Aflac NYSE: AFL opened 2026 with what management described as “a good start to the year,” supported by strong sales in Japan, steady premium growth in the U.S., and continued capital return to shareholders.
During the company’s first-quarter earnings call, Chairman and CEO Dan Amos said Aflac delivered net earnings per diluted share of $1.98 and adjusted earnings per diluted share of $1.75, attributing the performance to “focused execution of our strategy.”
Japan sales surge follows marketing and sales transformation
Amos highlighted momentum in Japan following a marketing and sales transformation implemented last year, noting it contributed to results in 2025 and continued into the first quarter of 2026. He said Aflac Japan’s sales increased 25.5% in the quarter, driven primarily by the company’s “newest medical product, Anshin Palette,” and its “latest cancer insurance product, Miraito.”
Amos also said Aflac continues to emphasize third-sector protection among newer and younger customers through its first-sector product, Tsumitasu. “By maintaining strong persistency while adding new premium through sales, we seek to offset the impact of lapses and reissue, as well as policies reaching paid-up status in the future,” he said.
On the financial side, CFO Max Brodén said Japan net earned premiums in yen terms declined 3.8% in the quarter. He added that Aflac Japan’s “underlying earned premiums,” excluding the impact of reinsurance, paid-up policies, and deferred profit liability, declined 1.3%, which he said provides “a clearer insight into long-term premium trends.”
Japan’s total benefit ratio was 62.9%, down 290 basis points year-over-year. Brodén said reserve remeasurement gains that exceeded plan contributed about 70 basis points of benefit. Persistency declined but remained “strong and in line with our expectations” at 92.8%, while the company continued to see an “uptick in lapse and reissue” on its cancer insurance product.
Japan’s expense ratio was 19.5%, down 10 basis points year-over-year. Adjusted net investment income in yen terms rose 4%, which Brodén said was primarily driven by “higher U.S. dollar fixed rate income on higher volume” and higher variable net investment income versus last year. Japan’s pre-tax margin was 35%, up 320 basis points year-over-year, which Brodén called “a very good result.”
Asked about Miraito’s sales trajectory, Koichiro Yoshizumi, EVP and head of the marketing and sales division at Aflac Life Insurance Japan, said through a translator that “Miraito’s momentum is continuing,” and the company expects 2026 sales “to be equivalent to that of 2025.” Yoshizumi added the company has “created a system whereby” Miraito, Anshin Palette, and Tsumitasu “to be sold concurrently.”
U.S. premium growth and persistency remain stable
In the U.S., Amos said the company delivered a 2.9% year-over-year increase in sales, while maintaining premium persistency of 79.3% and increasing net earned premium 3.5% for the quarter.
Brodén reported the U.S. total benefit ratio was 47.2%, 50 basis points lower than the prior-year quarter, driven by “favorable incurred claims for individual voluntary benefits products and group disability.” He estimated reserve remeasurement gains contributed about 230 basis points of benefit to the ratio, roughly 80 basis points above plan.
The U.S. expense ratio rose to 38.3%, up 70 basis points year-over-year, primarily due to “higher DAC amortization and commissions,” and the timing of “advertising and investment spend.” U.S. adjusted net investment income declined 0.5% as lower short-term rates were partly offset by higher variable net investment income. The U.S. pre-tax margin was 20.4%, down 40 basis points from the prior-year quarter.
In Q&A, President of Aflac Incorporated and Aflac U.S. Virgil Miller said the company has not seen “any additional pressure” following headlines about a state regulator forcing rate cuts on some products, adding that there were “no material impacts at all.”
Miller also provided detail on sales mix. He said that combining dental and vision, core voluntary benefits, and group life/absence/disability, the group categories were up about 12.4% in the quarter. He said the company’s “by-the-bill” businesses were up 25%, while the dental and vision business increased 52%. At the same time, Miller said the core traditional agent business was “slightly down to flat,” with efforts focused on recruiting and conversion. He reported a 60% conversion rate of new agents in the first quarter and said productivity in the agent group was “about 8%.”
Investment and corporate items, including impairments and charge-offs
Brodén said the corporate and other segment reported “break-even pre-tax adjusted earnings,” down from a $43 million gain in the prior year, driven by “lower adjusted net investment income, higher interest expense and operating costs, and run-off impacts from closed blocks of business.” He noted the segment’s results are sensitive to short-term rates and that runoff blocks have a “natural decay, roughly about 8% per year.” Looking to the second quarter, he said he would expect the segment “to be slightly negative” on a pre-tax basis given current volumes, rates, and reinsurance block performance.
In the investment portfolio, the company recorded $19 million of charge-offs on its loan portfolio and did not foreclose on any properties during the period. It also recorded $24 million of impairments on real estate owned to reflect “continued depressed valuations” in commercial real estate markets, though Brodén said management believes “the current distressed market does not reflect the true intrinsic value of our portfolio.”
For U.S. statutory results, the company recorded $12 million of impairments on invested assets and a $1 million valuation allowance on mortgage loans as an unrealized loss. On a Japan FSA basis, securities impairment reversals led to a net realized gain of JPY 66 million, and the company booked a JPY 201 million valuation allowance related to transitional real estate loans.
Reinsurance deal with Japan Post and capital return
Brodén disclosed that, effective March 31, Aflac Re Bermuda assumed a block of whole life annuities from Japan Post Insurance. He said the transaction was immaterial to Aflac’s financials but represents a “strategic milestone” as Aflac expands its reinsurance franchise targeting Japan. In response to analyst questions, Brodén said the capital impacts in the quarter were “relatively small” and not meaningful to ESR or FSA earnings.
Separately, he discussed another reinsurance transaction involving Japan business, saying it negatively impacted Aflac Japan earnings in the first quarter by “a mid single digit U.S dollars in millions,” with a similar negative impact expected for the next couple of quarters before moving “towards more of a zero impact” over time as policies reach paid-up status.
Management also discussed how reinsurance could become more meaningful over time. Brodén said that while the initial transaction was small, future transactions “could be material” and “immediately accretive” to earnings, though Aflac expects to be selective by niche and risk type. Amos said the company is taking “a slow, methodical approach,” adding, “What I like is evolution, not revolution.”
On capital and liquidity, Brodén said Aflac ended the quarter with $3.4 billion in unencumbered liquidity, which was $2.4 billion above its $1 billion minimum. Adjusted leverage was 21.2%, within its 20% to 25% target range, and Brodén said the company intentionally holds roughly 65% of its debt in yen as part of its enterprise hedging program.
Estimated regulatory capital metrics included an ESR of 227% (or 243% including USP) and combined RBC of approximately 560%. Given that position, Brodén said the company repurchased $1 billion of stock and paid $315 million in dividends during the quarter. Amos said total capital returned through buybacks and dividends was $1.3 billion in the first quarter and reiterated the company’s commitment to extending its record of 43 consecutive years of dividend increases.
Looking at the Japan premium outlook, Brodén said Aflac is currently experiencing “relatively predictable lapsation” of roughly JPY 90 billion and that reaching that sales level would be needed to achieve flat in-force earned premium on an annual basis. He said underlying earned premium has been running around “-1% to -2%” and that is the expectation for the full year. Masatoshi Koide, president and representative director of Aflac Life Insurance Japan, said through a translator that the company’s midterm strategy is to “grow the new business” and “aim to stop the stagnation of the earned premium.”
About Aflac NYSE: AFL
Aflac Incorporated (American Family Life Assurance Company of Columbus) is a provider of supplemental insurance products designed to help policyholders manage out-of-pocket health care and living expenses. The company underwrites a range of individual and group policies that typically pay cash benefits directly to insureds when covered events occur, enabling greater financial flexibility for medical treatment, hospital stays, critical illness, and related costs. Aflac's product mix includes supplemental health insurance, life insurance and other specialty coverages intended to complement primary medical plans.
Founded in the mid-20th century and headquartered in Columbus, Georgia, Aflac distributes its products through a combination of employer-sponsored programs, independent brokers and agents, and direct marketing.
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