Group 1 - Aflac Incorporated announced a cybersecurity incident affecting personal information of an unknown number of individuals, including claims information, health information, Social Security numbers, and other personal data [1] - Lynch Carpenter, LLP is investigating claims against Aflac related to the data breach, encouraging individuals who believe they have been impacted to fill out a form for legal review [2] - Lynch Carpenter is a national class action law firm with a decade of experience in data privacy matters, representing millions of clients and recognized for complex litigation [3]

Core Insights - Aflac has experienced a significant data breach, potentially compromising sensitive customer information including Social Security numbers and health data, marking it as the largest insurance company affected by such a cyberattack [1][2] - The breach was attributed to a sophisticated cybercrime group, with Aflac stating that their systems were not impacted by ransomware and that they are fully operational [2][3] Company Summary - Aflac is currently unable to determine the total number of individuals affected or the specific data that was stolen, but it has engaged third-party cybersecurity experts to address the situation [2] - The company detected suspicious activity and halted the intrusion within hours on June 12 [2] Industry Context - The recent hacks affecting Aflac, Erie Insurance, and Philadelphia Insurance Companies are believed to be linked to a group known as Scattered Spider, which employs social engineering tactics to manipulate employees into granting access to company systems [3][6] - Scattered Spider is known for targeting various organizations, including recent attacks on UK retailers and Las Vegas casinos, raising alarms within the cybersecurity community regarding the vulnerability of the US insurance industry [7][8]

Core Insights - Aflac Incorporated experienced a cyber incident on June 12, 2025, but managed to stop the intrusion quickly, ensuring business operations remained unaffected [1] - The attack was attributed to a sophisticated cybercrime group targeting the insurance industry, utilizing social engineering tactics to gain network access [2] - Aflac is offering free credit monitoring, identity theft protection, and Medical Shield for 24 months to potentially impacted individuals [2] Company Overview - Aflac is a Fortune 500 company providing financial protection and peace of mind for nearly seven decades, primarily through supplemental health insurance products in the U.S. and cancer and medical insurance in Japan [5] - The company has been recognized as the No. 1 provider of supplemental health insurance in the U.S. and the leading provider of cancer and medical insurance in Japan [5] - Aflac has been included in the World's Most Ethical Companies for 19 consecutive years and Fortune's World's Most Admired Companies for 24 years [5]

Core Insights - Investing in dividend stocks is a strategy for building long-term wealth and generating passive income, with dividend-paying companies historically outperforming non-dividend counterparts [1][2] Dividend Stock Performance - Research indicates that over a 50-year period, dividend stocks provided an annual return of approximately 9.2%, compared to 4.3% for non-dividend stocks [2] - Companies that consistently grow their dividends achieve even higher annual returns of 10.2% with lower volatility [2] Company Summaries - **Chubb**: A major player in the global insurance market with a strong history of conservative underwriting, Chubb has increased its dividend for 32 consecutive years and maintains a 17% payout ratio, supporting its dividend growth [5][6] - **Cincinnati Financial**: This insurer has raised its dividend for over 65 consecutive years, benefiting from disciplined underwriting and a conservative balance sheet, making it a member of the Dividend Kings club [7][8] - **FactSet Research Systems**: Provides financial data and analytics with a strong subscription model, generating steady revenue and raising dividends for over 27 consecutive years [9][10] - **Aflac**: A significant player in supplemental health and life insurance, Aflac has increased dividends for over 42 years, supported by low payout ratios and strong capital generation [11][12] - **S&P Global**: Engaged in credit ratings, indexes, and data analytics, S&P Global has a history of 53 consecutive years of dividend increases, supported by high-margin, recurring revenue businesses [13][14]

Industry Overview - The Zacks Accident and Health Insurance industry is expected to benefit from increased underwriting exposure and prudent underwriting standards among key players like Aflac, Unum Group, Trupanion, Globe Life, and AMERISAFE [1] - The industry has maintained profitability due to solid reserves, prudent claims management, and stable loss trends, although a softer performance is predicted for 2025 [2] - The global workers' compensation insurance market is projected to grow significantly between 2024 and 2032, driven by rising awareness of the benefits of coverage [3] Trends Impacting the Industry - Pricing pressure is anticipated to continue due to inflation, rising medical costs, and demographic changes, with workers' compensation insurance pricing expected to increase at a CAGR of 5.3% from 2022 to 2026 [4] - Claims frequency is improving due to better safety measures and working conditions, with a notable increase in the number of workers aged 75 and older expected to rise by 96.5% over the next decade [5] - The adoption of technology, including AI and data analytics, is accelerating in the industry, potentially reducing workers' compensation claim expenses by about 45% [6] Industry Performance - The Zacks Accident and Health Insurance industry ranks 95, placing it in the top 39% of 251 Zacks industries, indicating positive near-term prospects [7][8] - The industry has outperformed the Finance sector and the Zacks S&P 500 composite, with a collective gain of 29.6% over the past year compared to 5.8% and 2.2% respectively [10] Current Valuation - The industry is currently trading at a trailing 12-month price-to-book (P/B) ratio of 1.84X, significantly lower than the Zacks S&P 500 composite's 7.89X and the sector's 4.17X [13] Company Highlights - **Trupanion**: Positioned for growth in the underpenetrated pet insurance market, with a projected earnings increase of 130.4% in 2025 [19][20] - **Aflac**: Focused on strategic growth investments and digital solutions, with a long-term earnings growth rate of 4.8% [23][24] - **Unum Group**: Expected to see sales growth of 5-10% in 2025, with a long-term earnings growth rate of 7.2% [27][29] - **Globe Life**: Positive revenue trends driven by premium growth, with expected earnings increases of 10% and 9.8% in 2025 and 2026 respectively [32][34] - **AMERISAFE**: Benefits from a niche focus and a strong balance sheet, with a consistent record of dividend payments since 2013 [36][37]

Group 1: Dividend Kings Overview - The Dividend Kings group consists of companies that have increased their dividends for at least 50 consecutive years, making them ideal for investors seeking steady income streams [1] - These companies have demonstrated resilience through various economic conditions while consistently rewarding shareholders [1][6] Group 2: Philip Morris (PM) - Philip Morris shares have performed well in 2025, surpassing consensus EPS and sales expectations, driven by strong demand and product innovations, particularly in its smoke-free business [3] - Shipment volumes for the smoke-free business rose nearly 15% year-over-year, with sales from smoke-free products growing 27% year-over-year, indicating robust demand [4] - The stock currently offers a market-beating annual yield of 2.9% and has a five-year annualized dividend growth rate of 2.8% [4] Group 3: Aflac (AFL) - Aflac, a major supplier of supplemental insurance in the U.S., has an annual yield of 2.2% and a five-year annualized dividend growth rate of 15%, showcasing its commitment to shareholders [8] - The company is experiencing a slight growth slowdown, with consensus expectations indicating a 6% decrease in EPS and a 2% decline in sales for the current fiscal year, although growth is expected to resume in FY26 [10] Group 4: Emerson Electric (EMR) - Emerson Electric, a global technology and engineering company, reported positive quarterly results, leading to an updated FY25 outlook [11] - The company experienced a 14% year-over-year increase in free cash flow and margin expansion, supporting its ability to maintain dividend payouts, with shares yielding 1.8% annually [12]

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].

Core Viewpoint - Aflac Incorporated reported weaker-than-expected first-quarter 2025 results, with adjusted earnings per share (EPS) of $1.66, missing estimates by 1.2%, while revenues decreased to $4.3 billion, missing consensus by 1.3% [1][2] Financial Performance - Adjusted net investment income decreased by 2.2% year over year to $913 million [3] - Total net benefits and claims declined by 3.2% year over year to $1.9 billion [3] - Total acquisition and operating expenses increased by 4.1% year over year to $1.3 billion [3] - Pre-tax earnings plummeted by 93.3% year over year to $145 million [3] Segment Analysis - **Aflac Japan**: Adjusted revenues decreased by 8.1% year over year to $2.3 billion, missing estimates by 5.3%. Total net earned premiums dipped by 7.4% year over year to $1.7 billion [4] - **Aflac U.S.**: Adjusted revenues increased by 1.3% year over year to $1.7 billion, but missed estimates by 1.4%. Total net earned premiums climbed by 1.8% year over year to $1.4 billion [6] Investment and Capital Management - Aflac bought back 8.5 million shares worth $900 million in the first quarter, with 38.8 million shares remaining for buyback [11] - The company announced a dividend of 58 cents per share for the second quarter, payable on June 2, 2025 [11] Financial Position - As of March 31, 2025, total cash and cash equivalents decreased to $5.2 billion from $6.2 billion at the end of 2024 [8] - Total assets increased to $120.3 billion from $117.6 billion at the end of 2024 [8] - Adjusted debt increased to $7.5 billion from $7.2 billion at the end of 2024, with a debt to adjusted capitalization ratio of 20.7% [9] Future Outlook - Aflac anticipates improved sales in its Japan business for 2025, focusing on third-sector products and targeting younger customers [12] - The company expects a benefit ratio of 64-66% for Aflac Japan and 48-52% for Aflac U.S. in 2025 [13]