AI interpretation based on checked source excerpts. Issuer assertions and evidence limitations remain explicit.
Policy quality-scores-3: six equally weighted categories. The overall score requires full coverage. Missing inputs are not zero. Qualitative grades are sourced interpretations, not probabilities. 5/6 · 31/10/2026
Moat63
Equal-weight average of four evidence-backed rubric grades (0–4), scaled to 100.
structural advantage · 3/4 · Agreements covering approximately 90% of Japanese banks and longstanding commercial arrangements producing actual earned premiums support an established distribution franchise. These are current commercial assets, although nonexclusive distributors can sell competitors' products. Neither exclusive market access nor a demonstrated relative cost advantage is established.
durability · 3/4 · Arrangements maintained since 2008 still generated premiums in 2025, while recent product launches generated actual sales growth. That demonstrates persistence and adaptation across years. Intensifying competition and nonexclusive distribution limit protection, and the passages do not establish exceptional durability or future contractual renewal certainty.
customer dependency · 2/4 · Second-quarter premium persistency of 92.7% in Japan and 79.4% in the U.S. demonstrates repeat demand. It measures premiums remaining in force, not customer indispensability or contractual lock-in. Japan's decline and management's reported lapse-and-reissue activity also caution against interpreting persistency as strong switching friction.
erosion resilience · 2/4 · First-half sales increased in both markets, showing continued adaptation. However, Japan's quarterly sales and persistency declined, Japanese agency coverage contracted, and competing carriers bundle and discount products. The disclosed cyber incidents add operational vulnerability; their ultimate financial impact is not established.
Pricing power—
Insufficient evidence for every rubric criterion; no category score is inferred.
realized pricing · — · The CEO disclosed repricing Tsumitasu for new policies, but supplied neither direction nor magnitude. New annualized premium sales include policies, riders and incremental conversions, so sales growth cannot isolate price realization. Claims experience, investment income and reinsurance also prevent deriving policy pricing power from premium or margin changes.
retention · 3/4 · Direct premium persistency demonstrates substantial repeat demand: Japan retained 92.7% and the U.S. 79.4% on the reported rolling measure. Japan declined 100 basis points while the U.S. improved 20. The Japanese methodology change limits comparisons with periods before 2025; these are premium measures rather than customer retention rates.
margin resilience · 2/4 · First-half pretax adjusted margin improved to 34.6% from 31.9% in Japan but declined to 20.6% from 21.6% in the U.S. Benefits experience explains important movements, and consolidated adjusted earnings fell 4.2%. This supports mixed profitability resilience, without attributing the outcome to policy pricing.
contractual freedom · 1/4 · Regulatory approval of policy forms and premium rates constrains unilateral pricing discretion. Actual new-policy repricing demonstrates some flexibility, but its terms are unspecified. The supplied passages do not establish broad Japanese pricing freedom or rights to change premiums on existing contracts, so demonstrated discretion remains limited.
Predictability81
Financial-sector stability over 5 consecutive reported annual periods: equal weights for nondeclining revenue frequency, revenue-growth volatility (5–40pp), positive consolidated earnings frequency, and net-income/revenue margin volatility (3–20pp). Uses reported accounting scope; not industrial FCF or a growth forecast.
- Nondeclining revenue years (%)
- 25.00
- Revenue growth volatility (pp)
- 5.00
- positiveEarningsShare
- 100.00
- netMarginStdDev
- 3.27
- observedAnnualPeriods
- 5.00
Financial strength69
Qualitative insurance assessment: equal-weight average of four current evidence-backed grades (0–4), scaled to 100. Policy financial-industry-1; not an industrial ratio score or credit rating.
capital adequacy · 3/4 · Actual December 2025 Japan SMR was 995%, using solvency margin divided by half the risk total; Aflac Re met ECR and MSM requirements. These support strong historical capital adequacy. The new regime limits current comparability: management estimates June ESR at 226%, but its denominator and intervention benchmark are absent.
liquidity funding · 3/4 · Parent cash of $2.646 billion and operating inflows of $3.710 billion at December 2025 demonstrate liquidity generation. The June filing reports an undrawn ¥100 billion revolving facility and covenant compliance. Regulated subsidiary remittances remain important, and ESR sensitivity could reduce those inflows or require parent capital contributions.
asset liability risk · 2/4 · Fixed maturities are predominantly investment grade at amortized cost, and first-half reserve remeasurement reduced claims expense. However, actual credit losses, substantial sovereign concentration, reinvestment below older liability-accretion requirements and ESR market sensitivity demonstrate meaningful exposures. Complete duration matching and reinsurance recoverability evidence is unavailable.
earnings resilience · 3/4 · The recent supplement reports positive net and adjusted earnings throughout 2021–2025 and first-half 2026. First-half net earnings reached $1.844 billion, while adjusted earnings declined 4.2% to $1.784 billion. Persistent profitability supports resilience, but investment volatility, reserve remeasurement and declining adjusted earnings preclude an exceptional assessment.
Capital allocation63
Qualitative insurance assessment: equal-weight average of four current evidence-backed grades (0–4), scaled to 100. Policy financial-industry-1; not an industrial ratio score or credit rating.
capital efficiency · 3/4 · First-half annualized GAAP ROE was 12.3%; adjusted ROE excluding foreign currency remeasurement was 16.7%. GAAP uses net earnings over average shareholders' equity. The adjusted measure changes both earnings and equity, excluding AOCI and specified cumulative currency-related gains and losses. Productive accounting returns are demonstrated; exceptional risk-adjusted returns are not.
distributions and buffers · 2/4 · Second-quarter buybacks of $983 million and dividends of $309 million demonstrate actual distributions alongside profitable operations. Actual year-end solvency supports capacity, but 2025 parent distributions exceeded operating inflows. Management attributed a subsequent capital-ratio decline to subsidiary dividends; precise current post-distribution regulatory headroom remains unestablished.
dilution and cost · 3/4 · First-half diluted weighted-average shares fell to 510.150 million from 542.629 million, demonstrating net reduction despite awards. Unrecognized restricted-stock compensation was $82 million at June 2026. First-half interest expense increased to $124 million from $102 million, so favorable dilution outcomes coexist with compensation and financing costs.
investment discipline · 2/4 · A predominantly investment-grade fixed-maturity portfolio supports risk discipline, but first-half credit losses of $138 million and realized securities losses show imperfect outcomes. Losses alone do not establish poor asset-liability decisions. Approximately $230 million was deployed against the $400 million venture commitment, without supplied realized venture returns.
Management56
Equal-weight average of four evidence-backed rubric grades (0–4), scaled to 100.
capital discipline · 2/4 · Repurchases materially reduced average shares, and actual year-end solvency disclosures support capital capacity. However, 2025 parent treasury purchases and shareholder dividends exceeded parent operating inflows, with new borrowing contributing funding. Management also attributed a recent capital-ratio decline to subsidiary dividends. Repurchase investment returns are not demonstrated.
incentive alignment · 3/4 · Actual awards use multiyear return and solvency measures, and completed awards paid against measured performance. Performance stock can pay zero, supporting alignment. Compensation-specific adjustments increased the metric producing maximum annual pay, tempering that conclusion. Ownership guidelines are disclosed, but their compliance statement does not establish every executive's actual holding.
execution · 2/4 · Actual first-half sales growth in both markets and continued U.S. customer service during the cyber incident demonstrate execution. Japan's quarterly sales decline, weaker consolidated adjusted earnings and separate U.S. and Japan cyber incidents make outcomes mixed. This assessment uses operating evidence, rather than management's characterization of its performance.
governance · 2/4 · Independent committees, executive sessions, shareholder rights and final regulatory examinations without material findings support oversight. Actual ten-vote shares and a trust holding 20% of voting power limit equal shareholder influence, although voting restrictions bound the trust. Corrected adjusted financial calculations further temper confidence in exceptional oversight.
Evidence
At December 31, 2025, Aflac Japan had agreements with approximately 90% of the total number of banks in Japan to sell its products.
2025 Form 10-K, filed 2026-02-25; Japanese bank distribution · Filed 25/02/2026
Since 2008, the Company and Aflac Japan have maintained various commercial and contractual arrangements with Japan Post Holdings and certain of its affiliates.
2026 proxy, filed 2026-03-19; commercial arrangements since 2008 · Filed 19/03/2026
Under these arrangements, affiliates of Japan Post Holdings conduct the sale of Aflac Japan cancer insurance policies and, among other things, provide supplemental support necessary or beneficial to effectuating the sale and servicing of such policies.
2026 proxy; Japan Post Holdings affiliate sales and servicing relationship · Filed 19/03/2026
Aflac Japan’s cancer insurance policies issued pursuant to these contractual arrangements constituted approximately 6.7% of Aflac Japan’s earned premium for 2025, representing approximately 3.3% of Aflac Incorporated’s total consolidated earned premium for 2025.
2026 proxy; relationship contribution to 2025 earned premiums · Filed 19/03/2026
The Company's sales associates, brokers and other distribution partners are independent contractors and may sell products of its competitors.
2025 Form 10-K; nonexclusive independent distribution · Filed 25/02/2026
Since the deregulation of the Japan market in 2001, the number of insurance companies offering stand-alone cancer and medical insurance has increased, intensifying competition.
2025 Form 10-K; Japanese competition following deregulation · Filed 25/02/2026
products. However, given the profitability erosion some major medical carriers are facing in their core lines of business, the Company has seen a more competitive landscape as these carriers seek entry into Aflac's supplemental product segments and leverage their core benefit offerings by bundling and discounting products in order to gain market share.
2025 Form 10-K; competing carriers' bundling and discounting · Filed 25/02/2026
rolling)
92.7
%
93.7
%
(100)
Total benefits and claims, net / Total net earned premiums
64.0
%
66.5
%
(250)
Total adjusted expenses / Total adjusted revenues
20.2
%
20.6
%
(40)
Pretax adjusted earnings / Total adjusted revenues
34.3
%
32.0
%
230
In yen terms, Aflac Japan's net earned premiums were ¥245.1 billion for the quarter, or 3.7% lower than a year ago, mainly due to the impact of a new external reinsurance transaction for WAYS and Tsumitasu as well as limited pay products reaching paid-up status.
Second-quarter 2026 results, filed 2026-08-06; Japan persistency, ratios and premium decline explanation · Filed 06/08/2026
rolling)
79.4
%
79.2
%
20
Total benefits and claims, net / Total net earned premiums
49.5
%
47.3
%
220
Total adjusted expenses / Total adjusted revenues
36.1
%
36.3
%
(20)
Pretax adjusted earnings / Total adjusted revenues
20.9
%
22.5
%
(160)
Aflac U.S.
Second-quarter 2026 results; U.S. persistency and operating ratios · Filed 06/08/2026
Premium persistency is the percentage of premiums remaining in force at the end of a period, usually one year, and presented on a trailing 12-month average basis.
June 2026 Form 10-Q, filed 2026-08-07; premium persistency definition · Filed 07/08/2026
Beginning January 2025, the Company implemented a new methodology of calculating persistency rate which excludes annuitizations, premium halving and waiver premium from the terminations; prior periods have not been retroactively adjusted.
June 2026 financial supplement, filed 2026-08-06; Japan persistency methodology change · Filed 06/08/2026
2025 Selected Results
•Aflac Japan’s sales grew 16.0% for the year reflecting robust sales of Miraito, our latest cancer insurance product, and the continued success of agencies selling Tsumitasu, our repriced life insurance product which offers an asset formation component and options such as nursing care.
2026 proxy; 2025 Japan sales and product results · Filed 19/03/2026
For the quarter, total new annualized premium sales (sales) decreased 5.6% to ¥19.6 billion, or $123 million, reflecting a high prior-year sales baseline for Miraito cancer insurance following its launch in March 2025, partially offset by strong growth in the refreshed Tsumitasu savings-type life insurance and Anshin Palette, the new medical insurance product launched in December 2025.
Second-quarter 2026 results; Japan quarterly sales and product-launch comparison · Filed 06/08/2026
For the first six months, sales increased 7.0% to ¥37.3 billion, or $235 million.
Second-quarter 2026 results; Japan first-half new annualized premium sales · Filed 06/08/2026
(2) Effective March 31, 2026, Child Endowment is now included with Ordinary Life Other for all periods presented
29
Aflac Japan
Aflac Japan Sales Force Data
Number of Agencies by Type
Sales Contribution by Agency Type
1
Period
Individual/ Independent Corporate
Affiliated
Corporate
Bank
Total
Individual/ Independent Corporate
Affiliated
Corporate
Bank
Licensed Sales
Associates (1)
Recruited
Agencies
2021
6,779
1,283
360
8,422
51.1
%
43.7
%
5.2
%
111,854
62
2022
6,159
1,239
359
7,757
49.5
46.5
4.0
110,259
38
2023
5,751
1,203
360
7,314
46.7
50.0
3.3
113,010
24
2024
5,384
1,166
360
6,910
48.2
48.6
3.2
113,836
50
2025
5,155
1,125
358
6,638
47.5
49.2
3.3
111,915
236
2024
1
5,659
1,191
360
7,210
48.9
48.0
3.1
112,645
12
2
5,542
1,180
360
7,082
49.5
48.4
2.1
114,424
12
3
5,464
1,176
360
7,000
46.2
50.2
3.6
114,473
19
4
5,384
1,166
360
6,910
48.5
47.7
3.8
113,836
7
2025
1
5,300
1,155
358
6,813
52.8
43.8
3.4
112,996
18
2
5,225
1,141
358
6,724
46.8
50.4
2.8
111,387
76
3
5,213
1,136
358
6,707
45.1
51.4
3.5
111,736
73
4
5,155
1,125
358
6,638
47.0
49.5
3.5
111,915
69
2026
1
5,110
1,116
357
6,583
52.4
44.6
3.0
111,084
82
2
5,091
1,103
356
6,550
50.0
47.3
2.7
110,750
139
(1) Excludes Dai-ichi Life, banks, Japan Post Group and Daido Life
30
Aflac Japan
Yen/Dollar Exchange Rates
1
Period
Closing Rate (1)
Quarterly Average
Yearly Cumulative Average
% Change
2021
115.02
June 2026 financial supplement; Japanese agency counts, sales contribution and exclusions · Filed 06/08/2026
For the first six months, total new sales increased 2.8% to $667 million.
Second-quarter 2026 results; U.S. first-half new sales · Filed 06/08/2026
We continue to promote awareness for third sector protection to new and younger customers through our innovative first sector product Tsumitasu, which was repriced for new policies effective in September.
Fourth-quarter 2025 results, filed 2026-02-04; CEO disclosure of new-policy repricing · Filed 04/02/2026
•approval of policy forms and premium rates
2025 Form 10-K; regulatory approval of policy forms and premium rates · Filed 25/02/2026
As a result, the pretax adjusted profit margin for the Japan segment was 34.6%, compared with 31.9% a year ago.
Second-quarter 2026 results; Japan first-half pretax adjusted margin · Filed 06/08/2026
segment was 20.6%, compared with 21.6% a year ago.
Second-quarter 2026 results; U.S. first-half pretax adjusted margin · Filed 06/08/2026
Pretax adjusted earnings in yen for the quarter increased 3.4% on a reported basis to ¥118.2 billion, primarily driven by favorable benefits.
Second-quarter 2026 results; favorable benefits contributing to Japan earnings · Filed 06/08/2026
Pretax adjusted earnings were $370 million, 4.6% lower than a year ago, primarily driven by higher benefits.
Second-quarter 2026 results; higher benefits contributing to U.S. earnings decline · Filed 06/08/2026
(In Millions, except per-share data)
Years Ended December 31,
3 Months Ended June 30,
6 Months Ended June 30,
2021
2022
2023
2024
2025
2025
2026
% Change
2025
2026
% Change
Aflac Japan
$
3,756
$
3,281
$
3,234
$
3,494
$
3,440
$
790
$
741
(6.2)
%
$
1,512
$
1,500
(0.8)
%
Aflac U.S.
June 2026 financial supplement; dates, units and Japan segment earnings table context · Filed 06/08/2026
1,356
1,359
1,501
1,419
1,421
388
370
(4.6)
746
733
(1.7)
1
Corporate and other (1)
(293)
(218)
(425)
32
101
20
(10)
63
(10)
Pretax adjusted earnings
4,819
4,422
4,310
4,945
4,962
1,198
1,101
(8.1)
2,321
2,223
(4.2)
Income taxes (1)
893
808
577
873
954
241
218
(9.5)
458
439
(4.1)
2
Adjusted earnings (2)
3,925
3,614
3,733
4,072
4,008
957
883
(7.7)
1,863
1,784
(4.2)
Reconciling items:
Adjusted net investment gains (losses)
462
447
914
1,495
(375)
(377)
(106)
(1,301)
(3)
Other and non-recurring income (loss)
(73)
1
39
(23)
(54)
—
—
(53)
—
3
Income tax benefit (expense) on items excluded from adjusted earnings (3)
(83)
357
(26)
(101)
67
19
48
119
63
Net earnings
$
4,231
$
4,418
$
4,659
$
5,443
$
3,646
$
599
$
825
37.7
%
$
628
$
1,844
June 2026 financial supplement; 2021–2025 and first-half 2026 adjusted and net earnings · Filed 06/08/2026
199 SCHEDULE II CONDENSED FINANCIAL INFORMATION OF REGISTRANT Aflac Incorporated (Parent Only) Condensed Statements of Cash Flows Years ended December 31, (In millions) 2025 2024 2023 Cash flows from operating activities: Net earnings $ 3,646 $ 5,443 $ 4,659 Adjustments to reconcile net earnings to net cash provided from operating activities: Equity in earnings of subsidiaries(1) (3,708) (5,090) (4,418) Cash dividends received from subsidiaries 3,824 4,274 3,410 Other, net (52) (292) (686) Net cash provided (used) by operating activities 3,710 4,335 2,965 Cash flows from investing activities: Fixed maturity securities sold 824 572 547 Fixed maturity securities purchased (772) (695) (345) Other investments sold (purchased) 125 (243) (34) Settlement of derivatives 277 469 693 Additional capitalization of subsidiaries(1) (15) (84) (203) Other, net (58) 0 1 Net cash provided (used) by investing activities 381 19 659 Cash flows from financing activities: Purchases of treasury stock (3,530) (2,800) (2,801) Proceeds from borrowings 1,039 823 0 Principal payments under debt obligations (84) 0 0 Dividends paid to shareholders (1,198) (1,087) (966) Treasury stock reissued 8 14 17 Proceeds from exercise of stock options 7 9 13 Net change in amount due to/from subsidiaries(1) 25 (5) (6) Other, net (20) (7) (17) Net cash provided (used) by financing activities (3,753) (3,053) (3,760) Net change in cash and cash equivalents 338 1,301 (136) Cash and cash equivalents, beginning of period 2,308 1,007 1,143 Cash and cash equivalents, end of period $ 2,646 $ 2,308 $ 1,007 (1) Eliminated in consolidation See the accompanying Notes to Condensed Financial Statements.
2025 Form 10-K; parent-only cash flows, financing, distributions and cash balance · Filed 25/02/2026
•The company returned $1.3 billion to shareholders, consisting of $983 million in share repurchase and $309 million in dividends.
Second-quarter 2026 results; actual repurchases and shareholder dividends · Filed 06/08/2026
The Company's systems were not affected by ransomware, and the Company remained able to serve its policyholders and underwrite policies, review claims, and otherwise service customers as usual.
2025 Form 10-K; customer service continuity during U.S. cyber incident · Filed 25/02/2026
In December 2025, the Company determined that personal information associated with approximately 22.65 million individuals was involved.
2025 Form 10-K; individuals whose information was involved in U.S. cyber incident · Filed 25/02/2026
At this time, the full scope and potential ultimate impact of the June 2026 Japan Cyber Incident on the Company are not known.
June 2026 Form 10-Q; unknown ultimate impact of Japan cyber incident · Filed 07/08/2026
The PBRS will vest based on the Company’s achievement on a combination of these measures—AROE, RBC, SMR/ESR —for the cumulative three-year performance period beginning January 1, 2025 and ending December 31, 2027.
2026 proxy; 2025–2027 performance-based restricted stock measures and vesting period · Filed 19/03/2026
For all NEOs except, Mr. Miller, these awards were paid at 172% times the target number of shares initially awarded based on the three-year average results for each of the currency neutral AROE, SMR, and RBC metrics.
2026 proxy; actual completed performance award payout · Filed 19/03/2026
EXECUTIVE COMPENSATION
2026 PROXY STATEMENT
49
2025 MIP Targets and Actual Performance
Corporate Metric
Adjusted earnings per diluted share on a currency-neutral basis for the full year came in at $7.46 per share, and the MIP definition of the metric increased the achieved result to $7.52 on a currency-neutral basis, resulting in a maximum payout for 2025.
2026 proxy; adjusted compensation metric and maximum 2025 annual payout · Filed 19/03/2026
Actual performance, including modification for relative total shareholder return, may result in the ultimate award of 0% to 200% of the initial number of performance-based restricted stock issued, with the potential for no award if the Company's performance goals are not achieved.
June 2026 Form 10-Q; performance stock payout range and possibility of no award · Filed 07/08/2026
Compliance Status
Each current NEO and Non-employee Director has stock ownership that exceeds the ownership guidelines or is working toward meeting the requisite guideline within the allowed time frame.
2026 proxy; ownership-guideline compliance status · Filed 19/03/2026
In particular: •a substantial majority of our Board members are independent; •the Audit and Risk, Compensation, and Corporate Governance Committees all comprise independent Directors; •the Company has a Lead Non-Management Director with significant responsibilities, as described below; •the Non-employee Directors meet at each regularly scheduled Board meeting in executive session without management present; •the Corporate Governance Committee oversees and manages the annual assessment of Board performance, which includes consideration of the effectiveness of our Board leadership structure; •our shareholders have several avenues to make their views known, including the ability to amend the Bylaws of the Company, to call a special meeting of shareholders and to include director nominations in our proxy materials; and •members of our management team and/or independent Directors proactively engage on a year-round basis with our shareholders to understand their perspectives on our business, strategy, management, Board, and governance practices.
2026 proxy; independent oversight, executive sessions and shareholder rights · Filed 19/03/2026
The total number of shares of the Company’s Common Stock entitled to vote at the meeting was 515,183,672, of which 85,520,827 directly registered shares were entitled to ten votes per share and 23,397,450 shares held in “street” or “nominee” name exercised ten votes per share.
May 2026 annual-meeting results, filed 2026-05-07; actual ten-vote shares · Filed 07/05/2026
The shares owned by J&A Alliance Trust (the "Trust") represented, in aggregate, 20% of the total voting power of the Company's Common Stock.
May 2026 annual-meeting results; trust's voting-power concentration · Filed 07/05/2026
The Shareholders Agreement, entered into on February 28, 2019, by the Company, Japan Post Holdings Co., Ltd., J&A Alliance Holdings Corporation, solely in its capacity as trustee of the Trust, and General Incorporated Association J&A Alliance, provides voting restrictions that require the Trust to vote (i) all shares representing voting rights in excess of 20% of the voting rights in the Company and (ii) all of its shares in connection with a change in control transaction, in each case, in a manner proportionally equal to votes of shares not beneficially owned by the Trust.
May 2026 annual-meeting results; restrictions on trust voting · Filed 07/05/2026
There were no material findings in any of the NDOI and NYSDFS final examination reports.
2025 Form 10-K; final regulatory examination findings · Filed 25/02/2026
(2) Due to a calculation error, we have corrected the Adjusted BV Per Share Excluding Foreign Currency Remeasurement G/(L) and percentage changes for Q2 and Q3 2025.
June 2026 financial supplement; correction of adjusted book-value calculations · Filed 06/08/2026
As of December 31, 2025, Aflac Japan's SMR was 995%, compared with 1,221% at December 31, 2024.
2025 Form 10-K; actual December 2025 and 2024 Japan SMR · Filed 25/02/2026
Solvency Margin Ratio (SMR) is solvency margin total divided by one half of the risk total.
2025 Form 10-K; SMR's exact denominator · Filed 25/02/2026
At December 31, 2025 and 2024, Aflac Re was in compliance with the ECR and MSM requirements.
2025 Form 10-K; actual Aflac Re ECR and MSM compliance · Filed 25/02/2026
The FSA has introduced an economic value-based solvency regulation as a new prudential regulatory framework for insurance companies, effective from the fiscal year-end of 2025.
June 2026 Form 10-Q; introduction of Japan's economic-value solvency regime · Filed 07/08/2026
In accordance with this regulation, Aflac Japan made its initial disclosure of the ESR as of March 31, 2026 in July 2026.
June 2026 Form 10-Q; initial March 2026 ESR disclosure timing · Filed 07/08/2026
We ended the quarter with an estimated regulatory ESR of 226%.
Second-quarter 2026 CFO update, filed 2026-08-06; estimated quarter-end regulatory ESR · Filed 06/08/2026
If including the undertaking-specific parameter, or USP, this would add 14 points to the regulatory ratio and result in an ESR, with USP, of 240%.
Second-quarter 2026 CFO update; separately stated USP effect on estimated ESR · Filed 06/08/2026
The decline quarter over quarter was primarily driven by significant subsidiary dividends.
Second-quarter 2026 CFO update; subsidiary dividends driving quarter-over-quarter capital-ratio decline · Filed 06/08/2026
Aflac Japan's ESR is sensitive to interest rate, credit spread, and foreign exchange rate changes; therefore, the Company continues to evaluate alternatives for reducing this sensitivity, including the reduction of subsidiary dividends paid to the Parent Company and Parent Company capital contributions.
June 2026 Form 10-Q; ESR sensitivities and possible subsidiary funding responses · Filed 07/08/2026
Business
Purpose
Aflac Incorporated
and Aflac
uncommitted bilateral
364 days
December 4, 2026
$100 million
$0 million
The rate quoted by the bank and agreed upon at the time of borrowing
Up to 3 months
None
General corporate purposes
Aflac Incorporated
unsecured revolving
5 years
May 13,
2030, or the date commitments are terminated pursuant to an event of default
¥100.0 billion
¥0.0 billion
A rate per annum equal to, at the Company's option, either (a) Tokyo Interbank Market Rate (TIBOR) plus an applicable margin or (b) an alternative TIBOR based on the rate offered by the agent to major banks in yen for the applicable period plus an applicable margin
No later than
May 14, 2030
.28% to .45%, depending on the Parent Company's debt ratings as of the date of determination
June 2026 Form 10-Q; yen revolving facility capacity, borrowing balance and terms · Filed 07/08/2026
dollar-denominated borrowings or three-month TIBOR plus 68 basis points per annum for Japanese yen-denominated borrowings
No later than December 2, 2026
None
General corporate purposes
(1) Intercompany credit agreement
The Company was in compliance with all of the covenants of its notes payable and lines of credit at June 30, 2026.
June 2026 Form 10-Q; June 30 covenant compliance · Filed 07/08/2026
The Parent Company depends on its subsidiaries for cash flow, primarily in the form of dividends and management fees.
2025 Form 10-K; parent dependence on subsidiary cash flows · Filed 25/02/2026
These payments are also subject to various regulatory restrictions and approvals related to safeguarding the interests of insurance policyholders.
2025 Form 10-K; regulatory restrictions on subsidiary payments · Filed 25/02/2026
Investment exposures that individually exceeded 10% of shareholders' equity were as follows: June 30, 2026 December 31, 2025 (In millions) Credit Rating Amortized Cost Fair Value Credit Rating Amortized Cost Fair Value Japan National Government(1) A+ $29,714 $24,612 A+ $32,618 $28,434 (1) Japan Government Bonds (JGBs) or JGB-backed securities 16 Net Investment Gains and Losses Information regarding pretax net investment gains and losses was as follows: Three Months Ended June 30, Six Months Ended June 30, (In millions) 2026 2025 2026 2025 Net investment gains (losses): Sales and redemptions: Fixed maturity securities available-for-sale: Gross gains from sales $ 0 $ 5 $ 1 $ 119 Gross losses from sales (837) (98) (978) (333) Foreign currency gains (losses) 599 79 725 240 Other investments: Gross gains (losses) from sales and redemptions 0 11 (2) 12 Total sales and redemptions (238) (3) (254) 38 Equity securities 87 98 73 37 Impairment losses (11) (6) (35) (6) Credit losses: Fixed maturity securities held-to-maturity 0 0 1 0 Commercial mortgage and other loans (76) (61) (126) (114) Loan commitments (1) 2 1 0 Reinsurance recoverables and other 0 1 (14) 1 Total credit losses (77) (58) (138) (113) Derivatives and other: Derivative gains (losses) (134) 23 (229) (22) Foreign currency gains (losses) 220 (475) 479 (1,318) Total derivatives and other 86 (452) 250 (1,340) Total net investment gains (losses) $ (153) $ (421) $ (104) $ (1,384) In the three-month period ended June 30, 2026, the Company did not recognize impairment losses on real estate owned (REO) properties.
June 2026 Form 10-Q; concentrated sovereign exposure and investment and credit losses · Filed 07/08/2026
Currently, when the Company's fixed maturity securities mature, the proceeds may be reinvested at a yield below that required for the accretion of policy benefit liabilities on policies issued in earlier years.
June 2026 Form 10-Q; reinvestment yields versus older policy liability accretion · Filed 07/08/2026
Transitional Real Estate (floating rate)
5,246
6,455
5,998
4,703
3,611
4,115
3,029
Middle Market Loans (floating rate)
4,601
5,028
4,531
4,283
4,266
4,228
4,388
Commercial Mortgage Loans
1,854
1,775
1,697
1,523
1,443
1,478
1,362
Other Loans
20
238
301
360
445
443
575
Total Commercial mortgage and other loans, net of allowance for credit losses
11,721
13,496
12,527
10,869
9,765
10,264
9,354
Equity Securities, at FV through net earnings
1,603
1,091
1,088
796
887
882
925
1
Alternatives (1)
1,703
2,107
2,619
3,167
3,809
3,464
4,052
Total Portfolio
$
122,396
$
111,219
$
104,742
$
94,887
$
95,844
$
102,074
$
95,026
Unrealized Gains (Losses) on Invested Assets
(In Millions)
December 31,
June 30,
2021
2022
2023
2024
2025
2025
2026
Fixed Maturity Securities:
Available For Sale - Gross Gains
$
13,566
$
4,800
$
6,050
$
5,308
$
4,782
$
4,072
$
4,289
Available For Sale - Gross Losses
(239)
(4,528)
(3,449)
(4,128)
(5,924)
(5,223)
(6,631)
Total Available For Sale
13,327
272
2,601
1,180
(1,142)
(1,151)
(2,342)
Held to Maturity - Gross Gains
4,869
2,154
1,838
815
87
446
8
Held to Maturity - Gross Losses
—
—
—
(9)
(731)
(273)
(1,257)
Total Held to Maturity
$
4,869
$
2,154
$
1,838
$
806
$
(644)
$
173
$
(1,249)
Credit Ratings on Fixed Maturities
(At Amortized Cost)
December 31,
June 30,
Credit Rating:
2021
2022
2023
2024
2025
2025
2026
AAA
1.0
%
1.6
%
1.6
%
1.5
%
1.1
%
1.4
%
1.3
%
AA
5.1
5.2
5.7
6.0
6.6
6.3
7.0
A
68.9
68.0
68.1
68.0
69.0
68.5
69.0
BBB
22.5
23.0
22.9
22.9
21.9
22.2
21.4
BB or Lower
2.5
2.2
1.7
1.6
1.4
1.6
1.3
100.0
%
100.0
%
100.0
%
100.0
%
100.0
%
100.0
%
100.0
%
(1) Presented at carrying value; includes asset classes such as private equity and real estate funds managed by Global Investments; excludes Corporate driven activity, policy loans, short-term investments, real estate owned assets and FHLB equity balances
11
Aflac Incorporat
June 2026 financial supplement; investment portfolio, fixed-maturity ratings at amortized cost and scope footnote · Filed 06/08/2026
Financial Statements. Aflac Incorporated and Subsidiaries Consolidated Statements of Earnings Three Months Ended June 30, Six Months Ended June 30, (In millions, except for share and per-share amounts - Unaudited) 2026 2025 2026 2025 Revenues: Net earned premiums, principally supplemental health insurance (1) $ 3,252 $ 3,470 $ 6,562 $ 6,851 Net investment income 984 1,081 1,940 2,036 Net investment gains (losses) (153) (421) (104) (1,384) Other income (loss) 34 30 65 55 Total revenues 4,117 4,160 8,463 7,558 Benefits and expenses: Benefits and claims, excluding reserve remeasurement 1,898 2,047 3,812 4,033 Reserve remeasurement (gains) losses (46) (37) (128) (78) Total benefits and claims, net 1,852 2,010 3,684 3,955 Acquisition and operating expenses: Amortization of deferred policy acquisition costs 218 221 439 437 Insurance commissions 239 251 476 491 Insurance and other expenses 749 804 1,520 1,606 Interest expense 64 52 124 102 Total acquisition and operating expenses 1,270 1,328 2,559 2,636 Total benefits and expenses 3,122 3,338 6,243 6,591 Earnings before income taxes 995 822 2,220 967 Income taxes 170 223 376 339 Net earnings $ 825 $ 599 $ 1,844 $ 628 Net earnings per share: Basic $ 1.64 $ 1.12 $ 3.63 $ 1.16 Diluted 1.63 1.11 3.61 1.16 Weighted-average outstanding common shares used in computing earnings per share (In thousands): Basic 504,123 536,688 508,572 540,676 Diluted 505,578 538,425 510,150 542,629 Cash dividends per share $ .61 $ .58 $ 1.22 $ 1.16 (1) Includes a gain (loss) of an immaterial amount for the three- and six-month periods ended June 30, 2026 and 2025, respectively, related to remeasurement of the deferred profit liability for limited-payment contracts.
June 2026 Form 10-Q; consolidated earnings, claims, reserve remeasurement, interest expense and share counts · Filed 07/08/2026
8
Aflac Incorporated and Subsidiaries
Return on Equity
Year ended December 31,
3 Months Ended June 30,
6 Months Ended June 30,
1
2021 (4)
2022
2023
2024
2025
2025
2026
2025
2026
2
U.S.
June 2026 financial supplement; return-on-equity table period headings · Filed 06/08/2026
GAAP ROE - Net earnings (1)
26.7
%
23.8
%
22.1
%
22.6
%
13.1
%
9.0
%
10.9
%
4.7
%
12.3
%
Impact of excluding unrealized foreign currency translation gains (losses)
(1.7)
(2.5)
(3.1)
(3.6)
(2.6)
(1.5)
(2.0)
(0.8)
(2.2)
Impact of excluding unrealized gains (losses) on securities and derivatives
10.7
4.1
0.2
0.4
(0.5)
(0.5)
(1.1)
(0.2)
(1.0)
Impact of excluding effect on change in discount rate assumptions
(18.5)
(8.2)
(1.9)
(0.2)
2.6
1.6
3.9
0.7
4.0
Impact of excluding pension liability adjustment
(0.2)
(0.1)
—
—
—
—
—
—
—
Impact of excluding AOCI
(9.7)
(6.8)
(4.9)
(3.4)
(0.4)
(0.4)
0.9
(0.3)
0.9
U.S.
June 2026 financial supplement; GAAP ROE and AOCI reconciliation · Filed 06/08/2026
GAAP ROE - less AOCI
17.0
17.0
17.2
19.2
12.8
8.6
11.9
4.4
13.2
3
Differences between adjusted earnings and net earnings (2)
(1.2)
(3.1)
(3.4)
(4.8)
1.3
5.1
0.8
8.7
(0.4)
4
Adjusted ROE - reported (3)
15.8
13.9
13.8
14.4
14.0
13.7
12.7
13.1
12.8
5
Less: Impact of excluding gains (losses) associated with foreign currency remeasurement (5)
—
1.0
1.8
2.9
3.6
2.9
3.9
3.0
3.9
Adjusted ROE, excluding foreign currency remeasurement (5)(6)
16.0
14.9
15.6
17.3
17.6
16.6
16.6
16.1
16.7
(1) U.S.
June 2026 financial supplement; adjusted ROE reconciliation · Filed 06/08/2026
GAAP ROE is calculated by dividing net earnings (annualized) by average shareholders' equity.
Second-quarter 2026 results; GAAP ROE definition · Filed 06/08/2026
•Adjusted return on equity excluding foreign currency remeasurement is annualized adjusted earnings divided by average shareholders’ equity, excluding both accumulated other comprehensive income and the cumulative (beginning January 1, 2021) foreign currency gains/losses associated with i) foreign currency remeasurement and ii) sales and redemptions of invested assets.
Second-quarter 2026 results; adjusted ROE numerator and equity exclusions · Filed 06/08/2026
(In thousands of shares) Shares Weighted-Average Grant-Date Fair Value Per Share Restricted stock at December 31, 2025 1,867 $ 86.15 Granted in 2026 928 119.68 Canceled in 2026 (18) 101.26 Vested in 2026 (1,093) 75.39 Restricted stock at June 30, 2026 1,684 $ 102.84 As of June 30, 2026, total compensation cost not yet recognized in the Company's consolidated financial statements related to restricted stock was $82 million, of which $42 million (1.4 million shares) was related to performance-based restricted stock.
June 2026 Form 10-Q; restricted shares and unrecognized compensation cost · Filed 07/08/2026
As part of its overall corporate strategy, the Company has committed up to $400 million to Aflac Ventures, LLC (Aflac Ventures) as opportunities emerge, of which approximately $230 million has been deployed as of June 30, 2026.
June 2026 Form 10-Q; venture commitment and actual deployment · Filed 07/08/2026
We have continued to experience somewhat elevated lapse and reissue activity on recently launched products as we have expanded coverage options and competitiveness on new products.
Second-quarter 2026 CFO update; management explanation of elevated lapse and reissue activity · Filed 06/08/2026
New annualized premium sales generally represent annual premiums on policies and riders the Company sold and incremental increases from policy conversions that would be collected over a 12-month period assuming the policies remain in force for that entire period.
June 2026 financial supplement; new annualized premium sales definition · Filed 06/08/2026
Pretax adjusted profit margin is adjusted earnings divided by adjusted revenues, before taxes are applied.
June 2026 Form 10-Q; pretax adjusted profit margin definition · Filed 07/08/2026
