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Q4(LDTI)

FINAL

AS ADJUSTED

Financial Analysts Briefing Supplement

Fourth Quarter 2022 - As Adjusted

This document is a statistical supplement to the Financial Analysts Briefing (FAB) book. Throughout the presentation, amounts presented may not foot due to rounding. As you review the supplement, please note the non-U.S. GAAP financial measures and definitions found at the back of this document.

The Company adopted the Financial Accounting Standards Board's Accounting Standard Update 2018-12 Financial Services - Insurance: Targeted Improvements to the Accounting for Long-Duration Contracts, as clarified and amended by (i) ASU 2019-09 Financial Services - Insurance: Effective Date, and (ii) ASU 2020-11 Financial Services - Insurance: Effective Date and Early Application (collectively, "LDTI") as of January 1, 2023. The amended guidance is applied as of the beginning of the earliest period presented in the Company's quarterly and annual financial statements, which results in a January 1, 2021 Transition Date. The impacts to the 2021 and 2022 data in the FAB Supplement are being reflected at this time voluntarily and for comparative purposes only. In conjunction with the adoption of LDTI, the Company will change its practice of recording the change in the deferred profit liability on products with limited-payment features from the benefits and claims, net line item to the net earned premiums line item in the consolidated statement of earnings. This change in presentation will have no impact on net earnings and will be made for all comparative periods presented in quarterly and annual financial statements. This change has been reflected in the updated FAB Supplement. Updates to the original FAB Supplement for these items are highlighted in yellow herein.

Aflac Incorporated

Page

Share Data

2

Summary of Adjusted Results by Business Segment

3

Statements of Earnings

4

Analysis of Net Earnings and Net Earnings Per Share

5

Balance Sheets

6

Quarterly Financial Results

7

Quarterly Book Value Per Share

8

Retuon Equity

9

Adjusted Earnings Per Share Excluding Current Period Foreign Currency Impact

10

Investment Results

11,12,13

Long-Term Debt Data

14

Ratings

15

Aflac U.S.

Statement of Pretax Adjusted Earnings

16

Balance Sheets

17

Quarterly Pretax Adjusted Earnings

18

Operating Ratios

19

Sales

20,21

Aflac Japan

Statement of Pretax Adjusted Earnings

22,23

Balance Sheets

24,25

Quarterly Pretax Adjusted Earnings

26

Operating Ratios

27

Sales

28,29,30

Yen/Dollar Exchange Rates

31

Corporate and Other

Statement of Pretax Adjusted Earnings

32

Non-U.S. GAAP Financial Measures

33

For more information, contact:

David Young

Phone. 706.596.3264

Aflacir@aflac.com

investors.aflac.com

Aflac Incorporated and Subsidiaries

Share Data

(In Thousands)

Beginning

Shares Issued

Shares Purchased

Ending

QTD Weighted Avg. Shares

YTD Weighted Avg. Shares

Shares

Stk. Bon.

Stk. Opt.

Treas.

Misc.

Shares

Avg.

Dilutive

Avg.

Avg.

Dilutive

Avg.

Period

Outstanding

& DRP

& Misc.

Shares

Purch.(1)

Outstanding

Shares

Shares

Diluted

Shares

Shares

Diluted

2020

1

726,793

468

1,613

9,984

508

718,382

724,366

3,146

727,512

724,366

3,146

727,512

2

718,382

648

100

5,209

13

713,908

717,889

1,875

719,764

721,128

2,510

723,638

3

713,908

468

134

10,916

20

703,574

711,698

2,095

713,793

717,962

2,372

720,333

4

703,574

437

235

11,791

1

692,454

701,016

2,843

703,859

713,702

2,490

716,192

2021

1

692,454

387

1,684

13,440

378

680,707

688,938

3,002

691,940

688,938

3,002

691,940

2

680,707

330

130

9,174

3

671,990

678,050

2,871

680,921

683,464

2,936

686,400

3

671,990

250

188

9,572

39

662,817

668,762

3,163

671,925

678,509

3,012

681,521

4

662,817

249

224

11,140

18

652,132

659,100

3,412

662,512

673,617

3,112

676,729

2022

1

652,132

259

1,308

8,007

343

645,349

649,753

3,074

652,827

649,753

3,074

652,827

2

645,349

269

101

11,185

8

634,526

640,707

2,536

643,243

645,205

2,805

648,010

3

634,526

258

144

11,057

3

623,868

629,350

2,597

631,947

639,862

2,735

642,597

4

623,868

222

120

8,938

16

615,256

619,845

3,149

622,994

634,816

2,839

637,655
  1. Includes previously owned shares used to purchase options (swapped shares) and/or shares purchased for deferred compensation program

2

Aflac Incorporated and Subsidiaries

Summary of Adjusted Results by Business Segment

(In Millions, except per-share data and where noted)

Years Ended December 31,

3 Months Ended December 31,

12 Months Ended December 31,

%

%

2017

2018

2019

2020

2021

2021

2022

Change

2021

2022

Change

Aflac Japan

$

3,054

$

3,208

$

3,261

$

3,263

$

3,755

$

897

$

720

(19.7)

$

3,755

$

3,281

(12.6)

Aflac U.S.

1,245

1,285

1,272

1,268

1,356

282

339

20.2

1,356

1,359

.2

Corporate and other (1)

(214)

(139)

(72)

(115)

(293)

(152)

(45)

(293)

(218)

Pretax adjusted earnings

4,086

4,354

4,461

4,416

4,819

1,026

1,015

(1.1)

4,819

4,422

(8.2)

Income taxes (1)

1,370

1,129

1,147

864

893

151

198

31.1

893

808

(9.5)

Adjusted earnings (2)

2,716

3,226

3,314

3,552

3,925

875

817

(6.6)

3,925

3,614

(7.9)

Reconciling items:

Adjusted net investment gains (losses)

-

(297)

(15)

(229)

462

246

(477)

462

447

Other and non-recurring income (loss) (3)

(69)

(75)

(1)

(28)

(73)

(6)

-

(73)

1

Income tax benefit (expense) on items excluded

24

83

3

72

(83)

(50)

(144)

(83)

357

from adjusted earnings (4)

Tax reform adjustment (5)

1,933

(18)

4

-

-

-

-

-

-

Tax valuation allowance release (6)

-

-

-

1,411

-

-

-

-

-

Net earnings

$

4,604

$

2,920

$

3,304

$

4,778

$

4,231

$

1,065

$

196

(81.6)

$

4,231

$

4,418

4.4

Effective Tax rate

(14.6) %

26.7

%

25.7

%

(14.9) %

18.7

%

15.9

%

63.6

%

18.7

%

9.3

%

Earnings per share of common stock:

Net earnings (basic)

$

5.81

$

3.79

$

4.45

$

6.69

$

6.28

$

1.62

$

0.32

(80.2)

$

6.28

$

6.96

10.8

Net earnings (diluted)

5.77

3.77

4.43

6.67

6.25

1.61

0.31

(80.7)

6.25

6.93

10.9

Adjusted earnings (basic) (2)

$

3.43

$

4.20

$

4.46

$

4.98

$

5.83

$

1.33

$

1.32

(.8)

$

5.83

$

5.69

(2.4)

Adjusted earnings (diluted) (2)

3.40

4.16

4.44

4.96

5.80

1.32

1.31

(.8)

5.80

5.67

(2.2)
  1. The change in value of federal historic rehabilitation and solar investments in partnerships of $11 and $104 for the three-month periods and $91 and $138 for the twelve-month periods ended December 31, 2022, and 2021, respectively is included as a reduction to net investment income. Tax credits on these investments of $20 and $80 for the three-month period and $83 and $115 for the twelve-month periods ended December 31, 2022, and 2021, respectively, have been recorded as an income tax benefit in the consolidated statement of earnings.
  2. See non-U.S. GAAP financial measures for definition of adjusted earnings.
  3. Foreign currency gains and losses for all periods have been reclassified from Other and non-recurring income (loss) to Net investment gains and losses.
  4. Primarily reflects release of $452 in deferred taxes in 2022
  5. The impact of Tax Reform was adjusted in 2018 for return-to-provision adjustments, various amended returns filed by the Company, and final true-ups of deferred tax liabilities. Further impacts were recorded in 2019 as a result of additional guidance released by the IRS.
  6. Tax benefit recognized in 2020 represents the release of valuation allowances on deferred tax benefits related to foreign tax credits.

3

Aflac Incorporated and Subsidiaries

Consolidated Statements of Earnings - U.S. GAAP

(In Millions, except per-share data)

Years Ended December 31,

3 Months Ended December 31,

12 Months Ended December 31,

%

%

2017

2018

2019

2020

2021

2021

2022

Change

2021

2022

Change

Revenues:

Net earned premiums

Gross premiums

$

18,875

$

19,018

$

19,122

$

18,955

$

17,305

$

4,180

$

3,553

$

17,305

$

15,025

Assumed (ceded)

(345)

(341)

(342)

(333)

(210)

(48)

(30)

(210)

(124)

Total net earned premiums

18,531

18,677

18,780

18,622

17,095

4,132

3,523

(14.7)

17,095

14,901

(12.8)

Net investment income

3,220

3,442

3,578

3,638

3,818

910

896

(1.5)

3,818

3,656

(4.2)

Net investment gains (losses) (1)

(151)

(430)

(135)

(270)

468

243

(521)

468

363

Other income (1)

67

69

84

157

173

37

50

173

220

Total revenues

21,667

21,758

22,307

22,147

21,554

5,322

3,948

(25.8)

21,554

19,140

(11.2)

Benefits and Claims:

Benefits and claims, net

Incurred claims -direct

8,853

9,121

9,279

9,364

8,949

2,199

1,826

8,949

8,271

Incurred claims -assumed (ceded)

(446)

(421)

(372)

(296)

(147)

(24)

(18)

(147)

(108)

Increase in FPB (2)-direct

3,628

3,167

2,952

2,707

1,819

370

312

1,819

888

Increase in FPB (2)-assumed (ceded)

146

133

83

21

3

2

(3)

3

51

Total net benefits and claims, excluding

N/A

N/A

N/A

N/A

10,623

2,547

2,117

10,623

9,102

reserve remeasurement

Reserve remeasurement gain (loss)

N/A

N/A

N/A

N/A

(147)

(17)

(63)

(147)

(215)

Total net benefits and claims

12,181

12,000

11,942

11,796

10,476

2,529

2,054

(18.8)

10,476

8,887

(15.2)

Acquisition and operating expenses:

Amortization of DAC (3)

1,132

1,245

1,282

1,214

835

208

194

835

792

Insurance commissions

1,316

1,320

1,321

1,316

1,256

304

271

1,256

1,117

Insurance expenses

2,780

2,988

3,089

3,420

3,541

958

836

3,541

3,249

Interest expense

240

222

228

242

238

57

55

238

226

Other expenses

-

-

-

-

-

-

-

-

-

Total acquisition and operating expenses

5,468

5,775

5,920

6,192

5,870

1,527

1,356

(11.2)

5,870

5,384

(8.3)

Total benefits and claims

17,649

17,775

17,862

17,988

16,346

4,056

3,410

(15.9)

16,346

14,271

(12.7)

Pretax earnings

4,018

3,983

4,445

4,159

5,208

1,266

538

5,208

4,869

Income tax expense (benefit) (4)

(586)

1,063

1,141

(619)

977

201

342

977

451

Net earnings

$

4,604

$

2,920

$

3,304

$

4,778

$

4,231

$

1,065

$

196

(81.6)

$

4,231

$

4,418

4.4
  1. Foreign currency gains and losses for all periods have been reclassified from Other income to Net investment gains and losses for consistency with current period presentation.
  2. Future policy benefits
  3. Deferred acquisition costs
  4. Primarily reflects release of $452 in deferred taxes in 2022

4

Aflac Incorporated and Subsidiaries

Analysis of Net Earnings and Net Earnings Per Diluted Share

(In Millions, except for per-share data)

Other and

Foreign

Net

Other and Non-

Foreign

Net

Net

Non-Recurring

Currency

Net

Investment

Recurring

Currency

Earnings

Investment

Items

Impact

Period

Earnings

Gains (Losses) (1)

Items (1)(3)(4)

Impact (2)

Per Share

Gains (Losses) (1)

Per Share (1)(3)(4)

Per Share (2)

2017

4,604

-

1,888

(41)

5.77

-

2.37

(.05)

2018

2,920

(230)

(76)

28

3.77

(.30)

(.09)

.04

2019

3,304

(13)

3

15

4.43

(.02)

.01

.02

2020

4,778

(181)

1,407

31

6.67

(.25)

1.96

.04

2021

4,231

365

(59)

(42)

6.25

.54

(.09)

(.06)

2022

4,418

803

1

(262)

6.93

1.26

-

(.41)

2020

1

566

(322)

5

9

.78

(.44)

.01

.01

2

805

(116)

-

5

1.12

(.16)

-

.01

3

2,456

45

1,418

3

3.44

.06

1.99

-

4

951

212

(15)

14

1.35

.30

(.02)

.02

2021

1

1,224

240

(5)

5

1.77

.35

(.01)

.01

2

1,027

67

(42)

(6)

1.51

.10

(.06)

(.01)

3

915

(136)

(7)

(12)

1.36

(.20)

(.01)

(.02)

4

1,065

194

(5)

(29)

1.61

.29

(.01)

(.04)

2022

1

1,047

106

-

(35)

1.60

.16

-

(.05)

2

1,394

448

-

(59)

2.17

.70

-

(.09)

3

1,781

871

1

(97)

2.82

1.38

-

(.15)

4

196

(621)

-

(70)

.31

(1.00)

-

(.11)
  1. Items are presented net of tax.
  2. See non-U.S. GAAP financial measures for definition of adjusted earnings excluding current period foreign currency impact
  3. Foreign currency gains and losses and amortized hedge costs/income for all periods have been reclassified from Other income to Net investment gains and losses for consistency with current period presentation.

(4 )Tax benefit recognized in the third quarter of 2020 represents the release of valuation allowances on deferred tax benefits related to foreign tax credits.

5

Disclaimer

Aflac Incorporated published this content on 27 February 2023 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 27 February 2023 21:14:10 UTC.

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