Then Max Brodén, Senior Executive Vice President and Chief Financial Officer, Aflac Incorporated, will provide more detail on this quarter's financial results, including our capital and liquidity. These topics are also addressed in the materials we posted with our earnings release, financial supplement, and quarterly CFO video update on investors.aflac.com. As I mentioned earlier, the earnings release with reconciliations of certain non-U.S. Aflac Incorporated reported net earnings per diluted share of $1.98 and adjusted earnings per diluted share of $1.75.

With this in mind, I'm pleased with Aflac Japan's sales increase of a 25.5% increase for the first quarter. Turning to Aflac U.S., I am encouraged by the 2.9% year-over-year increase in sales and the momentum we are seeing within all areas of our group business, especially our group voluntary products. We continue to focus on driving our profitable growth with strong underwriting discipline and maintaining strong premium persistency. has continued its prudent approach to expense management and maintaining a strong pre-tax margin, as Max will expand upon shortly.

We generated strong capital and cash flows on an ongoing basis while maintaining our commitment to prudent liquidity and capital management. Our financial strength is the foundation that backs up our promise to our policyholders, balanced with the financial flexibility and tactical capital deployment. I am very pleased with the company's financial strength, which supports our capital deployment. We treasure our 43 consecutive years of dividend increases and remain committed to extending this record.

What went well
  • Aflac Japan sales rose 25.5% in Q1, led by new medical product Anshin Palette and cancer product Miraito
  • Adjusted EPS of $1.75 ($1.77, up 6.6% year-over-year excluding foreign currency)
  • Returned $1.3 billion to shareholders via $1 billion of buybacks and $315 million of dividends
  • Japan pre-tax margin of 35%, up 320 basis points year-over-year
  • Aflac U.S. net earned premiums up 3.5% with strong premium persistency of 79.3%
  • Strong capital position: ESR of 227% (243% with USP) and combined RBC of approximately 560%
What went wrong
  • Japan net earned premiums in yen declined 3.8% (underlying earned premiums down 1.3%)
  • Corporate and Other reported break-even pre-tax earnings, down from a $43 million gain a year ago
  • Recorded $24 million of real estate impairments and $19 million of loan charge-offs on the investment portfolio
  • U.S. expense ratio rose 70 basis points to 38.3% on higher DAC amortization, commissions and advertising timing
  • Continued uptick in lapse and reissue on the Japan cancer insurance product

Guidance Changes

MetricPeriodCurrent guidance
Japan total benefit ratioFY202660%-63%
U.S. total benefit ratioFY202648%-52%
Japan underlying earned premium growthFY2026-1% to -2%
Japan salesFY2026expected higher than 2025; CEO target closer to JPY 80 billion
Corporate and Other pre-tax earningsQ2 2026expected slightly negative

Performance Breakdown

MetricYoYNote
Adjusted EPS +6.6% ex-FX to $1.77 Focused execution of strategy; reported adjusted EPS $1.75, net EPS $1.98
Japan net earned premiums (yen) -3.8% Impact of reinsurance, paid-up policies and deferred profit liability; underlying down 1.3%
Japan total benefit ratio -290 bps to 62.9% Favorable cancer and hospitalization trends plus ~70 bps from reserve remeasurement gains above plan
Japan pre-tax margin +320 bps to 35% Favorable benefit ratio and expense trends
U.S. net earned premiums +3.5% Strong premium persistency of 79.3% and group voluntary growth
U.S. total benefit ratio -50 bps to 47.2% Favorable incurred claims for individual voluntary benefits and group disability; ~230 bps from remeasurement gains, ~80 bps above plan
U.S. pre-tax margin -40 bps to 20.4% Compared against a strong quarter a year ago
Adjusted ROE — 12.8% reported, 16.4% excluding foreign currency remeasurement, a solid spread to cost of capital

Earnings Call Themes & Trends

TopicPrevious mentionCurrent periodTrend
External reinsurance in JapanStarted with a reinsurance deal with another company, then took it internallyAflac Re Bermuda assumed a block of whole life annuities from Japan Post effective March 31; strategic milestone expected to be material over time—
Japan sales and marketing transformation2025 transformation drove strong sales momentumQ1 sales up 25.5% across all distribution channels; three products (Miraito, Anshin Palette, Tsumitasu) sold concurrently—
U.S. group business shiftInvestment in dental/vision and group life, absence and disabilityGroup products up 12.4%; combined with consumer markets up 25%; dental/vision up 52%; core agent business slightly down to flat—
Capital deploymentHighest return on capital and lowest cost of capital in the industry$1.3 billion returned in Q1; 43 consecutive years of dividend increases; leverage 21.2% within 20%-25% target—

Q&A Summary

How much capital benefit came from the external reinsurance deal, and were there ESR headwinds in Japan? (Evercore)
Capital impacts were relatively small and not meaningful to ESR or FSA earnings. ESR decline was mainly driven by subsidiary dividends moving from Aflac Japan to the holding company; higher yen rates slightly hurt ESR while yen weakening helped.
What does the shift toward younger customers in lapse and reissue mean for IRRs? (Evercore)
Impacts on IRRs across the in-force are expected to be quite minor. A single lapsed policy has a slightly lower IRR, but the new longer-duration policy it moves into may improve IRR, working as a balancing effect.
What drives expected improvement in the Japan benefit ratio toward the 60%-63% outlook? (KBW)
Continued favorable experience, the lower net premium ratio set in Q3 last year, and mix of lapsation (less old-age cancer, more recently issued policies). Management remains confident in the 60%-63% full-year range; assumption unlock comes in Q3.
How large is the Japan third-party reinsurance opportunity over time? (KBW)
Could be material over time with sizable, immediately accretive blocks. Aflac will be selective by niche, product and risk; its double-A balance sheet and Japan-market expertise make it attractive to counterparties. It will take time to build up.
Will Japan cancer sales (Miraito) improve sequentially next quarter? (Wells Fargo)
Miraito momentum is continuing; 2026 sales expected to be equivalent to 2025. A system was created to sell all three products (Miraito, Anshin Palette, Tsumitasu) concurrently.
What is the expected earnings run rate for the Corporate and Other segment? (Wells Fargo)
Mainly driven by net investment income on cash and short-term rates, plus roughly 8% annual decay on runoff reinsurance blocks. Q2 is expected to be slightly negative in pre-tax earnings at current volumes and rates.
What is the earnings impact of the external first-sector reinsurance transaction relative to premium impact? (Dowling & Partners)
It negatively impacted Aflac Japan Q1 earnings by mid-single-digit millions of U.S. dollars, will remain negative for the next couple of quarters, and moves toward zero over time as policies reach paid-up status.
Is the reinsurance push a sign the core Japan business has less growth? (Jefferies)
No. Aflac is always looking for opportunities and still sees a lot of growth in Japan. Reinsurance is a natural, methodical add-on: 'evolution, not revolution.'
What is happening with the U.S. core agent business? (Jefferies)
Core agent business is slightly down to flat while group grows. Focus is on recruiting and converting agents (60% Q1 conversion, ~8% productivity and new-agent success), plus innovative product and technology for smaller employer groups.
Does Aflac plan to raise debt, and what are the uses of its excess capital? (Raymond James)
No real plans to increase leverage (21.2%, within 20%-25%). Roughly two-thirds of debt is yen-denominated as part of the FX hedging program. Excess capital and reinsurance provide flexibility to deploy into operations and return to shareholders; external reinsurance consumes some capital but should not alter shareholder returns.

More on Aflac Inc

Reported 2026-04-30 · figures from the Aflac Inc Q1 2026 earnings call.

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