Aflac Inc Earnings - Q3 2025 Analysis & Highlights
Key Takeaways
Aflac Inc's Q3 2025 earnings call highlighted strong financial results driven by growth in Japan, particularly cancer insurance sales, and solid performance in the U.S. The company is focused on strategic capital deployment, including share repurchases and dividends, while navigating industry trends and investing in growth opportunities.
Key Financial Results
Net earnings per diluted share were reported at $3.08, and adjusted earnings per diluted share at $2.49 for Q3 2025.
Adjusted earnings per diluted share increased 15.3% year-over-year.
Adjusted book value per share, excluding foreign currency re-measurement, increased 6.3%.
The adjusted ROE was 19.1% and 22.1%, excluding foreign currency re-measurement.
Business Segment Results
Aflac Japan
Sales increased 11.8% year-over-year, with cancer insurance sales up 42%.
Net earned premiums declined 4%.
The total benefit ratio was 39.3%, down nearly 10 percentage points year-over-year.
The expense ratio was 19.8%, down 20 basis points year-over-year.
Pre-tax margin was 52.2%, up 750 basis points year-over-year.
Aflac US
New sales totaled $390 million, a 2.8% year-over-year increase.
Premium persistency was strong at 79%.
Net earned premiums increased 2.5%.
The total benefit ratio came in at 45.6%, 200 basis points lower than Q3 2024.
The expense ratio was 38.9%, up 90 basis points year-over-year, impacted by a onetime contract termination fee.
Pre-tax margin was 21.7%, a 90 basis points increase compared with the strong quarter a year ago.
Capital Allocation
Aflac Incorporated deployed a record $1 billion in capital to repurchase 9.3 million shares of its stock.
Dividends of $309 million were paid.
Aflac delivered $1.3 billion back to the shareholders in Q3 2025.
Industry Trends and Dynamics
Consumers need the products and solutions Aflac offers more than ever.
Families and individuals still seek a partner and solutions to help protect themselves from financial hardship that not even the best health insurance covers.
The complex healthcare environment has produced incredible medical advancements that come with incredible cost.
Growth Opportunities and Strategies
Emphasis on third sector protection to new and younger customers with the innovative first sector product, Tsumitasu.
Consumers are approached through a broad network of distribution channels, including agencies, alliance partners and banks.
Focus on driving more profitable growth by exercising a strong underwriting discipline and maintaining strong premium persistency in the U.S.
Leveraging every opportunity to convey how Aflac's products can help fill the gap during challenging times, providing not just financial assistance, but also compassion and care.
The company is working to bundle life and absence and disability products alongside core group VB products.
Financial Guidance and Outlook
For 2025, the benefit ratio in Japan is expected to be in the 58% to 60% range, and the expense ratio is expected to be at the lower end of the 20% to 23% range.
Aflac Japan's pre-tax profit margin is expected to be in the 35% to 38% range.
In the U.S., the benefit ratio for 2025 is expected to be at the lower end of the 48% to 52% range, and the expense ratio is expected to be in the mid- to upper-end of the 36% to 39% range.
Pre-tax profit margin for 2025 in the U.S. is expected to be at the upper end of the 17% to 20% range.
Capital Position
Unencumbered holding company liquidity stood at $4.5 billion, which was $2.7 billion above the minimum balance.
Leverage was 22% for the quarter, within the target range of 20% to 25%.
The company ended the quarter with an SMR above 900% and an estimated regulatory ESR, with the Undertaking-Specific Parameter, or USP, above 250%.
The combined RBC is estimated to be greater than 600%.
