INVESTMENTS (Tables)

9 Months Ended

Sep. 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.

September 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

13,684

765

14,449

Mortgage- and asset-backed securities

955

996

Public utilities

2,971

218

2,809

Sovereign and supranational

1,794

1,803

Banks/financial institutions

4,681

586

4,178

Other corporate

6,499

110

792

5,817

Total yen-denominated

30,584

1,119

1,651

30,052

Dollar-denominated:

U.S. government and agencies

1,336

428

1,764

Municipalities

1,055

108

1,154

Mortgage- and asset-backed securities

360

451

Public utilities

2,979

485

3,443

Sovereign and supranational

449

540

Banks/financial institutions

3,369

222

121

3,470

Other corporate

8,749

1,316

10,001

Total dollar-denominated

18,297

2,746

220

20,823

Total fixed maturities

48,881

3,865

1,871

50,875

Perpetual securities:

Yen-denominated:

Banks/financial institutions

6,798

982

5,893

Other corporate

349

317

Dollar-denominated:

Banks/financial institutions

357

320

Total perpetual securities

7,504

1,057

6,530

Equity securities

Total securities available for sale

56,407

3,952

2,930

57,429

September 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

11,534

282

11,815

Municipalities

563

590

Mortgage- and asset-backed securities

138

143

Public utilities

6,735

142

367

6,510

Sovereign and supranational

4,392

132

171

4,353

Banks/financial institutions

12,565

149

1,242

11,472

Other corporate

5,424

126

322

5,228

Total yen-denominated

41,351

869

2,109

40,111

Total securities held to maturity

41,351

869

2,109

40,111


	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 September 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	$	1,832	$	1,873	$	36	$	37
Due after one year through five years		3,558		3,716		267		291
Due after five years through 10 years		3,778		4,028		897		1,027
Due after 10 years		29,593		29,838		7,485		8,478
Mortgage- and asset-backed securities		1,268		1,389		47		59
Total fixed maturities available for sale	$	40,029	$	40,844	$	8,732	$	9,892

Held to maturity:
Due in one year or less	$	360	$	364	$	0	$	0
Due after one year through five years		1,301		1,389		0		0
Due after five years through 10 years		3,590		3,855		0		0
Due after 10 years		35,962		34,360		0		0
Mortgage- and asset-backed securities		138		143		0		0
Total fixed maturities held to maturity	$	41,351	$	40,111	$	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 September 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	$	458	$	524	$	0	$	0
Due after one year through five years		1,707		1,611		5		5
Due after five years through 10 years		749		691		0		0
Due after 10 years		4,413		3,539		172		160
Total perpetual securities available for sale	$	7,327	$	6,365	$	177	$	165

Bank and Financial Institution Investments

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


	September 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
Fixed Maturities:
Amortized cost	$	20,615	21 %	$	22,041	26 %
Fair value		19,120	20		20,741	24
Perpetual Securities:
Upper Tier II:
Amortized cost	$	4,637	5 %	$	4,957	6 %
Fair value		4,222	4		4,748	5
Tier I:
Amortized cost		2,518	2		2,542	3
Fair value		1,991	2		2,421	3

Total:
Amortized cost	$	27,770	28 %	$	29,540	35 %
Fair value		25,333	26		27,910	32

Gain (Loss) on Investments

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


	Three Months Ended September 30,						Nine Months Ended September 30,
(In millions)	2011			2010			2011			2010
Realized investment gains (losses) on securities:
Fixed maturities:
Available for sale:
Gross gains from sales	$	354		$	25		$	458		$	75
Gross losses from sales		(56	)		(17	)		(375	)		(207	)
Net gains (losses) from redemptions		9			0			15			1
Other-than-temporary impairment losses		(44	)		(12	)		(793	)		(12	)
Total debt securities		263			(4	)		(695	)		(143	)
Perpetual securities:
Available for sale:
Gross gains from sales		0			0			54			133
Gross losses from sales		0			0			(109	)		0
Other-than-temporary impairment losses		(122	)		0			(306	)		(41	)
Total perpetual securities		(122	)		0			(361	)		92
Equity securities:
Gross losses from sales		0			0			0			(2	)
Other-than-temporary impairment losses		0			(1	)		(1	)		(2	)
Total equity securities		0			(1	)		(1	)		(4	)
Other assets:
Derivative gains (losses)		(224	)		14			(291	)		(72	)
Other		0			0			18			0
Total other assets		(224	)		14			(273	)		(72	)
Total realized investment gains (losses)	$	(83	)	$	9		$	(1,330	)	$	(127	)

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 September 30,				Nine Months Ended September 30,
(In millions)	2011		2010		2011		2010
Perpetual securities	$	122	$	0	$	306	$	41
Corporate bonds		43		0		783		0
Mortgage- and asset-backed securities		1		12		9		12
Municipalities		0		0		1		0
Equity securities		0		1		1		2
Total other-than-temporary impairment losses realized	$	166	$	13	$	1,100	$	55

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 September 30,					Nine Months Ended September 30,
(In millions)	2011			2010		2011		2010
Cumulative credit loss impairments, beginning of period	$	4		$	13	$	13	$	24
Credit losses on securities for which an other-than-temporary impairment was previously recognized		0			1		0		1
Securities sold during period		(4	)		(1)		(13)		(12)
Cumulative credit loss impairments, end of period	$	0		$	13	$	0	$	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)	September 30, 2011			December 31, 2010
Unrealized gains (losses) on securities available for sale	$	1,022		$	(61)
Unamortized unrealized gains on securities transferred to held to maturity		99			135
Deferred income taxes		(419	)		(41)
Shareholders’ equity, unrealized gains (losses) on investment securities	$	702		$	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.

September 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

110

Municipalities:

Dollar-denominated

Yen-denominated

Mortgage- and asset- backed securities:

Yen-denominated

154

Public utilities:

Dollar-denominated

315

264

Yen-denominated

6,286

585

3,759

185

2,527

400

Sovereign and supranational:

Dollar-denominated

Yen-denominated

2,829

225

1,223

1,606

155

Banks/financial institutions:

Dollar-denominated

900

121

503

397

Yen-denominated

11,445

1,828

2,491

138

8,954

1,690

Other corporate:

Dollar-denominated

953

769

184

Yen-denominated

7,218

1,114

3,833

272

3,385

842

Total fixed maturities

30,368

3,980

12,901

780

17,467

3,200

Perpetual securities:

Dollar-denominated

243

164

Yen-denominated

4,774

1,014

2,557

221

2,217

793

Total perpetual securities

5,017

1,057

2,721

230

2,296

827

Equity securities

Total

35,395

5,039

15,630

1,011

19,765

4,028


					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.


	September 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 %	39 %	39 %	54 %
Perpetual securities:
Upper Tier II	9	10	9	10
Tier I	4	10	5	7
Total perpetual securities	13	20	14	17
Total	48 %	59 %	53 %	71 %

Investments in Variable Interest Entities

The following table details our investments in VIEs.

Investments in Variable Interest Entities


	September 30, 2011				December 31, 2010
(In millions)	Amortized Cost		Fair Value		Amortized Cost		Fair Value
VIEs:
Consolidated:
Total VIEs consolidated	$	7,189	$	7,214	$	7,201	$	7,363
Not consolidated:
CDOs		0		0		5		5
Other		13,948		13,626		13,914		13,214
Total VIEs not consolidated		13,948		13,626		13,919		13,219
Total VIEs	$	21,137	$	20,840	$	21,120	$	20,582

Securities Lending

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


(In millions)	September 30, 2011		December 31, 2010
Security loans outstanding, fair value	$	839	$	186
Cash collateral on loaned securities		858		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:


	September 30, 2011					December 31, 2010
(In millions)	Amortized Cost			Fair Value		Amortized Cost			Fair Value
Sovereign:
Italy	$	326		$	313	$	307		$	306
Spain		776			782		730			782
Total	$	1,102		$	1,095	$	1,037		$	1,088

Banks and financial institutions:
Greece	$	0		$	0	$	1,152		$	391
Ireland		552			330		710			659
Italy		196			187		184			183
Portugal		0			0		859			770
Spain		553			466		526			503
Total	$	1,301	⁽¹⁾	$	983	$	3,431	⁽¹⁾	$	2,506

⁽¹⁾

Represents 5% 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


		September 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	$	197	$	195	$	(2	)	$	190	$	201	$	11
	A		3,352		2,977		(375	)		3,279		3,250		(29	)
	BBB		1,174		1,104		(70	)		1,274		1,164		(110	)
	BB or lower		263		263		0			542		476		(66	)
Total Upper Tier II			4,986		4,539		(447	)		5,285		5,091		(194	)
Tier I:
	A		628		468		(160	)		632		568		(64	)
	BBB		1,175		974		(201	)		1,386		1,296		(90	)
	BB or lower		715		549		(166	)		524		557		33
Total Tier I			2,518		1,991		(527	)		2,542		2,421		(121	)
Total		$	7,504	$	6,530	$	(974	)	$	7,827	$	7,512	$	(315	)