Aflac (AFL) 10-Q 7 Aug 09 2009 Q2 Quarterly report Financial data

Consolidated Statements of Earn

Consolidated Statements of Earnings (USD $)
In Millions, except Share data in Thousands	3 Months Ended Jun. 30, 2009	3 Months Ended Jun. 30, 2008	6 Months Ended Jun. 30, 2009	6 Months Ended Jun. 30, 2008
Revenues:
Premiums, principally supplemental health insurance	$3,995	$3,684	$8,110	$7,319
Net investment income	668	637	1,356	1,264
Realized investment gains (losses):
Total other-than-temporary impairment losses	(388)	0	(626)	0
Other-than-temporary impairment losses recognized in other comprehensive income	3	0	7	0
Other-than-temporary impairment losses realized	(385)	0	(619)	0
Sales and redemptions	2	(1)	227	(8)
Total realized investment gains (losses)	(383)	(1)	(392)	(8)
Other income	33	16	57	28
Total revenues	4,313	4,336	9,131	8,603
Benefits and expenses:
Benefits and claims	2,723	2,575	5,534	5,113
Acquisition and operating expenses:
Amortization of deferred policy acquisition costs	225	184	475	376
Insurance commissions	381	362	770	720
Insurance expenses	462	432	919	845
Interest expense	14	7	21	14
Other operating expenses	35	36	68	69
Total acquisition and operating expenses	1,117	1,021	2,253	2,024
Total benefits and expenses	3,840	3,596	7,787	7,137
Earnings before income taxes	473	740	1,344	1,466
Income taxes	159	257	462	509
Net earnings	$314	$483	$882	$957
Net earnings per share:
Basic	0.67	1.02	1.89	2.01
Diluted	0.67	$1	1.89	1.98
Weighted-average outstanding common shares used in computing earnings per share (In thousands):
Basic	466,401	474,383	466,249	476,261
Diluted	468,285	480,828	467,709	482,623
Cash dividends per share	0.28	0.24	0.56	0.48

Consolidated Balance Sheets

Consolidated Balance Sheets (USD $)
In Millions	Jun. 30, 2009	Dec. 31, 2008
Assets:
Securities available for sale, at fair value, fixed maturities (amortized cost $35,344 in 2009 and $36,034 in 2008)	$32,982	$35,012
Securities available for sale, at fair value, perpetual securities (amortized cost $8,310 in 2009 and $9,074 in 2008)	7,226	8,047
Securities available for sale, at fair value, equity securities (cost $22 in 2009 and $24 in 2008)	26	27
Securities held to maturity, at amortized cost, fixed maturities (fair value $22,064 in 2009 and $23,084 in 2008)	23,559	24,436
Other investments	90	87
Cash and cash equivalents	1,689	941
Total investments and cash	65,572	68,550
Receivables, primarily premiums	840	920
Accrued investment income	627	650
Deferred policy acquisition costs	8,089	8,237
Property and equipment, at cost less accumulated depreciation	579	597
Other	334	377
Total assets	76,041	79,331
Liabilities:
Future policy benefits	57,788	59,310
Unpaid policy claims	3,128	3,118
Unearned premiums	847	874
Other policyholders' funds	3,032	2,917
Total policy liabilities	64,795	66,219
Notes payable	1,992	1,721
Income taxes	880	1,201
Payables for return of cash collateral on loaned securities	593	1,733
Other	1,431	1,818
Total liabilities	69,691	72,692
Shareholders' equity:
Common stock of $.10 par value. In thousands: authorized 1,900,000 shares in 2009 and 2008; issued 660,487 shares in 2009 and 660,035 shares in 2008	66	66
Additional paid-in capital	1,201	1,184
Retained earnings	12,058	11,306
Accumulated other comprehensive income:
Unrealized foreign currency translation gains	591	750
Unrealized gains (losses) on investment securities:
Unrealized gains (losses) on securities not other-than-temporarily impaired	(2,121)	(1,211)
Unrealized gains (losses) on other-than-temporarily impaired securities	(5)	0
Total unrealized gains (losses) on investment securities	(2,126)	(1,211)
Pension liability adjustment	(117)	(121)
Treasury stock, at average cost	(5,323)	(5,335)
Total shareholders' equity	6,350	6,639
Total liabilities and shareholders' equity	$76,041	$79,331

Consolidated Balance Sheets (Pa

Consolidated Balance Sheets (Parenthetical) (USD $)
In Millions, except Share data in Thousands	Jun. 30, 2009	Dec. 31, 2008
Consolidated Balance Sheets (Parenthetical)
Securities available for sale, at amortized cost, fixed maturities	$35,344	$36,034
Securities available for sale, at amortized cost, perpetual securities	8,310	9,074
Securities available for sale, at cost, equity securities	22	24
Securities held to maturity, at fair value, fixed maturities	$22,064	$23,084
Common stock, par value	0.1	0.1
Common stock, shares authorized	1,900,000	1,900,000
Common stock, shares issued	660,487	660,035

Consolidated Statements of Shar

Consolidated Statements of Shareholders' Equity (USD $)
In Millions	Additional paid-in capital	Common stock	Retained earnings	Accumulated other comprehensive income	Treasury stock (TreasuryStockMember)	Total
Total shareholders' equity at Dec. 31, 2007	$1,054	$66	$10,637	$934	($3,896)
Exercise of stock options	33	0
Share-based compensation	18
Gain on treasury stock reissued	27
Net earnings			957			957
Dividends to shareholders			(228)
Change in unrealized foreign currency translation gains (losses) during period, net of income taxes				163
Change in unrealized gains (losses) on investment securities not other-than-temporarily impaired, net of income taxes				(1,088)
Change in unrealized gains (losses) on other-than-temporarily impaired investment securities, net of income taxes				0
Total change in unrealized gains (losses) on investment securities during period, net of income taxes				(1,088)
Pension liability adjustment during period, net of income taxes				0
Purchases of treasury stock					(805)
Cost of shares issued					27
Total shareholders' equity at Jun. 30, 2008	1,132	66	11,366	9	(4,674)	7,899
Total shareholders' equity at Dec. 31, 2008	1,184	66	11,306	(582)	(5,335)	6,639
Exercise of stock options	1	0
Share-based compensation	16
Gain on treasury stock reissued	0
Net earnings			882			882
Dividends to shareholders			(130)
Change in unrealized foreign currency translation gains (losses) during period, net of income taxes				(159)
Change in unrealized gains (losses) on investment securities not other-than-temporarily impaired, net of income taxes				(910)
Change in unrealized gains (losses) on other-than-temporarily impaired investment securities, net of income taxes				(5)
Total change in unrealized gains (losses) on investment securities during period, net of income taxes				(915)
Pension liability adjustment during period, net of income taxes				4
Purchases of treasury stock					(2)
Cost of shares issued					14
Total shareholders' equity at Jun. 30, 2009	$1,201	$66	$12,058	($1,652)	($5,323)	$6,350

Consolidated Statements of Cash

Consolidated Statements of Cash Flows (USD $)
In Millions	6 Months Ended Jun. 30, 2009	6 Months Ended Jun. 30, 2008
Cash flows from operating activities:
Net earnings	$882	$957
Adjustments to reconcile net earnings to net cash provided by operating activities:
Change in receivables and advance premiums	125	14
Increase in deferred policy acquisition costs	(146)	(231)
Increase in policy liabilities	1,421	1,612
Change in income tax liabilities	217	108
Realized investment (gains) losses	392	8
Other, net	(17)	(14)
Net cash provided by operating activities	2,874	2,454
Cash flows from investing activities:
Proceeds from securities available for sale, fixed maturities sold	3,713	426
Proceeds from securities available for sale, fixed maturities matured or called	1,249	858
Proceeds from securities available for sale, perpetual securities sold	102	127
Proceeds from securities held to maturity, fixed maturities matured or called	209	0
Cost of securities available for sale, fixed maturities acquired	(4,565)	(2,385)
Cost of securities held to maturity, fixed maturities acquired	(1,906)	(1,510)
Cash received as collateral on loaned securities, net	(1,063)	701
Other, net	(47)	(31)
Net cash used by investing activities	(2,308)	(1,814)
Cash flows from financing activities:
Purchases of treasury stock	(2)	(805)
Proceeds from borrowings	844	0
Principal payments under debt obligations	(548)	(2)
Dividends paid to shareholders	(262)	(218)
Change in investment-type contracts, net	169	133
Treasury stock reissued	4	20
Other, net	(2)	31
Net cash provided (used) by financing activities	203	(841)
Effect of exchange rate changes on cash and cash equivalents	(21)	25
Net change in cash and cash equivalents	748	(176)
Cash and cash equivalents, beginning of period	941	1,563
Cash and cash equivalents, end of period	1,689	1,387
Supplemental disclosures of cash flow information:
Income taxes paid	304	362
Interest paid	15	13
Impairment losses included in realized investment gains (losses)	619	0
Noncash financing activities:
Capitalized lease obligations	1	2
Treasury stock issued for:
Associate stock bonus	6	23
Shareholder dividend reinvestment	0	10
Share-based compensation grants	$4	$2

Consolidated Statements of Comp

Consolidated Statements of Comprehensive Income (USD $)
In Millions	3 Months Ended Jun. 30, 2009	3 Months Ended Jun. 30, 2008	6 Months Ended Jun. 30, 2009	6 Months Ended Jun. 30, 2008
Net earnings	$314	$483	$882	$957
Other comprehensive income (loss) before income taxes:
Change in unrealized foreign currency translation gains (losses) during period	58	(43)	(51)	34
Unrealized holding gains (losses) on investment securities during period	945	(710)	(1,818)	(1,667)
Reclassification adjustment for realized (gains) losses on investment securities included in net earnings	384	1	396	8
Unrealized holding gains (losses) on derivatives during period	(1)	2	0	2
Pension liability adjustment during period	0	3	6	(1)
Total other comprehensive income (loss) before income taxes	1,386	(747)	(1,467)	(1,624)
Income tax expense (benefit) related to items of other comprehensive income (loss)	431	(129)	(397)	(699)
Other comprehensive income (loss), net of income taxes	955	(618)	(1,070)	(925)
Total comprehensive income (loss)	$1,269	($135)	($188)	$32

Summary of Significant Accounti

Summary of Significant Accounting Policies
	6 Months Ended Jun. 30, 2009 USD / shares
Summary of Significant Accounting Policies
Summary of Significant Accounting Policies	1.SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Description of Business: Aflac Incorporated (the Parent Company) and its subsidiaries (the Company) primarily sell supplemental health and life insurance in the United States and Japan. The Companys insurance business is marketed and administered through American Family Life Assurance Company of Columbus (Aflac), which operates in the United States (Aflac U.S.) and as a branch in Japan (Aflac Japan). Most of Aflacs policies are individually underwritten and marketed through independent agents. Our insurance operations in the United States and our branch in Japan service the two markets for our insurance business. Aflac Japan accounted for 77% and 72% of the Companys total revenues in the six-month periods ended June 30, 2009 and 2008, respectively, and comprised 86% and 87% of total assets at June 30, 2009, and December 31, 2008, respectively. Basis of Presentation We prepare our financial statements in accordance with U.S. generally accepted accounting principles (GAAP). These principles are established primarily by the Financial Accounting Standards Board (FASB). The preparation of financial statements in conformity with GAAP requires us to make estimates when recording transactions resulting from business operations based on currently available information. The most significant items on our balance sheet that involve a greater degree of accounting estimates and actuarial determinations subject to changes in the future are the valuation of investments, deferred policy acquisition costs, and liabilities for future policy benefits and unpaid policy claims. These accounting estimates and actuarial determinations are sensitive to market conditions, investment yields, mortality, morbidity, commission and other acquisition expenses, and terminations by policyholders. As additional information becomes available, or actual amounts are determinable, the recorded estimates will be revised and reflected in operating results. Although some variability is inherent in these estimates, we believe the amounts provided are adequate. The consolidated financial statements include the accounts of the Parent Company, its majority-owned 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, 2009, and December 31, 2008, and the consolidated statements of earnings and comprehensive income for the three- and six-month periods ended June 30, 2009, and 2008, and consolidated statements of shareholders' equity and cash flows for the six-month periods ended June 30, 2009, and 2008. 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 our annual re

Business Segment Information

Business Segment Information
	6 Months Ended Jun. 30, 2009 USD / shares
Business Segment Information
Business Segment Information	2.BUSINESS SEGMENT INFORMATION The Company consists of two reportable insurance business segments: Aflac Japan and Aflac U.S., both of which sell individual supplemental health and life insurance. Operating business segments that are not individually reportable are included in the "Other business segments" category. We do not allocate corporate overhead expenses to business segments. We evaluate and manage our business segments using a financial performance measure called pretax operating earnings. Our definition of operating earnings excludes the following items from net earnings on an after-tax basis: realized investment gains/losses, the impact from SFAS 133, and nonrecurring items. We then exclude income taxes related to operations to arrive at pretax operating earnings. Information regarding operations by segment follows: Three Months Ended June 30, Six Months Ended June 30, (In millions) 2009 2008 2009 2008 Revenues: Aflac Japan: Earned premiums $2,901 $2,620 $5,913 $5,205 Net investment income 544 508 1,105 1,004 Other income 15 14 22 13 Total Aflac Japan 3,460 3,142 7,040 6,222 Aflac U.S.: Earned premiums 1,094 1,064 2,197 2,114 Net investment income 127 125 252 248 Other income 2 2 4 5 Total Aflac U.S. 1,223 1,191 2,453 2,367 Other business segments 14 10 24 20 Total business segment revenues 4,697 4,343 9,517 8,609 Realized investment gains (losses) (383) (1) (392) (8) Corporate 34 14 69 44 Intercompany eliminations (35) (20) (63) (42) Total revenues $4,313 $4,336 $9,131 $8,603 Three Months Ended June 30, Six Months Ended June 30, (In millions) 2009 2008 2009 2008 Pretax earnings: Aflac Japan $ 679 $573 $1,361 $1,127 Aflac U.S. 198 190 402 380 Other business segments - 2 - (1) Total business segments 877 765 1,763 1,506 Interest expense, noninsurance operations (17) (6) (24) (13) Corporate and eliminations (6) (13) (16) (19) Pretax operating earnings 854 746 1,723 1,474 Realized investment gains (losses) (383) (1) (392) (8) Impact from SFAS 133 1 (5) (4) -

Investments

Investments
	6 Months Ended Jun. 30, 2009 USD / shares
Investments
Investments	3. INVESTMENTS The amortized cost for our investments in debt and perpetual securities, the cost for equity securities and the fair values of these investments are shown in the following tables. June 30, 2009 Cost or Gross Gross Amortized Unrealized Unrealized Fair (In millions) Cost Gains Losses Value Securities available for sale, carried at fair value: Fixed maturities: Yen-denominated: Japan government and agencies $10,191 $ 446 $ 156 $10,481 Mortgage- and asset-backed securities 449 4 - 453 Public utilities 2,191 133 81 2,243 Collateralized debt obligations 322 59 34 347 Sovereign and supranational 803 27 96 734 Banks/financial institutions 5,154 92 1,159 4,087 Other corporate 6,318 76 855 5,539 Total yen-denominated 25,428 837 2,381 23,884 Dollar-denominated: U.S. government and agencies 220 4 2 222 Municipalities 206 5 17 194 Mortgage- and asset-backed securities* 640 6 146 500 Collateralized debt obligations 29 4 4 29 Public utilities 1,471 64 124 1,411 Sovereign and supranational 351 26 16 361 Banks/financial institutions 2,673 32 546 2,159 Other corporate 4,326 208 312 4,222 Total dollar-denominated 9,916 349 1,167 9,098 Total fixed maturities 35,344 1,186 3,548 32,982 Perpetual securities: Yen-denominated: Banks/financial institutions 7,725 253 1,282 6,696 Other corporate 279 14 - 293 Dollar-denominated: Banks/financial institutions 306 12 81 237 Total perpetual securities 8,310 279 1,363 7,226 Equity securities 22 5 1 26 Total securities available for sale $43,676 $1,470 $4,912 $40,234 *Includes $7 million of other-than-temporary non-credit-related losses June 30, 2009 Cost or Gross Gross Amortized Unrealized Unrealized Fair (In millions) Cost Gains Losses Value Securities held to maturity, carried at amortized cost: Fixed maturities:

Fair Value Measurements and Fin

Fair Value Measurements and Financial Instruments
	6 Months Ended Jun. 30, 2009 USD / shares
Fair Value Measurements and Financial Instruments
Fair Value Measurements and Financial Instruments	4.FAIR VALUE MEASUREMENTS AND FINANCIAL INSTRUMENTS Fair Value Measurement We determine the fair values of our debt, perpetual and privately issued equity securities using three basic pricing approaches or techniques: quoted market prices readily available from public exchange markets, a discounted cash flow (DCF) pricing model, and price quotes we obtain from outside brokers. Our DCF pricing model utilizes various market inputs we obtain from both active and inactive markets. The estimated fair values developed by the DCF pricing models are most sensitive to prevailing credit spreads, the level of interest rates (yields) and interest rate volatility. Credit spreads are derived based on pricing data obtained from investment brokers and take into account the current yield curve, time to maturity and subordination levels for similar securities or classes of securities. We validate the reliability of the DCF pricing models periodically by using the models to price investments for which there are quoted market prices from active and inactive markets or, in the alternative, are quoted by our custodian for the same or similar securities. The pricing data and market quotes we obtain from outside sources are reviewed internally for reasonableness. If a fair value appears unreasonable, the inputs are re-examined and the value is confirmed or revised. During 2008 and through the first half of 2009, we noted a continued reduction in the availability of pricing data from market sources. This decline is due largely to the contraction of liquidity in the global markets and a reduction in the overall number of sources to provide pricing data. As a result, we have noted that available pricing data has become more volatile. The reduction in available pricing sources coupled with the increase in price volatility has increased the degree of management judgment required in the final determination of fair values. We continually assess the reasonableness of the pricing data we receive by comparing it to historical results. In addition to historical comparisons, we evaluate the reasonableness of the pricing data in light of current market trends and events. The final pricing data used to determine fair values is based on managements judgment. Fair Value Hierarchy SFAS No. 157, Fair Value Measurements (SFAS 157), specifies a hierarchy of valuation techniques based on whether the inputs to those valuations techniques are observable or unobservable. These two types of inputs create three valuation hierarchy levels. 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 valuation inputs are not observable in an active market. The vast majority of our financial instruments subject to the classification provis

Notes Payable

Notes Payable
	6 Months Ended Jun. 30, 2009 USD / shares
Notes Payable
Notes Payable	5.NOTES PAYABLE A summary of notes payable follows: June 30, December 31, (In millions) 2009 2008 8.50% senior notes due May 2019 $ 850 $ - 6.50% senior notes paid April 2009 - 450 Yen-denominated Uridashi notes: 1.52% notes due September 2011 (principal amount 15 billion yen) 156 165 2.26% notes due September 2016 (principal amount 8 billion yen in 2009 and 10 billion yen in 2008) 83 110 Variable interest rate notes due September 2011 (1.01% at June 2009, principal amount 20 billion yen) 209 220 Yen-denominated Samurai notes: .71% notes due July 2010 (principal amount 39.4 billion yen in 2009 and 40 billion yen in 2008) 410 439 1.87% notes due June 2012 (principal amount 26.6 billion yen in 2009 and 30 billion yen in 2008) 277 329 Capitalized lease obligations payable through 2014 7 8 Total notes payable $ 1,992 $ 1,721 During the first six months of 2009, we extinguished portions of our yen-denominated Uridashi and Samurai debt by buying the notes on the open market. We extinguished 2.0 billion yen (par value) of our Uridashi notes due September 2016 at a cost of 1.4 billion yen, yielding a gain of .6 billion yen. We extinguished 3.4 billion yen (par value) of our Samurai notes due June 2012 at a cost of 2.5 billion yen, yielding a gain of .9 billion yen. We extinguished .6 billion yen (par value) of our Samurai notes due July 2010 at a cost of .5 billion yen, yielding a gain of .1 billion yen. Through these transactions, we realized a total gain from extinguishment of debt of 1.6 billion yen, or $17 million ($11 million after-tax), which we included in other income. In April 2009, we used internally generated cash flow to pay off our $450 million senior notes upon their maturity. In May 2009, we issued $850 million of senior notes through a U.S. public debt offering. These notes pay interest semi-annually and have a 10-year maturity. The notes are redeemable at our option in whole at any time or in part from time to time at a redemption price equal to the greater of: (i) the principal amount of the notes or (ii) the present value of the remaining scheduled payments of principal and interest to be redeemed, discounted to the redemption date, plus accrued and unpaid interest. In July 2009, we executed a 10 billion yen loan (approximately $104 million using the June 30, 2009, exchange rate) at an interest rate of 3.60%. Interest on the loan is payable semiannually, and the loan has a six-year maturity. We were in compliance with all of the covenants of our notes payable at June 30, 2009. No events of default or defaults occurred during the six months ended June 30, 2009. For additional information, see Notes 4 and 7 of the Notes to the Consolidated Financial Statements in our annual report to shareholders for the year ended December 31, 2008.

Shareholders' Equity

Shareholders' Equity
	6 Months Ended Jun. 30, 2009 USD / shares
Shareholders' Equity
Shareholders' Equity	6.SHAREHOLDERS' EQUITY 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) 2009 2008 Common stock - issued: Balance, beginning of period 660,035 658,604 Exercise of stock options and issuance of restricted shares 452 997 Balance, end of period 660,487 659,601 Treasury stock: Balance, beginning of period 193,420 172,074 Purchases of treasury stock: Open market - 12,500 Other 89 109 Dispositions of treasury stock: Shares issued to AFL Stock Plan (355) (688) Exercise of stock options (17) (352) Other (134) (69) Balance, end of period 193,003 183,574 Shares outstanding, end of period 467,484 476,027 Outstanding share-based awards are excluded from the calculation of weighted-average shares used in the computation of basic earnings per share. The following table presents the approximate number of stock options to purchase shares, on a weighted-average basis, that were considered to be anti-dilutive and were excluded from the calculation of diluted earnings per share for the following periods. Three Months Ended June 30, Six Months Ended June 30, (In thousands) 2009 2008 2009 2008 Anti-dilutive stock options and restricted share awards 11,011 1,262 13,189 1,025 In the first quarter of 2008, we entered into an agreement for an accelerated share repurchase (ASR)program with Merrill Lynch. Under the agreement, we purchased 12.5million shares of our outstanding common stock at $60.61 per share for an initial purchase price of $758million. The shares were acquired as a part of previously announced share repurchase authorizations by our board of directors and are held in treasury. The ASR program was settled during the second quarter of 2008, resulting in a purchase price adjustment of $40 million, or $3.22 per share, paid to Merrill Lynch based upon the volume-weighted average price of our common stock during the ASR program period. The total purchase price for the 12.5 million shares was $798 million, or $63.83 per share. As of June 30, 2009, a remaining balance of 32.4 million shares of our common stock was available for purchase under share repurchase authorizations by our board of directors. The 32.4 million shares were comprised of 2.4 million shares remaining from a board authorization in 2006 and 30.0 million shares remaining from an authorization by the board of directors for purchase in January 2008.

Share-based Transactions

Share-based Transactions
	6 Months Ended Jun. 30, 2009 USD / shares
Share-based Transactions
Share-based Transactions	7.SHARE-BASED TRANSACTIONS The Company has two long-term incentive compensation plans. The first plan, which expired in February 2007, is a stock option plan which allowed grants for incentive stock options (ISOs) to employees and non-qualifying stock options (NQSOs) to employees and non-employee directors. Options granted before the plans expiration date remain outstanding in accordance with their terms. The second long-term incentive plan allows awards to Company employees for ISOs, NQSOs, restricted stock, restricted stock units, and stock appreciation rights. As of June 30, 2009, approximately 18.5 million shares were available for future grants under this plan, and the only performance-based awards issued and outstanding were restricted stock awards. The following table provides information on stock options outstanding and exercisable at June 30, 2009. Stock Weighted-Average Aggregate Option Remaining Intrinsic Weighted-Average Shares Term Value Exercise Price (in thousands) (in years) (in millions) Per Share Outstanding 17,868 5.2 $ 43 $ 36.52 Exercisable 13,087 3.9 28 34.67 We received cash from the exercise of stock options in the amount of $1.7 million during the first six months of 2009, compared with $27 million in the first six months of 2008. The tax benefit realized as a result of stock option exercises and restricted stock releases was $3 million in the first six months of 2009, compared with $18 million in the first six months of 2008. As of June 30, 2009, total compensation cost not yet recognized in our financial statements related to restricted-share-based awards was $24 million, of which $11 million (599 thousand shares) was related to restricted-share-based awards with a performance-based vesting condition. We expect 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. For additional information on our long-term share-based compensation plans and the types of share-based awards, see Note 10 of the Notes to the Consolidated Financial Statements included in our annual report to shareholders for the year ended December 31, 2008.

Benefit Plans

Benefit Plans
	6 Months Ended Jun. 30, 2009 USD / shares
Benefit Plans
Benefit Plans	8.BENEFIT PLANS Our basic employee defined-benefit pension plans cover substantially all of our full-time employees in the United States and Japan. The components of retirement expense for the Japanese and U.S. pension plans were as follows: Three Months Ended June 30, Six Months Ended June 30, 2009 2008 2009 2008 (In millions) Japan U.S. Japan U.S. Japan U.S. Japan U.S. Components of net periodic benefit cost: Service cost $ 3 $ 3 $ 2 $ 3 $ 6 $ 5 $ 5 $ 5 Interest cost 1 3 1 2 2 6 2 5 Expected return on plan assets - (3) - (3) (1) (6) (1) (6) Amortization of net actuarial loss - 1 1 - 1 2 1 1 Net periodic benefit cost $ 4 $ 4 $ 4 $ 2 $ 8 $ 7 $ 7 $ 5 During the six months ended June 30, 2009, Aflac Japan contributed approximately $8 million (using the June 30, 2009, exchange rate) to the Japanese pension plan, and Aflac U.S. did not make a contribution to the U.S. pension plan. For additional information regarding our Japanese and U.S. benefit plans, see Note 12 of the Notes to the Consolidated Financial Statements in our annual report to shareholders for the year ended December 31, 2008.

Commitments and Contingent Liab

Commitments and Contingent Liabilities
	6 Months Ended Jun. 30, 2009 USD / shares
Commitments and Contingent Liabilities
Commitments and Contingent Liabilities	9.COMMITMENTS AND CONTINGENT LIABILITIES We are a defendant in various lawsuits considered to be in the normal course of business. Members of our senior legal and financial management teams review litigation on a quarterly and annual basis. The final results of any litigation 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, we believe the outcome of pending litigation will not have a material adverse effect on our financial position, results of operations, or cash flows.

Subsequent Events

Subsequent Events
	6 Months Ended Jun. 30, 2009 USD / shares
Subsequent Events
Subsequent Events	10.SUBSEQUENT EVENTS We evaluated events that occurred subsequent to June 30, 2009, for recognition or disclosure in our financial statements and notes to our financial statements. We performed our subsequent event review through August 7, 2009, the date that these second quarter 2009 financials were issued. In July 2009, we executed a loan for 10 billion yen. See Note 5 for further discussion. On July 29, 2009, we entered into a definitive agreement to purchase for $100 million Continental American Insurance Group, Inc., which includes its wholly-owned subsidiary Continental American Insurance Company (CAIC). The purchase will be funded with internal capital, and the transaction is expected to close in the fourth quarter of 2009. CAIC, which is currently privately owned and headquartered in Columbia, South Carolina, specializes in offering voluntary group insurance products that are distributed by insurance brokers at the worksite.

Document Information

Document Information
	6 Months Ended Jun. 30, 2009 USD / shares
Document Information
Document Type	10-Q
Amendment Flag	false
Document Period End Date	2009-06-30

Entity Information

Entity Information (USD $)
	6 Months Ended Jun. 30, 2009	Aug. 04, 2009	Jun. 30, 2008
Entity Information
Entity Registrant Name	Aflac Incorporated
Entity Central Index Key	0000004977
Current Fiscal Year End Date	--12-31
Entity Well-known Seasoned Issuer	Yes
Entity Voluntary Filers	No
Entity Current Reporting Status	Yes
Entity Filer Category	Large Accelerated Filer
Entity Public Float			$28,808,332,505
Entity Common Stock, Shares Outstanding		467,525,284