What changed in this filing

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Item 1. Financial Statements

2025-05-07 compared with 2024-11-01 · 374 added, 738 removed, 2071 unchanged (35% of the section changed)

2 unchanged sentences

Consolidated Statements of Earnings

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

Three Months Ended March 31,

(In millions, except for share and per-share amounts - Unaudited) 2025 2024

27 unchanged sentences

Cash dividends per share $ .58 $ .50

(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.

(1) Includes a gain (loss) of an immaterial amount and $( 3 ) for the three-month periods ended March 31, 2025 and 2024, 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 September 30, Nine Months Ended September 30,

Three Months Ended March 31,

(In millions - Unaudited) 2025 2024

19 unchanged sentences

Consolidated Balance Sheets

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

(In millions, except for share and per-share amounts) March 31,

Investments and cash:

77 unchanged sentences

Balance at March 31, 2025 $ 136 $ 2,919 $ 52,308 $ ( 1,859 ) $ ( 27,166 ) $ 26,338

Net earnings 0 0 1,755 0 0 1,755

Unrealized foreign currency translation

gains (losses) during period, net of

income taxes 0 0 0 ( 425 ) 0 ( 425 )

Unrealized gains (losses) on fixed maturity

securities during period, net of income

taxes and reclassification adjustments 0 0 0 ( 691 ) 0 ( 691 )

Unrealized gains (losses) on derivatives

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

Effect of changes in discount rate assumptions

during period, net of income taxes 0 0 0 2,920 0 2,920

Pension liability adjustment during period,

net of income taxes 0 0 0 2 0 2

Dividends to shareholders (1)

($ .50 per share)

0 0 ( 282 ) 0 0 ( 282 )

Exercise of stock options 0 2 0 0 0 2

Share-based compensation 0 12 0 0 0 12

Purchases of treasury stock 0 0 0 0 ( 810 ) ( 810 )

Treasury stock reissued 0 15 0 0 8 23

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

(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 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, 2023

20 unchanged sentences

Balance at March 31, 2024 $ 136 $ 2,806 $ 49,872 $ ( 5,102 ) $ ( 24,175 ) $ 23,537

Net earnings 0 0 1,634 0 0 1,634

Unrealized foreign currency translation

gains (losses) during period, net of

income taxes 0 0 0 ( 631 ) 0 ( 631 )

Unrealized gains (losses) on fixed maturity

securities during period, net of income

taxes and reclassification adjustments 0 0 0 689 0 689

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 ( 165 ) 0 ( 165 )

Pension liability adjustment during period,

net of income taxes 0 0 0 46 0 46

Dividends to shareholders (1)

($ .42 per share)

0 0 ( 252 ) 0 0 ( 252 )

Exercise of stock options 0 5 0 0 0 5

Share-based compensation 1 17 0 0 0 18

Purchases of treasury stock 0 0 0 0 ( 708 ) ( 708 )

Treasury stock reissued 0 10 0 0 8 18

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

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

1 unchanged sentence

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

Nine Months Ended September 30,

Three Months Ended March 31,

(In millions - Unaudited) 2025 2024

14 unchanged sentences

Equity securities 96 267

Held-to-maturity fixed maturity securities 2 2

Commercial mortgage and other loans 500 379

11 unchanged sentences

Proceeds from borrowings 0 823

Principal payments under debt obligations ( 194 ) 0

Dividends paid to shareholders ( 306 ) ( 278 )

39 unchanged sentences

and Japan service the two markets for the Company's insurance business.

The Parent Company, other operating business units that are not individually reportable, reinsurance activities, including internal reinsurance activity with Aflac Re Bermuda Ltd.

(Aflac Re), and other business activities not included in Aflac Japan or Aflac U.S., as well as intercompany eliminations, are included in Corporate and other.

The Parent Company, other operating business units that are not individually reportable, reinsurance activities, including internal reinsurance activity with Aflac Re Bermuda Ltd.(Aflac Re), and other business activities not included in Aflac Japan or Aflac U.S., as well as intercompany eliminations, are included in Corporate and other.

Basis of Presentation

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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, 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 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

Recently Adopted Accounting Pronouncements

Accounting Standards Update (ASU) 2023-07 Segment Reporting (Topic 280) - Improvements to Reportable Segment Disclosures

In November 2023, the FASB issued amendments that add certain segment disclosures related to significant segment expenses and require that a public entity disclose the title and position of the Chief Operating Decision Maker (CODM) and an explanation of how the CODM uses the reported measure(s) of segment profit or loss in assessing segment performance and deciding how to allocate resources.

The Company adopted this guidance for the annual period beginning January 1, 2024, and interim periods beginning January 1, 2025.

The adoption of this guidance did not have an impact on the Company’s financial position or results of operations.

See Note 2 for expanded disclosures required as a result of the amended guidance.

Accounting Pronouncements Pending Adoption

Accounting Standards Update (ASU) 2023-09 Income Taxes (Topic 740) – Improvements to Income Tax Disclosures

ASU 2024-03 Income Statement (Topic 220) - Disaggregation of Income Statement Expenses

In November 2024, the FASB issued amendments that require disaggregated disclosure, in the notes to the financial statements, of specified information about certain costs and expenses including (1) the amounts of employee compensation, depreciation, and intangible asset amortization;

(2) certain expense, gain, or loss amounts that are already required to be disclosed under current GAAP in the same disclosure as the other disaggregation requirements;

(3) qualitative description of the amounts remaining in relevant expense captions that are not separately disaggregated quantitatively, and (4) the total amount of selling expenses and, in annual reporting periods, the Company’s definition of selling expenses.

The amendments are effective for annual periods beginning after December 15, 2026, and interim periods beginning after December 15, 2027.

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.

ASU 2023-09 Income Taxes (Topic 740) - Improvements to Income Tax Disclosures

In December 2023, the FASB issued amendments that require enhanced income tax disclosures including (1) disclosure of specific categories and greater disaggregation of information in the rate reconciliation and (2) income taxes paid disaggregated by jurisdiction.

4 unchanged sentences

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

ASU 2023-07 Segment Reporting (Topic 280) – Improvements to Reportable Segment Disclosures

In November 2023, the FASB issued amendments that will add certain segment disclosures related to significant segment expenses and require that a public entity disclose the title and position of the Chief Operating Decision Maker (CODM) and an explanation of how the CODM uses the reported measure(s) of segment profit or loss in assessing segment performance and deciding how to allocate resources.

The amendments are effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024.

Early adoption is permitted.

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.

5 unchanged sentences

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 adjusted earnings.

The Company’s reportable segments are regularly reviewed by the Company's CODM, Senior Executive Vice President and Chief Financial Officer, in deciding how to allocate resources and in assessing performance.

The Company's CODM reviews and approves the annual budget and operating forecast, which allocates resources to segments and serves as a key benchmark for tracking performance and accountability of each segment's operating results.

The Company’s CODM evaluates the performance of the segments using, in comparison to the annual budget, operating forecast and historical results, a financial performance measure called pretax adjusted earnings and believes this financial performance measure to be vitally important for understanding the underlying profitability drivers and trends of the Company’s insurance business.

• Pretax adjusted earnings are adjusted revenues less benefits and adjusted expenses.

2 unchanged sentences

◦ Adjusted revenues are U.S.

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

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.

◦ 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 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 September 30, Nine Months Ended September 30,

Aflac Japan's adjusted revenues as a percentage of the Company's total adjusted revenues were 53 % and 56 % in the three-month periods ended March 31, 2025 and 2024, respectively.

The percentage of the Company's total assets attributable to Aflac Japan was 78 % at March 31, 2025, compared with 77 % at December 31, 2024.

Information regarding operations by reportable segment and Corporate and other is presented in the following tables.

Three Months Ended March 31,

(In millions) 2025 2024

8 unchanged sentences

Total adjusted revenue Aflac U.S.

1,684 1,661 5,068 4,983

Corporate and other (2)

225 115 723 384

Total adjusted revenues 4,319 4,419

6 unchanged sentences

Total revenues $ 3,398 $ 5,436

(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.

(2) The change in value of federal historic rehabilitation and solar investments in partnerships of $ 8 and $ 32 for the three-month periods ended March 31, 2025 and 2024, respectively, is included as a reduction to net investment income.

Tax credits on these investments of $ 7 and $ 33 for the three-month periods ended March 31, 2025 and 2024, 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 September 30, Nine Months Ended September 30,

Three Months Ended March 31,

(In millions) 2025 2024

Pretax earnings:

Adjusted revenues:

Aflac Japan (1)

$ 2,272 $ 2,473

350 478 1,089 1,199

Corporate and other (2)

15 ( 49 ) 36 ( 107 )

Total adjusted revenues 4,319 4,419

Benefits and adjusted expenses:

Benefits and claims, excluding reserve remeasurement 1,130 1,243

Reserve remeasurement (gains) losses ( 25 ) ( 26 )

Total benefits and claims, net 1,105 1,217

Adjusted expenses:

Amortization of deferred policy acquisition costs 79 83

Insurance commissions 105 114

Insurance and other expenses 261 249

Total benefits and adjusted expenses Aflac Japan 1,550 1,663

Benefits and claims, excluding reserve remeasurement 731 715

Reserve remeasurement (gains) losses ( 15 ) ( 29 )

Total benefits and claims, net 716 686

Adjusted expenses:

Amortization of deferred policy acquisition costs 137 132

Insurance commissions 135 141

Insurance and other expenses 375 384

Total benefits and adjusted expenses Aflac U.S.

Corporate and other 283 250

Total adjusted expenses $ 3,196 $ 3,256

Pretax earnings:

Aflac Japan (1)

Corporate and other (2)

Pretax adjusted earnings 1,123 1,163

6 unchanged sentences

associated with certain investment strategies 65 88

Impact of interest from derivatives associated

with notes payable

( 8 ) ( 10 ) ( 25 ) ( 33 )

Impact of interest from derivatives associated with notes payable

Total earnings before income taxes $ 145 $ 2,170

2 unchanged sentences

adjusted earnings ( 8 ) ( 44 )

(2) The change in value of federal historic rehabilitation and solar investments in partnerships of $ 8 and $ 32 for the three-month periods ended March 31, 2025, and 2024, respectively, is included as a reduction to net investment income.

Tax credits on these investments of $ 7 and $ 33 for the three-month periods ended March 31, 2025, and 2024, respectively, have been recorded as an income tax benefit in the consolidated statements of earnings.

See Note 3 for additional information on these investments.

Internal Reinsurance:

Aflac Re is a Bermuda domiciled insurer that reinsures certain policies issued by Aflac Japan and is reported as a part of Corporate and other.

Under these internal reinsurance transactions, Aflac Japan's net earned premiums are reduced by the amount of premiums ceded to Aflac Re.

Aflac Re recorded net earned premiums of $ 178 million and $ 136 million for the three-month periods ended March 31, 2025 and 2024, respectively, related to these reinsurance transactions with Aflac Japan.

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

For additional information on these internal reinsurance transactions, see the accompanying Note 8 and Note 8 of the Notes to the Consolidated Financial Statements in the 2024 Annual Report.

Total Assets:

The Company's total assets were as follows:

(In millions) September 30,

(In millions) March 31,

2025 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.

September 30, 2024

(In millions)

March 31, 2025

(In millions) Amortized

Cost Allowance

21 unchanged sentences

Other currencies:

Public utilities 55 0 0 1 54

Other corporate

25 unchanged sentences

dollar-denominated 29,678 0 3,720 1,029 32,369

Other currencies:

Other corporate 25 0 1 0 26

Total other currencies 25 0 1 0 26

Total securities available-for-sale $ 64,089 $ 0 $ 5,308 $ 4,128 $ 65,269

September 30, 2024

(In millions)

March 31, 2025

(In millions) Amortized

Cost Allowance

24 unchanged sentences

Total securities held-to-maturity $ 15,971 $ 5 $ 15,966 $ 815 $ 9 $ 16,772

September 30,

2025 December 31, 2024

4 unchanged sentences

dollar-denominated 273 312

Other currencies 0 85

Total equity securities $ 764 $ 796

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 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.

During the first three months of 2025 and 2024, 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 September 30, 2024, were as follows:

The contractual and economic maturities of the Company's investments in fixed maturity securities at March 31, 2025, were as follows:

(In millions) Amortized

23 unchanged sentences

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

September 30, 2024 December 31, 2023

March 31, 2025 December 31, 2024

(In millions) Credit

6 unchanged sentences

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

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

Three Months Ended March 31,

(In millions) 2025 2024

21 unchanged sentences

Total net investment gains (losses) $ ( 963 ) $ 951

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.

The unrealized holding gains, net of losses, recorded as a component of net investment gains and losses for the three-month period ended March 31, 2025 that relate to equity securities held at the March 31, 2025 reporting date were $ 55 million.

The unrealized holding gains, net of losses, recorded as a component of net investment gains and losses for the three-month period ended March 31, 2024 that relate to equity securities held at the March 31, 2024 reporting date were $ 71 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) September 30,

(In millions) March 31,

2025 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 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

The following tables show the fair values and gross unrealized losses of the Company's available-for-sale investments for the periods ended March 31, 2025 and December 31, 2024, aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position.

March 31, 2025

Total Less than 12 months 12 months or longer

18 unchanged sentences

Yen-denominated 1,037 155 258 23 779 132

Other currencies 53 1 53 1 0 0

Sovereign and supranational:

dollar-denominated 0 0 0 0 0 0

Yen-denominated 49 10 0 0 49 10

28 unchanged sentences

Sovereign and supranational:

dollar-denominated 35 8 0 0 35 8

Yen-denominated 47 8 0 0 47 8

7 unchanged sentences

Analysis of Securities in Unrealized Loss Positions

The unrealized losses on the Company's available-for-sale securities have been primarily related to general market changes in interest rates, foreign exchange rates, and/or the levels of credit spreads rather than specific concerns with the issuer's ability to pay interest and repay principal.

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.

The unrealized losses on the Company's available-for-sale securities have been primarily related to general market factors such as changes in interest rates, foreign exchange rates, and/or the levels of credit spreads rather than specific concerns with the issuer's ability to pay interest and repay principal.

For available-for-sale securities in an unrealized loss position, the Company performs detailed analyses to identify whether the drivers of the decline in fair value are due to general market factors, 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 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.

For corporate issuers, the Company evaluates their assets, business profile including industry dynamics and competitive positioning, financial statements and other available financial data.

For corporate issuers, the Company evaluates their assets and business profile, including industry dynamics and competitive positioning, financial statements and other available financial data.

For non-corporate issuers, the Company analyzes all sources of credit support, including issuer-specific factors.

5 unchanged sentences

Further, the Company does not intend to sell the investments and it is not more likely than not that the Company will be required to sell the investments before recovery of their amortized cost bases, which may be at maturity.

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 September 30, 2024 .

However, if 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, an allowance for credit losses is recognized.

Based on an evaluation of its securities currently in an unrealized loss position, the Company has determined that those securities should not have an allowance for credit losses as of March 31, 2025 .

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

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

As of March 31, 2025 and December 31, 2024, 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) September 30, 2024 December 31, 2023

March 31, 2025 December 31, 2024

(In millions) Amortized

Total Amortized

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Total net commercial mortgage and other loans $ 10,656 $ 10,869

CMLs and TREs were secured by properties entirely within the U.S.

CMLs and TREs are secured by properties entirely within the U.S.

(with the largest concentrations in California ( 21 %), Texas ( 14 %) and Florida ( 10 %)).

1 unchanged sentence

Transitional Real Estate Loans

TREs are commercial mortgage loans that are typically relatively short-term floating rate instruments secured by a first lien on the property.

TREs are relatively short-term floating rate commercial mortgage loans that are 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 and do not typically require any principal repayment prior to the maturity date.

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

As of March 31, 2025, the Company had $ 245 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 $ 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.

As of March 31, 2025, the Company had commitments of approximately $ 664 million to fund future MMLs.

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

Other loans are primarily infrastructure loans.

Infrastructure loans are typically senior secured, financing operating portfolios of contracted solar and wind assets generating cash flow for loan repayment.

Infrastructure loans are typically senior secured, financing operating portfolios of renewable and conventional energy generation assets characterized by predictable, often contractual cash flows for loan repayment.

The infrastructure loan portfolio weighted average rating is investment grade.

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

As of March 31, 2025, 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 September 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 March 31, 2025 the amortized cost basis of TREs, CMLs, MMLs, and other loans by year of origination and credit quality indicator.

Transitional Real Estate Loans

38 unchanged sentences

Total $ 0 $ 184 $ 68 $ 114 $ 3 $ 0 $ 0 $ 369

Current-period gross writeoffs:

Current-period gross

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

1 unchanged sentence

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.

September 30, 2024

March 31, 2025

(In millions) Current Less Than

6 unchanged sentences

Total $ 10,389 $ 88 $ 547 $ 635 $ 11,024 $ 595

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

(1) As of March 31, 2025, there were no loans that were 90 days or more past due that continued to accrue interest.

December 31, 2024

8 unchanged sentences

(1) As of December 31, 2024, there were no loans that were 90 days or more past due that continued to accrue interest.

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.

For the three-month period ended March 31, 2025, the Company recognized $ 1 million of interest income for TREs, CMLs, MMLs, or other loans on nonaccrual status.

For the three-month period ended March 31, 2024, 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 $ 146 million and $ 140 million had no credit loss allowance as of March 31, 2025 and December 31, 2024, 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 March 31, 2025 and December 31, 2024, MMLs with an amortized cost of $ 20 million and $ 5 million, respectively, were 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 Company granted certain loan modifications to borrowers experiencing financial difficulty during the first three months of 2025 and 2024.

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.

Loans that have both been modified and are paid or written off during the period, resulting in an amortized cost balance of zero at the end of the period, are not included in the disclosures below.

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

March 31, 2025

(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

Middle Market Loans:

Principal forgiveness $ 1 0.0 % Reduction in the amortized cost basis of $ 3 million

Term extension 33 1.0 Term extension of six months on average

Other-than-insignificant

payment delays 47 1.0 Delay in principal and interest payments of 23 months on average

(1) Net of allowance for credit losses

Nine Months Ended

September 30, 2024

Three Months Ended

March 31, 2024

(In millions) Amortized Cost (1)

1 unchanged sentence

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

1 unchanged sentence

(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

March 31, 2025

(In millions) Current Less Than

Past Due 90 Days

Past Due Nonaccrual

Transitional real estate loans $ 347 $ 0 $ 0 $ 0

Middle market loans 96 0 0 20

Total $ 443 $ 0 $ 0 $ 20

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.

Loans that were granted a modification in the past 12 months, as of March 31, 2025 and 2024, and subsequently defaulted in the three-month periods ended March 31, 2025 and 2024, were immaterial.

As of March 31, 2025, the Company had $ 5 million of outstanding commitments to lend additional funds to borrowers experiencing financial difficulty that were granted a loan modification, compared with $ 14 million as of December 31, 2024.

Allowance for Credit Losses

6 unchanged sentences

Accordingly, the change in the estimated fair value of the collateral dependent loans, which are evaluated individually for credit loss, is recorded as a change in the credit loss allowance as a component of net investment gains (losses) in the consolidated statements of earnings.

The credit allowance for held-to-maturity fixed maturity securities and loan receivables is estimated using a probability-of-default (PD) / loss-given-default (LGD) method, discounted for the time value of money.

For held-to-maturity fixed maturity securities, available-for-sale fixed maturity securities and loan receivables, the Company includes the change in present value due to the passage of time in the change in the allowance for credit losses.

The credit allowance for held-to-maturity securities and loan receivables is estimated using a probability-of-default (PD) / loss-given-default (LGD) method, discounted for the time value of money.

For held-to-maturity securities, available-for-sale securities and loan receivables, the Company includes the change in present value due to the passage of time in the change in the allowance for credit losses.

The Company’s methodology for estimating credit losses utilizes the contractual maturity date of the financial asset, adjusted when necessary to reflect the expected timing of repayment (such as prepayment options, renewal options, call options, or extension options).

The Company applies reasonable and supportable forecasts of macroeconomic variables that impact the determination of PD / LGD over a two-year period for held-to-maturity fixed maturity securities and MMLs.

The Company applies reasonable and supportable forecasts of macroeconomic variables that impact the determination of PD / LGD over a two-year period for held-to-maturity securities and MMLs.

The Company reverts to historical loss information over one year, following the two-year forecast period.

1 unchanged sentence

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 $ 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.

The Company’s held-to-maturity portfolio includes Japan Government and Agency securities of $ 16.1 billion amortized cost as of March 31, 2025 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.

3 unchanged sentences

Such evaluations and assessments are revised as conditions change and new information becomes available.

When determining the Company's intention to sell a security prior to recovery of its fair value to amortized cost, the Company evaluates facts and circumstances such as, but not limited to, future cash flow needs, decisions to reposition its security portfolio, and risk profile of individual investment holdings.

When determining the Company's intention to sell a security prior to recovery of its amortized cost basis, the Company evaluates facts and circumstances such as, but not limited to, future cash flow needs, decisions to reposition its security portfolio, and risk profile of individual investment holdings.

The Company performs ongoing analyses of its liquidity needs, which includes cash flow testing of its policy liabilities, debt maturities, projected dividend payments, and other cash flow and liquidity needs.

4 unchanged sentences

Loans Commercial

Mortgage Loans Middle Market

Loans Other Loans

2 unchanged sentences

Securities Total

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 September 30, 2024

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

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 September 30, 2023

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

Nine Months Ended

September 30, 2024:

Three Months Ended March 31, 2025:

Balance at December 31, 2024

$ ( 199 ) $ ( 14 ) $ ( 140 ) $ ( 17 ) $ ( 5 ) $ 0 $ ( 375 )

(Addition to) release of allowance for credit losses

(Addition to) release of allowance

for credit losses

( 28 ) ( 1 ) ( 24 ) ( 2 ) 0 0 ( 55 )

1 unchanged sentence

Change in foreign exchange 0 0 0 0 0 0 0

Balance at September 30, 2024

Balance at March 31, 2025

$ ( 203 ) $ ( 15 ) $ ( 150 ) $ ( 19 ) $ ( 5 ) $ 0 $ ( 392 )

Nine Months Ended

September 30, 2023:

Three Months Ended March 31, 2024:

Balance at December 31, 2023

4 unchanged sentences

Change in foreign exchange 0 0 0 0 0 0 0

Balance at September 30, 2023

Balance at March 31, 2024

$ ( 114 ) $ ( 19 ) $ ( 99 ) $ ( 15 ) $ ( 5 ) $ 0 $ ( 252 )

(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.

As of March 31, 2025, the Company identified TREs with an amortized cost of $ 311 million in anticipation of potential foreclosure or deed in lieu of foreclosure transactions.

As of March 31, 2025, the Company established a credit allowance of $ 25 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) September 30,

(In millions) March 31,

2025 December 31,

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 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 $ 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.

As of March 31, 2025 and December 31, 2024, all REO was classified as held-and-used for the production of income, which is carried at cost less accumulated depreciation.

Depreciation expense was $ 6 million and $ 1 million for the three-month periods ended March 31, 2025 and 2024, respectively.

Additionally, as of March 31, 2025 and December 31, 2024, accumulated depreciation was $ 20 million and $ 14 million, respectively.

The Company had $ 2.6 billion and $ 2.8 billion in outstanding commitments to fund investments in limited partnerships, which includes $ 2.0 billion and $ 2.1 billion of unfunded commitments related to VIEs that are non-consolidated as of March 31, 2025 and December 31, 2024, respectively.

Variable Interest Entities (VIEs)

In the normal course of its activities, the Company invests in legal entities that are VIEs.

The Company's debt or ownership interest in VIEs is limited to holding the equity interests and obligations issued by them.

With the exception of commitments to limited partnerships and to certain loan investments made in the normal course of business, the Company has not provided any direct or contingent obligations to fund the limited activities of these VIEs or support related to the limited activities of these VIE and does not have any intention to do so in the future, nor does it have any direct or indirect financial guarantees.

The Company's variable interests in VIEs are limited to the debt and equity instruments issued by them.

With the exception of commitments to limited partnerships and to certain loan investments made in the normal course of business, the Company has not provided any direct or contingent obligations to fund the limited activities of these VIEs, or support related to the limited activities of these VIEs and does not have any intention to do so in the future, nor has it provided any direct or indirect financial guarantees.

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, and in certain cases, to any unfunded commitments held in the VIE.

1 unchanged sentence

VIEs - Consolidated

The Company is the primary beneficiary of a VIE if it has

• the power to direct the activities of the VIE that most significantly impact the economic performance of the entity

• the obligation to absorb losses of or the right to receive benefits from the entity that could be potentially significant to the VIE.

If the Company determines that it is the VIE’s primary beneficiary, it consolidates the VIE.

Creditors or beneficial interest holders of VIEs where the Company is the primary beneficiary have no recourse to the general credit of the Company except to the extent of the unfunded commitments referenced above, as the Company’s obligation to each VIE is limited to the amount of its committed investment.

The following table presents carrying value and balance sheet caption in which the assets and liabilities of consolidated VIEs are reported.

The following table presents the carrying value and balance sheet caption in which the assets and liabilities of consolidated VIEs are reported.

Investments in Consolidated Variable Interest Entities

(In millions) September 30,

(In millions) March 31,

2025 December 31,

6 unchanged sentences

Total liabilities of consolidated VIEs $ 642 $ 604

(1) Consists entirely of alternative investments in limited partnerships

(1) Consists entirely of alternative investments in limited partnerships, which represent VIEs where the Company is not the primary beneficiary and, therefore, are not consolidated

(2) Consists entirely of derivatives

9 unchanged sentences

The underlying collateral assets and funding of these consolidated VIEs are generally static in nature.

Investments in Unit Trust Structures

The Company also utilizes unit trust structures in its Aflac Japan segment to invest in various asset classes, which include CMLs, MMLs, TREs, other loans and limited partnerships.

As the sole investor of these VIEs, the Company is required to consolidate these trusts under U.S.

The limited partnership investments are comprised of private equity and real estate funds.

4 unchanged sentences

Investments in Variable Interest Entities Not Consolidated

(In millions) September 30,

(In millions) March 31,

2025 December 31,

6 unchanged sentences

The Company's involvement in the related VIEs is limited to that of a passive investor in asset-backed securities issued by the VIEs.

The Company also invests in VIEs that are the primary financing vehicles used by their corporate sponsors to raise financing in the capital markets.

The Company also invests in fixed maturity debt securities issued by VIEs that 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.

1 unchanged sentence

As such, the Company is not the primary beneficiary of these VIEs and therefore is not required to consolidate them.

The Company's maximum exposure to loss on these investments is limited to the amount of the Company's investment.

The Company also holds equity investments in limited partnerships that have been determined to be VIEs.

12 unchanged sentences

For loans involving unrestricted cash or securities as collateral, the collateral is reported as an asset with a corresponding liability for the return of the collateral.

For loans where the Company receives as collateral securities that the Company is not permitted to sell or repledge, the collateral is not reflected on the consolidated financial statements.

For loans where the Company receives as collateral securities that the Company is not permitted to sell or repledge, the collateral is not reflected in the consolidated financial statements.

Details of collateral by loaned security type and remaining maturity of the agreements were as follows:

1 unchanged sentence

Remaining Contractual Maturity of the Agreements

September 30, 2024 December 31, 2023

March 31, 2025 December 31, 2024

(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 $ 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.

In connection with securities lending, in addition to cash collateral received, the Company received from counterparties securities collateral of $ 1.3 billion and $ 3.0 billion at March 31, 2025 and December 31, 2024, 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 September 30, 2024, and December 31, 2023, respectively.

The Company did not have any repurchase agreements or repurchase-to-maturity transactions outstanding as of March 31, 2025, and December 31, 2024, 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.

5 unchanged sentences

• foreign currency forwards and options used to economically hedge certain portions of forecasted cash flows denominated in yen and hedge the Company's long term exposure to a weakening yen;

• cross-currency interest rate swaps, also referred to as foreign currency swaps, associated with certain senior notes and subordinated debentures;

• foreign currency swaps that are associated with variable interest entity (VIE) bond purchase commitments, and investments in special-purpose entities, including VIEs where the Company is the primary beneficiary;

• cross-currency swaps, also referred to as foreign currency swaps, associated with certain senior notes and subordinated debentures;

• foreign currency swaps that are associated with VIE bond purchase commitments, and investments in special-purpose entities, including VIEs where the Company is the primary beneficiary;

• interest rate swaps used to economically hedge interest rate fluctuations in certain variable-rate investments;

47 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.

September 30, 2024 December 31, 2023

March 31, 2025 December 31, 2024

(In millions) Asset

9 unchanged sentences

Total cash flow hedges 18 0 5 18 0 6

Fair value hedges:

Foreign currency options 0 0 0 2,158 0 0

Total fair value hedges 0 0 0 2,158 0 0

Net investment hedge:

Foreign currency forwards 2,674 91 38 1,809 185 0

Foreign currency options 0 0 0 456 0 0

Total net investment hedge 2,674 91 38 1,809 185 0

8 unchanged sentences

Cash Flow Hedges

For certain variable-rate U.S.

dollar-denominated available-for-sale securities held by Aflac Japan via consolidated VIEs, foreign currency swaps are used to swap the U.S.

Dollar (USD) variable rate interest and principal payments to fixed rate Japanese Yen (JPY) interest and principal payments.

From time to time, for certain variable-rate available-for-sale securities held by Aflac Japan via consolidated VIEs, foreign currency swaps are used to swap the variable rate interest to fixed rate interest as well as interest cash flows between Japanese yen and U.S.

The Company has designated foreign currency swaps as a hedge of the variability in cash flows of a forecasted transaction or of amounts to be received or paid related to a recognized asset (“cash flow” hedge).

12 unchanged sentences

The change in the time value of the swaptions is recognized in other comprehensive income (loss) and amortized into earnings (net investment income) over its legal term.

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 nine-month periods ended September 30, 2024.

Fair Value Hedging Relationships

(In millions) Hedging Derivatives Hedged Items

Hedging Derivatives Hedged Items Total

(Losses) Gains (Losses)

Excluded from Effectiveness Testing (1)

Gains (Losses)

Included in Effectiveness Testing (2)

Gains (Losses) (2)

Net Investment Gains (Losses) Recognized for Fair Value Hedge

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

Nine Months Ended September 30, 2023:

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

Total gains (losses) $ ( 65 ) $ ( 65 ) $ 0 $ 0 $ 0

(1) Gains (losses) excluded from effectiveness testing includes the forward point on foreign currency forwards and time value change on foreign currency options which are reported in the consolidated statements of earnings as net investment gains (losses).

It also includes the change in the fair value of the interest rate swaptions related to the time value of the swaptions which is recognized as a component of other comprehensive income (loss).

(2) Gains and losses on foreign currency forwards and options and related hedged items are reported in the consolidated statements of earnings as net investment gains (losses).

For interest rate swaptions and related hedged items, gains and losses included in the hedge assessment, premium amortization and time value amortization while the hedge items are still outstanding are reported within net investment income.

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 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 September 30, 2024 and December 31, 2023;

The Company had no fair value hedges of interest rate risk as of March 31, 2025 and December 31, 2024;

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

(In millions) Carrying Amount of the Hedged

Assets/(Liabilities) (1)

Cumulative Amount of Fair Value

Hedging Adjustment Included in

the Carrying Amount of Hedged

Assets/(Liabilities)

September 30,

(In millions) Carrying Amount of the Hedged Assets/(Liabilities) (1)

Cumulative Amount of Fair Value Hedging Adjustment Included in the Carrying Amount of Hedged Assets/(Liabilities)

2025 December 31,

2023 September 30,

2024 March 31,

2025 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 nine-month periods ended September 30, 2024 and 2023, respectively.

The Company's net investment hedge was effective during the three-month periods ended March 31, 2025 and 2024, respectively.

Non-qualifying Strategies

For the Company's derivative instruments in consolidated VIEs that do not qualify for hedge accounting treatment, all changes in their fair value are reported in current period earnings within n et i nvestment gains (losses).

The amount of gain or loss recognized in earnings for the Company's VIEs is attributable to the derivatives in those investment structures.

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 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.

The Parent Company had cross-currency swap agreements related to certain of its U.S.

dollar-denominated senior notes to effectively convert interest and principal on the notes from U.S.

dollar to Japanese yen.

Changes in the values of these swaps are recorded in current period earnings.

These swaps matured in March 2025.

Changes in the values of these swaps were recorded in earnings in the period where they occurred.

The Company uses foreign currency forwards and options to economically mitigate the currency risk of some of its U.S.

dollar-denominated loan receivables and U.S.

government fixed maturity securities held within the Aflac Japan segment.

government fixed maturity securities held in the Aflac Japan segment.

These arrangements are not designated as accounting hedges, as the foreign currency remeasurement of the loan receivables impacts current period earnings, and substantially offsets gains and losses from foreign currency forwards within net investment gains (losses).

4 unchanged sentences

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

Three Months Ended September 30,

(In millions) Net

Net Investment

Gains (Losses) Other

Comprehensive

Income (Loss) (2)

Net Investment

Gains (Losses) Other

Comprehensive

Income (Loss) (2)

Qualifying hedges:

Cash flow hedges:

Foreign currency swaps - VIE $ ( 1 ) $ ( 1 ) $ 2 $ ( 1 ) $ ( 1 ) $ 1

Total cash flow hedges ( 1 ) ( 1 ) (3)

2 ( 1 ) ( 1 ) (3)

Fair value hedges:

Foreign currency options 0 ( 1 )

Total fair value hedges 0 ( 1 )

Net investment hedge:

Non-derivative hedging

instruments 0 ( 522 ) 0 112

Foreign currency forwards 43 ( 225 ) 71 32

Total net investment hedge 43 ( 747 ) 71 144

Non-qualifying strategies:

Foreign currency swaps 0 1

Foreign currency swaps - VIE 44 ( 22 )

Foreign currency forwards 0 32

Foreign currency options 191 ( 9 )

Interest rate swaps 159 ( 124 )

Total non-qualifying strategies 394 ( 122 )

Total $ ( 1 ) $ 436 $ ( 745 ) $ ( 1 ) $ ( 53 ) $ 145

1) Interest expense/income on cash flow hedges are recorded in net investment income.

For interest rate swaptions classified as fair value hedges, the change in the time value of the swaptions is recognized in other comprehensive income (loss) and amortized into net investment income over its legal term.

If the swaption is early terminated but the hedge item is still outstanding, the amortization of disposal amount of the swaptions is recorded in net investment income over the remaining life of the hedged items.

(2) Gains and losses on cash flow hedges and the change in the fair value of interest rate swaptions related to the time value of the swaptions in fair value hedges are recorded as unrealized gains (losses).

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 September 30, 2024, and $ 1 of losses during the three-month period ended September 30, 2023.

Nine Months Ended September 30,

Three Months Ended March 31,

(In millions) Net

Net Investment

Gains (Losses) Other

(Losses) Other

Comprehensive

Income (Loss) (2)

Net Investment

Income (Loss) Net

Gains (Losses) Other

6 unchanged sentences

2 0 ( 1 ) (1)

Fair value hedges:

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

Net investment hedge:

2 unchanged sentences

Foreign currency forwards 36 ( 144 ) 44 145

Foreign currency options 0 0 ( 8 ) 0

Total net investment hedge 36 ( 384 ) 44 381

5 unchanged sentences

Interest rate swaps ( 18 ) ( 147 )

Forward bond purchase

commitment - VIE 0 ( 4 )

Total non-qualifying strategies ( 80 ) ( 258 )

Total $ 0 $ ( 45 ) $ ( 382 ) $ 0 $ ( 215 ) $ 381

(1) 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 March 31, 2025, and $ 1 of losses during the three-month period ended March 31, 2024.

Interest expense/income on cash flow hedges are recorded in net investment income.

If the swaption is early terminated but the hedged item is still outstanding, the amortization of disposal amount of the swaptions is recorded in net investment income over the remaining life of the hedged items.

Gains and losses on cash flow hedges and the change in the fair value of interest rate swaptions related to the time value of the swaptions in fair value hedges are recorded as unrealized gains (losses).

(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.

As of March 31, 2025, $ 3 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 September 30, 2024, all of the Company's derivative agreement counterparties were investment grade.

As of March 31, 2025, 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.

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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 $ 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 aggregate fair value of all derivative instruments with credit-risk-related contingent features that were in a net liability position by counterparty was approximately $ 883 million and $ 804 million as of March 31, 2025 and December 31, 2024, respectively.

If the credit-risk-related contingent features underlying these agreements had been triggered on March 31, 2025, the Company estimates that it would be required to post a maximum of $ 584 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

September 30, 2024

March 31, 2025

Gross Amounts Not Offset

34 unchanged sentences

OTC - bilateral $ 187 $ 0 $ 187 $ 0 $ ( 45 ) $ ( 135 ) $ 7

OTC - cleared 11 0 11 ( 11 ) 0 0 0

Total derivative

15 unchanged sentences

Offsetting of Financial Liabilities and Derivative Liabilities

September 30, 2024

March 31, 2025

Gross Amounts Not Offset

33 unchanged sentences

to a master netting

OTC - bilateral $ 504 $ 0 $ 504 $ ( 85 ) $ ( 381 ) $ ( 37 ) $ 1

OTC - cleared $ 329 $ 0 $ 329 $ 0 $ 0 $ ( 329 ) $ 0

24 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.

September 30, 2024

March 31, 2025

(In millions) Quoted Prices in

27 unchanged sentences

Foreign currency forwards 0 39 0 39

Foreign currency options 0 24 0 24

Interest rate swaps 0 304 0 304

23 unchanged sentences

Foreign currency forwards 0 185 0 185

Foreign currency options 0 2 0 2

Interest rate swaps 0 11 0 11

Total other assets 0 240 0 240

2 unchanged sentences

Foreign currency swaps $ 0 $ 604 $ 0 $ 604

Foreign currency forwards 0 504 0 504

Interest rate swaps 0 329 0 329

1 unchanged sentence

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.

September 30, 2024

March 31, 2025

(In millions) Carrying

55 unchanged sentences

The Company determines the fair values of privately issued equity securities using the following approaches or techniques:

price quotes and valuations from third-party pricing vendors, in-house valuations and non-binding price quotes the Company obtains from outside brokers.

• price quotes and valuations from third-party pricing vendors,

• in-house valuations, 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.

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

September 30, 2024

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

(Level 1) Significant Observable

(Level 2) Significant Unobservable

March 31, 2025

(In millions) Quoted Prices in

Active Markets

for Identical

(Level 1) Significant

(Level 2) Significant

(Level 3) Total

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Third-party pricing vendor $ 604 $ 0 $ 0 $ 604

Internal 0 0 26 26

Broker/other 0 0 134 134

Total equity securities $ 604 $ 0 $ 160 $ 764

September 30, 2024

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

(Level 1) Significant Observable

(Level 2) Significant Unobservable

March 31, 2025

(In millions) Quoted Prices in

Active Markets

for Identical

(Level 1) Significant

(Level 2) Significant

(Level 3) Total

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December 31, 2024

(In millions) Quoted Prices in Active Markets

(In millions) Quoted Prices in

Active Markets

for Identical Assets

(Level 1) Significant Observable

(Level 2) Significant Unobservable

(Level 1) Significant

(Level 2) Significant

(Level 3) Total

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Internal 0 312 0 312

Broker/other 8 32 0 40

Total government and agencies 17,088 758 0 17,846

2 unchanged sentences

Internal 0 243 0 243

Broker/other 0 616 0 616

Total municipalities 0 2,034 0 2,034

31 unchanged sentences

December 31, 2024

(In millions) Quoted Prices in Active Markets

(In millions) Quoted Prices in

Active Markets

for Identical Assets

(Level 1) Significant Observable

(Level 2) Significant Unobservable

(Level 1) Significant

(Level 2) Significant

(Level 3) Total

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The fair values of the foreign currency forwards and options are based on observable market inputs, therefore they are classified as Level 2.

The Parent Company has cross-currency swap agreements related to certain of its U.S.

The Parent Company had cross-currency 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.

dollar to Japanese yen.

Their fair values are based on observable market inputs, therefore they are classified as Level 2.

These swaps matured in March 2025.

Their fair values were based on observable market inputs, therefore they were classified as Level 2.

To determine the fair value of its interest rate derivatives, the Company uses inputs that are generally observable in the market or can be derived from observable market data.

39 unchanged sentences

Three Months Ended

September 30, 2024

March 31, 2025

Fixed Maturity Securities Equity

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Three Months Ended

September 30, 2023

March 31, 2024

Fixed Maturity Securities Equity

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included in earnings $ 1 $ 0 $ 0 $ 0 $ 0 $ ( 3 ) $ ( 2 )

Nine Months Ended

September 30, 2024

Fixed Maturity Securities Equity

(In millions) Mortgage-

Securities Public

Utilities Sovereign

Supranational Banks/

Institutions Other

Corporate Total

Balance, beginning of period $ 772 $ 253 $ 30 $ 78 $ 648 $ 248 $ 2,029

Net investment gains (losses) included

in earnings 3 0 0 0 0 ( 5 ) ( 2 )

Unrealized gains (losses) included in

other comprehensive income (loss) 48 8 0 ( 9 ) 16 0 63

Purchases, issuances, sales

and settlements:

Purchases 338 147 0 9 193 3 690

Issuances 0 0 0 0 0 0 0

Sales 0 0 0 0 0 ( 1 ) ( 1 )

Settlements ( 67 ) ( 26 ) ( 2 ) ( 9 ) ( 4 ) ( 84 ) ( 192 )

Transfers into Level 3 205 421 0 0 5 0 631

Transfers out of Level 3 ( 90 ) ( 233 ) 0 ( 59 ) ( 484 ) 0 ( 866 )

Balance, end of period $ 1,209 $ 570 $ 28 $ 10 $ 374 $ 161 $ 2,352

Changes in unrealized gains

(losses) relating to Level 3 assets

and liabilities still held at the end

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

Nine Months Ended

September 30, 2023

Fixed Maturity Securities Equity

(In millions) Mortgage-

Securities Public

Utilities Sovereign

Supranational Banks/

Institutions Other

Corporate Total

Balance, beginning of period $ 343 $ 497 $ 37 $ 159 $ 742 $ 209 $ 1,987

Net investment gains (losses) included

in earnings 0 0 0 0 0 ( 13 ) ( 13 )

Unrealized gains (losses) included in

other comprehensive income (loss) ( 23 ) ( 18 ) ( 4 ) 2 ( 33 ) 0 ( 76 )

Purchases, issuances, sales and

Purchases 383 36 0 0 148 10 577

Issuances 0 0 0 0 0 0 0

Sales 0 0 0 0 0 0 0

Settlements ( 144 ) ( 15 ) ( 2 ) ( 7 ) ( 3 ) 0 ( 171 )

Transfers into Level 3 124 18 0 3 39 0 184

Transfers out of Level 3 ( 3 ) ( 259 ) 0 ( 87 ) ( 329 ) ( 3 ) ( 681 )

Balance, end of period $ 680 $ 259 $ 31 $ 70 $ 564 $ 203 $ 1,807

Changes in unrealized gains

(losses) relating to Level 3 assets

and liabilities still held at the end

of the period included in earnings $ 1 $ 1 $ 0 $ 0 $ 0 $ ( 9 ) $ ( 7 )

Fair Value Sensitivity

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

September 30, 2024

March 31, 2025

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

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Mortgage- and asset-backed securities $ 1,156 Consensus pricing Offered quotes 84.08 - 104.60 (a)

Public utilities 253 Consensus pricing Offered quotes 94.34 - 102.99 (a)

Public utilities 647 Discounted cash flow Credit spreads 100 bps - 375 bps (c)

Sovereign and supranational 23 Consensus pricing Offered quotes N/A (b)

Banks/financial institutions 78 Discounted cash flow Credit spreads N/A (b)

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

Other corporate 231 Discounted cash flow Credit spreads 91 bps - 294 bps (c)

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

September 30, 2024

March 31, 2025

Aflac Japan Aflac U.S.

(In millions) Cancer Medical and Other Health Life Insurance Other Accident Disability Critical Care Hospital Indemnity Dental/Vision Life Insurance Other Total

(In millions) Cancer Medical

Insurance Other Accident Disability Critical

Care Hospital

Indemnity Dental/

Insurance Other Total

Deferred policy acquisition costs:

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other 160 107 27 1 0 0 0 0 0 0 0 295

Balance at September 30, 2024

Balance at March 31, 2025

$ 2,951 $ 1,942 $ 469 $ 54 $ 912 $ 636 $ 1,347 $ 454 $ 86 $ 232 $ 0 $ 9,083

1 unchanged sentence

Aflac Japan Aflac U.S.

(In millions) Cancer Medical and Other Health Life Insurance Other Accident Disability Critical Care Hospital Indemnity Dental/Vision Life Insurance Other Total

(In millions) Cancer Medical

Insurance Other Accident Disability Critical

Care Hospital

Indemnity Dental/

Insurance Other Total

Deferred policy acquisition costs:

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Future DAC amortization is impacted by persistency.

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.

There were no changes to the inputs, judgments, assumptions or methods used to determine amortization amounts during the three-month periods ended March 31, 2025 and 2024.

For additional information on deferred policy acquisition costs, see Notes 1 and 6 of the Notes to the Consolidated Financial Statements in the 2024 Annual Report.

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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.

September 30, 2024

March 31, 2025

Aflac Japan Aflac U.S.

(In millions) Cancer Medical and Other Health Life Insurance Other Accident Disability Critical Care Hospital Indemnity Dental/Vision Life Insurance Other

(In millions) Cancer Medical

Insurance Other Accident Disability Critical

Care Hospital

Indemnity Dental/

Insurance Other

Present value of expected future net premiums:

14 unchanged sentences

Effect of changes in discount rate assumptions ( 270 ) ( 415 ) ( 29 ) ( 42 ) ( 160 ) ( 72 ) ( 389 ) ( 86 ) ( 11 ) ( 53 ) 55

Balance at September 30, 2024

Balance at March 31, 2025

$ 14,496 $ 11,946 $ 5,283 $ 853 $ 2,529 $ 1,672 $ 4,058 $ 1,173 $ 203 $ 953 $ 1,090

14 unchanged sentences

Effect of changes in discount rate assumptions 1,538 ( 2,291 ) ( 3,022 ) ( 736 ) ( 221 ) ( 109 ) ( 1,184 ) ( 154 ) ( 30 ) ( 255 ) 52

Balance at September 30, 2024

Balance at March 31, 2025

41,438 20,848 24,478 4,267 3,155 2,362 10,922 1,945 448 1,928 1,557

6 unchanged sentences

Aflac Japan Aflac U.S.

(In millions) Cancer Medical and Other Health Life Insurance Other Accident Disability Critical Care Hospital Indemnity Dental/Vision Life Insurance Other

(In millions) Cancer Medical

Insurance Other Accident Disability Critical

Care Hospital

Indemnity Dental/

Insurance Other

Present value of expected future net premiums:

39 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.

September 30, 2024

March 31, 2025

Aflac Japan Aflac U.S.

Cancer Medical and Other Health Life Insurance Other Accident Disability Critical Care Hospital Indemnity Dental/Vision Life Insurance Other

Cancer Medical

Insurance Other Accident Disability Critical

Care Hospital

Indemnity Dental/

Insurance Other

Weighted-average interest, original discount rate (1)

7 unchanged sentences

Aflac Japan Aflac U.S.

Cancer Medical and Other Health Life Insurance Other Accident Disability Critical Care Hospital Indemnity Dental/Vision Life Insurance Other

Cancer Medical

Insurance Other Accident Disability Critical

Care Hospital

Indemnity Dental/

Insurance Other

Weighted-average interest, original discount rate (1)

7 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) September 30,

(In millions) March 31,

2025 December 31, 2024

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) (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) (effective for Aflac Japan's 2025 fiscal year-end), and is adjusted for credit and inflation components.

For the Aflac U.S.

6 unchanged sentences

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

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.

There were no changes to the methods used to determine the discount rates during the three-month periods ended March 31, 2025 and 2024.

Mortality rate assumptions are based on industry tables and adjusted for the Company's actual or expected experience where credible or appropriate.

7 unchanged sentences

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

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.

For the three-month periods ended March 31, 2025 and 2024 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 or methods used in measuring the liability for future policy benefits during the three-month periods ended March 31, 2025 and 2024.

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.

morbidity experience.

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

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 September 30, Nine Months Ended September 30,

Three Months Ended March 31,

(In millions) 2025 2024

3 unchanged sentences

Life insurance 316 339

Other 35 38 104 113

Accident 311 325

4 unchanged sentences

Life insurance 169 138

Other 29 13 75 31

Corporate and other 198 165

1 unchanged sentence

Total $ 3,381 $ 3,456

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 September 30, Nine Months Ended September 30,

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

Three Months Ended March 31,

(In millions) 2025 2024

3 unchanged sentences

Life insurance 114 118

Other 20 19 57 61

Accident 7 6 20 18

Disability 7 8

3 unchanged sentences

Life insurance 11 10

Other 7 7 20 20

Total $ 559 $ 576

6 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.

September 30, 2024 December 31, 2023

March 31, 2025 December 31, 2024

(In millions) Gross

Premiums Benefits and Expenses Gross Premiums Benefits and Expenses

Premiums Benefits and

Expenses Gross

Premiums Benefits and

Undiscounted expected future gross premiums

12 unchanged sentences

Total $ 148,495 $ 181,215 $ 142,653 $ 173,393

September 30, 2024 December 31, 2023

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

March 31, 2025 December 31, 2024

(In millions) Gross

Premiums Benefits and

Expenses Gross

Premiums Benefits and

Discounted expected future gross premiums

12 unchanged sentences

Total $ 108,031 $ 113,348 $ 105,686 $ 111,508

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

Loss expense as a result of NPR capping for the three-month periods ended March 31, 2025 and 2024 was immaterial.

Other Policyholders' Funds

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.

As of March 31, 2025 and December 31, 2024, 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) September 30,

(In millions) March 31,

2025 December 31,

13 unchanged sentences

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

September 30, 2024 December 31, 2023

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

At Guaranteed Minimum Cash Surrender Value Range of Guaranteed Minimum Crediting Rates (2)

At Guaranteed Minimum Cash Surrender Value

March 31, 2025 December 31, 2024

(In millions) Range of Guaranteed

Minimum Crediting

Value Range of Guaranteed

Minimum Crediting

Fixed annuities (1)

3 unchanged sentences

(1) Aflac Japan fixed annuities

(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.

(2) Weighted-average crediting rate of 1.5 % at March 31, 2025 and December 31, 2024.

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

The reserves are adequate to fully fund future benefits at any given time.

2 unchanged sentences

For each of its reinsurance agreements, the Company determines whether the agreement provides indemnification against loss or liability relating to insurance risk in accordance with applicable accounting standards.

For additional information on reinsurance, see Notes 1 and 8 of the Notes to the Consolidated Financial Statements in the 2023 Annual Report.

These reinsurance transactions are indemnity reinsurance agreements that do not relieve the Company from its obligations to policyholders.

In the event that the reinsurer is unable to meet their obligations, the Company remains liable for the reinsured claims.

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 September 30, Nine Months Ended September 30,

Three Months Ended March 31,

(In millions) 2025 2024

Direct earned premiums $ 3,360 $ 3,524 $ 10,194 $ 10,885

Ceded to other companies:

Ceded Aflac Japan closed blocks ( 32 ) ( 75 ) ( 97 ) ( 240 )

Other ( 39 ) ( 24 ) ( 109 ) ( 69 )

Assumed from other companies:

Retrocession activities 28 33 84 96

Other 11 18 37 65

Earned premiums:

Direct $ 3,433 $ 3,482

Ceded ( 88 ) ( 69 )

Assumed 36 43

Net earned premiums $ 3,381 $ 3,456

Direct benefits and claims, excluding reserve remeasurement $ 2,024 $ 2,106 $ 6,101 $ 6,545

Ceded benefits and change in reserves for future benefits:

Ceded Aflac Japan closed blocks ( 16 ) ( 71 ) ( 51 ) ( 222 )

Other ( 20 ) ( 7 ) ( 53 ) ( 29 )

Assumed from other companies:

Retrocession activities 17 29 42 90

Other ( 2 ) 8 3 36

Benefits and claims, excluding reserve remeasurement:

Direct reserve remeasurement (gains) losses $ ( 407 ) $ ( 219 ) $ ( 515 ) $ ( 327 )

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

Direct $ 2,031 $ 2,082

Ceded ( 56 ) ( 33 )

Assumed 11 17

Benefits and claims, excluding reserve remeasurement 1,986 2,066

Reserve remeasurement (gains) losses:

Direct ( 41 ) ( 57 )

Reserve remeasurement (gains) losses ( 41 ) ( 56 )

Total benefits and claims, net $ 1,945 $ 2,010

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 $ 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 remaining consolidated deferred reinsurance gain liability of $ 152 million and $ 146 million as of March 31, 2025 and December 31, 2024, 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 $ 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 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 $ 166 million and $ 163 million as of March 31, 2025 and December 31, 2024, respectively.

As of both March 31, 2025 and December 31, 2024, the allowance for credit losses related to the Company's reinsurance recoverable balance was $ 4 million.

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

As of March 31, 2025, the Company's reinsurance counterparties were rated A+.

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

These reinsurance transactions are indemnity reinsurance that do not relieve the Company from its obligations to policyholders.

In the event that the reinsurer is unable to meet its obligations, the Company remains liable for the reinsured claims.

Internal Reinsurance Transactions

Aflac Re is a Bermuda domiciled insurer that reinsures certain policies issued by ALIJ.

The inter-segment amounts associated with these internal reinsurance transactions are eliminated in consolidation.

For additional information on reinsurance, see Notes 1 and 8 of the Notes to the Consolidated Financial Statements in the 2024 Annual Report.

NOTES PAYABLE AND LEASE OBLIGATIONS

A summary of notes payable and lease obligations follows:

(In millions) September 30,

(In millions) March 31,

2025 December 31,

34 unchanged sentences

2.108 % subordinated debentures due October 2047 (principal amount ¥ 60.0 billion)

.963 % subordinated bonds paid April 2024 (principal amount ¥ 30.0 billion)

1.560 % senior notes due April 2051 (principal amount ¥ 20.0 billion)

13 unchanged sentences

Amounts in the table above are reported net of debt issuance costs and issuance premiums or discounts, if applicable, that are being amortized over the life of the notes.

In April 2024, ALIJ redeemed ¥ 30.0 billion of its .963 % subordinated bonds due April 2049.

In March 2024, the Parent Company issued five series of senior notes totaling ¥ 75.0 billion through a private placement.

The first series, which totaled ¥ 18.3 billion, bears interest at a fixed rate of 1.600 % per annum, payable semi-annually, and will mature in March 2034.

The second series, which totaled ¥ 15.0 billion, bears interest at a fixed rate of 1.740 % per annum, payable semi-annually, and will mature in March 2036.

The third series, which totaled ¥ 16.5 billion, bears interest at a fixed rate of 1.920 % per annum, payable semi-annually, and will mature in March 2039.

The fourth series, which totaled ¥ 5.7 billion, bears interest at a fixed rate of 2.160 % per annum, payable semi-annually, and will mature in March 2044.

The fifth series, which totaled ¥ 19.5 billion, bears interest at a fixed rate of 2.400 % per annum, payable semi-annually, and will mature in March 2054.

These notes are redeemable at the Parent Company's option (i) in whole at any time or (ii) in part from time to time in an amount not less than 5% of the aggregate principal amount then outstanding of the notes to be redeemed.

In March 2024, the Parent Company issued three series of senior notes totaling ¥ 48.6 billion through a public debt offering under its U.S.

shelf registration statement.

The first series, which totaled ¥ 13.0 billion, bears interest at a fixed rate of 1.048 % per annum, payable semi-annually, and will mature in March 2029.

The second series, which totaled ¥ 27.9 billion, bears interest at a fixed rate of 1.412 % per annum, payable semi-annually, and will mature in March 2031.

The third series, which totaled ¥ 7.7 billion, bears interest at a fixed rate of 1.682 % per annum, payable semi-annually, and will mature in March 2034.

These notes are redeemable at the Parent Company’s option at any time, in whole but not in part, upon the occurrence of certain changes affecting U.S.

taxation, as specified in the indenture governing the terms of the issuance.

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 $ 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

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 $ 46 million for the three-month periods March 31, 2025 and 2024, respectively.

A summary of the Company's lines of credit as of March 31, 2025 follows:

Borrower(s) Type Term Expiration

Date Capacity Amount

Outstanding Interest Rate on Borrowed Amount Maturity Period Commitment

Aflac Incorporated

and Aflac uncommitted bilateral 364 days December 5, 2025 $ 100 million

The rate quoted by the bank and agreed upon at the time of borrowing Up to 3 months None General corporate purposes

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 5 years May 9,

13 unchanged sentences

and Aflac uncommitted bilateral None specified None specified $ 50 million

A rate per annum equal to, at the Parent Company's option, either (a) a rate determined by reference to SOFR for the interest period relevant to such borrowing or (b) the base rate determined by reference to the highest of (1) the lender's USD short-term commercial loan rate and (2) the federal funds rate plus 1/2 of 1% Up to 3 months None General corporate purposes

None General corporate purposes

uncommitted revolving 364 days December 1, 2025 $ 250 million

9 unchanged sentences

Aflac New York (1)

uncommitted revolving 364 days December 2,

2024 $ 25 million

Three-month term SOFR plus a 10 basis point SOFR adjustment and an additional 75 basis points per annum No later than

December 3, 2024 None General corporate purposes

uncommitted revolving 364 days December 2,

2024 $ 15 million

Three-month term SOFR plus a 10 basis point SOFR adjustment and an additional 75 basis points per annum No later than

December 3, 2024 None General corporate purposes

uncommitted revolving 364 days December 1, 2025 $ 25 million

Three-month term SOFR plus a 10 basis point SOFR adjustment and an additional 75 basis points per annum No later than December 2, 2025 None General corporate purposes

uncommitted revolving 364 days December 1, 2025 $ 15 million

Three-month term SOFR plus a 10 basis point SOFR adjustment and an additional 75 basis points per annum No later than December 2, 2025 None General corporate purposes

(1) Intercompany credit agreement

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

uncommitted revolving 364 days December 2,

2024 $ 0.3 million

Three-month term SOFR plus a 10 basis point SOFR adjustment and an additional 75 basis points per annum No later than

December 3, 2024 None General corporate purposes

Borrower(s) Type Term Expiration

Date Capacity Amount

Outstanding Interest Rate on Borrowed Amount Maturity Period Commitment

uncommitted revolving 364 days December 1, 2025 $ 0.3 million

Three-month term SOFR plus a 10 basis point SOFR adjustment and an additional 75 basis points per annum No later than December 2, 2025 None General corporate purposes

Aflac GI Holdings LLC (1)

uncommitted revolving 364 days December 2,

2024 $ 30 million

Three-month term SOFR plus a 10 basis point SOFR adjustment and an additional 75 basis points per annum No later than

December 3, 2024 None General corporate purposes

uncommitted revolving 364 days December 1, 2025 $ 30 million

Three-month term SOFR plus a 10 basis point SOFR adjustment and an additional 75 basis points per annum No later than December 2, 2025 None General corporate purposes

Aflac Incorporated (1)

uncommitted revolving 364 days December 2,

2024 $ 400 million

uncommitted revolving 364 days December 1, 2025 $ 400 million

Three-month term SOFR plus a 10 basis point SOFR adjustment and an additional 97 basis points per annum for U.S.

dollar-denominated borrowings or three-month TIBOR plus 97 basis points per annum for Japanese yen-denominated borrowings No later than

December 3, 2024 None General corporate purposes

uncommitted revolving 364 days December 2,

2024 $ 400 million

dollar-denominated borrowings or three-month TIBOR plus 97 basis points per annum for Japanese yen-denominated borrowings No later than December 2, 2025 None General corporate purposes

uncommitted revolving 364 days December 1, 2025 $ 400 million

Three-month term SOFR plus a 10 basis point SOFR adjustment and an additional 68 basis points per annum for U.S.

dollar-denominated borrowings or three-month TIBOR plus 68 basis points per annum for Japanese yen-denominated borrowings No later than

December 3, 2024 None General corporate purposes

dollar-denominated borrowings or three-month TIBOR plus 68 basis points per annum for Japanese yen-denominated borrowings No later than December 2, 2025 None General corporate purposes

Aflac Asset Management LLC (1)

uncommitted revolving 214 days December 2,

2024 $ 25 million

uncommitted revolving 364 days December 1, 2025 $ 25 million

Three-month term SOFR plus a 10 basis point SOFR adjustment and an additional 68 basis points per annum for U.S.

dollar-denominated borrowings or three-month TIBOR plus 68 basis points per annum for Japanese yen-denominated borrowings No later than

December 3, 2024 None General corporate purposes

dollar-denominated borrowings or three-month TIBOR plus 68 basis points per annum for Japanese yen-denominated borrowings No later than December 2, 2025 None General corporate purposes

Aflac Global Ventures LLC (1)

uncommitted revolving 214 days December 2,

2024 $ 2 million

uncommitted revolving 364 days December 1, 2025 $ 2 million

Three-month term SOFR plus a 10 basis point SOFR adjustment and an additional 68 basis points per annum for U.S.

dollar-denominated borrowings or three-month TIBOR plus 68 basis points per annum for Japanese yen-denominated borrowings No later than

December 3, 2024 None General corporate purposes

dollar-denominated borrowings or three-month TIBOR plus 68 basis points per annum for Japanese yen-denominated borrowings No later than December 2, 2025 None General corporate purposes

(1) Intercompany credit agreement

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.

The Company was in compliance with all of the covenants of its notes payable and lines of credit at March 31, 2025.

No events of default or defaults occurred during the three-month period ended March 31, 2025.

For additional information, see Notes 4 and 9 of the Notes to the Consolidated Financial Statements in the 2024 Annual Report.

SHAREHOLDERS’ EQUITY

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.

The following table is a reconciliation of the number of shares of the Company's common stock for the three-month periods ended March 31.

(In thousands of shares) 2025 2024

14 unchanged sentences

Shares outstanding, end of period 542,493 570,278

Outstanding share-based awards are excluded from the calculation of weighted-average shares used in the computation of basic earnings per share (EPS).

Share Repurchase Program:

During the first three months of 2025, the Company repurchased 8.5 million shares of its common stock for $ 900 million as part of its share repurchase program.

During the first three months of 2024, the Company repurchased 9.3 million shares of its common stock for $ 750 million as part of its share repurchase program.

As of March 31, 2025, a remaining balance of 38.8 million shares of the Company's common stock was available for purchase under share repurchase authorizations by its board of directors.

Outstanding share-based awards are excluded from the calculation of weighted-average shares used in the computation of basic earnings per share (EPS), but are included in the calculation of weighted-average shares used in the computation of diluted EPS.

Anti-dilutive share-based awards are excluded from the computation of diluted 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 EPS for the following periods.

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

Three Months Ended March 31,

(In thousands) 2025 2024

Anti-dilutive share-based awards 0 69

Share Repurchase Program

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

September 30, 2024

(In millions) Unrealized Foreign

Currency Translation

Gains (Losses) Unrealized

Gains (Losses)

on Fixed Maturity Securities Unrealized

Gains (Losses)

on Derivatives Effect of Changes in Discount Rate Assumptions Pension

Adjustment Total

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

Other comprehensive

income (loss) before

reclassification 952 198 1 ( 1,492 ) ( 3 ) ( 344 )

Amounts reclassified from

accumulated other

comprehensive income

(loss) 0 ( 42 ) 1 0 0 ( 41 )

Net current-period other

comprehensive

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

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

September 30, 2023

(In millions) Unrealized Foreign

Currency Translation

Gains (Losses) Unrealized

Gains (Losses)

on Fixed Maturity Securities Unrealized

Gains (Losses)

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

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

Other comprehensive

income (loss) before

reclassification ( 235 ) ( 2,349 ) 0 4,193 0 1,609

Amounts reclassified from

accumulated other

comprehensive income

(loss) 0 ( 32 ) 1 0 0 ( 31 )

Net current-period other

comprehensive

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

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

All amounts in the table above are net of tax.

Nine Months Ended

September 30, 2024

March 31, 2025

(In millions) Unrealized Foreign

17 unchanged sentences

income (loss) 449 ( 1,257 ) 2 1,893 32 1,119

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

Balance at March 31, 2025 $ ( 4,549 ) $ ( 1,233 ) $ ( 18 ) $ 3,899 $ 42 $ ( 1,859 )

All amounts in the table above are net of tax.

Nine Months Ended

September 30, 2023

Three Months Ended

March 31, 2024

(In millions) Unrealized Foreign

16 unchanged sentences

income (loss) ( 597 ) ( 47 ) ( 4 ) 1,065 1 418

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

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

All amounts in the table above are net of tax.

2 unchanged sentences

(In millions) Three Months Ended

September 30, 2024

March 31, 2025

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

September 30, 2023

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 $ 41 Net investment gains (losses)

( 9 ) Tax (expense) or benefit (1)

$ 32 Net of tax

Unrealized gains (losses) on derivatives $ ( 1 ) Net investment gains (losses)

0 Tax (expense) or benefit (1)

$ ( 1 ) Net of tax

Amortization of defined benefit pension items:

Actuarial gains (losses) $ 0 Acquisition and operating expenses (2)

Prior service (cost) credit 0 Acquisition and operating expenses (2)

0 Tax (expense) or benefit (1)

$ 0 Net of tax

Total reclassifications for the period $ 31 Net of tax

(1) Based on 21 % tax rate

(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) 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

Statements of Earnings

Unrealized gains (losses) on available-for-sale

securities $ 271 Net investment gains (losses)

( 57 ) Tax (expense) or benefit (1)

$ 214 Net of tax

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

1 Tax (expense) or benefit (1)

$ ( 2 ) Net of tax

Amortization of defined benefit pension items:

Actuarial gains (losses) $ 1 Acquisition and operating expenses (2)

Prior service (cost) credit 0 Acquisition and operating expenses (2)

0 Tax (expense) or benefit (1)

$ 1 Net of tax

Total reclassifications for the period $ 213 Net of tax

(1) Based on 21 % tax rate

(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) Nine Months Ended

September 30, 2023

March 31, 2024

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 $ ( 1 ) Net investment gains (losses)

( 1 ) Net investment income

( 4 ) Total before tax

0 Tax (expense) or benefit (1)

$ ( 1 ) Net of tax

Amortization of defined benefit pension items:

Actuarial gains (losses) $ ( 1 ) Acquisition and operating expenses (2)

Prior service (cost) credit 0 Acquisition and operating expenses (2)

0 Tax (expense) or benefit (1)

$ ( 1 ) Net of tax

Total reclassifications for the period $ 132 Net of tax

(1) Based on 21 % tax rate

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

SHARE-BASED COMPENSATION

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).

As of March 31, 2025, 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.

2 unchanged sentences

If any awards granted under the Plan are forfeited or are terminated before being exercised or settled for any reason other than tax forfeiture, then the shares underlying the awards will again be available under the Plan.

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.

The Plan allows awards to Company employees for incentive stock options (ISOs), non-qualifying stock options (NQSOs), stock appreciation rights, restricted stock and restricted stock units.

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

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.

As of March 31, 2025, approximately 32.6 million shares were available for future grants under this plan.

The ISOs, NQSOs 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.

The share-based awards 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, 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.

Time-based restricted stock awards, restricted stock units and stock options generally vest on a ratable basis over three years .

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

As of March 31, 2025, the only performance-based awards issued and outstanding were restricted stock awards and units.

The Compensation Committee of the Board of Directors has the discretion to determine vesting schedules.

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, 2024.

The following table provides information on stock options outstanding and exercisable at March 31, 2025.

Option Shares

6 unchanged sentences

Exercisable 459 1.7 35 34.90

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 received cash from the exercise of stock options in the amount of $ 5 million during the first three months of both 2025 and 2024.

The tax benefit realized as a result of stock option exercises and restricted stock releases was $ 29 million in the first three months of 2025, compared with $ 24 million in the first three months of 2024.

As of March 31, 2025, total compensation cost not yet recognized in the Company's consolidated financial statements related to restricted stock awards and units was $ 50 million, of which $ 25 million ( 1.2 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 2.0 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, 2024.

The following table summarizes restricted stock activity during the three-month period ended March 31, 2025.

(In thousands of shares) Shares Weighted-Average

6 unchanged sentences

( 1,238 ) 68.36

Restricted stock at September 30, 2024

Restricted stock at March 31, 2025

1,906 $ 85.21

9 unchanged sentences

however, future benefits under the U.S.

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.

plan prior to the freeze, currently receive a nonelective 401(k) employer contribution.

plan were frozen effective January 1, 2024.

In January 2025, the Company purchased a nonparticipating single premium group annuity contract from an external insurer to settle its obligations under the U.S.

defined pension plan and paid to the insurer the related annuity premium.

As a result, the Company recognized a settlement charge of $ 55 million in the first quarter of 2025.

Effective April 1, 2025, the external insurer began making annuity payments to plan participants.

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.

4 unchanged sentences

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 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.

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 $ 57 million and $ 2 million for the three-month periods ended March 31, 2025 and 2024, respectively.

Total net periodic benefit cost includes the following components:

Three Months Ended September 30,

Pension Benefits Other

Postretirement Benefits

(In millions) 2024 2023 2024 2023 2024 2023

Components of net periodic

benefit cost:

Service cost $ 3 $ 4 $ 0 $ 0 $ 0 $ 0

Interest cost 2 2 9 10 1 0

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

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 (credit) $ 3 $ 4 $ 2 $ 2 $ 1 $ 0

Nine Months Ended September 30,

Three Months Ended March 31,

Pension Benefits Other

6 unchanged sentences

Expected return on plan assets ( 2 ) ( 2 ) ( 5 ) ( 7 ) 0 0

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

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

Amortization of net actuarial

(gain) loss 0 0 ( 1 ) 0 0 0

Settlement (gain) loss 0 0 55 0 0 0

Net periodic benefit cost (credit) $ 3 $ 4 $ 57 $ 2 $ 0 $ 0

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.

During the three months ended March 31, 2025, Aflac Japan contributed approximately $ 6 million (using the weighted-average yen/dollar exchange rate for the three-month period ended March 31, 2025) 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 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).

In February 2025, the Company renewed an outsourcing agreement with an information technology and data services company to provide application maintenance and development services for Aflac Japan.

The agreement has a remaining term of three years with an aggregate remaining cost of ¥ 10.3 billion ($ 69 million using the March 31, 2025 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 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.

Guaranty fund assessments for the three-month periods ended March 31, 2025 and 2024 were immaterial.

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