Aflac(US:AFL)2025-05-07 13:17Financial 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].