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The primary purpose of insurance company regulatory supervision is the protection of insurance policyholders, rather
than investors. The extent of regulation varies, but generally is governed by state statutes in the United States and by the
FSA and the MOF in Japan. These systems of supervision and regulation cover, among other things:
• standards of establishing and setting premium rates and the approval thereof
• standards of minimum capital and reserve requirements and solvency margins, including risk-based capital
measures
• restrictions on, limitations on and required approval of certain transactions between our insurance subsidiaries and
their affiliates, including management fee arrangements
• restrictions on the nature, quality and concentration of investments
• restrictions on the types of terms and conditions that we can include in the insurance policies offered by our
primary insurance operations
• limitations on the amount of dividends that insurance subsidiaries can pay or foreign profits that can be repatriated
• the existence and licensing status of a company under circumstances where it is not writing new or renewal
business
• certain required methods of accounting
• reserves for unearned premiums, losses and other purposes
• assignment of residual market business and potential assessments for the provision of funds necessary for the
settlement of covered claims under certain policies provided by impaired, insolvent or failed insurance companies
• administrative practices requirements
• imposition of fines and other sanctions
Regulatory authorities periodically re-examine existing laws and regulations applicable to insurance companies and
their products. Changes in these laws and regulations, or in interpretations thereof, could have a material adverse effect
on our financial condition and results of operations. This risk is particularly relevant in 2017 as a new presidential
administration begins in the United States which has expressed interest in making significant changes in specific areas of
the regulatory landscape in the United States.
Various forms of federal oversight and regulation of insurance were signed into law by the prior administration. For
example, the ACA gave the U.S. federal government direct regulatory authority over the business of health insurance and
made significant changes to the U.S. health care insurance marketplace, including the imposition of an individual medical
insurance coverage mandate, penalties on certain employers for failing to provide adequate coverage, the creation of
health insurance exchanges, and proscriptions regarding coverage and exclusions as well as medical loss ratios. The
legislation also includes changes in government reimbursements and tax credits for individuals and employers and alters
federal and state regulation of health insurers. These changes, directed toward major medical health insurance coverage
that Aflac does not offer, may or may not continue to be implemented over the next several years in light of the
commencement of a new U.S. presidential administration in January 2017. We believe that the ACA, as currently in force,
will not require us to materially change the design of our insurance products. However, indirect consequences of the
continuation, modification or partial or full repeal of the legislation and regulations could present challenges and/or
opportunities that could potentially have an impact on our sales model, financial condition and results of operations.
The process of implementing the Dodd-Frank Act is ongoing and continues to involve additional rulemaking from time
to time. The new presidential administration in the United States and Congress have stated proposals to reform or repeal
certain provisions of the Dodd-Frank Act. We cannot predict with any degree of certainty what impact, if any, the Dodd-
Frank Act will have on our U.S. business, financial condition, or results of operations
,
particularly given the election of a
new U.S. president in November 2016.
Changes in domestic or foreign tax laws or interpretations of such laws could increase our corporate taxes and reduce
our earnings. Additionally, global budget deficits make it likely that governments’ need for additional revenue will result in
future tax proposals that will increase our effective tax rate. However, it remains difficult to predict the timing and effect
that future tax law changes could have on our earnings both in the United States and in foreign jurisdictions, particularly in
light of the election of a new U.S. president in November 2016.
Compliance with applicable laws and regulations is time consuming and personnel-intensive, and changes in these
laws and regulations may materially increase our direct and indirect compliance and other expenses of doing business,
thus having a material adverse effect on our financial condition and results of operations.
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