Aflac(US:AFL)2025-11-05 14:17Financial 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].