Aflac Japan Pretax Profit Falls as U.S. Margin Widens

The Tip Desk · November 4, 2026 · 4 min read

Net earnings were $303 million, or $0.61 a share, after $1.1 billion of net investment losses tied to a portfolio repositioning.

Aflac Incorporated (AFL), the supplemental health insurer, reported third-quarter net earnings of $303 million, or $0.61 a share, down from $1.64 billion, or $3.08 a share, a year earlier, as realized losses from a strategic repositioning of the investment portfolio and a tax capital loss valuation allowance compressed GAAP profit.

The company said net earnings included net investment losses of $1.1 billion, or $2.15 a share, versus net investment gains of $275 million, or $0.52 a share, a year earlier. Those losses included $842 million from sales and redemptions, $146 million on certain derivatives and foreign currency activities, $102 million of current expected credit losses and $1 million of impairments, offset by a $19 million gain on equity securities. A $51 million, or $0.10 a share, tax capital loss valuation allowance was also recorded against deferred tax assets tied to tax capital loss carryforwards.

Total revenues were $3.27 billion, down 31.0% from $4.74 billion a year earlier. Adjusted earnings, which exclude those investment gains and losses, were $1.21 billion, down 8.5% from $1.33 billion. Adjusted earnings per diluted share fell 2.4% to $2.43. Adjusted earnings benefited from $453 million of reserve remeasurement gains. The average yen/dollar rate was 158.49, 6.8% weaker than 147.68 a year earlier, with a negative $0.03 impact on adjusted earnings per share.

Aflac Japan, the largest operating segment, posted pretax adjusted earnings of ¥152.3 billion, down 15.2% in yen and 21.0% in dollars to $961 million. The pretax adjusted profit margin compressed to 44.4% from 52.2% a year earlier. The company said the yen decline was driven primarily by higher benefits as reserve remeasurement gains fell after unlocking actuarial assumptions. Net earned premiums were ¥240.3 billion, down 2.0% in yen and 9.3% in dollars to $1.51 billion, which the company attributed to an external reinsurance transaction effective in the first quarter, an internal cancer reinsurance transaction in the third quarter, and limited-pay products reaching paid-up status. Total benefits and claims, net, rose 22.5% in yen to ¥118 billion, lifting the benefits-to-premiums ratio to 49.2% from 39.3%. New annualized premium sales fell 4.0% to ¥18.8 billion, or $118 million, reflecting high prior-year Miraito cancer sales, partially offset by growth in Tsumitasu savings-type life insurance and Anshin Palette medical insurance.

Aflac Japan ceded approximately ¥500 billion of reserves on an FSA basis associated with cancer insurance policies to Aflac Re Bermuda. Chairman and Chief Executive Officer Daniel P. Amos said the Japan results reflect the impact of the reinsurance strategy on the income statement included within Corporate and Other, where Aflac Re Bermuda is consolidated.

Aflac U.S. moved the other way. Pretax adjusted earnings were $493 million, up 31.5% from a year earlier, with the pretax adjusted profit margin expanding to 27.7% from 21.7%. The company said the increase was driven by lower benefits from higher reserve remeasurement gains after unlocking actuarial assumptions, higher premiums and lower expenses. Net earned premiums rose 3.3% to $1.54 billion on improved sales and persistency. Sales increased 3.5% to $403 million, primarily from network dental as well as group life and disability products.

Corporate and Other pretax adjusted earnings were $72 million, up 4.3% from $69 million a year earlier, with total adjusted revenues up 5.0% to $360 million. The company said the increase was driven by higher reserve remeasurement gains and new reinsurance transactions, offset by higher adjusted expenses and lower adjusted net investment income from reduced short-term asset balances and a smaller hedge program.

Shareholders’ equity was $29.3 billion, or $59.08 a share, at September 30, 2026. The company returned $1.1 billion to shareholders in the quarter, consisting of $804 million in share repurchase and $305 million in dividends. Annualized adjusted return on equity excluding foreign currency remeasurement was 23.7%. The board declared a fourth-quarter dividend of $0.61 a share, marking 44 consecutive years of dividend increases.