Item 1. Financial Statements.

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Item 1. Financial Statements.

Aflac Incorporated and Subsidiaries

Consolidated Statements of Earnings


	Three Months Ended June 30,						Six Months Ended June 30,
(In millions, except for share and per-share amounts - Unaudited)	2025			2024			2025			2024
Revenues:
Net earned premiums, principally supplemental health insurance (1)		$	3,470		$	3,325		$	6,851		$	6,781
Net investment income		1,081			1,095			2,036			2,095
Net investment gains (losses)		(421)			696			(1,384)			1,647
Other income (loss)		30			22			55			52
Total revenues		4,160			5,138			7,558			10,575
Benefits and expenses:
Benefits and claims, excluding reserve remeasurement		2,047			1,972			4,033			4,039
Reserve remeasurement (gains) losses		(37)			(51)			(78)			(107)
Total benefits and claims, net		2,010			1,921			3,955			3,932
Acquisition and operating expenses:
Amortization of deferred policy acquisition costs		221			208			437			424
Insurance commissions		251			246			491			501
Insurance and other expenses		804			694			1,606			1,431
Interest expense		52			50			102			97
Total acquisition and operating expenses		1,328			1,198			2,636			2,453
Total benefits and expenses		3,338			3,119			6,591			6,385
Earnings before income taxes		822			2,019			967			4,190
Income taxes		223			264			339			556
Net earnings		$	599		$	1,755		$	628		$	3,634
Net earnings per share:
Basic		$	1.12		$	3.11		$	1.16		$	6.38
Diluted		1.11			3.10			1.16			6.35
Weighted-average outstanding common shares used in computing earnings per share (In thousands):
Basic		536,688			564,573			540,676			569,730
Diluted		538,425			566,838			542,629			572,160
Cash dividends per share		$	.58		$	.50		$	1.16		$	1.00

(1) Includes a gain (loss) of an immaterial amount and $(2) for the three-month periods and an immaterial amount and $(5) for the six-month periods ended June 30, 2025 and 2024, respectively, related to remeasurement of the deferred profit liability for limited-payment contracts.

See the accompanying Notes to the Consolidated Financial Statements.

Aflac Incorporated and Subsidiaries

Consolidated Statements of Comprehensive Income (Loss)


	Three Months Ended June 30,						Six Months Ended June 30,
(In millions - Unaudited)	2025			2024			2025			2024
Net earnings		$	599		$	1,755		$	628		$	3,634
Other comprehensive income (loss) before income taxes:
Unrealized foreign currency translation gains (losses) during period		179			(340)			531			(838)
Unrealized gains (losses) on fixed maturity securities:
Unrealized holding gains (losses) on fixed maturity securities during period		(764)			(829)			(2,305)			(727)
Reclassification adjustment for (gains) losses on fixed maturity securities included in net earnings		14			(50)			(26)			(218)
Unrealized gains (losses) on derivatives during period		1			6			3			0
Effect of changes in discount rate assumptions during period		2,146			3,698			4,542			5,044
Pension liability adjustment during period		0			2			41			4
Total other comprehensive income (loss) before income taxes		1,576			2,487			2,786			3,265
Income tax expense (benefit) related to items of other comprehensive income (loss)		208			677			299			1,037
Other comprehensive income (loss), net of income taxes		1,368			1,810			2,487			2,228
Total comprehensive income (loss)		$	1,967		$	3,565		$	3,115		$	5,862

See the accompanying Notes to the Consolidated Financial Statements.

Aflac Incorporated and Subsidiaries

Consolidated Balance Sheets


(In millions, except for share and per-share amounts)	June 30, 2025 (Unaudited)			December 31, 2024
Assets:
Investments and cash:
Fixed maturity securities available-for-sale, at fair value (no allowance for credit losses in 2025 and 2024, amortized cost $66,978 in 2025 and $61,455 in 2024)		$	65,204		$	61,841
Fixed maturity securities available-for-sale - consolidated variable interest entities, at fair value (amortized cost $3,052 in 2025 and $2,634 in 2024)		3,675			3,428
Fixed maturity securities held-to-maturity, at amortized cost, net of allowance for credit losses of $5 in 2025 and $5 in 2024 (fair value $17,607 in 2025 and $16,772 in 2024)		17,434			15,966
Equity securities, at fair value		882			796
Commercial mortgage and other loans, net of allowance for credit losses of $384 in 2025 and $355 in 2024 (includes $8,207 in 2025 and $8,693 in 2024 of consolidated variable interest entities)		10,264			10,869
Other investments (includes $2,220 in 2025 and $2,176 in 2024 of consolidated variable interest entities)		7,345			5,958
Cash and cash equivalents		6,965			6,229
Total investments and cash		111,769			105,087
Receivables		873			779
Accrued investment income		753			710
Deferred policy acquisition costs		9,296			8,758
Property and equipment, at cost less accumulated depreciation		390			387
Other		1,655			1,845
Total assets		$	124,736		$	117,566
Liabilities and shareholders’ equity:
Liabilities:
Policy liabilities:
Future policy benefits		$	71,099		$	70,381
Unpaid policy claims		426			381
Unearned premiums		1,377			1,286
Other policyholders’ funds		6,002			5,460
Total policy liabilities		78,904			77,508
Income taxes		685			573
Payables for return of cash collateral on loaned securities		5,767			2,037
Notes payable and lease obligations		8,933			7,498
Other		3,247			3,852
Total liabilities		97,536			91,468
Commitments and contingent liabilities (Note 13)
Shareholders’ equity:
Common stock of $.10 par value. In thousands: authorized 1,900,000 shares in 2025 and 2024; issued 1,357,790 shares in 2025 and 1,356,763 shares in 2024		136			136
Additional paid-in capital		2,958			2,894
Retained earnings		52,595			52,277
Accumulated other comprehensive income (loss):
Unrealized foreign currency translation gains (losses)		(4,282)			(4,998)
Unrealized gains (losses) on fixed maturity securities		(1,828)			24
Unrealized gains (losses) on derivatives		(17)			(20)
Effect of changes in discount rate assumptions		5,594			2,006
Pension liability adjustment		42			10
Treasury stock, at average cost		(27,998)			(26,231)
Total shareholders’ equity		27,200			26,098
Total liabilities and shareholders’ equity		$	124,736		$	117,566

See the accompanying Notes to the Consolidated Financial Statements.

Aflac Incorporated and Subsidiaries

Consolidated Statements of Shareholders’ Equity


(In millions, except for per share amounts - Unaudited)	Common Stock		Additional Paid-in Capital		Retained Earnings		Accumulated Other Comprehensive Income (Loss)		Treasury Stock		Total Shareholders' Equity
Balance at December 31, 2024	$	136	$	2,894	$	52,277	$	(2,978)	$	(26,231)	$	26,098
Net earnings	0		0		29		0		0		29
Unrealized foreign currency translation gains (losses) during period, net of income taxes	0		0		0		449		0		449
Unrealized gains (losses) on fixed maturity securities during period, net of income taxes and reclassification adjustments	0		0		0		(1,257)		0		(1,257)
Unrealized gains (losses) on derivatives during period, net of income taxes	0		0		0		2		0		2
Effect of changes in discount rate assumptions during period, net of income taxes	0		0		0		1,893		0		1,893
Pension liability adjustment during period, net of income taxes	0		0		0		32		0		32
Dividends to shareholders (1) ($.00 per share)	0		0		2		0		0		2
Exercise of stock options	0		4		0		0		0		4
Share-based compensation	0		8		0		0		0		8
Purchases of treasury stock	0		0		0		0		(949)		(949)
Treasury stock reissued	0		13		0		0		14		27
Balance at March 31, 2025	$	136	$	2,919	$	52,308	$	(1,859)	$	(27,166)	$	26,338
Net earnings	0		0		599		0		0		599
Unrealized foreign currency translation gains (losses) during period, net of income taxes	0		0		0		267		0		267
Unrealized gains (losses) on fixed maturity securities during period, net of income taxes and reclassification adjustments	0		0		0		(595)		0		(595)
Unrealized gains (losses) on derivatives during period, net of income taxes	0		0		0		1		0		1
Effect of changes in discount rate assumptions during period, net of income taxes	0		0		0		1,695		0		1,695
Pension liability adjustment during period, net of income taxes	0		0		0		0		0		0
Dividends to shareholders (1) ($.58 per share)	0		0		(312)		0		0		(312)
Exercise of stock options	0		0		0		0		0		0
Share-based compensation	0		30		0		0		0		30
Purchases of treasury stock	0		0		0		0		(839)		(839)
Treasury stock reissued	0		9		0		0		7		16
Balance at June 30, 2025	$	136	$	2,958	$	52,595	$	(491)	$	(27,998)	$	27,200

(1) Dividends to shareholders are recorded in the period in which they are declared.

See the accompanying Notes to the Consolidated Financial Statements.

(continued)

Aflac Incorporated and Subsidiaries

Consolidated Statements of Shareholders’ Equity (continued)


(In millions, except for per share amounts - Unaudited)	Common Stock		Additional Paid-in Capital		Retained Earnings		Accumulated Other Comprehensive Income (Loss)		Treasury Stock		Total Shareholders' Equity
Balance at December 31, 2023	$	136	$	2,771	$	47,993	$	(5,520)	$	(23,395)	$	21,985
Net earnings	0		0		1,879		0		0		1,879
Unrealized foreign currency translation gains (losses) during period, net of income taxes	0		0		0		(597)		0		(597)
Unrealized gains (losses) on fixed maturity securities during period, net of income taxes and reclassification adjustments	0		0		0		(47)		0		(47)
Unrealized gains (losses) on derivatives during period, net of income taxes	0		0		0		(4)		0		(4)
Effect of changes in discount rate assumptions during period, net of income taxes	0		0		0		1,065		0		1,065
Pension liability adjustment during period, net of income taxes	0		0		0		1		0		1
Dividends to shareholders (1) ($.00 per share)	0		0		0		0		0		0
Exercise of stock options	0		4		0		0		0		4
Share-based compensation	0		18		0		0		0		18
Purchases of treasury stock	0		0		0		0		(793)		(793)
Treasury stock reissued	0		13		0		0		13		26
Balance at March 31, 2024	$	136	$	2,806	$	49,872	$	(5,102)	$	(24,175)	$	23,537
Net earnings	0		0		1,755		0		0		1,755
Unrealized foreign currency translation gains (losses) during period, net of income taxes	0		0		0		(425)		0		(425)
Unrealized gains (losses) on fixed maturity securities during period, net of income taxes and reclassification adjustments	0		0		0		(691)		0		(691)
Unrealized gains (losses) on derivatives during period, net of income taxes	0		0		0		4		0		4
Effect of changes in discount rate assumptions during period, net of income taxes	0		0		0		2,920		0		2,920
Pension liability adjustment during period, net of income taxes	0		0		0		2		0		2
Dividends to shareholders (1) ($.50 per share)	0		0		(282)		0		0		(282)
Exercise of stock options	0		2		0		0		0		2
Share-based compensation	0		12		0		0		0		12
Purchases of treasury stock	0		0		0		0		(810)		(810)
Treasury stock reissued	0		15		0		0		8		23
Balance at June 30, 2024	$	136	$	2,835	$	51,345	$	(3,292)	$	(24,977)	$	26,047

(1) Dividends to shareholders are recorded in the period in which they are declared.

See the accompanying Notes to the Consolidated Financial Statements.

Aflac Incorporated and Subsidiaries

Consolidated Statements of Cash Flows


	Six Months Ended June 30,
(In millions - Unaudited)	2025			2024
Cash flows from operating activities:
Net earnings		$	628		$	3,634
Adjustments to reconcile net earnings to net cash provided (used) by operating activities:
Change in receivables and advance premiums		(48)			19
Capitalization of deferred policy acquisition costs		(503)			(508)
Amortization of deferred policy acquisition costs		437			424
Increase in policy liabilities		(195)			(43)
Change in income tax liabilities		(267)			(221)
Net investment (gains) losses		1,384			(1,647)
Other, net		(448)			(554)
Net cash provided (used) by operating activities		988			1,104
Cash flows from investing activities:
Proceeds from investments sold or matured:
Available-for-sale fixed maturity securities		7,816			3,598
Equity securities		240			550
Held-to-maturity fixed maturity securities		2			1
Commercial mortgage and other loans		1,075			952
Costs of investments acquired:
Available-for-sale fixed maturity securities		(9,412)			(3,357)
Equity securities		(249)			(179)
Commercial mortgage and other loans		(799)			(512)
Other investments, net		(1,012)			(2,284)
Settlement of derivatives, net		26			(106)
Cash received (pledged or returned) as collateral, net		3,523			3,375
Other, net		(36)			256
Net cash provided (used) by investing activities		1,174			2,294
Cash flows from financing activities:
Purchases of treasury stock		(1,729)			(1,550)
Proceeds from borrowings		1,039			823
Principal payments under debt obligations		0			(194)
Dividends paid to shareholders		(607)			(550)
Change in investment-type contracts, net		(123)			(103)
Treasury stock reissued		2			12
Other, net		(5)			(14)
Net cash provided (used) by financing activities		(1,423)			(1,576)
Effect of exchange rate changes on cash and cash equivalents		(3)			(68)
Net change in cash and cash equivalents		736			1,754
Cash and cash equivalents, beginning of period		6,229			4,306
Cash and cash equivalents, end of period		$	6,965		$	6,060
Supplemental disclosures of cash flow information:
Income taxes paid		$	605		$	777
Interest paid		92			87
Noncash interest		10			11
Noncash real estate acquired in satisfaction of debt		247			294
Noncash financing activities:
Lease obligations		19			20
Treasury stock issued for:
Associate stock bonus		12			10
Shareholder dividend reinvestment		22			21
Share-based compensation grants		7			6

See the accompanying Notes to the Consolidated Financial Statements.

Aflac Incorporated and Subsidiaries

Notes to the Consolidated Financial Statements

(Interim period data - Unaudited)

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Description of Business

Aflac Incorporated (the Parent Company) and its subsidiaries (collectively, the Company) primarily sell supplemental health and life insurance in Japan and the United States (U.S.). The Company's insurance business is marketed and administered through Aflac Life Insurance Japan Ltd. (ALIJ) in Japan and through American Family Life Assurance Company of Columbus (Aflac), American Family Life Assurance Company of New York (Aflac New York), Continental American Insurance Company (CAIC), Tier One Insurance Company (TOIC) and Aflac Benefits Solutions, Inc. (ABS) in the U.S. The Company’s operations consist of two reportable business segments: Aflac Japan, which includes ALIJ, and Aflac U.S., which includes Aflac, Aflac New York, CAIC, TOIC, and ABS. Aflac New York is a wholly owned subsidiary of Aflac. Most of the Aflac U.S. policies are individually underwritten and marketed through independent agents. With the exception of dental and vision products administered by ABS, and certain group life insurance products, Aflac U.S. markets and administers group products through CAIC, branded as Aflac Group Insurance. Additionally, Aflac U.S. markets its consumer markets products through TOIC. The Company's insurance operations in the U.S. and Japan service the two markets for the Company's insurance business. The Parent Company, other operating business units that are not individually reportable, reinsurance activities, including internal reinsurance activity with Aflac Re Bermuda Ltd.(Aflac Re), and other business activities not included in Aflac Japan or Aflac U.S., as well as intercompany eliminations, are included in Corporate and other.

Basis of Presentation

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

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

In the opinion of management, the accompanying unaudited consolidated financial statements of the Company contain all adjustments, consisting of normal recurring accruals, which are necessary to fairly present the consolidated balance sheets as of June 30, 2025 and December 31, 2024, the consolidated statements of earnings and comprehensive income (loss) for the three- and six-month periods ended June 30, 2025 and 2024, the consolidated statements of shareholders' equity for the three-month periods ended March 31, 2025 and 2024 and June 30, 2025 and 2024, and the consolidated statements of cash flows for the six-month periods ended June 30, 2025 and 2024. Results of operations for interim periods are not necessarily indicative of results for the entire year. As a result, these financial statements should be read in conjunction with the financial statements and notes thereto included in the Company's annual report on Form 10-K for the year ended December 31, 2024 (2024 Annual Report).

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

New Accounting Pronouncements

Recently Adopted Accounting Pronouncements

Accounting Standards Update (ASU) 2023-07 Segment Reporting (Topic 280) - Improvements to Reportable Segment Disclosures

In November 2023, the FASB issued amendments that add certain segment disclosures related to significant segment expenses and require that a public entity disclose the title and position of the Chief Operating Decision Maker (CODM) and an explanation of how the CODM uses the reported measure(s) of segment profit or loss in assessing segment performance and deciding how to allocate resources.

The Company adopted this guidance for the annual period beginning January 1, 2024, and interim periods beginning January 1, 2025. The adoption of this guidance did not have an impact on the Company’s financial position or results of operations. See Note 2 for expanded disclosures required as a result of the amended guidance.

Accounting Pronouncements Pending Adoption

ASU 2024-03 Income Statement (Topic 220) - Disaggregation of Income Statement Expenses

In November 2024, the FASB issued amendments that require disaggregated disclosure, in the notes to the financial statements, of specified information about certain costs and expenses including (1) the amounts of employee compensation, depreciation, and intangible asset amortization; (2) certain expense, gain, or loss amounts that are already required to be disclosed under current U.S. GAAP in the same disclosure as the other disaggregation requirements; (3) qualitative description of the amounts remaining in relevant expense captions that are not separately disaggregated quantitatively, and (4) the total amount of selling expenses and, in annual reporting periods, the Company’s definition of selling expenses.

The amendments are effective for annual periods beginning after December 15, 2026, and interim periods beginning after December 15, 2027. Early adoption is permitted. The adoption of this guidance has no impact on the Company’s financial position or results of operations. The Company is evaluating the impact of adoption on its disclosures.

ASU 2023-09 Income Taxes (Topic 740) - Improvements to Income Tax Disclosures

In December 2023, the FASB issued amendments that require enhanced income tax disclosures including (1) disclosure of specific categories and greater disaggregation of information in the rate reconciliation and (2) income taxes paid disaggregated by jurisdiction. It also includes certain other amendments to improve the effectiveness of income tax disclosures.

The amendments are effective for annual periods beginning after December 15, 2024. Early adoption is permitted. The adoption of this guidance has no impact on the Company’s financial position or results of operations. The Company is evaluating the impact of adoption on its disclosures.

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

For additional information on new accounting pronouncements and recent accounting guidance and their impact, if any, on the Company's financial position, results of operations or disclosures, see Note 1 of the Notes to the Consolidated Financial Statements in the 2024 Annual Report.

2. BUSINESS SEGMENT INFORMATION

The Company consists of two reportable insurance business segments: Aflac Japan and Aflac U.S., both of which sell supplemental health and life insurance. In addition, the Parent Company, other operating business units that are not individually reportable, reinsurance activities, including internal reinsurance activity with Aflac Re, and other business activities not included in Aflac Japan or Aflac U.S., as well as intercompany eliminations, are included in Corporate and other. The Company does not allocate corporate overhead expenses to business segments.

The Company’s reportable segments are regularly reviewed by the Company's CODM, Senior Executive Vice President and Chief Financial Officer, in deciding how to allocate resources and in assessing performance. The Company's CODM reviews and approves the annual budget and operating forecast, which allocates resources to segments and serves as a key benchmark for tracking performance and accountability of each segment's operating results. The Company’s CODM evaluates the performance of the segments using, in comparison to the annual budget, operating forecast and historical results, a financial performance measure called pretax adjusted earnings and believes this financial performance measure to be vitally important for understanding the underlying profitability drivers and trends of the Company’s insurance business.

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

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

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

Aflac Japan's adjusted revenues as a percentage of the Company's total adjusted revenues were 54% in both the three- and six-month periods ended June 30, 2025 and 56% in both the three- and six-month periods ended June 30, 2024. The percentage of the Company's total assets attributable to Aflac Japan was 77% at both June 30, 2025 and December 31, 2024.

Information regarding operations by reportable segment and Corporate and other is presented in the following tables.


	Three Months Ended June 30,				Six Months Ended June 30,
(In millions)	2025		2024		2025		2024
Revenues:
Aflac Japan:
Net earned premiums (1)	$	1,761	$	1,715	$	3,442	$	3,531
Adjusted net investment income	699		725		1,285		1,374
Other income	12		7		17		14
Total adjusted revenue Aflac Japan	2,472		2,447		4,744		4,919
Aflac U.S.:
Net earned premiums	1,504		1,455		3,006		2,930
Adjusted net investment income	207		218		409		424
Other income	17		11		34		30
Total adjusted revenue Aflac U.S.	1,728		1,684		3,449		3,384
Corporate and other (2)	336		249		662		497
Total adjusted revenues	4,536		4,380		8,855		8,800
Net investment gains (losses)	(421)		696		(1,384)		1,647
Reconciling items:
Amortized hedge costs	11		7		18		13
Amortized hedge income	(30)		(34)		(60)		(62)
Net interest (income) expense from derivatives associated with certain investment strategies	64		89		129		177
Total revenues	$	4,160	$	5,138	$	7,558	$	10,575

(2) The change in value of federal historic rehabilitation and solar investments in partnerships of $8 and $30 for the three-month periods and $16 and $62 for the six-month periods ended June 30, 2025, and 2024, respectively, is included as a reduction to net investment income. Tax credits on these investments of $9 and $31 for the three-month periods and $16 and $64 for the six-month periods ended June 30, 2025, and 2024, respectively, have been recorded as an income tax benefit in the consolidated statements of earnings. See Note 3 for additional information on these investments.


	Three Months Ended June 30,				Six Months Ended June 30,
(In millions)	2025		2024		2025		2024
Adjusted revenues:
Aflac Japan (1)	$	2,472	$	2,447	$	4,744	$	4,919
Aflac U.S.	1,728		1,684		3,449		3,384
Corporate and other (2)	336		249		662		497
Total adjusted revenues	4,536		4,380		8,855		8,800
Benefits and adjusted expenses:
Aflac Japan:
Benefits and claims, excluding reserve remeasurement	1,186		1,174		2,316		2,417
Reserve remeasurement (gains) losses	(14)		(26)		(39)		(52)
Total benefits and claims, net	1,172		1,148		2,277		2,365
Adjusted expenses:
Amortization of deferred policy acquisition costs	85		77		164		160
Insurance commissions	112		105		217		220
Insurance and other expenses	313		253		574		500
Total benefits and adjusted expenses Aflac Japan	1,682		1,583		3,232		3,245
Aflac U.S.:
Benefits and claims, excluding reserve remeasurement	736		704		1,467		1,419
Reserve remeasurement (gains) losses	(24)		(24)		(39)		(54)
Total benefits and claims, net	712		680		1,428		1,365
Adjusted expenses:
Amortization of deferred policy acquisition costs	136		132		273		264
Insurance commissions	139		140		274		281
Insurance and other expenses	353		349		728		735
Total benefits and adjusted expenses Aflac U.S.	1,340		1,301		2,703		2,645
Corporate and other	316		226		599		476
Total adjusted expenses	$	3,338	$	3,110	$	6,534	$	6,366
Pretax earnings:
Aflac Japan (1)	$	790	$	864	$	1,512	$	1,674
Aflac U.S.	388		383		746		739
Corporate and other (2)	20		23		63		21
Pretax adjusted earnings	1,198		1,270		2,321		2,434
Other income (loss)	0		0		(53)		(2)
Net investment gains (losses)	(421)		696		(1,384)		1,647
Reconciling items:
Amortized hedge costs	11		7		18		13
Amortized hedge income	(30)		(34)		(60)		(62)
Net interest (income) expense from derivatives associated with certain investment strategies	64		89		129		177
Impact of interest from derivatives associated with notes payable	0		(9)		(4)		(17)
Total earnings before income taxes	$	822	$	2,019	$	967	$	4,190
Income taxes applicable to pretax adjusted earnings	$	241	$	235	$	458	$	438
Effect of foreign currency translation on after-tax adjusted earnings	23		(37)		15		(81)

Internal Reinsurance: Aflac Re is a Bermuda domiciled insurer that reinsures certain policies issued by Aflac Japan and is reported as a part of Corporate and other. Under these internal reinsurance transactions, Aflac Japan's net earned premiums are reduced by the amount of premiums ceded to Aflac Re. Aflac Re recorded net earned premiums of $178 million and $128 million for the three-month periods and $356 million and $264 million for the six-month periods ended June 30, 2025 and 2024, respectively, related to these reinsurance transactions with Aflac Japan. These internal reinsurance transactions have no financial statement impact on a consolidated basis, except for the effect of foreign currency accounting. For additional information on these internal reinsurance transactions, see the accompanying Note 8 and Note 8 of the Notes to the Consolidated Financial Statements in the 2024 Annual Report.

Total Assets: The Company's total assets were as follows:


(In millions)	June 30, 2025			December 31, 2024
Assets:
Aflac Japan		$	96,592		$	90,210
Aflac U.S.		22,038			21,930
Corporate and other		6,106			5,426
Total assets		$	124,736		$	117,566

3. INVESTMENTS

Investment Holdings

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


	June 30, 2025
(In millions)	Amortized Cost		Allowance for Credit Losses		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
Securities available-for-sale, carried at fair value through other comprehensive income:
Fixed maturity securities:
Yen-denominated:
Japan government and agencies	$	20,289	$	0	$	174	$	2,935	$	17,528
Municipalities	950		0		49		118		881
Mortgage- and asset-backed securities	338		0		3		30		311
Public utilities	2,861		0		165		183		2,843
Sovereign and supranational	359		0		9		11		357
Banks/financial institutions	5,771		0		214		420		5,565
Other corporate	5,755		0		445		438		5,762
Total yen-denominated	36,323		0		1,059		4,135		33,247
U.S. dollar-denominated:
U.S. government and agencies	226		0		1		2		225
Municipalities	1,212		0		66		85		1,193
Mortgage- and asset-backed securities	4,065		0		171		69		4,167
Public utilities	4,378		0		350		155		4,573
Sovereign and supranational	58		0		20		0		78
Banks/financial institutions	3,930		0		371		39		4,262
Other corporate	19,708		0		2,031		738		21,001
Total U.S. dollar-denominated	33,577		0		3,010		1,088		35,499
Other currencies:
Mortgage- and asset-backed securities	47		0		1		0		48
Public utilities	57		0		1		0		58
Other corporate	26		0		1		0		27
Total other currencies	130		0		3		0		133
Total securities available-for-sale	$	70,030	$	0	$	4,072	$	5,223	$	68,879


	December 31, 2024
(In millions)	Amortized Cost		Allowance for Credit Losses		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
Securities available-for-sale, carried at fair value through other comprehensive income:
Fixed maturity securities:
Yen-denominated:
Japan government and agencies	$	19,409	$	0	$	465	$	2,234	$	17,640
Municipalities	869		0		65		79		855
Mortgage- and asset-backed securities	327		0		4		23		308
Public utilities	2,746		0		202		108		2,840
Sovereign and supranational	330		0		16		8		338
Banks/financial institutions	5,376		0		267		342		5,301
Other corporate	5,329		0		568		305		5,592
Total yen-denominated	34,386		0		1,587		3,099		32,874
U.S. dollar-denominated:
U.S. government and agencies	208		0		1		3		206
Municipalities	1,167		0		65		53		1,179
Mortgage- and asset-backed securities	2,987		0		302		34		3,255
Public utilities	3,938		0		418		151		4,205
Sovereign and supranational	57		0		21		0		78
Banks/financial institutions	3,271		0		420		36		3,655
Other corporate	18,050		0		2,493		752		19,791
Total U.S. dollar-denominated	29,678		0		3,720		1,029		32,369
Other currencies:
Other corporate	25		0		1		0		26
Total other currencies	25		0		1		0		26
Total securities available-for-sale	$	64,089	$	0	$	5,308	$	4,128	$	65,269


	June 30, 2025
(In millions)	Amortized Cost		Allowance for Credit Losses		Net Carrying Amount		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
Securities held-to-maturity, carried at amortized cost:
Fixed maturity securities:
Yen-denominated:
Japan government and agencies	$	16,720	$	2	$	16,718	$	414	$	272	$	16,860
Municipalities	255		0		255		10		0		265

Public utilities	35		0		35		0		1		34
Sovereign and supranational	412		3		409		21		0		430

Other corporate	17		0		17		1		0		18
Total yen-denominated	17,439		5		17,434		446		273		17,607
Total securities held-to-maturity	$	17,439	$	5	$	17,434	$	446	$	273	$	17,607


	December 31, 2024
(In millions)	Amortized Cost		Allowance for Credit Losses		Net Carrying Amount		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
Securities held-to-maturity, carried at amortized cost:
Fixed maturity securities:
Yen-denominated:
Japan government and agencies	$	15,311	$	2	$	15,309	$	759	$	9	$	16,059
Municipalities	235		0		235		22		0		257
Public utilities	32		0		32		1		0		33
Sovereign and supranational	377		3		374		31		0		405
Other corporate	16		0		16		2		0		18
Total yen-denominated	15,971		5		15,966		815		9		16,772
Total securities held-to-maturity	$	15,971	$	5	$	15,966	$	815	$	9	$	16,772


	June 30, 2025			December 31, 2024
(In millions)	Fair Value			Fair Value
Equity securities, carried at fair value through net earnings:
Equity securities:
Yen-denominated		$	538		$	484
U.S. dollar-denominated		344			312

Total equity securities		$	882		$	796

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

During the first six months of 2025 and 2024, respectively, the Company did not reclassify any investments from the held-to-maturity category to the available-for-sale category.

Contractual and Economic Maturities

The contractual and economic maturities of the Company's investments in fixed maturity securities at June 30, 2025, were as follows:


(In millions)	Amortized Cost (1)			Fair Value
Available-for-sale:
Due in one year or less		$	1,382		$	1,481
Due after one year through five years		8,612			9,422
Due after five years through 10 years		16,665			17,423
Due after 10 years		38,921			36,027
Mortgage- and asset-backed securities		4,450			4,526
Total fixed maturity securities available-for-sale		$	70,030		$	68,879
Held-to-maturity:
Due in one year or less		$	35		$	35
Due after one year through five years		45			46
Due after five years through 10 years		9,256			9,647
Due after 10 years		8,098			7,879

Total fixed maturity securities held-to-maturity		$	17,434		$	17,607

(1) Net of allowance for credit losses

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

Investment Concentrations

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

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


	June 30, 2025			December 31, 2024
(In millions)	Credit Rating	Amortized Cost	Fair Value	Credit Rating	Amortized Cost	Fair Value
Japan National Government(1)	A+	$36,029	$33,508	A+	$33,822	$32,844

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

Net Investment Gains and Losses

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


	Three Months Ended June 30,				Six Months Ended June 30,
(In millions)	2025		2024		2025		2024
Net investment gains (losses):
Sales and redemptions:
Fixed maturity securities available-for-sale:
Gross gains from sales	$	5	$	6	$	119	$	40
Gross losses from sales	(98)		(27)		(333)		(309)
Foreign currency gains (losses)	79		71		240		487
Other investments:
Gross gains (losses) from sales and redemptions	11		5		12		10


Total sales and redemptions	(3)		55		38		228
Equity securities	98		11		37		87


Real estate owned impairments	(6)		0		(6)		0
Credit losses:

Fixed maturity securities held-to-maturity	0		0		0		0
Commercial mortgage and other loans	(61)		(21)		(114)		(28)

Loan commitments	2		2		0		3
Reinsurance recoverables and other	1		0		1		5
Total credit losses	(58)		(19)		(113)		(20)
Derivatives and other:
Derivative gains (losses)	23		(275)		(22)		(490)
Foreign currency gains (losses)	(475)		924		(1,318)		1,842
Total derivatives and other	(452)		649		(1,340)		1,352
Total net investment gains (losses)	$	(421)	$	696	$	(1,384)	$	1,647

During the second quarter of 2025, the Company recognized an impairment loss of $6 million on an office-type real estate owned (REO) property classified as held-and-used for the production of income. The impairment was based on the Company's evaluation of a material adverse change in occupancy and resulted in an estimated fair value of the REO property of $12 million. The fair value was based on expected future cash flows utilizing inputs classified as Level 3 under the fair value guidance in ASC 820.

The unrealized holding gains, net of losses, recorded as a component of net investment gains and losses for the three-month period ended June 30, 2025 that relate to equity securities held at the June 30, 2025 reporting date were $101 million. The unrealized holding gains, net of losses, recorded as a component of net investment gains and losses for the three-month period ended June 30, 2024 that relate to equity securities held at the June 30, 2024 reporting date were $15 million.

The unrealized holding gains, net of losses, recorded as a component of net investment gains and losses for the six-month period ended June 30, 2025 that relate to equity securities held at the June 30, 2025 reporting date were $47 million. The unrealized holding gains, net of losses, recorded as a component of net investment gains and losses for the six-month period ended June 30, 2024 that relate to equity securities held at the June 30, 2024 reporting date were $70 million.

Unrealized Investment Gains and Losses

Effect on Shareholders’ Equity

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


(In millions)	June 30, 2025			December 31, 2024
Unrealized gains (losses) on securities available-for-sale		$	(1,151)		$	1,180
Deferred income taxes		(677)			(1,156)
Shareholders’ equity, unrealized gains (losses) on fixed maturity securities		$	(1,828)		$	24

Gross Unrealized Loss Aging

The following tables show the fair values and gross unrealized losses of the Company's available-for-sale investments for the periods ended June 30, 2025 and December 31, 2024, aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position.


	June 30, 2025
	Total						Less than 12 months						12 months or longer
(In millions)	Fair Value			Unrealized Losses			Fair Value			Unrealized Losses			Fair Value			Unrealized Losses
Fixed maturity securities available- for-sale:
U.S. government and agencies:
U.S. dollar-denominated		$	108		$	2		$	73		$	0		$	35		$	2
Japan government and agencies:
Yen-denominated		11,469			2,935			5,838			288			5,631			2,647
Municipalities:
U.S. dollar-denominated		650			85			88			5			562			80
Yen-denominated		341			118			88			9			253			109
Mortgage- and asset- backed securities:
U.S. dollar-denominated		1,578			69			1,182			41			396			28
Yen-denominated		214			30			23			0			191			30
Public utilities:
U.S. dollar-denominated		1,911			155			1,045			30			866			125
Yen-denominated		1,048			183			211			10			837			173

Sovereign and supranational:

Yen-denominated		48			11			0			0			48			11
Banks/financial institutions:
U.S. dollar-denominated		1,065			39			890			16			175			23
Yen-denominated		3,759			420			655			16			3,104			404
Other corporate:
U.S. dollar-denominated		7,675			738			3,823			105			3,852			633
Yen-denominated		2,190			438			566			34			1,624			404
Total		$	32,056		$	5,223		$	14,482		$	554		$	17,574		$	4,669


	December 31, 2024
	Total						Less than 12 months						12 months or longer
(In millions)	Fair Value			Unrealized Losses			Fair Value			Unrealized Losses			Fair Value			Unrealized Losses
Fixed maturity securities available- for-sale:
U.S. government and agencies:
U.S. dollar-denominated		$	106		$	3		$	59		$	1		$	47		$	2
Japan government and agencies:
Yen-denominated		8,136			2,234			2,070			57			6,066			2,177
Municipalities:
U.S. dollar-denominated		666			53			67			3			599			50
Yen-denominated		341			79			96			2			245			77
Mortgage- and asset- backed securities:
U.S. dollar-denominated		567			34			173			2			394			32
Yen-denominated		196			23			12			0			184			23
Public utilities:
U.S. dollar-denominated		1,570			151			699			19			871			132
Yen-denominated		1,020			108			368			11			652			97
Sovereign and supranational:

Yen-denominated		47			8			0			0			47			8
Banks/financial institutions:
U.S. dollar-denominated		625			36			376			7			249			29
Yen-denominated		3,197			342			471			22			2,726			320
Other corporate:
U.S. dollar-denominated		6,097			752			2,036			59			4,061			693
Yen-denominated		1,733			305			289			14			1,444			291
Total		$	24,301		$	4,128		$	6,716		$	197		$	17,585		$	3,931

Analysis of Securities in Unrealized Loss Positions

The unrealized losses on the Company's available-for-sale securities have been primarily related to general market factors such as changes in interest rates, foreign exchange rates, and/or the levels of credit spreads rather than specific concerns with the issuer's ability to pay interest and repay principal.

For available-for-sale securities in an unrealized loss position, the Company performs detailed analyses to identify whether the drivers of the decline in fair value are due to general market factors, such as the recent rise in interest rates, or due to credit-related factors. Identifying the drivers of the declines in fair value helps to align and allocate the Company‘s resources to the review and monitoring of securities with real credit-related concerns that could impact ultimate collection of principal and interest. For any significant declines in fair value determined to be non-interest rate or market-related, the Company performs a more focused review of the related issuers' specific credit profile.

For corporate issuers, the Company evaluates their assets and business profile, including industry dynamics and competitive positioning, financial statements and other available financial data. For non-corporate issuers, the Company analyzes all sources of credit support, including issuer-specific factors. The Company utilizes information available in the public domain and, for certain private placement issuers, from consultations with the issuers directly. The Company also considers ratings from Nationally Recognized Statistical Rating Organizations (NRSROs), as well as the specific characteristics of the security it owns including seniority in the issuer's capital structure, covenant protections, or other relevant features. From these reviews, the Company evaluates the issuers' continued ability to service the Company's investment through payment of interest and principal.

Assuming no credit-related factors develop, unrealized gains and losses on available-for-sale securities are expected to diminish as investments near maturity. Based on its credit analysis, the Company believes that the issuers of its available-for-sale investments in the sectors shown in the table above have the ability to service their obligations to the Company. Further, the Company does not intend to sell the investments and it is not more likely than not that the Company will be required to sell the investments before recovery of their amortized cost bases, which may be at maturity.

However, if the Company identifies certain available-for-sale securities where the amortized cost basis exceeds the present value of the cash flows expected to be collected due to credit-related factors, an allowance for credit losses is recognized. Based on an evaluation of its securities currently in an unrealized loss position, the Company has determined that those securities should not have an allowance for credit losses as of June 30, 2025. Refer to the Allowance for Credit Losses section below for additional information.

As of June 30, 2025 and December 31, 2024, the Company had an immaterial amount of fixed maturity securities on nonaccrual status.

Commercial Mortgage and Other Loans

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

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


	June 30, 2025				December 31, 2024
(In millions)	Amortized Cost		% of Total		Amortized Cost		% of Total
Commercial Mortgage and other loans:
Transitional real estate loans:
Office	$	1,246	11.7	%	$	1,361	12.1	%
Retail	314		2.9		349		3.1
Apartments/Multi-Family	1,881		17.7		2,201		19.6
Industrial	100		.9		117		1.1
Hospitality	525		4.9		556		5.0
Other	292		2.7		318		2.8
Total transitional real estate loans	4,358		40.8		4,902		43.7
Commercial mortgage loans:
Office	294		2.8		300		2.7
Retail	210		2.0		214		1.9
Apartments/Multi-Family	559		5.3		572		5.1
Industrial	413		3.9		436		3.9

Other	14		.1		15		.1
Total commercial mortgage loans	1,490		14.1		1,537		13.7
Middle market loans	4,355		40.9		4,423		39.4
Other loans	445		4.2		362		3.2
Total commercial mortgage and other loans	$	10,648	100.0	%	$	11,224	100.0	%
Allowance for credit losses	(384)				(355)
Total net commercial mortgage and other loans	$	10,264			$	10,869

CMLs and TREs are secured by properties entirely within the U.S. (with the largest concentrations in California (20%), Texas (14%) and Florida (10%)). MMLs are issued only to companies domiciled within the U.S. and Canada.

Transitional Real Estate Loans

TREs are relatively short-term floating rate commercial mortgage loans that are secured by a first lien on the property. These loans provide funding for properties undergoing a change in their physical characteristics and/or economic profile and do not typically require any principal repayment prior to the maturity date.

As of June 30, 2025, the Company had $175 million in outstanding commitments to fund TREs. These commitments are contingent on the final underwriting and due diligence to be performed.

Commercial Mortgage Loans

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

Middle Market Loans

MMLs are typically first lien senior secured cash flow loans to small to mid-size companies for working capital, refinancing, acquisition, and recapitalization. These loans are generally considered to be below investment grade.

As of June 30, 2025, the Company had commitments of approximately $646 million to fund future MMLs. These commitments are contingent upon the availability of MMLs that meet the Company's underwriting criteria.

Other Loans

Other loans are primarily infrastructure loans. Infrastructure loans are typically senior secured, financing operating portfolios of renewable and conventional energy generation assets characterized by predictable, often contractual cash flows for loan repayment. The infrastructure loan portfolio weighted average rating is investment grade.

As of June 30, 2025, the Company had commitments of approximately $1 million to fund future other loans. These commitments are contingent upon the availability of other loans that meet the Company's underwriting criteria.

Credit Quality Indicators

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

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

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

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

The following tables present as of June 30, 2025 the amortized cost basis of TREs, CMLs, MMLs, and other loans by year of origination and credit quality indicator.


Transitional Real Estate Loans
(In millions)	2025		2024		2023		2022		2021		Prior		Total
Loan-to-Value Ratio:
0%-59.99%	$	0	$	0	$	0	$	370	$	391	$	10	$	771
60%-69.99%	0		0		77		419		442		400		1,338
70%-79.99%	0		0		14		772		625		44		1,455
80% or greater	0		0		0		186		297		311		794
Total	$	0	$	0	$	91	$	1,747	$	1,755	$	765	$	4,358
Current-period gross writeoffs:	$	0	$	0	$	0	$	5	$	0	$	24	$	29


Commercial Mortgage Loans
(In millions)	2025		2024		2023		2022		2021		Prior		Total		Weighted-Average DSCR
Loan-to-Value Ratio:
0%-59.99%	$	0	$	0	$	32	$	0	$	247	$	1,010	$	1,289	2.68
60%-69.99%	0		0		0		0		25		53		78		2.14
70%-79.99%	0		0		0		0		0		8		8		1.48
80% or greater	0		12		0		0		0		103		115		0.76
Total	$	0	$	12	$	32	$	0	$	272	$	1,174	$	1,490	2.50
Weighted Average DSCR	0.00		1.13		2.49		0.00		3.04		2.39
Current-period gross writeoffs:	$	0	$	0	$	0	$	0	$	0	$	0	$	0


Middle Market Loans
(In millions)	2025		2024		2023		2022		2021		Prior		Revolving Loans		Total
Credit Ratings:
BBB	$	13	$	37	$	30	$	0	$	71	$	106	$	11	$	268
BB	233		466		37		385		349		620		77		2,167
B	46		181		46		257		460		475		31		1,496
CCC	17		5		0		9		62		194		20		307
CC	0		0		0		14		0		0		1		15
C and lower	0		0		0		0		16		80		6		102
Total	$	309	$	689	$	113	$	665	$	958	$	1,475	$	146	$	4,355
Current-period gross writeoffs:	$	0	$	0	$	0	$	0	$	17	$	39	$	0	$	56


Other Loans
(In millions)	2025		2024		2023		2022		2021		Prior		Revolving Loans		Total
Credit Ratings:
A	$	40	$	0	$	0	$	74	$	0	$	0	$	0	$	114
AA	0		0		0		8		3		0		0		11
BBB	5		217		72		26		0		0		0		320
BB	0		0		0		0		0		0		0		0




Total	$	45	$	217	$	72	$	108	$	3	$	0	$	0	$	445
Current-period gross writeoffs:	$	0	$	0	$	0	$	0	$	0	$	0	$	0	$	0

Past Due and Nonaccrual Loans

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


	June 30, 2025
(In millions)	Current		Less Than 90 Days Past Due		90 Days or More Past Due(1)		Total Past Due		Total Loans		Nonaccrual Status
Transitional real estate loans	$	3,808	$	142	$	408	$	550	$	4,358	$	408
Commercial mortgage loans	1,490		0		0		0		1,490		0
Middle market loans	4,273		23		59		82		4,355		59
Other loans	445		0		0		0		445		0
Total	$	10,016	$	165	$	467	$	632	$	10,648	$	467

(1) As of June 30, 2025, there were no loans that were 90 days or more past due that continued to accrue interest.


	December 31, 2024
(In millions)	Current		Less Than 90 Days Past Due		90 Days or More Past Due(1)		Total Past Due		Total Loans		Nonaccrual Status
Transitional real estate loans	$	4,364	$	195	$	343	$	538	$	4,902	$	378
Commercial mortgage loans	1,537		0		0		0		1,537		0
Middle market loans	4,295		63		65		128		4,423		108
Other loans	362		0		0		0		362		0
Total	$	10,558	$	258	$	408	$	666	$	11,224	$	486

(1) As of December 31, 2024, there were no loans that were 90 days or more past due that continued to accrue interest.

For the three-month period ended June 30, 2025, the Company recognized no interest income for TREs, CMLs, MMLs, or other loans on nonaccrual status. For the six-month period ended June 30, 2025, the Company recognized $1 million of interest income for TREs, CMLs, MMLs, or other loans on nonaccrual status. For the three- and six-month periods ended June 30, 2024, the Company recognized no interest income for TREs, CMLs, MMLs, or other loans on nonaccrual status. Of these loans, TREs with an amortized cost of $45 million and $140 million had no credit loss allowance as of June 30, 2025 and December 31, 2024, respectively, because these loans are collateral dependent assets for which the estimated fair values of the collateral were in excess of amortized cost. As of June 30, 2025, no MMLs were on nonaccrual status without an allowance for credit loss. As of December 31, 2024, MMLs with an amortized cost of $5 million were on nonaccrual status without an allowance for credit losses.

Loan Modifications to Borrowers Experiencing Financial Difficulties

The Company granted certain loan modifications to borrowers experiencing financial difficulty during the first six months of 2025 and 2024. The types of modifications granted may include interest rate reductions, principal forgiveness, other-than-insignificant payment delays, term extensions or a combination of these types of modifications. The amount, timing, and extent of modifications granted are considered in determining any credit loss allowance recorded.

Loans that have both been modified and are paid or written off during the period, resulting in an amortized cost balance of zero at the end of the period, are not included in the disclosures below.

The following tables present the amortized cost basis of modified loans to borrowers experiencing financial difficulty and the financial effect of the modifications, disaggregated by loan classification and type of modification.


Three Months Ended June 30, 2025
(In millions)	Amortized Cost (1)		% of Total		Financial Effect
Transitional Real Estate Loans:




Term extension	$	128	3.1	%	Term extension of 22 months on average

Term extension and interest rate reduction	152		3.7		Term extension of 26 months on average and reduction in the weighted-average contractual interest rate from 4.8% to 4.3%
Middle Market Loans:

Principal forgiveness	$	4	.1	%	Reduction in the amortized cost basis of $0.3 million



Principal forgiveness and term extension	25		.6		Reduction in the amortized cost basis of $34 million and term extension of 30 months on average

(1) Net of allowance for credit losses


Three Months Ended June 30, 2024
(In millions)	Amortized Cost (1)		% of Total		Financial Effect
Transitional Real Estate Loans:



Other-than-insignificant payment delays and interest rate reduction	$	121	2.2	%	Delay in payments of 31 months on average and reduction in the weighted-average contractual interest rate from 8.1% to 7.8%

(1) Net of allowance for credit losses


Six Months Ended June 30, 2025
(In millions)	Amortized Cost (1)		% of Total		Financial Effect
Transitional Real Estate Loans:




Term extension	$	159	3.9	%	Term extension of 20 months on average

Term extension and interest rate reduction	152		3.7		Term extension of 26 months on average and reduction in the weighted-average contractual interest rate from 4.8% to 4.3%
Middle Market Loans:

Principal forgiveness	$	6	.1	%	Reduction in the amortized cost basis of $4 million
Term extension	33		.8		Term extension of six months on average
Other-than-insignificant payment delays	28		.7		Delay in principal and interest payments of 35 months on average
Principal forgiveness and term extension	25		.6		Reduction in the amortized cost basis of $34 million and term extension of 30 months on average

(1) Net of allowance for credit losses


Six Months Ended June 30, 2024
(In millions)	Amortized Cost (1)		% of Total		Financial Effect
Transitional Real Estate Loans:



Other-than-insignificant payment delays and interest rate reduction	$	332	6.0	%	Delay in payments of 44 months on average and reduction in the weighted-average contractual interest rate from 8.2% to 7.3%

(1) Net of allowance for credit losses

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

The following table presents an aging of loans that received modifications in the 12 months preceding the period presented, at amortized cost.


	June 30, 2025
(In millions)	Current		Less Than 90 Days Past Due		90 Days or More Past Due		Nonaccrual Status
Transitional real estate loans	$	592	$	0	$	60	$	60

Middle market loans	106		1		0		0

Total	$	698	$	1	$	60	$	60

The Company closely monitors the performance of the loans that are modified to borrowers experiencing financial difficulty to understand the effectiveness of its modification efforts. Loans that were granted a modification in the past 12 months, as of June 30, 2025 and 2024, and subsequently defaulted in the three- and six-month periods ended June 30, 2025 and 2024, were immaterial.

As of June 30, 2025, the Company had $12 million of outstanding commitments to lend additional funds to borrowers experiencing financial difficulty that were granted a loan modification, compared with $14 million as of December 31, 2024.

Allowance for Credit Losses

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

The Company groups CMLs and TREs and respective loan commitments by property type, property location and the property’s LTV and DSCR. On a quarterly basis, CMLs and TREs within a portfolio segment that share similar risk characteristics are pooled for calculation of credit loss allowance. On an ongoing basis, TREs, CMLs and other loans with dissimilar risk characteristics (i.e., loans with significant declines in credit quality), such as collateral dependent mortgage loans (i.e., when the borrower is experiencing financial difficulty, including when foreclosure is probable), are evaluated individually for credit loss. For example, the credit loss allowance for a collateral dependent loan is established as the excess of amortized cost over the estimated fair value of the loan’s underlying collateral, less selling cost when foreclosure is probable. Accordingly, the change in the estimated fair value of the collateral dependent loans, which are evaluated individually for credit loss, is recorded as a change in the credit loss allowance as a component of net investment gains (losses) in the consolidated statements of earnings.

The credit allowance for held-to-maturity securities and loan receivables is estimated using a probability-of-default (PD) / loss-given-default (LGD) method, discounted for the time value of money. For held-to-maturity securities, available-for-sale securities and loan receivables, the Company includes the change in present value due to the passage of time in the change in the allowance for credit losses. The Company’s methodology for estimating credit losses utilizes the contractual maturity date of the financial asset, adjusted when necessary to reflect the expected timing of repayment (such as prepayment options, renewal options, call options, or extension options). The Company applies reasonable and supportable forecasts of macroeconomic variables that impact the determination of PD / LGD over a two-year period for held-to-maturity securities and MMLs. The Company reverts to historical loss information over one year, following the two-year forecast period. For the CML and TRE portfolio, the Company applies reasonable and supportable forecasts of macroeconomic variables as well as national and local real-estate market factors to estimate future credit losses where the market factors revert back to historical levels over time with the period being dependent on current market conditions, projected market conditions and difference in the current and historical market levels for each factor. The Company continuously monitors the estimation methodology, due to changes in portfolio composition, changes in underwriting practices and significant events or conditions and makes adjustments as necessary.

The Company’s held-to-maturity portfolio includes Japan Government and Agency securities of $16.6 billion amortized cost as of June 30, 2025 that meet the requirements for zero-credit-loss expectation and therefore these asset classes have been excluded from the current expected credit loss measurement.

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

When determining the Company's intention to sell a security prior to recovery of its amortized cost basis, the Company evaluates facts and circumstances such as, but not limited to, future cash flow needs, decisions to reposition its security portfolio, and risk profile of individual investment holdings. The Company performs ongoing analyses of its liquidity needs, which includes cash flow testing of its policy liabilities, debt maturities, projected dividend payments, and other cash flow and liquidity needs.

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

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


(In millions)	Transitional Real Estate Loans		Commercial Mortgage Loans		Middle Market Loans		Other Loans and Loan Commitments		Held-to- Maturity Securities		Available- for-Sale Securities		Total
Three Months Ended June 30, 2025:
Balance at March 31, 2025	$	(203)	$	(15)	$	(150)	$	(19)	$	(5)	$	0	$	(392)
(Addition to) release of allowance for credit losses	(45)		3		(19)		2		0		0		(59)
Writeoffs, net of recoveries	5		0		42		0		0		0		47
Change in foreign exchange	0		0		0		0		0		0		0
Balance at June 30, 2025	$	(243)	$	(12)	$	(127)	$	(17)	$	(5)	$	0	$	(404)
Three Months Ended June 30, 2024:
Balance at March 31, 2024	$	(114)	$	(19)	$	(99)	$	(15)	$	(5)	$	0	$	(252)
(Addition to) release of allowance for credit losses	(24)		2		1		2		0		0		(19)
Writeoffs, net of recoveries	15		0		0		0		0		0		15
Change in foreign exchange	0		0		0		0		0		0		0
Balance at June 30, 2024 (2)	$	(123)	$	(17)	$	(98)	$	(13)	$	(5)	$	0	$	(256)
Six Months Ended June 30, 2025:
Balance at December 31, 2024	$	(199)	$	(14)	$	(140)	$	(17)	$	(5)	$	0	$	(375)
(Addition to) release of allowance for credit losses	(73)		2		(43)		0		0		0		(114)
Writeoffs, net of recoveries	29		0		56		0		0		0		85
Change in foreign exchange	0		0		0		0		0		0		0
Balance at June 30, 2025	$	(243)	$	(12)	$	(127)	$	(17)	$	(5)	$	0	$	(404)
Six Months Ended June 30, 2024:
Balance at December 31, 2023	$	(112)	$	(16)	$	(146)	$	(16)	$	(5)	$	0	$	(295)
(Addition to) release of allowance for credit losses	(26)		(1)		(2)		3		0		0		(26)
Writeoffs, net of recoveries	15		0		50		0		0		0		65
Change in foreign exchange	0		0		0		0		0		0		0
Balance at June 30, 2024	$	(123)	$	(17)	$	(98)	$	(13)	$	(5)	$	0	$	(256)

As of June 30, 2025, the Company identified TREs with an amortized cost of $136 million in anticipation of potential foreclosure or deed in lieu of foreclosure transactions. As of June 30, 2025, the Company established a credit allowance of $20 million related to these loans.

Other Investments

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


(In millions)	June 30, 2025			December 31, 2024
Other investments:
Policy loans		$	221		$	203
Short-term investments (1)		2,375			1,599
Limited partnerships (2)		3,745			3,435
Real estate owned		964			682
Other		40			39
Total other investments		$	7,345		$	5,958

(1) Includes securities lending collateral

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

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

REO consists of office buildings or other commercial properties obtained through foreclosure or deed in lieu of foreclosure of certain of the Company’s TREs. As of June 30, 2025 and December 31, 2024, all REO was classified as held-and-used for the production of income, which is carried at cost less accumulated depreciation. Depreciation expense was $8 million and $3 million for the three-month periods and $14 million and $4 million for the six-month periods ended June 30, 2025 and 2024, respectively. Additionally, as of June 30, 2025 and December 31, 2024, accumulated depreciation was $28 million and $14 million, respectively.

The Company had $2.4 billion and $2.8 billion in outstanding commitments to fund investments in limited partnerships, which included $2.1 billion and $2.1 billion of unfunded commitments related to VIEs that are non-consolidated as of June 30, 2025 and December 31, 2024, respectively.

Variable Interest Entities (VIEs)

In the normal course of its activities, the Company invests in legal entities that are VIEs. The Company's variable interests in VIEs are limited to the debt and equity instruments issued by them. With the exception of commitments to limited partnerships and to certain loan investments made in the normal course of business, the Company has not provided any direct or contingent obligations to fund the limited activities of these VIEs, or support related to the limited activities of these VIEs, and does not have any intention to do so in the future, nor has it provided any direct or indirect financial guarantees.

The Company's risk of loss related to its interests in any of its VIEs is limited to the carrying value of the related investments, and in certain cases, to any unfunded commitments held in the VIE.

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

VIEs - Consolidated

If the Company determines that it is the VIE’s primary beneficiary, it consolidates the VIE. Creditors or beneficial interest holders of VIEs where the Company is the primary beneficiary have no recourse to the general credit of the Company except to the extent of the unfunded commitments referenced above, as the Company’s obligation to each VIE is limited to the amount of its committed investment.

The following table presents the carrying value and balance sheet caption in which the assets and liabilities of consolidated VIEs are reported.

Investments in Consolidated Variable Interest Entities


(In millions)	June 30, 2025			December 31, 2024
Assets:
Fixed maturity securities, available-for-sale		$	3,675		$	3,428

Commercial mortgage and other loans		8,207			8,693
Other investments (1)		2,220			2,176
Other assets (2)		45			53
Total assets of consolidated VIEs		$	14,147		$	14,350
Liabilities:
Other liabilities (2)		$	589		$	604
Total liabilities of consolidated VIEs		$	589		$	604

(1) Consists entirely of alternative investments in limited partnerships, which represent VIEs where the Company is not the primary beneficiary and, therefore, are not consolidated

(2) Consists entirely of derivatives

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

Investments in Unit Trust Structures

The Company also utilizes unit trust structures in its Aflac Japan segment to invest in various asset classes, which include CMLs, MMLs, TREs, other loans and limited partnerships. As the sole investor of these VIEs, the Company is required to consolidate these trusts under U.S. GAAP. The limited partnership investments are comprised of private equity and real estate funds. The Company's loss exposure to these VIEs is limited to its original investments, together with any unfunded portion of the Company's commitments made in the normal course of business to fund certain loan investments and limited partnership investments, as described in the Commercial Mortgage and Other Loans and Other Investments sections of this note. Excluding these commitments, the Company does not provide financial or other support to consolidated VIEs.

VIEs - Not Consolidated

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

Investments in Variable Interest Entities Not Consolidated


(In millions)	June 30, 2025			December 31, 2024
Assets:
Fixed maturity securities, available-for-sale		$	7,121		$	6,243
Other investments (1)		1,367			1,124
Total investments in VIEs not consolidated		$	8,488		$	7,367

(1) Consists entirely of alternative investments in limited partnerships

Certain investments in VIEs that the Company is not required to consolidate are investments that are in the form of debt obligations issued by the VIEs. These fixed maturity securities include structured securities, primarily asset-backed securities. The Company's involvement in the related VIEs is limited to that of a passive investor in asset-backed securities issued by the VIEs. The Company also invests in fixed maturity debt securities issued by VIEs that are the

primary financing vehicles used by their corporate sponsors to raise financing in the capital markets. The variable interests created by these VIEs are principally or solely a result of the debt instruments issued by them. The Company does not have the power to direct the activities that most significantly impact the entity's economic performance, nor does it have the obligation to absorb losses of the VIE entity or the right to receive benefits from the entity that could be significant to the entity. As such, the Company is not the primary beneficiary of these VIEs and therefore is not required to consolidate them.

The Company also holds equity investments in limited partnerships that have been determined to be VIEs. These partnerships primarily invest in private equity and real estate funds. The Company’s maximum exposure to loss on these investments is limited to the amount of its investment and any unfunded commitments. As described in the Other Investments section of this note, the Company makes commitments to fund partnership investments in the normal course of business. Excluding these commitments, the Company did not provide financial or other support to unconsolidated VIEs. The Company is not the primary beneficiary of these VIEs and is therefore not required to consolidate them. The Company classifies these investments as other investments in the consolidated balance sheets.

Securities Lending and Pledged Securities

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

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


Securities Lending Transactions Accounted for as Secured Borrowings
Remaining Contractual Maturity of the Agreements
	June 30, 2025								December 31, 2024
(In millions)	Overnight and Continuous(1)		Up to 30 days		30-90 days		Total		Overnight and Continuous(1)		Up to 30 days		Total
Securities lending transactions:
Fixed maturity securities:
Japan government and agencies	$	0	$	3,837	$	1,035	$	4,872	$	0	$	1,027	$	1,027

Public utilities	27		0		0		27		34		0		34

Banks/financial institutions	145		0		0		145		193		0		193
Other corporate	723		0		0		723		783		0		783

Total borrowings	$	895	$	3,837	$	1,035	$	5,767	$	1,010	$	1,027	$	2,037
Gross amount of recognized liabilities for securities lending transactions							$	5,767					$	2,037

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

In connection with securities lending, in addition to cash collateral received, the Company received from counterparties securities collateral of $1.5 billion and $3.0 billion at June 30, 2025 and December 31, 2024, respectively, which may not be sold or re-pledged, unless the counterparty is in default. Such securities collateral is not reflected on the consolidated financial statements.

The Company did not have any repurchase agreements or repurchase-to-maturity transactions outstanding as of June 30, 2025, and December 31, 2024, respectively.

Certain fixed maturity securities can be pledged as collateral as part of derivative transactions, or pledged to support state deposit requirements on certain investment programs. For additional information regarding pledged securities related to derivative transactions, see Note 4.

4. DERIVATIVE INSTRUMENTS

The Company's freestanding derivative financial instruments include:

foreign currency forwards and options used in hedging foreign exchange risk on U.S. dollar-denominated investments in Aflac Japan's portfolio, with options used on a standalone basis and/or in a collar strategy;
foreign currency forwards and options used to economically hedge certain portions of forecasted cash flows denominated in yen and hedge the Company's long term exposure to a weakening yen;
cross-currency swaps, also referred to as foreign currency swaps, associated with certain senior notes and subordinated debentures;
foreign currency swaps that are associated with VIE bond purchase commitments, and investments in special-purpose entities, including VIEs where the Company is the primary beneficiary;
interest rate swaps used to economically hedge interest rate fluctuations in certain variable-rate investments;
interest rate swaptions used to hedge changes in the fair value associated with interest rate fluctuations for certain U.S. dollar-denominated available-for-sale fixed-maturity securities; and
bond purchase commitments at the inception of investments in consolidated VIEs.

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

Derivative Types

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

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

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

cash flow fluctuations. The Company also uses foreign currency swaps to economically convert certain of its U.S. dollar-denominated senior note and subordinated debenture principal and interest obligations into yen-denominated obligations.

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

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

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

Derivative Balance Sheet Classification

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


		June 30, 2025									December 31, 2024
(In millions)				Asset Derivatives			Liability Derivatives						Asset Derivatives			Liability Derivatives
Hedge Designation/ Derivative Type	Notional Amount			Fair Value			Fair Value			Notional Amount			Fair Value			Fair Value
Cash flow hedges:
Foreign currency swaps - VIE		$	18		$	0		$	4		$	18		$	0		$	6
Total cash flow hedges		18			0			4			18			0			6





Net investment hedge:
Foreign currency forwards		1,926			29			53			1,809			185			0

Total net investment hedge		1,926			29			53			1,809			185			0
Non-qualifying strategies:
Foreign currency swaps		0			0			0			450			2			0
Foreign currency swaps - VIE		3,096			45			585			3,042			53			598
Foreign currency forwards		572			0			8			0			0			0
Foreign currency options		25,000			2			0			24,195			0			0

Interest rate swaps		29,280			14			275			17,230			0			329

Forward bond purchase commitment - VIE		28			0			0			0			0			0
Total non-qualifying strategies		57,976			61			868			44,917			55			927
Total derivatives		$	59,920		$	90		$	925		$	46,744		$	240		$	933

Cash Flow Hedges

From time to time, for certain variable-rate available-for-sale securities held by Aflac Japan via consolidated VIEs, foreign currency swaps are used to swap the variable rate interest to fixed rate interest as well as interest cash flows between Japanese yen and U.S. dollar. The Company has designated foreign currency swaps as a hedge of the variability in cash flows of a forecasted transaction or of amounts to be received or paid related to a recognized asset (“cash flow” hedge). The remaining maximum length of time for which these cash flows are hedged is approximately one year. The derivatives in the Company's consolidated VIEs that are not designated as accounting hedges are discussed in the Non-qualifying Strategies section of this note.

Fair Value Hedges

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

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

Interest rate swaptions hedge the interest rate exposure of certain U.S. dollar-denominated available-for-sale securities held in Aflac Japan. For these hedging relationships, the Company excludes time value from the assessment of hedge effectiveness and recognizes changes in the intrinsic value of the swaptions in current earnings within net investment income. The change in the time value of the swaptions is recognized in other comprehensive income (loss) and amortized into earnings (net investment income) over its legal term.

The following table shows the carrying amounts of assets designated and qualifying as hedged items in fair value hedges of interest rate risk and the related cumulative hedge adjustment included in the carrying amount. The Company had no fair value hedges of interest rate risk as of June 30, 2025 and December 31, 2024; therefore, the amounts presented in the table below are related to previous fair value hedges of interest rate risk that were discontinued.


(In millions)	Carrying Amount of the Hedged Assets/(Liabilities)(1)					Cumulative Amount of Fair Value Hedging Adjustment Included in the Carrying Amount of Hedged Assets/(Liabilities)
		June 30, 2025		December 31, 2024		June 30, 2025		December 31, 2024
Fixed maturity securities		$	1,344	$	1,294	$	126	$	137

(1) The balance includes hedging adjustment on discontinued hedging relationships of $126 in 2025 and $137 in 2024.

Net Investment Hedge

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

The Company's net investment hedge was effective during the three- and six-month periods ended June 30, 2025 and 2024, respectively.

Non-qualifying Strategies

For the Company's derivative instruments in consolidated VIEs that do not qualify for hedge accounting treatment, all changes in their fair value are reported in current period earnings in net investment gains (losses). The amount of gain or loss recognized in earnings for the Company's VIEs is attributable to the derivatives in those investment structures. While the change in value of the swaps is recorded in current period earnings, the change in value of the available-for-sale fixed maturity securities associated with these swaps is recorded in other comprehensive income.

The Parent Company had cross-currency swap agreements related to certain of its U.S. dollar-denominated senior notes to effectively convert interest and principal on the notes from U.S. dollar to Japanese yen. These swaps matured in March 2025. Changes in the values of these swaps were recorded in earnings in the period where they occurred.

The Company uses foreign currency forwards and options to economically mitigate the currency risk of some of its U.S. dollar-denominated loan receivables and U.S. government fixed maturity securities held in the Aflac Japan segment. These arrangements are not designated as accounting hedges, as the foreign currency remeasurement of the loan receivables impacts current period earnings, and substantially offsets gains and losses from foreign currency forwards within net investment gains (losses). The Company also has certain foreign currency forwards on U.S. dollar-denominated available-for-sale securities where hedge accounting is not being applied.

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

Impact of Derivatives and Hedging Instruments

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


	Three Months Ended June 30,
	2025										2024
(In millions)	Net Investment Income			Net Investment Gains (Losses)				Other Comprehensive Income (Loss)			Net Investment Income			Net Investment Gains (Losses)				Other Comprehensive Income (Loss)
Qualifying hedges:
Cash flow hedges:
Foreign currency swaps - VIE		$	0		$	(1)			$	1		$	0		$	(1)			$	0
Total cash flow hedges		0			(1)		(1)		1			0			(1)		(1)		0





Net investment hedge:
Non-derivative hedging instruments					0				(139)						0				265

Foreign currency forwards					26				(81)						32				155

Total net investment hedge					26				(220)						32				420
Non-qualifying strategies:
Foreign currency swaps					0										1
Foreign currency swaps - VIE					30										(128)
Foreign currency forwards					(7)										0
Foreign currency options					(14)										(141)

Interest rate swaps					(11)										(38)

Total non-qualifying strategies					(2)										(306)
Total		$	0		$	23			$	(219)		$	0		$	(275)			$	420

(1) Impact of cash flow hedges reported as net investment gains (losses) includes $1 of losses reclassified from accumulated other comprehensive income (loss) into earnings during the three-month period ended June 30, 2025, and $1 of losses during the three-month period ended June 30, 2024.


	Six Months Ended June 30,
	2025										2024
(In millions)	Net Investment Income			Net Investment Gains (Losses)				Other Comprehensive Income (Loss)			Net Investment Income			Net Investment Gains (Losses)				Other Comprehensive Income (Loss)
Qualifying hedges:
Cash flow hedges:
Foreign currency swaps - VIE		$	0		$	(2)			$	3		$	0		$	(2)			$	0
Total cash flow hedges		0			(2)		(1)		3			0			(2)		(1)		0





Net investment hedge:
Non-derivative hedging instruments					0				(379)						0				501
Foreign currency forwards					62				(225)						76				300

Total net investment hedge					62				(604)						76				801
Non-qualifying strategies:
Foreign currency swaps					0										2
Foreign currency swaps - VIE					(27)										(216)
Foreign currency forwards					(7)										17
Foreign currency options					(19)										(182)
Interest rate swaps					(29)										(185)

Total non-qualifying strategies					(82)										(564)
Total		$	0		$	(22)			$	(601)		$	0		$	(490)			$	801

(1) Impact of cash flow hedges reported as net investment gains (losses) includes $2 of losses reclassified from accumulated other comprehensive income (loss) into earnings during the six-month period ended June 30, 2025, and $2 of losses during the six-month period ended June 30, 2024.

Interest expense/income on cash flow hedges are recorded in net investment income. For interest rate swaptions classified as fair value hedges, the change in the time value of the swaptions is recognized in other comprehensive income (loss) and amortized into net investment income over its legal term. If the swaption is early terminated but the hedged item is still outstanding, the amortization of disposal amount of the swaptions is recorded in net investment income over the remaining life of the hedged items. Gains and losses on cash flow hedges and the change in the fair value of interest rate swaptions related to the time value of the swaptions in fair value hedges are recorded as unrealized gains (losses). Gains and losses on net investment hedges related to changes in foreign currency spot rates are recorded in the unrealized foreign currency translation gains (losses) line in the consolidated statements of comprehensive income (loss).

As of June 30, 2025, $2 million of deferred losses on derivative instruments recorded in accumulated other comprehensive income are expected to be reclassified into earnings during the next 12 months.

Credit Risk Assumed through Derivatives

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

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

As of June 30, 2025, all of the Company's derivative agreement counterparties were investment grade.

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

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

Collateral posted by the Company to third parties for derivative transactions can generally be repledged or resold by the counterparties. The aggregate fair value of all derivative instruments with credit-risk-related contingent features that were in a net liability position by counterparty was approximately $852 million and $804 million as of June 30, 2025 and December 31, 2024, respectively. If the credit-risk-related contingent features underlying these agreements had been triggered on June 30, 2025, the Company estimates that it would be required to post a maximum of $584 million of additional collateral to these derivative counterparties. The Company is generally allowed to sell or repledge collateral obtained from its derivative counterparties, although it does not typically exercise such rights. See the Offsetting tables below for collateral posted or received as of the reported balance sheet dates.

Offsetting of Financial Instruments and Derivatives

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

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

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

Offsetting of Financial Assets and Derivative Assets


June 30, 2025
										Gross Amounts Not Offset in Balance Sheet
(In millions)	Gross Amount of Recognized Assets			Gross Amount Offset in Balance Sheet			Net Amount of Assets Presented in Balance Sheet			Financial Instruments			Securities Collateral		Cash Collateral Received			Net Amount
Derivative assets:
Derivative assets subject to a master netting agreement or offsetting arrangement
OTC - bilateral		$	31		$	0		$	31		$	(24)	$	0		$	(6)		$	1
OTC - cleared		14			0			14			(14)		0			0			0
Total derivative assets subject to a master netting agreement or offsetting arrangement		45			0			45			(38)		0			(6)			1
Derivative assets not subject to a master netting agreement or offsetting arrangement
OTC - bilateral		45						45											45

Total derivative assets not subject to a master netting agreement or offsetting arrangement		45						45											45
Total derivative assets		90			0			90			(38)		0			(6)			46
Securities lending and similar arrangements		5,732			0			5,732			0		0			(5,732)			0
Total		$	5,822		$	0		$	5,822		$	(38)	$	0		$	(5,738)		$	46


December 31, 2024
										Gross Amounts Not Offset in Balance Sheet
(In millions)	Gross Amount of Recognized Assets			Gross Amount Offset in Balance Sheet			Net Amount of Assets Presented in Balance Sheet			Financial Instruments			Securities Collateral		Cash Collateral Received			Net Amount
Derivative assets:
Derivative assets subject to a master netting agreement or offsetting arrangement
OTC - bilateral		$	187		$	0		$	187		$	0	$	(45)		$	(135)		$	7

Total derivative assets subject to a master netting agreement or offsetting arrangement		187			0			187			0		(45)			(135)			7
Derivative assets not subject to a master netting agreement or offsetting arrangement
OTC - bilateral		53						53											53

Total derivative assets not subject to a master netting agreement or offsetting arrangement		53						53											53
Total derivative assets		240			0			240			0		(45)			(135)			60
Securities lending and similar arrangements		2,001			0			2,001			0		0			(2,001)			0
Total		$	2,241		$	0		$	2,241		$	0	$	(45)		$	(2,136)		$	60

Offsetting of Financial Liabilities and Derivative Liabilities


June 30, 2025
										Gross Amounts Not Offset in Balance Sheet
(In millions)	Gross Amount of Recognized Liabilities			Gross Amount Offset in Balance Sheet			Net Amount of Liabilities Presented in Balance Sheet			Financial Instruments			Securities Collateral		Cash Collateral Pledged			Net Amount
Derivative liabilities:
Derivative liabilities subject to a master netting agreement or offsetting arrangement
OTC - bilateral		$	61		$	0		$	61		$	(24)	$	(5)		$	(2)		$	30
OTC - cleared		275			0			275			(14)		(19)			(242)			0
Total derivative liabilities subject to a master netting agreement or offsetting arrangement		336			0			336			(38)		(24)			(244)			30
Derivative liabilities not subject to a master netting agreement or offsetting arrangement
OTC - bilateral		589						589											589

Total derivative liabilities not subject to a master netting agreement or offsetting arrangement		589						589											589
Total derivative liabilities		925			0			925			(38)		(24)			(244)			619
Securities lending and similar arrangements		5,767			0			5,767			(5,732)		0			0			35
Total		$	6,692		$	0		$	6,692		$	(5,770)	$	(24)		$	(244)		$	654


December 31, 2024
										Gross Amounts Not Offset in Balance Sheet
(In millions)	Gross Amount of Recognized Liabilities			Gross Amount Offset in Balance Sheet			Net Amount of Liabilities Presented in Balance Sheet			Financial Instruments			Securities Collateral		Cash Collateral Pledged			Net Amount
Derivative liabilities:
Derivative liabilities subject to a master netting agreement or offsetting arrangement

OTC - cleared		$	329		$	0		$	329		$	0	$	0		$	(329)		$	0
Total derivative liabilities subject to a master netting agreement or offsetting arrangement		329			0			329			0		0			(329)			0
Derivative liabilities not subject to a master netting agreement or offsetting arrangement
OTC - bilateral		604						604											604

Total derivative liabilities not subject to a master netting agreement or offsetting arrangement		604						604											604
Total derivative liabilities		933			0			933			0		0			(329)			604
Securities lending and similar arrangements		2,037			0			2,037			(2,001)		0			0			36
Total		$	2,970		$	0		$	2,970		$	(2,001)	$	0		$	(329)		$	640

For additional information on the Company's financial instruments, see the accompanying Notes 3 and 5 and Notes 1, 3 and 5 of the Notes to the Consolidated Financial Statements in the 2024 Annual Report.

5. FAIR VALUE MEASUREMENTS

Fair Value Hierarchy

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

Level 1 valuations reflect quoted market prices for identical assets or liabilities in active markets.
Level 2 valuations reflect quoted market prices for similar assets or liabilities in an active market, quoted market prices for identical or similar assets or liabilities in non-active markets or model-derived valuations in which all significant valuation inputs are observable in active markets.
Level 3 valuations reflect valuations in which one or more of the significant inputs are not observable in an active market.

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


	June 30, 2025
(In millions)	Quoted Prices in Active Markets for Identical Assets (Level 1)			Significant Observable Inputs (Level 2)			Significant Unobservable Inputs (Level 3)			Total Fair Value
Assets:
Securities available-for-sale, carried at fair value:
Fixed maturity securities:
Government and agencies		$	16,975		$	778		$	0		$	17,753
Municipalities		0			2,074			0			2,074
Mortgage- and asset-backed securities		0			2,604			1,922			4,526
Public utilities		0			6,682			792			7,474
Sovereign and supranational		0			412			23			435
Banks/financial institutions		0			9,818			9			9,827
Other corporate		0			26,627			163			26,790
Total fixed maturity securities		16,975			48,995			2,909			68,879
Equity securities		715			0			167			882
Other investments		2,375			0			0			2,375
Cash and cash equivalents		6,965			0			0			6,965
Other assets:
Foreign currency swaps		0			45			0			45
Foreign currency forwards		0			29			0			29
Foreign currency options		0			2			0			2
Interest rate swaps		0			14			0			14


Total other assets		0			90			0			90
Total assets		$	27,030		$	49,085		$	3,076		$	79,191
Liabilities:
Other liabilities:
Foreign currency swaps		$	0		$	589		$	0		$	589
Foreign currency forwards		0			61			0			61

Interest rate swaps		0			275			0			275


Total liabilities		$	0		$	925		$	0		$	925


	December 31, 2024
(In millions)	Quoted Prices in Active Markets for Identical Assets (Level 1)			Significant Observable Inputs (Level 2)			Significant Unobservable Inputs (Level 3)			Total Fair Value
Assets:
Securities available-for-sale, carried at fair value:
Fixed maturity securities:
Government and agencies		$	17,088		$	758		$	0		$	17,846
Municipalities		0			2,034			0			2,034
Mortgage- and asset-backed securities		0			2,407			1,156			3,563
Public utilities		0			6,398			647			7,045
Sovereign and supranational		0			393			23			416
Banks/financial institutions		0			8,946			10			8,956
Other corporate		0			25,178			231			25,409
Total fixed maturity securities		17,088			46,114			2,067			65,269
Equity securities		639			0			157			796
Other investments		1,599			0			0			1,599
Cash and cash equivalents		6,229			0			0			6,229
Other assets:
Foreign currency swaps		0			55			0			55
Foreign currency forwards		0			185			0			185


Total other assets		0			240			0			240
Total assets		$	25,555		$	46,354		$	2,224		$	74,133
Liabilities:
Other liabilities:
Foreign currency swaps		$	0		$	604		$	0		$	604

Interest rate swaps		0			329			0			329


Total liabilities		$	0		$	933		$	0		$	933

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


	June 30, 2025
(In millions)	Carrying Value			Quoted Prices in Active Markets for Identical Assets (Level 1)			Significant Observable Inputs (Level 2)			Significant Unobservable Inputs (Level 3)			Total Fair Value
Assets:
Securities held-to-maturity, carried at amortized cost:
Fixed maturity securities:
Government and agencies		$	16,718		$	16,711		$	149		$	0		$	16,860
Municipalities		255			0			265			0			265

Public utilities		35			0			34			0			34
Sovereign and supranational		409			0			430			0			430

Other corporate		17			0			18			0			18
Commercial mortgage and other loans		10,264			0			0			10,099			10,099
Other investments (1)		40			0			40			0			40
Total assets		$	27,738		$	16,711		$	936		$	10,099		$	27,746
Liabilities:
Other policyholders’ funds		$	6,002		$	0		$	0		$	5,925		$	5,925
Notes payable (excluding leases)		8,837			0			7,678			737			8,415
Total liabilities		$	14,839		$	0		$	7,678		$	6,662		$	14,340

(1) Excludes policy loans of $221, equity method investments of $3,745, and REO of $964, at carrying valu**e


	December 31, 2024
(In millions)	Carrying Value			Quoted Prices in Active Markets for Identical Assets (Level 1)			Significant Observable Inputs (Level 2)			Significant Unobservable Inputs (Level 3)			Total Fair Value
Assets:
Securities held-to-maturity, carried at amortized cost:
Fixed maturity securities:
Government and agencies		$	15,309		$	15,916		$	143		$	0		$	16,059
Municipalities		235			0			257			0			257

Public utilities		32			0			33			0			33
Sovereign and supranational		374			0			405			0			405

Other corporate		16			0			18			0			18
Commercial mortgage and other loans		10,869			0			0			10,653			10,653
Other investments (1)		39			0			39			0			39
Total assets		$	26,874		$	15,916		$	895		$	10,653		$	27,464
Liabilities:
Other policyholders’ funds		$	5,460		$	0		$	0		$	5,389		$	5,389
Notes payable (excluding leases)		7,402			0			6,352			675			7,027
Total liabilities		$	12,862		$	0		$	6,352		$	6,064		$	12,416

(1) Excludes policy loans of $203, equity method investments of $3,435, and REO of $682, at carrying value

Fair Value of Financial Instruments

Fixed maturity and equity securities

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

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

price quotes and valuations from third-party pricing vendors,
in-house valuations, and
non-binding price quotes the Company obtains from outside brokers.

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

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

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

the most appropriate comparable security(ies) of a guarantor and/or parent
CDS spreads of a guarantor and/or parent
bonds of comparable issuers with similar characteristics such as rating, geography, or sector
CDS spreads of an appropriate index or of comparable issuers with similar characteristics such as rating, geography, or sector
bond indices that are comparative in rating, industry, maturity, and region.

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


	June 30, 2025
(In millions)	Quoted Prices in Active Markets for Identical Assets (Level 1)			Significant Observable Inputs (Level 2)			Significant Unobservable Inputs (Level 3)			Total Fair Value
Securities available-for-sale, carried at fair value:
Fixed maturity securities:
Government and agencies:
Third-party pricing vendor		$	16,975		$	446		$	0		$	17,421
Internal		0			332			0			332

Total government and agencies		16,975			778			0			17,753
Municipalities:
Third-party pricing vendor		0			1,827			0			1,827
Internal		0			247			0			247

Total municipalities		0			2,074			0			2,074
Mortgage- and asset-backed securities:
Third-party pricing vendor		0			2,422			0			2,422
Internal		0			182			38			220
Broker/other		0			0			1,884			1,884
Total mortgage- and asset-backed securities		0			2,604			1,922			4,526
Public utilities:
Third-party pricing vendor		0			3,734			0			3,734
Internal		0			2,948			0			2,948
Broker/other		0			0			792			792
Total public utilities		0			6,682			792			7,474
Sovereign and supranational:
Third-party pricing vendor		0			78			0			78
Internal		0			334			0			334
Broker/other		0			0			23			23
Total sovereign and supranational		0			412			23			435
Banks/financial institutions:
Third-party pricing vendor		0			5,636			0			5,636
Internal		0			4,182			5			4,187
Broker/other		0			0			4			4
Total banks/financial institutions		0			9,818			9			9,827
Other corporate:
Third-party pricing vendor		0			21,310			0			21,310
Internal		0			5,317			21			5,338
Broker/other		0			0			142			142
Total other corporate		0			26,627			163			26,790
Total securities available-for-sale		$	16,975		$	48,995		$	2,909		$	68,879
Equity securities, carried at fair value:
Third-party pricing vendor		$	715		$	0		$	0		$	715
Internal		0			0			1			1
Broker/other		0			0			166			166
Total equity securities		$	715		$	0		$	167		$	882


	June 30, 2025
(In millions)	Quoted Prices in Active Markets for Identical Assets (Level 1)			Significant Observable Inputs (Level 2)			Significant Unobservable Inputs (Level 3)			Total Fair Value
Securities held-to-maturity, carried at amortized cost:
Fixed maturity securities:
Government and agencies:
Third-party pricing vendor		$	16,711		$	149		$	0		$	16,860

Total government and agencies		16,711			149			0			16,860
Municipalities:
Third-party pricing vendor		0			265			0			265

Total municipalities		0			265			0			265




Public utilities:
Third-party pricing vendor		0			34			0			34


Total public utilities		0			34			0			34
Sovereign and supranational:
Third-party pricing vendor		0			212			0			212
Internal		0			218			0			218

Total sovereign and supranational		0			430			0			430




Other corporate:
Third-party pricing vendor		0			18			0			18


Total other corporate		0			18			0			18
Total securities held-to-maturity		$	16,711		$	896		$	0		$	17,607


	December 31, 2024
(In millions)	Quoted Prices in Active Markets for Identical Assets (Level 1)			Significant Observable Inputs (Level 2)			Significant Unobservable Inputs (Level 3)			Total Fair Value
Securities available-for-sale, carried at fair value:
Fixed maturity securities:
Government and agencies:
Third-party pricing vendor		$	17,088		$	446		$	0		$	17,534
Internal		0			312			0			312
Total government and agencies		17,088			758			0			17,846
Municipalities:
Third-party pricing vendor		0			1,791			0			1,791
Internal		0			243			0			243
Total municipalities		0			2,034			0			2,034
Mortgage- and asset-backed securities:
Third-party pricing vendor		0			2,352			0			2,352
Internal		0			55			37			92
Broker/other		0			0			1,119			1,119
Total mortgage- and asset-backed securities		0			2,407			1,156			3,563
Public utilities:
Third-party pricing vendor		0			3,628			0			3,628
Internal		0			2,770			0			2,770
Broker/other		0			0			647			647
Total public utilities		0			6,398			647			7,045
Sovereign and supranational:
Third-party pricing vendor		0			78			0			78
Internal		0			315			0			315
Broker/other		0			0			23			23
Total sovereign and supranational		0			393			23			416
Banks/financial institutions:
Third-party pricing vendor		0			4,975			0			4,975
Internal		0			3,971			5			3,976
Broker/other		0			0			5			5
Total banks/financial institutions		0			8,946			10			8,956
Other corporate:
Third-party pricing vendor		0			20,051			0			20,051
Internal		0			5,127			116			5,243
Broker/other		0			0			115			115
Total other corporate		0			25,178			231			25,409
Total securities available-for-sale		$	17,088		$	46,114		$	2,067		$	65,269
Equity securities, carried at fair value:
Third-party pricing vendor		$	639		$	0		$	0		$	639
Internal		0			0			26			26
Broker/other		0			0			131			131
Total equity securities		$	639		$	0		$	157		$	796


	December 31, 2024
(In millions)	Quoted Prices in Active Markets for Identical Assets (Level 1)			Significant Observable Inputs (Level 2)			Significant Unobservable Inputs (Level 3)			Total Fair Value
Securities held-to-maturity, carried at amortized cost:
Fixed maturity securities:
Government and agencies:
Third-party pricing vendor		$	15,916		$	143		$	0		$	16,059
Total government and agencies		15,916			143			0			16,059
Municipalities:
Third-party pricing vendor		0			257			0			257
Total municipalities		0			257			0			257




Public utilities:
Third-party pricing vendor		0			33			0			33
Total public utilities		0			33			0			33
Sovereign and supranational:
Third-party pricing vendor		0			198			0			198
Internal		0			207			0			207

Total sovereign and supranational		0			405			0			405



Other corporate:
Third-party pricing vendor		0			18			0			18

Total other corporate		0			18			0			18
Total securities held-to-maturity		$	15,916		$	856		$	0		$	16,772

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

Derivatives

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

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


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

(1) Option-based only

The fair values of the foreign currency forwards and options are based on observable market inputs, therefore they are classified as Level 2.

The Parent Company had cross-currency swap agreements related to certain of its U.S. dollar-denominated senior notes to effectively convert a portion of the interest on the notes from U.S. dollar to Japanese yen. These swaps matured in March 2025. Their fair values were based on observable market inputs; therefore, they were classified as Level 2.

To determine the fair value of its interest rate derivatives, the Company uses inputs that are generally observable in the market or can be derived from observable market data. Interest rate swaps are cleared trades. In a cleared swap contract, the clearinghouse provides benefits to the counterparties similar to contracts listed for investment traded on an exchange since it maintains a daily margin to mitigate counterparties' credit risk. These derivatives are priced using observable inputs, accordingly, they are classified as Level 2.

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

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

Commercial mortgage and other loans

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

Other investments

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

Other policyholders' funds

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

Notes payable

The fair values of the Company's publicly issued notes payable are determined by utilizing available sources of observable inputs from third-party pricing vendors and are classified as Level 2. The Company's private placement notes payable are valued using the same internal models that the Company uses for its yen-denominated and U.S. dollar-denominated private placement investment portfolio. The fair values for these private placements are deemed Level 2 valuations, as they are model-derived valuations that are generated internally with all significant valuation inputs being observed in active markets. The fair values of the Company's yen-denominated loans approximate their carrying values and are classified as Level 3.

Transfers between Hierarchy Levels and Level 3 Rollforward

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

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


Three Months Ended June 30, 2025
	Fixed Maturity Securities										Equity Securities
(In millions)	Mortgage- and Asset- Backed Securities		Public Utilities		Sovereign and Supranational		Banks/ Financial Institutions		Other Corporate				Total
Balance, beginning of period	$	1,603	$	756	$	24	$	10	$	137	$	160	$	2,690
Net investment gains (losses) included in earnings	0		0		0		0		0		3		3
Unrealized gains (losses) included in other comprehensive income (loss)	20		14		1		(1)		2		0		36
Purchases, issuances, sales and settlements:
Purchases	175		48		0		0		24		4		251
Issuances	0		0		0		0		0		0		0
Sales	0		0		0		0		0		0		0
Settlements	(44)		(26)		(2)		0		0		0		(72)
Transfers into Level 3	168		0		0		0		0		0		168
Transfers out of Level 3	0		0		0		0		0		0		0
Balance, end of period	$	1,922	$	792	$	23	$	9	$	163	$	167	$	3,076
Changes in unrealized gains (losses) relating to Level 3 assets and liabilities still held at the end of the period included in earnings	$	0	$	0	$	0	$	0	$	0	$	3	$	3


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


Six Months Ended June 30, 2025
	Fixed Maturity Securities										Equity Securities
(In millions)	Mortgage- and Asset- Backed Securities		Public Utilities		Sovereign and Supranational		Banks/ Financial Institutions		Other Corporate				Total
Balance, beginning of period	$	1,156	$	647	$	23	$	10	$	231	$	157	$	2,224
Net investment gains (losses) included in earnings	0		0		0		0		0		4		4
Unrealized gains (losses) included in other comprehensive income (loss)	30		20		2		(1)		4		0		55
Purchases, issuances, sales and settlements:
Purchases	609		158		0		0		24		7		798
Issuances	0		0		0		0		0		0		0
Sales	0		0		0		0		0		(1)		(1)
Settlements	(56)		(33)		(2)		0		(1)		0		(92)
Transfers into Level 3	183		0		0		0		0		0		183
Transfers out of Level 3	0		0		0		0		(95)		0		(95)
Balance, end of period	$	1,922	$	792	$	23	$	9	$	163	$	167	$	3,076
Changes in unrealized gains (losses) relating to Level 3 assets and liabilities still held at the end of the period included in earnings	$	0	$	0	$	0	$	0	$	0	$	4	$	4


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

Fair Value Sensitivity

Level 3 Significant Unobservable Input Sensitivity

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


June 30, 2025
(In millions)	Fair Value			Valuation Technique(s)	Unobservable Input	Range				Weighted Average
Assets:
Securities available-for-sale, carried at fair value:
Fixed maturity securities:
Mortgage- and asset-backed securities		$	1,922	Consensus pricing	Offered quotes	87.62	-	107.25	(a)	100.12
Public utilities		792		Discounted cash flow	Credit spreads	100 bps	-	347 bps	(c)	160 bps
Sovereign and supranational		23		Consensus pricing	Offered quotes	N/A			(b)	N/A
Banks/financial institutions		9		Adjusted cost	Private financials	N/A			(d)	N/A
Other corporate		163		Discounted cash flow	Credit spreads	100 bps	-	392 bps	(c)	228 bps
Equity securities		167		Adjusted cost	Private financials	N/A			(d)	N/A
Total assets		$	3,076

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

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

(c) Actual or equivalent credit spreads in basis points

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


December 31, 2024
(In millions)	Fair Value			Valuation Technique(s)	Unobservable Input	Range				Weighted Average
Assets:
Securities available-for-sale, carried at fair value:
Fixed maturity securities:
Mortgage- and asset-backed securities		$	1,156	Consensus pricing	Offered quotes	84.08	-	104.60	(a)	99.07
Public utilities		647		Discounted cash flow	Credit spreads	100 bps	-	375 bps	(c)	162 bps
Sovereign and supranational		23		Consensus pricing	Offered quotes	N/A			(b)	N/A
Banks/financial institutions		10		Adjusted cost	Private financials	N/A			(d)	N/A
Other corporate		231		Discounted cash flow	Credit spreads	91 bps	-	294 bps	(c)	173 bps
Equity securities		157		Adjusted cost	Private financials	N/A			(d)	N/A
Total assets		$	2,224

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

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

(c) Actual or equivalent credit spreads in basis points

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

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

Credit Spreads

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

Offered Quotes

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

Private Financials

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

For additional information on the Company's investments and financial instruments, see the accompanying Notes 3 and 4 and Notes 1, 3 and 4 of the Notes to the Consolidated Financial Statements in the 2024 Annual Report.

6. DEFERRED POLICY ACQUISITION COSTS

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


	June 30, 2025
	Aflac Japan								Aflac U.S.
(In millions)	Cancer		Medical and Other Health		Life Insurance		Other		Accident		Disability		Critical Care		Hospital Indemnity		Dental/ Vision		Life Insurance		Other		Total
Deferred policy acquisition costs:
Balance at December 31, 2024	$	2,776	$	1,833	$	441	$	52	$	915	$	636	$	1,348	$	452	$	86	$	219	$	0	$	8,758
Capitalization	139		46		17		2		65		61		78		42		6		47		0		503
Amortization expense	(94)		(51)		(17)		(2)		(72)		(61)		(77)		(38)		(6)		(19)		0		(437)

Foreign currency translation and other	257		170		41		4		0		0		0		0		0		0		0		472
Balance at June 30, 2025	$	3,078	$	1,998	$	482	$	56	$	908	$	636	$	1,349	$	456	$	86	$	247	$	0	$	9,296


	December 31, 2024
	Aflac Japan								Aflac U.S.
(In millions)	Cancer		Medical and Other Health		Life Insurance		Other		Accident		Disability		Critical Care		Hospital Indemnity		Dental/ Vision		Life Insurance		Other		Total
Deferred policy acquisition costs:
Balance at December 31, 2023	$	2,971	$	2,041	$	491	$	56	$	917	$	625	$	1,336	$	436	$	86	$	172	$	1	$	9,132
Capitalization	300		103		36		4		141		129		165		89		12		77		0		1,056
Amortization expense	(184)		(100)		(34)		(3)		(143)		(118)		(153)		(73)		(12)		(30)		(1)		(851)

Foreign currency translation and other	(311)		(211)		(52)		(5)		0		0		0		0		0		0		0		(579)
Balance at December 31, 2024	$	2,776	$	1,833	$	441	$	52	$	915	$	636	$	1,348	$	452	$	86	$	219	$	0	$	8,758

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


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

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

There were no changes to the inputs, judgments, assumptions or methods used to determine amortization amounts during the six-month periods ended June 30, 2025 and 2024. For additional information on deferred policy acquisition costs, see Notes 1 and 6 of the Notes to the Consolidated Financial Statements in the 2024 Annual Report.

7. POLICY LIABILITIES

Future Policy Benefits

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

The following tables present the changes in the present value of expected future net premiums and the present value of expected future policy benefits by reporting segment and disaggregated by product type. The present value of expected future net premiums and the present value of expected future policy benefits are presented gross of internal and external ceded reinsurance.


	June 30, 2025
	Aflac Japan								Aflac U.S.
(In millions)	Cancer		Medical and Other Health		Life Insurance		Other		Accident		Disability		Critical Care		Hospital Indemnity		Dental/ Vision		Life Insurance		Other
Present value of expected future net premiums:
Balance at December 31, 2024	$	14,184	$	11,817	$	5,156	$	846	$	2,497	$	1,635	$	3,901	$	1,122	$	196	$	909	$	826
Beginning balance at original discount rate	14,008		11,845		5,084		864		2,687		1,726		4,340		1,221		209		976		824
Effect of changes in cash flow assumptions	0		0		0		0		0		0		0		0		0		0		0
Effect of actual variances from expected experience	(62)		(75)		(23)		(4)		1		(11)		(9)		6		(6)		(14)		43
Adjusted beginning of period balance	13,946		11,770		5,061		860		2,688		1,715		4,331		1,227		203		962		867
Issuances	489		143		210		5		169		194		308		128		29		127		305
Interest accrual	186		147		56		8		55		34		89		24		4		20		26
Net premiums collected (1)	(717)		(547)		(409)		(48)		(242)		(201)		(294)		(125)		(20)		(85)		(52)
Foreign currency translation	1,292		1,085		464		79		0		0		0		0		0		0		0
Other	(1)		0		0		0		(3)		(2)		(3)		(2)		0		(2)		(24)
Ending balance at original discount rate	15,195		12,598		5,382		904		2,667		1,740		4,431		1,252		216		1,022		1,122
Effect of changes in discount rate assumptions	(463)		(616)		(76)		(50)		(143)		(59)		(364)		(77)		(9)		(45)		38
Balance at June 30, 2025	$	14,732	$	11,982	$	5,306	$	854	$	2,524	$	1,681	$	4,067	$	1,175	$	207	$	977	$	1,160
Present value of expected future policy benefits:
Balance at December 31, 2024	$	40,781	$	20,606	$	24,265	$	4,225	$	3,127	$	2,330	$	10,701	$	1,897	$	441	$	1,847	$	1,288
Beginning balance at original discount rate	37,856		21,957		26,330		4,765		3,386		2,466		12,013		2,073		477		2,126		1,293
Effect of changes in cash flow assumptions	0		0		0		0		0		0		0		0		0		0		0
Effect of actual variances from expected experience	(86)		(90)		(21)		(7)		(1)		(22)		(21)		2		(7)		(22)		43
Adjusted beginning of period balance	37,770		21,867		26,309		4,758		3,385		2,444		11,992		2,075		470		2,104		1,336
Issuances	495		146		212		7		173		204		322		132		29		133		304
Interest accrual	660		282		286		46		68		49		259		43		10		43		38
Benefit payments	(1,364)		(517)		(973)		(107)		(272)		(237)		(492)		(161)		(30)		(54)		(94)
Foreign currency translation	3,490		2,020		2,417		439		0		0		0		0		0		0		0
Other	0		0		0		0		0		0		0		0		0		0		0
Ending balance at original discount rate	41,051		23,798		28,251		5,143		3,354		2,460		12,081		2,089		479		2,226		1,584
Effect of changes in discount rate assumptions	675		(3,134)		(3,800)		(888)		(200)		(93)		(1,139)		(142)		(27)		(246)		38
Balance at June 30, 2025	41,726		20,664		24,451		4,255		3,154		2,367		10,942		1,947		452		1,980		1,622
Net liability for future policy benefits	26,994		8,682		19,145		3,401		630		686		6,875		772		245		1,003		462
Less: reinsurance recoverable	5,175		1,249		0		0		0		0		0		0		0		22		0
Net liability for future policy benefits after reinsurance recoverable	$	21,819	$	7,433	$	19,145	$	3,401	$	630	$	686	$	6,875	$	772	$	245	$	981	$	462

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


	December 31, 2024
	Aflac Japan								Aflac U.S.
(In millions)	Cancer		Medical and Other Health		Life Insurance		Other		Accident		Disability		Critical Care		Hospital Indemnity		Dental/ Vision		Life Insurance		Other
Present value of expected future net premiums:
Balance at December 31, 2023	$	17,509	$	14,697	$	6,488	$	1,088	$	2,488	$	1,652	$	4,074	$	1,107	$	206	$	853	$	277
Beginning balance at original discount rate	16,452		14,040		6,258		1,069		2,630		1,738		4,416		1,193		217		909		272
Effect of changes in cash flow assumptions	(625)		(154)		(190)		(19)		65		(47)		(106)		(21)		(17)		(5)		(8)
Effect of actual variances from expected experience	(71)		(164)		(97)		(14)		66		12		(100)		21		(12)		(29)		13
Adjusted beginning of period balance	15,756		13,722		5,971		1,036		2,761		1,703		4,210		1,193		188		875		277
Issuances	983		361		478		16		307		364		543		231		52		226		592
Interest accrual	378		302		110		17		106		66		173		46		9		37		25
Net premiums collected (1)	(1,453)		(1,135)		(862)		(101)		(479)		(401)		(578)		(244)		(39)		(157)		(53)
Foreign currency translation	(1,655)		(1,405)		(613)		(104)		0		0		0		0		0		0		0
Other	(1)		0		0		0		(8)		(6)		(8)		(5)		(1)		(5)		(17)
Ending balance at original discount rate	14,008		11,845		5,084		864		2,687		1,726		4,340		1,221		209		976		824
Effect of changes in discount rate assumptions	176		(28)		72		(18)		(190)		(91)		(439)		(99)		(13)		(67)		2
Balance at December 31, 2024	$	14,184	$	11,817	$	5,156	$	846	$	2,497	$	1,635	$	3,901	$	1,122	$	196	$	909	$	826
Present value of expected future policy benefits:
Balance at December 31, 2023	$	50,161	$	25,257	$	29,731	$	5,178	$	3,109	$	2,422	$	11,290	$	1,943	$	478	$	1,764	$	798
Beginning balance at original discount rate	43,626		25,023		30,256		5,444		3,302		2,541		12,120		2,076		506		1,971		769
Effect of changes in cash flow assumptions	(815)		(228)		(302)		(7)		109		(73)		(112)		(31)		(28)		(3)		(12)
Effect of actual variances from expected experience	(117)		(193)		(110)		(24)		91		(16)		(144)		21		(16)		(43)		(7)
Adjusted beginning of period balance	42,694		24,602		29,844		5,413		3,502		2,452		11,864		2,066		462		1,925		750
Issuances	1,004		373		488		22		311		381		559		237		55		231		597
Interest accrual	1,356		570		582		93		133		98		515		84		20		78		50
Benefit payments	(2,773)		(1,033)		(1,510)		(208)		(560)		(465)		(925)		(314)		(60)		(108)		(104)
Foreign currency translation	(4,425)		(2,555)		(3,074)		(555)		0		0		0		0		0		0		0
Other	0		0		0		0		0		0		0		0		0		0		0
Ending balance at original discount rate	37,856		21,957		26,330		4,765		3,386		2,466		12,013		2,073		477		2,126		1,293
Effect of changes in discount rate assumptions	2,925		(1,351)		(2,065)		(540)		(259)		(136)		(1,312)		(176)		(36)		(279)		(5)
Balance at December 31, 2024	40,781		20,606		24,265		4,225		3,127		2,330		10,701		1,897		441		1,847		1,288
Net liability for future policy benefits	26,597		8,789		19,109		3,379		630		695		6,800		775		245		938		462
Less: reinsurance recoverable	5,085		1,245		0		0		0		0		0		0		0		18		0
Net liability for future policy benefits after reinsurance recoverable	$	21,512	$	7,544	$	19,109	$	3,379	$	630	$	695	$	6,800	$	775	$	245	$	920	$	462

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

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


	June 30, 2025
	Aflac Japan				Aflac U.S.
	Cancer	Medical and Other Health	Life Insurance	Other	Accident	Disability	Critical Care	Hospital Indemnity	Dental/ Vision	Life Insurance	Other
Weighted-average interest, original discount rate (1)	3.8 %	2.5 %	2.1 %	1.8 %	4.0 %	4.3 %	4.6 %	4.5 %	4.3 %	3.9 %	5.4 %
Weighted-average interest, current discount rate (1)	2.8 %	3.4 %	2.6 %	3.1 %	5.3 %	5.1 %	5.5 %	5.4 %	5.3 %	5.4 %	5.4 %
Weighted-average liability duration (years)	12.6	23.0	16.2	16.4	7.6	5.6	11.0	9.0	7.6	13.5	8.4

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


	December 31, 2024
	Aflac Japan				Aflac U.S.
	Cancer	Medical and Other Health	Life Insurance	Other	Accident	Disability	Critical Care	Hospital Indemnity	Dental/ Vision	Life Insurance	Other
Weighted-average interest, original discount rate (1)	3.9 %	2.5 %	2.1 %	1.8 %	4.0 %	4.3 %	4.6 %	4.5 %	4.3 %	3.8 %	5.4 %
Weighted-average interest, current discount rate (1)	2.2 %	2.8 %	2.1 %	2.5 %	5.3 %	5.2 %	5.3 %	5.3 %	5.3 %	5.3 %	5.3 %
Weighted-average liability duration (years)	12.6	23.5	16.1	16.7	7.7	5.6	11.1	9.0	7.6	13.5	9.1

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

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


(In millions)	June 30, 2025			December 31, 2024
Balances included in future policy benefits rollforward:
Aflac Japan
Cancer		$	26,994		$	26,597
Medical and other health		8,682			8,789
Life insurance		19,145			19,109
Other		3,401			3,379
Aflac U.S.
Accident		630			630
Disability		686			695
Critical care		6,875			6,800
Hospital indemnity		772			775
Dental/vision		245			245
Life insurance		1,003			938
Other		462			462
Corporate and other		5,106			5,072
Deferred profit liability		2,097			1,844
Deferred reinsurance gain liability		885			806
Intercompany eliminations (1)		(5,884)			(5,760)
Total		$	71,099		$	70,381

(1) Elimination entry necessary due to the internal reinsurance transactions with Aflac Re and to recapture a portion of policy liabilities ceded externally as a result of the reinsurance retrocession transaction. See Note 8 of the Notes to the Consolidated Financial Statements in the 2024 Annual Report.

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

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

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

For the discount rates applicable to tenors for which the Japan single-A debt market is not liquid but there is sufficient observable market data and/or the observable market data is available for similar instruments (between 10 and 30 years), the Company estimates tenor-specific single-A credit spreads and applies them to risk-free government rates. Lastly, for the tenors where there is limited or no observable single-A or similar market data or risk-free government rates (beyond 30 years), the discount curve is derived by extrapolation of risk free rates beyond their last liquid point following the Smith-Wilson method and grading of the estimated forward credit spread anchored by the ultimate forward rate. The ultimate forward rate is based on the economic value-based solvency regime, which is consistent with the International Association of Insurance Supervisors (IAIS) Insurance Capital Standards (ICS) (effective for Aflac Japan's 2025 fiscal year-end), and is adjusted for credit and inflation components.

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

There were no changes to the methods used to determine the discount rates during the six-month periods ended June 30, 2025 and 2024.

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

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

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

For the three- and six-month periods ended June 30, 2025 and 2024, the variance of actual experience from expected experience was primarily due to favorable variances in morbidity assumptions as compared to actual experience. There were no changes to the inputs, judgments, assumptions or methods used in measuring the liability for future policy benefits during the six-month periods ended June 30, 2025 and 2024.

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

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


	Three Months Ended June 30,				Six Months Ended June 30,
(In millions)	2025		2024		2025		2024
Net earned premiums:
Aflac Japan
Cancer	$	885	$	832	$	1,724	$	1,710
Medical and other health	557		570		1,086		1,175
Life insurance	328		316		644		655
Other	33		35		65		69
Aflac U.S.
Accident	309		316		620		641
Disability	354		332		706		665
Critical care	443		441		884		885
Hospital indemnity	183		182		367		367
Dental/vision	52		46		101		105
Life insurance	170		141		339		279
Other	41		25		90		45
Corporate and other	206		155		404		320
Reinsurance ceded	(91)		(66)		(179)		(135)
Total	$	3,470	$	3,325	$	6,851	$	6,781

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


	Three Months Ended June 30,				Six Months Ended June 30,
(In millions)	2025		2024		2025		2024
Interest expense:
Aflac Japan
Cancer	$	241	$	237	$	474	$	483
Medical and other health	69		66		135		131
Life insurance	116		114		230		232
Other	20		18		38		37
Aflac U.S.
Accident	6		7		13		13
Disability	8		8		15		16
Critical care	85		86		170		171
Hospital indemnity	10		10		19		19
Dental/vision	3		3		6		6
Life insurance	12		10		23		20
Other	6		6		12		13

Total	$	576	$	565	$	1,135	$	1,141

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


	June 30, 2025						December 31, 2024
(In millions)	Gross Premiums			Benefits and Expenses			Gross Premiums			Benefits and Expenses
Undiscounted expected future gross premiums and expected future policy benefits and expenses:
Aflac Japan
Cancer		$	55,334		$	61,226		$	51,712		$	56,881
Medical and other health		35,449			37,821			33,250			34,864
Life insurance		11,752			40,586			10,915			37,520
Other		1,558			6,965			1,477			6,479
Aflac U.S.
Accident		8,778			4,647			8,862			4,687
Disability		5,717			3,097			5,727			3,094
Critical care		19,693			20,424			19,624			20,340
Hospital indemnity		4,906			3,044			4,859			3,017
Dental/vision		1,113			685			1,118			679
Life insurance		3,156			3,786			2,966			3,559
Other		2,908			2,788			2,143			2,273
Total		$	150,364		$	185,069		$	142,653		$	173,393


	June 30, 2025						December 31, 2024
(In millions)	Gross Premiums			Benefits and Expenses			Gross Premiums			Benefits and Expenses
Discounted expected future gross premiums and expected future policy benefits and expenses:
Aflac Japan
Cancer		$	41,068		$	41,726		$	40,170		$	40,781
Medical and other health		25,563			20,664			25,171			20,606
Life insurance		9,791			24,451			9,367			24,265
Other		1,222			4,255			1,204			4,225
Aflac U.S.
Accident		6,100			3,154			6,057			3,127
Disability		4,462			2,367			4,404			2,330
Critical care		12,147			10,942			11,900			10,701
Hospital indemnity		3,403			1,947			3,312			1,897
Dental/vision		768			452			761			441
Life insurance		2,215			1,980			2,050			1,847
Other		1,752			1,622			1,290			1,288
Total		$	108,491		$	113,560		$	105,686		$	111,508

Loss expense as a result of NPR capping for the three- and six-month periods ended June 30, 2025 and 2024 was immaterial.

Other Policyholders' Funds

As of June 30, 2025 and December 31, 2024, the largest component of the other policyholders' funds liability was the Company's annuity line of business in Aflac Japan. The Company's annuities have fixed benefits and premiums.

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


(In millions)	June 30, 2025		December 31, 2024
Other policyholders' funds:
Fixed annuities account balance, beginning of period (1)	$	5,221	$	5,939
Premiums received	55		104
Transfers from WAYS conversions	157		249
Surrenders and withdrawals	(35)		(58)
Benefit payments	(263)		(446)
Interest credited	26		49
Foreign currency translation and other	482		(616)
Fixed annuities account balance, end of period	5,643		5,221
Other deposit type reserves	359		239
Total	$	6,002	$	5,460

(1) Aflac Japan fixed annuities

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


	June 30, 2025			December 31, 2024
(In millions)	Range of Guaranteed Minimum Crediting Rates (2)	At Guaranteed Minimum	Cash Surrender Value	Range of Guaranteed Minimum Crediting Rates (2)	At Guaranteed Minimum	Cash Surrender Value
Fixed annuities (1)	0.5% - 2.2%	$5,643	$5,566	0.5% - 2.2%	$5,221	$5,150

(1) Aflac Japan fixed annuities

(2) Weighted-average crediting rate of 1.5% at June 30, 2025 and December 31, 2024.

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

For additional information on policy liabilities, see Notes 1 and 7 of the Notes to the Consolidated Financial Statements in the 2024 Annual Report.

8. REINSURANCE

The Company periodically enters into fixed quota-share coinsurance agreements in the normal course of business, primarily to provide additional capacity for future growth, optimize capital, limit losses, and minimize exposure to significant risks. For each of its reinsurance agreements, the Company determines whether the agreement provides indemnification against loss or liability relating to insurance risk in accordance with applicable accounting standards. These reinsurance transactions are indemnity reinsurance agreements that do not relieve the Company from its obligations to policyholders. In the event that the reinsurer is unable to meet their obligations, the Company remains liable for the reinsured claims.

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


	Three Months Ended June 30,						Six Months Ended June 30,
(In millions)	2025			2024			2025			2024
Earned premiums:
Direct		$	3,525		$	3,352		$	6,958		$	6,834
Ceded		(91)			(66)			(179)			(135)
Assumed		36			39			72			82
Net earned premiums		$	3,470		$	3,325		$	6,851		$	6,781

Benefits and claims, excluding reserve remeasurement:
Direct		$	2,097		$	1,995		$	4,128		$	4,077
Ceded		(64)			(36)			(120)			(68)
Assumed		14			13			25			30
Benefits and claims, excluding reserve remeasurement		2,047			1,972			4,033			4,039
Reserve remeasurement (gains) losses:
Direct		(37)			(51)			(78)			(108)
Ceded		0			0			0			1

Reserve remeasurement (gains) losses		(37)			(51)			(78)			(107)
Total benefits and claims, net		$	2,010		$	1,921		$	3,955		$	3,932

The Company has recorded a deferred reinsurance gain liability related to reinsurance transactions which represents ceded reserves in excess of consideration paid, or consideration received in excess of assumed reserves. The remaining consolidated deferred reinsurance gain liability of $154 million and $146 million as of June 30, 2025 and December 31, 2024, respectively, is included in future policy benefits in the consolidated balance sheets and is being amortized into income over the expected lives of the policies.

The Company has also recorded a reinsurance recoverable for reinsurance transactions. The reinsurance recoverable, which is included in other assets in the consolidated balance sheets, is reported net of allowance for credit losses and had a remaining balance of $166 million and $163 million as of June 30, 2025 and December 31, 2024, respectively. As of June 30, 2025 and December 31, 2024, the allowance for credit losses related to the Company's reinsurance recoverable balance was $4 million. The credit allowance for the reinsurance recoverable balance is estimated using a PD / LGD method and the key credit quality indicator is the credit rating of the Company’s significant reinsurance counterparties. The Company uses external credit ratings focused on these reinsurers' financial strength and credit worthiness. As of June 30, 2025, the Company's significant reinsurance counterparties were rated A+. The Company monitors the credit ratings periodically, but not less frequently than quarterly.

Aflac Re is a Bermuda domiciled insurer that reinsures certain policies issued by ALIJ. The inter-segment amounts associated with these internal reinsurance transactions are eliminated in consolidation.

For additional information on reinsurance, see Notes 1 and 8 of the Notes to the Consolidated Financial Statements in the 2024 Annual Report.

9. NOTES PAYABLE AND LEASE OBLIGATIONS

A summary of notes payable and lease obligations follows:


(In millions)	June 30, 2025			December 31, 2024
1.125% senior sustainability notes due March 2026		$	399		$	399
2.875% senior notes due October 2026		299			299
3.60% senior notes due April 2030		994			994
6.90% senior notes due December 2039		221			221
6.45% senior notes due August 2040		255			255
4.00% senior notes due October 2046		394			394
4.750% senior notes due January 2049		542			542
Yen-denominated senior notes and subordinated debentures:
.300% senior notes due September 2025 (principal amount ¥12.4 billion)		86			79
.932% senior notes due January 2027 (principal amount ¥60.0 billion)		413			378
1.048% senior notes due March 2029 (principal amount ¥13.0 billion)		89			81
1.075% senior notes due September 2029 (principal amount ¥33.4 billion)		230			211
.500% senior notes due December 2029 (principal amount ¥12.6 billion)		87			79
.550% senior notes due March 2030 (principal amount ¥13.3 billion)		91			84
1.159% senior notes due October 2030 (principal amount ¥29.3 billion)		201			184
1.726% senior notes due October 2030 (principal amount ¥35.0 billion)		241			0
1.412% senior notes due March 2031 (principal amount ¥27.9 billion)		192			176
.633% senior notes due April 2031 (principal amount ¥30.0 billion)		207			189
.843% senior notes due December 2031 (principal amount ¥9.3 billion)		64			58
.750% senior notes due March 2032 (principal amount ¥20.7 billion)		142			130
1.990% senior notes due May 2032 (principal amount ¥18.2 billion)		126			0
1.320% senior notes due December 2032 (principal amount ¥21.1 billion)		145			133
2.003% senior notes due December 2032 (principal amount ¥23.4 billion)		161			0
.844% senior notes due April 2033 (principal amount ¥12.0 billion)		83			76
1.488% senior notes due October 2033 (principal amount ¥15.2 billion)		104			95
1.682% senior notes due March 2034 (principal amount ¥7.7 billion)		53			48
1.600% senior notes due March 2034 (principal amount ¥18.3 billion)		126			115
.934% senior notes due December 2034 (principal amount ¥9.8 billion)		67			62
.830% senior notes due March 2035 (principal amount ¥10.6 billion)		73			66
2.320% senior notes due May 2035 (principal amount ¥38.3 billion)		264			0
2.369% senior notes due June 2035 (principal amount ¥9.5 billion)		65			0
1.740% senior notes due March 2036 (principal amount ¥15.0 billion)		102			94
1.039% senior notes due April 2036 (principal amount ¥10.0 billion)		69			63
1.594% senior notes due September 2037 (principal amount ¥6.5 billion)		45			41
1.750% senior notes due October 2038 (principal amount ¥8.9 billion)		61			56
1.920% senior notes due March 2039 (principal amount ¥16.5 billion)		113			103
1.122% senior notes due December 2039 (principal amount ¥6.3 billion)		43			39
2.650% senior notes due May 2040 (principal amount ¥11.6 billion)		80			0
2.779% senior notes due June 2040 (principal amount ¥7.0 billion)		48			0
1.264% senior notes due April 2041 (principal amount ¥10.0 billion)		69			63
2.160% senior notes due March 2044 (principal amount ¥5.7 billion)		39			35
3.040% senior notes due May 2045 (principal amount ¥7.0 billion)		48			0
2.108% subordinated debentures due October 2047 (principal amount ¥60.0 billion)		410			375
1.560% senior notes due April 2051 (principal amount ¥20.0 billion)		137			125
2.144% senior notes due September 2052 (principal amount ¥12.0 billion)		82			75
1.958% subordinated bonds due December 2053 (principal amount ¥30.0 billion)		206			188
2.400% senior notes due March 2054 (principal amount ¥19.5 billion)		134			122
Yen-denominated loans:
Variable interest rate loan due August 2027 (1.05% in 2025 and .84% in 2024, principal amount ¥11.7 billion)		81			74
Variable interest rate loan due August 2029 (1.15% in 2025 and .94% in 2024, principal amount ¥25.3 billion)		174			160
Variable interest rate loan due August 2032 (1.30% in 2025 and 1.09% in 2024, principal amount ¥70.0 billion)		482			441
Finance lease obligations payable through 2030		5			5
Operating lease obligations payable through 2049		91			91
Total notes payable and lease obligations		$	8,933		$	7,498

Amounts in the table above are reported net of debt issuance costs and issuance premiums or discounts, if applicable, that are being amortized over the life of the notes.

In June 2025, the Parent Company issued four series of senior notes totaling ¥74.9 billion through a public debt offering under its U.S. shelf registration statement. The first series, which totaled ¥35.0 billion, bears interest at a fixed rate of 1.726% per annum, payable semi-annually, and will mature in October 2030. The second series, which totaled ¥23.4 billion, bears interest at a fixed rate of 2.003% per annum, payable semi-annually, and will mature in December 2032. The third series, which totaled ¥9.5 billion, bears interest at a fixed rate of 2.369% per annum, payable semi-annually, and will mature in June 2035. The fourth series, which totaled ¥7.0 billion, bears interest at a fixed rate of 2.779% per annum, payable semi-annually, and will mature in June 2040. These notes are redeemable at the Parent Company’s option at any time, in whole but not in part, upon the occurrence of certain changes affecting U.S. taxation, as specified in the indenture governing the terms of the issuance. In addition, the notes maturing in October 2030, December 2032, June 2035 and June 2040 are redeemable at the Parent Company's option, in whole or in part from time to time, on or after July 18, 2030, September 14, 2032, December 5, 2034, and December 5, 2039, respectively, at a redemption price equal to the aggregate principal amount of the applicable series to be redeemed plus accrued and unpaid interest on the principal amount to be redeemed to, but excluding, the date of redemption.

In May 2025, the Parent Company issued four series of senior notes totaling ¥75.1 billion through a private placement. The first series, which totaled ¥18.2 billion, bears interest at a fixed rate of 1.990% per annum, payable semi-annually, and will mature in May 2032. The second series, which totaled ¥38.3 billion, bears interest at a fixed rate of 2.320% per annum, payable semi-annually, and will mature in May 2035. The third series, which totaled ¥11.6 billion, bears interest at a fixed rate of 2.650% per annum, payable semi-annually, and will mature in May 2040. The fourth series, which totaled ¥7.0 billion, bears interest at a fixed rate of 3.040% per annum, payable semi-annually, and will mature in May 2045. These notes are redeemable at the Parent Company's option (i) in whole at any time or (ii) in part from time to time in an amount not less than 5% of the aggregate principal amount then outstanding of the notes to be redeemed.

Interest expense related to the Company's notes payable, which is included in interest expense in the consolidated statements of earnings, was $51 million and $49 million for the three-month periods and $100 million and $96 million for the six-month periods ended June 30, 2025 and 2024, respectively.

A summary of the Company's lines of credit as of June 30, 2025 follows:


Borrower(s)	Type	Term	Expiration Date	Capacity	Amount Outstanding	Interest Rate on Borrowed Amount	Maturity Period	Commitment Fee	Business Purpose
Aflac Incorporated and Aflac	uncommitted bilateral	364 days	December 5, 2025	$100 million	$0 million	The rate quoted by the bank and agreed upon at the time of borrowing	Up to 3 months	None	General corporate purposes
Aflac Incorporated	unsecured revolving	5 years	May 13, 2030, or the date commitments are terminated pursuant to an event of default	¥100.0 billion	¥0.0 billion	A rate per annum equal to, at the Company's option, either (a) Tokyo Interbank Market Rate (TIBOR) plus an applicable margin or (b) an alternative TIBOR based on the rate offered by the agent to major banks in yen for the applicable period plus an applicable margin	No later than May 14, 2030	.28% to .45%, depending on the Parent Company's debt ratings as of the date of determination	General corporate purposes, including a capital contingency plan for the operations of the Parent Company
Aflac Incorporated and Aflac	unsecured revolving	5 years	November 15, 2027, or the date commitments are terminated pursuant to an event of default	$1.0 billion	$0.0 billion	A rate per annum equal to, at the Company's option, either, (a) Secured Overnight Financing Rate (SOFR) for U.S. dollar-denominated borrowings or TIBOR for Japanese yen-denominated borrowings, in either case adjusted for certain costs, or (b) a base rate determined by reference to the highest of (1) the federal funds rate plus 1/2 of 1%, (2) the rate of interest for such day announced by the agent as its prime rate, or (3) SOFR for an interest period of one month plus 1.00%, in each case plus an applicable margin	No later than November 15, 2027	.08% to .20%, depending on the Parent Company's debt ratings as of the date of determination	General corporate purposes, including a capital contingency plan for the operations of the Parent Company
Aflac Incorporated and Aflac	uncommitted bilateral	None specified	None specified	$50 million	$0 million	A rate per annum equal to, at the Parent Company's option, either (a) a rate determined by reference to SOFR for the interest period relevant to such borrowing or (b) the base rate determined by reference to the highest of (1) the lender's USD short-term commercial loan rate and (2) the federal funds rate plus 1/2 of 1%	Up to 3 months	None	General corporate purposes
Aflac(1)	uncommitted revolving	364 days	December 1, 2025	$250 million	$0 million	Three-month term SOFR plus a 10 basis point SOFR adjustment and an additional 75 basis points per annum	No later than December 2, 2025	None	General corporate purposes
Aflac Incorporated(1) (Tranche 1)	uncommitted revolving	364 days	November 25, 2025	¥50.0 billion	¥0.0 billion	Three-month yen TIBOR plus 75 basis points per annum	No later than November 26, 2025	None	General corporate purposes
Aflac Incorporated(1) (Tranche 2)	uncommitted revolving	364 days	November 25, 2025	¥50.0 billion	¥0.0 billion	Three-month yen TIBOR plus 75 basis points per annum	No later than November 26, 2025	None	General corporate purposes
Aflac New York(1)	uncommitted revolving	364 days	December 1, 2025	$25 million	$0 million	Three-month term SOFR plus a 10 basis point SOFR adjustment and an additional 75 basis points per annum	No later than December 2, 2025	None	General corporate purposes
CAIC(1)	uncommitted revolving	364 days	December 1, 2025	$15 million	$0 million	Three-month term SOFR plus a 10 basis point SOFR adjustment and an additional 75 basis points per annum	No later than December 2, 2025	None	General corporate purposes

(1) Intercompany credit agreement

(continued)


Borrower(s)	Type	Term	Expiration Date	Capacity	Amount Outstanding	Interest Rate on Borrowed Amount	Maturity Period	Commitment Fee	Business Purpose
TOIC(1)	uncommitted revolving	364 days	December 1, 2025	$0.3 million	$0 million	Three-month term SOFR plus a 10 basis point SOFR adjustment and an additional 75 basis points per annum	No later than December 2, 2025	None	General corporate purposes
Aflac GI Holdings LLC(1)	uncommitted revolving	364 days	December 1, 2025	$30 million	$0 million	Three-month term SOFR plus a 10 basis point SOFR adjustment and an additional 75 basis points per annum	No later than December 2, 2025	None	General corporate purposes
Aflac Incorporated(1)	uncommitted revolving	364 days	December 1, 2025	$400 million	$0 million	Three-month term SOFR plus a 10 basis point SOFR adjustment and an additional 97 basis points per annum for U.S. dollar-denominated borrowings or three-month TIBOR plus 97 basis points per annum for Japanese yen-denominated borrowings	No later than December 2, 2025	None	General corporate purposes
Aflac Re(1)	uncommitted revolving	364 days	December 1, 2025	$400 million	$0 million	Three-month term SOFR plus a 10 basis point SOFR adjustment and an additional 68 basis points per annum for U.S. dollar-denominated borrowings or three-month TIBOR plus 68 basis points per annum for Japanese yen-denominated borrowings	No later than December 2, 2025	None	General corporate purposes
Aflac Asset Management LLC(1)	uncommitted revolving	364 days	December 1, 2025	$25 million	$0 million	Three-month term SOFR plus a 10 basis point SOFR adjustment and an additional 68 basis points per annum for U.S. dollar-denominated borrowings or three-month TIBOR plus 68 basis points per annum for Japanese yen-denominated borrowings	No later than December 2, 2025	None	General corporate purposes
Aflac Global Ventures LLC(1)	uncommitted revolving	364 days	December 1, 2025	$2 million	$0 million	Three-month term SOFR plus a 10 basis point SOFR adjustment and an additional 68 basis points per annum for U.S. dollar-denominated borrowings or three-month TIBOR plus 68 basis points per annum for Japanese yen-denominated borrowings	No later than December 2, 2025	None	General corporate purposes

(1) Intercompany credit agreement

The Company was in compliance with all of the covenants of its notes payable and lines of credit at June 30, 2025. No events of default or defaults occurred during the six-month period ended June 30, 2025.

For additional information, see Notes 4 and 9 of the Notes to the Consolidated Financial Statements in the 2024 Annual Report.

10. SHAREHOLDERS’ EQUITY

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


(In thousands of shares)	2025	2024
Common stock - issued:
Balance, beginning of period	1,356,763	1,355,398
Exercise of stock options and issuance of restricted shares	1,027	1,220
Balance, end of period	1,357,790	1,356,618
Treasury stock:
Balance, beginning of period	806,799	776,919
Purchases of treasury stock:
Share repurchase program	16,413	18,564
Other	402	480
Dispositions of treasury stock:
Shares issued to AFL Stock Plan	(366)	(430)
Exercise of stock options	(41)	(98)
Other	(226)	(186)
Balance, end of period	822,981	795,249
Shares outstanding, end of period	534,809	561,369

Share Repurchase Program: During the first six months of 2025, the Company repurchased 16.4 million shares of its common stock for $1.7 billion as part of its share repurchase program. During the first six months of 2024, the Company repurchased 18.6 million shares of its common stock for $1.6 billion as part of its share repurchase program. As of June 30, 2025, a remaining balance of 30.9 million shares of the Company's common stock was available for purchase under share repurchase authorizations by its board of directors.

EPS: Outstanding share-based awards are excluded from the calculation of weighted-average shares used in the computation of basic earnings per share (EPS), but are included in the calculation of weighted-average shares used in the computation of diluted EPS. Anti-dilutive share-based awards are excluded from the computation of diluted EPS.

The following table presents the approximate number of share-based awards to purchase shares, on a weighted-average basis, that were considered to be anti-dilutive and were excluded from the calculation of diluted EPS for the following periods.


	Three Months Ended June 30,				Six Months Ended June 30,
(In thousands)	2025		2024		2025		2024
Anti-dilutive share-based awards		2		0		1		35

Reclassifications from Accumulated Other Comprehensive Income

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

Changes in Accumulated Other Comprehensive Income


Three Months Ended June 30, 2025
(In millions)	Unrealized Foreign Currency Translation Gains (Losses)			Unrealized Gains (Losses) on Fixed Maturity Securities			Unrealized Gains (Losses) on Derivatives			Effect of Changes in Discount Rate Assumptions			Pension Liability Adjustment			Total
Balance at March 31, 2025		$	(4,549)		$	(1,233)		$	(18)		$	3,899		$	42		$	(1,859)
Other comprehensive income (loss) before reclassification		267			(606)			0			1,695			(1)			1,355
Amounts reclassified from accumulated other comprehensive income (loss)		0			11			1			0			1			13
Net current-period other comprehensive income (loss)		267			(595)			1			1,695			0			1,368
Balance at June 30, 2025		$	(4,282)		$	(1,828)		$	(17)		$	5,594		$	42		$	(491)

All amounts in the table above are net of tax.


Three Months Ended June 30, 2024
(In millions)	Unrealized Foreign Currency Translation Gains (Losses)			Unrealized Gains (Losses) on Fixed Maturity Securities			Unrealized Gains (Losses) on Derivatives			Effect of Changes in Discount Rate Assumptions			Pension Liability Adjustment			Total
Balance at March 31, 2024		$	(4,666)		$	1,092		$	(26)		$	(1,495)		$	(7)		$	(5,102)
Other comprehensive income (loss) before reclassification		(425)			(652)			3			2,920			3			1,849
Amounts reclassified from accumulated other comprehensive income (loss)		0			(39)			1			0			(1)			(39)
Net current-period other comprehensive income (loss)		(425)			(691)			4			2,920			2			1,810
Balance at June 30, 2024		$	(5,091)		$	401		$	(22)		$	1,425		$	(5)		$	(3,292)

All amounts in the table above are net of tax.


Six Months Ended June 30, 2025
(In millions)	Unrealized Foreign Currency Translation Gains (Losses)			Unrealized Gains (Losses) on Fixed Maturity Securities			Unrealized Gains (Losses) on Derivatives			Effect of Changes in Discount Rate Assumptions			Pension Liability Adjustment			Total
Balance at December 31, 2024		$	(4,998)		$	24		$	(20)		$	2,006		$	10		$	(2,978)
Other comprehensive income (loss) before reclassification		716			(1,831)			1			3,588			32			2,506
Amounts reclassified from accumulated other comprehensive income (loss)		0			(21)			2			0			0			(19)
Net current-period other comprehensive income (loss)		716			(1,852)			3			3,588			32			2,487
Balance at June 30, 2025		$	(4,282)		$	(1,828)		$	(17)		$	5,594		$	42		$	(491)

All amounts in the table above are net of tax.


Six Months Ended June 30, 2024
(In millions)	Unrealized Foreign Currency Translation Gains (Losses)			Unrealized Gains (Losses) on Fixed Maturity Securities			Unrealized Gains (Losses) on Derivatives			Effect of Changes in Discount Rate Assumptions			Pension Liability Adjustment			Total
Balance at December 31, 2023		$	(4,069)		$	1,139		$	(22)		$	(2,560)		$	(8)		$	(5,520)
Other comprehensive income (loss) before reclassification		(1,022)			(566)			(2)			3,985			4			2,399
Amounts reclassified from accumulated other comprehensive income (loss)		0			(172)			2			0			(1)			(171)
Net current-period other comprehensive income (loss)		(1,022)			(738)			0			3,985			3			2,228
Balance at June 30, 2024		$	(5,091)		$	401		$	(22)		$	1,425		$	(5)		$	(3,292)

All amounts in the table above are net of tax.

The tables below summarize the amounts reclassified from each component of accumulated other comprehensive income into net earnings for the following periods.

Reclassifications Out of Accumulated Other Comprehensive Income


(In millions)	Three Months Ended June 30, 2025
Details about Accumulated Other Comprehensive Income Components	Amount Reclassified from Accumulated Other Comprehensive Income			Affected Line Item in the Statements of Earnings
Unrealized gains (losses) on available-for-sale securities		$	(14)	Net investment gains (losses)
		3		Tax (expense) or benefit(1)
		$	(11)	Net of tax
Unrealized gains (losses) on derivatives		$	(1)	Net investment gains (losses)
		0		Tax (expense) or benefit(1)
		$	(1)	Net of tax
Amortization of defined benefit pension items:
Actuarial gains (losses)		$	(1)	Acquisition and operating expenses(2)
Prior service (cost) credit		0		Acquisition and operating expenses(2)
		0		Tax (expense) or benefit(1)
		$	(1)	Net of tax
Total reclassifications for the period		$	(13)	Net of tax

(1) Based on 21% tax rate

(2) These accumulated other comprehensive income components are included in the computation of net periodic benefit cost (see Note 12 for additional details).


(In millions)	Three Months Ended June 30, 2024
Details about Accumulated Other Comprehensive Income Components	Amount Reclassified from Accumulated Other Comprehensive Income			Affected Line Item in the Statements of Earnings
Unrealized gains (losses) on available-for-sale securities		$	50	Net investment gains (losses)
		(11)		Tax (expense) or benefit(1)
		$	39	Net of tax
Unrealized gains (losses) on derivatives		$	(1)	Net investment gains (losses)
		0		Tax (expense) or benefit(1)
		$	(1)	Net of tax
Amortization of defined benefit pension items:
Actuarial gains (losses)		$	1	Acquisition and operating expenses(2)
Prior service (cost) credit		0		Acquisition and operating expenses(2)
		0		Tax (expense) or benefit(1)
		$	1	Net of tax
Total reclassifications for the period		$	39	Net of tax

(1) Based on 21% tax rate

(2) These accumulated other comprehensive income components are included in the computation of net periodic benefit cost (see Note 12 for additional details).


(In millions)	Six Months Ended June 30, 2025
Details about Accumulated Other Comprehensive Income Components	Amount Reclassified from Accumulated Other Comprehensive Income			Affected Line Item in the Statements of Earnings
Unrealized gains (losses) on available-for-sale securities		$	26	Net investment gains (losses)
		(5)		Tax (expense) or benefit(1)
		$	21	Net of tax
Unrealized gains (losses) on derivatives		$	(2)	Net investment gains (losses)


		0		Tax (expense) or benefit(1)
		$	(2)	Net of tax
Amortization of defined benefit pension items:
Actuarial gains (losses)		$	0	Acquisition and operating expenses(2)
Prior service (cost) credit		0		Acquisition and operating expenses(2)
		0		Tax (expense) or benefit(1)
		$	0	Net of tax
Total reclassifications for the period		$	19	Net of tax

(1) Based on 21% tax rate

(2) These accumulated other comprehensive income components are included in the computation of net periodic benefit cost (see Note 12 for additional details).


(In millions)	Six Months Ended June 30, 2024
Details about Accumulated Other Comprehensive Income Components	Amount Reclassified from Accumulated Other Comprehensive Income			Affected Line Item in the Statements of Earnings
Unrealized gains (losses) on available-for-sale securities		$	218	Net investment gains (losses)
		(46)		Tax (expense) or benefit(1)
		$	172	Net of tax
Unrealized gains (losses) on derivatives		$	(2)	Net investment gains (losses)
		0		Tax (expense) or benefit(1)
		$	(2)	Net of tax
Amortization of defined benefit pension items:
Actuarial gains (losses)		$	1	Acquisition and operating expenses(2)
Prior service (cost) credit		0		Acquisition and operating expenses(2)
		0		Tax (expense) or benefit(1)
		$	1	Net of tax
Total reclassifications for the period		$	171	Net of tax

(1) Based on 21% tax rate

(2) These accumulated other comprehensive income components are included in the computation of net periodic benefit cost (see Note 12 for additional details).

11. SHARE-BASED COMPENSATION

As of June 30, 2025, the Company has outstanding share-based awards under the Aflac Incorporated Long-Term Incentive Plan (As Amended and Restated February 14, 2017), as further amended on August 9, 2022 (the Plan). Share-based awards are designed to reward employees for their long-term contributions to the Company and provide incentives for them to remain with the Company. The number and frequency of share-based awards are based on competitive practices, operating results of the Company, government regulations, and other factors.

The Plan allows for a maximum number of shares issuable over its term of 75 million shares including 38 million shares that may be awarded in respect of awards other than options or stock appreciation rights. If any awards granted under the

Plan are forfeited or are terminated before being exercised or settled for any reason other than tax forfeiture, then the shares underlying the awards will again be available under the Plan.

The Plan allows awards to Company employees for incentive stock options (ISOs), non-qualifying stock options (NQSOs), stock appreciation rights, restricted stock and restricted stock units. Non-employee directors are eligible for grants of NQSOs, restricted stock, and stock appreciation rights. As of June 30, 2025, approximately 32.6 million shares were available for future grants under this plan.

The ISOs, NQSOs and stock appreciation rights granted under the amended Plan have an exercise price of at least the fair market value of the underlying stock on the grant date and have an expiration date no later than 10 years from the grant date. The share-based awards vest upon time-based conditions or time and performance-based conditions. Time-based vesting generally occurs after three years. Performance-based vesting conditions generally include the attainment of goals related to the Company's financial performance. As of June 30, 2025, the only performance-based awards issued and outstanding were restricted stock awards and units. The Compensation Committee of the Board of Directors has the discretion to determine vesting schedules.

Share-based awards granted to U.S.-based grantees are settled with authorized but unissued Company stock, while those issued to Japan-based grantees are settled with treasury shares.

The following table provides information on stock options outstanding and exercisable at June 30, 2025.


	Stock Option Shares (in thousands)		Weighted-Average Remaining Term (in years)		Aggregate Intrinsic Value (in millions)			Weighted-Average Exercise Price Per Share
Outstanding		447		1.5		$	31		$	34.98
Exercisable		447		1.5		31			34.98

The Company received cash from the exercise of stock options in the amount of $5 million and $9 million during the first six months of 2025 and 2024, respectively. The tax benefit realized as a result of stock option exercises and restricted stock releases was $30 million in the first six months of 2025, compared with $27 million in the first six months of 2024.

As of June 30, 2025, total compensation cost not yet recognized in the Company's consolidated financial statements related to restricted stock awards and units was $44 million, of which $22 million (1.6 million shares) was related to restricted stock awards and units with a performance-based vesting condition. The Company expects to recognize these amounts over a weighted-average period of approximately 1.8 years. There are no other contractual terms covering restricted stock awards once vested.

The following table summarizes restricted stock activity during the six-month period ended June 30, 2025.


(In thousands of shares)	Shares	Weighted-Average Grant-Date Fair Value Per Share
Restricted stock at December 31, 2024	2,099		$	73.65
Granted in 2025	1,098		104.46
Canceled in 2025	(70)		78.08
Vested in 2025	(1,270)		68.65
Restricted stock at June 30, 2025	1,857		$	85.81

In February 2025, the Company granted 284 thousand performance-based stock awards and units, which are contingent on the achievement of the Company's financial performance metrics and its market-based conditions. On the date of grant, the Company estimated the fair value of restricted stock awards and units with market-based conditions using a Monte Carlo simulation model. The model discounts the value of the stock at the assumed vesting date based on the risk-free interest rate. Based on estimates of actual performance versus the vesting thresholds, the calculated fair value percentage payout estimate will be updated each quarter.

The Company uses third-party analyses to assist in developing the assumptions used in, as well as calibrating, a Monte Carlo simulation model. The Company is responsible for determining the assumptions used in estimating the fair value of its share-based payment awards.

For additional information on the Company's long-term share-based compensation plans and the types of share-based awards, see Note 12 of the Notes to the Consolidated Financial Statements included in the 2024 Annual Report.

12. BENEFIT PLANS

The Company has funded defined benefit plans in Japan and the U.S.; however, future benefits under the U.S. plan were frozen effective January 1, 2024. In January 2025, the Company purchased a nonparticipating single premium group annuity contract from an external insurer to settle its obligations under the U.S. defined pension plan and paid to the insurer the related annuity premium. As a result, the Company recognized a settlement charge of $55 million in the first quarter of 2025. Effective April 1, 2025, the external insurer began making annuity payments to plan participants.

The Company also maintains non-qualified, unfunded supplemental retirement plans that provide defined pension benefits in excess of limits imposed by federal tax law for certain Japanese, U.S. and former employees. However, future benefits under the Company's Supplemental Executive Retirement Plan and Retirement Plan for Senior Officers were frozen effective January 1, 2024, provided that actively employed participants may continue to accrue service toward eligibility for early retirement benefits or delayed early retirement benefits.

The Company provides certain health care benefits for eligible U.S. retired employees, their beneficiaries and covered dependents (other postretirement benefits). The health care plan is contributory and unfunded. For certain employees and former employees, additional coverage is provided for all medical expenses for life.

Pension and other postretirement benefit expenses are included in acquisition and operating expenses in the consolidated statements of earnings, which includes other components of net periodic pension cost and postretirement costs (other than service costs) of $3 million and $2 million for the three-month periods and $60 million and $4 million for the six-month periods ended June 30, 2025 and 2024, respectively. Total net periodic benefit cost includes the following components:


	Three Months Ended June 30,
	Pension Benefits												Other
	Japan						U.S.						Postretirement Benefits
(In millions)	2025			2024			2025			2024			2025			2024
Components of net periodic benefit cost:
Service cost		$	3		$	3		$	0		$	0		$	0		$	0
Interest cost		2			2			2			10			0			0
Expected return on plan assets		(2)			(1)			0			(8)			0			0
Amortization of net actuarial (gain) loss		0			0			0			(1)			1			0


Settlement (gain) loss		0			0			0			0			0			0
Net periodic benefit cost (credit)		$	3		$	4		$	2		$	1		$	1		$	0


	Six Months Ended June 30,
	Pension Benefits												Other
	Japan						U.S.						Postretirement Benefits
(In millions)	2025			2024			2025			2024			2025			2024
Components of net periodic benefit cost:
Service cost		$	6		$	7		$	0		$	0		$	0		$	0
Interest cost		4			4			10			19			0			0
Expected return on plan assets		(4)			(3)			(5)			(15)			0			0
Amortization of net actuarial (gain) loss		0			0			(1)			(1)			1			0


Settlement (gain) loss		0			0			55			0			0			0
Net periodic benefit cost (credit)		$	6		$	8		$	59		$	3		$	1		$	0

During the six months ended June 30, 2025, Aflac Japan contributed approximately $12 million (using the weighted-average yen/dollar exchange rate for the six-month period ended June 30, 2025) to the Japanese funded defined benefit plan, and Aflac U.S. did not make a contribution to the U.S. funded defined benefit plan.

For additional information regarding the Company's Japanese and U.S. benefit plans, see Note 14 of the Notes to the Consolidated Financial Statements in the 2024 Annual Report.

13. COMMITMENTS AND CONTINGENT LIABILITIES

The Company is a defendant in various lawsuits and receives various regulatory inquiries considered to be in the normal course of business. Members of the Company's senior legal and financial management teams review litigation and regulatory inquiries on a quarterly and annual basis and the Company updates the related estimates, accruals, and disclosures, if any, based on such reviews. For litigation and regulatory matters where it is probable that a loss has been incurred, and the amount of that loss can be reasonably estimated, the Company establishes accruals for loss contingencies. Where a loss may be reasonably possible but not probable, or is probable but not reasonably estimable, no accrual is recorded. The final results of any litigation or regulatory inquiries cannot be predicted with certainty. Although some of this litigation is pending in states where large punitive damages, bearing little relation to the actual damages sustained by plaintiffs, have been awarded in recent years, the Company believes the outcome of pending litigation will not have a material adverse effect on its financial position, results of operations, or cash flows.

Cyber Incident

On June 12, 2025, the Company identified an incident involving unauthorized access to its network in the U.S. The Company promptly initiated its cybersecurity incident response protocols and believes that it contained the intrusion within hours. The Company’s business remains operational and its systems were not affected by ransomware. The Company continues to serve its policyholders as it responds to this incident and can underwrite policies, review claims, and otherwise service customers as usual.

The Company has been conducting a review of potentially impacted individuals and data. The Company is still in the process of validating the extent and nature of the files that were involved and the Company believes that the potential amount of loss cannot be reasonably estimated at this time.

Outsourcing Agreements and Other Commitments

In May 2025, the Company renewed an outsourcing agreement with an information technology and data services company to provide application maintenance and development services for Aflac Japan. The agreement has a remaining term of three years with an aggregate remaining cost of ¥10.9 billion ($75 million using the June 30, 2025 exchange rate).

In February 2025, the Company renewed an outsourcing agreement with an information technology and data services company to provide application maintenance and development services for Aflac Japan. The agreement has a remaining term of three years with an aggregate remaining cost of ¥9.4 billion ($65 million using the June 30, 2025 exchange rate).

See Note 3 for details on certain investment commitments.

Guaranty Fund Assessments

The U.S. insurance industry has a policyholder protection system that is monitored and regulated by state insurance departments. These life and health insurance guaranty associations are state entities (in all 50 states as well as Puerto Rico and the District of Columbia) created to protect policyholders of an insolvent insurance company. All insurance companies (with limited exceptions) licensed to sell life or health insurance in a state must be members of that state’s guaranty association. Under state guaranty association laws, certain insurance companies can be assessed (up to prescribed limits) for certain obligations to the policyholders and claimants of impaired or insolvent insurance companies that write the same line or similar lines of business.

Guaranty fund assessments for the three- and six-month periods ended June 30, 2025 and 2024 were immaterial.

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