01—Abstract
Summary
Summary of the 8-K filed August 5, 2025. Cited figures are marked; the original filing is the authoritative source.
Aflac reported second-quarter 2025 U.S. GAAP net earnings of $599 milliona, or $1.11 per diluted share, down sharply from $1.8 billion ($3.10) a year earlier.
The decline is driven by net investment losses of $421 millionb this quarter versus gains of $696 million in the prior-year period, mainly from $452 million of losses on certain derivatives and foreign currency activities. Excluding these items, the core metric is adjusted earnings, which fell 7.5% to $957 million, and adjusted EPS, which fell 2.7% to $1.78. Adjusted EPS excluding current-period FX was $1.73, down 5.5%, so the stronger yen contributed a $0.04 tailwind.
Underlying operations were mixed. Aflac Japan's pretax adjusted earnings fell 8.6%c in dollar terms and 15.0% in yen terms, with the pretax margin declining to 32.0% from 35.3%. Japan's yen net earned premiums fell 4.8%, but new annualized premium sales rose 23.2% to ¥20.7 billion, led by the Miraito cancer product.
Aflac U.S. grew more steadily, with net earned premiums up 3.4%, sales up 2.7%, pretax adjusted earnings up 1.3%, and persistency at 79.2%. Adjusted ROE was 13.7% (16.4% excluding foreign currency remeasurement), and adjusted book value per share excluding foreign currency remeasurement rose 5.2% to $44.17d. Capital deployment remained strong: Aflac repurchased $829 million of stock in the quarter, leaving 30.9 million shares authorized, and declared a $0.58 third-quarter dividend.
Holding-company liquidity rose to $5.1 billion after a ¥150 billion debt issuance, and adjusted leverage rose to 22.5%, still within the 20–25% target. The filing also notes a June 2025 unauthorized network access incident, which is a risk factor investors should monitor.
02—Key points
Key Highlights
- Net earnings fell 65.9% to $599 million ($1.11 diluted EPS), driven by $421 million in net investment losses versus $696 million of gains a year earlier
- Adjusted EPS declined 2.7% to $1.78 (down 5.5% excluding FX), with adjusted earnings of $957 million, down 7.5%
- Aflac Japan pretax adjusted earnings fell 8.6% in dollars and 15.0% in yen; pretax margin compressed to 32.0% from 35.3%, while new sales surged 23.2% on Miraito
- Aflac U.S. showed steady growth: net earned premiums up 3.4%, sales up 2.7%, pretax adjusted earnings up 1.3%, and persistency at 79.2%
- Adjusted ROE of 13.7% (16.4% excluding FX remeasurement); adjusted book value per share excluding FX remeasurement up 5.2% to $44.17
- Repurchased $829 million of shares and declared a $0.58 quarterly dividend (42 consecutive years of increases referenced); holding-company liquidity reached $5.1 billion
- Adjusted leverage rose to 22.5%, above the prior-year 19.5% but within the 20–25% target range after a ¥150 billion debt issuance to prefund 2026 maturities
03—Questions
Frequently Asked Questions
Why did Aflac's net earnings fall so sharply in Q2 2025?
The decline was mainly due to net investment losses of $421 million this quarter, compared with net investment gains of $696 million a year earlier. The losses included $452 million on certain derivatives and foreign currency activities and $58 million of credit loss provisions, partly offset by a $98 million gain on equity securities. Core adjusted earnings fell a more modest 7.5%.
How did the underlying businesses perform in Japan and the U.S.?
Aflac Japan's pretax adjusted earnings declined 15.0% in yen terms, reflecting lower net earned premiums, lower floating-rate investment income, and higher expenses. Sales jumped 23.2%, led by the Miraito cancer product. Aflac U.S. grew more steadily, with net earned premiums up 3.4%, sales up 2.7%, and pretax adjusted earnings up 1.3%.
Is Aflac's dividend and buyback program still intact?
Yes. The board declared a $0.58 per-share third-quarter dividend, payable September 2, 2025, and the company repurchased $829 million of stock in Q2 with 30.9 million shares remaining under authorization. Management said it will continue a balanced approach of investing in growth and returning capital.
What risks should investors watch from this filing?
Key risks include the large yen exposure and currency volatility, which drive reported results and book value, and the company's sensitivity to investment income such as floating-rate and variable investment income, which ran $35 million below expectations. The filing also flags an unauthorized access incident to Aflac's network in June 2025 and the commercial real estate portfolio, where CECL reserves were increased by $33 million.
04—Continue