Aflac Incorporated

What they do

Aflac earns revenue principally from insurance premiums and investments. Its principal business is supplemental health and life insurance products in Japan and the U.S., with Aflac Japan investing heavily in yen- and dollar-denominated securities. The company's profitability depends on pricing, actuarial experience, investment results, and expense management.

Revenue drivers

• Aflac Japan — Generates the majority of revenue from supplemental health and life insurance premiums in Japan; investment purchases totaled $12.1B in 2025, with new money yield of 4.17%.
• Aflac U.S. — Sells supplemental health products and related benefits to employers and employees; net earned premiums were $5,999M in 2025, with total adjusted revenues of $6,903M.
• Net investment income — A significant revenue source supporting insurance operations; adjusted net investment income for Aflac U.S. was $830M in 2025.

Recent performance

In Q2 2026, total revenues were $4.1B, down 1.0% year over year. Net earnings rose 37.7% to $825M ($1.63 per diluted share), but adjusted earnings fell 7.7% to $883M ($1.75 per diluted share), partly due to a weaker yen. For the first six months of 2026, total revenues were up 12.0% to $8.5B, and net earnings were $1.8B ($3.61 per diluted share). In 2025, annual revenue was $17.16B and net income was $3.65B, with diluted EPS of $6.82. Operating cash flow declined from $5.05B in 2021 to $2.56B in 2025.

Strategy

Management focuses on pursuing more profitable growth and tactical, opportunistic capital deployment. In Japan, product initiatives include Anshin Palette (medical insurance), Miraito (cancer insurance), and Tsumitasu (life insurance). In the U.S., the company focuses on meeting evolving employer and employee needs for supplemental health products. The company intends to continue a balanced approach of investing in growth and returning capital, with 43 consecutive years of dividend increases through 2025.

Risks

• Japan concentration — A large portion of business is in Japan, exposing results to yen/dollar exchange rate fluctuations and limited availability of acceptable yen-denominated investments.
• Interest rate and credit risk — Portfolio yields and investment results are sensitive to global interest rates and credit downgrades or defaults on fixed maturity securities and loans.
• Cyber incident — Unauthorized access to the company's network in June 2025 could lead to operational disruptions or regulatory and reputational damage.
• Regulatory and legal risk — Extensive regulation, changes in law, and potential litigation or regulatory inquiries, including worker misclassification allegations in the U.S., could affect operations.

Outlook

Management expects to extend the dividend increase record in 2026. They continue to pursue growth in Japan and the U.S., focusing on product innovation and meeting customer needs. The company acknowledges forward-looking risks including economic conditions, interest rates, and foreign currency fluctuations.