Aflac Q2 Earnings Beat Estimates on Solid Cancer Product Sales

Core Insights - Aflac Incorporated (AFL) reported second-quarter 2025 adjusted earnings per share (EPS) of $1.78, exceeding the Zacks Consensus Estimate by 4.1%, although it represented a 2.7% decline year over year [1][9] - Adjusted revenues fell 11.7% year over year to $4.5 billion, but still beat the consensus mark by 2.3% [1][2] Financial Performance - The quarterly results were bolstered by increased new annualized premium sales in the Japan segment, particularly from the Miraito cancer insurance product, alongside strong sales and persistency rates in the U.S. business [2] - Adjusted net investment income was $1 billion, a slight increase of 0.3% year over year [3] - Total net benefits and claims rose 4.6% year over year to $2 billion, while total acquisition and operating expenses increased 10.9% year over year to $1.3 billion [3] Segment Analysis - Aflac Japan: Adjusted revenues reached $2.5 billion, a 1% increase year over year, surpassing the Zacks Consensus Estimate of $2.4 billion [4] - Total net earned premiums in Japan improved 2.7% year over year to $1.76 billion, though it slightly missed the consensus mark [4] - New annualized premium sales in Japan climbed 23.2% year over year to $143 million, driven by strong demand for the Miraito product [5] - Aflac U.S.: Adjusted revenues were $1.73 billion, a 2.6% year-over-year growth, but marginally missed the Zacks Consensus Estimate of $1.74 billion [6] - Total net earned premiums in the U.S. rose 3.4% year over year to $1.5 billion, supported by sales growth and strong persistency rates [6] Financial Position - As of June 30, 2025, Aflac had total cash and cash equivalents of $7 billion, an 11.8% increase from the end of 2024 [8] - Total assets grew 6.1% year over year to $124.7 billion, while adjusted debt rose 12.8% to $8.1 billion [8] - Total shareholders' equity increased 4.2% from the end of 2024 to $27.2 billion [10] Capital Deployment - Aflac repurchased 7.9 million shares for $829 million in the second quarter, with 30.9 million shares remaining for buyback [11] - The company announced a dividend of 58 cents per share for the second quarter, payable on September 2, 2025 [11] 2025 Outlook - Aflac expects a benefit ratio of 64-66% for the Japan unit and 48-52% for the U.S. unit in 2025 [12] - The expense ratios for Aflac Japan and U.S. are projected to be 20-23% and 36-39%, respectively [12] - The pretax profit margins for Aflac Japan and U.S. are estimated to be within 30-33% and 17-20%, respectively [12]