INVESTMENTS (Tables)

6 Months Ended

Jun. 30, 2011

Securities Available For Sale And Held To Maturity

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.

June 30, 2011

(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

17,436

556

17,980

Mortgage- and asset-backed securities

923

950

Public utilities

2,575

117

2,529

Sovereign and supranational

1,721

119

1,821

Banks/financial institutions

4,766

134

410

4,490

Other corporate

5,860

154

485

5,529

Total yen-denominated

33,281

1,066

1,048

33,299

Dollar-denominated:

U.S. government and agencies

1,816

1,887

Municipalities

1,027

1,025

Mortgage- and asset-backed securities⁽¹⁾

451

548

Collateralized debt obligations

Public utilities

2,824

266

3,055

Sovereign and supranational

392

456

Banks/financial institutions

3,298

180

3,426

Other corporate

8,175

700

8,806

Total dollar-denominated

17,987

1,401

181

19,207

Total fixed maturities

51,268

2,467

1,229

52,506

Perpetual securities:

Yen-denominated:

Banks/financial institutions

6,570

200

374

6,396

Other corporate

332

357

Dollar-denominated:

Banks/financial institutions

357

350

Total perpetual securities

7,259

241

397

7,103

Equity securities

Total securities available for sale

58,548

2,712

1,628

59,632

⁽¹⁾

Includes less than $1 million of other-than-temporary non-credit-related losses

June 30, 2011

(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

3,216

3,282

Municipalities

535

550

Mortgage- and asset-backed securities

136

140

Public utilities

6,396

260

127

6,529

Sovereign and supranational

4,173

198

4,282

Banks/financial institutions

12,303

211

589

11,925

Other corporate

5,149

214

5,274

Total yen-denominated

31,908

976

902

31,982

Total securities held to maturity

31,908

976

902

31,982


	December 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	$	16,607	$	584	$	14	$	17,177
Mortgage- and asset-backed securities		1,224		35		15		1,244
Public utilities		2,554		117		80		2,591
Sovereign and supranational		903		47		12		938
Banks/financial institutions		5,927		152		1,177		4,902
Other corporate		5,733		136		457		5,412
Total yen-denominated		32,948		1,071		1,755		32,264
Dollar-denominated:
U.S. government and agencies		32		4		0		36
Municipalities		1,006		9		42		973
Mortgage- and asset-backed securities⁽¹⁾		485		90		13		562
Collateralized debt obligations		5		0		0		5
Public utilities		2,568		246		36		2,778
Sovereign and supranational		395		63		2		456
Banks/financial institutions		3,496		143		108		3,531
Other corporate		7,167		662		79		7,750
Total dollar-denominated		15,154		1,217		280		16,091
Total fixed maturities		48,102		2,288		2,035		48,355
Perpetual securities:
Yen-denominated:
Banks/financial institutions		7,080		172		533		6,719
Other corporate		328		15		0		343
Dollar-denominated:
Banks/financial institutions		419		61		30		450
Total perpetual securities		7,827		248		563		7,512
Equity securities		22		3		2		23
Total securities available for sale	$	55,951	$	2,539	$	2,600	$	55,890

⁽¹⁾

Includes $4 of other-than-temporary non-credit-related losses


	December 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	$	344	$	4	$	4	$	344
Municipalities		407		18		2		423
Mortgage- and asset-backed securities		146		5		0		151
Public utilities		6,339		326		120		6,545
Sovereign and supranational		4,951		305		65		5,191
Banks/financial institutions		12,618		216		526		12,308
Other corporate		5,279		274		46		5,507
Total yen-denominated		30,084		1,148		763		30,469
Total securities held to maturity	$	30,084	$	1,148	$	763	$	30,469

Contractual Maturities of Investments

The contractual maturities of our investments in fixed maturities at June 30, 2011, 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	$	1,515	$	1,558	$	56	$	57
Due after one year through five years		3,755		3,964		255		287
Due after five years through 10 years		3,697		3,951		936		1,076
Due after 10 years		32,370		32,378		7,199		7,619
Mortgage- and asset-backed securities		1,327		1,441		47		56
Total fixed maturities available for sale	$	42,664	$	43,292	$	8,493	$	9,095

Held to maturity:
Due in one year or less	$	714	$	724	$	0	$	0
Due after one year through five years		1,172		1,265		0		0
Due after five years through 10 years		3,103		3,439		0		0
Due after 10 years		26,782		26,413		0		0
Mortgage- and asset-backed securities		137		141		0		0
Total fixed maturities held to maturity	$	31,908	$	31,982	$	0	$	0

Economic Maturities of Investments in Perpetual Securities

The economic maturities of our investments in perpetual securities, which were all reported as available for sale at June 30, 2011, were as follows:


	Aflac Japan				Aflac U.S.
(In millions)	Amortized Cost		Fair Value		Amortized Cost		Fair Value
Due in one year or less	$	435	$	497	$	0	$	0
Due after one year through five years		1,498		1,555		5		5
Due after five years through 10 years		838		881		0		0
Due after 10 years		4,311		3,992		172		173
Total perpetual securities available for sale	$	7,082	$	6,925	$	177	$	178

Bank and Financial Institution Investments

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


	June 30, 2011			December 31, 2010
	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	$	20,367	22 %	$	22,041	26 %
Fair value		19,841	22		20,741	24
Perpetual Securities:
Upper Tier II:
Amortized cost	$	4,426	5 %	$	4,957	6 %
Fair value		4,432	5		4,748	5
Tier I:
Amortized cost		2,501	3		2,542	3
Fair value		2,314	2		2,421	3

Total:
Amortized cost	$	27,294	30 %	$	29,540	35 %
Fair value		26,587	29		27,910	32

Gain (Loss) on Investments

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


	Three Months Ended June 30,						Six Months Ended June 30,
(In millions)	2011			2010			2011			2010
Realized investment gains (losses) on securities:
Debt securities:
Available for sale:
Gross gains from sales	$	10		$	0		$	36		$	51
Gross losses from sales		(132	)		(110	)		(319	)		(190	)
Net gains (losses) from redemptions		(1	)		1			6			1
Other-than-temporary impairment losses		(344	)		0			(748	)		0
Total debt securities		(467	)		(109	)		(1,025	)		(138	)
Perpetual securities:
Available for sale:
Gross gains from sales		48			125			54			133
Gross losses from sales		(107	)		0			(109	)		0
Other-than-temporary impairment losses		(184	)		0			(184	)		(41	)
Total perpetual securities		(243	)		125			(239	)		92
Equity securities:
Gross losses from sales		0			(2	)		0			(2	)
Other-than-temporary impairment losses		0			0			(1	)		(1	)
Total equity securities		0			(2	)		(1	)		(3	)
Other assets:
Derivative gains (losses)		(25	)		(103	)		(55	)		(86	)
Other		67			0			73			0
Total other assets		42			(103	)		18			(86	)
Total realized investment gains (losses)	$	(668	)	$	(89	)	$	(1,247	)	$	(135	)

Other Than Temporary Impairment Losses on Investment Securities

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


	Three Months Ended June 30,				Six Months Ended June 30,
(In millions)	2011		2010		2011		2010
Perpetual securities	$	184	$	0	$	184	$	41
Corporate bonds		343		0		740		0
Mortgage- and asset-backed securities		1		0		7		0
Municipalities		0		0		1		0
Equity securities		0		0		1		1
Total other-than-temporary impairment losses realized	$	528	$	0	$	933	$	42

Other than Temporary Impairment, Credit Losses Recognized in Earnings

The following table summarizes cumulative credit-related impairment losses on the 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.


	Three Months Ended June 30,				Six Months Ended June 30,
(In millions)	2011		2010		2011		2010
Cumulative credit loss impairments, beginning of period	$	4	$	23	$	13	$	24
Securities sold during period		0		(10)		(9)		(11)
Cumulative credit loss impairments, end of period	$	4	$	13	$	4	$	13

Net Effect on Shareholders' Equity of Unrealized Gains and Losses from Investment Securities

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


(In millions)	June 30, 2011			December 31, 2010
Unrealized gains (losses) on securities available for sale	$	1,084		$	(61)
Unamortized unrealized gains on securities transferred to held to maturity		98			135
Deferred income taxes		(430	)		(41)
Shareholders’ equity, unrealized gains (losses) on investment securities	$	752		$	33

Investments 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.


	June 30, 2011
	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:
Japan government and agencies:
Yen-denominated	$	1,590	$	16	$	1,590	$	16	$	0	$	0
Municipalities:
Dollar-denominated		405		21		365		9		40		12
Yen-denominated		58		4		0		0		58		4
Mortgage- and asset- backed securities:
Dollar-denominated		20		1		5		0		15		1
Yen-denominated		154		5		12		1		142		4
Public utilities:
Dollar-denominated		636		35		585		28		51		7
Yen-denominated		4,340		244		1,886		42		2,454		202
Sovereign and supranational:
Dollar-denominated		62		3		29		1		33		2
Yen-denominated		2,115		108		968		16		1,147		92
Banks/financial institutions:
Dollar-denominated		1,074		52		535		15		539		37
Yen-denominated		9,517		999		1,111		29		8,406		970
Other corporate:
Dollar-denominated		1,882		69		1,512		43		370		26
Yen-denominated		4,739		574		1,248		53		3,491		521
Total fixed maturities		26,592		2,131		9,846		253		16,746		1,878
Perpetual securities:
Dollar-denominated		210		23		117		3		93		20
Yen-denominated		3,096		374		482		21		2,614		353
Total perpetual securities		3,306		397		599		24		2,707		373
Equity securities		8		2		6		1		2		1
Total	$	29,906	$	2,530	$	10,451	$	278	$	19,455	$	2,252


	December 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:
Japan government and agencies:
Yen-denominated	$	1,634	$	18	$	1,634	$	18	$	0	$	0
Municipalities:
Dollar-denominated		682		42		632		28		50		14
Yen-denominated		59		2		0		0		59		2
Mortgage- and asset- backed securities:
Dollar-denominated		78		13		20		0		58		13
Yen-denominated		415		15		415		15		0		0
Public utilities:
Dollar-denominated		556		36		498		28		58		8
Yen-denominated		2,877		200		766		47		2,111		153
Sovereign and supranational:
Dollar-denominated		45		2		12		0		33		2
Yen-denominated		1,579		77		428		1		1,151		76
Banks/financial institutions:
Dollar-denominated		1,484		108		753		22		731		86
Yen-denominated		10,609		1,703		1,506		40		9,103		1,663
Other corporate:
Dollar-denominated		1,741		79		1,456		52		285		27
Yen-denominated		4,503		503		507		45		3,996		458
Total fixed maturities		26,262		2,798		8,627		296		17,635		2,502
Perpetual securities:
Dollar-denominated		208		30		149		19		59		11
Yen-denominated		4,171		533		1,793		119		2,378		414
Total perpetual securities		4,379		563		1,942		138		2,437		425
Equity securities		13		2		13		1		0		1
Total	$	30,654	$	3,363	$	10,582	$	435	$	20,072	$	2,928

Bank and Financial Institution Investments in an Unrealized Loss Position

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.


	June 30, 2011		December 31, 2010
	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	35 %	41 %	39 %	54 %
Perpetual securities:
Upper Tier II	5	6	9	10
Tier I	6	10	5	7
Total perpetual securities	11	16	14	17
Total	46 %	57 %	53 %	71 %

Investments in Variable Interest Entities

The following table details our investments in VIEs.

Investments in Variable Interest Entities


	June 30, 2011				December 31, 2010
(In millions)	Amortized Cost		Fair Value		Amortized Cost		Fair Value
VIEs:
Consolidated:
Total VIEs consolidated	$	7,104	$	7,247	$	7,201	$	7,363
Not consolidated:
CDOs		4		4		5		5
Other		13,044		13,191		13,914		13,214
Total VIEs not consolidated		13,048		13,195		13,919		13,219
Total VIEs	$	20,152	$	20,442	$	21,120	$	20,582

Securities Lending

The following table presents our security loans outstanding and the corresponding collateral held:


(In millions)	June 30, 2011		December 31, 2010
Security loans outstanding, fair value	$	328	$	186
Cash collateral on loaned securities		338		191

PIIGS

Investment Exposure to Sovereign Debt and Financial Institutions

Our investment exposure to sovereign debt and financial institutions in Greece, Ireland, Italy, Portugal and Spain was as follows:


	June 30, 2011					December 31, 2010
(In millions)	Amortized Cost			Fair Value		Amortized Cost			Fair Value
Sovereign and supranational:
Italy	$	310		$	304	$	307		$	306
Spain		737			768		730			782
Total	$	1,047		$	1,072	$	1,037		$	1,088

Banks and financial institutions:
Greece	$	0		$	0	$	1,152		$	391
Ireland		525			379		710			659
Italy		186			182		184			183
Portugal		282			282		859			770
Spain		531			499		526			503
Total	$	1,524	⁽¹⁾	$	1,342	$	3,431	⁽¹⁾	$	2,506

⁽¹⁾

Represents 6% in 2011 and 12% in 2010 of total investments in the banks and financial institutions sector, and 1% in 2011 and 4% in 2010 of total investments in debt and perpetual securities

Perpetual Securities

Schedule of Available-for-sale Securities Reconciliation

Details of our holdings of perpetual securities were as follows:

Perpetual Securities


		June 30, 2011							December 31, 2010
(In millions)	Credit Rating	Amortized Cost		Fair Value		Unrealized Gain (Loss)			Amortized Cost		Fair Value		Unrealized Gain (Loss)
Upper Tier II:
	AA	$	192	$	204	$	12		$	190	$	201	$	11
	A		3,247		3,260		13			3,279		3,250		(29	)
	BBB		1,051		1,057		6			1,274		1,164		(110	)
	BB or lower		268		268		0			542		476		(66	)
Total Upper Tier II			4,758		4,789		31			5,285		5,091		(194	)
Tier I:
	A		601		524		(77	)		632		568		(64	)
	BBB		1,531		1,446		(85	)		1,386		1,296		(90	)
	BB or lower		369		344		(25	)		524		557		33
Total Tier I			2,501		2,314		(187	)		2,542		2,421		(121	)
Total		$	7,259	$	7,103	$	(156	)	$	7,827	$	7,512	$	(315	)