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Expected maturities may differ from contractual maturities because some issuers have the right to call or prepay
obligations with or without call or prepayment penalties.
The majority of our perpetual securities are subordinated to other debt obligations of the issuer, but rank higher than
the issuer's equity securities. Perpetual securities have characteristics of both debt and equity investments, along with
unique features that create economic maturity dates for the securities. Although perpetual securities have no contractual
maturity date, they have stated interest coupons that were fixed at their issuance and subsequently change to a floating
short-term interest rate after some period of time. The instruments are generally callable by the issuer at the time of
changing from a fixed coupon rate to a new variable rate of interest, which is determined by the combination of some
market index plus a fixed amount of basis points. The net effect is to create an expected maturity date for the instrument.
The economic maturities of our investments in perpetual securities, which were all reported as available for sale at
December 31, 2016, were as follows:
Aflac Japan
Aflac U.S.
(In millions)
Amortized
Cost
Fair
Value
Amortized
Cost
Fair
Value
Due in one year or less
$ 87
$ 82
$ 0
$ 0
Due after one year through five years
189
213
0
0
Due after 10 years
1,191
1,282
39
56
Total perpetual securities available for sale
$1,467
$1,577
$ 39
$ 56
106
Investment Concentrations
Our process for investing in credit-related investments begins with an independent approach to underwriting each
issuer's fundamental credit quality. We evaluate independently those factors which we believe could influence an issuer's
ability to make payments under the contractual terms of our 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). We further evaluate 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 as of December 31 were as follows:
2016
2015
(In millions)
Credit
Rating
Amortized
Cost
Fair
Value
Credit
Rating
Amortized
Cost
Fair
Value
Japan National Government
(1)
A
$42,931
$51,345
A
$36,859
$42,025
(1)
Japan Government Bonds (JGBs) or JGB-backed securities
Realized Investment Gains and Losses
Information regarding pretax realized gains and losses from investments for the years ended December 31 follows: