AFLAC INC (Form: 10-Q, Received: 05/06/2013 06:02:14)

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

[ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2013

[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission File Number: 001-07434

Aflac Incorporated

_________________________________________________________________________________________________________________________________________________________________________________________________________________________________________

(Exact name of registrant as specified in its charter)



Georgia		58-1167100
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

1932 Wynnton Road, Columbus, Georgia		31999
(Address of principal executive offices)		(ZIP Code)

706.323.3431

(Registrant's telephone number, including area code)

(Former name, former address and former fiscal year, if changed since last report)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. þ Yes ¨ No

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). þ Yes ¨ No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.



Large accelerated filer þ		Accelerated filer ¨
Non-accelerated filer ¨ (Do not check if a smaller reporting company)		Smaller reporting company ¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
¨ Yes þ No

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.



Class		April 26, 2013
Common Stock, $.10 Par Value		466,225,983

Aflac Incorporated and Subsidiaries

Quarterly Report on Form 10-Q

For the Quarter Ended March 31, 2013

Table of Contents



		Page
PART I.	FINANCIAL INFORMATION:

Item 1.	Financial Statements (Unaudited)

	Review by Independent Registered Public Accounting Firm	1

	Report of Independent Registered Public Accounting Firm	2

	Consolidated Statements of Earnings Three Months Ended March 31, 2013, and 2012	3

	Consolidated Statements of Comprehensive Income (Loss) Three Months Ended March 31, 2013, and 2012	4

	Consolidated Balance Sheets March 31, 2013 and December 31, 2012	5

	Consolidated Statements of Shareholders' Equity Three Months Ended March 31, 2013, and 2012	7

	Consolidated Statements of Cash Flows Three Months Ended March 31, 2013, and 2012	8

	Notes to the Consolidated Financial Statements	9

Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	60

Item 3.	Quantitative and Qualitative Disclosures about Market Risk	98

Item 4.	Controls and Procedures	98

PART II.	OTHER INFORMATION:	99

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	99

Item 6.	Exhibits	100

Items other than those listed above are omitted because they are not required or are not applicable.

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements.

Review by Independent Registered Public Accounting Firm

The March 31, 2013 , and 2012 , consolidated financial statements included in this filing have been reviewed by KPMG LLP, an independent registered public accounting firm, in accordance with established professional standards and procedures for such a review.

The report of KPMG LLP commenting upon its review is included on the following page.

Report of Independent Registered Public Accounting Firm

The Board of Directors and Shareholders

Aflac Incorporated:

We have reviewed the consolidated balance sheet of Aflac Incorporated and subsidiaries (the Company) as of March 31, 2013 , and the related consolidated statements of earnings, comprehensive income (loss), shareholders' equity and cash flows for the three -month periods ended March 31, 2013 and 2012 . These consolidated financial statements are the responsibility of the Company's management.

We conducted our reviews in accordance with the standards of the Public Company Accounting Oversight Board (United States). A review of interim financial information consists principally of applying analytical procedures and making inquiries of persons responsible for financial and accounting matters. It is substantially less in scope than an audit conducted in accordance with the standards of the Public Company Accounting Oversight Board (United States), the objective of which is the expression of an opinion regarding the financial statements taken as a whole. Accordingly, we do not express such an opinion.

Based on our reviews, we are not aware of any material modifications that should be made to the consolidated financial statements referred to above for them to be in conformity with U.S. generally accepted accounting principles.

We have previously audited, in accordance with standards of the Public Company Accounting Oversight Board (United States), the consolidated balance sheet of Aflac Incorporated and subsidiaries as of December 31, 2012 , and the related consolidated statements of earnings, comprehensive income (loss), shareholders' equity and cash flows for the year then ended (not presented herein); and in our report dated February 26, 2013 , we expressed an unqualified opinion on those consolidated financial statements. Our report refers to a change in the method of accounting for costs associated with acquiring or renewing insurance contracts in 2012 and a change in the method of evaluating the consolidation of variable interest entities (VIEs) and qualified special purpose entities (QSPEs) in 2010 . In our opinion, the information set forth in the accompanying consolidated balance sheet as of December 31, 2012, is fairly stated, in all material respects, in relation to the consolidated balance sheet from which it has been derived.

Atlanta, Georgia

May 3, 2013

Aflac Incorporated and Subsidiaries

Consolidated Statements of Earnings



	Three Months Ended March 31,
(In millions, except for share and per-share amounts - Unaudited)	2013				2012
Revenues:
Premiums, principally supplemental health insurance		$	5,184			$	5,378
Net investment income		833				882
Realized investment gains (losses):
Other-than-temporary impairment losses realized		(55		)		(203		)
Sales and redemptions		119				78
Derivative and other gains (losses)		92				80
Total realized investment gains (losses)		156				(45		)
Other income		35				25
Total revenues		6,208				6,240
Benefits and expenses:
Benefits and claims		3,521				3,646
Acquisition and operating expenses:
Amortization of deferred policy acquisition costs		283				287
Insurance commissions		392				435
Insurance expenses		534				564
Interest expense		71				57
Other operating expenses		46				49
Total acquisition and operating expenses		1,326				1,392
Total benefits and expenses		4,847				5,038
Earnings before income taxes		1,361				1,202
Income taxes		469				417
Net earnings		$	892			$	785
Net earnings per share:
Basic		$	1.91			$	1.68
Diluted		1.90				1.68
Weighted-average outstanding common shares used in computing earnings per share (In thousands):
Basic		466,462				465,887
Diluted		469,124				468,533
Cash dividends per share		$	.35			$	.33

See the accompanying Notes to the Consolidated Financial Statements.

Aflac Incorporated and Subsidiaries

Consolidated Statements of Comprehensive Income (Loss)



	Three Months Ended March 31,
(In millions - Unaudited)	2013				2012
Net earnings		$	892			$	785
Other comprehensive income (loss) before income taxes:
Unrealized foreign currency translation gains (losses) during period		(188		)		(100		)
Unrealized gains (losses) on investment securities:
Unrealized holding gains (losses) on investment securities during period		(874		)		324
Reclassification adjustment for realized (gains) losses on investment securities included in net earnings		(58		)		129
Unrealized gains (losses) on derivatives during period		(7		)		(12		)
Pension liability adjustment during period		5				5
Total other comprehensive income (loss) before income taxes		(1,122		)		346
Income tax expense (benefit) related to items of other comprehensive income (loss)		(58		)		311
Other comprehensive income (loss), net of income taxes		(1,064		)		35
Total comprehensive income (loss)		$	(172	)		$	820

See the accompanying Notes to the Consolidated Financial Statements.

Aflac Incorporated and Subsidiaries

Consolidated Balance Sheets



(In millions - Unaudited)	March 31, 2013				December 31, 2012
Assets:
Investments and cash:
Securities available for sale, at fair value:
Fixed maturities (amortized cost $48,058 in 2013 and $48,355 in 2012)		$	50,899			$	51,466
Fixed maturities - consolidated variable interest entities (amortized cost $4,721 in 2013 and $5,058 in 2012)		5,377				5,787
Perpetual securities (amortized cost $3,113 in 2013 and $3,654 in 2012)		2,678				3,728
Perpetual securities - consolidated variable interest entities (amortized cost $520 in 2013 and $559 in 2012)		455				574
Equity securities (cost $18 in 2013 and $20 in 2012)		24				23
Securities held to maturity, at amortized cost:
Fixed maturities (fair value $46,788 in 2013 and $54,554 in 2012)		44,938				54,137
Fixed maturities - consolidated variable interest entities (fair value $259 in 2013 and $287 in 2012)		266				289
Other investments		167				174
Cash and cash equivalents		2,596				2,041
Total investments and cash		107,400				118,219
Receivables		1,710				976
Accrued investment income		765				842
Deferred policy acquisition costs		9,210				9,658
Property and equipment, at cost less accumulated depreciation		527				564
Other		926		⁽¹⁾		835		⁽¹⁾
Total assets		$	120,538			$	131,094

⁽¹⁾ Includes $158 in 2013 and $191 in 2012 of derivatives from consolidated variable interest entities

See the accompanying Notes to the Consolidated Financial Statements.

(continued)

Aflac Incorporated and Subsidiaries

Consolidated Balance Sheets (continued)



(In millions, except for share and per-share amounts - Unaudited)	March 31, 2013					December 31, 2012
Liabilities and shareholders’ equity:
Liabilities:
Policy liabilities:
Future policy benefits		$	72,077				$	76,463
Unpaid policy claims		3,877					4,034
Unearned premiums		11,963					11,904
Other policyholders’ funds		5,034					5,319
Total policy liabilities		92,951					97,720
Income taxes		3,799					3,858
Payables for return of cash collateral on loaned securities		207					6,277
Notes payable		4,283					4,352
Other		3,763			⁽²⁾		2,909			⁽²⁾
Commitments and contingent liabilities (Note 10)
Total liabilities		105,003					115,116
Shareholders’ equity:
Common stock of $.10 par value. In thousands: authorized 1,900,000 shares in 2013 and 2012; issued 665,778 shares in 2013 and 665,239 shares in 2012		67					67
Additional paid-in capital		1,532					1,505
Retained earnings		18,114					17,387
Accumulated other comprehensive income (loss):
Unrealized foreign currency translation gains (losses)		(141		)			333
Unrealized gains (losses) on investment securities		1,981					2,570
Unrealized gains (losses) on derivatives		(9		)			(5		)
Pension liability adjustment		(180		)			(183		)
Treasury stock, at average cost		(5,829		)			(5,696		)
Total shareholders’ equity		15,535					15,978
Total liabilities and shareholders’ equity		$	120,538				$	131,094

⁽²⁾ Includes $371 in 2013 and $399 in 2012 of derivatives from consolidated variable interest entities

See the accompanying Notes to the Consolidated Financial Statements.

Aflac Incorporated and Subsidiaries

Consolidated Statements of Shareholders’ Equity



	Three Months Ended March 31,
(In millions - Unaudited)		2013			2012
Common stock:
Balance, beginning of period		$	67		$	66
Balance, end of period		67			66
Additional paid-in capital:
Balance, beginning of period		1,505			1,408
Exercise of stock options		10			13
Share-based compensation		3			5
Gain (loss) on treasury stock reissued		14			7
Balance, end of period		1,532			1,433
Retained earnings:
Balance, beginning of period		17,387			15,148
Net earnings		892			785
Dividends to shareholders		(165		)	(154		)
Balance, end of period		18,114			15,779
Accumulated other comprehensive income (loss):
Balance, beginning of period		2,715			1,965
Unrealized foreign currency translation gains (losses) during period, net of income taxes		(474		)	(266		)
Unrealized gains (losses) on investment securities during period, net of income taxes and reclassification adjustments		(589		)	305
Unrealized gains (losses) on derivatives during period, net of income taxes		(4		)	(8		)
Pension liability adjustment during period, net of income taxes		3			4
Balance, end of period		1,651			2,000
Treasury stock:
Balance, beginning of period		(5,696		)	(5,641		)
Purchases of treasury stock		(156		)	(10		)
Cost of shares issued		23			16
Balance, end of period		(5,829		)	(5,635		)
Total shareholders’ equity		$	15,535		$	13,643

See the accompanying Notes to the Consolidated Financial Statements.

Aflac Incorporated and Subsidiaries

Consolidated Statements of Cash Flows



	Three Months Ended March 31,
(In millions - Unaudited)	2013					2012
Cash flows from operating activities:
Net earnings		$	892				$	785
Adjustments to reconcile net earnings to net cash provided by operating activities:
Change in receivables and advance premiums		203					(17		)
Increase in deferred policy acquisition costs		(100		)			(141		)
Increase in policy liabilities		2,400					2,928
Change in income tax liabilities		193					(20		)
Realized investment (gains) losses		(156		)			45
Other, net		400					(24		)
Net cash provided (used) by operating activities		3,832					3,556
Cash flows from investing activities:
Proceeds from investments sold or matured:
Securities available for sale:
Fixed maturities sold		541					226
Fixed maturities matured or called		1,342					705
Perpetual securities sold		0					552
Perpetual securities matured or called		271					378
Securities held to maturity:
Fixed maturities matured or called		5,011					536
Costs of investments acquired:
Available for sale fixed maturities acquired		(3,160		)			(1,025		)
Held to maturity fixed maturities acquired		(160		)			(5,133		)
Settlement of derivatives		(851		)			0
Cash received as collateral on loaned securities, net		(6,070		)			(645		)
Other, net		(9		)			(30		)
Net cash provided (used) by investing activities		(3,085		)			(4,436		)
Cash flows from financing activities:
Purchases of treasury stock		(156		)			(10		)
Proceeds from borrowings		0					749
Principal payments under debt obligations		0					(1		)
Dividends paid to shareholders		(159		)			(148		)
Change in investment-type contracts, net		134					297
Treasury stock reissued		19					5
Other, net		6					9
Net cash provided (used) by financing activities		(156		)			901
Effect of exchange rate changes on cash and cash equivalents		(36		)			(60		)
Net change in cash and cash equivalents		555					(39		)
Cash and cash equivalents, beginning of period		2,041					2,249
Cash and cash equivalents, end of period		$	2,596				$	2,210
Supplemental disclosures of cash flow information:
Income taxes paid		$	295				$	356
Interest paid		43					44
Noncash interest		28			⁽¹⁾		13			⁽¹⁾
Impairment losses included in realized investment losses		55					203
Noncash financing activities:
Capitalized lease obligations		(1		)			1
Treasury stock issued for:
Associate stock bonus		8					8
Shareholder dividend reinvestment		6					6
Share-based compensation grants		4					4

⁽¹⁾ Consists primarily of accreted interest on discounted advance premiums

See the accompanying Notes to the Consolidated Financial Statements.

Aflac Incorporated and Subsidiaries

Notes to the Consolidated Financial Statements

(Interim period data – Unaudited)

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Description of Business

Aflac Incorporated (the Parent Company) and its subsidiaries (collectively, the Company) primarily sell supplemental health and life insurance in the United States and Japan. The Company's insurance business is marketed and administered through American Family Life Assurance Company of Columbus (Aflac), which operates in the United States (Aflac U.S.) and as a branch in Japan (Aflac Japan). Most of Aflac's policies are individually underwritten and marketed through independent agents. Additionally, Aflac U.S. markets and administers group products through Continental American Insurance Company (CAIC), branded as Aflac Group Insurance. Our insurance operations in the United States and our branch in Japan service the two markets for our insurance business. Aflac Japan's revenues, including realized gains and losses on its investment portfolio, accounted for 75% and 77% of the Company's total revenues in the three -month periods ended March 31, 2013 , and 2012 , respectively. The percentage of the Company's total assets attributable to Aflac Japan was 86% at March 31, 2013 , and 87% at December 31, 2012 .

Basis of Presentation

We prepare our financial statements in accordance with U.S. generally accepted accounting principles (GAAP). These principles are established primarily by the Financial Accounting Standards Board (FASB). In these Notes to the Consolidated Financial Statements, references to GAAP issued by the FASB are derived from the FASB Accounting Standards Codification ^TM (ASC). The preparation of financial statements in conformity with GAAP requires us to make estimates when recording transactions resulting from business operations based on currently available information. The most significant items on our balance sheet that involve a greater degree of accounting estimates and actuarial determinations subject to changes in the future are the valuation of investments, deferred policy acquisition costs, liabilities for future policy benefits and unpaid policy claims, and income taxes. These accounting estimates and actuarial determinations are sensitive to market conditions, investment yields, mortality, morbidity, commission and other acquisition expenses, and terminations by policyholders. As additional information becomes available, or actual amounts are determinable, the recorded estimates will be revised and reflected in operating results. Although some variability is inherent in these estimates, we believe the amounts provided are adequate.

The unaudited consolidated financial statements include the accounts of the Parent Company, its subsidiaries and those entities required to be consolidated under applicable accounting standards. All material intercompany accounts and transactions have been eliminated.

In the opinion of management, the accompanying unaudited consolidated financial statements of the Company contain all adjustments, consisting of normal recurring accruals, which are necessary to fairly present the consolidated balance sheets as of March 31, 2013 , and December 31, 2012 , and the consolidated statements of earnings and comprehensive income (loss), shareholders' equity and cash flows for the three- month periods ended March 31, 2013 , and 2012 . Results of operations for interim periods are not necessarily indicative of results for the entire year. As a result, these financial statements should be read in conjunction with the financial statements and notes thereto included in our annual report to shareholders for the year ended December 31, 2012 .

Significant Accounting Policies

We have updated the disclosure in the accounting policy for income taxes. All other categories of significant accounting policies remain unchanged from our annual report to shareholders for the year ended December 31, 2012 .

Income Taxes: Income tax provisions are generally based on pretax earnings reported for financial statement purposes, which differ from those amounts used in preparing our income tax returns. Deferred income taxes are recognized for temporary differences between the financial reporting basis and income tax basis of assets and liabilities, based on enacted tax laws and statutory tax rates applicable to the periods in which we expect the temporary differences to reverse. We record deferred tax assets for tax positions taken based on our assessment of whether the tax position is more likely than not to be sustained upon examination by taxing authorities. A valuation allowance is established for deferred tax assets when it is more likely than not that an amount will not be realized.

As discussed in the Translation of Foreign Currencies section in Note 1 of the Notes to the Consolidated Financial Statements in our annual report to shareholders for the year ended December 31, 2012 , Aflac Japan maintains a dollar-denominated investment portfolio on behalf of Aflac U.S. While there are no translation effects to record in other comprehensive income (loss), the deferred tax expense or benefit associated with foreign exchange gains or losses on the portfolio is recognized in other comprehensive income (loss) until the securities mature or are sold. Total income tax expense (benefit) related to items of other comprehensive income (loss) included tax expense of $ 424 million during the three-month period ended March 31, 2013 , and tax expense of $ 157 million during the three-month period ended March 31, 2012 , for this dollar-denominated portfolio. Excluding these amounts from total taxes on other comprehensive income (loss) would result in an effective income tax rate on pretax other comprehensive income (loss) of 43.0% and 44.5% in the three-month periods ended March 31, 2013 and 2012 , respectively.

Reclassifications: Certain reclassifications have been made to prior-year amounts to conform to current-year reporting classifications. These reclassifications had no impact on net earnings or total shareholders' equity.

New Accounting Pronouncements

Recently Adopted Accounting Pronouncements

Reporting of amounts reclassified out of accumulated other comprehensive income: In February 2013, the FASB issued guidance that requires reclassification adjustments for items that are reclassified out of accumulated other comprehensive income to net income to be presented in statements where the components of net income and the components of other comprehensive income are presented or in the footnotes to the financial statements. Additionally, the amendment requires cross-referencing to other disclosures currently required for other reclassification items. We adopted this guidance as of January 1, 2013 . The adoption of this guidance impacted our financial statement disclosures, but it did not have an impact on our financial position or results of operations.

Disclosures about offsetting assets and liabilities: In November 2011 , the FASB issued guidance to amend the disclosure requirements about offsetting assets and liabilities. The new guidance essentially clarifies the FASB's intent concerning the application of existing offsetting disclosure requirements. Entities are required to disclose gross and net information about both instruments and transactions eligible for offset in the statement of financial position and instruments and transactions when those activities are subject to an agreement similar to a master netting arrangement. The scope of this guidance was clarified and revised in January 2013 to apply to derivatives, repurchase agreements, reverse repurchase agreements, securities borrowing and securities lending arrangements. The objective of this disclosure is to move toward consistency between U.S. GAAP and International Financial Reporting Standards (IFRS). We adopted this guidance as of January 1, 2013 . The adoption of this guidance impacted our financial statement disclosures, but it did not have an impact on our financial position or results of operations.

Presentation of comprehensive income: In June 2011, the FASB issued guidance to amend the presentation of comprehensive income. The amendment requires that all non-owner changes in shareholders' equity be presented either in a single continuous statement of comprehensive income or in two separate but consecutive statements. We adopted this guidance as of January 1, 2012 and elected the option to report comprehensive income in two separate but consecutive statements. The adoption of this guidance did not have an impact on our financial position or results of operations.

Fair value measurements and disclosures: In May 2011 , the FASB issued guidance to amend the fair value measurement and disclosure requirements. Most of the amendments are clarifications of the FASB's intent about the application of existing fair value measurement and disclosure requirements. Other amendments change a particular principle or requirement for measuring fair value or disclosing information about fair value measurements. The new fair value measurement disclosures include additional quantitative and qualitative disclosures for Level 3 measurements, including a qualitative sensitivity analysis of fair value to changes in unobservable inputs, and categorization by fair value hierarchy level for items for which the fair value is only disclosed. We adopted this guidance as of January 1, 2012 . The adoption of this guidance impacted our financial statement disclosures, but it did not affect our financial position or results of operations.

Accounting for costs associated with acquiring or renewing insurance contracts: In October 2010 , the FASB issued amended accounting guidance on accounting for costs associated with acquiring or renewing insurance contracts. Under the previous guidance, costs that varied with and were primarily related to the acquisition of a policy were deferrable. Under the amended guidance, only incremental direct costs associated with the successful acquisition of a new or renewal contract may be capitalized, and direct-response advertising costs may be capitalized only if they meet certain criteria. This guidance is effective on a prospective or retrospective basis for interim and annual periods beginning

after December 15, 2011 . We retrospectively adopted this guidance as of January 1, 2012 . The retrospective adoption of this accounting standard resulted in an after-tax cumulative reduction to retained earnings of $391 million and an after-tax cumulative reduction to unrealized foreign currency translation gains in accumulated other comprehensive income of $67 million , resulting in a total reduction to shareholders' equity of $458 million as of December 31, 2009 (the opening balance sheet date in our annual report on Form 10-K for the year ended December 31, 2012 ). The adoption of this accounting standard had an immaterial impact on net income in 2011 and for all preceding years.

Recent accounting guidance not discussed above is not applicable, did not have, or is not expected to have a material impact to our business.

For additional information on new accounting pronouncements and recent accounting guidance and their impact, if any, on our financial position or results of operations, see Note 1 of the Notes to the Consolidated Financial Statements in our annual report to shareholders for the year ended December 31, 2012 .

2. BUSINESS SEGMENT INFORMATION

The Company consists of two reportable insurance business segments: Aflac Japan and Aflac U.S., both of which sell supplemental health and life insurance. Operating business segments that are not individually reportable and business activities not included in Aflac Japan or Aflac U.S. are included in the "Other business segments" category.

We do not allocate corporate overhead expenses to business segments. We evaluate and manage our business segments using a financial performance measure called pretax operating earnings. Our definition of operating earnings excludes the following items from net earnings on an after-tax basis: realized investment gains/losses (securities transactions, impairments, and the impact of derivative and hedging activities) and nonrecurring items. We then exclude income taxes related to operations to arrive at pretax operating earnings. Information regarding operations by segment follows:



	Three Months Ended March 31,
(In millions)	2013				2012
Revenues:
Aflac Japan:
Earned premiums		$	3,905			$	4,148
Net investment income		674				730
Other income		26				16
Total Aflac Japan		4,605				4,894
Aflac U.S.:
Earned premiums		1,280				1,231
Net investment income		157				152
Other income		1				2
Total Aflac U.S.		1,438				1,385
Other business segments		12				14
Total business segment revenues		6,055				6,293
Realized investment gains (losses)		156				(45		)
Corporate		92				68
Intercompany eliminations		(95		)		(76		)
Total revenues		$	6,208			$	6,240



	Three Months Ended March 31,
(In millions)	2013				2012
Pretax earnings:
Aflac Japan		$	989			$	1,040
Aflac U.S.		281				271
Total business segment pretax operating earnings		1,270				1,311
Interest expense, noninsurance operations		(48		)		(44		)
Corporate and eliminations		(17		)		(20		)
Pretax operating earnings		1,205				1,247
Realized investment gains (losses)		156				(45		)
Total earnings before income taxes		$	1,361			$	1,202
Income taxes applicable to pretax operating earnings		$	415			$	433
Effect of foreign currency translation on operating earnings		(71		)		20

Assets were as follows:



(In millions)	March 31, 2013				December 31, 2012
Assets:
Aflac Japan		$	103,098			$	113,678
Aflac U.S.		16,130				16,122
Other business segments		152				154
Total business segment assets		119,380				129,954
Corporate		19,861				20,318
Intercompany eliminations		(18,703		)		(19,178		)
Total assets		$	120,538			$	131,094

3. INVESTMENTS

Investment Holdings

The amortized cost for our investments in debt and perpetual securities, the cost for equity securities and the fair values of these investments are shown in the following tables.



	March 31, 2013
(In millions)	Cost or Amortized Cost			Gross Unrealized Gains			Gross Unrealized Losses			Fair Value
Securities available for sale, carried at fair value:
Fixed maturities:
Yen-denominated:
Japan government and agencies		$	12,035		$	748		$	0		$	12,783
Mortgage- and asset-backed securities		671			44			1			714
Public utilities		2,928			116			53			2,991
Sovereign and supranational		1,120			61			7			1,174
Banks/financial institutions		2,952			183			236			2,899
Other corporate		4,892			189			256			4,825
Total yen-denominated		24,598			1,341			553			25,386
Dollar-denominated:
U.S. government and agencies		95			16			0			111
Municipalities		1,018			149			6			1,161
Mortgage- and asset-backed securities		182			58			0			240
Public utilities		4,581			609			31			5,159
Sovereign and supranational		468			112			2			578
Banks/financial institutions		3,578			502			8			4,072
Other corporate		18,259			1,581			271			19,569
Total dollar-denominated		28,181			3,027			318			30,890
Total fixed maturities		52,779			4,368			871			56,276
Perpetual securities:
Yen-denominated:
Banks/financial institutions		3,080			73			525			2,628
Other corporate		285			0			67			218
Dollar-denominated:
Banks/financial institutions		268			25			6			287
Total perpetual securities		3,633			98			598			3,133
Equity securities		18			6			0			24
Total securities available for sale		$	56,430		$	4,472		$	1,469		$	59,433



	March 31, 2013
(In millions)	Cost or Amortized Cost			Gross Unrealized Gains			Gross Unrealized Losses			Fair Value
Securities held to maturity, carried at amortized cost:
Fixed maturities:
Yen-denominated:
Japan government and agencies		$	24,606		$	2,154		$	0		$	26,760
Municipalities		452			65			0			517
Mortgage- and asset-backed securities		77			4			0			81
Public utilities		4,532			202			222			4,512
Sovereign and supranational		2,953			220			100			3,073
Banks/financial institutions		8,480			163			690			7,953
Other corporate		4,104			249			202			4,151
Total yen-denominated		45,204			3,057			1,214			47,047
Total securities held to maturity		$	45,204		$	3,057		$	1,214		$	47,047



	December 31, 2012
(In millions)	Cost or Amortized Cost			Gross Unrealized Gains			Gross Unrealized Losses			Fair Value
Securities available for sale, carried at fair value:
Fixed maturities:
Yen-denominated:
Japan government and agencies		$	12,612		$	349		$	81		$	12,880
Mortgage- and asset-backed securities		746			40			1			785
Public utilities		3,608			116			72			3,652
Sovereign and supranational		1,404			71			0			1,475
Banks/financial institutions		3,455			233			180			3,508
Other corporate		5,656			241			153			5,744
Total yen-denominated		27,481			1,050			487			28,044
Dollar-denominated:
U.S. government and agencies		93			24			0			117
Municipalities		1,045			156			6			1,195
Mortgage- and asset-backed securities		188			58			0			246
Public utilities		4,204			658			17			4,845
Sovereign and supranational		476			123			2			597
Banks/financial institutions		3,626			506			6			4,126
Other corporate		16,300			1,878			95			18,083
Total dollar-denominated		25,932			3,403			126			29,209
Total fixed maturities		53,413			4,453			613			57,253
Perpetual securities:
Yen-denominated:
Banks/financial institutions		3,635			193			161			3,667
Other corporate		309			43			0			352
Dollar-denominated:
Banks/financial institutions		269			23			9			283
Total perpetual securities		4,213			259			170			4,302
Equity securities		20			4			1			23
Total securities available for sale		$	57,646		$	4,716		$	784		$	61,578



	December 31, 2012
(In millions)	Cost or Amortized Cost			Gross Unrealized Gains			Gross Unrealized Losses			Fair Value
Securities held to maturity, carried at amortized cost:
Fixed maturities:
Yen-denominated:
Japan government and agencies		$	32,043		$	356		$	67		$	32,332
Municipalities		492			30			2			520
Mortgage- and asset-backed securities		90			4			0			94
Public utilities		4,924			233			106			5,051
Sovereign and supranational		3,209			192			84			3,317
Banks/financial institutions		9,211			211			431			8,991
Other corporate		4,457			187			108			4,536
Total yen-denominated		54,426			1,213			798			54,841
Total securities held to maturity		$	54,426		$	1,213		$	798		$	54,841

The methods of determining the fair values of our investments in fixed-maturity securities, perpetual securities and equity securities, including a change in valuation methodology for determining fair value of privately issued securities as of March 31, 2013, are described in Note 5.

During the first quarter of 2013 , we did not reclassify any investments from the held-to-maturity portfolio to the available-for-sale portfolio. During the first quarter of 2012 , we reclassified one investment from the held-to-maturity portfolio to the available-for-sale portfolio as a result of a significant decline in the issuer's creditworthiness. At the time of the transfer, the security had an amortized cost of $122 million and an unrealized loss of $23 million .

Contractual and Economic Maturities

The contractual maturities of our investments in fixed maturities at March 31, 2013 , were as follows:



	Aflac Japan						Aflac U.S.
(In millions)	Amortized Cost			Fair Value			Amortized Cost			Fair Value
Available for sale:
Due in one year or less		$	715		$	724		$	107		$	110
Due after one year through five years		1,963			2,065			316			359
Due after five years through 10 years		8,295			8,615			1,336			1,548
Due after 10 years		30,805			32,172			8,245			9,562
Mortgage- and asset-backed securities		813			903			40			51
Total fixed maturities available for sale		$	42,591		$	44,479		$	10,044		$	11,630
Held to maturity:
Due in one year or less		$	321		$	322		$	0		$	0
Due after one year through five years		624			672			0			0
Due after five years through 10 years		2,924			3,127			0			0
Due after 10 years		41,258			42,845			0			0
Mortgage- and asset-backed securities		77			81			0			0
Total fixed maturities held to maturity		$	45,204		$	47,047		$	0		$	0

At March 31, 2013 , the Parent Company had a portfolio of investment-grade available-for-sale fixed-maturity securities totaling $144 million at amortized cost and $167 million at fair value, which is not included in the table above.

Expected maturities may differ from contractual maturities because some issuers have the right to call or prepay obligations with or without call or prepayment penalties.

The majority of our perpetual securities are subordinated to other debt obligations of the issuer, but rank higher than the issuer's equity securities. Perpetual securities have characteristics of both debt and equity investments, along with unique features that create economic maturity dates for the securities. Although perpetual securities have no contractual maturity date, they have stated interest coupons that were fixed at their issuance and subsequently change to a floating short-term interest rate of 125 to more than 300 basis points above an appropriate market index , generally by the 25th year after issuance , thereby creating an economic maturity date. The economic maturities of our investments in perpetual securities, which were all reported as available for sale at March 31, 2013 , were as follows:



	Aflac Japan						Aflac U.S.
(In millions)	Amortized Cost			Fair Value			Amortized Cost			Fair Value
Due in one year or less		$	0		$	0		$	0		$	0
Due after one year through five years		1,147			968			5			5
Due after five years through 10 years		285			218			0			0
Due after 10 years		2,037			1,771			159			171
Total perpetual securities available for sale		$	3,469		$	2,957		$	164		$	176

Investment Concentrations

Our investment process begins with an independent approach to underwriting each issuer's fundamental credit quality. We evaluate independently those factors which we believe could influence an issuer's ability to make payments under the contractual terms of our instruments. This includes a thorough analysis of a variety of items including the issuer's country of domicile (including political, legal, and financial considerations); the industry in which the issuer competes (with an analysis of industry structure, end-market dynamics, and regulation); company specific issues (such as management, assets, earnings, cash generation, and capital needs); and contractual provisions of the instrument (such as financial covenants and position in the capital structure). We further determine the appropriateness of the investment considering broad business and portfolio management objectives, asset/liability needs, portfolio diversification, and expected income.

Banks and Financial Institutions

Our total investments in the bank and financial institution sector, including those classified as perpetual securities, were as follows:



	March 31, 2013						December 31, 2012
	Total Investments in Banks and Financial Institutions Sector (in millions)			Percentage of Total Investment Portfolio			Total Investments in Banks and Financial Institutions Sector (in millions)			Percentage of Total Investment Portfolio
Fixed maturities:
Amortized cost		$	15,010		15	%		$	16,292		14	%
Fair value		14,924			14			16,625			14
Perpetual securities:
Upper Tier II:
Amortized cost		$	2,340		2	%		$	2,825		3	%
Fair value		2,059			2			2,919			3
Tier I:
Amortized cost		1,008			1			1,079			1
Fair value		856			1			1,031			1
Total:
Amortized cost		$	18,358		18	%		$	20,196		18	%
Fair value		17,839			17			20,575			18

Realized Investment Gains and Losses

Information regarding pretax realized gains and losses from investments is as follows:



	Three Months Ended March 31,
(In millions)	2013				2012
Realized investment gains (losses) on securities:
Fixed maturities:
Available for sale:
Gross gains from sales		$	119			$	14
Gross losses from sales		(6		)		(1		)
Net gains (losses) from redemptions		6				0
Other-than-temporary impairment losses		(54		)		(63		)
Held to maturity:
Net gains (losses) from redemptions		0				0
Total fixed maturities		65				(50		)
Perpetual securities:
Available for sale:
Gross gains from sales		0				70
Gross losses from sales		0				(65		)
Net gains (losses) from redemptions		0				60
Other-than-temporary impairment losses		0				(140		)
Total perpetual securities		0				(75		)
Equity securities:
Other-than-temporary impairment losses		(1		)		0
Total equity securities		(1		)		0
Derivatives and other:
Derivative gains (losses)		87				80
Other		5				0
Total derivatives and other		92				80
Total realized investment gains (losses)		$	156			$	(45	)

Other-than-temporary Impairment

The fair values of our debt and perpetual security investments fluctuate based on changes in interest rates and credit spreads in the global financial markets. Fair values can also be heavily influenced by the values of the assets of the issuer and expected ultimate recovery values upon default, bankruptcy or other financial restructuring. Credit spreads are most impacted by the general credit environment and global market liquidity. Interest rates are driven by numerous factors including, but not limited to, supply and demand, governmental monetary actions, expectations of inflation and economic growth. We believe that fluctuations in the fair value of our investment securities related to changes in credit spreads or interest rates have little bearing on underlying credit quality of the issuer, and whether our investment is ultimately recoverable. Generally, we consider such declines in fair values to be temporary even in situations where an investment remains in an unrealized loss position for a year or more.

However, in the course of our credit review process, we may determine that it is unlikely that we will recover our investment in an issuer due to factors specific to an individual issuer, as opposed to general changes in global credit spreads or interest rates. In this event, we consider such a decline in the investment's fair value, to the extent it is below the investment's cost or amortized cost, to be an other-than-temporary impairment of the investment and reduce the book value of the investment to its fair value.

In addition to the usual investment risk associated with a debt instrument, our perpetual security holdings are largely issued by banks that are integral to the financial markets of the corresponding 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.

When determining our intention to sell a security prior to recovery of its fair value to amortized cost, we evaluate facts and circumstances such as, but not limited to, sales of securities to meet cash flow needs and decisions to reposition our security portfolio. We perform ongoing analyses of our liquidity needs, which includes cash flow testing of our policy liabilities, debt maturities, projected dividend payments and other cash flow and liquidity needs. Our cash flow testing includes extensive duration matching of our investment portfolio and policy liabilities. Based on our analyses, we have concluded that we have sufficient excess cash flows to meet our liquidity needs without selling any of our investments prior to their maturity. Recently, we have been repositioning our security portfolio in an effort to enhance diversification and our credit profile by reducing our risk exposure through opportunistic investment transactions.

The following table details our pretax other-than-temporary impairment losses by investment category that resulted from our impairment evaluation process.



	Three Months Ended March 31,
(In millions)	2013			2012
Perpetual securities	$	0		$	140
Corporate bonds	38			63
Sovereign and supranational	16			0
Equity securities	1			0
Total other-than-temporary impairment losses realized	$	55	⁽¹⁾	$	203	⁽¹⁾

⁽¹⁾ Includes $0 and $28 for the three- month periods ended March 31, 2013 and 2012 , respectively, for credit-related impairments; $54 and $175 for the three- month periods ended March 31, 2013 and 2012 , respectively, from change in intent to sell securities; and $1 f or the three- month period ended March 31, 2013 for impairments due to severity and duration of decline in fair value

Unrealized Investment Gains and Losses

Effect on Shareholders’ Equity

The net effect on shareholders’ equity of unrealized gains and losses from investment securities was as follows:



(In millions)	March 31, 2013				December 31, 2012
Unrealized gains (losses) on securities available for sale		$	3,003			$	3,932
Unamortized unrealized gains on securities transferred to held to maturity		17				20
Deferred income taxes		(1,039		)		(1,382		)
Shareholders’ equity, unrealized gains (losses) on investment securities		$	1,981			$	2,570

Gross Unrealized Loss Aging

The following tables show the fair values and gross unrealized losses of our available-for-sale and held-to-maturity investments that were in an unrealized loss position, aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position.



	March 31, 2013
	Total						Less than 12 months						12 months or longer
(In millions)	Fair Value			Unrealized Losses			Fair Value			Unrealized Losses			Fair Value			Unrealized Losses
Fixed Maturities:
Japan government and agencies:
Yen-denominated		$	5		$	0		$	5		$	0		$	0		$	0
Municipalities:
Dollar-denominated		34			6			0			0			34			6
Mortgage- and asset- backed securities:
Dollar-denominated		9			0			9			0			0			0
Yen-denominated		125			1			0			0			125			1
Public utilities:
Dollar-denominated		1,154			31			1,144			31			10			0
Yen-denominated		3,052			275			1,779			120			1,273			155
Sovereign and supranational:
Dollar-denominated		33			2			0			0			33			2
Yen-denominated		903			107			515			17			388			90
Banks/financial institutions:
Dollar-denominated		347			8			318			7			29			1
Yen-denominated		6,537			926			3,178			171			3,359			755
Other corporate:
Dollar-denominated		7,478			271			7,350			263			128			8
Yen-denominated		4,847			458			3,509			265			1,338			193
Total fixed maturities		24,524			2,085			17,807			874			6,717			1,211
Perpetual securities:
Dollar-denominated		18			6			0			0			18			6
Yen-denominated		2,045			592			1,349			325			696			267
Total perpetual securities		2,063			598			1,349			325			714			273
Equity securities		1			0			0			0			1			0
Total		$	26,588		$	2,683		$	19,156		$	1,199		$	7,432		$	1,484



	December 31, 2012
	Total						Less than 12 months						12 months or longer
(In millions)	Fair Value			Unrealized Losses			Fair Value			Unrealized Losses			Fair Value			Unrealized Losses
Fixed Maturities:
Japan government and agencies:
Yen-denominated		$	17,342		$	148		$	17,342		$	148		$	0		$	0
Municipalities:
Dollar-denominated		34			6			1			0			33			6
Yen-denominated		56			2			56			2			0			0
Mortgage- and asset- backed securities:
Dollar-denominated		10			0			10			0			0			0
Yen-denominated		136			1			0			0			136			1
Public utilities:
Dollar-denominated		736			17			736			17			0			0
Yen-denominated		3,920			178			1,339			31			2,581			147
Sovereign and supranational:
Dollar-denominated		31			2			0			0			31			2
Yen-denominated		1,244			84			507			13			737			71
Banks/financial institutions:
Dollar-denominated		276			6			180			3			96			3
Yen-denominated		6,918			611			1,935			28			4,983			583
Other corporate:
Dollar-denominated		4,534			95			4,404			86			130			9
Yen-denominated		4,013			261			1,635			40			2,378			221
Total fixed maturities		39,250			1,411			28,145			368			11,105			1,043
Perpetual securities:
Dollar-denominated		136			9			120			0			16			9
Yen-denominated		1,315			161			0			0			1,315			161
Total perpetual securities		1,451			170			120			0			1,331			170
Equity securities		6			1			3			0			3			1
Total		$	40,707		$	1,582		$	28,268		$	368		$	12,439		$	1,214

Analysis of Securities in Unrealized Loss Positions

The unrealized losses on our investments have been primarily related to general market changes in foreign exchange rates or the levels of credit spreads or interest rates rather than specific concerns with the issuer's ability to pay interest and repay principal. In addition, in the first quarter of 2013, we refined our methodology for valuing certain privately issued securities (see Note 5). The change in valuation methodology resulted in an increase in gross unrealized losses as of March 31, 2013 , compared with December 31, 2012. The following summarizes our evaluation of investment categories with significant unrealized losses and securities that were rated below investment grade as of March 31, 2013 .

General Review of Credit Considerations

For any significant declines in fair value, we perform a more focused review of the related issuers' credit profile. We evaluate their ratings from the Nationally Recognized Statistical Rating Organizations (NRSROs), their assets, business profile including industry dynamics and competitive positioning, financial statements and other available financial data. We utilize information available in the public domain as well as consultations with issuers themselves. For non-corporate issuers, the analysis will focus on all sources of credit support including macro-economic variables and issuer specific factors. From these reviews, we evaluate the issuer's continued ability to service our investment through their payment of interest and principal.

Public Utilities

As of March 31, 2013 , 85% of the unrealized losses on investments in the public utilities sector were related to investments that were investment grade, compared with 69% at December 31, 2012 . We have determined that the majority of the unrealized losses in the public utilities sector as of March 31, 2013 were caused by general market changes. Based on our credit analysis, we believe that the issuers of our investments in this sector have the ability to service their obligations to us.

Sovereign and Supranational

As of March 31, 2013 , 99% of the unrealized losses on investment securities in the sovereign and supranational sector were related to investments that were investment grade, compared with 96% at December 31, 2012 . We have determined that the majority of the unrealized losses on the investments in the sovereign and supranational sector as of March 31, 2013 were caused by general market changes. Based on our credit analysis, we believe that the issuers of our investments in this sector have the ability to service their obligations to us.

Bank and Financial Institutions

The following table shows the composition of our investments in an unrealized loss position in the bank and financial institution sector by fixed-maturity securities and perpetual securities. The table reflects those securities in that sector that were in an unrealized loss position as a percentage of our total investment portfolio in an unrealized loss position. The table also reflects the respective unrealized losses in this sector as a percentage of total unrealized losses in our investment portfolio.



	March 31, 2013						December 31, 2012
	Percentage of Total Investments in an Unrealized Loss Position			Percentage of Total Unrealized Losses			Percentage of Total Investments in an Unrealized Loss Position			Percentage of Total Unrealized Losses
Fixed maturities		26	%		35	%		18	%		39	%
Perpetual securities:
Upper Tier II		5			13			2			4
Tier I		2			7			2			7
Total perpetual securities		7			20			4			11
Total		33	%		55	%		22	%		50	%

As of March 31, 2013 , 83% of the $1.5 billion in unrealized losses on investments in the bank and financial institution sector, including perpetual securities, were related to investments that were investment grade, compared with 81% at December 31, 2012 . Of the $8.7 billion in total investments, at fair value, in this sector in an unrealized loss position at March 31, 2013 , only $617 million , which had $255 million in unrealized losses, was below investment grade. Three issuers of investments comprised the $255 million unrealized loss.

Based on our credit analysis, we have determined that the majority of the unrealized losses on the investments in this sector as of March 31, 2013 were caused by wider credit spreads, the downturn in the global economic environment and, to a lesser extent, changes in foreign exchange rates. Further, unrealized gains or losses relating to prevailing interest rate environments are impacted by the remaining time to maturity of an investment. Assuming no credit-related factors develop, as investments near maturity, the unrealized gains or losses can be expected to diminish. Based on our credit analysis, we believe that the issuers of our investments in this sector have the ability to service their obligations to us.

Other Corporate

As of March 31, 2013 , 88% of the unrealized losses on investments in the other corporate sector were related to investments that were investment grade, compared with 72% at December 31, 2012 . We have determined that the majority of the unrealized losses on the investments in the other corporate sector as of March 31, 2013 were caused by general market changes. Based on our credit analysis, we believe that the issuers of our investments in this sector have the ability to service their obligations to us.

Perpetual Securities

As of March 31, 2013 , 88% of the unrealized losses on investments in perpetual securities were related to investments that were investment grade, compared with 100% at December 31, 2012 . The majority of our investments in Upper Tier II and Tier I perpetual securities were in highly-rated global financial institutions. Upper Tier II securities have more debt-like characteristics than Tier I securities and are senior to Tier I securities, preferred stock, and common equity of the issuer. Conversely, Tier I securities have more equity-like characteristics, but are senior to the common equity of the issuer. They may also be senior to certain preferred shares, depending on the individual security, the issuer's capital structure and the regulatory jurisdiction of the issuer.

Details of our holdings of perpetual securities were as follows:

Perpetual Securities



		March 31, 2013										December 31, 2012
(In millions)	Credit Rating	Amortized Cost			Fair Value			Unrealized Gain (Loss)				Amortized Cost			Fair Value			Unrealized Gain (Loss)
Upper Tier II:
	A		$	164		$	181		$	17			$	460		$	488		$	28
	BBB		1,911			1,684			(227		)		2,077			2,129			52
	BB or lower		265			194			(71		)		288			302			14
Total Upper Tier II			2,340			2,059			(281		)		2,825			2,919			94
Tier I:
	BBB		835			669			(166		)		966			904			(62		)
	BB or lower		173			187			14				113			127			14
Total Tier I			1,008			856			(152		)		1,079			1,031			(48		)
Other subordinated - non-banks	BBB		285			218			(67		)		309			352			43
Total			$	3,633		$	3,133		$	(500	)		$	4,213		$	4,302		$	89

With the exception of the Icelandic bank securities that we completely impaired in 2008, none of the perpetual securities we own were in default on interest and principal payments at March 31, 2013 .

During the first three months of 2013 , our aggregate holdings in perpetual securities moved from an unrealized gain of $89 million to an unrealized loss of $500 million . This change is primarily due to a refinement in our methodology for valuing privately issued securities, including perpetual securities, that was implemented in the first quarter of 2013 (see Note 5).

For those securities with unrealized losses as of March 31, 2013 , we believe the losses are principally due to a temporary widening of the applicable discount rate through a combination of interest rates and/or credit spreads. Based on our reviews, we do not believe the ability of these issuers to service our investments has been compromised. Assuming no unforeseen credit factors develop, as the investments near their expected economic maturity, the unrealized gains or losses should lessen. Based on our analysis, we believe the issuers of our holdings in this sector have the ability to service their obligations to us.

Variable Interest Entities (VIEs)

As a condition to our involvement or investment in a VIE, we enter into certain protective rights and covenants that preclude changes in the structure of the VIE that would alter the creditworthiness of our investment or our beneficial interest in the VIE.

Our involvement with all of the VIEs in which we have an interest is passive in nature, and we are not the arranger of these entities. We have not been involved in establishing these entities, except as it relates to our review and evaluation of the structure of these VIEs in the normal course of our investment decision-making process. Further, we are not, nor have we been, required to purchase any securities issued in the future by these VIEs.

Our ownership interest in the VIEs is limited to holding the obligations issued by them. All of the VIEs in which we invest are static with respect to funding and have no ongoing forms of funding after the initial funding date. We have no

direct or contingent obligations to fund the limited activities of these VIEs, nor do we have any direct or indirect financial guarantees related to the limited activities of these VIEs. We have not provided any assistance or any other type of financing support to any of the VIEs we invest in, nor do we have any intention to do so in the future. The weighted-average lives of our notes are very similar to the underlying collateral held by these VIEs where applicable.

Our risk of loss related to our interests in any of our VIEs is limited to our investment in the debt securities issued by them.

VIEs - Consolidated

The following table presents the amortized cost, fair value and balance sheet caption in which the assets and liabilities of consolidated VIEs are reported.

Investments in Consolidated Variable Interest Entities



	March 31, 2013						December 31, 2012
(In millions)	Amortized Cost			Fair Value			Amortized Cost			Fair Value
Assets:
Fixed maturities, available for sale		$	4,721		$	5,377		$	5,058		$	5,787
Perpetual securities, available for sale		520			455			559			574
Fixed maturities, held to maturity		266			259			289			287
Other assets		158			158			191			191
Total assets of consolidated VIEs		$	5,665		$	6,249		$	6,097		$	6,839
Liabilities:
Other liabilities		$	371		$	371		$	399		$	399
Total liabilities of consolidated VIEs		$	371		$	371		$	399		$	399

We are substantively the only investor in the consolidated VIEs listed in the table above. As the sole investor in these VIEs, we have the power to direct the activities of a variable interest entity that most significantly impact the entity's economic performance and are therefore considered to be the primary beneficiary of the VIEs that we consolidate. We also participate in substantially all of the variability created by these VIEs. The activities of these VIEs are limited to holding debt and perpetual securities and interest rate, foreign currency, and/or credit default swaps (CDSs), as appropriate, and utilizing the cash flows from these securities to service our investment. Neither we nor any of our creditors are able to obtain the underlying collateral of the VIEs unless there is an event of default or other specified event. For those VIEs that contain a swap, we are not a direct counterparty to the swap contracts and have no control over them. Our loss exposure to these VIEs is limited to our original investment. Our consolidated VIEs do not rely on outside or ongoing sources of funding to support their activities beyond the underlying collateral and swap contracts, if applicable. With the exception of our investment in senior secured bank loans through unit trust structures, the underlying collateral assets and funding of our consolidated VIEs are generally static in nature and the underlying collateral and the reference corporate entities covered by any CDS contracts were all investment grade at the time of issuance.

We are exposed to credit losses within any consolidated collateralized debt obligations (CDOs) that could result in principal losses to our investments. We have mitigated our risk of credit loss through the structure of the VIE, which contractually requires the subordinated tranches within these VIEs to absorb the majority of the expected losses from the underlying credit default swaps. We currently own only senior mezzanine CDO tranches. Based on our statistical analysis models and the current subordination levels in our CDOs, each of these VIEs can sustain a reasonable number of defaults in the underlying reference entities in the CDSs with no loss to our investment.

VIEs-Not Consolidated

The table below reflects the amortized cost, fair value and balance sheet caption in which our investment in VIEs not consolidated are reported.

Investments in Variable Interest Entities Not Consolidated



	March 31, 2013						December 31, 2012
(In millions)	Amortized Cost			Fair Value			Amortized Cost			Fair Value
Assets:
Fixed maturities, available for sale		$	6,907		$	7,287		$	7,738		$	8,350
Perpetual securities, available for sale		413			392			736			751
Fixed maturities, held to maturity		3,521			3,522			3,829			3,922
Total investments in VIEs not consolidated		$	10,841		$	11,201		$	12,303		$	13,023

The VIEs that we are not required to consolidate are investments that are limited to loans in the form of debt obligations from the VIEs that are irrevocably and unconditionally guaranteed by their corporate parents. These VIEs are the primary financing vehicles used by their corporate sponsors to raise financing in the international capital markets. The variable interests created by these VIEs are principally or solely a result of the debt instruments issued by them. We do not have the power to direct the activities that most significantly impact the entity's economic performance, nor do we have (1) the obligation to absorb losses of the entity or (2) the right to receive benefits from the entity. As such, we are not the primary beneficiary of these VIEs and are therefore not required to consolidate them. These VIE investments comprise securities from 143 separate issuers with an average credit rating of BBB .

Securities Lending

We lend fixed-maturity securities to financial institutions in short-term security-lending transactions. These short-term security-lending arrangements increase investment income with minimal risk. Our security lending policy requires that the fair value of the securities and/or unrestricted cash received as collateral be 102% or more of the fair value of the loaned securities. The following table presents our security loans outstanding and the corresponding collateral held:



(In millions)	March 31, 2013			December 31, 2012
Security loans outstanding, fair value		$	202		$	6,122
Cash collateral on loaned securities		207			6,277

The balance of our security loans outstanding was significantly lower at March 31, 2013 , compared with that at December 31, 2012 , due to the conclusion of a six-month securities lending program that began in the third quarter of 2012. For this particular securities lending program, we invested the cash collateral in JGBs with maturities that corresponded with the conclusion of the program.

4. DERIVATIVE INSTRUMENTS

Our freestanding derivative financial instruments consist of: (1) interest rate, foreign currency and credit default swaps that are associated with investments in special-purpose entities, including VIEs where we are the primary beneficiary; (2) foreign currency forward contracts used in hedging foreign exchange risk on U.S. dollar-denominated securities in Aflac Japan's portfolio; (3) swaps associated with our notes payable, consisting of an interest rate swap for our variable interest rate yen-denominated debt and cross-currency interest rate swaps, also referred to as foreign currency swaps, associated with our senior notes due in February 2017 and February 2022 and subordinated debentures due in September 2052 ; and (4) foreign currency options used to hedge certain portions of forecasted cash flows denominated in yen. We do not use derivative financial instruments for trading purposes, nor do we engage in leveraged derivative transactions. Some of our derivatives are designated as cash flow hedges or fair value hedges; however, other derivatives do not qualify for hedge strategies.

We utilize a net investment hedge to mitigate foreign exchange exposure resulting from our net investment in Aflac Japan. We have designated the majority of our yen-denominated Samurai and Uridashi notes and yen-denominated loans as nonderivative hedging instruments for this net investment hedge.

The following table summarized the impact to realized investment gains (losses) and other comprehensive income (loss) from all derivatives and hedging instruments.



	Three Months Ended March 31,
	2013									2012
(In millions)		Realized Investment Gains (Losses)				Other Comprehensive Income (Loss)				Realized Investment Gains (Losses)				Other Comprehensive Income (Loss)
Qualifying hedges:
Cash flow hedges:
Foreign currency swaps			$	(1	)		$	(7	)		$	0			$	(12	)
Total cash flow hedges			(1		)		(7		)		0				(12		)
Fair value hedges:
Foreign currency forwards ⁽¹⁾			(6		)		0				0				0
Total fair value hedges			(6		)		0				0				0
Net investment hedge:
Non-derivative hedging instruments			0				69				0				49
Total net investment hedge			0				69				0				49
Non-qualifying strategies:
Interest rate swaps			(4		)		0				(3		)		0
Foreign currency swaps			84				0				50				0
Foreign currency options			2				0				0				0
Credit default swaps			12				0				33				0
Total non-qualifying strategies			94				0				80				0
Total			$	87			$	62			$	80			$	37

⁽¹⁾ Impact shown net of effect of hedged items (see Fair Value Hedges section of this Note 4 for further detail)

Derivative Types

Interest rate swaps involve the periodic exchange of cash flows with other parties, at specified intervals, calculated using agreed upon rates or other financial variables and notional principal amounts. Generally, no cash or principal payments are exchanged at the inception of the contract. Typically, at the time a swap is entered into, the cash flow streams exchanged by the counterparties are equal in value. Interest rate swaps are primarily used to convert interest receipts on floating-rate fixed-maturity securities contracts to fixed rates. These derivatives are predominantly used to better match cash receipts from assets with cash disbursements required to fund liabilities.

Credit default swaps are used to assume credit risk related to an individual security or an index. These contracts entitle the consolidated VIE to receive a periodic fee in exchange for an obligation to compensate the derivative counterparty should the referenced security issuers experience a credit event, as defined in the contract. The consolidated VIE is also exposed to credit risk due to embedded derivatives associated with credit-linked notes.

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. Foreign currency swaps are used primarily in the consolidated VIEs in our Aflac Japan portfolio to convert foreign-denominated cash flows to yen, the functional currency of Aflac Japan, in order to minimize cash flow fluctuations. We also use foreign currency swaps to economically convert certain of our dollar-denominated senior note and subordinated debenture principal and interest obligations into yen-denominated obligations.

Foreign currency forwards with short-term maturities are executed for the Aflac Japan segment in order to economically convert certain fixed-maturity dollar-denominated securities into yen. In these transactions, Aflac Japan agrees with another party to buy a fixed amount of yen and sell a corresponding amount of U.S. dollars at a specified

future date. The foreign currency forwards are used in fair value hedging relationships to mitigate the foreign exchange risk associated with dollar-denominated investments supporting yen-denominated liabilities.

Foreign currency options are executed in order to hedge certain portions of forecasted cash flows that are denominated in yen, i.e. primarily profit repatriation from Aflac Japan. We use a combination of options to protect expected future cash flows by simultaneously purchasing a call option (an option that limits exposure to increasing foreign exchange rates) and selling a put option (an option that limits exposure to decreasing foreign exchange rates). The combination of these two actions results in no net premium paid (i.e. a costless or zero-cost collar).

Credit Risk Assumed through Derivatives

For the interest rate, foreign currency, and credit default swaps associated with our VIE investments for which we are the primary beneficiary, we bear the risk of foreign exchange or interest rate loss due to counterparty default even though we are not a direct counterparty to those contracts. We are a direct counterparty to the interest rate and foreign currency swaps that we have on certain of our senior notes, subordinated debentures, and Samurai notes; foreign currency forwards on certain fixed-maturity securities; and foreign currency options, therefore we are exposed to credit risk in the event of nonperformance by the counterparties in those contracts. The risk of counterparty default for our VIE and senior note and subordinated debenture swaps is mitigated by collateral posting requirements the counterparty must meet. The counterparty risk associated with the foreign currency forwards is the risk that at expiry of the contract, the counterparty is unable to deliver the agreed upon amount of yen at the agreed upon price or delivery date, thus exposing the Company to additional unhedged exposure to U.S. dollars in the Aflac Japan investment portfolio. As of March 31, 2013 , there were 10 counterparties to our derivative agreements, with five comprising 83% of the aggregate notional amount. The counterparties to these derivatives are financial institutions with the following credit ratings.



	March 31, 2013							December 31, 2012
	Fair Value				Notional Amount			Fair Value				Notional Amount
(In millions)	of Swaps				of Swaps			of Swaps				of Swaps
Counterparties' credit rating:
AA		$	(6	)		$	161		$	(1	)		$	161
A		(207		)		14,924			(588		)		13,209
Total		$	(213	)		$	15,085		$	(589	)		$	13,370

Certain of our derivative agreements with some of our counterparties contain credit-related triggers. If our credit rating were to fall below a certain level, the counterparties to the derivative instruments could request termination of the derivative at the then fair market value of the derivative or demand immediate full collateralization for derivative instruments in net liability positions. None of our derivative instruments with credit-risk-related features were in a net liability position as of March 31, 2013 .

Certain of our consolidated VIEs have credit default swap contracts that require them to assume credit risk from an asset pool. Those consolidated VIEs will receive periodic payments based on an agreed upon rate and notional amount and will only make a payment by delivery of associated collateral, which consists of highly rated asset-backed securities, if there is a credit event. A credit event payment will typically be equal to the notional value of the swap contract less the value of the referenced obligations. A credit event is generally defined as a default on contractually obligated interest or principal payments or bankruptcy of the referenced entity. The diversified portfolios of corporate issuers are established within sector concentration limits.

The following tables present the maximum potential risk, fair value, weighted-average years to maturity, and underlying referenced credit obligation type for credit default swaps within consolidated VIE structures.



March 31, 2013
		Less than one year				One to three years				Three to five years					Five to ten years					Total
(In millions)	Credit Rating	Maximum potential risk		Estimated fair value		Maximum potential risk		Estimated fair value		Maximum potential risk		Estimated fair value			Maximum potential risk		Estimated fair value			Maximum potential risk		Estimated fair value
Index exposure:
Corporate bonds:
	A	$	0	$	0	$	124	$	2	$	0	$	0		$	0	$	0		$	124	$	2
	BB or lower	0		0		0		0		106		(41		)	107		(15		)	213		(56		)
Total		$	0	$	0	$	124	$	2	$	106	$	(41	)	$	107	$	(15	)	$	337	$	(54	)



December 31, 2012
		Less than one year				One to three years					Three to five years						Five to ten years						Total
(In millions)	Credit Rating	Maximum potential risk		Estimated fair value		Maximum potential risk			Estimated fair value		Maximum potential risk			Estimated fair value			Maximum potential risk			Estimated fair value			Maximum potential risk			Estimated fair value
Index exposure:
Corporate bonds:
	A	$	0	$	0	$	(133	)	$	2	$	0		$	0		$	0		$	0		$	(133	)	$	2
	BB or lower	0		0		0			0		(106		)	(47		)	(116		)	(20		)	(222		)	(67		)
Total		$	0	$	0	$	(133	)	$	2	$	(106	)	$	(47	)	$	(116	)	$	(20	)	$	(355	)	$	(65	)

Accounting for Derivative Financial Instruments

Freestanding derivatives are carried in our consolidated balance sheets either as assets within other assets or as liabilities within other liabilities at estimated fair value. See Note 5 for a discussion on how we determine the fair value of our derivatives. Accruals on derivatives are recorded in accrued investment income or within other liabilities in the consolidated balance sheets.

If a derivative is not designated as an accounting hedge or its use in managing risk does not qualify for hedge accounting, changes in the estimated fair value of the derivative are generally reported within derivative and other gains(losses), which is a component of realized investment gains (losses). The fluctuations in estimated fair value of derivatives that have not been designated for hedge accounting can result in volatility in net earnings.

Hedge Documentation and Effectiveness Testing

To qualify for hedge accounting treatment, a derivative must be highly effective in mitigating the designated risk of the hedged item. At the inception of the hedging relationship, we formally document all relationships between hedging instruments and hedged items, as well as our risk-management objective and strategy for undertaking each hedge transaction. We document the designation of each hedge as either (i) a hedge of the variability of cash flows to be received or paid related to a recognized asset or liability or the hedge of a forecasted transaction ("cash flow hedge"); (ii) a hedge of the estimated fair value of a recognized asset or liability ("fair value hedge"); or (iii) a hedge of a net investment in a foreign operation. The documentation process includes linking derivatives and nonderivatives that are designated as hedges to specific assets or groups of assets or liabilities on the statement of financial position or to specific forecasted transactions and defining the effectiveness and ineffectiveness testing methods to be used. At the hedge's inception and on an ongoing quarterly basis, we also formally assess whether the derivatives that are used in hedging transactions have been, and are expected to continue to be, highly effective in offsetting their designated risk. Hedge effectiveness is assessed using qualitative and quantitative methods.

For assessing hedge effectiveness of cash flow hedges, qualitative methods may include the comparison of critical terms of the derivative to the hedged item, and quantitative methods include regression or other statistical analysis of changes in cash flows associated with the hedge relationship. Hedge ineffectiveness of the hedge relationships is measured each reporting period using the “Hypothetical Derivative Method.” For derivative instruments that are designated and qualify as cash flow hedges, the effective portion of the gain or loss on the derivative is reported as a component of other comprehensive income (loss) and reclassified into earnings in the same period or periods during which the hedged transaction affects earnings. Gains and losses on the derivative representing hedge ineffectiveness are recognized in current earnings within derivative and other gains (losses). All components of each derivative's gain or loss are included in the assessment of hedge effectiveness.

For assessing hedge effectiveness of fair value hedges, qualitative methods may include the comparison of critical terms of the derivative to the hedged item, and quantitative methods include regression or other statistical analysis of changes in cash flows associated with the hedge relationship. Hedge ineffectiveness of the hedge relationships is measured each reporting period using the dollar offset method. For derivative instruments that are designated and qualify as fair value hedges, changes in the estimated fair value of the derivative, including amounts measured as ineffectiveness, and changes in the estimated fair value of the hedged item related to the designated risk being hedged, are reported in current earnings within derivative and other gains (losses).

For the hedge of our net investment in Aflac Japan, we have designated the majority of the Parent Company’s yen-denominated liabilities (Samurai and Uridashi notes and yen-denominated loans) as non-derivative hedging instruments. If the total of the designated Parent Company yen-denominated liabilities is equal to or less than our net investment in Aflac Japan, the hedge is deemed to be effective and the related exchange effect on the liabilities is reported in the unrealized foreign currency component of other comprehensive income. Should these designated yen-denominated liabilities exceed our net investment in Aflac Japan, the foreign exchange effect on the portion of the Parent Company yen-denominated liabilities that exceeds our net investment in Aflac Japan would be recognized in current earnings within other income.

Discontinuance of Hedge Accounting

We discontinue hedge accounting prospectively when (1) it is determined that the derivative is no longer highly effective in offsetting changes in the estimated cash flows or fair value of a hedged item; (2) the derivative is de-designated as a hedging instrument; or (3) the derivative expires or is sold, terminated or exercised.

When hedge accounting is discontinued on a cash flow hedge or fair value hedge, the derivative is carried in the consolidated balance sheets at its estimated fair value, with changes in estimated fair value recognized in current period earnings. For discontinued cash flow hedges, including those where the derivative is sold, terminated or exercised, amounts previously deferred in other comprehensive income (loss) are reclassified into earnings when earnings are impacted by the cash flow of the hedged item.

Derivative Balance Sheet Classification

The tables below summarize the balance sheet classification of our derivative fair value amounts, as well as the gross asset and liability fair value amounts. The fair value amounts presented do not include income accruals. The notional amount of derivative contracts represents the basis upon which pay or receive amounts are calculated. Notional amounts are not reflective of credit risk.



		March 31, 2013
(In millions)	Net Derivatives							Asset Derivatives			Liability Derivatives
Hedge Designation/ Derivative Type	Notional Amount			Fair Value				Fair Value			Fair Value
Cash flow hedges:
Interest rate swaps		$	58		$	0			$	0		$	0
Foreign currency swaps		75			7				7			0
Total cash flow hedges		133			7				7			0
Fair value hedges:
Foreign currency forwards		8,661			(253		)		19			(272		)
Total fair value hedges		8,661			(253		)		19			(272		)
Non-qualifying strategies:
Interest rate swaps		336			25				26			(1		)
Foreign currency swaps		5,352			60				374			(314		)
Foreign currency options		266			2				2			0
Credit default swaps		337			(54		)		2			(56		)
Total non-qualifying strategies		6,291			33				404			(371		)
Total derivatives		$	15,085		$	(213	)		$	430		$	(643	)
Balance Sheet Location
Other assets		$	4,831		$	430			$	430		$	0
Other liabilities		10,254			(643		)		0			(643		)
Total derivatives		$	15,085		$	(213	)		$	430		$	(643	)

		December 31, 2012
(In millions)	Net Derivatives							Asset Derivatives			Liability Derivatives
Hedge Designation/ Derivative Type	Notional Amount			Fair Value				Fair Value			Fair Value
Cash flow hedges:
Interest rate swaps		$	64		$	0			$	0		$	0
Foreign currency swaps		75			14				14			0
Total cash flow hedges		139			14				14			0
Fair value hedges:
Foreign currency forwards		6,944			(535		)		0			(535		)
Total fair value hedges		6,944			(535		)		0			(535		)
Non-qualifying strategies:
Interest rate swaps		355			29				32			(3		)
Foreign currency swaps		5,577			(32		)		297			(329		)
Credit default swaps		355			(65		)		2			(67		)
Total non-qualifying strategies		6,287			(68		)		331			(399		)
Total derivatives		$	13,370		$	(589	)		$	345		$	(934	)
Balance Sheet Location
Other assets		$	2,585		$	345			$	345		$	0
Other liabilities		10,785			(934		)		0			(934		)
Total derivatives		$	13,370		$	(589	)		$	345		$	(934	)

Cash Flow Hedges

Certain of our consolidated VIEs have foreign currency swaps that qualify for hedge accounting treatment. For those that have qualified, we have designated the derivative as a hedge of the variability in cash flows of a forecasted transaction or of amounts to be received or paid related to a recognized asset (“cash flow” hedge). We expect to continue this hedging activity for a weighted-average period of approximately 13 years. The remaining derivatives in our consolidated VIEs that have not qualified for hedge accounting have been designated as held for other investment purposes (“non-qualifying strategies”).

We have an interest rate swap agreement related to 5.5 billion yen variable interest rate Samurai notes that we issued in July 2011 (see Note 6). By entering into this contract, we swapped the variable interest rate to a fixed interest rate of 1.475% . We have designated this interest rate swap as a hedge of the variability in our interest cash flows associated with the variable interest rate Samurai notes. The notional amount and terms of the swap match the principal amount and terms of the variable interest rate Samurai notes, and the swap had no value at inception. Changes in the fair value of the swap contract are recorded in other comprehensive income (loss) as the hedge is deemed effective. Should any portion of the hedge be deemed ineffective, that ineffective portion would be reported in net earnings.

The following table presents the components of the gain or loss on derivatives that qualified as cash flow hedges.

Derivatives in Cash Flow Hedging Relationships



(In millions)	Derivative Gain (Loss) Recognized in Other Comprehensive Income (Effective Portion)				Derivative Gains (Losses) Recognized in Income (Ineffective Portion)
Three Months Ended March 31, 2013:
Foreign currency swaps		$	(7	)		$	(1	)
Total		$	(7	)		$	(1	)

Three Months Ended March 31, 2012:
Foreign currency swaps		$	(12	)		$	0
Total		$	(12	)		$	0

There was no gain or loss reclassified from accumulated other comprehensive income (loss) into earnings related to our designated cash flow hedges for the three- month periods ended March 31, 2013 and 2012 . As of March 31, 2013 , deferred gains and losses on derivative instruments recorded in accumulated other comprehensive income that are expected to be reclassified to earnings during the next twelve months are immaterial.

Fair Value Hedges

We designate and account for foreign currency forwards as fair value hedges when they meet the requirements for hedge accounting. These foreign currency forwards hedge the foreign currency exposure of certain dollar-denominated fixed maturity securities within the investment portfolio of our Aflac Japan segment. We recognize gains and losses on these derivatives and the related hedged items in current earnings within derivative and other gains (losses). The change in the fair value of the foreign currency forwards related to the changes in the difference between the spot rate and the forward price is excluded from the assessment of hedge effectiveness.

The following table presents the gains and losses on derivatives and the related hedged items in fair value hedges.

Fair Value Hedging Relationships



(In millions)		Hedging Derivatives									Hedged Items
Hedging Derivatives	Hedged Items	Total Gains (Losses)			Gains (Losses) Excluded from Effectiveness Testing			Gains (Losses) Included in Effectiveness Testing			Foreign Currency Gains (Losses)		Ineffectiveness Recognized for Fair Value Hedge
Three Months Ended March 31, 2013: ⁽¹⁾
Foreign currency forwards	Fixed-maturity securities	$	(609	)	$	(5	)	$	(604	)	$	603	$	(1	)

⁽¹⁾ Fair value hedging program began in September 2012

Net Investment Hedge

Our primary exposure to be hedged is our net investment in Aflac Japan, which is affected by changes in the yen/dollar exchange rate. To mitigate this exposure, we have taken the following courses of action. First, Aflac Japan maintains an investment portfolio of dollar-denominated securities on behalf of Aflac U.S., which serves as an economic currency hedge of a portion of our investment in Aflac Japan. The functional currency for these investments is the U.S. dollar. The related investment income and realized/unrealized investment gains and losses are also denominated in U.S. dollars. The foreign exchange gains and losses related to this portfolio are taxable in Japan and the U.S. when the securities mature or are sold. Until maturity or sale, deferred tax expense or benefit associated with the foreign exchange gains or losses are recognized in other comprehensive income.

Second, we have designated a majority of the Parent Company's yen-denominated liabilities (Samurai and Uridashi notes and yen-denominated loans - see Note 6) as nonderivative hedges of the foreign currency exposure of our investment in Aflac Japan. We recognized a gain in other comprehensive income on our non-derivative hedging instruments of $69 million and $49 million for the three-month periods ended March 31, 2013 , and 2012 , respectively. Our net investment hedge was effective during the three- month periods ended March 31, 2013 , and 2012 . There was no gain or loss reclassified from accumulated other comprehensive income into earnings related to our net investment hedge during the three- month periods ended March 31, 2013 and 2012 .

Non-qualifying Strategies

For our derivative instruments in consolidated VIEs that do not qualify for hedge accounting treatment, all changes in their fair value are reported in current period earnings within derivative and other gains (losses). The amount of gain or loss recognized in earnings for our VIEs is attributable to the derivatives in those investment structures. While the change in value of the swaps is recorded through current period earnings, the change in value of the available-for-sale fixed income or perpetual securities associated with these swaps is recorded through other comprehensive income.

We have cross-currency interest rate swap agreements related to our $400 million of senior notes due February 2017 and $350 million of senior notes due February 2022 (see Note 6). The notional amounts and terms of the swaps match the principal amount and terms of the senior notes. By entering into these cross-currency swaps, we economically converted our $400 million liability into a 30.9 billion yen liability and reduced the interest rate on this debt from 2.65% in dollars to 1.22% in yen. We also economically converted our $350 million liability into a 27.0 billion yen liability and reduced the interest rate on this debt from 4.00% in dollars to 2.07% in yen.

We also have cross-currency interest rate swap agreements related to our $500 million subordinated debentures due September 2052 (see Note 6). The notional amounts of the swaps matches the principal amount of the subordinated debentures, but the swaps will mature in September 2017 . By entering into these cross-currency swaps, we economically converted our $500 million liability into a 39.2 billion yen liability and reduced the interest rate on this debt from 5.50% in dollars to 4.41% in yen.

In order to hedge foreign exchange risk for certain expected profit repatriation in yen from Aflac Japan scheduled to occur in July 2013, we entered into foreign exchange options as part of a foreign exchange collar strategy to establish a minimum U.S. dollar amount that will be received in exchange for 25 billion yen. See Note 11 for discussion of further hedging activity that occurred subsequent to March 31, 2013.

The following table presents the gain or loss recognized in income on non-qualifying strategies.

Non-qualifying Strategies

Derivative Gains (Losses) Recognized in Income



	Three Months Ended March 31,
(In millions)	2013				2012
Interest rate swaps		$	(4	)		$	(3	)
Foreign currency swaps		84				50
Foreign currency options		2				0
Credit default swaps		12				33
Total		$	94			$	80

Offsetting of Financial Instruments and Derivatives

The tables below summarize the balance sheet offsetting of financial instruments. Our financial instruments that are subject to balance sheet offsetting consist of derivatives (interest rate swaps, foreign currency swaps, foreign currency forwards, foreign currency options, and credit default swaps) and security lending transactions (see Note 3). In accordance with GAAP, our policy is to not offset financial instruments in the Consolidated Balance Sheets.

Offsetting of Financial Assets and Derivative Assets



	March 31, 2013
(In millions)	Gross Amounts Not Offset in the Consolidated Balance Sheets
Description	Carrying Value of Financial Instruments			Cash Collateral Received				Net Amount
Derivative assets:
Foreign currency swaps		$	251		$	0			$	251
Foreign currency forwards		19			0				19
Foreign currency options		2			0				2
Total derivative assets, subject to a master netting arrangement or offsetting arrangement		272			0				272
Securities lending and similar arrangements		202			(207		)		(5		)
Total		$	474		$	(207	)		$	267



	December 31, 2012
(In millions)	Gross Amounts Not Offset in the Consolidated Balance Sheets
Description	Carrying Value of Financial Instruments			Cash Collateral Received				Net Amount
Derivative assets:
Foreign currency swaps		$	154		$	0			$	154
Total derivative assets, subject to a master netting arrangement or offsetting arrangement		154			0				154
Securities lending and similar arrangements		6,122			(6,277		)		(155		)
Total		$	6,276		$	(6,277	)		$	(1	)

Offsetting of Financial Liabilities and Derivative Liabilities



	March 31, 2013
(In millions)	Gross Amounts Not Offset in the Consolidated Balance Sheets
Description	Carrying Value of Financial Instruments				Cash Collateral Pledged			Net Amount
Derivative liabilities:
Foreign currency forwards		$	(272	)		$	0		$	(272	)
Total derivative liabilities, subject to a master netting arrangement or offsetting arrangement		$	(272	)		$	0		$	(272	)



	December 31, 2012
(In millions)	Gross Amounts Not Offset in the Consolidated Balance Sheets
Description	Carrying Value of Financial Instruments				Cash Collateral Pledged			Net Amount
Derivative liabilities:
Foreign currency forwards		$	(535	)		$	0		$	(535	)
Total derivative liabilities, subject to a master netting arrangement or offsetting arrangement		$	(535	)		$	0		$	(535	)

For additional information on our financial instruments, see the accompanying Notes 1, 3 and 5 and Notes 1, 3 and 5 of the Notes to the Consolidated Financial Statements in our annual report to shareholders for the year ended December 31, 2012 .

5. FAIR VALUE MEASUREMENTS

Fair Value Hierarchy

GAAP specifies a hierarchy of valuation techniques based on whether the inputs to those valuation techniques are observable or unobservable. These two types of inputs create three valuation hierarchy levels. Level 1 valuations reflect quoted market prices for identical assets or liabilities in active markets. Level 2 valuations reflect quoted market prices for similar assets or liabilities in an active market, quoted market prices for identical or similar assets or liabilities in non-active markets or model-derived valuations in which all significant valuation inputs are observable in active markets. Level 3 valuations reflect valuations in which one or more of the significant inputs are not observable in an active market.

The following tables present the fair value hierarchy levels of the Company's assets and liabilities that are measured and carried at fair value on a recurring basis.



	March 31, 2013
(In millions)	Quoted Prices in Active Markets for Identical Assets (Level 1)			Significant Observable Inputs (Level 2)			Significant Unobservable Inputs (Level 3)			Total Fair Value
Assets:
Securities available for sale, carried at fair value:
Fixed maturities:
Government and agencies		$	12,190		$	704		$	0		$	12,894
Municipalities		0			1,161			0			1,161
Mortgage- and asset-backed securities		0			515			439			954
Public utilities		0			8,150			0			8,150
Sovereign and supranational		0			1,752			0			1,752
Banks/financial institutions		0			6,945			26			6,971
Other corporate		0			24,394			0			24,394
Total fixed maturities		12,190			43,621			465			56,276
Perpetual securities:
Banks/financial institutions		0			2,915			0			2,915
Other corporate		0			218			0			218
Total perpetual securities		0			3,133			0			3,133
Equity securities		15			5			4			24
Other assets:
Interest rate swaps		0			0			26			26
Foreign currency swaps		0			251			130			381
Foreign currency forwards		0			19			0			19
Foreign currency options		0			2			0			2
Credit default swaps		0			0			2			2
Total other assets		0			272			158			430
Cash and cash equivalents		2,596			0			0			2,596
Total assets		$	14,801		$	47,031		$	627		$	62,459
Liabilities:
Interest rate swaps		$	0		$	0		$	1		$	1
Foreign currency swaps		0			0			314			314
Foreign currency forwards		0			272			0			272
Credit default swaps		0			0			56			56
Total liabilities		$	0		$	272		$	371		$	643



	December 31, 2012
(In millions)	Quoted Prices in Active Markets for Identical Assets (Level 1)			Significant Observable Inputs (Level 2)			Significant Unobservable Inputs (Level 3)			Total Fair Value
Assets:
Securities available for sale, carried at fair value:
Fixed maturities:
Government and agencies		$	12,265		$	732		$	0		$	12,997
Municipalities		0			1,195			0			1,195
Mortgage- and asset-backed securities		0			693			338			1,031
Public utilities		0			8,077			420			8,497
Sovereign and supranational		0			1,654			418			2,072
Banks/financial institutions		0			6,610			1,024			7,634
Other corporate		0			22,841			986			23,827
Total fixed maturities		12,265			41,802			3,186			57,253
Perpetual securities:
Banks/financial institutions		0			3,735			215			3,950
Other corporate		0			352			0			352
Total perpetual securities		0			4,087			215			4,302
Equity securities		13			6			4			23
Other assets:
Interest rate swaps		0			0			32			32
Foreign currency swaps		0			154			157			311
Credit default swaps		0			0			2			2
Total other assets		0			154			191			345
Cash and cash equivalents		2,041			0			0			2,041
Total assets		$	14,319		$	46,049		$	3,596		$	63,964
Liabilities:
Interest rate swaps		$	0		$	0		$	3		$	3
Foreign currency swaps		0			0			329			329
Foreign currency forwards		0			535			0			535
Credit default swaps		0			0			67			67
Total liabilities		$	0		$	535		$	399		$	934

The following tables present the carrying amount and fair value categorized by fair value hierarchy level for the Company's financial instruments that are not carried at fair value.



	March 31, 2013
(In millions)	Carrying Value			Quoted Prices in Active Markets for Identical Assets (Level 1)			Significant Observable Inputs (Level 2)			Significant Unobservable Inputs (Level 3)			Total Fair Value
Assets:
Securities held to maturity, carried at amortized cost:
Fixed maturities:
Government and agencies		$	24,606		$	26,760		$	0		$	0		$	26,760
Municipalities		452			0			517			0			517
Mortgage and asset-backed securities		77			0			26			55			81
Public utilities		4,532			0			4,512			0			4,512
Sovereign and supranational		2,953			0			3,073			0			3,073
Banks/financial institutions		8,480			0			7,953			0			7,953
Other corporate		4,104			0			4,151			0			4,151
Total assets		$	45,204		$	26,760		$	20,232		$	55		$	47,047
Liabilities:
Notes payable (excluding capital leases)		$	4,276		$	0		$	0		$	4,924		$	4,924
Obligation to Japanese policyholder protection corporation		2			0			0			2			2
Total liabilities		$	4,278		$	0		$	0		$	4,926		$	4,926



	December 31, 2012
(In millions)	Carrying Value			Quoted Prices in Active Markets for Identical Assets (Level 1)			Significant Observable Inputs (Level 2)			Significant Unobservable Inputs (Level 3)			Total Fair Value
Assets:
Securities held to maturity, carried at amortized cost:
Fixed maturities:
Government and agencies		$	32,043		$	32,332		$	0		$	0		$	32,332
Municipalities		492			0			520			0			520
Mortgage and asset-backed securities		90			0			30			64			94
Public utilities		4,924			0			5,051			0			5,051
Sovereign and supranational		3,209			0			3,317			0			3,317
Banks/financial institutions		9,211			0			8,991			0			8,991
Other corporate		4,457			0			4,536			0			4,536
Total assets		$	54,426		$	32,332		$	22,445		$	64		$	54,841
Liabilities:
Notes payable (excluding capital leases)		$	4,343		$	0		$	0		$	4,992		$	4,992
Obligation to Japanese policyholder protection corporation		23			0			0			23			23
Total liabilities		$	4,366		$	0		$	0		$	5,015		$	5,015

Fair Value of Financial Instruments

U.S. GAAP requires disclosure of the fair value of certain financial instruments including those that are not carried at fair value. The carrying amounts for cash and cash equivalents, receivables, accrued investment income, accounts payable, cash collateral and payables for security transactions approximated their fair values due to the short-term nature of these instruments. Liabilities for future policy benefits and unpaid policy claims are not financial instruments as defined by GAAP.

Fixed maturities, perpetual securities, and equity securities

We determine the fair values of our fixed maturity securities, perpetual securities, and privately issued equity securities using the following approaches or techniques: price quotes and valuations from third party pricing vendors (including quoted market prices readily available from public exchange markets) and non-binding price quotes we obtain from outside brokers.

Prior to March 31, 2013, we had used a discounted cash flow (DCF) pricing model to value certain of our privately issued securities. Our DCF pricing model incorporated an option adjusted spread and utilized various market inputs we obtained from both active and inactive markets. The estimated fair values developed by the DCF pricing model were most sensitive to prevailing credit spreads, the level of interest rates (yields) and interest rate volatility. Credit spreads were derived from a widely used global bond index to create a credit matrix which took into account the current credit spread, ratings and remaining time to maturity, and subordination levels for securities that were included in the bond index. The index provided a broad-based measure of the global fixed-income bond market. Beginning March 31, 2013, to reflect the impact of the persistent economic environment and the changing regulatory framework, we engaged a third party pricing vendor to develop valuation models to determine fair values of these securities. These models were also DCF models, but also use information from related markets, specifically the credit default swap (CDS) market to estimate expected cash flows. These models take into consideration any unique characteristics of the securities and make various adjustments to arrive at an appropriate issuer-specific loss adjusted credit curve. This credit curve is then used with the relevant recovery rates to estimate expected cash flows and modeling of additional features, including illiquidity adjustments, if necessary, to price the bond by discounting those loss adjusted cash flows. In cases where a credit curve can not be developed from

the specific security features, the valuation methodology takes into consideration other market observable inputs, including: 1) the most appropriate comparable bond(s) of the issuer; 2) issuer-specific CDS spreads; 3) bonds or CDS spreads of comparable issuers with similar characteristics such as rating, geography, or sector; or 4) bond indices that are comparative in rating, industry, maturity and region.

The pricing data and market quotes we obtain from outside sources, including third party pricing services, are reviewed internally for reasonableness. If a fair value appears unreasonable, we will re-examine the inputs and assess the reasonableness of the pricing data with the vendor. Additionally, we may compare the inputs to relevant market indices and other performance measurements. The output of this analysis is presented to the Company's Credit Subcommittee, or CSC. Based on the analysis provided to the CSC, the valuation is confirmed or may be revised if there is evidence of a more appropriate estimate of fair value based on available market data. With the implementation of the pricing change associated with private placements previously noted, we have performed verification of the inputs and calculations in the models to confirm that the valuations represent reasonable estimates of fair value.

The fixed maturities classified as Level 3 consist of securities for which there are limited or no observable valuation inputs. For Level 3 securities that are investment grade, we estimate the fair value of these securities by obtaining non-binding broker quotes from a limited number of brokers. These brokers base their quotes on a combination of their knowledge of the current pricing environment and market conditions. We consider these inputs to be unobservable. For Level 3 investments that are below-investment-grade securities, we consider a variety of significant valuation inputs in the valuation process, including forward exchange rates, yen swap rates, dollar swap rates, interest rate volatilities, credit spread data on specific issuers, assumed default and default recovery rates, and certain probability assumptions. In obtaining these valuation inputs, we have determined that certain pricing assumptions and data used by our pricing sources are difficult to validate or corroborate by the market and/or appear to be internally developed rather than observed in or corroborated by the market. The use of these unobservable valuation inputs causes more subjectivity in the valuation process for these securities.

Historically, we have not adjusted the quotes or prices we obtain from the pricing services and brokers we use.

The following tables present the pricing sources for the fair values of our fixed maturities, perpetual securities, and equity securities.



	March 31, 2013
(In millions)	Quoted Prices in Active Markets for Identical Assets (Level 1)			Significant Observable Inputs (Level 2)			Significant Unobservable Inputs (Level 3)			Total Fair Value
Securities available for sale, carried at fair value:
Fixed maturities:
Government and agencies:
Third party pricing vendor		$	12,190		$	704		$	0		$	12,894
Total government and agencies		12,190			704			0			12,894
Municipalities:
Third party pricing vendor		0			1,161			0			1,161
Total municipalities		0			1,161			0			1,161
Mortgage- and asset-backed securities:
Third party pricing vendor		0			515			0			515
Broker/other		0			0			439			439
Total mortgage- and asset-backed securities		0			515			439			954
Public utilities:
Third party pricing vendor		0			8,125			0			8,125
Broker/other		0			25			0			25
Total public utilities		0			8,150			0			8,150
Sovereign and supranational:
Third party pricing vendor		0			1,420			0			1,420
Broker/other		0			332			0			332
Total sovereign and supranational		0			1,752			0			1,752
Banks/financial institutions:
Third party pricing vendor		0			6,945			0			6,945
Broker/other		0			0			26			26
Total banks/financial institutions		0			6,945			26			6,971
Other corporate:
Third party pricing vendor		0			24,256			0			24,256
Broker/other		0			138			0			138
Total other corporate		0			24,394			0			24,394
Total fixed maturities		12,190			43,621			465			56,276
Perpetual securities:
Banks/financial institutions:
Third party pricing vendor		0			2,915			0			2,915
Total banks/financial institutions		0			2,915			0			2,915
Other corporate:
Third party pricing vendor		0			218			0			218
Total other corporate		0			218			0			218
Total perpetual securities		0			3,133			0			3,133
Equity securities:
Third party pricing vendor		15			5			0			20
Broker/other		0			0			4			4
Total equity securities		15			5			4			24
Total securities available for sale		$	12,205		$	46,759		$	469		$	59,433



	March 31, 2013
(In millions)	Quoted Prices in Active Markets for Identical Assets (Level 1)			Significant Observable Inputs (Level 2)			Significant Unobservable Inputs (Level 3)			Total Fair Value
Securities held to maturity, carried at amortized cost:
Fixed maturities:
Government and agencies:
Third party pricing vendor		$	26,760		$	0		$	0		$	26,760
Total government and agencies		26,760			0			0			26,760
Municipalities:
Third party pricing vendor		0			517			0			517
Total municipalities		0			517			0			517
Mortgage- and asset-backed securities:
Third party pricing vendor		0			26			0			26
Broker/other		0			0			55			55
Total mortgage- and asset-backed securities		0			26			55			81
Public utilities:
Third party pricing vendor		0			4,512			0			4,512
Total public utilities		0			4,512			0			4,512
Sovereign and supranational:
Third party pricing vendor		0			3,073			0			3,073
Total sovereign and supranational		0			3,073			0			3,073
Banks/financial institutions:
Third party pricing vendor		0			7,953			0			7,953
Total banks/financial institutions		0			7,953			0			7,953
Other corporate:
Third party pricing vendor		0			4,151			0			4,151
Total other corporate		0			4,151			0			4,151
Total securities held to maturity		$	26,760		$	20,232		$	55		$	47,047



	December 31, 2012
(In millions)	Quoted Prices in Active Markets for Identical Assets (Level 1)			Significant Observable Inputs (Level 2)			Significant Unobservable Inputs (Level 3)			Total Fair Value
Securities available for sale, carried at fair value:
Fixed maturities:
Government and agencies:
Third party pricing vendor		$	12,265		$	685		$	0		$	12,950
DCF pricing model		0			47			0			47
Total government and agencies		12,265			732			0			12,997
Municipalities:
Third party pricing vendor		0			1,177			0			1,177
DCF pricing model		0			18			0			18
Total municipalities		0			1,195			0			1,195
Mortgage- and asset-backed securities:
Third party pricing vendor		0			682			0			682
DCF pricing model		0			11			0			11
Broker/other		0			0			338			338
Total mortgage- and asset-backed securities		0			693			338			1,031
Public utilities:
Third party pricing vendor		0			5,144			0			5,144
DCF pricing model		0			2,908			420			3,328
Broker/other		0			25			0			25
Total public utilities		0			8,077			420			8,497
Sovereign and supranational:
Third party pricing vendor		0			540			0			540
DCF pricing model		0			619			418			1,037
Broker/other		0			495			0			495
Total sovereign and supranational		0			1,654			418			2,072
Banks/financial institutions:
Third party pricing vendor		0			4,257			0			4,257
DCF pricing model		0			2,136			444			2,580
Broker/other		0			217			580			797
Total banks/financial institutions		0			6,610			1,024			7,634
Other corporate:
Third party pricing vendor		0			18,093			0			18,093
DCF pricing model		0			4,747			575			5,322
Broker/other		0			1			411			412
Total other corporate		0			22,841			986			23,827
Total fixed maturities		12,265			41,802			3,186			57,253
Perpetual securities:
Banks/financial institutions:
Third party pricing vendor		0			283			0			283
DCF pricing model		0			3,452			215			3,667
Total banks/financial institutions		0			3,735			215			3,950



(In millions)	Quoted Prices in Active Markets for Identical Assets (Level 1)			Significant Observable Inputs (Level 2)			Significant Unobservable Inputs (Level 3)			Total Fair Value
Other corporate:
DCF pricing model		0			352			0			352
Total other corporate		0			352			0			352
Total perpetual securities		0			4,087			215			4,302
Equity securities:
Third party pricing vendor		13			0			0			13
DCF pricing model		0			6			0			6
Broker/other		0			0			4			4
Total equity securities		13			6			4			23
Total securities available for sale		$	12,278		$	45,895		$	3,405		$	61,578



	December 31, 2012
(In millions)	Quoted Prices in Active Markets for Identical Assets (Level 1)			Significant Observable Inputs (Level 2)			Significant Unobservable Inputs (Level 3)			Total Fair Value
Securities held to maturity, carried at amortized cost:
Fixed maturities:
Government and agencies:
Third party pricing vendor		$	32,332		$	0		$	0		$	32,332
Total government and agencies		32,332			0			0			32,332
Municipalities:
Third party pricing vendor		0			464			0			464
DCF pricing model		0			56			0			56
Total municipalities		0			520			0			520
Mortgage- and asset-backed securities:
Third party pricing vendor		0			30			0			30
Broker/other		0			0			64			64
Total mortgage- and asset-backed securities		0			30			64			94
Public utilities:
Third party pricing vendor		0			58			0			58
DCF pricing model		0			4,993			0			4,993
Total public utilities		0			5,051			0			5,051
Sovereign and supranational:
Third party pricing vendor		0			370			0			370
DCF pricing model		0			2,947			0			2,947
Total sovereign and supranational		0			3,317			0			3,317
Banks/financial institutions:
Third party pricing vendor		0			254			0			254
DCF pricing model		0			8,737			0			8,737
Total banks/financial institutions		0			8,991			0			8,991
Other corporate:
Third party pricing vendor		0			122			0			122
DCF pricing model		0			4,414			0			4,414
Total other corporate		0			4,536			0			4,536
Total securities held to maturity		$	32,332		$	22,445		$	64		$	54,841

The following is a discussion of the determination of fair value of our remaining financial instruments.

Derivatives

We use derivative instruments to manage the risk associated with certain assets. However, the derivative instrument may not be classified in the same fair value hierarchy level as the associated asset. Inputs used to value derivatives include, but are not limited to, interest rates, credit spreads, foreign currency forward and spot rates, and interest volatility.

The fair values of the foreign currency forwards associated with certain fixed-maturity securities, the foreign currency options, the foreign currency swaps associated with our senior notes and subordinated debentures, and the interest rate swap associated with our yen-denominated notes are based on the amounts we would expect to receive or pay. The determination of the fair value of these derivatives is based on observable market inputs, therefore they are classified as Level 2.

For derivatives associated with VIEs where we are the primary beneficiary, we are not the direct counterparty to the swap contracts. As a result, the fair value measurements incorporate the credit risk of the collateral associated with the VIE. We receive valuations from a third party pricing vendor for these derivatives. Based on an analysis of these derivatives and a review of the methodology employed by the pricing vendor, we determined that due to the long duration of these swaps and the need to extrapolate from short-term observable data to derive and measure long-term inputs, certain inputs, assumptions and judgments are required to value future cash flows that cannot be corroborated by current inputs or current observable market data. As a result, the derivatives associated with our consolidated VIEs are classified as Level 3 of the fair value hierarchy.

Notes payable

The fair values of our publicly issued notes payable classified as Level 3 were obtained from a limited number of independent brokers. These brokers base their quotes on a combination of their knowledge of the current pricing environment and market conditions. We consider these inputs to be unobservable. The fair values of our yen-denominated loans approximate their carrying values.

Obligation to Japanese policyholder protection corporation

The fair value of the obligation to the Japanese policyholder protection corporation classified as Level 3 is our estimated share of the industry's obligation calculated on a pro rata basis by projecting our percentage of the industry's premiums and reserves and applying that percentage to the total industry obligation payable in future years. We consider our inputs for this valuation to be unobservable.

Level 3 Rollforward and Transfers between Hierarchy Levels

The following tables present the changes in fair value of our available-for-sale investments and derivatives classified as Level 3.



Three Months Ended March 31, 2013
	Fixed Maturities															Perpetual Securities			Equity Securities		Derivatives ⁽¹⁾
(In millions)	Mortgage- and Asset- Backed Securities			Public Utilities			Sovereign and Supranational			Banks/ Financial Institutions			Other Corporate			Banks/ Financial Institutions					Interest Rate Swaps			Foreign Currency Swaps			Credit Default Swaps			Total
Balance, beginning of period	$	338		$	420		$	418		$	1,024		$	986		$	215		$	4	$	29		$	(172	)	$	(65	)	$	3,197
Realized investment gains (losses) included in earnings	0			0			0			0			0			0			0		(4		)	(5		)	11			2
Unrealized gains (losses) included in other comprehensive income (loss)	(21		)	(20		)	0			(1		)	0			0			0		0			(7		)	0			(49		)
Purchases, issuances, sales and settlements:
Purchases	0			0			0			0			0			0			0		0			0			0			0
Issuances	0			0			0			0			0			0			0		0			0			0			0
Sales	0			(400		)	0			0			0			0			0		0			0			0			(400		)
Settlements	(3		)	0			0			0			0			0			0		0			0			0			(3		)
Transfers into Level 3 ⁽²⁾	125			0			0			0			0			0			0		0			0			0			125
Transfers out of Level 3 ⁽³⁾	0			0			(418		)	(997		)	(986		)	(215		)	0		0			0			0			(2,616		)
Balance, end of period	$	439		$	0		$	0		$	26		$	0		$	0		$	4	$	25		$	(184	)	$	(54	)	$	256
Changes in unrealized gains (losses) relating to Level 3 assets and liabilities still held at the end of the period included in realized investment gains (losses)	$	0		$	0		$	0		$	0		$	0		$	0		$	0	$	(4	)	$	(5	)	$	11		$	2

⁽¹⁾ Derivative assets and liabilities are presented net

⁽²⁾ Due to a lack of visibility to observe significant inputs to price

⁽³⁾ A result of changing our pricing methodology to a valuation method that uses observable market data as significant inputs to estimate fair value



Three Months Ended March 31, 2012
	Fixed Maturities														Perpetual Securities			Equity Securities		Derivatives ⁽¹⁾
(In millions)	Mortgage- and Asset- Backed Securities			Public Utilities			Sovereign and Supranational			Banks/ Financial Institutions		Other Corporate			Banks/ Financial Institutions					Interest Rate Swaps			Foreign Currency Swaps			Credit Default Swaps			Total
Balance, beginning of period	$	394		$	422		$	434		$	1,074	$	1,105		$	526		$	4	$	30		$	(56	)	$	(130	)	$	3,803
Realized investment gains (losses) included in earnings	0			0			0			0		2			49			0		(2		)	13			33			95
Unrealized gains (losses) included in other comprehensive income (loss)	(23		)	(13		)	(16		)	23		(38		)	6			0		0			(12		)	0			(73		)
Purchases, issuances, sales and settlements:
Purchases	0			0			0			0		0			0			0		0			0			0			0
Issuances	0			0			0			0		0			0			0		0			0			0			0
Sales	0			0			0			0		(34		)	(256		)	0		0			0			0			(290		)
Settlements	(4		)	0			0			0		0			0			0		0			(24		)	0			(28		)
Transfers into Level 3	0			0			0			0		0			0			0		0			0			0			0
Transfers out of Level 3	0			0			0			0		0			0			0		0			0			0			0
Balance, end of period	$	367		$	409		$	418		$	1,097	$	1,035		$	325		$	4	$	28		$	(79	)	$	(97	)	$	3,507
Changes in unrealized gains (losses) relating to Level 3 assets and liabilities still held at the end of the period included in realized investment gains (losses)	$	0		$	0		$	0		$	0	$	0		$	0		$	0	$	(2	)	$	13		$	33		$	44

⁽¹⁾ Derivative assets and liabilities are presented net

Transfers into and/or out of Level 3 are attributable to a change in the observability of inputs. The most significant transfer out of Level 3 into Level 2 during the three-month period ended March 31, 2013 related to our callable reverse dual-currency bonds (RDCs). RDCs are securities that have principal denominated in yen while paying U.S. dollar (USD) coupons. The market standard approach is to use implied volatility to value options or instruments with optionality because historical volatility may not represent current market participants' expectations about future volatility. Under our previous valuation approach, we used historical foreign exchange volatility as an input for valuing these investments. Given the importance of this input to the overall valuation of these RDCs and the determination of this input to be unobservable, we made the decision at December 31, 2011 to move these holdings to Level 3 of the fair value hierarchy. During the first quarter of 2013, we implemented a new valuation methodology for these securities that relies on comparable bonds in the market, the observable forward foreign exchange curve and other market inputs. Given that the significant inputs to the valuation of these items are now based on observable data, effective March 31, 2013, we have transferred these bonds from Level 3 to Level 2 of the fair value hierarchy.

In addition to the callable RDCs, we transferred certain other corporate securities from Level 3 to Level 2 in the first quarter of 2013. Prices for these securities were previously obtained from brokers and/or arrangers with minimal transparency around how the valuation was determined. Similar to the RDCs, these securities are now valued using the same methodology described above for our other privately issued securities.

There were no transfers between Level 1 and 2 for the three- month periods ended March 31, 2013 and 2012 .

Fair Value Sensitivity

Level 3 Significant Unobservable Input Sensitivity

The following tables summarize the significant unobservable inputs used in the valuation of our Level 3 available-for-sale investments and derivatives. Included in the tables are the inputs or range of possible inputs that have an effect on the overall valuation of the financial instruments.

March 31, 2013

(In millions)

Fair Value

Valuation Technique(s)

Unobservable Input

Range
(Weighted Average)

Assets:

Securities available for sale, carried at fair value:

Fixed maturities:

Mortgage- and asset-backed securities

439

Consensus pricing

Offered quotes

N/A

^(e)

Banks/financial institutions

Consensus pricing

Offered quotes

N/A

^(e)

Equity securities

Net asset value

Offered quotes

$1-$868 ($8)

Other assets:

Interest rate swaps

Discounted cash flow

Base correlation

45% - 56% (50%)

^(a)

CDS spreads

91 - 143 (120) bps

Recovery rate

37.00%

Foreign currency swaps

Discounted cash flow

Interest rates (USD)

2.01% - 3.02%

^(b)

Interest rates (JPY)

.69% - 1.84%

^(c)

CDS spreads

22 - 129 bps

Foreign exchange rates

21.10%

^(d)

Discounted cash flow

Interest rates (USD)

2.01% - 3.02%

^(b)

Interest rates (JPY)

.69% - 1.84%

^(c)

CDS spreads

15 - 125 bps

Discounted cash flow

Interest rates (USD)

2.01% - 3.02%

^(b)

Interest rates (JPY)

.69% - 1.84%

^(c)

Foreign exchange rates

21.10%

^(d)

Credit default swaps

Discounted cash flow

Base correlation

45% - 56% (50%)

^(a)

CDS spreads

91 - 143 (120) bps

Recovery rate

37.00%

Total assets

627

(a) Weighted-average range of base correlations for our bespoke tranches for attachment and detachment points corresponding to market indices

(b) Inputs derived from U.S. long-term rates to accommodate long maturity nature of our swaps

(d) Based on 10 year volatility of JPY/USD exchange rate

(e) N/A represents securities where we receive unadjusted broker quotes and for which there is no transparency into the providers' valuation techniques or unobservable inputs.

March 31, 2013

(In millions)

Fair Value

Valuation Technique(s)

Unobservable Input

Range
(Weighted Average)

Liabilities:

Interest rate swaps

Discounted cash flow

Base correlation

45% - 56% (50%)

^(a)

CDS spreads

91 - 143 (120) bps

Recovery rate

37.00%

Foreign currency swaps

114

Discounted cash flow

Interest rates (USD)

2.01% - 3.02%

^(b)

Interest rates (JPY)

.69% - 1.84%

^(c)

CDS spreads

35 - 157 bps

Foreign exchange rates

21.10%

^(d)

Discounted cash flow

Interest rates (USD)

2.01% - 3.02%

^(b)

Interest rates (JPY)

.69% - 1.84%

^(c)

CDS spreads

19 - 204 bps

154

Discounted cash flow

Interest rates (USD)

2.01% - 3.02%

^(b)

Interest rates (JPY)

.69% - 1.84%

^(c)

Foreign exchange rates

21.10%

^(d)

Credit default swaps

Discounted cash flow

Base correlations

45% - 56% (50%)

^(a)

CDS spreads

91 - 143 (120) bps

Recovery rate

37.00%

Total liabilities

371

(a) Weighted-average range of base correlations for our bespoke tranches for attachment and detachment points corresponding to market indices

(b) Inputs derived from U.S. long-term rates to accommodate long maturity nature of our swaps

(d) Based on 10 year volatility of JPY/USD exchange rate

December 31, 2012

(In millions)

Fair Value

Valuation Technique(s)

Unobservable Input

Range
(Weighted Average)

Assets:

Securities available for sale, carried at fair value:

Fixed maturities:

Mortgage- and asset-backed securities

338

Consensus pricing

Offered quotes

N/A

^(e)

Public utilities

420

Discounted cash flow

Historical volatility

7.36%

Sovereign and supranational

418

Discounted cash flow

Historical volatility

7.36%

Banks/financial institutions

444

Discounted cash flow

Historical volatility

7.36%

580

Consensus pricing

Offered quotes

N/A

^(e)

Other corporate

575

Discounted cash flow

Historical volatility

7.36%

411

Consensus pricing

Offered quotes

N/A

^(e)

Perpetual securities:

Banks/financial institutions

215

Discounted cash flow

Historical volatility

7.36%

Equity securities

Net asset value

Offered quotes

$2-$943 ($8)

Other assets:

Interest rate swaps

Discounted cash flow

Base correlation

49% - 50%

^(a)

CDS spreads

91 - 152 bps

Recovery rate

37.00%

Foreign currency swaps

Discounted cash flow

Interest rates (USD)

1.84% - 2.84%

^(b)

Interest rates (JPY)

.84% - 2.05%

^(c)

CDS spreads

12 - 117 bps

Foreign exchange rates

20.65%

^(d)

Discounted cash flow

Interest rates (USD)

1.84% - 2.84%

^(b)

Interest rates (JPY)

.84% - 2.05%

^(c)

CDS spreads

12 - 126 bps

102

Discounted cash flow

Interest rates (USD)

1.84% - 2.84%

^(b)

Interest rates (JPY)

.84% - 2.05%

^(c)

Foreign exchange rates

20.65%

^(d)

Credit default swaps

Discounted cash flow

Base correlation

49% - 50%

^(a)

CDS spreads

91 - 152 bps

Recovery rate

37.00%

Total assets

3,596

(a) Weighted-average range of base correlations for our bespoke tranches for attachment and detachment points corresponding to market indices

(b) Inputs derived from U.S. long-term rates to accommodate long maturity nature of our swaps

(d) Based on 10 year volatility of JPY/USD exchange rate

(e) N/A represents securities where we receive unadjusted broker quotes and for which there is no transparency into the providers' valuation techniques or unobservable inputs.

December 31, 2012

(In millions)

Fair Value

Valuation Technique(s)

Unobservable Input

Range
(Weighted Average)

Liabilities:

Interest rate swaps

Discounted cash flow

Base correlation

49% - 50%

^(a)

CDS spreads

91 - 152 bps

Recovery rate

37.00%

Foreign currency swaps

118

Discounted cash flow

Interest rates (USD)

1.84% - 2.84%

^(b)

Interest rates (JPY)

.84% - 2.05%

^(c)

CDS spreads

22 - 141 bps

Foreign exchange rates

20.65%

^(d)

Discounted cash flow

Interest rates (USD)

1.84% - 2.84%

^(b)

Interest rates (JPY)

.84% - 2.05%

^(c)

CDS spreads

25 - 186 bps

151

Discounted cash flow

Interest rates (USD)

1.84% - 2.84%

^(b)

Interest rates (JPY)

.84% - 2.05%

^(c)

Foreign exchange rates

20.65%

^(d)

Credit default swaps

Discounted cash flow

Base correlations

49% - 50%

^(a)

CDS spreads

91 - 152 bps

Recovery rate

37.00%

Total liabilities

399

(a) Weighted-average range of base correlations for our bespoke tranches for attachment and detachment points corresponding to market indices

(b) Inputs derived from U.S. long-term rates to accommodate long maturity nature of our swaps

(d) Based on 10 year volatility of JPY/USD exchange rate

The following is a discussion of the significant unobservable inputs or valuation technique used in determining the fair value of securities and derivatives classified as Level 3.

Annualized Historical Foreign Exchange Volatility

We own a portfolio of callable reverse dual-currency bonds (RDCs). RDCs are securities that have principal denominated in yen while paying U.S. dollar (USD) coupons. The market standard approach is to use implied volatility to value options or instruments with optionality because historical volatility may not represent current market participants' expectations about future volatility. Our use of historical foreign exchange volatility as an input for valuing these investments could result in a significant increase or decrease in fair value measurement, given the importance of this input to the overall valuation. Prior to March 31, 2013, historical volatility was an unobservable input in the determination of fair value of public utilities, sovereign and supranational, certain banks/financial institutions, and certain other corporate investments. As of March 31, 2013, we are no longer using this input in the valuation of these securities due to a change in valuation methodology as discussed previously.

Net Asset Value

We hold certain unlisted equity securities whose fair value is derived based on the financial statements published by the investee. These securities do not trade on an active market and the valuations derived are dependent on the availability of timely financial reporting of the investee. Net asset value is an unobservable input in the determination of fair value of equity securities.

Offered Quotes

In circumstances where our valuation model price is overridden because it implies a value that is not consistent with current market conditions, we will solicit bids from a limited number of brokers. We also receive unadjusted prices from brokers for our mortgage and asset-backed securities. These quotes are non-binding but are reflective of valuation best estimates at that particular point in time. Offered quotes are an unobservable input in the determination of fair value of mortgage- and asset-backed securities, certain banks/financial institutions, certain other corporate, and equity securities investments.

Interest Rates, CDS Spreads, Foreign Exchange Rates

The significant drivers of the valuation of the interest and foreign exchange swaps are interest rates, foreign exchange rates and CDS spreads. Our swaps have long maturities that increase the sensitivity of the swaps to interest rate fluctuations. Since most of our yen-denominated cross currency swaps are in a net liability position, an increase in interest rates will decrease the liabilities and increase the value of the swap.

Foreign exchange swaps also have a lump-sum final settlement of foreign exchange principal receivables at the termination of the swap. An increase in yen interest rates will decrease the value of the final settlement foreign exchange receivables and decrease the value of the swap, and an increase in USD interest rates increase the swap value.

A similar sensitivity pattern is observed for the foreign exchange rates. When the spot U.S. dollar/Japanese yen (USD/JPY) foreign exchange rate decreases and the swap is receiving a final exchange payment in JPY, the swap value will increase due to the appreciation of the JPY. Most of our swaps are designed to receive payments in JPY at the termination and will thus be impacted by the USD/JPY foreign exchange rate in this way. In cases where there is no final foreign exchange receivable in JPY and we are paying JPY as interest payments and receiving USD, a decrease in the foreign exchange rate will lead to a decrease in the swap value.

The extinguisher feature in most of our swaps results in a cessation of cash flows and no further payments between the parties to the swap in the event of a default on the referenced or underlying collateral. To price this feature, we apply the survival probability of the referenced entity to the projected cash flows. The survival probability uses the CDS spreads and recovery rates to adjust the present value of the cash flows. For extinguisher swaps with positive values, an increase in CDS spreads decreases the likelihood of receiving the final exchange payments and reduces the value of the swap.

Due to the long duration of these swaps and the need to extrapolate from short-term observable data to derive and measure long-term inputs, certain inputs, assumptions and judgments are required to value future cash flows that cannot be corroborated by current inputs or current observable market data.

Interest rates, CDS spreads, and foreign exchange rates are unobservable inputs in the determination of fair value of foreign currency swaps.

Base Correlations, CDS Spreads, Recovery Rates

Our CDOs are tranches on baskets of single-name credit default swaps. The risks in these types of synthetic CDOs come from the single-name CDS risk and the correlations between the single names. The valuation of synthetic CDOs is dependent on the calibration of market prices for interest rates, single name CDS default probabilities and base correlation using financial modeling tools. Since there is limited or no observable data available for these tranches, these base correlations must be obtained from commonly traded market tranches such as the CDX and iTraxx indices. From the historical prices of these indices, base correlations can be obtained to develop a pricing curve of CDOs with different seniorities. Since the reference entities of the market indices do not match those in our portfolio underlying the synthetic CDO to be valued, several processing steps are taken to map the securities in our portfolio to the indices. With the base correlation determined and the appropriate spreads selected, a valuation is calculated. An increase in the CDS spreads in the underlying portfolio leads to a decrease in the value due to higher probability of defaults and losses. The impact on the valuation due to base correlation depends on a number of factors, including the riskiness between market tranches and the modeled tranche based on our portfolio and the equivalence between detachment points in these tranches. Generally speaking, an increase in base correlation will decrease the value of the senior tranches while increasing the value of junior tranches. This may result in a positive or negative value change.

The CDO tranches in our portfolio are junior tranches and, due to the low level of credit support for these tranches, exhibit equity-like behavior. As a result, an increase in recovery rates tends to cause their values to decrease.

Our interest rate swaps are linked to the underlying synthetic CDOs. The valuation of these swaps is performed using a similar approach to that of the synthetic CDOs themselves; that is, the base correlation model is used to ensure consistency between the synthetic CDOs and the swaps.

Base correlations, CDS spreads, and recovery rates are unobservable inputs in the determination of fair value of credit default swaps and interest rate swaps.

For additional information on our investments and financial instruments, see the accompanying Notes 1, 3 and 4 and Notes 1, 3 and 4 of the Notes to the Consolidated Financial Statements in our annual report to shareholders for the year ended December 31, 2012 .

6. NOTES PAYABLE

A summary of notes payable follows:



(In millions)	March 31, 2013				December 31, 2012
8.50% senior notes due May 2019		$	850			$	850
6.45% senior notes due August 2040		448		⁽¹⁾		448		⁽¹⁾
6.90% senior notes due December 2039		396		⁽¹⁾		396		⁽¹⁾
3.45% senior notes due August 2015		300				300
2.65% senior notes due February 2017		656		⁽²⁾		657		⁽²⁾
4.00% senior notes due February 2022		349		⁽¹⁾		349		⁽¹⁾
5.50% subordinated debentures due September 2052		500				500
Yen-denominated Uridashi notes:
2.26% notes due September 2016 (principal amount 8 billion yen)		85				92
Yen-denominated Samurai notes:
1.47% notes due July 2014 (principal amount 28.7 billion yen)		305				331
1.84% notes due July 2016 (principal amount 15.8 billion yen)		168				182
Variable interest rate notes due July 2014 (1.32% in 2013 and 1.34% in 2012, principal amount 5.5 billion yen)		59				64
Yen-denominated loans:
3.60% loan due July 2015 (principal amount 10 billion yen)		107				116
3.00% loan due August 2015 (principal amount 5 billion yen)		53				58
Capitalized lease obligations payable through 2022		7				9
Total notes payable		$	4,283			$	4,352

⁽¹⁾ Principal amount net of an underwriting discount that is being amortized over the life of the notes

⁽²⁾ Principal amount plus an issuance premium that is being amortized over the life of the notes

On March 29, 2013, we terminated our senior unsecured revolving credit facility that was due to expire in June 2013, and the Parent Company and Aflac entered into a 5 -year senior unsecured revolving credit facility agreement with a syndicate of financial institutions that provides for borrowings in the amount of 50 billion yen. This credit agreement provides for borrowings in Japanese yen or the equivalent of Japanese yen in U.S. dollars on a revolving basis. Borrowings will bear interest at LIBOR plus the applicable margin of 1.125% . In addition, the Parent Company and Aflac are required to pay a facility fee of .125% on the commitments. As of March 31, 2013 , no borrowings were outstanding under our 50 billion yen revolving credit agreement. Borrowings under the credit agreement may be used for general corporate purposes, including a capital contingency plan for our Japanese operations. Borrowings under the financing agreement mature at the termination date of the credit agreement. The agreement requires compliance with certain financial covenants on a quarterly basis. This credit agreement will expire on the earlier of (a) March 29, 2018, or (b) the date of termination of the commitments upon an event of default as defined in the agreement.

We were in compliance with all of the covenants of our notes payable and line of credit at March 31, 2013 . No events of default or defaults occurred during the three -month period ended March 31, 2013 .

For additional information, see Notes 4 and 8 of the Notes to the Consolidated Financial Statements in our annual report to shareholders for the year ended December 31, 2012 .

7. SHAREHOLDERS’ EQUITY

The following table is a reconciliation of the number of shares of the Company's common stock for the three -month periods ended March 31 .



(In thousands of shares)	2013		2012
Common stock - issued:
Balance, beginning of period	665,239		663,639
Exercise of stock options and issuance of restricted shares	539		798
Balance, end of period	665,778		664,437
Treasury stock:
Balance, beginning of period	197,453		197,329
Purchases of treasury stock:
Open market	2,979		0
Other	124		199
Dispositions of treasury stock:
Shares issued to AFL Stock Plan	(364	)	(381	)
Exercise of stock options	(294	)	(39	)
Other	(145	)	(134	)
Balance, end of period	199,753		196,974
Shares outstanding, end of period	466,025		467,463

Outstanding share-based awards are excluded from the calculation of weighted-average shares used in the computation of basic earnings per share (EPS). The following table presents the approximate number of share-based awards to purchase shares, on a weighted-average basis, that were considered to be anti-dilutive and were excluded from the calculation of diluted earnings per share for the following periods.



	Three Months Ended March 31,
(In thousands)	2013		2012
Anti-dilutive share-based awards		3,623		5,457

Share Repurchase Program

During the first three months of 2013 , we repurchased 3.0 million shares of our common stock in the open market. We did not repurchase any shares of our common stock in the open market in the first three months of 2012 . As of March 31, 2013 , a remaining balance of 19.4 million shares of our common stock was available for purchase under a share repurchase authorization by our board of directors in 2008 .

Reclassifications from Accumulated Other Comprehensive Income

The following table is a reconciliation of accumulated other comprehensive income by component for the three-month period ended March 31 .

Changes in Accumulated Other Comprehensive Income ⁽¹⁾



	2013
(In millions)	Unrealized Foreign Currency Translation Gains (Losses)				Unrealized Gains (Losses) on Investment Securities				Unrealized Gains (Losses) on Derivatives				Pension Liability Adjustment				Total
Balance, beginning of period		$	333			$	2,570			$	(5	)		$	(183	)		$	2,715
Other comprehensive income before reclassification		(467		)		(554		)		(5		)		0				(1,026		)
Amounts reclassified from accumulated other comprehensive income		(7		)		(35		)		1				3				(38		)
Net current-period other comprehensive income		(474		)		(589		)		(4		)		3				(1,064		)
Balance, end of period		$	(141	)		$	1,981			$	(9	)		$	(180	)		$	1,651

⁽¹⁾ All amounts are net of tax. Amounts in parentheses indicate debits.

The table below summarizes the amounts reclassified from each component of accumulated other comprehensive income based on source for the three-month period ended March 31 .

Reclassifications Out of Accumulated Other Comprehensive Income



(In millions)	2013
Details about Accumulated Other Comprehensive Income Components	Amount Reclassified from Accumulated Other Comprehensive Income ⁽¹⁾			Affected Line Item in the Statements of Earnings
Unrealized foreign currency translation gains (losses)	$	10		Sales and redemptions
	(3		)	Tax (expense) or benefit ⁽²⁾
	$	7		Net of tax
Unrealized gains (losses) on available-for-sale securities	$	109		Sales and redemptions
	(55		)	Other-than-temporary impairment losses realized
	54			Total before tax
	(19		)	Tax (expense) or benefit ⁽²⁾
	$	35		Net of tax
Gains (losses) on cash flow hedges:
Foreign currency swaps	$	(1	)	Derivative and other gains (losses)
	0			Tax (expense) or benefit ⁽²⁾
	$	(1	)	Net of tax
Amortization of defined benefit pension items:
Actuarial gains (losses)	$	(5	)	Acquisition and operating expenses ⁽³⁾
	2			Tax (expense) or benefit ⁽²⁾
	$	(3	)	Net of tax
Total reclassifications for the period	$	38		Net of tax

⁽¹⁾ Amounts in parentheses indicate debits.

⁽²⁾ Based on 35% tax rate

⁽³⁾ These accumulated other comprehensive income components are included in the computation of net periodic pension cost (see

Note 9 for additional details).

8. SHARE-BASED COMPENSATION

As of March 31, 2013 , the Company has outstanding share-based awards under two long-term incentive compensation plans.

The first plan, which expired in February 2007, is a stock option plan which allowed grants for incentive stock options (ISOs) to employees and non-qualifying stock options (NQSOs) to employees and non-employee directors. The options have a term of 10 years. The exercise price of options granted under this plan is equal to the fair market value of a share of the Company's common stock at the date of grant. Options granted before the plan's expiration date remain outstanding in accordance with their terms.

The second long-term incentive compensation plan allows awards to Company employees for ISOs, NQSOs, restricted stock, restricted stock units, and stock appreciation rights. Non-employee directors are eligible for grants of NQSOs, restricted stock, and stock appreciation rights. The ISOs and NQSOs have a term of 10 years, and the share-based awards generally vest based upon time-based conditions or time- and performance-based conditions. Time-based vesting generally occurs after three years . Performance-based vesting conditions generally include the attainment of goals related to Company financial performance. As of March 31, 2013 , approximately 13 million shares were available for future grants under this plan, and the only performance-based awards issued and outstanding were restricted stock awards.

Share-based awards granted to U.S.-based grantees are settled with authorized but unissued Company stock, while those issued to Japan-based grantees are settled with treasury shares.

The following table provides information on stock options outstanding and exercisable at March 31, 2013 .



	Stock Option Shares (in thousands)		Weighted-Average Remaining Term (in years)		Aggregate Intrinsic Value (in millions)			Weighted-Average Exercise Price Per Share
Outstanding		12,829		4.8		$	103		$	45.43
Exercisable		10,826		4.0		96			44.54

We received cash from the exercise of stock options in the amount of $ 15 million during the first quarter of 2013 , compared with $6 million in the first quarter of 2012 . The tax benefit realized as a result of stock option exercises and restricted stock releases was $ 9 million in the first quarter of 2013 , compared with $ 13 million in the first quarter of 2012 .

As of March 31, 2013 , total compensation cost not yet recognized in our financial statements related to restricted stock awards was $ 51 million , of which $ 23 million ( 740 thousand shares) was related to restricted stock awards with a performance-based vesting condition. We expect to recognize these amounts over a weighted-average period of approximately 2.0 years. There are no other contractual terms covering restricted stock awards once vested.

For additional information on our long-term share-based compensation plans and the types of share-based awards, see Note 11 of the Notes to the Consolidated Financial Statements included in our annual report to shareholders for the year ended December 31, 2012 .

9. BENEFIT PLANS

We have funded defined benefit plans in Japan and the United States, which cover substantially all of our full-time employees. Additionally, we maintain non-qualified, unfunded supplemental retirement plans that provide defined pension benefits in excess of limits imposed by federal tax law for certain Japanese, U.S. and former employees.

We provide certain health care benefits for eligible U.S. retired employees, their beneficiaries and covered dependents ("other postretirement benefits"). The health care plan is contributory and unfunded. Substantially all of our U.S. employees may become eligible to receive other postretirement benefits if they retire at age 55 or older with at least 15 years of service or if they retire when their age plus service, in years, equals or exceeds 80 . At retirement, an employee is given an opportunity to elect continuation of coverage under our medical plan until age 65 . For certain employees and former employees, additional coverage is provided for all medical expenses for life.

Pension and other postretirement benefit expenses, included in acquisition and operating expenses in the consolidated statement of earnings, included the following components:



	Three Months Ended March 31,
	Pension Benefits																Other
	Japan								U.S.								Postretirement Benefits
(In millions)	2013				2012				2013				2012				2013			2012
Components of net periodic benefit cost:
Service cost		$	4			$	4			$	5			$	6			$	2		$	1
Interest cost		2				3				7				7				1			1
Expected return on plan assets		(1		)		(1		)		(4		)		(4		)		0			0
Amortization of net actuarial loss		1				1				4				2				0			0
Net periodic (benefit) cost		$	6			$	7			$	12			$	11			$	3		$	2

During the three months ended March 31, 2013 , Aflac Japan contributed approximately $ 5 million (using the weighted-average yen/dollar exchange rate for the three -month period ending March 31, 2013 ) to the Japanese funded defined benefit plan, and Aflac U.S. did not make a contribution to the U.S. funded defined benefit plan.

For additional information regarding our Japanese and U.S. benefit plans, see Note 13 of the Notes to the Consolidated Financial Statements in our annual report to shareholders for the year ended December 31, 2012 .

10. COMMITMENTS AND CONTINGENT LIABILITIES

We are a defendant in various lawsuits considered to be in the normal course of business. Members of our senior legal and financial management teams review litigation on a quarterly and annual basis. The final results of any litigation cannot be predicted with certainty. Although some of this litigation is pending in states where large punitive damages, bearing little relation to the actual damages sustained by plaintiffs, have been awarded in recent years, we believe the outcome of pending litigation will not have a material adverse effect on our financial position, results of operations, or cash flows.

11. SUBSEQUENT EVENTS

In April 2013, the Company sold and entered into an agreement to sell the below-investment grade investments in CSAV (Tollo Shipping Co. S.A.) and Bankia SA (Bancaja Emisiones SA Unipersonal), respectively. CSAV and Bankia SA had amortized costs of $107 million and $59 million at March 31, 2013 , respectively. Both of these securities had been previously impaired. The Company will recognize total gains of $64 million on the sale of these securities.

Subsequent to March 2013, the Company entered into additional foreign currency options and forwards to hedge foreign exchange risk for a portion of expected profit repatriation in yen from Aflac Japan scheduled to occur in July 2013. These derivatives mitigate the Company ' s exposure to further weakening of the yen relative to the U.S. dollar by establishing minimum levels of U.S. dollars that will be received upon the currency exchange. With these additional contracts, the cumulative total of expected profit repatriation covered under hedge contracts is 50 billion yen.


Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations

FORWARD-LOOKING INFORMATION

The Private Securities Litigation Reform Act of 1995 provides a “safe harbor” to encourage companies to provide prospective information, so long as those informational statements are identified as forward-looking and are accompanied by meaningful cautionary statements identifying important factors that could cause actual results to differ materially from those included in the forward-looking statements. We desire to take advantage of these provisions. This report contains cautionary statements identifying important factors that could cause actual results to differ materially from those projected herein, and in any other statements made by Company officials in communications with the financial community and contained in documents filed with the Securities and Exchange Commission (SEC). Forward-looking statements are not based on historical information and relate to future operations, strategies, financial results or other developments. Furthermore, forward-looking information is subject to numerous assumptions, risks and uncertainties. In particular, statements containing words such as “expect,” “anticipate,” “believe,” “goal,” “objective,” “may,” “should,” “estimate,” “intends,” “projects,” “will,” “assumes,” “potential,” “target” or similar words as well as specific projections of future results, generally qualify as forward-looking. Aflac undertakes no obligation to update such forward-looking statements.

We caution readers that the following factors, in addition to other factors mentioned from time to time, could cause actual results to differ materially from those contemplated by the forward-looking statements:


•	difficult conditions in global capital markets and the economy


•	governmental actions for the purpose of stabilizing the financial markets


•	defaults and credit downgrades of securities in our investment portfolio


•	impairment of financial institutions


•	credit and other risks associated with Aflac's investment in perpetual securities


•	differing judgments applied to investment valuations


•	significant valuation judgments in determination of amount of impairments taken on our investments


•	limited availability of acceptable yen-denominated investments


•	concentration of our investments in any particular single-issuer or sector


•	concentration of business in Japan


•	increased derivative activities


•	ongoing changes in our industry


•	exposure to significant financial and capital markets risk


•	fluctuations in foreign currency exchange rates


•	significant changes in investment yield rates


•	deviations in actual experience from pricing and reserving assumptions


•	subsidiaries' ability to pay dividends to Aflac Incorporated


•	changes in law or regulation by governmental authorities


•	ability to attract and retain qualified sales associates and employees


•	decreases in our financial strength or debt ratings


•	ability to continue to develop and implement improvements in information technology systems


•	interruption in telecommunication, information technology and other operational systems, or a failure to maintain the security, confidentiality or privacy of sensitive data residing on such systems


•	changes in U.S. and/or Japanese accounting standards


•	failure to comply with restrictions on patient privacy and information security


•	level and outcome of litigation


•	ability to effectively manage key executive succession


•	catastrophic events including, but not necessarily limited to, epidemics, pandemics, tornadoes, hurricanes, earthquakes, tsunamis, acts of terrorism and damage incidental to such events


•	failure of internal controls or corporate governance policies and procedures

MD&A OVERVIEW

Management’s Discussion and Analysis of Financial Condition and Results of Operations (MD&A) is intended to inform the reader about matters affecting the financial condition and results of operations of Aflac Incorporated and its subsidiaries for the three- month periods ended March 31, 2013 and 2012 . Results of operations for interim periods are not necessarily indicative of results for the entire year. As a result, the following discussion should be read in conjunction with the consolidated financial statements and notes that are included in our annual report to shareholders for the year ended December 31, 2012 . This MD&A is divided into the following sections:


•	Our Business


•	Performance Highlights


•	Critical Accounting Estimates


•	Results of Operations, consolidated and by segment


•	Analysis of Financial Condition, including discussion of market risks of financial instruments


•	Capital Resources and Liquidity, including discussion of availability of capital and the sources and uses of cash

OUR BUSINESS

PERFORMANCE HIGHLIGHTS

Reflecting the weaker yen/dollar exchange rate, revenues were relatively unchanged at $6.2 billion in the first quarter of 2013 , compared with a year ago. Net earnings were $892 million , or $1.90 per diluted share, compared with $785 million, or $1.68 per diluted share, in the first quarter of 2012 .

Results in the first quarter of 2013 included pretax net realized investment gains of $156 million ( $102 million after-tax), compared with net realized investment losses of $45 million ( $29 million after-tax) in the first quarter of 2012 . Net investment gains in the first quarter of 2013 included $55 million ( $35 million after-tax) of other-than-temporary impairment losses; $119 million of net gains ( $77 million after-tax) from the sale or redemption of securities; and $92 million of net gains ( $60 million after-tax) from valuing derivatives. Shareholders’ equity included a net unrealized gain on investment securities and derivatives of $2.0 billion at March 31, 2013 , compared with a net unrealized gain of $2.6 billion at December 31, 2012 .

In March 2013 , the Parent Company and Aflac entered into a five-year senior unsecured revolving credit facility agreement with a syndicate of financial institutions that provides for borrowings of 50 billion yen or the equivalent of Japanese yen in U.S. dollars. For further information regarding this transaction, see Note 6 of the Notes to the Consolidated Financial Statements and the Capital Resources and Liquidity section of this MD&A.

In the first quarter of 2013, we repurchased 3.0 million shares of our common stock in the open market.

CRITICAL ACCOUNTING ESTIMATES

We prepare our financial statements in accordance with U.S. generally accepted accounting principles (GAAP). These principles are established primarily by the Financial Accounting Standards Board (FASB). In this MD&A, references to GAAP issued by the FASB are derived from the FASB Accounting Standards Codification ^™ (ASC). The preparation of financial statements in conformity with GAAP requires us to make estimates based on currently available information when recording transactions resulting from business operations. The estimates that we deem to be most critical to an understanding of Aflac’s results of operations and financial condition are those related to the valuation of investments and derivatives, deferred policy acquisition costs (DAC), liabilities for future policy benefits and unpaid policy claims, and income taxes. The preparation and evaluation of these critical accounting estimates involve the use of various assumptions developed from management’s analyses and judgments. The application of these critical accounting estimates determines the values for which 95% of our assets and 76% of our liabilities are reported as of March 31, 2013 , and thus has a direct effect on net earnings and shareholders’ equity. Subsequent experience or use of other assumptions could produce significantly different results.

As of March 31, 2013, we engaged a third party pricing vendor to value privately issued securities within our investment portfolio which were previously being valued using our discounted cash flow pricing model at December 31, 2012. For further discussion regarding this change in pricing methodology, see Note 5 of the Notes to the Consolidated Financial Statements.

Other than the change in valuation methodology for certain investments as discussed above, there have been no other changes in the items that we have identified as critical accounting estimates during the three months ended March 31, 2013 . For additional information, see the Critical Accounting Estimates section of MD&A included in our annual report to shareholders for the year ended December 31, 2012 .

New Accounting Pronouncements

For information on new accounting pronouncements and the impact, if any, on our financial position or results of operations, see Note 1 of the Notes to the Consolidated Financial Statements.

RESULTS OF OPERATIONS

The following discussion includes references to our performance measures, operating earnings and operating earnings per diluted share , that are not based on accounting principles generally accepted in the United States of America (“GAAP”). After-tax operating earnings (operating earnings) is the measure of segment profit or loss we use to evaluate segment performance and allocate resources. Consistent with GAAP accounting guidance for segment reporting, operating earnings is our measure of segment performance. Aflac believes that an analysis of operating earnings is vitally important to an understanding of our underlying profitability drivers.

Aflac defines operating earnings (a non-GAAP financial measure) as the profits derived from operations before realized investment gains and losses (securities transactions, impairments, and derivative and hedging activities) as well as nonrecurring items. Aflac's derivative activities include: foreign currency, interest rate and credit default swaps in variable interest entities that are consolidated; foreign currency swaps associated with our senior notes and subordinated debentures; foreign currency forwards used in hedging foreign exchange risk on U.S. dollar-denominated securities in Aflac Japan's portfolio; and foreign currency options used to hedge certain portions of forecasted cash flows denominated in yen. Nonrecurring items are infrequent activities that are not directly associated with the Company's insurance operations .

Our management uses operating earnings to evaluate the financial performance of Aflac's insurance operations because realized investment gains and losses (securities transactions, impairments, and derivative and hedging activities) as well as nonrecurring items, tend to be driven by general economic conditions and events or are related to infrequent activities not directly associated with our insurance operations, and therefore may obscure the underlying fundamentals and trends in Aflac's insurance operations.

The following table is a reconciliation of items impacting operating and net earnings and operating and net earnings per diluted share.

Reconciliation of Operating Earnings to Net Earnings



	In Millions						Per Diluted Share
	Three Months Ended March 31,
	2013			2012			2013			2012
Operating earnings	$	790		$	814		$	1.69		$	1.74
Items impacting net earnings, net of tax:
Realized investment gains (losses):
Securities transactions and impairments	42			(81		)	.08			(.17		)
Impact of derivative and hedging activities:
Hedge costs related to foreign currency investments	(3		)	0			(.01		)	.00
Other derivative and hedging activities	63			52			.14			.11
Net earnings	$	892		$	785		$	1.90		$	1.68

Realized Investment Gains and Losses

Our investment strategy is to invest primarily in fixed-income securities to provide a reliable stream of investment income, which is one of the drivers of the Company’s profitability. This investment strategy incorporates asset-liability matching (ALM) to align the expected cash flows of the portfolio to the needs of the Company's liability structure. We do not purchase securities with the intent of generating capital gains or losses. However, investment gains and losses may be realized as a result of changes in the financial markets and the creditworthiness of specific issuers, tax planning strategies, and/or general portfolio maintenance and rebalancing. The realization of investment gains and losses is independent of the underwriting and administration of our insurance products, which are the principal drivers of our profitability.

Securities Transactions and Impairments

During the three -month period ended March 31, 2013 , we realized pretax investment gains, net of losses, of $119 million ( $77 million after-tax) from sales and redemptions of securities. We realized pretax investment losses of $55 million ( $35 million after-tax) as a result of the recognition of other-than-temporary impairment losses.

During the three- month period ended March 31, 2012 , we realized pretax investment gains, net of losses, of $78 million ( $51 million after-tax) from sales and redemptions of securities. These gains primarily resulted from both the redemption of a previously impaired perpetual security and sales related to our implemented plan to reduce the risk exposure in our investment portfolio. We realized pretax investment losses of $203 million ( $132 million after-tax) as a result of the recognition of other-than-temporary impairment losses on certain securities.

See Note 3 of the Notes to Consolidated Financial Statements for a more detailed discussion of these investment activities.

The following table details our pretax impairment losses by investment category.



	Three Months Ended March 31,
(In millions)	2013			2012
Perpetual securities	$	0		$	140
Corporate bonds	38			63
Sovereign and supranational	16			0
Equity securities	1			0
Total other-than-temporary impairment losses realized	$	55	⁽¹⁾	$	203	⁽¹⁾

⁽¹⁾ Includes $0 and $28 for the three- month periods ended March 31, 2013 and 2012 , respectively, for credit-related impairments; $54 and $175 for the three- month periods ended March 31, 2013 and 2012 , respectively, from change in intent to sell securities; and $1 for the three- month period ended March 31, 2013 for impairments due to severity and duration of decline in fair value

Impact of Derivative and Hedging Activities

Our derivative activities include foreign currency, interest rate and credit default swaps in VIEs that are consolidated; foreign currency forwards on certain fixed-maturity securities; foreign currency options that hedge certain portions of forecasted cash flows denominated in yen; cross-currency interest rate swaps associated with our senior notes due February 2017 and February 2022 and subordinated debentures due September 2052 ; and an interest rate swap associated with our variable interest rate yen-denominated debt. During the three -month period ended March 31, 2013 , we realized pretax investment gains, net of losses, of $92 million ( $60 million after-tax), compared with pretax investment gains, net of losses, of $80 million ( $52 million after-tax) for the same period in 2012 , as a result of valuing these derivatives. For a description of other items that could be included in the Impact of Derivative and Hedging Activities, see the Hedging Activities subsection of MD&A and Note 4 of the accompanying Notes to the Consolidated Financial Statements.

For additional information regarding realized investment gains and losses, see Notes 3 and 4 of the Notes to the Consolidated Financial Statements.

Foreign Currency Translation

Aflac Japan’s premiums and most of its investment income are received in yen. Claims and expenses are paid in yen, and we have yen-denominated assets that support yen-denominated policy liabilities. These and other yen-denominated financial statement items are translated into dollars for financial reporting purposes. We translate Aflac Japan’s yen-denominated income statement into dollars using an average exchange rate for the reporting period, and we translate its yen-denominated balance sheet using the exchange rate at the end of the period.

Due to the size of Aflac Japan, where our functional currency is the Japanese yen, fluctuations in the yen/dollar exchange rate can have a significant effect on our reported results. In periods when the yen weakens, translating yen into dollars results in fewer dollars being reported. When the yen strengthens, translating yen into dollars results in more dollars being reported. Consequently, yen weakening has the effect of suppressing current period results in relation to the comparable prior period, while yen strengthening has the effect of magnifying current period results in relation to the comparable prior period. As a result, we view foreign currency translation as a financial reporting issue for Aflac and not an economic event to our Company or shareholders. Because changes in exchange rates distort the growth rates of our operations, management evaluates Aflac’s financial performance excluding the impact of foreign currency translation.

Income Taxes

Our combined U.S. and Japanese effective income tax rate on pretax earnings was 34.5% for the three -month period ended March 31, 2013 , compared with 34.7% for the same period in 2012 .

Earnings Guidance

Certain items that cannot be predicted or that are outside of management's control may have a significant impact on net earnings. Therefore, in comparing period-over-period results, we also analyze operating earnings (a non-GAAP financial measure) which excludes realized investment gains and losses (securities transactions, impairments, and the impact of derivative and hedging activities) and nonrecurring items from net earnings. We also assume no impact from foreign currency translation on the Aflac Japan segment and the Parent Company’s yen-denominated interest expense for a given period in relation to the prior period.

Our objective for 2013 is to increase operating earnings per diluted share by 4% to 7% over 2012 , excluding the effect of foreign currency translation. This range reflects the impact of investing significant cash flows at historically low interest rates. We believe that 2013 earnings comparisons to 2012 will be more difficult because earnings in 2012 were significantly better than we originally anticipated. If we achieve our objective for 2013, the following table shows the likely results for operating earnings per diluted share, including the impact of foreign currency translation using various yen/dollar exchange rate scenarios.

2013 Operating Earnings Per Diluted Share Scenarios ⁽¹⁾



Weighted-Average Yen/Dollar Exchange Rate		Operating Earnings Per Diluted Share		% Growth Over 2012						Yen Impact
	79.81 ⁽²⁾		$6.86 - 7.06	3.9		-	7.0		%		$	.00
	85		6.60 - 6.80	0.0		-	3.0					(.26	)
	90		6.37 - 6.57	(3.5	)	-	(.5	)				(.49	)
	95		6.17 - 6.37	(6.5	)	-	(3.5	)				(.69	)
	100		5.99 - 6.19	(9.2	)	-	(6.2	)				(.87	)

⁽¹⁾ Excludes realized investment gains/losses (securities transactions, impairments, and the impact of derivative and hedging activities) and nonrecurring items in 2013 and 2012

⁽²⁾ Actual 2012 weighted-average exchange rate

Assuming we achieve our earnings objective and the yen averages 95 to 100 to the dollar for 2013, we would expect to report operating earnings of $5.99 to $6.37 per diluted share for the full year. Additionally, for the second quarter of 2013, using the same currency assumptions, we expect operating earnings will be in the range of $1.41 to $1.56 per diluted share.

INSURANCE OPERATIONS

Aflac’s insurance business consists of two segments: Aflac Japan and Aflac U.S. Aflac Japan, which operates as a branch of Aflac, is the principal contributor to consolidated earnings. GAAP financial reporting requires that a company report financial and descriptive information about operating segments in its annual and interim period financial statements. Furthermore, we are required to report a measure of segment profit or loss, certain revenue and expense items, and segment assets.

We measure and evaluate our insurance segments’ financial performance using operating earnings on a pretax basis. We define segment operating earnings as the profits we derive from our operations before realized investment gains and losses (securities transactions, impairments, and the impact of derivative and hedging activities) and nonrecurring items. We believe that an analysis of segment pretax operating earnings is vitally important to an understanding of the underlying profitability drivers and trends of our insurance business. Furthermore, because a significant portion of our business is conducted in Japan, we believe it is equally important to understand the impact of translating Japanese yen into U.S. dollars.

We evaluate our sales efforts using new annualized premium sales, an industry operating measure. New annualized premium sales, which include both new sales and the incremental increase in premiums due to conversions, represent the premiums that we would collect over a 12-month period, assuming the policies remain in force. For Aflac Japan, new annualized premium sales are determined by applications submitted during the reporting period. For Aflac U.S., new annualized premium sales are determined by applications that are issued during the reporting period. Premium income, or earned premiums, is a financial performance measure that reflects collected or due premiums that have been earned ratably on policies in force during the reporting period.

AFLAC JAPAN SEGMENT

Aflac Japan Pretax Operating Earnings

Changes in Aflac Japan’s pretax operating earnings and profit margins are primarily affected by morbidity, mortality, expenses, persistency and investment yields. The following table presents a summary of operating results for Aflac Japan.

Aflac Japan Summary of Operating Results



	Three Months Ended March 31,
(In millions)	2013		2012
Premium income	$	3,905	$	4,148
Net investment income:
Yen-denominated investment income	402		473
Dollar-denominated investment income	272		257
Net investment income	674		730
Other income (loss)	26		16
Total operating revenues	4,605		4,894
Benefits and claims	2,831		2,967
Operating expenses:
Amortization of deferred policy acquisition costs	163		178
Insurance commissions	247		294
Insurance and other expenses	375		415
Total operating expenses	785		887
Total benefits and expenses	3,616		3,854
Pretax operating earnings ⁽¹⁾	$	989	$	1,040
Weighted-average yen/dollar exchange rate	92.59		79.59



	In Dollars					In Yen
Percentage change over previous period:	2013			2012		2013		2012
Premium income	(5.9	)	%	12.0	%	9.8	%	7.8	%
Net investment income	(7.6	)		12.5		7.3		8.7
Total operating revenues	(5.9	)		12.0		9.7		7.8
Pretax operating earnings ⁽¹⁾	(4.8	)		6.8		10.7		3.2

⁽¹⁾ See the Insurance Operations section of this MD&A for our definition of segment operating expenses.

The percentage increases in premium income in yen reflect the growth of premiums in force. Annualized premiums in force increased 10.1% to 1.52 trillion yen as of March 31, 2013 , compared with 1.38 trillion yen as of March 31, 2012 . The increase in annualized premiums in force in yen reflects the sales of new policies combined with the high persistency of Aflac Japan’s business. Annualized premiums in force, translated into dollars at respective period-end exchange rates, were $16.2 billion at March 31, 2013 , compared with $16.8 billion a year ago.

Aflac Japan's investment portfolios include dollar-denominated securities and reverse-dual currency securities (yen-denominated debt securities with dollar coupon payments). Dollar-denominated investment income from these assets accounted for approximately 40% of Aflac Japan’s investment income in the first three months of 2013 , compared with 35% a year ago. In periods when the yen strengthens in relation to the dollar, translating Aflac Japan’s dollar-denominated investment income into yen lowers growth rates for net investment income, total operating revenues, and pretax operating earnings in yen terms. In periods when the yen weakens, translating dollar-denominated investment income into yen magnifies growth rates for net investment income, total operating revenues, and pretax operating earnings in yen terms. Excluding foreign currency changes from the prior period, dollar-denominated investment income accounted for approximately 37% of Aflac Japan’s investment income during the first three months of 2013 , compared with 36% a year ago.

The following table illustrates the effect of translating Aflac Japan’s dollar-denominated investment income and related items into yen by comparing certain segment results with those that would have been reported had yen/dollar exchange rates remained unchanged from the comparable period in the prior year.

Aflac Japan Percentage Changes Over Previous Period

(Yen Operating Results)

For the Periods Ended March 31 ,



	Including Foreign Currency Changes				Excluding Foreign Currency Changes ⁽²⁾
	Three Months				Three Months
	2013		2012		2013		2012
Net investment income	7.3	%	8.7	%	1.2	%	9.8	%
Total operating revenues	9.7		7.8		8.4		7.9
Pretax operating earnings ⁽¹⁾	10.7		3.2		5.4		3.4

⁽¹⁾ See the Insurance Operations section of this MD&A for our definition of segment operating earnings.

⁽²⁾ Amounts excluding foreign currency changes on dollar-denominated items were determined using the same yen/dollar exchange rate for the current period as the comparable period in the prior year.

The following table presents a summary of operating ratios in yen terms for Aflac Japan.



	Three Months Ended March 31,
Ratios to total revenues:	2013		2012
Benefits and claims	61.4	%	60.6	%
Operating expenses:
Amortization of deferred policy acquisition costs	3.6		3.6
Insurance commissions	5.4		6.0
Insurance and other expenses	8.1		8.5
Total operating expenses	17.1		18.1
Pretax operating earnings ⁽¹⁾	21.5		21.3

⁽¹⁾ See the Insurance Operations section of this MD&A for our definition of segment operating earnings.

In the past several years, the ratio of benefits and claims to total revenues (benefit ratio) for our health products has been positively impacted by favorable claim trends, primarily in our cancer product line. We expect this downward claim trend to continue. However, over the last several years, the rate of decline in Aflac Japan's benefit ratio has moderated, due primarily to strong sales results in our ordinary products, including WAYS and child endowment. These products have higher benefit ratios and lower expense ratios than our health products. The benefit ratio has also been impacted by the effect of low investment yields and portfolio derisking, both of which impact our profit margin by reducing the spread between investment yields and required interest on policy reserves. In the three- month period ended March 31, 2013 , the benefit ratio increased and the operating expense ratio decreased, resulting in a slightly higher pretax operating profit margin, compared with the same respective period in 2012 , primarily due to the change in business mix discussed above. For the full year of 2013 , we expect this trend to continue.

Aflac Japan Sales

The following table presents Aflac Japan’s new annualized premium sales for the periods ended March 31 .



	In Dollars						In Yen
	Three Months						Three Months
(In millions of dollars and billions of yen)	2013			2012			2013		2012
New annualized premium sales	$	578		$	659		53.8		52.4
Increase (decrease) over prior year	(12.2		)%	59.3		%	2.6	%	53.8	%

The following table details the contributions to new annualized premium sales by major insurance product for the periods ended March 31 .



	Three Months
	2013		2012
Medical	15.5	%	17.1	%
Cancer	11.7		13.0
Ordinary life:
Child endowment	14.8		13.7
WAYS	42.3		44.2
Other ordinary life	11.7		7.8
Other	4.0		4.2
Total	100.0	%	100.0	%

The bank channel generated new annualized premium sales of 21.1 billion yen in the first quarter of 2013 , a decrease of 13.2% over the first quarter of 2012 . Bank channel sales accounted for 39.2% of new annualized premium sales for Aflac Japan in the first quarter of 2013 , compared with 46.3% during the same period a year ago. WAYS, a unique hybrid whole-life product that we first launched in 2006 and introduced to the bank channel in 2009, has been a significant contributor to bank sales growth. The average premium for WAYS sold through the bank channel, the primary distribution outlet for this product, is about ten times the average premium for cancer and medical products, making it a strong contributor to revenue growth. The WAYS profit margin is lower than our traditional health insurance products, however the profit margin is significantly enhanced when policyholders elect to pay premiums upfront using the discounted advance premium option. More than 90% of customers at banks choose this payment option. Sales of WAYS of 22.7 billion yen during the first quarter of 2013 , a decrease of 1.9% over the first quarter of 2012 , represented 42.3% of total Aflac Japan sales for the first quarter of 2013 .

Despite the decrease in sales of WAYS, ordinary life sales increased 7.3% for the first quarter of 2013 , compared with the first quarter of 2012 . We repriced first sector products in April 2013, reflecting Japan’s Financial Services Agency's (FSA) reduction in the Japan Standard Interest Rate, which is used to determine FSA-based policy reserves. The ordinary life sales increase in the first quarter of 2013 was primarily driven by consumers who wanted to make insurance purchases of first sector products ahead of the rate increase in April 2013.

The foundation of Aflac Japan's product portfolio has been, and continues to be, our cancer and medical products. Sales of cancer and medical products combined decreased 7.1% during the first quarter of 2013, compared with the same period in 2012. We anticipate focusing more on the development of our cancer and medical products now that the first sector re-rating, as discussed above, has been completed. With continued cost pressure on Japan’s health care system, we expect the need for medical products will continue to rise in the future, and we remain convinced that the medical and cancer products Aflac Japan provides will continue to be an important part of our product portfolio.

At March 31, 2013 , we had agreements to sell our products at 373 banks, or more than 90% of the total number of banks in Japan. We believe we have significantly more banks selling our supplemental health insurance products than any other insurer operating in Japan. Japanese consumers rely on banks not only to provide traditional bank services, but also to provide insurance solutions, among other services. We believe our long-standing and strong relationships within the Japanese banking sector have proven to be advantageous to us in this channel. Our partnership with banks provides us with a wider demographic of potential customers than we would otherwise have been able to reach, and it also allows banks to expand their product and service offerings to consumers. Our access through the bank channel gives us the opportunity to cross-sell our medical and cancer policies along with WAYS and child endowment policies.

We remain committed to selling through our traditional channels. These channels, consisting of affiliated corporate agencies, independent corporate agencies and individual agencies, accounted for 59.7% of total new annualized premium sales for Aflac Japan in the first quarter of 2013 . During the three-month period ended March 31, 2013 , we recruited more than 360 new sales agencies. At March 31, 2013 , Aflac Japan was represented by approximately 17,900 sales agencies and more than 125,300 licensed sales associates employed by those agencies.

We continue to believe that there is a strong need for our products in Japan. Our strong sales results in 2012 and the premium rate increases for life insurance products will create difficult comparisons in 2013. However, we still expect Aflac Japan sales of third sector cancer and medical products to be flat to up 5% in 2013 .

Japanese Economy

The Bank of Japan's April 2013 Monthly Report of Recent Economic and Financial Developments stated that Japan's economy has stopped weakening and has shown some signs of improving. Public investment has continued to increase and housing investment has generally been increasing. Private consumption has also been increasingly resilient, assisted by the improvement in consumer sentiment. The report projected that Japan's economy is expected to return to a moderate recovery path, assuming that domestic demand remains resilient partly due to the effects of various economic measures and growth rates of overseas economies gradually increase. Exports are expected to increase primarily because growth rates of overseas economies are expected to gradually increase. As for domestic demand, public investment is expected to continue trending upward supported by the effects of various economic measures, and housing investment, private consumption, and industrial production are expected to generally increase. For additional information, see the Japanese Economy subsection of MD&A in our annual report to shareholders for the year ended December 31, 2012 .

Japanese Regulatory Environment

In 2005, legislation aimed at privatizing Japan’s postal system (Japan Post) was enacted into law. The privatization laws split Japan Post into four entities that began operating in October 2007. In 2007, one of these entities selected Aflac Japan as its provider of cancer insurance to be sold through its post offices, and, in 2008, we began selling cancer insurance through these post offices. Japan Post has historically been a popular place for consumers to purchase insurance products. Currently, our products are being offered in approximately 1,000 post offices. Legislation to reform the postal system passed the Diet in April 2012 and resulted in the merger of two of the postal operating entities (the one that delivers the mail and the one that runs the post offices) on October 1, 2012. We believe that postal reform is unlikely to change Aflac Japan's relationship with Japan Post.

Aflac Japan Investments

The level of investment income in yen is affected by available cash flow from operations, the timing of investing the cash flow, yields on new investments, and the effect of yen/dollar exchange rates on dollar-denominated investment income. Aflac Japan has historically invested primarily in Japanese Government Bonds (JGBs) and privately issued securities. Privately issued securities generally have higher yields than those available on JGBs and other publicly traded debt instruments. All of the privately issued securities we purchase were rated investment grade at the time of purchase. These securities were generally issued with documentation consistent with standard medium-term note programs. In addition, many of these investments have protective covenants appropriate to the specific issuer, industry and country. These covenants often require the issuer to adhere to specific financial ratios and give priority to repayment of our investment under certain circumstances.

In order to address our challenge of investing in Japan's low-interest-rate environment and reduce the amounts of privately issued securities in our overall portfolio, in the third quarter of 2012, we began investing in higher-yielding U.S. dollar-denominated publicly-traded investment grade corporate fixed-maturity securities, and entered into foreign currency forwards to economically convert these dollar-denominated investments into yen-denominated investments.

The following table presents the results of Aflac Japan’s investment yields for the periods ended March 31 .



	Three Months
	2013 ⁽¹⁾		2012
New money yield	3.03	%	2.03	%
Return on average invested assets, net of investment expenses	2.84		3.18
Portfolio yield, including dollar-denominated investments, end of period	3.01		3.18

⁽¹⁾ Yields are reported before the cost of foreign currency forwards that hedge foreign exchange risk of U.S. dollar-denominated publicly-

traded corporate bonds.

See Notes 3, 4 and 5 of the Notes to the Consolidated Financial Statements and the Analysis of Financial Condition section of this MD&A for additional information on our investments and hedging strategies.

AFLAC U.S. SEGMENT

Aflac U.S. Pretax Operating Earnings

Changes in Aflac U.S. pretax operating earnings and profit margins are primarily affected by morbidity, mortality, expenses, persistency and investment yields. The following table presents a summary of operating results for Aflac U.S.

Aflac U.S. Summary of Operating Results



	Three Months Ended March 31,
(In millions)	2013			2012
Premium income	$	1,280		$	1,231
Net investment income	157			152
Other income	1			2
Total operating revenues	1,438			1,385
Benefits and claims	691			678
Operating expenses:
Amortization of deferred policy acquisition costs	120			110
Insurance commissions	144			140
Insurance and other expenses	202			186
Total operating expenses	466			436
Total benefits and expenses	1,157			1,114
Pretax operating earnings ⁽¹⁾	$	281		$	271
Percentage change over previous year:
Premium income	4.0		%	5.2		%
Net investment income	3.4			5.5
Total operating revenues	3.9			5.2
Pretax operating earnings ⁽¹⁾	3.6			8.1

⁽¹⁾ See the Insurance Operations section of this MD&A for our definition of segment operating earnings.

Annualized premiums in force increased 3.6% to $5.4 billion as of March 31, 2013 , compared with $5.2 billion as of March 31, 2012 .

The following table presents a summary of operating ratios for Aflac U.S.



	Three Months Ended March 31,
Ratios to total revenues:	2013		2012
Benefits and claims	48.0	%	49.0	%
Operating expenses:
Amortization of deferred policy acquisition costs	8.3		7.9
Insurance commissions	10.0		10.1
Insurance and other expenses	14.2		13.4
Total operating expenses	32.5		31.4
Pretax operating earnin gs ⁽¹⁾	19.5		19.6

⁽¹⁾ See the Insurance Operations section of this MD&A for our definition of segment operating earnings.

The benefit ratio decreased and the expense ratio increased in the first quarter of 2013 , compared with the same period in 2012 . For the remainder of 2013 , we expect the benefit and expense ratios and pretax operating profit margin to be similar to those experienced in 2012 .

Aflac U.S. Sales

The following table presents Aflac's U.S. new annualized premium sales for the periods ended March 31 .



	Three Months
(In millions)	2013			2012
New annualized premium sales	$	332		$	351
Increase (decrease) over prior year	(5.2		)%	4.5		%

The following table details the contributions to new annualized premium sales by major insurance product category for the periods ended March 31 .



	Three Months
	2013		2012
Income-loss protection:
Short-term disability	21.3	%	20.0	%
Life	5.4		5.9
Asset-loss protection:
Accident	27.2		29.4
Critical care ⁽¹⁾	20.8		23.7
Supplemental medical:
Hospital indemnity	16.0		14.7
Dental/vision	6.4		6.3
Other	2.9		0.0
Total	100.0	%	100.0	%

⁽¹⁾ Includes cancer, critical illness, and hospital intensive care products

New annualized premium sales for accident insurance, our leading product category, decreased 12.2% , short-term disability sales increased .8% , critical care insurance sales (including cancer insurance) decreased 16.5% , and hospital indemnity insurance sales increased 3.1% in the first quarter of 2013 , compared with the same period in 2012.

As part of our U.S. sales strategy, we continue to focus on growing and enhancing the effectiveness of our U.S. sales force. As of March 31, 2013, our distribution network was made up of more than 75,900 licensed sales associates and brokers. Beyond expanding the size and capabilities of our traditional sales force, we remain encouraged about establishing and developing relationships with insurance brokers that typically handle the larger-case market. In the first quarter of 2013, we continued to develop our national insurance broker initiative that specifically targets the large national brokers and enrollment firms in the U.S. We developed sales and marketing strategies that brokers can use to complement and enhance the marketing methods they use to sell to their customers. This initiative is not only beneficial to our broker channel, but it also helps our traditional sales channels because each distribution avenue received focus and attention, opening up the doors for future growth potential.

The addition of group products has expanded our reach and enabled us to generate more sales opportunities with larger employers, brokers, and our traditional sales agents. We anticipate that the appeal of our group products will continue to enhance our opportunities to connect with larger businesses and their employees. Our portfolio of group and individual products offers businesses the opportunity to give their employees a more valuable and comprehensive selection of benefit options.

Although we remain somewhat cautious in the short-term sales outlook for Aflac U.S. due to the relatively weak economic environment, our longer-term view has not changed. We believe the need for the products we sell remains strong, and the United States provides a vast and accessible market for our products. For 2013, our objective is still for Aflac U.S. new annualized premium sales through our traditional and broker channels to be in the range of flat to up 5%.

U.S. Economy

Operating in the U.S. economy continues to be challenging. Our group products and growing relationships with insurance brokers that handle the larger-case market are helping us as we expand our reach selling to larger businesses. However, more than 90% of our products are sold in the small business segment, consisting of accounts with fewer than 100 employees. Small businesses, in particular, have proven to be especially vulnerable to ongoing economic weakness.

Small employers are still guarded with respect to their business outlook, and employees have been reluctant to make changes in their benefits in advance of health care reform implementation. Although we believe that the weakened U.S. economy has dampened our sales growth, we also believe our products remain affordable to the average American consumer. We believe that consumers' underlying need for our U.S. product line remains strong, and that the United States remains a sizeable and attractive market for our products.

U.S. Regulatory Environment

In March 2010, President Barack Obama signed into law the Patient Protection and Affordable Care Act and Health Care and Education Reconciliation Act of 2010 (PPACA) to give Americans of all ages and income levels access to comprehensive major medical health insurance. The primary subject of the new legislation is major medical insurance; therefore, we believe that the PPACA, as enacted, does not materially affect the design of our insurance products. However, indirect consequences of the legislation and regulations could present challenges and/or opportunities that could potentially have an impact on our sales model, financial condition and results of operations. Our experience with Japan’s national health care environment leads us to believe that the need for our products will only increase over the coming years.

In July 2010, President Obama signed into law the Dodd-Frank Wall Street Reform and Consumer Protection Act, commonly known as the Dodd-Frank Act, which, among other things, created a Financial Stability Oversight Council (the Council). In April 2012, the Council released a final rule describing the general process the Council will follow in determining whether to designate a nonbank financial company for supervision by the Board of Governors of the U.S. Federal Reserve System (the Board). The Council may designate by a two-thirds vote whether certain nonbank financial companies, including certain insurance companies and insurance holding companies, could pose a threat to the financial stability of the United States, in which case such nonbank financial companies would become subject to prudential regulation by the Board. On April 3, 2013, the Board published a final rule that establishes the requirements for determining when a nonbank financial company is "predominantly engaged in financial activities" - a prerequisite for designation by the Council. Prudential regulation by the Board includes supervision of capital requirements, leverage limits, liquidity requirements and examinations. The Board may limit such company’s ability to enter into merger transactions, restrict its ability to offer financial products, require it to terminate one or more activities, or impose conditions on the manner in which it conducts activities. Although Aflac is a nonbank financial company predominantly engaged in financial activities under Title I of the Dodd-Frank Act, we do not believe Aflac will be considered a company that poses a threat to the financial stability of the United States. The Dodd-Frank Act also established a Federal Insurance Office under the U.S. Treasury Department to monitor all aspects of the insurance industry and of lines of business other than certain health insurance, certain long-term care insurance and crop insurance. Traditionally, U.S. insurance companies have been regulated primarily by state insurance departments. The Dodd-Frank Act requires extensive rule-making and other future regulatory action, which in some cases will take a period of years to implement. However, at the current time, it is not possible to predict with any degree of certainty what impact, if any, the Dodd-Frank Act will have on our U.S. business, financial condition, or results of operations.

Aflac U.S. Investments

The level of investment income is affected by available cash flow from operations, profit repatriation from Aflac Japan, the timing of investing the cash flow, yields on new investments, and other factors. Aflac U.S. has invested primarily in investment grade corporate bonds.

The following table presents the results of Aflac's U.S. investment yields for the periods ended March 31 .



	Three Months
	2013		2012
New money yield	3.69	%	4.70	%
Return on average invested assets, net of investment expenses	5.86		6.48
Portfolio yield, end of period	6.19		6.61

The decrease in the U.S. new money yield for the three- month period ended March 31, 2013 reflects a low level of interest rates and tightening credit spreads. See Notes 3 and 5 of the Notes to the Consolidated Financial Statements and the Analysis of Financial Condition section of this MD&A for additional information on our investments.

ANALYSIS OF FINANCIAL CONDITION

Our financial condition has remained strong in the functional currencies of our operations. The yen/dollar exchange rate at the end of each period is used to translate yen-denominated balance sheet items to U.S. dollars for reporting purposes.

The following table demonstrates the effect of the change in the yen/dollar exchange rate by comparing select balance sheet items as reported at March 31, 2013 , with the amounts that would have been reported had the exchange rate remained unchanged from December 31, 2012 .

Impact of Foreign Exchange on Balance Sheet Items



(In millions)	As Reported			Exchange Effect				Net of Exchange Effect
Yen/dollar exchange rate ⁽¹⁾		94.05							86.58
Investments and cash		$	107,400		$	(6,438	)		$	113,838
Deferred policy acquisition costs		9,210			(548		)		9,758
Total assets		120,538			(7,185		)		127,723
Policy liabilities		92,951			(7,271		)		100,222
Total liabilities		105,003			(7,808		)		112,811

⁽¹⁾ The exchange rate at March 31, 2013 , was 94.05 yen to one dollar, or 7.9% weaker than the December 31, 2012 , exchange rate of 86.58 .

Market Risks of Financial Instruments

Our investment philosophy is to maximize investment income while emphasizing liquidity, safety and quality. Our investment objective, subject to appropriate risk constraints, is to fund policyholder obligations and other liabilities in a manner that enhances shareholders’ equity. We seek to achieve this objective through a diversified portfolio of fixed-income investments that reflects the characteristics of the liabilities it supports.

The following table details investment securities by segment.

Investment Securities by Segment



		Aflac Japan						Aflac U.S.
(In millions)	March 31, 2013			December 31, 2012			March 31, 2013				December 31, 2012
Securities available for sale, at fair value:
Fixed maturities		$	44,479		$	45,472		$	11,630	⁽¹⁾		$	11,625	⁽¹⁾
Perpetual securities		2,957			4,127			176				175
Equity securities		24			23			0				0
Total available for sale		47,460			49,622			11,806				11,800
Securities held to maturity, at amortized cost:
Fixed maturities		45,204			54,426			0				0
Total held to maturity		45,204			54,426			0				0
Total investment securities		$	92,664		$	104,048		$	11,806			$	11,800

⁽¹⁾ Excludes investment-grade, available-for-sale fixed-maturity securities held by the Parent Company of $167 in 2013 and $156 in

2012 .

Because we invest in fixed-income securities, our financial instruments are exposed primarily to three types of market risks: currency risk, interest rate risk, and credit risk.

Currency Risk

The functional currency of Aflac Japan's insurance operations is the Japanese yen. All of Aflac Japan's premiums, claims and commissions are received or paid in yen, as are most of its investment income and other expenses. While we began investing a portion of our yen cash flow in dollar-denominated securities in the third quarter of 2012, most of Aflac Japan's investments, cash and liabilities are yen-denominated. When yen-denominated securities mature or are sold, the

proceeds are generally reinvested in yen-denominated securities. Aflac Japan holds these yen-denominated assets to fund its yen-denominated policy obligations. In addition, Aflac Incorporated has yen-denominated debt obligations.

We are exposed to economic currency risk only when yen funds are actually converted into dollars. This primarily occurs when we repatriate yen-denominated funds from Aflac Japan to Aflac U.S., which is generally done annually. The exchange rates prevailing at the time of repatriation will differ from the exchange rates prevailing at the time the yen profits were earned. A portion of the yen repatriation may be used to service Aflac Incorporated's yen-denominated notes payable with the remainder converted into dollars. In order to hedge foreign exchange risk for a portion of the expected profit repatriation in yen from Aflac Japan scheduled to occur in July 2013, we entered into foreign exchange options in the first quarter of 2013 as part of a foreign exchange collar strategy on 25 billion yen. Subsequent to March 2013, the Company entered into additional foreign currency options and forwards to mitigate the Company ' s exposure to further weakening of the yen relative to the U.S. dollar by establishing minimum levels of U.S. dollars that will be received upon the currency exchange. With these additional contracts, the cumulative total of expected profit repatriation covered under hedge contracts is 50 billion yen.

In addition to profit repatriation, certain investment activities for Aflac Japan expose us to economic currency risk when yen are converted into dollars. As noted above, we invest a portion of our yen cash flows in dollar-denominated assets. This requires that we convert the yen cash flows to U.S. dollars before investing. As previously discussed, we then enter into a foreign currency forward contract to hedge the currency risk on the fair value of the U.S. dollar securities. The dollar coupon payments received on these investments are not hedged and are subject to foreign exchange fluctuations, which are realized in earnings. These coupons are then available for reinvestment through the U.S. dollar program. Also, Aflac Japan has invested in reverse-dual currency securities (RDCs, or yen-denominated debt securities with dollar coupon payments), which exposes Aflac to changes in foreign exchange rates. The foreign currency effect on the yen-denominated securities is accounted for as a component of unrealized gains or losses on available-for-sale securities in accumulated other comprehensive income, while the foreign currency effect on the dollar coupons is realized in earnings. The dollar coupons received in this RDC program are converted to yen and are available for reinvestment in yen. The RDCs provided a higher yield at the time of purchase than those available on Japanese government or other public corporate bonds, while still adhering to prudent standards of credit quality. The yen/dollar exchange rate would have to strengthen to approximately 37 before the yield on these instruments would equal that of a comparable yen-denominated instrument.

Aside from the activities discussed above, we generally do not convert yen into dollars; however, we do translate financial statement amounts from yen into dollars for financial reporting purposes. Therefore, reported amounts are affected by foreign currency fluctuations. We report unrealized foreign currency translation gains and losses in accumulated other comprehensive income. In periods when the yen weakens against the dollar, 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 weakening of the yen relative to the dollar will generally adversely affect the value of our yen-denominated investments in dollar terms. We attempt to minimize the exposure of shareholders' equity to foreign currency translation fluctuations. We accomplish this by investing a portion of Aflac Japan's investment portfolio in dollar-denominated securities and by the Parent Company's issuance of yen-denominated debt (for additional information, see the discussion under the Hedging Activities subsection of MD&A). As a result, the effect of currency fluctuations on our net assets is reduced.

The following table demonstrates the effect of foreign currency fluctuations by presenting the dollar values of our yen-denominated assets and liabilities, and our consolidated yen-denominated net asset exposure at selected exchange rates.

Dollar Value of Yen-Denominated Assets and Liabilities

at Selected Exchange Rates



(In millions)	March 31, 2013									December 31, 2012
Yen/dollar exchange rates	79.05			94.05 ⁽ ¹⁾			109.05			71.58			86.58 ⁽¹⁾			101.58
Yen-denominated financial instruments:
Assets:
Securities available for sale:
Fixed maturities ⁽²⁾	$	27,427		$	23,053		$	19,882		$	30,649		$	25,339		$	21,597
Fixed maturities - consolidated variable interest entities ⁽³⁾	2,776			2,333			2,012			3,272			2,705			2,306
Perpetual securities	2,948			2,477			2,137			4,270			3,530			3,009
Perpetual securities - consolidated variable interest entities ⁽³⁾	439			369			318			592			489			417
Equity securities	23			20			16			21			18			15
Securities held to maturity:
Fixed maturities	53,465			44,938			38,757			65,481			54,137			46,143
Fixed maturities - consolidated variable interest entities ⁽³⁾	316			266			229			349			289			246
Cash and cash equivalents	1,203			1,011			872			463			383			326
Derivatives	88			74			64			248			205			175
Other financial instruments	175			146			127			186			153			131
Subtotal	88,860			74,687			64,414			105,531			87,248			74,365
Liabilities:
Notes payable	932			784			676			1,030			852			726
Japanese policyholder protection corporation	3			2			2			28			23			20
Derivatives	529			445			384			864			715			609
Subtotal	1,464			1,231			1,062			1,922			1,590			1,355
Net yen-denominated financial instruments	87,396			73,456			63,352			103,609			85,658			73,010
Other yen-denominated assets	10,221			8,592			7,411			10,189			8,423			7,179
Other yen-denominated liabilities	106,220			89,279			76,999			119,778			99,026			84,403
Consolidated yen-denominated net assets (liabilities) subject to foreign currency fluctuation ⁽²⁾	$	(8,603	)	$	(7,231	)	$	(6,236	)	$	(5,980	)	$	(4,945	)	$	(4,214	)

⁽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 forwards 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 variable interest entities (VIEs). Some of the consolidated VIEs in our Aflac Japan 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 U.S. dollar-denominated 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. For additional information, see the Hedging Activities subsection of MD&A.

We have cross-currency interest rate swap agreements related to $400 million of senior notes due February 2017 and our $350 million senior notes due February 2022 . The notional amounts and terms of the swaps match the principal amount and terms of the senior notes. We entered into these cross-currency interest rate swaps to economically convert the dollar-denominated principal and interest on the senior notes we issued into yen-denominated obligations and to reduce interest expense. By entering into these cross-currency interest rate swaps, we economically converted our $400

million liability into a 30.9 billion yen liability and reduced the interest rate on this debt from 2.65% in dollars to 1.22% in yen. We also economically converted our $350 million liability into a 27.0 billion yen liability and reduced the interest rate on this debt from 4.00% in dollars to 2.07% in yen. Any strengthening of the yen to the U.S. dollar will have an adverse effect on the valuation of these cross-currency swaps.

We also have cross-currency interest rate swap agreements related to our $500 million subordinated debentures due September 2052 . The notional amounts of the swaps matches the principal amount of the subordinated debentures, but the swaps will mature in September 2017 . We entered into these cross-currency interest rate swaps to economically convert the dollar-denominated principal and interest on the subordinated debentures we issued into yen-denominated obligations and to reduce interest expense. By entering into these cross-currency interest rate swaps, we economically converted our $500 million liability into a 39.2 billion yen liability and reduced the interest rate on this debt from 5.50% in dollars to 4.41% in yen. Any strengthening of the yen to the U.S. dollar will have an adverse effect on the valuation of these cross-currency swaps.

Interest Rate Risk

Our primary interest rate exposure is to the impact of changes in interest rates on the fair value of our investments in debt and perpetual securities. We estimate that the reduction in the fair value of debt and perpetual securities we own resulting from a 100 basis point increase in market interest rates, based on our portfolios at March 31, 2013 , and December 31, 2012 , would be as follows:



(In millions)	March 31, 2013				December 31, 2012
Effect on yen-denominated debt and perpetual securities		$	(9,924	)		$	(10,559	)
Effect on dollar-denominated debt and perpetual securities		(3,037		)		(2,909		)
Effect on total debt and perpetual securities		$	(12,961	)		$	(13,468	)

There are various factors that affect the fair value of our investment in debt and perpetual securities. Included in those factors are changes in the prevailing interest rate environment, which directly affect the balance of unrealized gains or losses for a given period in relation to a prior period. Decreases in market yields generally improve the fair value of debt and perpetual securities, while increases in market yields generally have a negative impact on the fair value of our debt and perpetual securities. However, we do not expect to realize a majority of any unrealized gains or losses because we generally have the intent and ability to hold such securities until a recovery of value, which may be maturity. For additional information on unrealized losses on debt and perpetual securities, see Note 3 of the Notes to the Consolidated Financial Statements.

We attempt to match the duration of our assets with the duration of our liabilities. Currently, when debt and perpetual securities we own mature, the proceeds may be reinvested at a yield below that of the interest required for the accretion of policy benefit liabilities on policies issued in earlier years. However, adding riders to our older policies has helped offset negative investment spreads on these policies. Overall, adequate profit margins exist in Aflac Japan’s aggregate block of business because of changes in the mix of business and favorable experience from mortality, morbidity and expenses.

We entered into an interest rate swap agreement related to the 5.5 billion yen variable interest rate Samurai notes that we issued in July 2011. This agreement effectively converted the variable interest rate notes to fixed rate notes to eliminate the volatility in our interest expense. We also have interest rate swaps related to some of our consolidated VIEs. These interest rate swaps are primarily used to convert interest receipts on floating-rate fixed-maturity securities contracts to fixed rates. For further information, see Note 4 of the accompanying Notes to the Consolidated Financial Statements and Note 8 of the Notes to the Consolidated Financial Statements and the Interest Rate Risk subsection of MD&A in our annual report to shareholders for the year ended December 31, 2012 .

Credit Risk

A significant portion of our investment portfolio consists of fixed income or perpetual securities that expose us to the credit risk of the underlying issuer. We carefully evaluate this risk on every new investment and closely monitor the credit risk of our existing investment portfolio. We incorporate the needs of our products and liabilities, the overall requirements of the business, and other factors in addition to our underwriting of the credit risk for each investment in the portfolio.

Evaluating the underlying risks in our credit portfolio involves a multitude of factors including but not limited to our assessment of the issuers business activities, assets, products, market position, financial condition, and future prospects. We also must incorporate the assessment of the Nationally Recognized Statistical Rating Organizations (NRSROs) and the SVO in assigning credit ratings to our specific portfolio holdings. We employ a team of experienced credit investment professionals to perform extensive internal assessments of the credit risks for all our portfolio holdings and potential new investments.

The ratings of our securities referenced in the two tables below are based on the ratings designations provided by major NRSROs (Moody's, S&P and Fitch) or, if not rated, are determined based on the ratings assigned by the SVO of the NAIC and/or our internal analysis of such securities. For investment-grade securities where the ratings assigned by the major credit agencies are not equivalent, we use the second lowest rating that is assigned. For a description of the ratings methodology that we use when a security is split-rated, see "Market Risks of Financial Instruments - Below-Investment-Grade and Split-Rated Securities" in the Analysis of Financial Condition section of this MD&A.

The distributions by credit rating of our purchases of debt securities, based on acquisition cost, were as follows:

Composition of Purchases by Credit Rating



	Three Months Ended March 31, 2013			Twelve Months Ended December 31, 2012			Three Months Ended March 31, 2012
AAA		.2	%		.5	%		.6	%
AA		46.6			72.1			85.4
A		25.3			10.3			7.9
BBB		25.6			15.9			5.5
BB or lower		2.3			1.2			.6
Total		100.0	%		100.0	%		100.0	%

Purchases of securities from period to period are determined based on multiple objectives including appropriate portfolio diversification, the relative value of a potential investment and availability of investment opportunities, liquidity, credit and other risk factors while adhering to our investment policy guidelines. We did not purchase any perpetual securities during the periods presented in the table above. The increase in purchases of A and BBB rated securities in 2013 was related primarily to the purchase of U.S. dollar-denominated corporate fixed-income publicly traded securities for the Aflac Japan portfolio as discussed further in the Results of Operations - Aflac Japan Segment section of this MD&A. The purchases of BB or lower rated securities in 2013 and 2012 were due to a limited program that was initiated in 2011 to invest in senior secured bank loans to U.S. and Canadian corporate borrowers, most of which have below-investment-grade ratings. The program is managed externally by third party firms specializing in this asset class. This mandate requires a minimum average credit quality of BB-/Ba3, prohibits loans rated below B/B2, and restricts exposure to any individual credit to less than 3% of the program’s assets. The objectives of this program include enhancing the yield on invested assets, achieving further diversification of credit risk, and mitigating the risk of rising interest rates through the acquisition of floating rate assets.

The distributions of debt and perpetual securities we own, by credit rating, were as follows:

Composition of Portfolio by Credit Rating



		March 31, 2013						December 31, 2012
	Amortized Cost			Fair Value			Amortized Cost			Fair Value
AAA		1.5	%		1.6	%		1.5	%		1.6	%
AA		42.7			44.1			46.2			45.6
A		25.1			25.5			22.8			23.7
BBB		26.1			24.6			24.8			24.6
BB or lower		4.6			4.2			4.7			4.5
Total		100.0	%		100.0	%		100.0	%		100.0	%

As of March 31, 2013 , our direct and indirect exposure to securities in our investment portfolio that were guaranteed by third parties was immaterial both individually and in the aggregate.

Subordination Distribution

The majority of our total investments in debt and perpetual securities was senior debt at March 31, 2013 , and December 31, 2012 . We also maintained investments in subordinated financial instruments that primarily consisted of Lower Tier II, Upper Tier II, and Tier I securities, listed in order of seniority. The Lower Tier II (LTII) securities are debt instruments with fixed maturities. Our Upper Tier II (UTII) and Tier I investments consisted of debt instruments with fixed maturities and perpetual securities, which have an economic maturity as opposed to a stated maturity.

The following table shows the subordination distribution of our debt and perpetual securities.

Subordination Distribution of Debt and Perpetual Securities



		March 31, 2013						December 31, 2012
(In millions)	Amortized Cost			Percentage of Total			Amortized Cost			Percentage of Total
Senior notes		$	93,666		92.2	%		$	102,978		91.9	%
Subordinated securities:
Fixed maturities (stated maturity date):
Lower Tier II		3,699			3.6			3,985			3.6
Tier I ⁽¹⁾		148			.1			405			.3
Surplus notes		334			.3			335			.3
Trust preferred - non-banks		85			.1			85			.1
Other subordinated - non-banks		51			.1			51			.0
Total fixed maturities		4,317			4.2			4,861			4.3
Perpetual securities (economic maturity date):
Upper Tier II		2,340			2.3			2,825			2.5
Tier I		1,008			1.0			1,079			1.0
Other subordinated - non-banks		285			.3			309			.3
Total perpetual securities		3,633			3.6			4,213			3.8
Total debt and perpetual securities		$	101,616		100.0	%		$	112,052		100.0	%

⁽¹⁾ Includes trust preferred securities

Portfolio Composition

For information regarding the amortized cost for our investments in debt and perpetual securities, the cost for equity securities and the fair values of these investments, refer to Note 3 of the Notes to the Consolidated Financial Statements.

Investment Concentrations

After Japanese government bonds (JGBs), our second largest investment concentration as of March 31, 2013 , was banks and financial institutions. Within the countries we approve for investment opportunities, we primarily invest in financial institutions that are strategically crucial to each approved country's economy. The bank and financial institution sector is a highly regulated industry and plays a strategic role in the global economy. Within this sector, our credit risk by geographic region or country of issuer at March 31, 2013, based on amortized cost, was: Europe, excluding the United Kingdom ( 30% ); United States ( 27% ); Australia ( 8% ); Japan ( 7% ); United Kingdom ( 7% ); and other ( 21% ).

Our 20 largest global investment exposures as of March 31, 2013 , were as follows:

Largest Global Investment Positions

Amortized

% of

Ratings

(In millions)

Cost

Total

Seniority

Moody’s

S&P

Fitch

Japan National Government ⁽¹⁾

36,114

35.54

Senior

Aa3

AA-

A+

Israel Electric Corporation Limited

688

.68

Senior

Baa3

BB+

—

Republic of South Africa

647

.64

Senior

Baa1

BBB

Bank of America Corp. (includes Merrill Lynch)

478

.47

Merrill Lynch & Co. Inc.

266

.26

Senior

Baa2

A-

Bank of America Corp.

212

.21

Lower Tier II

Baa3

BBB+

BBB

Bank of Tokyo-Mitsubishi UFJ Ltd.

478

.47

Bank of Tokyo-Mitsubishi UFJ Ltd. (BTMU Curacao Holdings NV)

478

.47

Lower Tier II

A-

Investcorp SA

443

.44

Investcorp Capital Limited

443

.44

Senior

Ba2

—

Metlife Inc.

431

.42

Metlife Inc.

165

.16

Senior

A-

Metropolitan Life Global Funding I

266

.26

Senior

Aa3

AA-

A+

National Grid PLC

425

.42

National Grid Gas PLC

213

.21

Senior

A-

National Grid Electricity Transmission PLC

212

.21

Senior

A-

Sumitomo Mitsui Financial Group Inc.

425

.42

Sumitomo Mitsui Banking Corporation (includes SMBC
International Finance)

266

.26

Upper Tier II

BBB+

—

Sumitomo Mitsui Banking Corporation

106

.11

Lower Tier II

—

Sumitomo Mitsui Banking Corporation

.05

Upper Tier II

BBB+

—

Telecom Italia SpA

425

.42

Telecom Italia Finance SA

425

.42

Senior

Baa3

BBB

Deutsche Bank AG

425

.42

Deutsche Postbank AG

255

.25

Lower Tier II

Baa3

—

A-

Deutsche Bank Capital Trust II

154

.15

Tier I

Ba2

BBB

BBB-

Deutsche BK CAP FDG Capital Trust I

.02

Tier I

Ba2

BBB

BBB-

JP Morgan Chase & Co. (including Bear Stearns)

420

.42

JPMorgan Chase & Co. (including Bear Stearns Companies Inc.)

372

.37

Senior

A+

JPMorgan Chase & Co. (FNBC)

.02

Senior

Aa1

A+

—

JPMorgan Chase & Co. (Bank One Corp.)

.02

Lower Tier II

A-

JPMorgan Chase & Co. (NBD Bank)

.01

Lower Tier II

Citigroup Inc.

419

.41

Citigroup Inc. (includes Citigroup Global Markets Holdings Inc.)

318

.31

Senior

Baa2

A-

Citigroup Inc. (Citicorp)

100

.10

Senior

Baa2

A-

Citigroup Inc. (Citicorp)

.00

Lower Tier II

Baa3

BBB+

Banobras

393

.39

Senior

Baa1

BBB

Unique Zurich Airport

393

.39

Senior

—

General Electric Co.

388

.39

GE Capital Corporation

336

.33

Senior

AA+

—

Security Capital Group

.04

Senior

AA+

—

Susa Partnership LP

.01

Senior

AA+

—

GE Capital Services Inc.

.01

Lower Tier II

Aa3

AA+

—

Deutsche Telekom AG

373

.37

Deutsche Telekom AG

319

.32

Senior

Baa1

BBB+

Deutsche Telekom International Finance

.05

Senior

Baa1

BBB+

Sultanate of Oman

372

.37

Senior

—

Petroleos Mexicanos (Premex)

370

.36

Premex Proj FDG Master TR

319

.31

Senior

Baa1

BBB

Premex Finance LTD

.05

Senior

Baa1

A-

Koninklijke Ahold NV

366

.36

Koninklijke Ahold NV

351

.35

Senior

Baa3

BBB

Ahold USA Lease

.01

Senior

Baa3

BBB

—

Subtotal

44,473

43.80

Total debt and perpetual securities

101,616

100.00

⁽¹⁾ JGBs or JGB-backed securities

As previously disclosed, we own long-dated debt instruments in support of our long-dated policyholder obligations. Many of our largest global investment holdings are positions that were purchased many years ago and increased in size due to merger and consolidation activity among the issuing entities. In addition, many of our largest holdings are yen-denominated, therefore strengthening of the yen can increase our position in dollars, and weakening of the yen can decrease our position in dollars. Beginning in 2005, we have generally limited our investment exposures to individual issuers to no more than 5% of total adjusted capital (TAC) on a statutory accounting basis, with the exception of obligations of the Japanese and U.S. governments. However, existing investment exposures that exceeded 5% of TAC at the time this guidance was adopted, or exposures that may exceed this threshold from time to time through merger and consolidation activity, are not automatically reduced through sales of the issuers’ securities but rather are reduced over time consistent with our investment policy.

Geographical Exposure

The following table indicates the geographic exposure of our investment portfolio.



	March 31, 2013				December 31, 2012
(In millions)	Amortized Cost		% of Total		Amortized Cost		% of Total
Japan	$	40,065	39.4	%	$	48,598	43.4	%
United States and Canada	25,963		25.6		24,512		22.0
United Kingdom	3,797		3.7		4,025		3.6
Germany	3,423		3.4		3,965		3.5
France	2,345		2.3		2,500		2.2
PIIGS	3,810		3.7		4,550		4.1
Portugal	253		.2		272		.3
Italy	2,144		2.1		2,327		2.1
Ireland	455		.5		492		.4
Spain	958		.9		1,459		1.3
Nordic Region	3,130		3.1		3,407		3.0
Sweden	1,398		1.4		1,513		1.3
Norway	765		.7		814		.7
Denmark	480		.5		551		.5
Finland	487		.5		529		.5
Other Europe	4,127		4.0		4,441		3.9
Netherlands	2,093		2.1		2,259		2.0
Switzerland	645		.6		688		.6
Czech Republic	532		.5		577		.5
Austria	354		.3		386		.3
Belgium	284		.3		293		.3
Poland	219		.2		238		.2
Asia excluding Japan	5,052		5.0		5,397		4.8
Africa and Middle East	3,248		3.2		3,611		3.2
Latin America	3,237		3.2		3,381		3.0
Australia	2,828		2.8		2,982		2.7
All Others	591		.6		683		.6
Total debt and perpetual securities	$	101,616	100.0	%	$	112,052	100.0	%

Investments in Certain European Countries

Since 2008, many countries in Europe, and specifically Greece, Ireland, Italy, Portugal, and Spain (collectively the "peripheral Eurozone" countries), have been experiencing a debt crisis. Recently, Cyprus joined the list of European sovereigns requiring official assistance to address that country's banking crisis. Due to the participation in the single common currency of the Euro, developments affecting any of the European Union (EU) countries have direct impacts on

other EU countries. With the economic and market turmoil driven by the European debt crisis, European investments have been identified as having a higher level of inherent risk and potential volatility.

The primary factor considered when determining the domicile of investment exposure is the legal domicile of the issuer. However, other factors such as the location of the parent guarantor, the location of the company's headquarters or major business operations (including location of major assets), location of primary market (including location of revenue generation) and specific country risk publicly recognized by rating agencies can influence the assignment of the country (or geographic) risk location. When the issuer is a special financing vehicle or a branch or subsidiary of a global company, then we consider any guarantees and/or legal, regulatory and corporate relationships of the issuer relative to its ultimate parent in determining the proper assignment of country risk.

We had no direct exposure to Greece or Cyprus as of March 31, 2013 and December 31, 2012 . Our direct investment exposures to Ireland, Italy, Portugal and Spain and the related maturities of those investments were as follows:



March 31, 2013
	One to Five Years						Five to Ten Years						After Ten Years						Total
	Amortized			Fair			Amortized			Fair			Amortized			Fair			Amortized			Fair
(In millions)	Cost			Value			Cost			Value			Cost			Value			Cost			Value
Available-for-sale securities:
Ireland:
Banks/financial institutions		$	0		$	0		$	0		$	0		$	243		$	162		$	243		$	162
Italy:
Public utilities		0			0			0			0			15			16			15			16
Other corporate		0			0			0			0			332			309			332			309
Portugal:
Public utilities		7			8			140			141			106			97			253			246
Spain:
Sovereign		0			0			0			0			70			111			70			111
Banks/financial institutions		34			38			0			0			59			93			93			131
Other corporate		0			0			0			0			209			173			209			173
Held-to-maturity securities:
Ireland:
Banks/financial institutions		0			0			0			0			212			138			212			138
Italy:
Sovereign		0			0			0			0			266			200			266			200
Banks/financial institutions		0			0			0			0			159			113			159			113
Public utilities		0			0			0			0			787			696			787			696
Other corporate		0			0			0			0			585			494			585			494
Spain:
Public utilities		0			0			0			0			372			309			372			309
Other corporate		0			0			0			0			214			195			214			195
Total gross and net funded exposure		$	41		$	46		$	140		$	141		$	3,629		$	3,106		$	3,810		$	3,293



December 31, 2012
	One to Five Years						Five to Ten Years						After Ten Years						Total
	Amortized			Fair			Amortized			Fair			Amortized			Fair			Amortized			Fair
(In millions)	Cost			Value			Cost			Value			Cost			Value			Cost			Value
Available-for-sale securities:
Ireland:
Banks/financial institutions		$	0		$	0		$	0		$	0		$	261		$	183		$	261		$	183
Italy:
Public utilities		0			0			0			0			15			17			15			17
Other corporate		0			0			0			0			360			387			360			387
Portugal:
Public utilities		0			0			156			155			116			100			272			255
Spain:
Sovereign		0			0			0			0			76			91			76			91
Banks/financial institutions		34			36			0			0			64			66			98			102
Public utilities		0			0			0			0			427			420			427			420
Other corporate		0			0			0			0			223			217			223			217
Held-to-maturity securities:
Ireland:
Banks/financial institutions		0			0			0			0			231			197			231			197
Italy:
Sovereign		0			0			0			0			289			263			289			263
Banks/financial institutions		0			0			0			0			173			157			173			157
Public utilities		0			0			0			0			855			845			855			845
Other corporate		0			0			0			0			635			594			635			594
Spain:
Public utilities		0			0			0			0			404			380			404			380
Other corporate		0			0			0			0			231			224			231			224
Total gross and net funded exposure		$	34		$	36		$	156		$	155		$	4,360		$	4,141		$	4,550		$	4,332

We do not have any unfunded exposure in the European countries shown in the preceding table, and we have not entered into any hedges to mitigate credit risk for our funded exposure. The banks and financial institutions investments in Ireland, Italy, Portugal and Spain represented 4% of total investments in the banks and financial institutions sector at March 31, 2013 and December 31, 2012 , and 1% of total investments in debt and perpetual securities at March 31, 2013 and December 31, 2012 .

Ireland

As of March 31, 2013 , our total direct exposure within Ireland consisted of senior unsecured bank obligations. Senior securities issued by the Bank of Ireland with amortized costs and fair values totaling $213 million and $132 million , respectively, were rated below investment grade at Ba2/BB+/BBB by Moody's, S&P and Fitch, respectively. We believe that these unrealized losses were more closely linked to the Irish government's aggressive approach to addressing its debt burden, which included the possibility of imposing losses on senior debt holders of certain non-viable Irish banks. While the political risk of burden-sharing remains, it significantly subsided during the second half of 2011 as the government has shifted its focus to reducing its debt burden. This Irish bank is current on its obligation to us, and we

believe it has the ability to meet its obligations to us. In addition, as of March 31, 2013 , we had the intent to hold this investment to recovery in value. As a result, we did not recognize an other-than-temporary impairment for this investment as of March 31, 2013 . The other senior security holdings in Ireland were issued by DEPFA Bank PLC and had an amortized cost of $ 243 million and fair value of $169 million as of March 31, 2013 . DEPFA is an Irish-domiciled and licensed financial institution that is a wholly owned subsidiary of Hypo Real Estate Holding, a German licensed and regulated financial institution. Due to this ownership by a German parent, DEPFA has not been included in the Republic of Ireland's bank re-structuring and capitalization plan. DEPFA was current on its obligation to us and was rated investment grade at Baa3/BBB/BBB+ by Moody's, S&P and Fitch, respectively, as of March 31, 2013 .

We expect the operating environment will continue to be difficult in 2013 as Ireland ' s government continues utilizing austerity measures to reduce deficits. Meaningful economic growth will be difficult due to the aforementioned austerity measures, weak domestic demand, high unemployment and depressed real estate markets. Further, Ireland remains susceptible to contagion risks from difficulties of other European countries. Although there has been substantial improvement in the political environment and the fiscal outlook has improved recently, Ireland's economic and ratings profile is expected to remain under pressure in the short-term.

Italy

Although Italy remains a country of heightened inherent risk and Moody's, S&P, and Fitch all had downgrade actions for Italy in 2012, as of March 31, 2013 , Italy was still rated investment grade by all three rating agencies.

As of March 31, 2013 , our total direct exposure within Italy was $2.1 billion , at amortized cost. This exposure comprised $266 million of direct investment in the sovereign of Italy; a senior unsecured bank obligation of $159 million ; and several utility and industrial companies of $802 million and $917 million , respectively. Our total exposure to Italy-based utility companies contained $574 million of securities that have below-investment-grade put options.

We expect the operating environment will continue to be difficult in 2013 as the uncertainty of the recent elections combines with the planned austerity measures to reduce deficits. Meaningful economic growth will be difficult due to the aforementioned austerity measures and a contraction of bank credit. Although there has been substantial improvement, the political environment and the fiscal outlook remain tenuous, Italy's economic and ratings profile is expected to remain under pressure in the short-term.

Corporate issuers domiciled in Italy will continue to carry sovereign rating risk, but we expect they will continue to meet obligations due to a variety of factors supporting their individual credit profile.

As of March 31, 2013 , all of our Italian exposures were rated investment grade and were current on their obligations to us, and we believe they have the ability to meet their obligations to us.

Portugal

As of March 31, 2013 , our total direct exposure to Portugal was $253 million , at amortized cost. All of this exposure is to two electric utility issuers domiciled in Portugal; Redes Energeticas Nacionas SGPS, S.A. (REN) and Energias de Portugal SA (EDP). Our exposure to REN and EDP was $106 million and $147 million , respectively, at amortized cost. Both of these securities have been rated by external rating agencies and the Company as below investment grade as of March 31, 2013 ; however, they were both current on their obligations to us.

Our holdings domiciled in Portugal will continue to carry sovereign rating risk and could experience ratings pressure and difficulty in accessing capital markets because of that risk. However, we expect they will continue to meet debt obligations as a result of a variety of factors supporting their overall credit profile.

Spain

Although Spain remains a country of heightened inherent risk and Moody's, S&P, and Fitch all had multiple downgrade actions for the Kingdom of Spain throughout 2012, as of March 31, 2013 , the Kingdom of Spain was still rated investment grade by all three rating agencies.

We expect the operating environment will continue to be difficult in 2013 as Spain's government implements austerity measures to reduce deficits at both the federal and regional levels. In addition, economic growth will be pressured due to the aforementioned austerity measures and a contraction of bank credit. Greater uncertainty over their fiscal profiles has made it difficult for the regional governments in Spain to obtain reasonable financing for existing and new debt facilities.

Therefore, Spain's and its regional governments' economic and ratings profile are expected to remain under pressure for the forseeable future.

As of March 31, 2013 , our total direct exposure to Spain was $958 million , at amortized cost. This exposure comprised $70 million of investments in sub-sovereign (i.e. regional governments) issuers; a senior unsecured bank obligation of $59 million ; one Lower Tier II obligation of $34 million ; and Spain-domiciled utilities and industrials of $372 million and $423 million , respectively.

Concerns about Spain's sovereign's fiscal and economic condition has led to an increase in its overall cost of funding. The increase in funding costs as well as concerns about fiscal and economic conditions also have had a negative impact on the Spanish sub-sovereigns' cost of funding and made access to credit almost impossible for them. We recognized an other-than-temporary impairment of $144 million on our Spanish sub-sovereign investment in Generalitat de Catalunya in the second quarter of 2012. As of March 31, 2013 , our investment of $70 million , at amortized cost, in Generalitat de Catalunya was rated Ba3/BB/BBB- by Moody's, S&P, and Fitch, respectively, and we have classified this investment as below investment grade.

Our Spanish senior unsecured bank investment of $59 million , at amortized cost, was issued by Bankia SA (Bancaja Emisiones SA Unipersonal). Bankia is currently controlled by a bank holding company which is wholly owned by the Kingdom of Spain. The government has provided direct and planned capital injections and facilitated the transfer of non-performing assets into a state-sponsored entity ("Sareb") to manage such assets. Currently, we believe the Spanish government has the ability and desire to continue supporting Bankia. Although our holdings are senior level obligations, given the uncertainty surrounding the credit profile of Bankia, we transferred this investment from the held-to-maturity portfolio to the available-for-sale portfolio, and we recognized an other-than-temporary impairment of $120 million on our investment in Bankia SA in the second quarter of 2012. Bankia SA was rated Ba2/BB-/BBB by Moody's, S&P, and Fitch, respectively, and we have classified this investment as below investment grade as of March 31, 2013 . In April 2013, subsequent to the end of the first quarter of 2013, we entered into an agreement to sell our investment in Bankia, and we will realize a gain of $35 million on the sale.

Our holdings, especially utilities, domiciled in Spain will continue to carry sovereign rating risk and could experience ratings pressure and difficulty in accessing capital markets because of the risk. However, we expect they will continue to meet our debt obligations as a result of a variety of factors supporting their overall credit profile.

As of March 31, 2013 , with the exception of the securities discussed above, the remaining securities of our Spain-domiciled exposures were rated investment grade and were current on their obligations to us , and we believe they have the ability to meet their obligations to us.

European sovereign debt crisis - monitoring and mitigating exposure

During most of 2011, we saw the European sovereign crisis persist and escalate. Throughout 2012 and continuing into 2013, our internal team of experienced credit professionals continued to monitor the impact of the crisis on our individual investment holdings' overall credit quality. Our analysis includes factors beyond a baseline assessment of a company's assets, operations, financial statements, and credit metrics that may provide support for the instruments we own. Specifically, for our investments in European banks and financial institutions, we monitor the importance of the issuer to its local financial system, the likelihood of government support, and our investment's position in the capital structure of the issuer. For our investments in European utilities, we monitor the role of the issuer in its local economy as a provider of necessary infrastructure, and we monitor the value of the underlying assets owned by the issuer. For our investment in European corporates, industrials, and other commercial entities, we monitor the general credit quality of the issuer, the geographical mix of the issuer's customers (i.e. domestic vs. foreign), the geographical breakdown of the issuer's assets (i.e. domestic versus foreign), the value of the underlying assets owned by the issuer, capitalization of the issuer, and overall profitability and cash generation ability of the issuer. We monitor NRSRO actions and the likely actions for our investment exposures, as well as overall market conditions. By performing these analyses, we make a determination on the probability of timely payment of principal and interest of the issuers of our investments.

Some of our peripheral Eurozone fixed income investment contain covenants that we believe mitigate our risk to the issuer. These covenants could include put options that allow us to put our holdings at a predetermined price, usually par, should the issuer be downgraded to below investment grade by a rating agency, plus restrictions on the ability to incur additional debt, sell assets, or provide collateral for indebtedness.

Apart from our direct investments in peripheral Eurozone sovereign debt, our other exposures as of March 31, 2013 to the European sovereign debt crisis were investments in peripheral Eurozone banks and financial institutions of $.7 billion , peripheral Eurozone non-banks (excluding sovereigns) of $2.8 billion , core Eurozone ¹ banks and financial institutions of $2.9 billion , core Eurozone non-banks (excluding sovereigns) of $5.4 billion , core Eurozone sovereigns of $.6 billion , and non-Eurozone ² holdings throughout the balance of Europe of $7.8 billion , all at amortized cost. Other exposures to the European sovereign debt crisis that are not possible to measure include the impact of slower economic activity throughout Europe and its impact on global economic growth; the impact of a potential break-up of the European Union; and market disruption including illiquidity and impaired valuations due to heightened concerns and lack of investor confidence.

Given the severity of the crisis in Europe and the potential lasting impact, we are monitoring the situation closely. Among the areas that we believe warrant continued attention include the heightened interrelationship between political, monetary, fiscal, and economic forces; the possibility of continued contagion to additional sovereigns and other entities; further stress on the banking systems throughout the region; and the impact on the underlying economic fundamentals throughout the Euro region. See the following discussion regarding steps that management has taken in the past couple years to reduce our investment exposure to Europe.

Derisking

During the past couple years, we have had a general strategy of reducing the overall risk profile of our investment portfolio. During the first quarter of 2013, we reduced our exposure to European Tier I securities through a tender of our investment in UniCredit Bank AG (HVB Funding Trust I, III, & VI) which had an amortized cost of $257 million at December 31, 2012. Our efforts in 2011 and 2012 were largely focused on reducing our exposure to European issuers and to banks and financial institutions. As a result of these derisking activities, we have significantly reduced our exposure to these areas. At the start of 2008, sovereign and financial investments in peripheral Eurozone countries of $3.3 billion comprised 5.9% of total investments and cash, declining to $1.0 billion , or 1.0% of total investments and cash, by the end of the first quarter of 2013 . At the start of 2008, investments in perpetual securities of $8.3 billion comprised 14.7% of total investments and cash, declining to $3.6 billion , or 3.5% of total investments and cash, by the end of the first quarter of 2013 . As a result of these portfolio activities, we have dramatically reduced the impact to our portfolio from the European financial crisis. We will continue to be vigilant in monitoring our holdings and evaluating opportunities that may arise to further and appropriately reduce, reposition, and manage the risks in our portfolio.

Securities by Type of Issuance

We have investments in both publicly and privately issued securities. Our ability to sell either type of security is a function of overall market liquidity which is impacted by, among other things, the amount of outstanding securities of a particular issuance, trading history of the security, overall market conditions, and idiosyncratic events affecting the specific issuer.

¹ Core Eurozone includes Germany, France, Netherlands, Austria, Belgium and Finland.

² Non-Eurozone Europe includes the United Kingdom, Switzerland, Sweden, Norway, Denmark, Czech Republic and Poland.

The following table details investment securities by type of issuance.

Investment Securities by Type of Issuance



		March 31, 2013						December 31, 2012
(In millions)	Amortized Cost			Fair Value			Amortized Cost			Fair Value
Publicly issued securities:
Fixed maturities		$	61,381		$	66,222		$	67,116		$	70,026
Perpetual securities		127			148			128			146
Equity securities		10			15			11			13
Total publicly issued		61,518			66,385			67,255			70,185
Privately issued securities:
Fixed maturities		36,602			37,101			40,723			42,068
Perpetual securities		3,506			2,985			4,085			4,156
Equity securities		8			9			9			10
Total privately issued		40,116			40,095			44,817			46,234
Total investment securities		$	101,634		$	106,480		$	112,072		$	116,419

The following table details our privately issued investment securities.

Privately Issued Securities



(Amortized cost, in millions)	March 31, 2013				December 31, 2012
Privately issued securities as a percentage of total debt and perpetual securities		39.5		%		40.0		%
Privately issued securities held by Aflac Japan		$	37,098			$	41,624
Privately issued securities held by Aflac Japan as a percentage of total debt and perpetual securities		36.5		%		37.1		%

Reverse-Dual Currency Securities ⁽¹⁾



(Amortized cost, in millions)	March 31, 2013				December 31, 2012
Privately issued reverse-dual currency securities		$	8,708			$	9,916
Publicly issued collateral structured as reverse-dual currency securities		2,670				2,781
Total reverse-dual currency securities		$	11,378			$	12,697
Reverse-dual currency securities as a percentage of total debt and perpetual securities		11.2		%		11.3		%

⁽¹⁾ Principal payments in yen and interest payments in dollars

Aflac Japan has invested in 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 and have longer maturities, thereby allowing us to improve our asset/liability matching and our overall investment returns. Most of our privately issued securities were 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.

Below-Investment-Grade and Split-Rated Securities

The below-investment-grade securities shown in the following table were investment grade at the time of purchase and were subsequently downgraded.

Below-Investment-Grade Securities ⁽¹⁾



	March 31, 2013									December 31, 2012
(In millions)	Par Value		Amortized Cost		Fair Value		Unrealized Gain (Loss)			Par Value		Amortized Cost		Fair Value		Unrealized Gain(Loss)
Israel Electric Corporation Limited	$	734	$	688	$	669	$	(19	)	$	797	$	748	$	716	$	(32	)
Republic of Tunisia	532		332		332		0			739		496		496		0
Investcorp Capital Limited	443		443		340		(103		)	477		477		418		(59		)
Commerzbank AG (includes Dresdner Bank)	425		274		314		40			462		297		394		97
UPM-Kymmene	330		330		242		(88		)	358		358		263		(95		)
Lloyds Banking Group PLC	328		293		362		69			328		292		351		59
Societe Generale ⁽²⁾	266		265		195		(70		)	289		288		302		14
CSAV (Tollo Shipping Co. S.A.)	255		107		138		31			277		117		145		28
Bank of Ireland	213		213		132		(81		)	231		231		153		(78		)
Generalitat de Catalunya	191		70		111		41			208		76		91		15
Tokyo Electric Power Co., Inc.	183		184		189		5			199		201		203		2
Bankia SA (Bancaja Emisiones SA Unipersonal)	159		59		93		34			173		64		66		2
Energias de Portugal SA (EDP)	149		147		149		2			158		156		155		(1		)
IKB Deutsche Industriebank AG	138		62		62		0			150		78		96		18
Redes Energeticas Nacionais SGPS,S.A. (REN)	106		106		97		(9		)	116		116		100		(16		)
Finance For Danish Industry (FIH)	106		55		55		0			116		90		100		10
Barclays Bank PLC ⁽²⁾	65		48		62		14			65		48		62		14
Sparebanken Vest ⁽²⁾	60		60		60		0			60		60		60		0
Sparebanken Nord-Norge ⁽²⁾	60		60		60		0			*		*		*		*
Unicredit Bank AG (HVB Funding Trust I, III, & VI)	0		0		0		0			341		257		257		0
Other Issuers (below $50 million in par value) ⁽³⁾	392		383		401		18			448		419		429		10
Total	$	5,135	$	4,179	$	4,063	$	(116	)	$	5,992	$	4,869	$	4,857	$	(12	)

* Investment grade at respective reporting date

⁽¹⁾ Does not include senior secured bank loans in an externally managed portfolio that were below investment grade when initially purchased

⁽²⁾ Includes perpetual security

⁽³⁾ Includes 15 issuers in 2013 and 14 issuers in 2012

In 2011, we initiated a limited program to invest in senior secured bank loans to U.S. and Canadian corporate borrowers, most of which have below-investment-grade ratings. The program is managed externally by third party firms specializing in this asset class. This mandate requires a minimum average credit quality of BB-/Ba3, prohibits loans rated below B/B2, and prohibits exposure to any individual credit greater than 3% of the program’s assets. The objectives of this program include enhancing the yield on invested assets, achieving further diversification of credit risk, and mitigating the risk of rising interest rates through the acquisition of floating rate assets. Our investments in this program totaled $467 million at March 31, 2013 , compared with $414 million at December 31, 2012 , on an amortized cost basis.

Excluding the senior secured bank loans discussed above that were rated below investment grade when initially purchased, below-investment-grade debt and perpetual securities represented 4.1% of total debt and perpetual securities at March 31, 2013 , compared with 4.3% at December 31, 2012 , on an amortized cost basis. Debt and perpetual securities classified as below investment grade at March 31, 2013 and December 31, 2012 were generally reported as available for sale and carried at fair value.

Occasionally, a debt or perpetual security will be split rated. This occurs when one rating agency rates the security as investment grade while another rating agency rates the same security as below investment grade. As of the first quarter of 2012, our policy has been to utilize the second lowest rating designation assigned to the security, which in this case where there are only two ratings - one investment grade and one below investment grade - would result in the security being rated as below investment grade. In the event that the second lowest rating designation from the major credit rating agencies (Moody's, S&P and Fitch) is investment grade, our policies do not preclude us from assigning a below-investment-grade rating if our own internal analysis shows a credit deterioration has occurred and our assessment results in a rating below that which is assigned by such agencies. Our review in those cases includes evaluating the issuer’s credit position as well as current market pricing and other factors, such as the issuer’s or security’s inclusion on a credit rating downgrade watch list. Split-rated securities, excluding the senior secured bank loan investments discussed above, totaled $3.1 billion as of March 31, 2013 , compared with $3.8 billion as of December 31, 2012 , and represented 3.1% of total debt and perpetual securities, at amortized cost, at March 31, 2013 , compared with 3.4% at December 31, 2012 . The 10 largest split-rated securities as of March 31, 2013 , were as follows:



Split-Rated Securities
(In millions)	Amortized Cost			Investment-Grade Status
Israel Electric Corporation Limited		$	688	Below Investment Grade
SLM Corp.		349		Investment Grade
Commerzbank AG (includes Dresdner Bank)		274		Below Investment Grade
Societe Generale ⁽¹⁾		265		Below Investment Grade
Bank of Ireland		213		Below Investment Grade
Barclays Bank PLC ⁽¹⁾⁽²⁾		179		Below Investment Grade / Investment Grade
Deutsche Bank Capital Trust II & Capital Funding Trust I ⁽¹⁾		170		Investment Grade
Transnet Ltd.		159		Investment Grade
Energias de Portugal SA (EDP)		147		Below Investment Grade
Goldman Sachs Capital I		120		Investment Grade

⁽¹⁾ Perpetual security

⁽²⁾ Barclays is listed as "Below Investment Grade (BIG)/ Investment Grade (IG)" since the Upper Tier II holdings ($131 million amortized cost) are IG and the Tier I holdings ($48 million amortized cost) are BIG

For the interest rate, foreign currency, and credit default swaps associated with our VIE investments for which we are the primary beneficiary, we bear the risk of foreign exchange or interest rate loss due to counterparty default even though we are not a direct counterparty to those contracts. We are a direct counterparty to the interest rate and foreign currency swaps that we have on certain of our senior notes, subordinated debentures, and Samurai notes; foreign currency forwards on certain fixed-maturity securities; and foreign currency options, therefore we are exposed to credit risk in the event of nonperformance by the counterparties in those contracts. The risk of counterparty default for our VIE and senior note and subordinated debenture swaps is mitigated by collateral posting requirements the counterparty must meet. The counterparty risk associated with the foreign currency forwards is the risk that at expiry of the contract, the counterparty is unable to deliver the agreed upon amount of yen at the agreed upon price or delivery date, thus exposing the Company to additional unhedged exposure to U.S. dollars in the Aflac Japan investment portfolio. See Note 4 of the Notes to the Consolidated Financial Statements for more information.

Other-than-temporary Impairment

See Note 3 of the Notes to the Consolidated Financial Statements for a discussion of our impairment policy.

Unrealized Investment Gains and Losses

The following table provides details on amortized cost, fair value and unrealized gains and losses for our investments in debt and perpetual securities by investment-grade status as of March 31, 2013 .



(In millions)	Total Amortized Cost			Total Fair Value			Percentage of Total Fair Value			Gross Unrealized Gains			Gross Unrealized Losses
Available-for-sale securities:
Investment-grade securities		$	51,787		$	54,893		51.6	%		$	4,177		$	1,071
Below-investment-grade securities		4,625			4,516			4.2			289			398
Held-to-maturity securities:
Investment-grade securities		45,204			47,047			44.2			3,057			1,214
Total		$	101,616		$	106,456		100.0	%		$	7,523		$	2,683

The following table presents an aging of debt and perpetual securities in an unrealized loss position as of March 31, 2013 .

Aging of Unrealized Losses



(In millions)	Total Amortized Cost		Total Unrealized Loss		Less than Six Months				Six Months to Less than 12 Months				12 Months or Longer
					Less than Six Months				Six Months to Less than 12 Months				12 Months or Longer
					Amortized Cost		Unrealized Loss		Amortized Cost		Unrealized Loss		Amortized Cost		Unrealized Loss
Available-for-sale securities:
Investment-grade securities	$	16,437	$	1,071	$	13,795	$	719	$	519	$	34	$	2,123	$	318
Below- investment-grade securities	2,045		398		736		94		2		0		1,307		304
Held-to-maturity securities:
Investment-grade securities	10,787		1,214		5,136		339		159		13		5,492		862
Total	$	29,269	$	2,683	$	19,667	$	1,152	$	680	$	47	$	8,922	$	1,484

The following table presents a distribution of unrealized losses on debt and perpetual securities by magnitude as of March 31, 2013 .

Percentage Decline From Amortized Cost



(In millions)	Total Amortized Cost		Total Unrealized Loss		Less than 20%				20% to 50%				Greater than 50%
(In millions)	Total Amortized Cost		Total Unrealized Loss		Amortized Cost		Unrealized Loss		Amortized Cost		Unrealized Loss		Amortized Cost		Unrealized Loss
Available-for-sale securities:
Investment-grade securities	$	16,437	$	1,071	$	14,828	$	612	$	1,609	$	459	$	0	$	0
Below- investment-grade securities	2,045		398		845		55		1,200		343		0		0
Held-to-maturity securities:
Investment-grade securities	10,787		1,214		8,783		662		2,004		552		0		0
Total	$	29,269	$	2,683	$	24,456	$	1,329	$	4,813	$	1,354	$	0	$	0

The following table presents the 10 largest unrealized loss positions in our portfolio as of March 31, 2013 .



(In millions)	Credit Rating		Amortized Cost			Fair Value			Unrealized Loss
Investcorp Capital Limited		BB		$	443		$	340		$	(103	)
SLM Corp.		BBB		349			250			(99		)
UPM-Kymmene		BB		330			242			(88		)
Bank of Ireland		BB		213			132			(81		)
AXA ⁽¹⁾		BBB		338			259			(79		)
Kommunal Landspankasse (KLP) ⁽¹⁾		BBB		260			183			(77		)
DEPFA Bank PLC		BBB		243			169			(74		)
Telecom Italia SPA		BBB		425			353			(72		)
Societe Generale ⁽¹⁾		BB		265			195			(70		)
Nordea Bank AB ⁽¹⁾		BBB		358			289			(69		)

⁽¹⁾ Includes perpetual security

Declines in fair value noted above were impacted by changes in interest rates and credit spreads, yen/dollar exchange rates, and issuer credit status. However, we currently believe it would be inappropriate to recognize impairment charges because we believe the changes in fair value are temporary. See the Market Risks of Financial Instruments - Credit Risk subsection of this MD&A for a discussion of unrealized losses related to Ireland, and see the Unrealized Investment Gains and Losses section in Note 3 of the Notes to the Consolidated Financial Statements for further discussions of unrealized losses related to financial institutions, including perpetual securities, and other corporate investments.

Investment Valuation and Cash

We estimate the fair values of our securities available for sale on a monthly basis. We monitor the estimated fair values obtained from our custodian, pricing vendors and brokers for consistency from month to month, while considering current market conditions. We also periodically discuss with our custodian and pricing brokers and vendors the pricing techniques they use to monitor the consistency of their approach and periodically assess the appropriateness of the valuation level assigned to the values obtained from them. If a fair value appears unreasonable, we will re-examine the inputs and assess the reasonableness of the pricing data with the vendor. Additionally, we may compare the inputs to relevant market indices and other performance measurements. The output of this analysis is presented to the Company's Credit Subcommittee, or CSC. Based on the analysis provided to the CSC, the valuation is confirmed or may be revised if there is evidence of a more appropriate estimate of fair value based on available market data. With the implementation in the first quarter of 2013 of the pricing change associated with privately issued securities as previously discussed, we have performed verification of the inputs and calculations in the models to confirm that the valuations represent reasonable estimates of fair value.

Cash and cash equivalents totaled $2.6 billion , or 2.4% of total investments and cash, as of March 31, 2013 , compared with $2.0 billion , or 1.7% , at December 31, 2012 . For a discussion of the factors affecting our cash balance, see the Operating Activities, Investing Activities and Financing Activities subsections of this MD&A.

For additional information concerning our investments, see Notes 3, 4, and 5 of the Notes to the Consolidated Financial Statements.

Deferred Policy Acquisition Costs

The following table presents deferred policy acquisition costs by segment.



(In millions)	March 31, 2013			December 31, 2012			% Change
Aflac Japan		$	6,346		$	6,801		(6.7	)%	⁽¹⁾
Aflac U.S.		2,864			2,857			.2
Total		$	9,210		$	9,658		(4.6	)%

⁽¹⁾ Aflac Japan’s deferred policy acquisition costs increased 1.4% in yen during the three months ended March 31, 2013 .

See Note 1 of the Notes to the Consolidated Financial Statements in our annual report to shareholders for the year ended December 31, 2012 for a discussion of changes to the accounting policy for DAC which was effective January 1, 2012.

Policy Liabilities

The following table presents policy liabilities by segment.



(In millions)	March 31, 2013			December 31, 2012			% Change
Aflac Japan		$	84,277		$	89,183		(5.5	)%	⁽¹⁾
Aflac U.S.		8,672			8,534			1.6
Other		2			3			(33.3	)
Total		$	92,951		$	97,720		(4.9	)%

⁽¹⁾ Aflac Japan’s policy liabilities increased 2.7% in yen during the three months ended March 31, 2013 .

Notes Payable

Notes payable totaled $4.3 billion at March 31, 2013 , compared with $4.4 billion at December 31, 2012 . The ratio of debt to total capitalization (debt plus shareholders’ equity, excluding the unrealized gains and losses on investment securities and derivatives) was 24.0% as of March 31, 2013 , compared with 24.5% as of December 31, 2012 . See Note 6 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 9 of the accompanying Notes to the Consolidated Financial Statements and Note 13 of the Notes to the Consolidated Financial Statements in our annual report to shareholders for the year ended December 31, 2012 .

Policyholder Protection Corporation

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 December 27, 2011, Japan's FSA announced the plans to enhance the stability of the LIPPC by extending the government's fiscal support of the LIPPC through March 2017. Accordingly, the FSA submitted legislation to the Diet on January 27, 2012 to extend the government's fiscal support framework, and the legislation was approved on March 30, 2012.

Hedging Activities

Net Investment Hedge

Our primary exposure to be hedged is our investment in Aflac Japan, which is affected by changes in the yen/dollar exchange rate. To mitigate this exposure, we have taken the following courses of action. First, Aflac Japan maintains a portfolio of dollar-denominated securities, which serves as an economic currency hedge of a portion of our investment in Aflac Japan. The foreign exchange gains and losses related to this portfolio are taxable in Japan and the U.S. when the securities mature or are sold. Until maturity or sale, deferred tax expense or benefit associated with the foreign exchange gains or losses are recognized in other comprehensive income. Second, we have designated the majority of the Parent Company’s yen-denominated liabilities (Samurai and Uridashi notes and yen-denominated loans) as a hedge of our net investment in Aflac Japan. At the beginning of each quarter, we make our net investment hedge designation. If the total of the designated Parent Company yen-denominated liabilities is equal to or less than our net investment in Aflac Japan, the hedge is deemed to be effective and the related exchange effect on the liabilities is reported in the unrealized foreign currency component of other comprehensive income. Should these designated yen-denominated liabilities exceed our net investment in Aflac Japan, the foreign exchange effect on the portion of the Parent Company yen-denominated liabilities that exceeds our net investment in Aflac Japan would be recognized in net earnings. We estimate that if the Parent Company yen-denominated liabilities exceeded our net investment in Aflac Japan by 10 billion yen, we would report a foreign exchange gain/loss of approximately $1 million for every 1% yen weakening/strengthening in the end-of-period yen/dollar exchange rate. Our net investment hedge was effective during the three- month periods ended March 31, 2013 and 2012 , respectively.

The yen net asset figure calculated for hedging purposes differs from the yen-denominated net asset position as discussed in the Currency Risk subsection of MD&A. As disclosed in that subsection, the consolidation of the underlying assets in certain VIEs requires that we derecognize our yen-denominated investment in the VIE and recognize the underlying U.S. dollar-denominated 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.

The dollar values of our yen-denominated net assets, including certain VIEs as yen-denominated investments for net investment hedging purposes as discussed above, are summarized as follows (translated at end-of-period exchange rates):



(In millions)	March 31, 2013				December 31, 2012
Aflac Japan net assets		$	12,997			$	13,580
Aflac Japan dollar-denominated net assets		(8,318		)		(8,317		)
Aflac Japan yen-denominated net assets		4,679				$	5,263
Parent Company yen-denominated net liabilities		(779		)		(850		)
Consolidated yen-denominated net assets (liabilities) subject to foreign currency translation fluctuations		$	3,900			$	4,413

Cash Flow Hedges

We have freestanding derivative instruments related to our consolidated VIE investments that are reported in the consolidated balance sheet at fair value within other assets and other liabilities. As of March 31, 2013 , two of the freestanding swaps that are used within VIEs to hedge the risk arising from changes in foreign currency exchange rates qualified for hedge accounting.

We have an interest rate swap agreement related to the 5.5 billion yen variable interest rate Samurai notes that we issued in July 2011. By entering into this contract, we swapped the variable interest rate to a fixed interest rate of 1.475%. We have designated this interest rate swap as a hedge of the variability in our interest cash flows associated with the variable interest rate Samurai notes. This hedge was effective during the three- month periods ended March 31, 2013 and 2012 , respectively.

Fair Value Hedges

In the third quarter of 2012, we began entering into foreign currency forwards to mitigate the foreign exchange risk associated with new investments in U.S. dollar-denominated fixed-maturities that support yen-denominated liabilities within our Aflac Japan segment.

See Note 4 of the Notes to the Consolidated Financial Statements for additional information on our hedging activities.

Off-Balance Sheet Arrangements

As of March 31, 2013 , we had no material letters of credit, standby letters of credit, guarantees or standby repurchase obligations. See Note 14 of the Notes to the Consolidated Financial Statements in our annual report to shareholders for the year ended December 31, 2012 , for information on material unconditional purchase obligations that are not recorded on our balance sheet.

CAPITAL RESOURCES AND LIQUIDITY

Aflac provides the primary sources of liquidity to the Parent Company through dividends and management fees. The following table presents the amounts provided for the three -month periods ending March 31 .

Liquidity Provided by Aflac to Parent Company



(In millions)	2013		2012
Dividends declared or paid by Aflac	$	163	$	0
Management fees paid by Aflac	89		67

The primary uses of cash by the Parent Company are shareholder dividends, the repurchase of its common stock and interest on its outstanding indebtedness. The Parent Company’s sources and uses of cash are reasonably predictable and are not expected to change materially in the future. For additional information, see the Financing Activities subsection of this MD&A.

The Parent Company also accesses debt security markets to provide additional sources of capital. We filed a shelf registration statement with the SEC in May 2012 which enables us to issue an indefinite amount of senior and subordinated debt, in one or more series, from time to time until May 2015. In December 2011, we filed a shelf registration statement with Japanese regulatory authorities that allows us to issue up to 100 billion yen of yen-denominated Samurai notes in Japan through January 2014. If issued, these yen-denominated Samurai notes would not be available to U.S. persons. We believe outside sources for additional debt and equity capital, if needed, will continue to be available. For additional information, see Note 6 of the Notes to the Consolidated Financial Statements.

The principal sources of cash for our insurance operations are premiums and investment income. The primary uses of cash by our insurance operations are investments, policy claims, commissions, operating expenses, income taxes and payments to the Parent Company for management fees and dividends. Both the sources and uses of cash are reasonably predictable.

When making an investment decision, our first consideration is based on product needs. Our investment objectives provide for liquidity through the purchase of investment-grade debt securities. These objectives also take into account duration matching, and because of the long-term nature of our business, we have adequate time to react to changing cash flow needs.

As a result of policyholder aging, claims payments are expected to gradually increase over the life of a policy. Therefore, future policy benefit reserves are accumulated in the early years of a policy and are designed to help fund future claims payments. We expect our future cash flows from premiums and our investment portfolio to be sufficient to meet our cash needs for benefits and expenses.

In June 2012 , the Parent Company and Aflac entered into a 364 -day senior unsecured revolving credit facility agreement in the amount of 50 billion yen with a syndicate of financial institutions. This credit agreement provided for borrowings in Japanese yen or the equivalent of Japanese yen in U.S. dollars on a revolving basis. Borrowings would have born interest at LIBOR plus the applicable margin of 1.025% . We terminated this agreement on March 29, 2013, and the Parent Company and Aflac entered into a new five-year senior unsecured revolving credit facility agreement with a syndicate of financial institutions in the amount of 50 billion yen. This credit agreement provides for borrowings in Japanese yen or the equivalent of Japanese yen in U.S. dollars on a revolving basis. Borrowings will bear interest at LIBOR plus the applicable margin of 1.125% . In addition, the Parent Company and Aflac are required to pay a facility fee of .125% on the commitments. Borrowings under the credit agreement may be used for general corporate purposes, including a capital contingency plan for our Japanese operations. Borrowings under the financing agreement mature at the termination date of the credit agreement. The agreement requires compliance with certain financial covenants on a quarterly basis. This credit agreement will expire on the earlier of (a) March 29, 2018, or (b) the date of termination of the commitments upon an event of default as defined in the agreement. As of March 31, 2013 , no borrowings were outstanding under our 50 billion yen revolving credit agreement.

Our financial statements convey our financing arrangements during the periods presented. We have not engaged in material intra-period short-term financings during the periods presented that are not otherwise reported in our balance sheet. We were in compliance with all of the covenants of our notes payable at March 31, 2013 . We have not entered into transactions involving the transfer of financial assets with an obligation to repurchase financial assets that have been accounted for as a sale under applicable accounting standards, including securities lending transactions. See Note 3 of the Notes to the Consolidated Financial Statements and Note 1 of the Notes to the Consolidated Financial Statements in our annual report to shareholders for the year ended December 31, 2012 , for more information on our securities lending activity. We do not have a known trend, demand, commitment, event or uncertainty that would reasonably result in our liquidity increasing or decreasing by a material amount. Our cash and cash equivalents include unrestricted cash on hand, money market instruments, and other debt instruments with a maturity of 90 days or less when purchased, all of which has minimal market, settlement or other risk exposure.

Consolidated Cash Flows

We translate cash flows for Aflac Japan’s yen-denominated items into U.S. dollars using weighted-average exchange rates. In periods 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 three -month periods ended March 31 .



(In millions)	2013			2012
Operating activities	$	3,832		$	3,556
Investing activities	(3,085		)	(4,436		)
Financing activities	(156		)	901
Exchange effect on cash and cash equivalents	(36		)	(60		)
Net change in cash and cash equivalents	$	555		$	(39	)

Operating Activities

The following table summarizes operating cash flows by source for the three -month periods ended March 31 .



(In millions)	2013		2012
Aflac Japan	$	3,486	$	3,318
Aflac U.S. and other operations	346		238
Total	$	3,832	$	3,556

Investing Activities

Operating cash flow is primarily used to purchase debt securities to meet future policy obligations. The following table summarizes investing cash flows by source for the three -month periods ended March 31 .



(In millions)	2013			2012
Aflac Japan	$	(2,918	)	$	(4,256	)
Aflac U.S. and other operations	(167		)	(180		)
Total	$	(3,085	)	$	(4,436	)

Prudent portfolio management dictates that we attempt to match the duration of our assets with the duration of our liabilities. Currently, when our debt and perpetual securities mature, the proceeds may be reinvested at a yield below that required for the accretion of policy benefit liabilities on policies issued in earlier years. However, the long-term nature of our business and our strong cash flows provide us with the ability to minimize the effect of mismatched durations and/or yields identified by various asset adequacy analyses. When market opportunities arise, we dispose of selected debt and perpetual securities that are available for sale to improve the duration matching of our assets and liabilities, improve future investment yields, and/or re-balance our portfolio. As a result, dispositions before maturity can vary significantly from year to year. Dispositions before maturity were approximately 1% of the year-to-date average investment portfolio of debt and perpetual securities available for sale during the three -month periods ended March 31, 2013 and 2012.

Financing Activities

Consolidated cash used by financing activities was $156 million in the first three months of 2013 , compared with consolidated cash provided by financing activities of $901 million for the same period of 2012 . For information regarding the debt issuances in 2012, see Note 8 of the Notes to the Consolidated Financial Statements in our annual report to shareholders for the year ended December 31, 2012 .

Cash returned to shareholders through dividends and treasury stock purchases was $315 million during the three -month period ended March 31, 2013 , compared with $158 million during the three -month period ended March 31, 2012 .

See our preceding discussion in this Capital Resources and Liquidity section of MD&A regarding the five-year senior unsecured revolving credit facility agreement entered into by the Parent Company and Aflac in March 2013 in the amount of 50 billion yen. As of March 31, 2013 , no borrowings were outstanding under our 50 billion yen revolving credit agreement.

We were in compliance with all of the covenants of our notes payable and line of credit at March 31, 2013 .

The following tables present a summary of treasury stock activity during the three -month periods ended March 31 .

Treasury Stock Purchased



(In millions of dollars and thousands of shares)	2013		2012
Treasury stock purchases	$	156	$	10
Number of shares purchased:
Open market	2,979		0
Other	124		199
Total shares purchased	3,103		199

Treasury Stock Issued



(In millions of dollars and thousands of shares)	2013		2012
Stock issued from treasury:
Cash financing	$	19	$	5
Noncash financing	18		18
Total stock issued from treasury	$	37	$	23
Number of shares issued	803		554

During the first three months of 2013 , we repurchased 3.0 million shares of our common stock for approximately $150 million as part of our share repurchase program. As of March 31, 2013 , a remaining balance of 19.4 million shares of our common stock was available for purchase under a share repurchase authorization by our board of directors in 2008. We plan to purchase a total of $400 to $600 million of our common stock in 2013 .

Cash dividends paid to shareholders were $.35 per share in the first quarter of 2013 , compared with $.33 per share in the first quarter of 2012 . The following table presents the dividend activity for the three -month periods ended March 31 .



(In millions)	2013		2012
Dividends paid in cash	$	159	$	148
Dividends through issuance of treasury shares	6		6
Total dividends to shareholders	$	165	$	154

In April 2013, the board of directors declared the second quarter cash dividend of $ .35 per share. The dividend is payable on June 3, 2013, to shareholders of record at the close of business on May 22, 2013.

Regulatory Restrictions

Aflac is domiciled in Nebraska and is subject to its regulations. A life insurance company’s statutory capital and surplus is determined according to rules prescribed by the NAIC, as modified by the insurance department in the insurance company’s state of domicile. Statutory accounting rules are different from GAAP and are intended to emphasize policyholder protection and company solvency. The continued long-term growth of our business may require increases in the statutory capital and surplus of our insurance operations. Aflac’s insurance operations may secure additional statutory capital through various sources, such as internally generated statutory earnings or equity contributions by the Parent Company from funds generated through debt or equity offerings. The NAIC’s risk-based capital (RBC) formula is used by insurance regulators to help identify inadequately capitalized insurance companies. The RBC formula quantifies insurance risk, business risk, asset risk and interest rate risk by weighing the types and mixtures of risks inherent in the insurer’s operations. Aflac’s company action level RBC ratio as of March 31, 2013 was estimated to be above our ratio as of December 31, 2012 of 630%. Aflac’s RBC ratio remains high and reflects a strong capital and surplus position. The maximum amount of dividends that can be paid to the Parent Company by Aflac without prior approval of Nebraska's director of insurance is the greater of the net income from operations, which excludes net realized investment gains, for the previous year determined under statutory accounting principles, or 10% of statutory capital and surplus as of the previous year-end. Dividends declared by Aflac during 2013 in excess of $2.3 billion would require such approval.

In addition to limitations and restrictions imposed by U.S. insurance regulators, Japan’s FSA may not allow profit repatriations from Aflac Japan if the transfers would cause Aflac Japan to lack sufficient financial strength for the

protection of policyholders. The FSA maintains its own solvency standard. Aflac Japan's solvency margin ratio, most recently reported as of December 31, 2012, was 669.1% , which significantly exceeded regulatory minimums. Given the low interest rate environment and the sensitivity of the solvency margin ratio to interest rate changes, we have taken actions to improve our solvency margin, including entering into surplus relief reinsurance contracts and increasing our allocation of JGBs classified as held to maturity. As previously discussed, we have entered into a five-year senior unsecured revolving credit facility in the amount of 50 billion yen as a capital contingency plan in the event of a rapid change in interest rates. We continue to evaluate other alternatives for reducing the sensitivity of the solvency margin ratio against interest rate and foreign exchange rate changes.

Payments are made from Aflac Japan to the Parent Company for management fees and to Aflac U.S. for allocated expenses and remittances of earnings. The following table details Aflac Japan remittances for the three -month periods ended March 31 .

Aflac Japan Remittances



(In millions of dollars)	2013		2012
Aflac Japan management fees paid to Parent Company	$	10	$	6
Expenses allocated to Aflac Japan	28		17

For additional information on regulatory restrictions on dividends, profit repatriations and other transfers, see Note 12 of the Notes to the Consolidated Financial Statements and the Regulatory Restrictions subsection of MD&A, both in our annual report to shareholders for the year ended December 31, 2012 .

Other

For information regarding commitments and contingent liabilities, see Note 10 of the Notes to the Consolidated Financial Statements.


Item 3.	Quantitative and Qualitative Disclosures about Market Risk

The information required by Item 3 is incorporated by reference from the Market Risks of Financial Instruments subsection of MD&A in Part I, Item 2 of this report.


Item 4.	Controls and Procedures

Disclosure Controls and Procedures

The Company’s management, with the participation of the Company’s Chief Executive Officer and Chief Financial Officer, has evaluated the effectiveness of the Company’s disclosure controls and procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) as of the end of the period covered by this quarterly report (the “Evaluation Date”). Based on such evaluation, the Company’s Chief Executive Officer and Chief Financial Officer have concluded that, as of the Evaluation Date, the Company’s disclosure controls and procedures are effective.

Changes in Internal Control Over Financial Reporting

Effective March 31, 2013, the Company changed the valuation process for privately issued securities within the investment portfolio. At the same time, the Company also implemented new controls to validate the methodology used and the overall reasonableness of the valuations for the privately issued securities included in the Company's financial statements, including verification of the inputs and calculations in the models to confirm that the valuations represent reasonable estimates of fair value. Except for the change in controls over valuation of privately issued securities, there have not been any changes in the Company’s internal control over financial reporting (as such term is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during the first fiscal quarter of 2013 that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

PART II. OTHER INFORMATION


Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds

Issuer Purchases of Equity Securities

During the first quarter of 2013 , we repurchased shares of Aflac common stock as follows:



Period	Total Number of Shares Purchased		Average Price Paid Per Share		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs	Maximum Number of Shares that May Yet Be Purchased Under the Plans or Programs
January 1 - January 31	0		$	0.00	0	22,422,204
February 1 - February 28	1,570,020		49.89		1,455,000	20,967,204
March 1 - March 31	1,530,799		50.79		1,523,800	19,443,404
Total	3,100,819	⁽²⁾	$	50.34	2,978,800	19,443,404	⁽¹⁾

⁽¹⁾ The total remaining shares available for purchase at March 31, 2013 , consisted of 19,443,404 shares related to a 30,000,000

share repurchase authorization by the board of directors announced in January 2008.

⁽²⁾ During the first quarter of 2013 , 122,019 shares were purchased in connection with income tax withholding obligations related

to the vesting of restricted-share-based awards during the period.


Item 6.	Exhibits



(a)	EXHIBIT INDEX
	3.0	-	Articles of Incorporation, as amended – incorporated by reference from Form 10-Q for June 30, 2008, Exhibit 3.0 (File No. 001-07434).
	3.1	-	Bylaws of the Corporation, as amended – incorporated by reference from Form 10-Q for March 31, 2010, Exhibit 3.1 (File No. 001-07434).
	4.0	-	There are no instruments with respect to long-term debt not being registered in which the total amount of securities authorized exceeds 10% of the total assets of Aflac Incorporated and its subsidiaries on a consolidated basis. We agree to furnish a copy of any long-term debt instrument to the Securities and Exchange Commission upon request.
	4.1	-	Indenture, dated as of May 21, 2009, between Aflac Incorporated and The Bank of New York Mellon Trust Company, N.A., as trustee – incorporated by reference from Form 8-K dated May 21, 2009, Exhibit 4.1 (File No. 001-07434).
	4.2	-	First Supplemental Indenture, dated as of May 21, 2009, between Aflac Incorporated and The Bank of New York Mellon Trust Company, N.A., as trustee (including the form of 8.500% Senior Note due 2019) – incorporated by reference from Form 8-K dated May 21, 2009, Exhibit 4.2 (File No. 001-07434).
	4.3	-	Second Supplemental Indenture, dated as of December 17, 2009, between Aflac Incorporated and The Bank of New York Mellon Trust Company, N.A., as trustee (including the form of 6.900% Senior Note due 2039) – incorporated by reference from Form 8-K dated December 14, 2009, Exhibit 4.1 (File No. 001-07434).
	4.4	-	Third Supplemental Indenture, dated as of August 9, 2010, between Aflac Incorporated and The Bank of New York Mellon Trust Company, N.A., as trustee (including the form of 6.45% Senior Note due 2040) - incorporated by reference from Form 8-K dated August 4, 2010, Exhibit 4.1 (File No. 001-07434).
	4.5	-	Fourth Supplemental Indenture, dated as of August 9, 2010, between Aflac Incorporated and The Bank of New York and Mellon Trust Company, N.A., as trustee (including the form of 3.45% Senior Note due 2015) – incorporated by reference from Form 8-K dated August 4, 2010, Exhibit 4.2 (File No. 001-07434).
	4.6	-	Fifth Supplemental Indenture, dated as of February 10, 2012, between Aflac Incorporated and The Bank of New York Mellon Trust Company, N.A., as trustee (including the form of 2.65% Senior Note due 2017) - incorporated by reference from Form 8-K dated February 8, 2012, Exhibit 4.1 (File No. 001-07434).
	4.7	-	Sixth Supplemental Indenture, dated as of February 10, 2012, between Aflac Incorporated and The Bank of New York Mellon Trust Company, N.A., as trustee (including the form of 4.00% Senior Note due 2022) - incorporated by reference from Form 8-K dated February 8, 2012, Exhibit 4.2 (File No. 001-07434).
	4.8	-	Seventh Supplemental Indenture, dated as of July 31, 2012, between Aflac Incorporated and The Bank of New York Mellon Trust Company, N.A., as trustee (including the form of 2.65% Senior Note due 2017) - incorporated by reference from Form 8-K dated July 27, 2012, Exhibit 4.1 (File No. 001-07434).
	4.9	-	Subordinated Indenture, dated as of September 26, 2012, between Aflac Incorporated and The Bank of New York Mellon Trust Company, N.A., as trustee - incorporated by reference from Form 8-K dated October 1, 2012, Exhibit 4.1 (File No. 001-07434).
	4.10	-	First Supplemental Indenture, dated as of September 26, 2012, between Aflac Incorporated and The Bank of New York Mellon Trust Company, N.A., as trustee (including the form of 5.50% Subordinated Debenture due 2052) - incorporated by reference from Form 8-K dated October 1, 2012, Exhibit 4.2 (File No. 001-07434).
	10.0*	-	American Family Corporation Retirement Plan for Senior Officers, as amended and restated October 1, 1989 – incorporated by reference from 1993 Form 10-K, Exhibit 10.2 (File No. 001-07434).
	10.1*	-	Amendment to American Family Corporation Retirement Plan for Senior Officers, dated December 8, 2008 – incorporated by reference from 2008 Form 10-K, Exhibit 10.1 (File No. 001-07434).
	10.2*	-	Aflac Incorporated Supplemental Executive Retirement Plan, as amended and restated January 1, 2009 – incorporated by reference from 2008 Form 10-K, Exhibit 10.5 (File No. 001-07434).
	10.3*	-	First Amendment to the Aflac Incorporated Supplemental Executive Retirement Plan, as amended and restated January 1, 2009 – incorporated by reference from 2012 Form 10-K, Exhibit 10.3 (File No. 001-07434).
	10.4*	-	Aflac Incorporated Executive Deferred Compensation Plan, as amended and restated, effective January 1, 2009 – incorporated by reference from 2008 Form 10-K, Exhibit 10.9 (File No. 001-07434).

100



10.5*	-	First Amendment to the Aflac Incorporated Executive Deferred Compensation Plan dated June 1, 2009 – incorporated by reference from Form 10-Q for June 30, 2009, Exhibit 10.4 (File No. 001-07434).
10.6*	-	Aflac Incorporated Amended and Restated 2009 Management Incentive Plan – incorporated by reference from the 2008 Shareholders’ Proxy Statement, Appendix B (File No. 001-07434).
10.7*	-	First Amendment to the Aflac Incorporated Amended and Restated 2009 Management Incentive Plan, dated December 19, 2008 – incorporated by reference from 2008 Form 10-K, Exhibit 10.11 (File No. 001-07434).
10.8*	-	Aflac Incorporated 2013 Management Incentive Plan - incorporated by reference from the 2012 Proxy Statement, Appendix B (File No. 001-07434).
10.9*	-	Aflac Incorporated Sales Incentive Plan – incorporated by reference from 2007 Form 10-K, Exhibit 10.8 (File No. 001-07434).
10.10*	-	1999 Aflac Associate Stock Bonus Plan, amended and restated as of January 1, 2013.
10.11*	-	Aflac Incorporated 1997 Stock Option Plan – incorporated by reference from the 1997 Shareholders’ Proxy Statement, Appendix B (File No. 001-07434).
10.12*	-	Form of Officer Stock Option Agreement (Non-Qualifying Stock Option) under the Aflac Incorporated 1997 Stock Option Plan – incorporated by reference from Form 8-K dated January 28, 2005, Exhibit 10.5 (File No. 001-07434).
10.13*	-	Form of Officer Stock Option Agreement (Incentive Stock Option) under the Aflac Incorporated 1997 Stock Option Plan – incorporated by reference from Form 8-K dated January 28, 2005, Exhibit 10.6 (File No. 001-07434).
10.14*	-	Notice of grant of stock options and stock option agreement to officers under the Aflac Incorporated 1997 Stock Option Plan – incorporated by reference from Form 8-K dated January 28, 2005, Exhibit 10.7 (File No. 001-07434).
10.15*	-	2004 Aflac Incorporated Long-Term Incentive Plan, as amended and restated March 14, 2012 – incorporated by reference from the 2012 Proxy Statement, Appendix A (File No. 001-07434).
10.16*	-	Form of Non-Employee Director Stock Option Agreement (NQSO) under the 2004 Aflac Incorporated Long-Term Incentive Plan – incorporated by reference from Form 8-K dated January 28, 2005, Exhibit 10.1 (File No. 001-07434).
10.17*	-	Notice of grant of stock options to non-employee director under the 2004 Aflac Incorporated Long-Term Incentive Plan – incorporated by reference from Form 8-K dated January 28, 2005, Exhibit 10.2 (File No. 001-07434).
10.18*	-	Form of Non-Employee Director Restricted Stock Award Agreement under the 2004 Aflac Incorporated Long-Term Incentive Plan – incorporated by reference from Form 8-K dated January 28, 2005, Exhibit 10.3 (File No. 001-07434).
10.19*	-	Notice of restricted stock award to non-employee director under the 2004 Aflac Incorporated Long-Term Incentive Plan – incorporated by reference from Form 8-K dated January 28, 2005, Exhibit 10.4 (File No. 001-07434).
10.20*	-	Form of Officer Restricted Stock Award Agreement under the 2004 Aflac Incorporated Long-Term Incentive Plan – incorporated by reference from Form 8-K dated February 7, 2005, Exhibit 10.1 (File No. 001-07434).
10.21*	-	Notice of restricted stock award to officers under the 2004 Aflac Incorporated Long-Term Incentive Plan – incorporated by reference from Form 8-K dated February 7, 2005, Exhibit 10.2 (File No. 001-07434).
10.22*	-	Form of Officer Stock Option Agreement (Non-Qualifying Stock Option) under the 2004 Aflac Incorporated Long-Term Incentive Plan – incorporated by reference from Form 8-K dated February 7, 2005, Exhibit 10.3 (File No. 001-07434).
10.23*	-	Form of Officer Stock Option Agreement (Incentive Stock Option) under the 2004 Aflac Incorporated Long-Term Incentive Plan – incorporated by reference from Form 8-K dated February 7, 2005, Exhibit 10.4 (File No. 001-07434).
10.24*	-	Notice of grant of stock options to officers under the 2004 Aflac Incorporated Long-Term Incentive Plan – incorporated by reference from Form 8-K dated February 7, 2005, Exhibit 10.5 (File No. 001-07434).
10.25*	-	Aflac Incorporated Retirement Plan for Directors Emeritus, as amended and restated, dated February 9, 2010 – incorporated by reference from 2009 Form 10-K, Exhibit 10.26 (File No. 001-07434).

101



10.26*	-	Amendment to Aflac Incorporated Retirement Plan for Directors Emeritus, as amended and restated, dated August 10, 2010 – incorporated by reference from Form 10-Q for September 30, 2010, Exhibit 10.27 (File No. 001-07434).
10.27*	-	Aflac Incorporated Employment Agreement with Daniel P. Amos, dated August 1, 1993 – incorporated by reference from 1993 Form 10-K, Exhibit 10.4 (File No. 001-07434).
10.28*	-	Amendment to Aflac Incorporated Employment Agreement with Daniel P. Amos, dated December 8, 2008 – incorporated by reference from 2008 Form 10-K, Exhibit 10.32 (File No. 001-07434).
10.29*	-	Aflac Incorporated Employment Agreement with Kriss Cloninger III, dated February 14, 1992, and as amended November 12, 1993 – incorporated by reference from 1993 Form 10-K, Exhibit 10.6 (File No. 001-07434).
10.30*	-	Amendment to Aflac Incorporated Employment Agreement with Kriss Cloninger III, dated November 3, 2008 – incorporated by reference from 2008 Form 10-K, Exhibit 10.34 (File No. 001-07434).
10.31*	-	Amendment to Aflac Incorporated Employment Agreement with Kriss Cloninger III, dated December 19, 2008 – incorporated by reference from 2008 Form 10-K, Exhibit 10.35 (File No. 001-07434).
10.32*	-	Amendment to Aflac Incorporated Employment Agreement with Kriss Cloninger III, dated March 15, 2011 – incorporated by reference from Form 10-Q for March 31, 2011, Exhibit 10.33 (File No. 001-07434).
10.33*	-	Aflac Incorporated Employment Agreement with Paul S. Amos II, dated January 1, 2005 – incorporated by reference from Form 8-K dated February 7, 2005, Exhibit 10.2 (File No. 001-07434).
10.34*	-	Amendment to Aflac Incorporated Employment Agreement with Paul S. Amos II, dated December 19, 2008 – incorporated by reference from 2008 Form 10-K, Exhibit 10.39 (File No. 001-07434).
10.35*	-	Amendment to Aflac Incorporated Employment Agreement with Paul S. Amos II, dated March 7, 2012 - incorporated by reference from Form 10-Q for March 31, 2012, Exhibit 10.36 (File No. 001-07434).
10.36*	-	Aflac Incorporated Employment Agreement with Joey Loudermilk, dated September 12, 1994 and as amended December 10, 2008 – incorporated by reference from 2008 Form 10-K, Exhibit 10.40 (File No. 001-07434).
10.37*	-	Amendment to Aflac Incorporated Employee Agreement with Joey Loudermilk, dated December 14, 2011 - incorporated by reference from 2011 Form 10-K, Exhibit 10.37 (File No. 001-07434).
10.38*	-	Aflac Incorporated Employment Agreement with Tohru Tonoike, effective February 1, 2007 – incorporated by reference from 2008 Form 10-K, Exhibit 10.41 (File No. 001-07434).
10.39*	-	Amendment to Aflac Incorporated Employment Agreement with Tohru Tonoike, dated February 9, 2010 – incorporated by reference from 2009 Form 10-K, Exhibit 10.36 (File No. 001-07434).
10.40*	-	Amendment to Aflac Incorporated Employment Agreement with Tohru Tonoike, dated October 8, 2012 – incorporated by reference from 2012 Form 10-K, Exhibit 10.40 (File No. 001-07434).
10.41*	-	Aflac Retirement Agreement with E. Stephen Purdom, dated February 15, 2000 – incorporated by reference from 2000 Form 10-K, Exhibit 10.13 (File No. 001-07434).
11	-	Statement regarding the computation of per-share earnings for the Registrant.
12	-	Statement regarding the computation of ratio of earnings to fixed charges for the Registrant.
15	-	Letter from KPMG LLP regarding unaudited interim financial information.
31.1	-	Certification of CEO dated May 3, 2013, required by Rule 13a-14(a) or Rule 15d-14(a) of the Securities Exchange Act of 1934.
31.2	-	Certification of CFO dated May 3, 2013, required by Rule 13a-14(a) or Rule 15d-14(a) of the Securities Exchange Act of 1934.
32	-	Certification of CEO and CFO dated May 3, 2013, pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
99.1	-	Senior unsecured revolving credit facility agreement, dated March 29, 2013.
101.INS	-	XBRL Instance Document. ⁽¹⁾
101.SCH	-	XBRL Taxonomy Extension Schema.
101.CAL	-	XBRL Taxonomy Extension Calculation Linkbase.
101.DEF	-	XBRL Taxonomy Extension Definition Linkbase.

102



	101.LAB	-	XBRL Taxonomy Extension Label Linkbase.
	101.PRE	-	XBRL Taxonomy Extension Presentation Linkbase.

₍₁₎	Includes the following materials contained in this Quarterly Report on Form 10-Q for the period ended March 31, 2013, formatted in XBRL (eXtensible Business Reporting Language): (i) Consolidated Statements of Earnings, (ii) Consolidated Statements of Comprehensive Income (Loss), (iii) Consolidated Balance Sheets, (iv) Consolidated Statements of Shareholders’ Equity, (v) Consolidated Statements of Cash Flows, (vi) Notes to the Consolidated Financial Statements

*	Management contract or compensatory plan or arrangement required to be filed as an exhibit pursuant to Item 6 of this report

103

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.



		Aflac Incorporated

May 3, 2013		/s/ Kriss Cloninger III
		(Kriss Cloninger III)
		President, Chief Financial Officer, Treasurer and Director

May 3, 2013		/s/ June Howard
		(June Howard) Senior Vice President, Financial Services; Chief Accounting Officer

104

Aflac Incorporated 1st Quarter 2013 Form 10-Q

EXHIBIT 10.10

AMENDED AND RESTATED

1999 AFLAC ASSOCIATE

STOCK BONUS PLAN

EFFECTIVE AS OF JULY 1, 1999

AMENDED AND RESTATED AS OF JANUARY 1, 2013

AMENDED AND RESTATED 1999 AFLAC ASSOCIATE STOCK BONUS PLAN

The Amended and Restated 1999 AFLAC Associate Stock Bonus Plan was made effective as of July 1, 1999 and amended as of February 11, 2003 and August 20, 2007, and is hereby amended and restated as follows:

ARTICLE I

DEFINITIONS

As used herein, the following words and phrases shall have the meaning indicated unless otherwise defined or required by the context:

1.1 "Active Association" shall mean the performance of services by an Associate, Soliciting Broker, Sales Coordinator, Special Associate, Development Coordinator or Training Coordinator, who is properly licensed by the applicable regulatory authority, pursuant to a written contract with the Plan Sponsor for the solicitation of applications for certain insurance products of the Plan Sponsor, prior to the effective date of any termination of such contract whether for cause or without cause. Active Association shall also include a period of employment as an employee of the Plan Sponsor to the extent that such employment immediately precedes or follows a period of Active Association as it is defined above.

1.2 "Allocation Date" shall mean, with respect to each month, a day, determined in the discretion of the Stock Bonus Management Committee, not later than 45 days following the end of such month.

1.3 "Associate" shall mean any person or entity associated with the Plan Sponsor pursuant to an Associate's contract pertaining to services in the United States, its territories and

possessions, and any other location or country designated by the Plan Sponsor, who is paid on a commission basis and whose Active Association with the Plan Sponsor has not been terminated.

1.4 "Board" shall mean the Board of Directors of American Family Life Assurance Company of Columbus or of American Family Life Assurance Company of New York, as the case may be.

1.5 "Bonus Policy/Policies" shall mean those insurance policies issued by the Plan Sponsor that the Plan Sponsor, acting in its sole discretion, designates as "Bonus Policies." "Bonus Policies" shall not include conversions, upgrades or riders made effective as of a date later than twelve months from the original Issue Date on policies otherwise designated as a "Bonus Policy," unless the Plan Sponsor shall provide otherwise.

1.6 "Commencement Date" shall mean the date on which one first begins Active Association.

1.7 "Development Coordinator" shall mean any Associate who is also providing services to the Plan Sponsor pursuant to a contract as a Development Coordinator, and who is paid on a commission basis.

1.8 "First Year Premiums" shall mean premiums scheduled to be received for the first twelve months of coverage after a Bonus Policy sold by a Participant is issued at the home office of the Plan Sponsor.

1.9 "Issue Date" shall mean the date on which a Bonus Policy is made effective.

1.10 "New Business Transmittal" shall mean the new business transmittal form that is submitted to the Plan Sponsor with each application for a policy and which includes information concerning all Associates sharing commissions with respect to such policy.

1.11 "Paid to Date" shall mean the date to which coverage provided by a policy shall remain in force based on premiums applied by the Plan Sponsor to the policy.

1.12 "Participant" shall mean any Associate, Soliciting Broker, Sales Coordinator, Special Associate, Development Coordinator or Training Coordinator participating in this Plan.

1.13 "Plan" shall mean the Amended and Restated 1999 AFLAC Associate Stock Bonus Plan, as contained herein and as amended from time to time.

1.14 "Plan Sponsor" shall mean the American Family Life Assurance Company of Columbus, a Nebraska corporation, American Family Life Assurance Company of New York, a New York corporation, and any subsidiary or affiliate corporation that may hereafter adopt the Plan with the permission of their respective Boards.

1.15 "Sales Coordinator" shall mean any Associate who is also providing services to the Plan Sponsor pursuant to a contract as a District Sales Coordinator, Regional Sales Coordinator, or State Sales Coordinator, and who is paid on a commission basis.

1.16 "Soliciting Broker" shall mean any Associate who is also providing services to the Plan Sponsor pursuant to a standardized Soliciting Broker contract and who is paid on a commission basis.

1.17 "Special Associate" shall mean any person or entity associated with the Plan Sponsor pursuant to a special written agreement, who is engaged in the sale of the products of the Plan Sponsor and is paid on a commission basis, and whose Active Association with the Plan Sponsor has not been terminated.

1.18 "Stock" or "Shares of Stock" shall mean the common stock of AFLAC Incorporated.

1.19 "Stock Bonus Management Committee" shall mean the committee which shall oversee the operation of the Plan and shall be composed of the Plan Sponsor's Executive Vice

President in charge of domestic operations, its Director of Marketing and its Chief Accounting Officer, and/or such other persons as designated from time to time by the Board. The Board may remove any member of this committee at any time in its absolute discretion.

1.20 "Training Coordinator" shall mean any Associate who is also providing services to the Plan Sponsor pursuant to a contract as a Training Coordinator, and who is paid on a commission basis.

1.21 "Vested for Commission" shall mean that a Participant has a vested right, pursuant to the terms of the Participant's Associates Agreement, to receive renewal commissions that are payable on policies sold by the Participant (regardless of whether such vested amount is less than 100%, or is for a limited time period).

ARTICLE II

ELIGIBILITY AND PARTICIPATION

2.1 CONDITIONS OF ELIGIBILITY. Each Associate, Soliciting Broker, Sales

Coordinator, Development Coordinator and Training Coordinator is eligible to become a Participant in the Plan. Special Associates shall be eligible to participate in this Plan only if so provided in the written agreement between the Special Associate and the Plan Sponsor.

2.2 PARTICIPATION. Any Associate, Soliciting Broker, Sales Coordinator, Development Coordinator, Training Coordinator or, subject to Section 2.1, any Special Associate, shall become a Participant under the following circumstances: (i) if such individual was a Participant under either the AFLAC New York Associate Stock Bonus Plan, effective as of January 1, 1999, or the AFLAC Associate Stock Bonus Plan, amended and restated as of January 1, 1999, as of the termination date of such Plans, such individual shall automatically become a Participant on the effective date of this Plan, or (ii) if such individual's Commencement Date is on or after July 1, 1999, such individual shall automatically become a Participant upon his or her Commencement Date. If an individual was qualified to be a Participant under either the AFLAC New York Associate Stock Bonus Plan or the AFLAC Associate Stock Bonus Plan but opted not to become a Participant prior to February 11, 2003, and such individual qualifies to participate in this Plan, such individual must notify the Plan Sponsor in writing that he or she opts to enroll in the Plan. Such individual will become enrolled within 30 days of the receipt by the Plan Sponsor of such notice.

2.3 ACCEPTANCE. The Plan shall not be deemed to constitute a contract between the Plan Sponsor and the Participant or to be consideration, or an inducement, for the association of

any Participant. No provision of the Plan shall be deemed to give any Participant the right to be retained in association with the Plan Sponsor, or to interfere with the right of the Plan Sponsor to discharge any Participant at any time regardless of the effect which such discharge will have upon him as a Participant. Each Participant for himself or herself and his or her heirs and assigns shall be deemed conclusively by his or her act of participation herein, to have agreed to and accepted the terms and conditions of this Plan.

ARTICLE III

CONTRIBUTIONS AND EXPENSES

3.1 CONTRIBUTIONS BY PLAN SPONSOR. All contributions, if any, shall be made by the Plan Sponsor; provided, however, that the Board may authorize contributions from other sources. No contributions shall be made by any Participant.

3.2 COMPUTATION OF CONTRIBUTIONS FOR BONUS POLICIES WITH ISSUE DATES PRIOR TO JULY 1, 1999. With respect to Bonus Policies with an Issue Date prior to July 1, 1999, the amount of Plan Sponsor contributions to be made on or before each Allocation Date shall be equal to the applicable percentage (as described in Section 3.5) of First Year Premiums applied to the policy by the Plan Sponsor during the month to which such Allocation

Date relates.

3.3 COMPUTATION OF CONTRIBUTIONS FOR BONUS POLICIES WITH ISSUE DATES ON OR AFTER JULY 1, 1999. With respect to Bonus Policies with an Issue Date on or after July 1, 1999, the amount of Plan Sponsor contributions to be made on or before each Allocation Date shall be equal to the applicable percentage (as described in Section 3.5) of annualized First Year Premiums as of the date on which the period of time between the Issue Date and the Paid to Date equals thirteen months. Accordingly, no such Plan Sponsor contributions will be made if the period of time between the Issue Date and the Paid to Date is less than thirteen months for any Bonus Policy.

3.4 OFFSET AGAINST CONTRIBUTIONS; RECOVERY OF CREDITED AMOUNTS.

(a) Notwithstanding the provisions of Sections 3.2 and 3.3, the amount to be contributed by the Plan Sponsor may, in the sole discretion of the Plan Sponsor, be reduced to reflect the applicable percentage (as described in Section 3.5) of any First Year Premiums that the Plan Sponsor may, for any reason acting in his sole discretion, determine to refund.

(b) On each Allocation Date, the amount to be allocated to a Participant shall be reduced by the sum of amounts recoverable by the Plan Sponsor relating to refunded First Year Premiums for any period prior to such Allocation Date.

(c) To the extent that the amounts recoverable by the Plan Sponsor have been distributed to a Participant or transferred to the AFL Stock Plan on behalf of a Participant and cannot be

recovered pursuant to the procedures set forth in paragraph (b) above, then the amount of such distribution shall create a liability to the Plan Sponsor on the part of the Participant (1) to be charged back as a first lien against future earned commissions on first year or renewal business written by the Participant, or (2) to be paid to the Plan Sponsor by the Participant on demand of the Plan Sponsor.

3.5 APPLICABLE PERCENTAGE FOR BONUS POLICIES. Subject to Sections 3.2, 3.3, and 3.4, the applicable percentage of First Year Premiums received on Bonus Policies shall be as follows:

(a) ASSOCIATES AND SOLICITING BROKERS. The Plan Sponsor shall contribute a total of three and one-half percent (3.5%) (or such other percentage as is determined to be appropriate by the Stock Bonus Management Committee) of the First Year Premiums applied by the Plan Sponsor to the policy (pursuant to the terms of, and for purposes of, Section 3.2) or of the annualized First Year Premiums (pursuant to the terms of, and for purposes of, Section 3.3) for each Bonus Policy properly sold by a Participant in accordance with the policies and procedures of the Plan Sponsor. Such 3.5% contribution, if any, shall be allocated among applicable Participants on the same basis as the percentage allocation among Associates that is properly designated on the New Business Transmittal.

(b) SALES COORDINATORS. The Plan Sponsor shall contribute seven-tenths of one percent (.7%) (or such other percentage as is determined to be appropriate by the Stock Bonus Management Committee) of the First Year Premiums applied by the Plan Sponsor to the policy (pursuant to the terms of, and for purposes of, Section 3.2) or of the annualized First Year Premiums (pursuant to the terms of, and for purposes of, Section 3.3) for each Bonus Policy properly sold by a Participant or other individual who is assigned in writing to a Sales Coordinator at the time the policy is sold. Such .7% contribution, if any, shall be allocated among applicable Participants as necessary based on any allocation among Associates that is properly designated on the New Business Transmittal.

(c) SPECIAL ASSOCIATES. The applicable percentage of First Year Premiums applied by the Plan Sponsor to the policy or annualized First Year Premiums to be contributed with respect to Bonus Policies sold by a Special Associate shall be determined in accordance with the written agreement between the Special Associate and the Plan Sponsor.

3.6 DESIGNATION OF BONUS POLICIES. Bonus Policies will be designated as such by the Plan Sponsor on the schedule of commissions that is made available to Associates, Sales Coordinators, Soliciting Brokers, Special Associates, Development Coordinators and Training Coordinators.

3.7 ADDITIONAL CONTRIBUTIONS FOR DEVELOPMENT COORDINATORS AND TRAINING COORDINATORS. The Plan Sponsor shall make additional contributions on behalf of Development Coordinators and Training Coordinators in the amounts, at the times and on the conditions determined by the Stock Bonus Management Committee.

3.8 ACTIVE ASSOCIATION. Except as provided in Sections 3.9 and 3.10, contributions will be made only on behalf of Participants who are in Active Association with the Plan Sponsor.

3.9 DEATH AND DISABILITY. In the event of the death or the total and permanent disability of a Participant, contributions will continue to be made on behalf of the Participant with respect to Bonus Policies sold by the Participant if the Participant, at the time of such death or total and permanent disability, has become Vested for Commission. If the Participant has not become Vested for Commission, contributions will be made on behalf of the Participant through the end of the calendar month in which such death or total and permanent disability occurs.

3.10 TRANSFER OR TERMINATION. In the event of the transfer of a Participant to a position of employment with the Plan Sponsor other than as an Associate, Soliciting Broker, Sales Coordinator or Special Associate, or in the event of a termination of a Participant other than as a result of death or total and permanent disability, if the Participant is not Vested for Commission, contributions with respect to Bonus Policies will be made on behalf of the Participant through the end of the calendar month in which the transfer or termination date occurs, and the contribution will be reduced to reflect amounts recoverable by the Plan Sponsor with respect to refunded First Year Premiums (as provided for in Section 3.4) up to the last business day of the calendar month in which the date of termination occurs. In the event of a transfer or termination of a Participant who is Vested for Commission, contributions will continue to be made on behalf of the Participant with respect to Bonus Policies sold by the Participant.

3.11 EXPENSES. The Plan Sponsor shall bear all costs incurred in the operation of the Plan other than brokerage and other fees directly related to the purchase of Shares of Stock or other permitted investments. Such brokerage and other related fees shall be paid by AFLAC Incorporated pursuant to the terms of the AFL Stock Plan.

ARTICLE IV

PLAN CONTRIBUTIONS

4.1 CREDITING OF CONTRIBUTIONS. Plan Sponsor contributions with respect to Bonus Polices made during the month shall be credited to each Participant based on the applicable percentage of First Year Premiums applied by the Plan Sponsor to the policy (pursuant to the terms of, and for purposes of, Section 3.2) or of the annualized First Year Premiums (pursuant to the terms of, and for purposes of, Section 3.3) on Bonus Policies properly sold by the Participant, subject to reduction as provided in Section 3.4. The contributions shall be allocated to Participants as necessary based on any allocation among Associates that is properly designated on the New Business Transmittal. On a monthly basis the balance of this contribution amount and any contributions made to the Participant pursuant to Section 3.7 will be transferred to the Participant's AFL Stock Plan account to purchase Shares of Stock pursuant to the terms of

the AFL Stock Plan, or distributed directly to the Participant, each as provided in Article 5.

4.2 EXPRESSED IN DOLLARS. Contributions shall be expressed in dollars and cents.

4.3 REPORTING. Each Participant shall receive reports pursuant to the terms of the AFL Stock Plan with respect to the amount of cash contributed on such Participant's behalf and the total number of Shares of Stock held in the Participant's account under the AFL Stock Plan.

ARTICLE V

TRANSFERS AND DISTRIBUTIONS

5.1 TRANSFER AND DISTRIBUTION OF CONTRIBUTIONS. On a monthly basis,

the balance of the contribution (including contributions made pursuant to Section 3.7) owed on behalf of each Participant shall be transferred to the AFL Stock Plan for investment in Shares of Stock on behalf of such Participant if the balance of such contribution equals or exceeds $50 as of an Allocation Date. If the balance totals less than $50 as of an Allocation Date, the contribution balance shall be distributed directly to the Participant by means of the Participant's monthly commission statement. The Plan Sponsor will not pay interest on funds pending transfer to the AFL Stock Plan. All investments by the AFL Stock Plan shall be made pursuant to the terms of such plan.

5.2 DATE OF TRANSFERS AND DISTRIBUTIONS. Transfers shall be made to the AFL Stock Plan, or distributions made to the Participant, within 45 days following the end of each month in which a bonus becomes due.

5.3 DISTRIBUTIONS UPON DEATH. Subject to the terms of Section 3.9, in the event of the death of a Participant, contributions of less than $50 will continue to be paid by means of

the Participant's monthly commission statement. If the Participant's contribution balance equals or exceeds $50, the balance will continue to be transferred to the AFL Stock Plan. The provisions of the AFL Stock Plan will govern the payment of accumulated balances in the Participant's AFL Stock Plan account.

5.4 DISTRIBUTIONS TO AFFILIATES. The Stock Bonus Management Committee

shall have absolute discretion to determine the form of distribution under the Plan to a Participant who is at the time of distribution an "affiliate" of AFLAC Incorporated within the meaning of Rule 144 under the Securities Act of 1933, as amended. The Stock Bonus Management Committee shall determine which Participants are covered by this provision. In so doing, the Stock Bonus Management Committee shall take into account any information and conclusions furnished to it by the Plan Sponsor and AFLAC Incorporated, and may in its discretion seek advice of counsel.

5.5 DISTRIBUTION FOR SPECIAL ASSOCIATES. Notwithstanding anything to the contrary in this Article 5, if the written agreement between the Plan Sponsor and a Special

Associate includes provisions regarding distribution of benefits which are inconsistent with the

provisions of this Article 5, the provisions of such written agreement shall govern with respect to such Special Associate.

ARTICLE VI

ADMINISTRATION OF PLAN

6.1 ADMINISTRATION.

(a) The Stock Bonus Management Committee shall administer and have complete

control of the Plan, subject to the provisions hereof, with all powers necessary to enable it properly to carry out its duties in that respect. Not in limitation, but in amplification of the foregoing, the Stock Bonus Management Committee shall have the power to construe the Plan and to determine all questions that may arise hereunder, including all questions relating to the eligibility of Associates, Soliciting Brokers, Sales Coordinators, Special Associates, Development Coordinators or Training Coordinators to participate in the Plan and the amount of benefits to which any Participant may become entitled hereunder. The decision of the Stock Bonus Management Committee upon all matters within the scope of its authority shall be final.

(b) The Stock Bonus Management Committee may establish uniform rules and procedures to be followed by Participants regarding any matter required to administer the Plan.

(c) The Stock Bonus Management Committee shall prepare and distribute information concerning the Plan to the Participants in such manner as it shall deem appropriate and as required by law.

(d) The Stock Bonus Management Committee shall be entitled to rely upon all certificates and reports, if any, furnished by the consultant or actuary of the Plan Sponsor, and upon all opinions given by any legal counsel, accountant or doctor selected or approved by the Plan Sponsor; any action taken or suffered by the Stock Bonus Management Committee in good faith in reliance upon the advice or opinion of such consultant, actuary, legal counsel, accountant or doctor shall be conclusive upon each of them and upon all Participants or other persons interested in the Plan.

6.2 RECORDS. All material acts and determinations of the Stock Bonus Management Committee shall be duly recorded and all such records, together with such other documents as may be necessary for the administration of the Plan, shall be preserved in the custody of the Plan Sponsor. The Plan Sponsor shall provide all necessary forms, and accounting, clerical and other such services required to carry out the proper administration of the Plan.

6.3 DELEGATION OF AUTHORITY AND EXEMPTION FROM LIABILITY. The administrative duties and responsibilities set forth in this Article 6 may be delegated by the Stock Bonus Management Committee in whatever manner and to whatever extent it chooses to such persons as the Stock Bonus Management Committee selects. To the extent permitted by law, the Plan Sponsor shall indemnify and hold harmless each member of the Stock Bonus Management Committee, any member of the Board, and any other party acting with respect to the Plan at the request of the Plan Sponsor or the Stock Bonus Management Committee, against any and all claims, demands, suits, loss, damages, expense and liability arising from any act or failure to act with respect to the Plan, including any act or failure to act which is deemed to be a breach of such individual's fiduciary responsibilities, unless the same is determined to be due to gross negligence or willful misconduct.

ARTICLE VII

AMENDMENT AND TERMINATION OF PLAN

7.1 AMENDMENT OF THE PLAN. The Plan Sponsor shall have the right at any time to

modify, alter, or amend the Plan in whole or by action of the Board; provided, however, that unless it is necessary to meet the requirements of any state or federal law or regulation, no amendment shall operate to deprive any Participant of any vested right under this Plan.

7.2 TERMINATION OF THE PLAN. The Plan Sponsor has adopted this Plan with the

intent that it be continued indefinitely; however, the Plan Sponsor reserves the right at any time to reduce or to discontinue permanently the Plan Sponsor contributions to the Plan or to terminate the Plan by action of the Board. Such reduction or permanent discontinuance of Plan Sponsor contributions or termination may be made without the consent of the Participants or any other persons.

7.3 TRANSFER AND DISTRIBUTION ON TERMINATION. Upon termination of the Plan, the balance of all contributions due to Participants shall be brought up to date as of the last day of the month in which the termination occurs. All contributions shall be distributed to the Participants, or transferred to the AFL Stock Plan on behalf of the Participants, in accordance with the provisions of this Plan.

ARTICLE VIII

PLAN SPONSOR'S RIGHT OF SETOFF AGAINST

PARTICIPANT'S BENEFITS

8.1 RIGHT OF SETOFF; GRANT OF SECURITY INTEREST. Subject to any applicable legal limitations, the Plan Sponsor shall have the right to charge against any benefits owed to a Participant under this Plan, prior to the transfer of any bonus to the AFL Stock Plan on behalf of such Participant, the amount of certain obligations of such Participant to the Plan Sponsor. For purposes of this Section 8.1, "obligations" shall include any indebtedness of the Participant to the Plan Sponsor including, but not limited to, any advances, loans, unearned commissions or credits made by or from the Plan Sponsor to the Participant. In addition, the Plan Sponsor shall have a lien against contributions or benefits which have, or may become, due to such Participant under this Plan, prior to the transfer of any bonus to the AFL Stock Plan on behalf of such Participant, which lien shall be a first lien in favor of the Plan Sponsor as to such contributions or benefits. In consideration of the right to participate in this Plan and for the benefits paid hereunder to the Participant by the Plan Sponsor, each Participant grants and assigns the Plan Sponsor a security interest in all contributions, rights and benefits which have, or may become, due to the Participant pursuant to this Plan, prior to the transfer of such contributions to the AFL Stock Plan or to the Participant, as the case may be.

ARTICLE IX

MISCELLANEOUS

9.1 HEADINGS. The headings and subheadings in the Plan have been inserted for convenience of reference only and are to be ignored in any construction of the provisions hereof.

9.2 CONSTRUCTION. In the construction of the Plan, the masculine shall include the feminine and the singular the plural in all cases where such meanings would be appropriate. The Plan shall be construed in accordance with the laws of the State of Georgia.

9.3 INCORPORATION, ETC. In the event that an individual Participant's business as an Associate is transferred to a corporation, partnership, or other legal entity that becomes an Associate and Participant hereunder, such entity shall, if the Stock Bonus Management Committee so determines, succeed to the individual Participant's benefits and rights hereunder. Conversely, in the event that an Associate that is a corporation, partnership, or other legal entity ceases to be an Associate, any individual Associate who succeeds to the business of that entity shall, if the Stock Bonus Management Committee so determines, succeed to the benefits and rights of that entity hereunder.

9.4 SPENDTHRIFT CLAUSE. Except as provided in the Plan or as otherwise required by law, no benefits under the Plan shall be subject in any manner to anticipation, alienation, sale, transfer, assignment, pledge, encumbrance or charge and any attempt to so anticipate, alienate, sell, transfer, assign, pledge, encumber or charge shall be void. No such benefit shall in any manner be liable for or subject to the debts, contracts, liabilities, engagements, or torts of the person entitled to such benefit except as specifically provided in the Plan.

9.5 LEGALLY INCOMPETENT. If any Participant is in the judgment of the Stock

Bonus Management Committee legally incapable of personally receiving and giving a valid receipt for any payment due him hereunder, the Stock Bonus Management Committee may, unless and until claim shall have been made by a guardian of such person duly appointed by a court of competent jurisdiction, direct that payment or any part thereof be made to such person or to such person's spouse, child, parent, brother or sister, or other person deemed by the Stock Bonus Management Committee to be a proper person to receive such payment. If the Stock Bonus Management Committee is unable, after reasonable effort, to ascertain the identity,

whereabouts or existence of any Participant to whom a benefit is payable under this Plan, the benefits otherwise payable to such person shall be forfeited, anything to the contrary contained elsewhere in this Plan notwithstanding. However, if a claim is subsequently made by such person, or if satisfactory proof of death of such person is received by the Stock Bonus Management Committee, the Plan Sponsor shall make a contribution to the Plan which, notwithstanding any provision of this Plan to the contrary, shall be for and so as to enable such benefit to be paid to such person or his estate, as the case may be. Any benefits lost by reason of escheat under applicable state law shall also be forfeited, but shall not be subject to reinstatement.

9.6 CORRECTION OF ERRORS. If any change in records or error results in any Participant being credited with or receiving from the Plan more or less than the person would have been entitled to had the records been correct or had the error not been made, the Stock Bonus Management Committee. upon discovery of such error, shall adjust. as far as practicable, the contributions or transfer or payments, as the case may be. in such a manner as to correct the error. Any Plan Sponsor contribution made by mistake of fact shall be returned to the Plan Sponsor.

9.7 EXCLUSIVE BENEFIT. Except as otherwise specifically provided in this Plan all contributions of the Plan Sponsor under the Plan shall be held and used for the exclusive purpose of providing benefits for Participants.

9.8 LIABILITY OF PLAN SPONSOR. Notwithstanding any provision to the contrary in this Plan, the Plan Sponsor shall at all times remain liable to each Participant for the payment of any vested amounts distributable pursuant to the terms of this Plan to such Participant which are not so distributed in accordance with the terms of this Plan.

9.9 PARTIAL INVALIDITY. If any provision of this Plan is held invalid or unenforceable. its invalidity or unenforceability shall not affect any other provision and this Plan shall be construed and enforced as if such provision had not been included.

ARTICLE X

ARBITRATION

10.1 ARBITRATION. Any dispute arising under or related in any way to the Plan (“Dispute”), to the maximum extent allowed under the Federal Arbitration Act (“FAA”), shall be subject to mandatory and binding arbitration, including any Dispute arising under federal, state or local laws, statutes or ordinances. In any Dispute, all past and present officers, stockholders, employees, Associates, Special Associates, Sales Coordinators, Development Coordinators, Training Coordinators, agents and Soliciting Brokers of the Plan Sponsor, who are alleged to be liable or may be liable in any manner to either a Participant or the Plan Sponsor based upon the same allegations made against a Participant or the Plan Sponsor, are intended to be third-party beneficiaries of this Article 10 with full rights to enforce such Article. Regardless of whether the Plan Sponsor is a party, this Article 10 shall be applicable to any Dispute between the Participant and any past and present officers, stockholders, employees, Associates, Special Associates, Sales Coordinators, Development Coordinators, Training Coordinators, agents and Soliciting Brokers of the Plan Sponsor. THE PLAN SPONSOR AND THE PARTICIPANTS WAIVE ANY RIGHT TO TRIAL BY A JURY IN A COURT OF LAW TO RESOLVE ANY DISPUTE.

10.2 ARBITRATION PROCEDURE.

(a) The arbitration shall be covered by, and conducted pursuant to, the FAA. The party initiating the Dispute (“Complaining Party”) shall notify the other party or parties of the existence of a Dispute by certified mail. Notice to Participants shall be sent to their respective business addresses as they appear in the Plan Sponsor's records and notice to the Plan Sponsor shall be sent to: Arbitration Officer, c/o AFLAC Legal Division, 1932 Wynnton Road, Columbus, Georgia 31999.

(b) The Plan Sponsor and the Participants agree to attempt, in good faith, to resolve the Dispute within 15 days of the date that the notice of a Dispute has been given to the other party or parties. If the Dispute cannot be resolved through such informal methods, it shall be resolved by a panel of three arbitrators. The Complaining Party and the Plan Sponsor may each name an arbitrator (“Party Arbitrator”), who need not be neutral and each shall pay all expenses and fees of its selected Party Arbitrator. The Party Arbitrators shall appoint a neutral person to serve as a third arbitrator and to chair the panel (“Neutral Arbitrator”). If the Party Arbitrators are unable to agree on a Neutral Arbitrator, then either the Complaining Party or the Plan Sponsor may request a panel of qualified arbitrators from the headquarters office of the American Arbitration Association. The panel shall consist of an uneven number of qualified arbitrators not to exceed nine in number. The Complaining Party and the Plan Sponsor shall be entitled to up to four peremptory strikes with the party who served notice of the existence of a Dispute exercising the first strike. The one remaining arbitrator from the panel will then serve as the Neutral Arbitrator.

The Complaining Party shall have the choice of having the Plan Sponsor pay the fees of the Neutral Arbitrator or, if the Complaining Party prefers, the Plan Sponsor and the Complaining Party will equally divide the expenses and fees for the Neutral Arbitrator.

(c) The arbitrators may permit reasonable discovery as permitted by the Federal Rules of Civil Procedure, but in allowing discovery shall balance the policy favoring discovery against the policy of the FAA to facilitate cost-effective expeditious resolution of disputes. The arbitrators shall have the authority to award any remedy to which any party would be entitled in a court of law unless such remedy has been effectively waived. The hearing shall be at such place as the arbitrators shall set, taking into account the convenience of all parties and witnesses. Upon request by any party, the hearing shall be recorded, including video taping. All rulings shall require concurrence of the majority of the panel. The final award shall be in writing, signed by the arbitrators, and shall be rendered within 30 days of the completion of the hearing and promptly transmitted to the respective parties. Such award shall be binding and conclusive upon all parties hereto subject only to grounds permitted under the FAA for vacating, correcting, or modifying an award.

(d) Any party may request that the arbitration proceeding, including communications between or among the parties and the arbitrators, information and documents produced by any party, hearing or deposition transcripts and all rulings and decisions of the arbitrators, be kept strictly confidential. In the event that any of the parties elects to keep the arbitration proceedings confidential, all parties agree to enter into an appropriate confidentiality agreement. The parties further agree that all papers filed in court in connection with any action to enforce this Article 10 or the arbitrators' award shall be filed under seal.

10.3 ENFORCEMENT OF ARBITRATION. Any party may seek an order of any court of competent jurisdiction to enforce this Article 10. The Plan Sponsor may bring such action in any federal or state court in the State of Georgia and the Participant hereby consents to personal jurisdiction and venue in such court.

10.4 CONSOLIDATION AND CLASS ACTIONS. There shall be no consolidation of claims or class actions without the consent of all parties.

10.5 INJUNCTIVE RELIEF. Any court of competent jurisdiction is authorized to issue any injunctive or other equitable relief in aid of arbitration.

10.6 APPLICABILITY. The provisions of this Article 10 shall apply to any Plan Sponsor contribution made on or after February 11, 2003. Plan Sponsor contributions made prior to February 11, 2003 shall be governed by Section 9.6 of the Plan in effect prior to February 11, 2003.

Aflac Incorporated 1st Quarter 2013 Form 10-Q

EXHIBIT 11

Aflac Incorporated and Subsidiaries

Computation of Earnings Per Share

Three Month Ended March 31,



	2013		2012
Numerator (In millions):
Basic and diluted: net earnings applicable to common stock	$	892	$	785
Denominator (In thousands):
Weighted-average outstanding shares used in the computation of earnings per share - basic	466,462		465,887
Dilutive effect of share-based awards	2,662		2,646
Weighted-average outstanding shares used in the computation of earnings per share - diluted	469,124		468,533
Earnings per share:
Basic	$	1.91	$	1.68
Diluted	1.90		1.68

Aflac Incorporated 1st Quarter 2013 Form 10-Q

EXHIBIT 12

Aflac Incorporated and Subsidiaries

Ratio of Earnings to Fixed Charges

Three Months Ended March 31,



(In thousands)	2013		2012
Fixed charges:
Interest expense ⁽¹⁾	$	70,587	$	56,745
Interest on investment-type contracts	13,614		13,716
Rental expense deemed interest	175		242
Total fixed charges	$	84,376	$	70,703
Earnings before income tax ⁽¹⁾	$	1,361,443	$	1,201,908
Add back:
Total fixed charges	84,376		70,703
Total earnings before income tax and fixed charges	$	1,445,819	$	1,272,611
Ratio of earnings to fixed charges	17.1x		18.0x

⁽¹⁾ Excludes interest expense on income tax liabilities

Aflac Incorporated 1st Quarter 2013 Form 10-Q

EXHIBIT 15

KPMG LLP

303 Peachtree Street, N.E.

Suite 2000

Atlanta, GA 30308

May 3, 2013

Aflac Incorporated

Columbus, Georgia

Re: Registration Statement No. 333-181089 and 333-176178 on Form S-3; 333-161269, 333-135327, 333-158969, 333-27883, and 333-115105 on Form S-8

With respect to the subject registration statements, we acknowledge our awareness of the use therein of our report dated May 3, 2013 , related to our review of interim financial information.

Pursuant to Rule 436 under the Securities Act of 1933 (the Act), such report is not considered part of a registration statement prepared or certified by an independent registered public accounting firm, or a report prepared or certified by an independent registered public accounting firm within the meaning of Sections 7 and 11 of the Act.

Atlanta, Georgia

Aflac Incorporated 1st Quarter 2013 Form 10-Q

EXHIBIT 31.1

Certification of Chief Executive Officer

I, Daniel P. Amos, certify that:


1.	I have reviewed this quarterly report on Form 10-Q of Aflac Incorporated;


2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;


3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;


4.	The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:


a)	Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;


b)	Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;


c)	Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and


d)	Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and


5.	The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):


a)	All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and


b)	Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.




Date:	May 3, 2013	/s/ Daniel P. Amos
		Daniel P. Amos
		Chairman and Chief Executive Officer

Aflac Incorporated 1st Quarter 2013 Form 10-Q

EXHIBIT 31.2

Certification of Chief Financial Officer

I, Kriss Cloninger III, certify that:


1.	I have reviewed this quarterly report on Form 10-Q of Aflac Incorporated;


2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;


3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;


4.	The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:


a)	Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;


b)	Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;


c)	Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and


d)	Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and


5.	The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):


a)	All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and


b)	Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.




Date:	May 3, 2013	/s/ Kriss Cloninger III
		Kriss Cloninger III
		President, Chief Financial Officer and Treasurer

Aflac Incorporated 1st Quarter 2013 Form 10-Q

EXHIBIT 32

Certification of CEO and CFO Pursuant to

18 U.S.C. Section 1350,

as Adopted Pursuant to

Section 906 of the Sarbanes-Oxley Act of 2002

In connection with the Quarterly Report on Form 10-Q of Aflac Incorporated (the “Company”) for the quarterly period ended March 31, 2013 , as filed with the Securities and Exchange Commission on the date hereof (the “Report”), Daniel P. Amos, as Chief Executive Officer of the Company, and Kriss Cloninger III, as Chief Financial Officer of the Company, each hereby certifies, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to the best of his knowledge:


(1)	The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and


(2)	The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.



/s/ Daniel P. Amos
Name:		Daniel P. Amos
Title:		Chief Executive Officer
Date:		May 3, 2013



/s/ Kriss Cloninger III
Name:		Kriss Cloninger III
Title:		Chief Financial Officer
Date:		May 3, 2013

Aflac Incorporated 1st Quarter 2013 Form 10-Q

EXHIBIT 99.1

EXECUTION COPY

FIVE-YEAR CREDIT AGREEMENT

Dated as of March 29, 2013

among

AFLAC INCORPORATED

and

AMERICAN FAMILY LIFE ASSURANCE COMPANY OF COLUMBUS,

as Borrowers,

AFLAC INCORPORATED,

as Guarantor,

MIZUHO CORPORATE BANK, LTD.,

as Administrative Agent,

and

The Other Lenders Party Hereto

JPMORGAN CHASE BANK, N.A.,

Syndication Agent

THE BANK OF TOKYO-MITSUBISHI UFJ, LTD.

and

SUMITOMO MITSUI BANKING CORPORATION,

Co-Documentation Agents

MIZUHO CORPORATE BANK, LTD.

and

J.P. MORGAN SECURITIES LLC,

Joint Lead Arrangers and Joint Book Managers

TABLE OF CONTENTS

Section Page

Article I. Definitions and Accounting Terms…....................................................................................................- 1 -


1.01	Defined Terms…........................................................................................................................- 1 -


1.02	Other Interpretive Provisions…...............................................................................................- 17 -


1.03	Accounting Terms….................................................................................................................- 17 -


1.04	Rounding…..............................................................................................................................- 18 -


1.05	Exchange Rates; Currency Equivalents…...............................................................................- 18 -


1.06	Change of Currency…..............................................................................................................- 18 -


1.07	Times of Day…........................................................................................................................- 19 -

Article II. The Commitments and Loans….........................................................................................................- 19 -


2.01	Loans…....................................................................................................................................- 19 -


2.02	Borrowings, Conversions and Continuations of Loans............................................................- 19 -


2.03	Prepayments….........................................................................................................................- 20 -


2.04	Termination or Reduction of Commitments.............................................................................- 21 -


2.05	Repayment of Loans….............................................................................................................- 21 -


2.06	Interest…..................................................................................................................................- 21 -


2.07	Fees…......................................................................................................................................- 22 -


2.08	Computation of Interest and Fees.............................................................................................- 23 -


2.09	Evidence of Debt…..................................................................................................................- 23 -


2.10	Payments Generally; Administrative Agent's Clawback..........................................................- 23 -


2.11	Sharing of Payments by Lenders…..........................................................................................- 25 -


2.12	[Intentionally Omitted]….........................................................................................................- 25 -


2.13	Defaulting Lenders…...............................................................................................................- 25 -

Article III. Taxes, Yield Protection and Illegality…............................................................................................- 27 -


3.01	Taxes…....................................................................................................................................- 27 -


3.02	Illegality…...............................................................................................................................- 30 -


3.03	Inability to Determine Rates….................................................................................................- 31 -


3.04	Increased Costs….....................................................................................................................- 31 -


3.05	Compensation for Losses ….....................................................................................................- 32 -


3.06	Mitigation Obligations; Replacement of Lenders....................................................................- 33 -


3.07	Survival …................................................................................................................................- 34 -

Article IV. Conditions Precedent To Borrowings…............................................................................................- 34 -


4.01	Conditions of Initial Borrowing…...........................................................................................- 34 -


4.02	Conditions to all Borrowings…...............................................................................................- 36 -

Article V. Representations and Warranties….......................................................................................................- 36 -


5.01	Existence, Qualification and Power..........................................................................................- 36 -


5.02	Authorization; No Contravention.............................................................................................- 36 -


5.03	Governmental Authorization; Other Consents.........................................................................- 37 -


5.04	Binding Effect….......................................................................................................................- 37 -


5.05	Financial Statements; No Material Adverse Effect..................................................................- 37 -


5.06	Litigation…..............................................................................................................................- 38 -


5.07	No Default…............................................................................................................................- 38 -


5.08	Ownership of Property; Liens…..............................................................................................- 38 -


5.09	Environmental Compliance…..................................................................................................- 38 -

- ii -


5.10	Insurance…..............................................................................................................................- 38 -


5.11	Taxes…....................................................................................................................................- 38 -


5.12	ERISA Compliance…..............................................................................................................- 38 -


5.13	Margin Regulations; Investment Company Act.......................................................................- 39 -


5.14	Disclosure….............................................................................................................................- 39 -


5.15	Compliance with Laws….........................................................................................................- 40 -


5.16	Taxpayer Identification Number…..........................................................................................- 40 -


5.17	OFAC…...................................................................................................................................- 40 -


5.18	No Other Significant Subsidiary…..........................................................................................- 40 -

Article VI. Affirmative Covenants…...................................................................................................................- 40 -


6.01	Financial Statements….............................................................................................................- 40 -


6.02	Certificates; Other Information…............................................................................................- 41 -


6.03	Notices…..................................................................................................................................- 42 -


6.04	Payment of Obligations…........................................................................................................- 43 -


6.05	Preservation of Existence, Etc…..............................................................................................- 43 -


6.06	Maintenance of Properties…....................................................................................................- 43 -


6.07	Maintenance of Insurance….....................................................................................................- 43 -


6.08	Compliance with Laws….........................................................................................................- 44 -


6.09	Books and Records…...............................................................................................................- 44 -


6.10	Inspection Rights…..................................................................................................................- 44 -


6.11	Use of Proceeds…....................................................................................................................- 44 -

Article VII. Negative Covenants…......................................................................................................................- 44 -


7.01	Liens….....................................................................................................................................- 44 -


7.02	Fundamental Changes…..........................................................................................................- 46 -


7.03	Restricted Payments….............................................................................................................- 46 -


7.04	Change in Nature of Business…..............................................................................................- 46 -


7.05	Transactions with Affiliates…..................................................................................................- 46 -


7.06	Restrictive Agreements….........................................................................................................- 46 -


7.07	Use of Proceeds…....................................................................................................................- 46 -


7.08	Financial Covenants….............................................................................................................- 47 -

Article VIII. Events of Default and Remedies….................................................................................................- 47 -


8.01	Events of Default…..................................................................................................................- 47 -


8.02	Remedies Upon Event of Default.............................................................................................- 49 -


8.03	Application of Funds…............................................................................................................- 49 -

Article IX. Administrative Agent….....................................................................................................................- 50 -


9.01	Appointment and Authority…..................................................................................................- 50 -


9.02	Rights as a Lender…................................................................................................................- 50 -


9.03	Exculpatory Provisions….........................................................................................................- 50 -


9.04	Reliance by Administrative Agent ...........................................................................................- 51 -


9.05	Delegation of Duties….............................................................................................................- 51 -


9.06	Resignation of Administrative Agent.......................................................................................- 52 -


9.07	Non-Reliance on Administrative Agent and Other Lenders.....................................................- 53 -


9.08	No Other Duties, Etc…............................................................................................................- 53 -


9.09	Administrative Agent May File Proofs of Claim.....................................................................- 53 -

Article X. Guarantee…........................................................................................................................................- 53 -


10.01	Guarantee….............................................................................................................................- 53 -

- iii -


10.02	Acknowledgments, Waivers and Consents...............................................................................- 54 -


10.03	Reinstatement….......................................................................................................................- 56 -


10.04	Subrogation…..........................................................................................................................- 56 -


10.05	Remedies…..............................................................................................................................- 56 -


10.06	General Limitation on Guaranteed Obligations.......................................................................- 56 -


10.07	Priority of Obligations…..........................................................................................................- 56 -

Article XI. Miscellaneous…................................................................................................................................- 56 -


11.01	Amendments, Etc….................................................................................................................- 56 -


11.02	Notices; Effectiveness; Electronic Communication.................................................................- 58 -


11.03	No Waiver; Cumulative Remedies; Enforcement....................................................................- 59 -


11.04	Expenses; Indemnity; Damage Waiver.....................................................................................- 59 -


11.05	Payments Set Aside…..............................................................................................................- 61 -


11.06	Successors and Assigns…........................................................................................................- 61 -


11.07	Treatment of Certain Information; Confidentiality..................................................................- 65 -


11.08	Right of Setoff…......................................................................................................................- 65 -


11.09	Interest Rate Limitation…........................................................................................................- 66 -


11.10	Counterparts; Integration; Effectiveness..................................................................................- 66 -


11.11	Survival of Representations and Warranties.............................................................................- 66 -


11.12	Severability…..........................................................................................................................- 67 -


11.13	Governing Law; Jurisdiction; Etc….........................................................................................- 67 -


11.14	Waiver of Jury Trial…..............................................................................................................- 68 -


11.15	No Advisory or Fiduciary Responsibility….............................................................................- 68 -


11.16	Electronic Execution of Assignments and Certain Other Documents…..................................- 69 -


11.17	USA PATRIOT Act…...............................................................................................................- 69 -


11.18	Judgment Currency…...............................................................................................................- 69 -


11.19	Termination of Existing Credit Agreement…..........................................................................- 69 -

- iv -

SCHEDULES

2.01 Commitments and Applicable Percentages

7.01 Existing Liens

7.06 Restrictive Agreements

11.02 Administrative Agent's Office; Certain Addresses for Notices

EXHIBITS

Form of

A Loan Notice

B Note

C Compliance Certificate

D Assignment and Assumption

E-1 Form of U.S. Tax Compliance Certificate

E-2 Form of U.S. Tax Compliance Certificate

E-3 Form of U.S. Tax Compliance Certificate

E-4 Form of U.S. Tax Compliance Certificate

- v -

CREDIT AGREEMENT

This FIVE-YEAR CREDIT AGREEMENT (“ Agreement ”) is entered into as of March 29, 2013, among AFLAC INCORPORATED, a Georgia corporation (the “ Parent ”) and AMERICAN FAMILY LIFE ASSURANCE COMPANY OF COLUMBUS, a Nebraska domiciled insurance company (“ Aflac ” and, together with the Parent, in its capacity as a borrower, each a “ Borrower ” and collectively, the “ Borrowers ”), the Parent (in its capacity as a guarantor, the “ Guarantor ”), each lender from time to time party hereto (collectively, the “ Lenders ” and individually, a “ Lender ”), and MIZUHO CORPORATE BANK, LTD., as Administrative Agent.

The Borrowers have requested that the Lenders provide a revolving credit facility, and the Lenders are willing to do so on the terms and conditions set forth herein.

In consideration of the mutual covenants and agreements herein contained, the parties hereto covenant and agree as follows:


Article I.	Definitions and Accounting Terms

1.01 Defined Terms . As used in this Agreement, the following terms shall have the meanings set forth below:

“ Administrative Agent ” means Mizuho in its capacity as administrative agent under any of the Loan Documents, or any successor administrative agent.

“ Administrative Agent's Office ” means, with respect to any currency, the Administrative Agent's address and, as appropriate, account as set forth on Schedule 11.02 with respect to such currency, or such other address or account with respect to such currency as the Administrative Agent may from time to time notify to the Borrowers and the Lenders.

“ Administrative Questionnaire ” means an Administrative Questionnaire in a form approved by the Administrative Agent.

“ Affiliate ” means, with respect to a specified Person, another Person that directly, or indirectly through one or more intermediaries, Controls or is Controlled by or is under common Control with the Person specified.

“ Aflac ” has the meaning specified in the introductory paragraph hereto.

“ Aggregate Commitments ” means the Commitments of all the Lenders.

“ Agreement ” means this Credit Agreement.

“ Applicable Percentage ” means, with respect to any Lender, the percentage of the Aggregate Commitments represented by such Lender's Commitment. If the Commitments have terminated or expired, the Applicable Percentages shall be determined based upon the Commitments most recently in effect, giving effect to any assignments.

“ Applicable Rate ” means, from time to time, the following percentages per annum, based upon the Debt Ratings as set forth below:

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Applicable Rate
Pricing Level	Debt Ratings S&P/Moody's	Facility Fee	Eurocurrency Rate +	Base Rate +
1	≥ A+ / A1	0.085%	0.915%	—%
2	A / A2	0.1%	1.025%	0.025%
3	A- / A3	0.125%	1.125%	0.125%
4	BBB+ / Baa1	0.175%	1.2%	0.2%
5	< BBB+ / Baa1	0.225%	1.4%	0.4%

“ Debt Ratings ” means, as of any date of determination, the ratings as determined by S&P and Moody's (collectively, the “ Debt Ratings ”) of the Parent's non-credit-enhanced, senior unsecured long-term debt; provided that (a) if the respective Debt Ratings issued by the foregoing rating agencies differ by one level, then the Pricing Level for the higher of such Debt Ratings shall apply (with the Debt Ratings for Pricing Level 1 being the highest and the Debt Ratings for Pricing Level 5 being the lowest); (b) if there is a split in Debt Ratings of more than one level, then the Pricing Level that is one level lower than the Pricing Level of the higher Debt Rating shall apply; (c) if the Parent has only one Debt Rating, the Pricing Level of such Debt Rating shall apply; and (d) if the Parent does not have any Debt Rating, Pricing Level 5 shall apply.

Initially, the Applicable Rate shall be determined based upon Pricing Level 3. Thereafter, each change in the Applicable Rate resulting from a publicly announced change in either of the Debt Ratings shall be effective during the period commencing on the date of the public announcement thereof and ending on the date immediately preceding the effective date of the next such change.

“ Approved Fund ” means any Fund that is administered or managed by (a) a Lender, (b) an Affiliate of a Lender or (c) an entity or an Affiliate of an entity that administers or manages a Lender.

“ Arrangers ” means Mizuho and J.P. Morgan Securities LLC, in their capacity as joint lead arrangers and joint book managers.

“ Assignment and Assumption ” means an assignment and assumption entered into by a Lender and an Eligible Assignee (with the consent of any party whose consent is required by Section 11.06(b) ), and accepted by the Administrative Agent, in substantially the form of Exhibit D or any other form approved by the Administrative Agent.

“ Attributable Indebtedness ” means, on any date, in respect of any capital lease of any Person, the capitalized amount thereof that would appear on a balance sheet of such Person prepared as of such date in accordance with GAAP.

“ Audited Financial Statements ” means the audited consolidated balance sheet of the Parent and its Subsidiaries for the fiscal year ended December 31, 2012, and the related consolidated statements of income or operations, shareholders' equity and cash flows for such fiscal year of the Parent and its Subsidiaries, including the notes thereto.

“ Availability Period ” means the period from and including the Closing Date to the earliest of (a) the day immediately preceding the Maturity Date, (b) the date of termination of the Aggregate Commitments pursuant to Section 2.04 , and (c) the date of termination of the Commitment of each Lender to make Loans pursuant to Section 8.02 .

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“ Base Rate ” means, for any day, a fluctuating rate per annum equal to the highest of (a) the Federal Funds Rate plus 1/2 of 1%, (b) the rate of interest in effect for such day as publicly announced from time to time by Mizuho as its “ prime rate ”, and (c) the Eurocurrency Rate plus 1.00%. The “ prime rate ” is a rate set by Mizuho based upon various factors including Mizuho's costs and desired return, general economic conditions and other factors, and is used as a reference point for pricing some loans, which may be priced at, above, or below such announced rate. Any change in such prime rate announced by Mizuho shall take effect at the opening of business on the day specified in the public announcement of such change.

“ Base Rate Loan ” means a Loan that bears interest based on the Base Rate. All Base Rate Loans shall be denominated in Dollars.

“ Borrower ” and “ Borrowers ” have the meanings specified in the introductory paragraph hereto.

“ Borrower Materials ” has the meaning specified in Section 6.02 .

“ Borrowing ” means a borrowing consisting of simultaneous Loans of the same Type, in the same currency and, in the case of Eurocurrency Rate Loans, having the same Interest Period made by each of the Lenders pursuant to Section 2.01 .

“ Business Day ” means any day other than a Saturday, Sunday or other day on which commercial banks are authorized to close under the Laws of, or are in fact closed in, the state where the Administrative Agent's Office with respect to Obligations denominated in Yen or Dollars is located and in the State of New York and:

(a) if such day relates to any interest rate setting as to a Eurocurrency Rate Loan denominated in Yen, means any such day on which dealings in deposits in Yen are conducted by and between banks in the London or other applicable offshore interbank market for Yen;

(b) if such day relates to any fundings, disbursements, settlements and payments in Yen in respect of a Eurocurrency Rate Loan denominated in Yen, or any other dealings in Yen to be carried out pursuant to this Agreement in respect of any such Eurocurrency Rate Loan (other than any interest rate setting), means any such day on which banks are open for foreign exchange business in Tokyo, Japan; and

(c) if such day relates to any interest rate setting as to a Eurocurrency Rate Loan denominated in Dollars, any fundings, disbursements, settlements and payments in Dollars in respect of any such Eurocurrency Rate Loan, or any other dealings in Dollars to be carried out pursuant to this Agreement in respect of any such Eurocurrency Rate Loan, means any such day on which dealings in deposits in Dollars are conducted by and between banks in the London interbank eurodollar market.

“ Change in Law ” means the occurrence, after the date of this Agreement, of any of the following: (a) the adoption or taking effect of any law, rule, regulation or treaty, (b) any change in any law, rule, regulation or treaty or in the administration, interpretation, implementation or application thereof by any Governmental Authority or (c) the making or issuance of any request, rule, guideline or directive (whether or not having the force of law) by any Governmental Authority; provided that notwithstanding anything herein to the contrary, (x) the Dodd-Frank Wall Street Reform and Consumer Protection Act and all requests, rules, guidelines or directives thereunder or issued in connection therewith and (y) all requests, rules, guidelines or directives promulgated by the Bank for International Settlements, the Basel Committee on Banking Supervision (or any successor or similar authority) or the

- 3 -

United States or foreign regulatory authorities, in each case pursuant to Basel III, shall in each case be deemed to have been adopted and gone into effect after the date hereof.

“ Change of Control ” means an event or series of events by which:

(a) any “ person ” or “ group ” (as such terms are used in Sections 13(d) and 14(d) of the Securities Exchange Act of 1934, but excluding any employee benefit plan of such person or its subsidiaries, and any person or entity acting in its capacity as trustee, agent or other fiduciary or administrator of any such plan) becomes the “ beneficial owner ” (as defined in Rules 13d-3 and 13d-5 under the Securities Exchange Act of 1934, except that a person or group shall be deemed to have “ beneficial ownership ” of all securities that such person or group has the right to acquire, whether such right is exercisable immediately or only after the passage of time (such right, an “ option right ”)), directly or indirectly, of 25% or more of the equity securities of the Parent entitled to vote for members of the board of directors or equivalent governing body of the Parent on a fully-diluted basis (and taking into account all such securities that such person or group has the right to acquire pursuant to any option right);

(b) during any period of 12 consecutive months, a majority of the members of the board of directors or other equivalent governing body of the Parent cease to be composed of individuals (i) who were members of that board or equivalent governing body on the first day of such period, (ii) whose election or nomination to that board or equivalent governing body was approved by individuals referred to in clause (i) above constituting at the time of such election or nomination at least a majority of that board or equivalent governing body or (iii) whose election or nomination to that board or other equivalent governing body was approved by individuals referred to in clauses (i) and (ii) above constituting at the time of such election or nomination at least a majority of that board or equivalent governing body (excluding, in the case of both clause (ii) and clause (iii) , any individual whose initial nomination for, or assumption of office as, a member of that board or equivalent governing body occurs as a result of an actual or threatened solicitation of proxies or consents for the election or removal of one or more directors by any person or group other than a solicitation for the election of one or more directors by or on behalf of the board of directors); or

“ Closing Date ” means the first date all the conditions precedent in Section 4.01 are satisfied or waived in accordance with Section 11.01 .

“ Code ” means the Internal Revenue Code of 1986.

“ Commitment ” means, as to each Lender, its obligation to make Loans to each Borrower pursuant to Section 2.01 , in an aggregate principal amount at any one time outstanding not to exceed the amount set forth opposite such Lender's name on Schedule 2.01 or in the Assignment and Assumption pursuant to which such Lender becomes a party hereto, as applicable, as such amount may be adjusted from time to time in accordance with this Agreement.

“ Compliance Certificate ” means a certificate substantially in the form of Exhibit C .

“ Connection Income Taxes ” means Other Connection Taxes that are imposed on or measured by net income (however denominated) or that are franchise Taxes or branch profits Taxes.

- 4 -

“ Contractual Obligation ” means, as to any Person, any provision of any security issued by such Person or of any agreement, instrument or other undertaking to which such Person is a party or by which it or any of its property is bound.

“ Control ” means the possession, directly or indirectly, of the power to direct or cause the direction of the management or policies of a Person, whether through the ability to exercise voting power, by contract or otherwise. “ Controlling ” and “ Controlled ” have meanings correlative thereto.

“ Debtor Relief Laws ” means the Bankruptcy Code of the United States, and all other liquidation, conservatorship, bankruptcy, assignment for the benefit of creditors, moratorium, rearrangement, receivership, insolvency, reorganization, or similar debtor relief Laws of the United States or other applicable jurisdictions from time to time in effect.

“ Default ” means any event or condition that constitutes an Event of Default or that, with the giving of any notice, the passage of time, or both, would be an Event of Default.

“ Default Rate ” means, (a) with respect to a Eurocurrency Rate Loan, an interest rate equal to the interest rate (including any Applicable Rate) otherwise applicable to such Loan plus 2% per annum, and (b) with respect to a Base Rate Loan or any other Obligation (other than a Eurocurrency Rate Loan), the Base Rate plus (i) the Applicable Rate plus (ii) 2% per annum.

“ Defaulting Lender ” means, subject to Section 2.13(b) , any Lender that (a) has failed to (i) fund all or any portion of its Loans within two Business Days of the date such Loans were required to be funded hereunder unless such Lender notifies the Administrative Agent and the applicable Borrower in writing that such failure is the result of such Lender's reasonable determination that one or more conditions precedent to funding (each of which conditions precedent, together with any applicable default, shall be specifically identified in such writing) has not been satisfied, or (ii) pay to the Administrative Agent or any Lender any other amount required to be paid by it hereunder within two Business Days of the date when due, (b) has notified the Borrowers or the Administrative Agent in writing that it does not intend to comply with its funding obligations hereunder, or has made a public statement to that effect (unless such writing or public statement relates to such Lender's obligation to fund a Loan hereunder and states that such position is based on such Lender's determination that a condition precedent to funding (which condition precedent, together with any applicable default, shall be specifically identified in such writing or public statement) cannot be satisfied), (c) has failed, within three Business Days after written request by the Administrative Agent or the Borrowers, to confirm in writing to the Administrative Agent and the Borrowers that it will comply with its prospective funding obligations hereunder ( provided that such Lender shall cease to be a Defaulting Lender pursuant to this clause (c) upon receipt of such written confirmation by the Administrative Agent and the Borrowers), or (d) has, or has a direct or indirect parent company that has, (i) become the subject of a proceeding under any Debtor Relief Law, or (ii) had appointed for it a receiver, custodian, conservator, trustee, administrator, assignee for the benefit of creditors or similar Person charged with reorganization or liquidation of its business or assets, including the Federal Deposit Insurance Corporation or any other state or federal regulatory authority acting in such a capacity; provided that a Lender shall not be a Defaulting Lender solely by virtue of the ownership or acquisition of any equity interest in that Lender or any direct or indirect parent company thereof by a Governmental Authority so long as such ownership interest does not result in or provide such Lender with immunity from the jurisdiction of courts within the United States or from the enforcement of judgments or writs of attachment on its assets or permit such Lender (or such Governmental Authority) to reject, repudiate, disavow or disaffirm any contracts or agreements made with such Lender. Any determination by the Administrative Agent that a Lender is a Defaulting Lender under any one or more of clauses (a) through (d) above shall be conclusive and

- 5 -

binding absent manifest error, and such Lender shall be deemed to be a Defaulting Lender (subject to Section 2.13(b) ) upon delivery of written notice of such determination to the Borrowers and each Lender.

“ Dispose ” means the sale, transfer or other disposition (including any sale and leaseback transaction) of any property by any Person, including any sale, assignment, transfer or other disposal, with or without recourse, of any notes or accounts receivable or any rights and claims associated therewith.

“ Dollar ” and “ $ ” mean lawful money of the United States.

“ Dollar Equivalent ” means, at any time, (a) with respect to any amount denominated in Dollars, such amount, and (b) with respect to any amount denominated in Yen, the equivalent amount thereof in Dollars as determined by the Administrative Agent, at such time on the basis of the Spot Rate (determined as of the most recent Revaluation Date) for the purchase of Dollars with Yen.

“ Eligible Assignee ” means any Person that meets the requirements to be an assignee under Section 11.06(b)(iii) , 11.06(b)(v) , and 11.06(b)(vii) (subject to such consents, if any, as may be required under Section 11.06(b)(iii) ).

“Embargoed Person” means any person, entity or government subject to trade restrictions under U.S. law, or any regulations promulgated thereunder, including but not limited to, the International Emergency Economic Powers Act, 50 U.S.C. §1701 et seq., The Trading with the Enemy Act, 50 U.S.C. App. 1 et seq., and any Executive Orders of the President of the United States, with the result that any transaction between a Loan Party and such person, entity or government is prohibited by law or in violation of law.

“ Environmental Laws ” means any and all Federal, state, local, and foreign statutes, laws, regulations, ordinances, rules, judgments, orders, decrees, permits, or governmental licenses, relating to pollution and the protection of the environment or the release of any hazardous materials into the environment, including those related to hazardous substances or wastes, air emissions and discharges to the environment.

“ Equity Interests ” means, with respect to any Person, all of the shares of capital stock of (or other ownership in) such Person, all of the warrants, options or other rights for the purchase or acquisition from such Person of shares of capital stock of (or other ownership in) such Person, all of the securities convertible into or exchangeable for shares of capital stock of (or other ownership in) such Person or warrants, rights or options for the purchase or acquisition from such Person of such shares (or such other interests), and all of the other ownership in such Person (including partnership, member or trust interests therein), whether voting or nonvoting, and whether or not such shares, warrants, options, rights or other interests are outstanding on any date of determination.

“ ERISA ” means the Employee Retirement Income Security Act of 1974.

“ ERISA Affiliate ” means any trade or business (whether or not incorporated) under common control with any Loan Party within the meaning of Section 414(b) or (c) of the Code (and Sections 414(m) and (o) of the Code for purposes of provisions relating to Section 412 of the Code).

“ ERISA Event ” means (a) a Reportable Event with respect to a Pension Plan; (b) the withdrawal of any Loan Party or any ERISA Affiliate from a Pension Plan subject to Section 4063 of ERISA during a plan year in which such entity was a “ substantial employer ” as defined in Section 4001(a)(2) of ERISA or a cessation of operations that is treated as such a withdrawal under Section 4062(e) of ERISA; (c) a

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complete or partial withdrawal by a Loan Party or any ERISA Affiliate from a Multiemployer Plan or notification that a Multiemployer Plan is in reorganization; (d) the filing of a notice of intent to terminate, the treatment of a Pension Plan amendment as a termination under Section 4041 or 4041A of ERISA; (e) the institution by the PBGC of proceedings to terminate a Pension Plan; (f) any event or condition which constitutes grounds under Section 4042 of ERISA for the termination of, or the appointment of a trustee to administer, any Pension Plan; (g) the determination that any Pension Plan is considered an at-risk plan or a plan in endangered or critical status within the meaning of Sections 430 , 431 and 432 of the Code or Sections 303 , 304 and 305 of ERISA; or (h) the imposition of any liability under Title IV of ERISA, other than for PBGC premiums due but not delinquent under Section 4007 of ERISA, upon a Loan Party or any ERISA Affiliate.

“ Eurocurrency Base Rate ” has the meaning specified in the definition of Eurocurrency Rate.

“ Eurocurrency Rate ” means a rate per annum determined by the Administrative Agent pursuant to the following formula:



Eurocurrency Rate =	Eurocurrency Base Rate 1.00 - Eurocurrency Reserve Percentage

Where,

“ Eurocurrency Base Rate ” means:

(a) for any Interest Period with respect to a Eurocurrency Rate Loan, the rate per annum equal to the British Bankers Association LIBOR Rate or the successor thereto if the British Bankers Association is no longer making a LIBOR rate available (“ LIBOR ”), as published by Reuters (or other commercially available source providing quotations of LIBOR as designated by the Administrative Agent from time to time) at approximately 11:00 a.m., London time, two Business Days prior to the commencement of such Interest Period, for deposits in the relevant currency (for delivery on the first day of such Interest Period) with a term equivalent to such Interest Period. If such rate is not available at such time for any reason, then the “ Eurocurrency Base Rate ” for such Interest Period shall be the rate per annum determined by the Administrative Agent to be the rate at which deposits in the relevant currency for delivery on the first day of such Interest Period in Same Day Funds in the approximate amount of the Eurocurrency Rate Loan being made, continued or converted by Mizuho and with a term equivalent to such Interest Period would be offered by Mizuho's London Branch (or other Mizuho branch or Affiliate) to major banks in the London or other offshore interbank market for such currency at their request at approximately 11:00 a.m. (London time) two Business Days prior to the commencement of such Interest Period; and

(b) for any interest calculation with respect to a Base Rate Loan on any date, the rate per annum equal to (i) LIBOR, as published by Reuters (or other commercially available source providing quotations of LIBOR as designated by the Administrative Agent from time to time) at approximately 11:00 a.m., London time two Business Days prior to such date for Dollar deposits being delivered in the London interbank market for a term of one month commencing that day or (ii) if such published rate is not available at such time for any reason, the rate per annum determined by the Administrative Agent to be the rate at which deposits in Dollars for delivery on the date of determination in Same Day Funds in the approximate amount of the Base Rate Loan being made or maintained and with a term equal to one month would be offered by Mizuho's London Branch (or

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other Mizuho branch or Affiliate) to major banks in the London interbank eurodollar market at their request at the date and time of determination.

“ Eurocurrency Reserve Percentage ” means, for any day during any Interest Period, the reserve percentage (expressed as a decimal, carried out to five decimal places) in effect on such day, whether or not applicable to any Lender, under regulations issued from time to time by the FRB for determining the maximum reserve requirement (including any emergency, supplemental or other marginal reserve requirement) with respect to Eurocurrency funding (currently referred to as “ Eurocurrency liabilities ”). The Eurocurrency Rate for each outstanding Eurocurrency Rate Loan shall be adjusted automatically as of the effective date of any change in the Eurocurrency Reserve Percentage.

“ Eurocurrency Rate Loan ” means a Loan that bears interest at a rate based on the Eurocurrency Rate. Eurocurrency Rate Loans may be denominated in Yen or in Dollars.

“ Eurocurrency Reserve Percentage ” has the meaning specified in the definition of Eurocurrency Rate.

“ Event of Default ” has the meaning specified in Section 8.01 .

“ Excluded Taxes ” means any of the following Taxes imposed on or with respect to a Recipient or required to be withheld or deducted from a payment to a Recipient, (a) Taxes imposed on or measured by net income (however denominated), franchise Taxes, and branch profits Taxes, in each case, (i) imposed as a result of such Recipient being organized under the laws of, or having its principal office or, in the case of any Lender, its applicable lending office located in, the jurisdiction imposing such Tax (or any political subdivision thereof) or (ii) that are Other Connection Taxes, (b) in the case of a Lender, U.S. federal withholding Taxes imposed on amounts payable to or for the account of such Lender with respect to an applicable interest in a Loan or Commitment pursuant to a law in effect on the date on which (i) such Lender acquires such interest in the Loan or Commitment (other than pursuant to an assignment request by any Borrower under Section 3.06(b) ) or (ii) such Lender changes its lending office, except in each case to the extent that, pursuant to Section 3.01 , amounts with respect to such Taxes were payable either to such Lender's assignor immediately before such Lender became a party hereto or to such Lender immediately before it changed its lending office, (c) Taxes attributable to such Recipient's failure to comply with Section 3.01(f) and (d) any U.S. federal withholding Taxes imposed under FATCA.

“ Existing Credit Agreement ” means that certain 364-Day Credit Agreement dated as of June 28, 2012 among the Borrowers, Mizuho, as administrative agent, and a syndicate of lenders.

“ Facility Fee ” has the meaning specified in Section 2.07(a) .

“ FASB ASC ” means the Accounting Standards Codification of the Financial Accounting Standards Board.

“ FATCA ” means Sections 1471 through 1474 of the Code, as of the date of this Agreement (or any amended or successor version that is substantively comparable and not materially more onerous to comply with) and any current or future regulations or official interpretations thereof and any agreements entered into pursuant to Section 1471(b)(1) of the Code.

“ Federal Funds Rate ” means, for any day, the rate per annum equal to the weighted average of the rates on overnight Federal funds transactions with members of the Federal Reserve System arranged by Federal funds brokers on such day, as published by the Federal Reserve Bank of New York on the

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Business Day next succeeding such day; provided that (a) if such day is not a Business Day, the Federal Funds Rate for such day shall be such rate on such transactions on the next preceding Business Day as so published on the next succeeding Business Day, and (b) if no such rate is so published on such next succeeding Business Day, the Federal Funds Rate for such day shall be the average rate (rounded upward, if necessary, to a whole multiple of 1/100 of 1%) charged to Mizuho on such day on such transactions as determined by the Administrative Agent.

“ Fee Letters ” mean (i) the letter agreement, dated March 4, 2013, between the Parent and Mizuho and (ii) the letter agreement, dated March 4, 2013, between the Parent and J.P. Morgan Securities LLC.

“ Foreign Lender ” means a Lender that is not a U.S. Person.

“ FRB ” means the Board of Governors of the Federal Reserve System of the United States.

“ Fund ” means any Person (other than a natural Person) that is (or will be) engaged in making, purchasing, holding or otherwise investing in commercial loans and similar extensions of credit in the ordinary course of its activities.

“ GAAP ” means generally accepted accounting principles in the United States set forth in the opinions and pronouncements of the Accounting Principles Board and the American Institute of Certified Public Accountants and statements and pronouncements of the Financial Accounting Standards Board or such other principles as may be approved by a significant segment of the accounting profession in the United States, that are applicable to the circumstances as of the date of determination, consistently applied.

“ Governmental Authority ” means the government of the United States or any other nation, or of any political subdivision thereof, whether state or local, and any agency, authority, instrumentality, regulatory body, court, central bank or other entity exercising executive, legislative, judicial, taxing, regulatory or administrative powers or functions of government (including any supra-national bodies such as the European Union or the European Central Bank).

“ Guarantee ” means, as to any Person, (a) any obligation, contingent or otherwise, of such Person guaranteeing or having the economic effect of guaranteeing any Indebtedness or other obligation payable or performable by another Person (the “primary obligor”) in any manner, whether directly or indirectly, and including any obligation of such Person, direct or indirect, (i) to purchase or pay (or advance or supply funds for the purchase or payment of) such Indebtedness or other obligation, (ii) to purchase or lease property, securities or services for the purpose of assuring the obligee in respect of such Indebtedness or other obligation of the payment or performance of such Indebtedness or other obligation, (iii) to maintain working capital, equity capital or any other financial statement condition or liquidity or level of income or cash flow of the primary obligor so as to enable the primary obligor to pay such Indebtedness or other obligation, or (iv) entered into for the purpose of assuring in any other manner the obligee in respect of such Indebtedness or other obligation of the payment or performance thereof or to protect such obligee against loss in respect thereof (in whole or in part), or (b) any Lien on any assets of such Person securing any Indebtedness or other obligation of any other Person, whether or not such Indebtedness or other obligation is assumed by such Person (or any right, contingent or otherwise, of any holder of such Indebtedness to obtain any such Lien). The amount of any Guarantee shall be deemed to be an amount equal to the stated or determinable amount of the related primary obligation, or portion thereof, in respect of which such Guarantee is made or, if not stated or determinable, the maximum reasonably anticipated liability in respect thereof as determined by the guaranteeing Person in good faith. The term “Guarantee” as a verb has a corresponding meaning.

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“ Guarantor ” has the meaning specified in the introductory paragraph hereto.

“ Indebtedness ” means, as to any Person at a particular time, without duplication, all of the following, whether or not included as indebtedness or liabilities in accordance with GAAP:

(a) all obligations of such Person for borrowed money and all obligations of such Person evidenced by bonds, debentures, notes, loan agreements or other similar instruments;

(b) all direct or contingent obligations of such Person arising under letters of credit (including standby and commercial), bankers' acceptances, bank guaranties and similar instruments (excluding, for the avoidance of doubt, surety bonds, fidelity bonds and other similar insurance products);

(c) all obligations of such Person to pay the deferred purchase price of property or services (other than trade accounts payable in the ordinary course of business);

(d) indebtedness (excluding prepaid interest thereon) secured by a Lien on property owned or being purchased by such Person (including indebtedness arising under conditional sales or other title retention agreements), whether or not such indebtedness shall have been assumed by such Person or is limited in recourse;

(e) capital leases;

(f) all mandatory obligations of such Person to purchase, redeem, retire, defease or otherwise make any payment in respect of any Equity Interest in such Person or any other Person, valued, in the case of a redeemable preferred interest, at the greater of its voluntary or involuntary liquidation preference plus accrued and unpaid dividends; and

(g) all Guarantees of such Person in respect of any of the foregoing.

For all purposes hereof, the Indebtedness of any Person shall include the Indebtedness of any partnership or joint venture (other than a joint venture that is itself a corporation or limited liability company) in which such Person is a general partner or a joint venturer, unless such Indebtedness is expressly made non-recourse to such Person. The amount of any capital lease as of any date shall be deemed to be the amount of Attributable Indebtedness in respect thereof as of such date.

“ Indemnified Taxes ” means (a) Taxes, other than Excluded Taxes, imposed on or with respect to any payment made by or on account of any obligation of any Loan Party under any Loan Document and (b) to the extent not otherwise described in (a), Other Taxes.

“ Indemnitees ” has the meaning specified in Section 11.04(b) .

“ Information ” has the meaning specified in Section 11.07 .

“ Insurance Regulatory Authority ” means, for Aflac, the insurance department or similar administrative authority or agency of the State of Nebraska.

“ Interest Payment Date ” means, (a) as to any Eurocurrency Rate Loan, the last day of each Interest Period applicable to such Loan and the Maturity Date; provided , however , that if any Interest Period for a Eurocurrency Rate Loan exceeds three months, the date that falls three months after the

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beginning of such Interest Period shall also be an Interest Payment Date; and (b) as to any Base Rate Loan, the last Business Day of each March, June, September and December and the Maturity Date.

“ Interest Period ” means, as to any Eurocurrency Rate Loan, the period commencing on the date such Eurocurrency Rate Loan is disbursed or converted to or continued as a Eurocurrency Rate Loan and ending on the date one, two, three or six months thereafter, as selected by the applicable Borrower in its Loan Notice; provided that:

(i) any Interest Period that would otherwise end on a day that is not a Business Day shall be extended to the next succeeding Business Day unless, in the case of a Eurocurrency Rate Loan, such Business Day falls in another calendar month, in which case such Interest Period shall end on the next preceding Business Day;

(ii) any Interest Period pertaining to a Eurocurrency Rate Loan that begins on the last Business Day of a calendar month (or on a day for which there is no numerically corresponding day in the calendar month at the end of such Interest Period) shall end on the last Business Day of the calendar month at the end of such Interest Period; and

(iii) no Interest Period with respect to any Eurocurrency Rate Loan owing to any Lender shall extend beyond the Maturity Date of such Lender.

“ IRS ” means the United States Internal Revenue Service.

“ Laws ” means, collectively, all international, foreign, Federal, state and local statutes, treaties, rules, guidelines, regulations, ordinances, codes and administrative or judicial precedents or authorities, including the interpretation or administration thereof by any Governmental Authority charged with the enforcement, interpretation or administration thereof, and all applicable administrative orders, directed duties, and requests of any Governmental Authority, in each case having the force of law.

“ Lender ” has the meaning specified in the introductory paragraph hereto.

“ Lending Office ” means, as to any Lender, the office or offices of such Lender described as such in such Lender's Administrative Questionnaire, or such other office or offices as a Lender may from time to time notify the Borrowers and the Administrative Agent.

“ Lien ” means any mortgage, pledge, hypothecation, assignment, deposit arrangement, encumbrance, lien (statutory or other), charge, or preference, priority or other security interest or preferential arrangement in the nature of a security interest of any kind or nature whatsoever (including any conditional sale or other title retention agreement, any easement, right of way or other encumbrance on title to real property, and any financing lease having substantially the same economic effect as any of the foregoing).

“ Loan ” means an extension of credit by a Lender to a Borrower under Article II .

“ Loan Documents ” means this Agreement, each Note and the Fee Letters.

“ Loan Notice ” means a notice of (a) a Borrowing, (b) a conversion of Loans from one Type to the other, or (c) a continuation of Eurocurrency Rate Loans, pursuant to Section 2.02(a) , which, if in writing, shall be substantially in the form of Exhibit A .

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“ Loan Parties ” means, collectively, the Borrowers and the Guarantor.

“ Material Adverse Effect ” means (a) a material adverse change in, or a material adverse effect upon, the operations, business, assets, properties or financial condition of the Parent and its Subsidiaries taken as a whole; (b) a material impairment of the rights and remedies of the Administrative Agent or any Lender under any Loan Document to which it is a party or of the ability of any Loan Party to perform its obligations, taken as a whole, under any Loan Document to which it is a party; or (c) a material adverse effect upon the enforceability, taken as a whole, legality, validity or binding effect against any Loan Party of any Loan Document to which it is a party.

“ Maturity Date ” means March 29, 2018; provided , however , that if such date is not a Business Day, the Maturity Date shall be the next preceding Business Day.

“ Mizuho ” means Mizuho Corporate Bank, Ltd. and its successors.

“ Moody's ” means Moody's Investors Service, Inc. and any successor thereto.

“ Multiemployer Plan ” means any employee benefit plan of the type described in Section 4001(a)(3) of ERISA, to which a Loan Party or any ERISA Affiliate makes or is obligated to make contributions, or during the preceding five plan years, has made or been obligated to make contributions.

“ Multiple Employer Plan ” means a Plan which has two or more contributing sponsors (including a Loan Party or any ERISA Affiliate) at least two of whom are not under common control, as such a plan is described in Section 4064 of ERISA.

“ NAIC ” means the National Association of Insurance Commissioners and any successor thereto.

“ Net Income ” means, for any period, for the Parent and its Subsidiaries, the consolidated net income of the Parent and its Subsidiaries for that period determined in accordance with GAAP.

“ Net Worth ” means, as of any date of determination, the consolidated shareholders' equity, determined in accordance with GAAP, of the Parent and its Subsidiaries on that date; provided, however , that there shall be excluded from the calculation of “ Net Worth ” any effects resulting from accumulated other comprehensive income.

“ Non-Consenting Lender ” means any Lender that does not approve any consent, waiver or amendment that (i) requires the approval of all affected Lenders in accordance with the terms of Section 11.01 and (ii) has been approved by the Required Lenders.

“ Non-Defaulting Lender ” means, at any time, each Lender that is not a Defaulting Lender at such time.

“ Note ” means a promissory note made by a Borrower in favor of a Lender evidencing Loans made by such Lender, substantially in the form of Exhibit B .

“ Obligations ” means all advances to, and debts, liabilities and obligations of, any Loan Party arising under any Loan Document or otherwise with respect to any Loan, whether direct or indirect (including those acquired by assumption), absolute or contingent, due or to become due, now existing or hereafter arising and including interest and fees that accrue after the commencement by or against any Loan Party or any Affiliate thereof of any proceeding under any Debtor Relief Laws naming such Person

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as the debtor in such proceeding, regardless of whether such interest and fees are allowed claims in such proceeding.

“ OFAC ” means the Office of Foreign Assets Control of the United States Department of the Treasury.

“ Organization Documents ” means, (a) with respect to any corporation, the certificate or articles of incorporation and the bylaws (or equivalent or comparable constitutive documents with respect to any non-U.S. jurisdiction); (b) with respect to any limited liability company, the certificate or articles of formation or organization and operating agreement; and (c) with respect to any partnership, joint venture, trust or other form of business entity, the partnership, joint venture or other applicable agreement of formation or organization and any agreement, instrument, filing or notice with respect thereto filed in connection with its formation or organization with the applicable Governmental Authority in the jurisdiction of its formation or organization and, if applicable, any certificate or articles of formation or organization of such entity.

“ Other Connection Taxes ” means, with respect to any Recipient, Taxes imposed as a result of a present or former connection between such Recipient and the jurisdiction imposing such Tax (other than connections arising from such Recipient having executed, delivered, become a party to, performed its obligations under, received payments under, received or perfected a security interest under, engaged in any other transaction pursuant to or enforced any Loan Document, or sold or assigned an interest in any Loan or Loan Document).

“ Other Taxes ” means all present or future stamp, court or documentary, intangible, recording, filing or similar Taxes that arise from any payment made under, from the execution, delivery, performance, enforcement or registration of, from the receipt or perfection of a security interest under, or otherwise with respect to, any Loan Document, except any such Taxes that are Other Connection Taxes imposed with respect to an assignment (other than an assignment made pursuant to Section 3.06 ).

“ Outstanding Amount ” means, with respect to Loans on any date, the Yen Equivalent amount of the aggregate outstanding principal amount thereof after giving effect to any borrowings and prepayments or repayments of Loans occurring on such date.

“ Overnight Rate ” means, for any day, (a) with respect to any amount denominated in Yen, the rate of interest per annum at which overnight deposits in Yen, in an amount approximately equal to the amount with respect to which such rate is being determined, would be offered for such day by a branch or Affiliate of Mizuho in the applicable offshore interbank market for Yen to major banks in such interbank market and (b) with respect to any amount denominated in Dollars, the greater of (i) the Federal Funds Rate and (ii) an overnight rate determined by the Administrative Agent in accordance with banking industry rules on interbank compensation.

“ Parent ” has the meaning specified in the introductory paragraph hereto.

“ Participant ” has the meaning specified in Section 11.06(d) .

“ Participant Register ” has the meaning specified in Section 11.06(d) .

“ PBGC ” means the Pension Benefit Guaranty Corporation.

“ Pension Act ” means the Pension Protection Act of 2006.

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“ Pension Funding Rules ” means the rules of the Code and ERISA regarding minimum required contributions (including any installment payment thereof) to Pension Plans and set forth in, with respect to plan years ending prior to the effective date of the Pension Act, Section 412 of the Code and Section 302 of ERISA, each as in effect prior to the Pension Act and, thereafter, Section 412 , 430 , 431 , 432 and 436 of the Code and Sections 302 , 303 , 304 and 305 of ERISA.

“ Pension Plan ” means any employee pension benefit plan (including a Multiple Employer Plan or a Multiemployer Plan) that is maintained or is contributed to by any Loan Party or any ERISA Affiliate and is either covered by Title IV of ERISA or is subject to the minimum funding standards under Section 412 of the Code.

“ Person ” means any natural person, corporation, limited liability company, trust, joint venture, association, company, partnership, Governmental Authority or other entity.

“ Plan ” means any employee benefit plan within the meaning of Section 3(3) of ERISA (including a Pension Plan), maintained for employees of any Loan Party or any ERISA Affiliate or any such Plan to which any Loan Party or any ERISA Affiliate is required to contribute on behalf of any of its employees.

“ Platform ” has the meaning specified in Section 6.02 .

“ Public Lender ” has the meaning specified in Section 6.02 .

“ Recipient ” means (a) the Administrative Agent and (b) any Lender.

“ Register ” has the meaning specified in Section 11.06(c) .

“ Related Parties ” means, with respect to any Person, such Person's Affiliates and the partners, directors, officers, employees, agents, trustees, administrators, managers, advisors and representatives of such Person and of such Person's Affiliates.

“ Reportable Event ” means any of the events set forth in Section 4043(c) of ERISA, other than events for which the 30 day notice period has been waived.

“ Required Lenders ” means, at any time, Lenders having Total Credit Exposures representing more than 50% of the Total Credit Exposures of all Lenders. The Total Credit Exposure of any Defaulting Lender shall be disregarded in determining Required Lenders at any time.

“ Responsible Officer ” means the chief executive officer, president, chief financial officer, treasurer, assistant treasurer or controller of a Loan Party, and solely for purposes of the delivery of incumbency certificates pursuant to Section 4.01 , the secretary or any assistant secretary of a Loan Party and, solely for purposes of notices given pursuant to Article II , any other officer or employee of the applicable Loan Party so designated by any of the foregoing officers in a notice to the Administrative Agent. Any document delivered hereunder that is signed by a Responsible Officer of a Loan Party shall be conclusively presumed to have been authorized by all necessary corporate, partnership and/or other action on the part of such Loan Party and such Responsible Officer shall be conclusively presumed to have acted on behalf of such Loan Party.

“ Restricted Payment ” means any dividend or other distribution (whether in cash, securities or other property) with respect to any capital stock or other Equity Interest of the Parent, or any payment (whether in cash, securities or other property), including any sinking fund or similar deposit, on account of the purchase, redemption, retirement, acquisition, cancellation or termination of any such capital stock

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or other Equity Interest, or on account of any return of capital to the Parent's stockholders, partners or members (or the equivalent Person thereof).

“ Revaluation Date ” means, with respect to any Loan, each of the following: (i) each date of a Borrowing of a Eurocurrency Rate Loan denominated in Dollars, (ii) each date of a continuation of a Eurocurrency Rate Loan denominated in Dollars pursuant to Section 2.02 , (iii) each other date on which the Spot Rate is to be determined as provided herein, and (iv) each other date on which the Administrative Agent reasonably believes that the Outstanding Amount of the Loans exceeds 105% of the Aggregate Commitments then in effect.

“ Revolving Credit Exposure ” means, as to any Lender at any time, the Outstanding Amount of its Loans.

“ S&P ” means Standard & Poor's Financial Services LLC, a subsidiary of The McGraw-Hill Companies, Inc. and any successor thereto.

“ Same Day Funds ” means, (a) with respect to disbursements and payments in Yen, same day or other funds as may be determined by the Administrative Agent to be customary in the place of disbursement or payment for the settlement of international banking transactions in Yen and (b) with respect to disbursements and payments in Dollars, immediately available funds.

“Sanctioned” means currently identified (A) on the Specially Designated Nationals and Blocked Persons List maintained by OFAC and/or on any other similar list maintained by OFAC pursuant to any authorizing statute, executive order or regulation, and (B) as a Person or entity with whom a citizen of the United States is prohibited to engage in transactions by any trade embargo, economic sanction, or other prohibition of United States law, regulation, or Executive Order of the President of the United States.

“ SAP ” means the accounting procedures and practices prescribed or permitted by the Insurance Regulatory Authority or the NAIC.

“ SEC ” means the Securities and Exchange Commission, or any Governmental Authority succeeding to any of its principal functions.

“ Spot Rate ”, for a currency, means the rate determined by the Administrative Agent to be the rate quoted as the spot rate for the purchase by the Administrative Agent of such currency with another currency through its principal foreign exchange trading office at approximately 11:00 a.m. on the date two Business Days prior to the date as of which the foreign exchange computation is made; provided that the Administrative Agent may obtain such spot rate from another financial institution designated by the Administrative Agent if the Administrative Agent does not have as of the date of determination a spot buying rate for any such currency.

“ Statutory Statement ” means, as to Aflac, a statement of the condition and affairs of Aflac prepared in accordance with SAP, and filed with the Insurance Regulatory Authority.

“ Statutory Surplus ” means, with respect to Aflac at any date of determination, the consolidated statutory surplus of Aflac on such date computed in accordance with SAP.

“ Subsidiary ” of a Person means a corporation, partnership, joint venture, limited liability company or other business entity of which a majority of the shares of securities or other interests having ordinary voting power for the election of directors or other governing body (other than securities or interests having such power only by reason of the happening of a contingency) are at the time beneficially

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owned, or the management of which is otherwise controlled, directly, or indirectly through one or more intermediaries, or both, by such Person. Unless otherwise specified, all references herein to a “Subsidiary” or to “Subsidiaries” shall refer to a Subsidiary or Subsidiaries of each Borrower.

“ Swap Contract ” means (a) any and all rate swap transactions, basis swaps, credit derivative transactions, forward rate transactions, commodity swaps, commodity options, forward commodity contracts, equity or equity index swaps or options, bond or bond price or bond index swaps or options or forward bond or forward bond price or forward bond index transactions, interest rate options, forward foreign exchange transactions, cap transactions, floor transactions, collar transactions, currency swap transactions, cross-currency rate swap transactions, currency options, spot contracts, or any other similar transactions or any combination of any of the foregoing (including any options to enter into any of the foregoing), whether or not any such transaction is governed by or subject to any master agreement, and (b) any and all transactions of any kind, and the related confirmations, which are subject to the terms and conditions of, or governed by, any form of master agreement published by the International Swaps and Derivatives Association, Inc., any International Foreign Exchange Master Agreement, or any other master agreement (any such master agreement, together with any related schedules, a “ Master Agreement ”), including any such obligations or liabilities under any Master Agreement.

“ Swap Termination Value ” means, in respect of any one or more Swap Contracts, after taking into account the effect of any legally enforceable netting agreement relating to such Swap Contracts, (a) for any date on or after the date such Swap Contracts have been closed out and termination value(s) determined in accordance therewith, such termination value(s), and (b) for any date prior to the date referenced in clause (a) , the amount(s) determined as the mark-to-market value(s) for such Swap Contracts, as determined based upon one or more mid-market or other readily available quotations provided by any recognized dealer in such Swap Contracts (which may include a Lender or any Affiliate of a Lender).

“ Taxes ” means all present or future taxes, levies, imposts, duties, deductions, withholdings (including backup withholding), assessments, fees or other charges imposed by any Governmental Authority, including any interest, additions to tax or penalties applicable thereto.

“ Threshold Amount ” means $50,000,000 or its Yen Equivalent.

“ Total Capital ” means, at any time, Net Worth plus Total Funded Debt.

“ Total Credit Exposure ” means, as to any Lender at any time, the unused Commitment and Revolving Credit Exposure of such Lender at such time.

“ Total Funded Debt ” means, at any time, all Indebtedness of the Parent and its Subsidiaries and any other Person which would, at such time, be classified in whole or in part as a liability on the consolidated balance sheet of the Parent and its consolidated Subsidiaries in accordance with GAAP (it being understood, for the avoidance of doubt, that any liability or obligation excluded from the definition of Indebtedness shall not constitute Indebtedness for purposes of this definition).

“ Type ” means, with respect to a Loan, its character as a Base Rate Loan or a Eurocurrency Rate Loan.

“ United States ” and “ U.S.” mean the United States of America.

“ U.S. Person ” means any Person that is a “United States Person” as defined in Section 7701(a)(30) of the Code.

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“ U.S. Tax Compliance Certificate ” has the meaning specified in Section 3.01(f)(ii)(B)(3) .

“ Withholding Agent ” means any Loan Party and the Administrative Agent.

“ Yen ” and “ ¥ ” mean lawful money of Japan.

“ Yen Equivalent ” means, at any time, (a) with respect to any amount denominated in Yen, such amount, and (b) with respect to any amount denominated in Dollars, the equivalent amount thereof in Yen as determined by the Administrative Agent at such time on the basis of the Spot Rate (determined as of the most recent Revaluation Date) for the purchase of Yen with Dollars.

1.02 Other Interpretive Provisions . With reference to this Agreement and each other Loan Document, unless otherwise specified herein or in such other Loan Document:

(a) The definitions of terms herein shall apply equally to the singular and plural forms of the terms defined. Whenever the context may require, any pronoun shall include the corresponding masculine, feminine and neuter forms. The words “include,” “includes” and “including” shall be deemed to be followed by the phrase “without limitation.” The word “will” shall be construed to have the same meaning and effect as the word “shall.” Unless the context requires otherwise (a) any definition of or reference to any agreement, instrument or other document herein shall be construed as referring to such agreement, instrument or other document as from time to time amended, supplemented or otherwise modified (subject to any restrictions on such amendments, supplements or modifications set forth herein), (b) any reference herein to any Person shall be construed to include such Person's successors and assigns, (c) the words “herein,” “hereof” and “hereunder,” and words of similar import, shall be construed to refer to this Agreement in its entirety and not to any particular provision hereof, (d) all references herein to Articles, Sections, Exhibits and Schedules shall be construed to refer to Articles and Sections of, and Exhibits and Schedules to, this Agreement, (e) any reference to any law or regulation herein shall, unless otherwise specified, refer to such law or regulation as amended, modified or supplemented from time to time, and (f) the words “asset” and “property” shall be construed to have the same meaning and effect and to refer to any and all tangible and intangible assets and properties, including cash, securities, accounts and contract rights.

(b) In the computation of periods of time from a specified date to a later specified date, the word “from” means “from and including”; the words “to” and “until” each mean “to but excluding”; and the word “through” means “to and including”.

(c) Section headings herein and in the other Loan Documents are included for convenience of reference only and shall not affect the interpretation of this Agreement or any other Loan Document.

1.03 Accounting Terms

(a) Generally . All accounting terms not specifically or completely defined herein shall be construed in conformity with, and all financial data (including financial ratios and other financial calculations) required to be submitted pursuant to this Agreement shall be prepared in conformity with, GAAP or SAP, as applicable, applied on a consistent basis, as in effect from time to time, applied in a manner consistent with that used in preparing the Audited Financial Statements or Statutory Statements for the fiscal year ended December 31, 2012, except as otherwise specifically prescribed herein. Notwithstanding the foregoing, for purposes of determining compliance with any covenant (including the computation of any financial covenant)

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contained herein, Indebtedness of any Borrower and its Subsidiaries shall be deemed to be carried at 100% of the outstanding principal amount thereof, and the effects of FASB ASC 825 on financial liabilities shall be disregarded.

(b) Changes in GAAP or SAP . If at any time any change in GAAP or SAP, as applicable, would affect the computation of any financial ratio or requirement set forth in any Loan Document, and either the Borrowers or the Required Lenders shall so request, the Administrative Agent, the Lenders and the Borrowers shall negotiate in good faith to amend such ratio or requirement to preserve the original intent thereof in light of such change in GAAP or SAP, as applicable (subject to the approval of the Required Lenders); provided that , until so amended, (A) such ratio or requirement shall continue to be computed in accordance with GAAP or SAP, as applicable, prior to such change therein and (B) the Borrowers shall provide to the Administrative Agent and the Lenders financial statements and other documents required under this Agreement or as reasonably requested hereunder setting forth a reconciliation between calculations of such ratio or requirement made before and after giving effect to such change in GAAP or SAP, as applicable. Without limiting the foregoing, leases shall continue to be classified and accounted for on a basis consistent with that reflected in the Audited Financial Statements or Statutory Statements for the fiscal year ended December 31, 2012 for all purposes of this Agreement, notwithstanding any change in GAAP or SAP, as applicable, relating thereto, unless the parties hereto shall enter into a mutually acceptable amendment addressing such changes, as provided for above.

1.04 Rounding . Any financial ratios required to be maintained by the Borrowers pursuant to this Agreement shall be calculated by dividing the appropriate component by the other component, carrying the result to one place more than the number of places by which such ratio is expressed herein and rounding the result up or down to the nearest number (with a rounding-up if there is no nearest number).

1.05 Exchange Rates; Currency Equivalents .

(a) The Administrative Agent shall determine the Spot Rates as of each Revaluation Date to be used for calculating Yen Equivalent amounts of Borrowings and Outstanding Amounts denominated in Dollars. Such Spot Rates shall become effective as of such Revaluation Date and shall be the Spot Rates employed in converting any amounts between the applicable currencies until the next Revaluation Date to occur. Except for purposes of financial statements delivered by Loan Parties hereunder or calculating financial covenants hereunder or except as otherwise provided herein, the applicable amount of Dollars for purposes of the Loan Documents shall be such Yen Equivalent amount as so determined by the Administrative Agent.

(b) Wherever in this Agreement in connection with a Borrowing, conversion, continuation or prepayment of a Eurocurrency Rate Loan, an amount, such as a required minimum or multiple amount, is expressed in Yen, but such Borrowing or Eurocurrency Rate Loan is denominated in Dollars, such amount shall be the Dollar Equivalent of such Yen amount (rounded to the nearest unit of Dollars, with 0.5 of a unit being rounded upward), as determined by the Administrative Agent.

1.06 Change of Currency . Each provision of this Agreement shall be subject to such reasonable changes of construction as the Administrative Agent may from time to time specify to be appropriate to reflect a change in currency of any other country and any relevant market conventions or practices relating to the change in currency.

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1.07 Times of Day . Unless otherwise specified, all references herein to times of day shall be references to Eastern time (daylight or standard, as applicable).

Article II. The Commitments and Loans

2.01 Loans . Subject to the terms and conditions set forth herein, each Lender severally agrees to make loans (each such loan, a “ Loan ”) to each Borrower in Yen or in Dollars from time to time, on any Business Day during the Availability Period, in an aggregate amount for the Borrowers not to exceed at any time outstanding the amount of such Lender's Commitment (and, for each Lender, the amount of its Applicable Percentage of the applicable Borrowing); provided , however , that after giving effect to any Borrowing, (i) the Outstanding Amount of the Loans shall not exceed the Aggregate Commitments, and (ii) the Revolving Credit Exposure of any Lender shall not exceed such Lender's Commitment. Within the limits of each Lender's Commitment, and subject to the other terms and conditions hereof, any Borrower may borrow under this Section 2.01 , prepay under Section 2.03 , and reborrow under this Section 2.01 . Loans may be Base Rate Loans or Eurocurrency Rate Loans, as further provided herein.

2.02 Borrowings, Conversions and Continuations of Loans .

(a) Each Borrowing, each conversion of Loans from one Type to the other, and each continuation of Eurocurrency Rate Loans shall be made upon a Borrower's irrevocable notice to the Administrative Agent, which may be given by telephone. Each such notice must be received by the Administrative Agent not later than 11:00 a.m. (i) three Business Days prior to the requested date of any Borrowing of, conversion to or continuation of Eurocurrency Rate Loans or of any conversion of Eurocurrency Rate Loans denominated in Dollars to Base Rate Loans, and (ii) on the requested date of any Borrowing of Base Rate Loans. Each telephonic notice by a Borrower pursuant to this Section 2.02(a) must be confirmed promptly by delivery to the Administrative Agent of a written Loan Notice, appropriately completed and signed by a Responsible Officer of such Borrower. Each Borrowing of, conversion to or continuation of Eurocurrency Rate Loans shall be in a principal amount of ¥400,000,000 (or such amount's Dollar Equivalent) or a whole multiple of ¥40,000,000 (or such amount's Dollar Equivalent) in excess thereof. Each Borrowing of or conversion to Base Rate Loans shall be in a principal amount of $5,000,000 or a whole multiple of $500,000 in excess thereof. Each Loan Notice (whether telephonic or written) shall specify (i) whether the applicable Borrower is requesting a Borrowing, a conversion of Loans from one Type to the other, or a continuation of Eurocurrency Rate Loans, (ii) the requested date of the Borrowing, conversion or continuation, as the case may be (which shall be a Business Day), (iii) the principal amount of Loans to be borrowed, converted or continued, (iv) the Type of Loans to be borrowed or to which existing Loans are to be converted, (v) if applicable, the duration of the Interest Period with respect thereto, and (vi) the currency of the Loans to be borrowed. If a Borrower fails to specify a currency in a Loan Notice requesting a Borrowing, then the Loans so requested shall be made in Yen. If a Borrower fails to specify a Type of Loan in a Loan Notice or if a Borrower fails to give a timely notice requesting a conversion or continuation, then the applicable Loans shall, unless the applicable Loans are prepaid in accordance with Section 2.03 , be made as, or converted to or continued as, Eurocurrency Rate Loans in the applicable currency with an Interest Period of one month. If a Borrower requests a Borrowing of, conversion to, or continuation of Eurocurrency Rate Loans in any such Loan Notice, but fails to specify an Interest Period, it will be deemed to have specified an Interest Period of one month. No Loan may be converted into or continued as a Loan denominated in a different currency, but instead must, subject to Section 2.10(a) , be prepaid in the original currency of such Loan and reborrowed in the other currency.

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(b) Following receipt of a Loan Notice, the Administrative Agent shall promptly notify each Lender of the amount (and currency) of its Applicable Percentage of the applicable Loans and the other details of such Loans. In the case of a Borrowing, each Lender shall make the amount of its Loan (which shall be its Applicable Percentage of such Borrowing) available to the Administrative Agent not later than 2:00 p.m. and in Same Day Funds at the Administrative Agent's Office, on the Business Day specified in the applicable Loan Notice. Upon satisfaction of the applicable conditions set forth in Section 4.02 , the Administrative Agent shall make all funds so received available to the applicable Borrower in like funds as received by the Administrative Agent either by (i) crediting the account of the applicable Borrower on the books of Mizuho with the amount of such funds or (ii) wire transfer of such funds, in each case in accordance with instructions provided to (and reasonably acceptable to) the Administrative Agent by such Borrower.

(c) Except as otherwise provided herein, a Eurocurrency Rate Loan may be continued or converted only on the last day of an Interest Period for such Eurocurrency Rate Loan. During the existence of an Event of Default (or a Default under (x) Sections 8.01(a)(ii) , 8.01(a)(iii) , 8.01(f) , 8.01(g)(ii) , or 8.01(h)(ii) or (y) Section 8.01(c) as a result of failure to comply with the provisions of Sections 6.01 or 6.02 hereof, in each case without giving effect to any grace periods set forth in Section 8.01 with respect thereto), no Loans (i) denominated in Yen may be continued for an Interest Period longer than one month or (ii) denominated in Dollars may be converted to or continued as Eurocurrency Rate Loans, in each case, without the consent of the Required Lenders.

(d) The Administrative Agent shall promptly notify the applicable Borrower and the Lenders of the interest rate applicable to any Interest Period for Eurocurrency Rate Loans upon determination of such interest rate. At any time that Base Rate Loans are outstanding, the Administrative Agent shall notify the Borrowers and the Lenders of any change in Mizuho's prime rate used in determining the Base Rate promptly following the public announcement of such change.

(e) After giving effect to all Borrowings, all conversions of Loans from one Type to the other, and all continuations of Loans as the same Type, there shall not be more than ten Interest Periods in effect with respect to Loans.

2.03 Prepayments .

(a) Any Borrower may, upon notice to the Administrative Agent, at any time or from time to time voluntarily prepay Loans borrowed by it in whole or in part without premium or penalty; provided that (i) such notice must be received by the Administrative Agent not later than 11:00 a.m. (A) three Business Days prior to any date of prepayment of Eurocurrency Rate Loans, and (B) on the date of prepayment of Base Rate Loans; (ii) any prepayment of Eurocurrency Rate Loans shall be in a principal amount of ¥400,000,000 (or such amount's Dollar Equivalent) or a whole multiple of ¥40,000,000 (or such amount's Dollar Equivalent) in excess thereof; and (iii) any prepayment of Base Rate Loans shall be in a principal amount of $5,000,000 or a whole multiple of $500,000 in excess thereof or, in the case of clauses (ii) and (iii) above, if less, the entire principal amount thereof then outstanding. Each such notice shall specify the date and amount of such prepayment and the Type(s) of Loans to be prepaid and, if Eurocurrency Rate Loans are to be prepaid, the Interest Period(s) of such Loans. The Administrative Agent will promptly notify each Lender of its receipt of each such notice, and of the amount of such Lender's Applicable Percentage of such prepayment. If such notice is given by a Borrower, such Borrower shall make such prepayment and the payment amount specified in such notice shall be

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due and payable on the date specified therein. Any prepayment of a Eurocurrency Rate Loan shall be accompanied by all accrued interest on the amount prepaid, together with any additional amounts required pursuant to Section 3.05 . Subject to Section 2.13 , each such prepayment shall be applied to the Loans of the Lenders in accordance with their respective Applicable Percentages.

(b) If for any reason the Outstanding Amount of the Loans at any time exceed the Aggregate Commitments then in effect, one or more of the Borrowers shall immediately prepay Loans borrowed by it in an aggregate amount equal to such excess.

(c) Upon the occurrence of a Change of Control, the Administrative Agent shall, at the request of the Required Lenders, notify the Borrowers that the Aggregate Commitments and the Commitment of each Lender shall terminate as of the date specified in such notice. If such notice of termination has been requested by the Required Lenders, the Administrative Agent shall also, at that time or later, at the request of the Required Lenders, additionally notify the Borrowers that they shall prepay the Outstanding Amount of the Loans and the date on which such prepayment is required to be made (which date shall not be less than five (5) Business Days after the date of such notice), and each Borrower agrees that, upon such additional notice, such Borrower will prepay the Outstanding Amount of its Loans on the date specified.

2.04 Termination or Reduction of Commitments . The Borrowers may, upon notice to the Administrative Agent, terminate the Aggregate Commitments, or from time to time permanently reduce the Aggregate Commitments; provided that (i) any such notice shall be received by the Administrative Agent not later than 11:00 a.m. five Business Days prior to the date of termination or reduction, (ii) any such partial reduction shall be in an aggregate amount of ¥2,500,000,000 (or such amount's Dollar Equivalent) or a whole multiple of ¥100,000,000 (or such amount's Dollar Equivalent) in excess thereof, and (iii) the Borrowers shall not terminate or reduce the Aggregate Commitments if, after giving effect thereto and to any concurrent prepayments hereunder, the Outstanding Amount of the Loans would exceed the Aggregate Commitments. The Administrative Agent will promptly notify the Lenders of any such notice of termination or reduction of the Aggregate Commitments. Any reduction of the Aggregate Commitments shall be applied to the Commitment of each Lender according to its Applicable Percentage. All fees accrued until the effective date of any termination of the Aggregate Commitments shall be paid on the effective date of such termination.

2.05 Repayment of Loans . Each Borrower shall repay to each Lender on the Maturity Date the aggregate principal amount of Loans borrowed by it and outstanding on such date and the Commitment of such Lender shall terminate.

2.06 Interest .

(a) Subject to the provisions of subsection (b) below, (i) each Eurocurrency Rate Loan shall bear interest on the outstanding principal amount thereof for each Interest Period at a rate per annum equal to the Eurocurrency Rate for such Interest Period plus the Applicable Rate; and (ii) each Base Rate Loan shall bear interest on the outstanding principal amount thereof from the applicable borrowing date at a rate per annum equal to the Base Rate plus the Applicable Rate.

(b) (i) If any amount of principal of any Loan is not paid when due (without regard to any applicable grace periods), whether at stated maturity, by acceleration or otherwise, such amount shall thereafter bear interest at a fluctuating interest rate per annum at all times equal to the Default Rate to the fullest extent permitted by applicable Laws.

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(ii) If any amount (other than principal of any Loan) payable by any Borrower under any Loan Document is not paid when due (without regard to any applicable grace periods), whether at stated maturity, by acceleration or otherwise, then upon the request of the Required Lenders, such amount shall thereafter bear interest at a fluctuating interest rate per annum at all times equal to the Default Rate to the fullest extent permitted by applicable Laws.

(iii) While any Event of Default pursuant to Sections 8.01(a) or (f) exists (other than as set forth in clauses (b)(i) and (b)(ii) above), the applicable Borrower shall pay interest on the principal amount of all outstanding Obligations hereunder at a fluctuating interest rate per annum at all times equal to the Default Rate to the fullest extent permitted by applicable Laws.

(iv) Upon the request of the Required Lenders, while any Event of Default exists (other than as set forth in clauses (b)(i) , (b)(ii) , and (b)(iii) above), the applicable Borrower shall pay interest on the principal amount of all outstanding Obligations hereunder at a fluctuating interest rate per annum at all times equal to the Default Rate to the fullest extent permitted by applicable Laws.

(v) Accrued and unpaid interest on past due amounts (including interest on past due interest) shall be due and payable upon demand.

(c) Interest on each Loan shall be due and payable in arrears on each Interest Payment Date applicable thereto and at such other times as may be specified herein. Interest hereunder shall be due and payable in accordance with the terms hereof before and after judgment, and before and after the commencement of any proceeding under any Debtor Relief Law.

2.07 Fees .

(a) Facility Fee . The Borrowers shall jointly and severally pay to the Administrative Agent for the account of each Lender a facility fee (the “ Facility Fee ”) equal to the Applicable Rate times the actual daily amount of the Commitment of such Lender (or, if such Commitment has terminated, on the Outstanding Amount of all Loans owing to such Lender), regardless of usage, subject to adjustment as provided in Section 2.13 . The Facility Fee shall accrue at all times during the Availability Period (and thereafter so long as any Loans remain outstanding), including at any time during which one or more of the conditions in Article IV is not met, and shall be due and payable quarterly in arrears on the last Business Day of each March, June, September and December, commencing on June 30, 2013, and on the Maturity Date (and, if applicable, thereafter on demand). The Facility Fee shall be calculated quarterly in arrears.

(b) Other Fees .

(i) The Parent shall pay to each Arranger (as applicable) and the Administrative Agent, for their own respective accounts, fees in the amounts and at the times specified in the Fee Letters. Such fees shall be fully earned when paid and shall not be refundable for any reason whatsoever.

(ii) The Parent shall pay to the Lenders the fees required to be paid in accordance with Section 4.01(b) . Such fees shall be fully earned when paid and shall not be refundable for any reason whatsoever.

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2.08 Computation of Interest and Fees . All computations of interest for Base Rate Loans when the Base Rate is determined by the “ prime rate ” shall be made on the basis of a year of 365 or 366 days, as the case may be, and actual days elapsed. All other computations of fees and interest shall be made on the basis of a 360-day year and actual days elapsed (which results in more fees or interest, as applicable, being paid than if computed on the basis of a 365-day year). Interest shall accrue on each Loan for the day on which the Loan is made, and shall not accrue on a Loan, or any portion thereof, for the day on which the Loan or such portion is paid, provided that any Loan that is repaid on the same day on which it is made shall, subject to Section 2.10(a) , bear interest for one day. Each determination by the Administrative Agent of an interest rate or fee hereunder shall be conclusive and binding for all purposes, absent manifest error.

2.09 Evidence of Debt . The Loans made by each Lender shall be evidenced by one or more accounts or records maintained by such Lender and by the Administrative Agent in the ordinary course of business. The accounts or records maintained by the Administrative Agent and each Lender shall be conclusive absent manifest error of the amount of the Loans made by the Lenders to each Borrower and the interest and payments thereon. Any failure to so record or any error in doing so shall not, however, limit or otherwise affect the obligation of each Borrower hereunder to pay any amount owing with respect to the Obligations. In the event of any conflict between the accounts and records maintained by any Lender and the accounts and records of the Administrative Agent in respect of such matters, the accounts and records of the Administrative Agent shall control in the absence of manifest error. Upon the request of any Lender made through the Administrative Agent, each Borrower shall execute and deliver to such Lender (through the Administrative Agent) a Note, which shall evidence such Lender's Loans in addition to such accounts or records. Each Lender may attach schedules to its Note and endorse thereon the date, Type (if applicable), amount and maturity of its Loans and payments with respect thereto.

2.10 Payments Generally; Administrative Agent's Clawback .

(a) General . All payments to be made by each Borrower shall be made free and clear of and without condition or deduction for any counterclaim, defense, recoupment or setoff. Except as otherwise expressly provided herein, all payments by each Borrower hereunder shall be made to the Administrative Agent, for the account of the respective Lenders to which such payment is owed, at the Administrative Agent's Office in the applicable currency and in Same Day Funds not later than 2:00 p.m. on the date specified herein. Without limiting the generality of the foregoing, the Administrative Agent may require that any payments due under this Agreement be made in the United States. If, for any reason, any Borrower is prohibited by any Law from making any required payment hereunder (i) in Yen, such Borrower shall make such payment in Dollars in the Dollar Equivalent of such Yen payment amount or (ii) in Dollars, such Borrower shall make such payment in Yen in the Yen Equivalent of such Dollar payment amount. The Administrative Agent will promptly distribute to each Lender its Applicable Percentage (or other applicable share as provided herein) of such payment in like funds as received by wire transfer to such Lender's Lending Office. All payments received by the Administrative Agent after 2:00 p.m. shall be deemed received on the next succeeding Business Day and any applicable interest or fee shall continue to accrue. If any payment to be made by any Borrower shall come due on a day other than a Business Day, payment shall be made on the next following Business Day, and such extension of time shall be reflected in computing interest or fees, as the case may be.

(b) (i) Funding by Lenders; Presumption by Administrative Agent . Unless the Administrative Agent shall have received notice from a Lender prior to the proposed date of any Borrowing of Eurocurrency Rate Loans (or, in the case of any Borrowing of Base Rate Loans, prior to 12:00 noon on the date of such Borrowing) that such Lender

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will not make available to the Administrative Agent such Lender's share of such Borrowing, the Administrative Agent may assume that such Lender has made such share available on such date in accordance with Section 2.02 (or, in the case of a Borrowing of Base Rate Loans, that such Lender has made such share available in accordance with and at the time required by Section 2.02 ) and may, in reliance upon such assumption, make available to such Borrower a corresponding amount. In such event, if a Lender has not in fact made its share of the applicable Borrowing available to the Administrative Agent, then the applicable Lender and the applicable Borrower severally agree to pay to the Administrative Agent forthwith on demand such corresponding amount in Same Day Funds with interest thereon, for each day from and including the date such amount is made available to such Borrower to but excluding the date of payment to the Administrative Agent, at (A) in the case of a payment to be made by such Lender, the Overnight Rate, plus any administrative, processing or similar fees customarily charged by the Administrative Agent in connection with the foregoing, and (B) in the case of a payment to be made by such Borrower, the interest rate applicable to Eurocurrency Rate Loans having an Interest Period of one month. If the applicable Borrower and such Lender shall pay such interest to the Administrative Agent for the same or an overlapping period, the Administrative Agent shall promptly remit to the applicable Borrower the amount of such interest paid by such Borrower for such period. If such Lender pays its share of the applicable Borrowing to the Administrative Agent, then the amount so paid shall constitute such Lender's Loan included in such Borrowing. Any payment by the applicable Borrower shall be without prejudice to any claim such Borrower may have against a Lender that shall have failed to make such payment to the Administrative Agent.

(ii) Payments by Borrowers; Presumptions by Administrative Agent . Unless the Administrative Agent shall have received notice from the applicable Borrower prior to the date on which any payment is due to the Administrative Agent for the account of the applicable Lenders hereunder that such Borrower will not make such payment, the Administrative Agent may assume that such Borrower has made such payment on such date in accordance herewith and may, in reliance upon such assumption, distribute to the applicable Lenders the amount due. In such event, if such Borrower has not in fact made such payment, then each of the Lenders severally agrees to repay to the Administrative Agent forthwith on demand the amount so distributed to such Lender, in Same Day Funds with interest thereon, for each day from and including the date such amount is distributed to it to but excluding the date of payment to the Administrative Agent, at the Overnight Rate.

A notice of the Administrative Agent to any Lender or the applicable Borrower with respect to any amount owing under this subsection (b) shall be conclusive, absent manifest error.

(c) Failure to Satisfy Conditions Precedent . If any Lender makes available to the Administrative Agent funds for any Loan to be made by such Lender as provided in the foregoing provisions of this Article II , and such funds are not made available to any Borrower by the Administrative Agent because the conditions to the applicable Borrowing set forth in Article IV are not satisfied or waived in accordance with the terms hereof, the Administrative Agent shall return such funds (in like funds as received from such Lender) to such Lender, without interest.

(d) Obligations of Lenders Several . The obligations of the Lenders hereunder to make Loans and to make payments pursuant to Section 11.04(c) are several and not joint. The failure of any Lender to make any Loan or to make any payment under Section 11.04(c) on any

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date required hereunder shall not relieve any other Lender of its corresponding obligation to do so on such date, and no Lender shall be responsible for the failure of any other Lender to so make its Loan or to make its payment under Section 11.04(c) .

(e) Funding Source . Nothing herein shall be deemed to obligate any Lender to obtain the funds for any Loan in any particular place or manner or to constitute a representation by any Lender that it has obtained or will obtain the funds for any Loan in any particular place or manner.

2.11 Sharing of Payments by Lenders . If any Lender shall, by exercising any right of setoff or counterclaim or otherwise (excluding payments received pursuant to Section 2.13 ), obtain payment in respect of any principal of or interest on any of its Loans or other obligations hereunder resulting in such Lender receiving payment of a proportion of the aggregate amount of its Loans and accrued interest thereon or other such obligations greater than its pro rata share thereof as provided herein, then the Lender receiving such greater proportion shall (a) notify the Administrative Agent of such fact, and (b) purchase (for cash at face value) participations in the Loans and such other obligations of the other Lenders, or make such other adjustments as shall be equitable, so that the benefit of all such payments shall be shared by the Lenders ratably in accordance with the aggregate amount of principal of and accrued interest on their respective Loans and other amounts owing them; provided that:

(i) if any such participations are purchased and all or any portion of the payment giving rise thereto is recovered, such participations shall be rescinded and the purchase price restored to the extent of such recovery, without interest; and

(ii) the provisions of this paragraph shall not be construed to apply to (x) any payment made by any Borrower pursuant to and in accordance with the express terms of this Agreement (including the application of funds arising from the existence of a Defaulting Lender or pursuant to Section 3.05 ), or (y) any payment obtained by a Lender as consideration for the assignment of or sale of a participation in any of its Loans to any assignee or participant.

Each Loan Party consents to the foregoing and agrees, to the extent it may effectively do so under applicable law, that any Lender acquiring a participation pursuant to the foregoing arrangements of this Section 2.11 may exercise against each Loan Party rights of setoff and counterclaim with respect to such participation as fully as if such Lender were a direct creditor of each Loan Party in the amount of such participation.

2.12 [Intentionally Omitted] .

2.13 Defaulting Lenders .

(a) Adjustments . Notwithstanding anything to the contrary contained in this Agreement, if any Lender becomes a Defaulting Lender, then, until such time as such Lender is no longer a Defaulting Lender, to the extent permitted by applicable Law:

(i) Waivers and Amendments . Such Defaulting Lender's right to approve or disapprove any amendment, waiver or consent with respect to this Agreement shall be restricted as set forth in the definition of “ Required Lenders ” and Section 11.01 .

(ii) Defaulting Lender Waterfall . Any payment of principal, interest, fees or other amounts received by the Administrative Agent for the account of such

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Defaulting Lender (whether voluntary or mandatory, at maturity, pursuant to Article VIII or otherwise) or received by the Administrative Agent from a Defaulting Lender pursuant to Section 11.08 shall be applied at such time or times as may be determined by the Administrative Agent as follows: first , to the payment of any amounts owing by such Defaulting Lender to the Administrative Agent hereunder; second , as the Borrowers may request (so long as no Default exists), to the funding of any Loan in respect of which such Defaulting Lender has failed to fund its portion thereof as required by this Agreement, as determined by the Administrative Agent; third , if so determined by the Administrative Agent and the Borrowers, to be held in a deposit account and released pro rata in order to satisfy such Defaulting Lender's potential future funding obligations with respect to Loans under this Agreement; fourth , to the payment of any amounts owing to the Lenders as a result of any judgment of a court of competent jurisdiction obtained by any Lender against such Defaulting Lender as a result of such Defaulting Lender's breach of its obligations under this Agreement; fifth , so long as no Default exists, to the payment of any amounts owing to any Borrower as a result of any judgment of a court of competent jurisdiction obtained by such Borrower against such Defaulting Lender as a result of such Defaulting Lender's breach of its obligations under this Agreement; and sixth , to such Defaulting Lender or as otherwise directed by a court of competent jurisdiction; provided that if (x) such payment is a payment of the principal amount of any Loans in respect of which such Defaulting Lender has not fully funded its appropriate share, and (y) such Loans were made at a time when the conditions set forth in Section 4.02 were satisfied or waived, such payment shall be applied solely to pay the Loans of all Non-Defaulting Lenders on a pro rata basis prior to being applied to the payment of any Loans of such Defaulting Lender until such time as all Loans are held by the Lenders pro rata in accordance with the Commitments hereunder. Any payments, prepayments or other amounts paid or payable to a Defaulting Lender that are applied (or held) to pay amounts owed by a Defaulting Lender shall be deemed paid to and redirected by such Defaulting Lender, and each Lender irrevocably consents hereto.

(iii) Certain Fees .

(A) Each Defaulting Lender shall be entitled to receive a Facility Fee for any period during which that Lender is a Defaulting Lender only to extent allocable to the outstanding principal amount of the Loans funded by it.

(B) With respect to any Facility Fee not required to be paid to any Defaulting Lender pursuant to clause (A) above, the Borrowers shall not be required to pay the remaining amount of any such fee.

(b) Defaulting Lender Cure . If the Borrowers and the Administrative Agent agree in writing that a Lender is no longer a Defaulting Lender, the Administrative Agent will so notify the parties hereto, whereupon as of the effective date specified in such notice and subject to any conditions set forth therein, that Lender will, to the extent applicable, purchase at par that portion of outstanding Loans of the other Lenders or take such other actions as the Administrative Agent may determine to be necessary to cause the Loans to be held pro rata by the Lenders in accordance with the Commitments hereunder, whereupon such Lender will cease to be a Defaulting Lender; provided that no adjustments will be made retroactively with respect to fees accrued or payments made by or on behalf of any of the Borrowers while that Lender was a Defaulting Lender; and provided, further , that except to the extent otherwise expressly agreed by the affected parties, no change hereunder from Defaulting Lender to Lender will constitute a

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waiver or release of any claim of any party hereunder arising from that Lender's having been a Defaulting Lender.

Article III. Taxes, Yield Protection and Illegality

3.01 Taxes .

(a) Payments Free of Taxes . Any and all payments by or on account of any obligation of any Loan Party under any Loan Document shall be made without deduction or withholding for any Taxes, except as required by applicable law. If any applicable law (as determined in the good faith discretion of an applicable Withholding Agent) requires the deduction or withholding of any Tax from any such payment by a Withholding Agent, then the applicable Withholding Agent shall be entitled to make such deduction or withholding and shall timely pay the full amount deducted or withheld to the relevant Governmental Authority in accordance with applicable law and, if such Tax is an Indemnified Tax, then the sum payable by the applicable Loan Party shall be increased as necessary so that after such deduction or withholding has been made (including such deductions and withholdings applicable to additional sums payable under this Section) the applicable Recipient receives an amount equal to the sum it would have received had no such deduction or withholding been made. For purposes of this Article III , the term “applicable law” includes FATCA.

(b) Payment of Other Taxes by the Loan Parties . The applicable Loan Party shall timely pay to the relevant Governmental Authority in accordance with applicable law, or at the option of the Administrative Agent timely reimburse it for the payment of, any Other Taxes.

(c) Indemnification by the Loan Parties . The applicable Loan Party shall indemnify each Recipient, within 10 days after demand therefor, for the full amount of any Indemnified Taxes (including Indemnified Taxes imposed or asserted on or attributable to amounts payable under this Section) payable or paid by such Recipient or required to be withheld or deducted from a payment to such Recipient and any reasonable expenses arising therefrom or with respect thereto, whether or not such Indemnified Taxes were correctly or legally imposed or asserted by the relevant Governmental Authority. A certificate as to the amount of such payment or liability delivered to the applicable Loan Party by a Lender (with a copy to the Administrative Agent), or by the Administrative Agent on its own behalf or on behalf of a Lender, shall be conclusive absent manifest error.

(d) Indemnification by the Lenders . Each Lender shall severally indemnify the Administrative Agent, within 10 days after demand therefor, for (i) any Indemnified Taxes attributable to such Lender (but only to the extent that any Loan Party has not already indemnified the Administrative Agent for such Indemnified Taxes and without limiting the obligation of the Loan Parties to do so), (ii) any Taxes attributable to such Lender's failure to comply with the provisions of Section 11.06(d) relating to the maintenance of a Participant Register and (iii) any Excluded Taxes attributable to such Lender, in each case, that are payable or paid by the Administrative Agent in connection with any Loan Document, and any reasonable expenses arising therefrom or with respect thereto, whether or not such Taxes were correctly or legally imposed or asserted by the relevant Governmental Authority. A certificate as to the amount of such payment or liability delivered to any Lender by the Administrative Agent shall be conclusive absent manifest error. Each Lender hereby authorizes the Administrative Agent to set off and apply any and all amounts at any time owing to such Lender under any Loan Document or otherwise payable by the Administrative Agent to the Lender from any other source against any amount due to the Administrative Agent under this subsection (d) .

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(e) Evidence of Payments . As soon as practicable after any payment of Taxes by any Loan Party to a Governmental Authority pursuant to this Section 3.01 , such Loan Party shall deliver to the Administrative Agent the original or a certified copy of a receipt issued by such Governmental Authority evidencing such payment, a copy of the return reporting such payment or other evidence of such payment reasonably satisfactory to the Administrative Agent.

(f) Status of Lenders .

(i) Any Lender that is entitled to an exemption from or reduction of withholding Tax with respect to payments made under any Loan Document shall deliver to the applicable Loan Party and the Administrative Agent, at the time or times reasonably requested by the applicable Loan Party or the Administrative Agent, such properly completed and executed documentation reasonably requested by such Loan Party or the Administrative Agent as will permit such payments to be made without withholding or at a reduced rate of withholding. In addition, any Lender, if reasonably requested by any Loan Party or the Administrative Agent, shall deliver such other documentation prescribed by applicable law or reasonably requested by such Loan Party or the Administrative Agent as will enable such Loan Party or the Administrative Agent to determine whether or not such Lender is subject to backup withholding or information reporting requirements. Notwithstanding anything to the contrary in the preceding two sentences, the completion, execution and submission of such documentation (other than such documentation set forth in Section 3.01(f)(ii)(A) , 3.01(f)(ii)(B) and 3.01(f)(ii)(D) below) shall not be required if in the Lender's reasonable judgment such completion, execution or submission would subject such Lender to any material unreimbursed cost or expense or would materially prejudice the legal or commercial position of such Lender.

(ii) Without limiting the generality of the foregoing,

(A) any Lender that is a U.S. Person shall deliver to the Loan Parties and the Administrative Agent on or prior to the date on which such Lender becomes a Lender under this Agreement (and from time to time thereafter upon the reasonable request of any Loan Party or the Administrative Agent), executed originals of IRS Form W-9 certifying that such Lender is exempt from U.S. federal backup withholding tax;

(B) any Foreign Lender shall, to the extent it is legally entitled to do so, deliver to the Loan Parties and the Administrative Agent (in such number of copies as shall be requested by the recipient) on or prior to the date on which such Foreign Lender becomes a Lender under this Agreement (and from time to time thereafter upon the reasonable request of any Loan Party or the Administrative Agent), whichever of the following is applicable:

(1) in the case of a Foreign Lender claiming the benefits of an income tax treaty to which the United States is a party (x) with respect to payments of interest under any Loan Document, executed originals of IRS Form W-8BEN establishing an exemption from, or reduction of, U.S. federal withholding Tax pursuant to the “interest” article of such tax treaty and (y) with respect to any other applicable payments under any Loan Document, IRS Form W-8BEN establishing an exemption from, or reduction of, U.S. federal withholding Tax pursuant to the “business profits” or “other income” article of such tax treaty;

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(2) executed originals of IRS Form W-8ECI;

(3) in the case of a Foreign Lender claiming the benefits of the exemption for portfolio interest under Section 881(c) of the Code, (x) a certificate substantially in the form of Exhibit E-1 to the effect that such Foreign Lender is not a “bank” within the meaning of Section 881(c)(3)(A) of the Code, a “10 percent shareholder” of any Loan Party within the meaning of Section 881(c)(3)(B) of the Code, or a “controlled foreign corporation” described in Section 881(c)(3)(C) of the Code (a “ U.S. Tax Compliance Certificate ”) and (y) executed originals of IRS Form W-8BEN; or

(4) to the extent a Foreign Lender is not the beneficial owner, executed originals of IRS Form W-8IMY, accompanied by IRS Form W-8ECI, IRS Form W-8BEN, a U.S. Tax Compliance Certificate substantially in the form of Exhibit E-2 or Exhibit E-3 , IRS Form W-9, and/or other certification documents from each beneficial owner, as applicable; provided that if the Foreign Lender is a partnership and one or more direct or indirect partners of such Foreign Lender are claiming the portfolio interest exemption, such Foreign Lender may provide a U.S. Tax Compliance Certificate substantially in the form of Exhibit E-4 on behalf of each such direct and indirect partner;

(C) any Foreign Lender shall, to the extent it is legally entitled to do so, deliver to the Loan Parties and the Administrative Agent (in such number of copies as shall be requested by the recipient) on or prior to the date on which such Foreign Lender becomes a Lender under this Agreement (and from time to time thereafter upon the reasonable request of any Loan Party or the Administrative Agent), executed originals of any other form prescribed by applicable law as a basis for claiming exemption from or a reduction in U.S. federal withholding Tax, duly completed, together with such supplementary documentation as may be prescribed by applicable law to permit any Loan Party or the Administrative Agent to determine the withholding or deduction required to be made; and

(D) if a payment made to a Lender under any Loan Document would be subject to U.S. federal withholding Tax imposed by FATCA if such Lender were to fail to comply with the applicable reporting requirements of FATCA (including those contained in Section 1471(b) or 1472(b) of the Code, as applicable), such Lender shall deliver to the Loan Parties and the Administrative Agent at the time or times prescribed by law and at such time or times reasonably requested by any Loan Party or the Administrative Agent such documentation prescribed by applicable law (including as prescribed by Section 1471(b)(3)(C)(i) of the Code) and such additional documentation reasonably requested by any Loan Party or the Administrative Agent as may be necessary for such Loan Party and the Administrative Agent to comply with their obligations under FATCA and to determine that such Lender has complied with such Lender's obligations under FATCA or to determine the amount to deduct and withhold from such payment. Solely for purposes of this clause (D) , “ FATCA ” shall include any amendments made to FATCA after the date of this Agreement.

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(iii) Each Lender agrees that if any form or certification it previously delivered expires or becomes obsolete or inaccurate in any respect, it shall update such form or certification or promptly notify the Loan Parties and the Administrative Agent in writing of its legal inability to do so.

(g) Treatment of Certain Refunds . If any party determines, in its sole discretion exercised in good faith, that it has received a refund of any Taxes as to which it has been indemnified pursuant to this Section 3.01 (including by the payment of additional amounts pursuant to this Section 3.01 ), it shall pay to the indemnifying party an amount equal to such refund (but only to the extent of indemnity payments made under this Section with respect to the Taxes giving rise to such refund), net of (i) all out-of-pocket expenses (including Taxes) and (ii) any loss or gain realized in the conversion of such funds from or to another currency of such indemnified party and without interest (other than any interest paid by the relevant Governmental Authority with respect to such refund). Such indemnifying party, upon the request of such indemnified party, shall repay to such indemnified party the amount paid over pursuant to this subsection (g) (plus any penalties, interest or other charges imposed by the relevant Governmental Authority) in the event that such indemnified party is required to repay such refund to such Governmental Authority. Notwithstanding anything to the contrary in this subsection (g) , in no event will the indemnified party be required to pay any amount to an indemnifying party pursuant to this subsection (g) the payment of which would place the indemnified party in a less favorable net after-Tax position than the indemnified party would have been in if the indemnification payments or additional amounts giving rise to such refund had never been paid. This paragraph shall not be construed to require any indemnified party to make available its Tax returns (or any other information relating to its Taxes that it deems confidential) to the indemnifying party or any other Person.

(h) Survival . Each party's obligations under this Section 3.01 shall survive the resignation or replacement of the Administrative Agent or any assignment of rights by, or the replacement of, a Lender, the termination of the Commitments and the repayment, satisfaction or discharge of all obligations under any Loan Document.

3.02 Illegality . If any Lender determines that any Law has made it unlawful, or that any Governmental Authority has asserted that it is unlawful, for any Lender or its applicable Lending Office to make, maintain or fund Loans whose interest is determined by reference to the Eurocurrency Rate (whether denominated in Yen or Dollars), or to determine or charge interest rates based upon the Eurocurrency Rate, or any Governmental Authority has imposed material restrictions on the authority of such Lender to purchase or sell, or to take deposits of, Yen or Dollars in the applicable interbank market, then, on notice thereof by such Lender to the Borrowers through the Administrative Agent, (i) any obligation of such Lender to make or continue Eurocurrency Rate Loans in the affected currency or currencies or, in the case of Eurocurrency Rate Loans in Dollars, to convert Base Rate Loans to Eurocurrency Rate Loans shall be suspended, and (ii) if such notice asserts the illegality of such Lender making or maintaining Base Rate Loans the interest rate on which is determined by reference to the Eurocurrency Rate component of the Base Rate, the interest rate on which Base Rate Loans of such Lender shall, if necessary to avoid such illegality, be determined by the Administrative Agent without reference to the Eurocurrency Rate component of the Base Rate, in each case until such Lender notifies the Administrative Agent and the Borrowers that the circumstances giving rise to such determination no longer exist. Upon receipt of such notice, (x) the applicable Borrower shall, upon demand from such Lender (with a copy to the Administrative Agent), prepay or, if applicable and such Loans are denominated in Dollars, convert all such Eurocurrency Rate Loans of such Lender to Base Rate Loans (the interest rate on which Base Rate Loans of such Lender shall, if necessary to avoid such illegality, be determined by the Administrative Agent without reference to the Eurocurrency Rate component of the

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Base Rate), either on the last day of the Interest Period therefor, if such Lender may lawfully continue to maintain such Eurocurrency Rate Loans to such day, or immediately, if such Lender may not lawfully continue to maintain such Eurocurrency Rate Loans and (y) if such notice asserts the illegality of such Lender determining or charging interest rates based upon the Eurocurrency Rate, the Administrative Agent shall during the period of such suspension compute the Base Rate applicable to such Lender without reference to the Eurocurrency Rate component thereof until the Administrative Agent is advised in writing by such Lender that it is no longer illegal for such Lender to determine or charge interest rates based upon the Eurocurrency Rate. Upon any such prepayment or conversion, the applicable Borrower shall also pay accrued interest on the amount so prepaid or converted and any amounts payable under Section 3.05 .

3.03 Inability to Determine Rates . If in connection with any request for a Eurocurrency Rate Loan or a conversion to or continuation thereof, (a) the Administrative Agent determines that (i) deposits (whether in Yen or Dollars) are not being offered to banks in the applicable offshore interbank market for such currency for the applicable amount and Interest Period of such Eurocurrency Rate Loan or (ii) adequate and reasonable means do not exist for determining the Eurocurrency Rate for any requested Interest Period with respect to a proposed Eurocurrency Rate Loan (whether denominated in Yen or Dollars) or in connection with an existing or proposed Base Rate Loan or (b) the Required Lenders determine that for any reason the Eurocurrency Rate for any requested Interest Period with respect to a proposed Eurocurrency Rate Loan does not adequately and fairly reflect the cost to such Lenders of funding such Loan, the Administrative Agent will promptly so notify the Borrowers and each Lender. Thereafter, (x) the obligation of the Lenders to make or maintain Eurocurrency Rate Loans in the affected currency or currencies shall be suspended (to the extent of the affected Eurocurrency Rate Loans or Interest Periods), and (y) in the event of a determination described in the preceding sentence with respect to the Eurocurrency Rate component of the Base Rate, the utilization of the Eurocurrency Rate component in determining the Base Rate shall be suspended, in each case until the Administrative Agent (upon the instruction of the Required Lenders) revokes such notice. Upon receipt of such notice, any Borrower may revoke any pending request for a Borrowing of, conversion to or continuation of Eurocurrency Rate Loans in the affected currency or currencies (to the extent of the affected Eurocurrency Rate Loans or Interest Periods) or, failing that, will be deemed to have converted such request into a request for a Borrowing of Base Rate Loans in the amount specified therein.

3.04 Increased Costs .

(a) Increased Costs Generally . If any Change in Law shall:

(i) impose, modify or deem applicable any reserve, special deposit, compulsory loan, insurance charge or similar requirement against assets of, deposits with or for the account of, or credit extended or participated in by, any Lender (except any reserve requirement reflected in the Eurocurrency Rate);

(ii) subject any Recipient to any Taxes (other than (A) Indemnified Taxes, (B) Taxes described in clauses (b) through (d) of the definition of Excluded Taxes and (C) Connection Income Taxes) on its loans, loan principal, letters of credit, commitments, or other obligations, or its deposits, reserves, other liabilities or capital attributable thereto; or

(iii) impose on any Lender or the London interbank market any other condition, cost or expense (other than Taxes) affecting this Agreement or Loans made by such Lender;

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and the result of any of the foregoing shall be to increase the cost to such Lender or such other Recipient of making, converting to, continuing or maintaining any Loan or of maintaining its obligation to make any such Loan, or to reduce the amount of any sum received or receivable by such Lender or other Recipient hereunder (whether of principal, interest or any other amount) then, upon written request of such Lender or other Recipient, the applicable Borrower will pay to such Lender or other Recipient, as the case may be, such additional amount or amounts as will compensate such Lender or other Recipient, as the case may be, for such additional costs incurred or reduction suffered.

(b) Capital Requirements . If any Lender determines that any Change in Law affecting such Lender or any lending office of such Lender or such Lender's holding company, if any, regarding capital or liquidity requirements, has or would have the effect of reducing the rate of return on such Lender's capital or on the capital of such Lender's holding company, if any, as a consequence of this Agreement, the Commitments of such Lender or the Loans made by such Lender to a level below that which such Lender or such Lender's holding company could have achieved but for such Change in Law (taking into consideration such Lender's policies and the policies of such Lender's holding company with respect to capital adequacy), then from time to time the Borrowers shall jointly and severally pay to such Lender such additional amount or amounts as will compensate such Lender or such Lender's holding company for any such reduction suffered.

(c) Certificates for Reimbursement . A certificate of a Lender (a) setting forth the amount or amounts necessary to compensate such Lender or its holding company and (b) certifying that such Lender, such Lender's holding company or Recipient is generally also seeking such compensation from similarly situated borrowers under syndicated loan facilities similar to the facilities set forth herein that include provisions similar to this Section 3.04 and the definition of “ Change in Law ”, in each case, as specified in subsection (a) or (b) of this Section 3.04 and delivered to the applicable Borrower, shall be conclusive absent manifest error. The applicable Borrower shall pay such Lender the amount shown as due on any such certificate within 30 days after receipt thereof; provided , no amount specified in subsection (a) or (b) of this Section 3.04 shall be due until receipt of such certificate.

(d) Delay in Requests . Failure or delay on the part of any Lender to demand compensation pursuant to this Section shall not constitute a waiver of such Lender's right to demand such compensation; provided that none of the Borrowers shall be required to compensate a Lender pursuant to this Section for any increased costs incurred or reductions suffered more than six months prior to the date that such Lender notifies the Borrowers of the Change in Law giving rise to such increased costs or reductions, and of such Lender's intention to claim compensation therefor (except that, if the Change in Law giving rise to such increased costs or reductions is retroactive, then the six-month period referred to above shall be extended to include the period of retroactive effect thereof).

3.05 Compensation for Losses . Upon demand of any Lender (with a copy to the Administrative Agent) from time to time, the applicable Borrower shall promptly compensate such Lender for and hold such Lender harmless from any loss, cost or expense incurred by it as a result of:

(a) any continuation, conversion, payment or prepayment (including, without limitation, any prepayment pursuant to Section 2.03 ) of any Loan other than a Base Rate Loan on a day other than the last day of the Interest Period for such Loan (whether voluntary, mandatory, automatic, by reason of acceleration, or otherwise);

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(b) any failure by such Borrower (for a reason other than the failure of such Lender to make a Loan) to prepay, borrow, continue or convert any Loan other than a Base Rate Loan on the date or in the amount notified by such Borrower;

(c) any failure by any Borrower to make payment of any Loan (or interest due thereon) denominated in Dollars on its scheduled due date or any payment thereof in a different currency; or

(d) any assignment of a Eurocurrency Rate Loan on a day other than the last day of the Interest Period therefor as a result of a request by such Borrower pursuant to Section 3.06(b) ;

excluding any loss of anticipated profits but including any loss or expense arising from the liquidation or reemployment of funds obtained by it to maintain such Loan or from fees payable to terminate the deposits from which such funds were obtained. Such Borrower shall also pay any customary administrative fees charged by such Lender in connection with the foregoing.

For purposes of calculating amounts payable by any Borrower to the Lenders under this Section 3.05 , each Lender shall be deemed to have funded each Eurocurrency Rate Loan made by it at the Eurocurrency Rate for such Loan by a matching deposit or other borrowing in the offshore interbank market for such currency for a comparable amount and for a comparable period, whether or not such Eurocurrency Rate Loan was in fact so funded.

3.06 Mitigation Obligations; Replacement of Lenders .

(a) Designation of a Different Lending Office . If any Lender requests compensation under Section 3.04 , or if any Loan Party is required to pay any Indemnified Taxes or additional amounts to any Lender or any Governmental Authority for the account of any Lender pursuant to Section 3.01 , or if any Lender gives a notice pursuant to Section 3.02 , then in each case such Lender shall (at the request of such Loan Party) use reasonable efforts to designate a different Lending Office for funding or booking its Loans hereunder or to assign its rights and obligations hereunder to another of its offices, branches or affiliates, if, in the judgment of such Lender, such designation or assignment (i) would eliminate or reduce amounts payable pursuant to Section 3.01 or 3.04 , as the case may be, in the future, or eliminate the need for the notice pursuant to Section 3.02 , as applicable, and (ii) would not subject such Lender to any unreimbursed cost or expense and would not otherwise be disadvantageous to such Lender. Such Loan Party hereby agrees to pay all reasonable costs and expenses incurred by any Lender in connection with any such designation or assignment.

(b) Replacement of Lenders . If any Lender requests compensation under Section 3.04 , or if any Loan Party is required to pay any Indemnified Taxes or additional amounts to any Lender or any Governmental Authority for the account of any Lender pursuant to Section 3.01 and, in each case, such Lender has declined or is unable to designate a different lending office in accordance with Section 3.06(a) , or if any Lender is a Defaulting Lender or a Non-Consenting Lender, then in each case the Borrowers may, at their sole expense and effort, upon notice to such Lender and the Administrative Agent, require such Lender to assign and delegate, without recourse (in accordance with and subject to the restrictions contained in, and consents required by, Section 11.06 ), all of its interests, rights (other than its existing rights to payments pursuant to Section 3.01 or Section 3.04 ) and obligations under this Agreement and the related Loan Documents to an Eligible Assignee that shall assume such obligations (which assignee may be another Lender, if a Lender accepts such assignment); provided that:

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(i) the Borrowers (or the assignee) shall have paid to the Administrative Agent the assignment fee (if any) specified in Section 11.06 ;

(ii) such Lender shall have received payment of an amount equal to the outstanding principal of its Loans, accrued interest thereon, accrued fees and all other amounts payable to it hereunder and under the other Loan Documents (including any amounts under Section 3.05 ) from the assignee (to the extent of such outstanding principal and accrued interest and fees) or the applicable Borrower (in the case of all other amounts);

(iii) in the case of any such assignment resulting from a claim for compensation under Section 3.04 or payments required to be made pursuant to Section 3.01 , such assignment will result in a reduction in such compensation or payments thereafter;

(iv) such assignment does not conflict with applicable Laws; and

(v) in the case of any assignment resulting from a Lender becoming a Non-Consenting Lender, the applicable assignee shall have consented to the applicable amendment, waiver or consent.

A Lender shall not be required to make any such assignment or delegation if, prior thereto, as a result of a waiver by such Lender or otherwise, the circumstances entitling the Borrowers to require such assignment and delegation cease to apply.

3.07 Survival . All of the Loan Parties' obligations under this Article III shall survive termination of the Aggregate Commitments, repayment of all other Obligations hereunder, and resignation of the Administrative Agent.

Article IV. Conditions Precedent To Borrowings

4.01 Conditions of Initial Borrowing . The obligation of each Lender to make its initial Loan hereunder is subject to satisfaction of the following conditions precedent (it being agreed that the following conditions precedent will be satisfied concurrently with the execution and delivery of this Agreement):

(a) The Administrative Agent's receipt of the following, each of which shall be originals or facsimiles (followed promptly by originals) unless otherwise specified, each properly executed by a Responsible Officer of the signing Loan Party (if applicable), each dated the Closing Date (or, in the case of certificates of governmental officials, a recent date before the Closing Date) and each in form and substance satisfactory to the Administrative Agent and each of the Lenders:

(i) executed counterparts of this Agreement, sufficient in number for distribution to the Administrative Agent and the Borrowers;

(ii) Notes executed by the Borrowers in favor of each Lender requesting Notes;

(iii) such certificates of resolutions or other action, incumbency certificates and/or other certificates of Responsible Officers of each Loan Party as the Administrative

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Agent may require evidencing the identity, authority and capacity of each Responsible Officer thereof authorized to act as a Responsible Officer in connection with this Agreement and the other Loan Documents to which such Loan Party is a party;

(iv) such documents and certifications as the Administrative Agent may reasonably require to evidence that each Loan Party is duly organized or formed, and that each of the Loan Parties is validly existing and in good standing in its jurisdiction of organization, including a certificate from the Insurance Regulatory Authority as to the authority to do business and good standing of Aflac;

(v) favorable opinions of In-House Counsel, Skadden, Arps, Slate, Meagher & Flom LLP, and Lamson, Dugan and Murray, LLP, each as counsel to the Loan Parties, in form and substance acceptable to the Administrative Agent;

(vi) a certificate of a Responsible Officer of the Parent either (A) attaching copies of all consents, licenses and approvals required in connection with the execution, delivery and performance by each Loan Party and the validity against such Loan Party of the Loan Documents to which it is a party, and such consents, licenses and approvals shall be in full force and effect, or (B) stating that no such consents, licenses or approvals are so required;

(vii) a certificate signed by a Responsible Officer of the Parent certifying (A) that the conditions specified in Sections 4.02(a) and (b) have been satisfied, and (B) that there has been no event or circumstance since the date of the Audited Financial Statements that has had or could be reasonably expected to have, either individually or in the aggregate, a Material Adverse Effect; and

(viii) evidence that all amounts payable by the Borrowers under the Existing Credit Agreement have been (or concurrently with the making of the initial Loans will be) paid in full and the commitments of the lenders under the Existing Credit Agreement have been (or concurrently with the making of the initial Loans will be) terminated.

(b) Any fees required to be paid on or before the Closing Date shall have been paid.

(c) Unless waived by the Administrative Agent, the Borrowers shall have paid all fees, charges and disbursements of counsel to the Administrative Agent (directly to such counsel if requested by the Administrative Agent) to the extent invoiced prior to the Closing Date, plus such additional amounts of such fees, charges and disbursements as shall constitute its reasonable estimate of such fees, charges and disbursements incurred or to be incurred by it through the closing proceedings ( provided that such estimate shall not thereafter preclude a final settling of accounts between the Borrowers and the Administrative Agent).

Without limiting the generality of the provisions of the last paragraph of Section 9.03 , for purposes of determining compliance with the conditions specified in this Section 4.01 , each Lender that has signed this Agreement shall be deemed to have consented to, approved or accepted or to be satisfied with, each document or other matter required thereunder to be consented to or approved by or acceptable or satisfactory to a Lender unless the Administrative Agent shall have received notice from such Lender prior to the proposed Closing Date specifying its objection thereto.

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4.02 Conditions to all Borrowings . The obligation of each Lender to honor any Loan Notice (other than a Loan Notice requesting only a conversion of Loans to the other Type, or a continuation of Eurocurrency Rate Loans) is subject to the following conditions precedent:

(a) The representations and warranties of each Loan Party contained in Article V (excluding the representations and warranties contained in Sections 5.05(e) and 5.06 , which shall be made only on the Closing Date) or any other Loan Document, or which are contained in any document furnished at any time under or in connection herewith or therewith, shall be true and correct in all respects (or true and correct in all material respects if such representation or warranty is not qualified by materiality or Material Adverse Effect) on and as of the date of such Borrowing, except to the extent that such representations and warranties specifically refer to an earlier date, in which case they shall be true and correct in all respects (or true and correct in all material respects if such representation or warranty is not qualified by materiality or Material Adverse Effect) as of such earlier date, except that for purposes of this Section 4.02 , the representations and warranties contained in subsections (a) , (b) , (c) and (d) of Section 5.05 shall be deemed to refer to the most recent statements furnished pursuant to subsections (a) , (b) , (c) and (d) , respectively, of Section 6.01 .

(b) No Default shall exist, or would result from such proposed Borrowing or from the application of the proceeds thereof.

(d) In the case of a Loan to be denominated in Yen, there shall not have occurred any change in national or international financial, political or economic conditions or currency exchange rates or exchange controls which in the reasonable opinion of the Administrative Agent or the Required Lenders would make it impracticable for such Loan to be denominated in Yen.

Each Loan Notice (other than a Loan Notice requesting only a conversion of Loans to the other Type or a continuation of Eurocurrency Rate Loans) submitted by a Borrower shall be deemed to be a representation and warranty that the conditions specified in Sections 4.02(a) and (b) have been satisfied on and as of the date of the applicable Borrowing.

Article V. Representations and Warranties

Each Loan Party represents and warrants to the Administrative Agent and the Lenders that:

5.01 Existence, Qualification and Power . Each Loan Party (a) is duly organized or formed, validly existing and, as applicable, in good standing under the Laws of the jurisdiction of its incorporation or organization, (b) has all requisite power and authority and all requisite governmental licenses, authorizations, consents and approvals to (i) own or lease its assets and carry on its business and (ii) execute, deliver and perform its obligations under the Loan Documents to which it is a party, and (c) is duly qualified and is licensed and, as applicable, in good standing under the Laws of each jurisdiction where its ownership, lease or operation of properties or the conduct of its business requires such qualification or license, except in each case referred to in clause (b)(i) or (c) , to the extent that failure to do so could not reasonably be expected to have a Material Adverse Effect.

5.02 Authorization; No Contravention . The execution, delivery and performance by each Loan Party of each Loan Document to which such Person is party, have been duly authorized by all necessary corporate or other organizational action, and do not and will not (a) contravene the terms of any

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of such Person's Organization Documents, (b) conflict with or result in any breach or contravention of, or the creation of any Lien under, or require any payment to be made under (i) any Contractual Obligation to which such Person is a party or affecting such Person or the properties of such Person or (ii) any order, injunction, writ or decree of any Governmental Authority or any arbitral award to which such Person or its property is subject or (c) violate any Law, except in each case referred to in clause (b)(i) , to the extent such conflict, breach or contravention, creation or requirement could not reasonably be expected to have a Material Adverse Effect.

5.03 Governmental Authorization; Other Consents . No approval, consent, exemption, authorization, or other action by, or notice to, or filing with, any Governmental Authority or any other Person is necessary or required in connection with the execution, delivery or performance by, or enforcement against, any Loan Party of this Agreement or any other Loan Document, except as has been obtained or made and is in full force and effect.

5.04 Binding Effect . This Agreement has been, and each other Loan Document, when delivered hereunder, will have been, duly executed and delivered by each Loan Party that is party thereto. This Agreement constitutes, and each other Loan Document when so delivered will constitute, a legal, valid and binding obligation of such Loan Party, enforceable against each Loan Party that is party thereto in accordance with its terms, except as such enforceability may be limited by Debtor Relief Laws and general principles of equity.

5.05 Financial Statements; No Material Adverse Effect .

(a) The Audited Financial Statements (i) were prepared in accordance with GAAP consistently applied throughout the period covered thereby, except as otherwise expressly noted therein; (ii) fairly present the financial condition of the Parent and its Subsidiaries as of the date thereof and their results of operations for the period covered thereby in accordance with GAAP consistently applied throughout the period covered thereby, except as otherwise expressly noted therein; and (iii) show all material indebtedness and other liabilities, direct or contingent, of the Parent and its Subsidiaries as of the date thereof, including liabilities for taxes, material commitments and Indebtedness.

(b) The unaudited consolidated balance sheet of the Parent and its Subsidiaries dated September 30, 2012, and the related consolidated statements of income or operations, shareholders' equity and cash flows for the fiscal quarter ended on that date (i) were prepared in accordance with GAAP consistently applied throughout the period covered thereby, except as otherwise expressly noted therein, and (ii) fairly present the financial condition of the Parent and its Subsidiaries as of the date thereof and their results of operations for the period covered thereby, subject, in the case of clauses (i) and (ii) , to the absence of footnotes and to normal year-end audit adjustments.

(c) The annual Statutory Statement of Aflac for the fiscal year ended December 31, 2012 (subject to any adjustments as set forth in the audited annual Statutory Statement of Aflac to be filed on or before June 1, 2013), as filed with the Insurance Regulatory Authority, (i) was prepared in accordance with SAP consistently applied throughout the period covered thereby, except as otherwise expressly noted therein, and (ii) fairly presents the financial condition of Aflac as of the date thereof and its results of operations for the period covered thereby in accordance with SAP consistently applied throughout the period covered thereby, except as otherwise expressly noted therein.

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(d) The quarterly Statutory Statement of Aflac for the fiscal quarter ended September 30, 2012, as filed with the Insurance Regulatory Authority, (i) was prepared in accordance with SAP consistently applied throughout the period covered thereby, except as otherwise expressly noted therein, and (ii) fairly presents the financial condition of Aflac as of the date thereof and its results of operations for the period covered thereby in accordance with SAP consistently applied throughout the period covered thereby, except as otherwise expressly noted therein.

(e) Since December 31, 2012, there has been no event or circumstance, either individually or in the aggregate, that has had or could reasonably be expected to have a Material Adverse Effect.

5.06 Litigation . There are no actions, suits, proceedings, claims or disputes pending or, to the knowledge of any Loan Party, threatened or contemplated, at law, in equity, in arbitration or before any Governmental Authority, by or against any Loan Party or against any of their properties or revenues that (a) purport to adversely and materially affect this Agreement or any other Loan Document, or any of the transactions contemplated hereby, or (b) either individually or in the aggregate could reasonably be expected to have a Material Adverse Effect.

5.07 No Default . No Loan Party is in default under or with respect to any Contractual Obligation that could, either individually or in the aggregate, reasonably be expected to have a Material Adverse Effect.

5.08 Ownership of Property; Liens . Each Loan Party has good record and marketable title in fee simple to, or valid leasehold interests in, all real property necessary or used in the ordinary conduct of its business, except for such defects in title or interest as could not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect.

5.09 Environmental Compliance . Each Loan Party conducts their operations in material compliance with applicable Environmental Laws and as a result thereof the Loan Parties have reasonably concluded that continued compliance with such Environmental Laws could not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect.

5.10 Insurance . The properties of each Loan Party are insured in such amounts, with such deductibles and covering such risks as are customarily carried by companies engaged in similar businesses and owning similar properties in localities where such Loan Party operates; provided that self-insurance by such Loan Party shall not be deemed a violation of this representation and warranty to the extent that such self-insurance is consistent with reasonable and prudent business practice.

5.11 Taxes . Each Loan Party has filed all material Federal, state and other tax returns and reports required to be filed by such Loan Party, and has paid all material Federal, state and other taxes, assessments, fees and other governmental charges levied or imposed upon it or its properties, income or assets otherwise due and payable, except those which are being contested in good faith by appropriate proceedings diligently conducted and for which adequate reserves have been provided in accordance with GAAP. There is no proposed tax assessment against any Loan Party that could, if made, reasonably be expected to have a Material Adverse Effect.

5.12 ERISA Compliance .

(a) Each Plan (or to the best knowledge of the Loan Parties, with respect to each Multiemployer Plan and Multiple Employer Plan) is in compliance in all material respects with the applicable provisions of ERISA, the Code and other Federal or state laws. Each Pension Plan

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that is intended to be a qualified plan under Section 401(a) of the Code has received a favorable determination letter from the Internal Revenue Service to the effect that the form of such Plan is qualified under Section 401(a) of the Code and the trust related thereto has been determined by the Internal Revenue Service to be exempt from federal income tax under Section 501(a) of the Code, or an application for such a letter is currently being processed by the Internal Revenue Service. To the best knowledge of the Loan Parties, nothing has occurred that would prevent or cause the loss of such tax-qualified status.

(b) There are no pending or, to the best knowledge of the Loan Parties, threatened claims, actions or lawsuits, or action by any Governmental Authority, with respect to any Plan (or to the best knowledge of the Loan Parties, with respect to each Multiemployer Plan and Multiple Employer Plan) that could reasonably be expected to have a Material Adverse Effect. There has been no prohibited transaction or violation of the fiduciary responsibility rules with respect to any Plan (or to the best knowledge of the Loan Parties, with respect to each Multiemployer Plan and Multiple Employer Plan) that has resulted or could reasonably be expected to result in a Material Adverse Effect.

(c) (i) No ERISA Event has occurred, and no Loan Party nor any ERISA Affiliate is aware of any fact, event or circumstance that could reasonably be expected to constitute or result in an ERISA Event with respect to any Pension Plan, except as has not and could not reasonably be expected to result in a Material Adverse Effect; (ii) each Loan Party and each ERISA Affiliate has met all applicable requirements under the Pension Funding Rules in respect of each Pension Plan, and no waiver of the minimum funding standards under the Pension Funding Rules has been applied for or obtained, except as has not and could not reasonably be expected to result in a Material Adverse Effect; (iii) as of the most recent valuation date for any Pension Plan, the funding target attainment percentage (as defined in Section 430(d)(2) of the Code) is 60% or higher and no Loan Party nor any ERISA Affiliate knows of any facts or circumstances that could reasonably be expected to cause the funding target attainment percentage for any such plan to drop below 60% as of the most recent valuation date; (iv) no Loan Party nor any ERISA Affiliate has incurred any liability to the PBGC other than for the payment of premiums, and there are no premium payments which have become due that are unpaid, except as has not and could not reasonably be expected to result in a Material Adverse Effect; (v) no Loan Party nor any ERISA Affiliate has engaged in a transaction that could be subject to Section 4069 or Section 4212(c) of ERISA, except as has not and could not reasonably be expected to result in a Material Adverse Effect; and (vi) no Pension Plan has been terminated by the plan administrator thereof nor by the PBGC, and, to the best knowledge of the Loan Parties, no event or circumstance has occurred or exists that could reasonably be expected to cause the PBGC to institute proceedings under Title IV of ERISA to terminate any Pension Plan.

5.13 Margin Regulations; Investment Company Act .

(a) No Borrower is engaged or will engage, principally or as one of its important activities, in the business of purchasing or carrying margin stock (within the meaning of Regulation U issued by the FRB), or extending credit for the purpose of purchasing or carrying margin stock.

(b) No Borrower or any Person Controlling a Borrower is or is required to be registered as an “investment company” under the Investment Company Act of 1940.

5.14 Disclosure . Each Loan Party has disclosed to the Administrative Agent and the Lenders all agreements, instruments and corporate or other restrictions to which it is subject, and all other matters

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known to it, that, individually or in the aggregate, could reasonably be expected to result in a Material Adverse Effect. No report, financial statement, certificate or other information furnished (whether in writing or orally) by or on behalf of any Loan Party to the Administrative Agent or any Lender in connection with the transactions contemplated hereby and the negotiation of this Agreement or delivered hereunder or under any other Loan Document (in each case, as modified or supplemented by other information so furnished) contains any material misstatement of fact or omits to state any material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading; provided that, with respect to projected financial information, each Loan Party represents only that such information was prepared in good faith based upon assumptions believed to be reasonable at the time.

5.15 Compliance with Laws . Each Loan Party is in compliance in all material respects with the requirements of all Laws and all orders, writs, injunctions and decrees applicable to it or to its properties and all insurance licenses under which it operates, except in such instances in which (a) such requirement of Law or order, writ, injunction or decree or license is being contested in good faith by appropriate proceedings diligently conducted or (b) the failure to comply therewith, either individually or in the aggregate, could not reasonably be expected to have a Material Adverse Effect.

5.16 Taxpayer Identification Number . Each Borrower's true and correct U.S. taxpayer identification number is set forth on Schedule 11.02 , which schedule may be updated from time to time by each Borrower if any action which results in such Borrower's change in its U.S. taxpayer identification number is otherwise permitted hereunder or consented to by the Lenders as set forth in Section 11.01 .

5.17 OFAC . No Loan Party (i) is Sanctioned or (ii) is an Embargoed Person. Each Loan Party maintains, and, to the knowledge of such Loan Party, is in material compliance with, a policy and program designed to avoid doing business with any Person who is Sanctioned or who is an Embargoed Person.

5.18 No Other Significant Subsidiary . Neither Loan Party has a Subsidiary (other than Aflac) whose consolidated assets constitute more than 10% of the consolidated assets of the Parent, and the consolidated assets of the Subsidiaries of the Parent (excluding the assets of Aflac on an unconsolidated basis) do not constitute more than 30% of the consolidated assets of the Parent.

Article VI. Affirmative Covenants

So long as any Lender shall have any Commitment hereunder or any Loan or other Obligation (other than contingent indemnification obligations not then due and payable that survive the payment in full of the Obligations and the termination of this Agreement) hereunder shall remain unpaid or unsatisfied, each Loan Party shall:

6.01 Financial Statements . Deliver to the Administrative Agent and each Lender, in form and detail satisfactory to the Administrative Agent and the Required Lenders:

(a) as soon as available, but in any event within 90 days after the end of each fiscal year of the Parent, a consolidated balance sheet of the Parent and its Subsidiaries as at the end of such fiscal year, and the related consolidated statements of income or operations, changes in shareholders' equity, and cash flows for such fiscal year, setting forth in each case in comparative form the figures for the previous fiscal year, prepared in accordance with GAAP, all audited and reported and opined on in a manner consistent with the requirements of the Securities and Exchange Commission by an independent certified public accountant of nationally recognized standing reasonably acceptable to the Administrative Agent, which report and opinion shall not

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be subject to (i) any “going concern” or like qualification or exception or (ii) any qualification or exception as to the scope of such audit, in the case of this clause (ii) , that is not permitted by the requirements of the Securities and Exchange Commission;

(b) as soon as available, but in any event within 60 days after the end of each of the first three fiscal quarters of each fiscal year of the Parent, a consolidated balance sheet of the Parent and its Subsidiaries as at the end of such fiscal quarter, the related consolidated statements of income or operations for such fiscal quarter and for the portion of the Parent's fiscal year then ended, and the related consolidated statements of changes in shareholders' equity, and cash flows for the portion of the Parent's fiscal year then ended, in each case setting forth in comparative form, as applicable, the figures for the corresponding fiscal quarter of the previous fiscal year and the corresponding portion of the previous fiscal year, all in reasonable detail, such consolidated statements to be certified by the chief executive officer, chief financial officer, treasurer or controller of the Parent as fairly presenting the financial condition, results of operations, shareholders' equity and cash flows of the Parent and its Subsidiaries in accordance with GAAP, subject only to normal year-end audit adjustments and the absence of footnotes;

(c) promptly after filing with the Insurance Regulatory Authority and in any event within 120 days after the end of each fiscal year of Aflac, the annual Statutory Statement of Aflac (including, without limitation, management's discussion and analysis) for such year prepared in accordance with SAP, certified by a Responsible Officer of Aflac as fairly presenting in all material respects the financial condition and results of operations of Aflac in accordance with SAP;

(d) promptly after filing with the Insurance Regulatory Authority and in any event within 60 days after the end of each of the first three quarterly fiscal periods of each fiscal year of Aflac, the quarterly Statutory Statement of Aflac for such quarterly fiscal period prepared in accordance with SAP, certified by a Responsible Officer of Aflac as fairly presenting in all material respects the financial condition and results of operations of Aflac in accordance with SAP; and

(e) promptly after the filing thereof, any annual or quarterly financial statements required to be filed by Aflac or any of its Subsidiaries with the Japanese Financial Supervisory Agency (or its successor or other Governmental Authority performing its functions), except to the extent that such delivery is prohibited by applicable law.

As to any information contained in materials furnished pursuant to Section 6.02(c) , the Parent shall not be separately required to furnish such information under subsection (a) or (b) above, but the foregoing shall not be in derogation of the obligation of the Parent to furnish the information and materials described in subsection (a) or (b) above at the times specified therein.

6.02 Certificates; Other Information . Deliver to the Administrative Agent and each Lender, in form and detail satisfactory to the Administrative Agent and the Required Lenders:

(a) concurrently with the delivery of the financial statements referred to in Sections 6.01(a) and 6.01(b) , a duly completed Compliance Certificate signed by the chief executive officer, chief financial officer, treasurer or controller of the Parent (which delivery may be by electronic communication including fax or email and shall be deemed to be an original authentic counterpart thereof for all purposes);

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(b) promptly after the same are available, copies of each annual report, proxy or financial statement or other report or communication sent to the stockholders of the Parent, and copies of all annual, regular, periodic and special reports and registration statements which the Parent may file or be required to file with the SEC under Section 13 or 15(d) of the Securities Exchange Act of 1934, and not otherwise required to be delivered to the Administrative Agent pursuant hereto;

(c) promptly after Aflac receives the results of each examination by NAIC of the financial condition and operations of Aflac, a copy thereof; and

(d) promptly, such additional information regarding the business, financial or corporate affairs of any Loan Party, or compliance with the terms of the Loan Documents, as the Administrative Agent or any Lender may from time to time reasonably request.

Documents required to be delivered pursuant to Section 6.01(a) , 6.01(b) , or 6.02(a) or Section 6.02(b) (to the extent any such documents are included in materials otherwise filed with the SEC) may be delivered electronically and if so delivered, shall be deemed to have been delivered on the date (i) on which the Loan Parties post such documents, or provide a link thereto on Aflac's website on the Internet at the website address listed on Schedule 11.02 ; or (ii) on which such documents are posted on Aflac's behalf on an Internet or intranet website, if any, to which each Lender and the Administrative Agent have access (whether a commercial, third-party website or whether sponsored by the Administrative Agent); provided that the Loan Parties shall notify the Administrative Agent (by facsimile or electronic mail) of the posting of any such documents. The Administrative Agent shall have no obligation to maintain paper copies of the documents referred to above, and each Lender shall be solely responsible for maintaining its copies of such documents.

The Loan Parties hereby acknowledge that (a) the Administrative Agent and/or the Arrangers may, but shall not be obligated to, make available to the Lenders materials and/or information provided by or on behalf of the Loan Parties hereunder (collectively, “ Borrower Materials ”) by posting the Borrower Materials on Debt Domain, IntraLinks, Syndtrak or another similar electronic system (the “ Platform ”) and (b) certain of the Lenders (each, a “ Public Lender ”) may have personnel who do not wish to receive material non-public information with respect to the Loan Parties or any of their respective Affiliates, or the respective securities of any of the foregoing, and who may be engaged in investment and other market-related activities with respect to such Persons' securities. The Loan Parties hereby agree that (w) all Borrower Materials that are to be made available to Public Lenders shall be clearly and conspicuously marked “PUBLIC” which, at a minimum, shall mean that the word “PUBLIC” shall appear prominently on the first page thereof; (x) by marking Borrower Materials “PUBLIC”, the Loan Parties shall be deemed to have authorized the Administrative Agent, the Arrangers and the Lenders to treat such Borrower Materials as not containing any material non-public information with respect to the Loan Parties or their respective securities for purposes of United States Federal and state securities laws ( provided, however , that to the extent such Borrower Materials constitute Information, they shall be treated as set forth in Section 11.07 ); (y) all Borrower Materials marked “PUBLIC” are permitted to be made available through a portion of the Platform designated “Public Side Information”; and (z) the Administrative Agent and the Arrangers shall be entitled to treat any Borrower Materials that are not marked “PUBLIC” as being suitable only for posting on a portion of the Platform not designated “Public Side Information”.

6.03 Notices . Promptly notify the Administrative Agent and each Lender:

(a) of the occurrence and knowledge of any Default;

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(b) of any matter that has resulted or could reasonably be expected to result in a Material Adverse Effect, including (i) breach or non-performance of, or any default under, a Contractual Obligation of any Loan Party; (ii) any dispute, litigation, investigation, proceeding or suspension between any Loan Party and any Governmental Authority; or (iii) the commencement of, or any material development in, any litigation or proceeding affecting any Loan Party, including pursuant to any applicable Environmental Laws;

(c) of the occurrence of any ERISA Event that has resulted or could reasonably be expected to result in liability of any Loan Party under Title IV of ERISA to the Pension Plan, Multiemployer Plan or the PBGC in an aggregate amount in excess of the Threshold Amount; and

(d) of any material change in accounting policies or financial reporting practices by any Loan Party.

Each notice pursuant to this Section 6.03 shall be accompanied by a statement of a Responsible Officer of the applicable Loan Party setting forth details of the occurrence referred to therein and stating what action the applicable Loan Party has taken and proposes to take with respect thereto. Each notice pursuant to Section 6.03(a) shall describe with particularity any and all provisions of this Agreement and any other Loan Document that have been breached.

6.04 Payment of Obligations . Pay and discharge as the same shall become due and payable, all its obligations and liabilities, including (a) all material tax liabilities, assessments and governmental charges or levies upon it or its properties or assets, unless the same are being contested in good faith by appropriate proceedings diligently conducted and adequate reserves in accordance with GAAP are being maintained by such Loan Party, (b) all lawful claims which, if unpaid, at such time would by law become a Lien upon its property and (c) all Indebtedness, as and when due and payable, but subject to any subordination provisions contained in any instrument or agreement evidencing such Indebtedness.

6.05 Preservation of Existence, Etc . (a) Preserve, renew and maintain in full force and effect its legal existence and good standing under the Laws of the jurisdiction of its organization except in a transaction permitted by Section 7.02 ; (b) take all reasonable action to maintain all rights, privileges, permits, licenses and franchises necessary or desirable in the normal conduct of its business, except to the extent that failure to do so could not reasonably be expected to have a Material Adverse Effect; and (c) preserve or renew all of its registered patents, trademarks, trade names and service marks, the non-preservation of which could reasonably be expected to have a Material Adverse Effect.

6.06 Maintenance of Properties . (a) Maintain, preserve and protect all of its material properties and equipment necessary in the operation of its business in good working order and condition, ordinary wear and tear excepted; and (b) make all necessary repairs thereto and renewals and replacements thereof except where the failure to do so could not reasonably be expected to have a Material Adverse Effect.

6.07 Maintenance of Insurance . Maintain with financially sound and reputable insurance companies not Affiliates of any Loan Party, insurance with respect to its properties and business against loss or damage of the kinds customarily insured against by Persons engaged in the same or similar business, of such types and in such amounts as are customarily carried under similar circumstances by such other Persons; provided that self-insurance by such Loan Party shall not be deemed a violation of this covenant to the extent that such self-insurance is consistent with reasonable and prudent business practice.

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6.08 Compliance with Laws . Comply in all material respects with the requirements of all Laws and all orders, writs, injunctions and decrees applicable to it or to its business or property and all insurance licenses under which it operates, except in such instances in which (a) such requirement of Law or order, writ, injunction or decree or license is being contested in good faith by appropriate proceedings diligently conducted; or (b) the failure to comply therewith could not reasonably be expected to have a Material Adverse Effect.

6.09 Books and Records . Maintain proper books of record and account, in which full, true and correct entries in conformity with GAAP or SAP, as applicable, consistently applied shall be made of all financial transactions and matters involving the assets and business of such Loan Party, as the case may be.

6.10 Inspection Rights . Permit representatives and independent contractors of the Administrative Agent and each Lender (coordinated through the Administrative Agent and at the expense of the Administrative Agent or such Lender, as the case may be) to visit and inspect any of its properties, to examine its corporate, financial and operating records, and make copies thereof or abstracts therefrom, and to discuss its affairs, finances and accounts with its directors, officers, and independent public accountants (accompanied by a representative of the Loan Parties, if the Loan Parties so desire), all at reasonable times during normal business hours, upon reasonable advance notice to the Loan Parties; provided , however , that such visits and inspections shall not occur more than one time per year unless an Event of Default has occurred and is continuing; and provided further , however , that when an Event of Default exists the Administrative Agent or any Lender (or any of their respective representatives or independent contractors) may do any of the foregoing at the expense of the Loan Parties at any time during normal business hours and without advance notice.

6.11 Use of Proceeds . Use the proceeds of the Borrowings for general corporate purposes, including, without limitation, for capital contingency plans, not in contravention of any Law or of any Loan Document.

Article VII. Negative Covenants

7.01 Liens . Create, incur, assume or suffer to exist any Lien upon any of its property, assets or revenues, whether now owned or hereafter acquired, other than the following:

(a) Liens existing on the date hereof and listed on Schedule 7.01 and any renewals or extensions thereof, provided that (i) no additional property is covered thereby and (ii) the principal amount secured or benefited thereby is not increased, in each case after giving effect to such renewal or extension;

(b) Liens for taxes not yet due or which are being contested in good faith and by appropriate proceedings diligently conducted, if adequate reserves with respect thereto are maintained on the books of the applicable Person in accordance with GAAP;

(c) carriers', warehousemen's, mechanics', materialmen's, repairmen's or other like Liens which are not overdue for a period of more than 60 days or which are being contested in

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good faith and by appropriate proceedings diligently conducted, if adequate reserves with respect thereto are maintained on the books of the applicable Person;

(d) pledges or deposits in the ordinary course of business in connection with workers' compensation, unemployment insurance and other social security legislation, other than any Lien imposed by ERISA;

(e) deposits to secure the performance of bids, trade contracts and leases (other than Indebtedness), statutory obligations, surety and appeal bonds, performance bonds and other obligations of a like nature;

(f) easements, rights-of-way, restrictions and other similar encumbrances affecting real property which do not in any case materially detract from the value of the property subject thereto or materially interfere with the ordinary conduct of the business of the applicable Person;

(g) Liens securing judgments for the payment of money not constituting an Event of Default under Section 8.01(h) ;

(h) Liens arising under or in connection with escrows, trusts, custodianships, separate accounts, funds withheld or modified coinsurance procedures, and similar deposits, arrangements, or agreements established with respect to insurance policies, annuities, funding agreements, guaranteed investment contracts and similar products underwritten by, or reinsurance agreements entered into by, the applicable Person in the ordinary course of business, including Liens securing letters of credit issued in connection therewith;

(i) deposits with, Liens securing obligations (other than Indebtedness) owing to, or letters of credit issued in favor of or required by, insurance regulatory authorities;

(j) Liens on property of any corporation or other entity that becomes a Subsidiary of a Loan Party after the Closing Date, provided that such Liens are in existence at the time such corporation or entity becomes a Subsidiary of such Loan Party and were not created in anticipation thereof;

(k) Liens upon real and/or tangible personal property acquired or improved after the Closing Date (by purchase, capitalized lease, construction or otherwise) by the applicable Person, each of which Liens either (A) existed on such property before the time of its acquisition and was not created in anticipation thereof or (B) was created solely for the purpose of securing Indebtedness representing, or incurred to finance, refinance or refund, the cost (including the cost of construction) of such property or improvements thereon or thereto; provided that no such Lien shall extend to or cover any property of the applicable Person other than the property so acquired and improvements thereon;

(l) Liens arising in connection with repurchase agreements, reverse purchase agreements and other similar agreements for the purchase, sale or loan of securities, in each case in the ordinary course of business; provided that no such Lien shall extend to or cover any property or assets other than the securities subject thereto;

(m) Liens in favor of any Loan Party;

(n) Liens securing obligations under Swap Contracts and entered into not for speculative purposes;

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(o) Liens arising in the ordinary course of business on operating accounts (including deposit accounts and any related securities accounts), including bankers' Liens and rights of setoff arising in connection therewith (but excluding consensual Liens securing Indebtedness); and

(p) additional Liens upon real and/or personal property created after the Closing Date, provided that the aggregate Indebtedness secured thereby and incurred after the Closing Date shall not exceed the greater of an amount equal to (i) $500,000,000 and (ii) five percent (5%) of Net Worth;

provided that, in no event shall any of the contractual or consensual Liens permitted by the foregoing clauses cover any of the Equity Interests of Aflac.

7.02 Fundamental Changes . Merge, dissolve, liquidate, consolidate with or into another Person, or Dispose of (whether in one transaction or in a series of transactions) all or substantially all of its assets (whether now owned or hereafter acquired) to or in favor of any Person, except that, so long as no Default exists or would result therefrom:

(a) any Subsidiary (other than Aflac) may merge with (i) any Loan Party, provided that such Loan Party shall be the continuing or surviving Person, or (ii) any one or more other Subsidiaries, provided that when any wholly-owned Subsidiary is merging with another Subsidiary, the wholly-owned Subsidiary shall be the continuing or surviving Person; and

(b) any Subsidiary (other than Aflac) may Dispose of all or substantially all of its assets (upon voluntary liquidation or otherwise) to any Loan Party or to another Subsidiary; provided that if the transferor in such a transaction is a wholly-owned Subsidiary, then the transferee must either be a Loan Party or a wholly-owned Subsidiary.

7.03 Restricted Payments . Declare, directly or indirectly, any Restricted Payment if an Event of Default has occurred and is continuing at the time of such declaration or would result therefrom.

7.04 Change in Nature of Business . Engage in any material line of business substantially different from those lines of business conducted by any Loan Party and its Subsidiaries on the date hereof or any business substantially related or incidental thereto.

7.05 Transactions with Affiliates . Enter into any transaction of any kind with any Affiliate (other than a Subsidiary) of any Loan Party, whether or not in the ordinary course of business, other than on fair and reasonable terms to such Loan Party.

7.06 Restrictive Agreements . Enter into any Contractual Obligation that limits the ability of any Subsidiary (a) to make Restricted Payments to any Loan Party or to otherwise transfer property to any Loan Party or (b) to Guarantee the Indebtedness of any Loan Party, except (i) Contractual Obligations entered into to comply with applicable insurance Laws, (ii) Contractual Obligations existing on the date of this Agreement and described on Schedule 7.06 and (iii) Contractual Obligations limiting the transfer of property that are entered into in connection with the incurrence of Indebtedness secured by such property, so long as no other property of such Loan Party is subject to such limitation.

7.07 Use of Proceeds . Use the proceeds of any Borrowing, whether directly or indirectly, and whether immediately, incidentally or ultimately, to purchase or carry margin stock (within the meaning of Regulation U of the FRB) or to extend credit to others for the purpose of purchasing or carrying margin stock or to refund indebtedness originally incurred for such purpose.

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7.08 Financial Covenants .

(a) Minimum Consolidated Net Worth . Permit Net Worth at any time to be less than the sum of (i) $9,000,000,000, (ii) an amount equal to 25% of the Net Income reported for each fiscal quarter in which Net Income is a positive amount commencing with the fiscal quarter ending after December 31, 2012 (with no adjustment for losses), and (iii) an amount equal to 25% of any increase in Net Worth after the Closing Date by reason of the issuance and sale of common stock or other ownership interests of the Parent or any Subsidiary (other than issuances to the Parent or a wholly-owned Subsidiary), including upon any conversion of debt securities of the Parent into such common stock or other ownership interests.

(b) Total Funded Debt to Total Capital . Permit Total Funded Debt to exceed 35% of Total Capital at any time.

Article VIII. Events of Default and Remedies

8.01 Events of Default . Any of the following shall constitute an Event of Default:

(a) Non-Payment . Any Loan Party fails to pay (i) when and as required to be paid herein, and in the currency required hereunder, any amount of principal of any Loan, or (ii) within five days after the same becomes due, any interest on any Loan, or any fee due hereunder, or (iii) within ten days after the same becomes due, any other amount payable hereunder or under any other Loan Document; or

(b) Specific Covenants . Any Loan Party fails to perform or observe any term, covenant or agreement contained in any of Section 6.03 (other than Section 6.03(d) ), 6.05 or 6.11 or Article VII ; or

(c) Other Defaults . Any Loan Party fails to perform or observe any other covenant or agreement (not specified in subsection (a) or (b) above) contained in any Loan Document on its part to be performed or observed and such failure continues for 30 days; or

(d) Representations and Warranties . Any representation, warranty, certification or statement of fact made or deemed made by or on behalf of any Loan Party herein, in any other Loan Document, or in any document delivered in connection with any Loan Document shall be incorrect or misleading in any respect (or incorrect or misleading in any material respect if such representation or warranty is not qualified by materiality or Material Adverse Effect) when made or deemed made; or

(e) Cross-Default . (i) Any Loan Party (A) fails to make any payment when due (whether by scheduled maturity, required prepayment, acceleration, demand, or otherwise, and giving effect to any applicable grace period) in respect of any Indebtedness or Guarantee (other than Indebtedness hereunder and Indebtedness under Swap Contracts) having an aggregate outstanding principal amount (including amounts owing to all creditors under any combined or syndicated credit arrangement) of more than the Threshold Amount, or (B) fails to observe or perform any other agreement or condition relating to any such Indebtedness or Guarantee or contained in any instrument or agreement evidencing, securing or relating thereto, or any other event occurs, the effect of which default or other event is to cause, or to permit the holder or

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holders of such Indebtedness or the beneficiary or beneficiaries of such Guarantee (or a trustee or agent on behalf of such holder or holders or beneficiary or beneficiaries) to cause, with the giving of notice if required, such Indebtedness to be demanded or to become due or to be repurchased, prepaid, defeased or redeemed (automatically or otherwise), or an offer to repurchase, prepay, defease or redeem such Indebtedness to be made, prior to its stated maturity, or such Guarantee to become payable or cash collateral in respect thereof to be demanded; or (ii) there occurs under any Swap Contract an Early Termination Date (as defined in such Swap Contract) resulting from (A) any event of default under such Swap Contract as to which any Loan Party is the Defaulting Party (as defined in such Swap Contract) or (B) any Termination Event (as so defined) under such Swap Contract as to which any Loan Party is an Affected Party (as so defined) and, in either event, the Swap Termination Value owed by such Loan Party as a result thereof is greater than the Threshold Amount; or

(f) Insolvency Proceedings, Etc . Any Loan Party institutes or consents to the institution of any proceeding under any Debtor Relief Law, or makes an assignment for the benefit of creditors; or applies for or consents to the appointment of any receiver, trustee, custodian, conservator, liquidator, rehabilitator or similar officer for it or for all or any material part of its property; or any receiver, trustee, custodian, conservator, liquidator, rehabilitator or similar officer is appointed without the application or consent of such Person and the appointment continues undischarged or unstayed for 60 calendar days; or any proceeding under any Debtor Relief Law relating to any such Person or to all or any material part of its property is instituted without the consent of such Person and continues undismissed or unstayed for 60 calendar days, or an order for relief is entered in any such proceeding; or

(g) Inability to Pay Debts; Attachment . (i) Any Loan Party becomes unable or admits in writing its inability or fails generally to pay its debts as they become due, or (ii) any writ or warrant of attachment or execution or similar process is issued or levied against all or any material part of the property of any such Person and is not released, vacated or fully bonded within 45 days after its issue or levy; or

(h) Judgments . There is entered against any Loan Party (i) one or more final judgments or orders for the payment of money in an aggregate amount (as to all such judgments or orders) exceeding the Threshold Amount (to the extent not covered by independent third-party insurance as to which the insurer does not dispute coverage), or (ii) any one or more non-monetary final judgments that have, or could reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect and, in either case, (A) enforcement proceedings are commenced by any creditor upon such judgment or order, or (B) there is a period of 45 consecutive days during which a stay of enforcement of such judgment, by reason of a pending appeal or otherwise, is not in effect; or

(i) ERISA . (i) An ERISA Event occurs with respect to a Pension Plan or Multiemployer Plan which has resulted or could reasonably be expected to result in liability of any Loan Party under Title IV of ERISA to the Pension Plan, Multiemployer Plan or the PBGC in an aggregate amount in excess of the Threshold Amount, or (ii) any Loan Party or any ERISA Affiliate fails to pay when due, after the expiration of any applicable grace period, any installment payment with respect to its withdrawal liability under Section 4201 of ERISA under a Multiemployer Plan in an aggregate amount in excess of the Threshold Amount; or

(j) Invalidity of Loan Documents . Any Loan Party contests the validity or enforceability, taken as a whole, of any Loan Document; or any Loan Party denies that it has any

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or further liability or obligation under any Loan Document, or purports to revoke, terminate or rescind any Loan Document.

8.02 Remedies Upon Event of Default . If any Event of Default occurs and is continuing, the Administrative Agent shall, at the request of, or may, with the consent of, the Required Lenders, take any or all of the following actions:

(a) declare the Commitment of each Lender to make Loans to be terminated, whereupon the Aggregate Commitments shall be terminated;

(b) declare the unpaid principal amount of all outstanding Loans, all interest accrued and unpaid thereon, and all other amounts owing or payable hereunder or under any other Loan Document to be immediately due and payable, without presentment, demand, protest or other notice of any kind, all of which are hereby expressly waived by the Borrowers; and

(c) exercise on behalf of itself and the Lenders all rights and remedies available to it and the Lenders under the Loan Documents;

provided , however , that upon the occurrence of an actual or deemed entry of an order for relief with respect to any Borrower under the Bankruptcy Code of the United States, the obligation of each Lender to make Loans shall automatically terminate and the unpaid principal amount of all outstanding Loans and all interest and other amounts as aforesaid shall automatically become due and payable, in each case without further act of the Administrative Agent or any Lender.

8.03 Application of Funds . After the exercise of remedies provided for in Section 8.02 (or after the Loans have automatically become immediately due and payable as set forth in the proviso to Section 8.02 ), any amounts received on account of the Obligations shall, subject to the provisions of Section 2.13 , be applied by the Administrative Agent in the following order:

First , to payment of that portion of the Obligations constituting fees, indemnities, expenses and other amounts (including out-of-pocket fees, charges and disbursements of counsel to the Administrative Agent and amounts payable under Article III ) payable to the Administrative Agent in its capacity as such;

Second , to payment of that portion of the Obligations constituting fees, indemnities and other amounts (other than principal and interest) payable to the Lenders (including out-of-pocket fees, charges and disbursements of counsel to the respective Lenders and amounts payable under Article III ), ratably among them in proportion to the respective amounts described in this clause Second payable to them;

Third , to payment of that portion of the Obligations constituting accrued and unpaid interest on the Loans and other Obligations, ratably among the Lenders in proportion to the respective amounts described in this clause Third payable to them;

Fourth , to payment of that portion of the Obligations constituting unpaid principal of the Loans, ratably among the Lenders in proportion to the respective amounts described in this clause Fourth held by them; and

Last, the balance, if any, after all of the Obligations have been indefeasibly paid in full, to the applicable Borrower or as otherwise required by Law.

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Article IX. Administrative Agent

9.01 Appointment and Authority . Each of the Lenders hereby irrevocably appoints Mizuho to act on its behalf as the Administrative Agent hereunder and under the other Loan Documents and authorizes the Administrative Agent to take such actions on its behalf and to exercise such powers as are delegated to the Administrative Agent by the terms hereof or thereof, together with such actions and powers as are reasonably incidental thereto. The provisions of this Article are solely for the benefit of the Administrative Agent and the Lenders, and no Loan Party shall have any rights as a third-party beneficiary of any of such provisions. It is understood and agreed that the use of the term “agent” herein or in any other Loan Documents (or any other similar term) with reference to the Administrative Agent is not intended to connote any fiduciary or other implied (or express) obligations arising under agency doctrine of any applicable law. Instead such term is used as a matter of market custom, and is intended to create or reflect only an administrative relationship between contracting parties.

9.02 Rights as a Lender . With respect to its Commitment and the Loans made by it, if any, Mizuho (and any successor acting as Administrative Agent or in any other capacity in connection herewith or the transactions contemplated hereby) in its capacity as a Lender hereunder shall have the same rights, powers and obligations hereunder as any other Lender and may exercise such rights and powers as though it were not acting as the Administrative Agent or in any other capacity in connection herewith or the transactions contemplated hereby, and the term “ Lenders ” shall, unless the context otherwise indicates, include Mizuho in its individual capacity. Mizuho (and any successor acting as Administrative Agent or in any other capacity in connection herewith or the transactions contemplated hereby) and its Affiliates may (without having to account therefor to any Lender) accept deposits from, lend money to, make investments in and generally engage in any kind of banking, trust or other business with the Loan Parties and their Affiliates as if it were not acting as a Lender and/or the Administrative Agent or in any other capacity in connection herewith or the transactions contemplated hereby, and Mizuho (and any such successor) and its Affiliates may accept fees and other consideration from the Loan Parties and said other Persons for services in connection with this Agreement or otherwise without having to account for the same to the Lenders. The Lenders acknowledge that, pursuant to such activities, Mizuho or its Affiliates may receive information regarding the Loan Parties or their Affiliates (including information that may be subject to confidentiality obligations in favor of such Loan Party or such Affiliate) and acknowledge that the Administrative Agent or Mizuho acting as Lender or in any other capacity in connection herewith or the transactions contemplated hereby shall be under no obligation to provide such information to them. In addition, Mizuho and its Affiliates may be engaged in a broad range of transactions that involve interests that differ from, and may conflict with, those of the Loan Parties and their Affiliates, and neither Mizuho nor any of its Affiliates has any obligation to disclose any such interest by virtue of any advisory agency or fiduciary relationship or otherwise.

9.03 Exculpatory Provisions . The Administrative Agent shall not have any duties or obligations except those expressly set forth herein and in the other Loan Documents, and its duties hereunder shall be administrative in nature. Without limiting the generality of the foregoing, the Administrative Agent:

(a) shall not be subject to any fiduciary or other implied duties, regardless of whether a Default has occurred and is continuing;

(b) shall not have any duty to take any discretionary action or exercise any discretionary powers, except discretionary rights and powers expressly contemplated hereby or by the other Loan Documents that the Administrative Agent is required to exercise as directed in writing by the Required Lenders (or such other number or percentage of the Lenders as shall be expressly provided for herein or in the other Loan Documents); provided that the Administrative

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Agent shall not be required to take any action that, in its opinion or the opinion of its counsel, may expose the Administrative Agent to liability or that is contrary to any Loan Document or applicable law, including for the avoidance of doubt any action that may be in violation of the automatic stay under any Debtor Relief Law or that may effect a forfeiture, modification or termination of property of a Defaulting Lender in violation of any Debtor Relief Law; and

(c) shall not, except as expressly set forth herein and in the other Loan Documents, have any duty to disclose, and shall not be liable for the failure to disclose, any information relating to any Loan Party or any of its Affiliates that is communicated to or obtained by the Person serving as the Administrative Agent or any of its Affiliates in any capacity.

The Administrative Agent shall not be liable for any action taken or not taken by it (i) with the consent or at the request of the Required Lenders (or such other number or percentage of the Lenders as shall be necessary, or as the Administrative Agent shall believe in good faith shall be necessary, under the circumstances as provided in Sections 11.01 and 8.02 ) or (ii) in the absence of its own gross negligence or willful misconduct as determined by a court of competent jurisdiction by final and nonappealable judgment. The Administrative Agent shall be deemed not to have knowledge of any Default unless and until notice describing such Default is given to the Administrative Agent in writing by a Loan Party or a Lender.

The Administrative Agent shall not be responsible for or have any duty to ascertain or inquire into (i) any statement, warranty or representation made in or in connection with this Agreement or any other Loan Document, (ii) the contents of any certificate, report or other document delivered hereunder or thereunder or in connection herewith or therewith, (iii) the performance or observance of any of the covenants, agreements or other terms or conditions set forth herein or therein or the occurrence of any Default, (iv) the validity, enforceability, effectiveness or genuineness of this Agreement, any other Loan Document or any other agreement, instrument or document, or (v) the satisfaction of any condition set forth in Article IV or elsewhere herein, other than to confirm receipt of items expressly required to be delivered to the Administrative Agent.

9.04 Reliance by Administrative Agent . The Administrative Agent shall be entitled to rely upon, and shall not incur any liability for relying upon, any notice, request, certificate, consent, statement, instrument, document or other writing (including any electronic message, Internet or intranet website posting or other distribution) believed by it to be genuine and to have been signed, sent or otherwise authenticated by the proper Person. The Administrative Agent also may rely upon any statement made to it orally or by telephone and believed by it to have been made by the proper Person, and shall not incur any liability for relying thereon. In determining compliance with any condition hereunder to the making of a Loan, that by its terms must be fulfilled to the satisfaction of a Lender, the Administrative Agent may presume that such condition is satisfactory to such Lender unless the Administrative Agent shall have received notice to the contrary from such Lender prior to the making of such Loan. The Administrative Agent may consult with legal counsel (who may be counsel for the Loan Parties), independent accountants and other experts selected by it, and shall not be liable for any action taken or not taken by it in accordance with the advice of any such counsel, accountants or experts.

9.05 Delegation of Duties . The Administrative Agent may perform any and all of its duties and exercise its rights and powers hereunder or under any other Loan Document by or through any one or more sub‑agents appointed by the Administrative Agent. The Administrative Agent and any such sub‑agent may perform any and all of its duties and exercise its rights and powers by or through their respective Related Parties. The exculpatory provisions of this Article shall apply to any such sub‑agent and to the Related Parties of the Administrative Agent and any such sub‑agent, and shall apply to their respective activities in connection with the syndication of the credit facilities provided for herein as well

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as activities as Administrative Agent. The Administrative Agent shall not be responsible for the negligence or misconduct of any sub-agents except to the extent that a court of competent jurisdiction determines in a final and nonappealable judgment that the Administrative Agent acted with gross negligence or willful misconduct in the selection of such sub‑agents.

9.06 Resignation of Administrative Agent .

(a) The Administrative Agent may at any time give notice of its resignation to the Lenders and the Borrowers. Upon receipt of any such notice of resignation, the Required Lenders shall have the right, with the consent of the Borrowers (such consent not to be unreasonably withheld or delayed, provided , if an Event of Default has occurred and is continuing, the Required Lenders shall solely have such right), to appoint a successor, which shall be a bank with an office in the United States, or an Affiliate of any such bank with an office in the United States. If no such successor shall have been so appointed by the Required Lenders and shall have accepted such appointment within 30 days after the retiring Administrative Agent gives notice of its resignation (or such earlier day as shall be agreed by the Required Lenders and the Borrowers, if the Borrowers then have the right to consent to such appointment) (the “ Resignation Effective Date ”), then the retiring Administrative Agent may (but shall not be obligated to) on behalf of the Lenders, appoint a successor Administrative Agent meeting the qualifications set forth above. Whether or not a successor has been appointed, such resignation shall become effective in accordance with such notice on the Resignation Effective Date.

(b) If the Person serving as Administrative Agent is a Defaulting Lender pursuant to clause (d) of the definition thereof, the Required Lenders may, to the extent permitted by applicable law, by notice in writing to the Borrowers and such Person remove such Person as Administrative Agent and, with the consent of the Borrowers (such consent not to be unreasonably withheld or delayed, provided , if an Event of Default has occurred and is continuing, the Required Lenders shall solely have such right), appoint a successor. If no such successor shall have been so appointed by the Required Lenders and shall have accepted such appointment within 30 days (or such earlier day as shall be agreed by the Required Lenders and the Borrowers, if the Borrowers then have the right to consent to such appointment) (the “ Removal Effective Date ”), then such removal shall nonetheless become effective in accordance with such notice on the Removal Effective Date.

(c) With effect from the Resignation Effective Date or the Removal Effective Date (as applicable) (1) the retiring or removed Administrative Agent shall be discharged from its duties and obligations hereunder and under the other Loan Documents and (2) except for any indemnity payments owed to the retiring or removed Administrative Agent, all payments, communications and determinations provided to be made by, to or through the Administrative Agent shall instead be made by or to each Lender directly, until such time, if any, as the Required Lenders appoint a successor Administrative Agent as provided for above. Upon the acceptance of a successor's appointment as Administrative Agent hereunder, such successor shall succeed to and become vested with all of the rights, powers, privileges and duties of the retiring or removed Administrative Agent (other than any rights to indemnity payments owed to the retiring or removed Administrative Agent), and the retiring or removed Administrative Agent shall be discharged from all of its duties and obligations hereunder or under the other Loan Documents. The fees payable by the Borrowers to a successor Administrative Agent shall be the same as those payable to its predecessor unless otherwise agreed between the Borrowers and such successor. After the retiring or removed Administrative Agent's resignation or removal hereunder and under the other Loan Documents, the provisions of this Article and Section 11.04 shall continue in effect for the benefit of such retiring or removed Administrative Agent, its sub‑agents and their

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respective Related Parties in respect of any actions taken or omitted to be taken by any of them while the retiring or removed Administrative Agent was acting as Administrative Agent.

9.07 Non-Reliance on Administrative Agent and Other Lenders . Each Lender acknowledges that it has, independently and without reliance upon the Administrative Agent or any other Lender or any of their Related Parties and based on such documents and information as it has deemed appropriate, made its own credit analysis and decision to enter into this Agreement. Each Lender also acknowledges that it will, independently and without reliance upon the Administrative Agent or any other Lender or any of their Related Parties and based on such documents and information as it shall from time to time deem appropriate, continue to make its own decisions in taking or not taking action under or based upon this Agreement, any other Loan Document or any related agreement or any document furnished hereunder or thereunder.

9.08 No Other Duties, Etc . Anything herein to the contrary notwithstanding, none of the Lenders or other Persons listed on the cover page hereof as a “syndication agent,” “documentation agent,” “arranger” or “book manager” shall have any powers, duties or responsibilities under this Agreement or any of the other Loan Documents, except in its capacity, as applicable, as the Administrative Agent or a Lender hereunder.

9.09 Administrative Agent May File Proofs of Claim . In case of the pendency of any proceeding under any Debtor Relief Law or any other judicial proceeding relative to any Loan Party, the Administrative Agent (irrespective of whether the principal of any Loan shall then be due and payable as herein expressed or by declaration or otherwise and irrespective of whether the Administrative Agent shall have made any demand on any Borrower) shall be entitled and empowered (but not obligated) by intervention in such proceeding or otherwise:

(a) to file and prove a claim for the whole amount of the principal and interest owing and unpaid in respect of the Loans and all other Obligations that are owing and unpaid and to file such other documents as may be necessary or advisable in order to have the claims of the Lenders and the Administrative Agent (including any claim for the reasonable compensation, expenses, disbursements and advances of the Lenders and the Administrative Agent and their respective agents and counsel and all other amounts due the Lenders and the Administrative Agent under Sections 2.07 and 11.04 ) allowed in such judicial proceeding; and

(b) to collect and receive any monies or other property payable or deliverable on any such claims and to distribute the same;

and any custodian, receiver, assignee, trustee, liquidator, sequestrator or other similar official in any such judicial proceeding is hereby authorized by each Lender to make such payments to the Administrative Agent and, in the event that the Administrative Agent shall consent to the making of such payments directly to the Lenders, to pay to the Administrative Agent any amount due for the reasonable compensation, expenses, disbursements and advances of the Administrative Agent and its agents and counsel, and any other amounts due the Administrative Agent under Sections 2.07 and 11.04 .

Article X. Guarantee

10.01 Guarantee . The Guarantor hereby unconditionally and irrevocably guarantees, as a primary obligor and not as a surety merely, to the Administrative Agent and the Lenders (together, the “ Guaranteed Parties ”) the prompt payment in full when due (whether at stated maturity, by acceleration or otherwise) of the principal of and interest on the Loans and the Notes and all other amounts whatsoever now or hereafter payable or becoming payable by Aflac under this Agreement, in each case strictly in

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accordance with the terms hereof (such obligations being herein collectively called the “ Guaranteed Obligations ”). The Guarantor hereby further agrees that if Aflac shall fail to pay in full when due (whether at stated maturity, by acceleration or otherwise) any of the Guaranteed Obligations, the Guarantor will promptly pay the same upon receipt from the Administrative Agent of written demand for payment thereof, without any other demand or notice whatsoever, and that in the case of any extension of time of payment or renewal of any of the Guaranteed Obligations, the same will be promptly paid in full when due (whether at extended maturity, by acceleration or otherwise) in accordance with the terms of such extension or renewal. This guarantee is a continuing guarantee and is a guarantee of payment and is not merely a guarantee of collection, and shall apply to all Guaranteed Obligations whenever arising.

10.02 Acknowledgments, Waivers and Consents . The Guarantor agrees that its obligations under Section 10.01 shall, to the fullest extent permitted by applicable law, be primary, absolute, irrevocable and unconditional under any and all circumstances and that the guarantee herein is made with respect to any Guaranteed Obligations now existing or in the future arising. Without limiting the foregoing, the Guarantor agrees that:

(a) Guarantee Absolute . The occurrence of any one or more of the following shall not affect the enforceability or effectiveness of the obligations of the Guarantor under this Article X in accordance with their terms or affect, limit, reduce, discharge or terminate the liability of the Guarantor, or the rights, remedies, powers and privileges of any of the Guaranteed Parties hereunder:

(i) any modification or amendment (including without limitation by way of amendment, extension, renewal or waiver), or any acceleration or other change in the time for payment or performance, of the terms of all or any part of the Guaranteed Obligations or this Agreement, or any other agreement or instrument relating thereto, or any modification or termination of the Commitments;

(ii) any release, termination, waiver, abandonment, lapse or expiration, subordination or enforcement of the liability of any other guarantee of all or any part of the Guaranteed Obligations, or the non-perfection or release of any collateral for any of the Guaranteed Obligations; or

(iii) any time or indulgence that may be granted in respect of the Guaranteed Obligations.

(b) Waiver of Defenses . The enforceability and effectiveness of this guarantee and the liability of the Guarantor and the rights, remedies, powers and privileges of the Guaranteed Parties under this guarantee shall not be affected, limited, reduced, discharged or terminated, and the Guarantor hereby expressly waives to the fullest extent permitted by law any defense now or in the future arising, by reason of:

(i) the illegality, invalidity or unenforceability of all or any part of the Guaranteed Obligations or any other agreement or instrument whatsoever relating to all or any part of the Guaranteed Obligations;

(ii) any disability or other defense with respect to all or any part of the Guaranteed Obligations, including the effect of any statute of limitations that may bar the enforcement of all or any part of the Guaranteed Obligations;

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(iii) the cessation of liability of Aflac with respect to all or any part of the Guaranteed Obligations (other than, subject to Section 10.03 hereof, by reason of the full payment of all Guaranteed Obligations);

(iv) any failure of the Guaranteed Parties or any of them to marshal assets in favor of Aflac or any other Person (including any other guarantor of all or any part of the Guaranteed Obligations), to exhaust any collateral for all or any part of the Guaranteed Obligations, to pursue or exhaust any right, remedy, power or privilege it may have against Aflac or any other Person or to take any action whatsoever to mitigate or reduce such or any other Person's liability under this guarantee, the Guaranteed Parties being under no obligation to take any such action notwithstanding the fact that all or any part of the Guaranteed Obligations may be due and payable and that Aflac may be in default of its obligations under this Agreement;

(v) any counterclaim, set-off or other claim which Aflac may have or claim with respect to all or any part of the Guaranteed Obligations;

(vi) any failure of the Guaranteed Parties or any of them or any other Person to file or enforce a claim in any bankruptcy or other proceeding with respect to any Person;

(vii) any bankruptcy, insolvency, reorganization, winding-up or adjustment of debts, or appointment of a custodian, liquidator or the like of it, or similar proceedings commenced by or against Aflac, including any discharge of, or bar or stay against collecting, all or any part of the Guaranteed Obligations (or any interest on all or any part of the Guaranteed Obligations) in or as a result of any such proceeding;

(viii) any action taken by the Guaranteed Parties or any of them that is authorized by this Section 10.02 or otherwise in this guarantee or by any other provision of this Agreement or any omission to take any such action; or

(ix) any other circumstance whatsoever that might otherwise constitute a legal or equitable discharge or defense of a surety or guarantor.

(c) Set-offs and Counterclaims, Etc . To the fullest extent permitted by law, the Guarantor expressly waives, for the benefit of each of the Guaranteed Parties, all set-offs and counterclaims and all diligence, presentment, demand for payment or performance, notices of nonpayment or nonperformance, protest, notices of protest, notices of dishonor and all other notices or demands of any kind or nature whatsoever (other than the written demand for payment pursuant to Section 10.01 hereof), and any requirement that the Guaranteed Parties or any of them exhaust any right, power or remedy or proceed against Aflac under this Agreement or any other Loan Document or other agreement or instrument referred to herein or therein, or against any other Person under any other guarantee of, or security for, any of the Guaranteed Obligations, and all notices of the existence, creation, incurring or assumption of new or additional Guaranteed Obligations. The Guarantor further expressly waives the benefit of any and all statutes of limitation, to the fullest extent permitted by applicable law.

(d) Guarantee of Payment and not of Collection . The Guarantor waives, to the fullest extent permitted by law, for the benefit of each of the Guaranteed Parties, any right to which it may be entitled, including, without limitation:

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(i) that the assets of Aflac first be used, depleted and/or applied in satisfaction of Aflac's obligations under this Agreement prior to any amounts being claimed from or paid by the Guarantor; and

(ii) to require that Aflac be sued and all claims against Aflac be completed prior to an action or proceeding being initiated against the Guarantor.

10.03 Reinstatement . The obligations of the Guarantor under this Article X shall be automatically reinstated if and to the extent that for any reason any payment by or on behalf of Aflac or any other Person in respect of the Guaranteed Obligations is rescinded or must otherwise be restored by any holder of any of the Guaranteed Obligations, whether as a result of any proceedings in bankruptcy or reorganization or otherwise, and the Guarantor agrees that it will indemnify the Guaranteed Parties on demand for all reasonable costs and expenses (including, without limitation, reasonable out-of-pocket fees of counsel, but without duplication of the obligations of Aflac under this Agreement) incurred by them in connection with such rescission or restoration, including any such costs and expenses incurred in defending against any claim alleging that such payment constituted a preference, fraudulent transfer or the like under any bankruptcy, insolvency or similar law.

10.04 Subrogation . The Guarantor hereby agrees that, until the final payment in full of all Guaranteed Obligations and the expiration or termination of the Commitments under this Agreement, it shall not exercise any right or remedy arising by reason of any payment by it under its guarantee under this Article X hereof, whether by subrogation, reimbursement, contribution or otherwise, against Aflac or any security for any of the Guaranteed Obligations.

10.05 Remedies . The Guarantor agrees that, as between the Guarantor and the Guaranteed Parties, the obligations of Aflac under this Agreement and the other Loan Documents may be declared to be forthwith due and payable as provided herein or therein (and shall be deemed to have become automatically due and payable in the circumstances provided herein or therein) for purposes of Section 10.01 hereof, notwithstanding any stay, injunction or other prohibition preventing such declaration (or such obligations from becoming automatically due and payable) as against Aflac, and that, in the event of such declaration (or such obligations being deemed to have become automatically due and payable), such obligations (whether or not due and payable by Aflac) shall forthwith become due and payable by the Guarantor for purposes of said Section 10.01 .

10.06 General Limitation on Guaranteed Obligations . In any action or proceeding involving any state corporate law, or any state or Federal bankruptcy, insolvency, reorganization or other law affecting the rights of creditors generally, if the obligations of the Guarantor under Section 10.01 would otherwise be held or determined to be void, invalid or unenforceable, or subordinated to the claims of any other creditors, on account of the amount of its liability under Section 10.01 , then, notwithstanding any other provision hereof to the contrary, the amount of such liability shall, without any further action by the Guarantor, the Administrative Agent, the Lenders or any other Person, be automatically limited and reduced to the highest amount that is valid and enforceable and not subordinated to the claims of other creditors as determined in such action or proceeding.

10.07 Priority of Obligations . If any Obligations are owing by the Parent both as a Borrower and as a Guarantor, such Obligations shall be deemed to be owing by the Parent first as a Borrower.

Article XI. Miscellaneous

11.01 Amendments, Etc . No amendment or waiver of any provision of this Agreement or any other Loan Document, and no consent to any departure by any Loan Party therefrom, shall be effective

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unless in writing signed by the Required Lenders and the applicable Loan Party, as the case may be, and acknowledged by the Administrative Agent, and each such waiver or consent shall be effective only in the specific instance and for the specific purpose for which given; provided , however , that no such amendment, waiver or consent shall:

(a) waive any condition set forth in Section 4.01(a) without the written consent of each Lender;

(b) extend or increase the Commitment of any Lender (or reinstate any Commitment terminated pursuant to Section 8.02 ) without the written consent of such Lender;

(c) postpone any date fixed by this Agreement or any other Loan Document for any payment of principal, interest, fees or other amounts due to the Lenders (or any of them) hereunder or under any other Loan Document without the written consent of each Lender directly affected thereby;

(d) reduce the principal of, or the rate of interest specified herein on, any Loan or (subject to clause (ii) of the second proviso to this Section 11.01 ) any fees or other amounts payable hereunder or under any other Loan Document without the written consent of each Lender directly affected thereby; provided , however , that only the consent of the Required Lenders shall be necessary to amend the definition of “ Default Rate ” or to waive any obligation of the applicable Borrower to pay interest at the Default Rate;

(e) change Section 8.03 or any other applicable provision of this Agreement in a manner that would alter the pro rata sharing of payments required thereby without the written consent of each Lender directly affected thereby;

(f) change any provision of this Section or the definition of “ Required Lenders ” or any other provision hereof specifying the number or percentage of Lenders required to amend, waive or otherwise modify any rights hereunder or make any determination or grant any consent hereunder, without the written consent of each Lender; or

(g) release the Guarantor from its obligations hereunder without the written consent of each Lender directly affected thereby;

and, provided further , that (i) no amendment, waiver or consent shall, unless in writing and signed by the Administrative Agent in addition to the Lenders required above, affect the rights or duties of the Administrative Agent under this Agreement or any other Loan Document; and (ii) the Fee Letters may be amended, or rights or privileges thereunder waived, in a writing executed only by the parties thereto. Notwithstanding anything to the contrary herein, no Defaulting Lender shall have any right to approve or disapprove any amendment, waiver or consent hereunder (and any amendment, waiver or consent which by its terms requires the consent of all Lenders or each affected Lender may be effected with the consent of the applicable Lenders other than Defaulting Lenders), except that (x) the Commitment of any Defaulting Lender may not be increased or extended without the consent of such Lender and (y) any waiver, amendment or modification requiring the consent of all Lenders or each affected Lender that by its terms affects any Defaulting Lender disproportionately adversely relative to other affected Lenders shall require the consent of such Defaulting Lender.

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11.02 Notices; Effectiveness; Electronic Communication .

(a) Notices Generally . Except in the case of notices and other communications expressly permitted to be given by telephone (and except as provided in subsection (b) below), all notices and other communications provided for herein shall be in writing and shall be delivered by hand or overnight courier service, mailed by certified or registered mail or sent by facsimile or “PDF” (or similar electronic transmission) as follows:

(i) if to any Loan Party or the Administrative Agent, to the address, facsimile number, electronic mail address or telephone number specified for such Person on Schedule 11.02 ; and

(ii) if to any other Lender, to the address, facsimile number, electronic mail address or telephone number specified in its Administrative Questionnaire (including, as appropriate, notices delivered solely to the Person designated by a Lender on its Administrative Questionnaire then in effect for the delivery of notices that may contain material non-public information relating to the Loan Parties).

Notices sent by hand or overnight courier service, or mailed by certified or registered mail, shall be deemed to have been given when received; notices sent by facsimile or “PDF” (or similar electronic transmission) shall be deemed to have been given when sent (except that, if not given during normal business hours for the recipient, shall be deemed to have been given at the opening of business on the next Business Day for the recipient). Notices delivered through electronic communications, to the extent provided in subsection (b) below, shall be effective as provided in such subsection (b) .

(b) Electronic Communications . Notices and other communications to the Lenders hereunder may be delivered or furnished by electronic communication (including e‑mail and Internet or intranet websites) pursuant to procedures approved by the Administrative Agent, provided that the foregoing shall not apply to notices to any Lender pursuant to Article II if such Lender has notified the Administrative Agent that it is incapable of receiving notices under such Article by electronic communication. The Administrative Agent or any Loan Party may each, in its discretion, agree to accept notices and other communications to it hereunder by electronic communications pursuant to procedures approved by it, provided that approval of such procedures may be limited to particular notices or communications.

Unless the Administrative Agent otherwise prescribes, (i) notices and other communications sent to an e-mail address shall be deemed received upon the sender's receipt of an acknowledgement from the intended recipient (such as by the “return receipt requested” function, as available, return e-mail or other written acknowledgement), and (ii) notices or communications posted to an Internet or intranet website shall be deemed received upon the deemed receipt by the intended recipient at its e-mail address as described in the foregoing clause (i) of notification that such notice or communication is available and identifying the website address therefor; provided that, for both clauses (i) and (ii) , if such notice, email or other communication is not sent during the normal business hours of the recipient, such notice or communication shall be deemed to have been sent at the opening of business on the next Business Day for the recipient.

(c) The Platform . The Platform is provided “as is” and “as available.” The Agent Parties (as defined below) do not warrant the adequacy of the Platform and expressly disclaim liability for errors or omissions in the Communications. No warranty of any kind, express, implied or statutory, including, without limitation, any warranty of merchantability, fitness for a particular purpose, non-infringement of third-party rights or freedom from viruses or other code

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defects, is made by any Agent Party in connection with the Communications or the Platform. In no event shall the Administrative Agent or any of its Related Parties (collectively, the “ Agent Parties ”) have any liability to the Loan Parties, any Lender or any other Person or entity for damages of any kind, including, without limitation, direct or indirect, special, incidental or consequential damages, losses or expenses (whether in tort, contract or otherwise) arising out of any Loan Party's or the Administrative Agent's transmission of communications through the Platform, except to the extent resulting from any Agent Party's gross negligence or willful misconduct. “ Communications ” means, collectively, any notice, demand, communication, information, document or other material provided by or on behalf of any Loan Party pursuant to any Loan Document or the transactions contemplated therein which is distributed to the Administrative Agent or any Lender by means of electronic communications pursuant to this Section, including through the Platform.

(d) Change of Address, Etc . Any party hereto may change its address or facsimile number for notices and other communications hereunder by notice to the other parties hereto.

11.03 No Waiver; Cumulative Remedies; Enforcement . No failure by any Lender or the Administrative Agent to exercise, and no delay by any such Person in exercising, any right, remedy, power or privilege hereunder or under any other Loan Document shall operate as a waiver thereof; nor shall any single or partial exercise of any right, remedy, power or privilege hereunder preclude any other or further exercise thereof or the exercise of any other right, remedy, power or privilege. The rights, remedies, powers and privileges herein provided, and provided under each other Loan Document, are cumulative and not exclusive of any rights, remedies, powers and privileges provided by law.

Notwithstanding anything to the contrary contained herein or in any other Loan Document, the authority to enforce rights and remedies hereunder and under the other Loan Documents against the Loan Parties or any of them shall be vested exclusively in, and all actions and proceedings at law in connection with such enforcement shall be instituted and maintained exclusively by, the Administrative Agent in accordance with Section 8.02 for the benefit of all the Lenders; provided , however , that the foregoing shall not prohibit (a) the Administrative Agent from exercising on its own behalf the rights and remedies that inure to its benefit (solely in its capacity as Administrative Agent) hereunder and under the other Loan Documents, (b) any Lender from exercising setoff rights in accordance with Section 11.08 (subject to the terms of Section 2.11 ), or (c) any Lender from filing proofs of claim or appearing and filing pleadings on its own behalf during the pendency of a proceeding relative to any Loan Party under any Debtor Relief Law; and provided , further , that if at any time there is no Person acting as Administrative Agent hereunder and under the other Loan Documents, then (i) the Required Lenders shall have the rights otherwise ascribed to the Administrative Agent pursuant to Section 8.02 and (ii) in addition to the matters set forth in clauses (b) and (c) of the preceding proviso and subject to Section 2.11 , any Lender may, with the consent of the Required Lenders, enforce any rights and remedies available to it and as authorized by the Required Lenders.

11.04 Expenses; Indemnity; Damage Waiver .

(a) Costs and Expenses . The Borrowers shall jointly and severally pay (i) all reasonable out‑of‑pocket expenses incurred by the Administrative Agent and its Affiliates, in connection with the syndication of the credit facilities provided for herein, the preparation, negotiation, execution, delivery and administration of this Agreement and the other Loan Documents, or any amendments, modifications or waivers of the provisions hereof or thereof (whether or not the transactions contemplated hereby or thereby shall be consummated); provided that, with respect to such legal fees and expenses, only the reasonable out-of-pocket fees, charges and disbursements of one counsel for the Administrative Agent and its Affiliates, taken as a

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whole, shall be payable by the Borrowers hereunder, and (ii) all out‑of‑pocket expenses incurred by the Administrative Agent or any Lender in connection with the enforcement or protection of its rights (A) in connection with this Agreement and the other Loan Documents, including its rights under this Section, or (B) in connection with the Loans made hereunder, including all such out‑of‑pocket expenses incurred during any workout, restructuring or negotiations in respect of such Loans; provided that, with respect to such legal fees and expenses, only the reasonable out-of-pocket fees, charges and disbursements of one counsel for the Administrative Agent and the Lenders, taken as a whole, in case of a conflict, one additional counsel for the members of the group subject to the conflict, taken as a whole, and, if reasonably deemed necessary or appropriate by the Administrative Agent or the Lenders, one special or local counsel (in each appropriate jurisdiction) for the Administrative Agent or the Lenders, taken as a whole, shall be payable by the Borrowers hereunder.

(b) Indemnification by the Borrowers . The Borrowers shall jointly and severally indemnify the Administrative Agent (and any sub-agent thereof), the Arrangers and each Lender, and each Related Party of any of the foregoing Persons (each such Person being called an “ Indemnitee ”) against, and hold each Indemnitee harmless from, any and all losses, claims, damages, liabilities and related expenses (including the reasonable out-of-pocket fees, charges and disbursements of any counsel for any Indemnitee), incurred by any Indemnitee or asserted against any Indemnitee by any Person (including any Borrower or any other Loan Party) other than such Indemnitee and its Related Parties arising out of, in connection with, or as a result of (i) the execution or delivery of this Agreement, any other Loan Document or any agreement or instrument contemplated hereby or thereby, the performance by the parties hereto of their respective obligations hereunder or thereunder or the consummation of the transactions contemplated hereby or thereby, (ii) any Loan or the use or proposed use of the proceeds therefrom, (iii) any actual or alleged presence or release of hazardous materials on or from any property owned or operated by any Loan Party or any of its Subsidiaries, or any liability arising under any Environmental Law related in any way to such Loan Party or any of its Subsidiaries, or (iv) any actual or prospective claim, litigation, investigation or proceeding relating to any of the foregoing, whether based on contract, tort or any other theory, whether brought by a third party or by any Loan Party or any other Loan Party, and regardless of whether any Indemnitee is a party thereto; provided that such indemnity shall not, as to any Indemnitee, be available to the extent that such losses, claims, damages, liabilities or related expenses (x) are determined by a court of competent jurisdiction by final and nonappealable judgment to have resulted from the gross negligence or willful misconduct of such Indemnitee or (y) result from a claim brought by any Loan Party against an Indemnitee for breach in bad faith of such Indemnitee's obligations hereunder or under any other Loan Document, if such Loan Party has obtained a final and nonappealable judgment in its favor on such claim as determined by a court of competent jurisdiction. This Section 11.04(b) shall not apply with respect to Taxes other than any Taxes that represent losses, claims, damages, etc. arising from any non-Tax claim.

(c) Reimbursement by Lenders . To the extent that any Borrower for any reason fails to indefeasibly pay any amount required under subsection (a) or (b) of this Section to be paid by it to the Administrative Agent (or any sub-agent thereof) or any Related Party of any of the foregoing, each Lender severally agrees to pay to the Administrative Agent (or any such sub-agent) or such Related Party, as the case may be, such Lender's pro rata share (determined as of the time that the applicable unreimbursed expense or indemnity payment is sought based on each Lender's share of the Total Credit Exposure at such time) of such unpaid amount (including any such unpaid amount in respect of a claim asserted by such Lender); provided that the unreimbursed expense or indemnified loss, claim, damage, liability or related expense, as the case may be, was incurred by or asserted against the Administrative Agent (or any such sub-agent) or

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against any Related Party of any of the foregoing acting for the Administrative Agent (or any such sub-agent) in connection with such capacity. The obligations of the Lenders under this subsection (c) are subject to the provisions of Section 2.10(d) .

(d) Waiver of Consequential Damages, Etc . To the fullest extent permitted by applicable law, no Loan Party or Indemnitee shall assert, and each Loan Party and Indemnitee hereby waives, any claim against any Indemnitee or Loan Party, as applicable (unless such claim is brought by a third-party and is subject to Section 11.04(b) ), on any theory of liability, for special, indirect, consequential or punitive damages (as opposed to direct or actual damages) arising out of, in connection with, or as a result of, this Agreement, any other Loan Document or any agreement or instrument contemplated hereby, the transactions contemplated hereby or thereby, any Loan, or the use of the proceeds thereof. No Indemnitee referred to in subsection (b) above shall be liable for any damages arising from the use by unintended recipients of any information or other materials distributed by it through telecommunications, electronic or other information transmission systems in connection with this Agreement or the other Loan Documents or the transactions contemplated hereby or thereby, except to the extent resulting from any Indemnitee's gross negligence or willful misconduct as determined by a court of competent jurisdiction by final and nonappealable judgment.

(e) Payments . All amounts due under this Section shall be payable not later than 30 days after demand therefor.

(f) Survival . Each party's obligations under this Section shall survive the termination of the Loan Documents and payment of the Obligations hereunder.

11.05 Payments Set Aside . To the extent that any payment by or on behalf of any Borrower is made to the Administrative Agent or any Lender, or the Administrative Agent or any Lender exercises its right of setoff, and such payment or the proceeds of such setoff or any part thereof is subsequently invalidated, declared to be fraudulent or preferential, set aside or required (including pursuant to any settlement entered into by the Administrative Agent or such Lender in its discretion) to be repaid to a trustee, receiver or any other party, in connection with any proceeding under any Debtor Relief Law or otherwise, then (a) to the extent of such recovery, the obligation or part thereof originally intended to be satisfied shall be revived and continued in full force and effect as if such payment had not been made or such setoff had not occurred, and (b) each Lender severally agrees to pay to the Administrative Agent upon demand its applicable share (without duplication) of any amount so recovered from or repaid by the Administrative Agent, plus interest thereon from the date of such demand to the date such payment is made at a rate per annum equal to the applicable Overnight Rate from time to time in effect, in the applicable currency of such recovery or payment. The obligations of the Lenders under clause (b) of the preceding sentence shall survive the payment in full of the Obligations and the termination of this Agreement.

11.06 Successors and Assigns .

(a) Successors and Assigns Generally . The provisions of this Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns permitted hereby, except that no Borrower or any other Loan Party may assign or otherwise transfer any of its rights or obligations hereunder without the prior written consent of the Administrative Agent and each Lender, and no Lender may assign or otherwise transfer any of its rights or obligations hereunder except (i) to an assignee in accordance with the provisions of subsection (b) of this Section, (ii) by way of participation in accordance with the provisions of subsection (d) of this Section, or (iii) by way of pledge or assignment of a security interest (and

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any other attempted assignment or transfer by any party hereto shall be null and void). Nothing in this Agreement, expressed or implied, shall be construed to confer upon any Person (other than the parties hereto, their respective successors and assigns permitted hereby, Participants to the extent provided in subsection (d) of this Section and, to the extent expressly contemplated hereby, the Related Parties of each of the Administrative Agent and the Lenders) any legal or equitable right, remedy or claim under or by reason of this Agreement.

(b) Assignments by Lenders . Any Lender may at any time assign to one or more assignees all or a portion of its rights and obligations under this Agreement (including all or a portion of its Commitment and the Loans at the time owing to it); provided that any such assignment shall be subject to the following conditions:

(i) Minimum Amounts .

(A) in the case of an assignment of the entire remaining amount of the assigning Lender's Commitment and/or the Loans at the time owing to it or contemporaneous assignments to related Approved Funds that equal at least the amount specified in paragraph (b)(i)(B) of this Section in the aggregate or in the case of an assignment to a Lender, an Affiliate of a Lender or an Approved Fund, no minimum amount need be assigned; and

(B) in any case not described in subsection (b)(i)(A) of this Section, the aggregate amount of the Commitment (which for this purpose includes Loans outstanding thereunder) or, if the Commitment is not then in effect, the principal outstanding balance of the Loans of the assigning Lender subject to each such assignment (determined as of the date the Assignment and Assumption with respect to such assignment is delivered to the Administrative Agent or, if “ Trade Date ” is specified in the Assignment and Assumption, as of the Trade Date) shall not be less than ¥1,600,000,000 unless each of the Administrative Agent and, so long as no Event of Default has occurred and is continuing, the Borrowers otherwise consent (each such consent not to be unreasonably withheld or delayed).

(ii) Proportionate Amounts . Each partial assignment shall be made as an assignment of a proportionate part of all the assigning Lender's rights and obligations under this Agreement with respect to the Loans or the Commitment assigned;

(iii) Required Consents . No consent shall be required for any assignment except to the extent required by subsection (b)(i)(B) of this Section and, in addition:

(A) the consent of the Borrowers (such consent not to be unreasonably withheld or delayed) shall be required unless (1) an Event of Default has occurred and is continuing at the time of such assignment or (2) such assignment is to a Lender, an Affiliate of a Lender or an Approved Fund; provided that the Borrowers shall be deemed to have consented to any such assignment unless it shall object thereto by written notice to the Administrative Agent within ten (10) Business Days after having received written notice thereof; and

(B) the consent of the Administrative Agent (such consent not to be unreasonably withheld or delayed) shall be required for assignment in respect of

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any Commitment if such assignment is to a Person that is not a Lender, an Affiliate of such Lender or an Approved Fund with respect to such Lender.

(iv) Assignment and Assumption . The parties to each assignment shall execute and deliver to the Administrative Agent an Assignment and Assumption, together with a processing and recordation fee in the amount of the Yen Equivalent of $3,500; provided , however , that the Administrative Agent may, in its sole discretion, elect to waive such processing and recordation fee in the case of any assignment. The assignee, if it is not a Lender, shall deliver to the Administrative Agent an Administrative Questionnaire.

(v) No Assignment to Certain Persons . No such assignment shall be made (A) to any Loan Party or any of the Loan Parties' Affiliates or Subsidiaries or (B) to any Defaulting Lender or any of its Subsidiaries, or any Person who, upon becoming a Lender hereunder, would constitute any of the foregoing Persons described in this clause (B) .

(vi) No Assignment to Natural Persons . No such assignment shall be made to a natural Person.

(vii) Certain Additional Payments . In connection with any assignment of rights and obligations of any Defaulting Lender hereunder, no such assignment shall be effective unless and until, in addition to the other conditions thereto set forth herein, the parties to the assignment shall make such additional payments to the Administrative Agent in an aggregate amount sufficient, upon distribution thereof as appropriate (which may be outright payment, purchases by the assignee of participations or other compensating actions, including funding, with the consent of the Borrowers and the Administrative Agent, the applicable pro rata share of Loans previously requested but not funded by the Defaulting Lender, to each of which the applicable assignee and assignor hereby irrevocably consent), to (x) pay and satisfy in full all payment liabilities then owed by such Defaulting Lender to the Administrative Agent and each other Lender hereunder (and interest accrued thereon), and (y) acquire (and fund as appropriate) its full pro rata share of all Loans in accordance with its Applicable Percentage. Notwithstanding the foregoing, in the event that any assignment of rights and obligations of any Defaulting Lender hereunder shall become effective under applicable law without compliance with the provisions of this paragraph, then the assignee of such interest shall be deemed to be a Defaulting Lender for all purposes of this Agreement until such compliance occurs.

Subject to acceptance and recording thereof by the Administrative Agent pursuant to subsection (c) of this Section, from and after the effective date specified in each Assignment and Assumption, the assignee thereunder shall be a party to this Agreement and, to the extent of the interest assigned by such Assignment and Assumption, have the rights and obligations of a Lender under this Agreement, and the assigning Lender thereunder shall, to the extent of the interest assigned by such Assignment and Assumption, be released from its obligations under this Agreement (and, in the case of an Assignment and Assumption covering all of the assigning Lender's rights and obligations under this Agreement, such Lender shall cease to be a party hereto) but shall continue to be entitled to the benefits of Sections 3.01 , 3.04 , 3.05 , and 11.04 with respect to facts and circumstances occurring prior to the effective date of such assignment; provided , that except to the extent otherwise expressly agreed by the affected parties, no assignment by a Defaulting Lender will constitute a waiver or release of any claim of any party hereunder arising from that Lender's having been a Defaulting Lender. Any assignment or transfer by a Lender of rights or obligations under this Agreement that does not comply with this subsection shall be treated for

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purposes of this Agreement as a sale by such Lender of a participation in such rights and obligations in accordance with subsection (d) of this Section.

(c) Register . The Administrative Agent, acting solely for this purpose as an agent of the Borrowers, shall maintain at the Administrative Agent's Office a copy of each Assignment and Assumption delivered to it and a register for the recordation of the names and addresses of the Lenders, and the Commitments of, and principal amounts (and stated interest) of the Loans owing to, each Lender pursuant to the terms hereof from time to time (the “ Register ”). The entries in the Register shall be conclusive absent manifest error, and the Borrowers, the Administrative Agent and the Lenders shall treat each Person whose name is recorded in the Register pursuant to the terms hereof as a Lender hereunder for all purposes of this Agreement. The Register shall be available for inspection by the Borrowers and any Lender, at any reasonable time and from time to time upon reasonable prior notice.

(d) Participations . Any Lender may at any time, without the consent of, or notice to, any Borrower or the Administrative Agent, sell participations to any Person (other than a natural Person or a Loan Party or any of a Loan Party's Affiliates or Subsidiaries) (each, a “ Participant ”) in all or a portion of such Lender's rights and/or obligations under this Agreement (including all or a portion of its Commitment and/or the Loans owing to it); provided that (i) such Lender's obligations under this Agreement shall remain unchanged, (ii) such Lender shall remain solely responsible to the other parties hereto for the performance of such obligations, and (iii) the Borrowers, the Administrative Agent and the Lenders shall continue to deal solely and directly with such Lender in connection with such Lender's rights and obligations under this Agreement. For the avoidance of doubt, each Lender shall be responsible for the indemnity under Section 11.04(c) with respect to any payments made by such Lender to its Participant(s).

Any agreement or instrument pursuant to which a Lender sells such a participation shall provide that such Lender shall retain the sole right to enforce this Agreement and to approve any amendment, modification or waiver of any provision of this Agreement; provided that such agreement or instrument may provide that such Lender will not, without the consent of the Participant, agree to any amendment, waiver or other modification described in the first proviso to Section 11.01 that directly affects such Participant. The Borrowers agree that each Participant shall be entitled to the benefits of Sections 3.01 , 3.04 and 3.05 (subject to the requirements and limitations therein, including the requirements under Section 3.01(f) (it being understood that the documentation required under Section 3.01(f) shall be delivered to the participating Lender)) to the same extent as if it were a Lender and had acquired its interest by assignment pursuant to subsection (b) of this Section; provided that such Participant (A) agrees to be subject to the provisions of Section 3.06 as if it were an assignee under paragraph (b) of this Section and (B) shall not be entitled to receive any greater payment under Sections 3.01 or 3.04 , with respect to any participation, than its participating Lender would have been entitled to receive, except to the extent such entitlement to receive a greater payment results from a Change in Law that occurs after the Participant acquired the applicable participation to the extent its participating Lender would be entitled to receive such greater payment. Each Lender that sells a participation agrees, at the Borrowers' request and expense, to use reasonable efforts to cooperate with the Borrowers to effectuate the provisions of Section 3.06 with respect to any Participant. To the extent permitted by law, each Participant also shall be entitled to the benefits of Section 11.08 as though it were a Lender; provided that such Participant agrees to be subject to Section 2.11 as though it were a Lender. Each Lender that sells a participation shall, acting solely for this purpose as a non-fiduciary agent of the Borrowers, maintain a register in the United States on which it enters the name and address of each Participant and the principal amounts (and stated interest) of each Participant's interest in the Loans or other obligations under the Loan Documents (the “ Participant Register ”); provided that no Lender shall have any obligation to disclose all or any portion of the Participant Register (including the identity of any Participant or any information relating to

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a Participant's interest in any commitments, loans, letters of credit or its other obligations under any Loan Document) to any Person except to the extent that such disclosure is necessary to establish that such commitment, loan, letter of credit or other obligation is in registered form under Section 5f.103-1(c) of the United States Treasury Regulations. The entries in the Participant Register shall be conclusive absent manifest error, and such Lender shall treat each Person whose name is recorded in the Participant Register as the owner of such participation for all purposes of this Agreement notwithstanding any notice to the contrary. For the avoidance of doubt, the Administrative Agent (in its capacity as Administrative Agent) shall have no responsibility for maintaining a Participant Register.

(e) Certain Pledges . Any Lender may at any time pledge or assign a security interest in all or any portion of its rights under this Agreement to secure obligations of such Lender, including any pledge or assignment to secure obligations to a Federal Reserve Bank; provided that no such pledge or assignment shall release such Lender from any of its obligations hereunder or substitute any such pledgee or assignee for such Lender as a party hereto.

11.07 Treatment of Certain Information; Confidentiality . Each of the Administrative Agent and the Lenders agree to maintain the confidentiality of the Information (as defined below), except that Information may be disclosed (a) to its Affiliates and to its Related Parties (it being understood that the Persons to whom such disclosure is made will be informed of the confidential nature of such Information and instructed to keep such Information confidential); (b) to the extent required or requested by any regulatory authority purporting to have jurisdiction over such Person or its Related Parties (including any self-regulatory authority, such as the NAIC); (c) to the extent required by applicable laws or regulations or by any subpoena or similar legal process; (d) to any other party hereto (subject to Section 6.02 ); (e) in connection with the exercise of any remedies hereunder or under any other Loan Document or any action or proceeding relating to this Agreement or any other Loan Document or the enforcement of rights hereunder or thereunder; (f) subject to an agreement containing provisions substantially the same as those of this Section, to (i) any assignee of or Participant in, or any prospective assignee of or Participant in, any of its rights and obligations under this Agreement, or (ii) any actual or prospective party (or its Related Parties) to any swap, derivative or other transaction under which payments are to be made by reference to any Loan Party and its obligations, this Agreement or payments hereunder; (g) on a confidential basis to (i) any rating agency in connection with rating any Loan Party or its respective Subsidiaries or the credit facilities provided hereunder or (ii) the CUSIP Service Bureau or any similar agency in connection with the issuance and monitoring of CUSIP numbers with respect to the credit facilities provided hereunder; (h) with the consent of the applicable Loan Party; or (i) to the extent such Information (x) becomes publicly available other than as a result of a breach of this Section, or (y) becomes available to the Administrative Agent, any Lender or any of their respective Affiliates on a nonconfidential basis from a source other than any Loan Party.

For purposes of this Section, “ Information ” means all information received from any Loan Party or any of its Subsidiaries relating to such Loan Party or any of its Subsidiaries or any of their respective businesses, other than any such information that is available to the Administrative Agent or any Lender on a nonconfidential basis prior to disclosure by such Loan Party or any of its Subsidiaries; provided that, in the case of information received from any Loan Party or any of its Subsidiaries after the date hereof, such information is clearly identified at the time of delivery as confidential or not marked “PUBLIC” pursuant to Section 6.02 . Any Person required to maintain the confidentiality of Information as provided in this Section shall be considered to have complied with its obligation to do so if such Person has exercised the same degree of care to maintain the confidentiality of such Information as such Person would accord to its own confidential information.

11.08 Right of Setoff . If an Event of Default shall have occurred and be continuing, each Lender is hereby authorized at any time and from time to time, to the fullest extent permitted by

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applicable law, to set off and apply any and all deposits (general or special, time or demand, provisional or final, in whatever currency) at any time held, and other obligations (in whatever currency) at any time owing, by such Lender, to or for the credit or the account of any Borrower or any other Loan Party against any and all of the obligations of such Borrower or such Loan Party now or hereafter existing under this Agreement or any other Loan Document to such Lender, irrespective of whether or not such Lender shall have made any demand under this Agreement or any other Loan Document and although such obligations of such Borrower or such Loan Party may be contingent or unmatured or are owed to a branch or office of such Lender different from the branch or office holding such deposit or obligated on such indebtedness; provided that in the event that any Defaulting Lender shall exercise any such right of setoff, (x) all amounts so set off shall be paid over immediately to the Administrative Agent for further application in accordance with the provisions of Section 2.13 and, pending such payment, shall be segregated by such Defaulting Lender from its other funds and deemed held in trust for the benefit of the Administrative Agent and the Lenders, and (y) the Defaulting Lender shall provide promptly to the Administrative Agent a statement describing in reasonable detail the Obligations owing to such Defaulting Lender as to which it exercised such right of setoff. The rights of each Lender under this Section are in addition to other rights and remedies (including other rights of setoff) that such Lender may have. Each Lender agrees to notify the Borrowers and the Administrative Agent promptly after any such setoff and application; provided that the failure to give such notice shall not affect the validity of such setoff and application.

11.09 Interest Rate Limitation . Notwithstanding anything to the contrary contained in any Loan Document, the interest paid or agreed to be paid under the Loan Documents shall not exceed the maximum rate of non-usurious interest permitted by applicable Law (the “ Maximum Rate ”). If the Administrative Agent or any Lender shall receive interest in an amount that exceeds the Maximum Rate, the excess interest shall be applied to the principal of the Loans or, if it exceeds such unpaid principal, refunded to the applicable Borrower. In determining whether the interest contracted for, charged, or received by the Administrative Agent or a Lender exceeds the Maximum Rate, such Person may, to the extent permitted by applicable Law, (a) characterize any payment that is not principal as an expense, fee, or premium rather than interest, (b) exclude voluntary prepayments and the effects thereof, and (c) amortize, prorate, allocate, and spread in equal or unequal parts the total amount of interest throughout the contemplated term of the Obligations hereunder.

11.10 Counterparts; Integration; Effectiveness . This Agreement may be executed in counterparts (and by different parties hereto in different counterparts), each of which shall constitute an original, but all of which when taken together shall constitute a single contract. This Agreement and the other Loan Documents, and any separate letter agreements with respect to fees payable to the Administrative Agent, constitute the entire contract among the parties relating to the subject matter hereof and supersede any and all previous agreements and understandings, oral or written, relating to the subject matter hereof. Except as provided in Section 4.01 , this Agreement shall become effective when it shall have been executed by the Administrative Agent and when the Administrative Agent shall have received counterparts hereof that, when taken together, bear the signatures of each of the other parties hereto. Delivery of an executed counterpart of a signature page of this Agreement by facsimile or in electronic (i.e., “pdf” or “tif”) format shall be effective as delivery of a manually executed counterpart of this Agreement.

11.11 Survival of Representations and Warranties . All representations and warranties made hereunder and in any other Loan Document or other document delivered pursuant hereto or thereto or in connection herewith or therewith shall survive the execution and delivery hereof and thereof. Such representations and warranties have been or will be relied upon by the Administrative Agent and each Lender, regardless of any investigation made by the Administrative Agent or any Lender or on their behalf and notwithstanding that the Administrative Agent or any Lender may have had notice or

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knowledge of any Default at the time of any Borrowing, and shall continue in full force and effect as long as any Loan or any other Obligation hereunder shall remain unpaid or unsatisfied.

11.12 Severability . If any provision of this Agreement or the other Loan Documents is held to be illegal, invalid or unenforceable, (a) the legality, validity and enforceability of the remaining provisions of this Agreement and the other Loan Documents shall not be affected or impaired thereby and (b) the parties shall endeavor in good faith negotiations to replace the illegal, invalid or unenforceable provisions with valid provisions the economic effect of which comes as close as possible to that of the illegal, invalid or unenforceable provisions. The invalidity of a provision in a particular jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction. Without limiting the foregoing provisions of this Section 11.12 , if and to the extent that the enforceability of any provisions in this Agreement relating to Defaulting Lenders shall be limited by Debtor Relief Laws, as determined in good faith by the Administrative Agent, then such provisions shall be deemed to be in effect only to the extent not so limited.

11.13 Governing Law; Jurisdiction; Etc .

(a) GOVERNING LAW . THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS AND ANY CLAIMS, CONTROVERSY, DISPUTE OR CAUSE OF ACTION (WHETHER IN CONTRACT OR TORT OR OTHERWISE) BASED UPON, ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT (EXCEPT, AS TO ANY OTHER LOAN DOCUMENT, AS EXPRESSLY SET FORTH THEREIN) AND THE TRANSACTIONS CONTEMPLATED HEREBY AND THEREBY SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK.

(b) SUBMISSION TO JURISDICTION . EACH PARTY HERETO IRREVOCABLY AND UNCONDITIONALLY AGREES THAT IT WILL NOT COMMENCE ANY ACTION, LITIGATION OR PROCEEDING OF ANY KIND OR DESCRIPTION, WHETHER IN LAW OR EQUITY, WHETHER IN CONTRACT OR IN TORT OR OTHERWISE, AGAINST ANY OTHER PARTY HERETO IN ANY WAY RELATING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT OR THE TRANSACTIONS

RELATING HERETO OR THERETO, IN ANY FORUM OTHER THAN THE COURTS OF THE STATE OF NEW YORK SITTING IN NEW YORK COUNTY, AND OF THE UNITED STATES DISTRICT COURT OF THE SOUTHERN DISTRICT OF NEW YORK, AND ANY APPELLATE COURT FROM ANY THEREOF, AND EACH OF THE PARTIES HERETO IRREVOCABLY AND UNCONDITIONALLY SUBMITS TO THE JURISDICTION OF SUCH COURTS AND AGREES THAT ALL CLAIMS IN RESPECT OF ANY SUCH ACTION, LITIGATION OR PROCEEDING MAY BE HEARD AND DETERMINED IN SUCH NEW YORK STATE COURT OR, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, IN SUCH FEDERAL COURT. EACH OF THE PARTIES HERETO AGREES THAT A FINAL JUDGMENT IN ANY SUCH ACTION, LITIGATION OR PROCEEDING SHALL BE CONCLUSIVE AND MAY BE ENFORCED IN OTHER JURISDICTIONS BY SUIT ON THE JUDGMENT OR IN ANY OTHER MANNER PROVIDED BY LAW. NOTHING IN THIS AGREEMENT OR IN ANY OTHER LOAN DOCUMENT SHALL AFFECT ANY RIGHT THAT THE ADMINISTRATIVE AGENT OR ANY LENDER MAY OTHERWISE HAVE TO BRING ANY ACTION OR PROCEEDING RELATING TO ANY COLLATERAL RELATING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT AGAINST ANY BORROWER OR ANY OTHER LOAN PARTY OR ITS PROPERTIES IN THE COURTS OF ANY JURISDICTION.

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(c) WAIVER OF VENUE . EACH PARTY IRREVOCABLY AND UNCONDITIONALLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY OBJECTION THAT IT MAY NOW OR HEREAFTER HAVE TO THE LAYING OF VENUE OF ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT IN ANY COURT REFERRED TO IN PARAGRAPH (B) OF THIS SECTION. EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, THE DEFENSE OF AN INCONVENIENT FORUM TO THE MAINTENANCE OF SUCH ACTION OR PROCEEDING IN ANY SUCH COURT.

(d) SERVICE OF PROCESS . EACH PARTY HERETO IRREVOCABLY CONSENTS TO SERVICE OF PROCESS IN THE MANNER PROVIDED FOR NOTICES IN SECTION 11.02 . NOTHING IN THIS AGREEMENT WILL AFFECT THE RIGHT OF ANY PARTY HERETO TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY APPLICABLE LAW.

11.14 Waiver of Jury Trial . EACH PARTY HERETO HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY (WHETHER BASED ON CONTRACT, TORT OR ANY OTHER THEORY). EACH PARTY HERETO (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PERSON HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PERSON WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION.

11.15 No Advisory or Fiduciary Responsibility . In connection with all aspects of each transaction contemplated hereby (including in connection with any amendment, waiver or other modification hereof or of any other Loan Document), each Borrower and each other Loan Party acknowledges and agrees, and acknowledges its Affiliates' understanding, that: (i) (A) the arranging and other services regarding this Agreement provided by the Administrative Agent, the Arrangers, and the Lenders are arm's-length commercial transactions between each Borrower, each other Loan Party and their respective Affiliates, on the one hand, and the Administrative Agent, the Arrangers and the Lenders, on the other hand, (B) each Borrower and each other Loan Party has consulted its own legal, accounting, regulatory and tax advisors to the extent it has deemed appropriate, and (C) each Borrower and each other Loan Party is capable of evaluating, and understands and accepts, the terms, risks and conditions of the transactions contemplated hereby and by the other Loan Documents; (ii) (A) the Administrative Agent, each Arranger and each Lender is and has been acting solely as a principal and, except as expressly agreed in writing by the relevant parties, has not been, is not, and will not be acting as an advisor, agent or fiduciary for any Borrower, any other Loan Party or any of their respective Affiliates, or any other Person and (B) neither the Administrative Agent, any Arranger nor any Lender has any obligation to any Borrower, any other Loan Party or any of their respective Affiliates with respect to the transactions contemplated hereby except those obligations expressly set forth herein and in the other Loan Documents; and (iii) the Administrative Agent, the Arrangers and the Lenders and their respective Affiliates may be engaged in a broad range of transactions that involve interests that differ from those of each Borrower, the other Loan Parties and their respective Affiliates, and neither the Administrative Agent, any Arranger nor any Lender has any obligation to disclose any of such interests to any Borrower, any other Loan Party or

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any of their respective Affiliates. To the fullest extent permitted by law, each Borrower and each other Loan Party hereby waives and releases any claims that it may have against the Administrative Agent, any Arranger or any Lender with respect to any breach or alleged breach of agency or fiduciary duty in connection with any aspect of any transaction contemplated hereby.

11.16 Electronic Execution of Assignments and Certain Other Documents . The words “execution,” “signed,” “signature,” and words of like import in any Assignment and Assumption shall be deemed to include electronic signatures or the keeping of records in electronic form, each of which shall be of the same legal effect, validity or enforceability as a manually executed signature or the use of a paper-based recordkeeping system, as the case may be, to the extent and as provided for in any applicable law, including the Federal Electronic Signatures in Global and National Commerce Act, the New York State Electronic Signatures and Records Act, or any other similar state laws based on the Uniform Electronic Transactions Act.

11.17 USA PATRIOT Act . Each Lender that is subject to the Act (as hereinafter defined) and the Administrative Agent (for itself and not on behalf of any Lender) hereby notifies the Borrowers that pursuant to the requirements of the USA PATRIOT Act (Title III of Pub. L. 107-56 (signed into law October 26, 2001)) (the “ Act ”), it is required to obtain, verify and record information that identifies the Borrowers, which information includes the name and address of the Borrowers and other information that will allow such Lender or the Administrative Agent, as applicable, to identify the Borrowers in accordance with the Act. The Borrowers shall, promptly following a request by the Administrative Agent or any Lender, provide all documentation and other information that the Administrative Agent or such Lender requests in order to comply with its ongoing obligations under applicable “know your customer” and anti-money laundering rules and regulations, including the Act.

11.18 Judgment Currency . If, for the purposes of obtaining judgment in any court, it is necessary to convert a sum due hereunder or any other Loan Document in one currency into another currency, the rate of exchange used shall be the Spot Rate on the Business Day on which final judgment is given. The obligation of each Loan Party in respect of any such sum due from it to the Administrative Agent or any Lender hereunder or under the other Loan Documents shall, notwithstanding any judgment in a currency (the “ Judgment Currency ”) other than that in which such sum is denominated in accordance with the applicable provisions of this Agreement (the “ Agreement Currency ”), be discharged only to the extent that on the Business Day following receipt by the Administrative Agent or such Lender, as the case may be, of any sum adjudged to be so due in the Judgment Currency, the Administrative Agent or such Lender, as the case may be, may in accordance with normal banking procedures purchase the Agreement Currency with the Judgment Currency. If the amount of the Agreement Currency so purchased is less than the sum originally due to the Administrative Agent or any Lender from any Borrower in the Agreement Currency, such Loan Party agrees, as a separate obligation and notwithstanding any such judgment, to indemnify the Administrative Agent or such Lender, as the case may be, against such loss. If the amount of the Agreement Currency so purchased is greater than the sum originally due to the Administrative Agent or any Lender in such currency, the Administrative Agent or such Lender, as the case may be, agrees to return the amount of any excess to such Loan Party (or to any other Person who may be entitled thereto under applicable law).

11.19 Termination of Existing Credit Agreement . The Lenders which are parties to the Existing Credit Agreement hereby waive the notice requirement set forth in the Existing Credit Agreement for terminating the commitments under the Existing Credit Agreement and agree that the Existing Credit Agreement shall be terminated on the Closing Date (except for any provisions thereof which by their terms survive termination thereof).

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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed as of the date first above written.



AFLAC INCORPORATED , as a Borrower and the Guarantor


By:	/s/ Kriss Cloninger, III
Name:	Kriss Cloninger, III
Title:	President, Treasurer and Chief Financial Officer


AMERICAN FAMILY LIFE ASSURANCE COMPANY OF
COLUMBUS , as a Borrower


By:	/s/ Kriss Cloninger, III
Name:	Kriss Cloninger, III
Title:	President, Treasurer and Chief Financial Officer