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, 2024

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)

Securities registered pursuant to Section 12(b) of the Act:

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. 560,026,311 shares of the issuer's common stock were outstanding as of July 24, 2024.

Aflac Incorporated and Subsidiaries

Quarterly Report on Form 10-Q

For the Quarter Ended June 30, 2024

Table of Contents

PART I.		FINANCIAL INFORMATION:	Page
	Item 1.	Financial Statements (Unaudited)
		Consolidated Statements of Earnings    Three Months Ended June 30, 2024 and 2023    Six Months Ended June 30, 2024 and 2023	1
		Consolidated Statements of Comprehensive Income (Loss)      Three Months Ended June 30, 2024 and 2023     Six Months Ended June 30, 2024 and 2023	2
		Consolidated Balance Sheets   June 30, 2024, and December 31, 2023	3
		Consolidated Statements of Shareholders' Equity   Three Months Ended March 31, 2024 and 2023   Three Months Ended June 30, 2024 and 2023	4
		Consolidated Statements of Cash Flows   Six Months Ended June 30, 2024 and 2023	6
		Notes to the Consolidated Financial Statements	7
	Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	77
	Item 3.	Quantitative and Qualitative Disclosures about Market Risk	114
	Item 4.	Controls and Procedures	114
PART II.		OTHER INFORMATION:
	Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	115
	Item 5.	Other Information	115
	Item 6.	Exhibits	116
Glossary of Selected Terms			117

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)	2024			2023			2024			2023
Revenues:
Net earned premiums, principally supplemental health insurance (1)		$	3,325		$	3,573		$	6,781		$	7,262
Net investment income		1,095			999			2,095			1,942
Net investment gains (losses)		696			555			1,647			678
Other income (loss)		22			45			52			90
Total revenues		5,138			5,172			10,575			9,972
Benefits and expenses:
Benefits and claims, excluding reserve remeasurement		1,972			2,152			4,039			4,354
Reserve remeasurement (gains) losses		(51)			(54)			(107)			(107)
Total benefits and claims, net		1,921			2,098			3,932			4,247
Acquisition and operating expenses:
Amortization of deferred policy acquisition costs		208			202			424			407
Insurance commissions		246			268			501			547
Insurance and other expenses		694			728			1,431			1,505
Interest expense		50			51			97			99
Total acquisition and operating expenses		1,198			1,249			2,453			2,558
Total benefits and expenses		3,119			3,347			6,385			6,805
Earnings before income taxes		2,019			1,825			4,190			3,167
Income taxes		264			191			556			345
Net earnings		$	1,755		$	1,634		$	3,634		$	2,822
Net earnings per share:
Basic		$	3.11		$	2.72		$	6.38		$	4.66
Diluted		3.10			2.71			6.35			4.64
Weighted-average outstanding common shares used in   computing earnings per share (In thousands):
Basic		564,573			600,742			569,730			605,945
Diluted		566,838			602,929			572,160			608,411
Cash dividends per share		$	.50		$	.42		$	1.00		$	.84

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

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)	2024			2023			2024			2023
Net earnings		$	1,755		$	1,634		$	3,634		$	2,822
Other comprehensive income (loss) before income taxes:
Unrealized foreign currency translation gains (losses) during    period		(340)			(439)			(838)			(482)
Unrealized gains (losses) on fixed maturity securities:
Unrealized holding gains (losses) on fixed maturity securities    during period		(829)			890			(727)			3,468
Reclassification adjustment for (gains) losses on    fixed maturity securities included in net earnings		(50)			(27)			(218)			(84)
Unrealized gains (losses) on derivatives during period		6			1			0			2
Effect of changes in discount rate assumptions during period		3,698			(209)			5,044			(3,745)
Pension liability adjustment during period		2			58			4			67
Total other comprehensive income (loss) before income taxes		2,487			274			3,265			(774)
Income tax expense (benefit) related to items of other comprehensive    income (loss)		677			334			1,037			135
Other comprehensive income (loss), net of income taxes		1,810			(60)			2,228			(909)
Total comprehensive income (loss)		$	3,565		$	1,574		$	5,862		$	1,913

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, 2024 (Unaudited)			December 31, 2023
Assets:
Investments and cash:
Fixed maturity securities available-for-sale, at fair value (no allowance for credit losses in   2024 and 2023, amortized cost $61,934 in 2024 and $67,807 in 2023)		$	62,582		$	69,578
Fixed maturity securities available-for-sale - consolidated variable interest entities, at fair value   (amortized cost $2,669 in 2024 and $2,882 in 2023)		3,677			3,712
Fixed maturity securities held-to-maturity, at amortized cost, net of allowance   for credit losses of $5 in 2024 and $5 in 2023 (fair value $16,570 in 2024 and $19,657 in 2023)		15,685			17,819
Equity securities, at fair value		728			1,088
Commercial mortgage and other loans, net of allowance for credit losses of $238 in 2024 and $274   in 2023 (includes $9,454 in 2024 and $10,150 in 2023 of consolidated variable interest entities)		11,795			12,527
Other investments   (includes $2,571 in 2024 and $2,381 in 2023 of consolidated variable interest entities)		7,102			4,530
Cash and cash equivalents		6,060			4,306
Total investments and cash		107,629			113,560
Receivables		880			848
Accrued investment income		726			731
Deferred policy acquisition costs		8,550			9,132
Property and equipment, at cost less accumulated depreciation		398			445
Other		1,985			2,008
Total assets		$	120,168		$	126,724
Liabilities and shareholders’ equity:
Liabilities:
Policy liabilities:
Future policy benefits		$	70,339		$	83,718
Unpaid policy claims		359			261
Unearned premiums		1,216			1,451
Other policyholders’ funds		5,439			6,169
Total policy liabilities		77,353			91,599
Income taxes		752			154
Payables for return of cash collateral on loaned securities		4,493			1,503
Notes payable and lease obligations		7,430			7,364
Other		4,093			4,119
Total liabilities		94,121			104,739
Commitments and contingent liabilities (Note 13)
Shareholders’ equity:
Common stock of $.10 par value. In thousands: authorized 1,900,000    shares in 2024 and 2023; issued 1,356,618 shares in 2024 and 1,355,398 shares in 2023		136			136
Additional paid-in capital		2,835			2,771
Retained earnings		51,345			47,993
Accumulated other comprehensive income (loss):
Unrealized foreign currency translation gains (losses)		(5,091)			(4,069)
Unrealized gains (losses) on fixed maturity securities		401			1,139
Unrealized gains (losses) on derivatives		(22)			(22)
Effect of changes in discount rate assumptions		1,425			(2,560)
Pension liability adjustment		(5)			(8)
Treasury stock, at average cost		(24,977)			(23,395)
Total shareholders’ equity		26,047			21,985
Total liabilities and shareholders’ equity		$	120,168		$	126,724

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, 2023	$	136	$	2,771	$	47,993	$	(5,520)	$	(23,395)	$	21,985
Net earnings	0		0		1,879		0		0		1,879
Unrealized foreign currency translation    gains (losses) during period, net of    income taxes	0		0		0		(597)		0		(597)
Unrealized gains (losses) on fixed maturity    securities during period, net of income    taxes and reclassification adjustments	0		0		0		(47)		0		(47)
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		1,065		0		1,065
Pension liability adjustment during period,    net of income taxes	0		0		0		1		0		1
Dividends to shareholders (1)   ($.00 per share)	0		0		0		0		0		0
Exercise of stock options	0		4		0		0		0		4
Share-based compensation	0		18		0		0		0		18
Purchases of treasury stock	0		0		0		0		(793)		(793)
Treasury stock reissued	0		13		0		0		13		26
Balance at March 31, 2024	$	136	$	2,806	$	49,872	$	(5,102)	$	(24,175)	$	23,537
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.

(continued)

4

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' Equity
Balance at December 31, 2022	$	135	$	2,641	$	44,367	$	(6,429)	$	(20,574)	$	20,140
Net earnings	0		0		1,188		0		0		1,188
Unrealized foreign currency translation    gains (losses) during period, net of    income taxes	0		0		0		(54)		0		(54)
Unrealized gains (losses) on fixed maturity    securities during period, net of income    taxes and reclassification adjustments	0		0		0		1,991		0		1,991
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		(2,794)		0		(2,794)
Pension liability adjustment during period,    net of income taxes	0		0		0		7		0		7
Dividends to shareholders (1)   ($.00 per share)	0		0		0		0		0		0
Exercise of stock options	0		3		0		0		0		3
Share-based compensation	0		14		0		0		0		14
Purchases of treasury stock	0		0		0		0		(732)		(732)
Treasury stock reissued	0		7		0		0		13		20
Balance at March 31, 2023	$	135	$	2,665	$	45,555	$	(7,278)	$	(21,293)	$	19,784
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.

See the accompanying Notes to the Consolidated Financial Statements.

5

Aflac Incorporated and Subsidiaries

Consolidated Statements of Cash Flows

	Six Months Ended June 30,
(In millions - Unaudited)	2024			2023
Cash flows from operating activities:
Net earnings		$	3,634		$	2,822
Adjustments to reconcile net earnings to net cash provided (used) by operating activities:
Change in receivables and advance premiums		19			(35)
Capitalization of deferred policy acquisition costs		(508)			(525)
Amortization of deferred policy acquisition costs		424			407
Increase in policy liabilities		(43)			(37)
Change in income tax liabilities		(221)			(420)
Net investment (gains) losses		(1,647)			(678)
Other, net		(554)			(202)
Net cash provided (used) by operating activities		1,104			1,332
Cash flows from investing activities:
Proceeds from investments sold or matured:
Available-for-sale fixed maturity securities		3,598			1,548
Equity securities		550			244
Held-to-maturity fixed maturity securities		1			2
Commercial mortgage and other loans		952			728
Costs of investments acquired:
Available-for-sale fixed maturity securities		(3,357)			(1,817)
Equity securities		(179)			(191)
Commercial mortgage and other loans		(512)			(588)
Other investments, net		(2,284)			(1,492)
Settlement of derivatives, net		(106)			(289)
Cash received (pledged or returned) as collateral, net		3,375			3,427
Other, net		256			(84)
Net cash provided (used) by investing activities		2,294			1,488
Cash flows from financing activities:
Purchases of treasury stock		(1,550)			(1,400)
Proceeds from borrowings		823			0
Principal payments under debt obligations		(194)			0
Dividends paid to shareholders		(550)			(491)
Change in investment-type contracts, net		(103)			(64)
Treasury stock reissued		12			5
Other, net		(14)			6
Net cash provided (used) by financing activities		(1,576)			(1,944)
Effect of exchange rate changes on cash and cash equivalents		(68)			(99)
Net change in cash and cash equivalents		1,754			777
Cash and cash equivalents, beginning of period		4,306			3,943
Cash and cash equivalents, end of period		$	6,060		$	4,720
Supplemental disclosures of cash flow information:
Income taxes paid		$	777		$	765
Interest paid		87			94
Noncash interest		11			6
Noncash real estate acquired in satisfaction of debt		294			0
Noncash financing activities:
Lease obligations		20			43
Treasury stock issued for:
Associate stock bonus		10			9
Shareholder dividend reinvestment		21			19
Share-based compensation grants		6			5

See the accompanying Notes to the Consolidated Financial Statements.

6

Aflac Incorporated and Subsidiaries

Notes to the Consolidated Financial Statements

(Interim period data - Unaudited)

1.    SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Description of Business

Aflac Incorporated (the Parent Company) and its subsidiaries (collectively, the Company) primarily sell supplemental health and life insurance in Japan and the United States (U.S.). The Company's insurance business is marketed and administered through Aflac Life Insurance Japan Ltd. (ALIJ) in Japan and through American Family Life Assurance Company of Columbus (Aflac), American Family Life Assurance Company of New York (Aflac New York), Continental American Insurance Company (CAIC), Tier One Insurance Company (TOIC) and Aflac Benefits Solutions, Inc. (ABS) in the U.S. The Company’s operations consist of two reportable business segments: Aflac Japan, which includes ALIJ, and Aflac U.S., which includes Aflac, Aflac New York, CAIC, TOIC and ABS. Aflac New York is a wholly owned subsidiary of Aflac. Most of the Aflac U.S. policies are individually underwritten and marketed through independent agents. With the exception of dental and vision products administered by ABS, and certain group life insurance products, Aflac U.S. markets and administers group products through CAIC, branded as Aflac Group Insurance. Additionally, Aflac U.S. markets its consumer markets products through TOIC. The Company's insurance operations in the U.S. 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.

Basis of Presentation

The Company prepares its financial statements in accordance with U.S. generally accepted accounting principles (U.S. GAAP). These principles are established primarily by the Financial Accounting Standards Board (FASB). In these Notes to the Consolidated Financial Statements, references to U.S. GAAP issued by the FASB are derived from the FASB Accounting Standards CodificationTM (ASC). The preparation of financial statements in conformity with U.S. GAAP requires the Company to make estimates based on currently available information when recording transactions resulting from business operations. The most significant items on the Company's balance sheet that involve a greater degree of accounting estimates and actuarial determinations subject to changes in the future are the valuation of investments and derivatives, deferred policy acquisition costs (DAC), liabilities for future policy benefits and income taxes. These accounting estimates and actuarial determinations are sensitive to market conditions, investment yields, interest rates, mortality, morbidity, commission and other acquisition expenses and terminations by policyholders. As additional information becomes available, or actual amounts are determinable, the recorded estimates are revised and reflected in the consolidated financial statements. Although some variability is inherent in these estimates, the Company believes the amounts provided are reasonable and reflective of the best estimates of management.

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

In the opinion of management, the accompanying unaudited consolidated financial statements of the Company contain all adjustments, consisting of normal recurring accruals, which are necessary to fairly present the consolidated balance sheets as of June 30, 2024 and December 31, 2023, the consolidated statements of earnings and comprehensive income (loss) for the three- and six-month periods ended June 30, 2024 and 2023, the consolidated statements of shareholders' equity for the three-month periods ended March 31, 2024 and 2023 and June 30, 2024 and 2023, and the consolidated statements of cash flows for the six-month periods ended June 30, 2024 and 2023. Results of operations for interim periods are not necessarily indicative of results for the entire year. As a result, these financial statements should be read in conjunction with the financial statements and notes thereto included in the Company's annual report on Form 10-K for the year ended December 31, 2023 (2023 Annual Report).

Reclassifications: Certain reclassifications have been made to prior-year amounts to conform to current-year reporting classifications. These reclassifications had no impact on net earnings or total shareholders' equity.

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

7

New Accounting Pronouncements

Accounting Pronouncements Pending Adoption

Accounting Standards Update (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. It also includes certain other amendments to improve the effectiveness of income tax disclosures.

The amendments are effective for annual periods 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. 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. The Company is evaluating the impact of adoption on its disclosures.

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

For additional information on new accounting pronouncements and recent accounting guidance and their impact, if any, on the Company's financial position, results of operations or disclosures, see Note 1 of the Notes to the Consolidated Financial Statements in the 2023 Annual Report.

2.    BUSINESS SEGMENT INFORMATION

The Company consists of two reportable insurance business segments: Aflac Japan and Aflac U.S., both of which sell supplemental health and life insurance. In addition, the Parent Company, other operating business units that are not individually reportable, reinsurance activities, including internal reinsurance activity with 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 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.

•Pretax adjusted earnings are adjusted revenues less benefits and adjusted expenses. The adjustments to both revenues and expenses account for certain items that are outside management’s control because they tend to be driven by general economic conditions and events or are related to infrequent activities not directly associated with insurance operations. The Company excludes income taxes related to operations to arrive at pretax adjusted earnings.

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

8

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

Aflac Japan's adjusted revenues as a percentage of the Company's total adjusted revenues were 56% in the three- and six-month periods ended June 30, 2024 and 60% in the three- and six-month periods ended June 30, 2023. The percentage of the Company's total assets attributable to Aflac Japan was 77% at June 30, 2024, compared with 80% at December 31, 2023.

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

	Three Months Ended June 30,				Six Months Ended June 30,
(In millions)	2024		2023		2024		2023
Revenues:
Aflac Japan:
Net earned premiums (1)	$	1,715	$	2,064	$	3,531	$	4,234
Adjusted net investment income	725		637		1,374		1,248
Other income	7		9		14		18
Total adjusted revenue Aflac Japan	2,447		2,710		4,919		5,500
Aflac U.S.:
Net earned premiums	1,455		1,425		2,930		2,853
Adjusted net investment income	218		203		424		400
Other income	11		35		30		70
Total adjusted revenue Aflac U.S.	1,684		1,663		3,384		3,323
Corporate and other (2)	249		140		497		268
Total adjusted revenues	4,380		4,513		8,800		9,091
Net investment gains (losses)	696		555		1,647		678
Reconciling items:
Amortized hedge costs	7		63		13		122
Amortized hedge income	(34)		(38)		(62)		(67)
Net interest (income) expense from derivatives    associated with certain investment strategies	89		79		177		148
Total revenues	$	5,138	$	5,172	$	10,575	$	9,972

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

(2) The change in value of federal historic rehabilitation and solar investments in partnerships of $30 and $53 for the three-month periods and $62 and $105 for the six-month periods ended June 30, 2024, and 2023, respectively, is included as a reduction to net investment income. Tax credits on these investments of $31 and $56 for the three-month periods and $64 and $108 for the six-month periods ended June 30, 2024, and 2023, respectively, have been recorded as an income tax benefit in the consolidated statements of earnings. See Note 3 for additional information on these investments.

9

	Three Months Ended June 30,				Six Months Ended June 30,
(In millions)	2024		2023		2024		2023
Pretax earnings:
Aflac Japan (1)	$	864	$	822	$	1,674	$	1,610
Aflac U.S.	383		369		739		721
Corporate and other (2)	23		(52)		21		(58)
Pretax adjusted earnings	1,270		1,139		2,434		2,273
Other income (loss)	0		35		(2)		35
Net investment gains (losses)	696		555		1,647		678
Reconciling items:
Amortized hedge costs	7		63		13		122
Amortized hedge income	(34)		(38)		(62)		(67)
Net interest (income) expense from derivatives    associated with certain investment strategies	89		79		177		148
Impact of interest from derivatives associated    with notes payable	(9)		(8)		(17)		(22)
Total earnings before income taxes	$	2,019	$	1,825	$	4,190	$	3,167
Income taxes applicable to pretax adjusted earnings	$	235	$	186	$	438	$	366
Effect of foreign currency translation on after-tax   adjusted earnings	(37)		(25)		(81)		(66)

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

(2)The change in value of federal historic rehabilitation and solar investments in partnerships of $30 and $53 for the three-month periods and $62 and $105 for the six-month periods ended June 30, 2024, and 2023, respectively, is included as a reduction to net investment income. Tax credits on these investments of $31 and $56 for the three-month periods and $64 and $108 for the six-month periods ended June 30, 2024, and 2023, respectively, have been recorded as an income tax benefit in the consolidated statements of earnings. See Note 3 for additional information on these investments.

The Company's total assets were as follows:

(In millions)	June 30, 2024			December 31, 2023
Assets:
Aflac Japan		$	92,708		$	101,541
Aflac U.S.		21,755			21,861
Corporate and other		5,705			3,322
Total assets		$	120,168		$	126,724

10

3.     INVESTMENTS

Investment Holdings

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

	June 30, 2024
(In millions)	Amortized Cost		Allowance for Credit Losses		Gross Unrealized Gains		Gross Unrealized Losses		Fair   Value
Securities available-for-sale, carried at fair   value through other comprehensive income:
Fixed maturity securities:
Yen-denominated:
Japan government and agencies	$	19,952	$	0	$	524	$	2,376	$	18,100
Municipalities	853		0		71		74		850
Mortgage- and asset-backed securities	345		0		4		22		327
Public utilities	2,821		0		220		94		2,947
Sovereign and supranational	326		0		17		7		336
Banks/financial institutions	5,258		0		294		332		5,220
Other corporate	5,189		0		611		287		5,513
Total yen-denominated	34,744		0		1,741		3,192		33,293
U.S. dollar-denominated:
U.S. government and agencies	184		0		1		4		181
Municipalities	1,206		0		76		49		1,233
Mortgage- and asset-backed securities	3,064		0		356		44		3,376
Public utilities	3,603		0		426		150		3,879
Sovereign and supranational	93		0		34		3		124
Banks/financial institutions	3,090		0		439		50		3,479
Other corporate	18,619		0		2,898		823		20,694
Total U.S. dollar-denominated	29,859		0		4,230		1,123		32,966
Total securities available-for-sale	$	64,603	$	0	$	5,971	$	4,315	$	66,259

11

	December 31, 2023
(In millions)	Amortized Cost		Allowance for Credit Losses		Gross Unrealized Gains		Gross Unrealized Losses		Fair   Value
Securities available-for-sale, carried at fair   value through other comprehensive income:
Fixed maturity securities:
Yen-denominated:
Japan government and agencies	$	23,067	$	0	$	1,040	$	1,696	$	22,411
Municipalities	968		0		115		58		1,025
Mortgage- and asset-backed securities	215		0		6		11		210
Public utilities	3,757		0		325		82		4,000
Sovereign and supranational	373		0		24		7		390
Banks/financial institutions	5,896		0		320		365		5,851
Other corporate	5,898		0		699		294		6,303
Total yen-denominated	40,174		0		2,529		2,513		40,190
U.S. dollar-denominated:
U.S. government and agencies	191		0		2		4		189
Municipalities	1,246		0		65		38		1,273
Mortgage- and asset-backed securities	2,748		0		184		56		2,876
Public utilities	3,346		0		360		114		3,592
Sovereign and supranational	122		0		33		8		147
Banks/financial institutions	2,676		0		359		51		2,984
Other corporate	20,186		0		2,518		665		22,039
Total U.S. dollar-denominated	30,515		0		3,521		936		33,100
Total securities available-for-sale	$	70,689	$	0	$	6,050	$	3,449	$	73,290

	June 30, 2024
(In millions)	Amortized Cost		Allowance for Credit Losses		Net Carrying Amount		Gross Unrealized Gains		Gross Unrealized Losses		Fair   Value
Securities held-to-maturity, carried at   amortized cost:
Fixed maturity securities:
Yen-denominated:
Japan government and agencies	$	15,040	$	2	$	15,038	$	834	$	5	$	15,867
Municipalities	232		0		232		24		0		256
Public utilities	31		0		31		1		0		32
Sovereign and supranational	371		3		368		30		0		398
Other corporate	16		0		16		1		0		17
Total yen-denominated	15,690		5		15,685		890		5		16,570
Total securities held-to-maturity	$	15,690	$	5	$	15,685	$	890	$	5	$	16,570

12

	December 31, 2023
(In millions)	Amortized Cost		Allowance for Credit Losses		Net Carrying Amount		Gross Unrealized Gains		Gross Unrealized Losses		Fair   Value
Securities held-to-maturity, carried at   amortized cost:
Fixed maturity securities:
Yen-denominated:
Japan government and agencies	$	17,085	$	2	$	17,083	$	1,746	$	0	$	18,829
Municipalities	266		0		266		41		0		307
Public utilities	34		0		34		4		0		38
Sovereign and supranational	421		3		418		44		0		462
Other corporate	18		0		18		3		0		21
Total yen-denominated	17,824		5		17,819		1,838		0		19,657
Total securities held-to-maturity	$	17,824	$	5	$	17,819	$	1,838	$	0	$	19,657

	June 30, 2024			December 31, 2023
(In millions)	Fair Value			Fair Value
Equity securities, carried at fair value through net earnings:
Equity securities:
Yen-denominated		$	482		$	751
U.S. dollar-denominated		246			252
Other currencies		0			85
Total equity securities		$	728		$	1,088

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

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

13

Contractual and Economic Maturities

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

(In millions)	Amortized Cost (1)			Fair Value
Available-for-sale:
Due in one year or less		$	1,214		$	1,265
Due after one year through five years		6,729			7,665
Due after five years through 10 years		17,527			18,946
Due after 10 years		35,724			34,680
Mortgage- and asset-backed securities		3,409			3,703
Total fixed maturity securities available-for-sale		$	64,603		$	66,259
Held-to-maturity:
Due in one year or less		$	0		$	0
Due after one year through five years		33			34
Due after five years through 10 years		8,366			8,956
Due after 10 years		7,286			7,580
Total fixed maturity securities held-to-maturity		$	15,685		$	16,570

(1) Net of allowance for credit losses

Economic maturities are used for certain debt instruments with no stated maturity where the expected maturity date is based on the combination of features in the financial instrument such as the right to call or prepay obligations or changes in coupon rates.

Investment Concentrations

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

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

	June 30, 2024			December 31, 2023
(In millions)	Credit Rating	Amortized Cost	Fair Value	Credit Rating	Amortized Cost	Fair Value
Japan National Government(1)	A+	$34,111	$33,114	A+	$39,151	$40,222

(1)Japan Government Bonds (JGBs) or JGB-backed securities

14

Net Investment Gains and Losses

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

	Three Months Ended June 30,				Six Months Ended June 30,
(In millions)	2024		2023		2024		2023
Net investment gains (losses):
Sales and redemptions:
Fixed maturity securities available-for-sale:
Gross gains from sales	$	6	$	7	$	40	$	8
Gross losses from sales	(27)		(6)		(309)		(9)
Foreign currency gains (losses)	71		26		487		85
Other investments:
Gross gains (losses) from sales and redemptions	5		(3)		10		(3)
Total sales and redemptions	55		24		228		81
Equity securities	11		(9)		87		(12)
Credit losses:
Fixed maturity securities held-to-maturity	0		0		0		1
Commercial mortgage and other loans	(21)		(2)		(28)		(33)
Impairment losses	0		0		0		0
Loan commitments	2		1		3		4
Reinsurance recoverables and other	0		0		5		(3)
Total credit losses	(19)		(1)		(20)		(31)
Derivatives and other:
Derivative gains (losses)	(275)		(594)		(490)		(577)
Foreign currency gains (losses)	924		1,135		1,842		1,217
Total derivatives and other	649		541		1,352		640
Total net investment gains (losses)	$	696	$	555	$	1,647	$	678

The unrealized holding gains, net of losses, recorded as a component of net investment gains and losses for the three-month period ended June 30, 2024 that relate to equity securities held at the June 30, 2024 reporting date were $15 million. The unrealized holding losses, net of gains, recorded as a component of net investment gains and losses for the three-month period ended June 30, 2023 that relate to equity securities held at the June 30, 2023 reporting date were $16 million.

The unrealized holding gains, net of losses, recorded as a component of net investment gains and losses for the six-month period ended June 30, 2024 that relate to equity securities held at the June 30, 2024 reporting date were $70 million. The unrealized holding losses, net of gains, recorded as a component of net investment gains and losses for the six-month period ended June 30, 2023 that relate to equity securities held at the June 30, 2023 reporting date were $21 million.

Unrealized Investment Gains and Losses

Effect on Shareholders’ Equity

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

(In millions)	June 30, 2024			December 31, 2023
Unrealized gains (losses) on securities available-for-sale		$	1,656		$	2,601
Deferred income taxes		(1,255)			(1,462)
Shareholders’ equity, unrealized gains (losses) on fixed maturity securities		$	401		$	1,139

15

Gross Unrealized Loss Aging

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

	June 30, 2024
	Total						Less than 12 months						12 months or longer
(In millions)	Fair Value			Unrealized Losses			Fair Value			Unrealized Losses			Fair Value			Unrealized Losses
Fixed maturity securities available-    for-sale:
U.S. government and       agencies:
U.S. dollar-denominated		$	114		$	4		$	38		$	1		$	76		$	3
Japan government and       agencies:
Yen-denominated		8,156			2,376			2,577			574			5,579			1,802
Municipalities:
U.S. dollar-denominated		670			49			29			1			641			48
Yen-denominated		339			74			123			4			216			70
Mortgage- and asset-     backed securities:
U.S. dollar-denominated		684			44			167			1			517			43
Yen-denominated		223			22			41			0			182			22
Public utilities:
U.S. dollar-denominated		1,438			150			445			15			993			135
Yen-denominated		951			94			492			18			459			76
Sovereign and supranational:
U.S. dollar-denominated		14			3			0			0			14			3
Yen-denominated		25			7			0			1			25			6
Banks/financial institutions:
U.S. dollar-denominated		753			50			345			8			408			42
Yen-denominated		3,132			332			450			23			2,682			309
Other corporate:
U.S. dollar-denominated		6,336			823			1,473			43			4,863			780
Yen-denominated		1,719			287			429			19			1,290			268
Total		$	24,554		$	4,315		$	6,609		$	708		$	17,945		$	3,607

16

	December 31, 2023
	Total						Less than 12 months						12 months or longer
(In millions)	Fair Value			Unrealized Losses			Fair Value			Unrealized Losses			Fair Value			Unrealized Losses
Fixed maturity securities available-    for-sale:
U.S. government and       agencies:
U.S. dollar-denominated		$	123		$	4		$	53		$	1		$	70		$	3
Japan government and       agencies:
Yen-denominated		8,393			1,696			1,657			303			6,736			1,393
Municipalities:
U.S. dollar-denominated		703			38			31			1			672			37
Yen-denominated		301			58			34			0			267			58
Mortgage- and asset-     backed securities:
U.S. dollar-denominated		925			56			340			6			585			50
Yen-denominated		58			11			0			0			58			11
Public utilities:
U.S. dollar-denominated		1,120			114			228			4			892			110
Yen-denominated		1,028			82			444			13			584			69
Sovereign and supranational:
U.S. dollar-denominated		35			8			0			0			35			8
Yen-denominated		60			7			0			0			60			7
Banks/financial institutions:
U.S. dollar-denominated		655			51			159			4			496			47
Yen-denominated		3,673			365			186			4			3,487			361
Other corporate:
U.S. dollar-denominated		6,380			665			799			19			5,581			646
Yen-denominated		1,948			294			308			9			1,640			285
Total		$	25,402		$	3,449		$	4,239		$	364		$	21,163		$	3,085

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. Identifying the drivers of the declines in fair value helps to align and allocate the Company‘s resources to securities with real credit-related concerns that could impact ultimate collection of principal and interest. 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 non-corporate issuers, the Company analyzes all sources of credit support, including issuer-specific factors. The Company utilizes information available in the public domain and, for certain private placement issuers, from consultations with the issuers directly. The Company also considers ratings from Nationally Recognized Statistical Rating Organizations (NRSROs), as well as the specific characteristics of the security it owns including seniority in the issuer's capital structure, covenant protections, or other relevant features. From these reviews, the Company evaluates the issuers' continued ability to service the Company's investment through payment of interest and principal.

17

Assuming no credit-related factors develop, unrealized gains and losses on available-for-sale securities are expected to diminish as investments near maturity. Based on its credit analysis, the Company believes that the issuers of its available-for-sale investments in the sectors shown in the table above have the ability to service their obligations to the Company. 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 June 30, 2024. Refer to the Allowance for Credit Losses section below for additional information.

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

Commercial Mortgage and Other Loans

The Company classifies its transitional real estate loans (TREs), commercial mortgage loans (CMLs), middle market loans (MMLs), and other loans as held-for-investment and includes them in the commercial mortgage and other loans line on the consolidated balance sheets. The Company carries them on the balance sheet at amortized cost less an estimated allowance for credit losses.

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

(In millions)	June 30, 2024				December 31, 2023
	Amortized Cost		% of Total		Amortized Cost		% of Total
Commercial Mortgage and other loans:
Transitional real estate loans:
Office	$	1,635	13.6	%	$	1,807	14.1	%
Retail	337		2.8		473		3.7
Apartments/Multi-Family	2,438		20.3		2,608		20.4
Industrial	115		1.0		157		1.2
Hospitality	712		5.9		814		6.4
Other	432		3.6		255		2.0
Total transitional real estate loans	5,669		47.2		6,114		47.8
Commercial mortgage loans:
Office	354		2.9		359		2.8
Retail	218		1.8		301		2.4
Apartments/Multi-Family	579		4.8		586		4.6
Industrial	442		3.7		463		3.6
Other	15		.1		0		0.0
Total commercial mortgage loans	1,608		13.3		1,709		13.4
Middle market loans	4,489		37.3		4,677		36.5
Other loans	267		2.2		301		2.3
Total commercial mortgage and other loans	$	12,033	100.0	%	$	12,801	100.0	%
Allowance for credit losses	(238)				(274)
Total net commercial mortgage and other loans	$	11,795			$	12,527

CMLs and TREs were secured by properties entirely within the U.S. (with the largest concentrations in California (21%), Texas (13%) and Florida (9%)). MMLs are issued only to companies domiciled within the U.S. and Canada.

18

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

As of June 30, 2024, the Company had $400 million in outstanding commitments to fund TREs. These commitments are contingent on the final underwriting and due diligence to be performed.

Commercial Mortgage Loans

CMLs are typically fixed rate loans on commercial real estate with partial repayment of principal over the life of the loan with the remaining outstanding principal being repaid upon maturity. This loan portfolio is generally considered higher quality investment grade loans.

Middle Market Loans

MMLs are typically first lien senior secured cash flow loans to small to mid-size companies for working capital, refinancing, acquisition, and recapitalization. These loans are generally considered to be below investment grade. The carrying value for MMLs included $25 million and $24 million for a short-term credit facility that is reflected in other liabilities on the consolidated balance sheets, as of June 30, 2024 and December 31, 2023, respectively.

As of June 30, 2024, the Company had commitments of approximately $741 million to fund future MMLs. These commitments are contingent upon the availability of MMLs that meet the Company's underwriting criteria.

Other Loans

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. The infrastructure loan portfolio weighted average rating is investment grade. As of June 30, 2024, the Company had commitments of approximately $5 million to fund future other loans. These commitments are contingent upon the availability of other loans that meet the Company's underwriting criteria.

Credit Quality Indicators

For TREs, the Company’s key credit quality indicators include performance of the loan and loan-to-value (LTV), which is calculated by dividing the current outstanding loan balance by the estimated property value, primarily using values at origination. Given that TREs involve properties undergoing a repositioning of their commercial profile, LTV provides the most insight into the credit risk of the loan. The Company monitors the performance of the loans periodically, but not less frequently than quarterly. The monitoring process also focuses on higher risk loans, which include those that are delinquent or for which foreclosure or deed in lieu of foreclosure is anticipated.

For CMLs, the Company’s key credit quality indicators include LTV and debt service coverage ratios (DSCR). DSCR is the most recently available net operating income of the underlying property compared to the required debt service of the loan.

For MMLs and held-to-maturity fixed maturity securities, the Company’s key credit quality indicator is credit ratings. The Company’s held-to-maturity portfolio is composed of investment grade securities that are senior unsecured instruments, while its MMLs generally have below-investment-grade ratings but are typically senior secured instruments. The Company monitors the credit ratings periodically, but not less frequently than quarterly.

For other loans, the Company's key credit quality indicator is credit ratings. The Company monitors these credit ratings periodically, but not less frequently than quarterly.

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

Transitional Real Estate Loans
(In millions)	2024		2023		2022		2021		2020		Prior		Total
Loan-to-Value Ratio:
0%-59.99%	$	0	$	0	$	615	$	513	$	36	$	143	$	1,307
60%-69.99%	0		114		394		673		18		605		1,804
70%-79.99%	0		14		814		812		83		173		1,896
80% or greater	0		0		219		214		80		149		662
Total	$	0	$	128	$	2,042	$	2,212	$	217	$	1,070	$	5,669
Current-period gross   writeoffs:	$	0	$	0	$	0	$	5	$	0	$	10	$	15

Commercial Mortgage Loans
(In millions)	2024		2023		2022		2021		2020		Prior		Total		Weighted-Average DSCR
Loan-to-Value Ratio:
0%-59.99%	$	0	$	33	$	0	$	294	$	58	$	952	$	1,337	2.64
60%-69.99%	13		0		0		0		0		39		52		1.31
70%-79.99%	0		0		0		0		0		86		86		1.26
80% or greater	0		0		0		0		0		133		133		0.51
Total	$	13	$	33	$	0	$	294	$	58	$	1,210	$	1,608	2.34
Weighted Average DSCR	1.21		2.58		0.00		2.93		2.61		2.20
Current-period gross   writeoffs:	$	0	$	0	$	0	$	0	$	0	$	0	$	0

Middle Market Loans
(In millions)	2024		2023		2022		2021		2020		Prior		Revolving Loans		Total
Credit Ratings:
BBB	$	10	$	15	$	62	$	103	$	94	$	93	$	16	$	393
BB	85		41		367		415		280		499		81		1,768
B	111		45		246		563		249		620		42		1,876
CCC	0		0		22		78		90		140		16		346
CC	0		0		0		0		0		8		0		8
C and lower	0		0		0		6		0		90		2		98
Total	$	206	$	101	$	697	$	1,165	$	713	$	1,450	$	157	$	4,489
Current-period gross   writeoffs:	$	0	$	0	$	0	$	27	$	0	$	23	$	0	$	50

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Other Loans
(In millions)	2024		2023		2022		2021		2020		Prior		Revolving Loans		Total
Credit Ratings:
A	$	0	$	22	$	76	$	0	$	0	$	0	$	0	$	98
AA	0		0		22		3		0		0		0		25
BBB	5		64		0		0		0		0		0		69
BB	0		0		75		0		0		0		0		75
Total	$	5	$	86	$	173	$	3	$	0	$	0	$	0	$	267
Current-period gross   writeoffs:	$	0	$	0	$	0	$	0	$	0	$	0	$	0	$	0

Loan Modifications to Borrowers Experiencing Financial Difficulties

The Company granted certain loan modifications to borrowers experiencing financial difficulty during the first six months of 2024 and 2023. The amount, timing, and extent of modifications granted are considered in determining any credit loss allowance recorded.

Of these loans, 2% of TREs with an amortized cost of $121 million and 6% of TREs with an amortized cost of $332 million were modified in the form of interest rate reductions and other-than-insignificant payment delays during the three- and six-month periods ended June 30, 2024, respectively. The modifications resulted in a reduction in the weighted-average contractual interest rate from 8.1% to 7.8% for the three-month period and 8.2% to 7.3% for the six-month period ended June 30, 2024, respectively.

Additionally, an immaterial percentage of MMLs were modified in the form of principal forgiveness during each of the three- and six-month periods ended June 30, 2024. The modifications resulted in forgiveness of principal of $15 million, resulting in a remaining amortized cost of $2 million as of June 30, 2024.

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

Past Due and Nonaccrual Loans

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

	June 30, 2024
(In millions)	Current		Less Than 90 Days Past Due		90 Days or More  Past Due(1)		Total Past Due		Total Loans		Nonaccrual Status
Transitional real estate loans	$	4,934	$	217	$	518	$	735	$	5,669	$	475
Commercial mortgage loans	1,587		0		21		21		1,608		21
Middle market loans	4,384		62		43		105		4,489		43
Other loans	247		0		20		20		267		0
Total	$	11,152	$	279	$	602	$	881	$	12,033	$	539

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

	December 31, 2023
(In millions)	Current		Less Than 90 Days Past Due		90 Days or More  Past Due(1)		Total Past Due		Total Loans		Nonaccrual Status
Transitional real estate loans	$	5,481	$	108	$	525	$	633	$	6,114	$	633
Commercial mortgage loans	1,676		33		0		33		1,709		0
Middle market loans	4,592		0		85		85		4,677		85
Other loans	301		0		0		0		301		0
Total	$	12,050	$	141	$	610	$	751	$	12,801	$	718

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

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For the three- and six-month periods ended June 30, 2024 and June 30, 2023, the Company recognized no interest income for TREs, CMLs, MMLs, or other loans on nonaccrual status. Of these loans, TREs with an amortized cost of $68 million and $160 million had no credit loss allowance as of June 30, 2024 and December 31, 2023, respectively, because these loans are collateral dependent assets for which the estimated fair values of the collateral were in excess of amortized cost. As of June 30, 2024, MMLs with an amortized cost of $4 million were on nonaccrual status without an allowance for credit losses. As of December 31, 2023, there were no MMLs on nonaccrual status without an allowance for credit losses.

Allowance for Credit Losses

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

The Company groups CMLs and TREs and respective loan commitments by property type, property location and the property’s LTV and DSCR. On a quarterly basis, CMLs and TREs within a portfolio segment that share similar risk characteristics are pooled for calculation of credit loss allowance. On an ongoing basis, TREs, CMLs and other loans with dissimilar risk characteristics (i.e., loans with significant declines in credit quality), such as collateral dependent mortgage loans (i.e., when the borrower is experiencing financial difficulty, including when foreclosure is probable), are evaluated individually for credit loss. For example, the credit loss allowance for a collateral dependent loan is established as the excess of amortized cost over the estimated fair value of the loan’s underlying collateral, less selling cost when foreclosure is probable. 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 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 reverts to historical loss information over one year, following the two-year forecast period. For the CML and TRE portfolio, the Company applies reasonable and supportable forecasts of macroeconomic variables as well as national and local real-estate market factors to estimate future credit losses where the market factors revert back to historical levels over time with the period being dependent on current market conditions, projected market conditions and difference in the current and historical market levels for each factor. The Company continuously monitors the estimation methodology, due to changes in portfolio composition, changes in underwriting practices and significant events or conditions and makes adjustments as necessary.

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

An investment in an available-for-sale security may be impaired if the fair value falls below amortized cost. The Company regularly reviews its available-for-sale portfolio for declines in fair value. The Company's available-for-sale impairment model focuses on the ultimate collection of the cash flows from its investments and whether the Company has the intent to sell or if it is more likely than not the Company would be required to sell the security prior to recovery of its amortized cost. The determination of the amount of impairments under this model is based upon the Company's periodic evaluation and assessment of known and inherent risks associated with the respective securities. 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. 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.

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The Company’s methodology for estimating credit losses for available-for-sale securities utilizes the discounted cash flow model, based on past events, current market conditions and future economic conditions, as well as industry analysis and credit ratings of the securities. In addition, the Company evaluates the specific issuer’s probability of default and expected recovery of its position in the event of default based on the underlying financial condition and assets of the borrower as well as seniority and/or security of other debt holders in the issuer when developing management’s best estimate of expected cash flows.

The following table presents the roll forward of the allowance for credit losses by portfolio segment for loans and by accounting classification for securities.

(In millions)	Transitional Real Estate Loans		Commercial Mortgage Loans		Middle Market Loans		Other Loans and Loan Commitments		Held-to- Maturity Securities		Available- for-Sale Securities		Total
Three Months Ended June 30, 2024:
Balance at March 31, 2024	$	(114)	$	(19)	$	(99)	$	(15)	$	(5)	$	0	$	(252)
(Addition to) release of allowance for credit losses	(24)		2		1		2		0		0		(19)
Writeoffs, net of recoveries	15		0		0		0		0		0		15
Change in foreign exchange	0		0		0		0		0		0		0
Balance at June 30, 2024	$	(123)	$	(17)	$	(98)	$	(13)	$	(5)	$	0	$	(256)
Three Months Ended June 30, 2023:
Balance at March 31, 2023	$	(65)	$	(9)	$	(149)	$	(21)	$	(6)	$	0	$	(250)
(Addition to) release of allowance for credit losses	(11)		0		9		1		0		0		(1)
Writeoffs, net of recoveries	0		0		0		0		0		0		0
Change in foreign exchange	0		0		0		0		1		0		1
Balance at June 30, 2023	$	(76)	$	(9)	$	(140)	$	(20)	$	(5)	$	0	$	(250)
Six Months Ended June 30, 2024:
Balance at December 31, 2023	$	(112)	$	(16)	$	(146)	$	(16)	$	(5)	$	0	$	(295)
(Addition to) release of allowance for credit losses	(26)		(1)		(2)		3		0		0		(26)
Writeoffs, net of recoveries	15		0		50		0		0		0		65
Change in foreign exchange	0		0		0		0		0		0		0
Balance at June 30, 2024	$	(123)	$	(17)	$	(98)	$	(13)	$	(5)	$	0	$	(256)
Six Months Ended June 30, 2023:
Balance at December 31, 2022	$	(54)	$	(9)	$	(129)	$	(24)	$	(7)	$	0	$	(223)
(Addition to) release of allowance for credit losses	(22)		0		(11)		4		1		0		(28)
Writeoffs, net of recoveries	0		0		0		0		0		0		0
Change in foreign exchange	0		0		0		0		1		0		1
Balance at June 30, 2023	$	(76)	$	(9)	$	(140)	$	(20)	$	(5)	$	0	$	(250)

As of June 30, 2024, the Company identified additional TREs with an amortized cost of $267 million in anticipation of potential foreclosure or deed in lieu of foreclosure transactions. As of June 30, 2024, the Company established a credit allowance of $33 million for $656 million of loans for which the fair value of the collateral was below the amortized cost of the loans.

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Other Investments

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

(In millions)	June 30, 2024			December 31, 2023
Other investments:
Policy loans		$	195		$	214
Short-term investments (1)		3,380			1,304
Limited partnerships (2)		2,983			2,750
Real estate owned		497			227
Other		47			35
Total other investments		$	7,102		$	4,530

(1) Includes securities lending collateral

(2) Includes tax credit investments and asset classes such as private equity and real estate funds

The Parent Company invests in partnerships that specialize in rehabilitating historic structures or the installation of solar equipment in order to receive federal historic rehabilitation and solar tax credits. These investments are classified as limited partnerships and included in other investments in the consolidated balance sheets. The change in value of each investment is recorded as a reduction to net investment income. Tax credits generated by these investments are recorded as an income tax benefit in the consolidated statements of earnings.

Real estate owned (REO) consists of office buildings or other commercial properties obtained through foreclosure or deed in lieu of foreclosure of certain of the Company’s TREs. As of June 30, 2024, all REO was classified as held-and-used for the production of income and is carried at cost less accumulated depreciation. As of December 31, 2023, $210 million of REO was classified as held-and-used with the remaining $17 million classified as held-for-sale, which is carried at the lower of depreciated cost or fair value less cost to sell and is not further depreciated once classified as such. Depreciation expense was $3 million and $4 million for the three- and six-month periods ended June 30, 2024, respectively. Additionally, as of June 30, 2024 and December 31, 2023, accumulated depreciation was $4 million and an immaterial amount, respectively.

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

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 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.

For those VIEs other than certain unit trust structures, the Company's involvement is passive in nature.

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

and

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

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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.

Investments in Consolidated Variable Interest Entities

(In millions)	June 30, 2024			December 31, 2023
Assets:
Fixed maturity securities, available-for-sale		$	3,677		$	3,712
Commercial mortgage and other loans		9,454			10,150
Other investments (1)		2,571			2,381
Other assets (2)		58			55
Total assets of consolidated VIEs		$	15,760		$	16,298
Liabilities:
Other liabilities (2)		$	700		$	507
Total liabilities of consolidated VIEs		$	700		$	507

(1) Consists entirely of alternative investments in limited partnerships

(2) Consists entirely of derivatives

The Company is the sole investor in the consolidated VIEs listed in the table above. The Company invests in fixed maturity securities issued by VIEs that in turn hold U.S. dollar-denominated fixed maturity securities coupled with foreign currency swap agreements. The weighted-average lives of the Company's investments in these VIEs are very similar to the underlying collateral held by these VIEs. The activities of these VIEs are limited to holding invested assets and foreign currency swaps and utilizing the cash flows from these securities to service the VIEs' debt. Neither the Company nor any of its creditors are able to obtain the underlying collateral of these VIEs unless there is an event of default or other specified event. The Company is not a direct counterparty to the foreign currency swap contracts and has no control over them. The Company's loss exposure to these VIEs is limited to its original investment. These consolidated VIEs do not rely on outside or ongoing sources of funding to support their activities beyond the underlying collateral and foreign currency swap contracts, if applicable. The underlying collateral assets and funding of these consolidated VIEs are generally static in nature.

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. The limited partnership investments are comprised of private equity and real estate funds. The Company’s loss exposure to these VIEs is limited to its original investments, together with any unfunded portion of the Company’s commitments made in the normal course of business to fund certain loan investments and limited partnership investments, as described in the Commercial Mortgage and Other Loans and Other Investments sections of this note. Excluding these commitments, the Company does not provide financial or other support to consolidated VIEs.

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VIEs - Not Consolidated

The table below reflects the carrying value and balance sheet caption in which the Company's investments in VIEs that are not consolidated are reported.

Investments in Variable Interest Entities Not Consolidated

(In millions)	June 30, 2024			December 31, 2023
Assets:
Fixed maturity securities, available-for-sale		$	6,552		$	6,424
Other investments (1)		412			369
Total investments in VIEs not consolidated		$	6,964		$	6,793

(1) Consists entirely of alternative investments in limited partnerships

Certain investments in VIEs that the Company is not required to consolidate are investments that are in the form of debt obligations issued by the VIEs. These fixed maturity securities include structured securities, primarily asset-backed securities. 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 variable interests created by these VIEs are principally or solely a result of the debt instruments issued by them. The Company does not have the power to direct the activities that most significantly impact the entity's economic performance, nor does it have the obligation to absorb losses of the VIE entity or the right to receive benefits from the entity that could be significant to the entity. 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. These partnerships primarily invest in private equity and real estate funds. The Company’s maximum exposure to loss on these investments is limited to the amount of its investment and any unfunded commitments. As described in the Other Investments section of this note, the Company makes commitments to fund partnership investments in the normal course of business. Excluding these commitments, the Company did not provide financial or other support to unconsolidated VIEs. The Company is not the primary beneficiary of these VIEs and is therefore not required to consolidate them. The Company classifies these investments as other investments in the consolidated balance sheets.

Securities Lending and Pledged Securities

The Company lends fixed maturity securities and, from time to time, public equity securities to financial institutions in short-term securities lending transactions. These short-term securities lending arrangements increase investment income with minimal risk. The Company receives cash or other securities as collateral for such loans. The Company's securities lending policy requires that the fair value of the securities received as collateral be 102% or more of the fair value of the loaned securities and that unrestricted cash received as collateral be 100% or more of the fair value of the loaned securities. The securities loaned continue to be carried as investment assets on the Company's balance sheet during the terms of the loans and are not reported as sales. 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.

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

Securities Lending Transactions Accounted for as Secured Borrowings
Remaining Contractual Maturity of the Agreements
	June 30, 2024						December 31, 2023
(In millions)	Overnight and Continuous(1)		Up to 30 days		Total		Overnight and Continuous(1)		Up to 30 days		Total
Securities lending   transactions:
Fixed maturity securities:
Japan government and agencies	$	0	$	3,583	$	3,583	$	0	$	737	$	737
Public utilities	51		0		51		19		0		19
Banks/financial institutions	145		0		145		72		0		72
Other corporate	714		0		714		675		0		675
Total borrowings	$	910	$	3,583	$	4,493	$	766	$	737	$	1,503
Gross amount of recognized liabilities for securities    lending transactions					$	4,493					$	1,503

(1) The related loaned security, under the Company's U.S. securities lending program, can be returned to the Company at the transferee's discretion; therefore, they are classified as Overnight and Continuous.

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

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

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. For additional information regarding pledged securities related to derivative transactions, see Note 4.

4.    DERIVATIVE INSTRUMENTS

The Company's freestanding derivative financial instruments include:

•foreign currency forwards and options used in hedging foreign exchange risk on U.S. dollar-denominated investments in Aflac Japan's portfolio, with options used on a standalone basis and/or in a collar strategy;

•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;

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

•interest rate swaptions used to hedge changes in the fair value associated with interest rate fluctuations for certain U.S. dollar-denominated available-for-sale fixed-maturity securities; and

•bond purchase commitments at the inception of investments in consolidated VIEs.

Some of the Company's derivatives are designated as cash flow hedges, fair value hedges or net investment hedges; however, other derivatives do not qualify for hedge accounting or the Company elects not to designate them as accounting hedges.

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Derivative Types

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

From time to time, the Company may also enter into foreign currency forwards and options to hedge the currency risk associated with the net investment in Aflac Japan. In these forward transactions, the Company agrees with another party to buy a fixed amount of U.S. dollars and sell a corresponding amount of yen at a specified price at a specified future date. In the option transactions, the Company may use a combination of foreign currency options to protect expected future cash flows by simultaneously purchasing yen put options (options that protect against a weakening yen) and selling yen call options (options that limit participation in a strengthening yen). The combination of these two actions create a zero-cost collar. Additionally, the Company enters into purchased options to hedge cash flows from the net investment in Aflac Japan.

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

In order to reduce investment income volatility from its variable-rate investments, the Company enters into receive–fixed, pay–floating interest rate swaps. These derivatives are cleared and settled through a central clearinghouse.

Swaptions are used to mitigate the adverse impact resulting from significant changes in the fair value of U.S. dollar-denominated available-for-sale securities due to fluctuation in interest rates. In a payer swaption, the Company pays a premium to obtain the right, but not the obligation, to enter into a swap contract where it will pay a fixed rate and receive a floating rate. Interest rate swaption collars are combinations of two swaption positions. In order to maximize the efficiency of the collars while minimizing cost, a collar strategy is used whereby the Company purchases a long payer swaption (the Company purchases an option that allows it to enter into a swap where the Company will pay the fixed rate and receive the floating rate of the swap) and sells a short receiver swaption (the Company sells an option that provides the counterparty with the right to enter into a swap where the Company will receive the fixed rate and pay the floating rate of the swap). The combination of purchasing the long payer swaption and selling the short receiver swaption results in no net premium being paid (i.e. a costless or zero-cost collar).

Bond purchase commitments result from repackaged bond structures that are consolidated VIEs whereby there is a delay in the trade date and settlement date of the bond within the structure to ensure completion of all necessary legal agreements to support the consolidated VIE that issues the repackaged bond. Since the Company has a commitment to purchase the underlying bond at a specified price, the agreement meets the definition of a derivative where the value is derived based on the current market value of the bond compared to the fixed purchase price to be paid on the settlement date.

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Derivative Balance Sheet Classification

The table below summarizes the balance sheet classification of the Company's derivative fair value amounts, as well as the gross asset and liability fair value amounts. The fair value amounts presented do not include income accruals. Derivative assets are included in other assets, while derivative liabilities are included in other liabilities within the Company’s consolidated balance sheets. The notional amount of derivative contracts represents the basis upon which pay or receive amounts are calculated and are not reflective of exposure or credit risk.

		June 30, 2024									December 31, 2023
(In millions)				Asset Derivatives			Liability Derivatives						Asset Derivatives			Liability Derivatives
Hedge Designation/ Derivative   Type	Notional Amount			Fair Value			Fair Value			Notional Amount			Fair Value			Fair Value
Cash flow hedges:
Foreign currency swaps - VIE		$	18		$	0		$	6		$	18		$	0		$	4
Total cash flow hedges		18			0			6			18			0			4
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		1,972			235			0			2,611			179			27
Foreign currency options		0			0			0			456			0			0
Total net investment hedge		1,972			235			0			3,067			179			27
Non-qualifying strategies:
Foreign currency swaps		1,200			16			0			1,200			31			0
Foreign currency swaps - VIE		3,416			58			694			3,417			55			503
Foreign currency forwards		0			0			0			7,402			59			477
Foreign currency options		26,715			7			173			22,557			2			0
Interest rate swaps		17,230			0			451			17,230			11			419
Total non-qualifying strategies		48,561			81			1,318			51,806			158			1,399
Total derivatives		$	50,551		$	316		$	1,324		$	57,049		$	337		$	1,430

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. 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). The remaining maximum length of time for which these cash flows are hedged is approximately two years. The derivatives in the Company's consolidated VIEs that are not designated as accounting hedges are discussed in the Non-qualifying Strategies section of this note.

Fair Value Hedges

The Company designates and accounts for certain foreign currency forwards, options, and interest rate swaptions as fair value hedges when they meet the requirements for hedge accounting. The Company recognizes gains and losses on these derivatives as well as the offsetting gain or loss on the related hedged items in current earnings.

Foreign currency forwards and options hedge the foreign currency exposure of certain U.S. dollar-denominated available-for-sale fixed-maturity investments held in Aflac Japan. The change in the fair value of the foreign currency forwards related to the changes in the difference between the spot rate and the forward price is excluded from the assessment of hedge effectiveness. The change in fair value of the foreign currency option related to the time value of the option is recognized in current earnings and is excluded from the assessment of hedge effectiveness.

Interest rate swaptions hedge the interest rate exposure of certain U.S. dollar-denominated available-for-sale securities held in Aflac Japan. For these hedging relationships, the Company excludes time value from the assessment of hedge effectiveness and recognizes changes in the intrinsic value of the swaptions in current earnings within net investment income. 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.

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The following table presents the gains and losses on derivatives and the related hedged items in fair value hedges. The Company had no fair value hedges during the three- and six-month periods ended June 30, 2024.

Fair Value Hedging Relationships

(In millions)		Hedging Derivatives						Hedged Items
Hedging Derivatives	Hedged Items	Total Gains (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 June 30, 2023:
Foreign currency options	Fixed maturity securities	$	(25)	$	(25)	$	0	$	0	$	0
Total gains (losses)		$	(25)	$	(25)	$	0	$	0	$	0
Six Months Ended June 30, 2023:
Foreign currency options	Fixed maturity securities	$	(64)	$	(64)	$	0	$	0	$	0
Total gains (losses)		$	(64)	$	(64)	$	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 six-month periods ended June 30, 2023, gains and losses included in the hedge assessment on interest rate swaptions and related hedged items were immaterial.

The following table shows the carrying amounts of assets designated and qualifying as hedged items in fair value hedges of interest rate risk and the related cumulative hedge adjustment included in the carrying amount. The Company had no fair value hedges of interest rate risk as of June 30, 2024 and December 31, 2023; 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)
		June 30, 2024		December 31, 2023		June 30, 2024		December 31, 2023
Fixed maturity securities		$	1,452	$	1,692	$	153	$	164

(1) The balance includes hedging adjustment on discontinued hedging relationships of $153 in 2024 and $164 in 2023.

Net Investment Hedge

The Company's investment in Aflac Japan is affected by changes in the yen/dollar exchange rate. To mitigate this exposure, the Parent Company's yen-denominated liabilities (see Note 9) have been designated as non-derivative hedges and certain foreign currency forwards and options have been designated as derivative hedges of the foreign currency exposure of the Company's net investment in Aflac Japan.

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

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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 net investment 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 June 30, 2024, the Parent Company had $1.2 billion notional amount of cross-currency interest rate swap agreements related to certain of its U.S. dollar-denominated senior notes to effectively convert a portion of the interest on the notes from U.S. dollar to Japanese yen. Changes in the values of these swaps are recorded in current period earnings.

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. 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). The Company also has certain foreign currency forwards on U.S. dollar-denominated available-for-sale securities where hedge accounting is not being applied.

The Company uses interest rate swaps to economically convert the variable rate investment income to a fixed rate on certain variable-rate investments.

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Impact of Derivatives and Hedging Instruments

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

	Three Months Ended June 30,
	2024										2023
(In millions)	Net Investment Income (1)			Net Investment Gains (Losses)				Other Comprehensive Income (Loss)(2)			Net Investment Income (1)			Net Investment Gains (Losses)				Other Comprehensive Income (Loss)(2)
Qualifying hedges:
Cash flow hedges:
Foreign currency swaps - VIE		$	0		$	(1)			$	0		$	0		$	(1)			$	1
Total cash flow hedges		0			(1)		(3)		0			0			(1)		(3)		1
Fair value hedges:
Foreign currency options					0										(25)
Total fair value hedges					0										(25)
Net investment hedge:
Non-derivative hedging           instruments					0				265						0				313
Foreign currency forwards					32				155						37				393
Foreign currency options					0				0						(5)				0
Total net investment hedge					32				420						32				706
Non-qualifying strategies:
Foreign currency swaps					1										2
Foreign currency swaps - VIE					(128)										(63)
Foreign currency forwards					0										(331)
Foreign currency options					(141)										(18)
Interest rate swaps					(38)										(189)
Forward bond purchase          commitment - VIE					0										(1)
Total non-qualifying strategies					(306)										(600)
Total		$	0		$	(275)			$	420		$	0		$	(594)			$	707

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

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	Six Months Ended June 30,
	2024										2023
(In millions)	Net Investment Income(1)			Net Investment Gains (Losses)				Other Comprehensive Income (Loss)(2)			Net Investment Income(1)			Net Investment Gains (Losses)				Other Comprehensive Income (Loss)(2)
Qualifying hedges:
Cash flow hedges:
Foreign currency swaps - VIE		$	0		$	(2)			$	0		$	0		$	(2)			$	2
Total cash flow hedges		0			(2)		(3)		0			0			(2)		(3)		2
Fair value hedges:
Foreign currency options					0										(64)
Total fair value hedges					0										(64)
Net investment hedge:
Non-derivative hedging          instruments					0				501						0				338
Foreign currency forwards					76				300						127				422
Foreign currency options					0				0						(8)				0
Total net investment hedge					76				801						119				760
Non-qualifying strategies:
Foreign currency swaps					2										3
Foreign currency swaps - VIE					(216)										(90)
Foreign currency forwards					17										(382)
Foreign currency options					(182)										(37)
Interest rate swaps					(185)										(120)
Forward bond purchase          commitment - VIE					0										(4)
Total non-qualifying strategies					(564)										(630)
Total		$	0		$	(490)			$	801		$	0		$	(577)			$	762

(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 $2 of losses reclassified from accumulated other comprehensive income (loss) into earnings during the six-month period ended June 30, 2024, and $1 of losses during the six-month period ended June 30, 2023.

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

Credit Risk Assumed through Derivatives

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

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

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

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The Company engages in over-the-counter (OTC) bilateral derivative transactions directly with unaffiliated third parties under International Swaps and Derivatives Association, Inc. (ISDA) agreements and other documentation. Most of the ISDA agreements also include Credit Support Annexes (CSAs) provisions, which generally provide for two-way collateral postings at the first dollar of exposure. The Company mitigates the risk that counterparties to transactions might be unable to fulfill their contractual obligations by monitoring counterparty credit exposure and collateral value while generally requiring that collateral be posted at the outset of the transaction. In addition, a significant portion of the derivative transactions have provisions that give the counterparty the right to terminate the transaction upon a downgrade of the Company's financial strength rating. The actual amount of payments that the Company could be required to make depends on market conditions, the fair value of outstanding affected transactions, and other factors prevailing at and after the time of the downgrade.

The Company also engages in OTC cleared derivative transactions through regulated central clearing counterparties. These positions are marked to market and margined on a daily basis (both initial margin and variation margin), and the Company has minimal exposure to credit-related losses in the event of nonperformance by counterparties to these derivatives.

Collateral posted by the Company to third parties for derivative transactions can generally be repledged or resold by the counterparties. The aggregate fair value of all derivative instruments with credit-risk-related contingent features that were in a net liability position by counterparty was approximately $1.2 billion as of June 30, 2024 and December 31, 2023, respectively. If the credit-risk-related contingent features underlying these agreements had been triggered on June 30, 2024, the Company estimates that it would be required to post a maximum of $538 million of additional collateral to these derivative counterparties. The Company is generally allowed to sell or repledge collateral obtained from its derivative counterparties, although it does not typically exercise such rights. See the Offsetting tables below for collateral posted or received as of the reported balance sheet dates.

Offsetting of Financial Instruments and Derivatives

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

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

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

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Offsetting of Financial Assets and Derivative Assets

June 30, 2024
										Gross Amounts Not Offset in Balance Sheet
(In millions)	Gross Amount of Recognized Assets			Gross Amount Offset in Balance Sheet			Net Amount of Assets Presented  in Balance Sheet			Financial Instruments			Securities Collateral		Cash Collateral Received			Net Amount
Derivative   assets:
Derivative       assets subject to a       master netting       agreement or       offsetting       arrangement
OTC - bilateral		$	258		$	0		$	258		$	(6)	$	(90)		$	(161)		$	1
Total derivative       assets subject to a       master netting       agreement or       offsetting       arrangement		258			0			258			(6)		(90)			(161)			1
Derivative       assets not subject       to a master netting       agreement or       offsetting       arrangement
OTC - bilateral		58						58											58
Total derivative       assets not subject       to a master netting       agreement or       offsetting       arrangement		58						58											58
Total derivative       assets		316			0			316			(6)		(90)			(161)			59
Securities lending    and similar    arrangements		4,459			0			4,459			0		0			(4,459)			0
Total		$	4,775		$	0		$	4,775		$	(6)	$	(90)		$	(4,620)		$	59

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December 31, 2023
										Gross Amounts Not Offset in Balance Sheet
(In millions)	Gross Amount of Recognized Assets			Gross Amount Offset in Balance Sheet			Net Amount of Assets Presented  in Balance Sheet			Financial Instruments			Securities Collateral		Cash Collateral Received			Net Amount
Derivative   assets:
Derivative       assets subject to a       master netting       agreement or       offsetting       arrangement
OTC - bilateral		$	271		$	0		$	271		$	(85)	$	(53)		$	(130)		$	3
OTC - cleared		11			0			11			(11)		0			0			0
Total derivative       assets subject to a       master netting       agreement or       offsetting       arrangement		282			0			282			(96)		(53)			(130)			3
Derivative       assets not subject       to a master netting       agreement or       offsetting       arrangement
OTC - bilateral		55						55											55
Total derivative       assets not subject       to a master netting       agreement or       offsetting       arrangement		55						55											55
Total derivative       assets		337			0			337			(96)		(53)			(130)			58
Securities lending    and similar    arrangements		1,480			0			1,480			0		0			(1,480)			0
Total		$	1,817		$	0		$	1,817		$	(96)	$	(53)		$	(1,610)		$	58

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Offsetting of Financial Liabilities and Derivative Liabilities

June 30, 2024
										Gross Amounts Not Offset in Balance Sheet
(In millions)	Gross Amount of Recognized Liabilities			Gross Amount Offset in Balance Sheet			Net Amount of Liabilities Presented  in Balance Sheet			Financial Instruments			Securities Collateral		Cash Collateral Pledged			Net Amount
Derivative   liabilities:
Derivative       liabilities subject       to a master netting       agreement or       offsetting       arrangement
OTC - bilateral		$	173		$	0		$	173		$	(6)	$	(167)		$	0		$	0
OTC - cleared		451			0			451			0		(7)			(444)			0
Total derivative       liabilities subject       to a master netting       agreement or       offsetting       arrangement		624			0			624			(6)		(174)			(444)			0
Derivative       liabilities not       subject to a       master netting       agreement or       offsetting       arrangement
OTC - bilateral		700						700											700
Total derivative       liabilities not       subject to a       master netting       agreement or       offsetting       arrangement		700						700											700
Total derivative       liabilities		1,324			0			1,324			(6)		(174)			(444)			700
Securities lending    and similar    arrangements		4,493			0			4,493			(4,459)		0			0			34
Total		$	5,817		$	0		$	5,817		$	(4,465)	$	(174)		$	(444)		$	734

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December 31, 2023
										Gross Amounts Not Offset in Balance Sheet
(In millions)	Gross Amount of Recognized Liabilities			Gross Amount Offset in Balance Sheet			Net Amount of Liabilities Presented  in Balance Sheet			Financial Instruments			Securities Collateral		Cash Collateral Pledged			Net Amount
Derivative   liabilities:
Derivative       liabilities subject       to a master netting       agreement or       offsetting       arrangement
OTC - bilateral		$	504		$	0		$	504		$	(85)	$	(381)		$	(37)		$	1
OTC - cleared		419			0			419			(11)		(19)			(389)			0
Total derivative       liabilities subject       to a master netting       agreement or       offsetting       arrangement		923			0			923			(96)		(400)			(426)			1
Derivative       liabilities not       subject to a       master netting       agreement or       offsetting       arrangement
OTC - bilateral		507						507											507
Total derivative       liabilities not       subject to a       master netting       agreement or       offsetting       arrangement		507						507											507
Total derivative       liabilities		1,430			0			1,430			(96)		(400)			(426)			508
Securities lending    and similar    arrangements		1,503			0			1,503			(1,480)		0			0			23
Total		$	2,933		$	0		$	2,933		$	(1,576)	$	(400)		$	(426)		$	531

For additional information on the Company's financial instruments, see the accompanying Notes 3 and 5 and Notes 1, 3 and 5 of the Notes to the Consolidated Financial Statements in the 2023 Annual Report.

5.    FAIR VALUE MEASUREMENTS

Fair Value Hierarchy

U.S. GAAP specifies a hierarchy of valuation techniques based on whether the inputs to those valuation techniques are observable or unobservable. These two types of inputs create three valuation hierarchy levels, as follows:

•Level 1 valuations reflect quoted market prices for identical assets or liabilities in active markets.

•Level 2 valuations reflect quoted market prices for similar assets or liabilities in an active market, quoted market prices for identical or similar assets or liabilities in non-active markets or model-derived valuations in which all significant valuation inputs are observable in active markets.

•Level 3 valuations reflect valuations in which one or more of the significant inputs are not observable in an active market.

38

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

	June 30, 2024
(In millions)	Quoted Prices in Active Markets for Identical Assets (Level 1)			Significant Observable Inputs (Level 2)			Significant Unobservable Inputs (Level 3)			Total Fair Value
Assets:
Securities available-for-sale, carried at   fair value:
Fixed maturity securities:
Government and agencies		$	17,520		$	761		$	0		$	18,281
Municipalities		0			2,083			0			2,083
Mortgage- and asset-backed securities		0			2,490			1,213			3,703
Public utilities		0			6,461			365			6,826
Sovereign and supranational		0			435			25			460
Banks/financial institutions		0			8,630			69			8,699
Other corporate		0			25,823			384			26,207
Total fixed maturity securities		17,520			46,683			2,056			66,259
Equity securities		571			0			157			728
Other investments		3,380			0			0			3,380
Cash and cash equivalents		6,060			0			0			6,060
Other assets:
Foreign currency swaps		0			74			0			74
Foreign currency forwards		0			235			0			235
Foreign currency options		0			7			0			7
Total other assets		0			316			0			316
Total assets		$	27,531		$	46,999		$	2,213		$	76,743
Liabilities:
Other liabilities:
Foreign currency swaps		$	0		$	700		$	0		$	700
Foreign currency options		0			173			0			173
Interest rate swaps		0			451			0			451
Total liabilities		$	0		$	1,324		$	0		$	1,324

39

	December 31, 2023
(In millions)	Quoted Prices in Active Markets for Identical Assets (Level 1)			Significant Observable Inputs (Level 2)			Significant Unobservable Inputs (Level 3)			Total Fair Value
Assets:
Securities available-for-sale, carried at   fair value:
Fixed maturity securities:
Government and agencies		$	21,700		$	900		$	0		$	22,600
Municipalities		0			2,298			0			2,298
Mortgage- and asset-backed securities		0			2,314			772			3,086
Public utilities		0			7,339			253			7,592
Sovereign and supranational		0			507			30			537
Banks/financial institutions		0			8,757			78			8,835
Other corporate		0			27,694			648			28,342
Total fixed maturity securities		21,700			49,809			1,781			73,290
Equity securities		840			0			248			1,088
Other investments		1,304			0			0			1,304
Cash and cash equivalents		4,306			0			0			4,306
Other assets:
Foreign currency swaps		0			86			0			86
Foreign currency forwards		0			238			0			238
Foreign currency options		0			2			0			2
Interest rate swaps		0			11			0			11
Total other assets		0			337			0			337
Total assets		$	28,150		$	50,146		$	2,029		$	80,325
Liabilities:
Other liabilities:
Foreign currency swaps		$	0		$	507		$	0		$	507
Foreign currency forwards		0			504			0			504
Interest rate swaps		0			419			0			419
Total liabilities		$	0		$	1,430		$	0		$	1,430

40

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

	June 30, 2024
(In millions)	Carrying Value			Quoted Prices in Active Markets for Identical Assets (Level 1)			Significant Observable Inputs (Level 2)			Significant Unobservable Inputs (Level 3)			Total Fair Value
Assets:
Securities held-to-maturity,     carried at amortized cost:
Fixed maturity securities:
Government and agencies		$	15,038		$	15,727		$	140		$	0		$	15,867
Municipalities		232			0			256			0			256
Public utilities		31			0			32			0			32
Sovereign and    supranational		368			0			398			0			398
Other corporate		16			0			17			0			17
Commercial mortgage and     other loans		11,795			0			0			11,457			11,457
Other investments (1)		47			0			47			0			47
Total assets		$	27,527		$	15,727		$	890		$	11,457		$	28,074
Liabilities:
Other policyholders’ funds		$	5,439		$	0		$	0		$	5,364		$	5,364
Notes payable    (excluding leases)		7,322			0			6,275			663			6,938
Total liabilities		$	12,761		$	0		$	6,275		$	6,027		$	12,302

(1) Excludes policy loans of $195, equity method investments of $2,983, and REO of $497, at carrying value.

41

	December 31, 2023
(In millions)	Carrying Value			Quoted Prices in Active Markets for Identical Assets (Level 1)			Significant Observable Inputs (Level 2)			Significant Unobservable Inputs (Level 3)			Total Fair Value
Assets:
Securities held-to-maturity,    carried at amortized cost:
Fixed maturity securities:
Government and agencies		$	17,083		$	18,662		$	167		$	0		$	18,829
Municipalities		266			0			307			0			307
Public utilities		34			0			38			0			38
Sovereign and    supranational		418			0			462			0			462
Other corporate		18			0			21			0			21
Commercial mortgage and     other loans		12,527			0			0			12,217			12,217
Other investments (1)		35			0			35			0			35
Total assets		$	30,381		$	18,662		$	1,030		$	12,217		$	31,909
Liabilities:
Other policyholders’ funds		$	6,169		$	0		$	0		$	6,080		$	6,080
Notes payable    (excluding leases)		7,240			0			6,178			752			6,930
Total liabilities		$	13,409		$	0		$	6,178		$	6,832		$	13,010

(1) Excludes policy loans of $214, equity method investments of $2,750, and REO of $227, at carrying value.

Fair Value of Financial Instruments

Fixed maturity and equity securities

The fair values of the Company’s public fixed maturity securities are generally based on prices provided by third-party pricing vendors. The Company utilizes internally generated valuations or broker quotes for privately issued fixed maturity securities or fixed maturity securities where there is no price available from a third-party pricing vendor.

The fair values of the Company's public equity securities are generally based on price quotes, including quoted market prices readily available from independent public exchange markets or established security dealer associations. 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.

The pricing data and market quotes the Company obtains from outside sources, including third-party pricing services, are reviewed internally for reasonableness. If a fair value appears unreasonable, the Company will re-examine the inputs and assess the reasonableness of the pricing data with the provider. Additionally, the Company may compare the inputs to relevant market indices and other performance measurements. Based on management's analysis, the valuation is confirmed or may be revised if there is evidence of a more appropriate estimate of fair value based on available market data. The Company has performed verification of the inputs and calculations in any valuation models, including independent validations and back testing, to confirm that the valuations represent reasonable estimates of fair value. For the periods presented, the Company has not adjusted the quotes or prices it obtains from the pricing services and brokers it uses.

For internally generated valuations, the Company utilizes valuation models developed by a third-party pricing vendor. The models and associated processes and controls are executed by Company personnel.

42

These models are discounted cash flow (DCF) valuation models but also use information from related markets, specifically public bond markets and the credit default swap (CDS) market, to estimate expected cash flows. The models take into consideration any unique characteristics of the securities and make various adjustments to arrive at an appropriate issuer-specific loss adjusted credit curve using the most appropriate comparable security(ies) of the issuer and issuer-specific CDS spreads. This credit curve is then used with the relevant recovery rates to estimate expected cash flows and modeling of additional features, including illiquidity adjustments, if necessary, to price the security by discounting those loss adjusted cash flows. In cases where a credit curve cannot be developed from market information for the specific issuer, the valuation methodology takes into consideration other market observable inputs, including:

•the most appropriate comparable security(ies) of a guarantor and/or parent

•CDS spreads of a guarantor and/or parent

•bonds of comparable issuers with similar characteristics such as rating, geography, or sector

•CDS spreads of an appropriate index or of comparable issuers with similar characteristics such as rating, geography, or sector

•bond indices that are comparative in rating, industry, maturity, and region.

43

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

	June 30, 2024
(In millions)	Quoted Prices in Active Markets for Identical Assets (Level 1)			Significant Observable Inputs (Level 2)			Significant Unobservable Inputs (Level 3)			Total Fair Value
Securities available-for-sale, carried at fair value:
Fixed maturity securities:
Government and agencies:
Third-party pricing vendor		$	17,520		$	450		$	0		$	17,970
Internal		0			311			0			311
Total government and agencies		17,520			761			0			18,281
Municipalities:
Third-party pricing vendor		0			1,836			0			1,836
Internal		0			247			0			247
Total municipalities		0			2,083			0			2,083
Mortgage- and asset-backed securities:
Third-party pricing vendor		0			2,446			40			2,486
Internal		0			44			39			83
Broker/other		0			0			1,134			1,134
Total mortgage- and asset-backed securities		0			2,490			1,213			3,703
Public utilities:
Third-party pricing vendor		0			3,576			0			3,576
Internal		0			2,885			0			2,885
Broker/other		0			0			365			365
Total public utilities		0			6,461			365			6,826
Sovereign and supranational:
Third-party pricing vendor		0			124			0			124
Internal		0			311			0			311
Broker/other		0			0			25			25
Total sovereign and supranational		0			435			25			460
Banks/financial institutions:
Third-party pricing vendor		0			4,765			0			4,765
Internal		0			3,865			60			3,925
Broker/other		0			0			9			9
Total banks/financial institutions		0			8,630			69			8,699
Other corporate:
Third-party pricing vendor		0			20,738			0			20,738
Internal		0			5,024			127			5,151
Broker/other		0			61			257			318
Total other corporate		0			25,823			384			26,207
Total securities available-for-sale		$	17,520		$	46,683		$	2,056		$	66,259
Equity securities, carried at fair value:
Third-party pricing vendor		$	571		$	0		$	0		$	571
Broker/other		0			0			157			157
Total equity securities		$	571		$	0		$	157		$	728

44

	June 30, 2024
(In millions)	Quoted Prices in Active Markets for Identical Assets (Level 1)			Significant Observable Inputs (Level 2)			Significant Unobservable Inputs (Level 3)			Total Fair  Value
Securities held-to-maturity, carried at amortized cost:
Fixed maturity securities:
Government and agencies:
Third-party pricing vendor		$	15,727		$	140		$	0		$	15,867
Total government and agencies		15,727			140			0			15,867
Municipalities:
Third-party pricing vendor		0			256			0			256
Total municipalities		0			256			0			256
Public utilities:
Third-party pricing vendor		0			32			0			32
Total public utilities		0			32			0			32
Sovereign and supranational:
Third-party pricing vendor		0			196			0			196
Internal		0			202			0			202
Total sovereign and supranational		0			398			0			398
Other corporate:
Third-party pricing vendor		0			17			0			17
Total other corporate		0			17			0			17
Total securities held-to-maturity		$	15,727		$	843		$	0		$	16,570

45

	December 31, 2023
(In millions)	Quoted Prices in Active Markets for Identical Assets (Level 1)			Significant Observable Inputs (Level 2)			Significant Unobservable Inputs (Level 3)			Total Fair Value
Securities available-for-sale, carried at fair value:
Fixed maturity securities:
Government and agencies:
Third-party pricing vendor		$	21,692		$	808		$	0		$	22,500
Internal		0			60			0			60
Broker/other		8			32			0			40
Total government and agencies		21,700			900			0			22,600
Municipalities:
Third-party pricing vendor		0			1,426			0			1,426
Internal		0			256			0			256
Broker/other		0			616			0			616
Total municipalities		0			2,298			0			2,298
Mortgage- and asset-backed securities:
Third-party pricing vendor		0			2,277			0			2,277
Internal		0			27			105			132
Broker/other		0			10			667			677
Total mortgage- and asset-backed securities		0			2,314			772			3,086
Public utilities:
Third-party pricing vendor		0			4,570			0			4,570
Internal		0			2,677			0			2,677
Broker/other		0			92			253			345
Total public utilities		0			7,339			253			7,592
Sovereign and supranational:
Third-party pricing vendor		0			118			0			118
Internal		0			330			0			330
Broker/other		0			59			30			89
Total sovereign and supranational		0			507			30			537
Banks/financial institutions:
Third-party pricing vendor		0			5,085			0			5,085
Internal		0			3,008			69			3,077
Broker/other		0			664			9			673
Total banks/financial institutions		0			8,757			78			8,835
Other corporate:
Third-party pricing vendor		0			18,088			4			18,092
Internal		0			4,210			230			4,440
Broker/other		0			5,396			414			5,810
Total other corporate		0			27,694			648			28,342
Total securities available-for-sale		$	21,700		$	49,809		$	1,781		$	73,290
Equity securities, carried at fair value:
Third-party pricing vendor		$	800		$	0		$	0		$	800
Internal		0			0			216			216
Broker/other		40			0			32			72
Total equity securities		$	840		$	0		$	248		$	1,088

46

	December 31, 2023
(In millions)	Quoted Prices in Active Markets for Identical Assets (Level 1)			Significant Observable Inputs (Level 2)			Significant Unobservable Inputs (Level 3)			Total Fair  Value
Securities held-to-maturity, carried at amortized cost:
Fixed maturity securities:
Government and agencies:
Third-party pricing vendor		$	18,662		$	167		$	0		$	18,829
Total government and agencies		18,662			167			0			18,829
Municipalities:
Third-party pricing vendor		0			307			0			307
Total municipalities		0			307			0			307
Public utilities:
Third-party pricing vendor		0			38			0			38
Total public utilities		0			38			0			38
Sovereign and supranational:
Third-party pricing vendor		0			226			0			226
Internal		0			236			0			236
Total sovereign and supranational		0			462			0			462
Other corporate:
Third-party pricing vendor		0			21			0			21
Total other corporate		0			21			0			21
Total securities held-to-maturity		$	18,662		$	995		$	0		$	19,657

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

Derivatives

The Company uses derivative instruments to manage the risk associated with certain assets. However, the derivative instrument may not be classified in the same fair value hierarchy level as the associated asset. The significant inputs to pricing derivatives are generally observable in the market or can be derived by observable market data. When these inputs are observable, the derivatives are classified as Level 2.

The Company uses present value techniques to value non-option based derivatives. It also uses option pricing models to value option based derivatives. Key inputs are as follows:

Instrument Type	Level 2
Interest rate derivatives	Swap yield curves Basis curves Interest rate volatility (1)
Foreign currency exchange rate derivatives - Non-VIEs (forwards, swaps and options)	Foreign currency forward rates Swap yield curves Basis curves Foreign currency spot rates Foreign cross-currency basis curves Foreign currency volatility (1)
Foreign currency exchange rate derivatives - VIEs (swaps)	Foreign currency spot rates Swap yield curves Credit default swap curves Basis curves Recovery rates Foreign currency forward rates Foreign cross-currency basis curves

(1) Option-based only

47

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. 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.

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. Interest rate swaps are cleared trades. In a cleared swap contract, the clearinghouse provides benefits to the counterparties similar to contracts listed for investment traded on an exchange since it maintains a daily margin to mitigate counterparties' credit risk. These derivatives are priced using observable inputs, accordingly, they are classified as Level 2.

For derivatives associated with VIEs where the Company is the primary beneficiary, the Company is not the direct counterparty to the swap contracts. Nevertheless, the Company has full transparency into the contracts to properly value the swaps for reporting purposes. For these derivatives, the Company utilizes valuation models developed by independent valuation analytics providers. The models are market standard DCF models and all associated processes and controls are executed by Company personnel. These models take into consideration any unique characteristics of the derivatives in determining the appropriate valuation methodology to estimate expected cash flows. The fair values of these swaps are based on observable market inputs and are classified as Level 2 within the fair value hierarchy.

For forward bond purchase commitments with VIEs, the fair value of the derivative is based on the difference in the fixed purchase price and the current market value of the related bond prior to the settlement date. Since the bond is typically a public bond with readily available pricing, the derivatives associated with the forward purchase commitment are classified as Level 2 within the fair value hierarchy.

Commercial mortgage and other loans

Commercial mortgage and other loans include TREs, CMLs, MMLs and other loans. The Company's loan receivables do not have readily determinable market prices and generally lack market liquidity. Fair values for loan receivables are determined based on the present value of expected future cash flows discounted at the applicable U.S. Treasury or floating-rate benchmark yield plus an appropriate spread that considers other risk factors, such as credit and liquidity risk. The spreads are a significant component of the pricing inputs and are generally considered unobservable. Therefore, these investments are classified as Level 3 within the fair value hierarchy.

Other investments

Other investments includes short-term investments that are measured at fair value where amortized cost approximates fair value.

Other policyholders' funds

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

Notes payable

The fair values of the Company's publicly issued notes payable are determined by utilizing available sources of observable inputs from third-party pricing vendors and are classified as Level 2. The fair values of the Company's yen-denominated loans approximate their carrying values and are classified as Level 3.

48

Transfers between Hierarchy Levels and Level 3 Rollforward

Assets and liabilities are transferred into Level 3 when a significant input cannot be corroborated with market observable data. This occurs when market activity decreases significantly and underlying inputs cannot be observed, current prices are not available, and/or when there are significant variances in quoted prices, thereby affecting transparency. Assets and liabilities are transferred out of Level 3 when circumstances change such that a significant input can be corroborated with market observable data. This may be due to a significant increase in market activity, a specific event, or one or more significant input(s) becoming observable.

The following tables present the changes in fair value of the Company's investments carried at fair value classified as Level 3.

Three Months Ended June 30, 2024
	Fixed Maturity Securities										Equity Securities
(In millions)	Mortgage- and Asset- Backed Securities		Public Utilities		Sovereign and Supranational		Banks/ Financial Institutions		Other Corporate				Total
Balance, beginning of period	$	859	$	507	$	28	$	74	$	450	$	159	$	2,077
Net investment gains (losses) included   in earnings	1		0		0		0		0		(2)		(1)
Unrealized gains (losses) included in   other comprehensive income (loss)	(5)		(1)		(1)		(5)		(5)		0		(17)
Purchases, issuances, sales and   settlements:
Purchases	189		39		0		0		58		0		286
Issuances	0		0		0		0		0		0		0
Sales	0		0		0		0		0		0		0
Settlements	(21)		(3)		(2)		0		0		0		(26)
Transfers into Level 3	190		56		0		0		0		0		246
Transfers out of Level 3	0		(233)		0		0		(119)		0		(352)
Balance, end of period	$	1,213	$	365	$	25	$	69	$	384	$	157	$	2,213
Changes in unrealized gains (losses)   relating to Level 3 assets and liabilities   still held at the end of the period   included in earnings	$	1	$	0	$	0	$	0	$	0	$	(3)	$	(2)

Three Months Ended June 30, 2023
	Fixed Maturity Securities										Equity Securities
(In millions)	Mortgage- and Asset- Backed Securities		Public Utilities		Sovereign and Supranational		Banks/ Financial Institutions		Other Corporate				Total
Balance, beginning of period	$	418	$	350	$	37	$	161	$	753	$	221	$	1,940
Net investment gains (losses) included   in earnings	0		0		0		0		0		(8)		(8)
Unrealized gains (losses) included in   other comprehensive income (loss)	(13)		(16)		(3)		2		(22)		0		(52)
Purchases, issuances, sales and   settlements:
Purchases	136		0		0		0		37		0		173
Issuances	0		0		0		0		0		0		0
Sales	0		0		0		0		0		0		0
Settlements	(13)		(2)		(2)		(7)		(1)		0		(25)
Transfers into Level 3	124		0		0		0		0		0		124
Transfers out of Level 3	0		(30)		0		(87)		(195)		0		(312)
Balance, end of period	$	652	$	302	$	32	$	69	$	572	$	213	$	1,840
Changes in unrealized gains (losses)   relating to Level 3 assets and liabilities   still held at the end of the period   included in earnings	$	0	$	0	$	0	$	0	$	0	$	(8)	$	(8)

49

Six Months Ended June 30, 2024
	Fixed Maturity Securities										Equity Securities
(In millions)	Mortgage- and Asset- Backed Securities		Public Utilities		Sovereign and Supranational		Banks/ Financial Institutions		Other Corporate				Total
Balance, beginning of period	$	772	$	253	$	30	$	78	$	648	$	248	$	2,029
Net investment gains (losses) included   in earnings	2		0		0		0		0		(7)		(5)
Unrealized gains (losses) included in   other comprehensive income (loss)	(9)		(11)		(3)		(9)		(4)		0		(36)
Purchases, issuances, sales   and settlements:
Purchases	307		99		0		5		95		0		506
Issuances	0		0		0		0		0		0		0
Sales	0		0		0		0		0		0		0
Settlements	(49)		(25)		(2)		(5)		(3)		(84)		(168)
Transfers into Level 3	190		282		0		0		0		0		472
Transfers out of Level 3	0		(233)		0		0		(352)		0		(585)
Balance, end of period	$	1,213	$	365	$	25	$	69	$	384	$	157	$	2,213
Changes in unrealized gains   (losses) relating to Level 3 assets   and liabilities still held at the end   of the period included in earnings	$	2	$	0	$	0	$	0	$	0	$	(6)	$	(4)

Six Months Ended June 30, 2023
	Fixed Maturity Securities										Equity Securities
(In millions)	Mortgage- and Asset- Backed Securities		Public Utilities		Sovereign and Supranational		Banks/ Financial 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		(6)		(6)
Unrealized gains (losses) included in   other comprehensive income (loss)	(10)		(6)		(3)		4		8		0		(7)
Purchases, issuances, sales and   settlements:
Purchases	328		0		0		0		112		10		450
Issuances	0		0		0		0		0		0		0
Sales	0		0		0		0		0		0		0
Settlements	(133)		(9)		(2)		(7)		(3)		0		(154)
Transfers into Level 3	124		18		0		0		0		0		142
Transfers out of Level 3	0		(198)		0		(87)		(287)		0		(572)
Balance, end of period	$	652	$	302	$	32	$	69	$	572	$	213	$	1,840
Changes in unrealized gains   (losses) relating to Level 3 assets   and liabilities still held at the end   of the period included in earnings	$	0	$	0	$	0	$	0	$	0	$	(5)	$	(5)

50

Fair Value Sensitivity

Level 3 Significant Unobservable Input Sensitivity

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

June 30, 2024
(In millions)	Fair Value			Valuation Technique(s)	Unobservable Input	Range				Weighted Average
Assets:
Securities available-for-sale, carried at fair value:
Fixed maturity securities:
Mortgage- and asset-backed securities		$	1,213	Consensus pricing	Offered quotes	85.46	-	104.49	(a)	98.74
Public utilities		365		Discounted cash flow	Credit spreads	175 bps	-	225 bps	(c)	209 bps
Sovereign and supranational		25		Consensus pricing	Offered quotes	N/A			(b)	N/A
Banks/financial institutions		69		Discounted cash flow	Credit spreads	N/A			(b)	N/A
Other corporate		384		Discounted cash flow	Credit spreads	89 bps	-	363 bps	(c)	224 bps
Equity securities		157		Adjusted cost	Private financials	N/A			(d)	N/A
Total assets		$	2,213

(a) Represents prices for securities where the Company receives unadjusted broker quotes and for which there is no transparency into the providers' valuation techniques.

(b) Category represents a single security; range not applicable.

(c) Actual or equivalent credit spreads in basis points.

(d) Prices do not utilize credit spreads; therefore, range is not applicable.

December 31, 2023
(In millions)	Fair Value			Valuation Technique(s)	Unobservable Input	Range				Weighted Average
Assets:
Securities available-for-sale, carried at fair value:
Fixed maturity securities:
Mortgage- and asset-backed securities		$	772	Consensus pricing	Offered quotes	84.81	-	105.89	(a)	99.39
Public utilities		253		Consensus pricing	Offered quotes	94.34	-	102.99	(a)	96.46
Sovereign and supranational		30		Consensus pricing	Offered quotes	N/A			(b)	N/A
Banks/financial institutions		78		Discounted cash flow	Credit spreads	N/A			(b)	N/A
Other corporate		648		Discounted cash flow	Credit spreads	69 bps	-	423 bps	(c)	206 bps
Equity securities		248		Adjusted cost	Private financials	N/A			(d)	N/A
Total assets		$	2,029

(a) Represents prices for securities where the Company receives unadjusted broker quotes and for which there is no transparency into the providers' valuation techniques.

(b) Category represents a single security; range not applicable.

(c) Actual or equivalent credit spreads in basis points.

(d) Prices do not utilize credit spreads; therefore, range is not applicable

51

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

Credit Spreads

The Company holds certain assets that are of a unique, specialized, and/or securitized nature that do not trade on a regular basis in an active market, which makes their fair values difficult to estimate. Most of these assets are managed by external asset managers and the Company utilizes these managers for their expertise when evaluating various inputs used to determine the fair values for these assets, including identifying the appropriate credit or risk spread over risk-free interest rates that incorporates the unique nature or structure of the asset in the valuations. For those assets of a similar nature but not managed by external asset managers, the Company internally estimates the spreads and risk adjustments over risk-free interest rates that reflect the unique nature or structure of the asset as well as the current pricing environment and market conditions for comparable or related investments. Credit or risk spreads are an important input needed to complete the discounted cash flow analyses used to estimate an investment’s fair value. Credit or risk spreads underlying these fair values are a significant, unobservable input whose derivation is based on the Company’s evaluation of a combination of the external manager’s expertise and knowledge, the current pricing environment, and market conditions for the specific asset.

Offered Quotes

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

Private Financials

The Company invests in the debt and equity securities of private companies operating in the cancer, healthtech, insurtech, finance, internet of things, big data and analytics sectors. Due to their private and often small, startup nature, these companies rely on capital provided by institutional and private equity investors for their ongoing operations. They do not have public securities that trade on a regular basis in an active market, which makes their fair values difficult to estimate. The Company values these investments on a cost basis with appropriate adjustments made based on monitoring private financial information provided by these companies. Adjustments to valuations are generally made as new funding tranches are executed or if the financial information provided significantly changes indicating the need for impairment. This private financial information is unobservable and is a significant determinant in the fair value of these corporate venture investments.

For additional information on the Company's investments and financial instruments, see the accompanying Notes 3 and 4 and Notes 1, 3 and 4 of the Notes to the Consolidated Financial Statements in the 2023 Annual Report.

6.     DEFERRED POLICY ACQUISITION COSTS

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

52

	June 30, 2024
	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
Deferred policy acquisition costs:
Balance at December 31, 2023	$	2,971	$	2,041	$	491	$	56	$	917	$	625	$	1,336	$	436	$	86	$	172	$	1	$	9,132
Capitalization	146		55		15		2		68		62		81		41		6		31		1		508
Amortization expense	(92)		(50)		(16)		(2)		(72)		(59)		(77)		(36)		(6)		(14)		0		(424)
Foreign currency translation and   other	(358)		(244)		(58)		(6)		0		0		0		0		0		0		0		(666)
Balance at June 30, 2024	$	2,667	$	1,802	$	432	$	50	$	913	$	628	$	1,340	$	441	$	86	$	189	$	2	$	8,550

	December 31, 2023
	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
Deferred policy acquisition costs:
Balance at December 31, 2022	$	3,035	$	2,161	$	525	$	55	$	904	$	613	$	1,304	$	418	$	88	$	135	$	1	$	9,239
Capitalization	317		123		33		8		151		125		173		84		10		61		1		1,086
Amortization expense	(184)		(105)		(34)		(3)		(138)		(113)		(141)		(66)		(12)		(24)		4		(816)
Foreign currency translation and   other	(197)		(138)		(33)		(4)		0		0		0		0		0		0		(5)		(377)
Balance at December 31, 2023	$	2,971	$	2,041	$	491	$	56	$	917	$	625	$	1,336	$	436	$	86	$	172	$	1	$	9,132

The Company uses the following constant level bases to amortize deferred policy acquisition costs:

Policy Type	Constant-level Basis
Life Products (U.S.)	Face Amount
Health Products (U.S.)	Number of Policies in Force
Health & Life Products (Japan)	Units in Force

Face amount is the stated dollar amount that the policy’s beneficiaries receive upon the death of the insured. For life and health products issued in Japan, the constant-level basis used is units in force, which is a proxy for face amount and insurance in force, respectively. Future DAC amortization is impacted by persistency.

There were no changes to the inputs, judgments, assumptions and methods used to determine amortization amounts during the six-month periods ended June 30, 2024 and 2023. For additional information on deferred policy acquisition costs, see Notes 1 and 6 of the Notes to the Consolidated Financial Statements in the 2023 Annual Report.

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7.    POLICY LIABILITIES

Future Policy Benefits

The liability for future policy benefits is determined as the present value of expected future policy benefits to be paid to or on the behalf of policyholders and certain related expenses less the present value of expected future net premiums receivable under the Company's insurance contracts. Future net premiums receivable are future gross premiums receivable under the contract multiplied by the net premium ratio (NPR).

The following tables present the changes in the present value of expected future net premiums and the present value of expected future policy benefits by reporting segment and disaggregated by product type. 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.

54

	June 30, 2024
	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
Present value of expected future net premiums:
Balance at December 31, 2023	$	17,509	$	14,697	$	6,488	$	1,088	$	2,488	$	1,652	$	4,074	$	1,107	$	206	$	853	$	277
Beginning balance at original discount rate	16,452		14,040		6,258		1,069		2,630		1,738		4,416		1,193		217		909		272
Effect of changes in cash flow assumptions	0		0		0		0		0		0		0		0		0		0		0
Effect of actual variances from expected    experience	(77)		(84)		(39)		(8)		3		0		(60)		(6)		(7)		(18)		11
Adjusted beginning of period balance	16,375		13,956		6,219		1,061		2,633		1,738		4,356		1,187		210		891		283
Issuances	439		193		105		10		174		203		323		138		29		117		264
Interest accrual	189		149		55		9		52		33		87		22		4		18		9
Net premiums collected (1)	(721)		(565)		(435)		(50)		(236)		(201)		(286)		(120)		(20)		(76)		(20)
Foreign currency translation	(1,956)		(1,661)		(730)		(127)		0		0		0		0		0		0		0
Other	0		0		0		0		(3)		(4)		(3)		0		1		(3)		(4)
Ending balance at original discount rate	14,326		12,072		5,214		903		2,620		1,769		4,477		1,227		224		947		532
Effect of changes in discount rate assumptions	326		47		64		(12)		(197)		(108)		(472)		(109)		(16)		(73)		0
Balance at June 30, 2024	$	14,652	$	12,119	$	5,278	$	891	$	2,423	$	1,661	$	4,005	$	1,118	$	208	$	874	$	532
Present value of expected future policy benefits:
Balance at December 31, 2023	$	50,161	$	25,257	$	29,731	$	5,178	$	3,109	$	2,422	$	11,290	$	1,943	$	478	$	1,764	$	798
Beginning balance at original discount rate	43,626		25,023		30,256		5,444		3,302		2,541		12,120		2,076		506		1,971		769
Effect of changes in cash flow assumptions	0		0		0		0		0		0		0		0		0		0		0
Effect of actual variances from expected    experience	(105)		(97)		(46)		(14)		0		(11)		(84)		(13)		(9)		(25)		11
Adjusted beginning of period balance	43,521		24,926		30,210		5,430		3,302		2,530		12,036		2,063		497		1,946		780
Issuances	448		199		107		12		179		212		336		144		30		121		265
Interest accrual	672		280		287		46		65		49		258		41		10		38		22
Benefit payments	(1,357)		(497)		(827)		(97)		(259)		(229)		(460)		(154)		(29)		(57)		(42)
Foreign currency translation	(5,192)		(2,983)		(3,585)		(647)		0		0		0		0		0		0		0
Other	0		0		0		0		(1)		0		0		1		0		0		2
Ending balance at original discount rate	38,092		21,925		26,192		4,744		3,286		2,562		12,170		2,095		508		2,048		1,027
Effect of changes in discount rate assumptions	3,456		(1,230)		(1,822)		(500)		(266)		(157)		(1,323)		(188)		(40)		(280)		(2)
Balance at June 30, 2024	41,548		20,695		24,370		4,244		3,020		2,405		10,847		1,907		468		1,768		1,025
Net liability for future policy benefits	26,896		8,576		19,092		3,353		597		744		6,842		789		260		894		493
Less: reinsurance recoverable	3,420		1,247		0		0		0		0		0		0		0		15		1
Net liability for future policy benefits after   reinsurance recoverable	$	23,476	$	7,329	$	19,092	$	3,353	$	597	$	744	$	6,842	$	789	$	260	$	879	$	492

(1) Net premiums collected represent the portion of gross premiums collected from policyholders that is used to fund expected future benefit payments.

55

	December 31, 2023
	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
Present value of expected future net premiums:
Balance at December 31, 2022	$	19,298	$	16,714	$	7,485	$	1,256	$	2,534	$	1,635	$	4,486	$	1,220	$	211	$	724	$	110
Beginning balance at original discount rate	18,221		16,195		7,284		1,242		2,760		1,775		5,050		1,365		231		799		118
Effect of changes in cash flow assumptions	(165)		(470)		43		(12)		(16)		(51)		(494)		(142)		(9)		61		(9)
Effect of actual variances from expected    experience	(315)		(137)		(42)		(15)		(58)		(29)		(223)		(73)		(17)		(25)		(2)
Adjusted beginning of period balance	17,741		15,588		7,285		1,215		2,686		1,695		4,333		1,150		205		835		107
Issuances	1,034		418		335		26		323		376		493		249		44		181		169
Interest accrual	412		334		124		20		102		62		179		45		8		31		6
Net premiums collected (1)	(1,564)		(1,261)		(1,017)		(112)		(473)		(390)		(580)		(247)		(39)		(137)		(17)
Foreign currency translation	(1,170)		(1,038)		(469)		(80)		0		0		0		0		0		0		0
Other	(1)		(1)		0		0		(8)		(5)		(9)		(4)		(1)		(1)		7
Ending balance at original discount rate	16,452		14,040		6,258		1,069		2,630		1,738		4,416		1,193		217		909		272
Effect of changes in discount rate assumptions	1,057		657		230		19		(142)		(86)		(342)		(86)		(11)		(56)		5
Balance at December 31, 2023	$	17,509	$	14,697	$	6,488	$	1,088	$	2,488	$	1,652	$	4,074	$	1,107	$	206	$	853	$	277
Present value of expected future policy benefits:
Balance at December 31, 2022	$	54,766	$	27,419	$	31,954	$	5,582	$	3,098	$	2,445	$	11,489	$	2,074	$	488	$	1,526	$	622
Beginning balance at original discount rate	47,677		27,566		32,800		5,940		3,391		2,636		12,846		2,300		532		1,778		624
Effect of changes in cash flow assumptions	(147)		(507)		65		(27)		(11)		(59)		(592)		(194)		(14)		72		(13)
Effect of actual variances from expected    experience	(385)		(154)		(51)		(15)		(75)		(59)		(271)		(99)		(22)		(32)		(4)
Adjusted beginning of period balance	47,145		26,905		32,814		5,898		3,305		2,518		11,983		2,007		496		1,818		607
Issuances	1,059		432		341		32		331		392		505		258		46		185		169
Interest accrual	1,473		608		625		100		127		96		524		84		21		68		33
Benefit payments	(2,987)		(1,153)		(1,415)		(206)		(464)		(465)		(893)		(274)		(59)		(105)		(48)
Foreign currency translation	(3,064)		(1,769)		(2,109)		(380)		0		0		0		0		0		0		0
Other	0		0		0		0		3		0		1		1		2		5		8
Ending balance at original discount rate	43,626		25,023		30,256		5,444		3,302		2,541		12,120		2,076		506		1,971		769
Effect of changes in discount rate assumptions	6,535		234		(525)		(266)		(193)		(119)		(830)		(133)		(28)		(207)		29
Balance at December 31, 2023	50,161		25,257		29,731		5,178		3,109		2,422		11,290		1,943		478		1,764		798
Net liability for future policy benefits	32,652		10,560		23,243		4,090		621		770		7,216		836		272		911		521
Less: reinsurance recoverable	4,135		1,521		0		0		0		0		0		0		0		15		0
Net liability for future policy benefits after    reinsurance recoverable	$	28,517	$	9,039	$	23,243	$	4,090	$	621	$	770	$	7,216	$	836	$	272	$	896	$	521

(1) Net premiums collected represent the portion of gross premiums collected from policyholders that is used to fund expected future benefit payments.

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

	June 30, 2024
	Aflac Japan				Aflac U.S.
	Cancer	Medical and Other Health	Life Insurance	Other	Accident	Disability	Critical Care	Hospital Indemnity	Dental/Vision	Life Insurance	Other
Weighted-average interest, original discount rate (1)	3.9 %	2.5 %	2.1 %	1.8 %	3.9 %	4.3 %	4.5 %	4.5 %	4.3 %	3.8 %	5.4 %
Weighted-average interest, current discount rate (1)	2.2 %	2.7 %	2.0 %	2.4 %	5.4 %	5.3 %	5.4 %	5.4 %	5.4 %	5.4 %	5.4 %
Weighted-average liability duration (years)	13.0	24.4	16.1	17.0	8.0	5.6	11.2	9.2	7.8	13.7	9.1

(1) The weighted-average interest rates are calculated using the reserve balances as the weights. No adjustments were made to observable market information.

	December 31, 2023
	Aflac Japan				Aflac U.S.
	Cancer	Medical and Other Health	Life Insurance	Other	Accident	Disability	Critical Care	Hospital Indemnity	Dental/Vision	Life Insurance	Other
Weighted-average interest, original discount rate (1)	3.9 %	2.6 %	2.1 %	1.8 %	3.9 %	4.2 %	4.6 %	4.4 %	4.3 %	3.7 %	5.4 %
Weighted-average interest, current discount rate (1)	1.8 %	2.3 %	1.7 %	2.1 %	5.3 %	5.3 %	5.3 %	5.3 %	5.3 %	5.3 %	5.3 %
Weighted-average liability duration (years)	13.1	24.9	16.3	17.3	8.1	5.6	11.3	9.3	7.9	13.6	9.4

(1) The weighted-average interest rates are calculated using the reserve balances as the weights. No adjustments were made to observable market information.

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The following table presents a reconciliation of the disaggregated rollforwards above to the ending future policy benefits presented in the consolidated balance sheets. The deferred profit liability for limited-payment contracts and the deferred reinsurance gain liability are presented together with the liability for future policy benefits in the consolidated balance sheets and have been included as reconciling items in the table below.

(In millions)	June 30, 2024			December 31, 2023
Balances included in future policy benefits rollforward:
Aflac Japan
Cancer		$	26,896		$	32,652
Medical and other health		8,576			10,560
Life insurance		19,092			23,243
Other		3,353			4,090
Aflac U.S.
Accident		597			621
Disability		744			770
Critical care		6,842			7,216
Hospital indemnity		789			836
Dental/vision		260			272
Life insurance		894			911
Other		493			521
Corporate and other		3,405			4,225
Deferred profit liability		1,667			1,806
Deferred reinsurance gain liability		820			1,012
Intercompany eliminations (1)		(4,089)			(5,017)
Total		$	70,339		$	83,718

(1) Elimination entry necessary due to the internal reinsurance transactions with Aflac Re and to recapture a portion of policy liabilities ceded externally as a result of the reinsurance retrocession transaction. See Note 8 of the Notes to the Consolidated Financial Statements in the 2023 Annual Report.

Discount rates are determined using upper-medium grade (low-credit-risk) fixed-income instrument yields that reflect the duration characteristics of the liability. Locked-in discount rates are determined separately for each issue-year cohort as a single discount rate, calculated as the weighted-average of monthly upper-medium grade (low-credit-risk) fixed-income instrument forward curves in the calendar year, where the weights are the annualized premiums issued for each month of the cohort. The single discount rate for each issue-year cohort is determined by solving for a rate that produces an equivalent NPR to the forward curve and will remain unchanged after the calendar year of issue.

Discount rates are updated each reporting period and require estimation techniques (e.g., interpolation, extrapolation) for determination of points on the curve for which there is limited or no observable market data. The Company constructs a current discount rate curve separately for discounting cash flows used to calculate each of the Japan and U.S. liabilities for future policy benefits, reflective of the characteristics of the corresponding insurance liabilities, such as currency and tenor.

In the Aflac Japan segment, all long-duration insurance policies are denominated in yen. A significant portion of policies are characterized by tenors exceeding the availability of liquid market data in Japan for single-A rated (as a proxy for upper-medium grade) corporate yen-denominated debt. The discount rate curve is designed to prioritize the observable inputs where available, while past the last liquid point, the data is derived based on estimation techniques consistent with the fair value guidance in ASC 820. The Aflac Japan segment curve utilizes liquid market indices tracking publicly traded yen-denominated single-A corporate debt for the initial 10-year tenor. For the bonds within these market indices where only local ratings are available, the Company prioritizes the bonds with local ratings that are equivalent to a single-A rating based on international rating standards.

For the discount rates applicable to tenors for which the Japan single-A debt market is not liquid but there is sufficient observable market data and/or the observable market data is available for similar instruments (between 10 and 30 years), the Company estimates tenor-specific single-A credit spreads and applies them to risk-free government rates. Lastly, for the tenors where there is limited or no observable single-A or similar market data or risk-free government rates (beyond 30

58

years), the discount curve is derived by extrapolation of risk free rates beyond their last liquid point following the Smith-Wilson method and grading of the estimated forward credit spread anchored by the ultimate forward rate. The ultimate forward rate is based on the economic value-based solvency regime, which is consistent with the International Association of Insurance Supervisors (IAIS) Insurance Capital Standards (ICS) (which is expected to be introduced in Japan in 2025), and is adjusted for credit and inflation components.

For the Aflac U.S. segment where all long-duration insurance policies are denominated in U.S. dollar and substantially all have cash flow duration within 30 years, for which the U.S. upper-medium grade fixed-income market is liquid and observable, the Company uses data from a liquid fixed-income market index tracking single-A U.S. corporate debt. For the insignificant portion of the policies with cash flow tenors exceeding 30 years, the discount curve beyond that tenor is extrapolated following the Smith-Wilson method from year 30 to the same ultimate forward rate calculated for the Japan discount curve at year 60 and held constant thereafter. The use of the same ultimate rate for U.S. and Japan segments is based on the assumption of long-term global economic convergence.

For the three-month periods ended June 30, 2024 and 2023, the Company recognized $2.9 billion and $(165) million in other comprehensive income (loss) net of tax, respectively, due to changes in the future policy benefits estimate from updating the discount rate assumptions. For the six-month periods ended June 30, 2024 and 2023, the Company recognized $4.0 billion and $(3.0) billion in other comprehensive income (loss) net of tax, respectively, due to changes in the future policy benefits estimate from updating the discount rate assumptions. There were no changes to the methods used to determine the discount rates during the six-month periods ended June 30, 2024 and 2023.

For the year ended December 31, 2023, the Company recognized approximately $(460) million in other comprehensive income (loss) net of tax, due to changes in the future policy benefits estimate from updating the discount rate assumptions. There were no changes to the methods used to determine the discount rates during the year ended December 31, 2023.

Mortality rate assumptions are based on industry tables and adjusted for the Company's actual or expected experience where credible or appropriate. These assumptions typically vary by age, gender, and other demographic characteristics such as smoking status.

Morbidity assumptions are based on the Company's internal data and consider emerging experience. These assumptions are reflective of the coverage and benefits provided and generally vary by age, gender, duration, and any other material policyholder characteristics. In cases where a calendar-year trend is significant, future cash flow projections may include a trend adjustment.

In Japan, separate lapse assumptions are set based on actual or expected experience. These lapse and total termination rate assumptions vary by line of business and with policyholder characteristics such as duration. In the U.S., the majority of the future cash flows are modeled using total termination rates (which include both lapse and mortality) and are adjusted for actual experience. Policy provisions, such as reaching premium paid-up status, are taken into account when setting assumptions.

For the three- and six-month periods ended June 30, 2024 and 2023, the variance of actual experience from expected experience was primarily due to favorable variances in morbidity assumptions as compared to actual experience. There were no changes to the inputs, judgments, assumptions and methods used in measuring the liability for future policy benefits during the six-month periods ended June 30, 2024 and 2023.

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.

59

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

	Three Months Ended June 30,				Six Months Ended June 30,
(In millions)	2024		2023		2024		2023
Net earned premiums:
Aflac Japan
Cancer	$	832	$	1,054	$	1,710	$	2,149
Medical and other health	570		672		1,175		1,377
Life insurance	316		390		655		812
Other	35		38		69		77
Aflac U.S.
Accident	316		322		641		652
Disability	332		318		665		627
Critical care	441		439		885		882
Hospital indemnity	182		182		367		367
Dental/vision	46		53		105		107
Life insurance	141		115		279		228
Other	25		9		45		19
Corporate and other	155		84		320		175
Reinsurance ceded	(66)		(103)		(135)		(210)
Total	$	3,325	$	3,573	$	6,781	$	7,262

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

	Three Months Ended June 30,				Six Months Ended June 30,
(In millions)	2024		2023		2024		2023
Interest expense:
Aflac Japan
Cancer	$	237	$	276	$	483	$	561
Medical and other health	66		72		131		143
Life insurance	114		130		232		263
Other	18		20		37		42
Aflac U.S.
Accident	7		6		13		12
Disability	8		10		16		18
Critical care	86		86		171		173
Hospital indemnity	10		10		19		20
Dental/vision	3		3		6		6
Life insurance	10		10		20		19
Other	6		6		13		13
Total	$	565	$	629	$	1,141	$	1,270

60

The following tables summarize the amount of undiscounted expected future gross premiums and expected future policy benefits and expenses and discounted (discounted at the current period discount rate) expected future gross premiums and expected future policy benefits and expenses by reporting segment and disaggregated by product type. These tables are presented gross of internal and external ceded reinsurance. Future gross premiums represent the expected amount of future premiums to be received. For limited-payment policies, the premiums are collected over a shorter period than the policy term over which benefits are provided. As a result, once the policy reaches premium paid-up status, the future gross premiums can be significantly less than the future benefit payments. Further, benefits and expenses are generally greater in the later years of a policy. These are the primary factors that result in future gross premiums lower than future benefit and expense payments for certain lines of business of the Company.

	June 30, 2024						December 31, 2023
(In millions)	Gross Premiums			Benefits and Expenses			Gross Premiums			Benefits and Expenses
Undiscounted expected future gross premiums   and expected future policy benefits and expenses:
Aflac Japan
Cancer		$	51,506		$	57,838		$	59,169		$	66,427
Medical and other health		33,233			34,968			38,583			39,884
Life insurance		10,707			36,842			12,677			42,541
Other		1,523			6,467			1,781			7,448
Aflac U.S.
Accident		9,047			4,533			9,095			4,548
Disability		5,811			3,213			5,776			3,177
Critical care		19,966			20,670			19,886			20,626
Hospital indemnity		4,964			3,055			4,922			3,025
Dental/vision		1,154			729			1,162			726
Life insurance		2,865			3,432			2,719			3,260
Other		1,352			1,816			724			1,396
Total		$	142,128		$	173,563		$	156,494		$	193,058

	June 30, 2024						December 31, 2023
(In millions)	Gross Premiums			Benefits and Expenses			Gross Premiums			Benefits and Expenses
Discounted expected future gross premiums   and expected future policy benefits and expenses:
Aflac Japan
Cancer		$	40,474		$	41,548		$	48,363		$	50,161
Medical and other health		25,392			20,695			30,757			25,257
Life insurance		9,226			24,370			11,240			29,731
Other		1,250			4,244			1,512			5,178
Aflac U.S.
Accident		6,184			3,020			6,369			3,109
Disability		4,434			2,405			4,488			2,422
Critical care		12,076			10,847			12,417			11,290
Hospital indemnity		3,369			1,907			3,419			1,943
Dental/vision		780			468			807			478
Life insurance		1,968			1,768			1,914			1,764
Other		826			1,025			467			798
Total		$	105,979		$	112,297		$	121,753		$	132,131

61

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

Other Policyholders' Funds

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

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

(In millions)	June 30, 2024		December 31, 2023
Other policyholders' funds:
Fixed annuities account balance, beginning of period (1)	$	5,939	$	6,423
Premiums received	51		126
Transfers from WAYS conversions	116		229
Surrenders and withdrawals	(31)		(59)
Benefit payments	(208)		(419)
Interest credited	24		53
Foreign currency translation and other	(711)		(414)
Fixed annuities account balance, end of period	5,180		5,939
Other deposit type reserves	259		230
Total	$	5,439	$	6,169

(1) Aflac Japan fixed annuities

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

	June 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
Fixed annuities (1)	0.5% - 2.2%	$5,180	$5,106	0.5% - 2.3%	$5,939	$5,850

(1) Aflac Japan fixed annuities

(2) Weighted-average crediting rate of 1.5% at June 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. The reserves are adequate to fully fund future benefits at any given time.

For additional information on policy liabilities, see Notes 1 and 7 of the Notes to the Consolidated Financial Statements in the 2023 Annual Report.

8.    REINSURANCE

The Company periodically enters into fixed quota-share coinsurance agreements in the normal course of business, primarily to provide additional capacity for future growth, optimize capital, limit losses, and minimize exposure to significant risks. 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.

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

	Three Months Ended June 30,						Six Months Ended June 30,
(In millions)	2024			2023			2024			2023
Direct earned premiums		$	3,352		$	3,623		$	6,834		$	7,361
Ceded to other companies:
Ceded Aflac Japan closed blocks		(31)			(80)			(65)			(165)
Other		(35)			(23)			(70)			(45)
Assumed from other companies:
Retrocession activities		27			30			56			64
Other		12			23			26			47
Net earned premiums		$	3,325		$	3,573		$	6,781		$	7,262
Direct benefits and claims, excluding reserve remeasurement		$	1,995		$	2,182		$	4,077		$	4,438
Ceded benefits and change in reserves for future benefits:
Ceded Aflac Japan closed blocks		(17)			(74)			(35)			(151)
Other		(19)			6			(33)			(21)
Assumed from other companies:
Retrocession activities		12			20			25			61
Other		1			18			5			27
Benefits and claims, excluding reserve remeasurement		$	1,972		$	2,152		$	4,039		$	4,354
Direct reserve remeasurement (gains) losses		$	(51)		$	(54)		$	(108)		$	(107)
Ceded reserve remeasurement gains (losses)		0			0			1			0
Assumed reserve remeasurement (gains) losses		0			0			0			0
Reserve remeasurement (gains) losses		$	(51)		$	(54)		$	(107)		$	(107)
Total benefits and claims, net		$	1,921		$	2,098		$	3,932		$	4,247

The Company has recorded a deferred reinsurance gain liability related to reinsurance transactions which represents ceded reserves in excess of consideration paid, or consideration received in excess of assumed reserves. The remaining consolidated deferred reinsurance gain liability of $148 million and $175 million as of June 30, 2024 and December 31, 2023, respectively, is included in future policy benefits in the consolidated balance sheets and is being amortized into income over the expected lives of the policies.

The Company has also recorded a reinsurance recoverable for reinsurance transactions. The reinsurance recoverable, which is included in other assets in the consolidated balance sheets, is reported net of allowance for credit losses and had a remaining balance of $162 million and $183 million as of June 30, 2024 and December 31, 2023, respectively. The allowance for credit losses related to the Company's reinsurance recoverable balance was $3 million and $10 million as of June 30, 2024 and December 31, 2023, respectively. The credit allowance for the reinsurance recoverable balance is estimated using a PD / LGD method and the key credit quality indicator is the credit rating of the Company’s reinsurance counterparty. The Company uses external credit ratings focused on the reinsurer’s financial strength and credit worthiness. As of June 30, 2024, the Company's reinsurance counterparties were rated A+. 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.

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9.    NOTES PAYABLE AND LEASE OBLIGATIONS

A summary of notes payable and lease obligations follows:

(In millions)	June 30, 2024			December 31, 2023
1.125% senior sustainability notes due March 2026		$	399		$	398
2.875% senior notes due October 2026		299			299
3.60% senior notes due April 2030		993			993
6.90% senior notes due December 2039		221			221
6.45% senior notes due August 2040		255			254
4.00% senior notes due October 2046		394			394
4.750% senior notes due January 2049		542			542
Yen-denominated senior notes and subordinated debentures:
.300% senior notes due September 2025 (principal amount ¥12.4 billion)		77			87
.932% senior notes due January 2027 (principal amount ¥60.0 billion)		371			422
1.048% senior notes due March 2029 (principal amount ¥13.0 billion)		80			0
1.075% senior notes due September 2029 (principal amount ¥33.4 billion)		207			234
.500% senior notes due December 2029 (principal amount ¥12.6 billion)		78			88
.550% senior notes due March 2030 (principal amount ¥13.3 billion)		82			93
1.159% senior notes due October 2030 (principal amount ¥29.3 billion)		181			206
1.412% senior notes due March 2031 (principal amount ¥27.9 billion)		172			0
.633% senior notes due April 2031 (principal amount ¥30.0 billion)		186			211
.843% senior notes due December 2031 (principal amount ¥9.3 billion)		57			65
.750% senior notes due March 2032 (principal amount ¥20.7 billion)		128			145
1.320% senior notes due December 2032 (principal amount ¥21.1 billion)		130			148
.844% senior notes due April 2033 (principal amount ¥12.0 billion)		74			84
1.488% senior notes due October 2033 (principal amount ¥15.2 billion)		94			106
1.682% senior notes due March 2034 (principal amount ¥7.7 billion)		48			0
1.600% senior notes due March 2034 (principal amount ¥18.3 billion)		112			0
.934% senior notes due December 2034 (principal amount ¥9.8 billion)		60			69
.830% senior notes due March 2035 (principal amount ¥10.6 billion)		65			74
1.740% senior notes due March 2036 (principal amount ¥15.0 billion)		92			0
1.039% senior notes due April 2036 (principal amount ¥10.0 billion)		61			70
1.594% senior notes due September 2037 (principal amount ¥6.5 billion)		40			45
1.750% senior notes due October 2038 (principal amount ¥8.9 billion)		55			62
1.920% senior notes due March 2039 (principal amount ¥16.5 billion)		101			0
1.122% senior notes due December 2039 (principal amount ¥6.3 billion)		39			44
1.264% senior notes due April 2041 (principal amount ¥10.0 billion)		62			70
2.160% senior notes due March 2044 (principal amount ¥5.7 billion)		35			0
2.108% subordinated debentures due October 2047 (principal amount ¥60.0 billion)		368			419
.963% subordinated bonds paid April 2024 (principal amount ¥30.0 billion)		0			211
1.560% senior notes due April 2051 (principal amount ¥20.0 billion)		123			140
2.144% senior notes due September 2052 (principal amount ¥12.0 billion)		74			84
1.958% subordinated bonds due December 2053 (principal amount ¥30.0 billion)		185			210
2.400% senior notes due March 2054 (principal amount ¥19.5 billion)		119			0
Yen-denominated loans:
Variable interest rate loan due August 2027 (.55% in 2024 and .35% in 2023,   principal amount ¥11.7 billion)		73			82
Variable interest rate loan due August 2029 (.65% in 2024 and .45% in 2023,       principal amount ¥25.3 billion)		157			178
Variable interest rate loan due August 2032 (.80% in 2024 and .60% in 2023,   principal amount ¥70.0 billion)		433			492
Finance lease obligations payable through 2030		5			6
Operating lease obligations payable through 2049		103			118
Total notes payable and lease obligations		$	7,430		$	7,364

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.

64

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 $50 million for the three-month periods and $96 million for each of the six-month periods ended June 30, 2024 and 2023, respectively.

65

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

Borrower(s)	Type	Term	Expiration Date	Capacity	Amount Outstanding	Interest Rate on Borrowed Amount	Maturity Period	Commitment Fee	Business Purpose
Aflac Incorporated and Aflac	uncommitted bilateral	364 days	December 6, 2024	$100 million	$0 million	The rate quoted by the bank and agreed upon at the time of borrowing	Up to 3 months	None	General corporate purposes
Aflac Incorporated	unsecured revolving	5 years	May 9, 2027, or the date commitments are terminated pursuant to an event of default	¥100.0 billion	¥0.0 billion	A rate per annum equal to (a) Tokyo Interbank Market Rate (TIBOR) plus, the alternative applicable TIBOR margin during the availability period from the closing date to the commitment termination date or (b) the TIBOR rate offered by the agent to major banks in yen for the applicable period plus, the applicable alternative TIBOR margin during the term out period	No later than May 10, 2027	.28% to .45%, depending on the Parent Company's debt ratings as of the date of determination	General corporate purposes, including a capital contingency plan for the operations of the Parent Company
Aflac Incorporated and Aflac	unsecured revolving	5 years	November 15, 2027, or the date commitments are terminated pursuant to an event of default	$1.0 billion	$0.0 billion	A rate per annum equal to, at the Company's option, either, (a) Secured Overnight Financing Rate (SOFR) for U.S. dollar-denominated borrowings or TIBOR for Japanese yen-denominated borrowings, in either case adjusted for certain costs, or (b) a base rate determined by reference to the highest of (1) the federal funds rate plus 1/2 of 1%, (2) the rate of interest for such day announced by the agent as its prime rate, or (3) SOFR for an interest period of one month plus 1.00%, in each case plus an applicable margin	No later than November 15, 2027	.08% to .20%, depending on the Parent Company's debt ratings as of the date of determination	General corporate purposes, including a capital contingency plan for the operations of the Parent Company
Aflac Incorporated and Aflac	uncommitted bilateral	None specified	None specified	$50 million	$0 million	A rate per annum equal to, at the Parent Company's option, either (a) a 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
Aflac(1)	uncommitted revolving	364 days	December 2, 2024	$250 million	$0 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
Aflac Incorporated(1) (Tranche 1)	uncommitted revolving	364 days	November 25, 2024	¥50.0 billion	¥0.0 billion	Three-month yen TIBOR plus 75 basis points per annum	No later than November 26, 2024	None	General corporate purposes
Aflac Incorporated(1) (Tranche 2)	uncommitted revolving	364 days	November 25, 2024	¥50.0 billion	¥0.0 billion	Three-month yen TIBOR plus 75 basis points per annum	No later than November 26, 2024	None	General corporate purposes
Aflac New York(1)	uncommitted revolving	364 days	December 2, 2024	$25 million	$0 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
CAIC(1)	uncommitted revolving	364 days	December 2, 2024	$15 million	$0 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

(1) Intercompany credit agreement

(continued)

66

Borrower(s)	Type	Term	Expiration Date	Capacity	Amount Outstanding	Interest Rate on Borrowed Amount	Maturity Period	Commitment Fee	Business Purpose
TOIC(1)	uncommitted revolving	364 days	December 2, 2024	$0.3 million	$0 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
Aflac GI Holdings LLC(1)	uncommitted revolving	364 days	December 2, 2024	$30 million	$0 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
Aflac Incorporated(1)	uncommitted revolving	364 days	December 2, 2024	$400 million	$0 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
Aflac Re(1)	uncommitted revolving	364 days	December 2, 2024	$400 million	$0 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
Aflac Asset Management LLC(1)	uncommitted revolving	214 days	December 2, 2024	$25 million	$0 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
Aflac Global Ventures LLC(1)	uncommitted revolving	214 days	December 2, 2024	$2 million	$0 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

(1) Intercompany credit agreement

The Company was in compliance with all of the covenants of its notes payable and lines of credit at June 30, 2024. No events of default or defaults occurred during the six-month period ended June 30, 2024.

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

67

10.    SHAREHOLDERS’ EQUITY

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

(In thousands of shares)	2024	2023
Common stock - issued:
Balance, beginning of period	1,355,398	1,354,079
Exercise of stock options and issuance of restricted shares	1,220	1,148
Balance, end of period	1,356,618	1,355,227
Treasury stock:
Balance, beginning of period	776,919	738,823
Purchases of treasury stock:
Share repurchase program	18,564	20,809
Other	480	354
Dispositions of treasury stock:
Shares issued to AFL Stock Plan	(430)	(498)
Exercise of stock options	(98)	(52)
Other	(186)	(178)
Balance, end of period	795,249	759,258
Shares outstanding, end of period	561,369	595,969

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

	Three Months Ended June 30,				Six Months Ended June 30,
(In thousands)	2024		2023		2024		2023
Anti-dilutive share-based awards		0		39		35		102

Share Repurchase Program

During the first six months of 2024, the Company repurchased 18.6 million shares of its common stock for $1.6 billion as part of its share repurchase program. During the first six months of 2023, the Company repurchased 20.8 million shares of its common stock for $1.4 billion as part of its share repurchase program. As of June 30, 2024, a remaining balance of 59.2 million shares of the Company's common stock was available for purchase under share repurchase authorizations by its board of directors.

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Reclassifications from Accumulated Other Comprehensive Income

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

Changes in Accumulated Other Comprehensive Income

Three Months Ended June 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 Liability Adjustment			Total
Balance at March 31, 2024		$	(4,666)		$	1,092		$	(26)		$	(1,495)		$	(7)		$	(5,102)
Other comprehensive    income (loss) before    reclassification		(425)			(652)			3			2,920			3			1,849
Amounts reclassified from    accumulated other    comprehensive income   (loss)		0			(39)			1			0			(1)			(39)
Net current-period other    comprehensive    income (loss)		(425)			(691)			4			2,920			2			1,810
Balance at June 30, 2024		$	(5,091)		$	401		$	(22)		$	1,425		$	(5)		$	(3,292)

All amounts in the table above are net of tax.

Three Months Ended June 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 March 31, 2023		$	(3,618)		$	1,289		$	(26)		$	(4,894)		$	(29)		$	(7,278)
Other comprehensive    income (loss) before    reclassification		(631)			710			0			(165)			45			(41)
Amounts reclassified from    accumulated other    comprehensive income   (loss)		0			(21)			1			0			1			(19)
Net current-period other    comprehensive    income (loss)		(631)			689			1			(165)			46			(60)
Balance at June 30, 2023		$	(4,249)		$	1,978		$	(25)		$	(5,059)		$	17		$	(7,338)

All amounts in the table above are net of tax.

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Six Months Ended June 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 Liability Adjustment			Total
Balance at December 31, 2023		$	(4,069)		$	1,139		$	(22)		$	(2,560)		$	(8)		$	(5,520)
Other comprehensive    income (loss) before    reclassification		(1,022)			(566)			(2)			3,985			4			2,399
Amounts reclassified from    accumulated other    comprehensive income   (loss)		0			(172)			2			0			(1)			(171)
Net current-period other    comprehensive    income (loss)		(1,022)			(738)			0			3,985			3			2,228
Balance at June 30, 2024		$	(5,091)		$