Financial Data and Key Metrics Changes - Aflac Incorporated reported net earnings per diluted share of $1.11 and adjusted earnings per diluted share of $1.78 for Q2 2025, with adjusted earnings per diluted share decreasing by 2.7% year over year [5][16] - Adjusted book value per share excluding foreign currency remeasurement increased by 5.2% [16] - The adjusted return on equity (ROE) was 13.7% to 16.4%, indicating an acceptable spread to the cost of capital [16] Business Line Data and Key Metrics Changes - Aflac Japan experienced a 23.2% year-over-year sales increase, with a notable 53% increase in cancer insurance sales driven by the new product MiRyto [6][8] - Aflac US generated $340 million in new sales during Q2, reflecting a 2.7% year-over-year increase, with strong premium persistency of 79.2% and a 3.4% increase in net earned premium [9][10] - The total benefit ratio for Aflac US was 47.3%, which is 60 basis points higher than Q2 2024, driven by business mix [21] Market Data and Key Metrics Changes - Aflac Japan's net earned premiums declined by 4.8%, while underlying earned premiums, excluding certain impacts, declined by 1.1% [17] - Persistency in Japan remained solid at 93.7%, up approximately 40 basis points year over year [19] - In the US, the expense ratio improved to 36.3%, down 60 basis points year over year, driven by improved scale and expense efficiency [22] Company Strategy and Development Direction - The company is focused on maintaining strong premium persistency and expanding its product offerings to meet customer needs throughout different life stages [8][10] - Aflac is leveraging its broad distribution channels in Japan to optimize opportunities for financial protection [9] - The company aims to continue driving profitable growth with a stronger underwriting discipline and prudent expense management [10][12] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the ongoing need for Aflac's products, emphasizing the importance of being a partner in health for policyholders [11][15] - The company anticipates a stronger second half of 2025, driven by fourth-quarter bookings and a robust pipeline [66] - Management acknowledged the competitive landscape in the medical insurance market and plans to launch a new medical product within a year [84] Other Important Information - Aflac repurchased $829 million of its own stock and paid dividends of $312 million in Q2 2025, returning a total of $1.1 billion to shareholders [12][27] - The company celebrated several milestones, including the 30th anniversary of the Aflac Cancer and Blood Disorders Center [13] Q&A Session Summary Question: Impact of new cancer product on sales - Management indicated that the new cancer product, MiRyto, has gained traction and is expected to continue performing well, with strong sales across all channels [40] Question: Japan investment income trajectory - Management noted that variable net investment income (NII) improved due to better portfolio marks and strategic trades, with optimism for a solid second half of the year [44] Question: Approach to capital deployment and M&A - Management stated that capital deployment is based on operating capital generation, with a focus on organic growth and returning capital to shareholders through dividends and buybacks [61][75] Question: U.S. sales performance and expectations - Management acknowledged sluggish sales growth in the U.S. but expects stronger performance in the second half, driven by improved recruitment and pipeline strength [66] Question: Expense ratio trends in Japan - Management expects the expense ratio in Japan to remain within the guidance range of 20% to 23%, with some technology projects driving expenses higher [73]

Financial Data and Key Metrics Changes - Aflac reported net earnings per diluted share of $1.11 and adjusted earnings per diluted share of $1.78 for Q2 2025, with adjusted earnings per diluted share decreasing by 2.7% year over year [4][14] - Adjusted book value per share excluding foreign currency remeasurement increased by 5.2% [14] - The adjusted return on equity (ROE) was 13.7% to 16.4%, excluding foreign currency remeasurement [14] Business Line Data and Key Metrics Changes - Aflac Japan experienced a 23.2% year-over-year sales increase, with a notable 53% increase in cancer insurance sales driven by the new product MiRyto [5][6] - Aflac US generated $340 million in new sales during Q2, reflecting a 2.7% year-over-year increase, with strong premium persistency of 79.2% and a 3.4% increase in net earned premium [7][8] - Aflac Japan's net earned premiums declined by 4.8%, while underlying earned premiums, excluding certain impacts, declined by 1.1% [15] Market Data and Key Metrics Changes - Aflac Japan's total benefit ratio was 66.5%, down 40 basis points year over year, while the third sector benefits ratio was 57.4%, also down approximately 40 basis points [16] - In the US, the total benefit ratio was 47.3%, which was 60 basis points higher than Q2 2024, driven by business mix [20] Company Strategy and Development Direction - The company is focusing on maintaining strong premium persistency and expanding its distribution channels in Japan, including agencies and banks, to meet changing customer needs [6][7] - Aflac aims to leverage its innovative products, such as MiRyto, to attract new and younger customers while maintaining a strong reputation for financial protection [5][13] - The company is committed to prudent liquidity and capital management, with a focus on tactical capital deployment to drive strong risk-adjusted returns [10][25] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the ongoing demand for Aflac's products, emphasizing the importance of being a partner in health for policyholders [9][13] - The company anticipates a stronger second half of 2025, driven by fourth-quarter bookings and improved performance in various business segments [62][65] - Management acknowledged the competitive landscape in Japan, particularly in medical insurance, and plans to launch new products to enhance market position [82][86] Other Important Information - Aflac repurchased $829 million of its own stock and paid dividends of $312 million in Q2 2025, returning a total of $1.1 billion to shareholders [10][25] - The company celebrated several milestones, including the 30th anniversary of the Aflac Cancer and Blood Disorders Center and the 70th anniversary of its founding [11][12] Q&A Session Summary Question: Impact of new cancer product on sales - Management indicated that the new cancer product, MiRyto, has gained traction and is expected to continue driving strong sales performance [33][36] Question: Japan investment income and sustainability - Management noted that variable net investment income from alternatives contributed significantly to the improvement in Japan's investment income, with optimism for a solid second half [39][41] Question: Approach to capital deployment and M&A - Management emphasized a balanced approach to capital deployment, focusing on organic growth and shareholder returns, while remaining open to M&A opportunities [59][60] Question: U.S. sales performance and expectations - Management acknowledged the sluggish sales growth in the U.S. but expressed optimism for a stronger second half driven by improved recruitment and performance in specific segments [62][65] Question: Frequency of product refresh cycles - Management confirmed that the refresh cycle for cancer insurance is three years, while medical insurance is two years, contingent on regulatory approval [97]

Financial Data and Key Metrics Changes - Aflac reported net earnings per diluted share of $0.05, significantly impacted by net investment losses compared to net investment gains in Q1 2024 [6] - Adjusted earnings per diluted share remained unchanged at $1.66 year-over-year [6][13] - Adjusted return on equity (ROE) was 12.7% excluding foreign currency remeasurement, indicating a solid performance [13] Business Line Data and Key Metrics Changes - Aflac Japan experienced a 12.6% year-over-year sales increase, driven by significant contributions from Sumitas and a 6.3% increase in cancer insurance sales [6][8] - Aflac US saw a 3.5% year-over-year increase in sales, with strong performance in group life, disability, and network dental [9][17] - Net earned premiums for Aflac Japan declined by 5%, while underlying earned premiums adjusted for deferred profit liability and other factors declined by 1.4% [14] Market Data and Key Metrics Changes - Aflac Japan's total benefit ratio was 65.8%, down 120 basis points year-over-year, while the U.S. total benefit ratio was 47.7%, up 120 basis points year-over-year [15][18] - Persistency in Japan improved to 93.8%, up 40 basis points year-over-year, while U.S. persistency increased to 79.3%, up 60 basis points year-over-year [16][17] Company Strategy and Development Direction - The company aims to appeal to younger customers through products like Sumitas and is focused on cross-selling medical and cancer policies [7][9] - Aflac continues to emphasize strong capital and cash flow management while maintaining a commitment to liquidity and capital ratios [10][11] - The company is strategically deploying capital, having repurchased $900 million in stock and paid $317 million in dividends in Q1 2025 [11][23] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the underlying strengths of the business and potential for continued growth in both Japan and the U.S. [12] - The company is closely monitoring economic trends and adjusting its capital management strategies accordingly [38][41] - Management highlighted the importance of maintaining strong premium persistency and adapting to market conditions [10][11] Other Important Information - Aflac Japan launched a new cancer insurance product in March 2025, which is expected to contribute positively to sales [54] - The company has a robust hedging strategy in place to manage foreign currency exposure, particularly related to the yen [26][97] Q&A Session Summary Question: Why did the ESR ratio decline in Q1? - Management explained that the decline was due to the strengthening yen, partially offset by higher Japan interest rates and dividends flowing to Aflac Inc. [32][33] Question: How should we think about capital planning given recent macro changes? - Management indicated that capital management is designed with a long-term view and is not expected to change significantly despite macroeconomic volatility [37][41] Question: What are the expectations for the new cancer product sales? - Management expressed confidence that the new cancer product will continue to grow, with expectations for sales in 2025 to exceed those of 2024 [54][100] Question: How is the competitive landscape for medical insurance in Japan? - Management acknowledged increased competition but emphasized Aflac's pioneering position in cancer insurance and ongoing efforts to maintain market share [58][59] Question: How are remeasurement gains expected to trend? - Management noted that significant remeasurement gains are typically unlocked in the third quarter, with smaller adjustments in other quarters [63][66] Question: Is there any anti-U.S. sentiment affecting sales in Japan? - Management stated that there is no observable anti-American sentiment affecting the business, citing strong economic ties between the U.S. and Japan [116][117]

Financial Data and Key Metrics Changes - Aflac reported net earnings per diluted share of $0.05, significantly impacted by net investment losses compared to net investment gains in Q1 2024 [5] - Adjusted earnings per diluted share remained unchanged at $1.66 year over year [5][13] - Adjusted return on equity (ROE) was 12.7% excluding foreign currency remeasurement, indicating a solid performance [13] - Adjusted book value per share, excluding foreign currency remeasurement, increased by 2.2% [13] Business Line Data and Key Metrics Changes - Aflac Japan experienced a 12.6% year-over-year sales increase, driven by significant contributions from Sumitas and a 6.3% increase in cancer insurance sales [5][6] - Aflac US saw a 3.5% year-over-year increase in sales, with strong performance in group life, disability, and network dental [8] - Net earned premiums in Aflac Japan declined by 5%, while underlying earned premiums adjusted for deferred profit liability and reinsurance declined by 1.4% [14] - In the US, net earned premiums increased by 1.8%, with persistency rising by 60 basis points year over year to 79.3% [17] Market Data and Key Metrics Changes - Aflac Japan's total benefit ratio was 65.8%, down 120 basis points year over year, while the US total benefit ratio was 47.7%, up 120 basis points year over year [15][18] - Persistency in Japan remained solid at 93.8%, up 40 basis points year over year [16] - The expense ratio in Japan increased to 19.6%, primarily due to higher technology expenses, while the US expense ratio decreased to 37.6% [16][19] Company Strategy and Development Direction - Aflac aims to appeal to younger customers through products like Sumitas, which has been successful in reaching this demographic [6] - The company is focused on maintaining strong premium persistency and driving profitable growth through stronger underwriting discipline [8] - Aflac continues to leverage its strong capital and cash flows while maintaining prudent liquidity and capital management [10] - The company is committed to reinforcing its leading position in the life insurance markets of Japan and the US [12] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the demand for Aflac's products, emphasizing the importance of being a partner in health for policyholders [9] - The company is optimistic about the growth potential in both Japan and the US, with plans to continue capital deployment and maintain a strong dividend track record [11][12] - Management acknowledged the challenges posed by macroeconomic factors but remains committed to long-term capital management strategies [36] Other Important Information - Aflac repurchased $900 million worth of its own stock and paid $317 million in dividends during Q1 2025 [23] - The company ended the quarter with strong capital ratios, including an estimated regulatory ESR above 250% [24] - Aflac Japan's cancer insurance sales are expected to grow, supported by the launch of a new cancer product in March 2025 [52] Q&A Session Summary Question: Why did the ESR ratio decline in Q1? - Management explained that the decline was due to the strengthening yen, partially offset by higher Japan interest rates and significant dividends flowing from Aflac Japan to Aflac Inc [32] Question: How should capital planning be approached given recent macro changes? - Management stated that capital management is designed with a long-term view, and they do not plan to change their approach significantly despite recent volatility [36] Question: What are the expectations for the new cancer product sales? - Management expressed confidence in the new cancer product's growth, anticipating continued sales increases throughout 2025 [52] Question: How is the competitive landscape for medical insurance in Japan? - Management acknowledged increased competition but emphasized Aflac's pioneering position and unique services that provide a competitive advantage [56] Question: How does the company view the impact of the yen on its operations? - Management noted that while a strengthening yen introduces volatility, it also leads to higher future dividends in dollar terms from Aflac Japan, which offsets some negative impacts [95]