AFLAC INC

Company Overview

Aflac Incorporated (the Parent Company) and its subsidiaries (collectively, the Company) provide financial protection to millions of policyholders and customers in Japan and the United States (U.S.). The Company’s principal business is supplemental health and life insurance products with the goal to provide customers the best value in supplemental insurance products in Japan and the U.S. The Company's insurance business consists of two reporting segments: Aflac Japan and Aflac U.S. The Parent Company’s primary insurance subsidiaries are Aflac Life Insurance Japan Ltd. in Japan (Aflac Japan) and American Family Life Assurance Company of Columbus (Aflac); Continental American Insurance Company (CAIC), branded as Aflac Group Insurance (AGI); American Family Life Assurance Company of New York (Aflac New York); Tier One Insurance Company (TOIC) and Aflac Benefits Solutions, Inc. (ABS), which provides a platform for Aflac Dental and Vision in the U.S. (collectively, Aflac U.S.). The Parent Company, other operating business units that are not individually reportable, reinsurance activities, including internal reinsurance activity with Aflac Re Bermuda Ltd. (Aflac Re), and other business activities not included in Aflac Japan or Aflac U.S., as well as intercompany eliminations, are included in Corporate and other.

Performance Highlights

Total revenues were $5.4 billion in the first three months of 2024, compared with $4.8 billion in the first three months of 2023, reflecting net investment gains. Net earnings were $1.9 billion, or $3.25 per diluted share, in the first three months of 2024, compared with $1.2 billion, or $1.94 per diluted share, in the first three months of 2023.

Results in the first three months of 2024 included pretax net investment gains of $951 million, compared with pretax net investment gains of $123 million in the first three months of 2023. Net investment gains in the first three months of 2024 included an increase in credit loss allowances of $1 million; $703 million of net gains from certain derivative and foreign currency gains or losses; $76 million of net gains on equity securities; and $173 million of net gains from sales and redemptions.

The average yen/dollar exchange rate(1) for the three-month period ended March 31, 2024 was 148.67, or 11.0% weaker than the average yen/dollar exchange rate(1) of 132.30 for the same period in 2023.

Adjusted earnings(2) in the first three months of 2024 were $961 million, or $1.66 per diluted share, compared with $953 million, or $1.55 per diluted share, in the first three months of 2023. The weaker yen/dollar exchange rate negatively impacted adjusted earnings per diluted share by $.08.

In the first three months of 2024, Aflac Incorporated repurchased $750 million, or 9.3 million of its common shares. At March 31, 2024, the Company had 68.5 million remaining shares authorized for repurchase.

Shareholders’ equity was $23.5 billion, or $41.27 per share, at March 31, 2024, compared with $22.0 billion, or $38.00 per share, at December 31, 2023. Shareholders’ equity at March 31, 2024 included a cumulative decrease of $1.5 billion from the effect of changes in discount rate assumptions on insurance contracts, compared with a corresponding cumulative decrease of $2.6 billion at December 31, 2023, and a net unrealized gain on investment securities and derivatives of $1.1 billion, compared with a net unrealized gain of $1.1 billion at December 31, 2023. Shareholders’ equity at March 31, 2024 also included an unrealized foreign currency translation loss of $4.7 billion, compared with an unrealized foreign currency translation loss of $4.1 billion at December 31, 2023. The annualized return on average shareholders’ equity in the first quarter of 2024 was 33.0%.

Shareholders’ equity excluding accumulated other comprehensive income (AOCI)(2) (adjusted book value) was $28.6 billion, or $50.22 per share at March 31, 2024, compared with $27.5 billion, or $47.55 per share, at December 31, 2023. The annualized adjusted return on equity (ROE) excluding foreign currency impact(2) in the first quarter of 2024 was 14.3%.

(1) Yen/U.S. dollar exchange rates are based on the published MUFG Bank, Ltd. telegraphic transfer middle rate (TTM).

(2)See the Results of Operations section of this MD&A for a definition of this non-U.S. GAAP financial measure.