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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of The Securities Exchange Act of 1934
Date of Report (Date of earliest event reported)
May 1, 2024
Aflac Incorporated
________________________________________________________________________________
_________________________________________________________________________
(Exact name of registrant as specified in its charter)
Georgia 001-07434 58-1167100
(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification No.)
1932 Wynnton Road Columbus Georgia 31999
(Address of principal executive offices) (Zip Code)
706
.
323.3431
________________________________________________________________________________
_________________________________________________________________________
(Registrant's telephone number, including area code)
________________________________________________________________________________
_________________________________________________________________________
(Former name or former address, if changed since last report)
Check the appropriate box below if the Form 8-K filing is intended to
simultaneously satisfy the filing obligation of the registrant under any of
the following provisions:
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Securities registered pursuant to Section 12(b) of the Act:
Title of each class Trading Symbol(s) Name of each exchange on which registered
Common Stock, $.10 Par Value AFL New York Stock Exchange
Indicate by check mark whether the registrant is an emerging growth company as
defined in Rule 405 of the Securities Act of 1933 ((s)230.405 of this chapter)
or Rule 12b-2 of the Securities Exchange Act of 1934 ((s)240.12b-2 of this
chapter).
Emerging growth company
If an emerging growth company, indicate by check mark if the registrant has
elected not to use the extended transition period for complying with any new
or revised financial accounting standards provided pursuant to Section 13(a)
of the Exchange Act.
..
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Item 2.02 Results of Operations and Financial Condition.
On May 1, 2024, Aflac Incorporated (the "Company") issued a press release
dated May 1, 2024 in which it reported the Company's 2024 first quarter
financial results. A copy of the press release is furnished as Exhibit 99.1 to
this Current Report on Form 8-K and incorporated by reference herein in its
entirety. In addition, a copy of the Company's first quarter supplemental
earnings materials is furnished as Exhibit 99.2 to this Current Report on Form
8-K and incorporated by reference herein in its entirety.
On May 1, 2024, the Company posted to its investor relations website at
investors.aflac.com a video presentation by Max Broden, the Company's
Executive Vice President and Chief Financial Officer, discussing the Company's
2024 first quarter earnings. A copy of the transcript of Mr. Broden's comments
from the Investor Update and a copy of the Investor Presentation are furnished
as Exhibit 99.3 and Exhibit 99.4 to this Current Report on Form 8-K,
respectively, and are incorporated by reference herein in their entirety. The
Investor Update and the Investor Presentation should be read in conjunction
with the press release.
Item 9.01 Financial Statements and Exhibits.
(d) Exhibits.
Exhibit Number Exhibit Title or Description
99.1 Press release of Aflac Incorporated dated May 1, 2024
99.2 Financial Supplement for First Quarter 2024
99.3 Transcript of comments in video presentation by Max Broden, Executive
Vice President and Chief Financial Officer of Aflac Incorporated.
99.4 Slides referenced in video presentation by Max Broden, Executive
Vice President and Chief Financial Officer of Aflac Incorporated.
104 Cover Page Interactive Data File (the cover page XBRL
tags are embedded within the Inline XBRL document)
1
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
Aflac Incorporated
May 1, 2024 /s/ Robin L. Blackmon
(Robin L. Blackmon)
Senior Vice President, Financial Services
Chief Accounting Officer
2
News Release
Aflac Incorporated Announces First Quarter Results,
Reports First Quarter Net Earnings of $1.9 Billion,
Declares Second Quarter Cash Dividend
COLUMBUS, Ga. - May 1, 2024 - Aflac Incorporated (NYSE: AFL) today reported
its first quarter results.
Total revenues were $5.4 billion in the first quarter of 2024, compared with
$4.8 billion in the first quarter of 2023, reflecting net investment gains.
Net earnings were $1.9 billion, or $3.25 per diluted share, compared with $1.2
billion, or $1.94 per diluted share a year ago.
Net earnings in the first quarter of 2024 included net investment gains of
$951 million, or $1.65 per diluted share, compared with net investment gains
of $123 million, or $0.20 per diluted share a year ago. These net investment
gains were driven by net gains of $703 million on certain derivatives and
foreign currency; net gains from sales and redemptions of $173 million; and a
$76 million gain from an increase in the fair value of equity securities,
offset by a $1 million increase in the company's current expected credit
losses (CECL) reserves.
Adjusted earnings* in the first quarter were $961 million, compared with $953
million in the first quarter of 2023, reflecting
an increase
of 0.8%. Adjusted earnings per diluted share* increased 7.1% to $1.66 in the
quarter. Variable investment income ran $11 million, or $0.01 per share, below
the company's long-term return expectations. The weaker yen/dollar exchange
rate negatively impacted adjusted earnings per share by $0.08.
The average yen/dollar exchange rate in the first quarter of 2024 was 148.67,
or 11.0% weaker than the average rate of 132.30 in the first quarter of 2023.
Shareholders' equity was $23.5 billion, or $41.27 per share, at March 31,
2024, compared with $19.8 billion, or $32.65 per share, at March 31, 2023.
Shareholders' equity at the end of the first quarter included a cumulative
decrease of $1.5 billion
for the effect of the change in discount rate assumptions on insurance reserves
, compared with a corresponding cumulative decrease of $4.9 billion at March
31, 2023 and a net unrealized gain on investment securities and derivatives of
$1.1 billion, compared with a net unrealized gain of
$1.3 billion
at March 31, 2023.
Shareholders' equity at the end of the first quarter also included an
unrealized foreign currency translation loss of $4.7 billion, compared with an
unrealized foreign currency translation loss of $3.6 billion at March 31,
2023. The annualized return on average shareholders' equity in the first
quarter was 33.0%.
Shareholders' equity excluding AOCI (or adjusted book value*) was $28.6
billion, or $50.22 per share at March 31, 2024, compared with $27.1 billion,
or $44.66 per share, at March 31, 2023. The annualized adjusted return on
equity excluding foreign currency impact* in the first quarter was 14.3%.
AFLAC JAPAN
In yen terms, Aflac Japan's net earned premiums were Y269.9 billion for the
quarter, or 6.0% lower than a year ago, mainly due to the prior year
reinsurance transactions and limited-pay policies reaching paid-up status.
Adjusted net investment income increased 19.3% to Y96.6 billion, mainly due to
lower hedge costs, the favorable impact of the weakening yen on U.S. dollar
investments, and higher variable investment income. Total adjusted revenues in
yen declined 0.4% to Y367.6 billion. Pretax adjusted earnings in yen for the
quarter increased 15.6% on a reported basis to Y120.6 billion, primarily due
to lower benefits and expenses during the quarter. Pretax adjusted earnings
increased 9.3% on a currency-neutral basis. The pretax adjusted profit margin
for the Japan segment increased to 32.8%, compared with 28.2% a year ago.
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In dollar terms, net earned premiums decreased 16.3% to $1.8 billion in the
first quarter. Adjusted net investment income increased 6.1% to $648 million.
Total adjusted revenues declined by 11.4% to $2.5 billion. Pretax adjusted
earnings increased 2.8% to $810 million.
For the quarter, total new annualized premium sales (sales) decreased 5.1% to
Y12.5 billion, or $84 million, primarily reflecting softer first sector sales.
AFLAC U.S.
Aflac U.S. net earned premiums increased 3.3% to $1.5 billion in the first
quarter compared to the prior year due primarily to sales recovery in the
prior year and continued improvement in persistency. Adjusted net investment
income increased 4.6% to $206 million, largely due to higher variable
investment income and a shift to higher-yielding fixed-income investments.
Total adjusted revenues were up 2.3% to $1.7 billion. Pretax adjusted earnings
were $356 million, 1.1% higher than a year ago, primarily due to higher
revenue and lower expenses offset by higher benefits. The pretax adjusted
profit margin for the U.S. segment was 21.0%, compared with 21.2% a year ago.
Aflac U.S. sales decreased 5.2% in the quarter to $298 million, reflecting
continued strong underwriting discipline.
CORPORATE AND OTHER
For the quarter, total adjusted revenues increased 91.5% to $247 million
compared to the prior year primarily due to reinsurance transactions in the
fourth quarter of 2023 resulting in an increase to both total net earned
premiums and adjusted net investment income, which also increased due to a
lower volume of tax credit investments. Total benefits and adjusted expenses
increased $114 million compared to prior year primarily as a result of the
increased reinsurance activity. Pretax adjusted earnings were a loss of $3
million, compared with a loss of $7 million a year ago.
DIVIDEND AND CAPITAL RETURNED TO SHAREHOLDERS
The board of directors declared the second quarter dividend of $0.50 per
share, payable on June 3, 2024 to shareholders of record at the close of
business on May 22, 2024.
In the first quarter, Aflac Incorporated deployed $750 million in capital to
repurchase 9.3 million of its common shares. At the end of March 2024, the
company had 68.5 million remaining shares authorized for repurchase.
OUTLOOK
Commenting on the company's results, Aflac Incorporated Chairman, Chief
Executive Officer and President Daniel P. Amos stated: "Aflac delivered very
solid earnings for the quarter. We have continued to actively concentrate on
driving profitable growth in the U.S. and Japan with new products and
distribution strategies. We believe our strategy will continue to create
long-term value for shareholders.
"Looking at our operations in Japan, we have maintained disciplined
underwriting and expense management to drive strong pretax profit margins. We
expect sales campaigns around our 50th anniversary in Japan starting in the
second quarter to get us back on track for the year.
"In the U.S., we continue to focus on more profitable growth by exercising a
stronger underwriting discipline with an emphasis on persistency. As a result,
we are seeing positive results in both net earned premiums growth and
persistency. At the same time, we continue our disciplined approach to expense
management and maintaining a strong pretax margin. We expect to drive further
improvements throughout the year.
"We continue to generate strong capital and cash flows while maintaining our
commitment to prudent liquidity and capital management. We treasure our track
record of 41 consecutive years of dividend growth and remain committed to
extending it, supported by our financial strength. In the quarter, we
repurchased a record $750 million in shares and intend to continue our
balanced approach of investing in growth and driving long-term operating
efficiencies."
*See Non-U.S. GAAP Financial Measures section for an explanation of foreign
exchange and its impact on the financial statements and definitions of the
non-U.S. GAAP financial measures used in this earnings release, as well as a
reconciliation of such non-U.S. GAAP financial measures to the most comparable
U.S. GAAP financial measures.
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ABOUT AFLAC INCORPORATED
Aflac Incorporated (NYSE: AFL), a Fortune 500 company, has helped provide
financial protection and peace of mind for more than 68 years to millions of
policyholders and customers through its subsidiaries in the U.S. and Japan. In
the U.S., Aflac is the No. 1 provider of supplemental health insurance
products.
1
In Japan, Aflac Life Insurance Japan is the leading provider of cancer and
medical insurance in terms of policies in force. The company takes pride in
being there for its policyholders when they need us most, as well as being
included in the World's Most Ethical Companies by Ethisphere for 18
consecutive years (2024), Fortune's World's Most Admired Companies for 23
years (2024) and Bloomberg's Gender-Equality Index for the fourth consecutive
year (2023). In addition, the company became a signatory of the Principles for
Responsible Investment (PRI) in 2021 and has been included in the Dow Jones
Sustainability North America Index (2023) for 10 years. To find out how to get
help with expenses health insurance doesn't cover, get to know us at aflac.com
or aflac.com/espanol. Investors may learn more about Aflac Incorporated and
its commitment to corporate social responsibility and sustainability at
investors.aflac.com under "Sustainability."
1
LIMRA 2022 U.S. Supplemental Health Insurance Total Market Report
A copy of Aflac's financial supplement for the quarter can be found on the
"Investors" page at aflac.com.
Aflac Incorporated will webcast its quarterly conference call via the
"Investors" page of aflac.com at 7:00 a.m. (ET) on May 2, 2024.
Note: Tables within this document may not foot due to rounding.
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AFLAC INCORPORATED AND SUBSIDIARIES CONDENSED INCOME STATEMENT
(UNAUDITED - IN MILLIONS, EXCEPT FOR SHARE AND PER-SHARE AMOUNTS)
THREE MONTHS ENDED MARCH 31, 2024 2023 % Change
Total revenues $ 5,436 $ 4,800 13.3 %
Benefits and claims, net 2,010 2,150 (6.5)
Total acquisition and operating expenses 1,256 1,308 (4.0)
Earnings before income taxes 2,170 1,342 61.7
Income taxes 291 154
Net earnings $ 1,879 $ 1,188 58.2 %
Net earnings per share - basic $ 3.27 $ 1.94 68.6 %
Net earnings per share - diluted 3.25 1.94 67.5
Shares used to compute earnings per share (000):
Basic 574,886 611,205 (5.9) %
Diluted 577,482 613,950 (5.9)
Dividends paid per share $ 0.50 $ 0.42 19.0 %
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AFLAC INCORPORATED AND SUBSIDIARIES CONDENSED BALANCE SHEET
(UNAUDITED - IN MILLIONS, EXCEPT FOR SHARE AMOUNTS)
MARCH 31, 2024 2023 % Change
Assets:
Total investments and cash $ 111,716 $ 120,500 (7.3) %
Deferred policy acquisition costs 8,819 9,267 (4.8)
Other assets 4,207 5,199 (19.1)
Total assets $ 124,742 $ 134,966 (7.6) %
Liabilities and shareholders' equity:
Policy liabilities $ 85,364 $ 99,933 (14.6) %
Notes payable and lease obligations 7,912 7,420 6.6
Other liabilities 7,929 7,829 1.3
Shareholders' equity 23,537 19,784 19.0
Total liabilities and shareholders' equity $ 124,742 $ 134,966 (7.6) %
Shares outstanding at end of period (000) 570,278 605,952 (5.9) %
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NON-U.S. GAAP FINANCIAL MEASURES
This document includes references to the Company's financial performance
measures which are not calculated in accordance with United States generally
accepted accounting principles (U.S. GAAP) (non-U.S. GAAP). The financial
measures exclude items that the Company believes may obscure the underlying
fundamentals and trends in insurance operations because they tend to be driven
by general economic conditions and events or related to infrequent activities
not directly associated with insurance operations.
Due to the size of Aflac Japan, where the functional currency is the Japanese
yen, fluctuations in the yen/dollar exchange rate can have a significant
effect on reported results. In periods when the yen weakens, translating yen
into dollars results in fewer dollars being reported. When the yen
strengthens, translating yen into dollars results in more dollars being
reported. Consequently, yen weakening has the effect of suppressing current
period results in relation to the comparable prior period, while yen
strengthening has the effect of magnifying current period results in relation
to the comparable prior period. A significant portion of the Company's
business is conducted in yen and never converted into dollars but translated
into dollars for U.S. GAAP reporting purposes, which results in foreign
currency impact to earnings, cash flows and book value on a U.S. GAAP basis.
Management evaluates the Company's financial performance both including and
excluding the impact of foreign currency translation to monitor, respectively,
cumulative currency impacts and the currency-neutral operating performance
over time. The average yen/dollar exchange rate is based on the published MUFG
Bank, Ltd. telegraphic transfer middle rate (TTM).
The company defines the non-U.S. GAAP financial measures included in this
earnings release as follows:
.
Adjusted earnings are adjusted revenues less benefits and adjusted expenses.
Adjusted earnings per share (basic or diluted) are the adjusted earnings for
the period divided by the weighted average outstanding shares (basic or
diluted) for the period presented. The adjustments to both revenues and
expenses account for certain items that are outside of management's control
because they tend to be driven by general economic conditions and events or
are related to infrequent activities not directly associated with insurance
operations. Adjusted revenues are U.S. GAAP total revenues excluding adjusted
net investment gains and losses. Adjusted expenses are U.S. GAAP total
acquisition and operating expenses including the impact of interest from
derivatives associated with notes payable but excluding any non-recurring or
other items not associated with the normal course of the Company's insurance
operations and that do not reflect the Company's underlying business
performance. Management uses adjusted earnings and adjusted earnings per
diluted share to evaluate the financial performance of the Company's insurance
operations on a consolidated basis and believes that a presentation of these
financial measures is vitally important to an understanding of the underlying
profitability drivers and trends of the Company's insurance business. The most
comparable U.S. GAAP financial measures for adjusted earnings and adjusted
earnings per share (basic or diluted) are net earnings and net earnings per
share, respectively.
.
Adjusted earnings excluding current period foreign currency impact are
computed using the average foreign currency exchange rate for the comparable
prior-year period, which eliminates fluctuations driven solely by foreign
currency exchange rate changes. Adjusted earnings per diluted share excluding
current period foreign currency impact is adjusted earnings excluding current
period foreign currency impact divided by the weighted average outstanding
diluted shares for the period presented. The Company considers adjusted
earnings excluding current period foreign currency impact and adjusted
earnings per diluted share excluding current period foreign currency impact
important because a significant portion of the Company's business is conducted
in Japan and foreign exchange rates are outside management's control;
therefore, the Company believes it is important to understand the impact of
translating foreign currency (primarily Japanese yen) into U.S. dollars. The
most comparable U.S. GAAP financial measures for adjusted earnings excluding
current period foreign currency impact and adjusted earnings per diluted share
excluding current period foreign currency impact are net earnings and net
earnings per share, respectively.
.
Adjusted return on equity is adjusted earnings divided by average
shareholders' equity, excluding accumulated other comprehensive income (AOCI).
Management uses adjusted return on equity to evaluate the financial
performance of the Company's insurance operations on a consolidated basis and
believes that a presentation of this financial measure is vitally important to
an understanding of the underlying profitability drivers and trends of the
Company's insurance business. The Company considers adjusted return on equity
important as it excludes components of AOCI, which fluctuate due to market
movements that are outside management's control. The most comparable U.S. GAAP
financial measure for adjusted return on equity is return on average equity
(ROE) as determined using net earnings and average total shareholders' equity.
.
Adjusted return on equity excluding foreign currency impact is adjusted
earnings excluding the current period foreign currency impact divided by
average shareholders' equity, excluding AOCI. The Company considers adjusted
return on equity excluding foreign currency impact important as it excludes
changes in foreign currency and components of AOCI, which fluctuate due to
market movements that are outside management's control. The most comparable
U.S. GAAP financial measure for adjusted return on equity excluding foreign
currency impact is return on average equity (ROE) as determined using net
earnings and average total shareholders' equity.
.
Amortized hedge costs/income represent costs/income incurred or recognized as
a result of using foreign currency derivatives to hedge certain foreign
exchange risks in the Company's Japan segment or in Corporate and other. These
amortized hedge costs/income are estimated at the inception of the derivatives
based on the specific terms of each contract and are recognized on a
straight-line basis over the contractual term of the derivative. The Company
believes that amortized hedge costs/income measure the periodic currency risk
management costs/income related to hedging certain foreign currency exchange
risks and are an
-------------------------------------------------------------------------------
important component of net investment income. There is no comparable U.S. GAAP
financial measure for amortized hedge costs/income.
.
Adjusted book value is the U.S. GAAP book value (representing total
shareholders' equity), less AOCI as recorded on the U.S. GAAP balance sheet.
Adjusted book value per common share is adjusted book value at the period end
divided by the ending outstanding common shares for the period presented. The
Company considers adjusted book value and adjusted book value per common share
important as they exclude AOCI, which fluctuates due to market movements that
are outside management's control. The most comparable U.S. GAAP financial
measures for adjusted book value and adjusted book value per common share are
total book value and total book value per common share, respectively.
.
Adjusted book value including unrealized foreign currency translation gains
and losses is adjusted book value plus unrealized foreign currency translation
gains and losses. Adjusted book value including unrealized foreign currency
translation gains and losses per common share is adjusted book value plus
unrealized foreign currency translation gains and losses at the period end
divided by the ending outstanding common shares for the period presented. The
Company considers adjusted book value including unrealized foreign currency
translation gains and losses, and its related per share financial measure,
important as they exclude certain components of AOCI, which fluctuate due to
market movements that are outside management's control; however, it includes
the impact of foreign currency as a result of the significance of Aflac's
Japan operation. The most comparable U.S. GAAP financial measures for adjusted
book value including unrealized foreign currency translation gains and losses
and adjusted book value including unrealized foreign currency translation
gains and losses per common share are total book value and total book value
per common share, respectively.
.
Adjusted net investment income is net investment income adjusted for i)
amortized hedge cost/income related to foreign currency exposure management
strategies and certain derivative activity, and ii) net interest income/expense
from foreign currency and interest rate derivatives associated with certain
investment strategies, which are reclassified from net investment gains and
losses to net investment income. The Company considers adjusted net investment
income important because it provides a more comprehensive understanding of the
costs and income associated with the Company's investments and related hedging
strategies. The most comparable U.S. GAAP financial measure for adjusted net
investment income is net investment income.
.
Adjusted net investment gains and losses are net investment gains and losses
adjusted for i) amortized hedge cost/income related to foreign currency
exposure management strategies and certain derivative activity, ii) net
interest income/expense from foreign currency and interest rate derivatives
associated with certain investment strategies, which are both reclassified to
net investment income, and iii) the impact of interest from derivatives
associated with notes payable, which is reclassified to interest expense as a
component of total adjusted expenses. The Company considers adjusted net
investment gains and losses important as it represents the remainder amount
that is considered outside management's control, while excluding the
components that are within management's control and are accordingly
reclassified to net investment income and interest expense. The most
comparable U.S. GAAP financial measure for adjusted net investment gains and
losses is net investment gains and losses.
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RECONCILIATION OF NET EARNINGS TO ADJUSTED EARNINGS
(UNAUDITED - IN MILLIONS, EXCEPT FOR PER-SHARE AMOUNTS)
THREE MONTHS ENDED MARCH 31, 2024 2023 % Change
Net earnings $ 1,879 $ 1,188 58.2 %
Items impacting net earnings:
Adjusted net investment (gains) losses (1,009) (209)
Other and non-recurring (income) loss 2 -
Income tax (benefit) expense on items excluded 89 (26)
from adjusted earnings
Adjusted earnings 961 953 0.8 %
Current period foreign currency impact 44 N/A
1
Adjusted earnings excluding current period foreign $ 1,005 $ 953 5.5 %
currency impact
2
Net earnings per diluted share $ 3.25 $ 1.94 67.5 %
Items impacting net earnings:
Adjusted net investment (gains) losses (1.75) (0.34)
Other and non-recurring (income) loss - -
Income tax (benefit) expense on items excluded 0.15 (0.04)
from adjusted earnings
Adjusted earnings per diluted share 1.66 1.55 7.1 %
Current period foreign currency impact 0.08 N/A
1
Adjusted earnings per diluted share excluding $ 1.74 $ 1.55 12.3 %
current period foreign currency impact
2
1
Prior period foreign currency impact reflected as "N/A" to isolate change for
current period only.
2
Amounts excluding current period foreign currency impact are computed using
the average foreign currency exchange rate for the comparable prior-year
period, which eliminates fluctuations driven solely by foreign currency
exchange rate changes.
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RECONCILIATION OF NET INVESTMENT (GAINS) LOSSES TO ADJUSTED NET INVESTMENT (GAINS) LOSSES
(UNAUDITED - IN MILLIONS)
THREE MONTHS ENDED MARCH 31, 2024 2023 % Change
Net investment (gains) losses $ (951) $ (123) 673.2 %
Items impacting net investment (gains) losses:
Amortized hedge costs (6) (58)
Amortized hedge income 28 29
Net interest income (expense) from derivatives associated (88) (69)
with certain investment strategies
Impact of interest from derivatives associated with 8 12
notes payable
1
Adjusted net investment (gains) losses $ (1,009) $ (209) 382.8 %
1
Amounts are included with interest expenses that are a component of adjusted
expenses.
RECONCILIATION OF NET INVESTMENT INCOME TO ADJUSTED NET INVESTMENT INCOME
(UNAUDITED - IN MILLIONS)
THREE MONTHS ENDED MARCH 31, 2024 2023 % Change
Net investment income $ 1,000 $ 943 6.0 %
Items impacting net investment income:
Amortized hedge costs (6) (58)
Amortized hedge income 28 29
Net interest income (expense) from derivatives associated (88) (69)
with certain investment strategies
Adjusted net investment income $ 934 $ 845 10.5 %
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RECONCILIATION OF U.S. GAAP BOOK VALUE TO ADJUSTED BOOK VALUE
(UNAUDITED - IN MILLIONS, EXCEPT FOR SHARE AND PER-SHARE AMOUNTS)
MARCH 31, 2024 2023 % Change
U.S. GAAP $ 23,537 $ 19,784
book value
Less:
Unrealized foreign currency (4,666) (3,618)
translation gains (losses)
Unrealized gains (losses) on 1,066 1,263
securities and derivatives
Effect of changes in (1,495) (4,894)
discount rate assumptions
Pension liability (7) (29)
adjustment
Total AOCI (5,102) (7,278)
Adjusted $ 28,639 $ 27,062
book value
Add:
Unrealized foreign currency (4,666) (3,618)
translation gains (losses)
Adjusted book value including unrealized $ 23,973 $ 23,444
foreign currency translation gains (losses)
Number of outstanding shares 570,278 605,952
at end of period (000)
U.S. GAAP book value $ 41.27 $ 32.65 26.4 %
per common share
Less:
Unrealized foreign currency translation (8.18) (5.97)
gains (losses) per common share
Unrealized gains (losses) on securities 1.87 2.08
and derivatives per common share
Effect of changes in (2.62) (8.08)
discount rate assumptions
per common
share
Pension liability (0.01) (0.05)
adjustment per common share
Total AOCI per (8.95) (12.01)
common share
Adjusted book value $ 50.22 $ 44.66 12.4 %
per common share
Add:
Unrealized foreign currency translation (8.18) (5.97)
gains (losses) per common share
Adjusted book value including unrealized foreign $ 42.04 $ 38.69 8.7 %
currency translation gains (losses) per common share
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RECONCILIATION OF U.S. GAAP RETURN ON EQUITY (ROE) TO ADJUSTED ROE
(EXCLUDING IMPACT OF FOREIGN CURRENCY)
THREE MONTHS ENDED MARCH 31, 2024 2023
U.S. GAAP ROE - Net earnings 33.0 % 23.8 %
1
Impact of excluding unrealized foreign currency translation gains (losses) (5.1) (3.2)
Impact of excluding unrealized gains (losses) on securities and derivatives 1.3 0.2
Impact of excluding effect of changes in discount rate assumptions (2.4) (3.1)
Impact of excluding pension liability adjustment - -
Impact of excluding AOCI (6.2) (6.1)
U.S. GAAP ROE - less AOCI 26.8 17.7
Differences between adjusted earnings and net earnings (13.1) (3.5)
2
Adjusted ROE - reported 13.7 14.2
Less: Impact of foreign currency (0.6) N/A
3
Adjusted ROE, excluding impact of foreign currency 14.3 14.2
1
U.S. GAAP ROE is calculated by dividing net earnings (annualized) by average
shareholders' equity.
2
See separate reconciliation of net income to adjusted earnings.
3
Impact of foreign currency is calculated by restating all foreign currency
components of the income statement to the weighted average foreign currency
exchange rate for the comparable prior year period. The impact is the
difference of the restated adjusted earnings compared to reported adjusted
earnings. For comparative purposes, only current period income is restated
using the weighted average prior period exchange rate, which eliminates the
foreign currency impact for the current period. This allows for equal
comparison of this financial measure.
-------------------------------------------------------------------------------
EFFECT OF FOREIGN CURRENCY ON ADJUSTED RESULTS
1
(SELECTED PERCENTAGE CHANGES, UNAUDITED)
THREE MONTHS ENDED MARCH 31, 2024 Including Excluding
Currency Currency
Changes Changes
2
Net earned premiums (6.3) % 0.3 %
3
Adjusted net investment income 10.5 13.8
4
Total benefits and expenses (5.5) 0.9
Adjusted earnings 0.8 5.5
Adjusted earnings per diluted share 7.1 12.3
1
Refer to previously defined adjusted earnings and adjusted earnings per
diluted share.
2
Amounts excluding currency changes were determined using the same foreign
currency exchange rate for the current period as the comparable period in the
prior year, which eliminates dollar-based fluctuations driven solely from
currency rate changes.
3
Net of reinsurance
4
Refer to previously defined adjusted net investment income.
-------------------------------------------------------------------------------
FORWARD-LOOKING INFORMATION
The Private Securities Litigation Reform Act of 1995 provides a "safe harbor"
to encourage companies to provide prospective information, so long as those
informational statements are identified as forward-looking and are accompanied
by meaningful cautionary statements identifying important factors that could
cause actual results to differ materially from those included in the
forward-looking statements. The company desires to take advantage of these
provisions. This document contains cautionary statements identifying important
factors that could cause actual results to differ materially from those
projected herein, and in any other statements made by company officials in
communications with the financial community and contained in documents filed
with the Securities and Exchange Commission (SEC). Forward-looking statements
are not based on historical information and relate to future operations,
strategies, financial results or other developments. Furthermore,
forward-looking information is subject to numerous assumptions, risks and
uncertainties. In particular, statements containing words such as "expect,"
"anticipate," "believe," "goal," "objective," "may," "should," "estimate,"
"intends," "projects," "will," "assumes," "potential," "target," "outlook" or
similar words as well as specific projections of future results, generally
qualify as forward-looking. Aflac undertakes no obligation to update such
forward-looking statements.
The company cautions readers that the following factors, in addition to other
factors mentioned from time to time, could cause actual results to differ
materially from those contemplated by the forward-looking statements:
.
difficult conditions in global capital markets and the economy, including
inflation
.
defaults and credit downgrades of investments
.
global fluctuations in interest rates and exposure to significant interest
rate risk
.
concentration of business in Japan
.
limited availability of acceptable yen-denominated investments
.
foreign currency fluctuations in the yen/dollar exchange rate
.
differing interpretations applied to investment valuations
.
significant valuation judgments in determination of expected credit losses
recorded on the Company's investments
.
decreases in the Company's financial strength or debt ratings
.
decline in creditworthiness of other financial institutions
.
the Company's ability to attract and retain qualified sales associates,
brokers, employees, and distribution partners
.
deviations in actual experience from pricing and reserving assumptions
.
ability to continue to develop and implement improvements in information
technology systems and on successful execution of revenue growth and expense
management initiatives
.
interruption in telecommunication, information technology and other
operational systems, or a failure to maintain the security, confidentiality,
integrity or privacy of sensitive data residing on such systems
.
subsidiaries' ability to pay dividends to the Parent Company
.
inherent limitations to risk management policies and procedures
.
operational risks of third-party vendors
.
tax rates applicable to the Company may change
.
failure to comply with restrictions on policyholder privacy and information
security
.
extensive regulation and changes in law or regulation by governmental
authorities
.
competitive environment and ability to anticipate and respond to market trends
.
catastrophic events, including, but not limited to, as a result of climate
change, epidemics, pandemics, tornadoes, hurricanes, earthquakes, tsunamis,
war or other military action, major public health issues, terrorism or other
acts of violence, and damage incidental to such events
.
ability to protect the Aflac brand and the Company's reputation
.
ability to effectively manage key executive succession
.
changes in accounting standards
.
level and outcome of litigation or regulatory inquiries
.
allegations or determinations of worker misclassification in the United States
Analyst and investor contact - David A. Young, 706.596.3264; 800.235.2667 or
dyoung@aflac.com
Media contact - Ines Gutzmer, 762.207.7601 or igutzmer@aflac.com
FINAL
5/1/2024
Financial Supplement
First Quarter 2024
This document is a statistical supplement to Aflac's quarterly earnings
release. Throughout the presentation, amounts presented may not foot due to
rounding. As you review the supplement, please note the non-U.S. GAAP
financial measures and definitions found at the back of this document.
The Company adopted the Financial Accounting Standards Board's Accounting
Standard Update 2018-12 Financial Services - Insurance: Targeted Improvements
to the Accounting for Long-Duration Contracts, as clarified and amended by (i)
ASU 2019-09 Financial Services - Insurance: Effective Date, and (ii) ASU
2020-11 Financial Services - Insurance: Effective Date and Early Application
(collectively, "LDTI") as of January 1, 2023. The amended guidance is applied
as of the beginning of the earliest period presented in the Company's
quarterly and annual financial statements, which results in a January 1, 2021
Transition Date. In conjunction with the adoption of LDTI, the Company changed
its practice of recording the change in the deferred profit liability (DPL) on
products with limited-payment features from the benefits and claims, net line
item to the net earned premiums line item in the consolidated statement of
earnings. This change in presentation has no impact on net earnings. All
quarterly and annual amounts for 2021 and 2022 presented herein reflect these
changes for LDTI and DPL.
Aflac Incorporated Page
Share Data 2
Summary of Adjusted Results by Business Segment 3
Statements of Earnings 4
Analysis of Net Earnings and Net Earnings Per Share 5
Balance Sheets 6
Quarterly Financial Results 7
Quarterly Book Value Per Share 8
Return on Equity 9
Adjusted Earnings Per Share Excluding Current Period Foreign Currency Impact 10
Investment Results 11
,
12
,
13
Long-Term Debt Data 14
Ratings 15
Aflac U.S.
Statement of Pretax Adjusted Earnings 16
Balance Sheets 17
Quarterly Pretax Adjusted Earnings 18
Operating Ratios 19
Sales 20
,
21
Aflac Japan
Statement of Pretax Adjusted Earnings 22
,
23
Balance Sheets 24
,
25
Quarterly Pretax Adjusted Earnings 26
Operating Ratios 27
Sales 28
,
29
,
30
Yen/Dollar Exchange Rates 31
Corporate and Other
Statement of Pretax Adjusted Earnings 32
Non-U.S. GAAP Financial Measures 33
For more information, contact:
David Young
Phone. 706.596.3264
Aflacir@aflac.com
investors.aflac.com
-------------------------------------------------------------------------------
Aflac
Incorporated
and
Subsidiaries
Share Data
(In Thousands)
Beginning Shares Shares Ending QTD
Issued Purchased Weighted
Avg.
Shares
Shares Stk. Stk. Treas. Misc. Shares Avg. Dilutive Av
Bon. Opt.
Period Outstanding & & Shares Purch. Outstanding Shares Shares Dil
DRP Misc. (1)
2022 1 652,132 259 1,308 8,007 343 645,349 649,753 3,074 652
2 645,349 269 101 11,185 8 634,526 640,707 2,536 643
3 634,526 258 144 11,057 3 623,868 629,350 2,597 631
4 623,868 222 120 8,938 16 615,256 619,845 3,149 622
2023 1 615,256 239 1,152 10,348 347 605,952 611,205 2,745 613
2 605,952 259 225 10,461 6 595,969 600,742 2,187 602
3 595,969 210 115 9,390 7 586,897 591,246 2,350 593
4 586,897 191 94 8,698 5 578,479 581,876 3,005 584
2024 1 578,479 212 1,320 9,276 457 570,278 574,886 2,596 577
YTD
Weighted
Avg.
Shares
g. Avg. Dilutive Avg.
uted Shares Shares Diluted
,827 649,753 3,074 652,827
,243 645,205 2,805 648,010
,946 639,862 2,735 642,597
,994 634,816 2,839 637,655
,950 611,205 2,745 613,950
,929 605,945 2,466 608,411
,596 600,992 2,427 603,419
,881 596,173 2,572 598,745
,482 574,886 2,596 577,482
(1)
Includes previously owned shares used to purchase options (swapped shares)
and/or shares purchased for deferred compensation program
2
-------------------------------------------------------------------------------
Aflac
Incorporated
and
Subsidiaries
Summary of Adjusted Results by Business Segment
(In Millions, except per-share data and where noted)
Years Ended 3 Months Ended
December 31, March 31,
2019 2020 2021 2022 2023 2023 20
Aflac $ 3,261 $ 3,263 $ 3,755 $ 3,281 $ 3,234 $
Japan
Aflac 1,272 1,268 1,356 1,359 1,501
U.S.
Corporate (72) (115) (293) (218) (425)
and
other
(1)
Pretax 4,461 4,416 4,819 4,422 4,310 1
adjusted
earnings
Income 1,147 864 893 808 577
taxes
(1)
Adjusted 3,314 3,552 3,925 3,614 3,733
earnings
(2)
Reconciling
items:
Adjusted (15) (229) 462 447 914
net
investment
gains
(losses)
Other (1) (28) (73) 1 39
and
non-recurring
income
(loss)
(3)
Income 3 72 (83) 357 (26)
tax
benefit
(expense)
on
items
excluded
from
adjusted
earnings
(4)
Tax 4 - - - -
reform
adjustment
(5)
Tax - 1,411 - - -
valuation
allowance
release
(6)
Net $ 3,304 $ 4,778 $ 4,231 $ 4,418 $ 4,659 $ 1
earnings
Effective 25.7 % (14.9) % 18.7 % 9.3 % 11.5 % 11.5 %
Tax
rate
Earnings
per
share
of
common
stock:
Net $ 4.45 $ 6.69 $ 6.28 $ 6.96 $ 7.81 $
earnings
(basic)
Net 4.43 6.67 6.25 6.93 7.78
earnings
(diluted)
Adjusted $ 4.46 $ 4.98 $ 5.83 $ 5.69 $ 6.26 $
earnings
(basic)
(2)
Adjusted 4.44 4.96 5.80 5.67 6.23
earnings
(diluted)
(2)
(1) The change in value of federal
historic rehabilitation and
solar investments in partnerships
of $32 and $51 for the
three-month periods ended
March 31, 2024, and 2023,
respectively, is included as a
reduction to net investment
income. Tax credits on these
investments of $33 and $52
for the three-month periods
ended March 31, 2024, and
2023, respectively, have been
recorded as an income tax
benefit in the consolidated
statement of earnings.
(2) See non-U.S. GAAP financial measures
for definition of adjusted earnings.
(3) Foreign currency gains and losses for
all periods have been reclassified from
Other and non-recurring income (loss)
to Net investment gains and losses.
(4) Primarily reflects release of
$452 in deferred taxes in 2022
(5) The impact of Tax Reform was adjusted
in 2018 for return-to-provision
adjustments, various amended returns
filed by the Company, and final
true-ups of deferred tax liabilities.
Further impacts were recorded
in 2019 as a result of additional
guidance released by the IRS.
(6) Tax benefit recognized in 2020
represents the release of valuation
allowances on deferred tax benefits
related to foreign tax credits.
%
24 Change
788 $ 810 2.8
352 356 1.1
(7) (3)
,133 1,163 2.6
180 202 12.2
953 961 .8
209 1,009
- (2)
26 (89)
- -
- -
,188 $ 1,879 58.2
13.4 %
1.94 $ 3.27 68.6
1.94 3.25 67.5
1.56 $ 1.67 7.1
1.55 1.66 7.1
3
-------------------------------------------------------------------------------
Aflac
Incorporated
and
Subsidiaries
Consolidated Statements
of Earnings - U.S. GAAP
(In Millions, except per-share data)
Years Ended 3 Months Ended
December 31, March 31,
2019 2020 2021 2022 2023 2023 2024
Revenues:
Net
earned
premiums
Gross $ 19,122 $ 18,955 $ 17,305 $ 15,025 $ 14,318 $ 3,73
premiums
Assumed (342) (333) (210) (124) (195) (50
(ceded)
Total 18,780 18,622 17,095 14,901 14,123 3,68
net
earned
premiums
Net 3,578 3,638 3,818 3,656 3,811 94
investment
income
Net (135) (270) 468 363 590 12
investment
gains
(losses)
(1)
Other 84 157 173 220 177 4
income
(1)
Total 22,307 22,147 21,554 19,140 18,701 4,80
revenues
Benefits
and
Claims:
Benefits
and
claims,
net
Incurred 9,279 9,364 8,949 8,271 8,005 2,21
claims
-direct
Incurred (372) (296) (147) (108) (177) (41
claims
-assumed
(ceded)
Increase 2,952 2,707 1,819 888 594 3
in
FPB
(2)
-direct
Increase 83 21 3 51 172 (7
in
FPB
(2)
-assumed
(ceded)
Total N/A N/A 10,623 9,102 8,594 2,20
net
benefits
and
claims,
excluding
reserve
remeasurement
Reserve N/A N/A (147) (215) (383) (53
remeasurement
(gain)
loss
Total 11,942 11,796 10,476 8,887 8,211 2,15
net
benefits
and
claims
Acquisition
and
operating
expenses:
Amortization 1,282 1,214 835 792 816 20
of
DAC
(3)
Insurance 1,321 1,316 1,256 1,117 1,052 28
commissions
Insurance 3,089 3,420 3,541 3,249 3,165 77
expenses
Interest 228 242 238 226 195 4
expense
Total 5,920 6,192 5,870 5,384 5,228 1,30
acquisition
and
operating
expenses
Total 17,862 17,988 16,346 14,271 13,439 3,45
benefits
and
expenses
Pretax 4,445 4,159 5,208 4,869 5,262 1,34
earnings
Income 1,141 (619) 977 451 603 15
tax
expense
(benefit)
(4)
Net $ 3,304 $ 4,778 $ 4,231 $ 4,418 $ 4,659 $ 1,18
earnings
(1)
Foreign currency gains and
losses for all periods
have been reclassified
from Other income
to Net investment
gains and losses for
consistency with current
period presentation.
(2)
Future policy benefits
(3)
Deferred acquisition costs
(4)
Primarily reflects
release of
$452 in deferred
taxes in 2022
%
Change
8 $ 3,482
) (26)
8 3,456 (6.3)
3 1,000 6.0
3 951
6 29
0 5,436 13.3
5 2,277
) (16)
6 (195)
) -
3 2,066
) (56)
0 2,010 (6.5)
5 215
0 255
5 739
8 47
8 1,256 (4.0)
8 3,266 (5.6)
2 2,170
4 291
8 $ 1,879 58.2
4
-------------------------------------------------------------------------------
Aflac
Incorporated
and
Subsidiaries
Analysis of Net Earnings and Net Earnings Per Diluted Share
(In Millions, except for per-share data)
Oth
an
Net Other Foreign Net Net Non-Rec
and
Non-
Net Investment Recurring Currency Earnings Investment Ite
Period Earnings Gains Items Impact Per Gains Pe
(Losses) (1)(3)(4) (2) Share (Losses) Sha
(1) (1) (1)(3
2019 3,304 (13) 3 15 4.43 (.02) .01
2020 4,778 (181) 1,407 31 6.67 (.25) 1.96
2021 4,231 365 (59) (42) 6.25 .54 (.09)
2022 4,418 803 1 (262) 6.93 1.26 -
2023 4,659 896 31 (113) 7.78 1.50 .05
2022 1 1,047 106 (1) (35) 1.60 .16 -
2 1,394 448 - (59) 2.17 .70 -
3 1,781 871 1 (97) 2.82 1.38 -
4 196 (621) - (70) .31 (1.00) -
2023 1 1,188 235 - (41) 1.94 .38 -
2 1,634 653 28 (25) 2.71 1.08 .05
3 1,569 472 2 (33) 2.64 .80 -
4 268 (464) - (14) .46 (.79) -
2024 1 1,879 920 (2) (44) 3.25 1.59 -
(1)
Items are presented net of tax.
(2)
See non-U.S. GAAP financial measures for definition of adjusted
earnings excluding current period foreign currency impact
(3)
Foreign currency gains and losses and amortized hedge
costs/income for all periods have been reclassified
from Other income to Net investment gains and losses
for consistency with current period presentation.
(4 )
Tax benefit recognized in the third
quarter of 2020 represents the release of
valuation allowances on deferred tax
benefits related to foreign tax credits.
er Foreign
d
urring Currency
ms Impact
r Per
re Share
)(4) (2)
.02
.04
(.06)
(.41)
(.19)
(.05)
(.09)
(.15)
(.11)
(.07)
(.04)
(.06)
(.02)
(.08)
5
-------------------------------------------------------------------------------
Aflac
Incorporated
and
Subsidiaries
Consolidated Balance Sheets
(In Millions, except per-share data)
December 31, Mar
Assets: 2019 2020 2021 2022 2023 2023
Investments
and
cash:
Securities
available
for
sale:
Fixed $ 86,950 $ 101,286 $ 94,206 $ 71,936 $ 69,578 $ 74,174
maturity
securities
available
for
sale,
at
fair
value
Fixed 4,312 4,596 4,490 3,805 3,712 3,925
maturity
securities
available
for
sale
-
consolidated
variable
interest
entities,
at
fair
value
Fixed 30,085 24,464 22,000 19,056 17,819 18,936
maturity
securities
held
to
maturity,
at
amortized
cost,
net
of
allowance
for
credit
losses
Equity 802 1,283 1,603 1,091 1,088 1,087
securities,
at
fair
value
Commercial 9,569 10,554 11,786 13,496 12,527 13,328
mortgage
and
other
loans,
net
of
allowance
for
credit
losses
Other 1,477 2,429 3,842 4,070 4,530 5,241
investments
Cash 4,896 5,141 5,051 3,943 4,306 3,809
and
cash
equivalents
Total 138,091 149,753 142,978 117,397 113,560 120,500
investments
and
cash
Receivables, 816 778 672 647 848 789
net
of
allowance
for
credit
losses
(1)
Accrued 772 780 737 745 731 701
investment
income
Deferred 10,128 10,441 9,848 9,239 9,132 9,267
policy
acquisition
costs
Property 581 601 538 530 445 528
and
equipment,
net
Other 2,380 2,733 3,377 3,180 2,008 3,181
assets,
net
of
allowance
for
credit
losses
(1)(2)
Total $ 152,768 $ 165,086 $ 158,150 $ 131,738 $ 126,724 $ 134,966
assets
Liabilities
and
Shareholders'
Equity:
Liabilities:
Total $ 106,554 $ 114,391 $ 126,331 $ 96,910 $ 91,599 $ 99,933
policy
liabilities
Notes 6,569 7,899 7,956 7,442 7,364 7,420
payable
Income 5,370 4,661 30 698 154 647
taxes,
primarily
deferred
Other 5,316 4,576 6,802 6,548 5,622 7,182
liabilities
Total 123,809 131,527 141,119 111,598 104,739 115,182
liabilities
Shareholders'
equity:
Common 135 135 135 135 136 135
stock
Additional 2,313 2,410 2,529 2,641 2,771 2,665
paid-in
capital
Retained 34,291 37,984 40,963 44,367 47,993 45,555
earnings
Accumulated
other
comprehensive
income
(loss):
Unrealized (1,623) (1,109) (1,985) (3,564) (4,069) (3,618)
foreign
currency
translation
gains
(losses)
Unrealized 8,548 10,361 9,602 (702) 1,139 1,289
gains
(losses)
on
fixed
maturity
securities
Unrealized (33) (34) (30) (27) (22) (26)
gains
(losses)
on
derivatives
Effect N/A N/A (15,832) (2,100) (2,560) (4,894)
of
change
in
discount
rate
assumption(s)
Pension (277) (284) (166) (36) (8) (29)
liability
adjustment
Treasury (14,395) (15,904) (18,185) (20,574) (23,395) (21,293)
stock
Total 28,959 33,559 17,031 20,140 21,985 19,784
shareholders'
equity
Total $ 152,768 $ 165,086 $ 158,150 $ 131,738 $ 126,724 $ 134,966
liabilities
&
shareholders'
equity
ch 31,
2024
$ 66,452
3,678
16,689
762
12,360
6,677
5,098
111,716
1,038
693
8,819
418
2,058
$ 124,742
$ 85,364
7,912
777
7,152
101,205
136
2,806
49,872
(4,666)
1,092
(26)
(1,495)
(7)
(24,175)
23,537
$ 124,742
(1)
Certain reclassifications have been made to prior-year amounts to conform to
current-year reporting classifications. These reclassifications had no impact
on net earnings or total shareholders' equity.
(2)
Includes goodwill of $265 million in 2024, $270 million in 2023, $265 in 2022,
$268 in 2021, $269 million in 2020 and $140 million in 2019
6
-------------------------------------------------------------------------------
Aflac
Incorporated
and
Subsidiaries
Quarterly Financial Results
(Dollars In Millions, except per-share data)
Total
Net Net Benefits Acquisitions Total
Earned Inv. Total & & Pretax Net Adjusted
Period Premiums Income Revenues Claims, Adj. Earn. Earn. Earn.
Net Exp. (1)
2019 18,780 3,578 22,307 11,942 5,920 4,445 3,304 3,314
2020 18,622 3,638 22,147 11,796 6,192 4,159 4,778 3,552
2021 17,095 3,818 21,554 10,476 5,870 5,208 4,231 3,925
2022 14,901 3,656 19,140 8,887 5,384 4,869 4,418 3,614
2023 14,123 3,811 18,701 8,211 5,228 5,262 4,659 3,733
2022 1 4,079 903 5,173 2,483 1,396 1,294 1,047 942
2 3,764 937 5,315 2,274 1,333 1,708 1,394 945
3 3,535 920 4,704 2,076 1,299 1,329 1,781 910
4 3,523 896 3,948 2,054 1,356 538 196 817
2023 1 3,688 943 4,800 2,150 1,308 1,342 1,188 953
2 3,573 999 5,172 2,098 1,249 1,825 1,634 954
3 3,476 1,004 4,950 1,860 1,285 1,805 1,569 1,095
4 3,385 865 3,777 2,103 1,385 289 268 732
2024 1 3,456 1,000 5,436 2,010 1,256 2,170 1,879 961
Net Adj.
EPS EPS
(1)
Basic Dil. Basic Dil.
4.45 4.43 4.46 4.44
6.69 6.67 4.98 4.96
6.28 6.25 5.83 5.80
6.96 6.93 5.69 5.67
7.81 7.78 6.26 6.23
1.61 1.60 1.45 1.44
2.18 2.17 1.47 1.47
2.83 2.82 1.45 1.44
.32 .31 1.32 1.31
1.94 1.94 1.56 1.55
2.72 2.71 1.59 1.58
2.65 2.64 1.85 1.84
.46 .46 1.26 1.25
3.27 3.25 1.67 1.66
(1)
See non-U.S. GAAP financial measures for definition of adjusted earnings.
7
-------------------------------------------------------------------------------
Aflac Incorporated and Subsidiaries
Quarterly Book Value Per Share
(Dollars In Millions, except per-share data)
Adjusted BV
Adjusted BV Per Share Incl
Equity AOCI Adjusted BV Per Share Incl Foreign Currency
BV Per BV Per Adjusted BV Per Share Foreign Currency Translation G/(L)
Period Share Share Per Share % Change Translation G/(L) % Change
(1) (1)
2019 39.84 9.10 30.74 8.9% 28.51 10.6%
2020 48.46 12.90 35.56 15.7% 33.96 19.1%
2021 26.12 (12.90) 39.01 9.7% 35.97 5.9%
2022 32.73 (10.45) 43.18 10.7% 37.39 3.9%
2023 38.00 (9.54) 47.55 10.1% 40.51 8.3%
2022 1 27.21 (13.09) 40.31 10.1% 36.53 7.0%
2 30.82 (11.00) 41.82 11.3% 36.75 4.6%
3 31.97 (12.03) 44.00 14.6% 36.99 3.4%
4 32.73 (10.45) 43.18 10.7% 37.39 3.9%
2023 1 32.65 (12.01) 44.66 10.8% 38.69 5.9%
2 34.30 (12.31) 46.61 11.5% 39.48 7.4%
3 38.63 (9.81) 48.44 10.1% 40.80 10.3%
4 38.00 (9.54) 47.55 10.1% 40.51 8.3%
2024 1 41.27 (8.95) 50.22 12.4% 42.04 8.7%
(1)
See non-U.S. GAAP financial measures for definition of adjusted book value and
adjusted book value including unrealized
foreign currency translation gains and losses.
8
-------------------------------------------------------------------------------
Aflac
Incorporated
and
Subsidiaries
Return on Equity
Year Ended 3 Months
December Ended
31, March 31,
2019 2020 2021 2022 2023 2023 2
(4)
U.S. 12.6 % 15.3 % 26.7 % 23.8 % 22.1 % 23.8 %
GAAP
ROE
(1)
-
Net
earnings
Impact (1.0) (0.9) (1.7) (2.5) (3.1) (3.2)
of
excluding
unrealized
foreign
currency
translation
gains
(losses)
Impact 3.6 6.2 10.7 4.1 0.2 0.2
of
excluding
unrealized
gains
(losses)
on
securities
and
derivatives
Impact N/A N/A (18.5) (8.2) (1.9) (3.1)
of
excluding
effect
on
change
in
discount
rate
assumptions
Impact (0.1) (0.2) (0.2) (0.1) - -
of
excluding
pension
liability
adjustment
Impact 2.5 5.1 (9.7) (6.8) (4.9) (6.1)
of
excluding
AOCI
U.S. 15.1 20.3 17.0 17.0 17.2 17.7
GAAP
ROE
-
less
AOCI
Differences - (5.2) (1.2) (3.1) (3.4) (3.5) (
between
adjusted
earnings
and
net
earnings
(2)
Adjusted 15.2 15.1 15.8 13.9 13.8 14.2
ROE
-
reported
(3)
(1) U.S. GAAP ROE
is calculated
by dividing
net earnings
(annualized)
by average
shareholders' equity.
(2) See separate
reconciliation of
net income to
adjusted earnings.
(3) See non-U.S. GAAP
financial measures for
definition of adjusted
return on equity
(4) Return on equity
calculations for 2021
use beginning
retained earnings and
accumulated other
comprehensive income
adjusted for the
adoption of LDTI.
024
33.0 %
(5.1)
1.3
(2.4)
-
(6.2)
26.8
13.1)
13.7
9
-------------------------------------------------------------------------------
Aflac Incorporated
and Subsidiaries
Adjusted Earnings Per Share Excluding
Current Period Foreign Currency Impact
(1)
(Diluted Basis)
Change
QTD YTD Excluding Excluding
Foreign Foreign Foreign Foreign
Adjusted Currency Currency Currency Currency
Period EPS Growth Impact Impact Impact Impact
(1) (1) (1) (1)
2019 $ 4.44 6.7 % N/A .02 $ 4.42 6.3 %
2020 $ 4.96 11.7 % N/A .04 $ 4.92 10.8 %
2021 $ 5.80 16.9 % N/A (.06) $ 5.86 18.1 %
2022 $ 5.67 (2.2) % N/A (.41) $ 6.08 4.8 %
2023 $ 6.23 9.9 % N/A (.19) $ 6.43 13.4 %
2022 1 $ 1.44 .7 % (.05) (.05) $ 1.50 4.9 %
2 1.47 - (.09) (.15) 1.56 6.1
3 1.44 (8.3) (.15) (.30) 1.59 1.3
4 1.31 (.8) (.11) (.41) 1.43 8.3
$ 5.67 (2.2) % $ 6.08 4.8 %
2023 1 $ 1.55 7.6 % (.07) (.07) $ 1.62 12.5 %
2 1.58 7.5 (.04) (.11) 1.62 10.2
3 1.84 27.8 (.06) (.17) 1.90 31.9
4 1.25 (4.6) (.02) (.19) 1.28 (2.3)
$ 6.23 9.9 % $ 6.43 13.4 %
2024 1 $ 1.66 7.1 % (.08) (.08) $ 1.74 12.3 %
$ 1.66 7.1 % $ 1.74 12.3 %
(1)
See non-U.S.GAAP financial measures for definition of adjusted earnings
and adjusted earnings excluding current period foreign currency impact
10
-------------------------------------------------------------------------------
Aflac
Incorporated
and
Subsidiaries
Composition of Invested Assets
(In Millions)
December 31,
2019 2020 2021 2022 2023 2023
Fixed $ 109,456 $ 116,056 $ 107,369 $ 94,525 $ 88,508 $ 9
Maturity
Securities
(1)
Commercial
mortgage
and
other
loans,
net
of
allowance
for
credit
losses
(1)
Transitional 5,450 5,231 5,246 6,455 5,998
Real
Estate
(floating
rate)
Middle 2,412 3,635 4,601 5,028 4,531
Market
Loans
(floating
rate)
Commercial 1,707 1,688 1,854 1,775 1,697
Mortgage
Loans
Other - - 20 238 301
Loans
Total 9,569 10,554 11,721 13,496 12,527 1
Commercial
mortgage
and
other
loans,
net
of
allowance
for
credit
losses
(1)
Equity 802 1,283 1,603 1,091 1,088
Securities,
at
FV
through
net
earnings
Alternatives 551 919 1,703 2,107 2,619
(2)
Total $ 120,378 $ 128,812 $ 122,396 $ 111,219 $ 104,742 $ 11
Portfolio
Unrealized Gains (Losses) on Invested Assets
(In Millions)
December 31,
2019 2020 2021 2022 2023 2023
Fixed
Maturity
Securities
Available $ 12,266 $ 14,771 $ 13,566 $ 4,800 $ 6,050 $
For
Sale
-
Gross
Gains
Available (375) (481) (239) (4,528) (3,449) (3
For
Sale
-
Gross
Losses
Total 11,891 14,290 13,327 272 2,601
Available
For
Sale
Held 7,519 5,935 4,869 2,154 1,838
to
Maturity
-
Gross
Gains
Held (10) - - - -
to
Maturity
-
Gross
Losses
Total $ 7,509 $ 5,935 $ 4,869 $ 2,154 $ 1,838 $
Held
to
Maturity
Credit Ratings on Fixed Maturities
(At Amortized Cost)
December 31,
Credit 2019 2020 2021 2022 2023 2023
Rating
AAA 1.1 % 1.0 % 1.0 % 1.6 % 1.6 % 1.7 %
AA 4.3 4.5 5.1 5.2 5.7 5.3
A 68.6 69.3 68.9 68.0 68.1
BBB 23.1 21.9 22.5 23.0 22.9 23.0
BB 2.9 3.3 2.5 2.2 1.7
or
Lower
100.0 % 100.0 % 100.0 % 100.0 % 100.0 %
(1)
Presented at amortized cost, net
of reserves beginning in 2020
(2)
Presented at carrying value; includes
asset classes such as private
equity and real estate funds
managed by Global Investments;
excludes Corporate driven activity,
policy loans, short-term
investments, real estate owned
assets and FHLB equity balances
March 31,
2024
4,242 $ 84,283
6,635 5,964
4,935 4,487
1,457 1,634
301 275
3,328 12,360
1,087 762
2,255 2,686
0,912 $ 100,091
March 31,
2024
5,875 $ 6,038
,082) (3,502)
2,793 2,536
2,680 1,556
- -
2,680 $ 1,556
March 31,
2024
1.6 %
6.1
67.9 67.7
23.1
2.1 1.5
100.0 % 100.0 %
11
-------------------------------------------------------------------------------
Aflac
Incorporated
and
Subsidiaries
Supplemental
Investment
Data by
Segment
Mo
En
December Marc
31,
2019 2020 2021 2022 2023 2023
Aflac
Japan:
Invested Y 11,784,586 Y 11,936,087 Y 12,405,531 Y 12,617,181 Y 12,127,531 Y 12,534,653
assets
(in
millions)
(1)
Return 2.33 % 2.38 % 2.72 % 2.78 % 2.90 % 2.57 %
on
average
invested
assets
(2)
Portfolio 2.64 % 2.59 % 2.60 % 3.06 % 3.18 % 3.13 %
book
yield
at
end
of
period
(3)
Total Y 1,003,885 Y 714,124 Y 952,038 Y 716,964 Y 378,541 Y 159,440
purchases
for
period
(in
millions)
(3)
New 3.83 % 3.75 % 3.50 % 4.48 % 5.18 % 5.18 %
money
yield
(3)(4)
Aflac
U.S.:
Invested $ 14,036 $ 14,848 $ 15,841 $ 16,772 $ 17,075 $ 16,609
assets
(in
millions)
(1)
Return 5.70 % 4.90 % 4.87 % 4.72 % 4.88 % 4.74 %
on
average
invested
assets
(2)
Portfolio 5.40 % 5.18 % 4.94 % 5.39 % 5.53 % 5.46 %
book
yield
at
end
of
period
(3)
Total $ 1,835 $ 1,050 $ 2,130 $ 1,701 $ 907 $ 242
purchases
for
period
(in
millions)
(3)
New 4.51 % 3.04 % 3.41 % 5.16 % 7.56 % 7.01 %
money
yield
(3)(4)
Hedge Costs/Income Metrics
(5)(6)
Mo
En
December Marc
31,
2019 2020 2021 2022 2023 2023
Aflac
Japan:
FX $ 8.8 $ 6.0 $ 6.4 $ 4.1 $ - $ 3.7
hedged
notional
at
end
of
period
(in
billions)
-
forwards
(7)
FX 9.2 13.1 11.6 13.5 24.7 9.8
hedged
notional
at
end
of
period
(in
billions)
-
put
options
Amortized (257) (206) (76) (112) (157) (58)
hedge
costs
for
period
(in
millions)
Corporate
and
Other
(Parent
Company):
FX $ 4.9 $ 5.0 $ 5.0 $ 5.0 $ 2.6 $ 5.0
hedged
notional
at
end
of
period
(in
billions)
-
forwards
(7)
FX 2.0 2.0 1.9 2.6 0.5 10.4
hedged
notional
at
end
of
period
(in
billions)
-
put
options
Amortized 89 97 57 68 122 29
hedge
income
(costs)
for
period
(in
millions)
(1)
Invested assets, including cash and
short term investments, are stated
at amortized cost; except for
equities, which are at fair value.
(2)
Net of investment expenses
and amortized hedge costs,
year-to-date number reflected
on a quarterly average basis
(3)
Includes fixed maturity
securities, commercial
mortgage and other loans, equity securities,
and excludes alternative
investments in limited
partnerships, and any impacts from hedging
activities
(4)
Reported on a gross yield basis;
excludes investment expenses,
external management fees,
and amortized hedge costs
(5)
See non-U.S. GAAP financial
measures for definition
of amortized hedge
costs/income. Further, the
metrics in this table are
split to show the hedging
of the market value of a portion of the USD
investments in Japan Segment's
"USD Program" in the
"Japan Segment Portfolio
Allocation by Currency"
table on page 13 of this
supplement as well as the
corporate hedging activities
at Aflac Incorporated
(6)
Aflac Japan and the Parent Company utilize
foreign currency forwards and options
to hedge foreign currency exchange rate
risk. The hedge cost/income on the
table above reflects our FX forward
protection of the hedged USD portfolio, and
hedge costs on one sided options used
as caps, and on tail-risk put options.
(7)
Notional is
reported net of
any offsetting
positions
within Aflac
Japan or the
Parent Company,
respectively.
3
nths
ded
h 31,
2024
Y 12,486,906
3.14 %
3.24 %
Y 300,570
5.57 %
$ 17,171
4.87 %
5.57 %
$ 519
6.66 %
3
nths
ded
h 31,
2024
$ -
24.7
(6)
$ 2.3
-
28
12
-------------------------------------------------------------------------------
Aflac
Incorporated
and
Subsidiaries
Japan
Segment
Portfolio
Allocation
by
Currency
(1)
(Dollars
In
Millions,
U.S.
GAAP
Basis)
December March
31, 31,
2023 2024
Amortized Fair Amortized Fair
Cost Value Cost Value
(3) (3)
JGB $ 39,151 $ 40,222 $ 36,641 $ 37,170
Other 19,517 20,285 17,868 18,647
Total 58,668 60,507 54,509 55,817
yen
denominated
USD 23,384 25,254 24,986 27,053
Program
Other 2,081 2,902 1,948 2,848
US 25,465 28,156 26,934 29,901
dollar
denominated
Total $ 84,133 $ 88,663 $ 81,443 $ 85,718
Distribution
of
Consolidated
Fixed
Maturities
by
Sector
(2)
March
31,
2024
(In Amortized % of
millions) Cost Total
(3)
Government $ 37,754 44.8 %
and
agencies
Municipalities 2,392 2.8
Mortgage- 3,169 3.8
and
asset-backed
securities
Public 6,909 8.2
utilities
Electric 5,704 6.8
Natural 665 .8
Gas
Other 540 .6
Sovereign 835 1.1
and
supranational
Banks/financial 8,517 10.1
institutions
Banking 4,895 5.8
Insurance 1,816 2.2
Other 1,806 2.1
Other 24,707 29.2
corporate
Basic 2,121 2.5
Industry
Capital 3,011 3.6
Goods
Communications 2,653 3.1
Consumer 1,945 2.3
Cyclical
Consumer 5,740 6.8
Non-Cyclical
Energy 2,195 2.6
Other 1,094 1.3
Technology 3,153 3.7
Transportation 2,795 3.3
Total $ 84,283 100.0 %
fixed
maturity
securities
(1)
The
entire
U.S.
segment
investment
portfolio
is U.S.
dollar
denominated.
(2)
In the first quarter of
2023, the Utility/Energy
subsector was combined with
the Natural Gas subsector
to better reflect the risk
characteristics of those
issuers and align more
closely with industry
benchmarks.
(3)
Net of
reserves
13
-------------------------------------------------------------------------------
Aflac
Incorporated
and
Subsidiaries
Long-Term Debt Data
Adjusted Leverage Ratios
(In Millions)
December
31,
2019 2020 2021 2022 2023
Notes $ 6,569 $ 7,899 $ 7,956 $ 7,442 $ 7,364
payable
50% (408) (432) (389) (337) (315)
of
subordinated
debentures
and
perpetual
bonds
Pre-funding (348) - - - (211)
of
debt
maturities
Adjusted 5,814 7,467 7,568 7,105 6,839
debt
(1)
Total 28,959 33,559 17,031 20,140 21,985
Shareholders'
Equity
Accumulated
other
comprehensive
(income)
loss:
Unrealized 1,623 1,109 1,985 3,564 4,069
foreign
currency
translation
(gains)
losses
Unrealized (8,548) (10,361) (9,602) 702 (1,139)
(gains)
losses
on
fixed
maturity
securities
Unrealized 33 34 30 27 22
(gains)
losses
on
derivatives
Effect N/A N/A 15,832 2,100 2,560
on
change
in
discount
rate
assumptions
Pension 277 284 166 36 8
liability
adjustment
Adjusted 22,344 24,625 25,442 26,569 27,505
book
value
(1)
Adjusted $ 28,565 $ 32,524 $ 33,398 $ 34,011 $ 34,658
capitalization
ex-AOCI
(1)(2)
Adjusted 20.4 % 23.0 % 22.7 % 20.9 % 19.7 %
debt
to
adjusted
capitalization
ex-AOCI
Adjusted $ 26,665 $ 31,131 $ 31,247 $ 30,411 $ 30,581
capitalization
(1)(3)
Adjusted 21.8 % 24.0 % 24.2 % 23.4 % 22.4 %
debt
to
adjusted
capitalization
March
31,
2023 2024
$ 7,420 $ 7,912
(335) (295)
- (198)
7,086 7,420
19,784 23,537
3,618 4,666
(1,289) (1,092)
26 26
4,894 1,495
29 7
27,062 28,639
$ 34,482 $ 36,353
20.5 20.4 %
$ 30,835 $ 31,680
23.0 23.4 %
Debt Maturities
(4)
(In Millions)
March 31, 2024
d 1 1 5 5 10 20 Total
year years 10 20 years
years years +
Senior $ - $ 1,813 $ 2,882 $ 1,074 $ 1,291 $ 7,060
Notes
Subordinated - - - - 793 793
debt
Total $ - $ 1,813 $ 2,882 $ 1,074 $ 2,084 $ 7,853
(1)
See non-U.S. GAAP financial measures for definition of: adjusted debt;
adjusted book value; adjusted debt, including 50% of subordinated debentures
and perpetual bonds; and adjusted book value, including unrealized foreign
currency translation gains and losses and pension liability adjustment
(2)
Adjusted capitalization ex-AOCI is the sum of adjusted debt, including 50% of
subordinated debentures and perpetual bonds, plus adjusted book value
(3)
Adjusted capitalization is sum of adjusted debt, including 50% of subordinated
debentures and perpetual bonds, plus adjusted book value, including unrealized
foreign currency translation gains and losses and pension liability adjustment
(4)
Debt maturity amounts do not include discounts, premiums, deferred charges, or
capital lease obligations.
14
-------------------------------------------------------------------------------
Aflac Incorporated and Subsidiaries
Insurer Financial Strength Ratings
AM Best Moody's S&P JCR R&I
U.S. Operating
Companies
Aflac of A+ Aa3 A+ AA AA
Columbus
Aflac of A+ _ A+ _ _
New York
Continental American A+ _ _ _ _
Insurance Company
Japan Operating
Company
Aflac Life Insurance A+ Aa3 A+ AA AA
Japan Ltd.
Bermuda Operating
Company
Aflac Re _ _ _ AA _
Bermuda Ltd.
Issuer Credit Ratings
AM Best Moody's S&P JCR R&I
Aflac
Incorporated
Long-term a A3 A- A+ A+
Senior Debt
Junior a- Baa1 BBB _ A-
Subordinated Debt
Aflac of
Columbus
Long-term aa _ A+ AA _
Senior Debt
Aflac Life Insurance
Japan, Ltd.
Long-term aa _ A+ AA _
Senior Debt
Subordinated _ _ _ AA- _
Bonds
The outlook for all ratings assigned by A.M. Best, S&P, Moody's and R&I
is stable. The outlook for all ratings assigned by JCR is positive.
15
-------------------------------------------------------------------------------
Aflac
U.S.
Statements of Pretax Adjusted Earnings
(Before Management Fee)
(In Millions)
Years Ended 3 Months Ended
December 31, March 31,
2019 2020 2021 2022 2023 2023
Revenues:
Net
earned
premiums
Gross $ 5,818 $ 5,762 $ 5,540 $ 5,467 $ 5,669 $ 1,420
premiums
Assumed (11) (4) 73 103 6 8
(ceded)
Total 5,808 5,758 5,614 5,570 5,675 1,428
net
earned
premiums
Adjusted 720 705 754 755 820 197
net
investment
income
Other
income
excl.
realized
foreign
exchange 22 102 121 161 128 35
gains
(losses)
Total 6,550 6,565 6,489 6,486 6,623 1,660
adjusted
revenues
Benefits
and
claims:
Benefits
and
claims,
net
Incurred 2,611 2,498 2,183 2,245 2,423 595
claims
-direct
Incurred (5) (1) 89 104 17 9
claims
-assumed
(ceded)
Increase 268 271 463 326 280 88
in
FPB
-direct
Increase (2) (3) (11) 4 (5) (1)
in
FPB
-assumed
(ceded)
Total N/A N/A 2,724 2,679 2,715 691
benefits
and
claims,
net,
excluding
reserve
remeasurement
Reserve N/A N/A (85) (124) (283) (40)
remeasurement
(gain)
loss
Total 2,871 2,765 2,639 2,555 2,431 651
benefits
and
claims,
net
Adjusted
expenses:
Amortization
of
deferred
policy
acquisition 573 570 442 455 490 119
costs
Insurance 590 576 550 553 561 142
commissions
Insurance 1,244 1,386 1,502 1,564 1,640 395
and
other
expenses
Total 2,407 2,532 2,494 2,573 2,691 657
adjusted
expenses
Total 5,279 5,297 5,132 5,127 5,122 1,308
benefits
and
adjusted
expenses
Pretax $ 1,272 $ 1,268 $ 1,356 $ 1,359 $ 1,501 $ 352
adjusted
earnings
%
2024 Change
$ 1,489
(14)
1,475 3.3
206 4.6
18
1,699 2.3
765
(12)
(41)
2
715
(30)
686 5.4
132 10.9
141 (.7)
384 (2.8)
658
1,343 2.7
$ 356 1.1
16
-------------------------------------------------------------------------------
Aflac
U.S.
Balance Sheets
(In Millions)
December 31, March 31,
2019 2020 2021 2022 2023 2023 2024
Assets:
Investments $ 16,141 $ 17,949 $ 18,324 $ 15,987 $ 16,718 $ 16,228 $ 16,667
and
cash
Receivables, 650 667 574 584 688 720 710
net
of
allowance
for
credit
losses
(1)
Accrued 174 172 169 184 183 177 186
investment
income
Deferred 3,544 3,450 3,366 3,463 3,573 3,491 3,585
policy
acquisition
costs
Other 436 626 758 784 698 769 703
assets
(1)
Total $ 20,945 $ 22,864 $ 23,191 $ 21,002 $ 21,861 $ 21,385 $ 21,850
assets
Liabilities
and
Shareholders'
Equity:
Future $ 9,404 $ 9,674 $ 14,212 $ 10,870 $ 11,234 $ 11,199 $ 10,913
policy
benefits
Policy 1,779 2,010 151 200 258 225 340
and
contract
claims
Other 111 126 119 117 107 118 113
policy
liabilities
Deferred 51 235 (328) (243) (311) (157) (223)
income
taxes
Other 1,803 2,016 2,010 2,080 2,062 2,017 2,091
liabilities
Shareholders' 7,796 8,803 7,027 7,978 8,510 7,984 8,617
equity
Total $ 20,945 $ 22,864 $ 23,191 $ 21,002 $ 21,861 $ 21,385 $ 21,850
liabilities
&
shareholders'
equity
(1) Certain reclassifications have been made to prior-year amounts to conform
to current-year reporting classifications. These reclassifications had no
impact on
net earnings or total shareholders' equity.
17
-------------------------------------------------------------------------------
Aflac U.S.
Quarterly Statements of Pretax Adjusted Earnings and P
(Restated to conform to current classificat
(Dollars In Millions)
Net Total Benefits
Earned % Adjusted % Adjusted % & %
Period Premiums Change NII Change Revenues Change Claims, Change Am
Net
2019 5,808 1.8 720 (1.0) 6,550 1.7 2,871 (.6) 57
2020 5,758 (.9) 705 (2.1) 6,565 .2 2,765 (3.7) 57
2021 5,614 (2.5) 754 7.0 6,489 (1.2) 2,639 (4.6) 44
2022 5,570 (.8) 755 .1 6,486 - 2,555 (3.2) 45
2023 5,675 1.9 820 8.6 6,623 2.1 2,431 (4.9) 49
2022 1 1,413 (.6) 184 4.5 1,639 .7 666 (4.3) 11
2 1,394 (1.0) 193 2.1 1,628 .1 658 (4.6) 11
3 1,375 (1.3) 185 (3.1) 1,598 (1.1) 616 4.1 11
4 1,388 (.2) 192 (2.5) 1,621 .1 614 (7.0) 11
2023 1 1,428 1.1 197 7.1 1,660 1.3 651 (2.3) 11
2 1,425 2.2 203 5.2 1,663 2.1 645 (2.0) 12
3 1,419 3.2 209 13.0 1,661 3.9 510 (17.2) 12
4 1,403 1.1 211 9.9 1,639 1.1 626 2.0 12
2024 1 1,475 3.3 206 4.6 1,699 2.3 686 5.4 13
ercentage Changes
ions)
Total Pretax
% Adjusted % Adjusted %
ort. Change Expenses Change Earn. Change
3 7.3 2,407 6.0 1,272 (1.0)
0 (.5) 2,532 5.2 1,268 (.3)
2 (22.5) 2,494 (1.5) 1,356 6.9
5 2.9 2,573 3.2 1,359 .2
0 7.7 2,691 4.6 1,501 10.4
4 2.7 640 6.7 333 .6
3 1.8 627 4.7 343 1.5
4 3.6 638 3.2 345 (14.8)
5 4.5 667 (1.3) 339 20.2
9 4.4 657 2.7 352 5.7
0 6.2 648 3.3 369 7.6
2 7.0 674 5.6 478 38.6
9 12.2 712 6.7 302 (10.9)
2 10.9 658 .2 356 1.1
18
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Aflac U.S.
Operating Ratios
(Before Management Fee)
12-Mo. Total Combined Pretax
Rolling Adjusted
Premium Tot. Amort./ Expenses/ Ratio/ Profit
Ben./
Period Persistency Premium Premium Total Total Margin
(1) Adj. Adj.
Rev. Rev.
2019 77.7 49.4 9.9 36.7 80.6
2020 79.3 48.0 9.9 38.6 80.7
2021 79.7 47.0 7.9 38.4 79.1
2022 77.3 45.9 8.2 39.7 79.0
2023 78.6 42.8 8.6 40.6 77.3
2024 78.7 46.5 8.9 38.7 79.0
YTD
2022 1 78.7 47.1 8.1 39.0 79.7
2 78.1 47.2 8.1 38.5 78.9
3 77.9 44.8 8.3 39.9 78.4
4 77.3 44.2 8.3 41.1 79.1
2023 1 77.9 45.6 8.3 39.6 78.8
2 78.2 45.3 8.4 39.0 77.8
3 78.7 35.9 8.6 40.6 71.2
4 78.6 44.6 9.2 43.4 81.6
2024 1 78.7 46.5 8.9 38.7 79.0
(1)
Includes Network Dental & Vision, Consumer Markets, and Group Premier Life, Absence Management, and Disability Solutions products
beginning in the first quarter of 2021
19.4
19.3
20.9
21.0
22.7
21.0
20.3
21.1
21.6
20.9
21.2
22.2
28.8
18.4
21.0
19
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Aflac U.S.
Aflac U.S. Sales Results
(Dollars In Millions)
Annl. New Annl.
Prem. % Prem. %
Period In Force Change Sales Change
2019 6,301 1.1 1,580 (1.3)
2020 6,099 (3.2) 1,093 (30.8)
2021 6,003 (1.6) 1,278 16.9
2022 5,967 (.6) 1,483 16.1
2023 6,161 3.3 1,558 5.0
2022 1 5,942 (1.4) 299 19.0
2 5,926 (1.0) 305 15.6
3 5,889 (.7) 334 11.8
4 5,967 (.6) 545 17.4
2023 1 6,023 1.4 315 5.3
2 6,064 2.3 324 6.4
3 6,062 2.9 359 7.5
4 6,161 3.3 559 2.6
2024 1 6,211 3.1 298 (5.2)
20
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Aflac U.S.
Aflac U.S. Product Mix
(New Annualized Premium Sales, Dollars in Millions)
% % % Critical %
of of of of
Period Disability Total Life Total Accident Total Care Tota
(1)
2019 355 22.5 97 6.1 450 28.5 346 21.9
2020 243 22.3 80 7.3 285 26.1 242 22.2
2021 296 23.1 114 9.0 321 25.1 273 21.3
2022 378 25.5 156 10.5 338 22.8 299 20.1
2023 399 25.6 188 12.0 326 20.9 322 20.7
2022 1 70 23.3 24 7.9 75 25.3 63 21.2
2 77 25.2 26 8.3 75 24.6 63 20.6
3 97 28.9 33 10.0 76 22.6 60 18.1
4 135 24.9 73 13.4 112 20.5 112 20.6
2023 1 79 25.2 26 8.3 74 23.5 64 20.5
2 80 24.8 35 10.7 73 22.4 66 20.4
3 101 28.2 54 15.0 72 19.9 67 18.6
4 139 24.8 73 13.0 107 19.2 124 22.2
2024 1 69 23.0 32 10.8 67 22.5 66 22.1
Hospital % Dental/ %
of of
l Indemnity Total Vision Total Total
263 16.6 69 4.4 1,580
197 18.0 45 4.1 1,093
209 16.4 65 5.1 1,278
226 15.3 85 5.8 1,483
225 14.5 98 6.3 1,558
50 16.7 17 5.6 299
45 14.9 19 6.4 305
47 14.1 21 6.3 334
84 15.4 28 5.2 545
50 15.9 21 6.6 315
46 14.3 24 7.4 324
45 12.6 20 5.7 359
83 14.9 33 5.9 559
45 15.1 19 6.5 298
Aflac U.S. Sales Force Data
Average Productivity
Weekly (Production/
Recruited Agents Producer Avg. Weekly
Period Career Broker Total Equivalents Producers)
2019 15,227 3,603 18,830 8,184 193,120
2020 11,826 1,861 13,687 5,918 184,706
2021 10,641 5,445 16,086 5,993 213,235
2022 9,550 1,500 11,050 6,186 239,786
2023 10,103 1,463 11,566 6,239 249,663
2022 1 1,987 455 2,442 6,061 49,322
2 2,937 391 3,328 6,067 50,264
3 2,358 339 2,697 6,010 55,599
4 2,268 315 2,583 6,607 82,538
2023 1 2,676 348 3,024 6,108 51,525
2 2,801 399 3,200 6,196 52,361
3 2,407 431 2,838 6,044 59,425
4 2,219 285 2,504 6,608 84,645
2024 1 2,330 346 2,676 5,800 51,432
(1)
Includes cancer, critical illness, and hospital intensive care products
21
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Aflac Japan
Statements of Pretax Adjusted Earnings
(Before Management Fee)
(In Millions)
Years Ended 3 Months E
December 31, March 3
2019 2020 2021 2022 2023 2
Revenues:
Net
earned
premiums
Gross Y 1,450,586 Y 1,409,134 Y 1,290,527 Y 1,246,657 Y 1,212,654
premiums
Assumed (57,974) (55,926) (50,864) (48,578) (84,838)
(ceded)
Total 1,392,612 1,353,208 1,239,663 1,198,079 1,127,816
net
earned
premiums
Net
investment
income
(1)
Yen 142,473 138,397 138,513 149,449 138,073
denominated
US$ 157,717 167,541 202,905 215,171 247,277
denominated
Net 300,191 305,938 341,419 364,621 385,352
investment
income
Amortized (28,938) (22,816) (8,391) (13,155) (19,773)
hedge
costs
on
foreign
investments
(2)
Adjusted 271,253 283,122 333,028 351,466 365,579
net
investment
income
Other
income
excl.
realized
foreign
currency 4,869 4,497 4,512 4,442 4,720
gains
(losses)
Total 1,668,734 1,640,827 1,577,203 1,553,988 1,498,115
adjusted
revenues
Benefits
and
claims:
Benefits
and
claims,
net
Incurred 727,491 734,471 743,247 788,572 781,774
claims
-direct
Incurred (45,657) (37,806) (31,798) (36,141) (70,748)
claims
-assumed
(ceded)
Increase 292,444 260,200 149,084 73,592 44,121
in
FPB
-direct
Increase (6,497) (11,377) (11,425) (5,618) 2,226
in
FPB
-assumed
(ceded)
Total N/A N/A 849,108 820,405 757,373
benefits
and
claims,
net,
excluding
reserve
remeasurement
Reserve N/A N/A (6,879) (13,337) (13,072)
remeasurement
(gain)
loss
Total 967,782 945,487 842,229 807,068 744,301
benefits
and
claims,
net
Adjusted
expenses:
Amortization
of
deferred
policy
acquisition 77,286 68,818 43,131 44,123 45,840
costs
Insurance 79,661 79,036 77,449 73,482 68,751
commissions
Insurance 189,203 199,606 202,586 198,493 182,364
and
other
expenses
Total 346,150 347,460 323,166 316,097 296,955
adjusted
expenses
Total 1,313,932 1,292,947 1,165,395 1,123,165 1,041,256
benefits
and
adjusted
expenses
Pretax Y 354,802 Y 347,881 Y 411,808 Y 430,823 Y 456,859
adjusted
earnings
(1)
Includes the net interest
cash flows from derivatives
associated with certain
investment strategies
(2)
See non-U.S. GAAP financial
measures for the
definition of amortized
hedge costs/income
nded
1,
%
023 2024 Change
Y 306,739 Y 296,056
(19,691) (26,197)
287,048 269,859 (6.0)
34,749 34,351 (1.1)
53,853 62,996 17.0
88,602 97,348 9.9
(7,671) (796) (89.6)
80,931 96,551 19.3
1,166 1,183
369,145 367,593 (.4)
215,238 224,857
(16,877) (19,407)
(7,011) (23,025)
2,647 2,331
193,997 184,756
(1,727) (3,883)
192,270 180,873 (5.9)
11,281 12,289 8.9
18,215 16,988 (6.7)
43,129 36,880 (14.5)
72,625 66,157
264,895 247,029 (6.7)
Y 104,251 Y 120,564 15.6
22
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Aflac Japan
Statements of Pretax Adjusted Earnings
(Before Management Fee)
(In Millions)
Years Ended 3 Months Ended
December 31, March 31,
2019 2020 2021 2022 2023 2023 2024
Revenues:
Net
earned
premiums
Gross $ 13,304 $ 13,193 $ 11,765 $ 9,558 $ 8,649 $ 2,31
premiums
Assumed (532) (524) (463) (372) (602) (148
(ceded)
Total 12,772 12,670 11,301 9,186 8,047 2,17
net
earned
premiums
Net
investment
income
(1)
Yen 1,307 1,296 1,262 1,140 985 26
denominated
US$ 1,446 1,569 1,845 1,641 1,755 40
denominated
Net 2,753 2,865 3,107 2,782 2,739 66
investment
income
Amortized (257) (206) (76) (112) (157) (58
hedge
costs
on
foreign
investments
(2)
Adjusted 2,496 2,659 3,031 2,669 2,582 61
net
investment
income
Other
income
excl.
realized
foreign
currency 45 42 41 35 35
gains
(losses)
Total 15,313 15,371 14,373 11,890 10,664 2,79
adjusted
revenues
Benefits
and
claims
Benefits
and
claims,
net
Incurred 6,671 6,875 6,776 6,038 5,582 1,62
claims
-direct
Incurred (419) (354) (290) (275) (502) (127
claims
-assumed
(ceded)
Increase 2,684 2,437 1,356 562 314 (52
in
FPB
-direct
Increase (60) (107) (104) (43) 15 1
in
FPB
-assumed
(ceded)
Total N/A N/A 7,738 6,282 5,409 1,46
benefits
and
claims,
net,
excluding
reserve
remeasurement
Reserve N/A N/A (62) (91) (96) (13
remeasurement
(gain)
loss
Total 8,877 8,851 7,675 6,191 5,313 1,45
benefits
and
claims,
net
Adjusted
expenses:
Amortization
of
deferred
policy
acquisition 709 644 393 338 326 8
costs
Insurance 731 740 706 563 491 13
commissions
Insurance 1,734 1,873 1,843 1,517 1,299 32
and
other
expenses
Total 3,174 3,257 2,942 2,417 2,117 54
adjusted
expenses
Total 12,051 12,108 10,618 8,609 7,430 2,00
benefits
and
adjusted
expenses
Pretax $ 3,261 $ 3,263 $ 3,756 $ 3,281 $ 3,234 $ 78
adjusted
earnings
(1)
Includes the net interest
cash flows from derivatives
associated with certain
investment strategies
(2)
See non-U.S. GAAP
financial measures for
definition of amortized
hedge costs/income
%
Change
8 $ 1,992
) (176)
0 1,816 (16.3)
3 231 (12.2)
7 424 4.2
9 655 (2.1)
) (6) (89.7)
1 648 6.1
9 9
0 2,473 (11.4)
6 1,512
) (131)
) (154)
9 16
6 1,243
) (26)
3 1,217 (16.2)
5 83 (2.4)
8 114 (17.4)
6 248 (23.9)
9 445
2 1,663 (16.9)
8 $ 810 2.8
23
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Aflac Japan
Balance Sheets
(In Millions)
December 31,
2019 2020 2021 2022 2023 2023
Assets:
Investments Y 12,847,994 Y 13,080,154 Y 13,645,902 Y 12,777,746 Y 12,566,939 Y 12,976,
and
cash
Receivables, 28,219 20,782 22,439 23,138 24,848 25,
net
of
allowance
for
credit
losses
Accrued 65,485 62,722 67,493 76,489 74,666 68,
investment
income
Deferred 721,341 723,579 745,510 766,506 788,394 771,
policy
acquisition
costs
Other 308,411 320,351 386,832 387,065 946,644 682,
assets
Total Y 13,971,450 Y 14,207,588 Y 14,868,176 Y 14,030,944 Y 14,401,491 Y 14,523,
assets
Liabilities
and
Shareholders'
Equity:
Future Y 8,924,868 Y 9,175,501 Y 11,755,704 Y 10,315,140 Y 10,444,044 Y 10,768,
policy
benefits
Policy 315,477 328,778 - 28 465
and
contract
claims
Unearned 453,133 361,010 284,045 227,732 192,595 218,
premiums
Other 801,588 808,429 877,690 880,989 874,854 889,
policyholders'
funds
Income 618,901 478,969 36,166 114,688 95,297 101,
taxes
(prim.
deferred)
Other 357,135 253,219 502,633 575,554 576,879 694,
liabilities
Shareholders' 2,500,349 2,801,682 1,411,938 1,916,812 2,217,357 1,849,
equity
Total Y 13,971,450 Y 14,207,588 Y 14,868,176 Y 14,030,944 Y 14,401,491 Y 14,523,
liabilities
&
shareholders'
equity
March 31,
2024
202 Y 12,993,051
467 60,415
075 72,487
279 792,504
018 948,349
041 Y 14,866,806
070 Y 10,299,213
620 653
038 185,338
926 882,723
778 167,677
739 796,972
870 2,534,230
041 Y 14,866,806
24
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Aflac Japan
Balance Sheets
(In Millions)
December 31, March 31,
2019 2020 2021 2022 2023 2023 2024
Assets:
Investments $ 117,269 $ 126,378 $ 118,639 $ 96,290 $ 88,606 $ 97,178 $ 85,814
and
cash
Receivables, 258 201 195 174 175 191 399
net
of
allowance
for
credit
losses
Accrued 598 606 587 576 526 510 479
investment
income
Deferred 6,584 6,991 6,482 5,776 5,559 5,776 5,234
policy
acquisition
costs
Other 2,815 3,095 3,363 2,917 6,675 5,108 6,263
assets
Total $ 127,523 $ 137,271 $ 129,266 $ 105,734 $ 101,541 $ 108,762 $ 98,189
assets
Liabilities
and
Shareholders'
Equity:
Future $ 81,461 $ 88,652 $ 102,206 $ 77,733 $ 73,638 $ 80,642 $ 68,022
policy
benefits
Policy 2,879 3,177 - - 3 5 4
and
contract
claims
Unearned 4,136 3,488 2,470 1,716 1,358 1,633 1,224
premiums
Other 7,316 7,811 7,631 6,639 6,169 6,665 5,830
policyholders'
funds
Income 5,650 4,630 314 781 619 681 1,088
taxes
(prim.
deferred)
Other 3,260 2,447 4,369 4,337 4,067 5,203 5,264
liabilities
Shareholders' 22,820 27,068 12,276 14,528 15,687 13,935 16,757
equity
Total $ 127,523 $ 137,271 $ 129,266 $ 105,734 $ 101,541 $ 108,762 $ 98,189
liabilities
&
shareholders'
equity
25
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Aflac Japan
Quarterly Statements of Pretax Adjusted
(Yen In Mill
Net Total Benefits
Earned % Adjusted % Adjusted % & %
Period Premiums Change NII Change Revenues Change Claims, Chang
Net
2019 1,392,612 (1.1) 271,253 2.2 1,668,734 (.6) 967,782 (1.6
2020 1,353,208 (2.8) 283,122 4.4 1,640,827 (1.7) 945,487 (2.3
2021 1,239,663 (8.4) 333,028 17.6 1,577,203 (3.9) 842,229 (10.9
2022 1,198,079 (3.4) 351,466 5.5 1,553,988 (1.5) 807,068 (4.2
2023 1,127,816 (5.9) 365,579 4.0 1,498,115 (3.6) 744,301 (7.8
2022 1 304,884 (2.8) 79,042 5.9 385,000 (1.2) 206,890 (4.0
2 302,213 (3.1) 94,004 8.4 397,358 (.5) 204,807 (3.7
3 293,667 (4.5) 92,241 9.8 387,113 (1.4) 196,121 (4.8
4 297,315 (3.1) 86,180 (1.7) 384,517 (2.8) 199,250 (4.3
2023 1 287,048 (5.9) 80,931 2.4 369,145 (4.1) 192,270 (7.1
2 283,377 (6.2) 87,963 (6.4) 372,544 (6.2) 186,310 (9.0
3 285,305 (2.8) 98,866 7.2 385,363 (.5) 185,855 (5.2
4 272,085 (8.5) 97,819 13.5 371,063 (3.5) 179,866 (9.7
2024 1 269,859 (6.0) 96,551 19.3 367,593 (.4) 180,873 (5.9
Earnings and Percentage Changes
ions)
Total Pretax
% Adjusted % Adjusted %
e Amort. Change Expense Change Earn. Change
) 77,286 (1.5) 346,150 1.6 354,802 .2
) 68,818 (11.0) 347,459 .4 347,881 (2.0)
) 43,131 (37.3) 323,166 (7.0) 411,808 18.4
) 44,123 2.3 316,097 (2.2) 430,823 4.6
) 45,840 3.9 296,955 (6.1) 456,859 6.0
) 10,886 3.3 77,095 (.8) 101,015 4.7
) 10,964 2.5 79,022 (.3) 113,529 5.5
) 11,073 2.9 77,498 (4.0) 113,494 7.4
) 11,201 .6 82,482 (3.5) 102,785 .8
) 11,281 3.6 72,625 (5.8) 104,251 3.2
) 11,359 3.6 72,808 (7.9) 113,426 (.1)
) 11,435 3.3 73,068 (5.7) 126,440 11.4
) 11,766 5.0 78,454 (4.9) 112,742 9.7
) 12,289 8.9 66,157 (8.9) 120,564 15.6
26
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Aflac Japan
Operating Ratios
(Before Management Fee)
12-Mo. Tot. Tot. Combined Pretax
Rolling Ben./ Adj.
Premium Tot. Premiums Amort./ Expenses/ Ratio/ Profit
Ben./
Period Persistency Premium (3rd Premium Total Total Margin
(1) sector) Adj. Rev. Adj. Rev.
2019 94.4 69.5 59.3 5.5 20.7 78.7 21.3
2020 95.1 69.9 59.7 5.1 21.2 78.8 21.2
2021 94.3 67.9 58.7 3.5 20.5 73.9 26.1
2022 94.1 67.4 58.5 3.7 20.3 72.3 27.7
2023 93.4 66.0 56.2 4.1 19.8 69.5 30.5
2022 1 94.3 67.9 58.5 3.6 20.0 73.8 26.2
2 94.3 67.8 58.5 3.6 19.9 71.4 28.6
3 94.3 66.8 59.4 3.8 20.0 70.7 29.3
4 94.1 67.0 57.7 3.8 21.5 73.3 26.7
2023 1 93.9 67.0 57.7 3.9 19.7 71.8 28.2
2 93.8 65.7 56.2 4.0 19.5 69.6 30.4
3 93.5 65.1 54.8 4.0 19.0 67.2 32.8
4 93.4 66.1 56.2 4.3 21.1 69.6 30.4
2024 1 93.4 67.0 57.5 4.6 18.0 67.2 32.8
(1)
Premium persistency presented on a 12-month rolling basis for all periods,
rather than year to date
27
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Aflac Japan
Aflac Japan Sales Results
(Yen In Millions, unless otherwise noted)
Annl. Third Sector
Prem. New Annl. Total
In Force % Prem. % New Annual. %
Period (Billions) Change Sales Change Premium Sales Change
2019 1,489.3 (2.5) 72,836 (18.0) 79,697 (16.9)
2020 1,426.5 (4.2) 45,110 (38.1) 50,852 (36.2)
2021 1,360.6 (4.7) 48,977 8.6 54,764 7.7
2022 1,301.0 (4.4) 47,998 (2.0) 54,765 -
2023 1,246.4 (4.2) 52,234 8.8 60,730 10.9
2022 1 1,345.6 (4.6) 10,679 (19.0) 11,925 (14.8)
2 1,332.0 (4.3) 11,372 (6.2) 12,731 (6.4)
3 1,315.7 (4.3) 12,639 12.1 13,884 10.2
4 1,301.0 (4.4) 13,308 1.7 16,224 11.4
2023 1 1,281.4 (4.8) 10,952 2.6 13,213 10.8
2 1,268.4 (4.8) 13,964 22.8 16,112 26.6
3 1,257.4 (4.4) 13,606 7.7 15,600 12.4
4 1,246.4 (4.2) 13,711 3.0 15,805 (2.6)
2024 1 1,232.6 (3.8) 10,767 (1.7) 12,534 (5.1)
28
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Aflac Japan
Aflac Japan Product Mix
(New Annualized Premium Sales, Yen In Billions)
% % Income % Child %
of of of of
Period Cancer Total Medical Total Support Total Endowment Total WAYS
2019 47.2 59.2 24.6 31.0 1.0 1.2 .2 .2 .4
2020 28.8 56.6 15.9 31.2 .5 1.0 .2 .4 .4
2021 27.0 49.2 20.4 37.2 .3 .5 .2 .3 .4
2022 30.9 56.5 14.6 26.6 .7 1.3 .2 .3 1.9
2023 38.9 64.1 12.3 20.2 .3 .4 .2 .4 4.1
2022 1 6.4 53.0 3.8 31.4 .1 1.1 .1 .3 .1
2 6.8 53.4 3.8 29.9 .3 2.2 - .2 .1
3 8.4 60.1 3.7 26.4 .2 1.2 - .2 .1
4 9.5 58.2 3.4 20.8 .1 .8 .1 .4 1.6
2023 1 7.9 59.9 2.7 20.8 .1 .6 .1 .6 1.2
2 10.9 67.7 2.8 17.5 .1 .4 .1 .4 1.0
3 10.3 65.6 3.1 20.0 .1 .4 .1 .4 .9
4 9.9 62.5 3.6 22.8 .1 .4 - .3 .9
2024 1 7.9 63.2 2.7 21.1 - .3 - .3 .7
% Ordinary % %
of of of
Total Life Total Other Total Total
Other
.5 5.9 7.4 .4 .5 79.7
.7 4.8 9.5 .3 .6 50.9
.8 4.9 9.0 1.6 3.0 54.8
3.5 4.5 8.1 2.0 3.7 54.8
6.8 3.9 6.5 1.0 1.6 60.7
.7 1.1 9.0 .5 4.5 11.9
.8 1.2 9.2 .6 4.3 12.7
.6 1.0 7.7 .5 3.8 13.9
10.1 1.1 7.2 .4 2.5 16.2
8.9 1.0 7.3 .2 1.9 13.2
6.6 1.0 6.1 .2 1.3 16.1
6.0 .9 6.1 .2 1.5 15.6
6.0 1.1 6.6 .2 1.4 15.8
5.3 1.0 8.1 .2 1.7 12.5
29
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Aflac Japan
Aflac Japan Sales Force Data
Number of Sales
Agencies Contribution
by Type by Agency
Type
Period Individual/ Affiliated Bank Total Individual/ Affiliated Bank Li
Independent Corporate Independent Corporate S
Corporate Corporate Ass
2019 7,683 1,343 367 9,393 45.7 50.0 4.3 109
2020 7,231 1,312 361 8,904 52.3 42.6 5.1 111
2021 6,779 1,283 360 8,422 51.1 43.7 5.2 111
2022 6,159 1,239 359 7,757 49.5 46.5 4.0 110
2023 5,751 1,203 360 7,314 46.7 50.0 3.3 113
2024 5,659 1,191 360 7,210 48.9 48.0 3.1 112
YTD
2022 1 6,447 1,266 360 8,073 48.9 46.5 4.6 109
2 6,335 1,255 359 7,949 48.4 48.1 3.5 110
3 6,260 1,246 359 7,865 49.3 46.2 4.5 110
4 6,159 1,239 359 7,757 51.2 45.4 3.4 110
2023 1 6,056 1,232 359 7,647 50.9 45.4 3.7 109
2 5,947 1,219 360 7,526 44.8 52.5 2.7 112
3 5,843 1,211 360 7,414 44.4 51.9 3.7 112
4 5,751 1,203 360 7,314 47.7 49.2 3.1 113
2024 1 5,659 1,191 360 7,210 48.9 48.0 3.1 112
censed Recruited
ales Agencies
ociates
(1)
,265 77
,886 48
,854 62
,259 38
,010 24
,645 12
,873 6
,096 12
,400 12
,259 8
,769 4
,593 5
,795 6
,010 9
,645 12
(1)
Excludes Dai-ichi Life, banks, Japan Post Group and Daido Life
30
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Aflac Japan
Yen/Dollar Exchange Rates
Yearly
Closing Qtr Cum %
Period Rate Avg Avg Change
(1)
2019 109.56 N/A 109.07 1.2
2020 103.50 N/A 106.86 2.1
2021 115.02 N/A 109.79 (2.7)
2022 132.70 N/A 130.17 (15.7)
2023 141.83 N/A 140.57 (7.4)
2022 1 122.39 116.18 116.18 (8.9)
2 136.68 129.39 122.79 (12.2)
3 144.81 137.08 126.65 (14.3)
4 132.70 141.87 130.17 (15.7)
2023 1 133.53 132.30 132.30 (12.2)
2 144.99 137.53 134.97 (9.0)
3 149.58 144.97 138.38 (8.5)
4 141.83 148.11 140.57 (7.4)
2024 1 151.41 148.67 148.67 (11.0)
(1)
Closing rate is based on the latest available and
published MUFG Bank Ltd. TTM mid-day exchange rate.
31
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Corporate and Other
Statements of Pretax Adjusted Earnings
(Before Management Fee)
(In Millions)
Years Ended 3 Months
December 31, Ended
March 31,
2019 2020 2021 2022 2023 2023 2024
Revenues:
Total $ 200 $ 194 $ 180 $ 145 $ 400 $
net
earned
premiums
Net 88 80 (73) 30 (77)
investment
income
(1)
Amortized 89 97 57 68 121
hedge
income
(2)
Adjusted 177 177 (16) 98 44
net
investment
income
Other 15 13 11 24 15
income
Total 393 384 175 267 460 1
adjusted
revenues
Benefits
and
expenses:
Total 194 180 161 141 467
net
benefits
and
claims
Interest 133 164 165 162 144
expense
Other 137 155 142 181 273
adjusted
expenses
Total 464 499 469 485 885 1
benefits
and
adjusted
expenses
Pretax $ (72) $ (115) $ (293) $ (218) $ (425) $ (
adjusted
earnings
(1) The change in value of federal
historic rehabilitation and
solar investments in partnerships
of $32 and $51 for the
three-month periods ended
March 31, 2024, and 2023,
respectively, is included as a
reduction to net investment
income. Tax credits on these
investments of $33 and $52
for the three-month periods
ended March 31, 2024, and
2023, respectively, have been
recorded as an income tax
benefit in the consolidated
statement of earnings.
(2) See non-U.S. GAAP financial
measures for the
definition of amortized
hedge cost/income
%
Change
91 $ 165 81.3
7 51 628.6
29 28 (3.4)
36 79 119.4
2 3 50.0
29 247 91.5
46 107 132.6
33 36 9.1
57 107 87.7
36 250 83.8
7) $ (3) 57.1
32
-------------------------------------------------------------------------------
Non-U.S. GAAP Financial Measures
This document includes references to the Company's financial performance
measures which are not calculated in accordance with United States generally
accepted accounting principles (U.S. GAAP) (non-U.S. GAAP). The financial
measures exclude items that the Company believes may obscure the underlying
fundamentals and trends in insurance operations because they tend to be driven
by general economic conditions and events or related to infrequent activities
not directly associated with insurance operations.
Due to the size of Aflac Japan, where the functional currency is the Japanese
yen, fluctuations in the yen/dollar exchange rate can have a significant
effect on reported results. In periods when the yen weakens, translating yen
into dollars results in fewer dollars being reported. When the yen
strengthens, translating yen into dollars results in more dollars being
reported. Consequently, yen weakening has the effect of suppressing current
period results in relation to the comparable prior period, while yen
strengthening has the effect of magnifying current period results in relation
to the comparable prior period. A significant portion of the Company's
business is conducted in yen and never converted into dollars but translated
into dollars for U.S. GAAP reporting purposes, which results in foreign
currency impact to earnings, cash flows and book value on a U.S. GAAP basis.
Management evaluates the Company's financial performance both including and
excluding the impact of foreign currency translation to monitor, respectively,
cumulative currency impacts and the currency-neutral operating performance
over time. The average yen/dollar exchange rate is based on the published MUFG
Bank, Ltd. telegraphic transfer middle rate (TTM)
.
The Company defines the non-U.S. GAAP financial measures included in this
document as follows:
. Adjusted book value
is the U.S. GAAP book value (representing
total shareholders' equity), less AOCI as
recorded on the U.S. GAAP balance sheet.
Adjusted book value per common share is
adjusted book value at the period end divided
by the ending outstanding common shares
for the period presented. The Company
considers adjusted book value and adjusted
book value per common share important as
they exclude AOCI, which fluctuates due to
market movements that are outside management's
control. The most comparable U.S.
GAAP financial measures for adjusted book
value and adjusted book value per common
share are total book value and total book
value per common share, respectively.
. Adjusted book value including unrealized
foreign currency translation gains and losses
is adjusted book value plus unrealized foreign currency translation
gains and losses. Adjusted book value including unrealized foreign
currency translation gains and losses per common share is adjusted book
value plus unrealized foreign currency translation gains and losses
at the period end divided by the ending outstanding common shares
for the period presented. The Company considers adjusted book value
including unrealized foreign currency translation gains and losses, and
its related per share financial measure, important as they exclude
certain components of AOCI, which fluctuate due to market movements
that are outside management's control; however, it includes the impact
of foreign currency as a result of the significance of Aflac's Japan
operation. The most comparable U.S. GAAP financial measures for
adjusted book value including unrealized foreign currency translation
gains and losses and adjusted book value including unrealized
foreign currency translation gains and losses per common share are
total book value and total book value per common share, respectively.
. Adjusted book value including unrealized foreign currency
translation gains and losses and pension liability adjustment
is adjusted book value plus unrealized foreign
currency translation gains and losses and
pension liability adjustment. The Company considers
adjusted book value including unrealized
foreign currency translation gains and losses
and pension liability adjustment important
as it excludes certain components of AOCI,
which fluctuates due to market movements
that are outside management's control;
however, it includes the impact of foreign
currency as a result of the significance of
Aflac's Japan operation. The most comparable
U.S. GAAP financial measure for adjusted book
value including unrealized foreign currency
translation gains and losses and pension
liability adjustment is total book value.
. Adjusted debt
is the sum of notes payable, as recorded on the U.S.
GAAP balance sheet, excluding 50% of subordinated
debentures and perpetual bonds and all pre-funding
of debt maturities. The Company considers adjusted
debt important as it measures outstanding debt
consistently with expectations of the Company's rating
agency stakeholders. The most comparable U.S. GAAP
financial measure for adjusted debt is notes payable.
. Adjusted debt including 50% of subordinated
debentures and perpetual bonds
is the sum of notes payable, as recorded on the U.S. GAAP
balance sheet, excluding pre-funding of debt maturities. The
Company considers adjusted debt including 50% of subordinated
debentures and perpetual bonds important as it measures
outstanding debt consistently with expectations of the
Company's rating agency stakeholders. The most comparable U.S.
GAAP financial measure for adjusted debt including 50% of
subordinated debentures and perpetual bonds is notes payable.
33
-------------------------------------------------------------------------------
. Adjusted earnings
are adjusted revenues less benefits and adjusted expenses. Adjusted earnings per share (basic or
diluted) are the adjusted earnings for the period divided by the weighted average outstanding
shares (basic or diluted) for the period presented. The adjustments to both revenues and expenses
account for certain items that are outside of management's control because they tend to be
driven by general economic conditions and events or are related to infrequent activities not
directly associated with insurance operations. Adjusted revenues are U.S. GAAP total revenues
excluding adjusted net investment gains and losses. Adjusted expenses are U.S. GAAP total acquisition
and operating expenses including the impact of interest from derivatives associated with
notes payable but excluding any non-recurring or other items not associated with the normal
course of the Company's insurance operations and that do not reflect the Company's underlying
business performance. Management uses adjusted earnings and adjusted earnings per diluted share
to evaluate the financial performance of the Company's insurance operations on a consolidated
basis and believes that a presentation of these financial measures is vitally important to an
understanding of the underlying profitability drivers and trends of the Company's insurance
business. The most comparable U.S. GAAP financial measures for adjusted earnings and adjusted
earnings per share (basic or diluted) are net earnings and net earnings per share, respectively.
. Adjusted earnings excluding current period foreign currency impact
are computed using the average foreign currency exchange rate for the
comparable prior-year period, which eliminates fluctuations driven solely by
foreign currency exchange rate changes. Adjusted earnings per diluted share
excluding current period foreign currency impact is adjusted earnings
excluding current period foreign currency impact divided by the weighted
average outstanding diluted shares for the period presented. The Company
considers adjusted earnings excluding current period foreign currency impact
and adjusted earnings per diluted share excluding current period foreign
currency impact important because a significant portion of the Company's
business is conducted in Japan and foreign exchange rates are outside
management's control; therefore, the Company believes it is important to
understand the impact of translating foreign currency (primarily Japanese
yen) into U.S. dollars. The most comparable U.S. GAAP financial measures
for adjusted earnings excluding current period foreign currency impact and
adjusted earnings per diluted share excluding current period foreign
currency impact are net earnings and net earnings per share, respectively.
. Amortized hedge costs/income
represent costs/income incurred or recognized as
a result of using foreign currency derivatives
to hedge certain foreign exchange risks in
the Company's Japan segment or in Corporate
and other. These amortized hedge costs/income are
estimated at the inception of the derivatives
based on the specific terms of each contract
and are recognized on a straight-line
basis over the contractual term of the derivative.
The Company believes that amortized hedge
costs/income measure the periodic currency risk
management costs/income related to hedging
certain foreign currency exchange risks and
are an important component of net investment
income. There is no comparable U.S. GAAP financial
measure for amortized hedge costs/income.
. Adjusted net investment gains and losses
are net investment gains and losses adjusted for i) amortized
hedge cost/income related to foreign currency exposure
management strategies and certain derivative activity, ii) net
interest income/expense from foreign currency and interest
rate derivatives associated with certain investment strategies,
which are both reclassified to net investment income, and
iii) the impact of interest from derivatives associated with
notes payable, which is reclassified to interest expense
as a component of total adjusted expenses. The Company considers
adjusted net investment gains and losses important as
it represents the remainder amount that is considered outside
management's control, while excluding the components that
are within management's control and are accordingly reclassified
to net investment income and interest expense. The most
comparable U.S. GAAP financial measure for adjusted net
investment gains and losses is net investment gains and losses.
. Adjusted net investment income
is net investment income adjusted for i)
amortized hedge cost/income related to foreign
currency exposure management strategies and
certain derivative activity, and ii) net interest
income/expense from foreign currency and interest
rate derivatives associated with certain
investment strategies, which are reclassified
from net investment gains and losses
to net investment income. The Company considers
adjusted net investment income important
because it provides a more comprehensive
understanding of the costs and income associated
with the Company's investments and related
hedging strategies. The most comparable U.S.
GAAP financial measure for adjusted net
investment income is net investment income.
. Adjusted return on equity
is adjusted earnings divided by average shareholders'
equity, excluding accumulated other comprehensive
income (AOCI). Management uses adjusted return on
equity to evaluate the financial performance of
the Company's insurance operations on a consolidated
basis and believes that a presentation of this
financial measure is vitally important to an understanding
of the underlying profitability drivers and
trends of the Company's insurance business. The Company
considers adjusted return on equity important as
it excludes components of AOCI, which fluctuate due
to market movements that are outside management's
control. The most comparable U.S. GAAP financial
measure for adjusted return on equity is return
on average equity (ROE) as determined using net
earnings and average total shareholders' equity.
34
First Quarter 2024
Earnings Call
Video Update
Max K. Broden
May 1, 2024
For more information contact:
Investor and Rating Agency Relations
800.235.2667
aflacir@aflac.com
Aflac Worldwide Headquarters
1932 Wynnton Road
Columbus, GA 31999
1
-------------------------------------------------------------------------------
Preliminary note: Forward-Looking Information and Non-U.S. GAAP Financial
Measures
Forward-Looking Information
The Private Securities Litigation Reform Act of 1995 provides a "safe harbor"
to encourage companies to provide prospective information, so long as those
informational statements are identified as forward-looking and are accompanied
by meaningful cautionary statements identifying important factors that could
cause actual results to differ materially from those included in the
forward-looking statements. The company desires to take advantage of these
provisions. This transcript contains cautionary statements identifying
important factors that could cause actual results to differ materially from
those projected herein, and in any other statements made by company officials
in communications with the financial community and contained in documents
filed with the Securities and Exchange Commission (SEC). Forward-looking
statements are not based on historical information and relate to future
operations, strategies, financial results or other developments. Furthermore,
forward-looking information is subject to numerous assumptions, risks and
uncertainties. In particular, statements containing words such as "expect,"
"anticipate," "believe," "goal," "objective," "may," "should," "estimate,"
"intends," "projects," "will," "assumes," "potential," "target," "outlook" or
similar words as well as specific projections of future results, generally
qualify as forward-looking. Aflac undertakes no obligation to update such
forward-looking statements.
The company cautions readers that the following factors, in addition to other
factors mentioned from time to time, could cause actual results to differ
materially from those contemplated by the forward-looking statements:
.
difficult conditions in global capital markets and the economy, including
inflation
.
defaults and credit downgrades of investments
.
global fluctuations in interest rates and exposure to significant interest
rate risk
.
concentration of business in Japan
.
limited availability of acceptable yen-denominated investments
.
foreign currency fluctuations in the yen/dollar exchange rate
.
differing interpretations applied to investment valuations
.
significant valuation judgments in determination of expected credit losses
recorded on the Company's investments
.
decreases in the Company's financial strength or debt ratings
.
decline in creditworthiness of other financial institutions
.
the Company's ability to attract and retain qualified sales associates,
brokers, employees, and distribution partners
.
deviations in actual experience from pricing and reserving assumptions
.
ability to continue to develop and implement improvements in information
technology systems and on successful execution of revenue growth and expense
management initiatives
.
interruption in telecommunication, information technology and other
operational systems, or a failure to maintain the security, confidentiality,
integrity or privacy of sensitive data residing on such systems
.
subsidiaries' ability to pay dividends to the Parent Company
.
inherent limitations to risk management policies and procedures
.
operational risks of third-party vendors
.
tax rates applicable to the Company may change
.
failure to comply with restrictions on policyholder privacy and information
security
.
extensive regulation and changes in law or regulation by governmental
authorities
.
competitive environment and ability to anticipate and respond to market trends
.
catastrophic events, including, but not limited to, as a result of climate
change, epidemics, pandemics, tornadoes, hurricanes, earthquakes, tsunamis,
war or other military action, major public health issues, terrorism or other
acts of violence, and damage incidental to such events
.
ability to protect the Aflac brand and the Company's reputation
.
ability to effectively manage key executive succession
.
changes in accounting standards
.
level and outcome of litigation or regulatory inquiries
.
allegations or determinations of worker misclassification in the United States
Non-U.S. GAAP Financial Measures and Reconciliations
This document includes references to the Company's financial performance
measures which are not calculated in accordance with United States generally
accepted accounting principles (U.S. GAAP) (non-U.S. GAAP). The financial
-------------------------------------------------------------------------------
measures exclude items that the Company believes may obscure the underlying
fundamentals and trends in insurance operations because they tend to be driven
by general economic conditions and events or related to infrequent activities
not directly associated with insurance operations.
Definitions of the Company's non-U.S. GAAP financial measures and applicable
reconciliations to the most comparable U.S. GAAP measures are provided in the
presentation slides that accompany this transcript.
Due to the size of Aflac Japan, where the functional currency is the Japanese
yen, fluctuations in the yen/dollar exchange rate can have a significant
effect on reported results. In periods when the yen weakens, translating yen
into dollars results in fewer dollars being reported. When the yen
strengthens, translating yen into dollars results in more dollars being
reported. Consequently, yen weakening has the effect of suppressing current
period results in relation to the comparable prior period, while yen
strengthening has the effect of magnifying current period results in relation
to the comparable prior period. A significant portion of the Company's
business is conducted in yen and never converted into dollars but translated
into dollars for U.S. GAAP reporting purposes, which results in foreign
currency impact to earnings, cash flows and book value on a U.S. GAAP basis.
Management evaluates the Company's financial performance both including and
excluding the impact of foreign currency translation to monitor, respectively,
cumulative currency impacts and the currency-neutral operating performance
over time. The average yen/dollar exchange rate is based on the published MUFG
Bank, Ltd. telegraphic transfer middle rate (TTM).
-------------------------------------------------------------------------------
Max K. Broden
Q1 2024 CFO Video Update
May 1, 2024
Thank you for joining me as I provide a financial update on Aflac
Incorporated's results for the first quarter of 2024.
For the quarter, adjusted earnings per diluted share increased 7.1% year over
year to $1.66, with a $0.08 negative impact from FX in the quarter. In this
quarter, remeasurement gains totaled $56 million, and variable investment
income ran $11 million, or $0.01 per share, below our long-term return
expectations.
Adjusted book value per share including foreign currency translation gains and
losses increased 8.7%, and the adjusted ROE was 13.7%, an acceptable spread to
our cost of capital. Overall, we view these results in the quarter as solid.
Starting with our Japan segment, net earned premiums for the quarter declined
6.0%. This decline reflects a Y6.2 billion negative impact from paid up
policies. In addition, there is a Y7 billion negative impact from internal
reinsurance transactions
1
and a Y1.4 billion positive impact from deferred profit liability. Lapses were
somewhat elevated, but within our expectations. At the same time, policies in
force declined 2.3%.
Japan's total benefit ratio came in at 67.0% for the quarter, flat year over
year, and the third sector benefit ratio was 57.5%, down approximately 20
basis points year over year. We continue to experience favorable actual to
expected on our well-priced, large and mature in-force block. We estimate the
impact from remeasurement gains to be 144 basis points favorable to the
benefit ratio in Q1 2024. Long-term experience trends, as it relates to
treatment of cancer and hospitalization, continue to be in place, leading to
continued favorable underwriting experience.
Persistency remained solid with a rate of 93.4%, which was down 50 basis
points year over year, but flat quarter over quarter. We tend to experience
some elevation in lapses as customers update and refresh their coverage. This
change in persistency is not out of line with expectations.
Our expense ratio in Japan was 18.0%, down 170 basis points year over year,
driven primarily by good expense control and to some extent, by expense
allowance from reinsurance transactions.
Adjusted net investment income in yen terms was up 19.3%, mainly by lower
hedge costs and favorable impact from FX on USD investments in yen terms as
well as a higher return on our alternatives portfolio compared to first
quarter 2023. This was offset by the transfer of assets due to reinsurance in
the previous year leading to a lower asset base and lower floating rate income.
The pretax margin for Japan in the quarter was 32.8%, up 460 basis points year
over year; a very good result.
Turning to U.S. results, net earned premium was up 3.3%. Persistency increased
80 basis points year over year to 78.7%. This is a function of a poor
persistency quarter falling out of the metric and stabilization across
numerous product categories.
Our total benefit ratio came in at 46.5%, 90 basis points higher than Q1 2023,
driven by product mix and lower remeasurement gains than a year ago. We
estimate that remeasurement gains impacted the benefit ratio by 200 basis
points in the quarter. Claims utilization has stabilized, but as we
incorporate more recent experience into our reserve models, we have released
some reserves.
Our expense ratio in the U.S. was 38.7%, down 90 basis points year over year,
primarily driven by platforms improving scale and lower acquisition expenses.
1
Excludes the impact from reinsurance novated to Aflac Re in December 2023
whereby Aflac Re assumed the duties, obligations and liabilities through a
reinsurance of business ALIJ previously ceded to an external reinsurer.
-------------------------------------------------------------------------------
Our growth initiatives - group life & disability, network dental and vision
and direct to consumer - increased our total expense ratio by 230 basis
points. We would expect this impact to decrease going forward as these
businesses grow to scale and improve their profitability.
Adjusted net investment income in the U.S. was up 4.6%, mainly driven by
higher yields on both our alternatives and fixed-rate portfolios.
Profitability in the U.S. segment was solid, with a pretax margin of 21.0%,
driven primarily by net earned premiums growth and improved net investment
income year over year.
Our total commercial real estate watchlist remains approximately $1.2 billion,
with around $600 million of these in active foreclosure proceedings. As a
result of these current low valuation marks, we increased our CECL reserves
associated with these loans by $10 million in this quarter. We also moved one
property into real estate owned, which resulted in a $3.7 million gain. We
continue to believe that the current distressed market does not reflect the
true intrinsic economic value of our portfolio, which is why we are confident
in our ability to take ownership of these quality assets, manage them through
this cycle and maximize our recoveries.
Our portfolio of first lien senior secured middle market loans continue to
perform well, with losses well below our expectations for this point in the
cycle.
In our corporate segment, we recorded a pretax loss of $3 million. Adjusted
net investment income was $43 million higher than last year due to higher
volume of investable assets at Aflac Re and a lower volume of tax credit
investments at Aflac Inc. These tax credit investments impacted the corporate
net investment income line for U.S. GAAP purposes negatively by $32 million
with an associated credit to the tax line. The net impact to our bottom line
was a positive $4 million in the quarter. To date, these investments are
performing well and in line with expectations.
We are continuing to build out our reinsurance platform, and I am pleased with
the outcome and performance.
Our capital position remains strong, and we ended the quarter with an SMR
above 1,100% in Japan, and our combined RBC, while not finalized, we estimate
to be greater than 650%. Unencumbered holding company liquidity stood at $3.7
billion, $2.0 billion above our minimum balance. These are strong capital
ratios, which we actively monitor, stress and manage to withstand credit
cycles as well as external shocks. U.S. Statutory impairments were a release
of $3 million, and Japan FSA impairments were Y3.6 billion, or roughly $24
million in Q1. This is well within our expectations and with limited impact to
both earnings and capital.
Adjusted leverage remains at a comfortable 20.4%, at the low end of our
leverage corridor of 20% to 25%. In the quarter we issued Y123.6 billion in
multiple tranches with an average coupon of 1.72%. As we hold approximately
60% of our debt denominated in yen, our leverage will fluctuate with movements
in the yen/dollar rate. This is intentional and part of our enterprise hedging
program - protecting the economic value of Aflac Japan in U.S. dollar terms.
We repurchased $750 million of our own stock and paid dividends of $288
million in Q1, offering good relative IRR on these capital deployments. We
will continue to be flexible and tactical in how we manage the balance sheet
and deploy capital in order to drive strong risk-adjusted ROE with a
meaningful spread to our cost of capital.
I look forward to discussing our results in further detail on tomorrow's
earnings call. Thank you for your time and attention.
-------------------------------------------------------------------------------
Forward-Looking Statements and Non-GAAP Financial Measures The Private
Securities Litigation Reform Act of 1995 provides a "safe harbor" to encourage
companies to provide prospective information, so long as those informational
statements are identified as forward-looking and are accompanied by meaningful
cautionary statements identifying important factors that could cause actual
results to differ materially from those included in the forward-looking
statements. The company desires to take advantage of these provisions. This
document contains cautionary statements identifying important factors that
could cause actual results to differ materially from those projected herein,
and in any other statements made by company officials in communications with
the financial community and contained in documents filed with the Securities
and Exchange Commission (SEC). Forward-looking statements are not based on
historical information and relate to future operations, strategies, financial
results or other developments. Furthermore, forward-looking information is
subject to numerous assumptions, risks and uncertainties. In particular,
statements containing words such as "expect," "anticipate," "believe," "goal,"
"objective," "may," "should," "estimate," "e," "intends," "projects," "will,"
"assumes," "potential," "target," "outlook" or similar words as well as
specific projections of future results, generally qualify as forward-looking.
Aflac undertakes no obligation to update such forward-looking statements. The
company cautions readers that the following factors, in addition to other
factors mentioned from time to time, could cause actual results to differ
materially from those contemplated by the forward-looking statements: Non-U.S.
GAAP Financial Measures and Reconciliations This document includes references
to the Company's financial performance measures which are not calculated in
accordance with United States generally accepted accounting principles (U.S.
GAAP) (non-U.S. GAAP). The financial measures exclude items that the Company
believes may obscure the underlying fundamentals and trends in insurance
operations because they tend to be driven by general economic conditions and
events or related to infrequent activities not directly associated with
insurance operations. Definitions of the Company's non-U.S. GAAP financial
measures and applicable reconciliations to the most comparable U.S. GAAP
measures are provided as appropriate. Due to the size of Aflac Japan, where
the functional currency is the Japanese yen, fluctuations in the yen/dollar
exchange rate can have a significant effect on reported results. In periods
when the yen weakens, translating yen into dollars results in fewer dollars
being reported. When the yen strengthens, translating yen into dollars results
in more dollars being reported. Consequently, yen weakening has the effect of
suppressing current period results in relation to the comparable prior period,
while yen strengthening has the effect of magnifying current period results in
relation to the comparable prior period. A significant portion of the
Company's business is conducted in yen and never converted into dollars but
translated into dollars for U.S. GAAP reporting purposes, which results in
foreign currency impact to earnings, cash flows and book value on a U.S. GAAP
basis. Management evaluates the Company's financial performance both including
and excluding the impact of foreign currency translation to monitor,
respectively, cumulative currency impacts and the currency-neutral operating
performance over time. The average yen/dollar exchange rate is based on the
published MUFG Bank, Ltd. telegraphic transfer middle rate (TTM). . difficult
conditions in global capital markets and the economy, including inflation .
defaults and credit downgrades of investments . global fluctuations in
interest rates and exposure to significant interest rate risk . concentration
of business in Japan . limited availability of acceptable yen-denominated
investments . foreign currency fluctuations in the yen/dollar exchange rate .
differing interpretations applied to investment valuations . significant
valuation judgments in determination of expected credit losses recorded on the
Company's investments . decreases in the Company's financial strength or debt
ratings . decline in creditworthiness of other financial institutions . the
Company's ability to attract and retain qualified sales associates, brokers,
employees, and distribution partners . deviations in actual experience from
pricing and reserving assumptions . ability to continue to develop and
implement improvements in information technology systems and on successful
execution of revenue growth and expense management initiatives . interruption
in telecommunication, information technology and other operational systems, or
a failure to maintain the security, confidentiality, integrity or privacy of
sensitive data residing on such systems . subsidiaries' ability to pay
dividends to the Parent Company . inherent limitations to risk management
policies and procedures . operational risks of third-party vendors . tax rates
applicable to the Company may change . failure to comply with restrictions on
policyholder privacy and information security . extensive regulation and
changes in law or regulation by governmental authorities . competitive
environment and ability to anticipate and respond to market trends .
catastrophic events, including, but not limited to, as a result of climate
change, epidemics, pandemics, tornadoes, hurricanes, earthquakes, tsunamis,
war or other military action, major public health issues, terrorism or other
acts of violence, and damage incidental to such events . ability to protect
the Aflac brand and the Company's reputation . ability to effectively manage
key executive succession . changes in accounting standards . level and outcome
of litigation or regulatory inquiries . allegations or determinations of
worker misclassification in the United States 2
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Max K. Broden Executive Vice President CFO, Aflac Incorporated
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1Q24 - Another Solid Quarter $1.94 $3.25 1Q23 1Q24 Net EPS $1.55 $1.66 1Q23
1Q24 Adjusted EPS* +7.1%+67.5% 4 $1.55 $1.74 1Q23 1Q24 Adjusted EPS ex-FX*
+12.3% *A non-US GAAP financial measure. See appendix for information about
this measure.
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*A non-US GAAP financial measure. See appendix for information about this
measure. 23.8 33.0 14.2 13.7 1Q23 1Q24 ROE (%) Adjusted ROE (%)* Strong ROE 5
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Aflac Japan Maintains Solid Persistency 93.9 93.8 93.5 93.4 93.4 1Q23 2Q23
3Q23 4Q23 1Q24 6
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Aflac Japan 1Q24: Favorable experience, good expense control and very strong
margin Benefit Ratio % 68 66 Expense Ratio % 21 19 Pretax Profit Margin % 31
29 7 67 18 32.8 2024 Outlook Ranges YTD Actual Operating Ratios
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Aflac U.S. Improving Persistency 77.9 78.2 78.7 78.6 78.7 1Q23 2Q23 3Q23 4Q23
1Q24 8
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Aflac U.S. 1Q24: Providing customers value, scaling growth and solid margin
Benefit Ratio % 47 45 Expense Ratio % 40 38 Pretax Profit Ratio % 21 19 9 46.5
38.7 2024 Outlook Ranges 21.0 YTD Actual Operating Ratios
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Strong Capital Ratios Combined Risk-Based Capital Ratio 1 (Fiscal year ending
December 31, %) 531 550 659 732 710 0 200 400 600 800 2019 2020 2021 2022 2023
1Q24 >650 1 Combined RBC ratio is the aggregated ratio of four
subsidiaries: American Family Life Assurance Company of Columbus (Aflac);
Continental American Insurance Company (CAIC), branded as Aflac Group
Insurance (AGI); American Family Life Assurance Company of New York (Aflac New
York); and Tier One Insurance Company (TOIC) 961 881 917 941 889 0 200 400 600
800 1,000 1,200 1,400 2019 2020 2021 2022 2023 2024 Solvency Margin Ratio
(Fiscal year ending March 31, %) 10 >1,100
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Adjusted Leverage Ratio*: Comfortably at lower end of 20-25% range 20.5 19.4
18.8 19.7 20.4 15 20 25 1Q23 2Q23 3Q23 4Q23 1Q24 *Adjusted Leverage ratio is
computed as: Adjusted debt to Adjusted capitalization ex-AOCI. See Appendix
for information about this measure. 11 % % %
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Continued Tactical Capital Deployment Dividends and Share Repurchase ($
millions) 257 252 248 245 288 700 700 700 700 750 1Q23 2Q23 3Q23 4Q23 1Q24
Dividends Repurchase 12
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Appendix
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Glossary of Non-U.S. GAAP Measures The Company defines these non-U.S. GAAP
financial measures as follows: . Adjusted earnings are adjusted revenues less
benefits and adjusted expenses. Adjusted earnings per share (basic or diluted)
are the adjusted earnings for the period divided by the weighted average
outstanding shares (basic or diluted) for the period presented. The
adjustments to both revenues and expenses account for certain items that are
outside of management's control because they tend to be driven by general
economic conditions and events or are related to infrequent activities not
directly associated with insurance operations. Adjusted revenues are U.S. GAAP
total revenues excluding adjusted net investment gains and losses. Adjusted
expenses are U.S. GAAP total acquisition and operating expenses including the
impact of interest from derivatives associated with notes payable but
excluding any non- recurring or other items not associated with the normal
course of the Company's insurance operations and that do not reflect the
Company's underlying business performance. Management uses adjusted earnings
and adjusted earnings per diluted share to evaluate the financial performance
of the Company's insurance operations on a consolidated basis and believes
that a presentation of these financial measures is vitally important to an
understanding of the underlying profitability drivers and trends of the
Company's insurance business. The most comparable U.S. GAAP financial measures
for adjusted earnings and adjusted earnings per share (basic or diluted) are
net earnings and net earnings per share, respectively. . Adjusted earnings
excluding current period foreign currency impact are computed using the
average foreign currency exchange rate for the comparable prior-year period,
which eliminates fluctuations driven solely by foreign currency exchange rate
changes. Adjusted earnings per diluted share excluding current period foreign
currency impact is adjusted earnings excluding current period foreign currency
impact divided by the weighted average outstanding diluted shares for the
period presented. The Company considers adjusted earnings excluding current
period foreign currency impact and adjusted earnings per diluted share
excluding current period foreign currency impact important because a
significant portion of the Company's business is conducted in Japan and
foreign exchange rates are outside management's control; therefore, the
Company believes it is important to understand the impact of translating
foreign currency (primarily Japanese yen) into U.S. dollars. The most
comparable U.S. GAAP financial measures for adjusted earnings excluding
current period foreign currency impact and adjusted earnings per diluted share
excluding current period foreign currency impact are net earnings and net
earnings per share, respectively. . Adjusted book value including unrealized
foreign currency translation gains and losses is adjusted book value plus
unrealized foreign currency translation gains and losses. Adjusted book value
including unrealized foreign currency translation gains and losses per common
share is adjusted book value plus unrealized foreign currency translation
gains and losses at the period end divided by the ending outstanding common
shares for the period presented. The Company considers adjusted book value
including unrealized foreign currency translation gains and losses, and its
related per share financial measure, important as they exclude certain
components of AOCI, which fluctuate due to market movements that are outside
management's control; however, it includes the impact of foreign currency as a
result of the significance of Aflac's Japan operation. The most comparable
U.S. GAAP financial measures for adjusted book value including unrealized
foreign currency translation gains and losses and adjusted book value
including unrealized foreign currency translation gains and losses per common
share are total book value and total book value per common share,
respectively. . Adjusted return on equity is adjusted earnings divided by
average shareholders' equity, excluding accumulated other comprehensive income
(AOCI). Management uses adjusted return on equity to evaluate the financial
performance of the Company's insurance operations on a consolidated basis and
believes that a presentation of this financial measure is vitally important to
an understanding of the underlying profitability drivers and trends of the
Company's insurance business. The Company considers adjusted return on equity
important as it excludes components of AOCI, which fluctuate due to market
movements that are outside management's control. The most comparable U.S. GAAP
financial measure for adjusted return on equity is return on average equity
(ROE) as determined using net earnings and average total shareholders' equity.
. . 15
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Glossary of Non-U.S. GAAP Measures (cont'd) The Company defines these non-U.S.
GAAP financial measures as follows: . Adjusted return on equity excluding
foreign currency impact is adjusted earnings excluding the current period
foreign currency impact divided by average shareholders' equity, excluding
AOCI. The Company considers adjusted return on equity excluding foreign
currency impact important as it excludes changes in foreign currency and
components of AOCI, which fluctuate due to market movements that are outside
management's control. The most comparable U.S. GAAP financial measure for
adjusted return on equity excluding foreign currency impact is return on
average equity (ROE) as determined using net earnings and average total
shareholders' equity . Adjusted book value including unrealized foreign
currency translation gains and losses and pension liability adjustment is
adjusted book value plus unrealized foreign currency translation gains and
losses and pension liability adjustment. The Company considers adjusted book
value including unrealized foreign currency translation gains and losses and
pension liability adjustment important as it excludes certain components of
AOCI, which fluctuates due to market movements that are outside management's
control; however, it includes the impact of foreign currency as a result of
the significance of Aflac's Japan operation. The most comparable U.S. GAAP
financial measure for adjusted book value including unrealized foreign
currency translation gains and losses and pension liability adjustment is
total book value. . Adjusted debt is the sum of notes payable, as recorded on
the U.S. GAAP balance sheet, excluding 50% of subordinated debentures and
perpetual bonds and all pre-funding of debt maturities. The Company considers
adjusted debt important as it measures outstanding debt consistently with
expectations of the Company's rating agency stakeholders. The most comparable
U.S. GAAP financial measure for adjusted debt is notes payable. . Adjusted
debt including 50% of subordinated debentures and perpetual bonds is the sum
of notes payable, as recorded on the U.S. GAAP balance sheet, excluding
pre-funding of debt maturities. The Company considers adjusted debt including
50% of subordinated debentures and perpetual bonds important as it measures
outstanding debt consistently with expectations of the Company's rating agency
stakeholders. The most comparable U.S. GAAP financial measure for adjusted
debt including 50% of subordinated debentures and perpetual bonds is notes
payable. . Adjusted book value is the U.S. GAAP book value (representing total
shareholders' equity), less AOCI as recorded on the U.S. GAAP balance sheet.
Adjusted book value per common share is adjusted book value at the period end
divided by the ending outstanding common shares for the period presented. The
Company considers adjusted book value and adjusted book value per common share
important as they exclude AOCI, which fluctuates due to market movements that
are outside management's control. The most comparable U.S. GAAP financial
measures for adjusted book value and adjusted book value per common share are
total book value and total book value per common share, respectively. 16
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Reconciliation of Net Earnings Per Diluted Share to Adjusted Earnings per
Diluted Share Three Months Ended March 31 2024 2023 %Change Net Earnings per
diluted share $3.25 $1.94 67.5% Items impacting net earnings Adjusted net
investment (gains) losses (1.75) (0.34) Other and non-recurring (income) loss
- - Income tax (benefit) expense on items excluded from adjusted earnings 0.15
(0.04) Adjusted earnings per diluted share 1.66 1.55 7.1% Current period
foreign currency impact1 0.08 N/A Adjusted earnings per diluted share
excluding current period foreign currency impact2 $1.74 $1.55 12.3% 1Prior
period foreign currency impact reflected as "N/A" to isolate change for
current period only 2 Amounts excluding current period foreign currency
impacts are computed using the average foreign currency exchange rate for the
comparable prior year period, which eliminates fluctuations driven solely by
foreign currency exchange rate changes. 17
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1Prior period foreign currency impact reflected as "N/A" to isolate change for
current period only 2 Amounts excluding current period foreign currency
impacts are computed using the average foreign currency exchange rate for the
comparable prior year period, which eliminates fluctuations driven solely by
foreign currency exchange rate changes. Reconciliation of Net Earnings to
Adjusted Earnings1 Three Months Ended March 31, in millions of Dollars 2024
2023 %Change Net Earnings $1,879 $1,188 58.2% Items impacting net earnings
Adjusted net investment (gains) losses (1,009) (209) Other and non-recurring
(income) loss 2 - Income tax (benefit) expense on items excluded from adjusted
earnings 89 (26) Adjusted earnings 961 953 0.8% Current period foreign
currency impact1 44 N/A Adjusted earnings excluding current period foreign
currency impact2 $1,005 $953 5.5% 18
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Reconciliation of U.S. GAAP Return on Equity to Adjusted ROE1 Three Months
Ended March 31, in millions of Dollars 1Amounts presented may not foot due to
rounding 2 U.S. GAAP ROE is calculated by dividing net earnings (annualized)
by average shareholders' equity 3See separate reconciliation of net income to
adjusted earnings 4Impact of foreign currency is calculated by restating all
foreign currency components of the income statement to the weighted average
foreign currency exchange rate for the comparable prior year period. The
impact is the difference of the restated adjusted earnings compared to
reported adjusted earnings. For comparative purposes, only current period
income is restated using the weighted average prior period exchange rate,
which eliminates the foreign currency impact for the current period. This
allows for equal comparison of this financial measure 2024 2023 U.S. GAAP ROE
- Net earnings2 33.0% 23.8% Impact of excluding unrealized foreign currency
translation gains (losses) (5.1) (3.2) Impact of excluding unrealized gains
(losses) on securities and derivatives 1.3 0.2 Impact of excluding effect of
changes in discount rate assumptions (2.4) (3.1) Impact of excluding pension
liability adjustment - - Impact of excluding AOCI (6.2) (6.1) U.S. GAAP ROE -
less AOCI 26.8 17.7 Differences between adjusted earnings and net earnings3
(13.1) (3.5) Adjusted ROE - reported 13.7 14.2 Less: Impact of foreign
currency4 (0.6) N/A Adjusted ROE, excluding impact of foreign currency 14.3
14.2 19
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1Amounts may not foot due to rounding 2 Adjusted book value in the U.S. GAAP
book value (representing total shareholder's equity), excluding AOCI (as
recorded on the U.S. GAAP balance sheet). 3Adjusted book value including
unrealized foreign currency translation gains (losses) is adjusted book value
plus unrealized foreign currency translation gains (losses). Reconciliation of
U.S. GAAP Book Value per Share1 Three Months Ended March 31, in millions of
Dollars 2024 2023 %Change U.S. GAAP book value per common share $41.27 $32.65
26.4% Less: Unrealized foreign currency translation gains (losses) per common
share (8.18) (5.97) Unrealized gains (losses) on securities and derivatives
per common share 1.87 2.08 Effect of changes in discount rate assumptions per
common share (2.62) (8.08) Pension liability adjustment per common share
(0.01) (0.05) Total AOCI per common share (8.95) (12.01) Adjusted book value
per common share2 $50.22 $44.66 12.4% Add: Unrealized foreign currency
translation gains (losses) per common share (8.18) (5.97) Adjusted book value
including unrealized foreign currency translation gains (losses) per common
share3 $42.04 $38.69 8.7% 20
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Adjusted Leverage Ratios (In millions) 2024 2023 Notes Payable $7,912 $7,420
50% of subordinated debentures and perpetual bonds (295) (335) Pre-funding of
debt maturities (198) - Adjusted debt1 7,420 7,086 Total Shareholders' Equity
23,537 19,784 Accumulated other comprehensive (income)loss: Unrealized foreign
currency translation (gains) losses 4,666 3,618 Unrealized (gains) losses on
fixed maturity securities (1,092) (1,289) Unrealized (gains) losses on
derivatives 26 26 Effect on change in discount rate assumptions 1,495 4,894
Pension liability adjustment 7 29 Adjusted book value1 28,639 27,062 Adjusted
capitalization ex-AOCI 1,2 $36,353 $34,482 Adjusted debt to adjusted
capitalization ex-AOCI 20.4% 20.5% 1 See non-U.S. GAAP financial measures for
definition of: adjusted debt; adjusted book value; adjusted debt, including
50% of subordinated debentures and perpetual bonds; adjusted book value,
including unrealized foreign currency translation gains and losses and pension
liability adjustment 2 Adjusted capitalization ex-AOCI is the sum of adjusted
debt, including 50% of subordinated debentures and perpetual bonds, plus
adjusted book value 21
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