What changed in this filing

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Item 1. Financial Statements

2024-11-01 compared with 2024-08-01 · 320 added, 210 removed, 2489 unchanged (18% of the section changed)

2 unchanged sentences

Consolidated Statements of Earnings

Three Months Ended June 30, Six Months Ended June 30,

Three Months Ended September 30, Nine Months Ended September 30,

(In millions, except for share and per-share amounts - Unaudited) 2024 2023 2024 2023

27 unchanged sentences

Cash dividends per share $ .50 $ .42 $ 1.50 $ 1.26

(1) Includes a gain (loss) of $( 2 ) and $( 1 ) for the three-month periods and $( 5 ) and $( 1 ) for the six-month periods ended June 30, 2024 and 2023, respectively, related to remeasurement of the deferred profit liability for limited-payment contracts.

(1) Includes a gain (loss) of $( 75 ) and $ 22 for the three-month periods and $( 80 ) and $ 22 for the nine-month periods ended September 30, 2024 and 2023, respectively, related to remeasurement of the deferred profit liability for limited-payment contracts.

See the accompanying Notes to the Consolidated Financial Statements.

1 unchanged sentence

Consolidated Statements of Comprehensive Income (Loss)

Three Months Ended June 30, Six Months Ended June 30,

Three Months Ended September 30, Nine Months Ended September 30,

(In millions - Unaudited) 2024 2023 2024 2023

19 unchanged sentences

Consolidated Balance Sheets

(In millions, except for share and per-share amounts) June 30,

(In millions, except for share and per-share amounts) September 30,

Investments and cash:

103 unchanged sentences

(In millions, except for per share amounts - Unaudited) Common Stock Additional Paid-in Capital Retained Earnings Accumulated Other Comprehensive Income (Loss) Treasury Stock Total Shareholders'

Balance at June 30, 2024 $ 136 $ 2,835 $ 51,345 $ ( 3,292 ) $ ( 24,977 ) $ 26,047

Net earnings 0 0 ( 93 ) 0 0 ( 93 )

Unrealized foreign currency translation

gains (losses) during period, net of

income taxes 0 0 0 952 0 952

Unrealized gains (losses) on fixed maturity

securities during period, net of income

taxes and reclassification adjustments 0 0 0 156 0 156

Unrealized gains (losses) on derivatives

during period, net of income taxes 0 0 0 2 0 2

Effect of changes in discount rate assumptions

during period, net of income taxes 0 0 0 ( 1,492 ) 0 ( 1,492 )

Pension liability adjustment during period,

net of income taxes 0 0 0 ( 3 ) 0 ( 3 )

Dividends to shareholders (1)

($ .50 per share)

0 0 ( 280 ) 0 0 ( 280 )

Exercise of stock options 0 1 0 0 0 1

Share-based compensation 0 21 0 0 0 21

Purchases of treasury stock 0 0 0 0 ( 505 ) ( 505 )

Treasury stock reissued 0 19 0 0 5 24

Balance at September 30, 2024 $ 136 $ 2,876 $ 50,972 $ ( 3,677 ) $ ( 25,477 ) $ 24,830

(1) Dividends to shareholders are recorded in the period in which they are declared.

See the accompanying Notes to the Consolidated Financial Statements.

Aflac Incorporated and Subsidiaries

Consolidated Statements of Shareholders’ Equity (continued)

(In millions, except for per share amounts - Unaudited) Common Stock Additional Paid-in Capital Retained Earnings Accumulated Other Comprehensive Income (Loss) Treasury Stock Total Shareholders'

Balance at December 31, 2022

44 unchanged sentences

Aflac Incorporated and Subsidiaries

Consolidated Statements of Shareholders’ Equity (continued)

(In millions, except for per share amounts - Unaudited) Common Stock Additional Paid-in Capital Retained Earnings Accumulated Other Comprehensive Income (Loss) Treasury Stock Total Shareholders'

Balance at June 30, 2023 $ 136 $ 2,697 $ 46,937 $ ( 7,338 ) $ ( 21,993 ) $ 20,439

Net earnings 0 0 1,569 0 0 1,569

Unrealized foreign currency translation

gains (losses) during period, net of

income taxes 0 0 0 ( 235 ) 0 ( 235 )

Unrealized gains (losses) on fixed maturity

securities during period, net of income

taxes and reclassification adjustments 0 0 0 ( 2,381 ) 0 ( 2,381 )

Unrealized gains (losses) on derivatives

during period, net of income taxes 0 0 0 1 0 1

Effect of changes in discount rate assumptions

during period, net of income taxes 0 0 0 4,193 0 4,193

Pension liability adjustment during period,

net of income taxes 0 0 0 0 0 0

Dividends to shareholders (1)

($ .42 per share)

0 0 ( 249 ) 0 0 ( 249 )

Exercise of stock options 0 2 0 0 0 2

Share-based compensation 0 20 0 0 0 20

Purchases of treasury stock 0 0 0 0 ( 707 ) ( 707 )

Treasury stock reissued 0 10 0 0 7 17

Balance at September 30, 2023 $ 136 $ 2,729 $ 48,257 $ ( 5,760 ) $ ( 22,693 ) $ 22,669

(1) Dividends to shareholders are recorded in the period in which they are declared.

See the accompanying Notes to the Consolidated Financial Statements.

Aflac Incorporated and Subsidiaries

Consolidated Statements of Cash Flows

Six Months Ended June 30,

Nine Months Ended September 30,

(In millions - Unaudited) 2024 2023

86 unchanged sentences

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 June 30, 2024 and December 31, 2023, the consolidated statements of earnings and comprehensive income (loss) for the three- and six-month periods ended June 30, 2024 and 2023, the consolidated statements of shareholders' equity for the three-month periods ended March 31, 2024 and 2023 and June 30, 2024 and 2023, and the consolidated statements of cash flows for the six-month periods ended June 30, 2024 and 2023.

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, 2024 and December 31, 2023, the consolidated statements of earnings and comprehensive income (loss) for the three- and nine-month periods ended September 30, 2024 and 2023, the consolidated statements of shareholders' equity for the three-month periods ended March 31, 2024 and 2023, June 30, 2024 and 2023, and September 30, 2024 and 2023, and the consolidated statements of cash flows for the nine-month periods ended September 30, 2024 and 2023.

Results of operations for interim periods are not necessarily indicative of results for the entire year.

3 unchanged sentences

These reclassifications had no impact on net earnings or total shareholders' equity.

For the six-month period ended June 30, 2023, an immaterial reclassification was made to the consolidated statement of cash flows related to investments in limited partnerships resulting in an increase to net cash flows provided by operating activities of $ 245 million with a corresponding decrease to net cash flows provided by investing activities.

For the nine-month period ended September 30, 2023, an immaterial reclassification was made to the consolidated statement of cash flows related to investments in limited partnerships resulting in an increase to net cash flows provided by operating activities of $ 251 million with a corresponding decrease to net cash flows provided by investing activities.

New Accounting Pronouncements

11 unchanged sentences

Early adoption is permitted.

The adoption of this guidance has no impact on the Company’s financial position or results of operations.

The Company is evaluating the impact of adoption on its disclosures.

The adoption of this guidance has no impact on the Company’s financial position or results of operations but will expand its disclosures.

The Company has identified its significant segment expenses and developed the required disclosures in accordance with the new guidance, which will be reflected in the notes contained in the Company's 2024 Form 10-K.

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.

11 unchanged sentences

◦ Adjusted revenues are U.S.

GAAP total revenues excluding net investment gains and losses, except for amortized hedge costs/income related to foreign currency exposure management strategies and net interest income/expense from derivatives associated with certain investment strategies, which are reclassified from net investment gains (losses) and included in adjusted earnings as a component of adjusted net investment income when analyzing operations.

reclassified from net investment gains (losses) and included in adjusted earnings as a component of adjusted net investment income when analyzing operations.

◦ Adjusted expenses are U.S.

GAAP total acquisition and operating expenses including the impact of interest from derivatives associated with notes payable but excluding any non-recurring or other items not associated with the normal course of the Company’s insurance operations and that do not reflect the Company’s underlying business performance.

Aflac Japan's adjusted revenues as a percentage of the Company's total adjusted revenues were 56 % in the three- and six-month periods ended June 30, 2024 and 60 % in the three- and six-month periods ended June 30, 2023.

The percentage of the Company's total assets attributable to Aflac Japan was 77 % at June 30, 2024, compared with 80 % at December 31, 2023.

Aflac Japan's adjusted revenues as a percentage of the Company's total adjusted revenues were 55 % and 56 % in the three- and nine-month periods ended September 30, 2024, respectively, and 60 % in both the three- and nine-month periods ended September 30, 2023.

The percentage of the Company's total assets attributable to Aflac Japan was 79 % at September 30, 2024, compared with 80 % at December 31, 2023.

Information regarding operations by reportable segment and Corporate and other follows:

Three Months Ended June 30, Six Months Ended June 30,

Three Months Ended September 30, Nine Months Ended September 30,

(In millions) 2024 2023 2024 2023

19 unchanged sentences

Total revenues $ 2,949 $ 4,950 $ 13,524 $ 14,923

(2) The change in value of federal historic rehabilitation and solar investments in partnerships of $ 30 and $ 53 for the three-month periods and $ 62 and $ 105 for the six-month periods ended June 30, 2024, and 2023, respectively, is included as a reduction to net investment income.

Tax credits on these investments of $ 31 and $ 56 for the three-month periods and $ 64 and $ 108 for the six-month periods ended June 30, 2024, and 2023, respectively, have been recorded as an income tax benefit in the consolidated statements of earnings.

(2) The change in value of federal historic rehabilitation and solar investments in partnerships of $ 57 and $ 64 for the three-month periods and $ 119 and $ 169 for the nine-month periods ended September 30, 2024, and 2023, respectively, is included as a reduction to net investment income.

Tax credits on these investments of $ 78 and $ 63 for the three-month periods and $ 142 and $ 171 for the nine-month periods ended September 30, 2024, and 2023, respectively, have been recorded as an income tax benefit in the consolidated statements of earnings.

See Note 3 for additional information on these investments.

Three Months Ended June 30, Six Months Ended June 30,

Three Months Ended September 30, Nine Months Ended September 30,

(In millions) 2024 2023 2024 2023

20 unchanged sentences

adjusted earnings ( 16 ) ( 33 ) ( 97 ) ( 100 )

See Note 3 for additional information on these investments.

The Company's total assets were as follows:

(In millions) June 30,

(In millions) September 30,

2024 December 31,

5 unchanged sentences

The amortized cost and allowance for credit losses for the Company's investments in fixed maturity securities and the fair values of these investments as well as the fair value of the Company's investments in equity securities are shown in the following tables.

June 30, 2024

September 30, 2024

(In millions)

21 unchanged sentences

dollar-denominated 31,503 0 3,707 698 34,512

Other currencies:

Other corporate 27 0 1 0 28

Total other currencies 27 0 1 0 28

Total securities available-for-sale $ 70,419 $ 0 $ 5,748 $ 3,875 $ 72,292

1 unchanged sentence

(In millions) Amortized

Cost Allowance for Credit Losses Gross

Cost Allowance

Securities available-for-sale, carried at fair

20 unchanged sentences

Total securities available-for-sale $ 70,689 $ 0 $ 6,050 $ 3,449 $ 73,290

June 30, 2024

September 30, 2024

(In millions)

Cost Allowance

Losses Net Carrying Amount Gross

Securities held-to-maturity, carried at

11 unchanged sentences

(In millions) Amortized

Cost Allowance for Credit Losses Net Carrying Amount Gross

Cost Allowance

Securities held-to-maturity, carried at

9 unchanged sentences

Total securities held-to-maturity $ 17,824 $ 5 $ 17,819 $ 1,838 $ 0 $ 19,657

September 30,

2024 December 31,

7 unchanged sentences

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

During the first six months of 2024 and 2023, respectively, the Company did not reclassify any investments from the held-to-maturity category to the available-for-sale category.

During the first nine months of 2024 and 2023, respectively, the Company did not reclassify any investments from the held-to-maturity category to the available-for-sale category.

Contractual and Economic Maturities

The contractual and economic maturities of the Company's investments in fixed maturity securities at June 30, 2024, were as follows:

The contractual and economic maturities of the Company's investments in fixed maturity securities at September 30, 2024, were as follows:

(In millions) Amortized

23 unchanged sentences

Investment exposures that individually exceeded 10% of shareholders' equity were as follows:

June 30, 2024 December 31, 2023

September 30, 2024 December 31, 2023

(In millions) Credit

6 unchanged sentences

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

Three Months Ended June 30, Six Months Ended June 30,

Three Months Ended September 30, Nine Months Ended September 30,

(In millions) 2024 2023 2024 2023

9 unchanged sentences

Equity securities 13

( 9 ) 87 ( 12 )

Credit losses:

10 unchanged sentences

Total net investment gains (losses) $ ( 1,408 ) $ 423 $ 239 $ 1,101

The unrealized holding gains, net of losses, recorded as a component of net investment gains and losses for the three-month period ended June 30, 2024 that relate to equity securities held at the June 30, 2024 reporting date were $ 15 million.

The unrealized holding losses, net of gains, recorded as a component of net investment gains and losses for the three-month period ended June 30, 2023 that relate to equity securities held at the June 30, 2023 reporting date were $ 16 million.

The unrealized holding gains, net of losses, recorded as a component of net investment gains and losses for the six-month period ended June 30, 2024 that relate to equity securities held at the June 30, 2024 reporting date were $ 70 million.

The unrealized holding losses, net of gains, recorded as a component of net investment gains and losses for the six-month period ended June 30, 2023 that relate to equity securities held at the June 30, 2023 reporting date were $ 21 million.

The unrealized holding gains, net of losses, recorded as a component of net investment gains and losses for the three-month period ended September 30, 2024 that relate to equity securities held at the September 30, 2024 reporting date were $ 34 million.

The unrealized holding gains, net of losses, recorded as a component of net investment gains and losses for the three-month period ended September 30, 2023 that relate to equity securities held at the September 30, 2023 reporting date were $ 47 million.

The unrealized holding gains, net of losses, recorded as a component of net investment gains and losses for the nine-month period ended September 30, 2024 that relate to equity securities held at the September 30, 2024 reporting date were $ 79 million.

The unrealized holding gains, net of losses, recorded as a component of net investment gains and losses for the nine-month period ended September 30, 2023 that relate to equity securities held at the September 30, 2023 reporting date were $ 13 million.

Unrealized Investment Gains and Losses

1 unchanged sentence

The net effect on shareholders’ equity of unrealized gains and losses from fixed maturity securities was as follows:

(In millions) June 30,

(In millions) September 30,

2024 December 31,

3 unchanged sentences

Gross Unrealized Loss Aging

The following tables show the fair values and gross unrealized losses of the Company's available-for-sale investments for the periods ended June 30, 2024 and December 31, 2023, aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position.

June 30, 2024

The following tables show the fair values and gross unrealized losses of the Company's available-for-sale investments for the periods ended September 30, 2024 and December 31, 2023, aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position.

September 30, 2024

Total Less than 12 months 12 months or longer

19 unchanged sentences

Sovereign and supranational:

dollar-denominated 14 3 0 0 14 3

Yen-denominated 56 8 0 0 56 8

40 unchanged sentences

For any available-for-sale securities with significant declines in fair value, the Company performs detailed analyses to identify whether the drivers of the declines are due to general market drivers, such as the recent rise in interest rates, or due to credit-related factors.

Identifying the drivers of the declines in fair value helps to align and allocate the Company‘s resources to securities with real credit-related concerns that could impact ultimate collection of principal and interest.

Identifying the drivers of the declines in fair value helps to align and allocate the Company‘s resources to the review and monitoring of securities with real credit-related concerns that could impact ultimate collection of principal and interest.

For any significant declines in fair value determined to be non-interest rate or market-related, the Company performs a more focused review of the related issuers' specific credit profile.

8 unchanged sentences

However, from time to time the Company identifies certain available-for-sale securities where the amortized cost basis exceeds the present value of the cash flows expected to be collected due to credit-related factors and as a result, a credit loss allowance will be estimated.

Based on an evaluation of its securities currently in an unrealized loss position, the Company has determined that those securities should not have a credit loss allowance as of June 30, 2024 .

Based on an evaluation of its securities currently in an unrealized loss position, the Company has determined that those securities should not have a credit loss allowance as of September 30, 2024 .

Refer to the Allowance for Credit Losses section below for additional information.

As of June 30, 2024 and December 31, 2023, the Company had an immaterial amount of fixed maturity securities on nonaccrual status.

As of September 30, 2024 and December 31, 2023, the Company had an immaterial amount of fixed maturity securities on nonaccrual status.

Commercial Mortgage and Other Loans

2 unchanged sentences

The following table reflects the composition of the carrying value for commercial mortgage and other loans by property type as of the periods presented.

(In millions) June 30, 2024 December 31, 2023

(In millions) September 30, 2024 December 31, 2023

Total Amortized

26 unchanged sentences

These loans provide funding for properties undergoing a change in their physical characteristics and/or economic profile and do not typically require any principal repayment prior to the maturity date.

As of June 30, 2024, the Company had $ 400 million in outstanding commitments to fund TREs.

As of September 30, 2024, the Company had $ 362 million in outstanding commitments to fund TREs.

These commitments are contingent on the final underwriting and due diligence to be performed.

5 unchanged sentences

These loans are generally considered to be below investment grade.

The carrying value for MMLs included $ 25 million and $ 24 million for a short-term credit facility that is reflected in other liabilities on the consolidated balance sheets, as of June 30, 2024 and December 31, 2023, respectively.

As of June 30, 2024, the Company had commitments of approximately $ 741 million to fund future MMLs.

The carrying value for MMLs included $ 21 million and $ 24 million for a short-term credit facility that is reflected in other liabilities on the consolidated balance sheets, as of September 30, 2024 and December 31, 2023, respectively.

As of September 30, 2024, the Company had commitments of approximately $ 680 million to fund future MMLs.

These commitments are contingent upon the availability of MMLs that meet the Company's underwriting criteria.

2 unchanged sentences

The infrastructure loan portfolio weighted average rating is investment grade.

As of June 30, 2024, the Company had commitments of approximately $ 5 million to fund future other loans.

As of September 30, 2024, the Company had commitments of approximately $ 1 million to fund future other loans.

These commitments are contingent upon the availability of other loans that meet the Company's underwriting criteria.

11 unchanged sentences

The Company monitors these credit ratings periodically, but not less frequently than quarterly.

The following tables present as of June 30, 2024 the amortized cost basis of TREs, CMLs, MMLs, and other loans by year of origination and credit quality indicator.

The following tables present as of September 30, 2024 the amortized cost basis of TREs, CMLs, MMLs, and other loans by year of origination and credit quality indicator.

Transitional Real Estate Loans

40 unchanged sentences

$ 0 $ 0 $ 0 $ 0 $ 0 $ 0 $ 0 $ 0

Loan Modifications to Borrowers Experiencing Financial Difficulties

The Company granted certain loan modifications to borrowers experiencing financial difficulty during the first six months of 2024 and 2023.

The amount, timing, and extent of modifications granted are considered in determining any credit loss allowance recorded.

Of these loans, 2 % of TREs with an amortized cost of $ 121 million and 6 % of TREs with an amortized cost of $ 332 million were modified in the form of interest rate reductions and other-than-insignificant payment delays during the three- and six-month periods ended June 30, 2024, respectively.

The modifications resulted in a reduction in the weighted-average contractual interest rate from 8.1 % to 7.8 % for the three-month period and 8.2 % to 7.3 % for the six-month period ended June 30, 2024, respectively.

Additionally, an immaterial percentage of MMLs were modified in the form of principal forgiveness during each of the three- and six-month periods ended June 30, 2024.

The modifications resulted in forgiveness of principal of $ 15 million, resulting in a remaining amortized cost of $ 2 million as of June 30, 2024.

Loan modifications for the three- and six-month periods ended June 30, 2023 were immaterial.

Past Due and Nonaccrual Loans

The following tables present an aging of past due and nonaccrual loans at amortized cost, before allowance for credit losses, as of the periods presented.

June 30, 2024

September 30, 2024

(In millions) Current Less Than

6 unchanged sentences

Total $ 11,163 $ 78 $ 587 $ 665 $ 11,828 $ 592

(1) As of June 30, 2024, there were $ 106 of loans that were 90 days or more past due that continued to accrue interest.

(1) As of September 30, 2024, there were $ 18 of loans that were 90 days or more past due that continued to accrue interest.

December 31, 2023

8 unchanged sentences

(1) As of December 31, 2023, there were no loans that were 90 days or more past due that continued to accrue interest.

For the three- and six-month periods ended June 30, 2024 and June 30, 2023, the Company recognized no interest income for TREs, CMLs, MMLs, or other loans on nonaccrual status.

Of these loans, TREs with an amortized cost of $ 68 million and $ 160 million had no credit loss allowance as of June 30, 2024 and December 31, 2023, respectively, because these loans are collateral dependent assets for which the estimated fair values of the collateral were in excess of amortized cost.

As of June 30, 2024, MMLs with an amortized cost of $ 4 million were on nonaccrual status without an allowance for credit losses.

For the three- and nine-month periods ended September 30, 2024 and September 30, 2023, the Company recognized no interest income for TREs, CMLs, MMLs, or other loans on nonaccrual status.

Of these loans, TREs with an amortized cost of $ 202 million and $ 160 million had no credit loss allowance as of September 30, 2024 and December 31, 2023, respectively, because these loans are collateral dependent assets for which the estimated fair values of the collateral were in excess of amortized cost.

As of September 30, 2024, MMLs with an amortized cost of $ 5 million were on nonaccrual status without an allowance for credit losses.

As of December 31, 2023, there were no MMLs on nonaccrual status without an allowance for credit losses.

Loan Modifications to Borrowers Experiencing Financial Difficulties

The Company granted certain loan modifications to borrowers experiencing financial difficulty during the first nine months of 2024 and 2023.

The types of modifications granted may include interest rate reductions, principal forgiveness, other-than-insignificant payment delays, term extensions or a combination of these types of modifications.

The amount, timing, and extent of modifications granted are considered in determining any credit loss allowance recorded.

The following tables present the amortized cost basis of modified loans to borrowers experiencing financial difficulty and the financial effect of the modifications, disaggregated by loan classification and type of modification.

Three Months Ended

September 30, 2024

(In millions) Amortized Cost (1)

% of Total Financial Effect

Transitional Real Estate Loans:

Other-than-insignificant payment

delays $ 123 2.3 % Delay in payments of 24 months on average

(1) Net of allowance for credit losses

Nine Months Ended

September 30, 2024

(In millions) Amortized Cost (1)

% of Total Financial Effect

Transitional Real Estate Loans:

Other-than-insignificant payment

delays $ 198 3.8 % Delay in payments of 29 months on average

Other-than-insignificant payment delays and interest rate

216 4.1 Delay in payments of 47 months on average, and reduction in the weighted-average contractual interest rate from 7.9 % to 6.6 %

(1) Net of allowance for credit losses

Loan modifications to borrowers experiencing financial difficulty for the three- and nine-month periods ended September 30, 2023, were immaterial.

The following table presents an aging of loans that received modifications in the 12 months preceding the period presented, at amortized cost.

September 30, 2024

(In millions) Current Less Than

Past Due 90 Days

Transitional real estate loans $ 414 $ 0 $ 0

The Company closely monitors the performance of the loans that are modified to borrowers experiencing financial difficulty to understand the effectiveness of its modification efforts.

Loans that were granted a modification in the past 12 months, as of September 30, 2024, and subsequently defaulted in the three- and nine-month periods ended September 30, 2024, were immaterial.

There were no modified loans to borrowers experiencing financial difficulties in the past 12 months, as of September 30, 2023, that subsequently defaulted in the three- and nine-month periods ended September 30, 2023.

As of September 30, 2024, the Company had $ 6 million of outstanding commitments to lend additional funds to borrowers experiencing financial difficulty that were granted a loan modification.

Allowance for Credit Losses

The Company calculates its allowance for credit losses for held-to-maturity securities, loan receivables, loan commitments and reinsurance recoverable by grouping assets with similar risk characteristics when there is not a specific expectation of a loss for an individual asset.

The Company calculates its allowance for credit losses for held-to-maturity securities, loan receivables and loan commitments by grouping assets with similar risk characteristics when there is not a specific expectation of a loss for an individual asset.

For held-to-maturity securities, MMLs, and MML commitments, the Company groups assets by credit ratings, industry, and country.

11 unchanged sentences

The Company continuously monitors the estimation methodology, due to changes in portfolio composition, changes in underwriting practices and significant events or conditions and makes adjustments as necessary.

The Company’s held-to-maturity portfolio includes Japan Government and Agency securities of $ 14.9 billion amortized cost as of June 30, 2024 that meet the requirements for zero-credit-loss expectation and therefore these asset classes have been excluded from the current expected credit loss measurement.

The Company’s held-to-maturity portfolio includes Japan Government and Agency securities of $ 16.8 billion amortized cost as of September 30, 2024 that meet the requirements for zero-credit-loss expectation and therefore these asset classes have been excluded from the current expected credit loss measurement.

An investment in an available-for-sale security may be impaired if the fair value falls below amortized cost.

15 unchanged sentences

Securities Total

Three Months Ended June 30, 2024:

Balance at March 31, 2024

Three Months Ended

September 30, 2024:

Balance at June 30, 2024

$ ( 123 ) $ ( 17 ) $ ( 98 ) $ ( 13 ) $ ( 5 ) $ 0 $ ( 256 )

(Addition to) release of allowance for credit losses

( 67 ) ( 16 ) ( 5 ) ( 1 ) 0 0 ( 89 )

Writeoffs, net of recoveries 39 3 0 0 0 0 42

Change in foreign exchange 0 0 0 0 0 0 0

Balance at June 30, 2024

Balance at September 30, 2024

$ ( 151 ) $ ( 30 ) $ ( 103 ) $ ( 14 ) $ ( 5 ) $ 0 $ ( 303 )

Three Months Ended June 30, 2023:

Balance at March 31, 2023

Three Months Ended

September 30, 2023:

Balance at June 30, 2023

$ ( 76 ) $ ( 9 ) $ ( 140 ) $ ( 20 ) $ ( 5 ) $ 0 $ ( 250 )

(Addition to) release of allowance for credit losses (1)

( 35 ) ( 3 ) 3 1 1 0 ( 33 )

Writeoffs, net of recoveries 0 0 0 0 0 0 0

Change in foreign exchange 0 0 0 0 ( 1 ) 0 ( 1 )

Balance at June 30, 2023

Balance at September 30, 2023

$ ( 111 ) $ ( 12 ) $ ( 137 ) $ ( 19 ) $ ( 5 ) $ 0 $ ( 284 )

Six Months Ended June 30, 2024:

Nine Months Ended

September 30, 2024:

Balance at December 31, 2023

4 unchanged sentences

Change in foreign exchange 0 0 0 0 0 0 0

Balance at June 30, 2024

Balance at September 30, 2024

$ ( 151 ) $ ( 30 ) $ ( 103 ) $ ( 14 ) $ ( 5 ) $ 0 $ ( 303 )

Six Months Ended June 30, 2023:

Nine Months Ended

September 30, 2023:

Balance at December 31, 2022

1 unchanged sentence

(Addition to) release of allowance for credit losses (1)

( 57 ) ( 3 ) ( 8 ) 5 1 0 ( 62 )

Writeoffs, net of recoveries 0 0 0 0 0 0 0

Change in foreign exchange 0 0 0 0 1 0 1

Balance at June 30, 2023

Balance at September 30, 2023

$ ( 111 ) $ ( 12 ) $ ( 137 ) $ ( 19 ) $ ( 5 ) $ 0 $ ( 284 )

As of June 30, 2024, the Company identified additional TREs with an amortized cost of $ 267 million in anticipation of potential foreclosure or deed in lieu of foreclosure transactions.

As of June 30, 2024, the Company established a credit allowance of $ 33 million for $ 656 million of loans for which the fair value of the collateral was below the amortized cost of the loans.

(1) Includes an allowance for credit losses of $ 4 recognized on financial assets accounted for as purchased financial assets with credit deterioration that is not recorded in earnings upon recognition .

As of September 30, 2024, the Company identified TREs and CMLs with an amortized cost of $ 198 million and $ 28 million, respectively, in anticipation of potential foreclosure or deed in lieu of foreclosure transactions.

As of September 30, 2024, the Company established a credit allowance of $ 33 million related to these loans.

Other Investments

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

(In millions) June 30,

(In millions) September 30,

2024 December 31, 2023

12 unchanged sentences

Real estate owned (REO) consists of office buildings or other commercial properties obtained through foreclosure or deed in lieu of foreclosure of certain of the Company’s TREs.

As of June 30, 2024, all REO was classified as held-and-used for the production of income and is carried at cost less accumulated depreciation.

As of September 30, 2024, all REO was classified as held-and-used for the production of income and is carried at cost less accumulated depreciation.

As of December 31, 2023, $ 210 million of REO was classified as held-and-used with the remaining $ 17 million classified as held-for-sale, which is carried at the lower of depreciated cost or fair value less cost to sell and is not further depreciated once classified as such.

Depreciation expense was $ 3 million and $ 4 million for the three- and six-month periods ended June 30, 2024, respectively.

Additionally, as of June 30, 2024 and December 31, 2023, accumulated depreciation was $ 4 million and an immaterial amount, respectively.

As of June 30, 2024, the Company had $ 2.1 billion in outstanding commitments to fund investments in limited partnerships.

Depreciation expense was $ 4 million and $ 8 million for the three- and nine-month periods ended September 30, 2024, respectively, and immaterial for the three- and nine-month periods ended September 30, 2023.

Additionally, as of September 30, 2024 and December 31, 2023, accumulated depreciation was $ 9 million and an immaterial amount, respectively.

As of September 30, 2024, the Company had $ 3.0 billion in outstanding commitments to fund investments in limited partnerships.

Variable Interest Entities (VIEs)

12 unchanged sentences

Investments in Consolidated Variable Interest Entities

(In millions) June 30,

(In millions) September 30,

2024 December 31,

25 unchanged sentences

Investments in Variable Interest Entities Not Consolidated

(In millions) June 30,

(In millions) September 30,

2024 December 31,

29 unchanged sentences

Remaining Contractual Maturity of the Agreements

June 30, 2024 December 31, 2023

September 30, 2024 December 31, 2023

(In millions) Overnight

15 unchanged sentences

therefore, they are classified as Overnight and Continuous.

In connection with securities lending, in addition to cash collateral received, the Company received from counterparties securities collateral of $ 4.0 billion and $ 4.3 billion at June 30, 2024 and December 31, 2023, respectively, which may not be sold or re-pledged, unless the counterparty is in default.

In connection with securities lending, in addition to cash collateral received, the Company received from counterparties securities collateral of $ 3.3 billion and $ 4.3 billion at September 30, 2024 and December 31, 2023, respectively, which may not be sold or re-pledged, unless the counterparty is in default.

Such securities collateral is not reflected on the consolidated financial statements.

The Company did not have any repurchase agreements or repurchase-to-maturity transactions outstanding as of June 30, 2024, and December 31, 2023, respectively.

The Company did not have any repurchase agreements or repurchase-to-maturity transactions outstanding as of September 30, 2024, and December 31, 2023, respectively.

Certain fixed maturity securities can be pledged as collateral as part of derivative transactions, or pledged to support state deposit requirements on certain investment programs.

56 unchanged sentences

The notional amount of derivative contracts represents the basis upon which pay or receive amounts are calculated and are not reflective of exposure or credit risk.

June 30, 2024 December 31, 2023

September 30, 2024 December 31, 2023

(In millions) Asset

43 unchanged sentences

The following table presents the gains and losses on derivatives and the related hedged items in fair value hedges.

The Company had no fair value hedges during the three- and six-month periods ended June 30, 2024.

The Company had no fair value hedges during the three- and nine-month periods ended September 30, 2024.

Fair Value Hedging Relationships

7 unchanged sentences

Net Investment Gains (Losses) Recognized for Fair Value Hedge

Three Months Ended June 30, 2023:

Three Months Ended September 30, 2023:

Foreign currency options Fixed maturity securities $ ( 1 ) $ ( 1 ) $ 0 $ 0 $ 0

Total gains (losses) $ ( 1 ) $ ( 1 ) $ 0 $ 0 $ 0

Six Months Ended June 30, 2023:

Nine Months Ended September 30, 2023:

Foreign currency options Fixed maturity securities $ ( 65 ) $ ( 65 ) $ 0 $ 0 $ 0

5 unchanged sentences

The time value gains and losses for interest rate swaptions when the related hedged items are redeemed are reported in net investment gains (losses) consistent with the impact of the hedged item.

For the three- and six-month periods ended June 30, 2023, gains and losses included in the hedge assessment on interest rate swaptions and related hedged items were immaterial.

For the three- and nine-month periods ended September 30, 2023, gains and losses included in the hedge assessment on interest rate swaptions and related hedged items were immaterial.

The following table shows the carrying amounts of assets designated and qualifying as hedged items in fair value hedges of interest rate risk and the related cumulative hedge adjustment included in the carrying amount.

The Company had no fair value hedges of interest rate risk as of June 30, 2024 and December 31, 2023;

The Company had no fair value hedges of interest rate risk as of September 30, 2024 and December 31, 2023;

therefore, the amounts presented in the table below are related to previous fair value hedges of interest rate risk that were discontinued.

5 unchanged sentences

Assets/(Liabilities)

September 30,

2024 December 31,

2023 June 30,

2023 September 30,

2024 December 31,

4 unchanged sentences

To mitigate this exposure, the Parent Company's yen-denominated liabilities (see Note 9) have been designated as non-derivative hedges and certain 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 six-month periods ended June 30, 2024 and 2023, respectively.

The Company's net investment hedge was effective during the three- and nine-month periods ended September 30, 2024 and 2023, respectively.

Non-qualifying Strategies

2 unchanged sentences

While the change in value of the swaps is recorded in current period earnings, the change in value of the available-for-sale fixed maturity securities associated with these swaps is recorded in other comprehensive income.

As of June 30, 2024, the Parent Company had $ 1.2 billion notional amount of cross-currency interest rate swap agreements related to certain of its U.S.

As of September 30, 2024, the Parent Company had $ 1.2 billion notional amount of cross-currency interest rate swap agreements related to certain of its U.S.

dollar-denominated senior notes to effectively convert a portion of the interest on the notes from U.S.

10 unchanged sentences

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

Three Months Ended June 30,

Three Months Ended September 30,

(In millions) Net

19 unchanged sentences

Foreign currency forwards 43 ( 225 ) 71 32

Foreign currency options 0 0 ( 5 ) 0

Total net investment hedge 43 ( 747 ) 71 144

5 unchanged sentences

Interest rate swaps 159 ( 124 )

Forward bond purchase

commitment - VIE 0 ( 1 )

Total non-qualifying strategies 394 ( 122 )

5 unchanged sentences

Gains and losses on net investment hedges related to changes in foreign currency spot rates are recorded in the unrealized foreign currency translation gains (losses) line in the consolidated statements of comprehensive income (loss).

(3) Impact of cash flow hedges reported as net investment gains (losses) includes $ 1 of losses reclassified from accumulated other comprehensive income (loss) into earnings during the three-month period ended June 30, 2024, and $ 1 of losses during the three-month period ended June 30, 2023.

Six Months Ended June 30,

(3) Impact of cash flow hedges reported as net investment gains (losses) includes $ 1 of losses reclassified from accumulated other comprehensive income (loss) into earnings during the three-month period ended September 30, 2024, and $ 1 of losses during the three-month period ended September 30, 2023.

Nine Months Ended September 30,

(In millions) Net

14 unchanged sentences

Foreign currency options 0 ( 65 )

Interest rate swaptions (4)

0 0 0 ( 1 ) 0 1

Total fair value hedges 0 0 0 ( 1 ) ( 65 ) 1

20 unchanged sentences

(3) Impact of cash flow hedges reported as net investment gains (losses) includes $ 2 of losses reclassified from accumulated other comprehensive income (loss) into earnings during the six-month period ended June 30, 2024, and $ 1 of losses during the six-month period ended June 30, 2023.

As of June 30, 2024, $ 5 million of deferred losses on derivative instruments recorded in accumulated other comprehensive income are expected to be reclassified into earnings during the next twelve months.

(3) Impact of cash flow hedges reported as net investment gains (losses) includes $ 3 of losses reclassified from accumulated other comprehensive income (loss) into earnings during the nine-month period ended September 30, 2024, and $ 3 of losses during the nine-month period ended September 30, 2023.

(4) Includes $ 1 of losses reclassified from accumulated other comprehensive income (loss) into earnings during the nine-month period ended September 30, 2024, and $ 1 of losses during the nine-month period ended September 30, 2023, related to fair value hedges excluded component.

Impact shown net of effect of hedged items (see Fair Value Hedges section of this Note 4 for further detail).

As of September 30, 2024, $ 5 million of deferred losses on derivative instruments recorded in accumulated other comprehensive income are expected to be reclassified into earnings during the next twelve months.

Credit Risk Assumed through Derivatives

4 unchanged sentences

The risk of counterparty default for the Company's foreign currency swaps, certain foreign currency forwards, and foreign currency options is mitigated by collateral posting requirements that counterparties to those transactions must meet.

As of June 30, 2024, all of the Company's derivative agreement counterparties were investment grade.

As of September 30, 2024, all of the Company's derivative agreement counterparties were investment grade.

The Company engages in over-the-counter (OTC) bilateral derivative transactions directly with unaffiliated third parties under International Swaps and Derivatives Association, Inc.

7 unchanged sentences

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 $ 1.2 billion as of June 30, 2024 and December 31, 2023, respectively.

If the credit-risk-related contingent features underlying these agreements had been triggered on June 30, 2024, the Company estimates that it would be required to post a maximum of $ 538 million of additional collateral to these derivative 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 $ 794 million and $ 1.2 billion as of September 30, 2024 and December 31, 2023, respectively.

If the credit-risk-related contingent features underlying these agreements had been triggered on September 30, 2024, the Company estimates that it would be required to post a maximum of $ 566 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.

9 unchanged sentences

Offsetting of Financial Assets and Derivative Assets

June 30, 2024

September 30, 2024

Gross Amounts Not Offset

7 unchanged sentences

OTC - bilateral $ 128 $ 0 $ 128 $ ( 45 ) $ ( 12 ) $ ( 49 ) $ 22

OTC - cleared 19 0 19 ( 19 ) 0 0 0

Total derivative

42 unchanged sentences

Offsetting of Financial Liabilities and Derivative Liabilities

June 30, 2024

September 30, 2024

Gross Amounts Not Offset

60 unchanged sentences

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.

June 30, 2024

September 30, 2024

(In millions) Quoted Prices in

21 unchanged sentences

Foreign currency options 0 57 0 57

Interest rate swaps 0 19 0 19

Total other assets 0 199 0 199

2 unchanged sentences

Foreign currency swaps $ 0 $ 623 $ 0 $ 623

Foreign currency forwards 0 35 0 35

Foreign currency options 0 24 0 24

34 unchanged sentences

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.

June 30, 2024

September 30, 2024

(In millions) Carrying

74 unchanged sentences

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

June 30, 2024

September 30, 2024

(In millions) Quoted Prices in Active Markets for Identical Assets

(Level 1) Significant Observable Inputs

(Level 2) Significant Unobservable Inputs

(Level 1) Significant Observable

(Level 2) Significant Unobservable

(Level 3) Total

39 unchanged sentences

Total equity securities $ 647 $ 0 $ 161 $ 808

June 30, 2024

September 30, 2024

(In millions) Quoted Prices in Active Markets for Identical Assets

(Level 1) Significant Observable Inputs

(Level 2) Significant Unobservable Inputs

(Level 1) Significant Observable

(Level 2) Significant Unobservable

(Level 3) Total

22 unchanged sentences

(Level 1) Significant Observable

(Level 2) Significant Unobservable Inputs

(Level 2) Significant Unobservable

(Level 3) Total

46 unchanged sentences

(Level 1) Significant Observable

(Level 2) Significant Unobservable Inputs

(Level 2) Significant Unobservable

(Level 3) Total

76 unchanged sentences

The fair values of the Company's publicly issued notes payable are determined by utilizing available sources of observable inputs from third-party pricing vendors and are classified as Level 2.

The Company's private placement notes payable are valued using the same internal models that the Company uses for its yen-denominated and U.S.

dollar-denominated private placement investment portfolio.

The fair values for these private placements are deemed Level 2 valuations, as they are model-derived valuations that are generated internally with all significant valuation inputs being observed in active markets.

The fair values of the Company's yen-denominated loans approximate their carrying values and are classified as Level 3.

6 unchanged sentences

Three Months Ended

June 30, 2024

September 30, 2024

Fixed Maturity Securities Equity

23 unchanged sentences

Three Months Ended

June 30, 2023

September 30, 2023

Fixed Maturity Securities Equity

22 unchanged sentences

included in earnings $ 0 $ 0 $ 0 $ 0 $ 0 $ ( 3 ) $ ( 3 )

Six Months Ended

June 30, 2024

Nine Months Ended

September 30, 2024

Fixed Maturity Securities Equity

23 unchanged sentences

of the period included in earnings $ 3 $ 0 $ 0 $ 0 $ 0 $ 0 $ 3

Six Months Ended

June 30, 2023

Nine Months Ended

September 30, 2023

Fixed Maturity Securities Equity

26 unchanged sentences

Included in the tables are the inputs or range of possible inputs that have an effect on the overall valuation of the financial instruments.

June 30, 2024

September 30, 2024

(In millions) Fair Value Valuation Technique(s) Unobservable Input Range Weighted Average

4 unchanged sentences

Sovereign and supranational 28 Consensus pricing Offered quotes N/A (b)

Banks/financial institutions 69 Discounted cash flow Credit spreads N/A (b)

Banks/financial institutions 10 Adjusted cost Private financials N/A (d)

Other corporate 374 Discounted cash flow Credit spreads 90 bps - 294 bps (c)

46 unchanged sentences

The following tables present a rollforward of deferred policy acquisition costs by reporting segment and disaggregated by product type.

June 30, 2024

September 30, 2024

Aflac Japan Aflac U.S.

7 unchanged sentences

other ( 14 ) ( 13 ) ( 2 ) 0 0 0 0 0 0 0 0 ( 29 )

Balance at June 30, 2024

Balance at September 30, 2024

$ 3,039 $ 2,032 $ 488 $ 57 $ 911 $ 630 $ 1,341 $ 444 $ 86 $ 204 $ 0 $ 9,232

19 unchanged sentences

Future DAC amortization is impacted by persistency.

There were no changes to the inputs, judgments, assumptions and methods used to determine amortization amounts during the six-month periods ended June 30, 2024 and 2023.

There were no changes to the inputs, judgments or methods used to determine amortization amounts during the nine-month periods ended September 30, 2024 and 2023.

The Company updated the assumptions used to determine amortization using the same assumptions as those used for measuring the liability for future policy benefits during the nine-month periods ended September 30, 2024 and 2023.

The Company recognizes the effects of changes in assumptions prospectively over the remaining contract term as a revision of the future amortization pattern.

For additional information on deferred policy acquisition costs, see Notes 1 and 6 of the Notes to the Consolidated Financial Statements in the 2023 Annual Report.

5 unchanged sentences

The present value of expected future net premiums and the present value of expected future policy benefits are presented gross of internal and external ceded reinsurance.

June 30, 2024

September 30, 2024

Aflac Japan Aflac U.S.

16 unchanged sentences

Effect of changes in discount rate assumptions 535 269 125 ( 2 ) ( 96 ) ( 46 ) ( 256 ) ( 60 ) ( 6 ) ( 33 ) 35

Balance at June 30, 2024

Balance at September 30, 2024

$ 16,075 $ 13,562 $ 5,846 $ 975 $ 2,591 $ 1,685 $ 4,130 $ 1,164 $ 201 $ 934 $ 699

14 unchanged sentences

Effect of changes in discount rate assumptions 4,484 ( 761 ) ( 1,597 ) ( 460 ) ( 137 ) ( 66 ) ( 680 ) ( 95 ) ( 17 ) ( 175 ) 59

Balance at June 30, 2024

Balance at September 30, 2024

46,577 23,665 27,675 4,850 3,250 2,417 11,387 1,985 461 1,919 1,213

48 unchanged sentences

The following tables present the weighted-average interest rates and weighted-average liability duration (calculated using the original discount rate) by reporting segment and disaggregated by product type.

June 30, 2024

September 30, 2024

Aflac Japan Aflac U.S.

19 unchanged sentences

The deferred profit liability for limited-payment contracts and the deferred reinsurance gain liability are presented together with the liability for future policy benefits in the consolidated balance sheets and have been included as reconciling items in the table below.

(In millions) June 30,

(In millions) September 30,

2024 December 31, 2023

33 unchanged sentences

years), the discount curve is derived by extrapolation of risk free rates beyond their last liquid point following the Smith-Wilson method and grading of the estimated forward credit spread anchored by the ultimate forward rate.

The ultimate forward rate is based on the economic value-based solvency regime, which is consistent with the International Association of Insurance Supervisors (IAIS) Insurance Capital Standards (ICS) (which is expected to be introduced in Japan in 2025), and is adjusted for credit and inflation components.

The ultimate forward rate is based on the economic value-based solvency regime, which is consistent with the International Association of Insurance Supervisors (IAIS) Insurance Capital Standards (ICS) (to be introduced in Japan in 2025), and is adjusted for credit and inflation components.

For the Aflac U.S.

segment where all long-duration insurance policies are denominated in U.S.

dollar and substantially all have cash flow duration within 30 years, for which the U.S.

dollars and substantially all have cash flow duration within 30 years, for which the U.S.

upper-medium grade fixed-income market is liquid and observable, the Company uses data from a liquid fixed-income market index tracking single-A U.S.

3 unchanged sentences

and Japan segments is based on the assumption of long-term global economic convergence.

For the three-month periods ended June 30, 2024 and 2023, the Company recognized $ 2.9 billion and $( 165 ) million in other comprehensive income (loss) net of tax, respectively, due to changes in the future policy benefits estimate from updating the discount rate assumptions.

For the six-month periods ended June 30, 2024 and 2023, the Company recognized $ 4.0 billion and $( 3.0 ) billion in other comprehensive income (loss) net of tax, respectively, due to changes in the future policy benefits estimate from updating the discount rate assumptions.

There were no changes to the methods used to determine the discount rates during the six-month periods ended June 30, 2024 and 2023.

For the year ended December 31, 2023, the Company recognized approximately $( 460 ) million in other comprehensive income (loss) net of tax, due to changes in the future policy benefits estimate from updating the discount rate assumptions.

For the three-month periods ended September 30, 2024 and 2023, the Company recognized $( 1.5 ) billion and $ 4.2 billion in other comprehensive income (loss) net of tax, respectively, due to changes in the future policy benefits estimate from updating the discount rate assumptions.

For the nine-month periods ended September 30, 2024 and 2023, the Company recognized $ 2.5 billion and $ 1.2 billion in other comprehensive income (loss) net of tax, respectively, due to changes in the future policy benefits estimate from updating the discount rate assumptions.

There were no changes to the methods used to determine the discount rates during the nine-month periods ended September 30, 2024 and 2023.

For the year ended December 31, 2023, the Company recognized $( 460 ) million in other comprehensive income (loss) net of tax, due to changes in the future policy benefits estimate from updating the discount rate assumptions.

There were no changes to the methods used to determine the discount rates during the year ended December 31, 2023.

8 unchanged sentences

Policy provisions, such as reaching premium paid-up status, are taken into account when setting assumptions.

For the three- and six-month periods ended June 30, 2024 and 2023, the variance of actual experience from expected experience was primarily due to favorable variances in morbidity assumptions as compared to actual experience.

There were no changes to the inputs, judgments, assumptions and methods used in measuring the liability for future policy benefits during the six-month periods ended June 30, 2024 and 2023.

For the three- and nine-month periods ended September 30, 2024 and 2023, the variance of actual experience from expected experience was primarily due to favorable variances in morbidity assumptions as compared to actual experience.

There were no changes to the inputs, judgments or methods used in measuring the liability for future policy benefits during the nine-month periods ended September 30, 2024 and 2023.

The Company performs an annual review of its assumptions during the third quarter.

In 2024, the Company's annual assumption review process resulted in favorable changes largely due to recent favorable Japan morbidity experience.

In 2023, the Company's annual assumption review process resulted in favorable changes to its morbidity and termination assumptions, largely due to reflecting more recent favorable U.S.

1 unchanged sentence

The following table summarizes the amount of net earned premiums recognized in the consolidated statements of earnings by reporting segment and disaggregated by product type.

Three Months Ended June 30, Six Months Ended June 30,

Three Months Ended September 30, Nine Months Ended September 30,

(In millions) 2024 2023 2024 2023

15 unchanged sentences

The following table summarizes the amount of interest expense related to insurance contracts recognized in total benefits and claims, net in the consolidated statements of earnings by reporting segment and disaggregated by product type.

Three Months Ended June 30, Six Months Ended June 30,

Three Months Ended September 30, Nine Months Ended September 30,

(In millions) 2024 2023 2024 2023

19 unchanged sentences

These are the primary factors that result in future gross premiums lower than future benefit and expense payments for certain lines of business of the Company.

June 30, 2024 December 31, 2023

September 30, 2024 December 31, 2023

(In millions) Gross

1 unchanged sentence

Undiscounted expected future gross premiums

and expected future policy benefits and expenses:

and expected future policy benefits and

Cancer $ 57,471 $ 63,270 $ 59,169 $ 66,427

10 unchanged sentences

Total $ 153,700 $ 188,244 $ 156,494 $ 193,058

June 30, 2024 December 31, 2023

September 30, 2024 December 31, 2023

(In millions) Gross Premiums Benefits and Expenses Gross Premiums Benefits and Expenses

Discounted expected future gross premiums

and expected future policy benefits and expenses:

and expected future policy benefits and

Cancer $ 45,651 $ 46,577 $ 48,363 $ 50,161

10 unchanged sentences

Total $ 117,475 $ 125,399 $ 121,753 $ 132,131

Loss expense as a result of NPR capping for the three- and six-month periods ended June 30, 2024 and 2023 was immaterial.

Loss expense as a result of NPR capping for the three- and nine-month periods ended September 30, 2024 and 2023 was immaterial.

Other Policyholders' Funds

As of June 30, 2024 and December 31, 2023, the largest component of the other policyholders' funds liability was the Company's annuity line of business in Aflac Japan.

As of September 30, 2024 and December 31, 2023, the largest component of the other policyholders' funds liability was the Company's annuity line of business in Aflac Japan.

The Company's annuities have fixed benefits and premiums.

The following table presents the changes in other policyholders’ funds.

(In millions) June 30,

(In millions) September 30,

2024 December 31,

13 unchanged sentences

The following table presents other policyholders’ funds balances by range of guaranteed crediting rates.

June 30, 2024 December 31, 2023

September 30, 2024 December 31, 2023

(In millions) Range of Guaranteed Minimum Crediting Rates (2)

6 unchanged sentences

(1) Aflac Japan fixed annuities

(2) Weighted-average crediting rate of 1.5 % at June 30, 2024 and December 31, 2023.

(2) Weighted-average crediting rate of 1.5 % at September 30, 2024 and December 31, 2023.

Aflac Japan’s fixed annuities have guaranteed fixed crediting rates which results in the policyholders' funds balances being able to cover all guaranteed benefit amounts.

5 unchanged sentences

The following table reconciles direct earned premiums, direct benefits and claims, excluding reserve remeasurement gains and losses, and reserve remeasurement gains and losses to net amounts after the effect of reinsurance.

Three Months Ended June 30, Six Months Ended June 30,

Three Months Ended September 30, Nine Months Ended September 30,

(In millions) 2024 2023 2024 2023

17 unchanged sentences

Ceded reserve remeasurement gains (losses) ( 1 ) 14 0 15

Assumed reserve remeasurement (gains) losses 0 0 0 0

Reserve remeasurement (gains) losses $ ( 408 ) $ ( 205 ) $ ( 515 ) $ ( 312 )

1 unchanged sentence

The Company has recorded a deferred reinsurance gain liability related to reinsurance transactions which represents ceded reserves in excess of consideration paid, or consideration received in excess of assumed reserves.

The remaining consolidated deferred reinsurance gain liability of $ 148 million and $ 175 million as of June 30, 2024 and December 31, 2023, respectively, is included in future policy benefits in the consolidated balance sheets and is being amortized into income over the expected lives of the policies.

The remaining consolidated deferred reinsurance gain liability of $ 165 million and $ 175 million as of September 30, 2024 and December 31, 2023, respectively, is included in future policy benefits in the consolidated balance sheets and is being amortized into income over the expected lives of the policies.

The Company has also recorded a reinsurance recoverable for reinsurance transactions.

The reinsurance recoverable, which is included in other assets in the consolidated balance sheets, is reported net of allowance for credit losses and had a remaining balance of $ 162 million and $ 183 million as of June 30, 2024 and December 31, 2023, respectively.

The allowance for credit losses related to the Company's reinsurance recoverable balance was $ 3 million and $ 10 million as of June 30, 2024 and December 31, 2023, respectively.

The reinsurance recoverable, which is included in other assets in the consolidated balance sheets, is reported net of allowance for credit losses and had a remaining balance of $ 183 million as of September 30, 2024 and December 31, 2023.

The allowance for credit losses related to the Company's reinsurance recoverable balance was $ 4 million and $ 10 million as of September 30, 2024 and December 31, 2023, respectively.

The credit allowance for the reinsurance recoverable balance is estimated using a PD / LGD method and the key credit quality indicator is the credit rating of the Company’s reinsurance counterparty.

The Company uses external credit ratings focused on the reinsurer’s financial strength and credit worthiness.

As of June 30, 2024, the Company's reinsurance counterparties were rated A+.

As of September 30, 2024, the Company's reinsurance counterparties were rated A+.

The Company monitors the credit ratings periodically, but not less frequently than quarterly.

6 unchanged sentences

A summary of notes payable and lease obligations follows:

(In millions) June 30,

(In millions) September 30,

2024 December 31,

66 unchanged sentences

In addition, the notes maturing in March 2029, March 2031 and March 2034 are redeemable at the Parent Company's option, in whole or in part from time to time, on or after December 21, 2028, December 31, 2030 and September 21, 2033, respectively, at a redemption price equal to the aggregate principal amount of the applicable series to be redeemed plus accrued and unpaid interest on the principal amount to be redeemed to, but excluding, the date of redemption.

Interest expense related to the Company's notes payable, which is included in interest expense in the consolidated statements of earnings, was $ 49 million and $ 50 million for the three-month periods and $ 96 million for each of the six-month periods ended June 30, 2024 and 2023, respectively.

A summary of the Company's lines of credit as of June 30, 2024 follows:

Interest expense related to the Company's notes payable, which is included in interest expense in the consolidated statements of earnings, was $ 49 million and $ 48 million for the three-month periods and $ 145 million and $ 144 million for the nine-month periods ended September 30, 2024 and 2023, respectively.

A summary of the Company's lines of credit as of September 30, 2024 follows:

Borrower(s) Type Term Expiration Date Capacity Amount Outstanding Interest Rate on Borrowed Amount Maturity Period Commitment Fee Business Purpose

72 unchanged sentences

(1) Intercompany credit agreement

The Company was in compliance with all of the covenants of its notes payable and lines of credit at June 30, 2024.

No events of default or defaults occurred during the six-month period ended June 30, 2024.

The Company was in compliance with all of the covenants of its notes payable and lines of credit at September 30, 2024.

No events of default or defaults occurred during the nine-month period ended September 30, 2024.

For additional information, see Notes 4 and 9 of the Notes to the Consolidated Financial Statements in the 2023 Annual Report.

SHAREHOLDERS’ EQUITY

The following table is a reconciliation of the number of shares of the Company's common stock for the six-month periods ended June 30.

The following table is a reconciliation of the number of shares of the Company's common stock for the nine-month periods ended September 30.

(In thousands of shares) 2024 2023

16 unchanged sentences

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 EPS for the following periods.

Three Months Ended June 30, Six Months Ended June 30,

Three Months Ended September 30, Nine Months Ended September 30,

(In thousands) 2024 2023 2024 2023

1 unchanged sentence

Share Repurchase Program

During the first six months of 2024, the Company repurchased 18.6 million shares of its common stock for $ 1.6 billion as part of its share repurchase program.

During the first six months of 2023, the Company repurchased 20.8 million shares of its common stock for $ 1.4 billion as part of its share repurchase program.

As of June 30, 2024, a remaining balance of 59.2 million shares of the Company's common stock was available for purchase under share repurchase authorizations by its board of directors.

During the first nine months of 2024, the Company repurchased 23.4 million shares of its common stock for $ 2.1 billion as part of its share repurchase program.

During the first nine months of 2023, the Company repurchased 30.2 million shares of its common stock for $ 2.1 billion as part of its share repurchase program.

As of September 30, 2024, a remaining balance of 54.3 million shares of the Company's common stock was available for purchase under share repurchase authorizations by its board of directors.

Reclassifications from Accumulated Other Comprehensive Income

2 unchanged sentences

Three Months Ended

June 30, 2024

September 30, 2024

(In millions) Unrealized Foreign

6 unchanged sentences

Adjustment Total

Balance at March 31, 2024 $ ( 4,666 ) $ 1,092 $ ( 26 ) $ ( 1,495 ) $ ( 7 ) $ ( 5,102 )

Balance at June 30, 2024 $ ( 5,091 ) $ 401 $ ( 22 ) $ 1,425 $ ( 5 ) $ ( 3,292 )

Other comprehensive

8 unchanged sentences

income (loss) 952 156 2 ( 1,492 ) ( 3 ) ( 385 )

Balance at June 30, 2024 $ ( 5,091 ) $ 401 $ ( 22 ) $ 1,425 $ ( 5 ) $ ( 3,292 )

Balance at September 30, 2024 $ ( 4,139 ) $ 557 $ ( 20 ) $ ( 67 ) $ ( 8 ) $ ( 3,677 )

All amounts in the table above are net of tax.

Three Months Ended

June 30, 2023

September 30, 2023

(In millions) Unrealized Foreign

5 unchanged sentences

on Derivatives Effect of Changes in Discount Rate Assumptions Pension Liability Adjustment Total

Balance at March 31, 2023 $ ( 3,618 ) $ 1,289 $ ( 26 ) $ ( 4,894 ) $ ( 29 ) $ ( 7,278 )

Balance at June 30, 2023 $ ( 4,249 ) $ 1,978 $ ( 25 ) $ ( 5,059 ) $ 17 $ ( 7,338 )

Other comprehensive

8 unchanged sentences

income (loss) ( 235 ) ( 2,381 ) 1 4,193 0 1,578

Balance at June 30, 2023 $ ( 4,249 ) $ 1,978 $ ( 25 ) $ ( 5,059 ) $ 17 $ ( 7,338 )

Balance at September 30, 2023 $ ( 4,484 ) $ ( 403 ) $ ( 24 ) $ ( 866 ) $ 17 $ ( 5,760 )

All amounts in the table above are net of tax.

Six Months Ended

June 30, 2024

Nine Months Ended

September 30, 2024

(In millions) Unrealized Foreign

17 unchanged sentences

income (loss) ( 70 ) ( 582 ) 2 2,493 0 1,843

Balance at June 30, 2024 $ ( 5,091 ) $ 401 $ ( 22 ) $ 1,425 $ ( 5 ) $ ( 3,292 )

Balance at September 30, 2024 $ ( 4,139 ) $ 557 $ ( 20 ) $ ( 67 ) $ ( 8 ) $ ( 3,677 )

All amounts in the table above are net of tax.

Six Months Ended

June 30, 2023

Nine Months Ended

September 30, 2023

(In millions) Unrealized Foreign

16 unchanged sentences

income (loss) ( 920 ) 299 3 1,234 53 669

Balance at June 30, 2023 $ ( 4,249 ) $ 1,978 $ ( 25 ) $ ( 5,059 ) $ 17 $ ( 7,338 )

Balance at September 30, 2023 $ ( 4,484 ) $ ( 403 ) $ ( 24 ) $ ( 866 ) $ 17 $ ( 5,760 )

All amounts in the table above are net of tax.

2 unchanged sentences

(In millions) Three Months Ended

June 30, 2024

September 30, 2024

Details about Accumulated Other Comprehensive Income Components Amount Reclassified from Accumulated Other Comprehensive Income Affected Line Item in the

16 unchanged sentences

(In millions) Three Months Ended

June 30, 2023

September 30, 2023

Details about Accumulated Other Comprehensive Income Components Amount Reclassified from Accumulated Other Comprehensive Income Affected Line Item in the

15 unchanged sentences

(2) These accumulated other comprehensive income components are included in the computation of net periodic benefit cost (see Note 12 for additional details).

(In millions) Six Months Ended

June 30, 2024

(In millions) Nine Months Ended

September 30, 2024

Details about Accumulated Other Comprehensive Income Components Amount Reclassified from Accumulated Other Comprehensive Income Affected Line Item in the

15 unchanged sentences

(2) These accumulated other comprehensive income components are included in the computation of net periodic benefit cost (see Note 12 for additional details).

(In millions) Six Months Ended

June 30, 2023

(In millions) Nine Months Ended

September 30, 2023

Details about Accumulated Other Comprehensive Income Components Amount Reclassified from Accumulated Other Comprehensive Income Affected Line Item in the

5 unchanged sentences

Unrealized gains (losses) on derivatives $ ( 3 ) Net investment gains (losses)

( 1 ) Net investment income

( 4 ) Total before tax

1 Tax (expense) or benefit (1)

9 unchanged sentences

SHARE-BASED COMPENSATION

As of June 30, 2024, the Company has outstanding share-based awards under the Aflac Incorporated Long-Term Incentive Plan (As Amended and Restated February 14, 2017), as further amended on August 9, 2022 (the Plan).

As of September 30, 2024, the Company has outstanding share-based awards under the Aflac Incorporated Long-Term Incentive Plan (As Amended and Restated February 14, 2017), as further amended on August 9, 2022 (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.

4 unchanged sentences

Non-employee directors are eligible for grants of NQSOs, restricted stock, and stock appreciation rights.

As of June 30, 2024, approximately 33.6 million shares were available for future grants under this plan.

As of September 30, 2024, approximately 33.6 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.

1 unchanged sentence

Performance-based vesting conditions generally include the attainment of goals related to Company financial performance.

As of June 30, 2024, the only performance-based awards issued and outstanding were restricted stock awards and units.

As of September 30, 2024, the only performance-based awards issued and outstanding were restricted stock awards and units.

Stock options and stock appreciation rights granted under the amended Plan have an exercise price of at least the fair market value of the underlying stock on the grant date and have an expiration date no later than 10 years from the grant date.

2 unchanged sentences

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 June 30, 2024.

The following table provides information on stock options outstanding and exercisable at September 30, 2024.

Option Shares

6 unchanged sentences

Exercisable 688 1.8 54 33.65

The Company received cash from the exercise of stock options in the amount of $ 9 million and $ 10 million during the first six months of 2024 and 2023, respectively.

The tax benefit realized as a result of stock option exercises and restricted stock releases was $ 27 million in the first six months of 2024, compared with $ 19 million in the first six months of 2023.

As of June 30, 2024, total compensation cost not yet recognized in the Company's consolidated financial statements related to restricted stock awards and units was $ 60 million, of which $ 31 million ( 1.8 million shares) was related to restricted stock awards and units with a performance-based vesting condition.

The Company received cash from the exercise of stock options in the amount of $ 11 million and $ 13 million during the first nine months of 2024 and 2023, respectively.

The tax benefit realized as a result of stock option exercises and restricted stock releases was $ 28 million in the first nine months of 2024, compared with $ 20 million in the first nine months of 2023.

As of September 30, 2024, total compensation cost not yet recognized in the Company's consolidated financial statements related to restricted stock awards and units was $ 46 million, of which $ 22 million ( 1.8 million shares) was related to restricted stock awards and units with a performance-based vesting condition.

The Company expects to recognize these amounts over a weighted-average period of approximately 1.7 years.

There are no other contractual terms covering restricted stock awards once vested.

The following table summarizes restricted stock activity during the six-month period ended June 30, 2024.

The following table summarizes restricted stock activity during the nine-month period ended September 30, 2024.

(In thousands of shares) Shares Weighted-Average

6 unchanged sentences

( 1,449 ) 47.05

Restricted stock at June 30, 2024

Restricted stock at September 30, 2024

2,097 $ 73.44

10 unchanged sentences

plan were frozen effective January 1, 2024, which resulted in the Company recognizing a curtailment gain of $ 49 million in the second quarter of 2023.

As part of the U.S.

plan freeze, the Company offered lump sum payments to certain participants.

The lump sum payments are expected to be distributed in November 2024, and the Company expects to recognize an immaterial settlement charge in the fourth quarter of 2024 due to the payments being greater than the settlement threshold.

employees, including those that participated in the U.S.

13 unchanged sentences

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 statements of earnings, which includes other components of net periodic pension cost and postretirement costs (other than service costs) of $ 2 million and $( 45 ) million for the three-month periods and $ 4 million and $( 43 ) million for the six-month periods ended June 30, 2024 and 2023, respectively.

Pension and other postretirement benefit expenses are included in acquisition and operating expenses in the consolidated statements of earnings, which includes other components of net periodic pension cost and postretirement costs (other than service costs) of $ 3 million and $ 2 million for the three-month periods and $ 7 million and $( 41 ) million for the nine-month periods ended September 30, 2024 and 2023, respectively.

Total net periodic benefit cost includes the following components:

Three Months Ended June 30,

Three Months Ended September 30,

Pension Benefits Other

6 unchanged sentences

Expected return on plan assets ( 2 ) ( 2 ) ( 7 ) ( 8 ) 0 0

Amortization of net actuarial loss 0 0 ( 1 ) 0 0 1

Amortization of net actuarial (gain) loss 0 0 0 0 0 0

Curtailment (gain) loss 0 0 0 0 0 0

Net periodic (benefit) cost $ 4 $ 4 $ 1 $ ( 45 ) $ 0 $ 2

Six Months Ended June 30,

Net periodic benefit cost (credit) $ 3 $ 4 $ 2 $ 2 $ 1 $ 0

Nine Months Ended September 30,

Pension Benefits Other

6 unchanged sentences

Expected return on plan assets ( 5 ) ( 5 ) ( 22 ) ( 26 ) 0 0

Amortization of net actuarial loss 0 0 ( 1 ) 0 0 1

Amortization of net actuarial (gain) loss 0 0 ( 1 ) 0 0 1

Curtailment (gain) loss 0 0 0 ( 49 ) 0 0

Net periodic (benefit) cost $ 8 $ 8 $ 3 $ ( 39 ) $ 0 $ 2

During the six months ended June 30, 2024, Aflac Japan contributed approximately $ 12 million (using the weighted-average yen/dollar exchange rate for the six-month period ended June 30, 2024) to the Japanese funded defined benefit plan, and Aflac U.S.

Net periodic benefit cost (credit) $ 11 $ 12 $ 5 $ ( 37 ) $ 1 $ 2

During the nine months ended September 30, 2024, Aflac Japan contributed approximately $ 18 million (using the weighted-average yen/dollar exchange rate for the nine-month period ended September 30, 2024) to the Japanese funded defined benefit plan, and Aflac U.S.

did not make a contribution to the U.S.

3 unchanged sentences

COMMITMENTS AND CONTINGENT LIABILITIES

In June 2024, the Company entered into an agreement with an information technology and data services company to provide cloud hosting services for the Company.

As of June 30, 2024, the agreement has a remaining term of three years with an aggregate remaining cost of $ 68 million.

In June 2024, the Company renewed an outsourcing agreement with a technology and consulting company that provides for mainframe computer operations, distributed mid-range server computer operations, and related support for Aflac Japan.

As of June 30, 2024, the agreement has a remaining term of five years with an aggregate remaining cost of ¥ 48.2 billion ($ 299 million using the June 30, 2024 exchange rate).

In June 2024, the Company entered into an outsourcing agreement with a management consulting and technology services company to provide policy administration services for Aflac Japan.

As of June 30, 2024, the agreement has a remaining term of six years with an aggregate remaining cost of ¥ 6.8 billion ($ 42 million using the June 30, 2024 exchange rate).

In the second quarter of 2024, the Company entered into an agreement with an information technology and data services company to provide cloud hosting services for the Company.

As of September 30, 2024, the agreement has a remaining term of three years with an aggregate remaining cost of $ 58 million.

In the second quarter of 2024, the Company renewed an outsourcing agreement with a technology and consulting company that provides for mainframe computer operations, distributed mid-range server computer operations, and related support for Aflac Japan.

As of September 30, 2024, the agreement has a remaining term of four years with an aggregate remaining cost of ¥ 45.6 billion ($ 320 million using the September 30, 2024 exchange rate).

In the second quarter of 2024, the Company entered into an outsourcing agreement with a management consulting and technology services company to provide policy administration services for Aflac Japan.

As of September 30, 2024, the agreement has a remaining term of four years with an aggregate remaining cost of ¥ 6.8 billion ($ 48 million using the September 30, 2024 exchange rate).

The Company is a defendant in various lawsuits and receives various regulatory inquiries considered to be in the normal course of business.

8 unchanged sentences

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.

Guaranty fund assessments for the three- and six-month periods ended June 30, 2024 and 2023 were immaterial.

Guaranty fund assessments for the three- and nine-month periods ended September 30, 2024 and 2023 were immaterial.

For additional information regarding commitments and contingent liabilities, see Note 15 of the Notes to the Consolidated Financial Statements in the 2023 Annual Report.

SUBSEQUENT EVENTS

In October 2024, the Company received Bermuda Monetary Authority (BMA) approval for Aflac Re and ALIJ to enter into a coinsurance transaction whereby ALIJ will cede 30 % of the liabilities associated with certain cancer insurance policies and riders to Aflac Re.

The Company intends to execute this transaction in the fourth quarter of 2024.

This transaction is expected to transfer approximately ¥ 275 billion of reserves associated with these policies and is expected to also include the transfer of assets by ALIJ to Aflac Re to support these reserves.

This internal reinsurance transaction will have no financial statement impact on a consolidated basis, except for the effect of foreign currency accounting.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements