POLICY LIABILITIES

12 Months Ended

Dec. 31, 2024

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 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 for the years ended December 31. 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.


	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	(625)		(154)		(190)		(19)		65		(47)		(106)		(21)		(17)		(5)		(8)
Effect of actual variances from expected experience	(71)		(164)		(97)		(14)		66		12		(100)		21		(12)		(29)		13
Adjusted beginning of period balance	15,756		13,722		5,971		1,036		2,761		1,703		4,210		1,193		188		875		277
Issuances	983		361		478		16		307		364		543		231		52		226		592
Interest accrual	378		302		110		17		106		66		173		46		9		37		25
Net premiums collected (1)	(1,453)		(1,135)		(862)		(101)		(479)		(401)		(578)		(244)		(39)		(157)		(53)
Foreign currency translation	(1,655)		(1,405)		(613)		(104)		0		0		0		0		0		0		0
Other	(1)		0		0		0		(8)		(6)		(8)		(5)		(1)		(5)		(17)
Ending balance at original discount rate	14,008		11,845		5,084		864		2,687		1,726		4,340		1,221		209		976		824
Effect of changes in discount rate assumptions	176		(28)		72		(18)		(190)		(91)		(439)		(99)		(13)		(67)		2
Balance at December 31, 2024	$	14,184	$	11,817	$	5,156	$	846	$	2,497	$	1,635	$	3,901	$	1,122	$	196	$	909	$	826
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	(815)		(228)		(302)		(7)		109		(73)		(112)		(31)		(28)		(3)		(12)
Effect of actual variances from expected experience	(117)		(193)		(110)		(24)		91		(16)		(144)		21		(16)		(43)		(7)
Adjusted beginning of period balance	42,694		24,602		29,844		5,413		3,502		2,452		11,864		2,066		462		1,925		750
Issuances	1,004		373		488		22		311		381		559		237		55		231		597
Interest accrual	1,356		570		582		93		133		98		515		84		20		78		50
Benefit payments	(2,773)		(1,033)		(1,510)		(208)		(560)		(465)		(925)		(314)		(60)		(108)		(104)
Foreign currency translation	(4,425)		(2,555)		(3,074)		(555)		0		0		0		0		0		0		0
Other	0		0		0		0		0		0		0		0		0		0		0
Ending balance at original discount rate	37,856		21,957		26,330		4,765		3,386		2,466		12,013		2,073		477		2,126		1,293
Effect of changes in discount rate assumptions	2,925		(1,351)		(2,065)		(540)		(259)		(136)		(1,312)		(176)		(36)		(279)		(5)
Balance at December 31, 2024	40,781		20,606		24,265		4,225		3,127		2,330		10,701		1,897		441		1,847		1,288
Net liability for future policy benefits	26,597		8,789		19,109		3,379		630		695		6,800		775		245		938		462
Less: reinsurance recoverable	5,085		1,245		0		0		0		0		0		0		0		18		0
Net liability for future policy benefits after reinsurance recoverable	$	21,512	$	7,544	$	19,109	$	3,379	$	630	$	695	$	6,800	$	775	$	245	$	920	$	462

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


	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.

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 as of December 31.


	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 %	4.0 %	4.3 %	4.6 %	4.5 %	4.3 %	3.8 %	5.4 %
Weighted-average interest, current discount rate (1)	2.2 %	2.8 %	2.1 %	2.5 %	5.3 %	5.2 %	5.3 %	5.3 %	5.3 %	5.3 %	5.3 %
Weighted-average liability duration (years)	12.6	23.5	16.1	16.7	7.7	5.6	11.1	9.0	7.6	13.5	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.


	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.

The following table presents a reconciliation of the disaggregated rollforwards above to the ending future policy benefits presented in the consolidated balance sheets as of December 31. 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)	2024			2023
Balances included in future policy benefits rollforward:
Aflac Japan
Cancer		$	26,597		$	32,652
Medical and other health		8,789			10,560
Life insurance		19,109			23,243
Other		3,379			4,090
Aflac U.S.
Accident		630			621
Disability		695			770
Critical care		6,800			7,216
Hospital indemnity		775			836
Dental/vision		245			272
Life insurance		938			911
Other		462			521
Corporate and other		5,072			4,225
Deferred profit liability		1,844			1,806
Deferred reinsurance gain liability		806			1,012
Intercompany eliminations (1)		(5,760)			(5,017)
Total		$	70,381		$	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 for additional details.

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 years), the discount curve is derived by extrapolation of risk-free rates beyond their last liquid point following the Smith-

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

For the Aflac U.S. segment where all long-duration insurance policies are denominated in U.S. dollars and substantially all have cash flow duration within 30 years, for which the U.S. upper-medium grade fixed-income market is liquid and observable, the Company uses data from a liquid fixed-income market index tracking single-A U.S. 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.

There were no changes to the methods used to determine the discount rates during the years ended December 31, 2024 and 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.

In 2024 and 2023, the variance of actual experience from expected experience was primarily due to favorable variances in morbidity assumptions as compared to actual experience. There were no changes to the inputs, judgments or methods used in measuring the liability for future policy benefits in 2024 and 2023.

The Company performs an annual review of its assumptions during the third quarter. In 2024, the Company's annual assumption review process resulted in favorable changes largely due to recent favorable Japan morbidity experience. In 2023, the Company's annual assumption review process resulted in favorable changes to its morbidity and termination assumptions, largely due to reflecting more recent favorable U.S. morbidity experience.

The following table summarizes the amount of net earned premiums recognized in the consolidated statements of earnings by reporting segment and disaggregated by product type for the years ended December 31.


(In millions)	2024		2023		2022
Net earned premiums:
Aflac Japan
Cancer	$	3,545	$	4,063	$	4,716
Medical and other health	2,181		2,631		2,917
Life insurance	1,225		1,532		1,769
Other	134		149		161
Aflac U.S.
Accident	1,265		1,288		1,317
Disability	1,327		1,256		1,179
Critical care	1,763		1,749		1,758
Hospital indemnity	727		725		725
Dental/vision	202		214		199
Life insurance	565		475		396
Other	110		45		38
Corporate and other	680		400		145
Reinsurance ceded	(284)		(404)		(419)
Total	$	13,440	$	14,123	$	14,901

The following table summarizes the amount of interest expense related to insurance contracts recognized in benefits and claims, excluding reserve remeasurement in the consolidated statements of earnings by reporting segment and disaggregated by product type for the years ended December 31.



(In millions)	2024		2023		2022
Interest expense:
Aflac Japan
Cancer	$	978	$	1,061	$	1,140
Medical and other health	268		274		278
Life insurance	472		501		524
Other	76		80		84
Aflac U.S.
Accident	27		25		23
Disability	32		34		37
Critical care	342		345		346
Hospital indemnity	38		39		40
Dental/vision	11		13		12
Life insurance	41		37		35
Other	25		27		27

Total	$	2,310	$	2,436	$	2,546

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 as of December 31. 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.


	2024						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		$	51,712		$	56,881		$	59,169		$	66,427
Medical and other health		33,250			34,864			38,583			39,884
Life insurance		10,915			37,520			12,677			42,541
Other		1,477			6,479			1,781			7,448
Aflac U.S.
Accident		8,862			4,687			9,095			4,548
Disability		5,727			3,094			5,776			3,177
Critical care		19,624			20,340			19,886			20,626
Hospital indemnity		4,859			3,017			4,922			3,025
Dental/vision		1,118			679			1,162			726
Life insurance		2,966			3,559			2,719			3,260
Other		2,143			2,273			724			1,396
Total		$	142,653		$	173,393		$	156,494		$	193,058


	2024						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		$	40,170		$	40,781		$	48,363		$	50,161
Medical and other health		25,171			20,606			30,757			25,257
Life insurance		9,367			24,265			11,240			29,731
Other		1,204			4,225			1,512			5,178
Aflac U.S.
Accident		6,057			3,127			6,369			3,109
Disability		4,404			2,330			4,488			2,422
Critical care		11,900			10,701			12,417			11,290
Hospital indemnity		3,312			1,897			3,419			1,943
Dental/vision		761			441			807			478
Life insurance		2,050			1,847			1,914			1,764
Other		1,290			1,288			467			798
Total		$	105,686		$	111,508		$	121,753		$	132,131

Loss expense as a result of NPR capping for the years ended December 31, 2024, 2023 and 2022 was immaterial.

Other Policyholders' Funds

As of December 31, 2024 and 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 for the years ended December 31.


(In millions)	2024		2023
Other policyholders' funds:
Fixed annuities account balance, beginning of period (1)	$	5,939	$	6,423
Premiums received	104		126
Transfers from WAYS conversions	249		229
Surrenders and withdrawals	(58)		(59)
Benefit payments	(446)		(419)
Interest credited	49		53
Foreign currency translation and other	(616)		(414)
Fixed annuities account balance, end of period	5,221		5,939
Other deposit type reserves	239		230
Total	$	5,460	$	6,169

(1) Aflac Japan fixed annuities

The following table presents other policyholders’ funds balances by range of guaranteed crediting rates as of December 31.


	2024			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%	$5,221	$5,150	0.5% - 2.3%	$5,939	$5,850

(1) Aflac Japan fixed annuities

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

Aflac Japan’s fixed annuities have guaranteed fixed crediting rates which results in the policyholders' funds balances being sufficient to cover all guaranteed benefit amounts. The reserves are adequate to fully fund future benefits at any given time.

See Note 1 for additional information on policy liabilities.