Aflac Incorporated

02/27/2023 | Press release | Distributed by Public on 02/27/2023 15:11

Financial Analysts Briefing Supplement - Form 8-K

Financial Analysts Briefing Supplement
Fourth Quarter 2022 - As Adjusted
This document is a statistical supplement to the Financial Analysts Briefing (FAB) book. Throughout the presentation, amounts presented may not foot due to rounding. As you review the supplement, please note the non-U.S. GAAP financial measures and definitions found at the back of this document.

The Company adopted the Financial Accounting Standards Board's Accounting Standard Update 2018-12 Financial Services - Insurance: Targeted Improvements to the Accounting for Long-Duration Contracts, as clarified and amended by (i) ASU 2019-09 Financial Services - Insurance: Effective Date, and (ii) ASU 2020-11 Financial Services - Insurance: Effective Date and Early Application (collectively, "LDTI") as of January 1, 2023. The amended guidance is applied as of the beginning of the earliest period presented in the Company's quarterly and annual financial statements, which results in a January 1, 2021 Transition Date. The impacts to the 2021 and 2022 data in the FAB Supplement are being reflected at this time voluntarily and for comparative purposes only. In conjunction with the adoption of LDTI, the Company will change its practice of recording the change in the deferred profit liability on products with limited-payment features from the benefits and claims, net line item to the net earned premiums line item in the consolidated statement of earnings. This change in presentation will have no impact on net earnings and will be made for all comparative periods presented in quarterly and annual financial statements. This change has been reflected in the updated FAB Supplement. Updates to the original FAB Supplement for these items are highlighted in yellow herein.
Aflac Incorporated Page
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Aflac U.S.
Statement of Pretax Adjusted Earnings
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20,21
Aflac Japan
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Corporate and Other
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Non-U.S. GAAP Financial Measures
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For more information, contact:
David Young
Phone. 706.596.3264
investors.aflac.com


Aflac Incorporated and Subsidiaries
Share Data
(In Thousands)
Beginning Shares Issued Shares Purchased Ending QTD Weighted Avg. Shares YTD Weighted Avg. Shares
Shares Stk. Bon. Stk. Opt. Treas. Misc. Shares Avg. Dilutive Avg. Avg. Dilutive Avg.
Period Outstanding & DRP & Misc. Shares
Purch.(1)
Outstanding Shares Shares Diluted Shares Shares Diluted
2020 1 726,793 468 1,613 9,984 508 718,382 724,366 3,146 727,512 724,366 3,146 727,512
2 718,382 648 100 5,209 13 713,908 717,889 1,875 719,764 721,128 2,510 723,638
3 713,908 468 134 10,916 20 703,574 711,698 2,095 713,793 717,962 2,372 720,333
4 703,574 437 235 11,791 1 692,454 701,016 2,843 703,859 713,702 2,490 716,192
2021 1 692,454 387 1,684 13,440 378 680,707 688,938 3,002 691,940 688,938 3,002 691,940
2 680,707 330 130 9,174 3 671,990 678,050 2,871 680,921 683,464 2,936 686,400
3 671,990 250 188 9,572 39 662,817 668,762 3,163 671,925 678,509 3,012 681,521
4 662,817 249 224 11,140 18 652,132 659,100 3,412 662,512 673,617 3,112 676,729
2022 1 652,132 259 1,308 8,007 343 645,349 649,753 3,074 652,827 649,753 3,074 652,827
2 645,349 269 101 11,185 8 634,526 640,707 2,536 643,243 645,205 2,805 648,010
3 634,526 258 144 11,057 3 623,868 629,350 2,597 631,947 639,862 2,735 642,597
4 623,868 222 120 8,938 16 615,256 619,845 3,149 622,994 634,816 2,839 637,655

(1) Includes previously owned shares used to purchase options (swapped shares) and/or shares purchased for deferred compensation program
2

Aflac Incorporated and Subsidiaries
Summary of Adjusted Results by Business Segment
(In Millions, except per-share data and where noted)
Years Ended December 31, 3 Months Ended December 31, 12 Months Ended December 31,
% %
2017 2018 2019 2020 2021 2021 2022 Change 2021 2022 Change
Aflac Japan $ 3,054 $ 3,208 $ 3,261 $ 3,263 $ 3,755 $ 897 $ 720 (19.7) $ 3,755 $ 3,281 (12.6)
Aflac U.S. 1,245 1,285 1,272 1,268 1,356 282 339 20.2 1,356 1,359 .2
Corporate and other (1)
(214) (139) (72) (115) (293) (152) (45) (293) (218)
Pretax adjusted earnings 4,086 4,354 4,461 4,416 4,819 1,026 1,015 (1.1) 4,819 4,422 (8.2)
Income taxes (1)
1,370 1,129 1,147 864 893 151 198 31.1 893 808 (9.5)
Adjusted earnings (2)
2,716 3,226 3,314 3,552 3,925 875 817 (6.6) 3,925 3,614 (7.9)
Reconciling items:
Adjusted net investment gains (losses) - (297) (15) (229) 462 246 (477) 462 447
Other and non-recurring income (loss) (3)
(69) (75) (1) (28) (73) (6) - (73) 1
Income tax benefit (expense) on items excluded from adjusted earnings (4)
24 83 3 72 (83) (50) (144) (83) 357
Tax reform adjustment (5)
1,933 (18) 4 - - - - - -
Tax valuation allowance release (6)
- - - 1,411 - - - - -
Net earnings $ 4,604 $ 2,920 $ 3,304 $ 4,778 $ 4,231 $ 1,065 $ 196 (81.6) $ 4,231 $ 4,418 4.4
Effective Tax rate (14.6) % 26.7 % 25.7 % (14.9) % 18.7 % 15.9 % 63.6 % 18.7 % 9.3 %
Earnings per share of common stock:
Net earnings (basic) $ 5.81 $ 3.79 $ 4.45 $ 6.69 $ 6.28 $ 1.62 $ 0.32 (80.2) $ 6.28 $ 6.96 10.8
Net earnings (diluted) 5.77 3.77 4.43 6.67 6.25 1.61 0.31 (80.7) 6.25 6.93 10.9
Adjusted earnings (basic) (2)
$ 3.43 $ 4.20 $ 4.46 $ 4.98 $ 5.83 $ 1.33 $ 1.32 (.8) $ 5.83 $ 5.69 (2.4)
Adjusted earnings (diluted) (2)
3.40 4.16 4.44 4.96 5.80 1.32 1.31 (.8) 5.80 5.67 (2.2)
(1) The change in value of federal historic rehabilitation and solar investments in partnerships of $11 and $104 for the three-month periods and $91 and $138 for the twelve-month periods ended December 31, 2022, and 2021, respectively is included as a reduction to net investment income. Tax credits on these investments of $20 and $80 for the three-month period and $83 and $115 for the twelve-month periods ended December 31, 2022, and 2021, respectively, have been recorded as an income tax benefit in the consolidated statement of earnings.
(2) See non-U.S. GAAP financial measures for definition of adjusted earnings.
(3) Foreign currency gains and losses for all periods have been reclassified from Other and non-recurring income (loss) to Net investment gains and losses.
(4) Primarily reflects release of $452 in deferred taxes in 2022
(5) The impact of Tax Reform was adjusted in 2018 for return-to-provision adjustments, various amended returns filed by the Company, and final true-ups of deferred tax liabilities. Further impacts were recorded in 2019 as a result of additional guidance released by the IRS.
(6) Tax benefit recognized in 2020 represents the release of valuation allowances on deferred tax benefits related to foreign tax credits.
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Aflac Incorporated and Subsidiaries
Consolidated Statements of Earnings - U.S. GAAP
(In Millions, except per-share data)
Years Ended December 31, 3 Months Ended December 31, 12 Months Ended December 31,
% %
2017 2018 2019 2020 2021 2021 2022 Change 2021 2022 Change
Revenues:
Net earned premiums
Gross premiums $ 18,875 $ 19,018 $ 19,122 $ 18,955 $ 17,305 $ 4,180 $ 3,553 $ 17,305 $ 15,025
Assumed (ceded) (345) (341) (342) (333) (210) (48) (30) (210) (124)
Total net earned premiums 18,531 18,677 18,780 18,622 17,095 4,132 3,523 (14.7) 17,095 14,901 (12.8)
Net investment income 3,220 3,442 3,578 3,638 3,818 910 896 (1.5) 3,818 3,656 (4.2)
Net investment gains (losses) (1)
(151) (430) (135) (270) 468 243 (521) 468 363
Other income (1)
67 69 84 157 173 37 50 173 220
Total revenues 21,667 21,758 22,307 22,147 21,554 5,322 3,948 (25.8) 21,554 19,140 (11.2)
Benefits and Claims:
Benefits and claims, net
Incurred claims -direct 8,853 9,121 9,279 9,364 8,949 2,199 1,826 8,949 8,271
Incurred claims -assumed (ceded) (446) (421) (372) (296) (147) (24) (18) (147) (108)
Increase in FPB (2)-direct
3,628 3,167 2,952 2,707 1,819 370 312 1,819 888
Increase in FPB (2)-assumed (ceded)
146 133 83 21 3 2 (3) 3 51
Total net benefits and claims, excluding
reserve remeasurement 		N/A N/A N/A N/A 10,623 2,547 2,117 10,623 9,102
Reserve remeasurement gain (loss) N/A N/A N/A N/A (147) (17) (63) (147) (215)
Total net benefits and claims 12,181 12,000 11,942 11,796 10,476 2,529 2,054 (18.8) 10,476 8,887 (15.2)
Acquisition and operating expenses:
Amortization of DAC (3)
1,132 1,245 1,282 1,214 835 208 194 835 792
Insurance commissions 1,316 1,320 1,321 1,316 1,256 304 271 1,256 1,117
Insurance expenses 2,780 2,988 3,089 3,420 3,541 958 836 3,541 3,249
Interest expense 240 222 228 242 238 57 55 238 226
Other expenses - - - - - - - - -
Total acquisition and operating expenses 5,468 5,775 5,920 6,192 5,870 1,527 1,356 (11.2) 5,870 5,384 (8.3)
Total benefits and claims 17,649 17,775 17,862 17,988 16,346 4,056 3,410 (15.9) 16,346 14,271 (12.7)
Pretax earnings 4,018 3,983 4,445 4,159 5,208 1,266 538 5,208 4,869
Income tax expense (benefit) (4)
(586) 1,063 1,141 (619) 977 201 342 977 451
Net earnings $ 4,604 $ 2,920 $ 3,304 $ 4,778 $ 4,231 $ 1,065 $ 196 (81.6) $ 4,231 $ 4,418 4.4
(1) Foreign currency gains and losses for all periods have been reclassified from Other income to Net investment gains and losses for consistency with current period presentation.
(2) Future policy benefits
(3) Deferred acquisition costs
(4) Primarily reflects release of $452 in deferred taxes in 2022
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Aflac Incorporated and Subsidiaries
Analysis of Net Earnings and Net Earnings Per Diluted Share
(In Millions, except for per-share data)
Other and Foreign
Net Other and Non- Foreign Net Net Non-Recurring Currency
Net Investment Recurring Currency Earnings Investment Items Impact
Period Earnings
Gains (Losses) (1)
Items (1)(3)(4)
Impact (2)
Per Share
Gains (Losses) (1)
Per Share (1)(3)(4)
Per Share (2)
2017 4,604 - 1,888 (41) 5.77 - 2.37 (.05)
2018 2,920 (230) (76) 28 3.77 (.30) (.09) .04
2019 3,304 (13) 3 15 4.43 (.02) .01 .02
2020 4,778 (181) 1,407 31 6.67 (.25) 1.96 .04
2021 4,231 365 (59) (42) 6.25 .54 (.09) (.06)
2022 4,418 803 1 (262) 6.93 1.26 - (.41)
2020 1 566 (322) 5 9 .78 (.44) .01 .01
2 805 (116) - 5 1.12 (.16) - .01
3 2,456 45 1,418 3 3.44 .06 1.99 -
4 951 212 (15) 14 1.35 .30 (.02) .02
2021 1 1,224 240 (5) 5 1.77 .35 (.01) .01
2 1,027 67 (42) (6) 1.51 .10 (.06) (.01)
3 915 (136) (7) (12) 1.36 (.20) (.01) (.02)
4 1,065 194 (5) (29) 1.61 .29 (.01) (.04)
2022 1 1,047 106 - (35) 1.60 .16 - (.05)
2 1,394 448 - (59) 2.17 .70 - (.09)
3 1,781 871 1 (97) 2.82 1.38 - (.15)
4 196 (621) - (70) .31 (1.00) - (.11)
(1) Items are presented net of tax.
(2) See non-U.S. GAAP financial measures for definition of adjusted earnings excluding current period foreign currency impact
(3) Foreign currency gains and losses and amortized hedge costs/income for all periods have been reclassified from Other income to Net investment gains and losses for consistency with current period presentation.
(4 )Tax benefit recognized in the third quarter of 2020 represents the release of valuation allowances on deferred tax benefits related to foreign tax credits.

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Aflac Incorporated and Subsidiaries
Consolidated Balance Sheets
(In Millions, except per-share data)
December 31,
Assets: 2017 2018 2019 2020 2021 2022
Investments and cash:
Securities available for sale:
Fixed maturity securities available for sale, at fair value $ 78,804 $ 78,429 $ 86,950 $ 101,286 $ 94,206 $ 71,936
Fixed maturity securities available for sale - consolidated variable interest entities, at fair value 5,509 4,466 4,312 4,596 4,490 3,805
Fixed maturity securities held to maturity, at amortized cost, net of allowance for credit losses 31,430 30,318 30,085 24,464 22,000 19,056
Equity securities, at fair value 1,023 987 802 1,283 1,603 1,091
Commercial mortgage and other loans, net of allowance for credit losses 3,002 6,919 9,569 10,554 11,786 13,496
Other investments 400 787 1,477 2,429 3,842 4,070
Cash and cash equivalents 3,491 4,337 4,896 5,141 5,051 3,943
Total investments and cash 123,659 126,243 138,091 149,753 142,978 117,397
Receivables, net of allowance for credit losses (1)
820 844 816 778 672 647
Accrued investment income 769 773 772 780 737 745
Deferred policy acquisition costs 9,505 9,875 10,128 10,441 9,848 9,239
Property and equipment, net 434 443 581 601 538 530
Other assets, net of allowance for credit losses (1) (2)
2,030 2,228 2,380 2,733 3,377 3,180
Total assets $ 137,217 $ 140,406 $ 152,768 $ 165,086 $ 158,150 $ 131,738
Liabilities and Shareholders' Equity:
Liabilities:
Total policy liabilities $ 99,147 $ 103,188 $ 106,554 $ 114,391 $ 126,331 $ 96,910
Notes payable 5,289 5,778 6,569 7,899 7,956 7,442
Income taxes, primarily deferred 4,745 4,020 5,370 4,661 30 698
Other liabilities 3,438 3,958 5,316 4,576 6,802 6,548
Total liabilities 112,619 116,944 123,809 131,527 141,119 111,598
Shareholders' equity:
Common stock 135 135 135 135 135 135
Additional paid-in capital 2,052 2,177 2,313 2,410 2,529 2,641
Retained earnings 29,895 31,788 34,291 37,984 40,963 44,367
Accumulated other comprehensive income (loss):
Unrealized foreign currency translation gains (losses) (1,750) (1,847) (1,623) (1,109) (1,985) (3,564)
Unrealized gains (losses) on fixed maturity securities 5,964 4,234 8,548 10,361 9,602 (702)
Unrealized gains (losses) on derivatives (23) (24) (33) (34) (30) (27)
Effect on change in discount rate assumption(s) N/A N/A N/A N/A (15,832) (2,100)
Pension liability adjustment (163) (212) (277) (284) (166) (36)
Treasury stock (11,512) (12,789) (14,395) (15,904) (18,185) (20,574)
Total shareholders' equity 24,598 23,462 28,959 33,559 17,031 20,140
Total liabilities & shareholders' equity $ 137,217 $ 140,406 $ 152,768 $ 165,086 $ 158,150 $ 131,738
(1) Certain reclassifications have been made to prior-year amounts to conform to current-year reporting classifications. These reclassifications had no impact on net earnings or total shareholders' equity
(2) Includes goodwill of $265 million in 2022, $268 in 2021, $269 in 2020, $140 million in 2019, $67 million in 2018 and $67 million in 2017
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Aflac Incorporated and Subsidiaries
Quarterly Financial Results
(Dollars In Millions, except per-share data)
Total
Net Net Benefits Acquisitions Total Net EPS
Adj. EPS (1)
Earned Inv. Total & & Pretax Net Adjusted
Period Premiums Income Revenues Claims, net Adj. Exp. Earn. Earn.
Earn. (1)
Basic Dil. Basic Dil.
2017 18,531 3,220 21,667 12,181 5,468 4,018 4,604 2,716 5.81 5.77 3.43 3.40
2018 18,677 3,442 21,758 12,000 5,775 3,983 2,920 3,226 3.79 3.77 4.20 4.16
2019 18,780 3,578 22,307 11,942 5,920 4,445 3,304 3,314 4.45 4.43 4.46 4.44
2020 18,622 3,638 22,147 11,796 6,192 4,159 4,778 3,552 6.69 6.67 4.98 4.96
2021 17,095 3,818 21,554 10,476 5,870 5,208 4,231 3,925 6.28 6.25 5.83 5.80
2022 14,901 3,656 19,140 8,887 5,384 4,869 4,418 3,614 6.96 6.93 5.69 5.67
2020 1 4,681 904 5,162 2,939 1,503 720 566 882 0.78 0.78 1.22 1.21
2 4,664 870 5,407 2,897 1,440 1,070 805 921 1.12 1.12 1.28 1.28
3 4,623 896 5,665 2,985 1,527 1,153 2,456 994 3.45 3.44 1.40 1.39
4 4,653 968 5,913 2,974 1,723 1,216 951 755 1.36 1.35 1.08 1.07
2021 1 4,434 925 5,710 2,771 1,420 1,519 1,224 989 1.78 1.77 1.44 1.43
2 4,301 993 5,424 2,672 1,474 1,277 1,027 1,002 1.51 1.51 1.48 1.47
3 4,229 991 5,098 2,503 1,450 1,146 915 1,058 1.37 1.36 1.58 1.57
4 4,132 910 5,322 2,529 1,527 1,266 1,065 875 1.62 1.61 1.33 1.32
2022 1 4,079 903 5,173 2,483 1,396 1,295 1,047 942 1.61 1.60 1.45 1.44
2 3,764 937 5,315 2,274 1,334 1,708 1,394 945 2.18 2.17 1.47 1.47
3 3,535 920 4,704 2,076 1,299 1,329 1,781 910 2.83 2.82 1.45 1.44
4 3,523 896 3,948 2,054 1,356 538 196 817 0.32 0.31 1.32 1.31

(1) See non-U.S. GAAP financial measures for definition of adjusted earnings.
7

Aflac Incorporated and Subsidiaries
Quarterly Book Value Per Share
(Dollars In Millions, except per-share data)
Adjusted BV
Adjusted BV Per Share Incl
Equity AOCI Adjusted BV Per Share Incl Foreign Currency
BV Per BV Per Adjusted BV Per Share Foreign Currency Translation G/(L)
Period Share Share
Per Share (1)
% Change
Translation G/(L)(1)
% Change
2017 31.50 5.16 26.34 19.7% 24.10 23.3%
2018 31.06 2.85 28.22 7.1% 25.77 6.9%
2019 39.84 9.10 30.74 8.9% 28.51 10.6%
2020 48.46 12.90 35.56 15.7% 33.96 19.1%
2021 26.12 (12.90) 39.01 9.7% 35.97 5.9%
2022 32.73 (10.45) 43.18 10.7% 37.39 3.9%
2020 1 36.75 5.83 30.92 7.0% 28.77 8.9%
2 41.21 9.45 31.75 7.5% 29.70 7.7%
3 46.16 11.25 34.91 15.7% 33.08 17.4%
4 48.46 12.90 35.56 15.7% 33.96 19.1%
2021 1 22.98 (13.60) 36.59 18.3% 34.15 18.7%
2 24.39 (13.18) 37.57 18.3% 35.12 18.2%
3 25.19 (13.20) 38.39 10.0% 35.77 8.1%
4 26.12 (12.90) 39.01 9.7% 35.97 5.9%
2022 1 27.21 (13.09) 40.30 10.1% 36.53 7.0%
2 30.82 (11.00) 41.82 11.3% 36.75 4.6%
3 31.97 (12.03) 44.00 14.6% 36.99 3.4%
4 32.73 (10.45) 43.18 10.7% 37.39 3.9%

(1) See non-U.S. GAAP financial measures for definition of adjusted book value and adjusted book value including unrealized foreign currency translation gains and losses.
8

Aflac Incorporated and Subsidiaries
Return on Equity
Year Ended December 31,
2017 2018 2019 2020
2021(4)
2022
U.S. GAAP ROE (1) - Net earnings
20.4 % 12.2 % 12.6 % 15.3 % 26.7 % 23.8 %
Impact of excluding unrealized foreign currency translation gains (losses) (2.0) (1.0) (1.0) (0.9) (1.7) (2.5)
Impact of excluding unrealized gains (losses) on securities and derivatives 5.8 3.0 3.6 6.2 10.7 4.1
Impact of excluding effect on change in discount rate assumptions N/A N/A N/A N/A (18.5) (8.2)
Impact of excluding pension liability adjustment (0.2) (0.1) (0.1) (0.2) (0.2) (0.1)
Impact of excluding AOCI 3.6 1.8 2.5 5.1 (9.7) (6.8)
U.S. GAAP ROE - less AOCI 24.0 13.9 15.1 20.3 17.0 17.0
Differences between adjusted earnings and net earnings (2)
(9.8) 1.5 0.0 (5.2) (1.2) (3.1)
Adjusted ROE - reported (3)
14.2 15.4 15.2 15.1 15.8 13.9
(1)
U.S. GAAP ROE is calculated by dividing net earnings (annualized) by average shareholders' equity.
(2)
See separate reconciliation of net income to adjusted earnings.
(3)
Impact of foreign currency is calculated by restating all foreign currency components of the income statement to the weighted average foreign currency exchange rate for the comparable prior year period.
(4)
Return on equity calculations for 2021 use beginning retained earnings and accumulated other comprehensive income adjusted for the adoption of LDTI.
9

Aflac Incorporated and Subsidiaries
Adjusted Earnings Per Share Excluding Current Period Foreign Currency Impact (1)
(Diluted Basis)
Change
QTD YTD Excluding Excluding
Foreign Foreign Foreign Foreign
Adjusted Currency Currency Currency Currency
Period
EPS(1)
Growth
Impact(1)
Impact(1)
Impact(1)
Impact
2017 $ 3.40 4.6 % N/A (.05) $ 3.45 6.2 %
2018 $ 4.16 22.4 % N/A .04 $ 4.13 21.5 %
2019 $ 4.44 6.7 % N/A .02 $ 4.42 6.3 %
2020 $ 4.96 11.7 % N/A .04 $ 4.92 10.8 %
2021 $ 5.80 16.9 % N/A (.06) $ 5.86 18.1 %
2022 $ 5.67 (2.2) % N/A (.41) $ 6.08 4.8 %
2020 1 $ 1.21 8.0 % .01 .01 $ 1.20 7.1 %
2 1.28 13.3 .01 .02 1.27 12.4
3 1.39 19.8 - .02 1.39 19.8
4 1.07 3.9 .02 .04 1.05 1.9
$ 4.96 11.7 % $ 4.92 10.8 %
2021 1 $ 1.43 18.2 % .01 .01 $ 1.42 17.4 %
2 1.47 14.8 (.01) - 1.48 15.6
3 1.57 12.9 (.02) (.02) 1.59 14.4
4 1.32 23.4 (.04) (.06) 1.36 27.1
$ 5.80 16.9 % $ 5.86 18.1 %
2022 1 $ 1.44 .7 % (.05) (.05) $ 1.50 4.9 %
2 1.47 - (.09) (.15) 1.56 6.1
3 1.44 (8.3) (.15) (.30) 1.59 1.3
4 1.31 (.8) (.11) (.41) 1.43 8.3
$ 5.67 (2.2) % $ 6.08 4.8 %
(1) See non-U.S.GAAP financial measures for definition of adjusted earnings and adjusted earnings excluding current period foreign currency impact
10

Aflac Incorporated and Subsidiaries
Composition of Invested Assets
(In Millions)
December 31,
2017 2018 2019 2020 2021 2022
Fixed Maturity Securities(1)
$ 106,562 $ 107,174 $ 109,456 $ 116,056 $ 107,369 $ 94,525
Commercial mortgage and other loans, net of allowance for credit losses (1)
Transitional Real Estate (floating rate) 1,235 4,378 5,450 5,231 5,246 6,455
Middle Market Loans (floating rate) 859 1,478 2,412 3,635 4,601 5,028
Commercial Mortgage Loans 908 1,063 1,707 1,688 1,874 2,013
Total Commercial mortgage and other loans, net of allowance for credit losses(1)
3,002 6,919 9,569 10,554 11,721 13,496
Equity Securities, at FV through net earnings 846 987 802 1,283 1,603 1,091
Alternatives(2)
113 370 551 919 1,703 2,107
Total Portfolio $ 110,523 $ 115,450 $ 120,378 $ 128,812 $ 122,396 $ 111,219
Unrealized Gains (Losses) on Invested Assets
(In Millions)
December 31,
2017 2018 2019 2020 2021 2022
Fixed Maturity Securities
Available For Sale - Gross Gains $ 9,985 $ 7,733 $ 12,266 $ 14,771 $ 13,566 $ 4,800
Available For Sale - Gross Losses (804) (1,694) (375) (481) (239) (4,528)
Total Available For Sale 9,181 6,039 11,891 14,290 13,327 272
Held to Maturity - Gross Gains 6,651 6,470 7,519 5,935 4,869 2,154
Held to Maturity - Gross Losses (9) (66) (10) - - -
Total Held to Maturity $ 6,642 $ 6,404 $ 7,509 $ 5,935 $ 4,869 $ 2,154
Credit Ratings on Fixed Maturities
(At Amortized Cost)
December 31,
Credit Rating 2017 2018 2019 2020 2021 2022
AAA 1.0 % 1.0 % 1.1 % 1.0 % 1.0 % 1.6 %
AA 3.9 3.9 4.3 4.5 5.1 5.2
A 65.8 67.9 68.6 69.3 68.9 68.0
BBB 24.0 23.2 23.1 21.9 22.5 23.0
BB or Lower 5.3 4.0 2.9 3.3 2.5 2.2
100.0 % 100.0 % 100.0 % 100.0 % 100.0 % 100.0 %
(1) Presented at amortized cost, net of reserves beginning in 2020

(2) Presented at carrying value; includes asset classes such as private equity and real estate managed by Global Investments; excludes Corporate driven activity
11

Aflac Incorporated and Subsidiaries
Supplemental Investment Data by Segment
3 Months Ended
December 31, December 31,
2017 2018 2019 2020 2021 2022 2021 2022
Aflac Japan:
Invested assets (in millions)(1)
¥ 11,017,560 ¥ 11,442,444 ¥ 11,784,586 ¥ 11,936,087 ¥ 12,405,531 ¥ 12,617,181 ¥ 12,405,531 ¥ 12,617,181
Return on average invested assets(2)
2.31 % 2.33 % 2.33 % 2.38 % 2.72 % 2.78 % 2.83 % 2.70 %
Portfolio book yield at end of period(3)
2.56 % 2.61 % 2.64 % 2.59 % 2.60 % 3.06 % 2.60 % 3.06 %
Total purchases for period (in millions)(3)
¥ 1,078,586 ¥ 1,298,376 ¥ 1,003,885 ¥ 714,124 ¥ 952,038 ¥ 716,964 ¥ 262,311 ¥ 82,065
New money yield(3)(4)
1.98 % 3.06 % 3.83 % 3.75 % 3.50 % 4.48 % 3.82 % 6.81 %
Aflac U.S.:
Invested assets (in millions)(1)
$ 13,764 $ 13,798 $ 14,036 $ 14,848 $ 15,841 $ 16,772 $ 15,841 $ 16,772
Return on average invested assets(2)
5.07 % 5.16 % 5.70 % 4.90 % 4.87 % 4.72 % 4.98 % 4.65 %
Portfolio book yield at end of period(3)
5.52 % 5.55 % 5.40 % 5.18 % 4.94 % 5.39 % 4.94 % 5.39 %
Total purchases for period (in millions)(3)
$ 1,434 $ 2,155 $ 1,835 $ 1,050 $ 2,130 $ 1,701 $ 778 $ 307
New money yield(3)(4)
4.49 % 4.55 % 4.51 % 3.04 % 3.41 % 5.16 % 3.10 % 6.30 %
Hedge Costs/Income Metrics (5)(6)
3 Months Ended
December 31, December 31,
2017 2018 2019 2020 2021 2022 2021 2022
Aflac Japan:
FX hedged notional at end of period (in billions)(7)
$ 9.3 $ 9.9 $ 8.8 $ 6.0 $ 6.4 $ 4.1 $ 6.4 $ 4.1
Weighted average remaining tenor (in months)(8)
27.7 21.4 8.5 13.0 2.6 0.7 2.6 0.7
Amortized hedge costs for period (in millions) $ (228) $ (236) $ (257) $ (206) $ (76) $ (112) $ (21) $ (28)
Corporate and Other (Parent Company):
FX hedged notional at end of period (in billions)(7)
$ - $ 2.5 $ 4.9 $ 5.0 $ 5.0 $ 5.0 $ 5.0 $ 5.0
Weighted average remaining tenor (in months)(8)
- 16.1 13.7 12.1 11.5 10.8 11.5 10.8
Amortized hedge income (costs) for period (in millions) $ - $ 36 $ 89 $ 97 $ 57 $ 68 $ 12 $ 25
(1) Invested assets, including cash and short term investments, are stated at amortized cost; except for equities, which are at fair value.
(2) Net of investment expenses and amortized hedge costs, year-to-date number reflected on a quarterly average basis
(3) Includes fixed maturity securities, commercial mortgage and other loans, equity securities, and excludes alternative investments in limited partnerships, and any impacts from hedging
activities
(4) Reported on a gross yield basis; excludes investment expenses, external management fees, and amortized hedge costs
(5) See non-U.S. GAAP financial measures for definition of amortized hedge costs/income. Further, the metrics in this table are split to show the hedging of the market value of a portion of the USD investments in Japan Segment's "USD Program" in the "Japan Segment Portfolio Allocation by Currency" table on page 13 of this supplement as well as the corporate hedging activities at Aflac Inc.
(6) Aflac Japan and the Parent Company utilize foreign currency forwards and options to hedge foreign currency exchange rate risk. The hedge cost/income on the table above reflects our FX forward protection of the hedged USD portfolio, and hedge costs on one sided options used as caps, and on tail-risk put options. The table does not include the notional amount and weighted average remaining tenor for these options. At December 31, 2022, Aflac Japan caps and put options notional amount was $13.5 billion with a weighted average remaining tenor of 6.4 months. At December 31, 2022, the Parent Company caps notional amount was $2.6 billion with a weighted average remaining tenor of 9.0 months.
(7) Notional is reported net of any offsetting positions within Aflac Japan or the Parent Company, respectively.
(8) Tenor based on period reporting date to settlement date
12

Aflac Incorporated and Subsidiaries
Japan Segment Portfolio Allocation by Currency (1)
(Dollars In Millions, U.S. GAAP Basis)
December 31, 2021 December 31, 2022
Amortized
Cost (2)
Fair
Value
Amortized
Cost (2)
Fair
Value
JGB $ 50,186 $ 57,862 $ 42,618 $ 44,178
Other 23,661 27,684 20,930 21,277
Total yen denominated 73,847 85,546 63,548 65,455
USD Program 28,913 31,946 27,212 27,885
Other 2,236 3,328 2,209 2,795
US dollar denominated 31,149 35,274 29,421 30,680
Total $ 104,996 $ 120,820 $ 92,969 $ 96,135
Distribution of Consolidated Fixed Maturities by Sector
December 31, 2022
(In millions)
Amortized Cost (2)
% of
Total
Government and agencies $ 43,854 46.4 %
Municipalities 2,590 2.7
Mortgage- and asset-backed securities 2,167 2.3
Public utilities 7,450 7.9
Electric 6,036 6.4
Natural Gas 249 .3
Other 565 .6
Utility/Energy 600 .6
Sovereign and supranational 1,238 1.3
Banks/financial institutions 9,340 9.9
Banking 5,633 6.0
Insurance 1,703 1.8
Other 2,004 2.1
Other corporate 27,886 29.5
Basic Industry 2,452 2.6
Capital Goods 3,394 3.6
Communications 2,866 3.0
Consumer Cyclical 2,206 2.3
Consumer Non-Cyclical 6,238 6.7
Energy 2,664 2.8
Other 1,371 1.5
Technology 3,534 3.7
Transportation 3,161 3.3
Total fixed maturity securities $ 94,525 100.0 %
(1) The entire U.S. segment investment portfolio is U.S. dollar denominated.
(2) Net of reserves
13

Aflac Incorporated and Subsidiaries
Long-Term Debt Data
Adjusted Leverage Ratios
(In Millions)
December 31,
2017 2018 2019 2020 2021 2022
Notes payable $ 5,289 $ 5,778 $ 6,569 $ 7,899 $ 7,956 $ 7,442
50% of subordinated debentures and perpetual bonds (263) (268) (407.5) (432) (389) (337)
Pre-funding of debt maturities - - (348) - - -
Adjusted debt (1)
5,026 5,510 5,814 7,467 7,568 7,105
Total Shareholders' Equity 24,598 23,462 28,959 33,559 17,031 20,140
Accumulated other comprehensive (income) loss:
Unrealized foreign currency translation (gains) losses 1,750 1,847 1,623 1,109 1,985 3,564
Unrealized (gains) losses on fixed maturity securities (5,964) (4,234) (8,548) (10,361) (9,602) 702
Unrealized (gains) losses on derivatives 23 24 33 34 30 27
Effect on change in discount rate assumptions N/A N/A N/A N/A 15,832 2,100
Pension liability adjustment 163 212 277 284 166 36
Adjusted book value (1)
20,570 21,311 22,344 24,625 25,442 26,569
Adjusted capitalization ex-AOCI (1) (2)
$ 25,859 $ 27,089 $ 28,565 $ 32,524 $ 33,398 $ 34,011
Adjusted debt to adjusted capitalization ex-AOCI 19.4 % 20.3 % 20.4 % 23.0 % 22.7 % 20.9 %
Adjusted capitalization (1) (3)
$ 23,946 $ 25,030 $ 26,665 $ 31,131 $ 31,247 $ 30,411
Adjusted debt to adjusted capitalization 21.0 % 22.0 % 21.8 % 24.0 % 24.2 % 23.4 %
Debt Maturities(4)
(In Millions)
December 31, 2022
≤ 1 year 1 > 5 years 5 > 10 years 10 > 20 years 20 years + Total
Senior Notes $ - $ 1,334 $ 2,997 $ 1,153 $ 1,191 $ 6,675
Subordinated debt - - - - 678 678
Total $ - $ 1,334 $ 2,997 $ 1,153 $ 1,869 $ 7,353

(1) See non-U.S. GAAP financial measures for definition of: adjusted debt; adjusted book value; adjusted debt, including 50% of subordinated debentures and perpetual bonds; and adjusted book value, including unrealized foreign currency translation gains and losses and pension liability adjustment
(2) Adjusted capitalization ex-AOCI is the sum of adjusted debt, including 50% of subordinated debentures and perpetual bonds, plus adjusted book value
(3)Adjusted capitalization is sum of adjusted debt, including 50% of subordinated debentures and perpetual bonds, plus adjusted book value, including unrealized foreign currency translation gains and losses and pension liability adjustment
(4) Debt maturity amounts do not include discounts, premiums, deferred charges, or capital lease obligations.
14

Aflac Incorporated and Subsidiaries

Insurer Financial Strength Ratings
AM Best Moody's S&P JCR R&I
U.S. Operating Companies
Aflac of Columbus A+ Aa3 A+ AA AA
Aflac of New York A+ _ A+ _ _
Continental American Insurance Company A+ _ _ _ _
Japan Operating Company
Aflac Life Insurance Japan Ltd. A+ Aa3 A+ AA AA
Bermuda Operating Company
Aflac Re Bermuda Ltd. _ _ _ AA _
Issuer Credit Ratings
AM Best Moody's S&P JCR R&I
Aflac Incorporated
Long-term Senior Debt a A3 A- A+ A+
Junior Subordinated Debt a- Baa1 BBB _ A-
Aflac of Columbus
Long-term Senior Debt aa _ A+ AA _
Aflac Life Insurance Japan, Ltd.
Long-term Senior Debt aa _ A+ AA _
Subordinated Bonds _ _ _ AA- _
The outlook for all ratings assigned by A.M. Best, S&P, Moody's, JCR and R&I is stable.

15

Aflac U.S.
Statements of Pretax Adjusted Earnings
(Before Management Fee)
(In Millions)
Years Ended December 31, 3 Months Ended December 31, 12 Months Ended December 31,
% %
2017 2018 2019 2020 2021 2021 2022 Change 2021 2022 Change
Revenues:
Net earned premiums
Gross premiums $ 5,563 $ 5,711 $ 5,818 $ 5,762 $ 5,540 $ 1,371 $ 1,366 $ 5,540 $ 5,467
Assumed (ceded) - (3) (11) (4) 73 19 22 73 103
Total net earned premiums 5,563 5,708 5,808 5,758 5,613 1,391 1,388 (.2) 5,613 5,570 (.8)
Adjusted net investment income 721 727 720 705 754 197 192 (2.5) 754 755 .1
Other income excl. realized foreign
exchange gains (losses) 5 8 22 102 121 31 41 121 161
Total adjusted revenues 6,289 6,443 6,550 6,565 6,489 1,619 1,621 .1 6,489 6,486 -
Benefits and claims:
Benefits and claims, net
Incurred claims -direct 2,526 2,560 2,611 2,498 2,183 598 526 2,183 2,245
Incurred claims -assumed (ceded) (4) (4) (5) (1) 89 33 19 89 104
Increase in FPB -direct 363 331 268 271 463 42 111 463 326
Increase in FPB -assumed (ceded) - (1) (2) (3) (11) (2) (2) (11) 4
Total benefits and claims, net, excluding
reserve remeasurement 		N/A N/A N/A N/A 2,724 672 655 2,724 2,679
Reserve remeasurement gain (loss) N/A N/A N/A N/A (85) (11) (41) (85) (124)
Total benefits and claims, net 2,885 2,887 2,871 2,765 2,639 660 614 (7.0) 2,639 2,555 (3.2)
Adjusted expenses:
Amortization of deferred policy
acquisition costs 502 534 573 570 442 110 115 4.5 442 455 2.9
Insurance commissions 580 585 590 576 550 138 142 2.9 550 553 .5
Insurance and other expenses 1,077 1,152 1,244 1,386 1,502 428 411 (4.0) 1,502 1,564 4.1
Total adjusted expenses 2,159 2,271 2,407 2,532 2,494 676 667 2,494 2,573
Total benefits and adjusted expenses 5,044 5,158 5,279 5,297 5,132 1,337 1,282 (4.1) 5,132 5,127 (.1)
Pretax adjusted earnings $ 1,245 $ 1,285 $ 1,272 $ 1,268 $ 1,356 $ 282 $ 339 20.2 $ 1,356 $ 1,359 .2
16

Aflac U.S.
Balance Sheets
(In Millions)
December 31,
2017 2018 2019 2020 2021 2022
Assets:
Investments and cash $ 15,488 $ 14,518 $ 16,141 $ 17,949 $ 18,324 $ 15,987
Receivables, net of allowance for credit losses (1)
498 561 650 667 574 584
Accrued investment income 184 178 174 172 169 184
Deferred policy acquisition costs 3,355 3,491 3,544 3,450 3,366 3,463
Other assets (1)
368 352 436 626 758 784
Total assets $ 19,893 $ 19,100 $ 20,945 $ 22,864 $ 23,191 $ 21,002
Liabilities and Shareholders' Equity:
Future policy benefits $ 8,806 $ 9,137 $ 9,404 $ 9,674 $ 14,212 $ 10,870
Policy and contract claims 1,700 1,727 1,779 2,010 151 200
Other policy liabilities 119 116 111 126 119 117
Deferred income taxes 982 (397) 51 235 (328) (243)
Other liabilities 1,625 1,577 1,803 2,016 2,010 2,080
Shareholders' equity 6,661 6,939 7,796 8,803 7,027 7,978
Total liabilities & shareholders' equity $ 19,893 $ 19,100 $ 20,945 $ 22,864 $ 23,191 $ 21,002
(1) Certain reclassifications have been made to prior-year amounts to conform to current-year reporting classifications. These reclassifications had no impact on
net earnings or total shareholders' equity.

17

Aflac U.S.
Quarterly Statements of Pretax Adjusted Earnings and Percentage Changes
(Restated to conform to current classifications)
(Dollars In Millions)
Net Total Benefits Total Pretax
Earned % Adjusted % Adjusted % & % % Adjusted % Adjusted %
Period Premiums Change NII Change Revenues Change Claims, Net Change Amort. Change Expenses Change Earn. Change
2017 5,563 2.0 721 2.6 6,289 2.0 2,885 .6 502 1.0 2,159 3.3 1,245 3.1
2018 5,708 2.6 727 .8 6,443 2.4 2,887 .1 534 6.4 2,271 5.2 1,285 3.2
2019 5,808 1.8 720 (1.0) 6,550 1.7 2,871 (.6) 573 7.3 2,407 6.0 1,272 (1.0)
2020 5,758 (.9) 705 (2.1) 6,565 .2 2,765 (3.7) 570 (.5) 2,532 5.2 1,268 (.3)
2021 5,614 (2.5) 754 7.0 6,489 (1.2) 2,639 (4.6) 442 (22.5) 2,494 (1.5) 1,356 6.9
2022 5,570 (.8) 755 .1 6,486 - 2,555 (3.2) 455 2.9 2,573 3.2 1,359 .2
2020 1 1,483 1.5 177 - 1,687 2.9 713 (1.1) 160 .6 648 8.7 326 .9
2 1,458 (.1) 172 (4.4) 1,656 .9 646 (11.7) 134 2.3 584 2.3 426 26.0
3 1,407 (2.6) 175 (4.4) 1,606 (1.5) 679 (4.4) 141 1.4 597 2.1 329 (1.8)
4 1,410 (2.3) 182 1.1 1,617 (1.3) 727 2.5 135 (6.3) 703 7.5 187 (32.0)
2021 1 1,422 (4.1) 176 (.6) 1,628 (3.5) 696 (2.4) 111 (30.6) 600 (7.4) 331 1.5
2 1,408 (3.4) 189 9.9 1,627 (1.8) 690 6.8 111 (17.2) 599 2.6 338 (20.7)
3 1,393 (1.0) 191 9.1 1,616 .6 592 (12.8) 110 (22.0) 618 3.5 405 23.1
4 1,391 (1.3) 197 8.2 1,619 .1 660 (9.2) 110 (18.5) 676 (3.8) 282 50.8
2022 1 1,413 (.6) 184 4.5 1,639 .7 666 (4.3) 114 2.7 640 6.7 333 .6
2 1,394 (1.0) 193 2.1 1,628 .1 658 (4.6) 113 1.8 627 4.7 343 1.5
3 1,375 (1.3) 185 (3.1) 1,599 (1.1) 616 4.1 114 3.6 638 3.2 345 (14.8)
4 1,388 (0.2) 192 (2.5) 1,621 0.1 614 (7.0) 115 4.5 667 (1.3) 339 20.2

18

Aflac U.S.
Operating Ratios
(Before Management Fee)
12-Mo. Rolling Total Adjusted Combined Pretax
Premium Tot. Ben./ Amort./ Expenses/ Ratio/ Profit
Period
Persistency (1)
Premium Premium Total Adj. Rev. Total Adj. Rev. Margin
2017 78.4 51.9 9.0 34.3 80.2 19.8
2018 78.7 50.6 9.4 35.2 80.1 19.9
2019 77.7 49.4 9.9 36.7 80.6 19.4
2020 79.3 48.0 9.9 38.6 80.7 19.3
2021 79.6 47.0 7.9 38.4 79.1 20.9
2022 77.0 45.9 8.2 39.7 79.0 21.0
2020 1 77.6 48.1 10.8 38.4 80.7 19.3
2 78.3 44.3 9.2 35.3 74.3 25.7
3 78.8 48.3 10.0 37.2 79.5 20.5
4 79.3 51.6 9.6 43.5 88.4 11.6
2021 1 80.0 48.9 7.8 36.9 79.6 20.3
2 80.1 49.0 7.9 36.8 79.2 20.8
3 79.9 42.5 7.9 38.2 74.9 25.1
4 79.6 47.4 7.9 41.8 82.6 17.4
2022 1 78.5 47.1 8.1 39.0 79.7 20.3
2 77.9 47.2 8.1 38.5 78.9 21.1
3 77.6 44.8 8.3 39.9 78.4 21.6
4 77.0 44.2 8.3 41.1 79.1 20.9
(1) Excludes Network Dental & Vision, Consumer Markets, and Group Premier Life, Absence Management, and Disability Solutions products

19

Aflac U.S.
Aflac U.S. Sales Results
(Dollars In Millions)
Annl. New Annl.
Prem. % Prem. %
Period In Force Change Sales Change
2017 6,052 2.6 1,552 4.7
2018 6,231 3.0 1,601 3.2
2019 6,301 1.1 1,580 (1.3)
2020 6,099 (3.2) 1,093 (30.8)
2021 6,003 (1.6) 1,278 16.9
2022 5,967 (.6) 1,483 16.1
2020 1 6,224 .7 323 (5.2)
2 6,079 (1.7) 161 (55.6)
3 5,969 (2.9) 221 (35.7)
4 6,099 (3.2) 388 (27.2)
2021 1 6,027 (3.2) 251 (22.1)
2 5,988 (1.5) 264 64.1
3 5,929 (.7) 299 35.0
4 6,003 (1.6) 464 19.6
2022 1 5,942 (1.4) 299 19.0
2 5,926 (1.0) 305 15.6
3 5,889 (.7) 334 11.8
4 5,967 (.6) 545 17.4

20

Aflac U.S.
Aflac U.S. Product Mix
(New Annualized Premium Sales, Dollars in Millions)
% of % of % of Critical % of Hospital % of Dental/ % of
Period Disability Total Life Total Accident Total
Care(1)
Total Indemnity Total Vision Total Total
2017 356 22.9 78 5.0 456 29.4 354 22.8 229 14.8 79 5.1 1,552
2018 363 22.7 88 5.5 468 29.2 354 22.1 253 15.8 75 4.7 1,601
2019 355 22.5 97 6.1 450 28.5 346 21.9 263 16.6 69 4.4 1,580
2020 243 22.3 80 7.3 285 26.1 242 22.2 197 18.0 45 4.1 1,093
2021 296 23.1 114 9.0 321 25.1 273 21.3 209 16.4 65 5.1 1,278
2022 378 25.5 156 10.5 338 22.8 299 20.1 226 15.3 85 5.8 1,483
2020 1 73 22.6 25 7.7 88 27.3 68 21.1 55 16.9 14 4.4 323
2 38 23.9 14 8.6 41 25.7 33 20.6 28 17.1 7 4.1 161
3 54 24.2 16 7.1 58 26.4 45 20.5 37 16.8 11 5.0 221
4 79 20.4 26 6.6 98 25.2 95 24.5 77 20.0 13 3.3 388
2021 1 58 23.1 17 6.7 66 26.3 57 22.6 42 16.7 11 4.6 251
2 60 22.7 19 7.3 72 27.2 56 21.0 43 16.4 14 5.4 264
3 79 26.2 27 9.2 76 25.5 57 19.1 45 15.1 15 4.9 299
4 100 21.4 51 11.0 107 23.1 104 22.3 79 17.0 24 5.2 464
2022 1 70 23.3 24 7.9 75 25.3 63 21.2 50 16.7 17 5.6 299
2 77 25.2 26 8.3 75 24.6 63 20.6 45 14.9 19 6.4 305
3 97 28.9 33 10.0 76 22.6 60 18.1 47 14.1 21 6.3 334
4 135 24.9 73 13.4 112 20.5 112 20.6 84 15.4 28 5.2 545
Aflac U.S. Sales Force Data
Average Productivity
Weekly (Production/
Recruited Agents Producer Avg. Weekly
Period Career Broker Total Equivalents Producers)
2017 16,817 3,073 19,890 8,808 176,183
2018 15,774 3,380 19,154 8,531 187,720
2019 15,227 3,603 18,830 8,184 193,120
2020 11,826 1,861 13,687 5,918 184,706
2021 10,641 5,445 16,086 5,993 213,235
2022 9,550 1,500 11,050 6,186 239,786
2020 1 3,436 494 3,930 7,411 43,517
2 2,190 381 2,571 4,252 37,814
3 3,136 486 3,622 5,485 40,367
4 3,064 500 3,564 6,523 59,533
2021 1 2,890 1,063 3,953 5,643 44,530
2 2,754 1,355 4,109 5,925 44,540
3 2,502 1,615 4,117 5,926 50,448
4 2,495 1,412 3,907 6,477 71,723
2022 1 1,987 455 2,442 6,061 49,322
2 2,937 391 3,328 6,067 50,264
3 2,358 339 2,697 6,010 55,599
4 2,268 315 2,583 6,607 82,538
(1) Includes cancer, critical illness, and hospital intensive care products
21

Aflac Japan
Statements of Pretax Adjusted Earnings
(Before Management Fee)
(In Millions)
Years Ended December 31, 3 Months Ended December 31, 12 Months Ended December 31,
% %
2017 2018 2019 2020 2021 2021 2022 Change 2021 2022 Change
Revenues:
Net earned premiums
Gross premiums ¥ 1,493,299 ¥ 1,468,894 ¥ 1,450,586 ¥ 1,409,134 ¥ 1,290,527 ¥ 319,367 ¥ 309,305 ¥ 1,290,527 ¥ 1,246,657
Assumed (ceded) (62,873) (60,198) (57,974) (55,926) (50,864) (12,555) (11,990) (50,864) (48,578)
Total net earned premiums 1,430,426 1,408,697 1,392,612 1,353,208 1,239,663 306,812 297,315 (3.1) 1,239,663 1,198,079 (3.4)
Net investment income (1)
Yen denominated 145,114 141,575 142,473 138,397 138,513 34,321 34,272 (.1) 138,513 149,449 7.9
US$ denominated 131,168 149,801 157,717 167,541 202,905 55,667 55,386 (.5) 202,905 215,171 6.0
Net investment income 276,282 291,377 300,191 305,938 341,419 89,988 89,658 (.4) 341,419 364,621 6.8
Amortized hedge costs on foreign investments (2)
(24,528) (25,858) (28,938) (22,816) (8,391) (2,297) (3,478) 51.4 (8,391) (13,155) 56.8
Adjusted net investment income 251,754 265,519 271,253 283,122 333,028 87,690 86,180 (1.7) 333,028 351,466 5.5
Other income excl. realized foreign
currency gains (losses) 4,640 4,636 4,869 4,497 4,512 1,071 1,023 4,512 4,442
Total adjusted revenues 1,686,820 1,678,852 1,668,734 1,640,827 1,577,203 395,573 384,517 (2.8) 1,577,203 1,553,988 (1.5)
Benefits and claims:
Benefits and claims, net
Incurred claims -direct 710,251 724,556 727,491 734,471 743,247 182,324 184,223 743,247 788,572
Incurred claims -assumed (ceded) (55,691) (51,892) (45,657) (37,806) (31,798) (8,112) (7,091) (31,798) (36,141)
Increase in FPB -direct 366,376 313,343 292,444 260,200 149,084 37,389 28,524 149,084 73,592
Increase in FPB -assumed (ceded) (1,557) (2,000) (6,497) (11,377) (11,425) (2,559) (3,343) (11,425) (5,618)
Total benefits and claims, net, excluding reserve
remeasurement 		N/A N/A N/A N/A 849,108 209,041 202,312 849,108 820,405
Reserve remeasurement gain (loss) N/A N/A N/A N/A (6,879) (898) (3,062) (6,879) (13,337)
Total benefits and claims, net 1,019,378 984,007 967,782 945,487 842,229 208,143 199,250 (2.8) 842,229 807,068 (2.6)
Adjusted expenses:
Amortization of deferred policy
acquisition costs 70,670 78,459 77,286 68,818 43,131 11,134 11,201 .6 43,131 44,123 2.3
Insurance commissions 82,495 81,045 79,661 79,036 77,449 18,796 18,155 (3.4) 77,449 73,482 (5.1)
Insurance and other expenses 170,636 181,139 189,203 199,606 202,586 55,527 53,126 (4.3) 202,586 198,493 (2.0)
Total adjusted expenses 323,801 340,643 346,150 347,460 323,166 85,457 82,482 323,166 316,097
Total benefits and adjusted expenses 1,343,180 1,324,651 1,313,932 1,292,947 1,165,395 293,601 281,732 (4.0) 1,165,395 1,123,165 (3.6)
Pretax adjusted earnings ¥ 343,640 ¥ 354,201 ¥ 354,802 ¥ 347,881 ¥ 411,808 ¥ 101,973 ¥ 102,785 .8 ¥ 411,808 ¥ 430,823 4.6
(1) Includes the net interest cash flows from derivatives associated with certain investment strategies
(2) See non-U.S. GAAP financial measures for the definition of amortized hedge costs/income
22

Aflac Japan
Statements of Pretax Adjusted Earnings
(Before Management Fee)
(In Millions)
Years Ended December 31, 3 Months Ended December 31, 12 Months Ended December 31,
% %
2017 2018 2019 2020 2021 2021 2022 Change 2021 2022 Change
Revenues:
Net earned premiums
Gross premiums $ 13,312 $ 13,307 $ 13,304 $ 13,193 $ 11,765 $ 2,809 $ 2,187 $ 11,765 $ 9,558
Assumed (ceded) (561) (546) (532) (524) (463) (110) (85) (463) (372)
Total net earned premiums 12,752 12,762 12,772 12,670 11,301 2,698 2,102 (22.1) 11,301 9,186 (18.7)
Net investment income (1)
Yen denominated 1,294 1,283 1,307 1,296 1,262 302 242 (19.9) 1,262 1,140 (9.7)
US$ denominated 1,169 1,356 1,446 1,569 1,845 490 390 (20.4) 1,845 1,641 (11.1)
Net investment income 2,463 2,639 2,753 2,865 3,107 792 632 (20.2) 3,107 2,782 (10.5)
Amortized hedge costs on foreign investments (2)
(228) (236) (257) (206) (76) (21) (28) 33.3 (76) (112) 47.4
Adjusted net investment income 2,235 2,403 2,496 2,659 3,031 771 604 (21.7) 3,031 2,669 (11.9)
Other income excl. realized foreign
currency gains (losses) 41 41 45 42 41 10 7 41 35
Total adjusted revenues 15,028 15,206 15,313 15,371 14,373 3,478 2,713 (22.0) 14,373 11,889 (17.3)
Benefits and claims
Benefits and claims, net
Incurred claims -direct 6,332 6,566 6,671 6,875 6,776 1,603 1,303 6,776 6,038
Incurred claims -assumed (ceded) (497) (471) (419) (354) (290) (71) (50) (290) (275)
Increase in FPB -direct 3,265 2,836 2,684 2,437 1,356 327 201 1,356 562
Increase in FPB -assumed (ceded) (14) (18) (60) (107) (104) (22) (23) (104) (43)
Total benefits and claims, net, excluding reserve
remeasurement 		N/A N/A N/A N/A 7,738 1,837 1,431 7,738 6,282
Reserve remeasurement gain (loss) N/A N/A N/A N/A (62) (6) (22) (62) (91)
Total benefits and claims, net 9,087 8,913 8,877 8,851 7,675 1,830 1,408 (21.8) 7,675 6,191 (18.1)
Adjusted expenses:
Amortization of deferred policy
acquisition costs 630 710 709 644 393 98 55 79 (19.4) 393 338 (14.0)
Insurance commissions 736 735 731 740 706 165 128 (22.4) 706 563 (20.3)
Insurance and other expenses 1,521 1,640 1,734 1,873 1,843 488 377 (22.7) 1,843 1,517 (17.7)
Total adjusted expenses 2,887 3,085 3,174 3,257 2,942 751 584 2,942 2,417
Total benefits and adjusted expenses 11,974 11,998 12,051 12,108 10,618 2,582 1,993 (22.8) 10,618 8,609 (18.9)
Pretax adjusted earnings $ 3,054 $ 3,208 $ 3,261 $ 3,263 $ 3,755 $ 897 $ 720 (19.7) $ 3,755 $ 3,281 (12.6)
(1) Includes the net interest cash flows from derivatives associated with certain investment strategies
(2) See non-U.S. GAAP financial measures for definition of amortized hedge costs/income
23

Aflac Japan

Balance Sheets
(In Millions)
December 31,
2017 2018 2019 2020 2021 2022
Assets:
Investments and cash ¥ 11,854,224 ¥ 12,031,549 ¥ 12,847,994 ¥ 13,080,154 ¥ 13,645,902 ¥ 12,777,746
Receivables, net of allowance for credit losses 37,692 37,083 28,219 20,782 22,439 23,138
Accrued investment income 64,439 66,350 65,485 62,722 67,493 76,489
Deferred policy acquisition costs 695,025 708,638 721,341 723,579 745,510 766,506
Other assets 276,050 292,335 308,411 320,351 386,832 387,065
Total assets ¥ 12,927,431 ¥ 13,135,956 ¥ 13,971,450 ¥ 14,207,588 ¥ 14,868,176 ¥ 14,030,944
Liabilities and Shareholders' Equity:
Future policy benefits ¥ 8,323,560 ¥ 8,637,152 ¥ 8,924,868 ¥ 9,175,501 ¥ 11,755,704 ¥ 10,315,140
Policy and contract claims 304,248 317,043 315,477 328,778 - 28
Unearned premiums 659,977 552,419 453,133 361,010 284,045 227,732
Other policyholders' funds 784,117 793,148 801,588 808,429 877,690 880,989
Income taxes (prim. deferred) 431,949 510,528 618,901 478,969 36,166 114,688
Other liabilities 150,143 194,949 357,135 253,219 502,633 575,554
Shareholders' equity 2,273,438 2,130,718 2,500,349 2,801,682 1,411,938 1,916,812
Total liabilities & shareholders' equity ¥ 12,927,431 ¥ 13,135,956 ¥ 13,971,450 ¥ 14,207,588 ¥ 14,868,176 ¥ 14,030,944

24

Aflac Japan

Balance Sheets
(In Millions)
December 31,
2017 2018 2019 2020 2021 2022
Assets:
Investments and cash $ 104,905 $ 108,392 $ 117,269 $ 126,378 $ 118,639 $ 96,290
Receivables, net of allowance for credit losses 334 334 258 201 195 174
Accrued investment income 570 598 598 606 587 576
Deferred policy acquisition costs 6,150 6,384 6,584 6,991 6,482 5,776
Other assets 2,443 2,634 2,815 3,095 3,363 2,917
Total assets $ 114,402 $ 118,342 $ 127,523 $ 137,271 $ 129,266 $ 105,734
Liabilities and Shareholders' Equity:
Future policy benefits $ 73,661 $ 77,812 $ 81,461 $ 88,652 $ 102,206 $ 77,733
Policy and contract claims 2,692 2,856 2,879 3,177 - -
Unearned premiums 5,840 4,977 4,136 3,488 2,470 1,716
Other policyholders' funds 6,939 7,145 7,316 7,811 7,631 6,639
Income taxes (prim. deferred) 3,823 4,601 5,650 4,630 314 781
Other liabilities 1,328 1,756 3,260 2,447 4,369 4,337
Shareholders' equity 20,119 19,194 22,820 27,068 12,276 14,528
Total liabilities & shareholders' equity $ 114,402 $ 118,342 $ 127,523 $ 137,271 $ 129,266 $ 105,734

25

Aflac Japan
Quarterly Statements of Pretax Adjusted Earnings and Percentage Changes
(Yen In Millions)
Net Total Benefits Total Pretax
Earned % Adjusted % Adjusted % & % % Adjusted % Adjusted %
Period Premiums Change NII Change Revenues Change Claims, Net Change Amort. Change Expense Change Earn. Change
2017 1,430,426 (2.7) 251,754 (2.0) 1,686,820 (2.5) 1,019,378 (4.5) 70,670 1.2 323,801 .5 343,640 .6
2018 1,408,697 (1.5) 265,519 5.5 1,678,852 (.5) 984,007 (3.5) 78,460 11.0 340,642 5.2 354,201 3.1
2019 1,392,612 (1.1) 271,253 2.2 1,668,734 (.6) 967,782 (1.6) 77,286 (1.5) 346,150 1.6 354,802 .2
2020 1,353,208 (2.8) 283,122 4.4 1,640,827 (1.7) 945,487 (2.3) 68,818 (11.0) 347,459 .4 347,881 (2.0)
2021 1,239,663 (8.4) 333,028 17.6 1,577,203 (3.9) 842,229 (10.9) 43,131 (37.3) 323,166 (7.0) 411,808 18.4
2022 1,198,079 (3.4) 351,466 5.5 1,553,988 (1.5) 807,068 (4.2) 44,123 2.3 316,097 (2.2) 430,823 4.6
2020 1 343,054 (2.1) 69,812 4.0 414,045 (1.1) 238,148 (1.7) 18,842 (5.9) 82,939 (2.0) 92,958 1.2
2 339,891 (2.5) 68,036 2.0 409,126 (1.8) 237,328 (1.2) 16,697 (14.3) 81,648 (4.1) 90,150 (1.2)
3 336,488 (3.3) 70,219 (.2) 407,874 (2.8) 240,025 (1.4) 16,001 (16.5) 88,661 2.5 79,188 (11.6)
4 333,775 (3.5) 75,054 11.9 409,782 (1.0) 229,986 (4.9) 17,277 (7.2) 94,211 4.9 85,585 4.2
2021 1 313,769 (8.5) 74,621 6.9 389,679 (5.9) 215,445 (9.5) 10,534 (44.1) 77,715 (6.3) 96,519 3.8
2 311,733 (8.3) 86,681 27.4 399,488 (2.4) 212,617 (10.4) 10,700 (35.9) 79,234 (3.0) 107,637 19.4
3 307,350 (8.7) 84,035 19.7 392,463 (3.8) 206,023 (14.2) 10,762 (32.7) 80,760 (8.9) 105,680 33.5
4 306,812 (8.1) 87,690 16.8 395,573 (3.5) 208,143 (9.5) 11,134 (35.6) 85,457 (9.3) 101,973 19.1
2022 1 304,884 (2.8) 79,042 5.9 385,000 (1.2) 206,890 (4.0) 10,886 3.3 77,095 (.8) 101,015 4.7
2 302,213 (3.1) 94,004 8.4 397,358 (.5) 204,807 (3.7) 10,964 2.5 79,022 (.3) 113,529 5.5
3 293,667 (4.5) 92,241 9.8 387,113 (1.4) 196,121 (4.8) 11,073 2.9 77,498 (4.0) 113,494 7.4
4 297,315 (3.1) 86,180 (1.7) 384,517 (2.8) 199,250 (4.3) 11,201 .6 82,482 (3.5) 102,785 .8

26

Aflac Japan
Operating Ratios
(Before Management Fee)
12-Mo. Rolling Tot. Ben./ Tot. Adj. Combined Pretax
Premium Tot. Ben./ Premiums Amort./ Expenses/ Ratio/ Profit
Period
Persistency(1)
Premium (3rd sector) Premium Total Adj. Rev. Total Adj. Rev. Margin
2017 94.9 71.3 60.5 4.9 19.2 79.6 20.4
2018 94.1 69.9 59.2 5.6 20.3 78.9 21.1
2019 94.4 69.5 59.3 5.5 20.7 78.7 21.3
2020 95.1 69.9 59.7 5.1 21.2 78.8 21.2
2021 94.3 67.9 58.7 3.5 20.5 73.9 26.1
2022 94.1 67.4 58.5 3.7 20.3 72.3 27.7
2020 1 94.5 69.4 59.0 5.5 20.0 77.5 22.5
2 94.8 69.8 59.6 4.9 20.0 78.0 22.0
3 95.0 71.3 61.7 4.8 21.7 80.6 19.4
4 95.1 68.9 58.6 5.2 23.0 79.1 20.9
2021 1 95.0 68.7 59.6 3.4 19.9 75.2 24.8
2 94.7 68.2 59.0 3.4 19.8 73.1 26.9
3 94.5 67.0 57.8 3.5 20.6 73.1 26.9
4 94.3 67.8 58.4 3.6 21.6 74.2 25.8
2022 1 94.3 67.9 58.5 3.6 20.0 73.8 26.2
2 94.3 67.8 58.5 3.6 19.9 71.4 28.6
3 94.3 66.8 59.4 3.8 20.0 70.7 29.3
4 94.1 67.0 57.7 3.8 21.5 73.3 26.7

(1) Premium persistency presented on a 12-month rolling basis for all periods, rather than year to date

27

Aflac Japan

Aflac Japan Sales Results
(Yen In Millions, unless otherwise noted)
Annl. Third Sector
Prem. New Annl. Total
In Force % Prem. % New Annual. %
Period (Billions) Change Sales Change Premium Sales Change
2017 1,552.2 (3.4) 87,417 4.1 94,851 (16.6)
2018 1,527.1 (1.6) 88,813 1.6 95,894 1.1
2019 1,489.3 (2.5) 72,836 (18.0) 79,697 (16.9)
2020 1,426.5 (4.2) 45,110 (38.1) 50,852 (36.2)
2021 1,360.6 (4.7) 48,977 8.6 54,764 7.7
2022 1,301.0 (4.4) 47,998 (2.0) 54,765 -
2020 1 1,474.3 (2.8) 12,486 (26.7) 14,021 (25.4)
2 1,457.7 (3.4) 8,656 (60.9) 9,827 (58.8)
3 1,441.9 (.5) 11,167 (33.7) 12,601 (32.0)
4 1,426.5 (4.2) 12,801 (23.8) 14,404 (22.2)
2021 1 1,410.0 (4.4) 12,492 - 13,998 (.2)
2 1,391.7 (4.5) 12,125 40.1 13,602 38.4
3 1,375.0 (4.6) 11,275 1.0 12,605 -
4 1,360.6 (4.7) 13,084 2.2 14,559 1.1
2022 1 1,345.6 (4.6) 10,679 (19.0) 11,925 (14.8)
2 1,332.0 (4.3) 11,372 (6.2) 12,731 (6.4)
3 1,315.7 (4.3) 12,639 12.1 13,884 10.2
4 1,301.0 (4.4) 13,308 1.7 16,224 11.4

28

Aflac Japan
Aflac Japan Product Mix
(New Annualized Premium Sales, Yen In Billions)
% of % of Income % of Child % of % of Ordinary % of % of
Period Cancer Total Medical Total Support Total Endowment Total WAYS Total Life Other Total Other Total Total
2017 53.0 55.8 32.4 34.1 2.2 2.3 .5 .5 .6 .6 5.6 6.0 .6 .7 94.9
2018 63.1 65.8 23.9 25.0 1.7 1.8 .3 .3 .5 .5 5.9 6.1 .5 .5 95.9
2019 47.2 59.2 24.6 31.0 1.0 1.2 .2 .2 .4 .5 5.9 7.4 .4 .5 79.7
2020 28.8 56.6 15.9 31.2 .5 1.0 .2 .4 .4 .7 4.8 9.5 .3 .6 50.9
2021 27.0 49.2 20.4 37.2 .3 .5 .2 .3 .4 .8 4.9 9.0 1.6 3.0 54.8
2022 30.9 56.5 14.6 26.6 .7 1.3 .2 .3 1.9 3.5 4.5 8.1 2.0 3.7 54.8
2020 1 7.8 55.5 4.5 32.4 .2 1.2 - .3 .1 .6 1.3 9.3 .1 .7 14.0
2 5.4 54.7 3.2 32.5 .1 .9 - .4 .1 .8 1.0 10.0 - .7 9.8
3 7.0 55.7 4.0 32.0 .1 .9 .1 .4 .1 .8 1.2 9.6 .1 .6 12.6
4 8.6 59.7 4.1 28.4 .1 .8 .1 .3 .1 .8 1.3 9.3 .1 .7 14.4
2021 1 6.4 45.4 6.1 43.3 .1 .6 - .3 .1 .7 1.2 8.9 .1 .8 14.0
2 6.7 48.9 5.4 39.7 .1 .6 - .4 .1 .8 1.2 8.9 .1 .7 13.6
3 6.3 49.9 4.6 36.3 .1 .5 - .3 .1 .7 1.1 9.0 .4 3.3 12.6
4 7.7 52.7 4.4 29.9 .1 .4 - .3 .1 .8 1.2 8.6 1.1 7.3 14.6
2022 1 6.4 53.0 3.8 31.4 .1 1.1 .1 .3 .1 .7 1.1 9.0 .5 4.5 11.9
2 6.8 53.4 3.8 29.9 .3 2.2 - .2 .1 .8 1.2 9.2 .6 4.3 12.7
3 8.4 60.1 3.7 26.4 .2 1.2 - .2 .1 .6 1.0 7.7 .5 3.8 13.9
4 9.5 58.2 3.4 20.8 .1 .8 .1 .4 1.6 10.1 1.1 7.2 .4 2.5 16.2

29


Aflac Japan

Aflac Japan Sales Force Data
Number of Agencies by Type Sales Contribution by Agency Type
Period Individual/ Independent Corporate Affiliated
Corporate 		Bank Total Individual/ Independent Corporate Affiliated
Corporate 		Bank
Licensed Sales
Associates(1)
Recruited
Agencies
2017 9,492 1,455 374 11,321 42.8 52.0 5.2 109,197 174
2018 8,453 1,392 371 10,216 40.1 55.3 4.6 109,482 85
2019 7,683 1,343 367 9,393 45.7 50.0 4.3 109,265 77
2020 7,231 1,312 361 8,904 52.3 42.6 5.1 111,886 48
2021 6,779 1,283 360 8,422 51.1 43.7 5.2 111,854 62
2022 6,159 1,239 359 7,757 49.5 46.5 4.0 110,259 38
2020 1 7,537 1,332 364 9,233 52.8 42.7 4.5 110,129 17
2 7,426 1,329 364 9,119 53.8 42.8 3.4 109,850 5
3 7,312 1,317 364 8,993 51.7 41.4 6.9 111,016 19
4 7,231 1,312 361 8,904 51.3 43.4 5.3 111,886 7
2021 1 7,142 1,308 360 8,810 54.3 40.6 5.1 112,252 13
2 7,055 1,305 359 8,719 51.1 44.0 4.9 113,259 22
3 6,898 1,299 360 8,557 49.9 43.8 6.3 112,100 13
4 6,779 1,283 360 8,422 49.2 46.3 4.5 111,854 14
2022 1 6,447 1,266 360 8,073 48.9 46.5 4.6 109,873 6
2 6,335 1,255 359 7,949 48.4 48.1 3.5 110,096 12
3 6,260 1,246 359 7,865 49.3 46.2 4.5 110,400 12
4 6,159 1,239 359 7,757 51.2 45.4 3.4 110,259 8

(1) Excludes Dai-ichi Life, banks, Japan Post Group and Daido Life
30


Aflac Japan
Yen/Dollar Exchange Rates
Yearly
Closing Qtr Cum %
Period
Rate(1)
Avg Avg Change
2017 113.00 N/A 112.16 (3.1)
2018 111.00 N/A 110.39 1.6
2019 109.56 N/A 109.07 1.2
2020 103.50 N/A 106.86 2.1
2021 115.02 N/A 109.79 (2.7)
2022 132.70 N/A 130.17 (15.7)
2020 1 108.83 108.84 108.84 1.3
2 107.74 107.65 108.25 1.7
3 105.80 106.23 107.63 1.4
4 103.50 104.57 106.86 2.1
2021 1 110.71 105.88 105.88 2.8
2 110.58 109.48 107.79 .4
3 111.92 110.11 108.58 (.9)
4 115.02 113.70 109.79 (2.7)
2022 1 122.39 116.18 116.18 (8.9)
2 136.68 129.39 122.79 (12.2)
3 144.81 137.08 126.65 (14.3)
4 132.70 141.87 130.17 (15.7)
(1) Closing rate is based on the latest available and published MUFG Bank Ltd. TTM mid-day exchange rate.
31

Corporate and Other

Statements of Pretax Adjusted Earnings
(Before Management Fee)
(In Millions)
Years Ended December 31, 3 Months Ended December 31, 12 Months Ended December 31,
% %
2017 2018 2019 2020 2021 2021 2022 Change 2021 2022 Change
Revenues:
Total net earned premiums $ 216 $ 208 $ 200 $ 194 $ 180 $ 42 $ 33 (21.4) $ 180 $ 145 (19.4)
Net investment income (1)
35 77 88 80 (73) (88) 19 121.6 (73) 30 141.1
Amortized hedge income (2)
- 36 89 97 57 11 25 127.3 57 68 19.3
Adjusted net investment income 35 113 177 177 (16) (77) 44 157.1 (16) 98 712.5
Other income 21 18 15 13 11 - 2 - 11 24 118.2
Total adjusted revenues 272 339 393 384 175 (35) 79 325.7 175 267 52.6
Benefits and expenses:
Total net benefits and claims 209 199 194 180 161 38 31 (18.4) 161 141 (12.4)
Interest expense 122 120 133 164 165 39 39 - 165 162 (1.8)
Other adjusted expenses 154 159 137 155 142 40 53 32.5 142 181 27.5
Total benefits and adjusted expenses 486 478 464 499 469 118 123 4.2 469 485 3.4
Pretax adjusted earnings $ (214) $ (139) $ (72) $ (115) $ (293) $ (152) $ (45) 70.4 $ (293) $ (218) 25.6
(1) The change in value of federal historic rehabilitation and solar investments in partnerships of $11 and $104 for the three-month periods and $91 and $138 for the twelve-month periods ended December 31, 2022, and 2021, respectively is included as a reduction to net investment income. Tax credits on these investments of $20 and $80 for the three-month period and $83 and $115 for the twelve-month periods ended December 31, 2022, and 2021, respectively, have been recorded as an income tax benefit in the consolidated statement of earnings.
(2) See non-U.S. GAAP financial measures for the definition of amortized hedge cost/income

32

Non-U.S. GAAP Financial Measures

This document includes references to the Company's financial performance measures which are not calculated in accordance with United States generally accepted accounting principles (U.S. GAAP) (non-U.S. GAAP). The financial measures exclude items that the Company believes may obscure the underlying fundamentals and trends in insurance operations because they tend to be driven by general economic conditions and events or related to infrequent activities not directly associated with insurance operations.

Due to the size of Aflac Japan, where the functional currency is the Japanese yen, fluctuations in the yen/dollar exchange rate can have a significant effect on reported results. In periods when the yen weakens, translating yen into dollars results in fewer dollars being reported. When the yen strengthens, translating yen into dollars results in more dollars being reported. Consequently, yen weakening has the effect of suppressing current period results in relation to the comparable prior period, while yen strengthening has the effect of magnifying current period results in relation to the comparable prior period. A significant portion of the Company's business is conducted in yen and never converted into dollars but translated into dollars for U.S. GAAP reporting purposes, which results in foreign currency impact to earnings, cash flows and book value on a U.S. GAAP basis. Management evaluates the Company's financial performance both including and excluding the impact of foreign currency translation to monitor, respectively, cumulative currency impacts and the currency-neutral operating performance over time. The average yen/dollar exchange rate is based on the published MUFG Bank, Ltd. telegraphic transfer middle rate (TTM).

The Company defines the non-U.S. GAAP financial measures included in this document as follows:

•
Adjusted book value is the U.S. GAAP book value (representing total shareholders' equity), less AOCI as recorded on the U.S. GAAP balance sheet. Adjusted book value per common share is adjusted book value at the period end divided by the ending outstanding common shares for the period presented. The Company considers adjusted book value and adjusted book value per common share important as they exclude AOCI, which fluctuates due to market movements that are outside management's control. The most comparable U.S. GAAP financial measures for adjusted book value and adjusted book value per common share are total book value and total book value per common share, respectively.
•
Adjusted book value including unrealized foreign currency translation gains and losses is adjusted book value plus unrealized foreign currency translation gains and losses. Adjusted book value including unrealized foreign currency translation gains and losses per common share is adjusted book value plus unrealized foreign currency translation gains and losses at the period end divided by the ending outstanding common shares for the period presented. The Company considers adjusted book value including unrealized foreign currency translation gains and losses, and its related per share financial measure, important as they exclude certain components of AOCI, which fluctuate due to market movements that are outside management's control; however, it includes the impact of foreign currency as a result of the significance of Aflac's Japan operation. The most comparable U.S. GAAP financial measures for adjusted book value including unrealized foreign currency translation gains and losses and adjusted book value including unrealized foreign currency translation gains and losses per common share are total book value and total book value per common share, respectively.
•
Adjusted book value including unrealized foreign currency translation gains and losses and pension liability adjustment is adjusted book value plus unrealized foreign currency translation gains and losses and pension liability adjustment. The Company considers adjusted book value including unrealized foreign currency translation gains and losses and pension liability adjustment important as it excludes certain components of AOCI, which fluctuates due to market movements that are outside management's control; however, it includes the impact of foreign currency as a result of the significance of Aflac's Japan operation. The most comparable U.S. GAAP financial measure for adjusted book value including unrealized foreign currency translation gains and losses and pension liability adjustment is total book value.

•
Adjusted debt is the sum of notes payable, as recorded on the U.S. GAAP balance sheet, excluding 50% of subordinated debentures and perpetual bonds and all pre-funding of debt maturities. The Company considers adjusted debt important as it measures outstanding debt consistently with expectations of the Company's rating agency stakeholders. The most comparable U.S. GAAP financial measure for adjusted debt is notes payable.
•
Adjusted debt including 50% of subordinated debentures and perpetual bonds is the sum of notes payable, as recorded on the U.S. GAAP balance sheet, excluding pre-funding of debt maturities. The Company considers adjusted debt including 50% of subordinated debentures and perpetual bonds important as it measures outstanding debt consistently with expectations of the Company's rating agency stakeholders. The most comparable U.S. GAAP financial measure for adjusted debt including 50% of subordinated debentures and perpetual bonds is notes payable.
33

•
Adjusted earnings are adjusted revenues less benefits and adjusted expenses. Adjusted earnings per share (basic or diluted) are the adjusted earnings for the period divided by the weighted average outstanding shares (basic or diluted) for the period presented. The adjustments to both revenues and expenses account for certain items that cannot be predicted or that are outside management's control. Adjusted revenues are U.S. GAAP total revenues excluding adjusted net investment gains and losses. Adjusted expenses are U.S. GAAP total acquisition and operating expenses including the impact of interest cash flows from derivatives associated with notes payable but excluding any nonrecurring or other items not associated with the normal course of the Company's insurance operations and that do not reflect the Company's underlying business performance. Management uses adjusted earnings and adjusted earnings per diluted share to evaluate the financial performance of the Company's insurance operations on a consolidated basis and believes that a presentation of these financial measures is vitally important to an understanding of the underlying profitability drivers and trends of the Company's insurance business. The most comparable U.S. GAAP financial measures for adjusted earnings and adjusted earnings per share (basic or diluted) are net earnings and net earnings per share, respectively.
•
Adjusted earnings excluding current period foreign currency impact are computed using the average foreign currency exchange rate for the comparable prior-year period, which eliminates fluctuations driven solely by foreign currency exchange rate changes. Adjusted earnings per diluted share excluding current period foreign currency impact is adjusted earnings excluding current period foreign currency impact divided by the weighted average outstanding diluted shares for the period presented. The Company considers adjusted earnings excluding current period foreign currency impact and adjusted earnings per diluted share excluding current period foreign currency impact important because a significant portion of the Company's business is conducted in Japan and foreign exchange rates are outside management's control; therefore, the Company believes it is important to understand the impact of translating foreign currency (primarily Japanese yen) into U.S. dollars. The most comparable U.S. GAAP financial measures for adjusted earnings excluding current period foreign currency impact and adjusted earnings per diluted share excluding current period foreign currency impact are net earnings and net earnings per share, respectively.
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Amortized hedge costs/income represent costs/income incurred or recognized as a result of using foreign currency derivatives to hedge certain foreign exchange risks in the Company's Japan segment or in Corporate and other. These amortized hedge costs/ income are estimated at the inception of the derivatives based on the specific terms of each contract and are recognized on a straight-line basis over the term of the hedge. The Company believes that amortized hedge costs/income measure the periodic currency risk management costs/income related to hedging certain foreign currency exchange risks and are an important component of net investment income. There is no comparable U.S. GAAP financial measure for amortized hedge costs/ income.
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Adjusted net investment gains and losses are net investment gains and losses adjusted for i) amortized hedge cost/income related to foreign currency exposure management strategies and certain derivative activity, ii) net interest cash flows from foreign currency and interest rate derivatives associated with certain investment strategies, which are both reclassified to net investment income, and iii) the impact of interest cash flows from derivatives associated with notes payable, which is reclassified to interest expense as a component of total adjusted expenses. The Company considers adjusted net investment gains and losses important as it represents the remainder amount that is considered outside management's control, while excluding the components that are within management's control and are accordingly reclassified to net investment income and interest expense. The most comparable U.S. GAAP financial measure for adjusted net investment gains and losses is net investment gains and losses.
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Adjusted net investment income is net investment income adjusted for i) amortized hedge cost/income related to foreign currency exposure management strategies and certain derivative activity, and ii) net interest cash flows from foreign currency and interest rate derivatives associated with certain investment strategies, which are reclassified from net investment gains and losses to net investment income. The Company considers adjusted net investment income important because it provides a more comprehensive understanding of the costs and income associated with the Company's investments and related hedging strategies. The most comparable U.S. GAAP financial measure for adjusted net investment income is net investment income.
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Adjusted return on equity is adjusted earnings divided by average shareholders' equity, excluding accumulated other comprehensive income (AOCI). Management uses adjusted return on equity to evaluate the financial performance of the Company's insurance operations on a consolidated basis and believes that a presentation of this financial measure is vitally important to an understanding of the underlying profitability drivers and trends of the Company's insurance business. The Company considers adjusted return on equity important as it excludes components of AOCI, which fluctuate due to market movements that are outside management's control. The most comparable U.S. GAAP financial measure for adjusted return on equity is return on average equity (ROE) as determined using net earnings and average total shareholders' equity.

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