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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) November 1, 2023
Aflac Incorporated
_________________________________________________________________________________________________________________________________________________________
(Exact name of registrant as specified in its charter)
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Georgia | 001-07434 | | | 58-1167100 |
(State or other jurisdiction | (Commission | | | (IRS Employer |
of incorporation) | File Number) | | | Identification No.) |
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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:
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☐ | 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:
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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 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§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. ¨
Item 2.02 Results of Operations and Financial Condition.
Aflac Incorporated (the "Company") is furnishing its press release dated November 1, 2023 in which it reported its 2023 third quarter results herein as Exhibit 99.1 to this report. The Company is also furnishing its third quarter supplemental earnings materials as Exhibit 99.2 to this report.
On November 1, 2023, the Company posted to its investor relations website at investors.aflac.com a video presentation by Max Brodén, the Company's Executive Vice President and Chief Financial Officer, discussing the Company's 2023 third quarter earnings. The Company is furnishing a transcript of Mr. Brodén's comments and a copy of the slides referenced in the presentation as Exhibit 99.3 and Exhibit 99.4, respectively, to this report.
In accordance with General Instruction B.2 of Form 8-K, the information included or incorporated in this report (Exhibit 99.1) shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934 (the “Exchange Act”), nor shall such information be deemed incorporated by reference in any filing under the Securities Act of 1933 or the Exchange Act, except as shall be set forth by specific reference in such filing.
Item 9.01 Financial Statements and Exhibits.
(d) Exhibits.
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Exhibit Number | | Exhibit Title or Description |
| | Press release of Aflac Incorporated dated November 1, 2023 |
| | Financial Supplement for Third Quarter 2023 |
| | Transcript of comments in video presentation by Max Brodén, Executive Vice President and Chief Financial Officer of Aflac Incorporated. |
| | Slides referenced in video presentation by Max Brodén, 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) |
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.
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| | | | Aflac Incorporated |
| | |
November 1, 2023 | | | | /s/ June Howard |
| | | | (June Howard) |
| | | | Senior Vice President, Financial Services |
| | | | Chief Accounting Officer |
News Release
Aflac Incorporated Announces Third Quarter Results,
Reports Third Quarter Net Earnings of $1.6 Billion,
Declares Fourth Quarter Dividend,
Increases First Quarter 2024 Dividend 19%
COLUMBUS, Ga. - November 1, 2023 - Aflac Incorporated (NYSE: AFL) today reported its third quarter results.
Total revenues were $5.0 billion in the third quarter of 2023, compared with $4.7 billion in the third quarter of 2022. Net earnings were $1.6 billion, or $2.64 per diluted share, compared with $1.8 billion, or $2.82 per diluted share a year ago.
Net earnings in the third quarter of 2023 included net investment gains of $423 million, or $0.71 per diluted share, compared with net investment gains of $199 million, or $0.31 per diluted share a year ago. These net investment gains were driven by net gains on certain derivatives and foreign currency activities of $381 million, largely driven by changes in exchange rates, a $47 million gain from an increase in the fair value of equity securities and $24 million of net gains from sales and redemptions. Net investment losses included a $29 million increase in the company's current expected credit losses (CECL) reserves and impairments.
Adjusted earnings* in the third quarter were $1.1 billion, compared with $910 million in the third quarter of 2022, reflecting an increase of 20.3%. Adjusted earnings per diluted share* increased 27.8% to $1.84 in the quarter. Variable investment income ran $13 million, or $0.02 per share, below the company's long-term return expectations. The weaker yen/dollar exchange rate negatively impacted adjusted earnings per share by $0.06.
The average yen/dollar exchange rate in the third quarter of 2023 was 144.97, or 5.4% weaker than the average rate of 137.08 in the third quarter of 2022. For the first nine months, the average exchange rate was 138.38, or 8.5% weaker than the rate of 126.65 a year ago.
Total investments and cash at the end of September 2023 were $111.3 billion, compared with $114.5 billion at September 30, 2022. The decline in the carrying amount of the portfolio is principally driven by the rise in interest rates and weakening of yen exchange rates.
Shareholders’ equity was $22.7 billion, or $38.63 per share, at September 30, 2023, compared with $19.9 billion, or $31.97 per share, at September 30, 2022. Shareholders’ equity at the end of the third quarter included a cumulative decrease of $866 million for the effect of the change in discount rate assumptions on insurance reserves, compared with a corresponding cumulative decrease of $4.1 billion at September 30, 2022 and a net unrealized loss on investment securities and derivatives of $427 million, compared with a net unrealized gain of $1.1 billion at September 30, 2022. Shareholders’ equity at the end of the third quarter also included an unrealized foreign currency translation loss of $4.5 billion, compared with an unrealized foreign currency translation loss of $4.4 billion at September 30, 2022. The annualized return on average shareholders’ equity in the third quarter was 29.1%.
For the first nine months of 2023, total revenues were down 1.8% to $14.9 billion, compared with $15.2 billion in the first nine months of 2022. Net earnings were $4.4 billion, or $7.28 per diluted share, compared with $4.2 billion, or $6.57 per diluted share, for the first nine months of 2022. Adjusted earnings for the first nine months of 2023 were $3.0 billion, or $4.97 per diluted share, compared with $2.8 billion, or $4.35 per diluted share, in 2022. Excluding the negative impact of $0.17 per share from the weaker yen/dollar exchange rate, adjusted earnings per diluted share increased 18.2% to $5.14 for the first nine months of 2023.
Shareholders’ equity excluding AOCI (or adjusted book value*) was $28.4 billion, or $48.44 per share at September 30, 2023, compared with $27.5 billion, or $44.00 per share, at September 30, 2022. The annualized adjusted return on equity excluding foreign currency impact* in the third quarter was 16.1%.
AFLAC JAPAN
In yen terms, Aflac Japan's net earned premiums were ¥285.3 billion for the quarter, or 2.8% lower than a year ago, mainly due to limited pay products reaching paid-up status and a reinsurance transaction in the first quarter partially offset by an unlock of future deferred profit liability assumptions. Adjusted net investment income increased 7.2% to ¥98.9 billion, mainly due to higher variable investment income and floating rate income. Total adjusted revenues in yen declined 0.5% to ¥385.4 billion. Pretax adjusted earnings in yen for the quarter increased 11.4% on a reported basis to ¥126.4 billion, primarily due to lower benefits and expenses partially offset by decreased revenue during the quarter. Pretax adjusted earnings increased 7.0% on a currency-neutral basis. The pretax adjusted profit margin for the Japan segment increased to 32.8%, compared with 29.3% a year ago.
For the first nine months, net earned premiums in yen were ¥855.7 billion, or 5.0% lower than a year ago. Adjusted net investment income increased 0.9% to ¥267.8 billion. Total adjusted revenues in yen were down 3.6% to ¥1.1 trillion. Pretax adjusted earnings were ¥344.1 billion, or 4.9% higher than a year ago.
In dollar terms, net earned premiums decreased 7.2% to $2.0 billion in the third quarter. Adjusted net investment income increased 2.4% to $679 million. Total adjusted revenues declined by 4.9% to $2.7 billion. Pretax adjusted earnings increased 6.4% to $869 million.
For the first nine months, net earned premiums in dollars were $6.2 billion, or 12.4% lower than a year ago. Adjusted net investment income decreased 6.7% to $1.9 billion. Total adjusted revenues were down 11.1% to $8.2 billion. Pretax adjusted earnings were $2.5 billion, or 3.2% lower than a year ago.
For the quarter, total new annualized premium sales (sales) increased 12.4% to ¥15.6 billion, or $108 million, primarily reflecting the continued rollout of the new cancer product through alliance partners, driven largely by a 23% increase in cancer insurance sales. For the first nine months, total new sales increased 16.6% to ¥44.9 billion, or $325 million.
AFLAC U.S.
Aflac U.S. net earned premiums increased 3.2% to $1.4 billion in the third quarter compared to the prior year, reflecting the strong contribution from growth initiatives. Adjusted net investment income increased 13.0% to $209 million, largely due to higher variable investment income and a shift to higher-yielding fixed-income investments as well as increased floating rate income. Total adjusted revenues were up 3.9% to $1.7 billion. Pretax adjusted earnings were $478 million, 38.6% higher than a year ago, primarily due to lower benefits driven by actuarial assumption unlocks and higher adjusted net investment income, partially offset by higher adjusted expenses. Higher expenses reflected ongoing investments in the U.S. platform, as well as a write-off of certain capitalized software development costs in the third quarter of 2023. The pretax adjusted profit margin for the U.S. segment was 28.8%, compared with 21.6% a year ago.
For the first nine months, net earned premiums increased 2.2% to $4.3 billion. Adjusted net investment income increased 8.2% to $609 million. Total adjusted revenues were up 2.4% to $5.0 billion. Pretax adjusted earnings were $1.2 billion, or 17.5% higher than a year ago.
Aflac U.S. sales increased 7.5% in the quarter to $359 million, reflecting continued improvement from investment in growth initiatives as well as productivity gains. For the first nine months of the year, total new sales increased 6.4% to $998 million.
CORPORATE AND OTHER
For the quarter, total adjusted revenues increased 57.5% to $115 million compared to the prior year, primarily due to the reinsurance transaction in the first quarter of 2023 resulting in an increase to total net earned premiums, partially offset by lower net investment income driven by a higher volume of tax credit investments. Pretax adjusted earnings were a loss of $49 million, compared with a loss of $56 million a year ago, reflecting the increase in adjusted revenue, partially offset by higher total net benefit and claims and other adjusted expenses.
For the first nine months, total adjusted revenues increased 103.2% to $384 million. Pretax adjusted earnings were a loss of $107 million, compared with a loss of $173 million a year ago.
DIVIDEND AND CAPITAL RETURNED TO SHAREHOLDERS
The board of directors declared the fourth quarter dividend of $0.42 per share, payable on December 1, 2023 to shareholders of record at the close of business on November 15, 2023, and the first quarter 2024 dividend of $0.50 per share, payable on March 1, 2024 to shareholders of record at the close of business on February 21, 2024.
In the third quarter, Aflac Incorporated deployed $700 million in capital to repurchase 9.4 million of its common shares. At the end of September 2023, the company had 86.4 million remaining shares authorized for repurchase.
OUTLOOK
Commenting on the company’s results, Chairman and Chief Executive Officer Daniel P. Amos stated: "Aflac delivered very strong earnings for both the quarter and the first nine months. We have continued to actively concentrate on numerous initiatives in the U.S. and Japan around new products and distribution strategies to set the stage for future growth.
"Looking at our operations in Japan, I am pleased that our sales results reflect improvements through agencies and alliances, including Japan Post, Dai-ichi Life and Daido Life. While it's too soon to provide details about the new medical product we introduced in mid-September, early indications show that it is being well-received. Additionally, we see products like WAYS and Child Endowment as door-openers to gain new customers, which increases opportunities to sell our third sector products.
"In the U.S., I remain encouraged by the continued improvement in the productivity of our agents and brokers as well as contribution from our growth initiatives, including group life and disability; network dental and vision; and consumer markets. As we enter into the fourth quarter, which is typically our strongest quarter of the year, we continue to work toward accelerating our momentum and reinforcing our leading position.
"We continue to generate strong capital and cash flows while maintaining our commitment to prudent liquidity and capital management. I am very pleased that 2023 marks 41 consecutive years of dividend increases, a record we treasure. Additionally, I am very happy with the Board's decision to increase the first quarter 2024 dividend 19%. We also remained in the market repurchasing shares at the historically high levels of the first three quarters of this year. We intend to continue our balanced approach of investing in growth initiatives and to drive long-term operating efficiencies while preserving the strength of underlying cash flows, which supports our dividend track record and tactical share repurchase."
All relevant prior-year amounts have been adjusted for the adoption of accounting guidance on January 1, 2023 related to accounting for long-duration insurance contracts.
*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.
ABOUT AFLAC INCORPORATED
Aflac Incorporated (NYSE: AFL), a Fortune 500 company, has helped provide financial protection and peace of mind for more than 67 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 policies in force. The Company takes pride in being there for its policyholders when they need us most, as well as being included in 2023 in the World’s Most Ethical Companies by Ethisphere for 17 consecutive years, Fortune’s World’s Most Admired Companies for 22 years and Bloomberg’s Gender-Equality Index for the fourth consecutive year. 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 (2022) for nine 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 8:00 a.m. (ET) on November 2, 2023.
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 SEPTEMBER 30, | | 2023 | | 2022 | | % Change |
Total revenues | | $ | 4,950 | | | $ | 4,704 | | | 5.2 | % |
Benefits and claims, net | | 1,860 | | | 2,076 | | | (10.4) | |
Total acquisition and operating expenses | | 1,285 | | | 1,299 | | | (1.1) | |
Earnings before income taxes | | 1,805 | | | 1,329 | | | 35.8 | |
Income taxes | | 236 | | | (452) | | | |
Net earnings | | $ | 1,569 | | | $ | 1,781 | | | (11.9) | % |
Net earnings per share – basic | | $ | 2.65 | | | $ | 2.83 | | | (6.4) | % |
Net earnings per share – diluted | | 2.64 | | | 2.82 | | | (6.4) | |
Shares used to compute earnings per share (000): | | | | | | |
Basic | | 591,246 | | | 629,350 | | | (6.1) | % |
Diluted | | 593,596 | | | 631,946 | | | (6.1) | |
Dividends paid per share | | $ | 0.42 | | | $ | 0.40 | | | 5.0 | % |
All relevant prior-year amounts have been adjusted for the adoption of accounting guidance on January 1, 2023 related to accounting for long-duration
insurance contracts.
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AFLAC INCORPORATED AND SUBSIDIARIES CONDENSED INCOME STATEMENT |
(UNAUDITED – IN MILLIONS, EXCEPT FOR SHARE AND PER-SHARE AMOUNTS) |
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NINE MONTHS ENDED SEPTEMBER 30, | | 2023 | | 2022 | | % Change |
Total revenues | | $ | 14,923 | | | $ | 15,192 | | | (1.8) | % |
Benefits and claims, net | | 6,108 | | | 6,833 | | | (10.6) | |
Total acquisition and operating expenses | | 3,843 | | | 4,028 | | | (4.6) | |
Earnings before income taxes | | 4,972 | | | 4,331 | | | 14.8 | |
Income taxes | | 581 | | | 109 | | | |
Net earnings | | $ | 4,391 | | | $ | 4,222 | | | 4.0 | % |
Net earnings per share – basic | | $ | 7.31 | | | $ | 6.60 | | | 10.8 | % |
Net earnings per share – diluted | | 7.28 | | | 6.57 | | | 10.8 | |
Shares used to compute earnings per share (000): | | | | | | |
Basic | | 600,991 | | | 639,862 | | | (6.1) | % |
Diluted | | 603,419 | | | 642,597 | | | (6.1) | |
Dividends paid per share | | $ | 1.26 | | | $ | 1.20 | | | 5.0 | % |
All relevant prior-year amounts have been adjusted for the adoption of accounting guidance on January 1, 2023 related to accounting for long-duration
insurance contracts.
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AFLAC INCORPORATED AND SUBSIDIARIES CONDENSED BALANCE SHEET |
(UNAUDITED – IN MILLIONS, EXCEPT FOR SHARE AMOUNTS) |
| | | | | | |
SEPTEMBER 30, | | 2023 | | 2022 | | % Change |
Assets: | | | | | | |
Total investments and cash | | $ | 111,306 | | | $ | 114,528 | | | (2.8) | % |
Deferred policy acquisition costs | | 8,771 | | | 8,666 | | | 1.2 | |
Other assets | | 5,034 | | | 5,521 | | | (8.8) | |
Total assets | | $ | 125,111 | | | $ | 128,715 | | | (2.8) | % |
Liabilities and shareholders’ equity: | | | | | | |
Policy liabilities | | $ | 86,028 | | | $ | 92,586 | | | (7.1) | % |
Notes payable and lease obligations | | 6,961 | | | 7,518 | | | (7.4) | |
Other liabilities | | 9,453 | | | 8,665 | | | 9.1 | |
Shareholders’ equity | | 22,669 | | | 19,946 | | | 13.7 | |
Total liabilities and shareholders’ equity | | $ | 125,111 | | | $ | 128,715 | | | (2.8) | % |
Shares outstanding at end of period (000) | | 586,897 | | | 623,868 | | | (5.9) | % |
All relevant prior-year amounts have been adjusted for the adoption of accounting guidance on January 1, 2023 related to accounting for long-duration
insurance contracts.
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 cannot be predicted or that are outside management’s control. 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 cash flows from derivatives associated with notes payable but excluding any nonrecurring 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 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 term of the hedge. 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 cash flows 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 cash flows 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 cash flows 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 SEPTEMBER 30, | | 2023 | | 2022 | | % Change |
| | | | | | |
Net earnings | | $ | 1,569 | | | $ | 1,781 | | | (11.9) | % |
| | | | | | |
Items impacting net earnings: | | | | | | |
Adjusted net investment (gains) losses | | (504) | | | (222) | | | |
| | | | | | |
| | | | | | |
| | | | | | |
| | | | | | |
Other and non-recurring (income) loss | | (3) | | | (1) | | | |
Income tax (benefit) expense on items excluded from adjusted earnings 1 | | 33 | | | (648) | | | |
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Adjusted earnings | | 1,095 | | | 910 | | | 20.3 | % |
Current period foreign currency impact 2 | | 33 | | | N/A | | |
Adjusted earnings excluding current period foreign currency impact 3 | | $ | 1,128 | | | $ | 910 | | | 24.0 | % |
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Net earnings per diluted share | | $ | 2.64 | | | $ | 2.82 | | | (6.4) | % |
| | | | | | |
Items impacting net earnings: | | | | | | |
Adjusted net investment (gains) losses | | (0.85) | | | (0.35) | | | |
Other and non-recurring (income) loss | | (0.01) | | | — | | | |
Income tax (benefit) expense on items excluded from adjusted earnings 1 | | 0.06 | | | (1.03) | | | |
| | | | | | |
| | | | | | |
| | | | | | |
Adjusted earnings per diluted share | | 1.84 | | | 1.44 | | | 27.8 | % |
Current period foreign currency impact 2 | | 0.06 | | | N/A | | |
Adjusted earnings per diluted share excluding current period foreign currency impact 3 | | $ | 1.90 | | | $ | 1.44 | | | 31.9 | % |
All relevant prior-year amounts have been adjusted for the adoption of accounting guidance on January 1, 2023 related to accounting for long-duration
insurance contracts.
1 Primarily reflects release of $695 million in deferred taxes in the third quarter of 2022.
2 Prior period foreign currency impact reflected as “N/A” to isolate change for current period only.
3 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 EARNINGS TO ADJUSTED EARNINGS |
(UNAUDITED – IN MILLIONS, EXCEPT FOR PER-SHARE AMOUNTS) |
| | | | | | |
NINE MONTHS ENDED SEPTEMBER 30, | | 2023 | | 2022 | | % Change |
| | | | | | |
Net earnings | | $ | 4,391 | | | $ | 4,222 | | | 4.0 | % |
| | | | | | |
Items impacting net earnings: | | | | | | |
Adjusted net investment (gains) losses | | (1,363) | | | (923) | | | |
| | | | | | |
| | | | | | |
| | | | | | |
| | | | | | |
Other and non-recurring (income) loss | | (38) | | | (1) | | | |
Income tax (benefit) expense on items excluded from adjusted earnings 1 | | 12 | | | (501) | | | |
| | | | | | |
| | | | | | |
| | | | | | |
Adjusted earnings | | 3,001 | | | 2,797 | | | 7.3 | % |
Current period foreign currency impact 2 | | 100 | | | N/A | | |
Adjusted earnings excluding current period foreign currency impact 3 | | $ | 3,101 | | | $ | 2,797 | | | 10.9 | % |
| | | | | | |
Net earnings per diluted share | | $ | 7.28 | | | $ | 6.57 | | | 10.8 | % |
| | | | | | |
Items impacting net earnings: | | | | | | |
Adjusted net investment (gains) losses | | (2.26) | | | (1.44) | | | |
Other and non-recurring (income) loss | | (0.06) | | | — | | | |
Income tax (benefit) expense on items excluded from adjusted earnings 1 | | 0.02 | | | (0.78) | | | |
| | | | | | |
| | | | | | |
| | | | | | |
Adjusted earnings per diluted share | | 4.97 | | | 4.35 | | | 14.3 | % |
Current period foreign currency impact 2 | | 0.17 | | | N/A | | |
Adjusted earnings excluding current period foreign currency impact 3 | | $ | 5.14 | | | $ | 4.35 | | | 18.2 | % |
All relevant prior-year amounts have been adjusted for the adoption of accounting guidance on January 1, 2023 related to accounting for long-duration
insurance contracts.
1 Primarily reflects release of $695 million in deferred taxes in the third quarter of 2022.
2 Prior period foreign currency impact reflected as “N/A” to isolate change for current period only.
3 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 SEPTEMBER 30, | | 2023 | | 2022 | | % Change |
| | | | | | |
Net investment (gains) losses | | $ | (423) | | | $ | (199) | | | 112.6 | % |
| | | | | | |
Items impacting net investment (gains) losses: | | | | | | |
Amortized hedge costs | | (26) | | | (28) | | | |
Amortized hedge income | | 25 | | | 19 | | | |
Net interest cash flows from derivatives associated with certain investment strategies | | (88) | | | (26) | | | |
Interest rate component of the change in fair value of foreign currency swaps on notes payable1 | | 8 | | | 13 | | | |
| | | | | | |
Adjusted net investment (gains) losses | | $ | (504) | | | $ | (222) | | | 127.0 | % |
1 Amounts are included with interest expenses that are a component of adjusted expenses.
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RECONCILIATION OF NET INVESTMENT INCOME TO ADJUSTED NET INVESTMENT INCOME |
(UNAUDITED – IN MILLIONS) |
| | | | | | |
THREE MONTHS ENDED SEPTEMBER 30, | | 2023 | | 2022 | | % Change |
| | | | | | |
Net investment income | | $ | 1,004 | | | $ | 920 | | | 9.1 | % |
| | | | | | |
Items impacting net investment income: | | | | | | |
Amortized hedge costs | | (26) | | | (28) | | | |
Amortized hedge income | | 25 | | | 19 | | | |
Net interest cash flows from derivatives associated with certain investment strategies | | (88) | | | (26) | | | |
| | | | | | |
Adjusted net investment income | | $ | 915 | | | $ | 885 | | | 3.4 | % |
| | | | | | | | | | | | | | | | | | | | |
RECONCILIATION OF NET INVESTMENT (GAINS) LOSSES TO ADJUSTED NET INVESTMENT (GAINS) LOSSES |
(UNAUDITED – IN MILLIONS) |
| | | | | | |
NINE MONTHS ENDED SEPTEMBER 30, | | 2023 | | 2022 | | % Change |
| | | | | | |
Net investment (gains) losses | | $ | (1,101) | | | $ | (885) | | | 24.4 | % |
| | | | | | |
Items impacting net investment (gains) losses: | | | | | | |
Amortized hedge costs | | (148) | | | (84) | | | |
Amortized hedge income | | 92 | | | 44 | | | |
Net interest cash flows from derivatives associated with certain investment strategies | | (239) | | | (36) | | | |
Interest rate component of the change in fair value of foreign currency swaps on notes payable1 | | 32 | | | 38 | | | |
| | | | | | |
Adjusted net investment (gains) losses | | $ | (1,363) | | | $ | (923) | | | 47.7 | % |
1 Amounts are included with interest expenses that are a component of adjusted expenses.
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RECONCILIATION OF NET INVESTMENT INCOME TO ADJUSTED NET INVESTMENT INCOME |
(UNAUDITED – IN MILLIONS) |
| | | | | | |
NINE MONTHS ENDED SEPTEMBER 30, | | 2023 | | 2022 | | % Change |
| | | | | | |
Net investment income | | $ | 2,946 | | | $ | 2,760 | | | 6.7 | % |
| | | | | | |
Items impacting net investment income: | | | | | | |
Amortized hedge costs | | (148) | | | (84) | | | |
Amortized hedge income | | 92 | | | 44 | | | |
Net interest cash flows from derivatives associated with certain investment strategies | | (239) | | | (36) | | | |
| | | | | | |
Adjusted net investment income | | $ | 2,651 | | | $ | 2,684 | | | (1.2) | % |
| | | | | | | | | | | | | | | | | | | | |
RECONCILIATION OF U.S. GAAP BOOK VALUE TO ADJUSTED BOOK VALUE |
(UNAUDITED - IN MILLIONS, EXCEPT FOR SHARE AND PER-SHARE AMOUNTS) |
| | | | | | |
SEPTEMBER 30, | | 2023 | | 2022 | | % Change |
U.S. GAAP book value | | $ | 22,669 | | | $ | 19,946 | | | |
Less: | | | | | | |
Unrealized foreign currency translation gains (losses) | | (4,484) | | | (4,374) | | | |
Unrealized gains (losses) on securities and derivatives | | (427) | | | 1,102 | | | |
Effect of changes in discount rate assumptions | | (866) | | | (4,075) | | | |
Pension liability adjustment | | 17 | | | (158) | | | |
Total AOCI | | (5,760) | | | (7,505) | | | |
Adjusted book value | | $ | 28,429 | | | $ | 27,451 | | | |
Add: | | | | | | |
Unrealized foreign currency translation gains (losses) | | (4,484) | | | (4,374) | | | |
Adjusted book value including unrealized foreign currency translation gains (losses) | | $ | 23,945 | | | $ | 23,077 | | | |
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Number of outstanding shares at end of period (000) | | 586,897 | | | 623,868 | | | |
| | | | | | |
U.S. GAAP book value per common share | | $ | 38.63 | | | $ | 31.97 | | | 20.8 | % |
Less: | | | | | | |
Unrealized foreign currency translation gains (losses) per common share | | (7.64) | | | (7.01) | | | |
Unrealized gains (losses) on securities and derivatives per common share | | (0.73) | | | 1.77 | | | |
Effect of changes in discount rate assumptions per common share | | (1.48) | | | (6.53) | | | |
Pension liability adjustment per common share | | 0.03 | | | (0.25) | | | |
Total AOCI per common share | | (9.81) | | | (12.03) | | | |
Adjusted book value per common share | | $ | 48.44 | | | $ | 44.00 | | | 10.1 | % |
Add: | | | | | | |
Unrealized foreign currency translation gains (losses) per common share | | (7.64) | | | (7.01) | | | |
Adjusted book value including unrealized foreign currency translation gains (losses) per common share | | $ | 40.80 | | | $ | 36.99 | | | 10.3 | % |
All relevant prior-year amounts have been adjusted for the adoption of accounting guidance on January 1, 2023 related to accounting for long-duration
insurance contracts.
| | | | | | | | | | | | | | |
RECONCILIATION OF U.S. GAAP RETURN ON EQUITY (ROE) TO ADJUSTED ROE |
(EXCLUDING IMPACT OF FOREIGN CURRENCY) |
| | | | |
THREE MONTHS ENDED SEPTEMBER 30, | | 2023 | | 2022 |
U.S. GAAP ROE - Net earnings1 | | 29.1 | % | | 36.1 | % |
Impact of excluding unrealized foreign currency translation gains (losses) | | (4.5) | | | (5.1) | |
Impact of excluding unrealized gains (losses) on securities and derivatives | | 0.8 | | | 2.7 | |
Impact of excluding effect of changes in discount rate assumptions | | (3.1) | | | (7.1) | |
Impact of excluding pension liability adjustment | | — | | | (0.2) | |
Impact of excluding AOCI | | (6.8) | | | (9.7) | |
U.S. GAAP ROE - less AOCI | | 22.3 | | | 26.4 | |
Differences between adjusted earnings and net earnings2 | | (6.7) | | | (12.9) | |
Adjusted ROE - reported | | 15.6 | | | 13.5 | |
Less: Impact of foreign currency3 | | (0.5) | | | N/A |
Adjusted ROE, excluding impact of foreign currency | | 16.1 | | | 13.5 | |
All relevant prior-year amounts have been adjusted for the adoption of accounting guidance on January 1, 2023 related to accounting for long-duration
insurance contracts.
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.
| | | | | | | | | | | | | | |
RECONCILIATION OF U.S. GAAP RETURN ON EQUITY (ROE) TO ADJUSTED ROE |
(EXCLUDING IMPACT OF FOREIGN CURRENCY) |
| | | | |
NINE MONTHS ENDED SEPTEMBER 30, | | 2023 | | 2022 |
U.S. GAAP ROE - Net earnings1 | | 27.4 | % | | 30.4 | % |
Impact of excluding unrealized foreign currency translation gains (losses) | | (4.0) | | | (3.7) | |
Impact of excluding unrealized gains (losses) on securities and derivatives | | (0.6) | | | 6.2 | |
Impact of excluding effect of changes in discount rate assumptions | | (1.5) | | | (11.5) | |
Impact of excluding pension liability adjustment | | — | | | (0.2) | |
Impact of excluding AOCI | | (6.1) | | | (9.2) | |
U.S. GAAP ROE - less AOCI | | 21.3 | | | 21.3 | |
Differences between adjusted earnings and net earnings2 | | (6.7) | | | (7.2) | |
Adjusted ROE - reported | | 14.6 | | | 14.1 | |
Less: Impact of foreign currency3 | | (0.5) | | | N/A |
Adjusted ROE, excluding impact of foreign currency | | 15.0 | | | 14.1 | |
All relevant prior-year amounts have been adjusted for the adoption of accounting guidance on January 1, 2023 related to accounting for long-duration
insurance contracts.
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.
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EFFECT OF FOREIGN CURRENCY ON ADJUSTED RESULTS1 |
(SELECTED PERCENTAGE CHANGES, UNAUDITED) |
|
THREE MONTHS ENDED SEPTEMBER 30, 2023 | | Including Currency Changes | | Excluding Currency Changes2 |
Net earned premiums3 | | (1.7) | % | | 2.4 | % |
Adjusted net investment income4 | | 3.4 | | | 5.4 | |
Total benefits and expenses | | (6.7) | | | (3.0) | |
Adjusted earnings | | 20.3 | | | 24.0 | |
Adjusted earnings per diluted share | | 27.8 | | | 31.9 | |
All relevant prior-year amounts have been adjusted for the adoption of accounting guidance on January 1, 2023 related to accounting for long-duration
insurance contracts.
1Refer to previously defined adjusted earnings and adjusted earnings per diluted share.
2Amounts 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.
3Net of reinsurance
4Refer to previously defined adjusted net investment income.
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EFFECT OF FOREIGN CURRENCY ON ADJUSTED RESULTS1 |
(SELECTED PERCENTAGE CHANGES, UNAUDITED) |
|
NINE MONTHS ENDED SEPTEMBER 30, 2023 | | Including Currency Changes | | Excluding Currency Changes2 |
Net earned premiums3 | | (5.6) | % | | (0.6) | % |
Adjusted net investment income4 | | (1.2) | | | 1.3 | |
Total benefits and expenses | | (8.0) | | | (3.2) | |
Adjusted earnings | | 7.3 | | | 10.9 | |
Adjusted earnings per diluted share | | 14.3 | | | 18.2 | |
All relevant prior-year amounts have been adjusted for the adoption of accounting guidance on January 1, 2023 related to accounting for long-duration
insurance contracts.
1Refer to previously defined adjusted earnings and adjusted earnings per diluted share.
2Amounts 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.
3Net of reinsurance
4Refer 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 and the continued effects caused by COVID-19
•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
•concentration of the Company's investments in any particular single-issuer or sector
•major public health issues, including COVID-19 and any resulting or coincidental economic effects, on the Company's business and financial results
•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 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 (such as COVID-19), tornadoes, hurricanes, earthquakes, tsunamis, war or other military action, 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
•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 11/1/2023
Financial Supplement
Third Quarter 2023
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.
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| Aflac Incorporated | | | | | Page |
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| Aflac Japan | | | | | |
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| Non-U.S. GAAP Financial Measures | | | | |
For more information, contact:
David Young
Phone. 706.596.3264
Aflacir@aflac.com
investors.aflac.com
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Aflac Incorporated and Subsidiaries | | | | | | | | | | | | | | | | | | |
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| Share Data |
| (In Thousands) |
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| | | | Beginning | | Shares Issued | | Shares Purchased | | Ending | | QTD Weighted Avg. Shares | | YTD Weighted Avg. Shares |
| | | | Shares | | Stk. Bon. | | Stk. Opt. | | Treas. | | Misc. | | Shares | | Avg. | | Dilutive | | Avg. | | Avg. | | Dilutive | | Avg. |
| | Period | | Outstanding | | & DRP | | & Misc. | | Shares | | Purch.(1) | | Outstanding | | Shares | | Shares | | Diluted | | Shares | | Shares | | Diluted |
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| 2021 | 1 | | | 692,454 | | | 387 | | | 1,684 | | | 13,440 | | | 378 | | | 680,707 | | | 688,938 | | | 3,002 | | | 691,940 | | | 688,938 | | | 3,002 | | | 691,940 | |
| | 2 | | | 680,707 | | | 330 | | | 130 | | | 9,174 | | | 3 | | | 671,990 | | | 678,050 | | | 2,871 | | | 680,921 | | | 683,464 | | | 2,936 | | | 686,400 | |
| | 3 | | | 671,990 | | | 250 | | | 188 | | | 9,572 | | | 39 | | | 662,817 | | | 668,762 | | | 3,163 | | | 671,925 | | | 678,509 | | | 3,012 | | | 681,521 | |
| | 4 | | | 662,817 | | | 249 | | | 224 | | | 11,140 | | | 18 | | | 652,132 | | | 659,100 | | | 3,412 | | | 662,512 | | | 673,617 | | | 3,112 | | | 676,729 | |
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| 2022 | 1 | | | 652,132 | | | 259 | | | 1,308 | | | 8,007 | | | 343 | | | 645,349 | | | 649,753 | | | 3,074 | | | 652,827 | | | 649,753 | | | 3,074 | | | 652,827 | |
| | 2 | | | 645,349 | | | 269 | | | 101 | | | 11,185 | | | 8 | | | 634,526 | | | 640,707 | | | 2,536 | | | 643,243 | | | 645,205 | | | 2,805 | | | 648,010 | |
| | 3 | | | 634,526 | | | 258 | | | 144 | | | 11,057 | | | 3 | | | 623,868 | | | 629,350 | | | 2,597 | | | 631,946 | | | 639,862 | | | 2,735 | | | 642,597 | |
| | 4 | | | 623,868 | | | 222 | | | 120 | | | 8,938 | | | 16 | | | 615,256 | | | 619,845 | | | 3,149 | | | 622,994 | | | 634,816 | | | 2,839 | | | 637,655 | |
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| 2023 | 1 | | | 615,256 | | | 239 | | | 1,152 | | | 10,348 | | | 347 | | | 605,952 | | | 611,205 | | | 2,745 | | | 613,950 | | | 611,205 | | | 2,745 | | | 613,950 | |
| | 2 | | | 605,952 | | | 259 | | | 225 | | | 10,461 | | | 6 | | | 595,969 | | | 600,742 | | | 2,187 | | | 602,929 | | | 605,945 | | | 2,466 | | | 608,411 | |
| | 3 | | | 595,969 | | | 210 | | | 115 | | | 9,390 | | | 7 | | | 586,897 | | | 591,246 | | | 2,350 | | | 593,596 | | | 600,992 | | | 2,427 | | | 603,419 | |
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(1) Includes previously owned shares used to purchase options (swapped shares) and/or shares purchased for deferred compensation program
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Aflac Incorporated and Subsidiaries | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
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| Summary of Adjusted Results by Business Segment |
| (In Millions, except per-share data and where noted) |
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| | Years Ended December 31, | | 3 Months Ended September 30, | | 9 Months Ended September 30, |
| | | | | | | | | | | | | | | | | | | | | | | | % | | | | | | | | | % |
| | 2018 | | 2019 | | 2020 | | 2021 | | 2022 | | 2022 | | 2023 | | | Change | | 2022 | | 2023 | | | Change |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Aflac Japan | $ | 3,208 | | | $ | 3,261 | | | $ | 3,263 | | | $ | 3,755 | | | $ | 3,281 | | | $ | 817 | | | $ | 869 | | | | 6.4 | | | | $ | 2,560 | | | $ | 2,479 | | | | (3.2) | | |
| Aflac U.S. | | 1,285 | | | | 1,272 | | | | 1,268 | | | | 1,356 | | | | 1,359 | | | | 345 | | | | 478 | | | | 38.6 | | | | | 1,020 | | | | 1,199 | | | | 17.5 | | |
| Corporate and other (1) | | (139) | | | | (72) | | | | (115) | | | | (293) | | | | (218) | | | | (56) | | | | (49) | | | | | | | | (173) | | | | (107) | | | | | |
| Pretax adjusted earnings | | 4,354 | | | | 4,461 | | | | 4,416 | | | | 4,819 | | | | 4,422 | | | | 1,106 | | | | 1,298 | | | | 17.4 | | | | | 3,407 | | | | 3,571 | | | | 4.8 | | |
| Income taxes (1) | | 1,129 | | | | 1,147 | | | | 864 | | | | 893 | | | | 808 | | | | 196 | | | | 203 | | | | 3.6 | | | | | 610 | | | | 570 | | | | (6.6) | | |
| Adjusted earnings (2) | | 3,226 | | | | 3,314 | | | | 3,552 | | | | 3,925 | | | | 3,614 | | | | 910 | | | | 1,095 | | | | 20.3 | | | | | 2,797 | | | | 3,001 | | | | 7.3 | | |
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| Reconciling items: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Adjusted net investment gains (losses) | | (297) | | | | (15) | | | | (229) | | | | 462 | | | | 447 | | | | 222 | | | | 504 | | | | | | | | 923 | | | | 1,363 | | | | | |
| Other and non-recurring income (loss) (3) | | (75) | | | | (1) | | | | (28) | | | | (73) | | | | 1 | | | | 1 | | | | 3 | | | | | | | | 1 | | | | 38 | | | | | |
| Income tax benefit (expense) on items excluded from adjusted earnings (4) | | 83 | | | | 3 | | | | 72 | | | | (83) | | | | 357 | | | | 648 | | | | (33) | | | | | | | | 501 | | | | (12) | | | | | |
| Tax reform adjustment (5) | | (18) | | | | 4 | | | | — | | | | — | | | | — | | | | — | | | | — | | | | | | | | — | | | | — | | | | | |
| Tax valuation allowance release (6) | | — | | | | — | | | | 1,411 | | | | — | | | | — | | | | — | | | | — | | | | | | | | — | | | | — | | | | | |
| Net earnings | $ | 2,920 | | | $ | 3,304 | | | $ | 4,778 | | | $ | 4,231 | | | $ | 4,418 | | | $ | 1,781 | | | $ | 1,569 | | | | (11.9) | | | | $ | 4,222 | | | $ | 4,391 | | | | 4.0 | | |
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| Effective Tax rate | | 26.7 | | % | 25.7 | | % | (14.9) | | % | 18.7 | | % | 9.3 | | % | (34.0) | | % | 13.1 | | % | | | | | 2.5 | | % | 11.7 | | % | | |
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| Earnings per share of common stock: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Net earnings (basic) | $ | 3.79 | | | $ | 4.45 | | | $ | 6.69 | | | $ | 6.28 | | | $ | 6.96 | | | $ | 2.83 | | | $ | 2.65 | | | | (6.4) | | | | $ | 6.60 | | | $ | 7.31 | | | | 10.8 | | |
| Net earnings (diluted) | | 3.77 | | | | 4.43 | | | | 6.67 | | | | 6.25 | | | | 6.93 | | | | 2.82 | | | | 2.64 | | | | (6.4) | | | | | 6.57 | | | | 7.28 | | | | 10.8 | | |
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| Adjusted earnings (basic) (2) | $ | 4.20 | | | $ | 4.46 | | | $ | 4.98 | | | $ | 5.83 | | | $ | 5.69 | | | $ | 1.45 | | | $ | 1.85 | | | | 27.6 | | | | $ | 4.37 | | | $ | 4.99 | | | | 14.2 | | |
| Adjusted earnings (diluted) (2) | | 4.16 | | | | 4.44 | | | | 4.96 | | | | 5.80 | | | | 5.67 | | | | 1.44 | | | | 1.84 | | | | 27.8 | | | | | 4.35 | | | | 4.97 | | | | 14.3 | | |
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| (1) The change in value of federal historic rehabilitation and solar investments in partnerships of $64 and $19 for the three-month periods and $169 and $61 for the nine-month periods ended September 30, 2023, and 2022, respectively, is included as a reduction to net investment income. Tax credits on these investments of $63 and $19 for the three-month period and $171 and $63 for the nine-month periods ended September 30, 2023, and 2022, 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 $695 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. | |
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Aflac Incorporated and Subsidiaries | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
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| Consolidated Statements of Earnings - U.S. GAAP | |
| (In Millions, except per-share data) | |
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| | | Years Ended December 31, | | 3 Months Ended September 30, | | 9 Months Ended September 30, | |
| | | | | | | | | | | | | | | | | | | | | | | | % | | | | | | | | % | |
| | | 2018 | | 2019 | | 2020 | | 2021 | | 2022 | | 2022 | | 2023 | | Change | | 2022 | | 2023 | | Change | |
| Revenues: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Net earned premiums | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Gross premiums | $ | 19,018 | | | $ | 19,122 | | | $ | 18,955 | | | $ | 17,305 | | | $ | 15,025 | | | $ | 3,565 | | | $ | 3,524 | | | | | | $ | 11,472 | | | $ | 10,885 | | | | | |
| | Assumed (ceded) | | (341) | | | | (342) | | | | (333) | | | | (210) | | | | (124) | | | | (30) | | | | (48) | | | | | | | (93) | | | | (148) | | | | | |
| | Total net earned premiums | | 18,677 | | | | 18,780 | | | | 18,622 | | | | 17,095 | | | | 14,901 | | | | 3,535 | | | | 3,476 | | | (1.7) | | | | | 11,379 | | | | 10,737 | | | (5.6) | | | |
| | Net investment income | | 3,442 | | | | 3,578 | | | | 3,638 | | | | 3,818 | | | | 3,656 | | | | 920 | | | | 1,004 | | | 9.1 | | | | | 2,760 | | | | 2,946 | | | 6.7 | | | |
| | Net investment gains (losses) (1) | | (430) | | | | (135) | | | | (270) | | | | 468 | | | | 363 | | | | 199 | | | | 423 | | | | | | | 885 | | | | 1,101 | | | | | |
| | Other income (1) | | 69 | | | | 84 | | | | 157 | | | | 173 | | | | 220 | | | | 50 | | | | 47 | | | | | | | 168 | | | | 139 | | | | | |
| | Total revenues | | 21,758 | | | | 22,307 | | | | 22,147 | | | | 21,554 | | | | 19,140 | | | | 4,704 | | | | 4,950 | | | 5.2 | | | | | 15,192 | | | | 14,923 | | | (1.8) | | | |
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| Benefits and Claims: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Benefits and claims, net | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Incurred claims -direct | | 9,121 | | | | 9,279 | | | | 9,364 | | | | 8,949 | | | | 8,271 | | | | 2,112 | | | | 1,871 | | | | | | | 6,445 | | | | 6,034 | | | | | |
| | Incurred claims -assumed (ceded) | | (421) | | | | (372) | | | | (296) | | | | (147) | | | | (108) | | | | (47) | | | | (33) | | | | | | | (89) | | | | (114) | | | | | |
| | Increase in FPB (2)-direct | | 3,167 | | | | 2,952 | | | | 2,707 | | | | 1,819 | | | | 888 | | | | 63 | | | | 231 | | | | | | | 575 | | | | 499 | | | | | |
| | Increase in FPB (2)-assumed (ceded) | | 133 | | | | 83 | | | | 21 | | | | 3 | | | | 51 | | | | 41 | | | | (4) | | | | | | | 54 | | | | 1 | | | | | |
| | Total net benefits and claims, excluding reserve remeasurement | | N/A | | | N/A | | | N/A | | | 10,623 | | | | 9,102 | | | | 2,169 | | | | 2,065 | | | | | | | 6,985 | | | | 6,420 | | | | | |
| | Reserve remeasurement (gain) loss | | N/A | | | N/A | | | N/A | | | (147) | | | | (215) | | | | (93) | | | | (205) | | | | | | | (152) | | | | (312) | | | | | |
| | Total net benefits and claims | | 12,000 | | | | 11,942 | | | | 11,796 | | | | 10,476 | | | | 8,887 | | | | 2,076 | | | | 1,860 | | | (10.4) | | | | | 6,833 | | | | 6,108 | | | (10.6) | | | |
| | Acquisition and operating expenses: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Amortization of DAC (3) | | 1,245 | | | | 1,282 | | | | 1,214 | | | | 835 | | | | 792 | | | | 194 | | | | 201 | | | | | | | 598 | | | | 608 | | | | | |
| | Insurance commissions | | 1,320 | | | | 1,321 | | | | 1,316 | | | | 1,256 | | | | 1,117 | | | | 267 | | | | 250 | | | | | | | 846 | | | | 797 | | | | | |
| | Insurance expenses | | 2,988 | | | | 3,089 | | | | 3,420 | | | | 3,541 | | | | 3,249 | | | | 779 | | | | 785 | | | | | | | 2,413 | | | | 2,290 | | | | | |
| | Interest expense | | 222 | | | | 228 | | | | 242 | | | | 238 | | | | 226 | | | | 59 | | | | 49 | | | | | | | 171 | | | | 148 | | | | | |
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| | Total acquisition and operating expenses | 5,775 | | | | 5,920 | | | | 6,192 | | | | 5,870 | | | | 5,384 | | | | 1,299 | | | | 1,285 | | | (1.1) | | | | | 4,028 | | | | 3,843 | | | (4.6) | | | |
| | Total benefits and expenses | | 17,775 | | | | 17,862 | | | | 17,988 | | | | 16,346 | | | | 14,271 | | | | 3,375 | | | | 3,145 | | | (6.8) | | | | | 10,861 | | | | 9,951 | | | (8.4) | | | |
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| | Pretax earnings | | 3,983 | | | | 4,445 | | | | 4,159 | | | | 5,208 | | | | 4,869 | | | | 1,329 | | | | 1,805 | | | | | | | 4,331 | | | | 4,972 | | | | | |
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| | Income tax expense (benefit) (4) | | 1,063 | | | | 1,141 | | | | (619) | | | | 977 | | | | 451 | | | | (452) | | | | 236 | | | | | | | 109 | | | | 581 | | | | | |
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| | Net earnings | $ | 2,920 | | | $ | 3,304 | | | $ | 4,778 | | | $ | 4,231 | | | $ | 4,418 | | | $ | 1,781 | | | $ | 1,569 | | | (11.9) | | | | $ | 4,222 | | | $ | 4,391 | | | 4.0 | | | |
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| | (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 $695 in deferred taxes in 2022 | | |
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Aflac Incorporated and Subsidiaries | | | | | | | | | | | | | | | | |
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Analysis of Net Earnings and Net Earnings Per Diluted Share | |
(In Millions, except for per-share data) | |
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| | | | | | | | | | | | | | | | | | | | | Other and | | Foreign | |
| | | | | | | Net | | Other and Non- | | Foreign | | Net | | Net | | Non-Recurring | | Currency | |
| | | | Net | | Investment | | Recurring | | Currency | | Earnings | | Investment | | Items | | Impact | |
| | Period | | Earnings | | Gains (Losses) (1) | | Items (1)(3)(4) | | Impact (2) | | Per Share | | Gains (Losses) (1) | | Per Share (1)(3)(4) | | Per Share (2) | |
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| | 2018 | | 2,920 | | | | (230) | | | | (76) | | | | 28 | | | | 3.77 | | | | (.30) | | | | (.09) | | | | .04 | | |
| | 2019 | | 3,304 | | | | (13) | | | | 3 | | | | 15 | | | | 4.43 | | | | (.02) | | | | .01 | | | | .02 | | |
| | 2020 | | 4,778 | | | | (181) | | | | 1,407 | | | | 31 | | | | 6.67 | | | | (.25) | | | | 1.96 | | | | .04 | | |
| | 2021 | | 4,231 | | | | 365 | | | | (59) | | | | (42) | | | | 6.25 | | | | .54 | | | | (.09) | | | | (.06) | | |
| | 2022 | | 4,418 | | | | 803 | | | | 1 | | | | (262) | | | | 6.93 | | | | 1.26 | | | | — | | | | (.41) | | |
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| 2021 | 1 | | 1,224 | | | | 240 | | | | (5) | | | | 5 | | | | 1.77 | | | | .35 | | | | (.01) | | | | .01 | | |
| | 2 | | 1,027 | | | | 67 | | | | (42) | | | | (6) | | | | 1.51 | | | | .10 | | | | (.06) | | | | (.01) | | |
| | 3 | | 915 | | | | (136) | | | | (7) | | | | (12) | | | | 1.36 | | | | (.20) | | | | (.01) | | | | (.02) | | |
| | 4 | | 1,065 | | | | 194 | | | | (5) | | | | (29) | | | | 1.61 | | | | .29 | | | | (.01) | | | | (.04) | | |
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| 2022 | 1 | | 1,047 | | | | 106 | | | | (1) | | | | (35) | | | | 1.60 | | | | .16 | | | | — | | | | (.05) | | |
| | 2 | | 1,394 | | | | 448 | | | | — | | | | (59) | | | | 2.17 | | | | .70 | | | | — | | | | (.09) | | |
| | 3 | | 1,781 | | | | 871 | | | | 1 | | | | (97) | | | | 2.82 | | | | 1.38 | | | | — | | | | (.15) | | |
| | 4 | | 196 | | | | (621) | | | | — | | | | (70) | | | | .31 | | | | (1.00) | | | | — | | | | (.11) | | |
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| 2023 | 1 | | 1,188 | | | | 235 | | | | — | | | | (41) | | | | 1.94 | | | | .38 | | | | — | | | | (.07) | | |
| | 2 | | 1,634 | | | | 653 | | | | 28 | | | | (25) | | | | 2.71 | | | | 1.08 | | | | .05 | | | | (.04) | | |
| | 3 | | 1,569 | | | | 472 | | | | 2 | | | | (33) | | | | 2.64 | | | | .80 | | | | — | | | | (.06) | | |
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| (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. |
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Aflac Incorporated and Subsidiaries | | | | | | | | | | | | | | | | | | | | | | | | |
| Consolidated Balance Sheets | |
| (In Millions, except per-share data) | |
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| | | | December 31, | | September 30, | |
| Assets: | 2018 | | 2019 | | 2020 | | 2021 | | 2022 | | | | 2022 | | 2023 | |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| Investments and cash: | | | | | | | | | | | | | | | | | | | | | | | | |
| | Securities available for sale: | | | | | | | | | | | | | | | | | | | | | | | | |
| | Fixed maturity securities available for sale, at fair value | $ | 78,429 | | | $ | 86,950 | | | $ | 101,286 | | | $ | 94,206 | | | $ | 71,936 | | | | | | $ | 70,026 | | | $ | 66,369 | | |
| | Fixed maturity securities available for sale - consolidated variable interest entities, at fair value | | 4,466 | | | | 4,312 | | | | 4,596 | | | | 4,490 | | | | 3,805 | | | | | | | 3,617 | | | | 3,432 | | |
| | Fixed maturity securities held to maturity, at amortized cost, net of allowance for credit losses | | 30,318 | | | | 30,085 | | | | 24,464 | | | | 22,000 | | | | 19,056 | | | | | | | 17,466 | | | | 16,899 | | |
| | Equity securities, at fair value | | 987 | | | | 802 | | | | 1,283 | | | | 1,603 | | | | 1,091 | | | | | | | 1,064 | | | | 990 | | |
| | Commercial mortgage and other loans, net of allowance for credit losses | | 6,919 | | | | 9,569 | | | | 10,554 | | | | 11,786 | | | | 13,496 | | | | | | | 13,459 | | | | 12,873 | | |
| | Other investments | | 787 | | | | 1,477 | | | | 2,429 | | | | 3,842 | | | | 4,070 | | | | | | | 4,186 | | | | 5,241 | | |
| | Cash and cash equivalents | | 4,337 | | | | 4,896 | | | | 5,141 | | | | 5,051 | | | | 3,943 | | | | | | | 4,710 | | | | 5,502 | | |
| | | Total investments and cash | | 126,243 | | | | 138,091 | | | | 149,753 | | | | 142,978 | | | | 117,397 | | | | | | | 114,528 | | | | 111,306 | | |
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| Receivables, net of allowance for credit losses (1) | | 844 | | | | 816 | | | | 778 | | | | 672 | | | | 647 | | | | | | | 629 | | | | 712 | | |
| Accrued investment income | | 773 | | | | 772 | | | | 780 | | | | 737 | | | | 745 | | | | | | | 684 | | | | 687 | | |
| Deferred policy acquisition costs | | 9,875 | | | | 10,128 | | | | 10,441 | | | | 9,848 | | | | 9,239 | | | | | | | 8,666 | | | | 8,771 | | |
| Property and equipment, net | | 443 | | | | 581 | | | | 601 | | | | 538 | | | | 530 | | | | | | | 488 | | | | 445 | | |
| Other assets, net of allowance for credit losses (1)(2) | | 2,228 | | | | 2,380 | | | | 2,733 | | | | 3,377 | | | | 3,180 | | | | | | | 3,720 | | | | 3,190 | | |
| | | Total assets | $ | 140,406 | | | $ | 152,768 | | | $ | 165,086 | | | $ | 158,150 | | | $ | 131,738 | | | | | | $ | 128,715 | | | $ | 125,111 | | |
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| Liabilities and Shareholders' Equity: | | | | | | | | | | | | | | | | | | | | | | | | |
| Liabilities: | | | | | | | | | | | | | | | | | | | | | | | | |
| | Total policy liabilities | $ | 103,188 | | | $ | 106,554 | | | $ | 114,391 | | | $ | 126,331 | | | $ | 96,910 | | | | | | $ | 92,586 | | | $ | 86,028 | | |
| | Notes payable | | 5,778 | | | | 6,569 | | | | 7,899 | | | | 7,956 | | | | 7,442 | | | | | | | 7,518 | | | | 6,961 | | |
| | Income taxes, primarily deferred | | 4,020 | | | | 5,370 | | | | 4,661 | | | | 30 | | | | 698 | | | | | | | 764 | | | | 869 | | |
| | Other liabilities | | 3,958 | | | | 5,316 | | | | 4,576 | | | | 6,802 | | | | 6,548 | | | | | | | 7,901 | | | | 8,584 | | |
| | | Total liabilities | | 116,944 | | | | 123,809 | | | | 131,527 | | | | 141,119 | | | | 111,598 | | | | | | | 108,769 | | | | 102,442 | | |
| Shareholders' equity: | | | | | | | | | | | | | | | | | | | | | | | | |
| | Common stock | | 135 | | | | 135 | | | | 135 | | | | 135 | | | | 135 | | | | | | | 135 | | | | 136 | | |
| | Additional paid-in capital | | 2,177 | | | | 2,313 | | | | 2,410 | | | | 2,529 | | | | 2,641 | | | | | | | 2,615 | | | | 2,729 | | |
| | Retained earnings | | 31,788 | | | | 34,291 | | | | 37,984 | | | | 40,963 | | | | 44,367 | | | | | | | 44,680 | | | | 48,257 | | |
| | Accumulated other comprehensive income (loss): | | | | | | | | | | | | | | | | | | | | | | | | |
| | | Unrealized foreign currency translation gains (losses) | | (1,847) | | | | (1,623) | | | | (1,109) | | | | (1,985) | | | | (3,564) | | | | | | | (4,374) | | | | (4,484) | | |
| | | Unrealized gains (losses) on fixed maturity securities | | 4,234 | | | | 8,548 | | | | 10,361 | | | | 9,602 | | | | (702) | | | | | | | 1,131 | | | | (403) | | |
| | | Unrealized gains (losses) on derivatives | | (24) | | | | (33) | | | | (34) | | | | (30) | | | | (27) | | | | | | | (29) | | | | (24) | | |
| | | Effect on change in discount rate assumption(s) | | N/A | | | N/A | | | N/A | | | (15,832) | | | | (2,100) | | | | | | | (4,075) | | | | (866) | | |
| | | Pension liability adjustment | | (212) | | | | (277) | | | | (284) | | | | (166) | | | | (36) | | | | | | | (158) | | | | 17 | | |
| | Treasury stock | | (12,789) | | | | (14,395) | | | | (15,904) | | | | (18,185) | | | | (20,574) | | | | | | | (19,979) | | | | (22,693) | | |
| | | Total shareholders' equity | | 23,462 | | | | 28,959 | | | | 33,559 | | | | 17,031 | | | | 20,140 | | | | | | | 19,946 | | | | 22,669 | | |
| | | Total liabilities & shareholders' equity | $ | 140,406 | | | $ | 152,768 | | | $ | 165,086 | | | $ | 158,150 | | | $ | 131,738 | | | | | | $ | 128,715 | | | $ | 125,111 | | |
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(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 $269 million in 2023, $265 million in 2022, $268 in 2021, $269 in 2020, $140 million in 2019 and $67 million in 2018
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Aflac Incorporated and Subsidiaries | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | |
Quarterly Financial Results | |
(Dollars In Millions, except per-share data) | |
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| | | | | | | | | | | | Total | | | | | | | | | | | | | | | |
| | | | Net | | Net | | | | Benefits | | Acquisitions | | Total | | | | | | Net EPS | | Adj. EPS (1) | |
| | | | Earned | | Inv. | | Total | | & | | & | | Pretax | | Net | | Adjusted | | | | | | | | | |
| | Period | | Premiums | | Income | | Revenues | | Claims, Net | | Adj. Exp. | | Earn. | | Earn. | | Earn. (1) | | Basic | | Dil. | | Basic | | Dil. | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | 2018 | | 18,677 | | | 3,442 | | | 21,758 | | | 12,000 | | | 5,775 | | | 3,983 | | | 2,920 | | | 3,226 | | | 3.79 | | | 3.77 | | | 4.20 | | | 4.16 | | |
| | 2019 | | 18,780 | | | 3,578 | | | 22,307 | | | 11,942 | | | 5,920 | | | 4,445 | | | 3,304 | | | 3,314 | | | 4.45 | | | 4.43 | | | 4.46 | | | 4.44 | | |
| | 2020 | | 18,622 | | | 3,638 | | | 22,147 | | | 11,796 | | | 6,192 | | | 4,159 | | | 4,778 | | | 3,552 | | | 6.69 | | | 6.67 | | | 4.98 | | | 4.96 | | |
| | 2021 | | 17,095 | | | 3,818 | | | 21,554 | | | 10,476 | | | 5,870 | | | 5,208 | | | 4,231 | | | 3,925 | | | 6.28 | | | 6.25 | | | 5.83 | | | 5.80 | | |
| | 2022 | | 14,901 | | | 3,656 | | | 19,140 | | | 8,887 | | | 5,384 | | | 4,869 | | | 4,418 | | | 3,614 | | | 6.96 | | | 6.93 | | | 5.69 | | | 5.67 | | |
| | 2023 | | 10,737 | | | 2,946 | | | 14,923 | | | 6,108 | | | 3,843 | | | 4,972 | | | 4,391 | | | 3,001 | | | 7.31 | | | 7.28 | | | 4.99 | | | 4.97 | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | |
| 2021 | 1 | | 4,434 | | | 925 | | | 5,710 | | | 2,771 | | | 1,420 | | | 1,519 | | | 1,224 | | | 989 | | | 1.78 | | | 1.77 | | | 1.44 | | | 1.43 | | |
| | 2 | | 4,301 | | | 993 | | | 5,424 | | | 2,672 | | | 1,474 | | | 1,277 | | | 1,027 | | | 1,002 | | | 1.51 | | | 1.51 | | | 1.48 | | | 1.47 | | |
| | 3 | | 4,229 | | | 991 | | | 5,098 | | | 2,503 | | | 1,450 | | | 1,146 | | | 915 | | | 1,058 | | | 1.37 | | | 1.36 | | | 1.58 | | | 1.57 | | |
| | 4 | | 4,132 | | | 910 | | | 5,322 | | | 2,529 | | | 1,527 | | | 1,266 | | | 1,065 | | | 875 | | | 1.62 | | | 1.61 | | | 1.33 | | | 1.32 | | |
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| 2022 | 1 | | 4,079 | | | 903 | | | 5,173 | | | 2,483 | | | 1,396 | | | 1,294 | | | 1,047 | | | 942 | | | 1.61 | | | 1.60 | | | 1.45 | | | 1.44 | | |
| | 2 | | 3,764 | | | 937 | | | 5,315 | | | 2,274 | | | 1,333 | | | 1,708 | | | 1,394 | | | 945 | | | 2.18 | | | 2.17 | | | 1.47 | | | 1.47 | | |
| | 3 | | 3,535 | | | 920 | | | 4,704 | | | 2,076 | | | 1,299 | | | 1,329 | | | 1,781 | | | 910 | | | 2.83 | | | 2.82 | | | 1.45 | | | 1.44 | | |
| | 4 | | 3,523 | | | 896 | | | 3,948 | | | 2,054 | | | 1,356 | | | 538 | | | 196 | | | 817 | | | .32 | | | .31 | | | 1.32 | | | 1.31 | | |
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| 2023 | 1 | | 3,688 | | | 943 | | | 4,800 | | | 2,150 | | | 1,308 | | | 1,342 | | | 1,188 | | | 953 | | | 1.94 | | | 1.94 | | | 1.56 | | | 1.55 | | |
| | 2 | | 3,573 | | | 999 | | | 5,172 | | | 2,098 | | | 1,249 | | | 1,825 | | | 1,634 | | | 954 | | | 2.72 | | | 2.71 | | | 1.59 | | | 1.58 | | |
| | 3 | | 3,476 | | | 1,004 | | | 4,950 | | | 1,860 | | | 1,285 | | | 1,805 | | | 1,569 | | | 1,095 | | | 2.65 | | | 2.64 | | | 1.85 | | | 1.84 | | |
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(1) See non-U.S. GAAP financial measures for definition of adjusted earnings.
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Aflac Incorporated and Subsidiaries | | | | | |
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Quarterly Book Value Per Share |
(Dollars In Millions, except per-share data) |
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| | | | | | | | | | | | | | 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 (1) | | % Change | | Translation G/(L)(1) | | % Change | |
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| | 2018 | | 31.06 | | 2.85 | | 28.22 | | 7.1% | | 25.77 | | 6.9% | |
| | 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% | |
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| 2021 | 1 | | 22.98 | | (13.60) | | 36.59 | | 18.3% | | 34.15 | | 18.7% | |
| | 2 | | 24.39 | | (13.18) | | 37.57 | | 18.3% | | 35.12 | | 18.2% | |
| | 3 | | 25.19 | | (13.20) | | 38.39 | | 10.0% | | 35.77 | | 8.1% | |
| | 4 | | 26.12 | | (12.90) | | 39.01 | | 9.7% | | 35.97 | | 5.9% | |
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| 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% | |
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| 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% | |
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(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.
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Aflac Incorporated and Subsidiaries | |
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| Return on Equity | |
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| | | | Year Ended December 31, | | 3 Months Ended September 30, | | 9 Months Ended September 30, | | |
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| | | | 2018 | | 2019 | | 2020 | | 2021 (4) | | 2022 | | 2022 | | 2023 | | | 2022 | | 2023 | | |
| U.S. GAAP ROE (1) - Net earnings | 12.2 | % | | 12.6 | % | | 15.3 | % | | 26.7 | % | | 23.8 | % | | | 36.1 | % | | | 29.1 | % | | | | 30.4 | % | | | 27.4 | % | | |
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| | Impact of excluding unrealized foreign currency translation gains (losses) | (1.0) | | | (1.0) | | | (0.9) | | | (1.7) | | | (2.5) | | | | (5.1) | | | | (4.5) | | | | | (3.7) | | | | (4.0) | | | |
| | Impact of excluding unrealized gains (losses) on securities and derivatives | 3.0 | | | 3.6 | | | 6.2 | | | 10.7 | | | 4.1 | | | | 2.7 | | | | 0.8 | | | | | 6.2 | | | | (0.6) | | | |
| | Impact of excluding effect on change in discount rate assumptions | N/A | | N/A | | N/A | | (18.5) | | | (8.2) | | | | (7.1) | | | | (3.1) | | | | | (11.5) | | | | (1.5) | | | |
| | Impact of excluding pension liability adjustment | (0.1) | | | (0.1) | | | (0.2) | | | (0.2) | | | (0.1) | | | | (0.2) | | | | — | | | | | (0.2) | | | | — | | | |
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| | | Impact of excluding AOCI | 1.8 | | | 2.5 | | | 5.1 | | | (9.7) | | | (6.8) | | | | (9.7) | | | | (6.8) | | | | | (9.2) | | | | (6.1) | | | |
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| U.S. GAAP ROE - less AOCI | 13.9 | | | 15.1 | | | 20.3 | | | 17.0 | | | 17.0 | | | | 26.4 | | | | 22.3 | | | | | 21.3 | | | | 21.3 | | | |
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| Differences between adjusted earnings and net earnings (2) | 1.5 | | | 0.0 | | | (5.2) | | | (1.2) | | | (3.1) | | | | (12.9) | | | | (6.7) | | | | | (7.2) | | | | (6.7) | | | |
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| Adjusted ROE - reported (3) | 15.4 | | | 15.2 | | | 15.1 | | | 15.8 | | | 13.9 | | | | 13.5 | | | | 15.6 | | | | | 14.1 | | | | 14.6 | | | |
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| | (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. | |
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| | (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. | |
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Aflac Incorporated and Subsidiaries | | | | | | | |
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| 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(1) | | Growth | | | Impact(1) | | Impact(1) | | Impact(1) | | Impact | | |
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| | | | 2018 | | $ | 4.16 | | | 22.4 | % | | | N/A | | .04 | | | $ | 4.13 | | | 21.5 | % | | |
| | | | 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 | % | | |
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| | 2021 | | 1 | | $ | 1.43 | | | 18.2 | % | | | .01 | | | .01 | | | $ | 1.42 | | | 17.4 | % | | |
| | | | 2 | | 1.47 | | | 14.8 | | | | (.01) | | | — | | | 1.48 | | | 15.6 | | | |
| | | | 3 | | 1.57 | | | 12.9 | | | | (.02) | | | (.02) | | | 1.59 | | | 14.4 | | | |
| | | | 4 | | 1.32 | | | 23.4 | | | | (.04) | | | (.06) | | | 1.36 | | | 27.1 | | | |
| | | | | | $ | 5.80 | | | 16.9 | % | | | | | | | $ | 5.86 | | | 18.1 | % | | |
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| | 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 | % | | |
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| | 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 | | | |
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| | | | | | $ | 4.97 | | | 14.3 | % | | | | | | | $ | 5.14 | | | 18.2 | % | | |
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| | | | | | | | | | | | | | | | | | | |
| | (1) See non-U.S.GAAP financial measures for definition of adjusted earnings and adjusted earnings excluding current period foreign currency impact | |
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Aflac Incorporated and Subsidiaries | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
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| Composition of Invested Assets |
| (In Millions) |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | December 31, | | September 30, |
| | | 2018 | | 2019 | | 2020 | | 2021 | | 2022 | | | | 2022 | | | 2023 | |
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| Fixed Maturity Securities(1) | $ | 107,174 | | | | $ | 109,456 | | | | $ | 116,056 | | | | $ | 107,369 | | | | $ | 94,525 | | | | | | | | $ | 88,501 | | | | $ | 86,060 | | |
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| Commercial mortgage and other loans, net of allowance for credit losses (1) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Transitional Real Estate (floating rate) | | 4,378 | | | | | 5,450 | | | | | 5,231 | | | | | 5,246 | | | | | 6,455 | | | | | | | | | 6,447 | | | | | 6,439 | | |
| Middle Market Loans (floating rate) | | 1,478 | | | | | 2,412 | | | | | 3,635 | | | | | 4,601 | | | | | 5,028 | | | | | | | | | 4,995 | | | | | 4,712 | | |
| Commercial Mortgage Loans | | 1,063 | | | | | 1,707 | | | | | 1,688 | | | | | 1,874 | | | | | 2,013 | | | | | | | | | 2,017 | | | | | 1,722 | | |
| | Total Commercial mortgage and other loans, net of allowance for credit losses(1) | | 6,919 | | | | | 9,569 | | | | | 10,554 | | | | | 11,721 | | | | | 13,496 | | | | | | | | | 13,459 | | | | | 12,873 | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Equity Securities, at FV through net earnings | | 987 | | | | | 802 | | | | | 1,283 | | | | | 1,603 | | | | | 1,091 | | | | | | | | | 1,064 | | | | | 990 | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Alternatives(2) | | 370 | | | | | 551 | | | | | 919 | | | | | 1,703 | | | | | 2,107 | | | | | | | | | 2,004 | | | | | 2,498 | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Total Portfolio | $ | 115,450 | | | | $ | 120,378 | | | | $ | 128,812 | | | | $ | 122,396 | | | | $ | 111,219 | | | | | | | | $ | 105,028 | | | | $ | 102,421 | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Unrealized Gains (Losses) on Invested Assets |
| (In Millions) |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | December 31, | | | September 30, |
| | | 2018 | | 2019 | | 2020 | | 2021 | | 2022 | | | | | 2022 | | | 2023 | |
| Fixed Maturity Securities | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Available For Sale - Gross Gains | $ | 7,733 | | | | $ | 12,266 | | | | $ | 14,771 | | | | $ | 13,566 | | | | $ | 4,800 | | | | | | | | $ | 6,162 | | | | $ | 5,061 | | |
| Available For Sale - Gross Losses | | (1,694) | | | | | (375) | | | | | (481) | | | | | (239) | | | | | (4,528) | | | | | | | | | (3,554) | | | | | (4,421) | | |
| Total Available For Sale | | 6,039 | | | | | 11,891 | | | | | 14,290 | | | | | 13,327 | | | | | 272 | | | | | | | | | 2,608 | | | | | 640 | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Held to Maturity - Gross Gains | | 6,470 | | | | | 7,519 | | | | | 5,935 | | | | | 4,869 | | | | | 2,154 | | | | | | | | | 2,619 | | | | | 1,561 | | |
| Held to Maturity - Gross Losses | | (66) | | | | | (10) | | | | | — | | | | | — | | | | | — | | | | | | | | | — | | | | | — | | |
| Total Held to Maturity | $ | 6,404 | | | | $ | 7,509 | | | | $ | 5,935 | | | | $ | 4,869 | | | | $ | 2,154 | | | | | | | | $ | 2,619 | | | | $ | 1,561 | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Credit Ratings on Fixed Maturities |
| | (At Amortized Cost) |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | December 31, | | September 30, |
| | Credit Rating | 2018 | | 2019 | | 2020 | | 2021 | | 2022 | | | | 2022 | | | 2023 | |
| | AAA | | 1.0 | | % | | | 1.1 | | % | | | 1.0 | | % | | | 1.0 | | % | | | 1.6 | | % | | | | | | | 1.6 | | % | | | 1.5 | | % |
| | AA | | 3.9 | | | | | 4.3 | | | | | 4.5 | | | | | 5.1 | | | | | 5.2 | | | | | | | | | 5.4 | | | | | 5.7 | | |
| | A | | 67.9 | | | | | 68.6 | | | | | 69.3 | | | | | 68.9 | | | | | 68.0 | | | | | | | | | 67.6 | | | | | 68.0 | | |
| | BBB | | 23.2 | | | | | 23.1 | | | | | 21.9 | | | | | 22.5 | | | | | 23.0 | | | | | | | | | 23.0 | | | | | 22.8 | | |
| | BB or Lower | | 4.0 | | | | | 2.9 | | | | | 3.3 | | | | | 2.5 | | | | | 2.2 | | | | | | | | | 2.4 | | | | | 2.0 | | |
| | | | 100.0 | | % | | | 100.0 | | % | | | 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 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Aflac Incorporated and Subsidiaries | | | | | | | | | | | | | | | | | | | |
| | | Supplemental Investment Data by Segment | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | 3 Months Ended | | 9 Months Ended | |
| | | | December 31, | | September 30, | | September 30, | |
| | | | 2018 | | 2019 | | 2020 | | 2021 | | 2022 | | | | 2022 | | 2023 | | 2022 | | 2023 | |
| | | | | | | | | | | | | | | | | | | | | | | |
| Aflac Japan: | | | | | | | | | | | | | | | | | | | | |
| | Invested assets (in millions)(1) | ¥ | 11,442,444 | | | ¥ | 11,784,586 | | | ¥ | 11,936,087 | | | ¥ | 12,405,531 | | | ¥ | 12,617,181 | | | | | ¥ | 12,920,895 | | | ¥ | 12,945,618 | | | ¥ | 12,920,895 | | | ¥ | 12,945,618 | | |
| | Return on average invested assets(2) | 2.33 | % | | 2.33 | % | | 2.38 | % | | 2.72 | % | | 2.78 | % | | | | 2.87 | % | | 3.07 | % | | 2.79 | % | | 2.80 | % | |
| | Portfolio book yield at end of period(3) | 2.61 | % | | 2.64 | % | | 2.59 | % | | 2.60 | % | | 3.06 | % | | | | 2.91 | % | | 3.19 | % | | 2.91 | % | | 3.19 | % | |
| | Total purchases for period (in millions)(3) | ¥ | 1,298,376 | | | ¥ | 1,003,885 | | | ¥ | 714,124 | | | ¥ | 952,038 | | | ¥ | 716,964 | | | | | ¥ | 142,844 | | | ¥ | 70,531 | | | ¥ | 637,747 | | | ¥ | 317,355 | | |
| | New money yield(3)(4) | 3.06 | % | | 3.83 | % | | 3.75 | % | | 3.50 | % | | 4.48 | % | | | | 5.73 | % | | 4.28 | % | | 4.16 | % | | 4.84 | % | |
| | | | | | | | | | | | | | | | | | | | | | | |
| Aflac U.S.: | | | | | | | | | | | | | | | | | | | | |
| | Invested assets (in millions)(1) | $ | 13,798 | | | $ | 14,036 | | | $ | 14,848 | | | $ | 15,841 | | | $ | 16,772 | | | | | $ | 16,472 | | | $ | 16,861 | | | $ | 16,472 | | | $ | 16,861 | | |
| | Return on average invested assets(2) | 5.16 | % | | 5.70 | % | | 4.90 | % | | 4.87 | % | | 4.72 | % | | | | 4.57 | % | | 5.04 | % | | 4.74 | % | | 4.84 | % | |
| | Portfolio book yield at end of period(3) | 5.55 | % | | 5.40 | % | | 5.18 | % | | 4.94 | % | | 5.39 | % | | | | 5.21 | % | | 5.52 | % | | 5.21 | % | | 5.52 | % | |
| | Total purchases for period (in millions)(3) | $ | 2,155 | | | $ | 1,835 | | | $ | 1,050 | | | $ | 2,130 | | | $ | 1,701 | | | | | $ | 427 | | | $ | 217 | | | $ | 1,394 | | | $ | 748 | | |
| | New money yield(3)(4) | 4.55 | % | | 4.51 | % | | 3.04 | % | | 3.41 | % | | 5.16 | % | | | | 6.24 | % | | 7.21 | % | | 4.90 | % | | 7.38 | % | |
| | | | | | | | | | | | | | | | | | | | | | | |
| Hedge Costs/Income Metrics (5)(6) | |
| | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | 3 Months Ended | | 9 Months Ended | |
| | | | December 31, | | September 30, | | September 30, | |
| | | | 2018 | | 2019 | | 2020 | | 2021 | | 2022 | | | | 2022 | | 2023 | | 2022 | | 2023 | |
| Aflac Japan: | | | | | | | | | | | | | | | | | | | | |
| | | FX hedged notional at end of period (in billions) - forwards (7) | $ | 9.9 | | | $ | 8.8 | | | $ | 6.0 | | | $ | 6.4 | | | $ | 4.1 | | | | | $ | 4.1 | | | $ | — | | | $ | 4.1 | | | $ | — | | |
| | | FX hedged notional at end of period (in billions) - put options | — | | | 9.2 | | | 13.1 | | | 11.6 | | | 13.5 | | | | | 13.5 | | | 24.4 | | | 13.5 | | | 24.4 | | |
| | | Amortized hedge costs for period (in millions) | (236) | | | (257) | | | (206) | | | (76) | | | (112) | | | | | (28) | | | (26) | | | (84) | | | (148) | | |
| Corporate and Other (Parent Company): | | | | | | | | | | | | | | | | | | | | |
| | | FX hedged notional at end of period (in billions) - forwards (7) | $ | 2.5 | | | $ | 4.9 | | | $ | 5.0 | | | $ | 5.0 | | | $ | 5.0 | | | | | $ | 5.0 | | | $ | 2.4 | | | $ | 5.0 | | | $ | 2.4 | | |
| | | FX hedged notional at end of period (in billions) - put options | — | | | 2.0 | | | 2.0 | | | 1.9 | | | 2.6 | | | | | 1.7 | | | 0.9 | | | 1.7 | | | 0.9 | | |
| | | Amortized hedge income (costs) for period (in millions) | 36 | | | 89 | | | 97 | | | 57 | | | 68 | | | | | 19 | | | 25 | | | 44 | | | 92 | | |
| | | | | | | | | | | | | | | | | | | | | | | |
| (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. | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Aflac Incorporated and Subsidiaries | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | Japan Segment Portfolio Allocation by Currency (1) | | | | | | | | | | | |
| | | | (Dollars In Millions, U.S. GAAP Basis) | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | |
| | | | | December 31, 2022 | | | September 30, 2023 | | | | | | | | | | | | |
| | | | | Amortized Cost (3) | | | Fair Value | | | Amortized Cost (3) | | | Fair Value | | | | | | | | | | | | |
| | | JGB | | $ | 42,618 | | | | $ | 44,178 | | | | $ | 37,858 | | | | $ | 38,498 | | | | | | | | | | | | | |
| | | Other | | 20,930 | | | | 21,277 | | | | 18,365 | | | | 18,976 | | | | | | | | | | | | | |
| | | Total yen denominated | | 63,548 | | | | 65,455 | | | | 56,223 | | | | 57,474 | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | USD Program | | 27,212 | | | | 27,885 | | | | 24,176 | | | | 25,730 | | | | | | | | | | | | | |
| | | Other | | 2,209 | | | | 2,795 | | | | 1,974 | | | | 2,670 | | | | | | | | | | | | | |
| | | US dollar denominated | | 29,421 | | | | 30,680 | | | | 26,150 | | | | 28,400 | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | Total | | $ | 92,969 | | | | $ | 96,135 | | | | $ | 82,373 | | | | $ | 85,874 | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | |
| | | | Distribution of Consolidated Fixed Maturities by Sector (2) | | | | | | | | | | | |
| | | | | | | | | | September 30, 2023 | | | | | | | | | | | |
| | | (In millions) | | | | | | | | | | Amortized Cost (3) | | | % of Total | | | | | | | | | | | | |
| | | Government and agencies | | | | | | | | | | $ | 38,994 | | | | 45.3 | % | | | | | | | | | | | | |
| | | Municipalities | | | | | | | | | | 2,412 | | | | 2.8 | | | | | | | | | | | | | |
| | | Mortgage- and asset-backed securities | | | | | | | | | | 2,847 | | | | 3.3 | | | | | | | | | | | | | |
| | | Public utilities | | | | | | | | | | 7,027 | | | | 8.2 | | | | | | | | | | | | | |
| | | Electric | | | | | | | | | | 5,724 | | | | 6.7 | | | | | | | | | | | | | |
| | | Natural Gas | | | | | | | | | | 771 | | | | .9 | | | | | | | | | | | | | |
| | | Other | | | | | | | | | | 532 | | | | .6 | | | | | | | | | | | | | |
| | | Sovereign and supranational | | | | | | | | | | 872 | | | | 1.0 | | | | | | | | | | | | | |
| | | Banks/financial institutions | | | | | | | | | | 8,257 | | | | 9.5 | | | | | | | | | | | | | |
| | | Banking | | | | | | | | | | 4,940 | | | | 5.7 | | | | | | | | | | | | | |
| | | Insurance | | | | | | | | | | 1,667 | | | | 1.9 | | | | | | | | | | | | | |
| | | Other | | | | | | | | | | 1,650 | | | | 1.9 | | | | | | | | | | | | | |
| | | Other corporate | | | | | | | | | | 25,651 | | | | 29.9 | | | | | | | | | | | | | |
| | | Basic Industry | | | | | | | | | | 2,220 | | | | 2.6 | | | | | | | | | | | | | |
| | | Capital Goods | | | | | | | | | | 3,162 | | | | 3.7 | | | | | | | | | | | | | |
| | | Communications | | | | | | | | | | 2,704 | | | | 3.1 | | | | | | | | | | | | | |
| | | Consumer Cyclical | | | | | | | | | | 1,954 | | | | 2.3 | | | | | | | | | | | | | |
| | | Consumer Non-Cyclical | | | | | | | | | | 5,836 | | | | 6.8 | | | | | | | | | | | | | |
| | | Energy | | | | | | | | | | 2,316 | | | | 2.7 | | | | | | | | | | | | | |
| | | Other | | | | | | | | | | 1,206 | | | | 1.4 | | | | | | | | | | | | | |
| | | Technology | | | | | | | | | | 3,442 | | | | 4.0 | | | | | | | | | | | | | |
| | | Transportation | | | | | | | | | | 2,811 | | | | 3.3 | | | | | | | | | | | | | |
| | | Total fixed maturity securities | | | | | | | | | | $ | 86,060 | | | | 100.0 | % | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | (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 | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Aflac Incorporated and Subsidiaries | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Long-Term Debt Data |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Adjusted Leverage Ratios |
(In Millions) |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | December 31, | | | | | | | September 30, | |
| | | | | | | | | | 2018 | | | | 2019 | | | | 2020 | | | | 2021 | | | | 2022 | | | | | | | | | 2022 | | | | 2023 | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Notes payable | | | | | | | $ | 5,778 | | | | $ | 6,569 | | | | $ | 7,899 | | | | $ | 7,956 | | | | $ | 7,442 | | | | | | | | | $ | 7,518 | | | | $ | 6,961 | | | |
| | 50% of subordinated debentures and perpetual bonds | | | | (268) | | | | | (408) | | | | | (432) | | | | | (389) | | | | | (337) | | | | | | | | | | (309) | | | | | (299) | | | |
| | Pre-funding of debt maturities | | | | — | | | | | (348) | | | | | — | | | | | — | | | | | — | | | | | | | | | | (448) | | | | | — | | | |
| | Adjusted debt (1) | | | | | | | | 5,510 | | | | | 5,814 | | | | | 7,467 | | | | | 7,568 | | | | | 7,105 | | | | | | | | | | 6,762 | | | | | 6,663 | | | |
| |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Total Shareholders' Equity | | | | | | | | 23,462 | | | | | 28,959 | | | | | 33,559 | | | | | 17,031 | | | | | 20,140 | | | | | | | | | | 19,946 | | | | | 22,669 | | | |
| | Accumulated other comprehensive (income) loss: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Unrealized foreign currency translation (gains) losses | | | 1,847 | | | | | 1,623 | | | | | 1,109 | | | | | 1,985 | | | | | 3,564 | | | | | | | | | | 4,374 | | | | | 4,484 | | | |
| | Unrealized (gains) losses on fixed maturity securities | | | (4,234) | | | | | (8,548) | | | | | (10,361) | | | | | (9,602) | | | | | 702 | | | | | | | | | | (1,131) | | | | | 403 | | | |
| | Unrealized (gains) losses on derivatives | | | 24 | | | | | 33 | | | | | 34 | | | | | 30 | | | | | 27 | | | | | | | | | | 29 | | | | | 24 | | | |
| | Effect on change in discount rate assumptions | | | | N/A | | | | N/A | | | | N/A | | | | 15,832 | | | | | 2,100 | | | | | | | | | | 4,075 | | | | | 866 | | | |
| | Pension liability adjustment | | | 212 | | | | | 277 | | | | | 284 | | | | | 166 | | | | | 36 | | | | | | | | | | 158 | | | | | (17) | | | |
| | Adjusted book value (1) | | | | 21,311 | | | | | 22,344 | | | | | 24,625 | | | | | 25,442 | | | | | 26,569 | | | | | | | | | | 27,451 | | | | | 28,429 | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Adjusted capitalization ex-AOCI(1)(2) | | | $ | 27,089 | | | | $ | 28,565 | | | | $ | 32,524 | | | | $ | 33,398 | | | | $ | 34,011 | | | | | | | | | $ | 34,521 | | | | $ | 35,390 | | | |
| | Adjusted debt to adjusted capitalization ex-AOCI | | | | 20.3 | | % | | 20.4 | | % | | 23.0 | | % | | 22.7 | | % | | | 20.9 | | % | | | | | | | | 19.6 | | | | | 18.8 | | % | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Adjusted capitalization(1)(3) | | | $ | 25,030 | | | | $ | 26,665 | | | | $ | 31,131 | | | | $ | 31,247 | | | | $ | 30,411 | | | | | | | | | $ | 29,989 | | | | $ | 30,923 | | | |
| | Adjusted debt to adjusted capitalization | | | | 22.0 | | % | | 21.8 | | % | | 24.0 | | % | | 24.2 | | % | | | 23.4 | | % | | | | | | | | 22.5 | | | | | 21.5 | | % | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Debt Maturities(4) |
(In Millions) |
September 30, 2023 |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | ≤ 1 year | | 1 > 5 years | | 5 > 10 years | | 10 > 20 years | | 20 years + | | Total | | | | | |
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| | Senior Notes | | | | | | | $ | — | | | | $ | 1,262 | | | | $ | 2,953 | | | | $ | 896 | | | | $ | 1,164 | | | | $ | 6,275 | | | | | | | |
| | Subordinated debt | | | | | | | | — | | | | | — | | | | | — | | | | | — | | | | | 602 | | | | | 602 | | | | | | | |
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| | Total | | | | | | | $ | — | | | | $ | 1,262 | | | | $ | 2,953 | | | | $ | 896 | | | | $ | 1,766 | | | | $ | 6,877 | | | | | | | |
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(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.
Aflac Incorporated and Subsidiaries
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| Insurer Financial Strength Ratings |
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| | | | AM Best | | Moody's | | S&P | | JCR | | R&I |
| U.S. Operating Companies | | | | | | | | | | |
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| Aflac of Columbus | A+ | | Aa3 | | A+ | | AA | | AA |
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| Aflac of New York | A+ | | _ | | A+ | | _ | | _ |
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| Continental American Insurance Company | A+ | | _ | | _ | | _ | | _ |
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| Japan Operating Company | | | | | | | | | | |
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| Aflac Life Insurance Japan Ltd. | A+ | | Aa3 | | A+ | | AA | | AA |
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| Bermuda Operating Company | | | | | | | | | | |
| Aflac Re Bermuda Ltd. | _ | | _ | | _ | | AA | | _ |
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Issuer Credit Ratings |
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| | | | AM Best | | Moody's | | S&P | | JCR | | R&I |
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| Aflac Incorporated | | | | | | | | |
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| Long-term Senior Debt | a | | A3 | | A- | | A+ | | A+ |
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| Junior Subordinated Debt | | a- | | Baa1 | | BBB | | _ | | A- |
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| Aflac of Columbus | | | | | | | | |
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| Long-term Senior Debt | aa | | _ | | A+ | | AA | | _ |
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| Aflac Life Insurance Japan, Ltd. | | | | | | | | |
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| Long-term Senior Debt | aa | | _ | | A+ | | AA | | _ |
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| Subordinated Bonds | _ | | _ | | _ | | AA- | | _ |
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| The outlook for all ratings assigned by A.M. Best, S&P, Moody's, JCR and R&I is stable. | | | | |
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Aflac U.S. | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
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| Statements of Pretax Adjusted Earnings |
| (Before Management Fee) |
| (In Millions) |
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| | | Years Ended December 31, | | 3 Months Ended September 30, | | 9 Months Ended September 30, |
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| | | 2018 | | 2019 | | 2020 | | 2021 | | | 2022 | | | 2022 | | | 2023 | | Change | | | 2022 | | | 2023 | | Change |
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| Revenues: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Net earned premiums | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Gross premiums | $ | 5,711 | | | $ | 5,818 | | | $ | 5,762 | | | $ | 5,540 | | | $ | 5,467 | | | $ | 1,353 | | | $ | 1,418 | | | | | | $ | 4,101 | | | $ | 4,256 | | | | |
| | Assumed (ceded) | | (3) | | | | (11) | | | | (4) | | | | 73 | | | | 103 | | | | 22 | | | | 1 | | | | | | | 81 | | | | 16 | | | | |
| | Total net earned premiums | | 5,708 | | | | 5,808 | | | | 5,758 | | | | 5,613 | | | | 5,570 | | | | 1,375 | | | | 1,419 | | | 3.2 | | | | | 4,182 | | | | 4,272 | | | 2.2 | | |
| | Adjusted net investment income | | 727 | | | | 720 | | | | 705 | | | | 754 | | | | 755 | | | | 185 | | | | 209 | | | 13.0 | | | | | 563 | | | | 609 | | | 8.2 | | |
| | Other income excl. realized foreign | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | exchange gains (losses) | | 8 | | | | 22 | | | | 102 | | | | 121 | | | | 161 | | | | 38 | | | | 33 | | | | | | | 120 | | | | 102 | | | | |
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| | Total adjusted revenues | | 6,443 | | | | 6,550 | | | | 6,565 | | | | 6,489 | | | | 6,486 | | | | 1,598 | | | | 1,661 | | | 3.9 | | | | | 4,865 | | | | 4,983 | | | 2.4 | | |
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| Benefits and claims: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Benefits and claims, net | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Incurred claims -direct | | 2,560 | | | | 2,611 | | | | 2,498 | | | | 2,183 | | | | 2,245 | | | | 563 | | | | 602 | | | | | | | 1,719 | | | | 1,796 | | | | |
| | Incurred claims -assumed (ceded) | | (4) | | | | (5) | | | | (1) | | | | 89 | | | | 104 | | | | 17 | | | | 6 | | | | | | | 84 | | | | 20 | | | | |
| | Increase in FPB -direct | | 331 | | | | 268 | | | | 271 | | | | 463 | | | | 326 | | | | 75 | | | | 74 | | | | | | | 215 | | | | 234 | | | | |
| | Increase in FPB -assumed (ceded) | | (1) | | | | (2) | | | | (3) | | | | (11) | | | | 4 | | | | 8 | | | | (1) | | | | | | | 6 | | | | (3) | | | | |
| | Total benefits and claims, net, excluding reserve remeasurement | | N/A | | | N/A | | | N/A | | | 2,724 | | | | 2,679 | | | | 663 | | | | 682 | | | | | | | 2,024 | | | | 2,048 | | | | |
| | Reserve remeasurement (gain) loss | | N/A | | | N/A | | | N/A | | | (85) | | | | (124) | | | | (47) | | | | (172) | | | | | | | (84) | | | | (242) | | | | |
| | Total benefits and claims, net | | 2,887 | | | | 2,871 | | | | 2,765 | | | | 2,639 | | | | 2,555 | | | | 616 | | | | 510 | | | (17.2) | | | | | 1,940 | | | | 1,805 | | | (7.0) | | |
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| Adjusted expenses: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Amortization of deferred policy | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | acquisition costs | | 534 | | | | 573 | | | | 570 | | | | 442 | | | | 455 | | | | 114 | | | | 122 | | | 7.0 | | | | | 340 | | | | 361 | | | 6.2 | | |
| | Insurance commissions | | 585 | | | | 590 | | | | 576 | | | | 550 | | | | 553 | | | | 135 | | | | 138 | | | 2.2 | | | | | 411 | | | | 420 | | | 2.2 | | |
| | Insurance and other expenses | | 1,152 | | | | 1,244 | | | | 1,386 | | | | 1,502 | | | | 1,564 | | | | 389 | | | | 414 | | | 6.4 | | | | | 1,154 | | | | 1,198 | | | 3.8 | | |
| | Total adjusted expenses | | 2,271 | | | | 2,407 | | | | 2,532 | | | | 2,494 | | | | 2,573 | | | | 638 | | | | 674 | | | | | | | 1,905 | | | | 1,979 | | | | |
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| | Total benefits and adjusted expenses | | 5,158 | | | | 5,279 | | | | 5,297 | | | | 5,132 | | | | 5,127 | | | | 1,254 | | | | 1,183 | | | (5.7) | | | | | 3,845 | | | | 3,784 | | | (1.6) | | |
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| | Pretax adjusted earnings | $ | 1,285 | | | $ | 1,272 | | | $ | 1,268 | | | $ | 1,356 | | | $ | 1,359 | | | $ | 345 | | | $ | 478 | | | 38.6 | | | | $ | 1,020 | | | $ | 1,199 | | | 17.5 | | |
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Aflac U.S. | | | | | | | | | | | | | | | | | | | | | | | | | |
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| Balance Sheets | |
| (In Millions) | |
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| | | December 31, | | September 30, | |
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| | | 2018 | | 2019 | | 2020 | | 2021 | | 2022 | | | | 2022 | | 2023 | |
| Assets: | | | | | | | | | | | | | | | | | | | | | | | | |
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| Investments and cash | $ | 14,518 | | | $ | 16,141 | | | $ | 17,949 | | | $ | 18,324 | | | $ | 15,987 | | | | | | $ | 15.459 | | | $ | 15,641 | | |
| Receivables, net of allowance for credit losses (1) | | 561 | | | | 650 | | | | 667 | | | | 574 | | | | 584 | | | | | | | 583 | | | | 681 | | |
| Accrued investment income | | 178 | | | | 174 | | | | 172 | | | | 169 | | | | 184 | | | | | | | 174 | | | | 181 | | |
| Deferred policy acquisition costs | | 3,491 | | | | 3,544 | | | | 3,450 | | | | 3,366 | | | | 3,463 | | | | | | | 3,401 | | | | 3,530 | | |
| Other assets (1) | | 352 | | | | 436 | | | | 626 | | | | 758 | | | | 784 | | | | | | | 770 | | | | 718 | | |
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| | Total assets | $ | 19,100 | | | $ | 20,945 | | | $ | 22,864 | | | $ | 23,191 | | | $ | 21,002 | | | | | | $ | 20,386 | | | $ | 20,751 | | |
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| Liabilities and Shareholders' Equity: | | | | | | | | | | | | | | | | | | | | | | | | |
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| Future policy benefits | $ | 9,137 | | | $ | 9,404 | | | $ | 9,674 | | | $ | 14,212 | | | $ | 10,870 | | | | | | $ | 10,553 | | | $ | 10,319 | | |
| Policy and contract claims | | 1,727 | | | | 1,779 | | | | 2,010 | | | | 151 | | | | 200 | | | | | | | 201 | | | | 246 | | |
| Other policy liabilities | | 116 | | | | 111 | | | | 126 | | | | 119 | | | | 117 | | | | | | | 113 | | | | 111 | | |
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| Deferred income taxes | | (397) | | | | 51 | | | | 235 | | | | (328) | | | | (243) | | | | | | | (329) | | | | (226) | | |
| Other liabilities | | 1,577 | | | | 1,803 | | | | 2,016 | | | | 2,010 | | | | 2,080 | | | | | | | 2,087 | | | | 1,845 | | |
| Shareholders' equity | | 6,939 | | | | 7,796 | | | | 8,803 | | | | 7,027 | | | | 7,978 | | | | | | | 7,761 | | | | 8,457 | | |
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| | Total liabilities & shareholders' equity | $ | 19,100 | | | $ | 20,945 | | | $ | 22,864 | | | $ | 23,191 | | | $ | 21,002 | | | | | | $ | 20,386 | | | $ | 20,751 | | |
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(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.
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Aflac U.S. |
|
Quarterly Statements of Pretax Adjusted Earnings and Percentage Changes |
(Restated to conform to current classifications) |
(Dollars In Millions) |
| | | Net | | | | | | | | | | Total | | | | | Benefits | | | | | | | | | | | | Total | | | | Pretax | |
| | | Earned | | % | | Adjusted | | % | | Adjusted | | % | | & | % | | | | % | | | | Adjusted | | % | Adjusted | % |
| Period | | Premiums | | Change | | NII | | Change | | Revenues | | Change | | Claims, Net | Change | Amort. | | Change | | | | Expenses | | Change | Earn. | Change |
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| 2018 | | 5,708 | | | | 2.6 | | | | 727 | | | | .8 | | | | 6,443 | | | | 2.4 | | | | 2,887 | | | .1 | | | 534 | | | | 6.4 | | | | | | | | 2,271 | | | | 5.2 | | | 1,285 | | | 3.2 | |
| 2019 | | 5,808 | | | | 1.8 | | | | 720 | | | | (1.0) | | | | 6,550 | | | | 1.7 | | | | 2,871 | | | (.6) | | | 573 | | | | 7.3 | | | | | | | | 2,407 | | | | 6.0 | | | 1,272 | | | (1.0) | |
| 2020 | | 5,758 | | | | (.9) | | | | 705 | | | | (2.1) | | | | 6,565 | | | | .2 | | | | 2,765 | | | (3.7) | | | 570 | | | | (.5) | | | | | | | | 2,532 | | | | 5.2 | | | 1,268 | | | (.3) | |
| 2021 | | 5,614 | | | | (2.5) | | | | 754 | | | | 7.0 | | | | 6,489 | | | | (1.2) | | | | 2,639 | | | (4.6) | | | 442 | | | | (22.5) | | | | | | | | 2,494 | | | | (1.5) | | | 1,356 | | | 6.9 | |
| 2022 | | 5,570 | | | | (.8) | | | | 755 | | | | .1 | | | | 6,486 | | | | — | | | | 2,555 | | | (3.2) | | | 455 | | | | 2.9 | | | | | | | | 2,573 | | | | 3.2 | | | 1,359 | | | .2 | |
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2021 | 1 | | 1,422 | | | | (4.1) | | | | 176 | | | | (.6) | | | | 1,628 | | | | (3.5) | | | | 696 | | | (2.4) | | | 111 | | | | (30.6) | | | | | | | | 600 | | | | (7.4) | | | 331 | | | 1.5 | |
| 2 | | 1,408 | | | | (3.4) | | | | 189 | | | | 9.9 | | | | 1,627 | | | | (1.8) | | | | 690 | | | 6.8 | | | 111 | | | | (17.2) | | | | | | | | 599 | | | | 2.6 | | | 338 | | | (20.7) | |
| 3 | | 1,393 | | | | (1.0) | | | | 191 | | | | 9.1 | | | | 1,616 | | | | .6 | | | | 592 | | | (12.8) | | | 110 | | | | (22.0) | | | | | | | | 618 | | | | 3.5 | | | 405 | | | 23.1 | |
| 4 | | 1,391 | | | | (1.3) | | | | 197 | | | | 8.2 | | | | 1,619 | | | | .1 | | | | 660 | | | (9.2) | | | 110 | | | | (18.5) | | | | | | | | 676 | | | | (3.8) | | | 282 | | | 50.8 | |
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2022 | 1 | | 1,413 | | | | (.6) | | | | 184 | | | | 4.5 | | | | 1,639 | | | | .7 | | | | 666 | | | (4.3) | | | 114 | | | | 2.7 | | | | | | | | 640 | | | | 6.7 | | | 333 | | | .6 | |
| 2 | | 1,394 | | | | (1.0) | | | | 193 | | | | 2.1 | | | | 1,628 | | | | .1 | | | | 658 | | | (4.6) | | | 113 | | | | 1.8 | | | | | | | | 627 | | | | 4.7 | | | 343 | | | 1.5 | |
| 3 | | 1,375 | | | | (1.3) | | | | 185 | | | | (3.1) | | | | 1,598 | | | | (1.1) | | | | 616 | | | 4.1 | | | 114 | | | | 3.6 | | | | | | | | 638 | | | | 3.2 | | | 345 | | | (14.8) | |
| 4 | | 1,388 | | | | (.2) | | | | 192 | | | | (2.5) | | | | 1,621 | | | | .1 | | | | 614 | | | (7.0) | | | 115 | | | | 4.5 | | | | | | | | 667 | | | | (1.3) | | | 339 | | | 20.2 | |
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2023 | 1 | | 1,428 | | | | 1.1 | | | | 197 | | | | 7.1 | | | | 1,660 | | | | 1.3 | | | | 651 | | | (2.3) | | | 119 | | | | 4.4 | | | | | | | | 657 | | | | 2.7 | | | 352 | | | 5.7 | |
| 2 | | 1,425 | | | | 2.2 | | | | 203 | | | | 5.2 | | | | 1,663 | | | | 2.1 | | | | 645 | | | (2.0) | | | 120 | | | | 6.2 | | | | | | | | 648 | | | | 3.3 | | | 369 | | | 7.6 | |
| 3 | | 1,419 | | | | 3.2 | | | | 209 | | | | 13.0 | | | | 1,661 | | | | 3.9 | | | | 510 | | | (17.2) | | | 122 | | | | 7.0 | | | | | | | | 674 | | | | 5.6 | | | 478 | | | 38.6 | |
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Aflac U.S.
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Operating Ratios |
(Before Management Fee) |
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| | | 12-Mo. Rolling | | | | | | | | | | | | | | Total Adjusted | | Combined | | Pretax |
| | | Premium | | | | | | | | Tot. Ben./ | | Amort./ | | Expenses/ | | Ratio/ | | Profit |
| Period | | Persistency (1) | | | | | | | | Premium | | Premium | | Total Adj. Rev. | | Total Adj. Rev. | | Margin |
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| 2018 | | 78.7 | | | | | | | | | | | | | 50.6 | | | | 9.4 | | | | 35.2 | | | | 80.1 | | | | 19.9 | | |
| 2019 | | 77.7 | | | | | | | | | | | | | 49.4 | | | | 9.9 | | | | 36.7 | | | | 80.6 | | | | 19.4 | | |
| 2020 | | 79.3 | | | | | | | | | | | | | 48.0 | | | | 9.9 | | | | 38.6 | | | | 80.7 | | | | 19.3 | | |
| 2021 | | 79.7 | | | | | | | | | | | | | 47.0 | | | | 7.9 | | | | 38.4 | | | | 79.1 | | | | 20.9 | | |
| 2022 | | 77.3 | | | | | | | | | | | | | 45.9 | | | | 8.2 | | | | 39.7 | | | | 79.0 | | | | 21.0 | | |
| 2023 YTD | | 78.7 | | | | | | | | | | | | | 42.3 | | | | 8.5 | | | | 39.7 | | | | 75.9 | | | | 24.1 | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
2021 | 1 | | 80.0 | | | | | | | | | | | | | 48.9 | | | | 7.8 | | | | 36.9 | | | | 79.6 | | | | 20.3 | | |
| 2 | | 80.1 | | | | | | | | | | | | | 49.0 | | | | 7.9 | | | | 36.8 | | | | 79.2 | | | | 20.8 | | |
| 3 | | 80.0 | | | | | | | | | | | | | 42.5 | | | | 7.9 | | | | 38.2 | | | | 74.9 | | | | 25.1 | | |
| 4 | | 79.7 | | | | | | | | | | | | | 47.4 | | | | 7.9 | | | | 41.8 | | | | 82.6 | | | | 17.4 | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
2022 | 1 | | 78.7 | | | | | | | | | | | | | 47.1 | | | | 8.1 | | | | 39.0 | | | | 79.7 | | | | 20.3 | | |
| 2 | | 78.1 | | | | | | | | | | | | | 47.2 | | | | 8.1 | | | | 38.5 | | | | 78.9 | | | | 21.1 | | |
| 3 | | 77.9 | | | | | | | | | | | | | 44.8 | | | | 8.3 | | | | 39.9 | | | | 78.4 | | | | 21.6 | | |
| 4 | | 77.3 | | | | | | | | | | | | | 44.2 | | | | 8.3 | | | | 41.1 | | | | 79.1 | | | | 20.9 | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
2023 | 1 | | 77.9 | | | | | | | | | | | | | 45.6 | | | | 8.3 | | | | 39.6 | | | | 78.8 | | | | 21.2 | | |
| 2 | | 78.2 | | | | | | | | | | | | | 45.3 | | | | 8.4 | | | | 39.0 | | | | 77.8 | | | | 22.2 | | |
| 3 | | 78.7 | | | | | | | | | | | | | 35.9 | | | | 8.6 | | | | 40.6 | | | | 71.2 | | | | 28.8 | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
(1) Includes Network Dental & Vision, Consumer Markets, and Group Premier Life, Absence Management, and Disability Solutions products beginning in the first quarter of 2021 |
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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 |
| | | | | | | | | | | | | | | | |
| | 2018 | | | 6,231 | | | | 3.0 | | | | | 1,601 | | | | 3.2 | | |
| | 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 | | | 5,697 | | | | (.6) | | | | | 1,483 | | | | 16.1 | | |
| | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | |
| 2021 | 1 | | | 6,027 | | | | (3.2) | | | | | 251 | | | | (22.1) | | |
| | 2 | | | 5,988 | | | | (1.5) | | | | | 264 | | | | 64.1 | | |
| | 3 | | | 5,929 | | | | (.7) | | | | | 299 | | | | 35.0 | | |
| | 4 | | | 6,003 | | | | (1.6) | | | | | 464 | | | | 19.6 | | |
| | | | | | | | | | | | | | | | |
| 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 | | |
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Aflac U.S.
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Aflac U.S. Product Mix |
(New Annualized Premium Sales, Dollars in Millions) |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | % of | | | | | % of | | | | | | % of | | | Critical | | | % of | | | | Hospital | | | % of | | | Dental/ | | % of | | |
| | Period | | | Disability | | Total | | | Life | | Total | | | Accident | | | Total | | | Care(1) | | | Total | | | | Indemnity | | | Total | | | Vision | | Total | | Total |
| | 2018 | | | 363 | | | 22.7 | | | | 88 | | | 5.5 | | | | 468 | | | | 29.2 | | | | 354 | | | | 22.1 | | | | | 253 | | | | 15.8 | | | | 75 | | | 4.7 | | | 1,601 |
| | 2019 | | | 355 | | | 22.5 | | | | 97 | | | 6.1 | | | | 450 | | | | 28.5 | | | | 346 | | | | 21.9 | | | | | 263 | | | | 16.6 | | | | 69 | | | 4.4 | | | 1,580 |
| | 2020 | | | 243 | | | 22.3 | | | | 80 | | | 7.3 | | | | 285 | | | | 26.1 | | | | 242 | | | | 22.2 | | | | | 197 | | | | 18.0 | | | | 45 | | | 4.1 | | | 1,093 |
| | 2021 | | | 296 | | | 23.1 | | | | 114 | | | 9.0 | | | | 321 | | | | 25.1 | | | | 273 | | | | 21.3 | | | | | 209 | | | | 16.4 | | | | 65 | | | 5.1 | | | 1,278 |
| | 2022 | | | 378 | | | 25.5 | | | | 156 | | | 10.5 | | | | 338 | | | | 22.8 | | | | 299 | | | | 20.1 | | | | | 226 | | | | 15.3 | | | | 85 | | | 5.8 | | | 1,483 |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| 2021 | 1 | | | 58 | | | 23.1 | | | | 17 | | | 6.7 | | | | 66 | | | | 26.3 | | | | 57 | | | | 22.6 | | | | | 42 | | | | 16.7 | | | | 11 | | | 4.6 | | | 251 |
| | 2 | | | 60 | | | 22.7 | | | | 19 | | | 7.3 | | | | 72 | | | | 27.2 | | | | 56 | | | | 21.0 | | | | | 43 | | | | 16.4 | | | | 14 | | | 5.4 | | | 264 |
| | 3 | | | 79 | | | 26.2 | | | | 27 | | | 9.2 | | | | 76 | | | | 25.5 | | | | 57 | | | | 19.1 | | | | | 45 | | | | 15.1 | | | | 15 | | | 4.9 | | | 299 |
| | 4 | | | 100 | | | 21.4 | | | | 51 | | | 11.0 | | | | 107 | | | | 23.1 | | | | 104 | | | | 22.3 | | | | | 79 | | | | 17.0 | | | | 24 | | | 5.2 | | | 464 |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| 2022 | 1 | | | 70 | | | 23.3 | | | | 24 | | | 7.9 | | | | 75 | | | | 25.3 | | | | 63 | | | | 21.2 | | | | | 50 | | | | 16.7 | | | | 17 | | | 5.6 | | | 299 |
| | 2 | | | 77 | | | 25.2 | | | | 26 | | | 8.3 | | | | 75 | | | | 24.6 | | | | 63 | | | | 20.6 | | | | | 45 | | | | 14.9 | | | | 19 | | | 6.4 | | | 305 |
| | 3 | | | 97 | | | 28.9 | | | | 33 | | | 10.0 | | | | 76 | | | | 22.6 | | | | 60 | | | | 18.1 | | | | | 47 | | | | 14.1 | | | | 21 | | | 6.3 | | | 334 |
| | 4 | | | 135 | | | 24.9 | | | | 73 | | | 13.4 | | | | 112 | | | | 20.5 | | | | 112 | | | | 20.6 | | | | | 84 | | | | 15.4 | | | | 28 | | | 5.2 | | | 545 |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| 2023 | 1 | | | 79 | | | 25.2 | | | | 26 | | | 8.3 | | | | 74 | | | | 23.5 | | | | 64 | | | | 20.5 | | | | | 50 | | | | 15.9 | | | | 21 | | | 6.6 | | | 315 |
| | 2 | | | 80 | | | 24.8 | | | | 35 | | | 10.7 | | | | 73 | | | | 22.4 | | | | 66 | | | | 20.4 | | | | | 46 | | | | 14.3 | | | | 24 | | | 7.4 | | | 324 | |
| | 3 | | | 101 | | | 28.2 | | | | 54 | | | 15.0 | | | | 72 | | | | 19.9 | | | | 67 | | | | 18.6 | | | | | 45 | | | | 12.6 | | | | 20 | | | 5.7 | | | 359 | |
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Aflac U.S. Sales Force Data |
| | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | Average | | | Productivity |
| | | | | | | | | | | | | | Weekly | | | (Production/ |
| | | | | Recruited Agents | | | Producer | | | Avg. Weekly |
| | Period | | | Career | | | Broker | | | Total | | | Equivalents | | | Producers) |
| | 2018 | | | 15,774 | | | | 3,380 | | | | 19,154 | | | | 8,531 | | | | | 187,720 | | |
| | 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 | | |
| | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | |
2021 | | 1 | | | 2,890 | | | | 1,063 | | | | 3,953 | | | | 5,643 | | | | | 44,530 | | |
| | 2 | | | 2,754 | | | | 1,355 | | | | 4,109 | | | | 5,925 | | | | | 44,540 | | |
| | 3 | | | 2,502 | | | | 1,615 | | | | 4,117 | | | | 5,926 | | | | | 50,448 | | |
| | 4 | | | 2,495 | | | | 1,412 | | | | 3,907 | | | | 6,477 | | | | | 71,723 | | |
| | | | | | | | | | | | | | | | | | | |
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 | | |
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(1) Includes cancer, critical illness, and hospital intensive care products
Aflac Japan
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Statements of Pretax Adjusted Earnings |
| (Before Management Fee) |
| (In Millions) |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | Years Ended December 31, | | 3 Months Ended September 30, | | 9 Months Ended September 30, |
| | | | | | | | | | | | | | | | | | | | | | | | % | | | | | | | | % |
| | | 2018 | | 2019 | | 2020 | | 2021 | | 2022 | | 2022 | | 2023 | | Change | | 2022 | | 2023 | | Change |
| Revenues: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Net earned premiums | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Gross premiums | ¥ | 1,468,894 | | | ¥ | 1,450,586 | | | ¥ | 1,409,134 | | | ¥ | 1,290,527 | | | ¥ | 1,246,657 | | | ¥ | 305,702 | | | ¥ | 304,456 | | | | | | ¥ | 937,352 | | | ¥ | 913,996 | | | | |
| | Assumed (ceded) | | (60,198) | | | | (57,974) | | | | (55,926) | | | | (50,864) | | | | (48,578) | | | | (12,034) | | | | (19,151) | | | | | | | (36,588) | | | | (58,265) | | | | |
| | Total net earned premiums | | 1,408,697 | | | | 1,392,612 | | | | 1,353,208 | | | | 1,239,663 | | | | 1,198,079 | | | | 293,667 | | | | 285,305 | | | (2.8) | | | | | 900,765 | | | | 855,731 | | | (5.0) | | |
| | Net investment income (1) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Yen denominated | | 141,575 | | | | 142,473 | | | | 138,397 | | | | 138,513 | | | | 149,449 | | | | 46,205 | | | | 35,175 | | | (23.9) | | | | | 115,178 | | | | 104,158 | | | (9.6) | | |
| | US$ denominated | | 149,801 | | | | 157,717 | | | | 167,541 | | | | 202,905 | | | | 215,171 | | | | 49,323 | | | | 67,001 | | | 35.8 | | | | | 159,785 | | | | 182,941 | | | 14.5 | | |
| | Net investment income | | 291,377 | | | | 300,191 | | | | 305,938 | | | | 341,419 | | | | 364,621 | | | | 95,528 | | | | 102,176 | | | 7.0 | | | | | 274,964 | | | | 287,100 | | | 4.4 | | |
| | Amortized hedge costs on foreign investments (2) | | (25,858) | | | | (28,938) | | | | (22,816) | | | | (8,391) | | | | (13,155) | | | | (3,288) | | | | (3,310) | | | .7 | | | | | (9,677) | | | | (19,340) | | | 99.9 | | |
| | Adjusted net investment income | | 265,519 | | | | 271,253 | | | | 283,122 | | | | 333,028 | | | | 351,466 | | | | 92,241 | | | | 98,866 | | | 7.2 | | | | | 265,287 | | | | 267,760 | | | .9 | | |
| | Other income excl. realized foreign | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | currency gains (losses) | | 4,636 | | | | 4,869 | | | | 4,497 | | | | 4,512 | | | | 4,442 | | | | 1,205 | | | | 1,192 | | | | | | | 3,420 | | | | 3,561 | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Total adjusted revenues | | 1,678,852 | | | | 1,668,734 | | | | 1,640,827 | | | | 1,577,203 | | | | 1,553,988 | | | | 387,113 | | | | 385,363 | | | (.5) | | | | | 1,169,471 | | | | 1,127,052 | | | (3.6) | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Benefits and claims: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Benefits and claims, net | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Incurred claims -direct | | 724,556 | | | | 727,491 | | | | 734,471 | | | | 743,247 | | | | 788,602 | | | | 215,167 | | | | 184,015 | | | | | | | 604,350 | | | | 584,820 | | | | |
| | Incurred claims -assumed (ceded) | | (51,892) | | | | (45,657) | | | | (37,806) | | | | (31,798) | | | | (36,170) | | | | (12,232) | | | | (14,754) | | | | | | | (29,050) | | | | (47,148) | | | | |
| | Increase in FPB -direct | | 313,343 | | | | 292,444 | | | | 260,200 | | | | 149,084 | | | | 73,592 | | | | 1,352 | | | | 22,311 | | | | | | | 47,723 | | | | 36,954 | | | | |
| | Increase in FPB -assumed (ceded) | | (2,000) | | | | (6,497) | | | | (11,377) | | | | (11,425) | | | | (5,618) | | | | (871) | | | | (690) | | | | | | | (4,931) | | | | (681) | | | | |
| | Total benefits and claims, net, excluding reserve remeasurement | | N/A | | | N/A | | | N/A | | | 849,108 | | | | 820,405 | | | | 203,416 | | | | 190,881 | | | | | | | 618,093 | | | | 573,945 | | | | |
| | Reserve remeasurement (gain) loss | | N/A | | | N/A | | | N/A | | | (6,879) | | | | (13,337) | | | | (7,295) | | | | (5,027) | | | | | | | (10,275) | | | | (9,510) | | | | |
| | Total benefits and claims, net | | 984,007 | | | | 967,782 | | | | 945,487 | | | | 842,229 | | | | 807,068 | | | | 196,121 | | | | 185,855 | | | (5.2) | | | | | 607,818 | | | | 564,435 | | | (7.1) | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Adjusted expenses: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Amortization of deferred policy | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | acquisition costs | | 78,459 | | | | 77,286 | | | | 68,818 | | | | 43,131 | | | | 44,123 | | | | 11,073 | | | | 11,435 | | | 3.3 | | | | | 32,922 | | | | 34,074 | | | 3.5 | | |
| | Insurance commissions | | 81,045 | | | | 79,661 | | | | 79,036 | | | | 77,449 | | | | 73,482 | | | | 18,326 | | | | 16,113 | | | (12.1) | | | | | 55,327 | | | | 51,934 | | | (6.1) | | |
| | Insurance and other expenses | | 181,139 | | | | 189,203 | | | | 199,606 | | | | 202,586 | | | | 198,493 | | | | 48,100 | | | | 45,521 | | | (5.4) | | | | | 145,366 | | | | 132,493 | | | (8.9) | | |
| | Total adjusted expenses | | 340,643 | | | | 346,150 | | | | 347,460 | | | | 323,166 | | | | 316,097 | | | | 77,498 | | | | 73,068 | | | | | | | 233,616 | | | | 218,501 | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Total benefits and adjusted expenses | | 1,324,651 | | | | 1,313,932 | | | | 1,292,947 | | | | 1,165,395 | | | | 1,123,165 | | | | 273,619 | | | | 258,923 | | | (5.4) | | | | | 841,434 | | | | 782,935 | | | (7.0) | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Pretax adjusted earnings | ¥ | 354,201 | | | ¥ | 354,802 | | | ¥ | 347,881 | | | ¥ | 411,808 | | | ¥ | 430,823 | | | ¥ | 113,494 | | | ¥ | 126,440 | | | 11.4 | | | | ¥ | 328,037 | | | ¥ | 344,117 | | | 4.9 | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | (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 | |
Aflac Japan
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Statements of Pretax Adjusted Earnings |
| (Before Management Fee) |
| (In Millions) |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | Years Ended December 31, | | 3 Months Ended September 30, | | 9 Months Ended September 30, |
| | | | | | | | | | | | | | | | | | | | | | | | % | | | | | | | | % |
| | | 2018 | | 2019 | | 2020 | | 2021 | | 2022 | | 2022 | | 2023 | | Change | | 2022 | | 2023 | | Change |
| Revenues: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Net earned premiums | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Gross premiums | $ | 13,307 | | | $ | 13,304 | | | $ | 13,193 | | | $ | 11,765 | | | $ | 9,558 | | | $ | 2,212 | | | $ | 2,105 | | | | | | $ | 7,371 | | | $ | 6,629 | | | | |
| | Assumed (ceded) | | (546) | | | | (532) | | | | (524) | | | | (463) | | | | (372) | | | | (87) | | | | (132) | | | | | | | (287) | | | | (422) | | | | |
| | Total net earned premiums | | 12,762 | | | | 12,772 | | | | 12,670 | | | | 11,301 | | | | 9,186 | | | | 2,125 | | | | 1,973 | | | (7.2) | | | | | 7,084 | | | | 6,207 | | | (12.4) | | |
| | Net investment income (1) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Yen denominated | | 1,283 | | | | 1,307 | | | | 1,296 | | | | 1,262 | | | | 1,140 | | | | 335 | | | | 243 | | | (27.5) | | | | | 898 | | | | 755 | | | (15.9) | | |
| | US$ denominated | | 1,356 | | | | 1,446 | | | | 1,569 | | | | 1,845 | | | | 1,641 | | | | 357 | | | | 462 | | | 29.4 | | | | | 1,251 | | | | 1,320 | | | 5.5 | | |
| | Net investment income | | 2,639 | | | | 2,753 | | | | 2,865 | | | | 3,107 | | | | 2,782 | | | | 692 | | | | 705 | | | 1.9 | | | | | 2,149 | | | | 2,075 | | | (3.4) | | |
| | Amortized hedge costs on foreign investments (2) | | (236) | | | | (257) | | | | (206) | | | | (76) | | | | (112) | | | | (28) | | | | (26) | | | (7.1) | | | | | (84) | | | | (148) | | | 76.2 | | |
| | Adjusted net investment income | | 2,403 | | | | 2,496 | | | | 2,659 | | | | 3,031 | | | | 2,669 | | | | 663 | | | | 679 | | | 2.4 | | | | | 2,066 | | | | 1,927 | | | (6.7) | | |
| | Other income excl. realized foreign | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | currency gains (losses) | | 41 | | | | 45 | | | | 42 | | | | 41 | | | | 35 | | | | 9 | | | | 8 | | | | | | | 26 | | | | 26 | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Total adjusted revenues | | 15,206 | | | | 15,313 | | | | 15,371 | | | | 14,373 | | | | 11,889 | | | | 2,797 | | | | 2,660 | | | (4.9) | | | | | 9,176 | | | | 8,160 | | | (11.1) | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Benefits and claims | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Benefits and claims, net | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Incurred claims -direct | | 6,566 | | | | 6,671 | | | | 6,875 | | | | 6,776 | | | | 6,038 | | | | 1,550 | | | | 1,273 | | | | | | | 4,736 | | | | 4,250 | | | | |
| | Incurred claims -assumed (ceded) | | (471) | | | | (419) | | | | (354) | | | | (290) | | | | (275) | | | | (88) | | | | (102) | | | | | | | (225) | | | | (342) | | | | |
| | Increase in FPB -direct | | 2,836 | | | | 2,684 | | | | 2,437 | | | | 1,356 | | | | 562 | | | | 9 | | | | 157 | | | | | | | 381 | | | | 265 | | | | |
| | Increase in FPB -assumed (ceded) | | (18) | | | | (60) | | | | (107) | | | | (104) | | | | (43) | | | | (6) | | | | (9) | | | | | | | (40) | | | | (9) | | | | |
| | Total benefits and claims, net, excluding reserve remeasurement | | N/A | | | N/A | | | N/A | | | 7,738 | | | | 6,282 | | | | 1,465 | | | | 1,319 | | | | | | | 4,852 | | | | 4,164 | | | | |
| | Reserve remeasurement (gain) loss | | N/A | | | N/A | | | N/A | | | (62) | | | | (91) | | | | (45) | | | | (33) | | | | | | | (69) | | | | (68) | | | | |
| | Total benefits and claims, net | | 8,913 | | | | 8,877 | | | | 8,851 | | | | 7,675 | | | | 6,191 | | | | 1,420 | | | | 1,286 | | | (9.4) | | | | | 4,783 | | | | 4,097 | | | (14.3) | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Adjusted expenses: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Amortization of deferred policy | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | acquisition costs | | 710 | | | | 709 | | | | 644 | | | | 393 | | | | 338 | | | | 80 | | 55 | | 79 | | | (1.3) | | | | | 258 | | | | 247 | | | (4.3) | | |
| | Insurance commissions | | 735 | | | | 731 | | | | 740 | | | | 706 | | | | 563 | | | | 132 | | | | 112 | | | (15.2) | | | | | 435 | | | | 377 | | | (13.3) | | |
| | Insurance and other expenses | | 1,640 | | | | 1,734 | | | | 1,873 | | | | 1,843 | | | | 1,517 | | | | 347 | | | | 315 | | | (9.2) | | | | | 1,140 | | | | 960 | | | (15.8) | | |
| | Total adjusted expenses | | 3,085 | | | | 3,174 | | | | 3,257 | | | | 2,942 | | | | 2,417 | | | | 560 | | | | 506 | | | | | | | 1,833 | | | | 1,585 | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Total benefits and adjusted expenses | | 11,998 | | | | 12,051 | | | | 12,108 | | | | 10,618 | | | | 8,609 | | | | 1,980 | | | | 1,791 | | | (9.5) | | | | | 6,616 | | | | 5,682 | | | (14.1) | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Pretax adjusted earnings | $ | 3,208 | | | $ | 3,261 | | | $ | 3,263 | | | $ | 3,755 | | | $ | 3,281 | | | $ | 817 | | | $ | 869 | | | 6.4 | | | | $ | 2,560 | | | $ | 2,479 | | | (3.2) | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | |
| | (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 | |
Aflac Japan
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Balance Sheets | |
(In Millions) | |
| | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | |
| December 31, | | | | | September 30, | |
| 2018 | | 2019 | | 2020 | | 2021 | | 2022 | | | | 2022 | | 2023 | |
| | | | | | | | | | | | | | | | | | | | | | | | |
Assets: | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | |
Investments and cash | ¥ | 12,031,549 | | | ¥ | 12,847,994 | | | ¥ | 13,080,154 | | | ¥ | 13,645,902 | | | ¥ | 12,777,746 | | | | | | ¥ | 13,468,243 | | | ¥ | 13,282,202 | | |
Receivables, net of allowance for credit losses | | 37,083 | | | | 28,219 | | | | 20,782 | | | | 22,439 | | | | 23,138 | | | | | | | 22,386 | | | | 21,270 | | |
Accrued investment income | | 66,350 | | | | 65,485 | | | | 62,722 | | | | 67,493 | | | | 76,489 | | | | | | | 74,789 | | | | 73,446 | | |
Deferred policy acquisition costs | | 708,638 | | | | 721,341 | | | | 723,579 | | | | 745,510 | | | | 766,506 | | | | | | | 762,434 | | | | 783,890 | | |
Other assets | | 292,335 | | | | 308,411 | | | | 320,351 | | | | 386,832 | | | | 387,065 | | | | | | | 419,835 | | | | 708,507 | | |
| | | | | | | | | | | | | | | | | | | | | | | | |
Total assets | ¥ | 13,135,956 | | | ¥ | 13,971,450 | | | ¥ | 14,207,588 | | | ¥ | 14,868,176 | | | ¥ | 14,030,944 | | | | | | ¥ | 14,747,687 | | | ¥ | 14,869,316 | | |
| | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | |
Liabilities and Shareholders' Equity: | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | |
Future policy benefits | ¥ | 8,637,152 | | | ¥ | 8,924,868 | | | ¥ | 9,175,501 | | | ¥ | 11,755,704 | | | ¥ | 10,315,140 | | | | | | ¥ | 10,760,419 | | | ¥ | 10,264,585 | | |
Policy and contract claims | | 317,043 | | | | 315,477 | | | | 328,778 | | | | — | | | | 28 | | | | | | | — | | | | 433 | | |
Unearned premiums | | 552,419 | | | | 453,133 | | | | 361,010 | | | | 284,045 | | | | 227,732 | | | | | | | 240,184 | | | | 200,677 | | |
Other policyholders' funds | | 793,148 | | | | 801,588 | | | | 808,429 | | | | 877,690 | | | | 880,989 | | | | | | | 882,823 | | | | 879,922 | | |
Income taxes (prim. deferred) | | 510,528 | | | | 618,901 | | | | 478,969 | | | | 36,166 | | | | 114,688 | | | | | | | 121,155 | | | | 136,978 | | |
Other liabilities | | 194,949 | | | | 357,135 | | | | 253,219 | | | | 502,633 | | | | 575,554 | | | | | | | 766,420 | | | | 1,010,041 | | |
Shareholders' equity | | 2,130,718 | | | | 2,500,349 | | | | 2,801,682 | | | | 1,411,938 | | | | 1,916,812 | | | | | | | 1,976,686 | | | | 2,376,680 | | |
| | | | | | | | | | | | | | | | | | | | | | | | |
Total liabilities & shareholders' equity | ¥ | 13,135,956 | | | ¥ | 13,971,450 | | | ¥ | 14,207,588 | | | ¥ | 14,868,176 | | | ¥ | 14,030,944 | | | | | | ¥ | 14,747,687 | | | ¥ | 14,869,316 | | |
Aflac Japan
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Balance Sheets | |
(In Millions) | |
| | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | |
| December 31, | | September 30, | |
| 2018 | | 2019 | | 2020 | | 2021 | | 2022 | | | | 2022 | | 2023 | |
| | | | | | | | | | | | | | | | | | | | | | | | |
Assets: | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | |
Investments and cash | $ | 108,392 | | | $ | 117,269 | | | $ | 126,378 | | | $ | 118,639 | | | $ | 96,290 | | | | | | $ | 93,006 | | | $ | 88,797 | | |
Receivables, net of allowance for credit losses | | 334 | | | | 258 | | | | 201 | | | | 195 | | | | 174 | | | | | | | 155 | | | | 142 | | |
Accrued investment income | | 598 | | | | 598 | | | | 606 | | | | 587 | | | | 576 | | | | | | | 516 | | | | 491 | | |
Deferred policy acquisition costs | | 6,384 | | | | 6,584 | | | | 6,991 | | | | 6,482 | | | | 5,776 | | | | | | | 5,265 | | | | 5,241 | | |
Other assets | | 2,634 | | | | 2,815 | | | | 3,095 | | | | 3,363 | | | | 2,917 | | | | | | | 2,900 | | | | 4,737 | | |
| | | | | | | | | | | | | | | | | | | | | | | | |
Total assets | $ | 118,342 | | | $ | 127,523 | | | $ | 137,271 | | | $ | 129,266 | | | $ | 105,734 | | | | | | $ | 101,842 | | | $ | 99,407 | | |
| | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | |
Liabilities and Shareholders' Equity: | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | |
Future policy benefits | $ | 77,812 | | | $ | 81,461 | | | $ | 88,652 | | | $ | 102,206 | | | $ | 77,733 | | | | | | $ | 74,307 | | | $ | 68,623 | | |
Policy and contract claims | | 2,856 | | | | 2,879 | | | | 3,177 | | | | — | | | | — | | | | | | | — | | | | 3 | | |
Unearned premiums | | 4,977 | | | | 4,136 | | | | 3,488 | | | | 2,470 | | | | 1,716 | | | | | | | 1,659 | | | | 1,341 | | |
Other policyholders' funds | | 7,145 | | | | 7,316 | | | | 7,811 | | | | 7,631 | | | | 6,639 | | | | | | | 6,096 | | | | 5,883 | | |
Income taxes (prim. deferred) | | 4,601 | | | | 5,650 | | | | 4,630 | | | | 314 | | | | 781 | | | | | | | 768 | | | | 876 | | |
Other liabilities | | 1,756 | | | | 3,260 | | | | 2,447 | | | | 4,369 | | | | 4,337 | | | | | | | 5,293 | | | | 6,753 | | |
Shareholders' equity | | 19,194 | | | | 22,820 | | | | 27,068 | | | | 12,276 | | | | 14,528 | | | | | | | 13,719 | | | | 15,929 | | |
| | | | | | | | | | | | | | | | | | | | | | | | |
Total liabilities & shareholders' equity | $ | 118,342 | | | $ | 127,523 | | | $ | 137,271 | | | $ | 129,266 | | | $ | 105,734 | | | | | | $ | 101,842 | | | $ | 99,407 | | |
Aflac Japan
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Quarterly Statements of Pretax Adjusted Earnings and Percentage Changes |
(Yen In Millions) |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | Net | | | | | | | | Total | | | | Benefits | | | | | | | | | | | | | Total | | | | Pretax | | |
| | | | Earned | | % | | Adjusted | | % | | Adjusted | | % | | & | | % | | | | | % | | | | | | Adjusted | | % | | Adjusted | | % |
| Period | | | Premiums | | Change | | NII | | Change | | Revenues | | Change | | Claims, Net | | Change | | Amort. | | Change | | | | | | Expense | | Change | | Earn. | | Change |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| 2018 | | | | 1,408,697 | | | (1.5) | | | | 265,519 | | | 5.5 | | | | 1,678,852 | | | (.5) | | | | 984,007 | | | (3.5) | | | | 78,460 | | | 11.0 | | | | | | | | | 340,642 | | | 5.2 | | | | 354,201 | | | 3.1 | |
| 2019 | | | | 1,392,612 | | | (1.1) | | | | 271,253 | | | 2.2 | | | | 1,668,734 | | | (.6) | | | | 967,782 | | | (1.6) | | | | 77,286 | | | (1.5) | | | | | | | | | 346,150 | | | 1.6 | | | | 354,802 | | | .2 | |
| 2020 | | | | 1,353,208 | | | (2.8) | | | | 283,122 | | | 4.4 | | | | 1,640,827 | | | (1.7) | | | | 945,487 | | | (2.3) | | | | 68,818 | | | (11.0) | | | | | | | | | 347,459 | | | .4 | | | | 347,881 | | | (2.0) | |
| 2021 | | | | 1,239,663 | | | (8.4) | | | | 333,028 | | | 17.6 | | | | 1,577,203 | | | (3.9) | | | | 842,229 | | | (10.9) | | | | 43,131 | | | (37.3) | | | | | | | | | 323,166 | | | (7.0) | | | | 411,808 | | | 18.4 | |
| 2022 | | | | 1,198,079 | | | (3.4) | | | | 351,466 | | | 5.5 | | | | 1,553,988 | | | (1.5) | | | | 807,068 | | | (4.2) | | | | 44,123 | | | 2.3 | | | | | | | | | 316,097 | | | (2.2) | | | | 430,823 | | | 4.6 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
2021 | 1 | | | | 313,769 | | | (8.5) | | | | 74,621 | | | 6.9 | | | | 389,679 | | | (5.9) | | | | 215,445 | | | (9.5) | | | | 10,534 | | | (44.1) | | | | | | | | | 77,715 | | | (6.3) | | | | 96,519 | | | 3.8 | |
| 2 | | | | 311,733 | | | (8.3) | | | | 86,681 | | | 27.4 | | | | 399,488 | | | (2.4) | | | | 212,617 | | | (10.4) | | | | 10,700 | | | (35.9) | | | | | | | | | 79,234 | | | (3.0) | | | | 107,637 | | | 19.4 | |
| 3 | | | | 307,350 | | | (8.7) | | | | 84,035 | | | 19.7 | | | | 392,463 | | | (3.8) | | | | 206,023 | | | (14.2) | | | | 10,762 | | | (32.7) | | | | | | | | | 80,760 | | | (8.9) | | | | 105,680 | | | 33.5 | |
| 4 | | | | 306,812 | | | (8.1) | | | | 87,690 | | | 16.8 | | | | 395,573 | | | (3.5) | | | | 208,143 | | | (9.5) | | | | 11,134 | | | (35.6) | | | | | | | | | 85,457 | | | (9.3) | | | | 101,973 | | | 19.1 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
2022 | 1 | | | | 304,884 | | | (2.8) | | | | 79,042 | | | 5.9 | | | | 385,000 | | | (1.2) | | | | 206,890 | | | (4.0) | | | | 10,886 | | | 3.3 | | | | | | | | | 77,095 | | | (.8) | | | | 101,015 | | | 4.7 | |
| 2 | | | | 302,213 | | | (3.1) | | | | 94,004 | | | 8.4 | | | | 397,358 | | | (.5) | | | | 204,807 | | | (3.7) | | | | 10,964 | | | 2.5 | | | | | | | | | 79,022 | | | (.3) | | | | 113,529 | | | 5.5 | |
| 3 | | | | 293,667 | | | (4.5) | | | | 92,241 | | | 9.8 | | | | 387,113 | | | (1.4) | | | | 196,121 | | | (4.8) | | | | 11,073 | | | 2.9 | | | | | | | | | 77,498 | | | (4.0) | | | | 113,494 | | | 7.4 | |
| 4 | | | | 297,315 | | | (3.1) | | | | 86,180 | | | (1.7) | | | | 384,517 | | | (2.8) | | | | 199,250 | | | (4.3) | | | | 11,201 | | | .6 | | | | | | | | | 82,482 | | | (3.5) | | | | 102,785 | | | .8 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
2023 | 1 | | | | 287,048 | | | (5.9) | | | | 80,931 | | | 2.4 | | | | 369,145 | | | (4.1) | | | | 192,270 | | | (7.1) | | | | 11,281 | | | 3.6 | | | | | | | | | 72,625 | | | (5.8) | | | | 104,251 | | | 3.2 | |
| 2 | | | | 283,377 | | | (6.2) | | | | 87,963 | | | (6.4) | | | | 372,544 | | | (6.2) | | | | 186,310 | | | (9.0) | | | | 11,359 | | | 3.6 | | | | | | | | | 72,808 | | | (7.9) | | | | 113,426 | | | (.1) | |
| 3 | | | | 285,305 | | | (2.8) | | | | 98,866 | | | 7.2 | | | | 385,363 | | | (.5) | | | | 185,855 | | | (5.2) | | | | 11,435 | | | 3.3 | | | | | | | | | 73,068 | | | (5.7) | | | | 126,440 | | | 11.4 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Aflac Japan
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Operating Ratios |
(Before Management Fee) |
| | | | | | | | | | | | | | | | |
| | | | 12-Mo. Rolling | | | | Tot. Ben./ | | | | Tot. Adj. | | Combined | | Pretax |
| | | | Premium | | Tot. Ben./ | | Premiums | | Amort./ | | Expenses/ | | Ratio/ | | Profit |
| | Period | | Persistency(1) | | Premium | | (3rd sector) | | Premium | | Total Adj. Rev. | | Total Adj. Rev. | | Margin |
| | | | | | | | | | | | | | | | |
| | 2018 | | 94.1 | | 69.9 | | 59.2 | | 5.6 | | 20.3 | | 78.9 | | 21.1 |
| | 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 YTD | | 93.5 | | 66.0 | | 56.2 | | 4.0 | | 19.4 | | 69.5 | | 30.5 |
| | | | | | | | | | | | | | | | |
2021 | | 1 | | 95.0 | | 68.7 | | 59.6 | | 3.4 | | 19.9 | | 75.2 | | 24.8 |
| | 2 | | 94.7 | | 68.2 | | 59.0 | | 3.4 | | 19.8 | | 73.1 | | 26.9 |
| | 3 | | 94.5 | | 67.0 | | 57.8 | | 3.5 | | 20.6 | | 73.1 | | 26.9 |
| | 4 | | 94.3 | | 67.8 | | 58.4 | | 3.6 | | 21.6 | | 74.2 | | 25.8 |
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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 |
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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 |
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(1) Premium persistency presented on a 12-month rolling basis for all periods, rather than year to date
Aflac Japan
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Aflac Japan Sales Results |
(Yen In Millions, unless otherwise noted) |
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| | | Annl. | | | | Third Sector | | | | | | | | |
| | | Prem. | | | | New Annl. | | | | Total | | |
| | | In Force | | % | | Prem. | | % | | New Annual. | | % |
| Period | | (Billions) | | Change | | Sales | | Change | | Premium Sales | | Change |
| | | | | | | | | | | | | | | | | | | |
| 2018 | | | 1,527.1 | | | | (1.6) | | | | 88,813 | | | | 1.6 | | | | 95,894 | | | | 1.1 | |
| 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 | | | | — | |
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2021 | 1 | | | 1,410.0 | | | | (4.4) | | | | 12,492 | | | | — | | | | 13,998 | | | | (.2) | |
| 2 | | | 1,391.7 | | | | (4.5) | | | | 12,125 | | | | 40.1 | | | | 13,602 | | | | 38.4 | |
| 3 | | | 1,375.0 | | | | (4.6) | | | | 11,275 | | | | 1.0 | | | | 12,605 | | | | — | |
| 4 | | | 1,360.6 | | | | (4.7) | | | | 13,084 | | | | 2.2 | | | | 14,559 | | | | 1.1 | |
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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 | |
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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 | |
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Aflac Japan
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Aflac Japan Product Mix |
(New Annualized Premium Sales, Yen In Billions) |
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| | | | | | | % of | | | | % of | | Income | | % of | | Child | | % of | | | | % of | | Ordinary | | % of | | | | % of | | |
| | Period | | | Cancer | | Total | | Medical | | Total | | Support | | Total | | Endowment | | Total | | WAYS | | Total | | Life Other | | Total | | Other | | Total | | Total |
| | 2018 | | | 63.1 | | | 65.8 | | | 23.9 | | | 25.0 | | | 1.7 | | | 1.8 | | | .3 | | | .3 | | | .5 | | | .5 | | | 5.9 | | | 6.1 | | | .5 | | | .5 | | | 95.9 | |
| | 2019 | | | 47.2 | | | 59.2 | | | 24.6 | | | 31.0 | | | 1.0 | | | 1.2 | | | .2 | | | .2 | | | .4 | | | .5 | | | 5.9 | | | 7.4 | | | .4 | | | .5 | | | 79.7 | |
| | 2020 | | | 28.8 | | | 56.6 | | | 15.9 | | | 31.2 | | | .5 | | | 1.0 | | | .2 | | | .4 | | | .4 | | | .7 | | | 4.8 | | | 9.5 | | | .3 | | | .6 | | | 50.9 | |
| | 2021 | | | 27.0 | | | 49.2 | | | 20.4 | | | 37.2 | | | .3 | | | .5 | | | .2 | | | .3 | | | .4 | | | .8 | | | 4.9 | | | 9.0 | | | 1.6 | | | 3.0 | | | 54.8 | |
| | 2022 | | | 30.9 | | | 56.5 | | | 14.6 | | | 26.6 | | | .7 | | | 1.3 | | | .2 | | | .3 | | | 1.9 | | | 3.5 | | | 4.5 | | | 8.1 | | | 2.0 | | | 3.7 | | | 54.8 | |
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2021 | | 1 | | | 6.4 | | | 45.4 | | | 6.1 | | | 43.3 | | | .1 | | | .6 | | | — | | | .3 | | | .1 | | | .7 | | | 1.2 | | | 8.9 | | | .1 | | | .8 | | | 14.0 | |
| | 2 | | | 6.7 | | | 48.9 | | | 5.4 | | | 39.7 | | | .1 | | | .6 | | | — | | | .4 | | | .1 | | | .8 | | | 1.2 | | | 8.9 | | | .1 | | | .7 | | | 13.6 | |
| | 3 | | | 6.3 | | | 49.9 | | | 4.6 | | | 36.3 | | | .1 | | | .5 | | | — | | | .3 | | | .1 | | | .7 | | | 1.1 | | | 9.0 | | | .4 | | | 3.3 | | | 12.6 | |
| | 4 | | | 7.7 | | | 52.7 | | | 4.4 | | | 29.9 | | | .1 | | | .4 | | | — | | | .3 | | | .1 | | | .8 | | | 1.2 | | | 8.6 | | | 1.1 | | | 7.3 | | | 14.6 | |
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2022 | | 1 | | | 6.4 | | | 53.0 | | | 3.8 | | | 31.4 | | | .1 | | | 1.1 | | | .1 | | | .3 | | | .1 | | | .7 | | | 1.1 | | | 9.0 | | | .5 | | | 4.5 | | | 11.9 | |
| | 2 | | | 6.8 | | | 53.4 | | | 3.8 | | | 29.9 | | | .3 | | | 2.2 | | | — | | | .2 | | | .1 | | | .8 | | | 1.2 | | | 9.2 | | | .6 | | | 4.3 | | | 12.7 | |
| | 3 | | | 8.4 | | | 60.1 | | | 3.7 | | | 26.4 | | | .2 | | | 1.2 | | | — | | | .2 | | | .1 | | | .6 | | | 1.0 | | | 7.7 | | | .5 | | | 3.8 | | | 13.9 | |
| | 4 | | | 9.5 | | | 58.2 | | | 3.4 | | | 20.8 | | | .1 | | | .8 | | | .1 | | | .4 | | | 1.6 | | | 10.1 | | | 1.1 | | | 7.2 | | | .4 | | | 2.5 | | | 16.2 | |
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2023 | | 1 | | | 7.9 | | | 59.9 | | | 2.7 | | | 20.8 | | | .1 | | | .6 | | | .1 | | | .6 | | | 1.2 | | | 8.9 | | | 1.0 | | | 7.3 | | | .2 | | | 1.9 | | | 13.2 | |
| | 2 | | | 10.9 | | | 67.7 | | | 2.8 | | | 17.5 | | | .1 | | | .4 | | | .1 | | | .4 | | | 1.0 | | | 6.6 | | | 1.0 | | | 6.1 | | | .2 | | | 1.3 | | | 16.1 | |
| | 3 | | | 10.3 | | | 65.6 | | | 3.1 | | | 20.0 | | | .1 | | | .4 | | | .1 | | | .4 | | | .9 | | | 6.0 | | | .9 | | | 6.1 | | | .2 | | | 1.5 | | | 15.6 | |
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Aflac Japan
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Aflac Japan Sales Force Data |
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| | | | | | | Number of Agencies by Type | | Sales Contribution by Agency Type | |
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| | | | | Period | | Individual/ Independent Corporate | | Affiliated Corporate | | Bank | | Total | | Individual/ Independent Corporate | | Affiliated Corporate | | Bank | | Licensed Sales Associates(1) | | Recruited Agencies | |
| | | | | 2018 | | 8,453 | | | 1,392 | | | 371 | | | 10,216 | | | 40.1 | | | 55.3 | | | 4.6 | | | 109,482 | | | 85 | | |
| | | | | 2019 | | 7,683 | | | 1,343 | | | 367 | | | 9,393 | | | 45.7 | | | 50.0 | | | 4.3 | | | 109,265 | | | 77 | | |
| | | | | 2020 | | 7,231 | | | 1,312 | | | 361 | | | 8,904 | | | 52.3 | | | 42.6 | | | 5.1 | | | 111,886 | | | 48 | | |
| | | | | 2021 | | 6,779 | | | 1,283 | | | 360 | | | 8,422 | | | 51.1 | | | 43.7 | | | 5.2 | | | 111,854 | | | 62 | | |
| | | | | 2022 | | 6,159 | | | 1,239 | | | 359 | | | 7,757 | | | 49.5 | | | 46.5 | | | 4.0 | | | 110,259 | | | 38 | | |
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| | 2021 | | | 1 | | 7,142 | | | 1,308 | | | 360 | | | 8,810 | | | 54.3 | | | 40.6 | | | 5.1 | | | 112,252 | | | 13 | | |
| | | | | 2 | | 7,055 | | | 1,305 | | | 359 | | | 8,719 | | | 51.1 | | | 44.0 | | | 4.9 | | | 113,259 | | | 22 | | |
| | | | | 3 | | 6,898 | | | 1,299 | | | 360 | | | 8,557 | | | 49.9 | | | 43.8 | | | 6.3 | | | 112,100 | | | 13 | | |
| | | | | 4 | | 6,779 | | | 1,283 | | | 360 | | | 8,422 | | | 49.2 | | | 46.3 | | | 4.5 | | | 111,854 | | | 14 | | |
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| | 2022 | | | 1 | | 6,447 | | | 1,266 | | | 360 | | | 8,073 | | | 48.9 | | | 46.5 | | | 4.6 | | | 109,873 | | | 6 | | |
| | | | | 2 | | 6,335 | | | 1,255 | | | 359 | | | 7,949 | | | 48.4 | | | 48.1 | | | 3.5 | | | 110,096 | | | 12 | | |
| | | | | 3 | | 6,260 | | | 1,246 | | | 359 | | | 7,865 | | | 49.3 | | | 46.2 | | | 4.5 | | | 110,400 | | | 12 | | |
| | | | | 4 | | 6,159 | | | 1,239 | | | 359 | | | 7,757 | | | 51.2 | | | 45.4 | | | 3.4 | | | 110,259 | | | 8 | | |
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| | 2023 | | | 1 | | 6,056 | | | 1,232 | | | 359 | | | 7,647 | | | 50.9 | | | 45.4 | | | 3.7 | | | 109,769 | | | 4 | | |
| | | | | 2 | | 5,947 | | | 1,219 | | | 360 | | | 7,526 | | | 44.8 | | | 52.5 | | | 2.7 | | | 112,593 | | | 5 | | |
| | | | | 3 | | 5,843 | | | 1,211 | | | 360 | | | 7,414 | | | 44.4 | | | 51.9 | | | 3.7 | | | 112,795 | | | 6 | | |
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(1) Excludes Dai-ichi Life, banks, Japan Post Group and Daido Life
Aflac Japan
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Yen/Dollar Exchange Rates |
| | | | | | | | | |
| | | | | | | Yearly | | |
| | | Closing | | Qtr | | Cum | | % |
| Period | | Rate(1) | | Avg | | Avg | | Change |
| | | | | | | | | |
| 2018 | | 111.00 | | | N/A | | 110.39 | | | 1.6 | |
| 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) | |
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2021 | 1 | | 110.71 | | | 105.88 | | | 105.88 | | | 2.8 | |
| 2 | | 110.58 | | | 109.48 | | | 107.79 | | | .4 | |
| 3 | | 111.92 | | | 110.11 | | | 108.58 | | | (.9) | |
| 4 | | 115.02 | | | 113.70 | | | 109.79 | | | (2.7) | |
| | | | | | | | | |
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) | |
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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) | |
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| (1) Closing rate is based on the latest available and published MUFG Bank Ltd. TTM mid-day exchange rate. |
Corporate and Other
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| Statements of Pretax Adjusted Earnings | |
| (Before Management Fee) | |
| (In Millions) | |
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| | | Years Ended December 31, | | | 3 Months Ended September 30, | | 9 Months Ended September 30, | |
| | | | | | | | | | | | | | | | | | | | | | | | | % | | | | | | | | % | |
| | | 2018 | | 2019 | | 2020 | | 2021 | | 2022 | | | 2022 | | 2023 | | Change | | 2022 | | 2023 | | Change | |
| Revenues: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Total net earned premiums | | $ | 208 | | | | $ | 200 | | | | $ | 194 | | | | $ | 180 | | | | $ | 145 | | | | | $ | 35 | | | | $ | 83 | | | 137.1 | | | | | $ | 112 | | | | $ | 258 | | | 130.4 | | | |
| | Net investment income (1) | | 77 | | | | 88 | | | | 80 | | | | (73) | | | | 30 | | | | | 16 | | | | 2 | | | (87.5) | | | | | 11 | | | | 24 | | | 118.2 | | | |
| | Amortized hedge income (2) | | 36 | | | | 89 | | | | 97 | | | | 57 | | | | 68 | | | | | 19 | | | | 25 | | | 31.6 | | | | | 44 | | | | 92 | | | 109.1 | | | |
| | Adjusted net investment income | | 113 | | | | 177 | | | | 177 | | | | (16) | | | | 98 | | | | | 35 | | | | 27 | | | (22.9) | | | | | 55 | | | | 116 | | | 110.9 | | | |
| | Other income | | 18 | | | | 15 | | | | 13 | | | | 11 | | | | 24 | | | | | 3 | | | | 4 | | | 33.3 | | | | | 22 | | | | 9 | | | (59.1) | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Total adjusted revenues | | 339 | | | | 393 | | | | 384 | | | | 175 | | | | 267 | | | | | 73 | | | | 115 | | | 57.5 | | | | | 189 | | | | 384 | | | 103.2 | | | |
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| Benefits and expenses: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Total net benefits and claims | | 199 | | | | 194 | | | | 180 | | | | 161 | | | | 141 | | | | | 40 | | | | 65 | | | 62.5 | | | | | 110 | | | | 206 | | | 87.3 | | | |
| | Interest expense | | 120 | | | | 133 | | | | 164 | | | | 165 | | | | 162 | | | | | 44 | | | | 39 | | | (11.4) | | | | | 123 | | | | 109 | | | (11.4) | | | |
| | Other adjusted expenses | | 159 | | | | 137 | | | | 155 | | | | 142 | | | | 181 | | | | | 45 | | | | 59 | | | 31.1 | | | | | 129 | | | | 176 | | | 36.4 | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Total benefits and adjusted expenses | | 478 | | | | 464 | | | | 499 | | | | 469 | | | | 485 | | | | | 129 | | | | 163 | | | 26.4 | | | | | 362 | | | | 490 | | | 35.4 | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Pretax adjusted earnings | | $ | (139) | | | | $ | (72) | | | | $ | (115) | | | | $ | (293) | | | | $ | (218) | | | | | $ | (56) | | | | $ | (49) | | | 12.5 | | | | | $ | (173) | | | | $ | (107) | | | 38.2 | | | |
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| | (1) The change in value of federal historic rehabilitation and solar investments in partnerships of $64 and $19 for the three-month periods and $169 and $61 for the nine-month periods ended September 30, 2023, and 2022, respectively, is included as a reduction to net investment income. Tax credits on these investments of $63 and $19 for the three-month period and $171 and $63 for the nine-month periods ended September 30, 2023, and 2022, 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 | |
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:
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• | 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.
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• | 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. |
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• | 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 cannot be predicted or that are outside management’s control. 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 cash flows from derivatives associated with notes payable but excluding any nonrecurring 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 term of the hedge. 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 cash flows 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 cash flows 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 cash flows 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. |
Third Quarter 2023
Earnings Call
Video Update
Max K. Brodén
November 1, 2023
For more information contact:
Investor and Rating Agency Relations
800.235.2667
aflacir@aflac.com
Aflac Worldwide Headquarters
1932 Wynnton Road
Columbus, GA 31999
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 and the continued effects caused by COVID-19
•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
•concentration of the Company's investments in any particular single-issuer or sector
•major public health issues, including COVID-19 and any resulting or coincidental economic effects, on the Company's business and financial results
•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 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 (such as COVID-19), tornadoes, hurricanes, earthquakes, tsunamis, war or other military action, 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
•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. Brodén
Q3 2023 CFO Video Update
November 1, 2023
Thank you for joining me as I provide a financial update on Aflac Incorporated's results for the third quarter of 2023.
For the third quarter, adjusted earnings per diluted share increased 27.8% year over year to $1.84 , with a $0.06 negative impact from FX in the quarter. With this being the third quarter under the new LDTI accounting regime, we evaluate our reserve assumptions for morbidity, persistency and mortality at least annually to see if an update is needed. If necessary, these assumptions will be unlocked on a prospective basis, as they were in this quarter, leading to remeasurement gains of $205 million. Variable investment income ran $13 million, or $0.02 per share, below our long-term return expectations. We also wrote down certain software intangibles in our U.S. segment impacting our results by $0.04 per share.
Adjusted book value per share including foreign currency translation gains and losses increased 10.3%, and the adjusted ROE was 15.6%, a significant spread to our cost of capital. Overall, we view these results in the quarter as solid.
Starting with our Japan segment, net earned premium for the quarter declined 2.8%, reflecting the impacts of paid up policies, our January 1st reinsurance transaction and deferred profit liability. Lapses were somewhat elevated but within our expectations. However, if adjusting for all these factors, the earned premium declined an estimated 1.7%.
Japan’s total benefit ratio came in at 65.1% for the quarter, down 170 basis points year over year, and the third sector benefit ratio was 54.8%, down approximately 460 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 260 basis points favorable to the benefit ratio in Q3. 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 93.5%, but was down 80 basis points year over year. With product refreshments, we tend to experience some elevation in lapses as customers update and refresh their coverage, which was the case with the recently refreshed cancer and first sector products.
Our expense ratio in Japan was 19.0%, down 100 basis points year over year, driven primarily by good expense control and to some extent, by expense allowance from reinsurance transactions and a DAC commission true-up. For the full year, we would expect to end up towards the low end of our expense ratio range of 20 to 22%.
Adjusted net investment income in yen terms was up 7.2%, as we experienced higher yields on our USD-denominated investments and related favorable FX, and a return on our Alternatives portfolio more in line with long-term return expectations. This was offset by transfer of assets due to reinsurance.
In the quarter, we reduced our FX forwards and increased FX put options notional, leading to lower run-rate hedge costs and a more efficient use of our investment risk capital.
The pretax margin for Japan in the quarter was 32.8%, up 350 basis points year over year; a very good result for the quarter.
Turning to U.S. results, net earned premium was up 3.2%. Persistency increased 80 basis points year over year to 78.7%. This is a function of poor persistency quarters falling out of the metric and stabilization across numerous product categories, especially Group voluntary benefits.
Our total benefit ratio came in lower than expected at 35.9%, a full 890 basis points lower than Q3 2022. We estimate that remeasurement gains impacted the benefit ratio by 12.1 percentage points in the quarter. Claims utilization remained subdued, and as we incorporate more recent experience into our reserve models, we have released some reserves. For the full year, we now estimate our benefit ratio to be materially below our outlook range of 47 to 50%. Excluding remeasurement gains, however, we are tracking well within the 47 to 50% outlook range.
Our expense ratio in the U.S. was 40.6%, up 70 basis points year over year. This includes a 190 basis points impact from a software intangibles writedown. Adjusting for this writedown, we are trending in the right direction.
Our growth initiatives – group life & disability, network dental and vision and direct to consumer – increased our total expense ratio by 330 basis points. We would expect this impact to decrease over time as these businesses grow to scale and improve their profitability. For the full year, we now expect our expense ratio to come in slightly above our outlook range of 37 to 40%.
Adjusted net investment income in the U.S. was up 13.0%, mainly driven by higher yields on both our fixed and floating rate portfolios, and variable investment income in the quarter more in line with long-term return expectations.
Profitability in the U.S. segment was solid, with a pretax margin of 28.8%, driven primarily by the remeasurement gains from unlocking.
As you know, the commercial real estate markets are going through their worst cycle in decades, especially in the office sub-sector. We are seeing most property values quoted down 25 to 40%, but some distressed situations are driving market values down as much as 60%, far exceeding the 35 to 40% declines of the financial crisis. Our total commercial real estate watchlist remains approximately $1.0 billion, with around two-thirds 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 $34 million this quarter. We also moved two properties into real estate owned, which resulted in a $53 million write-down. We do not believe the current distressed market is indicative of the true intrinsic economic value of the underlying properties currently undergoing a foreclosure process. We continue to believe our ability to take ownership of these quality buildings and manage them through this cycle will allow us to maximize our recoveries.
In our corporate segment, we recorded a pretax loss of $49 million, which is somewhat smaller than a year ago primarily due to our reinsurance transaction. Adjusted net investment income was $8 million lower than last year due to an increased volume of tax credit investments. Higher rates began to earn in, and amortized hedge income increased. These tax credit investments impacted the corporate net investment income line for U.S. GAAP purposes negatively by $64 million with an associated credit to the tax line. The net impact to our bottom line was a positive $3.8 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. In Q4 we intend to execute another tranche with similar structure and economics to our first transaction from January this year.
Our capital position remains strong, and we ended the quarter with an SMR above 1,000% in Japan, and our combined RBC, while not finalized, we estimate to be greater than 650%. Unencumbered holding company liquidity stood at $3.3 billion, $1.6 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. stat impairments were $4 million, and Japan FSA impairments, JPY 2.9 billion, or roughly $20 million. This is well within our expectations and with limited impact to both earnings and capital.
Leverage remains at a comfortable 18.8%, just below our leverage corridor of 20% to 25%. The decline in the quarter is primarily driven by the weakening yen. As we hold approximately two-thirds 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 $700 million of our own stock and paid dividends of $248 million in Q3, 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.
Thank you for your time and attention. I look forward to discussing our results in further detail on tomorrow's earnings call.
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,” “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 and the continued effects caused by COVID-19 • 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 • concentration of the Company's investments in any particular single-issuer or sector • major public health issues, including COVID-19 and any resulting or coincidental economic effects, on the Company's business and financial results • 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 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 (such as COVID-19), tornadoes, hurricanes, earthquakes, tsunamis, war or other military action, 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 • allegations or determinations of worker misclassification in the United States
Max K. Brodén Executive Vice President CFO, Aflac Incorporated
Third quarter net earnings per diluted share $2.64
Third quarter adjusted earnings per diluted share* *Non-GAAP measure $1.84
ROE 29.1% Adj. ROE* 15.6% Adj. ROE ex-FX* 16.1% *Non-GAAP measure
Third quarter benefit ratio for Aflac Japan 65.1%
Third quarter third sector benefit ratio for Aflac Japan 54.8%
Third quarter premium persistency for Aflac Japan 93.5%
Third quarter total adjusted expense ratio for Aflac Japan 19.0%
Third quarter pretax profit margin for Aflac Japan 32.8%
Third quarter premium persistency for Aflac U.S. 78.7%
Third quarter benefit ratio for Aflac U.S. 35.9%
Third quarter total adjusted expense ratio for Aflac U.S. 40.6%
Third quarter pretax profit margin for Aflac U.S. 28.8%
Strong capital position at the end of Q3 >1,000% SMR >650% Combined RBC
Third quarter pretax Leverage* 18.8% *Adjusted debt to adjusted capitalization ex-AOCI, these are non-GAAP measures.
Third quarter share repurchase $700 million
Third quarter dividends $248 million
Appendix
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 cannot be predicted or that are outside management’s control. 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 cash flows from derivatives associated with notes payable but excluding any nonrecurring 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. • 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 ROE as determined using net earnings and average total shareholders’ equity.
Glossary of Non-U.S. GAAP Measures (cont’d) The Company defines these non-U.S. GAAP financial measures as follows: • Aflac Japan’s Underlying net earned premium is a measure that adjusts Aflac Japan’s net earned premiums under U.S. GAAP for significant variables including the increase in paid-up policies, the change in deferred profit liability (DPL) on limited payment contracts and the ceded premiums that are part of the Company’s internal reinsurance strategy initiated in January 2023. The most comparable U.S. GAAP measure is net earned premiums. The Company feels this measure is useful for investors to understand the impacts these items have on Aflac Japan's net earned premiums. • 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.
Reconciliation of Net Earnings Per Diluted Share to Adjusted Earnings per Diluted Share Three Months Ended September 30 2023 2022 %Change Net Earnings per diluted share $2.64 $2.82 (6.4)% Items impacting net earnings Adjusted net investment (gains) losses (0.85) (0.35) Other and non-recurring (income) loss (0.01) — Income tax (benefit) expense on items excluded from adjusted earnings 0.06 (1.03) Adjusted earnings per diluted share 1.84 1.44 27.8% Current period foreign currency impact1 0.06 N/A Adjusted earnings per diluted share excluding current period foreign currency impact2 $1.90 $1.44 31.9% All relevant prior-year amounts have been adjusted for the adoption of accounting guidance on January 1, 2023 related to accounting for long-duration insurance contracts 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.
All relevant prior-year amounts have been adjusted for the adoption of accounting guidance on January 1, 2023 related to accounting for long-duration insurance contracts 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 September 30, in millions of Dollars 2023 2022 %Change Net Earnings $1,569 $1,781 (11.9)% Items impacting net earnings Adjusted net investment (gains) losses (504) (222) Other and non-recurring (income) loss (3) (1) Income tax (benefit) expense on items excluded from adjusted earnings 33 (648) Adjusted earnings 1,095 910 20.3% Current period foreign currency impact1 33 N/A Adjusted earnings excluding current period foreign currency impact2 $1,128 $910 24.0%
Reconciliation of U.S. GAAP Return on Equity to Adjusted ROE1 Three Months Ended September 30, in millions of Dollars All relevant prior-year amounts have been adjusted for the adoption of accounting guidance on January 1, 2023 related to accounting for long-duration insurance contracts 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 2023 2022 U.S. GAAP ROE - Net earnings2 29.1% 36.1% Impact of excluding unrealized foreign currency translation gains (losses) (4.5) (5.1) Impact of excluding unrealized gains (losses) on securities and derivatives 0.8 2.7 Impact of excluding effect of changes in discount rate assumptions (3.1) (7.1) Impact of excluding pension liability adjustment — (0.2) Impact of excluding AOCI (6.8) (9.7) U.S. GAAP ROE - less AOCI 22.3 26.4 Differences between adjusted earnings and net earnings3 (6.7) (12.9) Adjusted ROE - reported 15.6 13.5 Less: Impact of foreign currency4 (0.5) N/A Adjusted ROE, excluding impact of foreign currency 16.1 13.5
All relevant prior-year amounts have been adjusted for the adoption of accounting guidance on January 1, 2023 related to accounting for long-duration insurance contracts 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 September 30, in millions of Dollars 2023 2022 %Change U.S. GAAP book value per common share $38.63 $31.97 20.8% Less: Unrealized foreign currency translation gains (losses) per common share (7.64) (7.01) Unrealized gains (losses) on securities and derivatives per common share (0.73) 1.77 Effect of changes in discount rate assumptions per common share (1.48) (6.53) Pension liability adjustment per common share 0.03 (0.25) Total AOCI per common share (9.81) (12.03) Adjusted book value per common share2 $48.44 $44.00 10.1% Add: Unrealized foreign currency translation gains (losses) per common share (7.64) (7.01) Adjusted book value including unrealized foreign currency translation gains (losses) per common share3 $40.80 $36.99 10.3%
Adjusted Leverage Ratios (In millions) 2023 2022 Notes Payable $6,961 $7,518 50% of subordinated debentures and perpetual bonds (299) (309) Pre-funding of debt maturities — (448) Adjusted debt1 6,663 6,762 Total Shareholders’ Equity 22,669 19,946 Accumulated other comprehensive (income)loss: Unrealized foreign currency translation (gains) losses 4,484 4,374 Unrealized (gains) losses on fixed maturity securities 403 (1,131) Unrealized (gains) losses on derivatives 24 29 Effect on change in discount rate assumptions 866 4,075 Pension liability adjustment (17) 158 Adjusted book value1 28,429 27,451 Adjusted capitalization ex-AOCI 1,2 $35,390 $34,521 Adjusted debt to adjusted capitalization ex-AOCI 18.8% 19.6% 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; and adjusted capitalization ex-AOCI 2) Adjusted capitalization ex-AOCI is the sum of adjusted debt, including 50% of subordinated debentures and perpetual bonds, plus adjusted book value
Aflac Japan’s Underlying Net Earned Premium Three Months Ended September 30, in millions of Yen 2023 2022 %Change Aflac Japan’s Net Earned Premium - as reported ¥285,305 ¥293,667 (2.8)% Estimated impacts of quarterly significiant variables: Increase in paid-up policies 8,300 Impact of reinsurance 7,700 Change in Deferred Policy Liability 3,500 16,200 Other 100 Aflac Japan’s Underlying Net Earned Premium ¥304,705 ¥309,867 (1.7)%
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