AFLAC INC Q1 FY26 Results

"Aflac delivered solid earnings for the quarter. These results reflect our focused execution of our strategy and thus creating long-term value for shareholders. We have attracted new business through successful product initiatives, including Anshin Palette (medical insurance), Miraito (cancer insurance), and Tsumitasu (life insurance) in Japan and group voluntary benefits, network dental and vision, as well as group life and disability in the U.S." "We remain focused on more profitable growth and the tactical, opportunistic deployment of capital. We treasure our 2025 milestone of 43 consecutive years of dividend increases, and the Board has set us on a path to extend this record when it increased the first quarter dividend 5.2% and declared the same dividend of $0.61 for the second quarter. We intend to continue our balanced approach of investing in growth and driving long-term value."

For the first quarter of 2026, adjusted earnings per diluted share increased 6.6% year over year to $1.77, excluding effect of foreign currency in the quarter. In this quarter, remeasurement gains on reserves totaled $82 million, reducing benefits, with $23 million, or $0.04 per diluted share, above plan. Variable investment income ran $14 million, or $0.02 per diluted share, below our long-term return expectations. Adjusted book value per share excluding foreign currency remeasurement increased 0.2%. The adjusted ROE was 12.8%, and 16.4% excluding foreign currency remeasurement, a solid spread to our cost of capital. Overall, we view these results in the quarter as solid. Starting with our Japan segment, net earned premiums in yen terms for the quarter declined 3.8%. Aflac Japan's underlying earned premiums1 – which excludes the impact of reinsurance, paid-up policies and deferred profit liability – declined 1.3%. We believe this metric provides a clearer insight into long-term premium trends. Japan’s total benefit ratio came in at 62.9% for the quarter, down 290 basis points year over year. We estimate the impact from reserve remeasurement gains exceeding plan to be approximately 70 basis points. We continue to have favorable trends in cancer and hospitalization. While persistency was down, it remained strong and in line with our expectations at 92.8%. We continue to see an uptick in lapse and reissue on our cancer insurance product. Lapses on our first sector savings block remain low and in line with previous periods, despite the increase in yen interest rates. Our expense ratio in Japan was 19.5% for the quarter, down 10 basis points year over year. For the quarter, adjusted net investment income in yen terms was up 4.0%, primarily driven by higher USD fixed rate income on higher volume and higher variable net investment income compared to last year partially offset by lower dollar-denominated floating rate income due to lower volume and rates, as well as reduced call income. The pretax margin for Japan in the quarter was 35.0%, up 320 basis points year over year – a very good result. Turning to U.S. results, net earned premiums were up 3.5%. Premium persistency remained solid at 79.3%. Our total benefit ratio came in at 47.2%, 50 basis points lower than Q1 2025, driven by favorable incurred claims for individual voluntary benefits products and group disability. We estimate that reserve remeasurement gains impacted the benefit ratio by approximately 230 basis points in the quarter, which is about 80 basis points above plan. Our expense ratio in the U.S. was 38.3%, up 70 basis points year over year, primarily driven by higher DAC amortization and commissions along with timing of advertising and investment spend. Adjusted net investment income in the U.S. was down 0.5% for the quarter, primarily driven by lower short-term rates offset by higher variable net investment income. Profitability in the U.S. segment was solid, with a pretax margin of 20.4%, a 40 basis points decrease compared with a strong quarter a year ago.