UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

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

For the quarterly period ended March 31, 2009

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

For the transition period from                      to                     

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     o 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).   o Yes o 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   o
Non-accelerated filer    o (Do not check if a smaller reporting company)		Smaller reporting company   o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). o 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		May 5, 2009
Common Stock, $.10 Par Value		467,444,323 shares

 

 

Aflac Incorporated and Subsidiaries
Table of Contents

				Page
PART I.		FINANCIAL INFORMATION:
Item 1.		Financial Statements.
		Review by Independent Registered Public Accounting Firm
		Report of Independent Registered Public Accounting Firm
		Consolidated Statements of Earnings        Three Months Ended March 31, 2009, and 2008			1
		Consolidated Balance Sheets        March 31, 2009 and December 31, 2008			2
		Consolidated Statements of Shareholders’ Equity        Three Months Ended March 31, 2009, and 2008			4
		Consolidated Statements of Cash Flows        Three Months Ended March 31, 2009, and 2008			5
		Consolidated Statements of Comprehensive Income        Three Months Ended March 31, 2009, and 2008			7
		Notes to the Consolidated Financial Statements			8
Item 2.		Management’s Discussion and Analysis of Financial Condition and Results of Operations.			60
Item 3.		Quantitative and Qualitative Disclosures about Market Risk.			103
Item 4.		Controls and Procedures.			103
PART II.		OTHER INFORMATION:
Item 2.		Unregistered Sales of Equity Securities and Use of Proceeds.			104
Item 4.		Submission of Matters to a Vote of Security Holders.			105
Item 6.		Exhibits.			106

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, 2009, and 2008, 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 shareholders and board of directors of Aflac Incorporated:

We have reviewed the consolidated balance sheet of Aflac Incorporated and subsidiaries as of March 31, 2009, and the related consolidated statements of earnings, shareholders’ equity, cash flows and comprehensive income for the three-month periods ended March 31, 2009 and 2008. 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 the standards of the Public Company Accounting Oversight Board (United States), the accompanying consolidated balance sheet of Aflac Incorporated and subsidiaries as of December 31, 2008, and the related consolidated statements of earnings, shareholders’ equity, cash flows and comprehensive income for the year then ended (not presented herein); and in our report dated February 19, 2009, we expressed an unqualified opinion on those consolidated financial statements.

Atlanta, Georgia
May 8, 2009

Aflac Incorporated and Subsidiaries
Consolidated Statements of Earnings

		Three Months Ended March 31,
(In millions, except for share and per-share amounts - Unaudited)		2009				2008
Revenues:
Premiums, principally supplemental health insurance		$	4,115			$	3,635
Net investment income			688				627
Realized investment gains (losses):
Other-than-temporary impairment losses:
Total other-than-temporary impairment losses			(238	)			—
Other-than-temporary impairment losses recognized in other comprehensive income			4				—
Net impairment losses realized			(234	)			—
Sales and redemptions			225				(7	)
Total realized investment gains (losses)			(9	)			(7	)
Other income			24				12
Total revenues			4,818				4,267
Benefits and expenses:
Benefits and claims			2,811				2,538
Acquisition and operating expenses:
Amortization of deferred policy acquisition costs			250				192
Insurance commissions			389				358
Insurance expenses			457				413
Interest expense			8				7
Other operating expenses			32				33
Total acquisition and operating expenses			1,136				1,003
Total benefits and expenses			3,947				3,541
Earnings before income taxes			871				726
Income taxes			302				252
Net earnings		$	569			$	474
Net earnings per share:
Basic		$	1.22			$	.99
Diluted			1.22				.98
Common shares used in computing earnings per share (In thousands):
Basic			466,097				478,138
Diluted			467,132				484,417
Cash dividends per share		$	.28			$	.24

See the accompanying Notes to the Consolidated Financial Statements.

Aflac Incorporated and Subsidiaries
Consolidated Balance Sheets

		March 31,
		2009				December 31,
(In millions)		(Unaudited)				2008
Assets:
Investments and cash:
Securities available for sale, at fair value:
Fixed maturities (amortized cost $33,970 in 2009 and $36,034 in 2008)		$	31,339			$	35,012
Perpetual securities (amortized cost $8,371 in 2009 and $9,074 in 2008)			6,209				8,047
Equity securities (cost $22 in 2009 and $24 in 2008)			25				27
Securities held to maturity, at amortized cost:
Fixed maturities (fair value $20,666 in 2009 and $23,084 in 2008)			22,876				24,436
Other investments			84				87
Cash and cash equivalents			1,196				941
Total investments and cash			61,729				68,550
Receivables, primarily premiums			667				920
Accrued investment income			599				650
Deferred policy acquisition costs			7,887				8,237
Property and equipment, at cost less accumulated depreciation			570				597
Other			363				377
Total assets		$	71,815			$	79,331

See the accompanying Notes to the Consolidated Financial Statements.

(continued)

Aflac Incorporated and Subsidiaries
Consolidated Balance Sheets (continued)

		March 31,
		2009				December 31,
(In millions, except for share and per-share amounts)		(Unaudited)				2008
Liabilities and shareholders’ equity:
Liabilities:
Policy liabilities:
Future policy benefits		$	55,995			$	59,310
Unpaid policy claims			3,013				3,118
Unearned premiums			824				874
Other policyholders’ funds			2,832				2,917
Total policy liabilities			62,664				66,219
Notes payable			1,573				1,721
Income taxes			368				1,201
Payables for return of cash collateral on loaned securities			111				1,733
Other			1,900				1,818
Commitments and contingent liabilities (Note 9)
Total liabilities			66,616				72,692
Shareholders’ equity:
Common stock of $.10 par value. In thousands: authorized 1,900,000 shares in 2009 and 2008; issued 660,426 shares in 2009 and 660,035 shares in 2008			66				66
Additional paid-in capital			1,190				1,184
Retained earnings			11,875				11,306
Accumulated other comprehensive income:
Unrealized foreign currency translation gains			495				750
Unrealized gains (losses) on investment securities:
Unrealized gains (losses) on securities not other-than-temporarily impaired			(2,983	)			(1,211	)
Unrealized gains (losses) on other-than-temporarily impaired securities			(3	)			—
Total unrealized gains (losses) on investment securities			(2,986	)			(1,211	)
Pension liability adjustment			(117	)			(121	)
Treasury stock, at average cost			(5,324	)			(5,335	)
Total shareholders’ equity			5,199				6,639
Total liabilities and shareholders’ equity		$	71,815			$	79,331
Shareholders’ equity per share		$	11.12			$	14.23

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, except for per-share amounts - Unaudited)		2009				2008
Common stock:
Balance, beginning of period		$	66			$	66
Exercise of stock options			—				—
Balance, end of period			66				66
Additional paid-in capital:
Balance, beginning of period			1,184				1,054
Exercise of stock options, including income tax benefits			—				17
Share-based compensation			6				7
Gain on treasury stock reissued			—				12
Balance, end of period			1,190				1,090
Retained earnings:
Balance, beginning of period			11,306				10,637
Net earnings			569				474
Dividends to shareholders			—				(114	)
Balance, end of period			11,875				10,997
Accumulated other comprehensive income:
Balance, beginning of period			(582	)			934
Change in unrealized foreign currency translation gains (losses) during period, net of income taxes			(255	)			334
Change in unrealized gains (losses) on investment securities during period, net of income taxes:
Change in unrealized gains (losses) on securities not other-than-temporarily impaired, net of income taxes			(1,772	)			(639	)
Change in unrealized gains (losses) on other-than-temporarily impaired securities, net of income taxes			(3	)			—
Total change in unrealized (losses) on investment securities during period, net of income taxes			(1,775	)			(639	)
Pension liability adjustment during period, net of income taxes			4				(2	)
Balance, end of period			(2,608	)			627
Treasury stock:
Balance, beginning of period			(5,335	)			(3,896	)
Purchases of treasury stock			(2	)			(764	)
Cost of shares issued			13				14
Balance, end of period			(5,324	)			(4,646	)
Total shareholders’ equity		$	5,199			$	8,134

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)		2009				2008
Cash flows from operating activities:
Net earnings		$	569			$	474
Adjustments to reconcile net earnings to net cash provided by operating activities:
Change in receivables and advance premiums			257				134
Increase in deferred policy acquisition costs			(68	)			(102	)
Increase in policy liabilities			734				783
Change in income tax liabilities			187				(117	)
Realized investment (gains) losses			12				7
Other, net			(42	)			17
Net cash provided by operating activities			1,649				1,196
Cash flows from investing activities:
Proceeds from investments sold or matured:
Securities available for sale:
Fixed maturities sold			3,575				192
Fixed maturities matured or called			1,087				232
Perpetual securities sold			—				99
Securities held to maturity:
Fixed maturities matured or called			103				—
Costs of investments acquired:
Securities available for sale:
Fixed maturities			(3,615	)			(1,156	)
Securities held to maturity:
Fixed maturities			(832	)			(550	)
Cash received as collateral on loaned securities, net			(1,582	)			97
Other, net			(61	)			(16	)
Net cash used by investing activities		$	(1,325	)		$	(1,102	)

See the accompanying Notes to the Consolidated Financial Statements.

(continued)

Aflac Incorporated and Subsidiaries
Consolidated Statements of Cash Flows (continued)

		Three Months Ended March 31,
(In millions - Unaudited)		2009				2008
Cash flows from financing activities:
Purchases of treasury stock		$	(2	)		$	(764	)
Change in investment-type contracts, net			90				60
Dividends paid to shareholders			(131	)			(109	)
Treasury stock reissued			4				9
Principal payments under debt obligations			(1	)			(1	)
Other, net			(5	)			16
Net cash used by financing activities			(45	)			(789	)
Effect of exchange rate changes on cash and cash equivalents			(24	)			40
Net change in cash and cash equivalents			255				(655	)
Cash and cash equivalents, beginning of period			941				1,563
Cash and cash equivalents, end of period		$	1,196			$	908
Supplemental disclosures of cash flow information:
Income taxes paid		$	190			$	295
Interest paid			6				5
Impairment losses included in realized investment gains (losses)			234				—
Noncash financing activities:
Treasury shares issued for:
Associate stock bonus			6				10
Shareholder dividend reinvestment			—				5
Shared-based compensation grants			3				2

See the accompanying Notes to the Consolidated Financial Statements.

Aflac Incorporated and Subsidiaries
Consolidated Statements of Comprehensive Income

		Three Months Ended March 31,
(In millions - Unaudited)		2009				2008
Net earnings		$	569			$	474
Other comprehensive income (loss) before income taxes:
Foreign currency translation adjustments:
Change in unrealized foreign currency translation gains (losses) during period			(109	)			77
Unrealized gains (losses) on investment securities:
Unrealized holding gains (losses) arising during the period			(2,763	)			(957	)
Reclassification adjustment for realized (gains) losses included in net earnings			12				7
Unrealized gains (losses) on derivatives:
Unrealized holding gains (losses) arising during the period			1				(1	)
Pension liability adjustment during period			6				(4	)
Total other comprehensive income (loss) before income taxes			(2,853	)			(878	)
Income tax expense (benefit) related to items of other comprehensive income (loss)			(827	)			(571	)
Other comprehensive income (loss), net of income taxes			(2,026	)			(307	)
Total comprehensive income (loss)		$	(1,457	)		$	167

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 (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. Our insurance operations in the United States and our branch in Japan service the two markets for our insurance business. Aflac Japan accounted for 74% and 72% of the Company’s total revenues in the three-month periods ended March 31, 2009 and 2008, respectively, and comprised 86% and 87% of total assets at March 31, 2009, and December 31, 2008, respectively.

     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). 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, and liabilities for future policy benefits and unpaid policy claims. 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 consolidated financial statements include the accounts of Aflac Incorporated (the Parent Company), its majority-owned 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 Aflac Incorporated and subsidiaries (the “Company”) contain all adjustments, consisting of normal recurring accruals, which are necessary to fairly present the consolidated balance sheets as of March 31, 2009, and December 31, 2008, and the consolidated statements of earnings, shareholders’ equity, cash flows and comprehensive income for the three-month periods ended March 31, 2009, and 2008. 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, 2008.

     Translation of Foreign Currencies: The functional currency of Aflac Japan’s insurance operations is the Japanese yen. We translate our yen-denominated financial statement accounts into

U.S. dollars as follows. Assets and liabilities are translated at end-of-period exchange rates. Realized gains and losses on security transactions are translated at the exchange rate on the trade date of each transaction. Other revenues, expenses and cash flows are translated using average exchange rates for the year. The resulting currency translation adjustments are reported in accumulated other comprehensive income. We include in earnings the realized currency exchange gains and losses resulting from transactions. Realized currency exchange gains and losses were immaterial during the three-month periods ended March 31, 2009 and 2008.

     Aflac Japan maintains an investment portfolio of dollar-denominated securities on behalf of Aflac U.S. 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.

     We have designated the yen-denominated Uridashi and Samurai notes issued by the Parent Company and the cross-currency swaps as a hedge of our investment in Aflac Japan (see the section in this note titled, “Derivatives”). Outstanding principal and related accrued interest on these items are translated into U.S. dollars at end-of-period exchange rates. Currency translation adjustments are recorded through other comprehensive income and are included in accumulated other comprehensive income.

     Insurance Revenue and Expense Recognition: The supplemental health and life insurance policies we issue are classified as long-duration contracts. The contract provisions generally cannot be changed or canceled during the contract period; however, we may adjust premiums for supplemental health policies issued in the United States within prescribed guidelines and with the approval of state insurance regulatory authorities.

     Insurance premiums for health and life policies are recognized ratably as earned income over the premium payment periods of the policies. When revenues are reported, the related amounts of benefits and expenses are charged against such revenues, so that profits are recognized in proportion to premium revenues during the period the policies are expected to remain in force. This association is accomplished by means of annual additions to the liability for future policy benefits and the deferral and subsequent amortization of policy acquisition costs.

     The calculation of deferred policy acquisition costs and the liability for future policy benefits requires the use of estimates based on sound actuarial valuation techniques. For new policy issues, we review our actuarial assumptions and deferrable acquisition costs each year and revise them when necessary to more closely reflect recent experience and studies of actual acquisition costs. For policies in force, we evaluate deferred policy acquisition costs by major product groupings to determine that they are recoverable from future revenues. Any resulting adjustment is charged against net earnings.

     Cash and Cash Equivalents: Cash and cash equivalents include cash on hand, money market instruments and other debt instruments with a maturity of 90 days or less when purchased.

     Investments: Our debt securities consist of fixed-maturity securities, which are classified as either held to maturity or available for sale. Securities classified as held to maturity are securities that we have the ability and intent to hold to maturity or redemption and are carried at amortized cost. All other fixed-maturity debt securities, our perpetual securities and our equity securities are classified as available for sale and are carried at fair value. If the fair value is higher than the amortized cost for debt and perpetual securities, or the purchase cost for equity securities, the excess is an unrealized gain, and if lower than cost, the difference is an unrealized loss.

     The net unrealized gains and losses on securities available for sale, plus the unamortized unrealized gains and losses on debt securities transferred to the held-to-maturity portfolio, less related deferred income taxes, are recorded through other comprehensive income and included in accumulated other comprehensive income.

     Amortized cost of debt and perpetual securities is based on our purchase price adjusted for accrual of discount, or amortization of premium. The amortized cost of debt and perpetual securities we purchase at a discount will equal the face or par value at maturity. Debt and perpetual securities that we purchase at a premium will have an amortized cost equal to face or par value at maturity or the call date, if applicable. Interest is reported as income when earned and is adjusted for amortization of any premium or discount.

     Our investments in qualifying special purpose entities (QSPEs) are accounted for as fixed-maturity or perpetual securities. All of our investments in QSPEs are held in our available-for-sale portfolio.

     For the collateralized mortgage obligations (CMOs) held in our fixed-maturity securities portfolio, we recognize income using a constant effective yield, which is based on anticipated prepayments and the estimated economic life of the securities. When estimates of prepayments change, the effective yield is recalculated to reflect actual payments to date and anticipated future payments. The net investment in CMO securities is adjusted to the amount that would have existed had the new effective yield been applied at the time of acquisition. This adjustment is reflected in net investment income.

     We use the specific identification method to determine the gain or loss from securities transactions and report the realized gain or loss in the consolidated statements of earnings.

     Our credit analysts/research personnel routinely monitor and evaluate the difference between the amortized cost and fair value of our investments. Additionally, credit analysis and/or credit rating issues related to specific investments may trigger more intensive monitoring to determine if a decline in fair value is other than temporary. For investments with a fair value below amortized cost, the process includes evaluating, among other factors, the length of time and the extent to which amortized cost exceeds fair value, the financial condition, operations, credit and liquidity posture, and future prospects of the issuer as well as our intent or need to dispose of the security prior to a recovery of its fair value. This process is not exact and requires consideration of risks such as credit risk, which to a certain extent can be controlled, and interest rate risk, which cannot be controlled. Therefore, if an investment’s amortized cost exceeds its fair value solely due to changes in interest rates, impairment may not be appropriate.

     If, after monitoring and analyses, management believes that fair value will not recover prior to the disposal of the security, we recognize an other-than-temporary impairment of the security. Once a security is considered to be other-than-temporarily impaired, the impairment loss is separated into two separate components, that portion of the impairment related to credit and that portion of the impairment related to factors other than credit. We automatically recognize a charge to earnings for the credit related portion of other-than-temporary impairments. Other-than-temporary impairments related to factors other than credit are charged to earnings in the event we determine that is unlikely that the fair value of the security will recover prior to its disposal, otherwise, non-credit related other-than-temporary impairments are charged to other comprehensive income.

     We lend fixed-maturity securities to financial institutions in short-term security lending transactions. These securities continue to be carried as investment assets on our balance sheet during the terms of the loans and are not reported as sales. We receive cash or other securities as collateral for such loans. For loans involving unrestricted cash collateral, the collateral is reported as an asset with a

corresponding liability for the return of the collateral. For loans collateralized by securities, the collateral is not reported as an asset or liability.

     For further information regarding our investments, see Note 3.

     Deferred Policy Acquisition Costs: The costs of acquiring new business are deferred and amortized with interest over the premium payment periods in proportion to the ratio of annual premium income to total anticipated premium income. Anticipated premium income is estimated by using the same mortality, persistency and interest assumptions used in computing liabilities for future policy benefits. In this manner, the related acquisition expenses are matched with revenues. Deferred costs include the excess of current-year commissions over ultimate renewal-year commissions and certain direct and allocated policy issue, underwriting and marketing expenses. All of these costs vary with and are primarily related to the production of new business.

     Policy Liabilities: Future policy benefits represent claims that are expected to occur in the future and are computed by a net level premium method using estimated future investment yields, persistency and recognized morbidity and mortality tables modified to reflect our experience, including a provision for adverse deviation. These assumptions are generally established at the time a policy is issued.

     Unpaid policy claims are estimates computed on an undiscounted basis using statistical analyses of historical claims experience adjusted for current trends and changed conditions. The ultimate liability may vary significantly from such estimates. We regularly adjust these estimates as new claims experience emerges and reflect the changes in operating results in the year such adjustments are made.

     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.

     Derivatives: We have limited activity with derivative financial instruments. We do not use them for trading purposes, nor do we engage in leveraged derivative transactions. At March 31, 2009, our only outstanding derivative contracts were interest-rate swaps related to our 20 billion yen variable interest rate Uridashi notes and cross-currency swaps related to our $450 million senior notes (see Notes 4 and 5).

     We document all relationships between hedging instruments and hedged items, as well as our risk-management objectives for undertaking various hedge transactions. This process includes linking derivatives and nonderivatives that are designated as hedges to specific assets or liabilities on the balance sheet. We also assess, both at inception and on an ongoing basis, whether the derivatives and nonderivatives used in hedging activities are highly effective in offsetting changes in fair values or cash flows of the hedged items. The assessment of hedge effectiveness determines the accounting treatment of noncash changes in fair value.

     We have designated our cross-currency swaps as a hedge of the foreign currency exposure of our investment in Aflac Japan. We include the fair value of the cross-currency swaps in either other assets or other liabilities on the balance sheet. We report the changes in fair value of the foreign currency portion of our cross-currency swaps in other comprehensive income. Changes in the fair value of the interest rate component are reflected in other income in the consolidated statements of earnings.

     We have designated our interest-rate swaps as a hedge of the variability of the interest cash flows associated with the variable interest rate Uridashi notes. We include the fair value of the interest rate swaps in either other assets or other liabilities on the balance sheet. We report the changes in fair value of the interest rate swaps in other comprehensive income as long as they are deemed effective. Should any portion of the swap be deemed ineffective, that value would be reported in other income in the consolidated statements of earnings.

     Policyholder Protection Corporation and State Guaranty Association Assessments: In Japan, the government has required the insurance industry to contribute to a policyholder protection corporation. We recognize a charge for our estimated share of the industry’s obligation once it is determinable. We review the estimated liability for policyholder protection corporation contributions on an annual basis and report any adjustments in Aflac Japan’s expenses.

     In the United States, each state has a guaranty association that supports insolvent insurers operating in those states. To date, our state guaranty association assessments have not been material.

     Treasury Stock: Treasury stock is reflected as a reduction of shareholders’ equity at cost. We use the weighted-average purchase cost to determine the cost of treasury stock that is reissued. We include any gains and losses in additional paid-in capital when treasury stock is reissued.

     Earnings Per Share: We compute basic earnings per share (EPS) by dividing net earnings by the weighted-average number of unrestricted shares outstanding for the period. Diluted EPS is computed by dividing net earnings by the weighted-average number of shares outstanding for the period plus the shares representing the dilutive effect of share-based awards.

     New Accounting Pronouncements: In April 2009, the FASB issued FASB Staff Position (FSP) FAS 157-4, “Determining Fair Value When the Volume and Level of Activity for the Asset or Liability Have Significantly Decreased and Identifying Transactions That Are Not Orderly” (FSP FAS 157-4). This FSP on fair-value measurements provides guidance on how to determine the fair value of assets and liabilities under Statement 157 in the current economic environment and reemphasizes that the objective of a fair-value measurement remains an exit price. This FSP provides factors to consider when determining whether there has been a significant decrease in the volume and level of activity in the market for an asset or liability as well as provides factors for companies to consider in identifying transactions that are not orderly. The FSP also discusses the necessity of adjustments to transaction or quoted prices to estimate fair value in accordance with FAS 157 when it is determined that there has been a significant decrease in the volume and level of activity or that the transaction is not orderly. The FSP is effective for interim and annual reporting periods ending after June 15, 2009, with early adoption permitted for periods ending after March 15, 2009. We adopted the provisions of FSP FAS 157-4 as of March 31, 2009. The adoption of this standard did not have a material impact on our financial position or results of operations.

     In April 2009, the FASB issued FSP FAS 115-2 and FAS 124-2, “Recognition and Presentation of Other-Than-Temporary Impairments.” This FSP modifies the requirements for recognizing other-than-temporarily impaired debt securities and significantly changes the existing impairment model for such securities. In accordance with this FSP, the intention to sell a security and the expectation regarding the recovery of the entire amortized cost basis of a security governs the recognition of other-than-temporary impairment losses. This FSP also modifies the presentation of other-than-temporary impairment losses in financial statements and increases the frequency of and expands already required disclosures about other-than-temporary impairment for debt and equity securities. The FSP

is effective for interim and annual reporting periods ending after June 15, 2009, with early adoption permitted for periods ending after March 15, 2009. We adopted the provisions of FSP FAS 115-2 and FAS 124-2 as of March 31, 2009. The adoption of this standard did not have a material impact on our financial position or results of operations.

     In April 2009, the FASB issued FSP FAS 107-1 and APB 28-1, “Interim Disclosures about Fair Value of Financial Instruments,” which requires publicly traded companies to disclose the fair value of financial instruments within the scope of SFAS 107, “Disclosures about Fair Value of Financial Instruments” in interim financial statements. This FSP also requires companies to disclose the method or methods and significant assumptions used to estimate the fair value of financial instruments and to discuss changes, if any, to those methods or assumptions during the period. The FSP is effective for interim and annual reporting periods ending after June 15, 2009, with early adoption permitted for periods ending after March 15, 2009. We adopted the provisions of FSP FAS 107-1 and APB 28-1 as of March 31, 2009. The adoption of this standard did not have an impact on our financial position or results of operations.

     In December 2008, the FASB issued FSP FAS 132(R)-1, “Employer’s Disclosures about Postretirement Benefit Plan Assets.” This FSP amends SFAS No. 132(R), “Employers’ Disclosures about Pensions and Other Postretirement Benefits — An Amendment of FASB Statements No. 87, 88, and 106” to require more detailed disclosures about plan assets of a defined benefit pension or other postretirement plan, including investment strategies; major categories of plan assets; concentrations of risk within plan assets; inputs and valuation techniques used to measure the fair value of plan assets; and the effect of fair-value measurements using significant unobservable inputs on changes in plan assets for the period. FSP 132(R)-1 is effective for fiscal years ending after December 15, 2009, with earlier application permitted. We do not expect the adoption of this standard to have an effect on our financial position or results of operations.

     In March 2008, the FASB issued SFAS No. 161, “Disclosures about Derivative Instruments and Hedging Activities — an amendment of FASB Statement No. 133” (SFAS 161). FASB Statement No. 133, “Accounting for Derivative Instruments and Hedging Activities,” establishes, among other things, the disclosure requirements for derivative instruments and for hedging activities. This statement amends and expands the disclosure requirements of Statement 133 with the intent to provide users of financial statements with an enhanced understanding of how and why an entity uses derivative instruments, how derivative instruments and related hedged items are accounted for under Statement 133 and its related interpretations, and how derivative instruments and related hedged items affect an entity’s financial position, financial performance, and cash flows. To meet those objectives, this statement requires qualitative disclosures about objectives and strategies for using derivatives, quantitative disclosures about fair value amounts of and gains and losses on derivative instruments, and disclosures about credit-risk-related contingent features in derivative agreements. SFAS 161 is effective for financial statements issued for fiscal years and interim periods beginning after November 15, 2008. We adopted the provisions of SFAS 161 as of January 1, 2009. The adoption of this standard did not have an effect on our financial position or results of operations.

     In December 2007, the FASB issued SFAS No. 160, “Noncontrolling Interests in Consolidated Financial Statements — an amendment of ARB No. 51” (SFAS 160). The purpose of SFAS 160 is to improve relevance, comparability, and transparency of the financial information that a reporting entity provides in its consolidated financial statements by establishing accounting and reporting standards for the noncontrolling interest in a subsidiary and for the deconsolidation of a subsidiary. SFAS 160 is effective for fiscal years beginning on or after December 15, 2008, with earlier adoption prohibited.

We adopted the provisions of SFAS 160 as of January 1, 2009. The adoption of this standard did not have an effect on our financial position or results of operations.

     Securities and Exchange Commission (SEC) Guidance: On October 14, 2008, the SEC issued a letter to the FASB addressing questions raised by various interested parties regarding declines in the fair value of perpetual preferred securities, or so-called “hybrid securities,” which have both debt and equity characteristics, and the assessment of those declines under existing accounting guidelines for other-than-temporary impairments. In its letter, the SEC recognized that hybrid securities are often structured in equity form but generally possess significant debt-like characteristics. The SEC also recognized that existing accounting guidance does not specifically address the impact, if any, of the debt-like characteristics of these hybrid securities on the assessment of other-than-temporary impairments.

     After consultation with and concurrence of the FASB staff, the SEC concluded that it will not object to the use of an other-than-temporary impairment model that considers the debt-like characteristics of hybrid securities (including the anticipated recovery period), provided there has been no evidence of a deterioration in credit of the issuer (for example, a decline in the cash flows from holding the investment or a downgrade of the rating of the security below investment grade), in filings after the date of its letter until the matter can be addressed further by the FASB.

     We maintain investments in subordinated financial instruments, or so-called “hybrid securities.” Within this class of investments, we own perpetual securities. These perpetual securities are subordinated to other debt obligations of the issuer, but rank higher than the issuers’ equity securities. Perpetual securities have characteristics of both debt and equity investments, along with unique features that create economic maturity dates of the securities. Although these 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 rate of interest of 125 to more than 300 basis points above an appropriate market index, generally by the 25^th year after issuance. We believe this interest step-up penalty has the effect of creating an economic maturity date of the perpetual securities. Since first purchasing these securities in 1993, and until the third quarter of 2008, we accounted for and reported perpetual securities as debt securities and classified them as both available-for-sale and held-to-maturity securities.

     In light of the recent unprecedented volatility in the debt and equity markets, we concluded in the third quarter of 2008 that all of our investments in perpetual securities should be classified as available-for-sale securities. We also concluded that our perpetual securities should be evaluated for other-than-temporary impairments using an equity security impairment model as opposed to our previous policy of using a debt security impairment model. We recognized realized investment losses

of $294 million ($191 million after tax) in the third quarter of 2008 as a result of applying our equity impairment model to this class of securities through June 30, 2008. Included in the $191 million other-than-temporary impairment charge is $40 million, $53 million, $50 million, and $38 million, net of tax, that relate to the years ended December 31, 2007, 2006, 2005 and 2004, respectively; and, $10 million, net of tax, that relates to the quarter ended June 30, 2008. There were no impairment charges related to the perpetual securities in the first quarter of 2008. The impact of classifying all of our perpetual securities as available-for-sale securities and assessing them for other-than-temporary impairments under our equity impairment model was determined to be immaterial to our results of operations and financial position for any previously reported period. In response to the SEC letter mentioned above regarding the appropriate impairment model for hybrid securities, we have applied our debt security impairment model to our perpetual securities in periods subsequent to June 30, 2008, with the exception of certain securities that have shown evidence of a deterioration in credit of the issuer and are therefore being evaluated under our equity impairment model. We will continue with this approach pending further guidance from the SEC or the FASB.

     Recent accounting guidance not discussed above is not applicable to our business.

     For additional information on new accounting pronouncements 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, 2008.

2. BUSINESS SEGMENT INFORMATION

     The Company consists of two reportable insurance business segments: Aflac Japan and Aflac U.S., both of which sell individual supplemental health and life insurance.

     Operating business segments that are not individually reportable 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, the impact from SFAS 133, and nonrecurring items. We then exclude income taxes related to operations to arrive at pretax operating earnings. Information regarding operations by segment for the three months ended March 31 follows:

(In millions)		2009				2008
Revenues:
Aflac Japan:
Earned premiums		$	3,012			$	2,585
Net investment income			560				496
Other income			7				(1	)
Total Aflac Japan			3,579				3,080
Aflac U.S.:
Earned premiums			1,103				1,050
Net investment income			125				123
Other income			2				3
Total Aflac U.S.			1,230				1,176
Other business segments			11				10
Total business segment revenues			4,820				4,266
Realized investment gains (losses)			(9	)			(7	)
Corporate			35				29
Intercompany eliminations			(28	)			(21	)
Total revenues		$	4,818			$	4,267

(In millions)		2009				2008
Pretax earnings:
Aflac Japan		$	681			$	554
Aflac U.S.			204				191
Other business segments			—				(3	)
Total business segments			885				742
Interest expense, noninsurance operations			(7	)			(7	)
Corporate and eliminations			(9	)			(7	)
Pretax operating earnings			869				728
Realized investment gains (losses)			(9	)			(7	)
Impact from SFAS 133			(5	)			5
Gain on extinguishment of debt			16				—
Total earnings before income taxes		$	871			$	726
Income taxes applicable to pretax operating earnings		$	302			$	253
Effect of foreign currency translation on operating earnings			41				25

     Assets were as follows:

		March 31,				December 31,
(In millions)		2009				2008
Assets:
Aflac Japan		$	61,814			$	69,141
Aflac U.S.			9,632				9,679
Other business segments			165				166
Total business segment			71,611				78,986
Corporate			6,990				8,716
Intercompany eliminations			(6,786	)			(8,371	)
Total assets		$	71,815			$	79,331

3. INVESTMENTS

     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, 2009
		Cost or				Gross				Gross
		Amortized				Unrealized				Unrealized				Fair
(In millions)		Cost				Gains				Losses				Value
Securities available for sale, carried at fair value:
Fixed maturities:
Yen-denominated:
Japan government and agencies		$	9,918			$	486			$	47			$	10,357
Mortgage- and asset-backed securities			449				2				3				448
Public utilities			2,142				132				57				2,217
Collateralized debt obligations			264				28				—				292
Sovereign and supranational			785				25				154				656
Banks/financial institutions			4,493				55				892				3,656
Other corporate			5,999				82				872				5,209
Total yen-denominated			24,050				810				2,025				22,835
Dollar-denominated:
U.S. government and agencies			247				5				1				251
Municipalities			151				2				17				136
Mortgage- and asset-backed securities			726				10				175				561
Collateralized debt obligations			29				2				4				27
Public utilities			1,402				21				163				1,260
Sovereign and supranational			316				28				17				327
Banks/financial institutions			2,685				29				746				1,968
Other corporate			4,364				137				527				3,974
Total dollar-denominated			9,920				234				1,650				8,504
Total fixed maturities			33,970				1,044				3,675				31,339
Perpetual securities:
Yen-denominated:
Banks/financial institutions			7,784				57				2,086				5,755
Other corporate			273				1				22				252
Dollar-denominated:
Banks/financial institutions			314				5				117				202
Total perpetual securities			8,371				63				2,225				6,209
Equity securities			22				5				2				25
Total securities available for sale		$	42,363			$	1,112			$	5,902			$	37,573

		March 31, 2009
		Cost or				Gross				Gross
		Amortized				Unrealized				Unrealized				Fair
(In millions)		Cost				Gains				Losses				Value
Securities held to maturity, carried at amortized cost:
Fixed maturities:
Yen-denominated:
Japan government and agencies		$	205			$	4			$	—			$	209
Municipalities			81				1				5				77
Mortgage- and asset-backed securities			89				—				1				88
Collateralized debt obligations			255				—				95				160
Public utilities			3,812				53				220				3,645
Sovereign and supranational			3,857				47				298				3,606
Banks/financial institutions			11,143				50				1,515				9,678
Other corporate			3,234				64				147				3,151
Total yen-denominated			22,676				219				2,281				20,614
Dollar-denominated:
Collateralized debt obligations			200				—				148				52
Total dollar-denominated			200				—				148				52
Total securities held to maturity		$	22,876			$	219			$	2,429			$	20,666

		December 31, 2008
		Cost or				Gross				Gross
		Amortized				Unrealized				Unrealized				Fair
(In millions)		Cost				Gains				Losses				Value
Securities available for sale, carried at fair value:
Fixed maturities:
Yen-denominated:
Japan government and agencies		$	11,153			$	988			$	16			$	12,125
Mortgage- and asset-backed securities			491				8				—				499
Public utilities			2,282				188				17				2,453
Collateralized debt obligations			253				6				—				259
Sovereign and supranational			943				37				126				854
Banks/financial institutions			4,667				81				686				4,062
Other corporate			6,183				155				576				5,762
Total yen-denominated			25,972				1,463				1,421				26,014
Dollar-denominated:
U.S. government and agencies			266				6				1				271
Municipalities			119				1				14				106
Mortgage- and asset-backed securities			738				7				189				556
Collateralized debt obligations			53				—				37				16
Public utilities			1,337				34				165				1,206
Sovereign and supranational			366				44				9				401
Banks/financial institutions			2,910				107				529				2,488
Other corporate			4,273				182				501				3,954
Total dollar-denominated			10,062				381				1,445				8,998
Total fixed maturities			36,034				1,844				2,866				35,012
Perpetual securities:
Yen-denominated:
Banks/financial institutions			8,400				187				1,091				7,496
Other corporate			294				13				—				307
Dollar-denominated:
Banks/financial institutions			380				—				136				244
Total perpetual securities			9,074				200				1,227				8,047
Equity securities			24				5				2				27
Total securities available for sale		$	45,132			$	2,049			$	4,095			$	43,086

		December 31, 2008
		Cost or				Gross				Gross
		Amortized				Unrealized				Unrealized				Fair
(In millions)		Cost				Gains				Losses				Value
Securities held to maturity, carried at amortized cost:
Fixed maturities:
Yen-denominated:
Japan government and agencies		$	220			$	17			$	—			$	237
Mortgage- and asset-backed securities			75				1				1				75
Collateralized debt obligations			403				—				295				108
Public utilities			3,951				168				66				4,053
Sovereign and supranational			3,582				93				132				3,543
Banks/financial institutions			12,291				147				1,195				11,243
Other corporate			3,714				145				84				3,775
Total yen-denominated			24,236				571				1,773				23,034
Dollar-denominated:
Collateralized debt obligations			200				—				150				50
Total dollar-denominated			200				—				150				50
Total securities held to maturity		$	24,436			$	571			$	1,923			$	23,084

     The methods of determining the fair values of our investments in debt securities, perpetual securities and equity securities are described in Note 4.

     During the first quarter of 2009, we reclassified six investments from the held-to-maturity portfolio to the available-for-sale portfolio as a result of a significant decline in the issuers’ credit worthiness. At the time of transfer, the securities had an aggregate amortized cost of $497 million and an aggregate unrealized loss of $200 million.

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

Composition by Credit Rating

		March 31, 2009								December 31, 2008
		Amortized				Fair				Amortized				Fair
		Cost				Value				Cost				Value
AAA			5.1	%			5.4	%			5.7	%			5.8	%
AA			34.5				37.4				39.8				42.2
A			37.1				36.1				34.1				33.2
BBB			18.3				17.7				18.6				17.6
BB or lower			5.0				3.4				1.8				1.2
Total			100.0	%			100.0	%			100.0	%			100.0	%

     Although our investment portfolio continues to be of high credit quality, various downgrades occurred during the first three months of 2009, causing a shift in composition by credit rating. The percentage of AA rated securities decreased as a result of downgrades of banks and financial institutions investments. The percentage of A and BB or lower rated securities increased due to downgrades of higher rated securities.

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

Subordination Distribution of Debt and Perpetual Securities

		March 31, 2009								December 31, 2008
		Amortized				Percentage				Amortized				Percentage
(In millions)		Cost				of Total				Cost				of Total
Senior notes		$	48,120				73.8	%		$	51,091				73.5	%
Subordinated securities:
Fixed maturities (stated maturity date):
Lower Tier II			7,252				11.2				7,777				11.2
Upper Tier II			275				.4				340				.5
Tier I*			723				1.1				750				1.1
Surplus Notes			339				.5				374				.5
Trust Preferred — Non-banks			86				.1				86				.1
Other subordinated — Non-banks			51				.1				52				.1
Total fixed maturities			8,726				13.4				9,379				13.5
Perpetual securities (economic maturity date):
Upper Tier II			6,054				9.3				6,532				9.4
Tier I			2,317				3.5				2,542				3.6
Total perpetual securities			8,371				12.8				9,074				13.0
Total debt and perpetual securities		$	65,217				100.0	%		$	69,544				100.0	%

*		Includes Trust Preferred securities

     As of March 31, 2009, the majority, or 73.8%, of our total investments in debt and perpetual securities was senior debt, while our investments in subordinated financial instruments comprised the remaining 26.2%. Our subordinated securities primarily consist of Lower Tier II, Upper Tier II, and Tier I securities. The Lower Tier II securities are debt instruments with fixed maturities. Our Upper

Tier II and Tier I investments consist of fixed maturity debt instruments and perpetual securities. Perpetual securities have contractually scheduled cash flows but have an economic maturity as opposed to a stated or fixed maturity date. Perpetual securities comprised 95.7% and 76.2% of our total Upper Tier II and Tier I investments, respectively, as of March 31, 2009.

     Privately issued securities were as follows:

Privately Issued Securities

		March 31,				December 31,
(Amortized cost, in millions)		2009				2008
Privately issued securities as a percentage of total debt and perpetual securities			72.4	%			72.0	%
Privately issued securities held by Aflac Japan		$	44,719			$	47,516
Privately issued securities held by Aflac Japan as a percentage of total debt and perpetual securities			68.6	%			68.3	%
Privately issued reverse-dual currency securities*		$	13,602			$	14,678
Reverse-dual currency securities* as a percentage of total privately issued securities			28.8	%			29.3	%

*		Principal payments in yen and interest payments in dollars

     Our investment discipline begins with a top-down approach for each investment opportunity we consider. Consistent with that approach, we first approve each country in which we invest. In our approach to sovereign analysis, we consider the political, legal and financial context of the sovereign entity in which an issuer is domiciled and operates. Next we approve the issuer’s industry sector, including such factors as the stability of results and the importance of the sector to the overall economy. Specific credit names within approved countries and industry sectors are evaluated for their market position and specific strengths and potential weaknesses. Structures in which we invest are chosen for specific portfolio management purposes, including asset/liability management, portfolio diversification and net investment income.

     Our largest investment industry sector concentration is 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 banks and financial institutions sector is a highly regulated industry and plays a strategic role in the global economy. We achieve some degree of diversification in the banks and financial institutions sector through a geographically diverse universe of credit exposures. Within this sector, the more significant concentration of our credit risk by geographic region or country of issuer at March 31, 2009, based on amortized cost, was: Europe (48%); United States (20%); United Kingdom (9%); and Japan (9%).

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

		March 31, 2009								December 31, 2008
		Total Investments in								Total Investments in
		Banks and Financial				Percentage of				Banks and Financial				Percentage of
		Institutions Sector				Total Investment				Institutions Sector				Total Investment
		(in millions)				Portfolio				(in millions)				Portfolio
x
Debt Securities:
Amortized cost		$	18,321				28	%		$	19,868				28	%
Fair value			15,301				26				17,793				27
Perpetual Securities:
Upper Tier II:
Amortized cost		$	5,781				9	%		$	6,238				9	%
Fair value			4,638				8				5,960				9
Tier I:
Amortized cost			2,318				4				2,542				4
Fair value			1,321				2				1,780				3
Total:
Amortized cost		$	26,420				41	%		$	28,648				41	%
Fair value			21,260				36				25,533				39

     At March 31, 2009, we owned below-investment-grade debt and perpetual securities in the amount of $3.3 billion at amortized cost ($2.0 billion at fair value), or 5.0% of total debt and perpetual securities, compared with $1.3 billion at amortized cost ($786 million at fair value), or 1.8% of total debt and perpetual securities at December 31, 2008. Each of the below-investment-grade securities was investment grade at the time of purchase and was subsequently downgraded by credit rating agencies. These securities are held in the available-for-sale portfolio.

     Debt and perpetual securities classified as below investment grade were as follows:

Below-Investment-Grade Securities

		March 31, 2009												December 31, 2008
		Par				Amortized				Fair				Par				Amortized				Fair
(In millions)		Value				Cost				Value				Value				Cost				Value
Lloyds Banking Group PLC (includes HBOS and Bank of Scotland)**		$	842			$	817			$	461			$	*			$	*			$	*
UPM-Kymmene			316				316				176				*				*				*
The Royal Bank of Scotland**			312				237				155				*				*				*
Ford Motor Credit Company			305				305				176				329				329				143
CSAV			244				244				136				264				264				157
Hella KG Hueck & Co.			224				223				138				*				*				*
Dresdner Funding Bank AG (part of Commerzbank)			206				208				91				*				*				*
BAWAG**			142				123				58				154				133				88
IKB Deutsche Industriebank			132				132				62				143				143				47
Ford Motor Company			111				43				43				111				57				31
Beryl Finance Limited 2008-7****			102				102				106				110				110				116
Kommunalkredit Austria AG			102				102				71				*				*				*
Finance for Danish Industry			102				102				51				*				*				*
Beryl Finance Limited 2007-14****			76				49				53				82				53				53
Morgan Stanley Aces 2006-31****			61				11				11				—				—				—
Beryl Finance Limited 2006-15****			51				40				42				55				43				43
Beryl Finance Limited 2007-5****			51				41				43				55				44				44
Morgan Stanley Aces 2007-21****			51				3				7				55				3				3
Morgan Stanley Aces 2007-29****			51				12				12				*				*				*
Rinker Materials Corp			43				42				30				43				42				23
Security Benefit Life			33				2				2				*				*				*
Morgan Stanley Aces 2007-19****			30				4				6				30				4				4
Sprint Capital			23				24				16				22				24				16
Academica Charter Schools Finance LLC			22				24				16				22				24				17
Terra CDO LTD 2007-3****			20				5				5				*				*				*
BankAmerica			18				18				8				*				*				*
MBIA			16				17				6				*				*				*
Allied Capital Corp			15				13				3				*				*				*
American General Capital II			15				19				5				*				*				*
Tiers Georgia****			11				—				—				11				1				1
Morgan Stanley Aces 2006-23****			10				2				2				*				*				*
LMT 2006-3***			4				3				1				*				*				*
Arlo VII Limited 2007****			1				—				—				*				*				*
Total		$	3,742			$	3,283			$	1,992			$	1,486			$	1,274			$	786