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Plan Assets
The investment objective of our Japanese and U.S. funded defined benefit plans is to preserve the purchasing power
of the plan's assets and earn a reasonable inflation-adjusted rate of return over the long term. Furthermore, we seek to
accomplish these objectives in a manner that allows for the adequate funding of plan benefits and expenses. In order to
achieve these objectives, our goal is to maintain a conservative, well-diversified and balanced portfolio of high-quality
equity, fixed-income and money market securities. As a part of our strategy, we have established strict policies covering
quality, type and concentration of investment securities. For our Japanese plan, these policies include limitations on
investments in derivatives including futures, options and swaps, and low-liquidity investments such as real estate, venture
capital investments, and privately issued securities. For our U.S. plan, these policies prohibit investments in precious
metals, limited partnerships, venture capital, and direct investments in real estate. We are also prohibited from trading on
margin.
The plan fiduciaries for our funded defined benefit plans have developed guidelines for asset allocations reflecting a
percentage of total assets by asset class, which are reviewed on an annual basis. Asset allocation targets as of
December 31, 2016 were as follows:
Japan
Pension
U.S.
Pension
Domestic equities
11%
40%
International equities
15
20
Fixed income securities
59
40
Other
15
0
Total
100%
100%
The following table presents the fair value of Aflac Japan's pension plan assets that are measured at fair value on a
recurring basis as of December 31. All of these assets are classified as Level 2 in the fair value hierarchy, except cash
and cash equivalents which are classified as Level 1.
(In millions)
2016
2015
Japan pension plan assets:
Equities:
Japanese equity securities
$ 28
$ 22
International equity securities
40
33
Fixed income securities:
Japanese bonds
79
71
International bonds
55
48
Insurance contracts
27
23
Cash and cash equivalents
0
1
Total
$ 229
$ 198
The following table presents the fair value of Aflac U.S.'s pension plan assets that are measured at fair value on a
recurring basis as of December 31. All of these assets are classified as Level 1 in the fair value hierarchy.
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