SCHEDULE II

CONDENSED FINANCIAL INFORMATION OF REGISTRANT

Aflac Incorporated (Parent Only)

Condensed Statements of Earnings


	Years ended December 31,
(In millions)	2011			2010			2009
Revenues:
Dividends from subsidiaries⁽¹⁾	$	282		$	370		$	464
Management and service fees from subsidiaries⁽¹⁾		230			206			124
Net investment income		10			11			9
Interest from subsidiaries⁽¹⁾		8			8			9
Realized investment gains (losses)		(1	)		0			0
Change in fair value of the interest rate component of the cross-currency swaps		0			0			(4	)
Other income (loss)		1			1			(11	)
Total revenues		530			596			591
Operating expenses:
Interest expense		168			140			73
Other operating expenses		69			66			65
Total operating expenses		237			206			138
Earnings before income taxes and equity in undistributed earnings of subsidiaries		293			390			453
Income tax expense (benefit):
Current		0			0			13
Deferred		(2	)		(3	)		(4	)
Total income taxes		(2	)		(3	)		9
Earnings before equity in undistributed earnings of subsidiaries		295			393			444
Equity in undistributed earnings of subsidiaries⁽¹⁾		1,669			1,951			1,053
Net earnings	$	1,964		$	2,344		$	1,497

⁽¹⁾

Eliminated in consolidation

See

the accompanying Notes to Condensed Financial Statements.

See

the accompanying Report of Independent Registered Public Accounting Firm.

SCHEDULE II

CONDENSED FINANCIAL INFORMATION OF REGISTRANT

Aflac Incorporated (Parent Only)

Condensed Balance Sheets


	December 31,
(In millions, except for share and per-share amounts)	2011			2010
Assets:
Investments and cash:
Fixed maturity securities available for sale, at fair value (amortized cost $120 in 2011 and $114 in 2010)	$	138		$	120
Investments in subsidiaries⁽¹⁾		16,091			13,125
Other investments		15			6
Cash and cash equivalents		385			693
Total investments and cash		16,629			13,944
Due from subsidiaries⁽¹⁾		134			140
Other assets		79			80
Total assets	$	16,842		$	14,164

Liabilities and shareholders' equity:
Liabilities:
Notes payable	$	3,345		$	3,098
Employee benefit plans		175			154
Income taxes		(311	)		(287	)
Other liabilities		127			143
Total liabilities		3,336			3,108
Shareholders' equity:
Common stock of $.10 par value. In thousands: authorized 1,900,000 shares in 2011 and 2010; issued 663,639 shares in 2011 and 662,660 shares in 2010		66			66
Additional paid-in capital		1,408			1,320
Retained earnings		15,583			14,194
Accumulated other comprehensive income (loss):
Unrealized foreign currency translation gains		1,109			926
Unrealized gains (losses) on investment securities		1,143			33
Unrealized gains (losses) on derivatives		9			31
Pension liability adjustment		(171	)		(128	)
Treasury stock, at average cost		(5,641	)		(5,386	)
Total shareholders' equity		13,506			11,056
Total liabilities and shareholders' equity	$	16,842		$	14,164

⁽¹⁾

Eliminated in consolidation

See

the accompanying Notes to Condensed Financial Statements.

See

the accompanying Report of Independent Registered Public Accounting Firm.

SCHEDULE II

CONDENSED FINANCIAL INFORMATION OF REGISTRANT

Aflac Incorporated (Parent Only)

Condensed Statements of Cash Flows


	Years ended December 31,
(In millions)	2011			2010			2009
Cash flows from operating activities:
Net earnings	$	1,964		$	2,344		$	1,497
Adjustments to reconcile net earnings to net cash provided from operating activities:
Equity in undistributed earnings of subsidiaries⁽¹⁾		(1,669	)		(1,951	)		(1,053	)
Change in income tax liabilities		(52	)		(77	)		26
Other, net		145			153			47
Net cash provided (used) by operating activities		388			469			517
Cash flows from investing activities:
Fixed maturity securities sold		4			12			4
Fixed maturity securities purchased		(10	)		(8	)		(12	)
Other investments sold (purchased)		0			0			0
Purchase of subsidiary		0			0			(97	)
Additional capitalization of subsidiaries⁽¹⁾		(40	)		0			(505	)
Other, net		0			0			1
Net cash provided (used) by investing activities		(46	)		4			(609	)
Cash flows from financing activities:
Purchases of treasury stock		(308	)		(121	)		(10	)
Proceeds from borrowings		620			748			1,405
Principal payments under debt obligations		(459	)		(447	)		(556	)
Dividends paid to shareholders		(552	)		(535	)		(524	)
Treasury stock reissued		26			45			24
Proceeds from exercise of stock options		14			27			8
Net change in amount due to/from subsidiaries⁽¹⁾		9			5			(15	)
Net cash provided (used) by financing activities		(650	)		(278	)		332
Net change in cash and cash equivalents		(308	)		195			240
Cash and cash equivalents, beginning of period		693			498			258
Cash and cash equivalents, end of period	$	385		$	693		$	498

⁽¹⁾

Eliminated in consolidation

See

the accompanying Notes to Condensed Financial Statements.

See

the accompanying Report of Independent Registered Public Accounting Firm.

SCHEDULE II

CONDENSED FINANCIAL INFORMATION OF REGISTRANT

Aflac Incorporated (Parent Only)

Condensed Statements of Comprehensive Income (Loss)


	Years ended December 31,
(In millions)	2011			2010			2009
Net earnings	$	1,964		$	2,344		$	1,497
Other comprehensive income (loss) before income taxes:
Foreign currency translation adjustments:
Unrealized foreign currency translation gains (losses) during period - parent only		(54	)		(127	)		72
Equity in unrealized foreign currency translation gains (losses) of subsidiaries during period		52			258			(7	)
Unrealized gains (losses) on investment securities:
Unrealized holding gains (losses) on investment securities during period - parent only		11			7			10
Equity in unrealized holding gains (losses) on investment securities held by subsidiaries during period		555			363			(352	)
Equity in reclassification adjustment for realized (gains) losses of subsidiaries included in net earnings		1,154			421			1,217
Unrealized gains (losses) on derivatives during period		(33	)		51			0
Pension liability adjustment during period		(65	)		(32	)		22
Total other comprehensive income (loss) before income taxes		1,620			941			962
Income tax expense (benefit) related to items of other comprehensive income (loss)		392			(32	)		351
Other comprehensive income (loss), net of income taxes		1,228			973			611
Total comprehensive income (loss)	$	3,192		$	3,317		$	2,108

See the accompanying Notes to Condensed Financial Statements.

See the accompanying Report of Independent Registered Public Accounting Firm.

SCHEDULE II

CONDENSED FINANCIAL INFORMATION OF REGISTRANT

Aflac Incorporated (Parent Only)

Notes to Condensed Financial Statements

The accompanying condensed financial statements should be read in conjunction with the consolidated financial statements and notes thereto of Aflac Incorporated and Subsidiaries included in Part II, Item 8 of this report.

(A) Notes Payable

A summary of notes payable as of December 31 follows:


(In millions)	2011			2010
8.50% senior notes due May 2019	$	850		$	850
6.45% senior notes due August 2040		448	*⁽¹⁾*		448	⁽¹⁾
6.90% senior notes due December 2039		396	*⁽²⁾*		396	⁽²⁾
3.45% senior notes due August 2015		300			300
Yen-denominated Uridashi notes:
1.52% notes paid September 2011 (principal amount 15 billion yen)		0			184
2.26% notes due September 2016 (principal amount 10 billion yen)		129			123
Variable interest rate notes paid September 2011 (.66% at December 2010, principal amount 20 billion yen)		0			245
Yen-denominated Samurai notes:
1.47% notes due July 2014 (principal amount 28.7 billion yen)		369			0
1.87% notes due June 2012 (principal amount 30 billion yen)		386			368
1.84% notes due July 2016 (principal amount 15.8 billion yen)		203			0
Variable interest rate notes due July 2014 (1.34% at December 2011, principal amount 5.5 billion yen)		71			0
Yen-denominated loans:
3.60% loan due July 2015 (principal amount 10 billion yen)		129			123
3.00% loan due August 2015 (principal amount 5 billion yen)		64			61

Total notes payable	$	3,345		$	3,098

⁽¹⁾

$450 issuance net of a $2 underwriting discount that is being amortized over the life of the notes

⁽²⁾

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

During 2009, Aflac Japan bought on the open market 5.4 billion yen of yen-denominated Uridashi and Samurai notes issued by the Parent Company which are outstanding as of December 31, 2011. In consolidation, those notes have been extinguished; however, they remain an outstanding liability for the Parent Company until their maturity date.

The aggregate contractual maturities of notes payable during each of the years after December 31, 2011, are as follows:


(In millions)
2012	$	386
2013		0
2014		440
2015		493
2016		332
Thereafter		1,700

Total	$	3,351

In February 2012, the Parent Company issued two series of senior notes totaling $750 million through a U.S. public debt offering. The first series, which totaled $400 million, bears interest at a fixed rate of 2.65% per annum, payable semi-annually, and has a five-year maturity. The second series, which totaled $350 million, bears interest at a fixed rate of 4.00% per annum, payable semi-annually, and has a ten-year maturity.

For further information regarding notes payable, see Note 8 of the Notes to the Consolidated Financial Statements.

(B) Derivatives

We do not use derivatives for trading purposes, nor do we engage in leveraged derivative transactions. At December 31, 2011, the Parent Company’s only outstanding freestanding derivative contract was an interest rate swap related to its 5.5 billion yen variable interest rate Samurai notes. For further information regarding this derivative, see Notes 1, 4 and 8 of the Notes to the Consolidated Financial Statements.

We have entered into cross-currency swaps on the $750 million of senior notes issued in February 2012 to minimize the impact of foreign currency translation on shareholders’ equity and to reduce interest expense by converting the dollar-denominated principal and interest on the senior notes we issued into yen-denominated obligations. By entering into these cross-currency swaps, we converted the first series $400 million liability into a 30.9 billion yen liability and reduced the interest rate on this debt from 2.65% in dollars to 1.22% in yen, and we converted the second series $350 million liability into a 27.0 billion yen liability and reduced the interest rate on this debt from 4.00% in dollars to 2.07% in yen.

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 balance sheet, with changes in fair value reported in earnings.

(C) Income Taxes

The Parent Company and its eligible U.S. subsidiaries file a consolidated U.S. federal income tax return. Income tax liabilities or benefits are recorded by each principal subsidiary based upon separate return calculations, and any difference between the consolidated provision and the aggregate amounts recorded by the subsidiaries is reflected in the Parent Company financial statements. For further information on income taxes, see Note 9 of the Notes to the Consolidated Financial Statements.

(D) Dividend Restrictions

See Note 12 of the Notes to the Consolidated Financial Statements for information regarding dividend restrictions.

(E) Supplemental Disclosures of Cash Flow Information


(In millions)	2011		2010		2009
Interest paid	$	163	$	124	$	61
Noncash financing activities:
Treasury shares issued for shareholder dividend reinvestment		23		0		0