Aflac Incorporated Reports Second Quarter Results
COLUMBUS, Ga., Aug. 5, 2025 /PRNewswire/ -- Aflac Incorporated (NYSE: AFL) today reported its second quarter results.
Total revenues were $4.2 billion in the second quarter of 2025, compared with $5.1 billion in the second quarter of 2024, primarily due to net investment losses of $421 million this quarter compared to net investment gains of $696 million in the second quarter of 2024. Net earnings were $599 million, or $1.11 per diluted share, compared with $1.8 billion, or $3.10 per diluted share a year ago.
Net earnings in the second quarter of 2025 included net investment losses of $421 million, or $0.78 per diluted share, compared with net investment gains of $696 million, or $1.23 per diluted share a year ago. These net investment losses were driven by:
- Net losses of $452 million on certain derivatives and foreign currency activities
- $58 million of current expected credit losses (CECL)
- Impairments of $6 million
- Net losses from sales and redemptions of $3 million
- Offset by a $98 million gain from an increase in the fair value of equity securities
Adjusted earnings* in the second quarter were $957 million, compared with $1.0 billion in the second quarter of 2024, reflecting a decrease of 7.5%. Adjusted earnings per diluted share* decreased 2.7% to $1.78 in the quarter. Variable investment income ran $35 million below the company's long-term return expectations. Net investment income included $35 million, or $0.05 per share, from a make-whole call of a security in the Japan segment. The stronger yen/dollar exchange rate positively impacted adjusted earnings per share by $0.04.
The average yen/dollar exchange rate in the second quarter of 2025 was 144.60, or 7.7% stronger than the average rate of 155.70 in the second quarter of 2024. For the first six months, the average exchange rate was 148.32, or 2.7% stronger than the rate of 152.30 a year ago.
Shareholders' equity was $27.2 billion, or $50.86 per share, at June 30, 2025, compared with $26.0 billion, or $46.40 per share, at June 30, 2024. Shareholders' equity at the end of the second quarter included a cumulative increase of $5.6 billion for the effect of the change in discount rate assumptions on insurance reserves, compared with a corresponding cumulative increase of $1.4 billion at June 30, 2024 and a net unrealized loss on investment securities and derivatives of $1.8 billion, compared with a net unrealized gain of $379 million at June 30, 2024. Shareholders' equity at the end of the second quarter also included an unrealized foreign currency translation loss of $4.3 billion, compared with an unrealized foreign currency translation loss of $5.1 billion at June 30, 2024. The annualized return on average shareholders' equity in the second quarter was 9.0%.
For the first six months of 2025, total revenues were down 28.5% to $7.6 billion, compared with $10.6 billion in the first half of 2024. Net earnings were $628 million, or $1.16 per diluted share, compared with $3.6 billion, or $6.35 per diluted share, for the first six months of 2024. Adjusted earnings for the first half of 2025 were $1.9 billion, or $3.43 per diluted share, compared with $2.0 billion, or $3.49 per diluted share, in 2024. Excluding the positive impact of $0.03 per share from the stronger yen/dollar exchange rate, adjusted earnings per diluted share decreased 2.3% to $3.41 for the first six months of 2025.
Shareholders' equity excluding AOCI (or adjusted book value*) was $27.7 billion, or $51.78 per share at June 30, 2025, compared with $29.3 billion, or $52.26 per share, at June 30, 2024. Adjusted book value excluding foreign currency remeasurement* was $23.6 billion, or $44.17 per share at June 30, 2025, compared with $23.6 billion, or $41.98 per share, at June 30, 2024. The annualized adjusted return on equity excluding foreign currency remeasurement* in the second quarter was 16.4%.
AFLAC JAPAN
In yen terms, Aflac Japan's net earned premiums were ¥254.6 billion for the quarter, or 4.8% lower than a year ago, mainly due to internal cancer reinsurance transactions, as well as limited-pay policies reaching paid-up status. Adjusted net investment income decreased 10.5% to ¥101.1 billion primarily due to lower floating rate income and the impact from foreign currency on USD investments in yen terms. Total adjusted revenues in yen declined 6.2% to ¥357.5 billion. Pretax adjusted earnings in yen for the quarter declined 15.0% on a reported basis to ¥114.3 billion, primarily due to the decline in revenue and an increase in expenses, partially offset by lower benefits. Pretax adjusted earnings decreased 11.5% on a currency-neutral basis. The pretax adjusted profit margin for the Japan segment was 32.0%, compared with 35.3% a year ago.
For the first six months, net earned premiums in yen were ¥511.0 billion, or 4.9% lower than a year ago. Adjusted net investment income decreased 9.1% to ¥190.4 billion. Total adjusted revenues in yen were down 6.0% to ¥704.0 billion. Pretax adjusted earnings were ¥224.3 billion, or 12.1% lower than a year ago.
In dollar terms, net earned premiums increased 2.7% to $1.8 billion in the second quarter. Adjusted net investment income decreased 3.6% to $699 million. Total adjusted revenues increased by 1.0% to $2.5 billion. Pretax adjusted earnings declined 8.6% to $790 million.
For the first six months, net earned premiums in dollars were $3.4 billion, or 2.5% lower than a year ago. Adjusted net investment income decreased 6.5% to $1.3 billion. Total adjusted revenues were down 3.6% to $4.7 billion. Pretax adjusted earnings were $1.5 billion, or 9.7% lower than a year ago. As a result, the pretax adjusted profit margin for the Japan segment was 31.9%, compared with 34.1% a year ago.
For the quarter, total new annualized premium sales (sales) increased 23.2% to ¥20.7 billion, or $143 million, primarily reflecting strong sales of Miraito, the new cancer insurance product. For the first six months, sales increased 18.7% to ¥34.8 billion, or $236 million.
AFLAC U.S.
Aflac U.S. net earned premiums increased 3.4% to $1.5 billion in the second quarter compared to the prior year, reflecting improved sales and persistency. Adjusted net investment income decreased 5.0% to $207 million, primarily due to lower floating rate income. Total adjusted revenues were up 2.6% to $1.7 billion. Pretax adjusted earnings were $388 million, 1.3% higher than a year ago, reflecting higher premiums, which were partially offset by increased benefits, lower net investment income and higher expenses. As a result, the pretax adjusted profit margin for the U.S. segment was 22.5%, compared with 22.7% a year ago.
For the first six months, net earned premiums increased 2.6% to $3.0 billion. Adjusted net investment income decreased 3.5% to $409 million. Total adjusted revenues were up 1.9% to $3.4 billion. Pretax adjusted earnings were $746 million, or 0.9% higher than a year ago. As a result, the pretax adjusted profit margin for the U.S. segment was 21.6%, compared with 21.8% a year ago.
Aflac U.S. sales increased 2.7% in the quarter to $340 million, primarily benefiting from sales of group life and disability products. For the first half of the year, total new sales increased 3.1% to $649 million.
CORPORATE AND OTHER
For the quarter, total adjusted revenues increased 34.9% to $336 million compared to the prior year. Internal reinsurance activity in the fourth quarter of 2024 drove an increase in both net earned premiums and adjusted net investment income. A lower volume of tax credit investments also contributed to higher adjusted net investment income. Total benefits and adjusted expenses increased $90 million compared to the prior year primarily due to reinsurance activity, higher costs pertaining to business operations, and higher interest expense. Pretax adjusted earnings were a gain of $20 million, compared with a gain of $23 million a year ago.
For the first six months, total adjusted revenues increased 33.2% to $662 million. Pretax adjusted earnings were a gain of $63 million, compared with a gain of $21 million a year ago.
DIVIDEND AND CAPITAL RETURNED TO SHAREHOLDERS
The board of directors declared the third quarter dividend of $0.58 per share, payable on September 2, 2025 to shareholders of record at the close of business on August 20, 2025.
In the second quarter, Aflac Incorporated deployed $829 million in capital to repurchase 7.9 million of its common shares. At the end of June 2025, the company had 30.9 million remaining shares authorized for repurchase.
OUTLOOK
Commenting on the company's results, Aflac Incorporated Chairman and Chief Executive Officer Daniel P. Amos stated: "Aflac delivered solid earnings for the quarter and the first six months. We have continued to actively concentrate on generating profitable growth in the U.S. and Japan with distribution strategies and refreshed products. We believe our strategy will continue to create long-term value for shareholders."
"Looking at our operations in Japan, I am pleased with Aflac Japan's 23.2% year-over-year sales increase and ongoing strong premium persistency. The strong sales were driven largely by sales of our newest cancer insurance product Miraito. We also continue to introduce the need for third sector protection to new and younger customers through our innovative first sector product Tsumitasu. Overall, I believe we have the right strategy to meet our customers' financial protection needs throughout their different life stages."
"In the U.S., I continue to be pleased with our premium persistency of 79.2%, in addition to our 3.4% increase in net earned premiums and 2.7% increase in sales. We are encouraged by the momentum we are seeing within all areas of our group business, especially our group life and disability as well as network dental. We continue to focus on more profitable growth through our stronger underwriting discipline and improving the productivity of agents and brokers. We are seeing improvement in net earned premiums and continue our prudent approach to expense management and maintaining a strong pretax margin."
"We continue to generate strong capital and cash flows while maintaining our commitment to prudent liquidity and capital management. We have been pleased with our investments, which have continued to produce strong net investment income. We treasure our 2024 milestone of 42 consecutive years of dividend increases and remain committed to extending this record, supported by our financial strength. We repurchased $829 million in shares for the quarter. We intend to continue our balanced approach of investing in growth and driving long-term operating efficiencies."
*See Non-U.S. GAAP Financial Measures section for an explanation of foreign exchange and its impact on the financial statements and definitions of the non-U.S. GAAP financial measures used in this earnings release, as well as a reconciliation of such non-U.S. GAAP financial measures to the most comparable U.S. GAAP financial measures.
ABOUT AFLAC INCORPORATED
Aflac Incorporated (NYSE: AFL), a Fortune 500 company, has helped provide financial protection and peace of mind for nearly seven decades to millions of policyholders and customers through its subsidiaries in the U.S. and Japan. In the U.S., Aflac is the No. 1 provider of supplemental health insurance products. In Japan, Aflac Life Insurance Japan is the leading provider of cancer and medical insurance in terms of policies in force. The company takes pride in being there for its policyholders when they need us most, as well as being included in the World's Most Ethical Companies by Ethisphere for 19 consecutive years (2025) and Fortune's World's Most Admired Companies for 24 years (2025). In addition, the company became a signatory of the Principles for Responsible Investment (PRI) in 2021 and has been included in the Dow Jones Sustainability North America Index (2024) for 11 years. To find out how to get help with expenses health insurance doesn't cover, get to know us at aflac.com or aflac.com/español. Investors may learn more about Aflac Incorporated and its commitment to corporate social responsibility and sustainability at investors.aflac.com under "Sustainability."
A copy of Aflac's financial supplement for the quarter can be found on the "Investors" page at aflac.com.
Aflac Incorporated will webcast its quarterly conference call via the "Investors" page of aflac.com at 8:00 a.m. (ET) on August 6, 2025.
Note: Tables within this document may not foot due to rounding.
