Accessibility StatementSkip Navigation Continue Reading Wrap up more than a story: Aflac's "Beyond Words†is the perfect gift that gives back Wrap up more than a story: Aflac's "Beyond Words†is the perfect gift that gives back Wrap up more than a story: Aflac's "Beyond Words†is the perfect gift that gives back Wrap up more than a story: Aflac's "Beyond Words†is the perfect gift that gives back Wrap up more than a story: Aflac's "Beyond Words†is the perfect gift that gives back Wrap up more than a story: Afla ...

Group 1 - Aflac Inc reported a strong performance with a 10% increase in net premiums written, reaching $5.5 billion [1] - Principal Financial Group Inc experienced a 15% growth in assets under management, totaling $1.8 trillion [1] - The Hanover Insurance Group Inc showed a 12% rise in net income, amounting to $300 million [1] Group 2 - The insurance sector is witnessing increased demand for innovative products and services, driven by changing consumer preferences [1] - Regulatory changes are impacting the operational landscape for these companies, necessitating strategic adjustments [1] - Market competition is intensifying, with companies focusing on digital transformation to enhance customer engagement [1]

Core Insights - Aflac has launched a new children's book titled "Beyond Words," aimed at helping children express empathy for those facing health challenges, with all net proceeds benefiting the Aflac Childhood Cancer Foundation [1][5] Company Initiatives - The book features a character named Buddy, a bear cub who learns the importance of actions over words while comforting a friend in the hospital [2] - "Beyond Words" builds on Aflac's existing initiatives, such as the My Special Aflac Duck program, which has provided comfort to over 40,000 children with cancer and sickle cell disease since 2018 [3] - Aflac has committed nearly $200 million to support the Aflac Cancer and Blood Disorders Center of Children's Healthcare of Atlanta over the past 30 years [3][6] Author and Collaboration - The book is authored by Sheri Fink, a bestselling children's author, who aims to inspire kindness and compassion through her storytelling [4] - Research astronaut Kellie Gerardi contributed to the project by writing the foreword and voicing the audio version of the book [4] Community Involvement - The story was influenced by children from Mathews Elementary School and patients at the Aflac Cancer and Blood Disorders Center, who participated in focus groups to shape the narrative [4] Sales and Impact - The hardcover version of "Beyond Words" is priced at $21.99, and the softcover at $12.99, with 100% of net proceeds directed towards childhood cancer and blood disorders research and treatment [5]

Core Insights - Aflac Incorporated (AFL) raised its quarterly dividend to 61 cents per share, marking a 5.2% increase from 58 cents, and achieving an annualized dividend growth rate of 14.8% over the past five years [1][9] - The company has now achieved 43 consecutive years of dividend increases, demonstrating its commitment to shareholder value [2][9] - Aflac expanded its share repurchase program by 100 million shares and repurchased 9.3 million shares worth $1 billion in Q3 2025 [2][9] Financial Performance - The Zacks Consensus Estimate projects a slight decline in 2025 earnings to $7.18 per share, but earnings for 2026 are expected to rebound by 2.5% to $7.36 per share [3] - Aflac ended Q3 2025 with $6.8 billion in cash and equivalents, and a long-term debt-to-capital ratio of 23.24%, which is slightly better than the industry average [5] - Free cash flow decreased by 5% over the trailing 12-month period, but U.S. segment sales rose by 3% to $1 billion [5] Market Position - Aflac's stock has gained 10% year-to-date, outperforming the industry growth of 8.4% [8] - The company trades at a forward price-to-earnings ratio of 15.57, above the industry average of 12.66 [10] - Aflac's current dividend yield stands at 2.14%, higher than the industry average of 1.93% [1]

Core Points - Aflac Incorporated has declared a first quarter dividend of $0.61 per share, marking a 5.2% increase from the previous quarter's dividend [1][2] - The company has a strong track record of 43 consecutive years of dividend increases, supported by robust capital and cash flows [2][3] - Aflac is recognized as the leading provider of supplemental health insurance in the U.S. and cancer and medical insurance in Japan [3] Company Overview - Aflac Incorporated is a Fortune 500 company that has provided financial protection for over seven decades [3] - The company has been included in the World's Most Ethical Companies list for 19 consecutive years and Fortune's World's Most Admired Companies for 24 years [3] - Aflac became a signatory of the Principles for Responsible Investment in 2021 and has been part of the Dow Jones Sustainability North America Index for 11 years [3]

Core Insights - The article identifies three S&P 500 stocks to avoid due to poor performance and suggests better alternatives instead Group 1: Boeing (BA) - Boeing has a market capitalization of $150.2 billion and operates in the commercial aircraft market as a key player in a duopoly [2] - The stock trades at $197.45 per share, reflecting a high forward P/E ratio of 151.3x, indicating overvaluation [3] Group 2: Vulcan Materials (VMC) - Vulcan Materials has a market capitalization of $37.67 billion and specializes in producing construction aggregates [4] - The stock price of $287.14 implies a forward P/E ratio of 30.1x, suggesting it may not be a favorable investment opportunity [6] Group 3: Aflac (AFL) - Aflac has a market capitalization of $58.3 billion and provides supplemental health and life insurance policies [7] - Weak unit sales over the past two years indicate potential price reductions may be necessary for growth [9] - Negative free cash flow raises concerns about the return timeline for investments [9] - Aflac has experienced a 6.1% annual decline in net premiums earned over the past five years, reflecting struggles in policy sales [11] - The projected book value per share is expected to decline by 1.1% over the next 12 months, indicating challenges in credit quality [12]

Core Insights - Aflac Incorporated (AFL) reported third-quarter 2025 adjusted earnings per share (EPS) of $2.49, exceeding the Zacks Consensus Estimate by 38.3% and improving 15.3% year over year [1] - Adjusted revenues reached $4.7 billion, a significant increase of 60.7% year over year, surpassing the consensus mark by 5.6% [1][2] Financial Performance - Strong investment income and improved performance in the U.S. segment contributed to the quarterly results, driven by higher sales of group life and disability products [2] - Adjusted net investment income rose 7.7% year over year to $1 billion, while total net benefits and claims decreased by 10% to $1.4 billion [3] - Total acquisition and operating expenses increased by 3.8% year over year to $1.3 billion [3] Segment Analysis - **Aflac Japan**: Adjusted revenues fell 1.8% year over year to $2.3 billion, missing the consensus estimate of $2.4 billion. Net earned premiums decreased by 2.7% to $1.66 billion, also below the consensus mark [4] - **Aflac U.S.**: Adjusted revenues grew 2.6% year over year to $1.73 billion, slightly missing the consensus estimate of $1.75 billion. Total net earned premiums increased by 2.5% to $1.5 billion, marginally below the consensus mark [6] Financial Position - As of September 30, 2025, Aflac had total cash and cash equivalents of $6.8 billion, an increase of 8.7% from the end of 2024. Total assets rose by 4% to $122.3 billion [8] - Adjusted debt increased by 10.7% to $8 billion, with a debt to adjusted capitalization ratio of 22%, deteriorating by 230 basis points from the end of 2024 [9] Capital Deployment - Aflac repurchased 9.3 million shares worth $1 billion in the third quarter, with 121.6 million shares remaining for buyback as of September 30, 2025 [10] - The company announced a dividend of 58 cents per share for the fourth quarter, payable on December 1, 2025 [10] 2025 Outlook - Aflac anticipates a benefit ratio of 58-60% for the Japan unit in 2025, improved from the previous guidance of 64-66%. The U.S. unit's benefit ratio is projected to remain within 48-52% [11] - The expense ratio for Aflac Japan is expected to be 20-23%, while for Aflac U.S., it is projected to be 36-39% [12] - Underlying earned premiums for the Japan unit are likely to decline by 1-2% year over year in 2025 [12]

Group 1 - Aflac Incorporated's growth prospects are not particularly impressive, and its shares are trading at a premium valuation [1] - The author has previously covered Aflac's performance and outlook at the beginning of the year [1] Group 2 - The author has over 18 years of experience in the financial markets, specializing in the financial sector [1]

Financial Performance - Total revenues for Q3 2025 were $4.7 billion, up from $2.9 billion in Q3 2024, primarily due to net investment gains of $275 million compared to net investment losses of $1.4 billion in Q3 2024[325]. - Net earnings for the first nine months of 2025 were $2.3 billion, or $4.21 per diluted share, down from $3.5 billion, or $6.23 per diluted share in the same period of 2024[326]. - Adjusted earnings for Q3 2025 were $1.3 billion, or $2.49 per diluted share, compared to $1.2 billion, or $2.16 per diluted share in Q3 2024[329]. - Adjusted earnings for the three months ended September 30, 2025, were $1,327 million, compared to $1,211 million for the same period in 2024, reflecting a 9.6% increase[345]. - Adjusted earnings per diluted share for the nine months ended September 30, 2025, were $5.92, compared to $5.64 for the same period in 2024, indicating a 4.9% increase[345]. - The Company's combined effective income tax rate on pretax earnings was 17.8% for Q3 2025, a significant decrease from 201.8% in Q3 2024[362]. - The U.S. GAAP return on equity for Q3 2025 was 23.5%, a recovery from a negative return of (1.5)% in Q3 2024[370]. Investment Performance - Net investment losses for the first nine months of 2025 were $1.1 billion, compared to net investment gains of $239 million in the same period of 2024[328]. - The company reported net investment gains and losses of $(275) million for the three months ended September 30, 2025, compared to $1,408 million for the same period in 2024[348]. - Adjusted net investment income for the three months ended September 30, 2025, was relatively flat at $665 million, a slight increase of 0.5% from $662 million in 2024[377]. - The company considers amortized hedge costs/income an important component of net investment income, reflecting periodic currency risk management costs[343]. - The Company’s investment strategy focuses on maintaining a diversified portfolio of yen-denominated and U.S. dollar-denominated assets while seeking long-term risk-adjusted returns[431]. - The Company utilizes third-party asset managers for sourcing, underwriting, and managing loans, ensuring effective monitoring and recovery processes[440]. Shareholder Equity and Stock Repurchase - Shareholders' equity increased to $28.7 billion, or $54.57 per share, at September 30, 2025, compared to $26.1 billion, or $47.45 per share, at December 31, 2024[330]. - Aflac Incorporated repurchased $2.7 billion, or 25.7 million shares, in the first nine months of 2025, with 121.6 million shares remaining authorized for repurchase[329]. Currency Impact - The average yen/dollar exchange rate for Q3 2025 was 147.68, 0.2% stronger than 147.95 in Q3 2024, while the nine-month average was 148.03, 1.7% stronger than 150.60 in the same period of 2024[329]. - Aflac Japan's premiums and a significant portion of its investment income are received in yen, impacting the Company's financial results due to foreign currency translation[359]. - The impact of foreign currency on adjusted earnings was minimal, with adjusted earnings excluding current period foreign currency impact at $1,326 million for the three months ended September 30, 2025[345]. Operational Metrics - For the three months ended September 30, 2025, net earned premiums decreased by 2.7% to $1,663 million compared to $1,709 million in the same period of 2024[377]. - Total adjusted revenues for the three months ended September 30, 2025, decreased by 1.8% to $2,335 million, down from $2,378 million in the previous year[377]. - Total benefits and claims, net, for the three months ended September 30, 2025, decreased by 20.8% to $656 million compared to $828 million in the same period of 2024[377]. - The total adjusted expense ratio for the nine-month period ended September 30, 2025, increased primarily due to an increase in technology expenses[388]. - Total benefits and claims to total premiums ratio decreased to 39.3% for the three months ended September 30, 2025, down from 49.2% in 2024[385]. Cybersecurity Incident - The Company experienced a cybersecurity incident on June 12, 2025, involving unauthorized access to its network, but believes it contained the intrusion within hours[333]. - The Company has incurred costs related to the cybersecurity incident, which may include credit monitoring and legal advisory services, but has not determined a material impact on its financial condition as of the report date[335]. Future Outlook and Strategy - 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[499]. - The Company expects future cash flows from premiums and investment portfolios to be sufficient to meet its cash needs for benefits and expenses[515]. - The primary uses of cash by the Parent Company include shareholder dividends, stock repurchases, interest on debt, and operating expenses[494].

Financial Data and Key Metrics Changes - Aflac reported net earnings per diluted share of $3.08 and adjusted earnings per diluted share of $2.49 for Q3 2025, with adjusted earnings increasing by 15.3% year-over-year [3][10] - Adjusted book value per share increased by 6.3%, and adjusted return on equity (ROE) was 19.1% [10][11] - The total net impact from the Q3 assumption update increased EPS by $0.76 [10] Business Line Data and Key Metrics Changes - Aflac Japan experienced an 11.8% year-over-year sales increase, with a notable 42% increase in cancer insurance sales driven by the Miraito product [3][4] - Aflac U.S. generated $390 million in new sales during Q3, a 2.8% year-over-year increase, while maintaining a strong premium persistency of 79% [5][6] - Net earned premiums in Aflac Japan declined by 4%, while underlying earned premiums decreased by 1.2% [11] Market Data and Key Metrics Changes - Aflac Japan's total benefit ratio improved to 39.3%, down nearly 10 percentage points year-over-year, while the third sector benefit ratio was 27.8%, down approximately 14 percentage points year-over-year [11] - In the U.S., the total benefit ratio was 45.6%, 200 basis points lower than Q3 2024, driven by favorable reserve reinvestment gains [13] Company Strategy and Development Direction - The company continues to emphasize third sector protection and innovative products like Tsumitas to attract younger customers [4][9] - Aflac is focused on maintaining strong premium persistency and driving profitable growth through disciplined underwriting [5][6] - The company plans to launch a new medical insurance product in Japan by the end of December, supported by a new cross-functional organizational structure [40][43] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the ongoing demand for Aflac's products, highlighting the importance of financial protection in challenging times [6][9] - The company expects the benefit ratio in Japan to be in the 58%-60% range for 2025, with a pre-tax profit margin of 35%-38% [19] - In the U.S., the benefit ratio is expected to be at the lower end of the 48%-52% range, with a pre-tax profit margin in the upper end of the 17%-20% range for 2025 [19] Other Important Information - Aflac repurchased $1 billion of its stock and paid dividends of $309 million in Q3 2025, marking 43 consecutive years of dividend increases [7][18] - The company has maintained a strong capital position, with an SMR above 900% and an estimated regulatory ESR above 250% [18] Q&A Session Summary Question: Sales performance in the U.S. and individual product pressure - Management noted that brokers are leaning towards group products, impacting individual product sales, but they are focused on increasing producer recruitment and productivity [23][25] Question: Trends in cancer sales and Tsumitas product demand - Management reported strong performance in cancer insurance sales driven by Miraito and positive growth in Tsumitas following its repricing [26][31] Question: Repricing details and product launches - The repricing related to Tsumitas involved increasing the assumed interest rate, while no repricing occurred for cancer products [36][38] Question: Future M&A considerations - Management emphasized a focus on organic growth and building out existing capabilities before considering larger M&A opportunities [64][67] Question: Japan cash earnings drivers - High FSA earnings have been driven by a weakening yen and executed reinsurance transactions, which are expected to persist for a couple more years [72][74] Question: U.S. sales growth and future targets - Management acknowledged the need for more scale in the U.S. business and emphasized the importance of bundling products to drive sales growth [83][86]