UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2022

or

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from                      to                     

Commission File Number: 001-07434

Aflac Incorporated

_________________________________________________________________________________________________________________________________________________________________________________________________________________________________________

(Exact name of registrant as specified in its charter)

Georgia			58-1167100
(State or other jurisdiction of incorporation or organization)			(I.R.S. Employer Identification No.)
1932 Wynnton Road	Columbus,	Georgia	31999
(Address of principal executive offices)			(ZIP Code)

706. 323.3431

(Registrant's telephone number, including area code)

(Former name, former address and former fiscal year, if changed since last report)

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, $.10 par value per share	AFL	New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.  þ  Yes  ¨  No

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).            þ  Yes  ¨  No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company.  See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer	þ	Accelerated filer	☐
Non-accelerated filer	¨	Smaller reporting company	☐
		Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).  ☐  Yes  þ  No

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date. 631,916,478 shares of the issuer's common stock were outstanding as of July 25, 2022.

Aflac Incorporated and Subsidiaries

Quarterly Report on Form 10-Q

For the Quarter Ended June 30, 2022

Table of Contents

PART I.		FINANCIAL INFORMATION:	Page
	Item 1.	Financial Statements (Unaudited)
		Consolidated Statements of Earnings   Three Months Ended June 30, 2022 and 2021   Six Months Ended June 30, 2022 and 2021	1
		Consolidated Statements of Comprehensive Income (Loss)    Three Months Ended June 30, 2022 and 2021   Six Months Ended June 30, 2022 and 2021	2
		Consolidated Balance Sheets   June 30, 2022, and December 31, 2021	3
		Consolidated Statements of Shareholders' Equity   Three Months Ended March 31, 2022 and 2021   Three Months Ended June 30, 2022 and 2021	4
		Consolidated Statements of Cash Flows   Six Months Ended June 30, 2022 and 2021	6
		Notes to the Consolidated Financial Statements	7
	Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	68
	Item 3.	Quantitative and Qualitative Disclosures about Market Risk	100
	Item 4.	Controls and Procedures	100
PART II.		OTHER INFORMATION:
	Item 1A.	Risk Factors	100
	Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	100
	Item 6.	Exhibits	102
Glossary of Selected Terms			104

Items other than those listed above are omitted because they are not required or are not applicable.

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements.

Aflac Incorporated and Subsidiaries

Consolidated Statements of Earnings

	Three Months Ended June 30,						Six Months Ended June 30,
(In millions, except for share and per-share amounts - Unaudited)	2022			2021			2022			2021
Revenues:
Net earned premiums, principally supplemental health insurance		$	3,849		$	4,441		$	8,028		$	9,034
Net investment income		937			993			1,840			1,918
Net investment gains (losses)		564			89			686			396
Other income (loss)		50			41			118			85
Total revenues		5,400			5,564			10,672			11,433
Benefits and expenses:
Benefits and claims, net		2,298			2,653			4,785			5,387
Acquisition and operating expenses:
Amortization of deferred policy acquisition costs		268			280			590			592
Insurance commissions		279			315			579			641
Insurance and other expenses (1)		799			881			1,629			1,712
Interest expense		55			62			112			124
Total acquisition and operating expenses		1,401			1,538			2,910			3,069
Total benefits and expenses		3,699			4,191			7,695			8,456
Earnings before income taxes		1,701			1,373			2,977			2,977
Income taxes		313			268			557			579
Net earnings		$	1,388		$	1,105		$	2,420		$	2,398
Net earnings per share:
Basic		$	2.17		$	1.63		$	3.75		$	3.51
Diluted		2.16			1.62			3.73			3.49
Weighted-average outstanding common shares used in   computing earnings per share (In thousands):
Basic		640,707			678,050			645,205			683,464
Diluted		643,243			680,920			648,010			686,400
Cash dividends per share		$	.40		$	.33		$	.80		$	.66

(1) Includes expense of $48 in the three- and six-month periods ended June 30, 2021 for the early extinguishment of debt.

See the accompanying Notes to the Consolidated Financial Statements.

1

Aflac Incorporated and Subsidiaries

Consolidated Statements of Comprehensive Income (Loss)

	Three Months Ended June 30,						Six Months Ended June 30,
(In millions - Unaudited)	2022			2021			2022			2021
Net earnings		$	1,388		$	1,105		$	2,420		$	2,398
Other comprehensive income (loss) before income taxes:
Unrealized foreign currency translation gains (losses) during    period		(779)			25			(1,246)			(557)
Unrealized gains (losses) on fixed maturity securities:
Unrealized holding gains (losses) on fixed maturity securities    during period		(3,503)			1,522			(8,254)			(481)
Reclassification adjustment for (gains) losses on    fixed maturity securities included in net earnings		(114)			(5)			(192)			15
Unrealized gains (losses) on derivatives during period		0			1			1			1
Pension liability adjustment during period		5			0			8			6
Total other comprehensive income (loss) before income taxes		(4,391)			1,543			(9,683)			(1,016)
Income tax expense (benefit) related to items of other comprehensive    income (loss)		(730)			331			(1,742)			(101)
Other comprehensive income (loss), net of income taxes		(3,661)			1,212			(7,941)			(915)
Total comprehensive income (loss)		$	(2,273)		$	2,317		$	(5,521)		$	1,483

See the accompanying Notes to the Consolidated Financial Statements.

2

Aflac Incorporated and Subsidiaries

Consolidated Balance Sheets

(In millions, except for share and per-share amounts)	June 30, 2022 (Unaudited)			December 31, 2021
Assets:
Investments and cash:
Fixed maturity securities available for sale, at fair value, (no allowance for credit losses in   2022 and 2021, amortized cost $71,551 in 2022 and $82,105 in 2021)		$	75,611		$	94,206
Fixed maturity securities available for sale - consolidated variable interest entities, at fair value   (amortized cost $2,995 in 2022 and $3,264 in 2021)		3,820			4,490
Fixed maturity securities held to maturity, at amortized cost, net of allowance   for credit losses of $7 in 2022 and $8 in 2021 (fair value $21,532 in 2022 and $26,869 in 2021)		18,507			22,000
Equity securities, at fair value		1,149			1,603
Commercial mortgage and other loans, net of allowance for credit losses of $170 in 2022 and $174   in 2021 (includes $10,630 in 2022 and $9,740 in 2021 of consolidated variable interest entities)		13,053			11,786
Other investments   (includes $1,823 in 2022 and $1,535 in 2021 of consolidated variable interest entities)		4,102			3,842
Cash and cash equivalents		5,173			5,051
Total investments and cash		121,415			142,978
Receivables		687			693
Accrued investment income		714			737
Deferred policy acquisition costs		8,458			9,525
Property and equipment, at cost less accumulated depreciation		512			538
Other		3,843			3,071
Total assets		$	135,629		$	157,542
Liabilities and shareholders’ equity:
Liabilities:
Policy liabilities:
Future policy benefits		$	78,210		$	90,588
Unpaid policy claims		4,453			4,836
Unearned premiums		1,971			2,576
Other policyholders’ funds		5,984			7,072
Total policy liabilities		90,618			105,072
Income taxes		2,275			4,339
Payables for return of cash collateral on loaned securities		3,261			2,162
Notes payable and lease obligations		7,416			7,956
Other		5,672			4,760
Total liabilities		109,242			124,289
Commitments and contingent liabilities (Note 12)
Shareholders’ equity:
Common stock of $.10 par value. In thousands: authorized 1,900,000    shares in 2022 and 2021; issued 1,353,871 shares in 2022 and 1,352,739 shares in 2021		135			135
Additional paid-in capital		2,589			2,529
Retained earnings		43,547			41,381
Accumulated other comprehensive income (loss):
Unrealized foreign currency translation gains (losses)		(3,289)			(2,013)
Unrealized gains (losses) on fixed maturity securities		2,930			9,602
Unrealized gains (losses) on derivatives		(29)			(30)
Pension liability adjustment		(160)			(166)
Treasury stock, at average cost		(19,336)			(18,185)
Total shareholders’ equity		26,387			33,253
Total liabilities and shareholders’ equity		$	135,629		$	157,542