Executive Summary

Adjusted EPS was $1.66, essentially in line with consensus ($1.67), while GAAP results were heavily impacted by net investment losses, driving total revenues to $3.40B and diluted EPS to $0.05; adjusted earnings of $0.91B declined 5.7% YoY .
Segment performance was resilient: Japan pretax adjusted margin 31.8% (down ~100 bps YoY), U.S. pretax margin 20.8% (roughly flat YoY), with Japan sales +12.6% on Tsumitasu and initial Miraito launch and U.S. sales +3.5% driven by group products .
Variable investment income ran $27M below long-term expectations and FX reduced adjusted EPS by $0.01; remeasurement gains on reserves totaled $41M, partially offsetting benefits .
Capital deployment remained a catalyst: $900M buybacks (8.5M shares) and a $0.58 quarterly dividend; holding company liquidity stood at $4.3B with strong capital ratios (SMR >950%, ESR ~250%) .

What Went Well and What Went Wrong

What Went Well

Japan sales momentum: total new annualized premium sales +12.6% to ¥14.1B ($93M), led by first-sector Tsumitasu and the March launch of Miraito cancer insurance; premium persistency robust at 93.8% .
Quote: “We have continued to focus on third sector products, including Miraito… while continuing to introduce these policies to new and younger customers through Tsumitasu” — Daniel P. Amos .
U.S. execution: net earned premiums +1.8%, sales +3.5% to $309M, expense ratio improvement to 37.6% (-110 bps YoY) and pretax margin at 20.8% .
Quote: “Our growth initiatives… and continuous focus on expense efficiency” — Max Broden .
Tactical capital return: $900M repurchases, $0.58 dividend, and maintained strong capital ratios (SMR >950%, ESR ~250%, combined RBC >600%) supporting flexible deployment .

What Went Wrong

GAAP volatility: net investment losses of $963M (vs. gains of $951M in Q1’24) drove a 37.5% revenue decline and GAAP EPS of $0.05; adjusted earnings fell 5.7% YoY to $906M .
Investment income headwinds: floating-rate portfolio pressure and variable investment income $27M below expectations; adjusted NII decreased in Japan (-9.6% to $586M) and U.S. (-1.9% to $202M) .
Japan expense ratio rose to 19.6% (+160 bps YoY) on technology spend; U.S. benefit ratio increased to 47.7% (+120 bps YoY) on mix and lower remeasurement gains vs. prior year .

Financial Results

Metric	Q1 2024	Q4 2024	Q1 2025
Total Revenues ($USD Billions)	$5.44B	$5.40B	$3.40B
Net Earnings ($USD Billions)	$1.88B	$1.90B	$0.03B
Diluted EPS (GAAP) ($USD)	$3.25	$3.42	$0.05
Adjusted Earnings ($USD Billions)	$0.96B	$0.87B	$0.91B
Adjusted EPS ($USD)	$1.66	$1.56	$1.66

Margin/Ratio	Q3 2024	Q4 2024	Q1 2025
Japan Pretax Adjusted Margin (%)	44.7%	31.6%	31.8%
U.S. Pretax Adjusted Margin (%)	20.8%	19.7%	20.8%
Japan Total Benefit Ratio (%)	49.2%	66.5%	65.8%
Japan Expense Ratio (%)	20.0%	20.8%	19.6%
U.S. Total Benefit Ratio (%)	47.6%	46.3%	47.7%
U.S. Expense Ratio (%)	38.0%	40.3%	37.6%

Segment (Q1 2025)	Net Earned Premiums ($USD Billions)	Adjusted Net Investment Income ($USD Millions)	Total Adjusted Revenues ($USD Billions)	Pretax Adjusted Earnings ($USD Millions)	Pretax Margin (%)
Aflac Japan	$1.7B (−7.4%)	$586M (−9.6%)	$2.3B (−8.1%)	$722M (−10.9%)	31.8%
Aflac U.S.	$1.5B (+1.8%)	$202M (−1.9%)	$1.7B (+1.3%)	$358M (+0.6%)	20.8%
Corporate & Other	N/A	N/A	$0.33B (+32.0%)	$43M (vs. −$3M)	N/A

KPIs	Q3 2024	Q4 2024	Q1 2025
Japan Premium Persistency (%)	93.3	93.4	93.8
U.S. Premium Persistency (%)	78.9	79.3	79.3
Japan New Sales ($USD Millions)	$117M	$113M	$93M
U.S. Sales ($USD Millions)	$379M	$534M	$309M
Share Repurchases ($USD Millions)	$500M	$750M	$900M
Dividends per Share (Decl/Pay)	$0.50	$0.50	$0.58 declared for Q2
Holding Co. Liquidity ($USD Billions)	$3.9B	$4.1B	$4.3B
Capital Ratios	SMR >1,100%	SMR >1,150%, ESR ~270%	SMR >950%, ESR ~250%, RBC >600%

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
Japan Benefit Ratio (%)	FY 2025	64–66 (toward high end)	Maintained	Maintained
Japan Expense Ratio (%)	FY 2025	20–23 (toward low end)	Maintained	Maintained
Japan Pretax Margin (%)	FY 2025	30–33 (toward low end)	Maintained	Maintained
U.S. Benefit Ratio (%)	FY 2025	48–52 (toward low end)	Maintained	Maintained
U.S. Expense Ratio (%)	FY 2025	36–39 (toward high end)	Maintained	Maintained
U.S. Pretax Margin (%)	FY 2025	17–20 (toward high end)	Maintained	Maintained
Dividend per Share	Quarterly	$0.58 declared Q1 2025	$0.58 declared Q2 2025	Maintained
FX Sensitivity	FY 2025	~$0.07 EPS per ¥5 move	Reiterated	Maintained

Earnings Call Themes & Trends

Topic	Previous Mentions (Q3 2024, Q4 2024)	Current Period (Q1 2025)	Trend
Japan sales strategy (Tsumitasu, Miraito)	Tsumitas drove +12.3% Q3 sales; cancer relaunch planned for spring; cross-sell to third sector	Tsumitasu + strong start; Miraito launched March and expanded to all channels in April; expect uplift in Q2	Improving momentum
U.S. dental platform stabilization	Q4 acknowledged service degradation; partner SkyGen; expected recovery in 2025	Stabilization progressing; dental agents who sold product saw +20% overall sales; 23% dental sales increase in Q1 for those agents	Gradual recovery
Remeasurement gains (seasonality)	Large unlock in Q3; Q4 remeasurement gains ~100–170 bps benefit ratios	Q1 remeasurement gains $41M; expect larger impact in Q3 unlock, smaller in other quarters	Normalizing to seasonality
Floating-rate NII headwind	2025 guidance set below 2024 on floating-rate decline and comps	~100 bps SOFR decline YoY pressuring NII; mitigation via portfolio repositioning and wider spreads	Headwind persists
FX/ESR hedging approach	ESR strong; size FX risk; US$ assets held in Japan; yen debt; forwards; put options	ESR ~250%; unhedged US$ assets $25.5B; $2.7B forwards; $4.4B yen debt; $24.2B notional puts; program unchanged	Stable program
Corporate reinsurance to Bermuda	Additional tranche planned in Q4’24; improves ROE and reduces risk	Tool remains available; ~6% ceded to date; capacity up to 10% internal cap; no near-term change	Ongoing
Commercial real estate	Watchlist manageable; foreclosure as needed; long recovery	CECL reserves increase modest ($2M CRE, $7M middle market loans); continued cautious stance	Cautious

Management Commentary

“Adjusted earnings per diluted share of $1.66, unchanged from the first quarter of 2024… I am pleased with Aflac Japan’s 12.6% year-over-year sales increase” — Daniel P. Amos .
“Remeasurement gains on reserves totaled $41M… variable investment income ran $27M below our long-term return expectations… adjusted ROE was 12.7% and 15.6% excluding foreign currency remeasurement” — Max Broden .
“We repurchased $900 million in shares for the quarter… We intend to continue our balanced approach of investing in growth and driving long-term operating efficiencies” — Daniel P. Amos .
“Our expense ratio in the U.S. was 37.6%, down 110 basis points year-over-year… profitability… pretax margin of 20.8%” — Max Broden .

Q&A Highlights

ESR movement and hedging: ESR decline tied to yen strengthening and dividend flows to Inc.; FX program sized to ~40–45 ESR points; ESR ~250% starting point; no major changes planned to hedging structure .
Japan cancer launch: Miraito launched in March, rolled out across channels by April; management expects stronger sales contribution in Q2 and throughout 2025 .
U.S. dental momentum: Platform stabilized with SkyGen; agents selling dental saw ~20% overall sales lift; focus on re-engaging veterans and brokers .
Investment income trajectory: Floating-rate headwind through 2025 given SOFR decline; offset via deploying capital at wider spreads and repositioning portfolios .
Japan Post data issue: Not related to Aflac products; sales of new cancer product by Japan Post Group continued in April .

Estimates Context

Metric	Q3 2024	Q4 2024	Q1 2025
EPS Consensus Mean ($)	1.6835*	1.6171*	1.6737*
EPS Actual ($)	2.16	1.56	1.66
Revenue Consensus Mean ($USD)	4,460,886,860*	4,163,104,090*	4,268,534,640*
Revenue Actual ($USD)	2,949,000,000	5,403,000,000	3,398,000,000

Q1 2025: Adjusted EPS of $1.66 was slightly below consensus (~$1.67), while GAAP revenue missed materially due to net investment losses; this revenue volatility is typical for insurers given investment mark-to-market dynamics .
Prior quarters highlight estimate dispersion driven by investment gains/losses: Q3’24 EPS beat on adjusted earnings and remeasurement gains, but GAAP revenue missed; Q4’24 EPS modest miss with GAAP revenue beat .
Implications: Sell-side may trim NII run-rate and assume continued floating-rate headwinds; U.S. benefit ratio mix shift and Japan tech investment could modestly pressure margins near term .

Consensus values marked with * are from S&P Global.

Key Takeaways for Investors

Resilient core insurance performance: Segments maintained attractive pretax margins (Japan ~32%, U.S. ~21%) despite NII headwinds, supported by favorable underwriting experience and persistency .
Near-term sales catalysts: Japan’s Miraito ramp and Tsumitasu cross-sell should aid Q2/Q3 volumes; watch for continued sales uplift in bank and agency channels .
Investment income is the swing factor: SOFR-driven NII headwind and variable income variance are key to quarterly EPS variability; management is redeploying at wider spreads to mitigate .
Capital return and buffers: Strong liquidity and capital ratios underpin continued buybacks/dividends; FX program provides tail protection, with ~$0.07 EPS sensitivity per ¥5 move .
U.S. platform recovery: Dental stabilization plus group life/disability scale can support expense leverage and sales mix improvement; monitor benefit ratio from mix (group L&D runs low-80s) .
Guidance steady: 2025 segment ratio ranges maintained; look for Japan benefit ratio to trend down over the multi-year horizon as mix skews further to third sector .
Risk watchlist: FX volatility (yen), floating-rate resets, CRE workout cadence, and Japan expense investments may create quarterly noise; underlying ROE spread remains acceptable .

Additional Relevant Press Releases (Q1 2025 Window)

Aflac expanded partnership with Empathy to include LifeVault legacy planning for group term life members (effective July 1), enhancing customer value proposition and engagement .
Aflac Wellness Matters survey highlights preventive care gaps among Americans, supporting the company’s broader health advocacy and product positioning .

Note: An explicit 8‑K 2.02 was not available in the document catalog for Q1 2025; the comprehensive earnings press release and financial tables were read and used as the primary source for results and reconciliations –.

AFLAC INC (AFL)·Q1 2025 Earnings Summary