Executive Summary

Adjusted EPS of $2.49 significantly beat S&P Global consensus $1.78, and revenue of $4.74B exceeded $4.48B consensus; GAAP diluted EPS was $3.08, aided by $275M net investment gains and reserve remeasurement unlocks; variable investment income tracked long-term expectations . Revenue/EPS consensus values from S&P Global.*
Segment profitability strengthened: Japan pretax margin rose to 52.2% (from 44.7% YoY), and U.S. pretax margin reached 21.7% (from 20.8% YoY), driven by assumption unlock, favorable underwriting experience, and disciplined expense management .
Management updated 2025 guidance: Japan benefit ratio 58–60%, expense ratio lower end of 20–23%, pretax margin 35–38%; U.S. benefit ratio lower end of 48–52%, expense ratio 36–39% (mid–upper), pretax margin upper end of 17–20% .
Capital deployment was a notable catalyst: record $1.0B buybacks (9.3M shares) and dividends of $309M in Q3; liquidity reinforced with $2B PCAP trusts, leverage at 22%, and robust capital ratios (SMR >900%, estimated combined RBC >600%) .

What Went Well and What Went Wrong

What Went Well
- Japan sales momentum: Miraito cancer insurance drove 11.8% YoY sales growth in Q3 (¥19.6B/$133M); pretax margin expanded to 52.2% on assumption unlock and favorable experience . “I am pleased with Aflac Japan’s 11.8% year-over-year sales increase... driven largely by continued sales of our cancer insurance product Miraito” — Daniel P. Amos .
- EPS surprise and quality: Adjusted EPS $2.49 beat, with $0.76 EPS uplift from Q3 assumption updates; FX had no impact; variable investment income in line with long-term expectations .
- U.S. execution: Net earned premiums up 2.5%, pretax margin to 21.7%; group life & disability and dental/vision continued to scale; productivity initiatives and underwriting discipline supported profitability .
What Went Wrong
- U.S. expense headwinds: Expense ratio rose 90 bps YoY to 38.9%, including a one-time $21M tech contract termination as part of cloud migration; advertising timing also elevated expenses .
- Japan premium trend: Net earned premiums down 2.7% in USD (4.0% in JPY) due to internal cancer reinsurance and paid-up policies; adjusted revenues declined modestly YoY .
- Investment/credit marks: Increased CECL reserves in commercial real estate ($28M) and middle-market loans ($7M); small FSA impairments; transitional real estate loan loss (JPY 189M), reflecting continued CRE stress (though within expectations) .

Financial Results

Metric	Q3 2024	Q2 2025	Q3 2025 Actual	Q3 2025 Consensus
Total Revenues ($USD Billions)	$2.949	$4.160	$4.740	$4.475*
GAAP Diluted EPS ($)	$(0.17)	$1.11	$3.08	—
Adjusted EPS (Diluted) ($)	$2.16	$1.78	$2.49	$1.78*
Adjusted Earnings ($USD Billions)	$1.211	$0.957	$1.327	—
Net Investment Gains/(Losses) ($USD Billions)	$(1.408)	$(0.421)	$0.275	—

Segment Breakdown

Segment / Metric	Q3 2024	Q2 2025	Q3 2025
Japan Net Earned Premiums ($USD Billions)	$1.709	$1.800	$1.663
Japan Adjusted NII ($USD Billions)	$0.662	$0.699	$0.665
Japan Total Adjusted Revenues ($USD Billions)	$2.378	$2.500	$2.335
Japan Pretax Adjusted Earnings ($USD Billions)	$1.073	$0.790	$1.216
Japan Pretax Adjusted Margin (%)	44.7%	31.9%	52.2%
U.S. Net Earned Premiums ($USD Billions)	$1.459	$1.504	$1.495
U.S. Adjusted NII ($USD Billions)	$0.210	$0.207	$0.214
U.S. Total Adjusted Revenues ($USD Billions)	$1.684	$1.728	$1.728
U.S. Pretax Adjusted Earnings ($USD Millions)	$350	$388	$375
U.S. Pretax Adjusted Margin (%)	20.8%	22.5%	21.7%

KPIs

KPI	Q1 2025	Q2 2025	Q3 2025
Japan New Annualized Premium Sales ($USD Millions)	$93	$143	$133
U.S. New Annualized Premium Sales ($USD Millions)	$309	$340	$390
Japan Premium Persistency (%)	93.8	93.7	93.3
U.S. Premium Persistency (%)	79.3	79.2	79.0
Japan Total Benefit Ratio (%)	65.8	66.5	39.3
U.S. Total Benefit Ratio (%)	47.7	47.3	45.6

Sequential context: Revenues rose to $4.74B from $4.16B; adjusted EPS increased to $2.49 from $1.78; net investment swung to a $275M gain from a $421M loss .

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
Japan Benefit Ratio (%)	FY 2025	Not disclosed in reviewed docs	58–60	Updated
Japan Expense Ratio (%)	FY 2025	Not disclosed in reviewed docs	Lower end of 20–23	Maintained
Japan Pretax Margin (%)	FY 2025	Not disclosed in reviewed docs	35–38	Updated
U.S. Benefit Ratio (%)	FY 2025	Not disclosed in reviewed docs	Lower end of 48–52	Maintained
U.S. Expense Ratio (%)	FY 2025	Not disclosed in reviewed docs	36–39 (mid–upper)	Maintained
U.S. Pretax Margin (%)	FY 2025	Not disclosed in reviewed docs	Upper end of 17–20	Maintained
Dividend	Q4 2025	$0.50 (prior year)	$0.58 declared	Raised YoY
Dividend	Q1 2026	$0.58 (Q4 2025)	$0.61 declared (+5.2%)	Raised

Earnings Call Themes & Trends

Topic	Previous Mentions (Q1 & Q2)	Current Period (Q3)	Trend
Japan product performance (Miraito, Tsumitas)	Miraito launched in March; Tsumitas driving younger customers; Q1 sales +12.6% (¥14.1B) ; Q2 sales +23.2% (¥20.7B)	Q3 sales +11.8% (¥19.6B); Miraito customization and child plans; Tsumitas repriced on higher assumed rates; strong multi-channel traction	Strengthening, broad-based momentum
U.S. distribution and product mix	Group life & disability, dental/vision scaling; persistency ~79%	Brokers leaning into group; individual under pressure; bundling dental with VB (approx $0.85 VB per $1 dental); rebuild producer base	Mix shifting to group; bundling strategy
Technology/AI initiatives	Not detailed in Q1/Q2 press releases	Cloud migration; $21M early termination fee; focus on unified experience; active framework for AI efficiency	Investment now for future efficiencies
Capital & liquidity	Persistent buybacks ($900M Q1; $829M Q2)	$1.0B buybacks, $309M dividends; $2B PCAP trusts; leverage 22%; SMR >900%, ESR >250%, combined RBC >600% (est.)	Strong, flexible capital deployment
Regulatory/legal & cybersecurity	Disclosure of incident in June 2025 noted in risk factors	Ongoing uncertainty from unauthorized network access cited in risk factors	Monitoring and remediation
Macro/FX	Q2 FX tailwind to EPS (+$0.04)	Q3 FX neutral to adjusted EPS; yen avg 147.68	FX impact moderated

Management Commentary

“We repurchased a record $1.0 billion 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 .
“In this quarter, reinvestment gains on reserves totaled $580 million... The total net impact from the Q3 assumption update increased EPS by $0.76.” — Max Brodén (CFO) .
“Adjusted net investment income in the U.S. was up 1.9%... profitability in the U.S. segment was very strong, with a pre-tax margin of 21.7%.” — Max Brodén .
“During the quarter, we... created two off-balance sheet pre-capitalized trusts (PCAPs) totaling $2 billion... Unencumbered holding company liquidity stood at $4.5 billion...” — Max Brodén .
“We are very aware of what’s happening in the world of AI... we will be active in ensuring efficiency and effectiveness in managing our business.” — Virgil Miller (President, Aflac Inc. and Aflac U.S.) .

Q&A Highlights

U.S. sales mix and broker dynamics: Brokers favor group; individual sales under pressure; bundling dental with VB products to present unified solutions; producer recruiting and conversion improving (8% conversion; productivity +16%) .
Japan product repricing and pipeline: Tsumitas repriced (assumed rate raised; discounted advance premium rate from 25 bps to 1%); Miraito continues strong; medical product launch targeted end-December with organizational cross-functional support to run three brands in parallel .
Capital deployment and FSA earnings drivers: Elevated Japan cash earnings driven by FX gains on maturing USD assets and reinsurance reserve releases; buybacks tactically based on IRR; strong capital ratios maintained .
M&A posture: Focus remains on scaling built capabilities; inorganic optionality primarily for tech/AI capabilities; niche distribution/admin complexity constrains larger deals; stance unchanged .
Private credit outlook: No systemic deterioration; disciplined underwriting and liquidity focus; CRE reserves increased modestly; no foreclosures in quarter; portfolio performing in line with expectations .

Estimates Context

Metric	Actual	S&P Global Consensus	Surprise
Adjusted EPS (Diluted) ($)	$2.49	$1.78*	Beat
Total Revenues ($USD Billions)	$4.740	$4.475*	Beat
# of EPS Estimates	—	13*	—
# of Revenue Estimates	—	3*	—

Aflac delivered a broad-based beat versus S&P Global consensus on both adjusted EPS and revenue, supported by reserve reinvestment gains and strong segment margins. Consensus values from S&P Global.*

Key Takeaways for Investors

EPS quality and margin strength: Adjusted EPS beat with Japan margin expansion to 52.2% and U.S. margin at 21.7%; assumption unlocks added $0.76 EPS, but underlying underwriting trends (e.g., cancer and hospitalization) remain favorable .
Sales trajectory: Japan sales growth sustained by Miraito and Tsumitas; U.S. group products scaling with bundling strategy; watch individual product recovery as producer base rebuilds .
Guidance signals: 2025 ranges suggest sustained profitability (Japan benefit 58–60%, pretax margin 35–38; U.S. benefit lower end 48–52, pretax margin upper end 17–20); monitor Q4 medical launch impact on mix .
Capital deployment: Record buybacks and rising dividends (Q1 2026 dividend +5.2%) support shareholder returns; added liquidity via PCAPs enhances flexibility for tactical deployment .
Credit and investment risk: Modest CECL reserve builds in CRE and middle-market loans are prudent; no foreclosures; portfolio disciplined; limited exposure to troubled names .
FX sensitivity: Q3 FX neutral to adjusted EPS; FSA cash earnings benefit from yen weakness on maturing USD assets; directionally, stronger yen could temper this tailwind .
Near-term trading: Positive setup on EPS/Revenue beat, margin expansion, and capital return; watch Q4 cadence for U.S. expense normalization post one-time fee and Japan sales momentum as medical product launches .

Values marked with an asterisk were retrieved from S&P Global.

AFLAC INC (AFL)·Q3 2025 Earnings Summary