INVESTMENTS (Tables)

12 Months Ended

Dec. 31, 2011

The components of net investment income for the years ended December 31 were as follows:


(In millions)	2011		2010		2009
Fixed-maturity securities	$	3,026	$	2,695	$	2,413
Perpetual securities		274		328		367
Equity securities and other		5		4		3
Short-term investments and cash equivalents		4		6		6
Gross investment income		3,309		3,033		2,789
Less investment expenses		29		26		24
Net investment income	$	3,280	$	3,007	$	2,765

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 at December 31 are shown in the following tables.

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

11,108

670

11,778

Mortgage- and asset-backed securities

912

954

Public utilities

3,850

226

3,683

Sovereign and supranational

1,704

1,775

Banks/financial institutions

4,312

359

4,027

Other corporate

6,213

120

459

5,874

Total yen-denominated

28,099

1,053

1,061

28,091

Dollar-denominated:

U.S. government and agencies

Municipalities

1,060

107

1,159

Mortgage- and asset-backed securities

310

384

Public utilities

3,052

517

3,542

Sovereign and supranational

449

533

Banks/financial institutions

3,324

223

121

3,426

Other corporate

9,031

1,433

10,402

Total dollar-denominated

17,257

2,447

223

19,481

Total fixed maturities

45,356

3,500

1,284

47,572

Perpetual securities:

Yen-denominated:

Banks/financial institutions

6,217

155

604

5,768

Other corporate

344

361

Dollar-denominated:

Banks/financial institutions

336

310

Total perpetual securities

6,897

175

633

6,439

Equity securities

Total securities available for sale

52,275

3,679

1,918

54,036

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

18,775

297

19,071

Municipalities

553

584

Mortgage- and asset-backed securities

129

134

Public utilities

5,615

188

166

5,637

Sovereign and supranational

4,200

148

183

4,165

Banks/financial institutions

12,389

170

1,079

11,480

Other corporate

5,348

149

185

5,312

Total yen-denominated

47,009

992

1,618

46,383

Total securities held to maturity

47,009

992

1,618

46,383


	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


	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

Investments Classified by Contractual Maturity Date

The contractual maturities of our investments in fixed maturities at December 31, 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	$	1,877	$	1,902	$	12	$	12
Due after one year through five years		3,170		3,300		301		328
Due after five years through 10 years		3,855		4,086		890		1,020
Due after 10 years		26,418		26,905		7,491		8,544
Mortgage- and asset-backed securities		1,177		1,280		45		57
Total fixed maturities available for sale	$	36,497	$	37,473	$	8,739	$	9,961

Held to maturity:
Due in one year or less	$	488	$	495	$	0	$	0
Due after one year through five years		1,148		1,230		0		0
Due after five years through 10 years		3,539		3,855		0		0
Due after 10 years		41,704		40,668		0		0
Mortgage- and asset-backed securities		130		135		0		0
Total fixed maturities held to maturity	$	47,009	$	46,383	$	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 December 31, 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	$	323	$	389	$	0	$	0
Due after one year through five years		1,876		1,953		5		5
Due after five years through 10 years		547		565		0		0
Due after 10 years		3,974		3,364		172		163
Total perpetual securities available for sale	$	6,720	$	6,271	$	177	$	168

Investment Exposures that Exceeded Ten Percent of Shareholders' Equity

Investment exposures that individually exceeded 10% of shareholders’ equity as of December 31 were as follows:

2011

2010

(In millions)

Credit
Rating

Amortized
Cost

Fair
Value

Credit
Rating

Amortized
Cost

Fair
Value

Japan National Government

AA-

$29,244

$30,145

16,342

16,861

Bank and Financial Institution Investments

Our total investments in the bank and financial institution sector as of December 31, including those classified as perpetual securities, were as follows:


	2011					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	$	20,025		20	%	$	22,041		26	%
Fair value		18,933		19			20,741		24
Perpetual Securities:
Upper Tier II:
Amortized cost	$	4,285		5	%	$	4,957		6	%
Fair value		4,244		4			4,748		5
Tier I:
Amortized cost		2,268		2			2,542		3
Fair value		1,834		2			2,421		3
Total:
Amortized cost	$	26,578		27	%	$	29,540		35	%
Fair value		25,011		25			27,910		32

Gain (Loss) on Investments

Information regarding pretax realized gains and losses from investments for the years ended December 31 follows:


(In millions)	2011			2010			2009
Realized investment gains (losses) on securities:
Fixed maturities:
Available for sale:
Gross gains from sales	$	992		$	117		$	258
Gross losses from sales		(465	)		(212	)		(18	)
Net gains (losses) from redemptions		69			1			1
Other-than-temporary impairment losses		(1,335	)		(297	)		(630	)
Held to maturity:
Net gains (losses) from redemptions		0			2			1
Total fixed maturities		(739	)		(389	)		(388	)
Perpetual securities:
Available for sale:
Gross gains from sales		102			133			4
Gross losses from sales		(109	)		0			(101	)
Other-than-temporary impairment losses		(565	)		(160	)		(729	)
Total perpetual securities		(572	)		(27	)		(826	)
Equity securities:
Gross losses from sales		0			(2	)		0
Other-than-temporary impairment losses		(1	)		(2	)		(2	)
Total equity securities		(1	)		(4	)		(2	)
Other assets:
Derivative gains (losses)		(257	)		(1	)		0
Other		17			(1	)		4
Total other assets		(240	)		(2	)		4
Total realized investment gains (losses)	$	(1,552	)	$	(422	)	$	(1,212	)

Other Than Temporary Impairment Losses on Investment Securities

The following table details our pretax other-than-temporary impairment losses by investment category that resulted from our impairment evaluation process for the years ended December 31.


(In millions)	2011			2010			2009
Perpetual securities	$	565		$	160		$	729
Corporate bonds		1,316			285			458
Collateralized debt obligations		0			0			148
Mortgage- and asset-backed securities		17			12			24
Municipalities		2			0			0
Equity securities		1			2			2
Total other-than-temporary impairment losses realized	$	1,901	*⁽¹⁾*	$	459	⁽²⁾	$	1,361	⁽²⁾

⁽¹⁾

Includes $1.3 billion for credit-related impairments and $615 million from change in intent to sell securities

⁽²⁾

Consisted completely of credit-related impairments

Other than Temporary Impairment, Credit Losses Recognized in Earnings

For those securities that were still held at the end of the reporting period which have had other-than-temporary impairments with credit-related and non-credit-related components, the following table summarizes the cumulative credit-related impairment losses that were recognized in earnings during the years ended December 31.


(In millions)	2011			2010			2009
Cumulative credit loss impairments, beginning of period	$	13		$	24		$	0
Credit losses on securities for which an other-than-temporary impairment was not previously recognized		0			0			24
Credit losses on securities for which an other-than-temporary impairment was previously recognized		0			1			0
Securities sold during period		(13	)		(12	)		0
Cumulative credit loss impairments, end of period	$	0		$	13		$	24

Unrealized Gain (Loss) on Investments

Information regarding changes in unrealized gains and losses from investments for the years ended December 31 follows:


(In millions)	2011			2010			2009
Changes in unrealized gains (losses):
Debt securities:
Available for sale	$	1,963		$	1,105		$	170
Transferred to held to maturity		(101	)		(12	)		(31	)
Perpetual securities:
Available for sale		(143	)		(24	)		736
Equity securities		2			(1	)		(1	)
Total change in unrealized gains (losses)	$	1,721		$	1,068		$	874

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 at December 31 was as follows:


(In millions)	2011			2010
Unrealized gains (losses) on securities available for sale	$	1,761		$	(61	)
Unamortized unrealized gains on securities transferred to held to maturity		34			135
Deferred income taxes		(652	)		(41	)
Shareholders' equity, unrealized gains (losses) on investment securities	$	1,143		$	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 at December 31.

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

940

859

Municipalities:

Dollar-denominated

Yen-denominated

Mortgage- and asset- backed securities:

Yen-denominated

151

Public utilities:

Dollar-denominated

295

110

185

Yen-denominated

4,995

392

2,404

141

2,591

251

Sovereign and supranational:

Dollar-denominated

Yen-denominated

2,349

199

749

1,600

137

Banks/financial institutions:

Dollar-denominated

770

121

391

379

Yen-denominated

10,175

1,438

1,639

8,536

1,392

Other corporate:

Dollar-denominated

834

639

195

Yen-denominated

6,106

644

2,523

110

3,583

534

Total fixed maturities

26,795

2,902

9,370

449

17,425

2,453

Perpetual securities:

Dollar-denominated

217

109

108

Yen-denominated

2,290

604

630

1,660

535

Total perpetual securities

2,507

633

739

1,768

560

Equity securities

Total

29,310

3,536

10,115

523

19,195

3,013


	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 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 at December 31.


	2011						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		37	%		44	%		39	%		54	%
Perpetual securities:
Upper Tier II		4			6			9			10
Tier I		5			12			5			7
Total perpetual securities		9			18			14			17
Total		46	%		62	%		53	%		71	%

Investments in Variable Interest Entities

The following table details our investments in VIEs as of December 31.

Investments in Variable Interest Entities


	2011				2010
(In millions)	Amortized Cost		Fair Value		Amortized Cost		Fair Value
VIEs:
Consolidated:
Total VIEs consolidated	$	6,997	$	7,206	$	7,201	$	7,363
Not consolidated:
CDOs		0		0		5		5
Other		13,753		13,714		13,914		13,214
Total VIEs not consolidated		13,753		13,714		13,919		13,219
Total VIEs	$	20,750	$	20,920	$	21,120	$	20,582

Securities Lending

The following table presents our security loans outstanding and the corresponding collateral held as of December 31:


(In millions)	2011		2010
Security loans outstanding, fair value	$	812	$	186
Cash collateral on loaned securities		838		191

Perpetual Securities

Schedule of Available-for-sale Securities Reconciliation

Details of our holdings of perpetual securities as of December 31 were as follows:


Perpetual Securities
		2011							2010
(In millions)	Credit Rating	Amortized Cost		Fair Value		Unrealized Gain (Loss)			Amortized Cost		Fair Value		Unrealized Gain (Loss)
Upper Tier II:
	AA	$	196	$	204	$	8		$	190	$	201	$	11
	A		2,108		2,046		(62	)		3,279		3,250		(29	)
	BBB		1,791		1,804		13			946		821		(125	)
	BB or lower		190		190		0			542		476		(66	)
Total Upper Tier II			4,285		4,244		(41	)		4,957		4,748		(209	)
Tier I:
	A		0		0		0			632		568		(64	)
	BBB		1,684		1,417		(267	)		1,386		1,296		(90	)
	BB or lower		584		417		(167	)		524		557		33
Total Tier I			2,268		1,834		(434	)		2,542		2,421		(121	)
Other subordinated - non-banks	BBB		344		361		17			328		343		15
Total		$	6,897	$	6,439	$	(458	)	$	7,827	$	7,512	$	(315	)