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Notes Payable
As of January 1, 2016, we adopted updated accounting guidance related to the presentation of debt issuance costs
and have reclassified debt issuance costs related to a debt liability as a direct deduction from the carrying amount of that
debt liability. Prior year amounts have been adjusted to reflect the current year adoption. See Note 1 of the accompanying
Notes to the Consolidated Financial Statements for additional information.
Notes payable totaled $5.4 billion at December 31, 2016, compared with $5.0 billion at December 31, 2015.
In September 2016, the Parent Company issued two series of senior notes totaling $700 million through a U.S. public
debt offering. The first series, which totaled $300 million, bears interest at a fixed rate of 2.875% per annum, payable
semi-annually, and has a 10-year maturity. The second series, which totaled $400 million, bears interest at a fixed rate of
4.00% per annum, payable semi-annually, and has a 30-year maturity.
In September 2016, the Parent Company entered into two series of senior unsecured term loan facilities totaling 30.0
billion yen. The first series, which totaled 5.0 billion yen, bears an interest rate per annum equal to the Tokyo interbank
market rate (TIBOR), or alternate TIBOR, if applicable, plus the applicable TIBOR margin. The applicable margin ranges
between .20% and .60%, depending on the Parent Company's debt ratings as of the date of determination. The second
series, which totaled 25.0 billion yen, bears an interest rate per annum equal to TIBOR, or alternate TIBOR, if applicable,
plus the applicable TIBOR margin. The applicable margin ranges between .35% and .75%, depending on the Parent
Company's debt ratings as of the date of determination.
In December 2016, the Parent Company completed a tender offer in which it extinguished $176 million principal of its
6.90% senior notes due 2039 and $193 million principal of its 6.45% senior notes due 2040. The pretax non-operating
loss due to the early redemption of these notes was $137 million ($89 million after-tax, or $.21 per diluted share).
In September 2016, we extinguished 8.0 billion yen of 2.26% fixed rate Uridashi notes upon their maturity and in July
2016, we extinguished 15.8 billion yen of 1.84% fixed rate Samurai notes upon their maturity.
Subsequent to December 31, 2016, in January 2017 the Parent Company issued 60.0 billion yen of senior notes
through a U.S. public debt offering. The notes bear interest at a fixed rate of .932% per annum, payable semi-annually,
and have a 10-year maturity. These notes may only be redeemed before maturity, in whole but not in part, upon the
occurrence of certain changes affecting U.S. taxation, as specified in the indenture governing the terms of the issuance.
See Note 9 of the accompanying Notes to the Consolidated Financial Statements for additional information on our
notes payable.
Benefit Plans
Aflac Japan and Aflac U.S. have various benefit plans. For additional information on our Japanese and U.S. plans, see
Note 14 of the Notes to the Consolidated Financial Statements.
Policyholder Protection
The Japanese insurance industry has a policyholder protection system that provides funds for the policyholders of
insolvent insurers. Legislation enacted regarding the framework of the Life Insurance Policyholder Protection Corporation
(LIPPC) included government fiscal measures supporting the LIPPC. On March 30, 2012, the Diet approved legislation to
enhance the stability of the LIPPC by extending the government's fiscal support of the LIPPC through March 2017. On
November 25, 2016, Japan's Diet passed legislation that again extends the government's fiscal support of the LIPPC
through March 2022. Effective April 2014, the annual LIPPC contribution amount for the total life industry was lowered
from 40 billion yen to 33 billion yen.
Off-Balance Sheet Arrangements
As of December 31, 2016, we had no material letters of credit, standby letters of credit, guarantees or standby
repurchase obligations. See Note 15 of the Notes to the Consolidated Financial Statements for information on material
unconditional purchase obligations that are not recorded on our balance sheet.
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