[PART I. FINANCIAL INFORMATION](index=3&type=section&id=PART%20I.%20FINANCIAL%20INFORMATION) [Item 1. Financial Statements (Unaudited)](index=3&type=section&id=Item%201.%20Financial%20Statements%20(Unaudited)) This section presents Aflac's unaudited consolidated financial statements for Q2 2025, covering earnings, balance sheets, cash flows, and notes [Consolidated Statements of Earnings](index=3&type=section&id=Consolidated%20Statements%20of%20Earnings) Net earnings significantly decreased for both periods ended June 30, 2025, primarily due to net investment losses Metric (in millions) | Metric (in millions) | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | | :------------------- | :----------------------------- | :----------------------------- | :----------------------------- | :----------------------------- | | Total Revenues | $4,160 | $5,138 | $7,558 | $10,575 | | Total Benefits and Expenses | $3,338 | $3,119 | $6,591 | $6,385 | | Net Earnings | $599 | $1,755 | $628 | $3,634 | | Basic EPS | $1.12 | $3.11 | $1.16 | $6.38 | | Diluted EPS | $1.11 | $3.10 | $1.16 | $6.35 | | Cash Dividends per Share | $0.58 | $0.50 | $1.16 | $1.00 | - Net investment gains (losses) significantly impacted total revenues and net earnings, with a **loss of $(421) million** in Q2 2025 compared to a **gain of $696 million** in Q2 2024, and a **loss of $(1,384) million** in H1 2025 compared to a **gain of $1,647 million** in H1 2024[9](index=9&type=chunk) [Consolidated Statements of Comprehensive Income (Loss)](index=4&type=section&id=Consolidated%20Statements%20of%20Comprehensive%20Income%20(Loss)) Total comprehensive income (loss) decreased for both periods ended June 30, 2025, due to lower net earnings and unrealized losses Metric (in millions) | Metric (in millions) | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | | :------------------- | :----------------------------- | :----------------------------- | :----------------------------- | :----------------------------- | | Net Earnings | $599 | $1,755 | $628 | $3,634 | | Unrealized foreign currency translation gains (losses) | $179 | $(340) | $531 | $(838) | | Unrealized holding gains (losses) on fixed maturity securities | $(764) | $(829) | $(2,305) | $(727) | | Effect of changes in discount rate assumptions | $2,146 | $3,698 | $4,542 | $5,044 | | Total comprehensive income (loss) | $1,967 | $3,565 | $3,115 | $5,862 | [Consolidated Balance Sheets](index=5&type=section&id=Consolidated%20Balance%20Sheets) Total assets and shareholders' equity increased as of June 30, 2025, driven by investments and discount rate assumption changes Metric (in millions) | Metric (in millions) | June 30, 2025 | December 31, 2024 | | :------------------- | :------------ | :---------------- | | Total Investments and Cash | $111,769 | $105,087 | | Total Assets | $124,736 | $117,566 | | Total Liabilities | $97,536 | $91,468 | | Total Shareholders' Equity | $27,200 | $26,098 | | Unrealized foreign currency translation gains (losses) | $(4,282) | $(4,998) | | Unrealized gains (losses) on fixed maturity securities | $(1,828) | $24 | | Effect of changes in discount rate assumptions | $5,594 | $2,006 | [Consolidated Statements of Shareholders' Equity](index=6&type=section&id=Consolidated%20Statements%20of%20Shareholders'%20Equity) Total shareholders' equity increased from December 31, 2024, to June 30, 2025, due to net earnings and discount rate changes Metric (in millions) | Metric (in millions) | Balance at Dec 31, 2024 | Balance at June 30, 2025 | | :------------------- | :---------------------- | :----------------------- | | Total Shareholders' Equity | $26,098 | $27,200 | | Net Earnings | $29 (Q1) + $599 (Q2) | $628 | | Unrealized foreign currency translation gains (losses), net of tax | $449 (Q1) + $267 (Q2) | $716 | | Unrealized gains (losses) on fixed maturity securities, net of tax | $(1,257) (Q1) + $(595) (Q2) | $(1,852) | | Effect of changes in discount rate assumptions, net of tax | $1,893 (Q1) + $1,695 (Q2) | $3,588 | | Purchases of treasury stock | $(949) (Q1) + $(839) (Q2) | $(1,788) | | Dividends to shareholders | $2 (Q1) + $(312) (Q2) | $(310) | [Consolidated Statements of Cash Flows](index=8&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) Net cash and cash equivalents increased for the six months ended June 30, 2025, from operating and investing activities Cash Flow Activity (in millions) | Cash Flow Activity (in millions) | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | | :------------------------------- | :----------------------------- | :----------------------------- | | Net Cash Provided (Used) by Operating Activities | $988 | $1,104 | | Net Cash Provided (Used) by Investing Activities | $1,174 | $2,294 | | Net Cash Provided (Used) by Financing Activities | $(1,423) | $(1,576) | | Net Change in Cash and Cash Equivalents | $736 | $1,754 | | Cash and Cash Equivalents, End of Period | $6,965 | $6,060 | - Operating cash flows decreased slightly in H1 2025 compared to H1 2024, while investing cash flows saw a more significant decrease[21](index=21&type=chunk) - Financing activities resulted in a net outflow, primarily due to treasury stock purchases and dividends paid[21](index=21&type=chunk) [Notes to the Consolidated Financial Statements](index=9&type=section&id=Notes%20to%20the%20Consolidated%20Financial%20Statements) These notes provide detailed explanations and disclosures supporting the consolidated financial statements, covering significant accounting policies and financial details [1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES](index=9&type=section&id=1.%20SUMMARY%20OF%20SIGNIFICANT%20ACCOUNTING%20POLICIES) This section outlines Aflac's core business, U.S. GAAP basis, and significant accounting estimates, including recent pronouncements - Aflac Incorporated primarily sells supplemental health and life insurance in Japan and the United States, operating through two reportable segments: Aflac Japan and Aflac U.S.[24](index=24&type=chunk) - The financial statements are prepared in accordance with U.S. GAAP, requiring significant estimates for investment and derivative valuation, deferred policy acquisition costs (DAC), future policy benefits, and income taxes[26](index=26&type=chunk) - The Company adopted ASU 2023-07 (Segment Reporting) for interim periods beginning January 1, 2025, which did not impact financial position or results of operations but expanded disclosures[31](index=31&type=chunk) - Pending adoption are ASU 2024-03 (Disaggregation of Income Statement Expenses) and ASU 2023-09 (Improvements to Income Tax Disclosures), effective for annual periods after December 15, 2026, and December 15, 2024, respectively, with no expected impact on financial position or results of operations[33](index=33&type=chunk)[35](index=35&type=chunk) [2. BUSINESS SEGMENT INFORMATION](index=11&type=section&id=2.%20BUSINESS%20SEGMENT%20INFORMATION) This note details Aflac Japan, Aflac U.S., and Corporate and other segments, explaining performance evaluation and financial breakdowns - Aflac Japan accounted for **54% of total adjusted revenues** in Q2 and H1 2025, and **77% of total assets** at June 30, 2025, highlighting its significant contribution[39](index=39&type=chunk) Total Adjusted Revenues by Segment (in millions) | Segment | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | | :------------- | :----------------------------- | :----------------------------- | :----------------------------- | :----------------------------- | | Aflac Japan | $2,472 | $2,447 | $4,744 | $4,919 | | Aflac U.S. | $1,728 | $1,684 | $3,449 | $3,384 | | Corporate and other | $336 | $249 | $662 | $497 | | **Total** | **$4,536** | **$4,380** | **$8,855** | **$8,800** | Pretax Adjusted Earnings by Segment (in millions) | Segment | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | | :------------- | :----------------------------- | :----------------------------- | :----------------------------- | :----------------------------- | | Aflac Japan | $790 | $864 | $1,512 | $1,674 | | Aflac U.S. | $388 | $383 | $746 | $739 | | Corporate and other | $20 | $23 | $63 | $21 | | **Total** | **$1,198** | **$1,270** | **$2,321** | **$2,434** | Total Assets by Segment (in millions) | Segment | June 30, 2025 | December 31, 2024 | | :------------- | :------------ | :---------------- | | Aflac Japan | $96,592 | $90,210 | | Aflac U.S. | $22,038 | $21,930 | | Corporate and other | $6,106 | $5,426 | | **Total** | **$124,736** | **$117,566** | [3. INVESTMENTS](index=15&type=section&id=3.%20INVESTMENTS) This note details Aflac's investment portfolio, including fixed maturity and equity securities, loans, fair value, and credit quality Total Securities Available-for-Sale (in millions) | Metric (in millions) | June 30, 2025 | December 31, 2024 | | :------------------- | :------------ | :---------------- | | Amortized Cost | $70,030 | $64,089 | | Fair Value | $68,879 | $65,269 | | Gross Unrealized Gains | $4,072 | $5,308 | | Gross Unrealized Losses | $5,223 | $4,128 | Net Investment Gains (Losses) (in millions) | Category (in millions) | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | | :--------------------- | :----------------------------- | :----------------------------- | :----------------------------- | :----------------------------- | | Sales and Redemptions | $(3) | $55 | $38 | $228 | | Equity Securities | $98 | $11 | $37 | $87 | | Credit Losses | $(58) | $(19) | $(113) | $(20) | | Derivatives and Other | $(452) | $649 | $(1,340) | $1,352 | | **Total Net Investment Gains (Losses)** | **$(421)** | **$696** | **$(1,384)** | **$1,647** | - Total commercial mortgage and other loans decreased from **$11,224 million** at December 31, 2024, to **$10,648 million** at June 30, 2025, with a corresponding increase in allowance for credit losses from **$(355) million** to **$(384) million**[70](index=70&type=chunk) - The allowance for credit losses for loans and securities increased from **$(375) million** at December 31, 2024, to **$(404) million** at June 30, 2025, reflecting additions to the allowance of **$(114) million** and write-offs of **$85 million** during the six-month period[100](index=100&type=chunk) - Total assets of consolidated Variable Interest Entities (VIEs) were **$14,147 million** at June 30, 2025, primarily consisting of fixed maturity securities and commercial mortgage and other loans[111](index=111&type=chunk) [4. DERIVATIVE INSTRUMENTS](index=34&type=section&id=4.%20DERIVATIVE%20INSTRUMENTS) This note details Aflac's use of derivatives for foreign currency and interest rate risk, including types, classification, and impact - The Company uses foreign currency forwards and options to hedge currency risk on U.S. dollar-denominated investments in Aflac Japan and to hedge the net investment in Aflac Japan[124](index=124&type=chunk)[125](index=125&type=chunk) - Interest rate swaps are used to economically hedge interest rate fluctuations in variable-rate investments, and interest rate swaptions are used to hedge changes in fair value due to interest rate fluctuations for U.S. dollar-denominated available-for-sale fixed-maturity securities[126](index=126&type=chunk)[129](index=129&type=chunk) Derivative Fair Value Amounts (in millions) | Category | Notional Amount (June 30, 2025) | Asset Fair Value (June 30, 2025) | Liability Fair Value (June 30, 2025) | | :----------------------- | :------------------------------ | :------------------------------- | :----------------------------------- | | Cash flow hedges | $18 | $0 | $4 | | Net investment hedge | $1,926 | $29 | $53 | | Non-qualifying strategies | $57,976 | $61 | $868 | | **Total Derivatives** | **$59,920** | **$90** | **$925** | - The Company's net investment hedge was effective during the three- and six-month periods ended June 30, 2025 and 2024[141](index=141&type=chunk) - As of June 30, 2025, all derivative agreement counterparties were investment grade, and the Company mitigates credit risk through collateral posting requirements[155](index=155&type=chunk)[156](index=156&type=chunk) [5. FAIR VALUE MEASUREMENTS](index=46&type=section&id=5.%20FAIR%20VALUE%20MEASUREMENTS) This note details fair value measurements for assets and liabilities, categorized by a three-level hierarchy and valuation techniques Fair Value Hierarchy of Assets (in millions) at June 30, 2025 | Asset Category | Level 1 (Quoted Prices) | Level 2 (Observable Inputs) | Level 3 (Unobservable Inputs) | Total Fair Value | | :----------------------------- | :---------------------- | :-------------------------- | :---------------------------- | :--------------- | | Fixed maturity securities | $16,975 | $48,995 | $2,909 | $68,879 | | Equity securities | $715 | $0 | $167 | $882 | | Other investments | $2,375 | $0 | $0 | $2,375 | | Cash and cash equivalents | $6,965 | $0 | $0 | $6,965 | | Other assets (Derivatives) | $0 | $90 | $0 | $90 | | **Total Assets** | **$27,030** | **$49,085** | **$3,076** | **$79,191** | Fair Value Hierarchy of Liabilities (in millions) at June 30, 2025 | Liability Category | Level 1 (Quoted Prices) | Level 2 (Observable Inputs) | Level 3 (Unobservable Inputs) | Total Fair Value | | :----------------------------- | :---------------------- | :-------------------------- | :---------------------------- | :--------------- | | Other liabilities (Derivatives) | $0 | $925 | $0 | $925 | | **Total Liabilities** | **$0** | **$925** | **$0** | **$925** | - Commercial mortgage and other loans, and other policyholders' funds (annuities) are primarily classified as Level 3 due to the use of significant unobservable inputs like credit spreads and cash surrender values[194](index=194&type=chunk)[196](index=196&type=chunk) - The total fair value of Level 3 assets increased from **$2,224 million** at December 31, 2024, to **$3,076 million** at June 30, 2025, primarily due to purchases and transfers into Level 3[200](index=200&type=chunk)[201](index=201&type=chunk) [6. DEFERRED POLICY ACQUISITION COSTS](index=59&type=section&id=6.%20DEFERRED%20POLICY%20ACQUISITION%20COSTS) This note provides a rollforward of deferred policy acquisition costs (DAC) by segment and product, detailing capitalization and amortization Deferred Policy Acquisition Costs (DAC) by Segment (in millions) | Segment | Balance at Dec 31, 2024 | Capitalization (H1 2025) | Amortization (H1 2025) | Foreign Currency Translation and Other (H1 2025) | Balance at June 30, 2025 | | :---------- | :---------------------- | :----------------------- | :--------------------- | :----------------------------------------------- | :----------------------- | | Aflac Japan | $5,102 | $248 | $(224) | $472 | $5,614 | | Aflac U.S. | $3,656 | $273 | $(273) | $0 | $3,682 | | **Total** | **$8,758** | **$503** | **$(437)** | **$472** | **$9,296** | - Aflac Japan's DAC increased by **10.0%** (0.7% in yen terms) during the six months ended June 30, 2025, primarily due to foreign currency translation gains[212](index=212&type=chunk)[465](index=465&type=chunk) - Amortization of DAC for the six months ended June 30, 2025, was **$437 million**, with no changes to inputs, judgments, assumptions, or methods used to determine amortization amounts[212](index=212&type=chunk)[214](index=214&type=chunk) [7. POLICY LIABILITIES](index=60&type=section&id=7.%20POLICY%20LIABILITIES) This note details policy liabilities, including future policy benefits and other policyholders' funds, with interest rates and durations Net Liability for Future Policy Benefits After Reinsurance Recoverable (in millions) | Segment | June 30, 2025 | December 31, 2024 | | :---------- | :------------ | :---------------- | | Aflac Japan | $51,800 | $51,540 | | Aflac U.S. | $10,166 | $10,039 | | Corporate and other | $5,106 | $5,072 | | **Total** | **$67,072** | **$66,651** | Weighted-Average Interest Rates and Liability Duration for Aflac Japan (June 30, 2025) | Product Type | Original Discount Rate | Current Discount Rate | Liability Duration (years) | | :-------------------- | :--------------------- | :-------------------- | :------------------------- | | Cancer | 3.8% | 2.8% | 12.6 | | Medical and other health | 2.5% | 3.4% | 23.0 | | Life insurance | 2.1% | 2.6% | 16.2 | | Other | 1.8% | 3.1% | 16.4 | - Discount rates are determined using upper-medium grade fixed-income instrument yields reflecting liability duration characteristics, with specific methodologies for Japan (yen-denominated) and U.S. (U.S. dollar-denominated) policies, including extrapolation for longer tenors[225](index=225&type=chunk)[227](index=227&type=chunk)[229](index=229&type=chunk) - Other policyholders' funds, primarily Aflac Japan's fixed annuities, increased from **$5,460 million** at December 31, 2024, to **$6,002 million** at June 30, 2025, with a weighted-average crediting rate of **1.5%**[244](index=244&type=chunk)[245](index=245&type=chunk) [8. REINSURANCE](index=70&type=section&id=8.%20REINSURANCE) This note details reinsurance activities, including quota-share agreements, reconciliation of premiums and benefits, and recoverables Net Earned Premiums and Benefits and Claims (in millions) | Metric (in millions) | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | | :------------------- | :----------------------------- | :----------------------------- | :----------------------------- | :----------------------------- | | Direct Earned Premiums | $3,525 | $3,352 | $6,958 | $6,834 | | Ceded Earned Premiums | $(91) | $(66) | $(179) | $(135) | | Assumed Earned Premiums | $36 | $39 | $72 | $82 | | **Net Earned Premiums** | **$3,470** | **$3,325** | **$6,851** | **$6,781** | | Direct Benefits and Claims | $2,097 | $1,995 | $4,128 | $4,077 | | Ceded Benefits and Claims | $(64) | $(36) | $(120) | $(68) | | Assumed Benefits and Claims | $14 | $13 | $25 | $30 | | **Net Benefits and Claims** | **$2,047** | **$1,972** | **$4,033** | **$4,039** | - The Company recorded a deferred reinsurance gain liability of **$154 million** at June 30, 2025, and a reinsurance recoverable of **$166 million** (net of $4 million allowance for credit losses), with significant reinsurance counterparties rated A+[249](index=249&type=chunk)[250](index=250&type=chunk) - Aflac Re, a Bermuda-domiciled insurer, reinsures certain policies issued by ALIJ, with inter-segment amounts eliminated in consolidation[251](index=251&type=chunk) [9. NOTES PAYABLE AND LEASE OBLIGATIONS](index=71&type=section&id=9.%20NOTES%20PAYABLE%20AND%20LEASE%20OBLIGATIONS) This note summarizes notes payable and lease obligations, including recent debt issuances, credit facilities, and covenant compliance Notes Payable and Lease Obligations (in millions) | Category | June 30, 2025 | December 31, 2024 | | :---------------------------------------- | :------------ | :---------------- | | U.S. dollar-denominated senior notes | $2,605 | $2,605 | | Yen-denominated senior notes and subordinated debentures | $4,090 | $2,990 | | Yen-denominated loans | $787 | $675 | | Finance lease obligations | $5 | $5 | | Operating lease obligations | $91 | $91 | | **Total Notes Payable and Lease Obligations** | **$8,933** | **$7,498** | - In June 2025, the Parent Company issued four series of senior notes totaling **¥74.9 billion** (approx. **$518 million** at current exchange rates) through a public debt offering, with maturities ranging from October 2030 to June 2040[254](index=254&type=chunk) - In May 2025, the Parent Company issued four series of senior notes totaling **¥75.1 billion** (approx. **$519 million** at current exchange rates) through a private placement, with maturities ranging from May 2032 to May 2045[255](index=255&type=chunk) - Interest expense related to notes payable was **$51 million** for Q2 2025 and **$100 million** for H1 2025[256](index=256&type=chunk) - The Company maintains various uncommitted and unsecured revolving credit facilities, totaling over **$1.8 billion** and **¥200 billion** in capacity, with no outstanding borrowings as of June 30, 2025[258](index=258&type=chunk)[259](index=259&type=chunk) [10. SHAREHOLDERS' EQUITY](index=76&type=section&id=10.%20SHAREHOLDERS'%20EQUITY) This note reconciles common stock and treasury stock, details share repurchases, EPS calculation, and AOCI components and reclassifications Common Stock and Treasury Stock Activity (in thousands of shares) | Category | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | | :----------------------- | :----------------------------- | :----------------------------- | | Common stock - issued, end of period | 1,357,790 | 1,356,618 | | Treasury stock, end of period | 822,981 | 795,249 | | Shares outstanding, end of period | 534,809 | 561,369 | - The Company repurchased **16.4 million shares** for **$1.7 billion** in H1 2025, with **30.9 million shares** remaining authorized for repurchase as of June 30, 2025[262](index=262&type=chunk) Changes in Accumulated Other Comprehensive Income (in millions, net of tax) | Component | Balance at Dec 31, 2024 | H1 2025 Change (before reclassification) | H1 2025 Reclassifications | Balance at June 30, 2025 | | :-------------------------------------- | :---------------------- | :--------------------------------------- | :------------------------ | :----------------------- | | Unrealized foreign currency translation gains (losses) | $(4,998) | $716 | $0 | $(4,282) | | Unrealized gains (losses) on fixed maturity securities | $24 | $(1,831) | $(21) | $(1,828) | | Unrealized gains (losses) on derivatives | $(20) | $1 | $2 | $(17) | | Effect of changes in discount rate assumptions | $2,006 | $3,588 | $0 | $5,594 | | Pension liability adjustment | $10 | $32 | $0 | $42 | | **Total** | **$(2,978)** | **$2,506** | **$(19)** | **$(491)** | - Reclassifications from AOCI into net earnings for H1 2025 included **$21 million** (net of tax) from unrealized gains/losses on available-for-sale securities and **$(2) million** (net of tax) from unrealized gains/losses on derivatives[277](index=277&type=chunk) [11. SHARE-BASED COMPENSATION](index=80&type=section&id=11.%20SHARE-BASED%20COMPENSATION) This note describes the Long-Term Incentive Plan, stock options, restricted stock activity, and unrecognized compensation costs - As of June 30, 2025, **32.6 million shares** were available for future grants under the Plan[281](index=281&type=chunk) Stock Options Outstanding and Exercisable (June 30, 2025) | Category | Stock Option Shares (in thousands) | Weighted-Average Remaining Term (in years) | Intrinsic Value (in millions) | Weighted-Average Exercise Price Per Share | | :---------- | :--------------------------------- | :----------------------------------------- | :---------------------------- | :---------------------------------------- | | Outstanding | 447 | 1.5 | $31 | $34.98 | | Exercisable | 447 | 1.5 | $31 | $34.98 | - Total unrecognized compensation cost related to restricted stock awards and units was **$44 million** as of June 30, 2025, expected to be recognized over approximately **1.8 years**[286](index=286&type=chunk) Restricted Stock Activity (6 Months Ended June 30, 2025) | Activity | Shares (in thousands) | Weighted-Average Grant-Date Fair Value Per Share | | :------------------------ | :-------------------- | :----------------------------------------------- | | Restricted stock at Dec 31, 2024 | 2,099 | $73.65 | | Granted in 2025 | 1,098 | $104.46 | | Vested in 2025 | (1,270) | $68.65 | | Restricted stock at June 30, 2025 | 1,857 | $85.81 | [12. BENEFIT PLANS](index=83&type=section&id=12.%20BENEFIT%20PLANS) This note covers funded defined benefit plans, non-qualified retirement plans, and postretirement benefits, including the U.S. pension plan settlement - In January 2025, the Company settled its obligations under the U.S. defined pension plan by purchasing a nonparticipating single premium group annuity contract, resulting in a settlement charge of **$55 million** in Q1 2025[291](index=291&type=chunk) Components of Net Periodic Benefit Cost (in millions) | Component (in millions) | Japan Pension Benefits (H1 2025) | U.S. Pension Benefits (H1 2025) | Other Postretirement Benefits (H1 2025) | | :---------------------- | :------------------------------- | :------------------------------ | :-------------------------------------- | | Service cost | $6 | $0 | $0 | | Interest cost | $4 | $10 | $0 | | Expected return on plan assets | $(4) | $(5) | $0 | | Settlement (gain) loss | $0 | $55 | $0 | | **Net periodic benefit cost (credit)** | **$6** | **$59** | **$1** | [13. COMMITMENTS AND CONTINGENT LIABILITIES](index=84&type=section&id=13.%20COMMITMENTS%20AND%20CONTINGENT%20LIABILITIES) This note addresses commitments, contingent liabilities, and a cybersecurity incident identified in June 2025, detailing its potential impacts - On June 12, 2025, the Company identified a cybersecurity incident involving unauthorized access to its U.S. network, leading to the exfiltration of certain data including claims, health, social security numbers, and other personal information[297](index=297&type=chunk)[320](index=320&type=chunk) - The Company believes the intrusion was contained within hours and its business remains operational, but the full financial impact, including potential litigation, regulatory actions, and reputational harm, is not yet reasonably estimable[297](index=297&type=chunk)[298](index=298&type=chunk)[321](index=321&type=chunk) - The Company renewed two outsourcing agreements for Aflac Japan's IT services in May and February 2025, with aggregate remaining costs of **$75 million** and **$65 million**, respectively[299](index=299&type=chunk)[300](index=300&type=chunk) - Guaranty fund assessments for both U.S. and Japan were immaterial for the three- and six-month periods ended June 30, 2025 and 2024[303](index=303&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations (MD&A)](index=85&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations%20(MD%26A)) This section provides management's perspective on Aflac's financial condition and results for H1 2025, covering operations, investments, liquidity, and estimates [FORWARD-LOOKING INFORMATION](index=85&type=section&id=FORWARD-LOOKING%20INFORMATION) This section provides cautionary statements regarding forward-looking information, identifying factors that could cause actual results to differ materially - Forward-looking statements are subject to numerous assumptions, risks, and uncertainties, and the Company undertakes no obligation to update them[304](index=304&type=chunk) - Key risk factors include difficult global capital markets, investment defaults, interest rate fluctuations, concentration of business in Japan, foreign currency fluctuations, and the impact of the June 2025 cybersecurity incident[305](index=305&type=chunk) [MD&A OVERVIEW](index=86&type=section&id=MD%26A%20OVERVIEW) This section introduces the MD&A, explaining its purpose to inform readers about factors affecting financial condition and results of operations - The MD&A should be read in conjunction with the consolidated financial statements and notes from the 2024 Annual Report, as interim results are not necessarily indicative of full-year results[307](index=307&type=chunk) [EXECUTIVE SUMMARY](index=87&type=section&id=EXECUTIVE%20SUMMARY) This summary overviews Aflac's business, Q2 and H1 2025 performance, and the cybersecurity incident, noting declines in net earnings - Total revenues decreased to **$4.2 billion** in Q2 2025 (from $5.1 billion in Q2 2024) and **$7.6 billion** in H1 2025 (from $10.6 billion in H1 2024), primarily due to net investment losses[311](index=311&type=chunk)[312](index=312&type=chunk) - Net earnings significantly decreased to **$599 million** in Q2 2025 (from $1.8 billion in Q2 2024) and **$628 million** in H1 2025 (from $3.6 billion in H1 2024)[311](index=311&type=chunk)[312](index=312&type=chunk) - Adjusted earnings were **$957 million** (**$1.78 per diluted share**) in Q2 2025 and **$1.9 billion** (**$3.43 per diluted share**) in H1 2025, with a stronger yen/dollar exchange rate positively impacting EPS by **$0.04** and **$0.03**, respectively[315](index=315&type=chunk) - Shareholders' equity increased to **$27.2 billion** (**$50.86 per share**) at June 30, 2025, from **$26.1 billion** (**$47.45 per share**) at December 31, 2024, largely due to changes in discount rate assumptions[316](index=316&type=chunk) - A cybersecurity incident in June 2025 involved unauthorized access and data exfiltration, but the Company's business remains operational, and the financial impact is not yet deemed material[319](index=319&type=chunk)[320](index=320&type=chunk)[321](index=321&type=chunk) [RESULTS OF OPERATIONS](index=88&type=section&id=RESULTS%20OF%20OPERATIONS) This section details overall operating performance, revenue sources, expenses, non-U.S. GAAP measures, and the impact of foreign currency and taxes - Profitability depends on pricing insurance products to cover benefits and administration costs, actuarial experience, investment results, capital deployment, and expense management[323](index=323&type=chunk) - Fluctuations in the yen/dollar exchange rate significantly affect reported results, with yen strengthening magnifying dollar-denominated results[325](index=325&type=chunk)[327](index=327&type=chunk) Reconciliation of Net Earnings to Adjusted Earnings (in millions) | Metric (in millions) | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | | :------------------- | :----------------------------- | :----------------------------- | :----------------------------- | :----------------------------- | | Net Earnings | $599 | $1,755 | $628 | $3,634 | | Adjusted net investment (gains) losses | $377 | $(749) | $1,301 | $(1,758) | | Other and non-recurring (income) loss | $0 | $0 | $53 | $2 | | Income tax (benefit) expense on items excluded | $(19) | $29 | $(119) | $118 | | **Adjusted Earnings** | **$957** | **$1,035** | **$1,863** | **$1,996** | - The combined U.S. and Japanese effective income tax rate on pretax earnings was **27.0%** for Q2 2025 (vs. 13.1% in Q2 2024) and **35.0%** for H1 2025 (vs. 13.3% in H1 2024), differing from the U.S. statutory rate due to foreign currency translation and tax credits[347](index=347&type=chunk) Reconciliation of Book Value to Adjusted Book Value (in millions) | Metric (in millions) | June 30, 2025 | December 31, 2024 | | :------------------- | :------------ | :---------------- | | U.S. GAAP book value | $27,200 | $26,098 | | Total accumulated other comprehensive income | $(491) | $(2,978) | | Adjusted book value | $27,691 | $29,076 | | Foreign currency remeasurement gains (losses) | $4,069 | $5,725 | | Adjusted book value excluding foreign currency remeasurement | $23,622 | $23,351 | [RESULTS OF OPERATIONS BY SEGMENT](index=97&type=section&id=RESULTS%20OF%20OPERATIONS%20BY%20SEGMENT) This section analyzes operating results for Aflac Japan, Aflac U.S., and Corporate and other, covering earnings, sales, and investment yields Aflac Japan Summary of Operating Results (in millions of dollars) | Metric (in millions) | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | | :------------------- | :----------------------------- | :----------------------------- | :----------------------------- | :----------------------------- | | Net earned premiums | $1,761 | $1,715 | $3,442 | $3,531 | | Adjusted net investment income | $699 | $725 | $1,285 | $1,374 | | Total adjusted revenues | $2,472 | $2,447 | $4,744 | $4,919 | | Pretax adjusted earnings | $790 | $864 | $1,512 | $1,674 | | Weighted-average yen/dollar exchange rate | 144.60 | 155.70 | 148.32 | 152.30 | - Aflac Japan's pretax adjusted earnings decreased by **15.0%** in yen terms for Q2 2025 and **12.1%** for H1 2025, primarily due to lower adjusted net investment income and net earned premiums, partially offset by lower benefits[362](index=362&type=chunk)[363](index=363&type=chunk)[366](index=366&type=chunk) - Aflac Japan's new annualized premium sales increased by **23.2%** in yen terms for Q2 2025 and **18.7%** for H1 2025, driven by strong sales of the new cancer insurance product, Miraito, and Tsumitasu[374](index=374&type=chunk)[377](index=377&type=chunk) Aflac U.S. Summary of Operating Results (in millions) | Metric (in millions) | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | | :------------------- | :----------------------------- | :----------------------------- | :----------------------------- | :----------------------------- | | Net earned premiums | $1,504 | $1,455 | $3,006 | $2,930 | | Adjusted net investment income | $207 | $218 | $409 | $424 | | Total adjusted revenues | $1,728 | $1,684 | $3,449 | $3,384 | | Pretax adjusted earnings | $388 | $383 | $746 | $739 | - Aflac U.S. pretax adjusted earnings increased by **1.3%** for Q2 2025 and **0.9%** for H1 2025, driven by higher net earned premiums from growth initiatives, partially offset by lower floating rate income and higher incurred claims[392](index=392&type=chunk)[393](index=393&type=chunk)[396](index=396&type=chunk) - Aflac U.S. new annualized premium sales increased by **2.7%** for Q2 2025 and **3.1%** for H1 2025, primarily driven by sales of group products[401](index=401&type=chunk) Corporate and Other Summary of Operating Results (in millions) | Metric (in millions) | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | | :------------------- | :----------------------------- | :----------------------------- | :----------------------------- | :----------------------------- | | Net earned premiums | $206 | $155 | $404 | $320 | | Adjusted net investment income | $128 | $91 | $254 | $169 | | Total adjusted revenues | $336 | $249 | $662 | $497 | | Pretax adjusted earnings | $20 | $23 | $63 | $21 | - Corporate and other pretax adjusted earnings decreased by **13.0%** for Q2 2025 but increased by **200.0%** for H1 2025, influenced by internal reinsurance activity, lower federal historic rehabilitation and solar tax credit investments, and higher business operation costs including cybersecurity incident response[411](index=411&type=chunk)[413](index=413&type=chunk)[414](index=414&type=chunk) [INVESTMENTS](index=109&type=section&id=INVESTMENTS) This section elaborates on Aflac's investment strategy, portfolio composition by segment, credit rating, and the impact of real estate conditions - The Company's investment strategy aims for long-term risk-adjusted returns, stable income, and shareholder value, with diversified portfolios in yen and U.S. dollar-denominated assets[416](index=416&type=chunk) Total Investments and Cash by Segment (in millions) | Segment | June 30, 2025 | December 31, 2024 | | :------------------ | :------------ | :---------------- | | Aflac Japan | $82,904 | $77,233 | | Aflac U.S. | $16,864 | $16,775 | | Corporate and Other | $12,001 | $11,079 | | **Total** | **$111,769** | **$105,087** | - Commercial real estate market conditions have affected TREs and CMLs, with **$257 million** in TREs undergoing foreclosure or deed in lieu of foreclosure in H1 2025, resulting in a net loss of **$10 million**[423](index=423&type=chunk)[424](index=424&type=chunk) Composition of Fixed Maturity Securities by Credit Rating | Credit Rating | June 30, 2025 (Amortized Cost) | June 30, 2025 (Fair Value) | Dec 31, 2024 (Amortized Cost) | Dec 31, 2024 (Fair Value) | | :------------ | :----------------------------- | :------------------------- | :---------------------------- | :------------------------ | | AAA | 1.4% | 1.4% | 1.5% | 1.5% | | AA | 6.3% | 6.6% | 6.0% | 6.3% | | A | 68.5% | 66.7% | 68.0% | 66.1% | | BBB | 22.2% | 23.5% | 22.9% | 24.4% | | BB or lower | 1.6% | 1.8% | 1.6% | 1.7% | | **Total** | **100.0%** | **100.0%** | **100.0%** | **100.0%** | - The Company's below-investment-grade exposure totaled **$5,392 million** (amortized cost) at June 30, 2025, including high-yield corporate bonds and middle market loans, aimed at enhancing yield and diversifying credit risk[432](index=432&type=chunk)[434](index=434&type=chunk)[435](index=435&type=chunk) [HEDGING ACTIVITIES](index=115&type=section&id=HEDGING%20ACTIVITIES) This section describes strategies for managing foreign currency and interest rate risks using derivatives, including Aflac Japan's hedge program - Aflac Japan uses foreign currency forwards and options to hedge U.S. dollar-denominated investments back to yen, economically creating yen assets and supporting Japan's solvency margin ratio (SMR)[450](index=450&type=chunk)[451](index=451&type=chunk) Foreign Currency Exchange Rate Risk Hedge Program Metrics (in billions of dollars) | Program/Metric | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | | :----------------------- | :----------------------------- | :----------------------------- | :----------------------------- | :----------------------------- | | Aflac Japan FX option notional | $25.0 | $24.7 | $25.0 | $24.7 | | Corporate FX forward notional | $1.9 | $2.0 | $1.9 | $2.0 | | Corporate amortized hedge income (cost) | $30 | $34 | $60 | $62 | - The Parent Company's net investment in Aflac Japan was partially hedged at **$7.4 billion** as of June 30, 2025, using yen-denominated debt (**$5.5 billion**) and foreign currency forwards (**$1.9 billion**)[455](index=455&type=chunk) - Aflac Japan and Aflac U.S. use interest rate swaps and swaptions to mitigate investment income volatility and interest rate risk on variable-rate and U.S. dollar-denominated investments[460](index=460&type=chunk) [DEFERRED POLICY ACQUISITION COSTS](index=120&type=section&id=DEFERRED%20POLICY%20ACQUISITION%20COSTS) This section summarizes deferred policy acquisition costs (DAC) by segment, noting the increase in Aflac Japan's DAC due to foreign currency Deferred Policy Acquisition Costs (DAC) by Segment (in millions) | Segment | June 30, 2025 | December 31, 2024 | % Change | | :---------- | :------------ | :---------------- | :------- | | Aflac Japan | $5,614 | $5,102 | 10.0% | | Aflac U.S. | $3,682 | $3,656 | 0.7% | | **Total** | **$9,296** | **$8,758** | **6.1%** | - Aflac Japan's DAC increased by **0.7%** in yen terms during the six months ended June 30, 2025, with the dollar-denominated increase primarily due to foreign currency translation[465](index=465&type=chunk) [POLICY LIABILITIES](index=120&type=section&id=POLICY%20LIABILITIES) This section summarizes policy liabilities by segment, including future policy benefits and deferred profit liability, noting reinsurance impacts Policy Liabilities by Segment (in millions) | Segment | June 30, 2025 | December 31, 2024 | % Change | | :------------------ | :------------ | :---------------- | :------- | | Aflac Japan | $68,857 | $67,549 | 1.9% | | Aflac U.S. | $11,237 | $11,063 | 1.6% | | Corporate and other | $4,882 | $4,839 | 0.9% | | Intercompany eliminations | $(6,072) | $(5,943) | (2.2)% | | **Total** | **$78,904** | **$77,508** | **1.8%** | - Aflac Japan's policy liabilities decreased by **6.7%** in yen terms during the six months ended June 30, 2025, while the dollar-denominated amount increased by **1.9%**[468](index=468&type=chunk) [BENEFIT PLANS](index=122&type=section&id=BENEFIT%20PLANS) This section refers to Note 12 for detailed information on Aflac's Japanese and U.S. benefit plans [POLICYHOLDER PROTECTION](index=122&type=section&id=POLICYHOLDER%20PROTECTION) This section discusses policyholder protection systems in Japan and the U.S., including LIPPC and state guaranty fund assessments - Aflac Japan did not recognize an expense for LIPPC assessments in H1 2025 and H1 2024, as the LIPPC reached its required balance of **¥400 billion** in March 2022[472](index=472&type=chunk) - U.S. guaranty fund assessments were immaterial for the three- and six-month periods ended June 30, 2025 and 2024[473](index=473&type=chunk) [LIQUIDITY AND CAPITAL RESOURCES](index=122&type=section&id=LIQUIDITY%20AND%20CAPITAL%20RESOURCES) This section discusses liquidity management, capital structure, cash flows, debt, share repurchases, dividends, and regulatory restrictions - The Company targets a minimum of **$1.8 billion** in cash and cash equivalents at the Parent Company for capital buffer and liquidity support, holding **$7.0 billion** at June 30, 2025[476](index=476&type=chunk) Liquidity Provided by Subsidiaries to Parent Company (in millions) | Metric (in millions) | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | | :------------------- | :----------------------------- | :----------------------------- | | Management fees paid by subsidiaries | $87 | $81 | | Dividends declared or paid by subsidiaries | $2,567 | $2,111 | Consolidated Cash Flows by Activity (in millions) | Activity | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | | :----------------------- | :----------------------------- | :----------------------------- | | Operating activities | $988 | $1,104 | | Investing activities | $1,174 | $2,294 | | Financing activities | $(1,423) | $(1,576) | | Net change in cash and cash equivalents | $736 | $1,754 | - Cash returned to shareholders through treasury stock purchases and dividends was **$2.3 billion** in H1 2025, compared to **$2.1 billion** in H1 2024[505](index=505&type=chunk) - Aflac Japan's Solvency Margin Ratio (SMR) remains high, and the Company is committed to maintaining strong capital levels, while the FSA will introduce an economic value-based solvency regime (ESR) by March 31, 2026[516](index=516&type=chunk)[517](index=517&type=chunk) - Aflac U.S.'s combined Risk-based Capital (RBC) ratio remains high, reflecting a strong capital and surplus position[519](index=519&type=chunk) [CRITICAL ACCOUNTING ESTIMATES](index=130&type=section&id=CRITICAL%20ACCOUNTING%20ESTIMATES) This section identifies critical accounting estimates for investments, derivatives, DAC, policy benefits, and income taxes, emphasizing judgment - Critical accounting estimates are sensitive to market conditions, investment yields, interest rates, mortality, morbidity, and policyholder behavior[26](index=26&type=chunk) - These estimates determine the values for **92%** of the Company's assets and **74%** of its liabilities as of June 30, 2025[528](index=528&type=chunk) - There have been no changes in the identified critical accounting estimates during the six-month period ended June 30, 2025[529](index=529&type=chunk) [New Accounting Pronouncements](index=131&type=section&id=New%20Accounting%20Pronouncements) This section refers to Note 1 for information on new accounting pronouncements and their impact [Item 3. Quantitative and Qualitative Disclosures about Market Risk](index=131&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20about%20Market%20Risk) This section states that Aflac is exposed to currency, interest rate, credit, and equity risks, with no material changes since 2024 - The Company's primary market risks include currency risk, interest rate risk, credit risk, and equity risk[531](index=531&type=chunk) - No material changes to the Company's market risk exposures have occurred since the 2024 Annual Report[531](index=531&type=chunk) [Item 4. Controls and Procedures](index=131&type=section&id=Item%204.%20Controls%20and%20Procedures) This section confirms the effectiveness of disclosure controls and procedures as of June 30, 2025, with no material changes in internal control - The Company's disclosure controls and procedures were evaluated as effective as of June 30, 2025[532](index=532&type=chunk) - No material changes in internal control over financial reporting occurred during the second fiscal quarter of 2025[533](index=533&type=chunk) [PART II. OTHER INFORMATION](index=132&type=section&id=PART%20II.%20OTHER%20INFORMATION) [Item 1A. Risk Factors](index=132&type=section&id=Item%201A.%20Risk%20Factors) This section supplements 2024 risk factors, detailing potential adverse effects of the June 2025 cybersecurity incident, including costs and litigation - The June 2025 cybersecurity incident could lead to additional costs (credit monitoring, incident response, legal), litigation, governmental investigations, enforcement actions, elevated cybersecurity insurance premiums, and reputational harm[536](index=536&type=chunk)[537](index=537&type=chunk) - The incident involved the exfiltration of sensitive personal data, including claims information, health information, and social security numbers, relating to a substantial number of customers, beneficiaries, employees, and agents in the U.S. business[537](index=537&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=132&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) This section details common stock repurchases during H1 2025, including shares bought under the program and for tax withholding obligations Issuer Purchases of Equity Securities (6 Months Ended June 30, 2025) | Period | Total Number of Shares Purchased | Average Price Paid Per Share | Number of Shares Purchased as Part of Publicly Announced Programs | Maximum Number of Shares that May Yet Be Purchased Under the Programs | | :--------------------- | :------------------------------- | :--------------------------- | :---------------------------------------------------------------- | :-------------------------------------------------------------------- | | January 1 - June 30 | 16,814,820 | $105.30 | 16,412,547 | 30,905,007 | - During H1 2025, **402,273 shares** were purchased in connection with income tax withholding obligations related to restricted-share-based awards[538](index=538&type=chunk) - As of June 30, 2025, **30.9 million shares** remained authorized for repurchase under a November 2022 board authorization[538](index=538&type=chunk) [Item 5. Other Information](index=133&type=section&id=Item%205.%20Other%20Information) This section states no directors or executive officers adopted or terminated insider trading arrangements in Q2 2025 - No insider trading arrangements (Rule 10b5-1(c) or non-Rule 10b5-1) were adopted or terminated by directors or executive officers in Q2 2025[540](index=540&type=chunk) [Item 6. Exhibits](index=134&type=section&id=Item%206.%20Exhibits) This section lists all exhibits filed with the Form 10-Q, including corporate documents, debt indentures, and certifications [Glossary of Selected Terms](index=135&type=section&id=Glossary%20of%20Selected%20Terms) [SIGNATURES](index=139&type=section&id=SIGNATURES)

Core Viewpoint - Aflac Incorporated (AFL) is expected to report a decline in both earnings and revenues for the second quarter of 2025, with earnings estimated at $1.71 per share and revenues at $4.43 billion, reflecting year-over-year decreases [1][7]. Financial Estimates - The second-quarter earnings estimate has decreased by 2 cents over the past 60 days, indicating a year-over-year decline of 6.6% [2]. - The Zacks Consensus Estimate for total revenues in the second quarter suggests a year-over-year decrease of 13.7% [2]. - For the full year 2025, the revenue estimate is $17.68 billion, implying a 0.9% decline year over year, while the EPS estimate is $6.75, indicating a 6.4% year-over-year decline [3]. Earnings Performance - Aflac has beaten earnings estimates in two of the past four quarters and missed twice, with an average surprise of 9.3% [3]. - The current Earnings ESP is -1.25%, and the Zacks Rank is 2 (Buy), suggesting uncertainty regarding an earnings beat this quarter [4]. Factors Influencing Q2 Results - Expected premium growth may be offset by lower earnings from Japan and weaker investment income [7]. - The consensus estimate for total net earned premiums indicates a 3.4% year-over-year increase, while the Aflac U.S. unit is expected to see a 3.3% increase in adjusted revenues, contrasting with a 2.6% decline in the Aflac Japan unit [8]. - Net investment income is projected to decline by 17.2% year over year [9]. - The total benefit to premium ratio for Aflac U.S. is expected to rise to 47.8 from 46.7 a year ago, while Aflac Japan's ratio is expected to decrease to 65.3 from 66.9 [9]. - Pre-tax adjusted earnings from Aflac U.S. are estimated to fall by 8.1%, and Aflac Japan is likely to see a 13.2% decline [9][10]. Peer Performance - Marsh & McLennan reported adjusted earnings of $2.72 per share, surpassing estimates by 2.3% due to strong growth in Risk and Insurance Services [11]. - AON reported adjusted earnings of $3.49 per share, beating estimates by 2.7%, benefiting from new business growth and solid retention rates [12]. - AMERISAFE reported adjusted earnings of 53 cents per share, missing estimates by 3.6%, affected by a drop in net investment income and elevated expenses [13].

Core Insights - Aflac (AFL) is expected to report quarterly earnings of $1.71 per share, a decline of 6.6% year-over-year, with revenues forecasted at $4.43 billion, down 13.7% from the previous year [1] Earnings Estimates - The consensus EPS estimate has been revised 0.6% higher in the last 30 days, indicating a collective reevaluation by analysts [2] - Revisions to earnings estimates are crucial indicators for predicting investor actions regarding the stock [3] Revenue Projections - Analysts expect 'Revenues- Other income (loss)' to be $29.80 million, reflecting a year-over-year increase of 35.5% [5] - 'Revenues- Net investment income' is projected to reach $907.26 million, indicating a decrease of 17.2% year-over-year [5] - 'Revenues- Total net earned premiums' is estimated at $3.44 billion, showing a year-over-year increase of 3.4% [5] Adjusted Revenue Estimates - 'Total adjusted revenues- Corporate and other' is estimated at $328.50 million, a year-over-year increase of 31.9% [6] - 'Total adjusted revenues- Aflac Japan' is forecasted to be $2.38 billion, reflecting a decrease of 2.6% year-over-year [6] - 'Total adjusted revenues- Aflac Japan- Total net earned premiums' is projected at $1.77 billion, indicating a year-over-year increase of 3.2% [7] - 'Total adjusted revenues- Aflac Japan- Net investment income' is expected to be $615.74 million, down 15.9% from the previous year [7] Other Key Metrics - 'Total adjusted revenues- Aflac U.S.- Other income' is expected to be $15.00 million, reflecting a year-over-year increase of 36.4% [8] - 'Total Benefit/Premium - Aflac Japan' is projected to be 65.3%, down from 66.9% year-over-year [8] - 'Total Adjusted Expenses/Total Adjusted Revenue - Aflac U.S.' is estimated at 38.1%, compared to 36.9% in the same quarter last year [9] - 'Total Benefit/Premium - Aflac U.S.' is expected to reach 47.8%, up from 46.7% year-over-year [9] - 'Total Adjusted Expenses/Total Adjusted Revenue - Aflac Japan' is projected at 19.7%, compared to 17.8% in the previous year [10] Stock Performance - Over the past month, Aflac shares have returned -4.8%, while the Zacks S&P 500 composite has increased by 2.7% [11] - Aflac currently holds a Zacks Rank 2 (Buy), suggesting potential outperformance in the near future [11]

Core Viewpoint - Aflac Inc. is under investigation for potential breaches of fiduciary duty and corporate governance failures related to a recent cybersecurity breach that may have compromised sensitive personal data of customers and employees [1][2][3] Group 1: Cybersecurity Breach - On June 12, 2025, Aflac disclosed that unauthorized actors accessed its U.S. systems, potentially compromising personal data including Social Security numbers, health records, and insurance claim information [2] - The company is currently assessing the full scope of the data exposure resulting from the breach [2] Group 2: Investigation Details - Berger Montague is evaluating whether Aflac's officers and directors failed to implement adequate cybersecurity protocols and whether they provided timely and accurate disclosures regarding the breach [3] - The investigation will also consider if there was a breach of the duty of oversight by Aflac's leadership [3]

Group 1 - Aflac Incorporated will release its second quarter 2025 financial results on August 5, 2025, after market close [1] - A conference call to discuss the quarterly results is scheduled for August 6, 2025, at 8:00 a.m. (ET) [2] - Aflac is the leading provider of supplemental health insurance in the U.S. and cancer and medical insurance in Japan [3] Group 2 - Aflac has been recognized as one of the World's Most Ethical Companies for 19 consecutive years and has been included in Fortune's World's Most Admired Companies for 24 years [3] - The company became a signatory of the Principles for Responsible Investment (PRI) in 2021 and has been part of the Dow Jones Sustainability North America Index for 11 years [3] - Aflac has provided financial protection to millions of policyholders for nearly seven decades [3]

Core Points - Aflac Incorporated experienced a data breach, with unauthorized access to its network identified on June 12, 2025 [2] - The breach potentially impacts sensitive personal data of millions, including claims information, health information, and Social Security Numbers [2] - Barrack, Rodos & Bacine is investigating the breach and may pursue legal action on behalf of affected individuals [1][3] Company Summary - Aflac acknowledged that files containing sensitive information related to customers, beneficiaries, employees, and agents were accessed by an unknown party [2] - The company holds sensitive personal data, including names, addresses, contact information, Social Security Numbers, and health information of millions of policyholders [2] - The ongoing investigation may lead to legal responsibilities for Aflac if it is found that the company failed to adequately protect this information [3] Legal Implications - Individuals affected by the breach may be entitled to compensation due to the risks associated with identity theft and financial fraud [3] - Barrack, Rodos & Bacine has a long history of prosecuting class actions related to consumer rights and corporate misconduct, indicating a strong potential for legal action [5]

Financial Performance - Aflac Incorporated reported revenues of $18.9 billion[9], net earnings of $5.4 billion[9], and adjusted earnings of $4.1 billion[9] as of December 31, 2024[8] - The company's adjusted leverage stood at 19.7%[9] as of December 31, 2024[8] - Aflac Japan's pretax adjusted earnings increased to ¥527.675 billion[39] in 2024[39], with a pretax profit margin of 36.0%[39] - Aflac U.S. reported pretax adjusted earnings of $1.419 billion[56] in 2024[56], with a pretax profit margin of 21.1%[56] Investment Portfolio - Aflac's investment portfolio has $103 billion in assets under management (AUM)[62], with 84.7% allocated to fixed maturity securities[62] - The average rating of the fixed maturities portfolio is A-[62] - The net book value of the transitional real estate (TRE) portfolio is $4.7 billion with a book yield of 8.14%[63], while the commercial mortgage loan (CML) portfolio has a net book value of $1.5 billion with a book yield of 3.44%[63] - The middle market loan portfolio has a net book value of $4.3 billion and a book yield of 10.03%[77] Capital Management - Aflac Japan's Estimated Solvency Ratio (ESRe) is >270%[70] - The Combined Risk-Based Capital (RBC) Ratio for Aflac U.S. is 677%[70]

Core Points - Aflac, a major U.S. insurance company, reported a cyberattack that resulted in the theft of customer personal information [1][2] - The company confirmed the breach occurred on June 12, with personal data including Social Security numbers and health information being compromised [2][3] - Aflac's systems were not affected by ransomware, and the breach was attributed to a cybercrime group targeting the U.S. insurance industry using social engineering tactics [3][4] Company Impact - Aflac has approximately 50 million customers, making it a significant player in the insurance market [4] - The breach has raised concerns as it follows a trend of cyberattacks on other U.S. insurance companies, indicating a broader threat to the industry [4][6] Industry Context - The cybercrime group known as Scattered Spider has been linked to multiple intrusions in the U.S. insurance sector, employing social engineering tactics to gain access [5][6] - Recent attacks have also affected other companies like Erie Insurance and Philadelphia Insurance, highlighting a pattern of financially motivated cyberattacks across the insurance and retail sectors [6]

Core Points - Aflac disclosed a data breach on June 20th, which may have compromised sensitive personal information, including social security numbers [3] - The breach was detected on June 12th, and Aflac is investigating the extent of the breach with external cybersecurity experts [3] - The hacking group Scattered Spider is believed to be responsible for the breach, which has previously targeted the insurance industry [4][5] - Scattered Spider employs social engineering tactics, posing as employees to manipulate IT support staff [6] - Aflac is offering free credit monitoring and identity theft insurance to affected customers for two years [8] Industry Insights - The insurance industry is currently under threat from cybercriminals, particularly from groups like Scattered Spider, which focus on specific sectors [5] - Managed Service Providers are often targeted as they can be weak links in security, allowing hackers to access multiple companies through one breach [7] - Companies in the insurance sector should remain vigilant against social engineering schemes that could compromise their security [5]

Core Insights - Aflac Incorporated is currently facing a data privacy investigation due to a cyber breach that occurred around June 12, 2025, where personal information may have been compromised [1][3][5] Company Overview - Aflac is a Fortune 500 company known for specialized insurance products that cover expenses not typically addressed by health insurance. The company was originally established as the American Family Life Assurance Company of Columbus and officially shortened its name to Aflac in 1989 [2] Incident Details - On or around June 12, 2025, Aflac discovered suspicious activity on its network, leading to an investigation that revealed a breach caused by cybercriminals who potentially accessed personal information [3] Compromised Information - The personal information that may have been stolen includes names, health information, Social Security numbers, and other information related to customers, beneficiaries, employees, agents, and other individuals [4][8] Legal Actions - Edelson Lechtzin LLP is investigating a class action lawsuit to seek legal remedies for individuals whose sensitive personal data may have been compromised due to the Aflac data breach [5]