AFLAC INC

Previous wording

MD&A is intended to inform the reader about matters affecting the financial condition and results of operations of Aflac Incorporated and its subsidiaries for the three-month periods ended March 31, 2024 and 2023, respectively. Results of operations for interim periods are not necessarily indicative of results for the entire year. As a result, the following discussion should be read in conjunction with the consolidated financial statements and notes that are included in the Company's annual report on Form 10-K for the year ended December 31, 2023 (2023 Annual Report). In this MD&A, amounts may not foot due to rounding.

Current wording

MD&A is intended to inform the reader about matters affecting the financial condition and results of operations of Aflac Incorporated and its subsidiaries for the six-month periods ended June 30, 2024 and 2023, respectively. Results of operations for interim periods are not necessarily indicative of results for the entire year. As a result, the following discussion should be read in conjunction with the consolidated financial statements and notes that are included in the Company's annual report on Form 10-K for the year ended December 31, 2023 (2023 Annual Report). In this MD&A, amounts may not foot due to rounding.

Previous wording

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.

Current wording

Total revenues were $10.6 billion in the first six months of 2024, compared with $10.0 billion in the first six months of 2023. Net earnings were $3.6 billion, or $6.35 per diluted share, in the first six months of 2024, compared with $2.8 billion, or $4.64 per diluted share, in the first six months of 2023.

Previous wording

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.

Current wording

Results in the first six months of 2024 included pretax net investment gains of $1.6 billion, compared with pretax net investment gains of $678 million in the first six months of 2023. Net investment gains in the first six months of 2024 included an increase in credit loss allowances of $20 million; $1.4 billion of net gains from certain derivative and foreign currency gains or losses; $87 million of net gains on equity securities; and $228 million of net gains from sales and redemptions.

Previous wording

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.

Current wording

The average yen/dollar exchange rate(1) for the three-month period ended June 30, 2024 was 155.70, or 11.7% weaker than the average yen/dollar exchange rate(1) of 137.53 for the same period in 2023. The average yen/dollar exchange rate(1) for the six-month period ended June 30, 2024 was 152.30, or 11.4% weaker than the average yen/dollar exchange rate(1) of 134.97 for the same period in 2023.

Previous wording

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.

Current wording

Adjusted earnings(2) in the second quarter of 2024 were $1.0 billion, or $1.83 per diluted share, compared with $954 million, or $1.58 per diluted share, in the second quarter of 2023. The weaker yen/dollar exchange rate negatively impacted adjusted earnings per diluted share by $.07. Adjusted earnings(2) in the first six months of 2024 were $2.0 billion, or $3.49 per diluted share, compared with $1.9 billion, or $3.13 per diluted share, in the first six months of 2023. The weaker yen/dollar exchange rate negatively impacted adjusted earnings per diluted share by $.14.

Previous wording

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.

Current wording

In the first six months of 2024, Aflac Incorporated repurchased $1.6 billion, or 18.6 million of its common shares. At June 30, 2024, the Company had 59.2 million remaining shares authorized for repurchase.

Previous wording

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%.

Current wording

Shareholders’ equity was $26.0 billion, or $46.40 per share, at June 30, 2024, compared with $22.0 billion, or $38.00 per share, at December 31, 2023. Shareholders’ equity at June 30, 2024 included a cumulative increase of $1.4 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 $379 million, compared with a net unrealized gain of $1.1 billion at December 31, 2023. Shareholders’ equity at June 30, 2024 also included an unrealized foreign currency translation loss of $5.1 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 second quarter of 2024 was 28.3%.

Previous wording

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%.

Current wording

Shareholders’ equity excluding accumulated other comprehensive income (AOCI)(2) (adjusted book value) was $29.3 billion, or $52.26 per share, at June 30, 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 second quarter of 2024 was 14.8%.