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underlying fixed-maturity or perpetual securities and cross-currency swaps. While these U.S. dollar investments will create
foreign currency fluctuations, the combination of the U.S. dollar-denominated investment and the cross-currency swap
economically creates a yen-denominated investment that qualifies for inclusion as a component of our investment in Aflac
Japan. Similarly, the combination of the U.S. corporate bonds and the foreign currency forwards and options that we have
entered into, as discussed in the Aflac Japan Investment subsection of MD&A, economically creates a yen-denominated
investment that qualifies for inclusion as a component of our investment in Aflac Japan.
The dollar values of our yen-denominated net assets, including economic yen-denominated investments for net
investment hedging purposes as discussed above, are summarized as follows (translated at end-of-period exchange
rates) for the years ended December 31:
(In millions)
2016
2015
Aflac Japan net assets
$ 16,215
$ 13,558
Aflac Japan unhedged dollar-denominated net assets
(9,694)
(8,111)
Consolidated yen-denominated net assets (liabilities)
$ 6,521
$ 5,447
For the hedge of our net investment in Aflac Japan, we have designated certain of the Parent Company's yen-
denominated liabilities, certain unhedged U.S. dollar investments and foreign currency forwards and options as a hedge of
our net investment in Aflac Japan. Our consolidated yen-denominated net asset position was partially hedged at $1.3
billion as of December 31, 2016, compared with $1.2 billion as of December 31, 2015.
See Note 4 of the Notes to the Consolidated Financial Statements for additional information on our hedging activities.
Deferred Policy Acquisition Costs
The following table presents deferred policy acquisition costs by segment for the years ended December 31.
(In millions)
2016
2015
% Change
Aflac Japan
$ 5,765
$ 5,370
7.4%
(1)
Aflac U.S.
3,228
3,141
2.8
Total
$ 8,993
$ 8,511
5.7%
(1)
Aflac Japan’s deferred policy acquisition costs increased 3.7% in yen during the year ended December 31, 2016.
See Note 6 of the Notes to the Consolidated Financial Statements for additional information on our deferred policy
acquisition costs.
Policy Liabilities
The following table presents policy liabilities by segment for the years ended December 31.
(In millions)
2016
2015
% Change
Aflac Japan
$ 84,141
$ 78,460
7.2%
(1)
Aflac U.S.
10,212
9,815
4.0
Other
91
43
100.0
Intercompany eliminations
(2)
(718)
(687)
(100.0)
Total
$ 93,726
$ 87,631
7.0%
(1)
Aflac Japan’s policy liabilities increased 3.6% in yen during the year ended December 31, 2016.
(2)
Elimination entry necessary due to recapture of a portion of policy liabilities ceded externally, as a result of the reinsurance
retrocession transaction as described in Note 8 of the Notes to the Consolidated Financial Statements.
See Note 7 of the Notes to the Consolidated Financial Statements for additional information on our policy liabilities.
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