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Dollar Value of Yen-Denominated Assets and Liabilities
at Selected Exchange Rates
(In millions)
2016
2015
Yen/dollar exchange rates
101.49 116.49
(1)
131.49
105.61 120.61
(1)
135.61
Yen-denominated financial instruments:
Assets:
Securities available for sale:
Fixed maturities
(2)
$ 41,856 $ 36,467 $ 32,306
$ 31,544 $ 27,621 $ 24,566
Fixed maturities - consolidated variable
interest entities
(3)
783
682
604
1,016
890
792
Perpetual securities
1,557 1,357 1,202
1,883 1,649 1,466
Perpetual securities - consolidated
variable interest entities
(3)
231
201
178
214
187
167
Equity securities
155
136
120
408
357
318
Equity securities - consolidated variable
interest entities
653
569
504
149
130
116
Securities held to maturity:
Fixed maturities
38,279 33,350 29,545
38,212 33,459 29,758
Cash and cash equivalents
1,013
883
782
730
640
569
Derivatives
2,245 1,207 3,515
2,416
676
968
Other financial instruments
206
178
159
179
156
139
Subtotal
86,978 75,030 68,915
76,751 65,765 58,859
Liabilities:
Notes payable
304
265
235
234
205
183
Derivatives
1,712 1,998 5,549
545
371 1,901
Subtotal
2,016 2,263 5,784
779
576 2,084
Net yen-denominated financial instruments
84,962 72,767 63,131
75,972 65,189 56,775
Other yen-denominated assets
8,741 7,616 6,747
8,195 7,176 6,382
Other yen-denominated liabilities
102,132 88,981 78,830
94,775 82,988 73,808
Consolidated yen-denominated net assets
(liabilities) subject to foreign currency
fluctuation
(2)
$ (8,429) $ (8,598) $ (8,952)
$ (10,608) $ (10,623) $ (10,651)
(1)
Actual period-end exchange rate
(2)
Does not include the U.S. dollar-denominated corporate bonds for which we have entered into foreign currency derivatives as
discussed in the Aflac Japan Investment subsection of MD&A
(3)
Does not include U.S. dollar-denominated bonds that have corresponding cross-currency swaps in consolidated VIEs
We are required to consolidate certain VIEs. Some of the consolidated VIEs in Aflac Japan's portfolio use foreign
currency swaps to convert foreign denominated cash flows to yen, the functional currency of Aflac Japan, in order to
minimize cash flow fluctuations. Foreign currency swaps exchange an initial principal amount in two currencies, agreeing
to re-exchange the currencies at a future date, at an agreed upon exchange rate. There may also be periodic exchanges
of payments at specified intervals based on the agreed upon rates and notional amounts. Prior to consolidation, our
beneficial interest in these VIEs was a yen-denominated available-for-sale fixed maturity security. Upon consolidation, the
original yen-denominated investment was derecognized and the underlying fixed-maturity or perpetual securities and
cross-currency swaps were recognized. The combination of a U.S. dollar-denominated investment and cross-currency
swap economically creates a yen-denominated investment and has no impact on our net investment hedge position.
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 for net investment hedge
purposes.
For additional information regarding our Aflac Japan net investment hedge, see the Hedging Activities subsection of
MD&A.
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