Financial Performance - Total revenues for Q1 2025 were $3.4 billion, down from $5.4 billion in Q1 2024, primarily due to net investment losses of $963 million compared to net investment gains of $951 million in the prior year [295]. - Net earnings in Q1 2025 were $29 million, or $0.05 per diluted share, significantly lower than $1.9 billion, or $3.25 per diluted share, in Q1 2024 [295]. - Adjusted earnings for Q1 2025 were $906 million, or $1.66 per diluted share, compared to $961 million, or $1.66 per diluted share, in Q1 2024, with the weaker yen/dollar exchange rate negatively impacting adjusted earnings per diluted share by $0.01 [297]. - Net earnings for Q1 2025 were $29 million, compared to $1,879 million in Q1 2024, resulting in adjusted earnings of $906 million for Q1 2025, down from $961 million in Q1 2024 [308]. - Adjusted earnings per diluted share for Q1 2025 were $1.66, consistent with Q1 2024, while adjusted earnings excluding current period foreign currency impact were $914 million, also consistent with Q1 2024 [308]. Shareholders' Equity - Shareholders' equity at March 31, 2025, was $26.3 billion, or $48.55 per share, an increase from $26.1 billion, or $47.45 per share, at December 31, 2024 [298]. - Shareholders' equity excluding accumulated other comprehensive income (AOCI) was $28.2 billion, or $51.98 per share, at March 31, 2025, down from $29.1 billion, or $52.87 per share, at December 31, 2024 [299]. - The annualized return on average shareholders' equity in Q1 2025 was 0.4% [298]. Investment Performance - Net investment losses in Q1 2025 included $888 million from derivatives and foreign currency, $61 million from equity securities, and an increase in credit loss allowances of $55 million [296]. - The company's net investment gains for Q1 2025 were $963 million, compared to a loss of $951 million in Q1 2024, with adjusted net investment gains of $924 million in Q1 2025 [310]. - The effective income tax rate for the combined U.S. and Japanese operations was 80.3% for Q1 2025, significantly higher than 13.4% for the same period in 2024 [324]. Aflac Japan Performance - Aflac Japan's net earned premiums decreased by 7.4% to $1,681 million for the three months ended March 31, 2025, compared to $1,816 million in the same period of 2024 [339]. - Total adjusted revenues for Aflac Japan fell by 8.1% to $2,272 million, down from $2,473 million year-over-year [339]. - Pretax adjusted earnings for Aflac Japan decreased by 10.9% to $722 million, compared to $810 million in the prior year [339]. - Annualized premiums in force in Aflac Japan decreased by 2.7% to ¥1.20 trillion as of March 31, 2025, from ¥1.23 trillion as of March 31, 2024 [342]. - Aflac Japan's premium persistency improved to 93.8% as of March 31, 2025, compared to 93.4% in the previous year [351]. Aflac U.S. Performance - Aflac U.S. net earned premiums increased by 1.8% to $1.502 billion in Q1 2025, driven by growth initiatives in group life and disability [371]. - Aflac U.S. new annualized premium sales rose by 3.5% to $309 million in Q1 2025, primarily due to sales of group products [379]. - Aflac U.S. premium persistency improved to 79.3% in Q1 2025, up from 78.7% in Q1 2024 [375]. - The total adjusted revenues for Aflac U.S. increased by 1.3% to $1.721 billion in Q1 2025, reflecting the growth in net earned premiums [371]. Investment Strategy - The company’s investment strategy focuses on fixed maturity securities to provide a reliable stream of investment income, aligning cash flows with liability needs [310]. - The Company maintains a diversified portfolio of investments, including fixed maturity securities and growth assets, to optimize risk-adjusted returns [393]. - The Company utilizes third-party asset managers for loan sourcing and management, ensuring experienced oversight for loan workouts [401]. Cash Flow and Liquidity - The Company generated $589 million from operating activities for the three-month period ended March 31, 2025, down from $849 million in 2024 [469]. - The Company reported a net change in cash and cash equivalents of $(998) million for the three-month period ended March 31, 2025, compared to an increase of $792 million in 2024 [469]. - Aflac Ventures has deployed approximately $290 million of the $400 million committed to support business development needs as of March 31, 2025 [475]. - The Company plans to maintain higher than historical levels of liquidity and capital at the Parent Company to address hedge costs and mitigate against long-term weakening of the Japanese yen [460]. Shareholder Returns - The Company returned $1.2 billion to shareholders through treasury stock purchases and dividends during the three-month period ended March 31, 2025, compared to $1.0 billion in the same period of 2024 [479]. - Cash dividends paid to shareholders were $0.58 per share in Q1 2025, an increase of 16% compared to $0.50 per share in Q1 2024 [485].

Core Points - Aflac is expanding its partnership with Empathy to include the Empathy LifeVault™ service for group term life insurance certificate holders starting July 1, 2025 [1][3] - LifeVault is a digital platform designed for legacy planning, making it easier for Aflac customers to manage essential documents related to their life insurance policies [2][3] - The partnership aims to provide comprehensive support for families dealing with loss and planning for the future, enhancing Aflac's commitment to customer care [3][4] Company Overview - Aflac is a leading provider of supplemental health insurance in the U.S. and has been recognized as the No. 1 provider in this sector [5] - The company has a long-standing reputation for ethical practices, being included in the World's Most Ethical Companies for 19 consecutive years and Fortune's World's Most Admired Companies for 24 years [5] - Aflac's services are designed to provide financial protection and peace of mind to millions of policyholders [5] Empathy Overview - Empathy is a technology company focused on transforming how people navigate life's toughest moments, serving over 40 million people across North America [7] - The company partners with seven of the top ten U.S. life insurance carriers and handles one in five life insurance claims nationwide [7] - Empathy has received $90 million in funding from top-tier venture firms and global insurance leaders, emphasizing its innovative approach to bereavement and legacy planning [7]

Core Viewpoint - Aflac Inc's stock declined by 3.6% to $104.83 following lower-than-expected first-quarter earnings and revenue due to investment losses, despite strong growth in Japan. However, there are indications of a potential short-term rally as the stock shows a historically bullish signal [1]. Group 1: Stock Performance - Aflac's shares are currently within one standard deviation of their 50-day moving average, having been above this trendline in at least eight of the last ten trading days and spending 80% of the last six months above it [2]. - Historical data indicates that in the past five years, when similar conditions occurred, Aflac's stock was higher one month later 71% of the time, with an average gain of 4% [2]. Group 2: Analyst Sentiment - Among the 16 analysts covering Aflac stock, 13 maintain a "hold" or worse rating, suggesting there is significant potential for upgrades if the stock moves higher [3].

Aflac Incorporated (AFL) reported first-quarter 2025 adjusted earnings per share (EPS) of $1.66, which missed the Zacks Consensus Estimate by 1.2%. However, the bottom line was in line year over year. (See the Zacks Earnings Calendar to stay ahead of market-making news.)Aflac’s revenues decreased from $5.4 billion in the year-ago quarter to $4.3 billion in the quarter under review. However, the top line missed the consensus mark by 1.3%.Weaker-than-expected quarterly results were affected by lower premiums ...

Financial Data and Key Metrics Changes - Aflac reported net earnings per diluted share of $0.05, significantly impacted by net investment losses compared to net investment gains in Q1 2024 [5] - Adjusted earnings per diluted share remained unchanged at $1.66 year over year [5][13] - Adjusted return on equity (ROE) was 12.7% excluding foreign currency remeasurement, indicating a solid performance [13] - Adjusted book value per share, excluding foreign currency remeasurement, increased by 2.2% [13] Business Line Data and Key Metrics Changes - Aflac Japan experienced a 12.6% year-over-year sales increase, driven by significant contributions from Sumitas and a 6.3% increase in cancer insurance sales [5][6] - Aflac US saw a 3.5% year-over-year increase in sales, with strong performance in group life, disability, and network dental [8] - Net earned premiums in Aflac Japan declined by 5%, while underlying earned premiums adjusted for deferred profit liability and reinsurance declined by 1.4% [14] - In the US, net earned premiums increased by 1.8%, with persistency rising by 60 basis points year over year to 79.3% [17] Market Data and Key Metrics Changes - Aflac Japan's total benefit ratio was 65.8%, down 120 basis points year over year, while the US total benefit ratio was 47.7%, up 120 basis points year over year [15][18] - Persistency in Japan remained solid at 93.8%, up 40 basis points year over year [16] - The expense ratio in Japan increased to 19.6%, primarily due to higher technology expenses, while the US expense ratio decreased to 37.6% [16][19] Company Strategy and Development Direction - Aflac aims to appeal to younger customers through products like Sumitas, which has been successful in reaching this demographic [6] - The company is focused on maintaining strong premium persistency and driving profitable growth through stronger underwriting discipline [8] - Aflac continues to leverage its strong capital and cash flows while maintaining prudent liquidity and capital management [10] - The company is committed to reinforcing its leading position in the life insurance markets of Japan and the US [12] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the demand for Aflac's products, emphasizing the importance of being a partner in health for policyholders [9] - The company is optimistic about the growth potential in both Japan and the US, with plans to continue capital deployment and maintain a strong dividend track record [11][12] - Management acknowledged the challenges posed by macroeconomic factors but remains committed to long-term capital management strategies [36] Other Important Information - Aflac repurchased $900 million worth of its own stock and paid $317 million in dividends during Q1 2025 [23] - The company ended the quarter with strong capital ratios, including an estimated regulatory ESR above 250% [24] - Aflac Japan's cancer insurance sales are expected to grow, supported by the launch of a new cancer product in March 2025 [52] Q&A Session Summary Question: Why did the ESR ratio decline in Q1? - Management explained that the decline was due to the strengthening yen, partially offset by higher Japan interest rates and significant dividends flowing from Aflac Japan to Aflac Inc [32] Question: How should capital planning be approached given recent macro changes? - Management stated that capital management is designed with a long-term view, and they do not plan to change their approach significantly despite recent volatility [36] Question: What are the expectations for the new cancer product sales? - Management expressed confidence in the new cancer product's growth, anticipating continued sales increases throughout 2025 [52] Question: How is the competitive landscape for medical insurance in Japan? - Management acknowledged increased competition but emphasized Aflac's pioneering position and unique services that provide a competitive advantage [56] Question: How does the company view the impact of the yen on its operations? - Management noted that while a strengthening yen introduces volatility, it also leads to higher future dividends in dollar terms from Aflac Japan, which offsets some negative impacts [95]

Financial Data and Key Metrics Changes - Aflac reported net earnings per diluted share of $0.05, significantly impacted by net investment losses compared to net investment gains in Q1 2024 [6] - Adjusted earnings per diluted share remained unchanged at $1.66 year-over-year [6][13] - Adjusted return on equity (ROE) was 12.7% excluding foreign currency remeasurement, indicating a solid performance [13] Business Line Data and Key Metrics Changes - Aflac Japan experienced a 12.6% year-over-year sales increase, driven by significant contributions from Sumitas and a 6.3% increase in cancer insurance sales [6][8] - Aflac US saw a 3.5% year-over-year increase in sales, with strong performance in group life, disability, and network dental [9][17] - Net earned premiums for Aflac Japan declined by 5%, while underlying earned premiums adjusted for deferred profit liability and other factors declined by 1.4% [14] Market Data and Key Metrics Changes - Aflac Japan's total benefit ratio was 65.8%, down 120 basis points year-over-year, while the U.S. total benefit ratio was 47.7%, up 120 basis points year-over-year [15][18] - Persistency in Japan improved to 93.8%, up 40 basis points year-over-year, while U.S. persistency increased to 79.3%, up 60 basis points year-over-year [16][17] Company Strategy and Development Direction - The company aims to appeal to younger customers through products like Sumitas and is focused on cross-selling medical and cancer policies [7][9] - Aflac continues to emphasize strong capital and cash flow management while maintaining a commitment to liquidity and capital ratios [10][11] - The company is strategically deploying capital, having repurchased $900 million in stock and paid $317 million in dividends in Q1 2025 [11][23] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the underlying strengths of the business and potential for continued growth in both Japan and the U.S. [12] - The company is closely monitoring economic trends and adjusting its capital management strategies accordingly [38][41] - Management highlighted the importance of maintaining strong premium persistency and adapting to market conditions [10][11] Other Important Information - Aflac Japan launched a new cancer insurance product in March 2025, which is expected to contribute positively to sales [54] - The company has a robust hedging strategy in place to manage foreign currency exposure, particularly related to the yen [26][97] Q&A Session Summary Question: Why did the ESR ratio decline in Q1? - Management explained that the decline was due to the strengthening yen, partially offset by higher Japan interest rates and dividends flowing to Aflac Inc. [32][33] Question: How should we think about capital planning given recent macro changes? - Management indicated that capital management is designed with a long-term view and is not expected to change significantly despite macroeconomic volatility [37][41] Question: What are the expectations for the new cancer product sales? - Management expressed confidence that the new cancer product will continue to grow, with expectations for sales in 2025 to exceed those of 2024 [54][100] Question: How is the competitive landscape for medical insurance in Japan? - Management acknowledged increased competition but emphasized Aflac's pioneering position in cancer insurance and ongoing efforts to maintain market share [58][59] Question: How are remeasurement gains expected to trend? - Management noted that significant remeasurement gains are typically unlocked in the third quarter, with smaller adjustments in other quarters [63][66] Question: Is there any anti-U.S. sentiment affecting sales in Japan? - Management stated that there is no observable anti-American sentiment affecting the business, citing strong economic ties between the U.S. and Japan [116][117]

Forward-Looking Statements and Non-GAAP Financial Measures 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. The company desires to take advantage of these ...

Core Viewpoint - Aflac reported quarterly earnings of $1.66 per share, slightly missing the Zacks Consensus Estimate of $1.68 per share, indicating a -1.19% earnings surprise [1]. Financial Performance - Aflac's revenues for the quarter ended March 2025 were $4.32 billion, which was 1.26% below the Zacks Consensus Estimate and a decrease from $5.44 billion year-over-year [2]. - Over the last four quarters, Aflac has surpassed consensus EPS estimates two times and topped revenue estimates only once [2]. Stock Performance - Aflac shares have increased approximately 5% since the beginning of the year, contrasting with a -5.5% decline in the S&P 500 [3]. - The current Zacks Rank for Aflac is 3 (Hold), suggesting that the stock is expected to perform in line with the market in the near future [6]. Earnings Outlook - The consensus EPS estimate for the upcoming quarter is $1.74 on revenues of $4.4 billion, while for the current fiscal year, the estimate is $6.84 on revenues of $17.62 billion [7]. - The trend of estimate revisions for Aflac is currently mixed, which may change following the recent earnings report [6]. Industry Context - The Insurance - Accident and Health industry, to which Aflac belongs, is currently ranked in the top 36% of over 250 Zacks industries, indicating a favorable outlook compared to the bottom 50% [8].

Financial Performance - Aflac Japan reported adjusted earnings of $722 million for Q1 2025, a decrease of 10.9% compared to $810 million in Q1 2024[8]. - Aflac U.S. achieved adjusted earnings of $358 million in Q1 2025, reflecting a slight increase of 0.6% from $356 million in Q1 2024[8]. - The company's total pretax adjusted earnings for Q1 2025 were $1,123 million, down 3.4% from $1,163 million in Q1 2024[8]. - Net earnings for Q1 2025 were reported at $29 million, a significant decline of 98.5% compared to $1,879 million in Q1 2024[8]. - The diluted earnings per share for Q1 2025 were $0.05, a drastic drop from $3.25 in Q1 2024, indicating a 98.5% decrease[8]. - Total revenues for 2023 decreased to $18,701 million, a decline of 37.5% compared to 2022[11]. - Net earned premiums for 2023 were $14,123 million, down 2.2% from $14,901 million in 2022[11]. - Net investment income increased to $3,811 million in 2023, compared to $3,656 million in 2022, reflecting a growth of 4.3%[11]. - Net earnings for 2023 were $4,659 million, reflecting a slight increase from $4,418 million in 2022[11]. - The company expects net earnings to reach $5,443 million in 2024, representing a projected growth of 16.7%[11]. Investment and Assets - Aflac's investment results for Q1 2025 included adjusted net investment losses of $924 million, compared to gains of $1,009 million in Q1 2024[8]. - Total assets decreased from $165.086 billion in 2020 to $126.724 billion in 2023, representing a decline of approximately 23%[15]. - Total liabilities decreased from $131.527 billion in 2020 to $104.739 billion in 2023, a reduction of about 20%[15]. - Total invested assets as of March 31, 2023, amount to $104.742 billion, down from $111.219 billion in 2022[28]. - Fixed Maturity Securities decreased to $88.508 billion in 2023 from $94.525 billion in 2022[28]. - The total portfolio value is projected to be $100.091 billion in 2024, up from $94.887 billion in 2023[28]. Shareholder Metrics - Adjusted Book Value Per Share for 2023 is $47.55, reflecting a 10.1% increase from the previous year[20]. - Adjusted Earnings Per Share (EPS) for 2023 is $6.23, representing a 9.9% growth year-over-year, with an adjusted EPS excluding foreign currency impact of $6.43, a 13.4% increase[25]. - The projected net earnings per diluted share for 2024 is $9.63, up from $7.78 in 2023, indicating a growth of 23.7%[12]. - The company expects an adjusted EPS of $7.21 for 2024, indicating a 15.7% growth[25]. Operational Efficiency - Total acquisition and operating expenses for 2023 were $5,228 million, a decrease of 4.1% compared to $5,384 million in 2022[11]. - The company reported a net investment gain of $590 million in 2023, compared to a gain of $363 million in 2022[11]. - The combined ratio for 2023 was 77.3%, indicating a 22.7% pretax profit margin[60]. - The persistency ratio for 2023 was 78.6%, showing a slight decrease from 2022[60]. Future Projections - The company plans to maintain a focus on market expansion and new product development in the upcoming years[15]. - The company anticipates a return on equity of 22.6% for 2024[23]. - The company expects a further decrease in net earned premiums to $1,050 million in 2024, representing a 6.9% decline[78]. - The company anticipates total net earned premiums to increase to $680 million in 2024, representing a growth of 70% from 2023[90]. Market and Sales - New annualized premium sales in 2023 amounted to $1,558 million, representing a 5.0% increase year-over-year[63]. - The sales force in 2023 consisted of 11,566 recruited agents, with an average weekly productivity of 249,663[67]. - Aflac Japan's annualized premium sales for 2023 were ¥1,246.4 billion, down 4.2% from 2022[81]. - New annualized premium sales in Aflac Japan for 2023 increased by 8.8% to ¥52.234 billion[81]. Tax and Accounting Changes - Aflac's effective tax rate for Q1 2025 was 80.3%, compared to 13.4% in Q1 2024[8]. - The company adopted the LDTI accounting standard as of January 1, 2023, impacting the presentation of deferred profit liability[3].

Core Insights - Aflac Incorporated reported a significant decline in total revenues for Q1 2025, amounting to $3.4 billion, down from $5.4 billion in Q1 2024, primarily due to net investment losses of $963 million compared to net gains of $951 million in the previous year [1][20][27] - Net earnings for the first quarter were $29 million, or $0.05 per diluted share, a drastic decrease from $1.9 billion, or $3.25 per diluted share, in the same quarter last year [1][20][27] Financial Performance - Net investment losses in Q1 2025 were $963 million, driven by losses on derivatives and foreign currency activities, as well as a decrease in the fair value of equity securities [2][3] - Adjusted earnings for the quarter were $906 million, a decrease of 5.7% from $961 million in Q1 2024, with adjusted earnings per diluted share remaining flat at $1.66 [3][27] - Shareholders' equity increased to $26.3 billion, or $48.55 per share, compared to $23.5 billion, or $41.27 per share, a year earlier [5][21] Segment Performance - Aflac Japan's net earned premiums in yen decreased by 5.0% to ¥256.5 billion, while in dollar terms, net earned premiums fell by 7.4% to $1.7 billion [7][8] - Aflac U.S. saw a 1.8% increase in net earned premiums to $1.5 billion, with total adjusted revenues up 1.3% to $1.7 billion [10][11] Sales and New Products - Total new annualized premium sales in Japan increased by 12.6% to ¥14.1 billion, reflecting strong sales of new products [9] - In the U.S., sales increased by 3.5% to $309 million, driven by group product sales [11] Capital Management - The board declared a second-quarter dividend of $0.58 per share, with $900 million deployed for share repurchases in Q1 2025 [13][17] - The company maintained a strong focus on capital and cash flow generation while managing liquidity and capital effectively [17] Outlook and Strategy - The CEO expressed satisfaction with the adjusted earnings and premium persistency rates in both Japan and the U.S., emphasizing a focus on profitable growth and improved underwriting discipline [14][16]