AFLAC Incorporated
AFL · NYSE
Next quarter
Reports Nov 3, 2026.
Consensus is $1.81 EPS for Sep 2026 across 6 estimates, ranging $1.75 to $1.93.
AFL Jun 2026
- 1.13%
- -1.62%
- $1.77
- $1.75
- —
- $4.12B
Reported results
- $4.12B
- $825.00M
- $1.63
Highlights
- Earnings miss: Diluted EPS was $1.75 versus the $1.77 consensus, a 1.13% shortfall; adjusted diluted EPS was also $1.75, down 1.7% from $1.78 a year ago.
- Lower operating revenue: Total revenue was $4.12 billion, down 1.0% from $4.16 billion a year ago and 5.3% from $4.35 billion in Q1; net earned premiums fell 6.3% year over year to $3.25 billion.
- Adjusted earnings softened: Adjusted earnings declined 7.7% year over year to $883 million and were down 2.0% from $901 million in Q1, while reported net income rose 37.7% year over year to $825 million.
- Japan remained the largest drag: Aflac Japan pretax adjusted earnings fell 6.2% year over year to $741 million, with adjusted revenue down 0.8% to $3.44 billion.
- U.S. premiums grew but margins narrowed: Aflac U.S. net earned premiums increased 2.3% to $1.54 billion, but pretax adjusted earnings declined 4.6% to $370 million as benefits and claims rose 7.0% to $762 million.
- Investment volatility shaped GAAP: The company recorded a $58 million net investment loss, versus a $358 million loss in Q2 2025 and a $118 million gain in Q1 2026; current-period foreign currency reduced adjusted EPS by $0.05.
- Capital remained solid: Adjusted book value per share increased to $55.01 from $54.06 at year-end 2025, while adjusted debt to adjusted capitalization was 25.3% and insurer financial-strength ratings remained stable.
- Share count continued to decline: Ending shares outstanding fell to 502.3 million from 510.5 million at the end of Q1 and 534.8 million a year earlier.
Analysis
Aflac’s second quarter was a modest operating miss rather than a major earnings disruption. Diluted EPS of $1.75 was 1.13% below the $1.77 consensus. Revenue of $4.12 billion declined 1.0% year over year and 5.3% sequentially, while reported net income of $825 million rose 37.7% from Q2 2025 but fell 19.1% from $1.02 billion in Q1. The more comparable adjusted figures were weaker: adjusted earnings of $883 million fell 7.7% year over year and 2.0% sequentially, with adjusted EPS of $1.75 versus $1.78 a year ago and $1.75 in Q1.
The print was defined by contrasting segment trends and investment noise. Japan pretax adjusted earnings declined 6.2% to $741 million, while the U.S. produced 2.3% premium growth to $1.54 billion but saw pretax adjusted earnings fall 4.6% to $370 million as benefits and claims increased 7.0% to $762 million. A $58 million investment loss and a $0.05 foreign-currency drag on adjusted EPS further separated GAAP results from underlying operations. Capital metrics nevertheless improved, with adjusted book value per share at $55.01 versus $54.06 at year-end 2025.
Operating earnings quality
The quarter’s headline net-income growth overstated the underlying performance. Reported net income benefited from a much smaller investment loss than in the prior-year period, while adjusted earnings declined as both operating segments contributed less.
- Adjusted earnings: Adjusted earnings were $883 million, down 7.7% from $957 million in Q2 2025 and 2.0% from $901 million in Q1 2026.
- Revenue mix: Total revenue declined 1.0% year over year to $4.12 billion. Net earned premiums fell 6.3% to $3.25 billion and net investment income fell 9.0% to $984 million.
- Expense base: Total benefits and claims declined 7.9% to $1.85 billion, but total acquisition and operating expenses fell only 4.4% to $1.27 billion, limiting operating leverage.
Aflac Japan
Japan remained the largest contributor but was the biggest segment earnings headwind. Dollar-denominated results were pressured by lower adjusted revenue and reduced pretax earnings, despite a still sizable investment portfolio.
- Segment earnings: Pretax adjusted earnings declined 6.2% to $741 million from $790 million a year ago; first-half earnings were down 0.8% to $1.50 billion.
- Revenue: Adjusted revenue fell 0.8% to $3.44 billion, with net earned premiums down 6.1% to $2.51 billion and adjusted net investment income down 6.3% to $733 million.
- Investment profile: Japan invested assets were ¥12.39 trillion at quarter-end, up from ¥12.06 trillion a year earlier. Portfolio book yield increased to 3.39% from 3.26%, while new-money yield was 4.45%.
Aflac U.S.
The U.S. business continued to grow premiums, but higher claims and expenses more than absorbed that growth. The result was a lower pretax margin despite improving premium scale.
- Premium growth: Net earned premiums rose 2.3% year over year to $1.54 billion and 2.9% for the first half to $3.09 billion.
- Claims pressure: Benefits and claims increased 7.0% to $762 million, lifting the benefit-to-premium ratio to 48.4% for the first half of 2026 from 47.3% in 2025.
- Earnings: Pretax adjusted earnings fell 4.6% to $370 million, and the pretax profit margin declined to 20.6% from 22.4% in Q2 2025.
- Persistency: Twelve-month rolling premium persistency was 79.4%, broadly stable with 79.2% for 2025.
Investments and currency
Investment and foreign-exchange movements were the main reason GAAP and adjusted comparisons diverged. The company remained exposed to market-value changes across a large fixed-income portfolio and to yen translation.
- Investment result: Net investment losses were $58 million, versus a $358 million loss in Q2 2025 and a $118 million gain in Q1 2026.
- Foreign currency: Current-period foreign currency reduced adjusted EPS by $0.05 in the quarter, compared with no impact in Q2 2025; adjusted EPS excluding that impact was $1.80.
- Portfolio: Consolidated fixed maturities totaled $80.70 billion at amortized cost, including 69.0% rated A and 21.4% rated BBB; securities rated BB or lower represented 1.3%.
Capital and shareholder value
Aflac’s capital position strengthened on an adjusted basis even as reported equity remained sensitive to accumulated other comprehensive income and currency movements. The company also continued reducing its share count.
- Book value: Adjusted book value per share was $55.01 at June 30, up from $54.06 at December 31, 2025; reported equity book value per share was $60.35.
- Leverage: Adjusted debt was $7.79 billion and adjusted debt to adjusted capitalization was 25.3%, compared with 24.7% at year-end 2025.
- Share repurchases and dilution: Ending shares outstanding were 502.3 million, down from 510.5 million at March 31 and 534.8 million at June 30, 2025.
- Ratings: Aflac’s insurer financial-strength ratings and issuer ratings were reported with stable outlooks.
