificates, an information statement described in Section 1(b) of this Article be issued in place of any certificate theretofore issued by the Corporation and alleged to have been lost, stolen or destroyed, upon the making of an affidavit of that fact by the person claiming the certificate of stock to be lost, stolen or destroyed. When authorizing such issue of a new certificate or, in the case of uncertificated shares, an information statement, the Board of Directors may, in its discretion and as a condition precedent to the issuance thereof, require the owner of such lost, stolen or destroyed certificate, or his legal representative, to advertise the same in such manner as it shall require and/or to give the Corporation a bond in such sum as it may direct as indemnity against any claim that may be made against the Corporation with respect to the certificate alleged to have been lost, stolen or destroyed.

Section 3. Transfers of Stock.

(a) Transfers of shares of the capital stock of the Corporation shall be made only on the books of the Corporation by the record holder thereof, or by his duly authorized attorney, or with a transfer clerk or transfer agent appointed as in Section 5 of this Article, and in the case of certificated shares, only on surrender of the certificate or certificates representing such shares, properly endorsed or accompanied by a duly executed stock transfer power and the payment of all taxes thereon. Upon receipt of proper transfer instructions from the record holder of uncertificated shares of stock, which may be in the form of a properly endorsed information statement described in Section 1(b), and the payment of all taxes thereon, such uncertificated shares shall be cancelled and issuance of new equivalent shares shall be made to the person entitled thereto and the transaction shall be recorded in the books of the Corporation.

(b) The Corporation shall be entitled to recognize the exclusive right of a person registered on its books as the owner of shares to receive dividends, and to vote as such owner, and for all other purposes, and shall not be bound to recognize any equitable or other claim to or interest in such share or shares on the part of any other person, whether or not it shall have express or other notice thereof, except as otherwise provided by law.

(c) Certificated shares of capital stock may be transferred by delivery of the certificates thereof, accompanied either by an assignment in writing on the back of the certificates or by separate stock power to sell, assign and transfer the same, signed by the record holder thereof, or by his duly authorized attorney in fact. Uncertificated shares of capital stock may be transferred by delivery of written instructions, which may be in the form of a properly endorsed information statement described in Section 1(b), or by separate stock power to sell, assign and transfer the same, signed by the record holder thereof, or by his duly authorized attorney in fact, or by electronic transfer instructions from the broker authorized by the record holder or by his duly authorized attorney in fact. No transfer of certificated or uncertificated shares shall affect the right of the Corporation to pay any dividend upon the stock to the holder of record as the holder in fact thereof for all purposes, and no transfer shall be valid, except between the parties thereto, until such transfer shall have been made upon the books of the Corporation as herein provided.

(d) The Board may, from time to time, make such additional rules and regulations as it may deem expedient, not inconsistent with these Bylaws or the Articles of Incorporation, concerning the issue, transfer, and registration of certificates for shares or uncertificated shares of the capital stock of the Corporation.

Section 4. Record Date. In order that the Corporation may determine the shareholders entitled to notice of or to vote at any meeting of shareholders or any adjournment thereof, or to demand a special meeting, or to express consent to corporate action in writing without a meeting, or entitled to receive payment of any dividend or other distribution or allotment of any rights, or entitled to exercise any rights in respect of any change, conversion or exchange of stock or for the proposal of any other lawful action, the Board of Directors may fix, in advance, a record date, which shall not be more than 70 days and,. in case of a meeting of shareholders, not less than 10 days prior to the date on which the particular action requiring such determination of shareholders is to be taken. If no record date is fixed by the Board for the determination of shareholders

entitled to notice of and to vote at any meeting of shareholders, the record date shall be at the close of business on the day next receding the day on which the notice is given, or, if notice is waived, at the close of business on the day next preceding the day on which the meeting is held. If no record date is fixed for other purposes, the record date shall be at the close of business on the day next preceding the day on which the Board of Directors adopts the resolution relating thereto. A determination of Shareholders of record entitled to notice of or to vote at a meeting of shareholders shall apply to any adjournment of the meeting unless the Board of Directors shall fix a new record date for the adjourned meeting, which it shall do if the meeting is adjourned to a date more than 120 days after the date fixed for the original meeting.

Section 5. Transfer Agent and Registrar. The Board of Directors may appoint one or more transfer agents or one or more transfer clerks and one or more registrars, and may require all certificates of stock to bear the signature or signatures of any of them.

ARTICLE VI

GENERAL PROVISIONS

Section 1. Dividends. Dividends upon the capital stock of the Corporation, subject to the provisions of the Articles of Incorporation, if any, may be declared by the Board of Directors at any regular or special meeting, pursuant to law. Dividends may be paid in cash, in property, or in shares of the Corporation’s capital stock, subject to the provisions of the Articles of Incorporation and applicable law. Before payment of any dividend, there may be set aside out of any funds of the Corporation available for dividends such sum or sums as the directors from time to time, in their absolute discretion, think proper as a reserve or reserves to meet contingencies, or for equalizing dividends, or for repairing or maintaining any property of the Corporation, or for such other purpose as the directors shall think conducive to the interest of the Corporation, and the directors may modify or abolish any such reserve in the manner in which it was created.

Section 2. Fiscal Year. The fiscal year of the Corporation shall be fixed by resolution of the Board of Directors.

Section 3. Seal. The corporate seal shall have inscribed thereon the name of the Corporation, the year of its organization and the words “Corporate Seal” and “Georgia.” The seal may be used by causing it or a facsimile thereof to be impressed or affixed or reproduced or otherwise. In the event it is inconvenient to use such a seal at any time, the signature of the Corporation followed by the word “Seal” enclosed in parentheses shall be deemed the seal of the Corporation.

Section 4. Annual Statements. Not later than four months after the close of each fiscal year, and in any case prior to the next annual meeting of shareholders, the Corporation shall prepare:

(a) A balance sheet showing in reasonable detail the financial condition of the Corporation as of the close of its fiscal year, and

(b) A profit and loss statement showing the result of its operations during its fiscal year.

Upon written request, the Corporation promptly shall mail to any shareholder of record a copy of the most recent such balance sheet and profit and loss statement.

Section 5. Business Combinations With Interested Shareholders. All of the requirements and provisions of Article llA, Chapter 2, Title 14 of the Georgia Business Corporation Code of the Official Code of Georgia Annotated, or as the same may be amended or re-codified from time to time, shall apply to the Corporation.

Section 6. Shareholders’ Right to Inspect Records. To the extent such limitation is permitted by law, a shareholder owning two percent or less of the outstanding shares of the Corporation shall have no right to inspect or copy excerpts from minutes of any meeting of the Board of Directors, records of any action of a committee of the Board of Directors while acting in place of the Board of Directors on behalf of the Corporation, minutes of any meeting of the shareholders, records of action taken by the shareholders or the Board of Directors without a meeting, the accounting records of the Corporation, and the record of shareholders.

ARTICLE VII

INDEMNIFICATION OF DIRECTORS & OFFICERS

Section 1. Indemnification. The Corporation shall indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action, suit or proceeding (including, but not limited to, any action, suit or proceeding by or in the right of the Corporation), whether civil, criminal, administrative or investigative, by reason of the fact that he is or was a director, advisory director, officer, employee or agent of the Corporation or is or was acting at the request of the Corporation, or who was serving as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise, and shall advance expenses to such person reasonably incurred in connection therewith, to the fullest extent permitted by the relevant provisions of the Georgia Business Corporation Code, as such law presently exists or hereafter may be amended.

Section 2. Purchase of Insurance. The Board of Directors may authorize the Corporation to purchase and maintain insurance on behalf of any person who is or was a director, officer, employee or agent of the Corporation, or is or was serving at the request of the Corporation as a director, officer, partner, trustee, employee or agent of another corporation, partnership, joint venture, trust, employee benefit plan, or other enterprise against liability asserted against him or incurred by him in any such capacity or arising out of his status as such whether or not the Corporation would have the power to indemnify him against such liability under the provisions of this Article VII or the Georgia Business Corporation Code.

ARTICLE VIII

ADVISORY DIRECTORS

The Board of Directors of the Corporation may at its annual meeting, or from time to time thereafter, appoint any individual to serve as a member of an Advisory Board of Directors of the Corporation. Any individual appointed to serve as a member of an Advisory Board of Directors of the Corporation shall be permitted to attend all meetings of the Board of Directors and may participate in any discussion thereat, but such individual may not vote at any meeting of the Board of Directors or be counted in determining a quorum for such meeting. It shall be the duty of members of the Advisory Board of Directors of the Corporation to advise and provide general policy advice to the Board of Directors of the Corporation at such times and places and in such groups and committees as may be determined from time to time by the Board of Directors, but such individual shall not have any responsibility or be subject to any liability imposed upon a director or in any manner otherwise deemed a director. The compensation paid to members of the Advisory Board of Directors shall be determined from time to time by the Board of Directors of the Corporation. Each member of the Advisory Board of Directors, except in the case of his earlier death, resignation, retirement, disqualification or removal, shall serve until the next succeeding annual meeting of the Board of Directors and thereafter until his successor shall have been appointed.

ARTICLE IX

EMERITUS DIRECTORS

Any director of the Corporation who is not an officer or employee of the Corporation and who has served as a director in such capacity for five or more years and has attained fifty-five (55) years of age shall be eligible to be appointed as a director emeritus upon his retirement or resignation. A director emeritus shall be entitled to serve for a term equal to said director’s length of service as a member of the Board of Directors. The director emeritus shall have the right to attend and participate in discussions of the business of the Corporation at regular and special meetings of the Board of Directors but shall not be entitled to vote on any matter. The director emeritus shall be a goodwill ambassador on behalf of the Corporation and shall hold himself or herself available at mutually convenient times for consultation with members of the Board and senior management of the Corporation concerning the business and affairs of the Corporation.

ARTICLE X

AMENDMENTS

The Board of Directors shall have power to amend or repeal the Bylaws or adopt new Bylaws, but any Bylaws adopted by the Board of Directors may be altered, amended or repealed, and new Bylaws adopted, by the shareholders. The shareholders may prescribe that any Bylaw or Bylaws adopted by them shall not be altered, amended or repealed by the Board of Directors. Action by the shareholders with respect to Bylaws shall be taken by an affirmative vote of a majority of the voting power of all shares entitled to elect directors, and action by the directors with respect to Bylaws shall be taken by an affirmative vote of a majority of all directors then holding office.

RESOLUTION OF THE BOARD OF DIRECTORS

OF

AFLAC INCORPORATED

RESOLVED, that the Board finds it advisable and in the best interests of the Corporation and its shareholders that Article III, Section 2(a) of the Bylaws of the Corporation be, and it hereby is, amended to read as follows:

Section 2. Number, Election and Term.

(a) The number of Directors which shall constitute the whole Board shall be not less than three (3) or more than twenty-five (25). The specific number of Directors within such range shall be fixed or changed from time to time by a majority of the Board of Directors then in office. A decrease in the number of Directors shall not have the effect of shortening the term of any incumbent director.

Except as otherwise provided in these Bylaws shareholders shall elect Directors by a vote of not less than a plurality of the votes present in person or represented by proxy at the meeting. Each Director elected shall hold office until his successor is elected and qualified or until his earlier resignation, removal from office or death. No person 20 years of age or younger or 75 years of age or older shall be eligible for election, reelection, appointment, or reappointment as a member of the Board of Directors. Directors need not be residents of the State of Georgia or shareholders of the Corporation.

Adopted 10/21/06

AMENDED AND RESTATED ARTICLE III, SECTION 2(a)

OF THE BYLAWS

Section 2. Number, Election and Term.

(a) The number of Directors which shall constitute the whole Board shall be not less than three (3) or more than twenty-five (25). The specific number of Directors within such range shall be fixed or changed from time to time by a majority of the Board of Directors then in office. A decrease in the number of Directors shall not have the effect of shortening the term of any incumbent Director.

Except as otherwise provided in these Bylaws, a nominee for Director shall be elected if the votes cast for such nominee’s election exceed the votes cast against such nominee’s election; provided, however, that the Directors shall be elected by a plurality of the votes cast at any meeting of shareholders for which (i) the Secretary of the Corporation receives a notice that a shareholder has nominated a person for election to the Board of Directors in compliance with the advance notice requirements for shareholder nominees for Director set forth in this Section 2; and (ii) such nomination has not been withdrawn by such shareholder on or prior to the fourteenth day preceding the date the Corporation first mails its notice of meeting for such meeting to the shareholders.

Each Director elected shall hold office until his successor is elected and qualified or until his earlier resignation, removal from office or death. No person 20 years of age or younger or 75 years of age or older shall be eligible for election, reelection, appointment, or reappointment as a member of the Board of Directors. Directors need not be residents of the State of Georgia or shareholders of the Corporation.

AMENDED AND RESTATED ARTICLE II, SECTION 5

OF THE BYLAWS

Section 5. Voting.

When a quorum is present at any meeting, the vote of the holders of stock representing a majority of the voting power, as defined in the Articles of Incorporation, present in person or represented by proxy shall decide any question brought before such meeting, unless the question is one upon which by express provision of law, the Articles of Incorporation or these Bylaws, a different vote is required, in which case such express provision shall govern and control the decision of the question. Each shareholder shall at every meeting of the shareholders be entitled to vote, as defined, in person or by proxy for each share of the capital stock having voting power registered in his name on the books of the Corporation, but no proxy shall be voted or acted upon after 11 months from its date, unless otherwise provided in the proxy.

Adopted 02/10/2009

AMENDED AND RESTATED ARTICLE II, SECTION 5

OF THE BYLAWS

Section 5. Voting. When a quorum is present at any meeting, any question brought before such meeting shall be determined by a majority of the votes cast at the meeting of the holders of shares entitled to vote thereon, unless the question is one upon which by express provision of law, the Articles of Incorporation or these Bylaws, a different vote is required, in which case such express provision shall govern and control the decision of the question. For purposes of this Section, a majority of the votes cast means that the number of “for” votes cast exceeds the number of “against” votes cast. Each shareholder shall at every meeting of the shareholders be entitled to vote, as defined, in person or by proxy for each share of the capital stock having voting power registered in his name on the books of the Corporation, but no proxy shall be voted or acted upon after 11 months from its date, unless otherwise provided in the proxy.

Adopted 05/03/2010

EX-11

Aflac Incorporated 1st Quarter 2010 Form 10-Q

EXHIBIT 11

Aflac Incorporated and Subsidiaries

Computation of Earnings Per Share

Three Months Ended March 31,

	2010		2009
Numerator (In millions):
Basic and diluted: net earnings applicable to common stock	$	636	$	569
Denominator (In thousands):
Weighted-average outstanding shares used in the computation of earnings per share - basic		467,926		466,097
Dilutive effect of share-based awards		4,524		1,035
Weighted-average outstanding shares used in the computation of earnings per share - diluted		472,450		467,132
Earnings per share:
Basic	$	1.36	$	1.22
Diluted		1.35		1.22

EXH 11-1

EX-12

Aflac Incorporated 1st Quarter 2010 Form 10-Q

EXHIBIT 12

Aflac Incorporated and Subsidiaries

Ratio of Earnings to Fixed Charges

Three Months Ended March 31,

(In thousands)		2010		2009
Fixed charges:
Interest expense(1)	$	32,682	$	7,801
Interest on investment-type contracts		9,294		8,461
Rental expense deemed interest		250		402
Total fixed charges	$	42,226	$	16,664
Earnings before income tax(1)	$	973,725	$	871,163
Add back:
Total fixed charges		42,226		16,664
Total earnings before income tax and fixed charges	$	1,015,951	$	887,827
Ratio of earnings to fixed charges		24.1x		53.3x

⁽¹⁾ Excludes interest expense on income tax liabilities

EXH 12-1

EX-15

Aflac Incorporated 1st Quarter 2010 Form 10-Q

EXHIBIT 15

KPMG LLP

303 Peachtree Street, N.E.

Suite 2000

Atlanta, GA 30308

May 7, 2010

Aflac Incorporated

Columbus, Georgia

Re: Registration Statement No. 333-159111 and 333-155678 on Form S-3; 333-161269, 333-135327, 333-158969; 333-135324, 333-27883, and 333-115105 on Form S-8

With respect to the subject registration statements, we acknowledge our awareness of the use therein of our report dated May 7, 2010, related to our review of interim financial information.

Pursuant to Rule 436 under the Securities Act of 1933 (the Act), such report is not considered part of a registration statement prepared or certified by an independent registered public accounting firm, or a report prepared or certified by an independent registered public accounting firm within the meaning of Sections 7 and 11 of the Act.

Atlanta, Georgia

EXH 15-1

EX-31.1

Aflac Incorporated 1st Quarter 2010 Form 10-Q

EXHIBIT 31.1

Certification of Chief Executive Officer

I, Daniel P. Amos, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Aflac Incorporated;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: May 7, 2010	/s/ Daniel P. Amos
	Daniel P. Amos
	Chairman and Chief Executive Officer

EXH 31.1-1

EX-31.2

Aflac Incorporated 1st Quarter 2010 Form 10-Q

EXHIBIT 31.2

Certification of Chief Financial Officer

I, Kriss Cloninger III, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Aflac Incorporated;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: May 7, 2010	/s/ Kriss Cloninger III
	Kriss Cloninger III
	President, Chief Financial Officer and Treasurer

EXH 31.2-1

EX-32

Aflac Incorporated 1st Quarter 2010 Form 10-Q

EXHIBIT 32

Certification of CEO and CFO Pursuant to

18 U.S.C. Section 1350,

as Adopted Pursuant to

Section 906 of the Sarbanes-Oxley Act of 2002

In connection with the Quarterly Report on Form 10-Q of Aflac Incorporated (the “Company”) for the quarterly period ended March 31, 2010, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), Daniel P. Amos, as Chief Executive Officer of the Company, and Kriss Cloninger III, as Chief Financial Officer of the Company, each hereby certifies, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to the best of his knowledge:

(1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

/s/ Daniel P. Amos
Name:	Daniel P. Amos
Title:	Chief Executive Officer
Date:	May 7, 2010
/s/ Kriss Cloninger III
Name:	Kriss Cloninger III
Title:	Chief Financial Officer
Date:	May 7, 2010

EXH 32-1