DEFERRED POLICY ACQUISITION COSTS AND INSURANCE EXPENSES

12 Months Ended

Dec. 31, 2011

DEFERRED POLICY ACQUISITION COSTS AND INSURANCE EXPENSES

6. DEFERRED POLICY ACQUISITION COSTS AND INSURANCE EXPENSES

Deferred Policy Acquisition Costs and Insurance Expenses: Consolidated policy acquisition costs deferred during the year were $1.68 billion in 2011, compared with $1.44 billion in 2010 and $1.30 billion in 2009. The following table presents a rollforward of deferred policy acquisition costs by segment for the years ended December 31.


	2011						2010
(In millions)	Japan			U.S.			Japan			U.S.
Deferred policy acquisition costs:
Balance, beginning of year	$	6,964		$	2,770		$	5,846		$	2,687
Capitalization		1,109			567			929			516
Amortization		(686	)		(416	)		(597	)		(433	)
Foreign currency translation and other		346			0			786			0

Balance, end of year	$	7,733		$	2,921		$	6,964		$	2,770

Commissions deferred as a percentage of total acquisition costs deferred were 77% in 2011 and 2010, compared with 76% in 2009.

Personnel, compensation and benefit expenses as a percentage of insurance expenses were 42% in 2011, 44% in 2010 and 43% in 2009. Advertising expense, which is included in insurance expenses in the consolidated statements of earnings, was as follows for the years ended December 31:


(In millions)	2011		2010		2009
Advertising expense:
Aflac Japan	$	128	$	112	$	106
Aflac U.S.		130		116		107

Total advertising expense	$	258	$	228	$	213

Depreciation and other amortization expenses, which are included in insurance expenses in the consolidated statements of earnings, were as follows for the years ended December 31:


(In millions)	2011		2010		2009
Depreciation expense	$	59	$	60	$	60
Other amortization expense		5		22		21

Total depreciation and other amortization expense⁽¹⁾	$	64	$	82	$	81

⁽¹⁾

Aflac Japan accounted for $51 in 2011, $48 in 2010 and $46 in 2009.

Lease and rental expense, which are included in insurance expenses in the consolidated statements of earnings, were as follows for the years ended December 31:


(In millions)	2011		2010		2009
Lease and rental expense:
Aflac Japan	$	73	$	68	$	72
Aflac U.S.		8		8		8
Other		1		1		1

Total lease and rental expense	$	82	$	77	$	81

- Definition

Disclosure of accounting policy for capitalizing costs incurred to write or acquire insurance contracts, the basis for and methodology for capitalizing such costs, the accounting for such deferred acquisition costs (DAC) when modifications or internal replacements of related insurance contracts occur and the effect on results of operations, and the methodology and amount of amortization. This disclosure addresses the nature, type, and amount of capitalized costs incurred to write or acquire insurance contracts.

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