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BUSINESS SEGMENT INFORMATION | 3 Months Ended
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Sep. 30, 2021
Segment Reporting [Abstract] |
BUSINESS SEGMENT INFORMATION | BUSINESS SEGMENT INFORMATION The Company consists of two reportable insurance business segments: Aflac Japan and Aflac U.S., both of which sell supplemental health and life insurance. In addition, the Parent Company, other operating business units that are not individually reportable, and business activities, including reinsurance retrocession activities, not included in Aflac Japan or Aflac U.S. are included in Corporate and other. The Company does not allocate corporate overhead expenses to business segments. Consistent with U.S. GAAP accounting guidance for segment reporting, the Company evaluates and manages its business segments using a financial performance measure called pretax adjusted earnings. Adjusted earnings are adjusted revenues less benefits and adjusted expenses. 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 net investment gains and losses, except for amortized hedge costs/income related to foreign currency exposure management strategies and net interest cash flows from derivatives associated with certain investment strategies. 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 Aflac’s underlying business performance. The Company excludes income taxes related to operations to arrive at pretax adjusted earnings. Information regarding operations by reportable segment and Corporate and other, follows:
| Three Months Ended September 30, |  | Nine Months Ended September 30, |
(In millions) | 2021 |  | 2020 |  | 2021 |  | 2020 |
Revenues: |  |  |  |  |  |  |  |
Aflac Japan: |  |  |  |  |  |  |  |
Net earned premiums | $ | 2,934 |  |  | $ | 3,168 |  |  | $ | 9,045 |  |  | $ | 9,476 |  |
Adjusted net investment income (1),(2) | 763 |  |  | 663 |  |  | 2,260 |  |  | 1,939 |  |
Other income | 10 |  |  | 11 |  |  | 32 |  |  | 32 |  |
Total adjusted revenue Aflac Japan | 3,707 |  |  | 3,842 |  |  | 11,337 |  |  | 11,447 |  |
Aflac U.S.: |  |  |  |  |  |  |  |
Net earned premiums | 1,393 |  |  | 1,407 |  |  | 4,223 |  |  | 4,348 |  |
Adjusted net investment income (3) | 191 |  |  | 175 |  |  | 557 |  |  | 523 |  |
Other income | 32 |  |  | 24 |  |  | 90 |  |  | 78 |  |
Total adjusted revenue Aflac U.S. | 1,616 |  |  | 1,606 |  |  | 4,870 |  |  | 4,949 |  |
Corporate and other (4),(5) | 72 |  |  | 87 |  |  | 205 |  |  | 292 |  |
Total adjusted revenues | 5,395 |  |  | 5,535 |  |  | 16,412 |  |  | 16,688 |  |
Net investment gains (losses) (1),(2),(3),(4) | (158) |  |  | 130 |  |  | 258 |  |  | (454) |  |
Total revenues | $ | 5,237 |  |  | $ | 5,665 |  |  | $ | 16,670 |  |  | $ | 16,234 |  |
(1) Amortized hedge costs of $20 and $51 for the three-month periods and $55 and $155 for the nine-month periods ended September 30, 2021, and 2020, respectively, related to certain foreign currency exposure management strategies have been reclassified from net investment gains (losses) and reported as a deduction from net investment income when analyzing operations. (2) Net interest cash flows from derivatives associated with certain investment strategies of $(7) and $6 for the three-month periods and $(24) and $5 for the nine-month periods ended September 30, 2021 and 2020, respectively, have been reclassified from net investment gains (losses) and included in adjusted earnings as a component of net investment income when analyzing operations. (3) Net interest cash flows from derivatives associated with certain investment strategies of $1 for both three-month periods and $1 and $2 for the nine-month periods ended September 30, 2021 and 2020, respectively, have been reclassified from net investment gains (losses) and included in adjusted earnings as a component of net investment income. (4) Amortized hedge income of $13 and $22 for the three-month periods and $45 and $78 for the nine-month periods ended September 30, 2021, and 2020, respectively, related to certain foreign currency exposure management strategies has been reclassified from net investment gains (losses) and reported as an increase to net investment income when analyzing operations. (5) The change in value of federal historic rehabilitation and solar investments in partnerships of $5 and $35 for the three- and nine-month periods ended September 30, 2021, respectively, are included as a reduction to net investment income. Offsetting tax credits on these investments of $10 and $35 for the three- and nine-month periods ended September 30, 2021, respectively, have been recorded as an income tax benefit in the consolidated statement of earnings. See Note 3 of the Notes to the Consolidated Financial Statements for additional information on these investments.
| Three Months Ended September 30, |  | Nine Months Ended September 30, |
(In millions) | 2021 |  | 2020 |  | 2021 |  | 2020 |
Pretax earnings: |  |  |  |  |  |  |  |
Aflac Japan (1),(2) | $ | 976 |  |  | $ | 747 |  |  | $ | 2,867 |  |  | $ | 2,442 |  |
Aflac U.S. (3) | 358 |  |  | 329 |  |  | 1,217 |  |  | 1,082 |  |
Corporate and other (4),(5),(6) | (41) |  |  | (39) |  |  | (144) |  |  | (69) |  |
Pretax adjusted earnings (7) | 1,293 |  |  | 1,037 |  |  | 3,940 |  |  | 3,455 |  |
Net investment gains (losses) (1),(2),(3),(4),(5) | (172) |  |  | 117 |  |  | 216 |  |  | (497) |  |
Other income (loss) | (8) |  |  | (1) |  |  | (66) |  |  | (16) |  |
Total earnings before income taxes | $ | 1,113 |  |  | $ | 1,153 |  |  | $ | 4,090 |  |  | $ | 2,942 |  |
Income taxes applicable to pretax adjusted earnings | $ | 262 |  |  | $ | 43 |  |  | $ | 771 |  |  | $ | 659 |  |
Effect of foreign currency translation on after-tax adjusted earnings | (14) |  |  | 3 |  |  | (8) |  |  | 17 |  |
(1) Amortized hedge costs of $20 and $51 for the three-month periods and $55 and $155 for the nine-month periods ended September 30, 2021, and 2020, respectively, related to certain foreign currency exposure management strategies have been reclassified from net investment gains (losses) and reported as a deduction from net investment income when analyzing operations. (2) Net interest cash flows from derivatives associated with certain investment strategies of $(7) and $6 for the three-month periods and $(24) and $5 for the nine-month periods ended September 30, 2021 and 2020, respectively, have been reclassified from net investment gains (losses) and included in adjusted earnings as a component of net investment income when analyzing operations. (3) Net interest cash flows from derivatives associated with certain investment strategies of $1 for both three-month periods and $1 and $2 for the nine-month periods ended September 30, 2021 and 2020, respectively, have been reclassified from net investment gains (losses) and included in adjusted earnings as a component of net investment income. (4) Amortized hedge income of $13 and $22 for the three-month periods and $45 and $78 for the nine-month periods ended September 30, 2021, and 2020, respectively, related to certain foreign currency exposure management strategies has been reclassified from net investment gains (losses) and reported as an increase in net investment income when analyzing operations. (5) A gain of $14 and $13 for the three-month periods and $41 and $43 for the nine-month periods ended September 30, 2021, and 2020, respectively, related to the interest rate component of the change in fair value of foreign currency swaps on notes payable has been reclassified from net investment gains (losses) and included in adjusted earnings when analyzing operations. (6) The change in value of federal historic rehabilitation and solar investments in partnerships of $5 and $35 for the three- and nine-month periods ended September 30, 2021, respectively, is included as a reduction to net investment income. Offsetting tax credits on these investments of $10 and $35 for the three- and nine-month periods ended September 30, 2021, respectively, have been recorded as an income tax benefit in the consolidated statement of earnings. See Note 3 of the Notes to the Consolidated Financial Statements for additional information on these investments. (7) Includes $40 and $44 for the three-month periods and $130 and $122 for the nine-month periods ended September 30, 2021, and 2020, respectively, of interest expense on debt. Assets were as follows:
(In millions) | September 30, 2021 |  | December 31, 2020
Assets: |  |  |  |  |  |  |
Aflac Japan |  | $ | 131,651 |  |  |  |  | $ | 137,271 |  |
Aflac U.S. |  | 23,304 |  |  |  |  | 22,864 |  |
Corporate and other |  | 5,642 |  |  |  |  | 4,951 |  |
Total assets |  | $ | 160,597 |  |  |  |  | $ | 165,086 |  |

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- Definition The entire disclosure for reporting segments including data and tables. Reportable segments include those that meet any of the following quantitative thresholds a) it's reported revenue, including sales to external customers and intersegment sales or transfers is 10 percent or more of the combined revenue, internal and external, of all operating segments b) the absolute amount of its reported profit or loss is 10 percent or more of the greater, in absolute amount of 1) the combined reported profit of all operating segments that did not report a loss or 2) the combined reported loss of all operating segments that did report a loss c) its assets are 10 percent or more of the combined assets of all operating segments. + References Reference 1: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 31 -URI http://asc.fasb.org/extlink&oid=123359005&loc=d3e8924-108599 Reference 2: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 34 -URI http://asc.fasb.org/extlink&oid=123359005&loc=d3e8981-108599 Reference 3: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 21 -Subparagraph (a) -URI http://asc.fasb.org/extlink&oid=123359005&loc=d3e8721-108599 Reference 4: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 40 -URI http://asc.fasb.org/extlink&oid=123359005&loc=d3e9031-108599 Reference 5: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 32 -Subparagraph (f) -URI http://asc.fasb.org/extlink&oid=123359005&loc=d3e8933-108599 Reference 6: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 32 -Subparagraph (e) -URI http://asc.fasb.org/extlink&oid=123359005&loc=d3e8933-108599 Reference 7: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 26 -URI http://asc.fasb.org/extlink&oid=123359005&loc=d3e8844-108599 Reference 8: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 41 -URI http://asc.fasb.org/extlink&oid=123359005&loc=d3e9038-108599 Reference 9: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 32 -Subparagraph (d) -URI http://asc.fasb.org/extlink&oid=123359005&loc=d3e8933-108599 Reference 10: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 22 -URI http://asc.fasb.org/extlink&oid=123359005&loc=d3e8736-108599 Reference 11: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 42 -URI http://asc.fasb.org/extlink&oid=123359005&loc=d3e9054-108599 Reference 12: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 15 -URI http://asc.fasb.org/extlink&oid=123359005&loc=d3e8657-108599 Reference 13: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 21 -Subparagraph (b) -URI http://asc.fasb.org/extlink&oid=123359005&loc=d3e8721-108599 Reference 14: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -URI http://asc.fasb.org/topic&trid=2134510 + Details
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