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Revenue from Contracts with Customers:
In May 2014, the FASB issued updated guidance that affects any entity
that either enters into contracts with customers to transfer goods or services or enters into contracts for the transfer of
nonfinancial assets unless those contracts are within the scope of other standards (e.g., insurance contracts or lease
contracts). The core principle of the guidance is that an entity should recognize revenue to depict the transfer of promised
goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in
exchange for those goods or services. In August 2015, the FASB deferred the effective date for this standard to annual
reporting periods beginning after December 15, 2017, including interim periods within that reporting period. Other updates
related to the new guidance, which are effective as of the same reporting period, pertain to improvements in certain areas.
Earlier application is permitted only as of annual reporting periods beginning after December 15, 2016, including interim
reporting periods. We have identified revenue in scope of this guidance to include certain revenues associated with
affiliated entities in support of our operations. We estimate the revenue within scope of the guidance to represent less
than 1% of our total revenues as of December 31, 2016. We estimate that the adoption of this guidance will not have a
significant impact on our financial position, results of operations and disclosures.
Recent accounting guidance not discussed above is not applicable, did not have, or is not expected to have a material
impact to our business.
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2. BUSINESS SEGMENT AND FOREIGN 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. Operating business segments that are not individually reportable and business
activities, including reinsurance retrocession activities, not included in Aflac Japan or Aflac U.S. are included in the "Other
business segments" category.
We do not allocate corporate overhead expenses to business segments. Consistent with U.S. GAAP accounting
guidance for segment reporting, we evaluate and manage our business segments using a financial performance measure
called pretax operating earnings. Our definition of operating earnings includes interest cash flows associated with notes
payable and excludes the following items from net earnings on an after-tax basis: realized investment gains/losses
(securities transactions, impairments, and the impact of derivative and hedging activities), nonrecurring items and other
non-operating income (loss). We then exclude income taxes related to operations to arrive at pretax operating earnings.
Information regarding operations by segment for the years ended December 31 follows: