Aflac’s Earnings Call: Mixed Insights and Future Outlook

AFLAC Incorporated ((AFL)) has held its Q2 earnings call. Read on for the main highlights of the call.

Aflac’s recent earnings call presented a mixed sentiment, highlighting robust sales growth in Japan, particularly in cancer insurance, and effective capital returns to shareholders. However, challenges were noted with declining net earned premiums in Japan and slower-than-expected sales growth in the U.S., painting a complex picture of the company’s performance.

Strong Performance in Aflac Japan

Aflac Japan demonstrated impressive growth with a 23.2% year-over-year sales increase, primarily driven by a 53% surge in cancer insurance sales. This growth was significantly influenced by the introduction of the new Miraito product, which has been well-received in the market.

Capital Return to Shareholders

Aflac Incorporated showed its commitment to returning value to shareholders by deploying $829 million in capital to repurchase 7.9 million shares and distributing $312 million in dividends. This resulted in a total return of $1.1 billion to shareholders in the second quarter of 2025.

Persistency and Premium Growth in Aflac U.S.

In the U.S., Aflac reported a 2.7% year-over-year increase in new sales, maintaining a strong premium persistency rate of 79.2%. Additionally, there was a 3.4% increase in net earned premium, indicating steady growth in the U.S. market.

Strong Capital Position

Aflac’s financial health remains robust, with a combined RBC estimated to be over 600%. The company continues to hold a strong capital position, characterized by a high return on capital and a low cost of capital.

Decline in Japan’s Net Earned Premiums

Despite strong sales growth, Aflac Japan faced a 4.8% decline in net earned premiums in Q2 2025. When excluding certain impacts, the underlying earned premiums declined by 1.1%, highlighting an area of concern for the company.

Challenges in U.S. Sales Growth

Aflac U.S. experienced a modest 2.7% year-over-year increase in sales, which was at the lower end of expectations. The company is optimistic about a stronger performance in the second half of the year, driven by anticipated fourth-quarter bookings.

Japan Expense Ratio Increase

The expense ratio in Japan increased by 280 basis points year-over-year to 20.6%, primarily due to rising technology expenses. This increase poses a challenge to maintaining profitability in the region.

Forward-Looking Guidance

Aflac’s forward-looking guidance indicates a cautious yet optimistic outlook. The company reported net earnings per diluted share of $1.11 and adjusted earnings per diluted share of $1.78, reflecting a 2.7% year-over-year decrease. Despite this, Aflac maintains a strong capital position and expects continued growth, particularly in the Japanese market, driven by the Miraito product.

In summary, Aflac’s earnings call revealed a mixed performance with strong growth in Japan offset by challenges in the U.S. market and declining premiums in Japan. The company’s solid capital position and commitment to shareholder returns remain key strengths, while it navigates the complexities of maintaining growth across different regions.