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 $3.4 billion in the first quarter of 2025, compared with $5.4 billion in the first quarter of 2024, primarily due to net investment losses of $963 million in the first quarter of 2025 compared with net investment gains of $951 million in the first quarter of 2024. Net earnings were $29 million, or $.05 per diluted share, in the first quarter of 2025, compared with $1.9 billion, or $3.25 per diluted share, in the first quarter of 2024.

Net earnings in the first quarter of 2025 included net investment losses of $963 million, compared with net investment gains of $951 million in the first quarter of 2024. Net investment losses in the first quarter of 2025 included $888 million of net losses from certain derivative and foreign currency gains or losses; $61 million of net losses on equity securities; an increase in credit loss allowances of $55 million; and $41 million of net gains from sales and redemptions.

The average yen/dollar exchange rate(1) for the three-month period ended March 31, 2025 was 152.40, or 2.4% weaker than the average yen/dollar exchange rate(1) of 148.67 for the same period in 2024.

Adjusted earnings(2) in the first quarter of 2025 were $906 million, or $1.66 per diluted share, compared with $961 million, or $1.66 per diluted share, in the first quarter of 2024. The weaker yen/dollar exchange rate negatively impacted adjusted earnings per diluted share by $.01.

In the first three months of 2025, Aflac Incorporated repurchased $900 million, or 8.5 million of its common shares. At March 31, 2025, the Company had 38.8 million remaining shares authorized for repurchase.

Shareholders’ equity was $26.3 billion, or $48.55 per share, at March 31, 2025, compared with $26.1 billion, or $47.45 per share, at December 31, 2024. Shareholders’ equity at March 31, 2025 included a cumulative increase of $3.9 billion from the effect of changes in discount rate assumptions on insurance reserves, compared with a corresponding cumulative increase of $2.0 billion at December 31, 2024, and a net unrealized loss on investment securities and derivatives of $1.3 billion, compared with a net unrealized gain of $4 million at December 31, 2024. Shareholders’ equity at March 31, 2025 also included an unrealized foreign currency translation loss of $4.5 billion, compared with an unrealized foreign currency translation loss of $5.0 billion at December 31, 2024. The annualized return on average shareholders’ equity in the first quarter of 2025 was .4%.

Shareholders’ equity excluding accumulated other comprehensive income (AOCI)(2) (adjusted book value) was $28.2 billion, or $51.98 per share, at March 31, 2025, compared with $29.1 billion, or $52.87 per share, at December 31, 2024. Adjusted book value excluding foreign currency remeasurement(2) was $23.1 billion, or $42.61 per share, at March 31, 2025, compared with $23.4 billion, or $42.46 per share, at December 31, 2024. The annualized adjusted return on equity (ROE) excluding foreign currency remeasurement(2) in the first quarter of 2025 was 15.6%.

(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.