Key Takeaways Aflac sales rose 18.7% in Japan and 3.1% in the United States in the first half of the year.Cost discipline supported a 22.5% U.S. pretax margin in the second quarter.Operating cash flow fell for four straight years, down 10.5% in early 2025.Aflac Incorporated (AFL) is well-poised for growth on the back of expanding sales in both Japan and the United States, a trusted brand, innovative product offerings, strict underwriting discipline and effective cost management. The company’s stability, def ...

Core Insights - Aflac Incorporated (AFL) has expanded its share repurchase program by adding 100 million shares to the existing 30.9 million, bringing the total buyback capacity to approximately 130.9 million shares, indicating management's confidence in the company's long-term prospects [1][8] - In Q2, Aflac repurchased 7.9 million shares for $829 million and declared a dividend of 58 cents per share, with a dividend yield of 2.24%, surpassing the industry average of 2.05% [2][8] - Aflac ended Q2 with $7 billion in cash and cash equivalents, an 11.8% increase from year-end 2024, and maintained a total debt-to-capital ratio of 24.7%, below the industry average [3] Financial Performance - Adjusted net investment income rose to $1 billion in Q2, with the U.S. segment's pre-tax profit margin improving to 21.6% from 21.1% in 2024 [3] - Aflac Japan reported an 18.7% year-over-year sales increase to $236 million in H1 2025, driven by sales momentum from Miraito and new product launches [4][8] Industry Context - Other insurers like Aon plc and Marsh & McLennan are also engaging in shareholder-friendly initiatives, including share repurchase programs and dividends [5] - Aon repurchased 0.7 million shares for approximately $250 million in Q2, while Marsh & McLennan bought back 1.4 million shares worth $300 million [6] Valuation and Estimates - Aflac shares have gained 2.2% year-to-date, slightly outperforming the industry growth of 2% [7] - The company trades at a forward price-to-earnings ratio of 14.91, above the industry average of 12.14, with a Zacks Consensus Estimate for 2025 earnings at $6.81 per share, reflecting a 5.6% decline from the previous year [10][11]

Core Insights - Aflac Incorporated reported a significant decline in total revenues and net earnings for the second quarter of 2025 compared to the same period in 2024, primarily due to net investment losses [2][3][7] Financial Performance - Total revenues for Q2 2025 were $4.2 billion, down 19.0% from $5.1 billion in Q2 2024 [2][27] - Net earnings fell to $599 million, or $1.11 per diluted share, a decrease of 65.9% from $1.8 billion, or $3.10 per diluted share, a year earlier [2][27] - Adjusted earnings for Q2 2025 were $957 million, down 7.5% from $1.0 billion in Q2 2024 [4][32] Investment Performance - The company experienced net investment losses of $421 million in Q2 2025, compared to net investment gains of $696 million in Q2 2024 [3][37] - Adjusted net investment income for Q2 2025 was $1.036 billion, a slight increase of 0.3% from $1.033 billion in Q2 2024 [38] Shareholder Equity - Shareholders' equity increased to $27.2 billion, or $50.86 per share, at June 30, 2025, compared to $26.0 billion, or $46.40 per share, at June 30, 2024 [6][39] - The annualized return on average shareholders' equity for Q2 2025 was 9.0% [6][40] Segment Performance - Aflac Japan's net earned premiums in yen decreased by 4.8% to ¥254.6 billion in Q2 2025, primarily due to internal cancer reinsurance transactions [9][10] - In dollar terms, Aflac U.S. net earned premiums increased by 3.4% to $1.5 billion in Q2 2025, reflecting improved sales and persistency [14][15] Sales and Growth - Total new annualized premium sales in Aflac Japan increased by 23.2% to ¥20.7 billion, or $143 million, in Q2 2025 [13] - Aflac U.S. sales increased by 2.7% in Q2 2025 to $340 million, benefiting from group life and disability products [16] Capital Management - The board declared a third-quarter dividend of $0.58 per share, payable on September 2, 2025 [19] - Aflac repurchased $829 million in shares during Q2 2025, with 30.9 million shares remaining authorized for repurchase [19][23]