POLICY LIABILITIES

6 Months Ended

Jun. 30, 2025

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.