Item 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

The Company is exposed primarily to the following types of market risks: currency risk, interest rate risk, credit risk and equity risk. Fluctuations in these factors could impact the Company’s consolidated results of operations or financial condition. The Company regularly monitors its market risks and uses a variety of strategies to manage its exposure to these market risks.

Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Currency Risk

Aflac Japan

The functional currency of Aflac Japan's insurance operations is the Japanese yen. Aflac Japan’s premiums and a significant portion of its investment income are received in yen, and its claims and most expenses are paid in yen. Aflac Japan purchases yen-denominated assets and U.S. dollar-denominated assets, which may be hedged to yen, to support yen-denominated policy liabilities. These and other yen-denominated financial statement items are, however, translated into U.S. dollars for financial reporting purposes. Most of Aflac Japan's cash and liabilities are yen-denominated.

The Company engages in hedging activities to mitigate certain currency risks from holding U.S. dollar-denominated investments in Aflac Japan; however, this hedging program also has some inherent risks. There is a risk that in a scenario of long-term yen weakening there could be significant derivative losses that create corresponding liquidity requirements to support interim derivative settlements. Further, the derivatives used for hedging are shorter in duration than the hedged investments, so there is rollover risk. In unfavorable market environments, the rollover of derivatives throughout the hedging period could result in increased hedge costs. Additionally, as discussed in detail in the Risk Factors section titled “Lack of availability of acceptable yen-denominated investments could adversely affect the Company's results of operations, financial position or liquidity,” there is a risk that losses realized on derivative settlements during periods of yen weakening may not be recouped through realization of the corresponding holding currency gains on the hedged U.S. dollar-denominated investments if these investments are not ultimately sold and the U.S. dollar proceeds converted to yen.

The Company has taken steps to refine the strategy to mitigate currency exposure of Aflac Japan from U.S. dollar-denominated investments while balancing the consideration of the economic equity surplus in Aflac Japan. This refinement in strategy resulted in an increased amount of the unhedged U.S. dollar-denominated investments held in Aflac Japan while at the same time mitigating hedge cost increases. Generally, Aflac Japan’s exposure to the currency risk increases when its portfolio of unhedged U.S. dollar-denominated investments increases. As the value of the U.S. dollar-denominated investment portfolio in Aflac Japan fluctuates and the Company’s business model evolves, the Company periodically reevaluates this size of the unhedged portfolio and may accordingly adjust up or down its currency hedging targets. See Part I, Item 1A. Risk Factors for the risk factor titled "The Company is exposed to foreign currency fluctuations in the yen/dollar exchange rate" for additional information.

Corporate and Other

The Company is exposed to currency risk when yen funds are converted into U.S. dollars. This occurs when yen-denominated funds are paid as dividends and management fees from Aflac Japan to the Parent Company and with quarterly settlements of internal reinsurance transactions. The exchange rates prevailing at the time of yen payments will differ from the exchange rates prevailing at the time the yen profits were earned. The Company may use a portion of the yen dividend and management fee payments to service Aflac Incorporated's yen-denominated notes payable with the remainder converted into U.S. dollars. Internal reinsurance transactions create foreign currency exposure at Aflac Re, primarily due to yen-denominated reinsurance liabilities to Aflac Japan while a majority of Aflac Re's assets are denominated in U.S. dollars, which may require Aflac Re to convert U.S. dollars to yen or enter foreign exchange derivatives with the Parent Company to manage yen-denominated liabilities.

In addition to yen payments and internal reinsurance transactions, certain investment activities for Aflac Japan expose the Company to economic currency risk when yen are converted into U.S. dollars. As noted above, the Company invests a portion of its yen cash flows in U.S. dollar-denominated assets. This requires that the Company convert the yen cash flows to U.S. dollars before investing. As previously discussed, for certain of its U.S. dollar-denominated securities, the Company enters into foreign currency forward and option contracts to hedge the currency risk on the fair value of hedged investments. Additionally, the Parent Company enters into forward contracts to accomplish a dual objective of hedging foreign currency rate risk to dividend payments by Aflac Japan, and reducing enterprise-wide hedge costs. The Company also balances the volume of hedging instruments between forwards and options in an attempt to manage and balance the risks associated with collateral, hedge costs and cash settlements. If the markets experience a significant strengthening of yen, this could cause cash strain at the Parent Company as a result of cash collateral and potentially cash settlement requirements. Based on the timing and severity of exchange rate fluctuations combined with the level of outstanding activity in this program, the cash strain at the Parent Company could be significant.

Aside from the activities discussed above, the Company generally does not convert yen into U.S. dollars; however, it does translate financial statement amounts from yen into U.S. dollars for financial reporting purposes. Therefore, reported amounts are affected by foreign currency fluctuations. The Company reports unrealized foreign currency translation gains

Item 7A. Quantitative and Qualitative Disclosures About Market Risk

and losses in AOCI. In periods when the yen weakens against the dollar, translating yen into dollars causes fewer dollars to be reported. When the yen strengthens, translating yen into U.S. dollars causes more U.S. dollars to be reported. The weakening of the yen relative to the U.S. dollar will generally adversely affect the value of the Company's yen-denominated investments in U.S. dollar terms. The Company also considers the economic equity surplus in Aflac Japan and related exposure to foreign currency. The Company manages this currency risk by investing a portion of Aflac Japan's investment portfolio in U.S. dollar-denominated securities and by the Parent Company's issuance of yen-denominated debt. As a result, the effect of currency fluctuations on the Company's net assets is reduced.

The following table demonstrates the effect of foreign currency fluctuations by presenting the dollar values of the Company's yen-denominated assets and liabilities, and its consolidated yen-denominated net asset exposure at selected exchange rates as of December 31.

Dollar Value of Yen-Denominated Assets and Liabilities

at Selected Exchange Rates

(In millions)			2024																		2023
Yen/dollar exchange rates			143.18						158.18 (1)						173.18						126.83						141.83 (1)						156.83
Yen-denominated financial instruments:
Assets:
Securities available-for-sale: (2)
Fixed maturity securities (3)			$	35,805					$	32,409					$	29,603					$	44,357					$	39,665					$	35,872
Fixed maturity securities - consolidated variable interest entities (4)			514						465						425						587						525						475
Securities held-to-maturity: (2)
Fixed maturity securities			17,638						15,966						14,583						19,926						17,819						16,115
Equity securities			534						484						442						840						751						679
Cash and cash equivalents			894						809						739						1,131						1,011						915
Derivatives			111						240						384						223						337						893
Other financial instruments			382						346						315						415						371						335
Subtotal			55,878						50,719						46,491						67,479						60,479						55,284
Liabilities:
Notes payable			4,808						4,351						3,973						4,709						4,211						3,807
Derivatives			811						933						1,065						1,374						1,430						1,894
Subtotal			5,619						5,284						5,038						6,083						5,641						5,701
Net yen-denominated financial instruments			50,259						45,435						41,453						61,396						54,838						49,583
Other yen-denominated assets			12,040						10,898						9,954						12,262						10,965						9,916
Other yen-denominated liabilities			80,551						72,913						66,599						95,457						85,361						77,197
Consolidated yen-denominated net assets (liabilities) subject to foreign currency fluctuation*(2)*			$	(18,252)					$	(16,580)					$	(15,192)					$	(21,799)					$	(19,558)					$	(17,698)

(1) Actual period-end exchange rate

(2) Net of allowance for credit losses

(3) Does not include the U.S. dollar-denominated corporate bonds for which the Company has entered into foreign currency derivatives as discussed in the Aflac Japan Investment subsection of MD&A

(4) Does not include U.S. dollar-denominated bonds that have corresponding cross-currency swaps in consolidated VIEs

The Company is required to consolidate certain VIEs. Some of the consolidated VIEs in Aflac Japan's portfolio use foreign currency swaps to convert foreign denominated cash flows to yen, the functional currency of Aflac Japan, in order to minimize cash flow fluctuations. Foreign currency swaps exchange an initial principal amount in two currencies, agreeing to re-exchange the currencies at a future date, at an agreed upon exchange rate. There may also be periodic exchanges of payments at specified intervals based on the agreed upon rates and notional amounts. Prior to consolidation, the Company's beneficial interest in these VIEs was a yen-denominated available-for-sale fixed maturity security. Upon consolidation, the original yen-denominated investment was derecognized and the underlying fixed maturity securities and cross-currency swaps were recognized. The combination of a U.S. dollar-denominated investment and cross-currency swap economically creates a yen-denominated investment and has no impact on the Company's net investment hedge position.

Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Similarly, the combination of the U.S. corporate bonds and the foreign currency forwards and options that the Company has entered into, as discussed in the Aflac Japan Investment subsection of MD&A, economically creates a yen-denominated investment that qualifies for inclusion as a component of the Company's investment in Aflac Japan for net investment hedge purposes.

For additional information regarding the Company's Aflac Japan net investment hedge, see the Hedging Activities subsection of Item 7. MD&A.

Interest Rate Risk

The Company's primary interest rate exposure is to the impact of changes in interest rates on the fair value of its investments in debt securities. Significant increases in interest rates cause declines in the values of the Company's investment portfolio which also has a secondary impact on the Company's overall evaluation of its deferred tax asset position. The Company monitors its investment portfolio on a quarterly basis utilizing a full valuation methodology, measuring price volatility, and sensitivity of the fair values of its investments to interest rate changes on the debt securities the Company owns. For example, if the current duration of a debt security is 10 years, then the fair value of that security will increase by approximately 10% if market interest rates decrease by 100 basis points, assuming all other factors remain constant. Likewise, the fair value of the debt security will decrease by approximately 10% if market interest rates increase by 100 basis points, assuming all other factors remain constant.

The estimated effect of potential increases in interest rates on the fair values of debt securities the Company owns; derivatives and notes payable as of December 31 follows:

Sensitivity of Fair Values of Financial Instruments

to Interest Rate Changes

			2024																					2023
(In millions)			Fair Value									+100 Basis Points												Fair Value									+100 Basis Points
Assets:
Debt securities:
Fixed maturity securities:
Yen-denominated						$	49,646								$	44,699											$	59,847								$	51,412
U.S. dollar-denominated						32,369									30,677												33,100									31,099
Other currencies						26									23												0									0
Total debt securities						$	82,041								$	75,399											$	92,947								$	82,511
Commercial mortgage and other loans						$	10,653								$	10,598											$	12,217								$	12,150
Derivatives						$	240								$	225											$	337								$	352
Liabilities:
Notes payable (1)						$	7,027								$	6,601											$	6,930								$	6,502
Derivatives						933									957												1,430									1,506

(1) Excludes lease obligations

There are various factors that affect the fair value of the Company's investments in debt securities. Included in those factors are changes in the prevailing interest rate environment, which directly affect the balance of unrealized gains or losses for a given period in relation to a prior period. Decreases in market yields generally improve the fair value of debt securities, while increases in market yields generally have a negative impact on the fair value of the Company's debt securities. However, the Company does not expect to realize a majority of any unrealized gains or losses. For additional information on unrealized losses on debt securities, see Note 3 of the Notes to the Consolidated Financial Statements.

The Company attempts to match the duration of its assets with the duration of its liabilities. The following table presents the approximate duration of yen-denominated assets and liabilities of Aflac Japan, along with premiums, as of December 31.

Item 7A. Quantitative and Qualitative Disclosures About Market Risk

(In years)			2024						2023
Yen-denominated debt securities			11						12
Policy benefits and related expenses to be paid in future years			14						14
Premiums to be received in future years on policies in force			10						10

The following table presents the approximate duration of U.S. dollar-denominated assets and liabilities of Aflac U.S., along with premiums, as of December 31.

(In years)			2024						2023
U.S. dollar-denominated debt securities			7						7
Policy benefits and related expenses to be paid in future years			8						8
Premiums to be received in future years on policies in force			6						6

The following table shows a comparison of average required interest rates for future policy benefits and investment yields, based on amortized cost, for the years ended December 31.

Comparison of Interest Rates for Future Policy Benefits

and Investment Yields

(Net of Investment Expenses)

			2024																		2023
			U.S.									Japan									U.S.									Japan
Policies issued during year:
Required interest on policy reserves						5.28		%							3.32		%	(1)						5.38		%							2.90		%	(1)
New money yield on investments						6.68									5.92									7.34									4.99
Policies in force at year-end:
Required interest on policy reserves						4.46									2.88			(1)						4.45									2.91			(1)
Portfolio book yield, end of period						5.36									3.03									5.31									2.99

(1) Represents investments for Aflac Japan that support policy obligations and therefore excludes Aflac Japan’s annuity products

Aflac Japan investment yields above include U.S. dollar-denominated investment yields prior to factoring in amortized hedge costs. The Company continues to monitor the spread between its new money yield and the required interest assumption for newly issued products in both the U.S. and Japan and will re-evaluate those assumptions as necessary. Currently, when investments the Company owns mature, the proceeds may be reinvested at a yield below that of the interest required for the accretion of policy benefit liabilities on policies issued in earlier years. Overall, adequate profit margins exist in Aflac Japan's aggregate block of business because of changes in the mix of business and favorable experience from mortality, morbidity and expenses.

Periodically, the Company may enter into derivative transactions to hedge interest rate risk, depending on general economic conditions. For additional information on interest rate derivatives, see the Hedging Activities subsection of Item 7. MD&A and Note 4 of the Notes to the Consolidated Financial Statements.

Credit Risk

A significant portion of the Company's investment portfolio consists of debt securities and loans that expose it to the credit risk of the underlying issuer or borrower. The Company carefully evaluates this risk on every new investment and closely monitors the credit risk of its existing investment portfolio. The Company incorporates the needs of its products and liabilities, the overall requirements of the business, and other factors in addition to its underwriting of the credit risk for each investment in the portfolio.

Evaluating the underlying risks in the Company's credit portfolio involves a multitude of factors including but not limited to its assessment of the issuer's or borrower's business activities, assets, products, market position, financial condition, and future prospects, including sustainability of the issuer’s or borrower’s business. The Company incorporates the assessment of the NRSROs in assigning credit ratings and incorporates the rating methodologies of its external managers in assigning loan ratings to portfolio holdings. The Company performs extensive internal assessments of the credit risks for all its portfolio holdings and potential new investments, which includes using analyses provided by the Company's

Item 7A. Quantitative and Qualitative Disclosures About Market Risk

specialist external managers. For assets managed by external asset managers, the Company provides investment and credit risk parameters that must be used when making investment decisions and requires ongoing monitoring and reporting from the asset managers on significant changes in credit risks within the portfolio.

Investment Concentrations

The Company's 15 largest exposures from investments in fixed maturity securities were as follows:

Largest Global Fixed Maturity Security Investment Positions

(In millions)

December 31, 2024

																		Total						% of Total
No.												Consolidated Corporate/Sovereign Exposure						Consolidated						Fixed Maturity						Credit
																		Book Value						Securities						Rating
1												Japan National Government (1)						$	33,822					42.25		%				A+
2												MUFG Bank, Ltd.						285						.36
												MUFG Bank, Ltd.						190						.24						A
												MUFG Bank, Ltd.						95						.12						A-
3												Bank of America NA						284						.36
												Bank Of America Corp						158						.20						A-
												Bank Of America Corp						126						.16						BBB+
4												E.On International Finance Bv						270						.34						BBB+
5												Banobras						234						.29						BBB-
6												Walt Disney Co.						221						.28						A
7												Investcorp SA						221						.28						BB
8												Nordea Bank AB						220						.27						A-
9												AXA						219						.27						A-
10												Deutsche Telekom AG						209						.26						BBB+
11												CFE						202						.25						BBB
12												Berkshire Hathaway Inc						201						.25						AA
13												Japan Expressway Holding and Debt						201						.25						A+
14												Barclay's Bank PLC						193						.24						BBB
15												Exelon Corp						191						.24						A
												Subtotal						$	36,973					46.19		%
												Total fixed maturity securities						$	80,060					100.00		%

*(1)*JGBs or JGB-backed securities

As previously disclosed, the Company owns long-dated debt instruments in support of its long-dated policyholder obligations. Some of the Company's largest global investment holdings are positions that were purchased many years ago and increased in size due to merger and consolidation activity among the issuing entities. In addition, many of the Company's largest holdings are yen-denominated, therefore strengthening of the yen can increase its position in dollars, and weakening of the yen can decrease its position in dollars. The Company's global investment guidelines establish concentration limits for its investment portfolios.

Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Geographical Exposure

The following table indicates the geographic exposure of the Company's debt securities as of December 31.

			2024												2023
(In millions)			Amortized Cost						% of Total						Amortized Cost						% of Total
Japan			$	37,115					46.5		%				$	42,840					48.4		%
United States and Canada			27,146						34.0						27,926						31.6
United Kingdom			2,756						3.4						2,951						3.3
Germany			1,755						2.2						1,949						2.1
France			1,645						2.1						1,687						1.9
Peripheral Eurozone			1,353						1.6						1,675						1.9
Portugal			0						.0						71						.1
Italy			724						.9						932						1.1
Ireland			110						.1						109						.1
Spain			519						.6						563						.6
Nordic Region			1,451						1.8						1,543						1.8
Sweden			833						1.0						857						1.0
Norway			254						.3						281						.3
Denmark			231						.3						257						.3
Finland			133						.2						148						.2
Other Europe			2,005						2.4						2,436						2.8
Netherlands			896						1.1						1,117						1.3
Switzerland			516						.6						553						.6
Czech Republic			335						.4						374						.4
Austria			14						.0						100						.1
Belgium			118						.1						151						.2
Poland			126						.2						141						.2
Asia excluding Japan			1,218						1.5						1,678						1.9
Africa and Middle East			565						.7						872						1.0
Latin America			1,419						1.8						1,560						1.8
Australia			1,520						1.9						1,283						1.4
All Others			112						.1						113						.1
Total fixed maturity securities			$	80,060					100.0		%				$	88,513					100.0		%

The primary factor considered when determining the domicile of investment exposure is the legal country risk location of the issuer. However, other factors such as the location of the parent guarantor, the location of the company's headquarters or major business operations (including location of major assets), location of primary market (including location of revenue generation) and specific country risk publicly recognized by rating agencies can influence the assignment of the country (or geographic) risk location. When the issuer is a special financing vehicle or a branch or subsidiary of a global company, then the Company considers any guarantees and/or legal, regulatory and corporate relationships of the issuer relative to its ultimate parent in determining the proper assignment of country risk.

Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Derivative Counterparties

The Company is a direct counterparty to the majority of derivative instruments and is exposed to credit risk in the event of nonperformance by the counterparties in those contracts. For the foreign currency swaps associated with the Company's VIE investments for which it is the primary beneficiary, the Company bears the risk of foreign exchange and/or credit loss due to counterparty default even though it is not a direct counterparty to those contracts. The risk of counterparty default for the Company's VIE and senior note and subordinated debenture swaps, foreign currency swaps, certain foreign currency forwards, foreign currency options and interest rate swaptions is mitigated by collateral posting requirements that counterparties to those transactions must meet. If collateral posting agreements are not in place or the counterparty defaults on its collateral posting obligations, the counterparty risk associated with foreign currency forwards and foreign currency options is the risk that at expiry of the contract, the counterparty is unable to deliver the agreed upon amount of yen at the agreed upon price or delivery date, thus exposing the Company to additional unhedged exposure to U.S. dollars in the Aflac Japan investment portfolio. See Note 4 of the Notes to the Consolidated Financial Statements for additional information.

Equity Risk

Market prices for equity securities are subject to fluctuation and consequently the amount realized in the subsequent sale of an investment may significantly differ from the reported market value. Fluctuation in the market price of a security may result from the relative price of alternative investments and general market conditions. The Company's three largest equity exposures had a fair value of $222 million or approximately 28% of its total investment in equity securities as of December 31, 2024. If equity prices experienced a hypothetical broad-based decline of 10%, the fair value of the Company's equity investments would decline by approximately $80 million.

Item 8. Financial Statements and Supplementary Data