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Investment Securities by Type of Issuance
2016
2015
(In millions)
Amortized
Cost
Fair
Value
Amortized
Cost
Fair
Value
Publicly issued securities:
Fixed maturities
$ 75,406
$ 86,132
$ 68,528
$ 74,933
Perpetual securities
51
75
77
111
Equity securities
1,196
1,300
473
489
Total publicly issued
76,653
87,507
69,078
75,533
Privately issued securities:
(1)
Fixed maturities
24,307
27,649
25,573
27,936
Perpetual securities
1,455
1,558
1,764
1,836
Equity securities
7
9
7
9
Total privately issued
25,769
29,216
27,344
29,781
Total investment securities
$ 102,422
$ 116,723
$ 96,422
$ 105,314
(1)
Includes Rule 144A securities
The perpetual securities we hold were largely issued by banks that are integral to the financial markets of the
sovereign country of the issuer. As a result of the issuer's position within the economy of the sovereign country, our
perpetual securities may be subject to a higher risk of nationalization of their issuers in connection with capital injections
from an issuer's sovereign government. We cannot be assured that such capital support will extend to all levels of an
issuer's capital structure. In addition, certain governments or regulators may consider imposing interest and principal
payment restrictions on issuers of hybrid securities to preserve cash and preserve the issuer's capital. Beyond the cash
flow impact that additional deferrals would have on our portfolio, such deferrals could result in ratings downgrades of the
affected securities, which in turn could result in a reduction of fair value of the securities and increase our regulatory
capital requirements. We consider these factors in our credit review process.
The following table details our privately issued investment securities as of December 31.
Privately Issued Securities
(Amortized cost, in millions)
2016
2015
Privately issued securities as a percentage of total investment securities
25.2%
28.4%
Privately issued securities held by Aflac Japan
$ 23,104
$ 24,602
Privately issued securities held by Aflac Japan as a percentage of total
investment securities
22.6%
25.5%
Reverse-Dual Currency Securities
(1)
(Amortized cost, in millions)
2016
2015
Privately issued reverse-dual currency securities
$ 5,628
$ 5,372
Publicly issued collateral structured as reverse-dual currency securities
1,349
1,303
Total reverse-dual currency securities
$ 6,977
$ 6,675
Reverse-dual currency securities as a percentage of total investment
securities
6.8%
6.9%
(1)
Principal payments in yen and interest payments in dollars
Aflac Japan has a portfolio of privately issued securities to better match liability characteristics and secure higher
yields than those available on Japanese government or other public corporate bonds. Aflac Japan’s investments in yen-
denominated privately issued securities consist primarily of non-Japanese issuers, are rated investment grade at
purchase and have longer maturities, thereby allowing us to improve our asset/liability matching and our overall
investment returns. These securities are generally either privately negotiated arrangements or issued under medium-term
note programs and have standard documentation commensurate with credit ratings of the issuer, except when internal
credit analysis indicates that additional protective and/or event-risk covenants were required. Many of these investments
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