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8-K

Aflac Inc (AFL)

8-K 2023-02-01 For: 2023-02-01
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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of The Securities Exchange Act of 1934

Date of Report (Date of earliest event reported) February 1, 2023

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Aflac Incorporated

_________________________________________________________________________________________________________________________________________________________

(Exact name of registrant as specified in its charter)

Georgia 001-07434 58-1167100
(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) 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 or former address, if changed since last report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

☐ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
☐ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
☐ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
☐ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

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 AFL New York Stock Exchange

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

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. ¨

Item 2.02 Results of Operations and Financial Condition.

Aflac Incorporated (the "Company") is furnishing its press release dated February 1, 2023 in which it reported its 2022 fourth quarter results herein as Exhibit 99.1 to this report. The Company is also furnishing its fourth quarter supplemental earnings materials as Exhibit 99.2 to this report.

On February 1, 2023, the Company posted to its investor relations website at investors.aflac.com a video presentation by Max Brodén, the Company's Executive Vice President and Chief Financial Officer, discussing the Company's 2022 fourth quarter earnings. The Company is furnishing a transcript of Mr. Brodén's comments and a copy of the slides referenced in the presentation as Exhibit 99.3 and Exhibit 99.4, respectively, to this report.

In accordance with General Instruction B.2 of Form 8-K, the information included or incorporated in this report (Exhibit 99.1) shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934 (the “Exchange Act”), nor shall such information be deemed incorporated by reference in any filing under the Securities Act of 1933 or the Exchange Act, except as shall be set forth by specific reference in such filing.

Item 9.01 Financial Statements and Exhibits.

(d) Exhibits.

Exhibit Number Exhibit Title or Description
99.1 Press release of Aflac Incorporated dated February 1, 2023
99.2 Financial Analyst Briefing Supplement for Fourth Quarter 2022
99.3 Transcript of comments in video presentation by Max Brodén, Executive Vice President and Chief Financial Officer of Aflac Incorporated.
99.4 Slides referenced in video presentation by Max Brodén, Executive Vice President and Chief Financial Officer of Aflac Incorporated.
104 Cover Page Interactive Data File (the cover page XBRL tags are embedded within the Inline XBRL document)

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

Aflac Incorporated
February 1, 2023 /s/ June Howard
(June Howard)
Senior Vice President, Financial Services
Chief Accounting Officer

2

Document

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News Release

Aflac Incorporated Announces Fourth Quarter Results,

Reports Fourth Quarter Net Earnings of $185 Million,

Reiterates Increase in First Quarter Cash Dividend of 5.0%

COLUMBUS, Ga. - February 1, 2023 - Aflac Incorporated (NYSE: AFL) today reported its fourth quarter results.

Total revenues were $4.0 billion in the fourth quarter of 2022, compared with $5.4 billion in the fourth quarter of 2021. Net earnings were $185 million, or $0.30 per diluted share, compared with $1.0 billion, or $1.57 per diluted share a year ago. The large decline in net earnings for the fourth quarter reflects significant foreign exchange-related net investment losses recognized in the current quarter as compared with significant net realized gains a year ago.

Net earnings in the fourth quarter of 2022 included net investment losses of $521 million, or $0.84 per diluted share, compared with net investment gains of $243 million, or $0.37 per diluted share a year ago. These net investment losses were driven by net losses on certain derivatives and foreign currency activities of $684 million, which was partially offset by $207 million of net gains from sales and redemptions, both of which were largely driven by changes in exchange rates. Net investment losses also included a $28 million loss from a decrease in the fair value of equity securities and a $16 million increase in the company's current expected credit losses (CECL) reserves and impairments.

Adjusted earnings* in the fourth quarter were $806 million, compared with $850 million in the fourth quarter of 2021, reflecting a decrease of 5.2%. Adjusted earnings per diluted share* increased 0.8% to $1.29 in the quarter. Adjusted earnings included a variable investment income loss of $21 million from alternative investments, which was $0.09 per share below return expectations. The weaker yen/dollar exchange rate negatively impacted adjusted earnings per share by $0.11.

The average yen/dollar exchange rate in the fourth quarter of 2022 was 141.87, or 19.9% weaker than the average rate of 113.70 in the fourth quarter of 2021. For the full year, the average exchange rate was 130.17, or 15.7% weaker than the rate of 109.79 a year ago.

Total investments and cash at the end of December 2022 were $117.4 billion, compared with $143.0 billion at December 31, 2021. The decline in the portfolio is principally driven by the weaker yen and higher interest rates.

Shareholders’ equity was $22.4 billion, or $36.35 per share, at December 31, 2022, compared with $33.3 billion, or $50.99 per share, at December 31, 2021. Shareholders’ equity at the end of the fourth quarter included a net unrealized loss on investment securities and derivatives of $0.7 billion, compared with a net unrealized gain of $9.6 billion at December 31, 2021. Shareholders’ equity at the end of the fourth quarter also included an unrealized foreign currency translation loss of $3.6 billion, compared with an unrealized foreign currency translation loss of $2.0 billion at December 31, 2021. The annualized return on average shareholders’ equity in the fourth quarter was 3.2%.

For the full year of 2022, total revenues were down 11.8% to $19.5 billion, compared with $22.1 billion for the full year of 2021. Net earnings were $4.2 billion, or $6.59 per diluted share, compared with $4.3 billion, or $6.39 per share, for the full year of 2021. Adjusted earnings for the full year of 2022 were $3.4 billion, or $5.33 per diluted share, compared with $4.0 billion, or $5.94 per share, in 2021. Adjusted earnings included variable investment income from alternative investments, which was $0.10 per diluted share below return expectations. Excluding the negative impact of $0.34 per diluted share from the weaker yen/dollar exchange rate, adjusted earnings per share decreased 4.5% to $5.67 for the full year of 2022.

Shareholders’ equity excluding AOCI (or adjusted book value*) was $26.8 billion, or $43.51 per share at December 31, 2022, compared with $25.9 billion, or $39.65 per share, at December 31, 2021. The annualized adjusted return on equity excluding foreign currency impact* in the fourth quarter was 12.9%.

AFLAC JAPAN

In yen terms, Aflac Japan's net earned premiums were ¥306.1 billion for the quarter, or 4.1% lower than a year ago, mainly due to limited pay products reaching paid-up status and slightly declining inforce. Adjusted net investment income decreased 1.7% to ¥86.2 billion, mainly due to lower variable investment income. Total adjusted revenues in yen declined 3.6% to ¥393.3 billion. Pretax adjusted earnings in yen for the quarter declined 0.4% on a reported basis to ¥100.5 billion, primarily due to decreased revenues offset by lower benefits recognized during the quarter. Pretax adjusted earnings decreased 10.8% on a currency-neutral basis. The pretax adjusted profit margin for the Japan segment increased to 25.5%, compared with 24.7% a year ago.

For the full year, net earned premiums in yen were ¥1.2 trillion, or 4.2% lower than a year ago. Adjusted net investment income increased 5.5% to ¥351.5 billion. Total adjusted revenues in yen were down 2.2% to ¥1.6 trillion. Pretax adjusted earnings were ¥399.3 billion, or 3.1% lower than a year ago.

In dollar terms, net earned premiums decreased 22.9% to $2.2 billion in the fourth quarter. Adjusted net investment income decreased 21.7% to $604 million. Total adjusted revenues declined by 22.7% to $2.8 billion. Pretax adjusted earnings declined 20.6% to $704 million.

For the full year, net earned premiums in dollars were $9.5 billion, or 19.4% lower than a year ago. Adjusted net investment income decreased 11.9% to $2.7 billion. Total adjusted revenues were down 17.9% to $12.3 billion. Pretax adjusted earnings were $3.1 billion, or 18.6% lower than a year ago.

For the quarter, total new annualized premium sales (sales) increased 11.4% to ¥16.2 billion, or $115 million, primarily reflecting the continued rollout of the new cancer product. For the full year, total new sales were essentially flat at ¥54.8 billion, or $416 million, reflecting constrained sales in the first half of the year due to ongoing pandemic conditions offset by a new cancer product launch and first sector product updates in the second half of the year.

AFLAC U.S.

Aflac U.S. net earned premiums declined 0.2% to $1.4 billion in the fourth quarter, impacted by lower persistency. Adjusted net investment income decreased 2.5% to $192 million, largely due to lower variable investment income. Total adjusted revenues were up 0.1% to $1.6 billion. Pretax adjusted earnings were $340 million, 30.3% higher than a year ago, primarily due to lower benefits recognized during the quarter. The pretax adjusted profit margin for the U.S. segment was 21.0%, compared with 16.1% a year ago.

For the full year, net earned premiums declined 0.8% to $5.6 billion, impacted by lower persistency. Adjusted net investment income increased 0.1% to $755 million. Total adjusted revenues were essentially flat at $6.5 billion. Pretax adjusted earnings were $1.3 billion, or 10.4% lower than a year ago.

Aflac U.S. sales increased 17.4% in the quarter to $545 million, reflecting continued improvement from investment in growth initiatives as well as productivity gains. For the full year, total new sales increased 16.1% to $1.5 billion.

CORPORATE AND OTHER

For the quarter, total adjusted revenues increased 325.7% to $79 million, primarily due to higher adjusted net investment income resulting from lower federal tax credit investments, higher interest rates, and an increase in amortized hedge income, partially offset by a reduction in total premiums as a result of significant yen weakening. Pretax adjusted earnings were a loss of $44 million, compared with a loss of $155 million a year ago, primarily reflecting an increase in adjusted net investment income.

For the full year, total adjusted revenues increased 52.6% to $267 million, primarily due to a $114 million increase in adjusted net investment income, partially offset by a reduction in total premiums as a result of significant yen weakening. Pretax adjusted earnings were a loss of $223 million, compared with a loss of $298 million a year ago.

DIVIDEND AND CAPITAL RETURNED TO SHAREHOLDERS

The board of directors declared the first quarter dividend of $0.42 per share, payable on March 1, 2023 to shareholders of record at the close of business on February 15, 2023.

In the fourth quarter, Aflac Incorporated deployed $600 million in capital to repurchase 8.9 million of its common shares. For the full year, the company deployed $2.4 billion in capital to repurchase 39.2 million of its common shares. At the end of December 2022, the company had 116.6 million remaining shares authorized for repurchase.

OUTLOOK

Commenting on the company’s results, Chairman and Chief Executive Officer Daniel P. Amos stated: "When adjusting for a material weakening in the yen, Aflac delivered another quarter of solid earnings results capping off a year of overall strong performance. Pandemic conditions in Japan are gradually improving, but impacted operations throughout the year, while in the U.S. they have largely subsided.

"Looking at our operations in Japan, I am encouraged by the sales increase of 11.4% in the fourth quarter and 10.8% in the second half of the year, which reflected a new cancer product launch and first sector product updates. Persistency remained strong in the fourth quarter. We continue to monitor evolving pandemic conditions, which resulted in a slow start to 2022. The slow start negatively impacted sales for the full year, but we are working to build on the momentum we experienced in the quarter as we look to 2023. As anticipated, our benefit ratio returned to a more normal level in the fourth quarter.

"In the U.S., I am pleased with the 17.4% sales increase in the fourth quarter and 16.1% sales increase for the year. This reflects continued improvement in the productivity of our agents and brokers as well as contribution from the buildout of our acquired platforms, namely network dental and vision and group life and disability. We continue to work toward reinforcing our leading position and building our momentum into 2023.

"As always, we are committed to prudent liquidity and capital management. We continue to generate strong investment results while remaining in a defensive position as we monitor evolving economic conditions. In addition, we have taken proactive steps in recent years to defend cash flow and deployable capital against a weakening yen. With the fourth quarter's declaration, 2022 marked the 40th consecutive year of dividend increases. We treasure our track record of dividend growth and remain committed to extending it, supported by the strength of our capital and cash flows. At the same time, we remain in the market repurchasing shares with a tactical approach, focused on integrating the growth investments we have made in our platform to improve our strength and leadership position."

*See Non-U.S. GAAP Financial Measures section for an explanation of foreign exchange and its impact on the financial statements and definitions of the non-U.S. GAAP financial measures used in this earnings release, as well as a reconciliation of such non-U.S. GAAP financial measures to the most comparable U.S. GAAP financial measures.

ABOUT AFLAC INCORPORATED

Aflac Incorporated (NYSE: AFL) is a Fortune 500 company helping provide protection to more than 50 million people through its subsidiaries in Japan and the U.S., paying cash fast when policyholders get sick or injured. For more than six decades, insurance policies of Aflac Incorporated's subsidiaries have given policyholders the opportunity to focus on recovery, not financial stress. In the U.S., Aflac is the number one provider of supplemental health insurance products1. Aflac Life Insurance Japan is the leading provider of medical and cancer insurance in Japan, where it insures 1 in 4 households. In 2021, the company became a signatory of the Principles for Responsible Investment (PRI). In 2022, the company was included in the Dow Jones Sustainability North America Index, as one of the World's Most Ethical Companies by Ethisphere for the 16th consecutive year, on Fortune's World's Most Admired Companies for the 21st time and in Bloomberg's Gender-Equality Index for the fourth consecutive year. To find out how to get help with expenses health insurance doesn't cover, get to know us at aflac.com or aflac.com/espanol. Investors may learn more about Aflac Incorporated and its commitment to ESG and social responsibility at investors.aflac.com under “Sustainability.”

1 LIMRA 2021 U.S. Supplemental Health Insurance Total Market Report

A copy of Aflac’s Financial Analysts Briefing (FAB) supplement for the quarter can be found on the “Investors” page at aflac.com.

Aflac Incorporated will webcast its quarterly conference call via the “Investors” page of aflac.com at 8:00 a.m. (ET) on Thursday, February 2, 2023.

Note: Tables within this document may not foot due to rounding.

AFLAC INCORPORATED AND SUBSIDIARIES CONDENSED INCOME STATEMENT
(UNAUDITED – IN MILLIONS, EXCEPT FOR SHARE AND PER-SHARE AMOUNTS)
THREE MONTHS ENDED DECEMBER 31, 2022 2021 % Change
Total revenues $ 4,010 $ 5,433 (26.2) %
Benefits and claims, net 2,028 2,581 (21.4)
Total acquisition and operating expenses 1,458 1,619 (9.9)
Earnings before income taxes 524 1,233 (57.5)
Income taxes 339 194
Net earnings $ 185 $ 1,039 (82.2) %
Net earnings per share – basic $ 0.30 $ 1.58 (81.0) %
Net earnings per share – diluted 0.30 1.57 (80.9)
Shares used to compute earnings per share (000):
Basic 619,845 659,100 (6.0) %
Diluted 622,994 662,512 (6.0)
Dividends paid per share $ 0.40 $ 0.33 21.2 %
AFLAC INCORPORATED AND SUBSIDIARIES CONDENSED INCOME STATEMENT
--- --- --- --- --- --- ---
(UNAUDITED – IN MILLIONS, EXCEPT FOR SHARE AND PER-SHARE AMOUNTS)
TWELVE MONTHS ENDED DECEMBER 31, 2022 2021 % Change
Total revenues $ 19,502 $ 22,106 (11.8) %
Benefits and claims, net 9,153 10,576 (13.5)
Total acquisition and operating expenses 5,745 6,208 (7.5)
Earnings before income taxes 4,604 5,322 (13.5)
Income taxes 403 997
Net earnings $ 4,201 $ 4,325 (2.9) %
Net earnings per share – basic $ 6.62 $ 6.42 3.1 %
Net earnings per share – diluted 6.59 6.39 3.1
Shares used to compute earnings per share (000):
Basic 634,816 673,617 (5.8) %
Diluted 637,655 676,729 (5.8)
Dividends paid per share $ 1.60 $ 1.32 21.2 %
AFLAC INCORPORATED AND SUBSIDIARIES CONDENSED BALANCE SHEET
--- --- --- --- --- --- ---
(UNAUDITED – IN MILLIONS, EXCEPT FOR SHARE AMOUNTS)
DECEMBER 31, 2022 2021 % Change
Assets:
Total investments and cash $ 117,397 $ 142,978 (17.9) %
Deferred policy acquisition costs 8,593 9,525 (9.8)
Other assets 5,027 5,039 (0.2)
Total assets $ 131,017 $ 157,542 (16.8) %
Liabilities and shareholders’ equity:
Policy liabilities $ 93,258 $ 105,072 (11.2) %
Notes payable and lease obligations 7,442 7,956 (6.5)
Other liabilities 7,952 11,261 (29.4)
Shareholders’ equity 22,365 33,253 (32.7)
Total liabilities and shareholders’ equity $ 131,017 $ 157,542 (16.8) %
Shares outstanding at end of period (000) 615,256 652,132 (5.7) %

NON-U.S. GAAP FINANCIAL MEASURES

This document includes references to the Company’s financial performance measures which are not calculated in accordance with United States generally accepted accounting principles (U.S. GAAP) (non-U.S. GAAP). The financial measures exclude items that the Company believes may obscure the underlying fundamentals and trends in insurance operations because they tend to be driven by general economic conditions and events or related to infrequent activities not directly associated with insurance operations.

Due to the size of Aflac Japan, where the functional currency is the Japanese yen, fluctuations in the yen/dollar exchange rate can have a significant effect on reported results. In periods when the yen weakens, translating yen into dollars results in fewer dollars being reported. When the yen strengthens, translating yen into dollars results in more dollars being reported. Consequently, yen weakening has the effect of suppressing current period results in relation to the comparable prior period, while yen strengthening has the effect of magnifying current period results in relation to the comparable prior period. A significant portion of the Company’s business is conducted in yen and never converted into dollars but translated into dollars for U.S. GAAP reporting purposes, which results in foreign currency impact to earnings, cash flows and book value on a U.S. GAAP basis. Management evaluates the Company's financial performance both including and excluding the impact of foreign currency translation to monitor, respectively, cumulative currency impacts and the currency-neutral operating performance over time. The average yen/dollar exchange rate is based on the published MUFG Bank, Ltd. telegraphic transfer middle rate (TTM).

The company defines the non-U.S. GAAP financial measures included in this earnings release as follows:

•Adjusted earnings are adjusted revenues less benefits and adjusted expenses. Adjusted earnings per share (basic or diluted) are the adjusted earnings for the period divided by the weighted average outstanding shares (basic or diluted) for the period presented. The adjustments to both revenues and expenses account for certain items that cannot be predicted or that are outside management’s control. Adjusted revenues are U.S. GAAP total revenues excluding adjusted net investment gains and losses. Adjusted expenses are U.S. GAAP total acquisition and operating expenses including the impact of interest cash flows from derivatives associated with notes payable but excluding any nonrecurring 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. Management uses adjusted earnings and adjusted earnings per diluted share to evaluate the financial performance of the Company’s insurance operations on a consolidated basis and believes that a presentation of these financial measures is vitally important to an understanding of the underlying profitability drivers and trends of the Company’s insurance business. The most comparable U.S. GAAP financial measures for adjusted earnings and adjusted earnings per share (basic or diluted) are net earnings and net earnings per share, respectively.

•Adjusted earnings excluding current period foreign currency impact are computed using the average foreign currency exchange rate for the comparable prior-year period, which eliminates fluctuations driven solely by foreign currency exchange rate changes. Adjusted earnings per diluted share excluding current period foreign currency impact is adjusted earnings excluding current period foreign currency impact divided by the weighted average outstanding diluted shares for the period presented. The Company considers adjusted earnings excluding current period foreign currency impact and adjusted earnings per diluted share excluding current period foreign currency impact important because a significant portion of the Company's business is conducted in Japan and foreign exchange rates are outside management’s control; therefore, the Company believes it is important to understand the impact of translating foreign currency (primarily Japanese yen) into U.S. dollars. The most comparable U.S. GAAP financial measures for adjusted earnings excluding current period foreign currency impact and adjusted earnings per diluted share excluding current period foreign currency impact are net earnings and net earnings per share, respectively.

•Adjusted return on equity is adjusted earnings divided by average shareholders’ equity, excluding accumulated other comprehensive income (AOCI). Management uses adjusted return on equity to evaluate the financial performance of the Company’s insurance operations on a consolidated basis and believes that a presentation of this financial measure is vitally important to an understanding of the underlying profitability drivers and trends of the Company’s insurance business. The Company considers adjusted return on equity important as it excludes components of AOCI, which fluctuate due to market movements that are outside management's control. The most comparable U.S. GAAP financial measure for adjusted return on equity is return on average equity (ROE) as determined using net earnings and average total shareholders’ equity.

•Adjusted return on equity excluding foreign currency impact is adjusted earnings excluding the current period foreign currency impact divided by average shareholders’ equity, excluding AOCI. The Company considers adjusted return on equity excluding foreign currency impact important as it excludes changes in foreign currency and components of AOCI, which fluctuate due to market movements that are outside management's control. The most comparable U.S. GAAP financial measure for adjusted return on equity excluding foreign currency impact is ROE as determined using net earnings and average total shareholders’ equity.

•Amortized hedge costs/income represent costs/income incurred or recognized as a result of using foreign currency derivatives to hedge certain foreign exchange risks in the Company's Japan segment or in Corporate and other. These amortized hedge costs/ income are estimated at the inception of the derivatives based on the specific terms of each contract and are recognized on a straight-line basis over the term of the hedge. The Company believes that amortized hedge costs/income measure the periodic currency risk management costs/income related to hedging certain foreign currency exchange risks and are an important component of net investment income. There is no comparable U.S. GAAP financial measure for amortized hedge costs/ income.

•Adjusted book value is the U.S. GAAP book value (representing total shareholders’ equity), less AOCI as recorded on the U.S. GAAP balance sheet. Adjusted book value per common share is adjusted book value at the period end divided by the ending outstanding common shares for the period presented. The Company considers adjusted book value and adjusted book value per common share important as they exclude AOCI, which fluctuates due to market movements that are outside management’s control. The most comparable U.S. GAAP financial measures for adjusted book value and adjusted book value per common share are total book value and total book value per common share, respectively.

•Adjusted book value including unrealized foreign currency translation gains and losses is adjusted book value plus unrealized foreign currency translation gains and losses. Adjusted book value including unrealized foreign currency translation gains and losses per common share is adjusted book value plus unrealized foreign currency translation gains and losses at the period end divided by the ending outstanding common shares for the period presented. The Company considers adjusted book value including unrealized foreign currency translation gains and losses, and its related per share financial measure, important as they exclude certain components of AOCI, which fluctuate due to market movements that are outside management's control; however, it includes the impact of foreign currency as a result of the significance of Aflac’s Japan operation. The most comparable U.S. GAAP financial measures for adjusted book value including unrealized foreign currency translation gains and losses and adjusted book value including unrealized foreign currency translation gains and losses per common share are total book value and total book value per common share, respectively.

•Adjusted net investment income is net investment income adjusted for i) amortized hedge cost/income related to foreign currency exposure management strategies and certain derivative activity, and ii) net interest cash flows from foreign currency and interest rate derivatives associated with certain investment strategies, which are reclassified from net investment gains and losses to net investment income. The Company considers adjusted net investment income important because it provides a more comprehensive understanding of the costs and income associated with the Company’s investments and related hedging strategies. The most comparable U.S. GAAP financial measure for adjusted net investment income is net investment income.

•Adjusted net investment gains and losses are net investment gains and losses adjusted for i) amortized hedge cost/income related to foreign currency exposure management strategies and certain derivative activity, ii) net interest cash flows from foreign currency and interest rate derivatives associated with certain investment strategies, which are both reclassified to net investment income, and iii) the impact of interest cash flows from derivatives associated with notes payable, which is reclassified to interest expense as a component of total adjusted expenses. The Company considers adjusted net investment gains and losses important as it represents the remainder amount that is considered outside management’s control, while excluding the components that are within management’s control and are accordingly reclassified to net investment income and interest expense. The most comparable U.S. GAAP financial measure for adjusted net investment gains and losses is net investment gains and losses.

RECONCILIATION OF NET EARNINGS TO ADJUSTED EARNINGS
(UNAUDITED – IN MILLIONS, EXCEPT FOR PER-SHARE AMOUNTS)
THREE MONTHS ENDED DECEMBER 31, 2022 2021 % Change
Net earnings $ 185 $ 1,039 (82.2) %
Items impacting net earnings:
Adjusted net investment (gains) losses 477 (246)
Other and non-recurring (income) loss — 6
Income tax (benefit) expense on items excluded <br>from adjusted earnings 144 50
Adjusted earnings 806 850 (5.2) %
Current period foreign currency impact 1 68 N/A
Adjusted earnings excluding current period foreign <br> currency impact 2 $ 875 $ 850 2.9 %
Net earnings per diluted share $ 0.30 $ 1.57 (80.9) %
Items impacting net earnings:
Adjusted net investment (gains) losses 0.77 (0.37)
Other and non-recurring (income) loss — 0.01
Income tax (benefit) expense on items excluded <br>from adjusted earnings 0.23 0.08
Adjusted earnings per diluted share 1.29 1.28 0.8 %
Current period foreign currency impact 1 0.11 N/A
Adjusted earnings per diluted share excluding <br> current period foreign currency impact 2 $ 1.40 $ 1.28 9.4 %

1    Prior period foreign currency impact reflected as “N/A” to isolate change for current period only.

2    Amounts excluding current period foreign currency impact are computed using the average foreign currency exchange rate for the comparable prior-year period, which eliminates fluctuations driven solely by foreign currency exchange rate changes.

RECONCILIATION OF NET EARNINGS TO ADJUSTED EARNINGS
(UNAUDITED – IN MILLIONS, EXCEPT FOR PER-SHARE AMOUNTS)
TWELVE MONTHS ENDED DECEMBER 31, 2022 2021 % Change
Net earnings $ 4,201 $ 4,325 (2.9) %
Items impacting net earnings:
Adjusted net investment (gains) losses (447) (462)
Other and non-recurring (income) loss (1) 73
Income tax (benefit) expense on items excluded <br>from adjusted earnings 1 (357) 83
Adjusted earnings 3,397 4,019 (15.5) %
Current period foreign currency impact 2 215 N/A
Adjusted earnings excluding current period foreign <br> currency impact 3 $ 3,613 $ 4,019 (10.1) %
Net earnings per diluted share $ 6.59 $ 6.39 3.1 %
Items impacting net earnings:
Adjusted net investment (gains) losses (0.7) (0.68)
Other and non-recurring (income) loss — 0.11
Income tax (benefit) expense on items excluded <br>from adjusted earnings 1 (0.56) 0.12
Adjusted earnings per diluted share 5.33 5.94 (10.3) %
Current period foreign currency impact 2 0.34 N/A
Adjusted earnings excluding current period foreign <br> currency impact 3 $ 5.67 $ 5.94 (4.5) %

1 Primarily reflects release of $452 million in deferred taxes year to date.

2 Prior period foreign currency impact reflected as “N/A” to isolate change for current period only.

3    Amounts excluding current period foreign currency impact are computed using the average foreign currency exchange rate for the comparable prior-year period, which eliminates fluctuations driven solely by foreign currency exchange rate changes.

RECONCILIATION OF NET INVESTMENT (GAINS) LOSSES TO ADJUSTED NET INVESTMENT (GAINS) LOSSES
(UNAUDITED – IN MILLIONS)
THREE MONTHS ENDED DECEMBER 31, 2022 2021 % Change
Net investment (gains) losses $ 521 $ (243) (314.4) %
Items impacting net investment (gains) losses:
Amortized hedge costs (28) (21)
Amortized hedge income 25 11
Net interest cash flows from derivatives associated<br><br>with certain investment strategies (53) (7)
Interest rate component of the change in fair value of foreign<br><br>currency swaps on notes payable1 13 14
Adjusted net investment (gains) losses $ 477 $ (246) (293.9) %

1    Amounts are included with interest expenses that are a component of adjusted expenses.

RECONCILIATION OF NET INVESTMENT INCOME TO ADJUSTED NET INVESTMENT INCOME
(UNAUDITED – IN MILLIONS)
THREE MONTHS ENDED DECEMBER 31, 2022 2021 % Change
Net investment income $ 896 $ 910 (1.5) %
Items impacting net investment income:
Amortized hedge costs (28) (21)
Amortized hedge income 25 11
Net interest cash flows from derivatives associated<br><br>with certain investment strategies (53) (7)
Adjusted net investment income $ 840 $ 893 (5.9) %
RECONCILIATION OF NET INVESTMENT (GAINS) LOSSES TO ADJUSTED NET INVESTMENT (GAINS) LOSSES
--- --- --- --- --- --- ---
(UNAUDITED – IN MILLIONS)
TWELVE MONTHS ENDED DECEMBER 31, 2022 2021 % Change
Net investment (gains) losses $ (363) $ (468) (22.4) %
Items impacting net investment (gains) losses:
Amortized hedge costs (112) (76)
Amortized hedge income 68 57
Net interest cash flows from derivatives associated<br><br>with certain investment strategies (90) (30)
Interest rate component of the change in fair value of foreign<br><br>currency swaps on notes payable1 50 55
Adjusted net investment (gains) losses $ (447) $ (462) (3.2) %

1    Amounts are included with interest expenses that are a component of adjusted expenses.

RECONCILIATION OF NET INVESTMENT INCOME TO ADJUSTED NET INVESTMENT INCOME
(UNAUDITED – IN MILLIONS)
TWELVE MONTHS ENDED DECEMBER 31, 2022 2021 % Change
Net investment income $ 3,656 $ 3,818 (4.2) %
Items impacting net investment income:
Amortized hedge costs (112) (76)
Amortized hedge income 68 57
Net interest cash flows from derivatives associated<br><br>with certain investment strategies (90) (30)
Adjusted net investment income $ 3,522 $ 3,769 (6.6) %
RECONCILIATION OF U.S. GAAP BOOK VALUE TO ADJUSTED BOOK VALUE
--- --- --- --- --- --- ---
(UNAUDITED - IN MILLIONS, EXCEPT FOR SHARE AND PER-SHARE AMOUNTS)
DECEMBER 31, 2022 2021 % Change
U.S. GAAP book value $ 22,365 $ 33,253
Less:
Unrealized foreign currency translation gains (losses) (3,640) (2,013)
Unrealized gains (losses) on securities and derivatives (729) 9,572
Pension liability adjustment (36) (166)
Total AOCI (4,405) 7,393
Adjusted book value $ 26,770 $ 25,860
Add:
Unrealized foreign currency translation gains (losses) (3,640) (2,013)
Adjusted book value including unrealized foreign currency translation gains (losses) $ 23,130 $ 23,847
Number of outstanding shares at end of period (000) 615,256 652,132
U.S. GAAP book value per common share $ 36.35 $ 50.99 (28.7) %
Less:
Unrealized foreign currency translation gains (losses) per common share (5.92) (3.09)
Unrealized gains (losses) on securities and derivatives per common share (1.18) 14.68
Pension liability adjustment per common share (0.06) (0.25)
Total AOCI per common share (7.16) 11.34
Adjusted book value per common share $ 43.51 $ 39.65 9.7 %
Add:
Unrealized foreign currency translation gains (losses) per common share (5.92) (3.09)
Adjusted book value including unrealized foreign currency translation gains (losses) per common share $ 37.59 $ 36.57 2.8 %
RECONCILIATION OF U.S. GAAP RETURN ON EQUITY (ROE) TO ADJUSTED ROE
--- --- --- --- ---
(EXCLUDING IMPACT OF FOREIGN CURRENCY)
THREE MONTHS ENDED DECEMBER 31, 2022 2021
U.S. GAAP ROE - Net earnings1 3.2 % 12.4 %
Impact of excluding unrealized foreign currency translation gains (losses) (0.5) (0.9)
Impact of excluding unrealized gains (losses) on securities and derivatives — 4.6
Impact of excluding pension liability adjustment — (0.1)
Impact of excluding AOCI (0.5) 3.6
U.S. GAAP ROE - less AOCI 2.7 16.1
Differences between adjusted earnings and net earnings2 9.1 (2.9)
Adjusted ROE - reported 11.8 13.1
Less: Impact of foreign currency3 (1.0) N/A
Adjusted ROE, excluding impact of foreign currency 12.9 13.1

1    U.S. GAAP ROE is calculated by dividing net earnings (annualized) by average shareholders' equity.

2    See separate reconciliation of net income to adjusted earnings.

3    Impact of foreign currency is calculated by restating all foreign currency components of the income statement to the weighted average foreign currency exchange rate for the comparable prior year period. The impact is the difference of the restated adjusted earnings compared to reported adjusted earnings. For comparative purposes, only current period income is restated using the weighted average prior period exchange rate, which eliminates the foreign currency impact for the current period. This allows for equal comparison of this financial measure.

RECONCILIATION OF U.S. GAAP RETURN ON EQUITY (ROE) TO ADJUSTED ROE
(EXCLUDING IMPACT OF FOREIGN CURRENCY)
TWELVE MONTHS ENDED DECEMBER 31, 2022 2021
U.S. GAAP ROE - Net earnings1 15.1 % 12.9 %
Impact of excluding unrealized foreign currency translation gains (losses) (1.7) (0.8)
Impact of excluding unrealized gains (losses) on securities and derivatives 2.7 5.1
Impact of excluding pension liability adjustment (0.1) (0.1)
Impact of excluding AOCI 0.9 4.2
U.S. GAAP ROE - less AOCI 16.0 17.1
Differences between adjusted earnings and net earnings2 (3.1) (1.2)
Adjusted ROE - reported 12.9 15.9
Less: Impact of foreign currency3 (0.8) N/A
Adjusted ROE, excluding impact of foreign currency 13.7 15.9

1    U.S. GAAP ROE is calculated by dividing net earnings (annualized) by average shareholders' equity.

2    See separate reconciliation of net income to adjusted earnings.

3    Impact of foreign currency is calculated by restating all foreign currency components of the income statement to the weighted average foreign currency exchange rate for the comparable prior year period. The impact is the difference of the restated adjusted earnings compared to reported adjusted earnings. For comparative purposes, only current period income is restated using the weighted average prior period exchange rate, which eliminates the foreign currency impact for the current period. This allows for equal comparison of this financial measure.

EFFECT OF FOREIGN CURRENCY ON ADJUSTED RESULTS1
(SELECTED PERCENTAGE CHANGES, UNAUDITED)
THREE MONTHS ENDED DECEMBER 31, 2022 Including<br>Currency<br>Changes Excluding<br><br>Currency<br><br>Changes2
Net earned premiums3 (15.5) % (2.8) %
Adjusted net investment income4 (5.9) % 0.4
Total benefits and expenses (16.9) (4.6)
Adjusted earnings (5.2) 2.9
Adjusted earnings per diluted share 0.8 9.4

1Refer to previously defined adjusted earnings and adjusted earnings per diluted share.

2Amounts excluding currency changes were determined using the same foreign currency exchange rate for the current period as the comparable period in the prior year, which eliminates dollar-based fluctuations driven solely from currency rate changes.

3Net of reinsurance

4Refer to previously defined adjusted net investment income.

EFFECT OF FOREIGN CURRENCY ON ADJUSTED RESULTS1
(SELECTED PERCENTAGE CHANGES, UNAUDITED)
TWELVE MONTHS ENDED DECEMBER 31, 2022 Including<br>Currency<br>Changes Excluding<br><br>Currency<br><br>Changes2
Net earned premiums3 (13.5) % (3.2) %
Adjusted net investment income4 (6.6) % (0.7)
Total benefits and expenses (10.8) (0.1)
Adjusted earnings (15.5) (10.1)
Adjusted earnings per diluted share (10.3) (4.5)

1Refer to previously defined adjusted earnings and adjusted earnings per diluted share.

2Amounts excluding currency changes were determined using the same foreign currency exchange rate for the current period as the comparable period in the prior year, which eliminates dollar-based fluctuations driven solely from currency rate changes.

3Net of reinsurance

4Refer to previously defined adjusted net investment income.

FORWARD-LOOKING INFORMATION

The Private Securities Litigation Reform Act of 1995 provides a “safe harbor” to encourage companies to provide prospective information, so long as those informational statements are identified as forward-looking and are accompanied by meaningful cautionary statements identifying important factors that could cause actual results to differ materially from those included in the forward-looking statements. The company desires to take advantage of these provisions. This document contains cautionary statements identifying important factors that could cause actual results to differ materially from those projected herein, and in any other statements made by company officials in communications with the financial community and contained in documents filed with the Securities and Exchange Commission (SEC). Forward-looking statements are not based on historical information and relate to future operations, strategies, financial results or other developments. Furthermore, forward-looking information is subject to numerous assumptions, risks and uncertainties. In particular, statements containing words such as “expect,” “anticipate,” “believe,” “goal,” “objective,” “may,” “should,” “estimate,” “intends,” “projects,” “will,” “assumes,” “potential,” “target,” "outlook" or similar words as well as specific projections of future results, generally qualify as forward-looking. Aflac undertakes no obligation to update such forward-looking statements.

The company cautions readers that the following factors, in addition to other factors mentioned from time to time, could cause actual results to differ materially from those contemplated by the forward-looking statements:

•difficult conditions in global capital markets and the economy, including those caused by COVID-19

•defaults and credit downgrades of investments

•global fluctuations in interest rates and exposure to significant interest rate risk

•concentration of business in Japan

•limited availability of acceptable yen-denominated investments

•foreign currency fluctuations in the yen/dollar exchange rate

•differing interpretations applied to investment valuations

•significant valuation judgments in determination of expected credit losses recorded on the Company's investments

•decreases in the Company's financial strength or debt ratings

•decline in creditworthiness of other financial institutions

•concentration of the Company's investments in any particular single-issuer or sector

•major public health issues, the effects of COVID-19 and its variants (both known and emerging), and any resulting economic effects and government interventions, on the Company's business and financial results

•the Company's ability to attract and retain qualified sales associates, brokers, employees, and distribution partners

•deviations in actual experience from pricing and reserving assumptions

•ability to continue to develop and implement improvements in information technology systems

•interruption in telecommunication, information technology and other operational systems, or a failure to maintain the security,

confidentiality or privacy of sensitive data residing on such systems

•subsidiaries' ability to pay dividends to the Parent Company

•inherent limitations to risk management policies and procedures

•operational risks of third party vendors

•tax rates applicable to the Company may change

•failure to comply with restrictions on policyholder privacy and information security

•extensive regulation and changes in law or regulation by governmental authorities

•competitive environment and ability to anticipate and respond to market trends

•catastrophic events, including, but not limited to, as a result of climate change, epidemics, pandemics (such as COVID-19), tornadoes, hurricanes, earthquakes, tsunamis, war or other military action, terrorism or other acts of violence, and damage incidental to such events

•ability to protect the Aflac brand and the Company's reputation

•ability to effectively manage key executive succession

•changes in accounting standards

•level and outcome of litigation

•allegations or determinations of worker misclassification in the United States

Analyst and investor contact - David A. Young, 706.596.3264 or 800.235.2667 or dyoung@aflac.com

Media contact - Ines Gutzmer, 762.207.7601 or igutzmer@aflac.com

Document

FINAL                    2/1/2023

aflaclogoa01a01a01a33a.jpg

Financial Analysts Briefing Supplement

Fourth Quarter 2022

This document is a statistical supplement to the Financial Analysts Briefing book. Throughout the presentation, amounts presented may not foot due to rounding. As you review the supplement, please note the non-U.S. GAAP financial measures and definitions found at the back of this document.

Aflac Incorporated Page
Share Data 2
Summary of Adjusted Results by Business Segment 3
Statements of Earnings 4
Analysis of Net Earnings and Net Earnings Per Share 5
Balance Sheets 6
Quarterly Financial Results 7
Quarterly Book Value Per Share 8
Return on Equity 9
Adjusted Earnings Per Share Excluding Current Period Foreign Currency Impact 10
Investment Results 11,12,13
Long-Term Debt Data 14
Ratings 15
Aflac U.S.
Statement of Pretax Adjusted Earnings 16
Balance Sheets 17
Quarterly Pretax Adjusted Earnings 18
Operating Ratios 19
Sales 20,21
Aflac Japan
Statement of Pretax Adjusted Earnings 22,23
Balance Sheets 24,25
Quarterly Pretax Adjusted Earnings 26
Operating Ratios 27
Sales 28,29,30
Yen/Dollar Exchange Rates 31
Corporate and Other
Statement of Pretax Adjusted Earnings 32
Non-U.S. GAAP Financial Measures 33

For more information, contact:

David Young

Phone. 706.596.3264

Aflacir@aflac.com

investors.aflac.com

Aflac Incorporated and Subsidiaries
Share Data
(In Thousands)
Beginning Shares Issued Shares Purchased Ending QTD Weighted Avg. Shares YTD Weighted Avg. Shares
Shares Stk. Bon. Stk. Opt. Treas. Misc. Shares Avg. Dilutive Avg. Avg. Dilutive Avg.
Period Outstanding & DRP & Misc. Shares Purch.(1) Outstanding Shares Shares Diluted Shares Shares Diluted
2020 1 726,793 468 1,613 9,984 508 718,382 724,366 3,146 727,512 724,366 3,146 727,512
2 718,382 648 100 5,209 13 713,908 717,889 1,875 719,764 721,128 2,510 723,638
3 713,908 468 134 10,916 20 703,574 711,698 2,095 713,793 717,962 2,372 720,333
4 703,574 437 235 11,791 1 692,454 701,016 2,843 703,859 713,702 2,490 716,192
2021 1 692,454 387 1,684 13,440 378 680,707 688,938 3,002 691,940 688,938 3,002 691,940
2 680,707 330 130 9,174 3 671,990 678,050 2,871 680,921 683,464 2,936 686,400
3 671,990 250 188 9,572 39 662,817 668,762 3,163 671,925 678,509 3,012 681,521
4 662,817 249 224 11,140 18 652,132 659,100 3,412 662,512 673,617 3,112 676,729
2022 1 652,132 259 1,308 8,007 343 645,349 649,753 3,074 652,827 649,753 3,074 652,827
2 645,349 269 101 11,185 8 634,526 640,707 2,536 643,243 645,205 2,805 648,010
3 634,526 258 144 11,057 3 623,868 629,350 2,597 631,947 639,862 2,735 642,597
4 623,868 222 120 8,938 16 615,256 619,845 3,149 622,994 634,816 2,839 637,655

(1) Includes previously owned shares used to purchase options (swapped shares) and/or shares purchased for deferred compensation program

Aflac Incorporated and Subsidiaries
Summary of Adjusted Results by Business Segment
(In Millions, except per-share data and where noted)
3 Months Ended December 31, 12 Months Ended December 31,
% %
2018 2019 2020 2021 2021 2022 Change 2021 2022 Change
Aflac Japan 3,054 $ 3,208 $ 3,261 $ 3,263 $ 3,754 $ 887 $ 704 (20.6) $ 3,754 $ 3,056 (18.6)
Aflac U.S. 1,245 1,285 1,272 1,268 1,478 261 340 30.3 1,478 1,324 (10.4)
Corporate and other (1) (214) (139) (72) (115) (298) (155) (44) (298) (223)
Pretax adjusted earnings 4,086 4,354 4,461 4,416 4,934 993 1,001 .8 4,934 4,157 (15.7)
Income taxes (1) 1,370 1,129 1,147 864 915 143 194 35.7 915 760 (16.9)
Adjusted earnings (2) 2,716 3,226 3,314 3,552 4,019 850 806 (5.2) 4,019 3,397 (15.5)
Reconciling items:
Adjusted net investment gains (losses) — (297) (15) (229) 462 246 (477) 462 447
Other and non-recurring income (loss) (3) (69) (75) (1) (28) (73) (6) — (73) 1
Income tax benefit (expense) on items excluded from adjusted earnings (4) 24 83 3 72 (83) (50) (144) (83) 357
Tax reform adjustment (5) 1,933 (18) 4 — — — — — —
Tax valuation allowance release (6) — — — 1,411 — — — — —
Net earnings 4,604 $ 2,920 $ 3,304 $ 4,778 $ 4,325 $ 1,039 $ 185 (82.2) $ 4,325 $ 4,201 (2.9)
Effective Tax rate (14.6) % 26.7 % 25.7 % (14.9) % 18.7 % 15.7 % 64.6 % 18.7 % 8.8 %
Earnings per share of common stock:
Net earnings (basic) 5.81 $ 3.79 $ 4.45 $ 6.69 $ 6.42 $ 1.58 $ 0.30 (81.0) $ 6.42 $ 6.62 3.1
Net earnings (diluted) 5.77 3.77 4.43 6.67 6.39 1.57 0.30 (80.9) 6.39 6.59 3.1
Adjusted earnings (basic) (2) 3.43 $ 4.20 $ 4.46 $ 4.98 $ 5.97 $ 1.29 $ 1.30 .8 $ 5.97 $ 5.35 (10.4)
Adjusted earnings (diluted) (2) 3.40 4.16 4.44 4.96 5.94 1.28 1.29 .8 5.94 5.33 (10.3)
(1) The change in value of federal historic rehabilitation and solar investments in partnerships of 11 and 104 for the three-month periods and 91 and 138 for the twelve-month periods ended December 31, 2022, and 2021, respectively is included as a reduction to net investment income. Tax credits on these investments of 20 and 80 for the three-month period and 83 and 115 for the twelve-month periods ended December 31, 2022, and 2021, respectively, have been recorded as an income tax benefit in the consolidated statement of earnings.
(2) See non-U.S. GAAP financial measures for definition of adjusted earnings.
(3) Foreign currency gains and losses for all periods have been reclassified from Other and non-recurring income (loss) to Net investment gains and losses.
(4) Primarily reflects release of 452 in deferred taxes in 2022
(5) The impact of Tax Reform was adjusted in 2018 for return-to-provision adjustments, various amended returns filed by the Company, and final true-ups of deferred tax liabilities. Further impacts were recorded in 2019 as a result of additional guidance released by the IRS.
(6) Tax benefit recognized in 2020 represents the release of valuation allowances on deferred tax benefits related to foreign tax credits.

All values are in US Dollars.

Aflac Incorporated and Subsidiaries
Consolidated Statements of Earnings - U.S. GAAP
(In Millions, except per-share data)
3 Months Ended December 31, 12 Months Ended December 31,
% %
2018 2019 2020 2021 2021 2022 Change 2021 2022 Change
Revenues:
Net earned premiums
Gross premiums 18,875 $ 19,018 $ 19,122 $ 18,955 $ 17,857 $ 4,290 $ 3,615 $ 17,857 $ 15,387
Assumed (ceded) (345) (341) (342) (333) (210) (48) (30) (210) (124)
Total net earned premiums 18,531 18,677 18,780 18,622 17,647 4,242 3,585 (15.5) 17,647 15,263 (13.5)
Net investment income 3,220 3,442 3,578 3,638 3,818 910 896 (1.5) 3,818 3,656 (4.2)
Net investment gains (losses) (1) (151) (430) (135) (270) 468 243 (521) 468 363
Other income (1) 67 69 84 157 173 38 50 173 220
Total revenues 21,667 21,758 22,307 22,147 22,106 5,433 4,010 (26.2) 22,106 19,502 (11.8)
Benefits and Expenses:
Benefits and claims, net
Incurred claims -direct 8,853 9,121 9,279 9,364 8,947 2,200 1,826 8,947 8,270
Incurred claims -assumed (ceded) (446) (421) (372) (296) (148) (24) (18) (148) (107)
Increase in FPB (2)-direct 3,628 3,167 2,952 2,707 1,759 401 215 1,759 972
Increase in FPB (2)-assumed (ceded) 146 133 83 21 18 4 4 18 18
Total net benefits and claims 12,181 12,000 11,942 11,796 10,576 2,581 2,028 (21.4) 10,576 9,153 (13.5)
Acquisition and operating expenses:
Amortization of DAC (3) 1,132 1,245 1,282 1,214 1,170 300 295 1,170 1,152
Insurance commissions 1,316 1,320 1,321 1,316 1,256 304 271 1,256 1,117
Insurance expenses 2,780 2,988 3,089 3,420 3,544 958 837 3,544 3,250
Interest expense 240 222 228 242 238 57 55 238 226
Other expenses — — — — — — — — —
Total acquisition and operating expenses 5,468 5,775 5,920 6,192 6,208 1,619 1,458 (9.9) 6,208 5,745 (7.5)
Total benefits and expenses 17,649 17,775 17,862 17,988 16,784 4,200 3,486 (17.0) 16,784 14,898 (11.2)
Pretax earnings 4,018 3,983 4,445 4,159 5,322 1,233 524 5,322 4,604
Income tax expense (benefit) (4) (586) 1,063 1,141 (619) 997 194 339 997 403
Net earnings 4,604 $ 2,920 $ 3,304 $ 4,778 $ 4,325 $ 1,039 $ 185 (82.2) $ 4,325 $ 4,201 (2.9)
(1) Foreign currency gains and losses for all periods have been reclassified from Other income to Net investment gains and losses for consistency with current period presentation.
(2) Future policy benefits
(3) Deferred acquisition costs
(4) Primarily reflects release of 452 in deferred taxes in 2022

All values are in US Dollars.

Aflac Incorporated and Subsidiaries
Analysis of Net Earnings and Net Earnings Per Diluted Share
(In Millions, except for per-share data)
Other and Foreign
Net Other and Non- Foreign Net Net Non-Recurring Currency
Net Investment Recurring Currency Earnings Investment Items Impact
Period Earnings Gains (Losses) (1) Items (1)(3)(4) Impact (2) Per Share Gains (Losses) (1) Per Share (1)(3)(4) Per Share (2)
2017 4,604 — 1,888 (41) 5.77 — 2.37 (.05)
2018 2,920 (230) (76) 28 3.77 (.30) (.09) .04
2019 3,304 (13) 3 15 4.43 (.02) .01 .02
2020 4,778 (181) 1,407 31 6.67 (.25) 1.96 .04
2021 4,325 365 (59) (38) 6.39 .54 (.09) (.06)
2022 4,201 803 1 (215) 6.59 1.26 — (.34)
2020 1 566 (322) 5 9 .78 (.44) .01 .01
2 805 (116) — 5 1.12 (.16) — .01
3 2,456 45 1,418 3 3.44 .06 1.99 —
4 951 212 (15) 14 1.35 .30 (.02) .02
2021 1 1,293 240 (5) 13 1.87 .35 (.01) .02
2 1,105 67 (42) (6) 1.62 .10 (.06) (.01)
3 888 (136) (7) (14) 1.32 (.20) (.01) (.02)
4 1,039 194 (5) (30) 1.57 .29 (.01) (.05)
2022 1 1,032 106 (1) (37) 1.58 .16 — (.06)
2 1,388 448 — (57) 2.16 .70 — (.09)
3 1,596 871 1 (53) 2.53 1.38 — (.08)
4 185 (621) — (68) .30 (1.00) — (.11)
(1) Items are presented net of tax.
(2) See non-U.S. GAAP financial measures for definition of adjusted earnings excluding current period foreign currency impact
(3) Foreign currency gains and losses and amortized hedge costs/income for all periods have been reclassified from Other income to Net investment gains and losses for consistency with current period presentation.
(4 )Tax benefit recognized in the third quarter of 2020 represents the release of valuation allowances on deferred tax benefits related to foreign tax credits.
Aflac Incorporated and Subsidiaries
--- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- ---
Consolidated Balance Sheets
(In Millions, except per-share data)
December 31,
Assets: 2017 2018 2019 2020 2021 2022
Investments and cash:
Securities available for sale:
Fixed maturity securities available for sale, at fair value $ 78,804 $ 78,429 $ 86,950 $ 101,286 $ 94,206 $ 71,936
Fixed maturity securities available for sale - consolidated variable interest entities, at fair value 5,509 4,466 4,312 4,596 4,490 3,805
Fixed maturity securities held to maturity, at amortized cost, net of allowance for credit losses 31,430 30,318 30,085 24,464 22,000 19,056
Equity securities, at fair value 1,023 987 802 1,283 1,603 1,091
Commercial mortgage and other loans, net of allowance for credit losses 3,002 6,919 9,569 10,554 11,786 13,496
Other investments 400 787 1,477 2,429 3,842 4,070
Cash and cash equivalents 3,491 4,337 4,896 5,141 5,051 3,943
Total investments and cash 123,659 126,243 138,091 149,753 142,978 117,397
Receivables, net of allowance for credit losses 827 851 828 796 693 672
Accrued investment income 769 773 772 780 737 745
Deferred policy acquisition costs 9,505 9,875 10,128 10,441 9,525 8,593
Property and equipment, net 434 443 581 601 538 530
Other assets, net of allowance for credit losses (1) 2,023 2,221 2,368 2,715 3,071 3,080
Total assets $ 137,217 $ 140,406 $ 152,768 $ 165,086 $ 157,542 $ 131,017
Liabilities and Shareholders' Equity:
Liabilities:
Total policy liabilities $ 99,147 $ 103,188 $ 106,554 $ 114,391 $ 105,072 $ 93,258
Notes payable 5,289 5,778 6,569 7,899 7,956 7,442
Income taxes, primarily deferred 4,745 4,020 5,370 4,661 4,339 1,296
Other liabilities 3,438 3,958 5,316 4,576 6,922 6,656
Total liabilities 112,619 116,944 123,809 131,527 124,289 108,652
Shareholders' equity:
Common stock 135 135 135 135 135 135
Additional paid-in capital 2,052 2,177 2,313 2,410 2,529 2,641
Retained earnings 29,895 31,788 34,291 37,984 41,381 44,568
Accumulated other comprehensive income (loss):
Unrealized foreign currency translation gains (losses) (1,750) (1,847) (1,623) (1,109) (2,013) (3,640)
Unrealized gains (losses) on fixed maturity securities 5,964 4,234 8,548 10,361 9,602 (702)
Unrealized gains (losses) on derivatives (23) (24) (33) (34) (30) (27)
Pension liability adjustment (163) (212) (277) (284) (166) (36)
Treasury stock (11,512) (12,789) (14,395) (15,904) (18,185) (20,574)
Total shareholders' equity 24,598 23,462 28,959 33,559 33,253 22,365
Total liabilities & shareholders' equity $ 137,217 $ 140,406 $ 152,768 $ 165,086 $ 157,542 $ 131,017

(1) Includes goodwill of $265 million in 2022, $268 in 2021, $269 in 2020, $140 million in 2019, $67 million in 2018 and $67 million in 2017

Aflac Incorporated and Subsidiaries
Quarterly Financial Results
(Dollars In Millions, except per-share data)
Total
Net Net Benefits Acquisitions Total Net EPS Adj. EPS (1)
Earned Inv. Total & & Pretax Net Adjusted
Period Premiums Income Revenues Claims Adj. Exp. Earn. Earn. Earn. (1) Basic Dil. Basic Dil.
2017 18,531 3,220 21,667 12,181 5,468 4,018 4,604 2,716 5.81 5.77 3.43 3.40
2018 18,677 3,442 21,758 12,000 5,775 3,983 2,920 3,226 3.79 3.77 4.20 4.16
2019 18,780 3,578 22,307 11,942 5,920 4,445 3,304 3,314 4.45 4.43 4.46 4.44
2020 18,622 3,638 22,147 11,796 6,192 4,159 4,778 3,552 6.69 6.67 4.98 4.96
2021 17,647 3,818 22,106 10,576 6,208 5,322 4,325 4,019 6.42 6.39 5.97 5.94
2022 15,263 3,656 19,502 9,153 5,745 4,604 4,201 3,397 6.62 6.59 5.35 5.33
2020 1 4,681 904 5,162 2,939 1,503 720 566 882 .78 .78 1.22 1.21
2 4,664 870 5,407 2,897 1,440 1,070 805 921 1.12 1.12 1.28 1.28
3 4,623 896 5,665 2,985 1,527 1,153 2,456 994 3.45 3.44 1.40 1.39
4 4,653 968 5,913 2,974 1,723 1,216 951 755 1.36 1.35 1.08 1.07
2021 1 4,593 925 5,869 2,735 1,531 1,603 1,293 1,058 1.88 1.87 1.54 1.53
2 4,441 993 5,564 2,653 1,538 1,373 1,105 1,080 1.63 1.62 1.59 1.59
3 4,372 991 5,237 2,609 1,515 1,113 888 1,031 1.33 1.32 1.54 1.53
4 4,242 910 5,433 2,581 1,619 1,233 1,039 850 1.58 1.57 1.29 1.28
2022 1 4,178 903 5,272 2,487 1,509 1,276 1,032 927 1.59 1.58 1.43 1.42
2 3,849 937 5,400 2,298 1,401 1,701 1,388 939 2.17 2.16 1.47 1.46
3 3,651 920 4,820 2,340 1,377 1,103 1,596 725 2.54 2.53 1.15 1.15
4 3,585 896 4,010 2,028 1,458 524 185 806 0.30 0.30 1.30 1.29

(1) See non-U.S. GAAP financial measures for definition of adjusted earnings.

Aflac Incorporated and Subsidiaries
Quarterly Book Value Per Share
(Dollars In Millions, except per-share data)
Adjusted BV
Adjusted BV Per Share Incl
Equity AOCI Adjusted BV Per Share Incl Foreign Currency
BV Per BV Per Adjusted BV Per Share Foreign Currency Translation G/(L)
Period Share Share Per Share (1) % Change Translation G/(L)(1) % Change
2017 31.50 5.16 26.34 19.7% 24.10 23.3%
2018 31.06 2.85 28.22 7.1% 25.77 6.9%
2019 39.84 9.10 30.74 8.9% 28.51 10.6%
2020 48.46 12.90 35.56 15.7% 33.96 19.1%
2021 50.99 11.34 39.65 11.5% 36.57 7.7%
2022 36.35 (7.16) 43.51 9.7% 37.59 2.8%
2020 1 36.75 5.83 30.92 7.0% 28.77 8.9%
2 41.21 9.45 31.75 7.5% 29.70 7.7%
3 46.16 11.25 34.91 15.7% 33.08 17.4%
4 48.46 12.90 35.56 15.7% 33.96 19.1%
2021 1 47.16 10.00 37.16 20.2% 34.70 20.6%
2 50.20 11.93 38.27 20.5% 35.80 20.5%
3 50.62 11.56 39.06 11.9% 36.41 10.1%
4 50.99 11.34 39.65 11.5% 36.57 7.7%
2022 1 45.75 4.82 40.93 10.1% 37.08 6.9%
2 41.59 (0.86) 42.45 10.9% 37.27 4.1%
3 38.71 (5.63) 44.34 13.5% 37.20 2.2%
4 36.35 (7.16) 43.51 9.7% 37.59 2.8%

(1) See non-U.S. GAAP financial measures for definition of adjusted book value and adjusted book value including unrealized foreign currency translation gains and losses.

Aflac Incorporated and Subsidiaries
Return on Equity
Year Ended December 31,
2017 2018 2019 2020 2021 2022
U.S. GAAP ROE (1) - Net earnings 20.4 % 12.2 % 12.6 % 15.3 % 12.9 % 15.1 %
Impact of excluding unrealized foreign currency translation gains (losses) (2.0) (1.0) (1.0) (0.9) (0.8) (1.7)
Impact of excluding unrealized gains (losses) on securities and derivatives 5.8 3.0 3.6 6.2 5.1 2.7
Impact of excluding pension liability adjustment (0.2) (0.1) (0.1) (0.2) (0.1) (0.1)
Impact of excluding AOCI 3.6 1.8 2.5 5.1 4.2 0.9
U.S. GAAP ROE - less AOCI 24.0 13.9 15.1 20.3 17.1 16.0
Differences between adjusted earnings and net earnings (2) (9.8) 1.5 0.0 (5.2) (1.2) (3.1)
Adjusted ROE - reported (3) 14.2 15.4 15.2 15.1 15.9 12.9
(1) U.S. GAAP ROE is calculated by dividing net earnings (annualized) by average shareholders' equity.
(2) See separate reconciliation of net income to adjusted earnings.
(3) See non-U.S. GAAP financial measures for definition of adjusted return on equity
Aflac Incorporated and Subsidiaries
--- --- --- --- --- --- --- --- --- --- --- --- --- ---
Adjusted Earnings Per Share Excluding Current Period Foreign Currency Impact (1)
(Diluted Basis)
Change
QTD YTD Excluding Excluding
Foreign Foreign Foreign Foreign
Adjusted Currency Currency Currency Currency
Period EPS(1) Growth Impact(1) Impact(1) Impact(1) Impact
2017 $ 3.40 4.6 % N/A (.05) $ 3.45 6.2 %
2018 $ 4.16 22.4 % N/A .04 $ 4.13 21.5 %
2019 $ 4.44 6.7 % N/A .02 $ 4.42 6.3 %
2020 $ 4.96 11.7 % N/A .04 $ 4.92 10.8 %
2021 $ 5.94 19.8 % N/A (.06) $ 6.00 21.0 %
2022 $ 5.33 (10.3) % N/A (.34) $ 5.67 (4.5) %
2020 1 $ 1.21 8.0 % .01 .01 $ 1.20 7.1 %
2 1.28 13.3 .01 .02 1.27 12.4
3 1.39 19.8 — .02 1.39 19.8
4 1.07 3.9 .02 .04 1.05 1.9
$ 4.96 11.7 % $ 4.92 10.8 %
2021 1 $ 1.53 26.4 % .02 .02 $ 1.51 24.8 %
2 1.59 24.2 (.01) .01 1.59 24.2
3 1.53 10.1 (.02) (.01) 1.56 12.2
4 1.28 19.6 (.05) (.06) 1.33 24.3
$ 5.94 19.8 % $ 6.00 21.0 %
2022 1 $ 1.42 (7.2) % (.06) (.06) $ 1.48 (3.3) %
2 1.46 (8.2) (.09) — 1.55 (2.5)
3 1.15 (24.8) (.08) (.23) 1.23 (19.6)
4 1.29 .8 (.11) (.34) 1.40 9.4
$ 5.33 (10.3) % $ 5.67 (4.5) %
(1) See non-U.S.GAAP financial measures for definition of adjusted earnings and adjusted earnings excluding current period foreign currency impact
Aflac Incorporated and Subsidiaries
--- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- ---
Composition of Invested Assets
(In Millions)
December 31,
2017 2018 2019 2020 2021 2022
Fixed Maturity Securities(1) $ 106,562 $ 107,174 $ 109,456 $ 116,056 $ 107,369 $ 94,525
Commercial mortgage and other loans, net of allowance for credit losses (1)
Transitional Real Estate (floating rate) 1,235 4,378 5,450 5,231 5,246 6,455
Middle Market Loans (floating rate) 859 1,478 2,412 3,635 4,601 5,028
Commercial Mortgage Loans 908 1,063 1,707 1,688 1,874 2,013
Total Commercial mortgage and other loans, net of allowance for credit losses(1) 3,002 6,919 9,569 10,554 11,721 13,496
Equity Securities, at FV through net earnings 846 987 802 1,283 1,603 1,091
Alternatives(2) 113 370 551 919 1,703 2,107
Total Portfolio $ 110,523 $ 115,450 $ 120,378 $ 128,812 $ 122,396 $ 111,219
Unrealized Gains (Losses) on Invested Assets
(In Millions)
December 31,
2017 2018 2019 2020 2021 2022
Fixed Maturity Securities
Available For Sale - Gross Gains $ 9,985 $ 7,733 $ 12,266 $ 14,771 $ 13,566 $ 4,800
Available For Sale - Gross Losses (804) (1,694) (375) (481) (239) (4,528)
Total Available For Sale 9,181 6,039 11,891 14,290 13,327 272
Held to Maturity - Gross Gains 6,651 6,470 7,519 5,935 4,869 2,154
Held to Maturity - Gross Losses (9) (66) (10) — — —
Total Held to Maturity $ 6,642 $ 6,404 $ 7,509 $ 5,935 $ 4,869 $ 2,154
Credit Ratings on Fixed Maturities
(At Amortized Cost)
December 31,
Credit Rating 2017 2018 2019 2020 2021 2022
AAA 1.0 % 1.0 % 1.1 % 1.0 % 1.0 % 1.6 %
AA 3.9 3.9 4.3 4.5 5.1 5.2
A 65.8 67.9 68.6 69.3 68.9 68.0
BBB 24.0 23.2 23.1 21.9 22.5 23.0
BB or Lower 5.3 4.0 2.9 3.3 2.5 2.2
100.0 % 100.0 % 100.0 % 100.0 % 100.0 % 100.0 %
(1) Presented at amortized cost, net of reserves beginning in 2020
(2) Presented at carrying value; includes asset classes such as private equity and real estate managed by Global Investments; excludes Corporate driven activity
Aflac Incorporated and Subsidiaries
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Supplemental Investment Data by Segment
3 Months Ended
December 31, December 31,
2017 2018 2019 2020 2021 2022 2021 2022
Aflac Japan:
¥ 11,017,560 ¥ 11,442,444 ¥ 11,784,586 ¥ 11,936,087 ¥ 12,405,531 ¥ 12,617,181 ¥ 12,405,531 ¥ 12,617,181
2.31 % 2.33 % 2.33 % 2.38 % 2.72 % 2.78 % 2.83 % 2.70 %
2.56 % 2.61 % 2.64 % 2.59 % 2.60 % 3.06 % 2.60 % 3.06 %
¥ 1,078,586 ¥ 1,298,376 ¥ 1,003,885 ¥ 714,124 ¥ 952,038 ¥ 716,964 ¥ 262,311 ¥ 82,065
1.98 % 3.06 % 3.83 % 3.75 % 3.50 % 4.48 % 3.82 % 6.81 %
Aflac U.S.:
$ 13,764 $ 13,798 $ 14,036 $ 14,848 $ 15,841 $ 16,772 $ 15,841 $ 16,772
5.07 % 5.16 % 5.70 % 4.90 % 4.87 % 4.72 % 4.98 % 4.65 %
5.52 % 5.55 % 5.40 % 5.18 % 4.94 % 5.39 % 4.94 % 5.39 %
$ 1,434 $ 2,155 $ 1,835 $ 1,050 $ 2,130 $ 1,701 $ 778 $ 307
4.49 % 4.55 % 4.51 % 3.04 % 3.41 % 5.16 % 3.10 % 6.30 %
Hedge Costs/Income Metrics (5)(6)
3 Months Ended
December 31, December 31,
2017 2018 2019 2020 2021 2022 2021 2022
Aflac Japan:
FX hedged notional at end of period (in billions)(7) $ 9.3 $ 9.9 $ 8.8 $ 6.0 $ 6.4 $ 4.1 $ 6.4 $ 4.1
Weighted average remaining tenor (in months)(8) 27.7 21.4 8.5 13.0 2.6 0.7 2.6 0.7
Amortized hedge costs for period (in millions) $ (228) $ (236) $ (257) $ (206) $ (76) $ (112) $ (21) $ (28)
Corporate and Other (Parent Company):
FX hedged notional at end of period (in billions)(7) $ — $ 2.5 $ 4.9 $ 5.0 $ 5.0 $ 5.0 $ 5.0 $ 5.0
Weighted average remaining tenor (in months)(8) — 16.1 13.7 12.1 11.5 10.8 11.5 10.8
Amortized hedge income (costs) for period (in millions) $ — $ 36 $ 89 $ 97 $ 57 $ 68 $ 12 $ 25
(1) Invested assets, including cash and short term investments, are stated at amortized cost; except for equities, which are at fair value.
(2) Net of investment expenses and amortized hedge costs, year-to-date number reflected on a quarterly average basis
(3) Includes fixed maturity securities, commercial mortgage and other loans, equity securities, and excludes alternative investments in limited partnerships, and any impacts from hedging      activities
(4) Reported on a gross yield basis; excludes investment expenses, external management fees, and amortized hedge costs
(5) See non-U.S. GAAP financial measures for definition of amortized hedge costs/income. Further, the metrics in this table are split to show the hedging of the market value of a portion of the investments in Japan Segment’s " Program" in the "Japan Segment Portfolio Allocation by Currency" table on page 13 of this supplement as well as the corporate hedging activities at Aflac Inc.
(6) Aflac Japan and the Parent Company utilize foreign currency forwards and options to hedge foreign currency exchange rate risk. The hedge cost/income on the table above reflects our FX forward protection of the hedged portfolio, and hedge costs on one sided options used as caps, and on tail-risk put options. The table does not include the notional amount and weighted average remaining tenor for these options. At December 31, 2022, Aflac Japan caps and put options notional amount was 13.5 billion with a weighted average remaining tenor of 6.4 months. At December 31, 2022, the Parent Company caps notional amount was 2.6 billion with a weighted average remaining tenor of 9.0 months.
(7) Notional is reported net of any offsetting positions within Aflac Japan or the Parent Company, respectively.
(8) Tenor based on period reporting date to settlement date

All values are in US Dollars.

Aflac Incorporated and Subsidiaries
December 31, 2021 December 31, 2022
Amortized<br>Cost (2) Fair <br>Value Amortized<br>Cost (2) Fair <br>Value
JGB $ 50,186 $ 57,862 $ 42,618 $ 44,178
Other 23,661 27,684 20,930 21,277
Total yen denominated 73,847 85,546 63,548 65,455
Program 28,913 31,946 27,212 27,885
Other 2,236 3,328 2,209 2,795
US dollar denominated 31,149 35,274 29,421 30,680
Total $ 104,996 $ 120,820 $ 92,969 $ 96,135
December 31, 2022
(In millions) Amortized Cost (2) % of <br>Total
Government and agencies $ 43,854 46.4 %
Municipalities 2,590 2.7
Mortgage- and asset-backed securities 2,167 2.3
Public utilities 7,450 7.9
Electric 6,036 6.4
Natural Gas 249 .3
Other 565 .6
Utility/Energy 600 .6
Sovereign and supranational 1,238 1.3
Banks/financial institutions 9,340 9.9
Banking 5,633 6.0
Insurance 1,703 1.8
Other 2,004 2.1
Other corporate 27,886 29.5
Basic Industry 2,452 2.6
Capital Goods 3,394 3.6
Communications 2,866 3.0
Consumer Cyclical 2,206 2.3
Consumer Non-Cyclical 6,238 6.7
Energy 2,664 2.8
Other 1,371 1.5
Technology 3,534 3.7
Transportation 3,161 3.3
Total fixed maturity securities $ 94,525 100.0 %
(1) The entire U.S. segment investment portfolio is U.S. dollar denominated.
(2) Net of reserves

All values are in US Dollars.

Aflac Incorporated and Subsidiaries
Long-Term Debt Data
Adjusted Leverage Ratios
(In Millions)
December 31,
2017 2018 2019 2020 2021 2022
Notes payable $ 5,289 $ 5,778 $ 6,569 $ 7,899 $ 7,956 $ 7,442
50% of subordinated debentures and perpetual bonds (263) (268) (408) (432) (389) (337)
Pre-funding of debt maturities — — (348) — — —
Adjusted debt (1) 5,026 5,510 5,814 7,467 7,568 7,105
Total Shareholders' Equity 24,598 23,462 28,959 33,559 33,253 22,365
Accumulated other comprehensive (income) loss:
Unrealized foreign currency translation (gains) losses 1,750 1,847 1,623 1,109 2,013 3,640
Unrealized (gains) losses on fixed maturity securities (5,964) (4,234) (8,548) (10,361) (9,602) 702
Unrealized (gains) losses on derivatives 23 24 33 34 30 27
Pension liability adjustment 163 212 277 284 166 36
Adjusted book value (1) 20,570 21,311 22,344 24,625 25,860 26,770
Adjusted capitalization ex-AOCI (1) (2) $ 25,859 $ 27,089 $ 28,565 $ 32,524 $ 33,816 $ 34,212
Adjusted debt to adjusted capitalization ex-AOCI 19.4 % 20.3 % 20.4 % 23.0 % 22.4 % 20.8 %
Adjusted capitalization (1) (3) $ 23,946 $ 25,030 $ 26,665 $ 31,131 $ 31,637 $ 30,536
Adjusted debt to adjusted capitalization 21.0 % 22.0 % 21.8 % 24.0 % 23.9 % 23.3 % Debt Maturities(4)
--- --- --- --- --- --- --- --- --- --- --- --- --- ---
(In Millions)
December 31, 2022
≤ 1 year 1 > 5 years 5 > 10 years 10 > 20 years 20 years + Total
Senior Notes $ — $ 1,334 $ 2,997 $ 1,153 $ 1,191 $ 6,675
Subordinated debt — — — — 678 678
Total $ — $ 1,334 $ 2,997 $ 1,153 $ 1,869 $ 7,353

(1) See non-U.S. GAAP financial measures for definition of: adjusted debt; adjusted book value; adjusted debt, including 50% of subordinated debentures and perpetual bonds; and adjusted book value, including unrealized foreign currency translation gains and losses and pension liability adjustment

(2) Adjusted capitalization ex-AOCI is the sum of adjusted debt, including 50% of subordinated debentures and perpetual bonds, plus adjusted book value

(3)Adjusted capitalization is sum of adjusted debt, including 50% of subordinated debentures and perpetual bonds, plus adjusted book value, including unrealized foreign currency translation gains and losses and pension liability adjustment

(4) Debt maturity amounts do not include discounts, premiums, deferred charges, or capital lease obligations.

Aflac Incorporated and Subsidiaries

Insurer Financial Strength Ratings
AM Best Moody's S&P JCR R&I
U.S. Operating Companies
Aflac of Columbus A+ Aa3 A+ AA AA
Aflac of New York A+ _ A+ _ _
Continental American Insurance Company A+ _ _ _ _
Japan Operating Company
Aflac Life Insurance Japan Ltd. A+ Aa3 A+ AA AA
Bermuda Operating Company
Aflac Re Bermuda Ltd. _ _ _ AA _
Issuer Credit Ratings
AM Best Moody's S&P JCR R&I
Aflac Incorporated
Long-term Senior Debt a A3 A- A+ A+
Junior Subordinated Debt a- Baa1 BBB _ A-
Aflac of Columbus
Long-term Senior Debt aa _ A+ AA _
Aflac Life Insurance Japan, Ltd.
Long-term Senior Debt aa _ A+ AA _
Subordinated Bonds _ _ _ AA- _
The outlook for all ratings assigned by A.M. Best, S&P, Moody's, JCR and R&I is stable.
Aflac U.S.
--- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- ---
Statements of Pretax Adjusted Earnings
(Before Management Fee)
(In Millions)
Years Ended December 31, 3 Months Ended December 31, 12 Months Ended December 31,
% %
2017 2018 2019 2020 2021 2021 2022 Change 2021 2022 Change
Revenues:
Net earned premiums
Gross premiums $ 5,563 $ 5,711 $ 5,818 $ 5,762 $ 5,540 $ 1,371 $ 1,366 $ 5,540 $ 5,467
Assumed (ceded) — (3) (11) (4) 73 19 22 73 103
Total net earned premiums 5,563 5,708 5,808 5,758 5,614 1,391 1,388 (.2) 5,614 5,570 (.8)
Adjusted net investment income 721 727 720 705 754 197 192 (2.5) 754 755 .1
Other income excl. realized foreign
exchange gains (losses) 5 8 22 102 121 31 41 121 161
Total adjusted revenues 6,289 6,443 6,550 6,565 6,489 1,619 1,621 .1 6,489 6,486 —
Benefits and claims:
Benefits and claims, net
Incurred claims -direct 2,526 2,560 2,611 2,498 2,174 598 525 2,174 2,246
Incurred claims -assumed (ceded) (4) (4) (5) (1) 89 33 19 89 104
Increase in FPB -direct 363 331 268 271 187 20 22 187 94
Increase in FPB -assumed (ceded) — (1) (2) (3) (3) (1) — (3) (2)
Total net benefits and claims 2,885 2,887 2,871 2,765 2,447 649 566 (12.8) 2,447 2,442 (.2)
Adjusted expenses:
Amortization of deferred policy
acquisition costs 502 534 573 570 517 143 162 13.3 517 605 17.0
Insurance commissions 580 585 590 576 550 138 142 2.9 550 553 .5
Insurance and other expenses 1,077 1,152 1,244 1,386 1,498 427 410 (4.0) 1,498 1,562 4.3
Total adjusted expenses 2,159 2,271 2,407 2,532 2,564 709 714 2,564 2,720
Total benefits and adjusted expenses 5,044 5,158 5,279 5,297 5,011 1,358 1,280 (5.7) 5,011 5,162 3.0
Pretax adjusted earnings $ 1,245 $ 1,285 $ 1,272 $ 1,268 $ 1,478 $ 261 $ 340 30.3 $ 1,478 $ 1,324 (10.4)
Aflac U.S.
--- --- --- --- --- --- --- --- --- --- --- --- --- --- ---
Balance Sheets
(In Millions)
December 31,
2017 2018 2019 2020 2021 2022
Assets:
Investments and cash $ 15,488 $ 14,518 $ 16,141 $ 17,949 $ 18,324 $ 15,987
Receivables, net of allowance for credit losses 505 568 662 685 595 609
Accrued investment income 184 178 174 172 169 184
Deferred policy acquisition costs 3,355 3,491 3,544 3,450 3,292 3,238
Other assets 361 345 424 608 726 761
Total assets $ 19,893 $ 19,100 $ 20,945 $ 22,864 $ 23,106 $ 20,779
Liabilities and Shareholders' Equity:
Future policy benefits $ 8,806 $ 9,137 $ 9,404 $ 9,674 $ 9,865 $ 9,960
Policy and contract claims 1,700 1,727 1,779 2,010 1,933 1,952
Other policy liabilities 119 116 111 126 119 117
Deferred income taxes 982 (397) 51 235 187 (472)
Other liabilities 1,625 1,577 1,803 2,016 2,034 2,102
Shareholders' equity 6,661 6,939 7,796 8,803 8,968 7,120
Total liabilities & shareholders' equity $ 19,893 $ 19,100 $ 20,945 $ 22,864 $ 23,106 $ 20,779
Aflac U.S.
--- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- ---
Quarterly Statements of Pretax Adjusted Earnings and Percentage Changes
(Restated to conform to current classifications)
(Dollars In Millions)
Net Total Total Pretax
Earned % Adjusted % Adjusted % Total % % Adjusted % Adjusted %
Period Premiums Change NII Change Revenues Change Benefits Change Amort. Change Expenses Change Earn. Change
2017 5,563 2.0 721 2.6 6,289 2.0 2,885 .6 502 1.0 2,159 3.3 1,245 3.1
2018 5,708 2.6 727 .8 6,443 2.4 2,887 .1 534 6.4 2,271 5.2 1,285 3.2
2019 5,808 1.8 720 (1.0) 6,550 1.7 2,871 (.6) 573 7.3 2,407 6.0 1,272 (1.0)
2020 5,758 (.9) 705 (2.1) 6,565 .2 2,765 (3.7) 570 (.5) 2,532 5.2 1,268 (.3)
2021 5,614 (2.5) 754 7.0 6,489 (1.2) 2,447 (11.5) 517 (9.3) 2,564 1.3 1,478 16.6
2022 5,570 (.8) 755 .1 6,486 — 2,442 (.2) 605 17.0 2,720 6.1 1,324 (10.4)
2020 1 1,483 1.5 177 — 1,687 2.9 713 (1.1) 160 .6 648 8.7 326 .9
2 1,458 (.1) 172 (4.4) 1,656 .9 646 (11.7) 134 2.3 584 2.3 426 26.0
3 1,407 (2.6) 175 (4.4) 1,606 (1.5) 679 (4.4) 141 1.4 597 2.1 329 (1.8)
4 1,410 (2.3) 182 1.1 1,617 (1.3) 727 2.5 135 (6.3) 703 7.5 187 (32.0)
2021 1 1,422 (4.1) 176 (.6) 1,628 (3.5) 556 (22.0) 139 (13.1) 626 (3.4) 445 36.5
2 1,408 (3.4) 189 9.9 1,627 (1.8) 613 (5.1) 111 (17.2) 601 2.9 413 (3.1)
3 1,393 (1.0) 191 9.1 1,616 .6 628 (7.5) 123 (12.8) 629 5.4 358 8.8
4 1,391 (1.3) 197 8.2 1,619 .1 649 (10.7) 143 5.9 709 .9 261 39.6
2022 1 1,413 (.6) 184 4.5 1,639 .7 622 11.9 168 20.9 692 10.5 325 (27.0)
2 1,394 (1.0) 193 2.1 1,628 .1 633 3.3 131 18.0 645 7.3 349 (15.5)
3 1,375 (1.3) 185 (3.1) 1,598 (1.1) 621 (1.1) 144 17.1 668 6.2 309 (13.7)
4 1,388 (0.2) 192 (2.5) 1,621 0.1 566 (12.8) 162 13.3 714 0.7 340 30.3

Aflac U.S.

Operating Ratios
(Before Management Fee)
12-Mo. Rolling Total Adjusted Combined Pretax
Premium Tot. Ben./ Amort./ Expenses/ Ratio/ Profit
Period Persistency (1) Premium Premium Total Adj. Rev. Total Adj. Rev. Margin
2017 78.4 51.9 9.0 34.3 80.2 19.8
2018 78.7 50.6 9.4 35.2 80.1 19.9
2019 77.7 49.4 9.9 36.7 80.6 19.4
2020 79.3 48.0 9.9 38.6 80.7 19.3
2021 79.6 43.6 9.2 39.5 77.2 22.8
2022 77.0 43.8 10.9 41.9 79.6 20.4
2020 1 77.6 48.1 10.8 38.4 80.7 19.3
2 78.3 44.3 9.2 35.3 74.3 25.7
3 78.8 48.3 10.0 37.2 79.5 20.5
4 79.3 51.6 9.6 43.5 88.4 11.6
2021 1 80.0 39.1 9.8 38.5 72.6 27.3
2 80.1 43.5 7.9 36.9 74.6 25.4
3 79.9 45.1 8.8 38.9 77.8 22.2
4 79.6 46.7 10.3 43.8 83.9 16.1
2022 1 78.5 44.0 11.9 42.2 80.2 19.8
2 77.9 45.4 9.4 39.6 78.5 21.4
3 77.6 45.2 10.5 41.8 80.7 19.3
4 77.0 40.8 11.7 44.0 79.0 21.0
(1) Excludes Network Dental & Vision, Consumer Markets, and Group Premier Life, Absence Management, and Disability Solutions products

Aflac U.S.

Aflac U.S. Sales Results
(Dollars In Millions)
Annl. New Annl.
Prem. % Prem. %
Period In Force Change Sales Change
2017 6,052 2.6 1,552 4.7
2018 6,231 3.0 1,601 3.2
2019 6,301 1.1 1,580 (1.3)
2020 6,099 (3.2) 1,093 (30.8)
2021 6,003 (1.6) 1,278 16.9
2022 5,967 (.6) 1,483 16.1
2020 1 6,224 .7 323 (5.2)
2 6,079 (1.7) 161 (55.6)
3 5,969 (2.9) 221 (35.7)
4 6,099 (3.2) 388 (27.2)
2021 1 6,027 (3.2) 251 (22.1)
2 5,988 (1.5) 264 64.1
3 5,929 (.7) 299 35.0
4 6,003 (1.6) 464 19.6
2022 1 5,942 (1.4) 299 19.0
2 5,926 (1.0) 305 15.6
3 5,889 (.7) 334 11.8
4 5,967 (.6) 545 17.4

Aflac U.S.

Aflac U.S. Product Mix
(New Annualized Premium Sales, Dollars in Millions)
% of % of % of Critical % of Hospital % of Dental/ % of
Period Disability Total Life Total Accident Total Care(1) Total Indemnity Total Vision Total Total
2017 356 22.9 78 5.0 456 29.4 354 22.8 229 14.8 79 5.1 1,552
2018 363 22.7 88 5.5 468 29.2 354 22.1 253 15.8 75 4.7 1,601
2019 355 22.5 97 6.1 450 28.5 346 21.9 263 16.6 69 4.4 1,580
2020 243 22.3 80 7.3 285 26.1 242 22.2 197 18.0 45 4.1 1,093
2021 296 23.1 114 9.0 321 25.1 273 21.3 209 16.4 65 5.1 1,278
2022 378 25.5 156 10.5 338 22.8 299 20.1 226 15.3 85 5.8 1,483
2020 1 73 22.6 25 7.7 88 27.3 68 21.1 55 16.9 14 4.4 323
2 38 23.9 14 8.6 41 25.7 33 20.6 28 17.1 7 4.1 161
3 54 24.2 16 7.1 58 26.4 45 20.5 37 16.8 11 5.0 221
4 79 20.4 26 6.6 98 25.2 95 24.5 77 20.0 13 3.3 388
2021 1 58 23.1 17 6.7 66 26.3 57 22.6 42 16.7 11 4.6 251
2 60 22.7 19 7.3 72 27.2 56 21.0 43 16.4 14 5.4 264
3 79 26.2 27 9.2 76 25.5 57 19.1 45 15.1 15 4.9 299
4 100 21.4 51 11.0 107 23.1 104 22.3 79 17.0 24 5.2 464
2022 1 70 23.3 24 7.9 75 25.3 63 21.2 50 16.7 17 5.6 299
2 77 25.2 26 8.3 75 24.6 63 20.6 45 14.9 19 6.4 305
3 97 28.9 33 10.0 76 22.6 60 18.1 47 14.1 21 6.3 334
4 135 24.9 73 13.4 112 20.5 112 20.6 84 15.4 28 5.2 545 Aflac U.S. Sales Force Data
--- --- --- --- --- --- ---
Average Productivity
Weekly (Production/
Recruited Agents Producer Avg. Weekly
Period Career Broker Total Equivalents Producers)
2017 16,817 3,073 19,890 8,808 176,183
2018 15,774 3,380 19,154 8,531 187,720
2019 15,227 3,603 18,830 8,184 193,120
2020 11,826 1,861 13,687 5,918 184,706
2021 10,641 5,445 16,086 5,993 213,235
2022 9,550 1,500 11,050 6,186 239,786
2020 1 3,436 494 3,930 7,411 43,517
2 2,190 381 2,571 4,252 37,814
3 3,136 486 3,622 5,485 40,367
4 3,064 500 3,564 6,523 59,533
2021 1 2,890 1,063 3,953 5,643 44,530
2 2,754 1,355 4,109 5,925 44,540
3 2,502 1,615 4,117 5,926 50,448
4 2,495 1,412 3,907 6,477 71,723
2022 1 1,987 455 2,442 6,061 49,322
2 2,937 391 3,328 6,067 50,264
3 2,358 339 2,697 6,010 55,599
4 2,268 315 2,583 6,607 82,538

(1) Includes cancer, critical illness, and hospital intensive care products

Aflac Japan

Aflac Japan

Statements of Pretax Adjusted Earnings
(Before Management Fee)
(In Millions)
3 Months Ended December 31, 12 Months Ended December 31,
% %
2018 2019 2020 2021 2021 2022 Change 2021 2022 Change
Revenues:
Net earned premiums
Gross premiums 1,493,299 ¥ 1,468,894 ¥ 1,450,586 ¥ 1,409,134 ¥ 1,350,945 ¥ 331,899 ¥ 318,086 ¥ 1,350,945 ¥ 1,294,166
Assumed (ceded) (62,873) (60,198) (57,974) (55,926) (50,864) (12,555) (11,990) (50,864) (48,578)
Total net earned premiums 1,430,426 1,408,697 1,392,612 1,353,208 1,300,082 319,344 306,095 (4.1) 1,300,082 1,245,588 (4.2)
Net investment income (1)
Yen denominated 145,114 141,575 142,473 138,397 138,513 34,321 34,272 (.1) 138,513 149,449 7.9
US denominated 131,168 149,801 157,717 167,541 202,905 55,667 55,386 (.5) 202,905 215,171 6.0
Net investment income 276,282 291,377 300,191 305,938 341,419 89,988 89,658 (.4) 341,419 364,621 6.8
Amortized hedge costs on foreign investments (2) (24,528) (25,858) (28,938) (22,816) (8,391) (2,297) (3,478) 51.4 (8,391) (13,155) 56.8
Adjusted net investment income 251,754 265,519 271,253 283,122 333,028 87,690 86,180 (1.7) 333,028 351,466 5.5
Other income excl. realized foreign
currency gains (losses) 4,640 4,636 4,869 4,497 4,512 1,071 1,023 4,512 4,442
Total adjusted revenues 1,686,820 1,678,852 1,668,734 1,640,827 1,637,621 408,105 393,298 (3.6) 1,637,621 1,601,496 (2.2)
Benefits and claims:
Benefits and claims, net
Incurred claims -direct 710,251 724,556 727,491 734,471 743,610 182,488 184,576 743,610 788,323
Incurred claims -assumed (ceded) (55,691) (51,892) (45,657) (37,806) (31,801) (8,112) (7,146) (31,801) (36,110)
Increase in FPB -direct 366,376 313,343 292,444 260,200 172,525 43,291 27,491 172,525 115,863
Increase in FPB -assumed (ceded) (1,557) (2,000) (6,497) (11,377) (11,132) (2,651) (2,309) (11,132) (9,787)
Total net benefits and claims 1,019,378 984,007 967,782 945,487 873,202 215,016 202,613 (5.8) 873,202 858,288 (1.7)
Adjusted expenses:
Amortization of deferred policy
acquisition costs 70,670 78,459 77,286 68,818 71,657 17,880 18,633 4.2 71,657 71,454 (.3)
Insurance commissions 82,495 81,045 79,661 79,036 77,449 18,796 18,155 (3.4) 77,449 73,482 (5.1)
Insurance and other expenses 170,636 181,139 189,203 199,606 203,169 55,545 53,416 (3.8) 203,169 199,000 (2.1)
Total adjusted expenses 323,801 340,643 346,150 347,460 352,275 92,221 90,204 352,275 343,936
Total benefits and adjusted expenses 1,343,180 1,324,651 1,313,932 1,292,947 1,225,477 307,237 292,817 (4.7) 1,225,477 1,202,224 (1.9)
Pretax adjusted earnings 343,640 ¥ 354,201 ¥ 354,802 ¥ 347,881 ¥ 412,144 ¥ 100,868 ¥ 100,481 (.4) ¥ 412,144 ¥ 399,272 (3.1)
(1) Includes the net interest cash flows from derivatives associated with certain investment strategies
(2) See non-U.S. GAAP financial measures for the definition of amortized hedge costs/income

All values are in US Dollars.

Aflac Japan

Statements of Pretax Adjusted Earnings
(Before Management Fee)
(In Millions)
3 Months Ended December 31, 12 Months Ended December 31,
% %
2018 2019 2020 2021 2021 2022 Change 2021 2022 Change
Revenues:
Net earned premiums
Gross premiums 13,312 $ 13,307 $ 13,304 $ 13,193 $ 12,317 $ 2,919 $ 2,249 $ 12,317 $ 9,920
Assumed (ceded) (561) (546) (532) (524) (463) (110) (85) (463) (372)
Total net earned premiums 12,752 12,762 12,772 12,670 11,853 2,808 2,164 (22.9) 11,853 9,548 (19.4)
Net investment income (1)
Yen denominated 1,294 1,283 1,307 1,296 1,262 302 242 (19.9) 1,262 1,140 (9.7)
US denominated 1,169 1,356 1,446 1,569 1,845 490 390 (20.4) 1,845 1,641 (11.1)
Net investment income 2,463 2,639 2,753 2,865 3,107 792 632 (20.2) 3,107 2,782 (10.5)
Amortized hedge costs on foreign investments (2) (228) (236) (257) (206) (76) (21) (28) 33.3 (76) (112) 47.4
Adjusted net investment income 2,235 2,403 2,496 2,659 3,031 771 604 (21.7) 3,031 2,669 (11.9)
Other income excl. realized foreign
currency gains (losses) 41 41 45 42 41 10 7 41 35
Total adjusted revenues 15,028 15,206 15,313 15,371 14,925 3,589 2,775 (22.7) 14,925 12,252 (17.9)
Benefits and claims
Benefits and claims, net
Incurred claims -direct 6,332 6,566 6,671 6,875 6,783 1,605 1,306 6,783 6,036
Incurred claims -assumed (ceded) (497) (471) (419) (354) (290) (71) (51) (290) (275)
Increase in FPB -direct 3,265 2,836 2,684 2,437 1,572 381 193 1,572 879
Increase in FPB -assumed (ceded) (14) (18) (60) (107) (102) (23) (16) (102) (75)
Total net benefits and claims 9,087 8,913 8,877 8,851 7,963 1,891 1,432 (24.3) 7,963 6,565 (17.6)
Adjusted expenses:
Amortization of deferred policy
acquisition costs 630 710 709 644 653 157 132 (15.9) 653 547 (16.2)
Insurance commissions 736 735 731 740 706 165 128 (22.4) 706 563 (20.3)
Insurance and other expenses 1,521 1,640 1,734 1,873 1,849 488 379 (22.3) 1,849 1,520 (17.8)
Total adjusted expenses 2,887 3,085 3,174 3,257 3,208 811 639 3,208 2,630
Total benefits and adjusted expenses 11,974 11,998 12,051 12,108 11,171 2,702 2,071 (23.4) 11,171 9,195 (17.7)
Pretax adjusted earnings 3,054 $ 3,208 $ 3,261 $ 3,263 $ 3,754 $ 887 $ 704 (20.6) $ 3,754 $ 3,056 (18.6)
(1) Includes the net interest cash flows from derivatives associated with certain investment strategies
(2) See non-U.S. GAAP financial measures for definition of amortized hedge costs/income

All values are in US Dollars.

Aflac Japan

Balance Sheets
(In Millions)
December 31,
2017 2018 2019 2020 2021 2022
Assets:
Investments and cash ¥ 11,854,224 ¥ 12,031,549 ¥ 12,847,994 ¥ 13,080,154 ¥ 13,645,902 ¥ 12,777,746
Receivables, net of allowance for credit losses 37,692 37,083 28,219 20,782 22,439 23,138
Accrued investment income 64,439 66,350 65,485 62,722 67,493 76,489
Deferred policy acquisition costs 695,025 708,638 721,341 723,579 716,984 710,648
Other assets 276,050 292,335 308,411 320,351 331,449 368,386
Total assets ¥ 12,927,431 ¥ 13,135,956 ¥ 13,971,450 ¥ 14,207,588 ¥ 14,784,268 ¥ 13,956,407
Liabilities and Shareholders' Equity:
Future policy benefits ¥ 8,323,560 ¥ 8,637,152 ¥ 8,924,868 ¥ 9,175,501 ¥ 9,336,894 ¥ 9,441,541
Policy and contract claims 304,248 317,043 315,477 328,778 333,900 346,283
Unearned premiums 659,977 552,419 453,133 361,010 284,045 227,732
Other policyholders' funds 784,117 793,148 801,588 808,429 812,512 811,950
Income taxes (prim. deferred) 431,949 510,528 618,901 478,969 467,877 224,415
Other liabilities 150,143 194,949 357,135 253,219 513,580 587,009
Shareholders' equity 2,273,438 2,130,718 2,500,349 2,801,682 3,035,460 2,317,477
Total liabilities & shareholders' equity ¥ 12,927,431 ¥ 13,135,956 ¥ 13,971,450 ¥ 14,207,588 ¥ 14,784,268 ¥ 13,956,407

Aflac Japan

Balance Sheets
(In Millions)
December 31,
2017 2018 2019 2020 2021 2022
Assets:
Investments and cash $ 104,905 $ 108,392 $ 117,269 $ 126,378 $ 118,639 $ 96,290
Receivables, net of allowance for credit losses 334 334 258 201 195 174
Accrued investment income 570 598 598 606 587 576
Deferred policy acquisition costs 6,150 6,384 6,584 6,991 6,233 5,355
Other assets 2,443 2,634 2,815 3,095 2,882 2,776
Total assets $ 114,402 $ 118,342 $ 127,523 $ 137,271 $ 128,536 $ 105,173
Liabilities and Shareholders' Equity:
Future policy benefits $ 73,661 $ 77,812 $ 81,461 $ 88,652 $ 81,176 $ 71,150
Policy and contract claims 2,692 2,856 2,879 3,177 2,903 2,610
Unearned premiums 5,840 4,977 4,136 3,488 2,469 1,716
Other policyholders' funds 6,939 7,145 7,316 7,811 7,064 6,119
Income taxes (prim. deferred) 3,823 4,601 5,650 4,630 4,067 1,608
Other liabilities 1,328 1,756 3,260 2,447 4,465 4,424
Shareholders' equity 20,119 19,194 22,820 27,068 26,391 17,547
Total liabilities & shareholders' equity $ 114,402 $ 118,342 $ 127,523 $ 137,271 $ 128,536 $ 105,173

Aflac Japan

Quarterly Statements of Pretax Adjusted Earnings and Percentage Changes
(Yen In Millions)
Net Total Total Pretax
Earned % Adjusted % Adjusted % Total % % Adjusted % Adjusted %
Period Premiums Change NII Change Revenues Change Benefits Change Amort. Change Expense Change Earn. Change
2017 1,430,426 (2.7) 251,754 (2.0) 1,686,820 (2.5) 1,019,378 (4.5) 70,670 1.2 323,801 .5 343,640 .6
2018 1,408,697 (1.5) 265,519 5.5 1,678,852 (.5) 984,007 (3.5) 78,460 11.0 340,642 5.2 354,201 3.1
2019 1,392,612 (1.1) 271,253 2.2 1,668,734 (.6) 967,782 (1.6) 77,286 (1.5) 346,150 1.6 354,802 .2
2020 1,353,208 (2.8) 283,122 4.4 1,640,827 (1.7) 945,487 (2.3) 68,818 (11.0) 347,459 .4 347,881 (2.0)
2021 1,300,082 (3.9) 333,028 17.6 1,637,621 (.2) 873,202 (7.6) 71,657 4.1 352,275 1.4 412,144 18.5
2022 1,245,588 (4.2) 351,466 5.5 1,601,496 (2.2) 858,288 (1.7) 71,454 (.3) 343,935 (2.4) 399,272 (3.1)
2020 1 343,054 (2.1) 69,812 4.0 414,045 (1.1) 238,148 (1.7) 18,842 (5.9) 82,939 (2.0) 92,958 1.2
2 339,891 (2.5) 68,036 2.0 409,126 (1.8) 237,328 (1.2) 16,697 (14.3) 81,648 (4.1) 90,150 (1.2)
3 336,488 (3.3) 70,219 (.2) 407,874 (2.8) 240,025 (1.4) 16,001 (16.5) 88,661 2.5 79,188 (11.6)
4 333,775 (3.5) 75,054 11.9 409,782 (1.0) 229,986 (4.9) 17,277 (7.2) 94,211 4.9 85,585 4.2
2021 1 330,595 (3.6) 74,621 6.9 406,505 (1.8) 225,965 (5.1) 18,225 (3.3) 86,732 4.6 93,808 .9
2 327,071 (3.8) 86,681 27.4 414,825 1.4 218,791 (7.8) 18,541 11.0 86,088 5.4 109,947 22.0
3 323,072 (4.0) 84,035 19.7 408,185 .1 213,430 (11.1) 17,011 6.3 87,234 (1.6) 107,521 35.8
4 319,344 (4.3) 87,690 16.8 408,105 (.4) 215,016 (6.5) 17,880 3.5 92,221 (2.1) 100,868 17.9
2022 1 316,429 (4.3) 79,042 5.9 396,545 (2.5) 212,182 (6.1) 17,882 (1.9) 84,208 (2.9) 100,154 6.8
2 313,186 (4.2) 94,004 8.4 408,331 (1.6) 211,115 (3.5) 17,747 (4.3) 85,502 (.7) 111,714 1.6
3 309,877 (4.1) 92,241 9.8 403,323 (1.2) 232,378 8.9 17,192 1.1 84,021 (3.7) 86,924 (19.2)
4 306,095 (4.1) 86,180 (1.7) 393,298 (3.6) 202,613 (5.8) 18,633 4.2 90,204 (2.2) 100,481 (.4)

Aflac Japan

Operating Ratios
(Before Management Fee)
12-Mo. Rolling Tot. Ben./ Tot. Adj. Combined Pretax
Premium Tot. Ben./ Premiums Amort./ Expenses/ Ratio/ Profit
Period Persistency(1) Premium (3rd sector) Premium Total Adj. Rev. Total Adj. Rev. Margin
2017 94.9 71.3 60.5 4.9 19.2 79.6 20.4
2018 94.1 69.9 59.2 5.6 20.3 78.9 21.1
2019 94.4 69.5 59.3 5.5 20.7 78.7 21.3
2020 95.1 69.9 59.7 5.1 21.2 78.8 21.2
2021 94.3 67.2 56.6 5.5 21.5 74.8 25.2
2022 94.1 68.9 59.2 5.7 21.5 75.1 24.9
2020 1 94.5 69.4 59.0 5.5 20.0 77.5 22.5
2 94.8 69.8 59.6 4.9 20.0 78.0 22.0
3 95.0 71.3 61.7 4.8 21.7 80.6 19.4
4 95.1 68.9 58.6 5.2 23.0 79.1 20.9
2021 1 95.0 68.4 58.0 5.5 21.3 76.9 23.1
2 94.7 66.9 56.5 5.7 20.8 73.5 26.5
3 94.5 66.1 55.0 5.3 21.4 73.7 26.3
4 94.3 67.3 57.0 5.6 22.6 75.3 24.7
2022 1 94.3 67.1 56.4 5.7 21.2 74.7 25.3
2 94.3 67.4 57.5 5.7 20.9 72.6 27.4
3 94.3 75.0 67.2 5.5 20.8 78.4 21.6
4 94.1 66.2 55.9 6.1 22.9 74.5 25.5

(1) Premium persistency presented on a 12-month rolling basis for all periods, rather than year to date

Aflac Japan

Aflac Japan Sales Results
(Yen In Millions, unless otherwise noted)
Annl. Third Sector
Prem. New Annl. Total
In Force % Prem. % New Annual. %
Period (Billions) Change Sales Change Premium Sales Change
2017 1,552.2 (3.4) 87,417 4.1 94,851 (16.6)
2018 1,527.1 (1.6) 88,813 1.6 95,894 1.1
2019 1,489.3 (2.5) 72,836 (18.0) 79,697 (16.9)
2020 1,426.5 (4.2) 45,110 (38.1) 50,852 (36.2)
2021 1,360.6 (4.7) 48,977 8.6 54,764 7.7
2022 1,301.0 (4.4) 47,998 (2.0) 54,765 —
2020 1 1,474.3 (2.8) 12,486 (26.7) 14,021 (25.4)
2 1,457.7 (3.4) 8,656 (60.9) 9,827 (58.8)
3 1,441.9 (.5) 11,167 (33.7) 12,601 (32.0)
4 1,426.5 (4.2) 12,801 (23.8) 14,404 (22.2)
2021 1 1,410.0 (4.4) 12,492 — 13,998 (.2)
2 1,391.7 (4.5) 12,125 40.1 13,602 38.4
3 1,375.0 (4.6) 11,275 1.0 12,605 —
4 1,360.6 (4.7) 13,084 2.2 14,559 1.1
2022 1 1,345.6 (4.6) 10,679 (19.0) 11,925 (14.8)
2 1,332.0 (4.3) 11,372 (6.2) 12,731 (6.4)
3 1,315.7 (4.3) 12,639 12.1 13,884 10.2
4 1,301.0 (4.4) 13,308 1.7 16,224 11.4

Aflac Japan

Aflac Japan Product Mix
(New Annualized Premium Sales, Yen In Billions)
% of % of Income % of Child % of % of Ordinary % of % of
Period Cancer Total Medical Total Support Total Endowment Total WAYS Total Life Other Total Other Total Total
2017 53.0 55.8 32.4 34.1 2.2 2.3 .5 .5 .6 .6 5.6 6.0 .6 .7 94.9
2018 63.1 65.8 23.9 25.0 1.7 1.8 .3 .3 .5 .5 5.9 6.1 .5 .5 95.9
2019 47.2 59.2 24.6 31.0 1.0 1.2 .2 .2 .4 .5 5.9 7.4 .4 .5 79.7
2020 28.8 56.6 15.9 31.2 .5 1.0 .2 .4 .4 .7 4.8 9.5 .3 .6 50.9
2021 27.0 49.2 20.4 37.2 .3 .5 .2 .3 .4 .8 4.9 9.0 1.6 3.0 54.8
2022 30.9 56.5 14.6 26.6 .7 1.3 .2 .3 1.9 3.5 4.5 8.1 2.0 3.7 54.8
2020 1 7.8 55.5 4.5 32.4 .2 1.2 — .3 .1 .6 1.3 9.3 .1 .7 14.0
2 5.4 54.7 3.2 32.5 .1 .9 — .4 .1 .8 1.0 10.0 — .7 9.8
3 7.0 55.7 4.0 32.0 .1 .9 .1 .4 .1 .8 1.2 9.6 .1 .6 12.6
4 8.6 59.7 4.1 28.4 .1 .8 .1 .3 .1 .8 1.3 9.3 .1 .7 14.4
2021 1 6.4 45.4 6.1 43.3 .1 .6 — .3 .1 .7 1.2 8.9 .1 .8 14.0
2 6.7 48.9 5.4 39.7 .1 .6 — .4 .1 .8 1.2 8.9 .1 .7 13.6
3 6.3 49.9 4.6 36.3 .1 .5 — .3 .1 .7 1.1 9.0 .4 3.3 12.6
4 7.7 52.7 4.4 29.9 .1 .4 — .3 .1 .8 1.2 8.6 1.1 7.3 14.6
2022 1 6.4 53.0 3.8 31.4 .1 1.1 .1 .3 .1 .7 1.1 9.0 .5 4.5 11.9
2 6.8 53.4 3.8 29.9 .3 2.2 — .2 .1 .8 1.2 9.2 .6 4.3 12.7
3 8.4 60.1 3.7 26.4 .2 1.2 — .2 .1 .6 1.0 7.7 .5 3.8 13.9
4 9.5 58.2 3.4 20.8 .1 .8 .1 .4 1.6 10.1 1.1 7.2 .4 2.5 16.2

Aflac Japan

Aflac Japan Sales Force Data
Number of Agencies by Type Sales Contribution by Agency Type
Period Individual/ Independent Corporate Affiliated<br>Corporate Bank Total Individual/ Independent Corporate Affiliated<br>Corporate Bank Licensed Sales<br>Associates(1) Recruited<br>Agencies
2017 9,492 1,455 374 11,321 42.8 52.0 5.2 109,197 174
2018 8,453 1,392 371 10,216 40.1 55.3 4.6 109,482 85
2019 7,683 1,343 367 9,393 45.7 50.0 4.3 109,265 77
2020 7,231 1,312 361 8,904 52.3 42.6 5.1 111,886 48
2021 6,779 1,283 360 8,422 51.1 43.7 5.2 111,854 62
2022 6,159 1,239 359 7,757 49.5 46.5 4.0 110,259 38
2020 1 7,537 1,332 364 9,233 52.8 42.7 4.5 110,129 17
2 7,426 1,329 364 9,119 53.8 42.8 3.4 109,850 5
3 7,312 1,317 364 8,993 51.7 41.4 6.9 111,016 19
4 7,231 1,312 361 8,904 51.3 43.4 5.3 111,886 7
2021 1 7,142 1,308 360 8,810 54.3 40.6 5.1 112,252 13
2 7,055 1,305 359 8,719 51.1 44.0 4.9 113,259 22
3 6,898 1,299 360 8,557 49.9 43.8 6.3 112,100 13
4 6,779 1,283 360 8,422 49.2 46.3 4.5 111,854 14
2022 1 6,447 1,266 360 8,073 48.9 46.5 4.6 109,873 6
2 6,335 1,255 359 7,949 48.4 48.1 3.5 110,096 12
3 6,260 1,246 359 7,865 49.3 46.2 4.5 110,400 12
4 6,159 1,239 359 7,757 51.2 45.4 3.4 110,259 8

(1) Excludes Dai-ichi Life, banks, Japan Post Group and Daido Life

Aflac Japan

Yen/Dollar Exchange Rates
Yearly
Closing Qtr Cum %
Period Rate(1) Avg Avg Change
2017 113.00 N/A 112.16 (3.1)
2018 111.00 N/A 110.39 1.6
2019 109.56 N/A 109.07 1.2
2020 103.50 N/A 106.86 2.1
2021 115.02 N/A 109.79 (2.7)
2022 132.70 N/A 130.17 (15.7)
2020 1 108.83 108.84 108.84 1.3
2 107.74 107.65 108.25 1.7
3 105.80 106.23 107.63 1.4
4 103.50 104.57 106.86 2.1
2021 1 110.71 105.88 105.88 2.8
2 110.58 109.48 107.79 .4
3 111.92 110.11 108.58 (.9)
4 115.02 113.70 109.79 (2.7)
2022 1 122.39 116.18 116.18 (8.9)
2 136.68 129.39 122.79 (12.2)
3 144.81 137.08 126.65 (14.3)
4 132.70 141.87 130.17 (15.7)
(1) Closing rate is based on the latest available and published MUFG Bank Ltd. TTM mid-day exchange rate.

Corporate and Other

Statements of Pretax Adjusted Earnings
(Before Management Fee)
(In Millions)
3 Months Ended December 31, 12 Months Ended December 31,
% %
2018 2019 2020 2021 2021 2022 Change 2021 2022 Change
Revenues:
Total net earned premiums $ 216 $ 208 $ 200 $ 194 $ 180 $ 42 $ 33 (21.4) $ 180 $ 145 (19.4)
Net investment income (1) 35 77 88 80 (73) (88) 19 121.6 (73) 30 141.1
Amortized hedge income (2) — 36 89 97 57 11 25 127.3 57 68 19.3
Adjusted net investment income 35 113 177 177 (16) (77) 44 157.1 (16) 98 712.5
Other income 21 18 15 13 11 — 2 — 11 24 118.2
Total adjusted revenues 272 339 393 384 175 (35) 79 325.7 175 267 52.6
Benefits and expenses:
Total net benefits and claims 209 199 194 180 166 40 30 (25.0) 166 146 (12.0)
Interest expense 122 120 133 164 165 39 39 — 165 162 (1.8)
Other adjusted expenses 154 159 137 155 142 41 54 31.7 142 182 28.2
Total benefits and adjusted expenses 486 478 464 499 473 120 123 2.5 473 490 3.6
Pretax adjusted earnings $ (214) $ (139) $ (72) $ (115) $ (298) $ (155) $ (44) 71.6 $ (298) $ (223) 25.2
(1) The change in value of federal historic rehabilitation and solar investments in partnerships of 11 and 104 for the three-month periods and 91 and 138 for the twelve-month periods ended December 31, 2022, and 2021, respectively is included as a reduction to net investment income. Tax credits on these investments of 20 and 80 for the three-month period and 83 and 115 for the twelve-month periods ended December 31, 2022, and 2021, respectively, have been recorded as an income tax benefit in the consolidated statement of earnings.
(2) See non-U.S. GAAP financial measures for the definition of amortized hedge cost/income

All values are in US Dollars.

Non-U.S. GAAP Financial Measures

This document includes references to the Company’s financial performance measures which are not calculated in accordance with United States generally accepted accounting principles (U.S. GAAP) (non-U.S. GAAP). The financial measures exclude items that the Company believes may obscure the underlying fundamentals and trends in insurance operations because they tend to be driven by general economic conditions and events or related to infrequent activities not directly associated with insurance operations.

Due to the size of Aflac Japan, where the functional currency is the Japanese yen, fluctuations in the yen/dollar exchange rate can have a significant effect on reported results. In periods when the yen weakens, translating yen into dollars results in fewer dollars being reported. When the yen strengthens, translating yen into dollars results in more dollars being reported. Consequently, yen weakening has the effect of suppressing current period results in relation to the comparable prior period, while yen strengthening has the effect of magnifying current period results in relation to the comparable prior period. A significant portion of the Company’s business is conducted in yen and never converted into dollars but translated into dollars for U.S. GAAP reporting purposes, which results in foreign currency impact to earnings, cash flows and book value on a U.S. GAAP basis. Management evaluates the Company's financial performance both including and excluding the impact of foreign currency translation to monitor, respectively, cumulative currency impacts and the currency-neutral operating performance over time. The average yen/dollar exchange rate is based on the published MUFG Bank, Ltd. telegraphic transfer middle rate (TTM).

The Company defines the non-U.S. GAAP financial measures included in this document as follows:

• Adjusted book value is the U.S. GAAP book value (representing total shareholders’ equity), less AOCI as recorded on the U.S. GAAP balance sheet. Adjusted book value per common share is adjusted book value at the period end divided by the ending outstanding common shares for the period presented. The Company considers adjusted book value and adjusted book value per common share important as they exclude AOCI, which fluctuates due to market movements that are outside management’s control. The most comparable U.S. GAAP financial measures for adjusted book value and adjusted book value per common share are total book value and total book value per common share, respectively.
• Adjusted book value including unrealized foreign currency translation gains and losses is adjusted book value plus unrealized foreign currency translation gains and losses. Adjusted book value including unrealized foreign currency translation gains and losses per common share is adjusted book value plus unrealized foreign currency translation gains and losses at the period end divided by the ending outstanding common shares for the period presented. The Company considers adjusted book value including unrealized foreign currency translation gains and losses, and its related per share financial measure, important as they exclude certain components of AOCI, which fluctuate due to market movements that are outside management's control; however, it includes the impact of foreign currency as a result of the significance of Aflac’s Japan operation. The most comparable U.S. GAAP financial measures for adjusted book value including unrealized foreign currency translation gains and losses and adjusted book value including unrealized foreign currency translation gains and losses per common share are total book value and total book value per common share, respectively.
• Adjusted book value including unrealized foreign currency translation gains and losses and pension liability adjustment is adjusted book value plus unrealized foreign currency translation gains and losses and pension liability adjustment. The Company considers adjusted book value including unrealized foreign currency translation gains and losses and pension liability adjustment important as it excludes certain components of AOCI, which fluctuates due to market movements that are outside management's control; however, it includes the impact of foreign currency as a result of the significance of Aflac’s Japan operation. The most comparable U.S. GAAP financial measure for adjusted book value including unrealized foreign currency translation gains and losses and pension liability adjustment is total book value.
• Adjusted debt is the sum of notes payable, as recorded on the U.S. GAAP balance sheet, excluding 50% of subordinated debentures and perpetual bonds and all pre-funding of debt maturities. The Company considers adjusted debt important as it measures outstanding debt consistently with expectations of the Company’s rating agency stakeholders. The most comparable U.S. GAAP financial measure for adjusted debt is notes payable.
• Adjusted debt including 50% of subordinated debentures and perpetual bonds is the sum of notes payable, as recorded on the U.S. GAAP balance sheet, excluding pre-funding of debt maturities. The Company considers adjusted debt including 50% of subordinated debentures and perpetual bonds important as it measures outstanding debt consistently with expectations of the Company’s rating agency stakeholders. The most comparable U.S. GAAP financial measure for adjusted debt including 50% of subordinated debentures and perpetual bonds is notes payable.
• Adjusted earnings are adjusted revenues less benefits and adjusted expenses. Adjusted earnings per share (basic or diluted) are the adjusted earnings for the period divided by the weighted average outstanding shares (basic or diluted) for the period presented. The adjustments to both revenues and expenses account for certain items that cannot be predicted or that are outside management’s control. Adjusted revenues are U.S. GAAP total revenues excluding adjusted net investment gains and losses. Adjusted expenses are U.S. GAAP total acquisition and operating expenses including the impact of interest cash flows from derivatives associated with notes payable but excluding any nonrecurring 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. Management uses adjusted earnings and adjusted earnings per diluted share to evaluate the financial performance of the Company’s insurance operations on a consolidated basis and believes that a presentation of these financial measures is vitally important to an understanding of the underlying profitability drivers and trends of the Company’s insurance business. The most comparable U.S. GAAP financial measures for adjusted earnings and adjusted earnings per share (basic or diluted) are net earnings and net earnings per share, respectively.
--- ---
• Adjusted earnings excluding current period foreign currency impact are computed using the average foreign currency exchange rate for the comparable prior-year period, which eliminates fluctuations driven solely by foreign currency exchange rate changes. Adjusted earnings per diluted share excluding current period foreign currency impact is adjusted earnings excluding current period foreign currency impact divided by the weighted average outstanding diluted shares for the period presented. The Company considers adjusted earnings excluding current period foreign currency impact and adjusted earnings per diluted share excluding current period foreign currency impact important because a significant portion of the Company's business is conducted in Japan and foreign exchange rates are outside management’s control; therefore, the Company believes it is important to understand the impact of translating foreign currency (primarily Japanese yen) into U.S. dollars. The most comparable U.S. GAAP financial measures for adjusted earnings excluding current period foreign currency impact and adjusted earnings per diluted share excluding current period foreign currency impact are net earnings and net earnings per share, respectively.
• Amortized hedge costs/income represent costs/income incurred or recognized as a result of using foreign currency derivatives to hedge certain foreign exchange risks in the Company's Japan segment or in Corporate and other. These amortized hedge costs/ income are estimated at the inception of the derivatives based on the specific terms of each contract and are recognized on a straight-line basis over the term of the hedge. The Company believes that amortized hedge costs/income measure the periodic currency risk management costs/income related to hedging certain foreign currency exchange risks and are an important component of net investment income. There is no comparable U.S. GAAP financial measure for amortized hedge costs/ income.
• Adjusted net investment gains and losses are net investment gains and losses adjusted for i) amortized hedge cost/income related to foreign currency exposure management strategies and certain derivative activity, ii) net interest cash flows from foreign currency and interest rate derivatives associated with certain investment strategies, which are both reclassified to net investment income, and iii) the impact of interest cash flows from derivatives associated with notes payable, which is reclassified to interest expense as a component of total adjusted expenses. The Company considers adjusted net investment gains and losses important as it represents the remainder amount that is considered outside management’s control, while excluding the components that are within management’s control and are accordingly reclassified to net investment income and interest expense. The most comparable U.S. GAAP financial measure for adjusted net investment gains and losses is net investment gains and losses.
• Adjusted net investment income is net investment income adjusted for i) amortized hedge cost/income related to foreign currency exposure management strategies and certain derivative activity, and ii) net interest cash flows from foreign currency and interest rate derivatives associated with certain investment strategies, which are reclassified from net investment gains and losses to net investment income. The Company considers adjusted net investment income important because it provides a more comprehensive understanding of the costs and income associated with the Company’s investments and related hedging strategies. The most comparable U.S. GAAP financial measure for adjusted net investment income is net investment income.
• Adjusted return on equity is adjusted earnings divided by average shareholders’ equity, excluding accumulated other comprehensive income (AOCI). Management uses adjusted return on equity to evaluate the financial performance of the Company’s insurance operations on a consolidated basis and believes that a presentation of this financial measure is vitally important to an understanding of the underlying profitability drivers and trends of the Company’s insurance business. The Company considers adjusted return on equity important as it excludes components of AOCI, which fluctuate due to market movements that are outside management's control. The most comparable U.S. GAAP financial measure for adjusted return on equity is return on average equity (ROE) as determined using net earnings and average total shareholders’ equity.

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Fourth Quarter 2022

Earnings Call

Video Update

Max K. Brodén

February 1, 2023

For more information contact:

Investor and Rating Agency Relations

800.235.2667

aflacir@aflac.com

Aflac Worldwide Headquarters

1932 Wynnton Road

Columbus, GA 31999

Preliminary note: Forward-Looking Information and Non-U.S. GAAP Financial Measures

Forward-Looking Information

The Private Securities Litigation Reform Act of 1995 provides a “safe harbor” to encourage companies to provide prospective information, so long as those informational statements are identified as forward-looking and are accompanied by meaningful cautionary statements identifying important factors that could cause actual results to differ materially from those included in the forward-looking statements. The company desires to take advantage of these provisions. This transcript contains cautionary statements identifying important factors that could cause actual results to differ materially from those projected herein, and in any other statements made by company officials in communications with the financial community and contained in documents filed with the Securities and Exchange Commission (SEC). Forward-looking statements are not based on historical information and relate to future operations, strategies, financial results or other developments. Furthermore, forward-looking information is subject to numerous assumptions, risks and uncertainties. In particular, statements containing words such as “expect,” “anticipate,” “believe,” “goal,” “objective,” “may,” “should,” “estimate,” “intends,” “projects,” “will,” “assumes,” “potential,” “target,” "outlook" or similar words as well as specific projections of future results, generally qualify as forward-looking. Aflac undertakes no obligation to update such forward-looking statements.

The company cautions readers that the following factors, in addition to other factors mentioned from time to time, could cause actual results to differ materially from those contemplated by the forward-looking statements:

•difficult conditions in global capital markets and the economy, including those caused by COVID-19

•defaults and credit downgrades of investments

•global fluctuations in interest rates and exposure to significant interest rate risk

•concentration of business in Japan

•limited availability of acceptable yen-denominated investments

•foreign currency fluctuations in the yen/dollar exchange rate

•differing interpretations applied to investment valuations

•significant valuation judgments in determination of expected credit losses recorded on the Company's investments

•decreases in the Company's financial strength or debt ratings

•decline in creditworthiness of other financial institutions

•concentration of the Company's investments in any particular single-issuer or sector

•major public health issues, the effects of COVID-19 and its variants (both known and emerging), and any resulting economic effects and government interventions, on the Company's business and financial results

•the Company's ability to attract and retain qualified sales associates, brokers, employees, and distribution partners

•deviations in actual experience from pricing and reserving assumptions

•ability to continue to develop and implement improvements in information technology systems

•interruption in telecommunication, information technology and other operational systems, or a failure to maintain the security, confidentiality or privacy of sensitive data residing on such systems

•subsidiaries' ability to pay dividends to the Parent Company

•inherent limitations to risk management policies and procedures

•operational risks of third party vendors

•tax rates applicable to the Company may change

•failure to comply with restrictions on policyholder privacy and information security

•extensive regulation and changes in law or regulation by governmental authorities

•competitive environment and ability to anticipate and respond to market trends

•catastrophic events, including, but not limited to, as a result of climate change, epidemics, pandemics (such as COVID-19), tornadoes, hurricanes, earthquakes, tsunamis, war or other military action, terrorism or other acts of violence, and damage incidental to such events

•ability to protect the Aflac brand and the Company's reputation

•ability to effectively manage key executive succession

•changes in accounting standards

•level and outcome of litigation

•allegations or determinations of worker misclassification in the United States

Non-U.S. GAAP Financial Measures and Reconciliations

This document includes references to the Company’s financial performance measures which are not calculated in accordance with United States generally accepted accounting principles (U.S. GAAP) (non-U.S. GAAP). The financial measures exclude items that the Company believes may obscure the underlying fundamentals and trends in insurance operations because they tend to be driven by general economic conditions and events or related to infrequent activities not directly associated with insurance operations.

Definitions of the Company’s non-U.S. GAAP financial measures and applicable reconciliations to the most comparable U.S. GAAP measures are provided in the presentation slides that accompany this transcript.

Due to the size of Aflac Japan, where the functional currency is the Japanese yen, fluctuations in the yen/dollar exchange rate can have a significant effect on reported results. In periods when the yen weakens, translating yen into dollars results in fewer dollars being reported. When the yen strengthens, translating yen into dollars results in more dollars being reported. Consequently, yen weakening has the effect of suppressing current period results in relation to the comparable prior period, while yen strengthening has the effect of magnifying current period results in relation to the comparable prior period. A significant portion of the Company’s business is conducted in yen and never converted into dollars but translated into dollars for U.S. GAAP reporting purposes, which results in foreign currency impact to earnings, cash flows and book value on a U.S. GAAP basis. Management evaluates the Company's financial performance both including and excluding the impact of foreign currency translation to monitor, respectively, cumulative currency impacts and the currency-neutral operating performance over time. The average yen/dollar exchange rate is based on the published MUFG Bank, Ltd. telegraphic transfer middle rate (TTM).

Max K. Brodén

4Q22 CFO Video Update

February 1, 2023

Hello, and thank you for joining me as I provide a financial update on Aflac Incorporated’s results for the fourth quarter of 2022.

For the fourth quarter, adjusted earnings per diluted share increased 0.8% year over year to $1.29, with an $0.11 negative impact from FX in the quarter. We benefited from low benefit ratios in both Japan and the U.S., as claims utilization remained below our long term expectations. Variable investment income ran $66 million, or $0.09 per share, below our long-term return expectations.

Adjusted book value per share including foreign currency translation gains and losses grew 2.8%, and the adjusted ROE was 11.8%, or 12.9% excluding the impact of foreign currency, a significant spread to our cost of capital. Overall, we view our results in the quarter as solid.

Starting with our Japan segment, net earned premium for the quarter declined 4.1%, and policies in-force declined 1.7%. Both of these numbers are key metrics for us when analyzing the underlying business.

Japan’s total benefit ratio came in at 66.2% for the quarter, down 110 basis points year over year, and the third sector benefit ratio was 55.9%, also down 110 basis points year over year. We continue to experience favorable actual to expected on our well-priced, large and mature in-force block. We estimate our normalized benefit ratio to be 67.1% in Q4. The changes to deemed hospitalization on September 26th have played out in line with our expectations, and we feel good about our current IBNR for COVID claims.

Persistency remained strong with a rate of 94.1%, but was down 20 basis points year over year. With product refreshments we tend to experience some elevation in lapses as customers update and refresh their coverage, which was the case with the recently refreshed cancer product.

Our expense ratio in Japan was 22.9%, up 30 basis points year over year. Despite lower absolute expenses, the lower revenue base means that holding our expense ratio flat is becoming increasingly challenging with a shrinking in force.

Adjusted Net investment income in yen terms stayed relatively flat year over year, as negative marks on our alternative assets portfolio were substantially offset by increasing returns from our USD floating rate portfolio net of amortized hedge costs, leading to a total 1.7% decline in total adjusted net investment income.

The pretax margin for Japan in the quarter was 25.5%, up 80 basis points year over year; a very good result for the quarter.

Turning to U.S. results, net earned premium was down 0.2%, as higher lapses beginning in the first quarter of the year offset the impact of new business written in the fourth quarter. Persistency declined 260 basis points year over year to 77.0%. We have continued to experience relatively high lapses of policy and certificate holders as the U.S. labor force has been in a higher velocity period in 2022.

Our total benefit ratio came in lower than expected at 40.8%, a full 590.0 basis points lower than Q4 2021. We peg the underlying benefit ratio to 47.8%, with the main driver being significantly higher than normal IBNR releases. Claims utilization remained subdued in the quarter, and as we incorporate more recent experience into our reserve models, we have released some IBNR.

Our expense ratio in the U.S. was 44.0%, up 20 basis points year over year. About 130 basis points can be explained by higher lapsation discussed earlier, which directly hits expenses by greater DAC amortization. As policies lapse, the DAC balance associated with those policies will be written off and flow through our P&L. The expense ratio is also impacted by a lower denominator as increased lapses lead to lower net earned premiums.

Our continued build-out of growth initiatives – group life & disability, network dental and vision and direct to consumer – increased our total U.S. expense ratio by 420 basis points. We would expect this impact to decrease over time as these businesses grow to scale and improve their profitability.

Adjusted net investment income in the U.S. was down 2.5%, mainly driven by unfavorable variable investment income in the quarter somewhat offset by higher yields on our floating rate portfolio.

Profitability in the U.S. segment was solid, with a pretax margin of 21.0%, driven primarily by the abnormally low benefit ratio.

In our Corporate segment, we recorded a pretax loss of $44 million. Adjusted net investment income was $121 million higher than last year as fewer tax credit investments were recognized, higher rates began to earn in and amortized hedge income increased. These tax credit investments negatively impact the Corporate net investment income line for U.S. GAAP purposes with an associated credit to the tax line. The net impact to our bottom line was a positive $6.8 million in the quarter. To date, these investments are performing well and in line with expectations.

Our capital position remains strong, and we ended the quarter with an SMR north of 850% in Japan and a combined RBC greater than 650% in the U.S. Unencumbered holding company liquidity stood at $3.1 billion, $1.0 billion above our minimum balance. Seasonality tends to push down holding company cash levels in the fourth quarter, so we would expect higher subsidiary dividends in the next two quarters to add to this cash metric.

Leverage, which includes the sustainability bond, remains at a comfortable 20.8%, towards the lower end of our leverage corridor of 20% to 25%.

We repurchased $600 million of our own stock and paid dividends of $248 million in Q4, offering good relative IRR on these capital deployments. We will continue to be flexible and tactical in how we manage the balance sheet and deploy capital in order to drive strong risk-adjusted ROE with a meaningful spread to our cost of capital.

At the enterprise level, we continue to be pleased with our ability to hedge economic exposure to the yen by holding unhedged U.S. dollar assets in the Japan general account, entering FX forwards at the holding company and borrowing in yen. In doing so, we reduce the volatility and cost of capital, while protecting the long-term value of Aflac Japan and dividends to the holding company.

As it relates to our recently established reinsurance platform, our first transaction is in place and proceeding.

Thank you for your time and attention. I look forward to discussing our results in further detail on tomorrow's earnings call. Thank you.

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