Aflac’s Q3 2025 Earnings Call: Strong Growth Amid Challenges

AFLAC Incorporated ((AFL)) has held its Q3 earnings call. Read on for the main highlights of the call.

Aflac Incorporated’s recent earnings call conveyed a predominantly positive sentiment, highlighting strong financial performance across its U.S. and Japan segments. The company showcased robust capital deployment and significant sales growth in Japan’s cancer insurance sector. However, challenges were noted in the U.S. market, particularly concerning the shift away from individual products and issues related to expense management.

Strong Earnings Per Share

Aflac reported impressive financial results for the third quarter of 2025, with net earnings per diluted share reaching $3.08 and adjusted earnings per diluted share at $2.49. This represents a notable 15.3% increase compared to the previous year, underscoring the company’s strong financial health.

Significant Growth in Japan

Aflac Japan experienced remarkable growth, with an 11.8% year-over-year increase in sales. The surge was particularly pronounced in the cancer insurance sector, where sales rose by 42%, driven by the successful launch of the Miraito product.

Capital Deployment

The company demonstrated effective capital management by deploying a record $1 billion to repurchase 9.3 million shares and distributing $309 million in dividends. This resulted in a total return of $1.3 billion to shareholders in the third quarter of 2025.

Strong Performance in U.S. Buy-to-Build Initiatives

In the U.S., Aflac’s buy-to-build initiatives yielded $390 million in new sales, marking a 2.8% year-over-year increase. The segment maintained a strong premium persistency rate of 79%, reflecting the effectiveness of its strategic initiatives.

Milestone Achievements

The year 2025 marks several significant milestones for Aflac, including its 70th anniversary and 43 consecutive years of dividend increases. Additionally, the company celebrated important anniversaries for the Aflac Cancer and Blood Disorders Center and the Aflac Duck.

Challenges in U.S. Individual Product Sales

Despite overall positive performance, Aflac faced challenges in the U.S. with individual product sales. The shift in broker preferences towards group products contributed to weaker performance in this area.

Expense Management Challenges

The U.S. segment encountered expense management challenges, with the expense ratio increasing to 38.9%. This was attributed to a $21 million onetime termination fee and the timing of advertising expenses.

Decline in Japan Premiums

Aflac Japan saw a decline in net earned premiums, which fell by 4% for the quarter. The underlying earned premiums also decreased by 1.2%, indicating some challenges in maintaining premium growth.

Forward-Looking Guidance

Looking ahead, Aflac provided financial guidance for 2025, with expectations for Japan’s benefit ratio to range between 58% and 60%, and the U.S. benefit ratio to be at the lower end of the 48% to 52% range. The company emphasized strategic initiatives to support these goals, maintaining a strong capital position with leverage at 22% and unencumbered holding company liquidity of $4.5 billion.

In conclusion, Aflac’s earnings call highlighted a strong financial performance and strategic growth, particularly in Japan’s insurance market. While the U.S. segment faces challenges, the company’s robust capital management and forward-looking strategies position it well for future success. Investors and market watchers will be keen to see how Aflac navigates these challenges and capitalizes on its growth opportunities.