Aflac (NYSE:AFL) reported second-quarter 2026 net earnings of $1.63 per diluted share and adjusted earnings of $1.75 per diluted share, as the insurer cited continued sales momentum in Japan and growth in its U.S. group insurance operations. Chief Financial Officer Max Brodén said adjusted earnings increased 1.1% year over year to $1.80 per diluted share excluding foreign-currency effects.
Chairman and Chief Executive Officer Dan Amos said the quarter extended a “solid financial start” to the year, supported by operating execution, investment income and capital generation. The company returned $1.3 billion to shareholders during the quarter through $983 million of stock repurchases and $309 million in dividends. For the first six months of 2026, shareholder returns totaled $2.6 billion.
Japan Sales Decline Against Strong Comparison
Aflac Japan recorded sales of ¥11 billion in the second quarter, down 5.6% from a year earlier, reflecting a difficult comparison following the prior-year launch of Miraito Cancer Insurance. First-half sales, however, rose 7%, and Amos said the company expects full-year Japan sales to exceed 2025 levels.
The company cited strong growth from its refreshed Tsumitasu savings-type life product and its Anshin Palette medical insurance product, introduced in December 2025. Tsumitasu accounted for about 20% of total sales, according to Masatoshi Koide, president and representative director of Aflac Life Insurance Japan.
Koide said Tsumitasu has helped broaden Aflac’s customer base among younger consumers and has supported sales of cancer and medical products alongside the savings product. Koichiro Yoshizumi, executive vice president of sales and marketing at Aflac Life Insurance Japan, said concurrent sales of cancer and medical coverage with Tsumitasu have exceeded the company’s initial 25% target.
While medical insurance sales declined sequentially from the first quarter, Yoshizumi said momentum has remained stronger than expected and should continue through the second half. The first-quarter result benefited from extensive preparation surrounding the late-December product launch, he said.
Japan premium persistency was 92.7%, unchanged from the prior quarter. Brodén said the company has experienced elevated lapse-and-reissue activity on recently introduced products, particularly Miraito, but expects that activity to normalize now that the cancer product has been in the market for more than a year.
- Japan net earned premiums declined 3.7% in yen terms.
- Underlying earned premiums, excluding reinsurance, paid-up policies and deferred profit liability effects, declined 1.4%.
- The Japan benefit ratio was 64%, down 250 basis points year over year.
- The expense ratio was 20.2%, down 40 basis points despite inflation pressures in Japan.
- Japan’s pretax margin increased 230 basis points to 34.3%.
Brodén said the company now expects Japan’s full-year benefit ratio to land at the high end of its 60% to 63% guidance range, excluding the annual third-quarter actuarial assumption review. He attributed the higher year-to-date ratio partly to fewer lapses of older policies, which carry larger accumulated reserves and would otherwise provide a greater benefit-ratio reduction when they lapse.
U.S. Group Business Gains Momentum
In the U.S., Aflac reported a 2.6% year-over-year increase in sales and a 2.3% increase in net earned premiums. Premium persistency improved 20 basis points to 79.4%, while the U.S. pretax margin was 20.9%.
President Virgil Miller said the company’s group life, absence and disability business, together with dental and vision products and group voluntary benefits, generated sales growth of 7.1% in the second quarter. Earned premiums for those group products rose 13%.
Dental and vision sales increased 47%, driven heavily by Aflac’s agency force, Miller said. He added that the company plans to focus in the second half on increasing broker adoption of network dental products while continuing to pair dental and vision sales with voluntary-benefits offerings.
Aflac expects 2026 U.S. net earned premium growth to come in slightly below its previous 3% to 6% guidance range, compared with its earlier expectation for growth at the low end of that range. Brodén said the company still expects its 2025-2027 net earned premium compound annual growth rate to remain within the 3% to 6% range.
The U.S. benefit ratio rose 220 basis points year over year to 49.5%, primarily because of increased incurred group disability claims following favorable results in the prior quarter. The U.S. expense ratio fell 20 basis points to 36.1%.
Portfolio Repositioning and Capital Management
Aflac repositioned $4.8 billion of its investment portfolio through switch trades during the quarter. Global Chief Investment Officer Brad Dyslin said the activity was concentrated in Japan and involved harvesting foreign-exchange gains on U.S. dollar assets to offset losses on older, lower-yielding bonds, including Japanese government bonds.
Brodén said the transactions are expected to increase net investment income by more than $50 million on an annualized run-rate basis, while having a limited effect on capital. The company also said the trades improved asset-liability management, reduced the risk of future Financial Services Agency impairments and strengthened portfolio quality.
Aflac ended the quarter with $3.3 billion in unencumbered liquidity, or $2.3 billion above its $1 billion minimum balance. Adjusted leverage was 21.8%, within the company’s 20% to 25% target range. Its estimated regulatory economic solvency ratio was 226%, or 240% including the Undertaking-Specific Parameter, while combined risk-based capital was slightly above 600%.
The company also revised its internal Japan reinsurance target to permit cessions of up to 30% of Financial Services Agency reserves, replacing a prior target of up to 10% of U.S. GAAP assets. Brodén said the expanded capacity is intended to reduce risk, improve balance-sheet efficiency and support higher returns on equity, though the timing and size of future transactions will vary.
Amos said Aflac will continue evaluating acquisition opportunities but will apply a “strenuous test” before pursuing a deal. He said the company has been encouraged by the progress of smaller businesses it previously acquired and would consider larger opportunities if they made financial and strategic sense.
About Aflac (NYSE:AFL)
Aflac Incorporated (American Family Life Assurance Company of Columbus) is a provider of supplemental insurance products designed to help policyholders manage out-of-pocket health care and living expenses. The company underwrites a range of individual and group policies that typically pay cash benefits directly to insureds when covered events occur, enabling greater financial flexibility for medical treatment, hospital stays, critical illness, and related costs. Aflac’s product mix includes supplemental health insurance, life insurance and other specialty coverages intended to complement primary medical plans.
Founded in the mid-20th century and headquartered in Columbus, Georgia, Aflac distributes its products through a combination of employer-sponsored programs, independent brokers and agents, and direct marketing.
