Aflac Incorporated

Aflac reported net earnings per diluted share of $1.63 and adjusted earnings per diluted share of $1.75 for the second quarter of 2026. Excluding foreign currency, adjusted EPS increased 1.1% year over year to $1.80. Adjusted book value per share, excluding FX remeasurement, decreased 4.1%, while adjusted ROE was 12.7% and 16.6% excluding FX. In Japan, net earned premiums in yen declined 3.7%, underlying earned premiums declined 1.4%, the total benefit ratio was 64% (down 250 bps year over year), the expense ratio was 20.2% (down 40 bps), and pretax margin was 34.3% (up 230 bps). In the U.S., net earned premiums rose 2.3%, the total benefit ratio was 49.5% (up 220 bps), the expense ratio was 36.1% (down 20 bps), and pretax margin was 20.9% (down 160 bps). Management expects Japan full-year 2026 benefit ratio to be at the high end of the 60% to 63% range, excluding the annual actuarial assumption review in Q3. It also expects Japan sales to exceed 2025, U.S. 2026 net earned premium growth to be just below the low end of the 3% to 6% range, and the 2025 to 2027 U.S. net earned premium CAGR to remain within 3% to 6%. Liquidity ended at $3.3 billion, adjusted leverage was 21.8%, ESR was 226% (240% with USP), combined RBC was slightly above 600%, and capital returned in Q2 totaled $983 million of buybacks and $309 million of dividends.

Dan Amos said the quarter showed continued execution of Aflac’s strategy and long-term value creation. He emphasized that higher out-of-pocket medical costs in Japan and the U.S. make Aflac’s protection products more compelling, and he pointed to strong distribution channels, product innovation, and disciplined capital deployment as central to the company’s momentum. His tone was confident and steady, with repeated support for maintaining dividend growth and looking for opportunistic growth and capital uses.

Max Broden framed the quarter as solid, highlighting adjusted EPS of $1.80 excluding FX, a $46 million reserve remeasurement gain, $72 million of variable investment income below long-term expectations, and a $26 million expense contingency release in the U.S. He noted that Japan’s benefit ratio was 64% and that the company now expects the full-year ratio to land at the high end of 60% to 63%, while Japan’s expense ratio of 20.2% was down 40 bps despite inflationary pressure. He also pointed to strong balance-sheet metrics, including $3.3 billion of unencumbered liquidity, 21.8% adjusted leverage, 226% ESR, and active capital deployment through $983 million of buybacks and $309 million of dividends.

Analysts pressed management on the $4.8 billion portfolio repositioning, and Brad Dyslin said Aflac was able to reposition about 5% of the portfolio by harvesting FX gains and offsetting losses on older bonds, with more opportunity ahead in the higher-rate environment. Questions also focused on Japan first-sector mix, Japan reinsurance capacity, M&A appetite, lapses and persistency, and the Japan benefit ratio. Management said there is no fixed limit on first-sector mix, reinsurance is still lumpy and will build over time, M&A would only be pursued if it passes a stringent discipline test, and the lapse-driven benefit ratio pressure should normalize as Miraito matures.