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 March 31, 2023

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. 604,226,995 shares of the issuer's common stock were outstanding as of April 21, 2023.

Aflac Incorporated and Subsidiaries

Quarterly Report on Form 10-Q

For the Quarter Ended March 31, 2023

Table of Contents

PART I.		FINANCIAL INFORMATION:	Page
	Item 1.	Financial Statements (Unaudited)
		Consolidated Statements of Earnings     Three Months Ended March 31, 2023 and 2022	1
		Consolidated Statements of Comprehensive Income (Loss)    Three Months Ended March 31, 2023 and 2022	2
		Consolidated Balance Sheets   March 31, 2023, and December 31, 2022	3
		Consolidated Statements of Shareholders' Equity   Three Months Ended March 31, 2023 and 2022	4
		Consolidated Statements of Cash Flows   Three Months Ended March 31, 2023 and 2022	5
		Notes to the Consolidated Financial Statements	6
	Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	75
	Item 3.	Quantitative and Qualitative Disclosures about Market Risk	107
	Item 4.	Controls and Procedures	107
PART II.		OTHER INFORMATION:
	Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	108
	Item 6.	Exhibits	109
Glossary of Selected Terms			110

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 March 31,
(In millions, except for share and per-share amounts - Unaudited)	2023			2022
Revenues:
Net earned premiums, principally supplemental health insurance		$	3,688		$	4,079
Net investment income		943			903
Net investment gains (losses)		123			122
Other income (loss)		46			69
Total revenues		4,800			5,173
Benefits and expenses:
Benefits and claims, excluding reserve remeasurement		2,203			2,517
Reserve remeasurement (gains) losses		(53)			(34)
Total benefits and claims, net		2,150			2,483
Acquisition and operating expenses:
Amortization of deferred policy acquisition costs		205			207
Insurance commissions		280			300
Insurance and other expenses		775			833
Interest expense		48			56
Total acquisition and operating expenses		1,308			1,396
Total benefits and expenses		3,458			3,879
Earnings before income taxes		1,342			1,294
Income taxes		154			247
Net earnings		$	1,188		$	1,047
Net earnings per share:
Basic		$	1.94		$	1.61
Diluted		1.94			1.60
Weighted-average outstanding common shares used in   computing earnings per share (In thousands):
Basic		611,205			649,753
Diluted		613,950			652,827
Cash dividends per share		$	.42		$	.40

Prior-year amounts have been adjusted for the adoption of accounting guidance on January 1, 2023 related to accounting for long-duration insurance contracts.

See the accompanying Notes to the Consolidated Financial Statements.

1

Aflac Incorporated and Subsidiaries

Consolidated Statements of Comprehensive Income (Loss)

	Three Months Ended March 31,
(In millions - Unaudited)	2023			2022
Net earnings		$	1,188		$	1,047
Other comprehensive income (loss) before income taxes:
Unrealized foreign currency translation gains (losses) during    period		(43)			(452)
Unrealized gains (losses) on fixed maturity securities:
Unrealized holding gains (losses) on fixed maturity securities    during period		2,578			(4,752)
Reclassification adjustment for (gains) losses on    fixed maturity securities included in net earnings		(57)			(77)
Unrealized gains (losses) on derivatives during period		1			1
Effect of changes in discount rate assumptions during period		(3,537)			5,347
Pension liability adjustment during period		9			3
Total other comprehensive income (loss) before income taxes		(1,049)			70
Income tax expense (benefit) related to items of other comprehensive    income (loss)		(200)			110
Other comprehensive income (loss), net of income taxes		(849)			(40)
Total comprehensive income (loss)		$	339		$	1,007

Prior-year amounts have been adjusted for the adoption of accounting guidance on January 1, 2023 related to accounting for long-duration insurance contracts.

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 - Unaudited)	March 31, 2023			December 31, 2022
Assets:
Investments and cash:
Fixed maturity securities available for sale, at fair value, (no allowance for credit losses in   2023 and 2022, amortized cost $72,084 in 2023 and $72,246 in 2022)		$	74,174		$	71,936
Fixed maturity securities available for sale - consolidated variable interest entities, at fair value   (amortized cost $3,222 in 2023 and $3,223 in 2022)		3,925			3,805
Fixed maturity securities held to maturity, at amortized cost, net of allowance   for credit losses of $6 in 2023 and $7 in 2022 (fair value $21,616 in 2023 and $21,210 in 2022)		18,936			19,056
Equity securities, at fair value		1,087			1,091
Commercial mortgage and other loans, net of allowance for credit losses of $223 in 2023 and $192   in 2022 (includes $10,684 in 2023 and $10,832 in 2022 of consolidated variable interest entities)		13,328			13,496
Other investments   (includes $2,049 in 2023 and $1,909 in 2022 of consolidated variable interest entities)		5,241			4,070
Cash and cash equivalents		3,809			3,943
Total investments and cash		120,500			117,397
Receivables		789			647
Accrued investment income		701			745
Deferred policy acquisition costs		9,267			9,239
Property and equipment, at cost less accumulated depreciation		528			530
Other		3,181			3,180
Total assets		$	134,966		$	131,738
Liabilities and shareholders’ equity:
Liabilities:
Policy liabilities:
Future policy benefits		$	91,293		$	88,241
Unpaid policy claims		229			201
Unearned premiums		1,743			1,825
Other policyholders’ funds		6,668			6,643
Total policy liabilities		99,933			96,910
Income taxes		647			698
Payables for return of cash collateral on loaned securities		3,460			1,809
Notes payable and lease obligations		7,420			7,442
Other		3,722			4,739
Total liabilities		115,182			111,598
Commitments and contingent liabilities (Note 13)
Shareholders’ equity:
Common stock of $.10 par value. In thousands: authorized 1,900,000    shares in 2023 and 2022; issued 1,355,012 shares in 2023 and 1,354,079 shares in 2022		135			135
Additional paid-in capital		2,665			2,641
Retained earnings		45,555			44,367
Accumulated other comprehensive income (loss):
Unrealized foreign currency translation gains (losses)		(3,618)			(3,564)
Unrealized gains (losses) on fixed maturity securities		1,289			(702)
Unrealized gains (losses) on derivatives		(26)			(27)
Effect of changes in discount rate assumptions		(4,894)			(2,100)
Pension liability adjustment		(29)			(36)
Treasury stock, at average cost		(21,293)			(20,574)
Total shareholders’ equity		19,784			20,140
Total liabilities and shareholders’ equity		$	134,966		$	131,738

Prior-year amounts have been adjusted for the adoption of accounting guidance on January 1, 2023 related to accounting for long-duration insurance contracts.

See the accompanying Notes to the Consolidated Financial Statements.

3

Aflac Incorporated and Subsidiaries

Consolidated Statements of Shareholders’ Equity

(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' Equity
Balance at December 31, 2022	$	135	$	2,641	$	44,367	$	(6,429)	$	(20,574)	$	20,140
Net earnings	0		0		1,188