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Assuming no credit-related factors develop, unrealized gains and losses on fixed maturities and perpetual securities
are expected to diminish as investments near maturity. Based on our credit analysis, we believe that the issuers of our
fixed maturity and perpetual security investments in the sectors shown in the table above have the ability to service their
obligations to us.
110
Variable Interest Entities (VIEs)
As a condition to our involvement or investment in a VIE, we enter into certain protective rights and covenants that
preclude changes in the structure of the VIE that would alter the creditworthiness of our investment or our beneficial
interest in the VIE.
For those VIEs other than certain unit trust structures, our involvement is passive in nature. We are not, nor have we
been, required to purchase any securities issued in the future by these VIEs.
Our ownership interest in VIEs is limited to holding the obligations issued by them. We have no direct or contingent
obligations to fund the limited activities of these VIEs, nor do we have any direct or indirect financial guarantees related to
the limited activities of these VIEs. We have not provided any assistance or any other type of financing support to any of
the VIEs we invest in, nor do we have any intention to do so in the future. For those VIEs in which we hold debt
obligations, the weighted-average lives of our notes are very similar to the underlying collateral held by these VIEs where
applicable.
We also utilize unit trust structures in our Aflac Japan segment to invest in various asset classes. As the sole investor
of these VIEs, we are required to consolidate these entities under U.S. GAAP.
Our risk of loss related to our interests in any of our VIEs is limited to the carrying value of the related investments
held in the VIE.
VIEs - Consolidated
The following table presents the cost or amortized cost, fair value and balance sheet caption in which the assets and
liabilities of consolidated VIEs are reported as of December 31.
Investments in Consolidated Variable Interest Entities
2016
2015
(In millions)
Cost or
Amortized
Cost
Fair
Value
Cost or
Amortized
Cost
Fair
Value
Assets:
Fixed maturities, available for sale
$4,168
$4,982
$3,739
$4,554
Perpetual securities, available for sale
237
208
255
228
Equity securities
972
1,044
363
363
Other investments
819
789
0
0
Other assets
127
127
102
102
Total assets of consolidated VIEs
$6,323
$7,150
$4,459
$5,247
Liabilities:
Other liabilities
$ 146
$ 146
$ 293
$ 293
Total liabilities of consolidated VIEs
$ 146
$ 146
$ 293
$ 293
We are substantively the only investor in the consolidated VIEs listed in the table above. As the sole investor in these
VIEs, we have the power to direct the activities of the variable interest entity that most significantly impact the entity's
economic performance and are therefore considered to be the primary beneficiary of the VIEs that we consolidate. We
also participate in substantially all of the variability created by these VIEs. The activities of these VIEs are limited to
holding invested assets and foreign currency, and/or CDS, as appropriate, and utilizing the cash flows from these
securities to service our investment. Neither we nor any of our creditors are able to obtain the underlying collateral of the
VIEs unless there is an event of default or other specified event. For those VIEs that contain a swap, we are not a direct
counterparty to the swap contracts and have no control over them. Our loss exposure to these VIEs is limited to our