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Distribution of Payments by Period
(In millions)
Total
Liability
(1)
Total
Payments
Less
Than
One Year
One to
Three
Years
Four to
Five Years
After
Five Years
Future policy benefits liability
(Note 7)
(2)
$ 76,106 $ 240,650 $ 8,410 $ 16,949 $ 16,664 $ 198,627
Unpaid policy claims liability
(Note 7)
(3)
4,045
4,046
2,644
766
348
288
Other policyholders' funds
(Note 7)
(3)
6,659
10,254
319
364
465
9,106
Long-term debt – principal
(Note 9)
5,339
5,388
650
0
593
4,145
Long-term debt – interest
(Note 9)
41
2,910
182
360
335
2,033
Cash collateral on loaned securities
(Note 3)
526
526
526
0
0
0
Operating service agreements
(Note 15)
N/A
(4)
608
167
297
144
0
Operating lease obligations
(Note 15)
N/A
(4)
145
62
59
24
0
Capitalized lease obligations
(Note 9)
21
21
6
11
3
1
Total contractual obligations
$ 92,737 $ 264,548 $ 12,966 $ 18,806 $ 18,576 $ 214,200
Liabilities for unrecognized tax benefits in the amount of $15 have been excluded from the tabular disclosure above because the timing
of cash payment is not reasonably estimable.
(1)
Liability amounts are those reported on the consolidated balance sheet as of December 31, 2016.
(2)
The estimated payments due by period reflect future estimated cash payments to be made to policyholders and others for future
policy benefits. These projected cash outflows are based on assumptions for future policy persistency, mortality, morbidity, and other
assumptions comparable with our experience, consider future premium receipts on current policies in force, and assume market
growth and interest crediting consistent with assumptions used in amortizing deferred acquisition costs. These cash outflows are
undiscounted with respect to interest and, as a result, the sum of the cash outflows shown for all years in the table of $240,650
exceeds the corresponding liability amount of $76,106. We have made significant assumptions to determine the future estimated
cash outflows related to the underlying policies and contracts. Due to the significance of the assumptions used, actual cash outflow
amounts and timing will differ, possibly materially, from these estimates.
(3)
Includes assumptions as to the timing of policyholders reporting claims for prior periods and the amount of those claims. Actual
amounts and timing of unpaid policy claims payments may differ significantly from the estimates above.
(4)
Not applicable
For more information on our major contractual obligations, see the applicable Note in the Notes to the Consolidated
Financial Statements as indicated in the line items in the table above.
Consolidated Cash Flows
We translate cash flows for Aflac Japan's yen-denominated items into U.S. dollars using weighted-average exchange
rates. In years when the yen weakens, translating yen into dollars causes fewer dollars to be reported. When the yen
strengthens, translating yen into dollars causes more dollars to be reported.
The following table summarizes consolidated cash flows by activity for the years ended December 31.
(In millions)
2016
2015
2014
Operating activities
$ 5,987
$ 6,776
$ 6,550
Investing activities
(3,855)
(4,897)
(4,241)
Financing activities
(1,619)
(2,187)
(147)
Exchange effect on cash and cash equivalents
(4)
0
(47)
Net change in cash and cash equivalents
$ 509
$ (308)
$ 2,115
Operating Activities
Consolidated cash flow from operations decreased 11.6% in 2016, compared with 2015. The following table
summarizes operating cash flows by source for the years ended December 31.
(In millions)
2016
2015
2014
Aflac Japan
$ 4,605
$ 5,285
$ 5,711
Aflac U.S. and other operations
1,382
1,491
839
Total
$ 5,987
$ 6,776
$ 6,550
66