AFLAC (AFL) Q2 2026 Earnings Report

The call conveyed a generally positive tone: management highlighted solid capital ratios, strong shareholder returns, active investment portfolio repositioning expected to boost recurring income, and product momentum in both Japan (Tsumitasu, Anshin Palette) and U.S. group/dental & vision channels. Offsetting issues were modest — near-term sales comparisons in Japan versus a strong 2025 quarter, a small decline in adjusted book value per share, some investment income shortfalls, elevated lapse/reissue activity on new Japan products and higher U.S. group disability claims. Management maintained constructive outlooks for capital deployment, reserve/reinsurance actions and premium growth (2025–2027 net earned premium CAGR guidance of 3%–6%), suggesting that positives outweigh the contained challenges.

Guidance highlights: management expects Aflac Japan sales to exceed 2025 and now sees Japan’s full‑year benefit ratio at the high end of its 60%–63% guidance (ytd 63.4%; Q2 Japan benefit ratio 64%), with Japan persistency 92.7% (Q2) and U.S. persistency 79.4%; company-level net earned premium growth in 2026 is expected to be just below the prior 3%–6% guidance (U.S. Q2 net earned premium +2.3%; Japan Q2 net earned premiums −3.7% in yen, underlying −1.4%), while the 2025–2027 net earned premium CAGR is still expected to be 3%–6%. Financial targets and capital metrics cited include adjusted EPS up ~1.1% ex‑FX to about $1.80 (reported adjusted ~$1.75; net EPS $1.63), adjusted book value per share −4.1% ex‑FX, adjusted ROE 12.7% (16.6% ex‑FX), pretax margins Japan 34.3% and U.S. 20.9%, expense ratios Japan 20.2% and U.S. 36.1%, U.S. benefit ratio 49.5% (Q2, +220 bps YoY), Aflac Inc. unencumbered liquidity $3.3B ($2.3B above $1B minimum), adjusted leverage 21.8% (target 20%–25%), estimated ESR 226% (240% with USP), combined RBC slightly above 600%, and continued capital returns ($1.3B to shareholders in Q2 — $983M buybacks and $309M dividends; $2.6B YTD); portfolio actions included $4.8B repositioned and an anticipated annualized NII uplift of >$50M.