The September 30, ~~2017,~~2018, and ~~2016,~~2017, consolidated financial statements included in this filing have been reviewed by KPMG LLP, an independent registered public accounting firm, in accordance with established professional standards and procedures for such a review.

The report of KPMG LLP commenting upon its review is included on the following page.

Aflac Incorporated (the Parent Company) and its subsidiaries (collectively, the Company) primarily sell supplemental health and life insurance in the United States and Japan. The Company's insurance business is marketed and administered through American Family Life Assurance Company of Columbus (Aflac)~~, which operates~~ in the United States (Aflac U.S.) and, ~~as a branch~~effective April 1, 2018, through Aflac Life Insurance Japan Ltd. in Japan (Aflac Japan). Prior to April 1, 2018, the Company's insurance business was marketed in Japan as a branch of Aflac. American Family Life Assurance Company of New York (Aflac New York) is a wholly owned subsidiary of Aflac. Most of Aflac's policies are individually underwritten and marketed through independent agents. Additionally, Aflac U.S. markets and administers group products through Continental American Insurance Company (CAIC), branded as Aflac Group Insurance. The Company's insurance operations in the United States and ~~its branch in~~ Japan service the two markets for the Company's insurance business. Aflac Japan's revenues, including realized gains and losses on its investment portfolio, accounted for 69% ~~and 74%~~ of the Company's total revenues in both the nine-month periods ended September 30, ~~2017~~2018 and ~~2016,~~2017, respectively. The percentage of the Company's total assets attributable to Aflac Japan was 84% at September 30, 2018, compared with 83% at ~~both September 30, 2017, and~~ December 31, ~~2016.~~2017.

The unaudited consolidated financial statements include the accounts of the Parent Company, its subsidiaries and those entities required to be consolidated under applicable accounting standards. All material intercompany accounts and transactions have been eliminated.

In the opinion of management, the accompanying unaudited consolidated financial statements of the Company contain all adjustments, consisting of normal recurring accruals, which are necessary to fairly present the consolidated balance sheets as of September 30, ~~2017,~~2018, and December 31, ~~2016,~~2017, the consolidated statements of earnings and comprehensive income (loss) for the three- and nine-month periods ended September 30, ~~2017~~2018 and ~~2016,~~2017, and the consolidated statements of shareholders' equity and cash flows for the nine-month periods ended September 30, ~~2017~~2018 and ~~2016.~~2017. Results of operations for interim periods are not necessarily indicative of results for the entire year. As a result, these financial statements should be read in conjunction with the financial statements and notes thereto included in the Company's annual report on Form 10-K for the year ended December 31, ~~2016 (2016~~2017 (2017 Annual Report).

~~Prior year foreign currency transaction gains and losses~~

Perpetual securities have been reclassified in prior periods from ~~Other income (loss)~~a separate line item to ~~Realized investment gains (losses) - Derivative and other gains (losses)~~fixed maturity securities to conform to ~~current-year~~current period reporting classifications. ~~These reclassifications~~This reclassification had no impact on net earnings or total ~~shareholders'~~shareholder’s equity. ~~This change in classification was made to reflect that the major source of the Company's foreign currency transaction gains and losses is directly or indirectly a result of its investment activity.~~

Recent accounting guidance not discussed above is not applicable, did not have, or is not expected to have a material impact to the Company's business.

For additional information on new accounting pronouncements and recent accounting guidance and their impact, if any, on the Company's financial position or results of operations, see Note 1 of the Notes to the Consolidated Financial Statements in the ~~2016~~2017 Annual Report.

The Company does not allocate corporate overhead expenses to business segments. Consistent with U.S. GAAP accounting guidance for segment reporting, the Company evaluates and manages its business segments using a financial performance measure called pretax ~~operating~~adjusted earnings. Adjusted earnings are adjusted revenues less benefits and adjusted expenses. The ~~Company's definition of operating earnings includes interest~~

The methods of determining the fair values of the Company's investments in ~~fixed-maturity securities, perpetual~~fixed maturity securities and equity securities are described in Note 5.

During the first nine months of 2018, the Company did not reclassify any investments from the held-to-maturity category to the available-for-sale category.

During the third quarter of 2017, the Company did not reclassify any investments from the held-to-maturity category to

Expected maturities may differ from contractual maturities because some issuers have the right to call or prepay obligations with or without call or prepayment penalties.

The Company's process for investing in credit-related investments begins with an independent approach to underwriting each issuer's fundamental credit quality. The Company evaluates independently those factors that it believes could influence an issuer's ability to make payments under the contractual terms of the Company's instruments. This includes a thorough analysis of a variety of items including the issuer's country of domicile (including political, legal, and financial considerations); the industry in which the issuer competes (with an analysis of industry structure, end-market dynamics, and regulation); company specific issues (such as management, assets, earnings, cash generation, and capital needs); and contractual provisions of the instrument (such as financial covenants and position in the capital structure). The Company further evaluates the investment considering broad business and portfolio management objectives, including asset/liability needs, portfolio diversification, and expected income.

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

Assuming no credit-related factors develop, unrealized gains and losses on fixed ~~maturities and perpetual~~maturity securities are expected to diminish as investments near maturity. Based on its credit analysis, the Company believes that the issuers of its fixed maturity ~~and perpetual security~~ investments in the sectors shown in the table above have the ability to service their obligations to the Company.

The table below reflects the composition of the carrying value for other investments as of the periods presented.

The Company classifies its transitional real estate loans (TREs), commercial mortgage loans (CMLs) and middle market loans (MMLs) as held-for-investment and includes them in the other investments line on the consolidated balance sheets. The Company carries them on the balance sheet at amortized cost less an estimated allowance for loan losses. The Company's allowance for loan losses is established using both general and specific allowances. The general allowance is used for loans grouped by similar risk characteristics where a loan-specific or market-specific risk has not been identified, but for which the Company estimates probable incurred losses. The specific allowance is used on an individual loan basis when it is probable that a loss has been incurred. As of September 30, ~~2017,~~2018, and December 31, ~~2016,~~2017, the Company's allowance for loan losses was $8$25 million and $3$11 million, respectively. As of September 30, ~~2017,~~2018, and December 31, ~~2016,~~2017, the Company had no loans that were past due in regards to principal and/or interest payments. Additionally, the Company held no loans that were on nonaccrual status or considered impaired as of September 30, ~~2017,~~2018, and December 31, ~~2016.~~2017. The Company had no troubled debt restructurings during the nine months ended September 30, ~~2017~~2018 and ~~2016.~~2017.

~~Commercial~~Transitional real estate loans are commercial mortgage loans ~~include transitional real estate (TRE) loans.~~that are typically relatively short-term floating rate instruments secured by a first lien on the property. These loans provide funding for properties undergoing a change in their physical characteristics and/or economic profile. As of September 30, ~~2017,~~2018, the Company had ~~$103~~$720 million in outstanding commitments to fund ~~commercial mortgage loans, inclusive of loans held in unit trust structures.~~transitional real estate loans. These commitments are contingent on the final underwriting and due diligence to be performed.

Middle market loans are generally considered to be below investment grade. The carrying value for middle market loans included an unfunded amount of ~~$133~~$155 million and ~~$91~~$109 million, as of September 30, ~~2017,~~2018, and December 31, ~~2016,~~2017, respectively, that is reflected in other liabilities on the consolidated balance sheets.

As of September 30, ~~2017,~~2018, the Company had commitments of approximately ~~$530~~$896 million to fund potential future loan originations related to this investment ~~program, inclusive of loans held in unit trust structures.~~program. These commitments are contingent upon the availability of middle market loans that meet the Company's underwriting criteria.

Other investments primarily includes investments in limited partnerships. As of September 30, ~~2017,~~2018, the Company had ~~$365 million~~$1.0 billion in outstanding commitments to fund alternative investments in limited partnerships.

As a condition of its involvement or investment in a VIE, the Company enters into certain protective rights and covenants that preclude changes in the structure of the VIE that would alter the creditworthiness of the Company's investment or its beneficial interest in the VIE.

The Company's ownership interest in VIEs is limited to holding the obligations issued by them. The Company has no direct or contingent obligations to fund the limited activities of these VIEs, nor does it have any direct or indirect financial guarantees related to the limited activities of these VIEs. The Company has not provided any assistance or any other type of financing support to any of the VIEs it invests in, nor does it have any intention to do so in the future. For those VIEs in which the Company holds debt obligations, the weighted-average lives of the Company's notes are very similar to the underlying collateral held by these VIEs where applicable.

The Company's risk of loss related to its interests in any of its VIEs is limited to the carrying value of the related investments held in the VIE.

The following table presents the cost or amortized cost, fair value and balance sheet caption in which the assets and liabilities of consolidated VIEs are reported.

The Company is substantively the only investor in the consolidated VIEs listed in the table above. As the sole investor in these VIEs, the Company has the power to direct the activities of a variable interest entity that most significantly impact the entity's economic performance and is therefore considered to be the primary beneficiary of the VIEs that it consolidates. The Company also participates in substantially all of the variability created by these VIEs. The activities of these VIEs are limited to holding invested assets and foreign currency ~~and/or credit default~~ swaps, ~~(CDS),~~ as appropriate,

The Company ~~invests through~~also utilizes unit trust structures in ~~yen-denominated public equity securities, U.S. dollar-denominated public equity securities, bank loans, commercial mortgage loans, infrastructure debt, middle market loans, and alternative investments~~its Aflac Japan segment to invest in ~~limited partnerships. The~~various asset classes. As the sole investor of these VIEs, the Company is ~~the only investor in these trusts and meets the requirements~~required to consolidate these trusts under U.S. GAAP. The yen-denominated and U.S. dollar-denominated equity securities, bank loans and certain infrastructure debt are classified as available for sale in the financial statements. The commercial mortgage loans, middle market loans and certain infrastructure debt that meets the criteria to be classified as a loan are classified as loans held for investment and reflected in other investments on the consolidated balance sheets at amortized cost. Limited partnership investments are recognized as equity method investments.

The Company holds alternative investments in limited partnerships that have been determined to be VIEs. These partnerships invest in private equity and structured investments. The Company’s maximum exposure to loss on these investments is limited to the amount of its investment. The Company is not the primary beneficiary of these VIEs and is therefore not required to consolidate them. The Company classifies these investments as Other investments in the consolidated balance sheets.

Certain investments in VIEs that the Company is not required to consolidate are investments that are in the form of debt obligations from the VIEs that are irrevocably and unconditionally guaranteed by their corporate parents or sponsors. These VIEs are the primary financing vehicles used by their corporate sponsors to raise financing in the capital markets. The variable interests created by these VIEs are principally or solely a result of the debt instruments issued by them. The Company does not have the power to direct the activities that most significantly impact the entity's economic performance, nor does it have the obligation to absorb losses of the entity or the right to receive benefits from the entity. As such, the Company is not the primary beneficiary of these VIEs and is therefore not required to consolidate them.

The Company did not have any repurchase agreements or repurchase-to-maturity transactions outstanding as of September 30, ~~2017,~~2018, and December 31, ~~2016,~~2017, respectively.

The Company's freestanding derivative financial instruments have historically consisted of: (1) foreign currency forwards and options used in hedging foreign exchange risk on U.S. dollar-denominated investments in Aflac Japan's portfolio; (2) foreign currency forwards and options used to ~~hedge foreign exchange risk from the Company's net investment in Aflac Japan and~~ economically hedge certain portions of forecasted cash flows denominated in yen and hedge the Company's long term exposure to a weakening yen; (3) swaps associated with the Company's notes payable, consisting of cross-currency interest rate swaps, also referred to as foreign currency swaps, associated with certain senior notes and its subordinated debentures; (4) foreign currency swaps and credit default swaps that are associated with investments in special-purpose entities, including VIEs where the Company is the primary beneficiary; and (5) ~~options on~~ interest rate swaps ~~(or interest rate swaptions) and futures~~ used to economically hedge interest rate ~~risk for~~fluctuations in certain ~~available-for-sale securities.~~variable-rate investments. The Company does not use derivative financial instruments for trading purposes, nor does it engage in leveraged derivative transactions. Some of the Company's derivatives are designated as cash flow hedges, fair value hedges or net investment hedges; however, other derivatives do not qualify for hedge accounting or the Company elects not to designate them as an accounting hedge. The Company utilizes a net investment hedge to mitigate foreign exchange exposure resulting from its net investment in Aflac Japan. In addition to designating derivatives as hedging instruments, the Company has designated the majority of the Parent Company's yen-denominated liabilities (notes payable and loans) as nonderivative hedging instruments for this net investment hedge.hedges.

Foreign currency forwards and options are executed for the Aflac Japan segment in order to hedge the currency risk on the carrying value of certain U.S. dollar-denominated investments. The average maturity of these forwards and options can change depending on factors such as market conditions and types of investments being held. In situations where the maturity of the forwards and options are shorter than the underlying investment being hedged, the Company may enter into new forwards and options near maturity of the existing derivative in order to continue hedging the underlying investment. In forward transactions, Aflac Japan agrees with another party to buy a fixed amount of yen and sell a corresponding amount of U.S. dollars at a specified future date. Aflac Japan also executes foreign currency option transactions in a collar strategy, where Aflac Japan agrees with another party to simultaneously purchase a fixed amount of U.S. dollar put options and sell U.S. dollar call options. The combination of these two actions results in no net premium being paid (i.e. a costless or zero-cost collar). The foreign currency forwards and options are used in fair value hedging relationships to mitigate the foreign exchange risk associated with U.S. dollar-denominated investments supporting yen-denominated liabilities.

The Company enters into foreign currency swaps pursuant to which it exchanges an initial principal amount in one currency for an initial principal amount of another currency, with an agreement to re-exchange the currencies at a future date at an agreed upon exchange rate. There may also be periodic exchanges of payments at specified intervals based on the agreed upon rates and notional amounts. Foreign currency swaps are used primarily in the consolidated VIEs in the Company's Aflac Japan portfolio to convert foreign-denominated cash flows to yen, the functional currency of Aflac Japan, in order to minimize cash flow fluctuations. The Company also uses foreign currency swaps to economically convert certain of its U.S. dollar-denominated senior note and subordinated debenture principal and interest obligations into yen-denominated obligations.

The Company's investment in Aflac Japan is affected by changes in the yen/dollar exchange rate. To mitigate this exposure, the Parent Company's yen-denominated liabilities (see Note 8) have been designated as non-derivative hedges and, prior to April 1, 2018, foreign currency forwards and options have been designated as derivative hedges of the foreign currency exposure of the Company's net investment in Aflac Japan.

The Company's net investment hedge was effective during the three- and nine-month periods ended September 30, 2018 and 2017, ~~and 2016,~~ respectively.

The following table summarizes the impact to realized investment gains (losses) and other comprehensive income (loss) from all derivatives and hedging instruments.

The Company reclassified an immaterial amount related to its cash flow hedges from accumulated other comprehensive income (loss) into earnings for the three- and nine-month periods ended September 30, ~~2017,~~2018 and ~~reclassified an immaterial amount and a $1 million gain for the three- and nine-month periods ended September 30, 2016, respectively.~~ 2017.

For the foreign currency and credit default swaps associated with the Company's VIE investments for which it is the primary beneficiary, the Company bears the risk of loss due to counterparty default even though it is not a direct counterparty to those contracts.

The Company is a direct counterparty to the foreign currency swaps that it has entered into in connection with certain of its senior notes and subordinated debentures; foreign currency forwards; and foreign currency ~~options; and interest rate swaptions,~~options, and therefore the Company is exposed to credit risk in the event of nonperformance by the counterparties in those contracts. The risk of counterparty default for the Company's foreign currency swaps, certain foreign currency forwards, and foreign currency options ~~and interest rate swaptions~~ is mitigated by collateral posting requirements that counterparties to those transactions must meet.

As of September 30, ~~2017,~~2018, there were 15 counterparties to the Company's derivative agreements, with ~~five~~three comprising ~~67%~~51% of the aggregate notional amount. The counterparties to these derivatives are financial institutions with the following credit ratings:

September 30, 2017 December 31, 2016
(In millions) Notional Amount
of Derivatives Asset Derivatives
Fair Value Liability Derivatives
Fair Value Notional Amount
of Derivatives Asset Derivatives
Fair Value Liability Derivatives
Fair Value
Counterparties' credit rating:
AA $ 5,553
$ 90
$ (189 ) $ 6,844
$ 247
$ (308 )
A 22,257
381
(718 ) 36,019
900
(1,621 )
BBB 440
8
(67 ) 1,064
60
(69 )
Total $ 28,250
$ 479
$ (974 ) $ 43,927
$ 1,207
$ (1,998 )

Collateral posted by the Company to third parties for derivative transactions can generally be repledged or resold by the counterparties. The aggregate fair value of all derivative instruments with credit-risk-related contingent features that were in a net liability position by counterparty was approximately ~~$623~~$301 million and ~~$1.2 billion~~$264 million as of September 30, ~~2017,~~2018, and December 31, ~~2016,~~2017, respectively. If the credit-risk-related contingent features underlying these agreements had been triggered on September 30, ~~2017,~~2018, the Company estimates that it would be required to post a maximum of $5$79 million of additional collateral to these derivative counterparties. The Company is generally allowed to sell or repledge collateral obtained from its derivative counterparties, although it does not typically exercise such rights. (See the Offsetting tables below for collateral posted or received as of the reported balance sheet dates.)

Most of the Company's derivative instruments are subject to enforceable master netting arrangements that provide for the net settlement of all derivative contracts between the Parent Company or Aflac and its respective counterparty in the event of default or upon the occurrence of certain termination events. Collateral support agreements with the master netting arrangements generally provide that the Company will receive or pledge financial collateral at the first dollar of exposure.

The Company has securities lending agreements with unaffiliated financial institutions that post collateral to the Company in return for the use of its fixed maturity and public equity securities (see Note 3). When the Company has entered into securities lending agreements with the same counterparty, the agreements generally provide for net settlement in the event of default by the counterparty. This right of set-off allows the Company to keep and apply collateral received if the counterparty failed to return the securities borrowed from the Company as contractually agreed.

The tables below summarize the Company's derivatives and securities lending transactions, and as reflected in the tables, in accordance with U.S. GAAP, the Company's policy is to not offset these financial instruments in the Consolidated Balance Sheets.

For additional information on the Company's financial instruments, see the accompanying Notes 1, 3 and 5 and Notes 1, 3 and 5 of the Notes to the Consolidated Financial Statements in the ~~2016~~2017 Annual Report.

U.S. GAAP specifies a hierarchy of valuation techniques based on whether the inputs to those valuation techniques are observable or unobservable. These two types of inputs create three valuation hierarchy levels. Level 1 valuations reflect quoted market prices for identical assets or liabilities in active markets. Level 2 valuations reflect quoted market prices for similar assets or liabilities in an active market, quoted market prices for identical or similar assets or liabilities in non-active markets or model-derived valuations in which all significant valuation inputs are observable in active markets. Level 3 valuations reflect valuations in which one or more of the significant inputs are not observable in an active market.

The following tables present the fair value hierarchy levels of the Company's assets and liabilities that are measured and carried at fair value on a recurring basis.

The following tables present the carrying amount and fair value categorized by fair value hierarchy level for the Company's financial instruments that are not carried at fair value.

The Company determines the fair values of ~~its~~ fixed maturity ~~securities, perpetual~~ securities and public and ~~privately issued~~privately-issued equity securities using the following approaches or techniques: price quotes and valuations from third party pricing vendors (including quoted market prices readily available from public exchange markets) and non-binding price quotes the Company obtains from outside brokers.

The pricing data and market quotes the Company obtains from outside sources, including third party pricing services, are reviewed internally for reasonableness. If a fair value appears unreasonable, the Company will re-examine the inputs and assess the reasonableness of the pricing data with the vendor. Additionally, the Company may compare the inputs to relevant market indices and other performance measurements. ~~The output of this analysis is presented to the Company's Valuation and Classification Subcommittee (VCS).~~ Based on ~~the~~management's analysis, ~~provided to the VCS,~~ the valuation is confirmed or may be revised if there is evidence of a more appropriate estimate of fair value based on available market

The fixed ~~maturities~~maturity securities classified as Level 3 consist of securities with limited or no observable valuation inputs. For Level 3 securities, the Company estimates the fair value of these securities by obtaining non-binding broker quotes from a limited number of brokers. These brokers base their quotes on a combination of their knowledge of the current pricing environment and market conditions. The Company considers these inputs to be unobservable. The Company also considers a variety of significant valuation inputs in the valuation process, including forward exchange rates, yen swap rates, dollar swap rates, interest rate volatilities, credit spread data on specific issuers, assumed default and default recovery rates, and certain probability assumptions. In obtaining these valuation inputs, the Company has determined that certain pricing assumptions and data used by its pricing sources are difficult to validate or corroborate by the market and/or appear to be internally developed rather than observed in or corroborated by the market. The use of these unobservable valuation inputs causes more subjectivity in the valuation process for these securities.

For the periods presented, the Company has not adjusted the quotes or prices it obtains from the pricing services and brokers it uses.

The following tables present the pricing sources for the fair values of the Company's fixed ~~maturities, perpetual securities,~~maturity and equity securities.

The following is a discussion of the determination of fair value of the Company's remaining financial instruments.

The Company uses derivative instruments to manage the risk associated with certain assets. However, the derivative instrument may not be classified in the same fair value hierarchy level as the associated asset. Inputs used to value derivatives include, but are not limited to, interest rates, credit spreads, foreign currency forward and spot rates, and interest volatility.

The fair values of the foreign currency forwards ~~options,~~ and ~~interest rate swaptions~~options associated with certain investments; the foreign currency forwards and options used to hedge foreign exchange risk from the Company's net investment in Aflac Japan and economically hedge certain portions of forecasted cash flows denominated in yen; and the foreign currency swaps associated with certain senior notes and subordinated debentures are based on the amounts the Company would expect to receive or pay. The determination of the fair value of these derivatives is based on observable market inputs, therefore they are classified as Level 2.

For derivatives associated with VIEs where the Company is the primary beneficiary, the Company is not the direct counterparty to the swap contracts. As a result, the fair value measurements incorporate the credit risk of the collateral associated with the VIE. The Company receives valuations from a third party pricing vendor for these derivatives. Based on an analysis of these derivatives and a review of the methodology employed by the pricing vendor, the Company determined that due to the long duration of these swaps and the need to extrapolate from short-term observable data to derive and measure long-term inputs, certain inputs, assumptions and judgments are required to value future cash flows that cannot be corroborated by current inputs or current observable market data. As a result, the derivatives associated with the Company's consolidated VIEs are classified as Level 3 of the fair value hierarchy.

The largest component of the other policyholders' funds liability is the Company's annuity line of business in Aflac Japan. The Company's annuities have fixed benefits and premiums. For this product, the Company estimates the fair value to be equal to the cash surrender value. This is analogous to the value paid to policyholders on the valuation date if they were to surrender their policy. The Company periodically checks the cash value against discounted cash flow projections for reasonableness. The Company considers its inputs for this valuation to be unobservable and have accordingly classified this valuation as Level 3.

~~As of December 31, 2016, the~~The fair values of the Company's publicly issued notes payable ~~were obtained from a limited number of independent brokers and classified as Level 3 within the fair value hierarchy. However, in 2017 recognizing the similarities of the Company's~~publicly issued notes payable to fixed income securities in its investment portfolios, the Company aligned the determination of the fair values of these liabilities with its practices of determining asset fair values whereby the Company utilizesare determined by utilizing available sources of observable inputs from third party pricing ~~vendors; therefore, the fair values of the Company's publicly issued notes payable were reclassified into~~vendors and are classified as Level 2 from Level 3 in the first quarter of 2017. Further review of available sources for these liabilities has led to reclassifying the Parent Company’s subordinated debentures into Level 1 from Level 2 in the second quarter of 2017 given these securities are listed and traded on an exchange where their valuations reflect quoted market prices for identical assets or liabilities in an active market. 2. The fair values of the Company's yen-denominated loans approximate their carrying ~~values.~~values and are classified as Level 3.

During the three- and nine-month periods ended September 30, ~~2017~~2018 and ~~2016,~~2017, respectively, there were no transfers between Level 1 and 2 for assets and liabilities that are measured and carried at fair value on a recurring basis.

The following tables summarize the significant unobservable inputs used in the valuation of the Company's Level 3 ~~available-for-sale~~ investments and ~~derivatives.~~derivatives carried at fair value. Included in the tables are the inputs or range of possible inputs that have an effect on the overall valuation of the financial instruments.

The following is a discussion of the significant unobservable inputs or valuation techniques used in determining the fair value of securities and derivatives classified as Level 3.

In circumstances where the Company's valuation model price is overridden because it implies a value that is not consistent with current market conditions, the Company will solicit bids from a limited number of brokers. The Company also receives unadjusted prices from brokers for its mortgage and asset-backed securities. These quotes are non-binding but are reflective of valuation best estimates at that particular point in time. Offered quotes are an unobservable input in the determination of fair value of mortgage- and asset-backed securities, certain banks/financial institutions, certain other corporate, and equity securities investments.

A similar sensitivity pattern is observed for the foreign exchange rates. When the spot U.S. dollar/Japanese yen (USD/JPY) foreign exchange rate decreases and the swap is receiving a final exchange payment in JPY, the swap value will increase due to the appreciation of the JPY. Most of the Company's swaps are designed to receive payments in JPY at the termination and will thus be impacted by the USD/JPY foreign exchange rate in this way. In cases where there is no final foreign exchange receivable in JPY and the Company is paying JPY as interest payments and receiving USD, a decrease in the foreign exchange rate will lead to a decrease in the swap value.

The extinguisher feature in most of the Company's VIE swaps results in a cessation of cash flows and no further payments between the parties to the swap in the event of a default on the referenced or underlying collateral. To price this feature, the Company applies the survival probability of the referenced entity to the projected cash flows. The survival probability uses the CDS spreads and recovery rates to adjust the present value of the cash flows. For extinguisher swaps with positive values, an increase in CDS spreads decreases the likelihood of receiving the final exchange payments and reduces the value of the swap.

For additional information on the Company's investments and financial instruments, see the accompanying Notes 1, 3 and 4 and Notes 1, 3 and 4 of the Notes to the Consolidated Financial Statements in the ~~2016~~2017 Annual Report.

The Company has experienced continued favorable claim trends in ~~2017~~2018 for its core health products in Japan. The Company's experience in Japan related to the average length of stay in the hospital for cancer treatment has shown continued decline in the current period. In addition, cancer treatment patterns in Japan are continuing to be influenced by significant advances in early-detection techniques and by the increased use of pathological diagnosis rather than clinical exams. Additionally, follow-up radiation and chemotherapy treatments are occurring more often on an outpatient basis. Such changes in treatment not only increase the quality of life and initial outcomes for the patients, but also decrease the average length of each hospital stay, resulting in favorable claims development.

The remainder of the favorable claims development related to prior years for the nine-month period ended September 30, 2018, reflects Aflac U.S. favorable claims experience compared to previous estimates, primarily in the cancer and accident lines of business.

In January 2017, the Parent Company issued 60.0 billion yen of senior notes through a U.S. public debt offering. The notes bear interest at a fixed rate of .932% per annum, payable semi-annually, and have a 10-year maturity. These notes may only be redeemed before maturity, in whole but not in part, upon the occurrence of certain changes affecting U.S. taxation, as specified in the indenture governing the terms

A summary of the ~~issuance.~~

The Company was in compliance with all of the covenants of its notes payable and lines of credit at September 30, ~~2017.~~2018. No events of default or defaults occurred during the nine-month period ended September 30, ~~2017.~~2018.

For additional information, see Notes 4 and 9 of the Notes to the Consolidated Financial Statements in the ~~2016~~2017 Annual Report.

For the United States, the Tax Cuts and Jobs Act (Tax Act) was signed into law on December 22, 2017. Effective January 1, 2018, the Tax Act imposes a broad number of changes in tax law, including the permanent reduction of the U.S. federal statutory corporate income tax rate from 35% to 21%.

The following includes an overview of the existing current and deferred balances for which calculation of income tax effects of the Tax Act has not been completed:

Japan deferred tax balances: The Tax Act reduces the U.S. tax rate to 21%, effective January 1, 2018. Prior to the reduction in rate, the Japan deferred tax balances were completely offset by an anticipatory foreign tax credit. As a result of the rate reduction, the Japan deferred tax balance will no longer be offset by an anticipatory foreign tax credit as all of the foreign tax credits will be used to offset the U.S. deferred tax balance of the Aflac Japan branch.

The Company has not yet completed its analysis of the components of the Japan tax computation, including a complete validation of the Aflac Japan tax basis. Additional time is needed to collect, analyze, and validate the detailed data underlying the deferred tax amounts in the Aflac Japan branch. As of the fourth quarter of 2017, the Company had recorded a provisional amount of $4.5 billion of net DTL related to this item.

Valuation allowances: The Company must assess whether its valuation allowance analyses are impacted by various aspects of the Tax Act with a primary focus on any unused anticipatory foreign tax credits. As the Company has recorded provisional amounts related to the Japan deferred tax balances, any corresponding determination of the need for or change in a valuation allowance is also provisional. As of the fourth quarter of 2017, the Company had recorded a provisional valuation allowance of $.7 billion against its anticipatory foreign tax credit asset.

The impact of the Tax Act may differ, possibly materially, from the recorded provisional amounts.

Outstanding share-based awards are excluded from the calculation of weighted-average shares used in the computation of basic earnings per share (EPS). The following table presents the approximate number of share-based awards to purchase shares, on a weighted-average basis, that were considered to be anti-dilutive and were excluded from the calculation of diluted earnings per share for the following periods.

During the first nine months of ~~2017,~~2018, the Company repurchased ~~13.9~~20.4 million shares of its common stock in the open market for ~~$1.0 billion~~$923 million as part of its share repurchase program. During the first nine months of ~~2016,~~2017, the Company repurchased ~~18.8~~27.8 million shares of its common stock in the open market for ~~$1.2~~$1.0 billion as part of its share repurchase program. In August 2017, the Company's board of directors authorized the purchase of an additional 40 million shares of its common ~~stock.~~stock, which increased to 80 million shares in February 2018 in connection with the Company's stock split scheduled for March 2018. As of September 30, ~~2017,~~2018, a remaining balance of ~~52.9~~77.6 million shares of the Company's common stock was available for purchase under share repurchase authorizations by its board of directors.

The tables below are reconciliations of accumulated other comprehensive income by component for the following periods.

For the nine-month period ended September 30, 2018, see Note 1 for discussion of the amounts reclassified between AOCI and retained earnings upon the adoption of new accounting pronouncements.

Nine Months Ended
September 30, 2016
(In millions) Unrealized Foreign
Currency Translation
Gains (Losses) Unrealized
Gains (Losses)
on Investment Securities Unrealized
Gains (Losses)
on Derivatives Pension Liability Adjustment Total
Balance, beginning of period $ (2,196 ) $ 2,986
$ (26 ) $ (139 ) $ 625

Other comprehensive
income (loss) before
reclassification 1,602
3,155
7
(7 ) 4,757

Amounts reclassified from
accumulated other
comprehensive income
(loss) 0
(21 ) 0
3
(18 )
Net current-period other
comprehensive
income (loss) 1,602
3,134
7
(4 ) 4,739

Balance, end of period $ (594 ) $ 6,120
$ (19 ) $ (143 ) $ 5,364

The tables below summarize the amounts reclassified from each component of accumulated other comprehensive income ~~based on source~~into net earnings for the following periods.

See Note 1 for a discussion of the stock split that occurred in March 2018. All share and per-share amounts have been adjusted to reflect the stock split for any of the periods presented.

As of September 30, ~~2017,~~2018, the Company has outstanding share-based awards under the Aflac Incorporated Long-Term Incentive Plan (the “Plan”). Share-based awards are designed to reward employees for their long-term contributions to the Company and provide incentives for them to remain with the Company. The number and frequency of share-based awards are based on competitive practices, operating results of the Company, government regulations, and other factors.

The Plan allows awards to Company employees for incentive stock options (ISOs), non-qualifying stock options (NQSOs), restricted stock, restricted stock units, and stock appreciation rights. Non-employee directors are eligible for grants of NQSOs, restricted stock, and stock appreciation rights. As of September 30, ~~2017,~~2018, approximately ~~20.6~~40.3 million shares were available for future grants under this plan. The ISOs and NQSOs have a term of 10 years, and the share-based awards generally vest upon time-based conditions or time and performance-based conditions. Time-based vesting generally occurs after three years. Performance-based vesting conditions generally include the attainment of goals related to Company financial performance. As of September 30, ~~2017,~~2018, the only performance-based awards issued and outstanding were restricted stock awards.

Share-based awards granted to U.S.-based grantees are settled with authorized but unissued Company stock, while those issued to Japan-based grantees are settled with treasury shares.

The following table provides information on stock options outstanding and exercisable at September 30, ~~2017.~~2018.

The Company received cash from the exercise of stock options in the amount of ~~$48~~$42 million during the first nine months of ~~2017,~~2018, compared with ~~$59~~$48 million in the first nine months of ~~2016.~~2017. The tax benefit realized as a result of stock option exercises and restricted stock releases was $17 million in the first nine months of 2018, compared with $37 million in the first nine months of ~~2017, compared with $29 million in the first nine months of 2016.~~2017.

As of September 30, ~~2017,~~2018, total compensation cost not yet recognized in the Company's financial statements related to restricted stock awards was ~~$43~~$45 million, of which ~~$17~~$20 million ~~(968~~(799 thousand shares) was related to restricted stock awards with a performance-based vesting condition. The Company expects to recognize these amounts over a weighted-average period of approximately 1.1 years. There are no other contractual terms covering restricted stock awards once vested.

The following table summarizes restricted stock activity during the nine-month period ended September 30.

In February ~~2017,~~2018, the Company granted ~~253~~432 thousand performance-based stock awards, which are contingent on the achievement of the Company's financial performance metrics and its market-based conditions. On the date of grant, the Company estimated the fair value of restricted stock awards with market-based conditions using a Monte Carlo simulation model. The model discounts the value of the stock at the assumed vesting date based on the risk-free interest rate. Based on estimates of actual performance versus the vesting thresholds, the calculated fair value percentage pay-out estimate will be updated each quarter.

For additional information on the Company's long-term share-based compensation plans and the types of share-based awards, see Note 12 of the Notes to the Consolidated Financial Statements included in the ~~2016~~2017 Annual Report.

The Company has funded defined benefit plans in Japan and the United States, however the U.S. plan was frozen to new participants effective October 1, 2013. The Company also maintains non-qualified, unfunded supplemental retirement plans that provide defined pension benefits in excess of limits imposed by federal tax law for certain Japanese, U.S. and former employees, however the U.S. plan was frozen to new participants effective January 1, 2015. U.S. employees who are not participants in the defined benefit plan receive a nonelective 401(k) employer contribution.

The Company provides certain health care benefits for eligible U.S. retired employees, their beneficiaries and covered dependents ("other postretirement benefits"). The health care plan is contributory and unfunded. Effective January 1, 2014, employees eligible for benefits included the following: (1) active employees whose age plus service, in years, equaled or exceeded 80 (rule of 80); (2) active employees who were age 55 or older and have met the 15 years of service requirement; (3) active employees who would meet the rule of 80 in the next five years; (4) active employees who were age 55 or older and who would meet the 15 years of service requirement within the next five years; and (5) current retirees. For certain employees and former employees, additional coverage is provided for all medical expenses for life.

Pension and other postretirement benefit expenses are included in acquisition and operating expenses in the consolidated statement of earnings, ~~included~~which includes other components of net periodic pension cost and postretirement costs (other than service costs) of $7 million for both the three-month periods and $20 million and $22 million for the nine-month periods ended September 30, 2018 and 2017, respectively. Total net periodic cost includes the following components:

During the nine months ended September 30, ~~2017,~~2018, Aflac Japan contributed approximately ~~$18~~$22 million (using the weighted-average yen/dollar exchange rate for the nine-month period ending September 30, ~~2017)~~2018) to the Japanese funded defined benefit plan, and Aflac U.S. contributed ~~$40~~$60 million to the U.S. funded defined benefit plan.

As a result of U.S. tax reform legislation enacted in December 2017, the Company announced it would make a one-time contribution of $500 to the U.S. 401(k) plan to all employees active on December 31, 2017. This contribution was made by January 31, 2018. The Company also announced that it would increase its matching contributions to 100% of each employee's contributions which were not in excess of 4% of the employee's annual cash compensation. This increase became effective on January 1, 2018.

For additional information regarding the Company's Japanese and U.S. benefit plans, see Note 14 of the Notes to the Consolidated Financial Statements in the ~~2016~~2017 Annual Report.

The Company is a defendant in various lawsuits considered to be in the normal course of business. Members of the Company's senior legal and financial management teams review litigation on a quarterly and annual basis. The final results of any litigation cannot be predicted with certainty. Although some of this litigation is pending in states where large punitive damages, bearing little relation to the actual damages sustained by plaintiffs, have been awarded in recent years, the Company believes the outcome of pending litigation will not have a material adverse effect on its financial position, results of operations, or cash flows.

See Note 3 of the Notes to the Consolidated Financial Statements for details on certain investment commitments.

The United States insurance industry has a policyholder protection system that is monitored and regulated by state insurance departments. These life and health insurance guaranty associations are state entities (in all 50 states as well as Puerto Rico and the District of Columbia) created to protect policyholders of an insolvent insurance company. All insurance companies (with limited exceptions) licensed to sell life or health insurance in a state must be members of that state’s guaranty association. Under state guaranty association laws, certain insurance companies can be assessed (up to prescribed limits) for certain obligations to the policyholders and claimants of impaired or insolvent insurance companies that write the same line or similar lines of business.

In 2009, the Pennsylvania Insurance Commissioner placed long-term care insurer Penn Treaty Network America Insurance Company and its subsidiary American Network Insurance Company (collectively referred to as Penn Treaty), neither of which is affiliated with Aflac, in rehabilitation and petitioned a state court for approval to liquidate Penn Treaty. A final order of liquidation was granted by a recognized judicial authority on March 1, 2017, and as a result, Penn Treaty is in the process of liquidation. The Company estimated and recognized the impact of its share of guaranty fund assessments resulting from the liquidation using a discounted rate of 4.25%. The Company recognized a discounted liability for the assessments of $62 million (undiscounted $94 million), offset by discounted premium tax credits of $48 million (undiscounted $74 million), for a net $14 million impact to net income in the quarter ended March 31, 2017. The

Guaranty fund assessments infor the ~~second and third quarters of 2017~~nine-month period ended September 30, 2018 were immaterial.

In the three- and nine-month periods ended September 30, ~~2017,~~2018, the benefit ratio decreased, compared with the same respective periods in the prior year, primarily due to the continued change in mix of first and third sector business as first sector products become paid-up, ~~and a de-emphasis on first sector savings products,~~ as well as continued favorable third sector claims ~~experience.~~trends. In the three- and ~~nine-month~~nine-

The level of investment income in yen is affected by available cash flow from operations, the timing of investing the cash flow, yields on new investments, the effect of yen/dollar exchange rates on U.S. dollar-denominated investment income, and other factors.

As part of the Company's portfolio management and asset allocation process, Aflac Japan invests in yen and U.S. dollar-denominated investments. Yen-denominated investments primarily consist of JGBs and public and private fixed maturity securities. Aflac Japan's U.S. dollar-denominated investments ~~fixed-maturity~~include fixed maturity investments and growth assets, including public ~~equities~~equity securities and alternative investments in limited partnerships or similar investment vehicles. Aflac Japan has been investing in both publicly-traded and privately originated U.S. dollar-denominated investment-grade and below-investment-grade ~~fixed-maturity~~fixed maturity securities and ~~loans,~~loan receivables, and has entered into foreign currency forwards and options to hedge the currency risk on the fair value of a portion of the U.S. dollar investments.

⁽³⁾ ~~Includes $85 and $231 of transitional real estate (TRE) loans for the three- and nine-month periods ended September 30, 2017, respectively.~~

Aflac ~~Japan's~~Japan purchased $1.1 billion of yen-denominated private placement portfolio had declined over the last several years as a result of call and maturity activity and no reinvestment activity. However, beginning in 2016 and continuing into 2017, Aflac Japan began to selectively purchase yen-denominated private placements. Inplacements for the first nine months of ~~2017, Aflac Japan purchased $886 million of yen-denominated private placements, after purchasing $268 million~~2018 and for

See the Analysis of Financial Condition section of this MD&A for further discussion of these investment programs, and see Notes 3 and 4 of the Notes to the Consolidated Financial Statements and Notes 1, 3 and 4 of the Notes to the Consolidated Financial Statements in the ~~2016~~2017 Annual Report for more information regarding loans and loan receivables.

The increase in the Aflac Japan new money yield in the ~~three-month period~~three- and nine-month periods ended September 30, ~~2017~~2018 was primarily due to ~~increases in U.S. and Japan interest rates, compared with the same period in 2016, and~~ increased allocations to ~~higher-yielding~~higher yielding U.S. dollar-denominated asset classes. The decrease in the Aflac Japan new money yield in the nine-month period ended September 30, 2017 was primarily due to the increased allocation to Japan Government Bonds (JGBs) and other high quality yen-denominated investments.

See Notes 3, 4 and 5 of the Notes to the Consolidated Financial Statements and the Analysis of Financial Condition section of this MD&A for additional information on the Company's investments and hedging strategies.

~~The benefit ratio in~~

For the three-month period ended September 30, ~~2017 was consistent~~2018, the benefit ratio decreased when compared with the same period in ~~2016.~~2017. For the same period, the adjusted expense ratio increased compared with the same period in 2017, primarily related to planned spending increases reflecting elevated investment in the platform. The pretax adjusted profit margin (calculated by dividing adjusted earnings by adjusted revenues) increased during the period compared with the same period in 2017, as decreased benefit ~~ratio in~~ratios were not quite offset by increased expense ratios.

For the nine-month period ended September 30, ~~2017~~2018, the benefit ratio decreased ~~slightly,~~when compared with the same period in ~~2016. For~~2017, due in large part to benefit reserve releases related to slightly elevated lapses of older individual cancer policies in the ~~three- and~~first quarter of 2018. The adjusted expense ratio increased slightly for the nine-month ~~periods~~period ended September 30, ~~2017, the operating expense ratio was somewhat elevated~~2018, when compared to ~~2016,~~the same period in 2017, primarily due to planned spending increases reflecting ~~larger investment~~elevated investments in the ~~Aflac U.S.~~ platform. The ~~higher expenses are partially offset by decreasing amortization and commission expense ratios. Therefore, the~~ pretax ~~operating~~adjusted profit margin ~~(calculated by dividing operating earnings by operating revenues) decreased~~increased slightly ~~for the three- and nine-month periods ended September 30, 2017,~~when compared ~~with~~to the same ~~periods~~period in ~~2016. For~~2017, primarily due to lower benefit ratios.

Note that all of these ratios-to-revenue reflect reduced net investment income due to the ~~full year~~Company's planned drawdown of ~~2017,~~excess capital to lower Risk-Based Capital (RBC) ratios. (See the ~~Company expects~~Capital Resources and Liquidity section of this MD&A for further discussion of the ~~Aflac U.S. benefit ratio to be slightly lower than full year 2016, while expense ratios are expected to increase marginally as Aflac U.S. continues to invest in its platform and shift some~~planned reduction of ~~its costs from commissions to insurance expenses.~~RBC.)

New annualized premium sales for accident insurance, the Aflac U.S. leading product category, increased ~~7.5%~~2.5%; short-term disability sales increased ~~1.2%~~2.4%; critical care insurance sales (including cancer insurance) ~~increased 17.1%~~decreased 2.6%; and hospital indemnity insurance sales increased ~~7.3%~~13.6% in the third quarter of ~~2017,~~2018, compared with the same period in ~~2016.~~2017.

The addition of group products has expanded Aflac U.S.'s reach and enabled Aflac U.S. to generate more sales opportunities with larger employers and through broker and ~~traditional~~ sales agent channels. The Company anticipates that the appeal of Aflac U.S. group products will continue to enhance opportunities to connect with larger businesses and their employees. The Aflac U.S. portfolio of group and individual products offers businesses the opportunity to give their employees a more valuable and comprehensive selection of benefit options.

In the third quarter of ~~2017,~~2018, the Aflac U.S. sales force included ~~approximately 8,500~~more than 8,200 U.S. agents, including brokers, who were actively producing business on a weekly basis. The Company believes that this ~~metric, the~~ average weekly producer equivalent metric allows sales management to monitor progress and needs.

President Trump signed an Executive Order in October 2017 directing federal regulatory agencies to review and modify certain regulations issued under the ACA. The stated objectives of the Executive Order are to increase competition and consumer choices in health care markets, and to lower costs for health care, by making association health plans available to more employers, allowing employers to make better use of health reimbursement arrangements, and expanding coverage through short-term insurance. The Executive Order tasks three federal agencies, the Departments of Labor (DOL), Treasury, and Health and Human Services (HHS) with reviewing current rules and developing guidance to implement the order. While the details of any proposed modifications will not be known until further action by the agencies, the Company anticipates that the Executive Order will not have a significant impact on the availability or marketability of its products.

The Tax Act was signed into law on December 22, 2017. Among other things, effective January 1, 2018, the Tax Act reduced the U.S. federal statutory corporate income tax rate from 35% to 21%, eliminated or reduced certain deductions and credits and limited the deductibility of interest expense and executive compensation.

The Tax Act also transitions international corporate taxation from a worldwide system to a modified territorial system, which in light of the current tax treatment of Aflac Japan as a branch has the effect of subjecting the earnings of Aflac Japan to Japan taxation and subjecting the Company's other earnings, including the consolidated earnings of the Parent Company, to U.S. taxation. The treatment of Aflac Japan as a branch for U.S. tax purposes did not change following the completion of its conversion from a branch structure to a subsidiary structure for legal purposes on April 1, 2018.

Aflac U.S. prices its business on an internal rate of return basis. The Aflac U.S. business has a financial structure that the Company expects to be neutral on a pricing basis from these tax changes. The Aflac U.S. products have high initial costs for marketing, underwriting and administration, which will have less tax relief under the changes and will increase the amount required to invest in new business. In addition, the Company expects that RBC requirements will increase on an after-tax basis, being another source of initial funding required for these products. The tax basis for reserves and DAC may also change the timing of tax payments in an accelerated or unfavorable direction. All of these effects will offset a favorable lower tax rate on income in later years. The overall impact is expected to be neutral on a pricing basis from these various effects.

The Tax Act changes became effective on January 1, 2018. However, because changes to tax rates are accounted for in the period of enactment, during the period ended December 31, 2017, the Company revalued its deferred tax assets and liabilities and recorded, as its current reasonable estimate, a net deferred tax liability reduction of $1.9 billion as of that date. For information on the effects of the Tax Act during the period ended December 31, 2017, see Note 10 of the Notes to the Consolidated Financial Statements in the 2017 Annual Report. For information on the conversion of Aflac Japan from a branch to a subsidiary, see General Business under Item 1, Business, in the 2017 Annual Report and the Insurance Operations subsection of this MD&A.

Title VII of the Dodd-Frank Act and regulations issued thereunder, in particular rules to require central clearing for certain types of derivatives, may have an impact on Aflac's derivative activity, including activity on behalf of Aflac Japan. In addition, in 2015 and 2016, six U.S. financial regulators, including the U.S. Commodity Futures Trading Commission (CFTC), issued final rules regarding the exchange of initial margin (IM) and variation margin (VM) for uncleared swaps that impose greater obligations on swap dealers regarding uncleared swaps with certain counterparties, such as Aflac. The requirements of such rules with respect to VM, as well as similar regulations in Europe, became effective on March 1, 2017. Full compliance with respect to all counterparties was required by September 1, 2017. The requirements of such rules with respect to IM are currently being phased in and will be fully implemented by September 1, 2020. In October of 2017, the CFTC and the European Commission each finalized comparability determinations that permit certain swap dealers who are subject to both regulatory margin regimes to take advantage of substituted compliance by complying with one set of margin requirements. The margin requirements are expected to result in more stringent collateral requirements and to affect other aspects of Aflac's derivatives activity.

The Dodd-Frank Act also established a Federal Insurance Office (FIO) under the U.S. Treasury Department to monitor all aspects of the insurance industry and of lines of business other than certain health insurance, certain long-term care insurance and crop insurance. Traditionally, U.S. insurance companies have been regulated primarily by state insurance

Under state insurance guaranty association laws and similar laws in international jurisdictions, Aflac is subject to assessments, based on the share of business it writes in the relevant jurisdiction, for certain obligations of insolvent insurance companies to policyholders and claimants. In the United States, some states permit member insurers to recover assessments paid through full or partial premium tax offsets. The Company's policy is to accrue assessments when the entity for which the insolvency relates has met its state of domicile's statutory definition of insolvency, the amount of the loss is reasonably estimable and the related premium upon which the assessment is based is written. In most states, the definition is met with a declaration of financial insolvency by a court of competent jurisdiction.

The level of investment income is affected by available cash flow from operations, the timing of investing the cash flow, yields on new investments, and other factors.

As part of the Company's portfolio management and asset allocation process, Aflac U.S. invests in ~~fixed-maturity~~fixed maturity investments and growth assets, including public ~~equities~~equity securities and alternative investments in limited partnerships. Aflac U.S. has been investing in both publicly traded and privately originated investment-grade and below-investment-grade ~~fixed-maturity~~fixed maturity securities and loan receivables.

⁽¹⁾~~Includes $30 and $71 of TRE loans for the three- and nine-month periods ended September 30, 2017, respectively.~~

See Note 3 of the Notes to the Consolidated Financial Statements and Notes 1 and 3 of the Notes to the Consolidated Financial Statements in the ~~2016~~2017 Annual Report for more information regarding loans and loans receivables.

The following table presents the results of Aflac's U.S. investment yields for the periods ended September 30.

The increase in the Aflac U.S. new money yield for the three- and nine-month periods ended September 30, ~~2017~~2018 was primarily due to ~~increases in U.S. interest rates, compared with the same respective periods in 2016.~~increased allocations to higher yielding floating rate assets. See Notes 3

In the three-month period ended September 30, 2018, total revenue increased 18.8% to $82 million, reflecting net investment income of $27 million. Net investment income, which increased $17 million, benefited from a $9 million pretax contribution from the Company’s corporate yen hedging program and invested assets transferred as part of the drawdown of excess capital in the U.S. segment beginning in the fourth quarter of 2017. Pretax adjusted earnings were a loss of $29 million, compared with a loss of $50 million a year ago.

The ~~Company's~~Company’s investment ~~philosophy is~~strategy utilizes disciplined asset and liability management while seeking long-term risk-adjusted investment returns and the delivery of stable income within regulatory and capital objectives, and preserving shareholder value. In attempting to ~~fulfill its fiduciary responsibility~~optimally balance these objectives, the Company seeks to ~~invest~~maintain on behalf of Aflac Japan a diversified portfolio of yen-denominated investment assets, inU.S. dollar-denominated investment portfolio hedged back to yen and a ~~prudent manner to meet the present and future needs~~portfolio of ~~its policyholders’ contractual obligations while maximizing the long-term financial return on assets consistent with~~unhedged U.S. dollar-denominated assets. As part of the Company's ~~goals of maximizing long-term shareholder value within defined risk appetites~~portfolio management and ~~limits,~~asset allocation process, Aflac U.S. invests in fixed maturity investments and ~~maintaining adequate liquidity.~~growth assets, including public equity securities and alternative investments in limited partnerships. Aflac U.S. has been investing in both publicly traded and privately originated investment-grade and below-investment-grade fixed maturity securities and loans.

The following table details investments by segment.

Cash and cash equivalents totaled ~~$4.9~~$3.4 billion, or ~~4.0%~~2.8% of total investments and cash, as of September 30, ~~2017,~~2018, compared with ~~$4.9~~$3.5 billion, or ~~4.2%~~2.8%, at December 31, ~~2016.~~2017. For a discussion of the factors affecting the Company's cash balance, see the Operating Activities, Investing Activities and Financing Activities subsections of this MD&A.

~~During the third quarter of~~In 2017, Aflac U.S. became a member of the Federal Home Loan Bank of Atlanta (FHLB). As a member, Aflac U.S. can ~~obtain~~ access to low-cost funding and also receive dividends on FHLB membership stock. Additional FHLB stock purchases are required based ~~upon the amount of funds borrowed from~~on funding activity with the FHLB. Aflac U.S. will be required to post

For additional information concerning the Company's investments, see Notes 3, 4, and 5 of the Notes to the Consolidated Financial Statements.

The ratings of the Company's securities referenced in the table below are based on the ratings designations provided by major Nationally Recognized Statistical Rating Organizations (NRSROs) (Moody's, S&P and Fitch) or, if not rated, are determined based on the Company's internal analysis of such securities. When the ratings issued by the rating agencies differ, the Company utilizes the second lowest rating when three or more rating agency ratings are available or the lowest rating when only two rating agency ratings are available.

As of September 30, ~~2017,~~2018, the Company's direct and indirect exposure to securities in its investment portfolio that were guaranteed by third parties was immaterial both individually and in the aggregate.

The following table presents the 10 largest unrealized loss positions in the Company's portfolio as of September 30, ~~2017.~~2018.

Generally, declines in fair values can be a result of changes in interest rates, yen/dollar exchange rate, and changes in net spreads driven by a broad market move or a change in the issuer's underlying credit quality. As the Company believes these issuers have the ability to continue making timely payments of principal and interest, the Company views these changes in fair value to be temporary and does not believe it is necessary to impair the carrying value of these securities. See the Unrealized Investment Gains and Losses section in Note 3 of the Notes to the Consolidated Financial Statements for further discussions of unrealized losses related to financial institutions ~~including perpetual securities,~~ and other corporate investments.

The Company's portfolio of below-investment-grade securities includes debt securities purchased while the issuer was rated investment grade plus other loans and bonds purchased as part of an allocation to that segment of the market. The following is the Company's below-investment-grade exposure.

The Company maintains an allocation to higher yielding corporate bonds within the Aflac Japan and Aflac U.S. portfolios. Most of these securities were rated below-investment-grade at the time of purchase, but the Company also purchased several that were rated investment grade which, because of market pricing, offer yields commensurate with below-investment-grade risk profiles. The objective of this allocation was to enhance the Company's yield on invested assets and further diversify credit risk. All investments must have a minimum rating of low BB using the Company's above described rating methodology and are managed by the Company's internal credit portfolio management team.

The Company's portfolio of below-investment-grade securities includes debt securities purchased while the issuer was rated investment grade plus other loans and bonds purchased as part of an allocation to that segment of the market. The following is the Company's below-investment-grade exposure.

The ~~following table details investment~~Company maintains an allocation to higher yielding corporate bonds within the Aflac Japan and Aflac U.S. portfolios. Most of these securities ~~by type~~were rated below-investment-grade at the time of ~~issuance.~~

The Company's portfolio of below-investment-grade securities includes debt securities purchased while the issuer was rated investment grade plus other loans and bonds purchased as part of an allocation to that segment of the market. The following is the Company's below-investment-grade exposure.

The Company maintains an allocation to higher yielding corporate bonds within the Aflac Japan and Aflac U.S. portfolios. Most of these securities were rated below-investment-grade at the time of purchase, but the Company also purchased several that were rated investment grade which, because of market pricing, offer yields commensurate with below-investment-grade risk profiles. The objective of this allocation was to enhance the Company's yield on invested assets and further diversify credit risk. All investments must have a minimum rating of low BB using the Company's above described rating methodology and are managed by the Company's internal credit portfolio management team.

The following table details investment securities by type of issuance.

As of September 30, 2018, Aflac Japan ~~was $71.8~~had $10.0 billion ~~and $23.0 billion, respectively. As September 30, 2017, the Company had~~ outstanding notional amounts of foreign currency forwards ~~of $11.4~~and $9.7 billion ~~and~~outstanding notional amounts of foreign currency ~~collars~~options, of ~~$5.7 billion~~which none were in-the-money, hedging the U.S. dollar-denominated investments, resulting in the unhedged fair value of the U.S. dollar Japan portfolio of $15.0 billion, excluding certain U.S. dollar-denominated assets shown in the table above as a result of consolidation that have been economically converted to yen using derivatives.

For additional discussion of the risks associated with the foreign currency exposure refer to the Currency Risk section in Item 7A., Quantitative and Qualitative Disclosures about Market Risk, and the Risk Factor sections titled “The Company is exposed to foreign currency fluctuations in the yen/dollar exchange rate" and “Lack of availability of acceptable yen-denominated investments could adversely affect the Company's results of operations, financial position or liquidity" in the 2017 Annual Report. For discussion of the Company’s view on the stressed economic surplus in Aflac Japan, refer to the Investments subsection within Item 1., Business, in the 2017 Annual Report.

The Japanese insurance industry has a policyholder protection system that provides funds for the policyholders of insolvent insurers. Legislation enacted regarding the framework of the Life Insurance Policyholder Protection Corporation (LIPPC) included government fiscal measures supporting the LIPPC. On March 30, 2012, the Diet approved legislation to enhance the stability of the LIPPC by extending the government's fiscal support of the LIPPC through March 2017. On November 25, 2016, Japan's Diet passed legislation that again extends the government's fiscal support of the LIPPC through March 2022. Effective April 2014, the annual LIPPC contribution amount for the total life industry was lowered from 40 billion yen to 33 billion yen.

Under state guaranty association laws, certain insurance companies can be assessed (up to prescribed limits) for certain obligations to the policyholders and claimants of impaired or insolvent insurance companies that write the same line or similar lines of business. The amount of the guaranty fund assessment that an insurer is assessed is based on its proportionate share of premiums in that state.

As of September 30, ~~2017,~~2018, the Company has estimated and recognized the impact of its share of guaranty fund assessments resulting from the liquidation of a long-term care insurer. See Note 1215 of the Notes to the Consolidated Financial Statements for further information on the assessment.

As of September 30, ~~2017,~~2018, the Company had no material letters of credit, standby letters of credit, guarantees or standby repurchase obligations. See Note 15 of the Notes to the Consolidated Financial Statements in the ~~2016~~2017 Annual Report for information on material unconditional purchase obligations that are not recorded on the Company's balance sheet.

As part of the FHLB funding arrangement as discussed previously in the ~~amount~~Analysis of ~~$50 million. Borrowings will bear interest at~~Financial Condition section of this MD&A, Aflac U.S. borrowed and repaid $86 million during the ~~rate quoted by the bank and agreed upon at the time~~first nine months of making such loan and will have up to a three-month maturity period. There are no related facility fees, upfront expenses or financial covenant requirements. Borrowings under this credit agreement may be used for general corporate purposes. As of September 30, 2017, the Company did not have any borrowings outstanding under its $50 million credit agreement.2018.

The Company's financial statements convey its financing arrangements during the periods presented. The Company has not engaged in material intra-period short-term financings during the periods presented that are not otherwise reported in its balance ~~sheet.~~sheet or disclosed therein. The Company was in compliance with all of the covenants of its notes payable and lines of credit at September 30, ~~2017.~~2018. The Company has not entered into transactions involving the transfer of financial assets with an obligation to repurchase financial assets that have been accounted for as a sale under applicable accounting standards, including securities lending transactions. See Notes 3 and 4 of the Notes to the Consolidated Financial Statements and Notes 1, 3, and 4 of the Notes to the Consolidated Financial Statements in the ~~2016~~2017 Annual Report for more information on the Company's securities lending and derivative activities. With the exception of disclosed activities in those referenced footnotes, the Company does not have a known trend, demand, commitment, event or uncertainty that would reasonably result in its liquidity increasing or decreasing by a material amount. The Company's cash and cash equivalents include unrestricted cash on hand, money market instruments, and other debt instruments with a maturity of 90 days or less when purchased, all of which has minimal market, settlement or other risk exposure.

Prudent portfolio management dictates that the Company attempts to match the duration of its assets with the duration of its liabilities. Currently, when the Company's ~~fixed-maturity securities and perpetual~~fixed maturity securities mature, the proceeds may be reinvested at a yield below that required for the accretion of policy benefit liabilities on policies issued in earlier years. However, the long-term nature of the Company's business and its strong cash flows provide the Company with the ability to minimize the effect of mismatched durations and/or yields identified by various asset adequacy analyses. From time to time or when market opportunities arise, the Company disposes of selected ~~fixed-maturity and perpetual~~fixed maturity securities that are available for sale to improve the duration matching of ~~its~~ assets and liabilities, improve future investment yields, and/or re-balance its portfolio. As a result, dispositions before maturity can vary significantly from year to year. ~~Dispositions before maturity were approximately 3%~~

As part of its overall corporate strategy, the Company announced in September 2018 that it intends to increase its original investment in the Aflac Ventures Fund from $100 million over three years to $250 million over three to four years, as opportunities emerge. These investments are included in the other investments line in the consolidated balance sheets. The Aflac Ventures Fund is a subsidiary of Aflac Corporate Ventures which is reported in the "Corporate and 1%other" business segment. The central mission of Aflac Corporate Ventures is to support the organic growth and business development needs of Aflac Japan and Aflac U.S. with emphasis on digital applications designed to improve the customer experience, gain efficiencies, and develop new markets in an effort to enhance and defend long-term shareholder value.

See Note 3 of the ~~year-to-date average~~Notes to the Consolidated Financial Statements for details on certain investment ~~portfolio of fixed maturities and perpetual securities available for sale during the nine-month periods ended September 30, 2017 and 2016, respectively.~~commitments.

Consolidated cash used by financing activities was ~~$1.6~~$1.5 billion in the first nine months of ~~2017,~~2018, compared with consolidated cash used by financing activities of ~~$835 million~~$1.6 billion for the same period of ~~2016.~~2017.

The Company was in compliance with all of the covenants of its notes payable and lines of credit at September 30, ~~2017.~~2018.

Cash returned to shareholders through dividends and treasury stock purchases was $1.5 billion during the nine-month periods ended September 30, 2018 and 2017, respectively.

The following tables present a summary of treasury stock activity during the nine-month periods ended September 30.

During the first nine months of ~~2017,~~2018, the Company repurchased ~~13.9~~20.4 million shares of its common stock for ~~$1.0 billion~~$923 million as part of its share repurchase program. As of September 30, ~~2017,~~2018, a remaining balance of ~~52.9~~77.6 million shares of the Company's common stock was available for purchase under share repurchase authorizations by its board of directors. The Company currently plans to repurchase a total of ~~$1.3~~$1.1 billion to ~~$1.5~~$1.4 billion of its common stock in ~~2017,~~2018, assuming stable capital conditions and ~~absent~~the absence of compelling alternatives.

Cash dividends paid to shareholders were ~~$.43~~$.26 per share in the third quarter of ~~2017,~~2018, compared with ~~$.41~~$.22 per share in the third quarter of ~~2016.~~2017. The following table presents the dividend activity for the nine-month periods ended September 30.

Aflac and CAIC are domiciled in Nebraska and are subject to its regulations. Subsequent to the Japan branch conversion to a subsidiary, Aflac Japan is domiciled in Japan and subject to local regulations. See further discussion below. A life insurance company’s statutory capital and surplus is determined according to rules prescribed by the National Association of Insurance Commissioners (NAIC), as modified by the insurance department in the insurance company’s state of domicile. Statutory accounting rules are different from U.S. GAAP and are intended to emphasize policyholder protection and company solvency. Similar laws apply in New York, the domiciliary jurisdiction of ~~the Parent Company's other~~Aflac's New York insurance ~~subsidiary, Aflac New York.~~ subsidiary.

The continued long-term growth of the Company's business may require increases in the statutory capital and surplus of its insurance operations. Aflac’s insurance operations may secure additional statutory capital through various sources, such as internally generated statutory earnings, ~~equity~~capital contributions by the Parent Company from funds generated through debt or equity offerings, or reinsurance transactions. The NAIC’s risk-based capital (RBC) formula is used by insurance regulators to help identify inadequately capitalized insurance companies. The RBC formula quantifies insurance risk, business risk, asset risk and interest rate risk by weighing the types and mixtures of risks inherent in the insurer’s operations.

As of September 30, ~~2017,~~2018, Aflac’s U.S.-only RBC ratio remains high and reflects a strong capital and surplus ~~position.~~ position, even reflecting the full negative impact of the U.S. Tax Act, which is expected to be fully adopted in 2018. This reduction occurs as a result of writing down deferred tax assets and the increase in required capital due to the reduction in tax rates. However, Aflac expects to recover from this negative impact over a period of three to five years through additional statutory income, assuming that the additional income is fully retained. The Company expects to continue to draw down RBC levels through dividends for the remainder of 2018; however, the RBC level is still expected to be strong at the end of the year.

The maximum amount of dividends that can be paid to the Parent Company by Aflac without prior approval of Nebraska's director of insurance is the greater of the net income from operations, which excludes net realized investment gains, for the previous year determined under statutory accounting principles, or 10% of statutory capital and surplus as of the previous year-end. Dividends declared by Aflac during ~~2017~~2018 in excess of ~~$2.8~~$2.6 billion would be considered extraordinary and require such approval. Subsequent to the Japan branch conversion to a subsidiary, the Company intends to use extraordinary dividends as needed to actively manage to appropriate RBC levels that are lower yet sufficient to maintain ratings and support prudent capital management.

The Company has already undertaken various measures to mitigate the sensitivity of Aflac Japan's SMR. For example, the Company employs policy reserve matching (PRM) investment strategies, which is a Japan-specific accounting treatment that reduces SMR interest rate sensitivity since PRM-designated investments are carried at amortized cost consistent with corresponding liabilities. In order for a PRM-designated asset to be held at amortized cost, there are certain criteria that must be maintained. The primary criteria relates to maintaining the duration of designated assets and 9liabilities within a specified tolerance range. If the duration difference is not maintained within the specified range without rebalancing, then a certain portion of the assets must be re-classified as available for sale and held at fair value with any associated unrealized gain or loss recorded in surplus. To rebalance, assets may need to be sold in order to maintain the duration with the specified range, resulting in realizing a gain or loss from the sale. For U.S. GAAP, PRM investments are categorized as available-for-sale. The Company also uses foreign currency derivatives to hedge a portion of its U.S. dollar-denominated investments. (See Notes 3, 4 and 8 of the Notes to the Consolidated Financial Statements in the ~~2016~~2017 Annual Report for additional information on the Company's ~~capital contingency plan.~~investment strategies, hedging activities, and reinsurance, respectively.)

Payments are made from Aflac Japan to the Parent Company for management fees, ~~and to Aflac U.S. for~~ allocated expenses and remittances of earnings. Prior to the Aflac Japan branch conversion on April 1, 2018, Aflac Japan paid allocated expenses and profit remittances to Aflac U.S. The following table details Aflac Japan remittances for the nine-month periods ended September 30.

The Company had foreign exchange forwards and options as part of aan economic hedge of foreign exchange risk on ~~21.9~~30.0 billion yen of profit ~~repatriation~~remittances received from Aflac Japan in ~~September 2017,~~the first nine months of 2018, resulting in $2 million more funds when the yen were exchanged into dollars. The Company had foreign exchange forwards and options as part of a hedge on 45.0 billion yen of profit repatriation received from Aflac Japan in July 2017, resulting in $5 million less funds received when the yen were exchanged into ~~dollars. Provided that capital conditions remain stable,~~dollars relative to what would have been received at the ~~Company believes its financial strength in Japan positions Aflac Japan to repatriate in the range of 120.0 billion yen to 140.0 billion yen to the U.S. for the full year 2017.~~then-current exchange rate.

For information regarding commitments and contingent liabilities, see Note 1213 of the Notes to the Consolidated Financial Statements.

The Company’s management, with the participation of the Company’s Chief Executive Officer and Chief Financial Officer, has evaluated the effectiveness of the Company’s disclosure controls and procedures (as such term is defined in Rule 13a-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) as of the end of the period covered by this quarterly report (the “Evaluation Date”). Based on such evaluation, the Company’s Chief Executive Officer and Chief Financial Officer have concluded that, as of the Evaluation Date, the Company’s disclosure controls and procedures are effective.

There have not been any changes in the Company’s internal control over financial reporting (as such term is defined in Rule 13a-15(f) under the Exchange Act) during the third fiscal quarter of ~~2017~~2018 that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting, with the exception of the new and revised internal controls related to the implementation of a new investment accounting reporting system. The Company had also implemented new and revised internal controls related to the upgrade to a newer version of the Company's financial accounting and reporting consolidation system effective January 2018. The Company's management believes that the implementation of these systems has improved and enhanced its internal control over financial reporting.

On December 14, 2017, three former independent sales contractors filed a shareholders derivative complaint in the U.S. District Court for the Southern District of New York naming the Parent Company as nominal defendant and the Parent Company’s Chairman and Chief Executive Officer, several of its directors, and a former officer and director as defendants. The complaint alleges breaches of fiduciary duty, misstatements and omissions in the Company’s public disclosures, and insider trading. The Company’s Board of Directors had previously established a special litigation committee (SLC) in July 2017 to investigate certain allegations underlying the derivative action. The SLC issued a report of its investigation in September 2017 and another report in February 2018, each of which determined that it was not in the best interests of the Company to pursue the action demanded by the shareholders. An amended complaint was filed on January 31, 2018. On February 12, 2018, this litigation was transferred to the U.S. District Court for the Middle District of Georgia. The SLC issued a third report of its investigation in May 2018 regarding certain additional allegations raised in the amended complaint, in which the SLC also determined that it was not in the best interests of the Company to pursue the action demanded by the shareholders. On August 31, 2018, the District Court granted the Company's motion and the amended complaint was dismissed. The plaintiffs have filed a notice of appeal to the United States Court of Appeals for the Eleventh Circuit. The Company believes the outcome of this litigation will not have a material adverse effect on its financial position, results of operation or cash flows.

Readers should carefully consider the risk factors that may affect the Company’s business or operations described under “Risk Factors” in Part I, Item 1A. of the Company's 2017 Annual Report on Form 10-K for the year ended December 31, 2017 and in Part II, Item 1A. of the Company's Quarterly Report on Form 10-Q for the quarter ended March 31, 2018 and its Quarterly Report on Form 10-Q for the quarter ended June 30, 2018.



Georgia		58-1167100
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

1932 Wynnton Road, Columbus, Georgia		31999
(Address of principal executive offices)		(ZIP Code)



Large accelerated filer þ		Accelerated filer ¨
Non-accelerated filer ¨ (Do not check if a smaller reporting company)		Smaller reporting company ¨
		Emerging growth company ¨



Class		October ~~25, 2017~~24, 2018
Common Stock, $.10 Par Value		~~393,149,620~~761,279,345



PART I.		FINANCIAL INFORMATION:	Page
		~~Page~~
~~PART I.~~	Item 1.	~~FINANCIAL INFORMATION:~~Financial Statements (Unaudited)

~~Item 1.~~	~~Financial Statements (Unaudited)~~

	Review by Independent Registered Public Accounting Firm	1

		Report of Independent Registered Public Accounting Firm	2

		Consolidated Statements of Earnings Three Months Ended September 30, ~~2017~~2018 and ~~2016~~2017 Nine Months Ended September 30, ~~2017~~2018 and ~~2016~~2017	3

		Consolidated Statements of Comprehensive Income (Loss) Three Months Ended September 30, ~~2017~~2018 and ~~2016~~2017 Nine Months Ended September 30, ~~2017~~2018 and ~~2016~~2017	4

		Consolidated Balance Sheets September 30, ~~2017,~~2018, and December 31, ~~2016~~2017	5

		Consolidated Statements of Shareholders' Equity Nine Months Ended September 30, ~~2017~~2018 and ~~2016~~2017	7

		Consolidated Statements of Cash Flows Nine Months Ended September 30, ~~2017~~2018 and ~~2016~~2017	8

		Notes to the Consolidated Financial Statements	9

	Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	6770

	Item 3.	Quantitative and Qualitative Disclosures about Market Risk	94100

	Item 4.	Controls and Procedures	95101

PART II.		OTHER INFORMATION:

	Item 1.	Legal Proceedings	96102

	Item 1A.	Risk Factors	102

	Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	96102

	Item 6.	Exhibits	97104



	Three Months Ended September 30,								Nine Months Ended September 30,
(In millions, except for share and per-share amounts - Unaudited)	2018				2017				2018				2017
Revenues:
Net premiums, principally supplemental health insurance		$	4,636			$	4,648			$	14,086			$	13,951
Net investment income		870				811				2,569				2,408
Realized investment gains (losses):
Other-than-temporary impairment losses realized		(5		)		(8		)		(17		)		(27		)
Other gains (losses) ⁽¹⁾		61				38				(59		)		(139		)
Total realized investment gains (losses)		56				30				(76		)		(166		)
Other income (loss)		15				17				53				50
Total revenues		5,577				5,506				16,632				16,243
Benefits and expenses:
Benefits and claims, net		3,002				3,083				9,075				9,174
Acquisition and operating expenses:
Amortization of deferred policy acquisition costs		315				271				932				848
Insurance commissions		331				332				1,007				996
Insurance and other expenses		730				686				2,193				2,025
Interest expense		53				59				164				181
Total acquisition and operating expenses		1,429				1,348				4,296				4,050
Total benefits and expenses		4,431				4,431				13,371				13,224
Earnings before income taxes		1,146				1,075				3,261				3,019
Income taxes		301				359				866				998
Net earnings		$	845			$	716			$	2,395			$	2,021
Net earnings per share:
Basic		$	1.10			$	.91			$	3.10			$	2.54
Diluted		1.09				.90				3.08				2.52
Weighted-average outstanding common shares used in computing earnings per share (In thousands):
Basic		767,049				788,958				772,807				794,645
Diluted		772,070				794,762				777,867				800,483
Cash dividends per share		$	.26			$	.22			$	.78			$	.65


(In millions)	September 30, 2017 (Unaudited)			December 31, 2016			September 30, 2018 (Unaudited)			December 31, 2017
Assets:
Investments and cash:
Securities available for sale, at fair value:
Fixed maturities (amortized cost $67,970 in 2017 and $62,195 in 2016)		$	75,191		$	68,778
Fixed maturities - consolidated variable interest entities (amortized cost $4,274 in 2017 and $4,168 in 2016)		5,224			4,982
Perpetual securities (amortized cost $1,310 in 2017 and $1,269 in 2016)		1,652			1,425
Perpetual securities - consolidated variable interest entities (amortized cost $239 in 2017 and $237 in 2016)		211			208
Equity securities (cost $216 in 2017 and $231 in 2016)		238			265
Equity securities - consolidated variable interest entities (cost $595 in 2017 and $972 in 2016)		690			1,044
Fixed maturity securities (amortized cost $72,207 in 2018 and $70,594 in 2017) ⁽¹⁾								$	77,443		$	78,804
Fixed maturity securities - consolidated variable interest entities (amortized cost $4,045 in 2018 and $4,538 in 2017) ⁽¹⁾								4,853			5,509
Securities held to maturity, at amortized cost:
Fixed maturities (fair value $38,599 in 2017 and $40,021 in 2016)		31,998			33,350
Other investments ⁽¹⁾		2,358			1,450
Fixed maturity securities (fair value $36,250 in 2018 and $38,072 in 2017)								30,421			31,430
Equity securities, at fair value:
Equity securities ⁽¹⁾								880			270
Equity securities - consolidated variable interest entities								179			753
Other investments ⁽²⁾								7,009			3,402
Cash and cash equivalents		4,927			4,859			3,429			3,491
Total investments and cash		122,489			116,361			124,214			123,659
Receivables		937			669			784			827
Accrued investment income		730			754			735			769
Deferred policy acquisition costs		9,413			8,993			9,622			9,505
Property and equipment, at cost less accumulated depreciation		439			433			435			434
Other ⁽²⁾		2,075			2,609
Other ⁽³⁾								2,151			2,023
Total assets		$	136,083		$	129,819		$	137,941		$	137,217


	Nine Months Ended September 30,							Nine Months Ended September 30,
(In millions - Unaudited)		2017			2016				2018			2017
Common stock:
Balance, beginning of period		$	67		$	67			$	135		$	135
Balance, end of period		67			67				135			135
Additional paid-in capital:
Balance, beginning of period		1,976			1,828				2,052			1,908
Exercise of stock options		33			38				30			33
Share-based compensation		38			41				39			38
Gain (loss) on treasury stock reissued		30			29				30			30
Balance, end of period		2,077			1,936				2,151			2,009
Retained earnings:
Balance, beginning of period		25,981			24,007				29,895			25,981
Cumulative effect of change in accounting principle - financial instruments, net of income taxes ⁽¹⁾									148			0
Cumulative effect of change in accounting principle - tax effects from tax reform ⁽¹⁾									(374		)	0
Net earnings		2,021			1,908				2,395			2,021
Dividends to shareholders		(513		)	(511		)		(603		)	(513		)
Balance, end of period		27,489			25,404				31,461			27,489
Accumulated other comprehensive income (loss):
Balance, beginning of period		2,630			625				4,028			2,630
Cumulative effect of change in accounting principle - financial instruments, net of income taxes ⁽¹⁾									(148		)	0
Cumulative effect of change in accounting principle - tax effects from tax reform ⁽¹⁾									374			0
Unrealized foreign currency translation gains (losses) during period, net of income taxes		268			1,602				(38		)	268
Unrealized gains (losses) on investment securities during period, net of income taxes and reclassification adjustments		632			3,134
Unrealized gains (losses) on fixed maturity securities during period, net of income taxes and reclassification adjustments ⁽¹⁾									(2,310		)	632
Unrealized gains (losses) on derivatives during period, net of income taxes		1			7				2			1
Pension liability adjustment during period, net of income taxes		0			(4		)		1			0
Balance, end of period		3,531			5,364				1,909			3,531
Treasury stock:
Balance, beginning of period		(10,172		)	(8,819		)		(11,512		)	(10,172		)
Purchases of treasury stock		(1,053		)	(1,222		)		(939		)	(1,053		)
Cost of shares issued		38			55				29			38
Balance, end of period		(11,187		)	(9,986		)		(12,422		)	(11,187		)
Total shareholders’ equity		$	21,977		$	22,785			$	23,234		$	21,977



	Nine Months Ended September 30,
(In millions - Unaudited)	2018				2017
Cash flows from operating activities:
Net earnings		$	2,395			$	2,021
Adjustments to reconcile net earnings to net cash provided by operating activities:
Change in receivables and advance premiums		(27		)		(32		)
Capitalization of deferred policy acquisition costs		(1,082		)		(1,077		)
Amortization of deferred policy acquisition costs		932				848
Increase in policy liabilities		1,821				2,137
Change in income tax liabilities		38				323
Realized investment (gains) losses		76				166
Other, net		506				210
Net cash provided (used) by operating activities		4,659				4,596
Cash flows from investing activities:
Proceeds from investments sold or matured:
Available-for-sale fixed maturity securities		5,991				3,382
Equity securities		369				755
Held-to-maturity fixed maturity securities		880				1,714
Other investments - loan receivables		597				134
Costs of investments acquired:
Available-for-sale fixed maturity securities		(7,845		)		(6,827		)
Equity securities		(338		)		(391		)
Other investments - loan receivables		(4,150		)		(916		)
Other investments, excluding loan receivables, net		(136		)		(167		)
Settlement of derivatives, net		(141		)		(240		)
Cash received (pledged or returned) as collateral, net		1,413				(273		)
Other, net		188				(58		)
Net cash provided (used) by investing activities		(3,172		)		(2,887		)
Cash flows from financing activities:
Purchases of treasury stock		(923		)		(1,053		)
Proceeds from borrowings		0				524
Principal payments under debt obligations		0				(660		)
Dividends paid to shareholders		(595		)		(491		)
Change in investment-type contracts, net		(17		)		39
Treasury stock reissued		36				23
Other, net		(14		)		5
Net cash provided (used) by financing activities		(1,513		)		(1,613		)
Effect of exchange rate changes on cash and cash equivalents		(36		)		(28		)
Net change in cash and cash equivalents		(62		)		68
Cash and cash equivalents, beginning of period		3,491				4,859
Cash and cash equivalents, end of period		$	3,429			$	4,927
Supplemental disclosures of cash flow information:
Income taxes paid		$	827			$	693
Interest paid		124				144
Noncash interest		41				38
Impairment losses included in realized investment losses		17				27
Noncash financing activities:
Capital lease obligations		10				7
Treasury stock issued for:
Associate stock bonus		7				22
Shareholder dividend reinvestment		8				22
Share-based compensation grants		2				1



Standard	Description	Date of Adoption	Effect on Financial Statements or Other Significant Matters
Accounting Standards Update (ASU) 2018-03 Technical Corrections and Improvements to Financial Instruments - Overall	In February 2018, the FASB issued amendments to clarify certain aspects of the guidance issued in the original Financial Instruments - Overall - Recognition and Measurement pronouncement summarized below. Specifically, for entities who have chosen the measurement alternative approach for equity securities without readily determinable fair values, the amendments clarify that entities may change from a measurement alternative approach to a fair value method through an irrevocable election that would apply to a specific equity security and all identical or similar investments of the same issuer; entities should use an observable price at the date of the transaction rather than reporting date for the measurement alternative calculation; and insurance companies should use a prospective transition method when applying the measurement alternative. The amendments are effective for public business entities for fiscal years beginning after December 15, 2017, and interim periods within those fiscal years beginning after June 15, 2018. All entities may early adopt these amendments for fiscal years beginning after December 15, 2017, including interim periods within those fiscal years, as long as they have adopted the Financial Instruments - Overall - Recognition and Measurement guidance discussed below.	Early adopted as of January 1, 2018	The adoption of this guidance did not have a significant impact on the Company’s financial position, results of operations, or disclosures.



(In millions)	September 30, 2018			December 31, 2017
Assets:
Aflac Japan		$	116,181		$	114,402
Aflac U.S.		19,585			19,893
Corporate and other		2,175			2,922
Total assets		$	137,941		$	137,217



(In millions)	September 30, 2017			December 31, 2016
Assets:
Aflac Japan		$	113,625		$	107,858
Aflac U.S.		20,348			19,453
Other business segments		513			270
Total business segment assets		134,486			127,581
Corporate and eliminations		1,597			2,238
Total assets		$	136,083		$	129,819



	September 30, 2018
(In millions)	Cost or Amortized Cost				Gross Unrealized Gains			Gross Unrealized Losses			��Fair Value
Securities available for sale, carried at fair value through other comprehensive income:
Fixed maturity securities: ⁽¹⁾
Yen-denominated:
Japan government and agencies		$	29,499			$	2,955		$	426		$	32,028
Municipalities		376				25			17			384
Mortgage- and asset-backed securities		151				21			0			172
Public utilities		1,685				303			9			1,979
Sovereign and supranational		1,116				133			1			1,248
Banks/financial institutions		5,317				602			159			5,760
Other corporate		4,618				683			36			5,265
Total yen-denominated		42,762				4,722			648			46,836
U.S. dollar-denominated:
U.S. government and agencies		136				7			1			142
Municipalities		1,339				123			12			1,450
Mortgage- and asset-backed securities		154				8			1			161
Public utilities		4,863				562			91			5,334
Sovereign and supranational		248				61			0			309
Banks/financial institutions		2,767				431			19			3,179
Other corporate		23,983				1,677			775			24,885
Total U.S. dollar-denominated		33,490				2,869			899			35,460
Total securities available for sale		$	76,252	⁽¹⁾		$	7,591		$	1,547		$	82,296	⁽¹⁾



	September 30, 2017
(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		$	27,027		$	3,272		$	423		$	29,876
Municipalities		315			26			15			326
Mortgage- and asset-backed securities		248			29			0			277
Public utilities		1,643			369			7			2,005
Sovereign and supranational		1,428			190			3			1,615
Banks/financial institutions		3,307			494			59			3,742
Other corporate		3,811			771			25			4,557
Total yen-denominated		37,779			5,151			532			42,398
U.S. dollar-denominated:
U.S. government and agencies		150			12			0			162
Municipalities		818			148			0			966
Mortgage- and asset-backed securities		166			13			0			179
Public utilities		5,231			813			34			6,010
Sovereign and supranational		325			89			0			414
Banks/financial institutions		2,683			592			7			3,268
Other corporate		25,092			2,388			462			27,018
Total U.S. dollar-denominated		34,465			4,055			503			38,017
Total fixed maturities		72,244			9,206			1,035			80,415
Perpetual securities:
Yen-denominated:
Banks/financial institutions		1,308			277			32			1,553
Other corporate		195			41			0			236
U.S. dollar-denominated:
Banks/financial institutions		46			28			0			74
Total perpetual securities		1,549			346			32			1,863
Equity securities:
Yen-denominated		555			95			2			648
U.S. dollar-denominated		256			30			6			280
Total equity securities		811			125			8			928
Total securities available for sale		$	74,604		$	9,677		$	1,075		$	83,206



	December 31, 2016
(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		$	22,857		$	3,359		$	160		$	26,056
Municipalities		246			29			8			267
Mortgage- and asset-backed securities		1,096			33			8			1,121
Public utilities		1,533			318			3			1,848
Sovereign and supranational		862			186			5			1,043
Banks/financial institutions		2,673			403			74			3,002
Other corporate		3,192			623			3			3,812
Total yen-denominated		32,459			4,951			261			37,149
U.S dollar-denominated:
U.S. government and agencies		148			10			0			158
Municipalities		894			142			8			1,028
Mortgage- and asset-backed securities		196			20			0			216
Public utilities		5,205			690			60			5,835
Sovereign and supranational		335			91			0			426
Banks/financial institutions		2,570			507			16			3,061
Other corporate		24,556			2,021			690			25,887
Total U.S. dollar-denominated		33,904			3,481			774			36,611
Total fixed maturities		66,363			8,432			1,035			73,760
Perpetual securities:
Yen-denominated:
Banks/financial institutions		1,266			128			49			1,345
Other corporate		189			24			0			213
U.S. dollar-denominated:
Banks/financial institutions		51			24			0			75
Total perpetual securities		1,506			176			49			1,633
Equity securities:
Yen-denominated		624			83			2			705
U.S. dollar-denominated		579			31			6			604
Total equity securities		1,203			114			8			1,309
Total securities available for sale		$	69,072		$	8,722		$	1,092		$	76,702



	December 31, 2017
(In millions)	Cost or Amortized Cost				Gross Unrealized Gains			Gross Unrealized Losses			Fair Value
Securities available for sale, carried at fair value:
Fixed maturity securities: ⁽¹⁾
Yen-denominated:
Japan government and agencies		$	27,980			$	3,363		$	271		$	31,072
Municipalities		314				28			12			330
Mortgage- and asset-backed securities		242				29			0			271
Public utilities		1,635				352			6			1,981
Sovereign and supranational		1,380				190			1			1,569
Banks/financial institutions		4,742				811			53			5,500
Other corporate		4,085				809			7			4,887
Total yen-denominated		40,378				5,582			350			45,610
U.S dollar-denominated:
U.S. government and agencies		146				13			1			158
Municipalities		872				168			0			1,040
Mortgage- and asset-backed securities		161				12			0			173
Public utilities		5,116				884			27			5,973
Sovereign and supranational		267				73			0			340
Banks/financial institutions		2,808				633			8			3,433
Other corporate		25,384				2,620			418			27,586
Total U.S. dollar-denominated		34,754				4,403			454			38,703
Total securities available for sale		$	75,132	⁽¹⁾		$	9,985		$	804		$	84,313	⁽¹⁾


1.	SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES


2.	BUSINESS SEGMENT INFORMATION


3.	INVESTMENTS


	September 30, 2017																		September 30, 2018
	Total						Less than 12 months						12 months or longer						Total						Less than 12 months						12 months or longer
(In millions)	Fair Value			Unrealized Losses			Fair Value			Unrealized Losses			Fair Value			Unrealized Losses			Fair Value			Unrealized Losses			Fair Value			Unrealized Losses			Fair Value			Unrealized Losses
Fixed Maturities:
Fixed maturity securities: ⁽¹⁾
U.S. government and agencies:
U.S. dollar-denominated																				$	80		$	1		$	80		$	1		$	0		$	0
Japan government and agencies:
Yen-denominated		$	6,404		$	423		$	6,208		$	399		$	196		$	24		9,221			426			9,221			426			0			0
Municipalities:
U.S. dollar-denominated																				490			12			490			12			0			0
Yen-denominated		152			15			62			3			90			12			224			17			224			17			0			0
Mortgage- and asset- backed securities:
U.S. dollar-denominated																				81			1			81			1			0			0
Public utilities:
U.S. dollar-denominated		879			34			252			4			627			30			1,726			91			1,721			91			5			0
Yen-denominated		95			7			69			6			26			1			381			10			381			10			0			0
Sovereign and supranational:
Yen-denominated		352			3			352			3			0			0			43			1			43			1			0			0
Banks/financial institutions:
U.S. dollar-denominated		188			7			145			3			43			4			552			19			517			18			35			1
Yen-denominated		1,616			77			637			29			979			48			2,806			170			2,806			170			0			0
Other corporate:
U.S. dollar-denominated		7,886			462			2,803			52			5,083			410			11,731			775			11,291			744			440			31
Yen-denominated		424			25			386			24			38			1			1,134			42			1,134			42			0			0
Total fixed maturities		17,996			1,053			10,914			523			7,082			530
Perpetual securities:
Yen-denominated		340			32			0			0			340			32
Total perpetual securities		340			32			0			0			340			32
Equity securities:
U.S. dollar-denominated		58			6			50			5			8			1
Yen-denominated		72			2			67			1			5			1
Total equity securities		130			8			117			6			13			2
Total		$	18,466		$	1,093		$	11,031		$	529		$	7,435		$	564		$	28,469		$	1,565		$	27,989		$	1,533		$	480		$	32

																	Securities Lending Transactions Accounted for as Secured Borrowings
September 30, 2017
September 30, 2018							September 30, 2018
Remaining Contractual Maturity of the Agreements
(In millions)	Overnight and Continuous⁽¹⁾		Up to 30 days		Total		Overnight and Continuous⁽¹⁾		Up to 30 days		30-90 days		Greater than 90 days		Total
Securities lending transactions:
Fixed maturity securities:
Japan government and agencies							$	15	$	1,516	1		$	1,158	$	2,690
Public utilities	$	37	$	0	$	37	17		0		0		0		17
Banks/financial institutions	37		0		37		48		0		0		0		48
Other corporate	434		0		434		365		0		0		0		365
Equity securities	14		0		14		8		0		0		0		8
Total borrowings	$	522	$	0	$	522	$	453	$	1,516	$	1	$	1,158	$	3,128
Gross amount of recognized liabilities for securities lending transactions	Gross amount of recognized liabilities for securities lending transactions				$	522	Gross amount of recognized liabilities for securities lending transactions								$	1,970
Amounts related to agreements not included in offsetting disclosure in Note 4	Amounts related to agreements not included in offsetting disclosure in Note 4				$	0	Amounts related to agreements not included in offsetting disclosure in Note 4								$	1,158



(In millions)		Hedging Derivatives									Hedged Items
Hedging Derivatives	Hedged Items	Total Gains (Losses)			Gains (Losses) Excluded from Effectiveness Testing			Gains (Losses) Included in Effectiveness Testing			Gains (Losses)			Ineffectiveness Recognized for Fair Value Hedge
Three Months Ended September 30, 2018:
Foreign currency forwards	Fixed maturity securities	$	(106	)	$	(19	)	$	(87	)	$	83		$	(4	)
Foreign currency options	Fixed maturity securities	(7		)	(7		)	0			0			0
Nine Months Ended September 30, 2018:
Foreign currency forwards	Fixed maturity securities	$	93		$	(88	)	$	181		$	(195	)	$	(14	)
Foreign currency options	Fixed maturity securities	(10		)	(10		)	0			0			0
Three Months Ended September 30, 2017:
Foreign currency forwards	Fixed maturity and equity securities	$	(114	)	$	(53	)	$	(61	)	$	61		$	0
Foreign currency options	Fixed maturity securities	(14		)	(14		)	0			0			0
Nine Months Ended September 30, 2017:
Foreign currency forwards	Fixed maturity and equity securities	$	193		$	(151	)	$	344		$	(326	)	$	18
Foreign currency options	Fixed maturity securities	3			(8		)	11			(10		)	1


	Three Months Ended September 30,																Nine Months Ended September 30,																Three Months Ended September 30,																Nine Months Ended September 30,
	2017								2016								2017								2016								2018								2017								2018								2017
(In millions)	Realized Investment Gains (Losses)				Other Comprehensive Income (Loss)⁽¹⁾				Realized Investment Gains (Losses)				Other Comprehensive Income (Loss)⁽¹⁾				Realized Investment Gains (Losses)				Other Comprehensive Income (Loss)⁽¹⁾				Realized Investment Gains (Losses)				Other Comprehensive Income (Loss)⁽¹⁾				Realized Investment Gains (Losses)				Other Comprehensive Income (Loss)⁽¹⁾				Realized Investment Gains (Losses)				Other Comprehensive Income (Loss)⁽¹⁾				Realized Investment Gains (Losses)				Other Comprehensive Income (Loss)⁽¹⁾				Realized Investment Gains (Losses)				Other Comprehensive Income (Loss)⁽¹⁾
Qualifying hedges:
Cash flow hedges:
Foreign currency swaps		$	0			$	(1	)		$	0			$	0			$	0			$	0			$	1			$	11			$	0			$	(2	)		$	0			$	(1	)		$	1			$	2			$	0			$	0
Total cash flow hedges		0				(1		)		0				0				0				0				1				11				0				(2		)		0				(1		)		1				2				0				0
Fair value hedges:
Foreign currency forwards⁽²⁾		(53		)		0				(198		)		0				(133		)		0				(303		)		0				(23		)						(53		)						(102		)						(133		)
Foreign currency options⁽²⁾		(14		)		0				(4		)		0				(7		)		0				2				0				(7		)						(14		)						(10		)						(7		)
Total fair value hedges		(67		)		0				(202		)		0				(140		)		0				(301		)		0				(30		)						(67		)						(112		)						(140		)
Net investment hedge:
Non- derivative hedging instruments		0				5				0				(2		)		0				(13		)		0				(39		)		0				36				0				5				0				7				0				(13		)
Foreign currency forwards		0				4				0				(28		)		0				(24		)		0				(161		)		0				0				0				4				0				0				0				(24		)
Foreign currency options		0				(5		)		0				31				0				3				0				0				0				0				0				(5		)		0				(8		)		0				3
Total net investment hedge		0				4				0				1				0				(34		)		0				(200		)		0				36				0				4				0				(1		)		0				(34		)
Non-qualifying strategies:
Foreign currency swaps		17				0				(51		)		0				43				0				(145		)		0				23								17								51								43
Foreign currency forwards		10				0				144				0				(46		)		0				165				0				(154		)						10								(129		)						(46		)
Credit default swaps		0				0				2				0				0				0				2				0
Foreign currency options																																		0								0								0								0
Interest rate swaps																																		(1		)						0								(1		)						0
Total non- qualifying strategies		27				0				95				0				(3		)		0				22				0				(132		)						27								(79		)						(3		)
Total		$	(40	)		$	3			$	(107	)		$	1			$	(143	)		$	(34	)		$	(278	)		$	(189	)		$	(162	)		$	34			$	(40	)		$	3			$	(190	)		$	1			$	(143	)		$	(34	)



December 31, 2017
												Gross Amounts Not Offset in Balance Sheet
(In millions)	Gross Amount of Recognized Liabilities				Gross Amount Offset in Balance Sheet			Net Amount of Liabilities Presented in Balance Sheet				Financial Instruments			Securities Collateral		Cash Collateral Pledged			Net Amount
Derivative liabilities:
Derivative liabilities subject to a master netting agreement or offsetting arrangement
OTC - bilateral		$	(346	)		$	0		$	(346	)		$	82	$	245		$	10		$	(9	)
Total derivative liabilities subject to a master netting agreement or offsetting arrangement		(346		)		0			(346		)		82		245			10			(9		)
Derivative liabilities not subject to a master netting agreement or offsetting arrangement
OTC - bilateral		(128		)					(128		)										(128		)
Total derivative liabilities not subject to a master netting agreement or offsetting arrangement		(128		)					(128		)										(128		)
Total derivative liabilities		(474		)		0			(474		)		82		245			10			(137		)
Securities lending and similar arrangements		(606		)		0			(606		)		592		0			0			(14		)
Total		$	(1,080	)		$	0		$	(1,080	)		$	674	$	245		$	10		$	(151	)



	December 31, 2017
(In millions)	Quoted Prices in Active Markets for Identical Assets (Level 1)			Significant Observable Inputs (Level 2)			Significant Unobservable Inputs (Level 3)			Total Fair Value
Assets:
Securities available for sale, carried at fair value:
Fixed maturity securities: ⁽¹⁾
Government and agencies		$	30,109		$	1,121		$	0		$	31,230
Municipalities		0			1,370			0			1,370
Mortgage- and asset-backed securities		0			269			175			444
Public utilities		0			7,886			68			7,954
Sovereign and supranational		0			1,909			0			1,909
Banks/financial institutions		0			8,908			25			8,933
Other corporate		0			32,327			146			32,473
Total fixed maturity securities		30,109			53,790			414			84,313		⁽¹⁾
Equity securities		1,001			6			16			1,023
Other investments		57			0			0			57
Cash and cash equivalents		3,491			0			0			3,491
Other assets:
Foreign currency swaps		0			146			150			296
Foreign currency forwards		0			22			0			22
Foreign currency options		0			12			0			12
Credit default swaps		0			0			1			1
Total other assets		0			180			151			331
Total assets		$	34,658		$	53,976		$	581		$	89,215
Liabilities:
Other liabilities:
Foreign currency swaps		$	0		$	69		$	128		$	197
Foreign currency forwards		0			274			0			274
Foreign currency options		0			3			0			3
Total liabilities		$	0		$	346		$	128		$	474



	December 31, 2017
(In millions)	Carrying Value			Quoted Prices in Active Markets for Identical Assets (Level 1)			Significant Observable Inputs (Level 2)			Significant Unobservable Inputs (Level 3)			Total Fair Value
Assets:
Securities held to maturity, carried at amortized cost:
Fixed maturity securities:
Government and agencies		$	21,331		$	26,491		$	0		$	0		$	26,491
Municipalities		357			0			462			0			462
Mortgage and asset-backed securities		26			0			8			19			27
Public utilities		3,300			0			3,698			0			3,698
Sovereign and supranational		1,523			0			1,835			0			1,835
Banks/financial institutions		2,206			0			2,387			0			2,387
Other corporate		2,687			0			3,172			0			3,172
Other investments ⁽¹⁾		3,017			0			15			2,987			3,002
Total assets		$	34,447		$	26,491		$	11,577		$	3,006		$	41,074
Liabilities:
Other policyholders’ funds		$	6,939		$	0		$	0		$	6,841		$	6,841
Notes payable (excluding capital leases)		5,267			0			5,288			265			5,553
Total liabilities		$	12,206		$	0		$	5,288		$	7,106		$	12,394



	September 30, 2018
(In millions)	Quoted Prices in Active Markets for Identical Assets (Level 1)			Significant Observable Inputs (Level 2)			Significant Unobservable Inputs (Level 3)			Total Fair Value
Securities available for sale, carried at fair value:
Fixed maturity securities: ⁽¹⁾
Government and agencies:
Third party pricing vendor		$	30,888		$	1,282		$	0		$	32,170
Total government and agencies		30,888			1,282			0			32,170
Municipalities:
Third party pricing vendor		0			1,834			0			1,834
Total municipalities		0			1,834			0			1,834
Mortgage- and asset-backed securities:
Third party pricing vendor		0			161			0			161
Broker/other		0			0			172			172
Total mortgage- and asset-backed securities		0			161			172			333
Public utilities:
Third party pricing vendor		0			7,209			0			7,209
Broker/other		0			0			104			104
Total public utilities		0			7,209			104			7,313
Sovereign and supranational:
Third party pricing vendor		0			1,557			0			1,557
Total sovereign and supranational		0			1,557			0			1,557
Banks/financial institutions:
Third party pricing vendor		0			8,916			0			8,916
Broker/other		0			0			23			23
Total banks/financial institutions		0			8,916			23			8,939
Other corporate:
Third party pricing vendor		0			29,861			0			29,861
Broker/other		0			98			191			289
Total other corporate		0			29,959			191			30,150
Total securities available for sale		$	30,888		$	50,918		$	490		$	82,296	⁽¹⁾
Equity securities, carried at fair value: ⁽¹⁾
Third party pricing vendor		$	972		$	71		$	0		$	1,043
Broker/other		0			0			16			16
Total equity securities		$	972		$	71		$	16		$	1,059	⁽¹⁾



	December 31, 2017
(In millions)	Quoted Prices in Active Markets for Identical Assets (Level 1)			Significant Observable Inputs (Level 2)			Significant Unobservable Inputs (Level 3)			Total Fair Value
Securities available for sale, carried at fair value:
Fixed maturity securities: ⁽¹⁾
Government and agencies:
Third party pricing vendor		$	30,109		$	1,121		$	0		$	31,230
Total government and agencies		30,109			1,121			0			31,230
Municipalities:
Third party pricing vendor		0			1,370			0			1,370
Total municipalities		0			1,370			0			1,370
Mortgage- and asset-backed securities:
Third party pricing vendor		0			269			0			269
Broker/other		0			0			175			175
Total mortgage- and asset-backed securities		0			269			175			444
Public utilities:
Third party pricing vendor		0			7,886			0			7,886
Broker/other		0			0			68			68
Total public utilities		0			7,886			68			7,954
Sovereign and supranational:
Third party pricing vendor		0			1,807			0			1,807
Broker/other		0			102			0			102
Total sovereign and supranational		0			1,909			0			1,909
Banks/financial institutions:
Third party pricing vendor		0			8,908			0			8,908
Broker/other		0			0			25			25
Total banks/financial institutions		0			8,908			25			8,933
Other corporate:
Third party pricing vendor		0			32,327			0			32,327
Broker/other		0			0			146			146
Total other corporate		0			32,327			146			32,473
Total securities available for sale		$	30,109		$	53,790		$	414		$	84,313	⁽¹⁾
Equity securities, carried at fair value:
Third party pricing vendor		$	1,001		$	6		$	0		$	1,007
Broker/other		0			0			16			16
Total equity securities		$	1,001		$	6		$	16		$	1,023



Three Months Ended September 30, 2018
	Fixed Maturity Securities											Equity Securities			Derivatives ⁽¹⁾
(In millions)	Mortgage- and Asset- Backed Securities			Public Utilities			Banks/ Financial Institutions		Other Corporate						Foreign Currency Swaps			Credit Default Swaps		Total
Balance, beginning of period	$	178		$	106		$	23	$	196		$	17		$	110		$	0	$	630
Realized investment gains (losses) included in earnings	0			0			0		0			(1		)	(19		)	0		(20		)
Unrealized gains (losses) included in other comprehensive income (loss)	(6		)	(2		)	0		(4		)	0			(2		)	0		(14		)
Purchases, issuances, sales and settlements:
Purchases	0			0			0		0			0			0			0		0
Issuances	0			0			0		0			0			0			0		0
Sales	0			0			0		0			0			0			0		0
Settlements	0			0			0		(1		)	0			0			0		(1		)
Transfers into Level 3	0			0			0		0			0			0			0		0
Transfers out of Level 3	0			0			0		0			0			0			0		0
Balance, end of period	$	172		$	104		$	23	$	191		$	16		$	89		$	0	$	595
Changes in unrealized gains (losses) relating to Level 3 assets and liabilities still held at the end of the period included in realized investment gains (losses)	$	0		$	0		$	0	$	0		$	(1	)	$	(19	)	$	0	$	(20	)



Three Months Ended September 30, 2017
	Fixed Maturities										Equity Securities		Derivatives ⁽¹⁾
(In millions)	Mortgage- and Asset- Backed Securities			Public Utilities		Banks/ Financial Institutions		Other Corporate					Foreign Currency Swaps		Credit Default Swaps			Total
Balance, beginning of period	$	188		$	53	$	25	$	77		$	14	$	7	$	2		$	366
Realized investment gains (losses) included in earnings	0			0		0		0			0		8		(1		)	7
Unrealized gains (losses) included in other comprehensive income (loss)	(2		)	0		0		1			0		0		0			(1		)
Purchases, issuances, sales and settlements:
Purchases	0			24		0		25			4		0		0			53
Issuances	0			0		0		0			0		0		0			0
Sales	0			0		0		(1		)	0		0		0			(1		)
Settlements	(8		)	0		0		0			0		0		0			(8		)
Transfers into Level 3	0			0		0		0			0		0		0			0
Transfers out of Level 3	0			0		0		0			0		0		0			0
Balance, end of period	$	178		$	77	$	25	$	102		$	18	$	15	$	1		$	416
Changes in unrealized gains (losses) relating to Level 3 assets and liabilities still held at the end of the period included in realized investment gains (losses)	$	0		$	0	$	0	$	0		$	0	$	8	$	(1	)	$	7



Three Months Ended September 30, 2016
	Fixed Maturities									Equity Securities		Derivatives ⁽¹⁾
(In millions)	Mortgage- and Asset- Backed Securities			Public Utilities		Banks/ Financial Institutions		Other Corporate					Foreign Currency Swaps			Credit Default Swaps		Total
Balance, beginning of period	$	252		$	0	$	26	$	0	$	3		$	59		$	1	$	341
Realized investment gains (losses) included in earnings	0			0		0		0		0			(18		)	2		(16		)
Unrealized gains (losses) included in other comprehensive income (loss)	1			0		0		0		0			0			0		1
Purchases, issuances, sales and settlements:
Purchases	0			0		0		0		0			0			0		0
Issuances	0			0		0		0		0			0			0		0
Sales	0			0		0		0		0			0			0		0
Settlements	(13		)	0		0		0		0			0			0		(13		)
Transfers into Level 3	0			0		0		0		0			0			0		0
Transfers out of Level 3	0			0		0		0		0			0			0		0
Balance, end of period	$	240		$	0	$	26	$	0	$	3		$	41		$	3	$	313
Changes in unrealized gains (losses) relating to Level 3 assets and liabilities still held at the end of the period included in realized investment gains (losses)	$	0		$	0	$	0	$	0	$	0		$	(18	)	$	2	$	(16	)


Nine Months Ended September 30, 2017
Nine Months Ended September 30, 2018																							Nine Months Ended September 30, 2018
	Fixed Maturities										Equity Securities			Derivatives ⁽¹⁾									Fixed Maturity Securities												Equity Securities			Derivatives ⁽¹⁾
(In millions)	Mortgage- and Asset- Backed Securities			Public Utilities		Banks/ Financial Institutions		Other Corporate						Foreign Currency Swaps			Credit Default Swaps			Total			Mortgage- and Asset- Backed Securities			Public Utilities			Banks/ Financial Institutions			Other Corporate						Foreign Currency Swaps		Credit Default Swaps			Total
Balance, beginning of period	$	198		$	16	$	25	$	0		$	3		$	(21	)	$	2		$	223		$	175		$	68		$	25		$	146		$	16		$	22	$	1		$	453
Realized investment gains (losses) included in earnings	0			0		0		0			0			36			(1		)	35			0			0			0			0			(1		)	65		(1		)	63
Unrealized gains (losses) included in other comprehensive income (loss)	4			0		0		3			0			0			0			7			(3		)	(4		)	(2		)	(6		)	0			2		0			(13		)
Purchases, issuances, sales and settlements:
Purchases	0			61		0		100			16			0			0			177			0			40			0			55			1			0		0			96
Issuances	0			0		0		0			0			0			0			0			0			0			0			0			0			0		0			0
Sales	0			0		0		(1		)	(1		)	0			0			(2		)	0			0			0			0			0			0		0			0
Settlements	(24		)	0		0		0			0			0			0			(24		)	0			0			0			(4		)	0			0		0			(4		)
Transfers into Level 3	0			0		0		0			0			0			0			0			0			0			0			0			0			0		0			0
Transfers out of Level 3	0			0		0		0			0			0			0			0			0			0			0			0			0			0		0			0
Balance, end of period	$	178		$	77	$	25	$	102		$	18		$	15		$	1		$	416		$	172		$	104		$	23		$	191		$	16		$	89	$	0		$	595
Changes in unrealized gains (losses) relating to Level 3 assets and liabilities still held at the end of the period included in realized investment gains (losses)	$	0		$	0	$	0	$	0		$	0		$	36		$	(1	)	$	35		$	0		$	0		$	0		$	0		$	(1	)	$	65	$	(1	)	$	63


Nine Months Ended September 30, 2016
Nine Months Ended September 30, 2017																				Nine Months Ended September 30, 2017
	Fixed Maturities									Equity Securities		Derivatives ⁽¹⁾								Fixed Maturity Securities										Equity Securities			Derivatives ⁽¹⁾
(In millions)	Mortgage- and Asset- Backed Securities			Public Utilities		Banks/ Financial Institutions		Other Corporate				Foreign Currency Swaps			Credit Default Swaps		Total			Mortgage- and Asset- Backed Securities			Public Utilities		Banks/ Financial Institutions		Other Corporate						Foreign Currency Swaps			Credit Default Swaps			Total
Balance, beginning of period	$	220		$	0	$	26	$	0	$	3	$	(192	)	$	1	$	58		$	198		$	16	$	25	$	0		$	3		$	(21	)	$	2		$	223
Realized investment gains (losses) included in earnings	0			0		0		0		0		250			2		252			0			0		0		0			0			36			(1		)	35
Unrealized gains (losses) included in other comprehensive income (loss)	48			0		0		0		0		(16		)	0		32			4			0		0		3			0			0			0			7
Purchases, issuances, sales and settlements:
Purchases	0			0		0		0		0		0			0		0			0			61		0		100			16			0			0			177
Issuances	0			0		0		0		0		0			0		0			0			0		0		0			0			0			0			0
Sales	0			0		0		0		0		0			0		0			0			0		0		(1		)	(1		)	0			0			(2		)
Settlements	(28		)	0		0		0		0		(1		)	0		(29		)	(24		)	0		0		0			0			0			0			(24		)
Transfers into Level 3	0			0		0		0		0		0			0		0			0			0		0		0			0			0			0			0
Transfers out of Level 3	0			0		0		0		0		0			0		0			0			0		0		0			0			0			0			0
Balance, end of period	$	240		$	0	$	26	$	0	$	3	$	41		$	3	$	313		$	178		$	77	$	25	$	102		$	18		$	15		$	1		$	416
Changes in unrealized gains (losses) relating to Level 3 assets and liabilities still held at the end of the period included in realized investment gains (losses)	$	0		$	0	$	0	$	0	$	0	$	250		$	2	$	252		$	0		$	0	$	0	$	0		$	0		$	36		$	(1	)	$	35



Borrower	Type	Term	Expiration Date	Capacity	Amount Outstanding	Interest Rate on Borrowed Amount	Maturity Period	Commitment Fee	Business Purpose
Aflac Incorporated and Aflac	uncommitted bilateral	364 days	November 30, 2018	$100 million	$0 million	The rate quoted by the bank and agreed upon at the time of borrowing	Up to 3 months	None	General corporate purposes
Aflac Incorporated	unsecured revolving	3 years	March 31, 2019, or the date commitments are terminated pursuant to an event of default	100.0 billion yen	0.0 billion yen	A rate per annum equal to (a) Tokyo interbank market rate (TIBOR) plus, the alternative applicable TIBOR margin during the availability period from the closing date to the commitment termination date or (b) the TIBOR rate offered by the agent to major banks in yen for the applicable period plus, the applicable alternative TIBOR margin during the term out period	No later than March 31, 2019	.30% to .50%, depending on the Parent Company's debt ratings as of the date of determination	General corporate purposes, including a capital contingency plan for the operations of the Parent Company
Aflac Incorporated and Aflac	unsecured revolving	5 years	April 4, 2023, or the date commitments are terminated pursuant to an event of default⁽¹⁾	55.0 billion yen, or the equivalent amount in U.S. dollars	0.0 billion yen	A rate per annum equal to, at the Company's option, either, (a) London Interbank Offered Rate (LIBOR) adjusted for certain costs or (b) a base rate determined by reference to the highest of (1) the federal funds rate plus 1/2 of 1%, (2) the rate of interest for such day announced by Mizuho Bank, Ltd. as its prime rate, or (3) the eurocurrency rate for an interest period of one month plus 1.00%, in each case plus an applicable margin	No later than April 4, 2023	.085% to .225%, depending on the Parent Company's debt ratings as of the date of determination	General corporate purposes, including a capital contingency plan for the operations of the Parent Company
Aflac Incorporated and Aflac	uncommitted bilateral	None specified	None specified	$50 million	$0 million	A rate per annum equal to, at the Parent Company's option, either (a) a eurocurrency rate determined by reference to the agent's LIBOR for the interest period relevant to such borrowing or (b) the base rate determined by reference to the greater of (i) the prime rate as determined by the agent, and (ii) the sum of 0.50% and the federal funds rate for such day	Up to 3 months	None	General corporate purposes
Aflac⁽²⁾	uncommitted revolving	364 days	November 30, 2018	$250 million	$0 million	USD three-month LIBOR plus 75 basis points per annum	3 months	None	General corporate purposes
Aflac Incorporated⁽²⁾	uncommitted revolving	364 days	April 2, 2019	37.5 billion yen	0.0 billion yen	Three-month TIBOR plus 80 basis points per annum	3 months	None	General corporate purposes



(In thousands of shares)	2018		2017
Common stock - issued:
Balance, beginning of period	1,345,762		1,342,498
Exercise of stock options and issuance of restricted shares	1,614		2,840
Balance, end of period	1,347,376		1,345,338
Treasury stock:
Balance, beginning of period	564,852		530,877
Purchases of treasury stock:
Open market	20,443		27,796
Other	361		872
Dispositions of treasury stock:
Shares issued to AFL Stock Plan	(850	)	(1,392	)
Exercise of stock options	(430	)	(526	)
Other	(113	)	(39	)
Balance, end of period	584,263		557,588
Shares outstanding, end of period	763,113		787,750



	Three Months Ended September 30,				Nine Months Ended September 30,
(In thousands)	2018		2017		2018		2017
Anti-dilutive share-based awards		46		532		34		670



Three Months Ended September 30, 2018
(In millions)	Unrealized Foreign Currency Translation Gains (Losses)				Unrealized Gains (Losses) on Investment Securities				Unrealized Gains (Losses) on Derivatives				Pension Liability Adjustment				Total
Balance, beginning of period		$	(1,766	)		$	4,836			$	(23	)		$	(195	)		$	2,852
Other comprehensive income (loss) before reclassification		(347		)		(569		)		(1		)		(2		)		(919		)
Amounts reclassified from accumulated other comprehensive income (loss)		0				(27		)		0				3				(24		)
Net current-period other comprehensive income (loss)		(347		)		(596		)		(1		)		1				(943		)
Balance, end of period		$	(2,113	)		$	4,240			$	(24	)		$	(194	)		$	1,909



(In millions)	Nine Months Ended September 30, 2018
Details about Accumulated Other Comprehensive Income Components	Amount Reclassified from Accumulated Other Comprehensive Income				Affected Line Item in the Statements of Earnings
Unrealized gains (losses) on available-for-sale securities		$	(2	)	Other-than-temporary impairment losses realized
		13			Other gains (losses)
		11			Total before tax
		(3		)	Tax (expense) or benefit⁽¹⁾
		$	8		Net of tax
Amortization of defined benefit pension items:
Actuarial gains (losses)		$	(13	)	Acquisition and operating expenses⁽²⁾
Prior service (cost) credit		0			Acquisition and operating expenses⁽²⁾
		5			Tax (expense) or benefit⁽¹⁾
		$	(8	)	Net of tax
Total reclassifications for the period		$	0		Net of tax



	Stock Option Shares (in thousands)		Weighted-Average Remaining Term (in years)		Aggregate Intrinsic Value (in millions)			Weighted-Average Exercise Price Per Share
Outstanding		5,600		5.2		$	105		$	28.33
Exercisable		4,084		4.2		83			26.87