Executive Summary

Q4 2024 delivered strong reported results: total revenues $5.403B, GAAP diluted EPS $3.42, driven by $1.032B net investment gains; adjusted EPS rose 24.8% to $1.56 while FX shaved $0.01 off adjusted EPS .
Segment profitability remained solid: Japan pretax adjusted margin 31.6% (up 120 bps YoY), U.S. margin 19.7% (up 130 bps YoY), with Japan sales +9% and U.S. sales -4.5% amid dental platform recovery efforts .
Capital return accelerates: $750M buyback in Q4; dividend increased 16% to $0.58 for Q1 2025, marking 42 consecutive years of dividend growth .
2025 outlook: Japan benefit ratio expected at high end of 64–66% and pretax margin at low end of 30–33% due to lower floating-rate NII; U.S. pretax margin expected upper end of 17–20% as new lines scale .
Wall Street consensus (S&P Global) for Q4 2024 was unavailable at time of analysis; results vs estimates cannot be assessed. We will update when SPGI access is restored.

What Went Well and What Went Wrong

What Went Well

Japan profitability and persistency: “Aflac Japan represented more than 70% of pretax adjusted earnings... record 36% pretax profit margin in 2024... I am pleased with Aflac Japan's 93.4% premium persistency” (Dan Amos) .
New product momentum: Japan fourth-sector product (Tsumitasu) drove sales +9% QoQ; management highlighted Tsumitasu as a hook to grow third-sector policies and planned launch of new cancer product in Mar–Apr .
Expense discipline and margin in U.S.: U.S. pretax margin 19.7% with expense ratio down 310 bps YoY; persistency improved to 79.3% .

What Went Wrong

U.S. sales softness: Q4 U.S. sales -4.5% YoY to $534M, driven by weaker network dental and a conscious focus on underwriting discipline over volume (management cited Q4 2023 as a tough compare) .
Floating-rate NII headwinds: CFO sees 2025 NII pressure from lower short rates; tail hedge swap currently ineffective, exposing earnings to short-rate declines .
Commercial real estate (CRE) stress: CECL reserves increased $40M net; two foreclosures added to REO; recovery expected to be prolonged with depressed valuations .

Financial Results

Metric	Q4 2023	Q3 2024	Q4 2024
Total Revenues ($USD Billions)	$3.777	$2.949	$5.403
GAAP Diluted EPS ($)	$0.46	-$0.17	$3.42
Adjusted Earnings ($USD Millions)	$732	$1,211	$865
Adjusted EPS ($)	$1.25	$2.16	$1.56
FX Impact on Adjusted EPS ($)	N/A	$0.03	$0.01

Segment breakdown (quarterly):

Segment	Metric	Q3 2024	Q4 2024
Japan	Net Earned Premiums ($)	$1.7B	$1.7B (-8.2% YoY)
Japan	Adjusted NII ($)	$662M	$665M
Japan	Total Adjusted Revenues ($)	$2.4B	$2.4B (-5.6% YoY)
Japan	Pretax Adjusted Earnings ($)	$1.1B	$0.7B (-1.1% YoY)
Japan	Pretax Adjusted Margin (%)	44.7%	31.6% (30.4% a year ago)
U.S.	Net Earned Premiums ($)	$1.5B	$1.4B (+2.7% YoY)
U.S.	Adjusted NII ($)	$210M	$213M
U.S.	Total Adjusted Revenues ($)	$1.7B	$1.7B (+2.0% YoY)
U.S.	Pretax Adjusted Earnings ($)	$350M	$330M (+9.3% YoY)
U.S.	Pretax Adjusted Margin (%)	20.8%	19.7% (18.4% a year ago)

Key performance indicators (quarterly):

KPI	Q3 2024	Q4 2024
Japan Persistency (%)	93.4	93.4
Japan Third-Sector Benefit Ratio (%)	56.9	56.9
Japan Total Benefit Ratio (%)	66.5	66.5
Japan Sales (New AP)	¥17.5B / $117M	¥17.2B / $113M (+9.0% YoY)
U.S. Persistency (%)	78.6 (approx; +70 bps YoY stated)	79.3
U.S. Total Benefit Ratio (%)	46.3	46.3
U.S. Expense Ratio (%)	40.3	40.3
U.S. Sales ($)	$379M	$534M (-4.5% YoY)

Capital actions and balance sheet:

Metric	Q3 2024	Q4 2024
Buybacks ($)	$500M	$750M
Dividend per Share	$0.50 (Q4)	$0.58 (Q1 2025 declared)
Shareholders’ Equity ($B)	$24.830	$26.098
Holding Co. Liquidity ($B)	N/A	$4.1

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
Japan Benefit Ratio	FY 2025	64–66% (range communicated Dec 3)	Toward high end of 64–66%	Maintained range; positioned higher
Japan Expense Ratio	FY 2025	20–23%	Lower end of 20–23%	Maintained range; positioned lower
Japan Pretax Margin	FY 2025	30–33%	Lower end of 30–33%	Maintained range; positioned lower
U.S. Benefit Ratio	FY 2025	48–52%	Lower end of 48–52%	Maintained range; positioned lower
U.S. Expense Ratio	FY 2025	36–39%	Upper end of 36–39%	Maintained range; positioned higher
U.S. Pretax Margin	FY 2025	17–20%	Upper end of 17–20%	Maintained range; positioned higher
Dividend per Share	Q1 2025	$0.50 (Q4 prior)	$0.58 (+16%)	Raised

Rationale: Guidance positioning reflects anticipated short-rate declines impacting floating-rate NII (Japan), ongoing scaling investments in U.S. growth initiatives, and robust margin management .

Earnings Call Themes & Trends

Topic	Q2 2024 Mentions	Q3 2024 Mentions	Q4 2024 Current	Trend
Japan product strategy (Tsumitasu, cancer)	Initial introduction, sales +4.5%; focus on younger customers and third-sector cross-sell	Stronger contribution; sales +12.3%; staged new product momentum	Tsumitasu momentum; new cancer product staged Mar–Apr with enhanced coverage/consultation	Improving product-led growth
U.S. dental & vision platform	Partnership and platform investments; improving NII	Recovery post failed implementation; brokers’ trust rebuilding	Q4 dental sales -33%; renewed outreach; expect sales to improve in 2025	Near-term headwind; gradual recovery
Underwriting discipline vs volume	Emphasis on profitable growth and persistency	Lower remeasurement gains; higher benefits; margin compression vs prior year	Management prioritizes earnings quality over sales volume; U.S. margin up YoY	Consistent focus on profitability
Floating-rate NII/hedging	Benefit from call income (Japan); strong NII	FX volatility; derivative losses from yen strengthening	2025 headwind from falling short rates; tail hedge swap currently ineffective	Turning negative for NII
CRE portfolio	Minimal impairments; strong NII	Noted volatile markets; capital strong	CECL +$40M; 2 foreclosures; prolonged recovery expected	Challenged but manageable
Capital returns	Record $800M buyback; dividend consistency	$500M buyback; declared $0.50 dividend	$750M buyback Q4; dividend raised to $0.58	Sustained, increasing returns

Management Commentary

“Aflac Japan... record 36% pretax profit margin in 2024... 93.4% premium persistency and 5.6% year-over-year sales increase” — Daniel P. Amos .
“We expect the Japan pretax profit margin to be at the lower end of 30% to 33%... floating-rate income is expected to be lower” — Max Broden .
“We saw a 33% decline in our dental sales for Q4... we must earn back broker trust; we are open for business” — Virgil Miller .
“We repurchased $2.8B in shares for the year... 42 consecutive years of dividend increases” — Daniel P. Amos .

Q&A Highlights

U.S. sales competitiveness: Management chose underwriting discipline over low-quality volume; dental recovery hinges on broker confidence and platform readiness .
Japan sales trajectory: Tsumitasu as a hook for third-sector; new cancer product launch expected to drive activity; focus on younger customer acquisition .
2025 margins and NII: Floating-rate declines likely reduce NII; Japan margins positioned lower within range; U.S. margins upper end as new lines scale .
CRE outlook: Continued watchlist work, selective foreclosures, slow recovery with depressed valuations; manageable through-cycle approach .
Capital deployment: Elevated buybacks in Q4; IRR-driven prioritization of policy growth; strong liquidity and capital ratios .

Estimates Context

S&P Global Wall Street consensus for Q4 2024 EPS and revenue was unavailable due to data access limits; comparison to estimates cannot be provided at this time. We will update with SPGI consensus when available.

Key Takeaways for Investors

Quality over quantity in U.S. growth: Expect near-term sales variability as underwriting discipline and dental platform rehab take precedence; margin management remains robust .
Japan profitability durable but NII-sensitive: 2025 margin positioning reflects short-rate headwinds; product pipeline (new cancer) and Tsumitasu should underpin sales .
Capital return remains a lever: $750M Q4 buyback and 16% dividend increase signal confidence; liquidity $4.1B and strong capital ratios support continued returns .
Watch CRE and FX: CRE provisioning and foreclosures suggest a long recovery; yen/dollar FX translation will continue to introduce GAAP volatility despite economic hedging .
2025 guideposts: Monitor benefit/expense ratios within ranges and NII trend vs short-rate moves; U.S. margin targeted upper end as initiatives scale .
Tactical implication: Favor buy-the-dip on execution milestones (dental broker re-engagement, Japan cancer launch traction) and on capital-return announcements; be cautious around macro-driven NII/FX shocks .

Sources: Q4 2024 press release and financial tables , Q4 2024 earnings call transcripts , Q3 2024 press release , Q2 2024 press release , dividend press release .

AFLAC INC (AFL)·Q4 2024 Earnings Summary