Why did GAAP net earnings jump so sharply year over year, and is that the right measure of performance?

The jump from $29 million to $1.0 billion mainly reflects the absence of a $963 million net investment loss in Q1 2025, compared with $49 million of gains in Q1 2026. Aflac uses adjusted earnings to strip out these investment gains and losses, along with certain non-recurring items, because they are largely outside management's control. On that basis, adjusted earnings were roughly flat at $901 million (down 0.6%), so adjusted EPS (up 5.4%) is the more representative measure of underlying performance.

How much of the quarter's profitability came from one-time or favorable reserve items?

Reserve remeasurement gains of $82 million reduced benefits in Q1, with management stating $23 million was above plan (about $0.04 per diluted share). In Japan, roughly 70 bps of the 290 bps benefit ratio improvement was attributed to remeasurement gains exceeding plan, and in the U.S., remeasurement gains improved the benefit ratio by about 230 bps, roughly 80 bps above plan. Variable investment income also ran $14 million below long-term expectations, which partly offset these benefits.

What are the main headwinds investors should watch?

Key headwinds include a 3.8% decline in Japan's yen net earned premiums (underlying premiums down 1.3% per management), a weaker yen (average 156.87 per dollar, 2.8% weaker, a roughly $0.02 EPS drag), lower short-term rates reducing U.S. investment income, higher U.S. expense ratios from DAC amortization and commissions, and $24 million of real estate impairments plus $61 million of CECL charges. The corporate segment also turned to breakeven as hedge benefits declined and interest expense rose.

How strong is Aflac's capital position after the quarter's buybacks and dividends?

Capital remains strong. The estimated regulatory ESR was 227% (243% including the undertaking-specific parameter), combined U.S. RBC was about 560%, and adjusted leverage was 21.2%, inside the company's 20% to 25% target range. Holding-company unencumbered liquidity was $3.4 billion, $2.4 billion above the $1 billion minimum, which supports continued repurchases and dividend increases.

What is the outlook for dividends and share repurchases?

Aflac raised its first-quarter dividend 5.2% to $0.61 per share and declared the same $0.61 for Q2, which the company describes as continuing its streak of annual dividend increases (43 consecutive years in 2025). Management said it will remain flexible and tactical in deploying capital, targeting strong risk-adjusted ROE with a meaningful spread over its cost of capital. Q1 buybacks of $1.0 billion were of similar size to recent quarters, but the filing gives no explicit full-year repurchase target.

AFL 8-K: Earnings & Results & Regulation FD

01—Abstract

Summary

Summary of the 8-K filed April 29, 2026. Cited figures are marked; the original filing is the authoritative source.

Aflac (AFL) reported first quarter 2026 results on April 29, 2026, with a headline GAAP swing driven largely by investment gains rather than underlying operations.

Total revenues rose 27.9% to $4.3 billion^a and net earnings were $1.0 billion ($1.98 per diluted share), versus $29 million a year earlier. That comparison is distorted by a $963 million net investment loss in Q1 2025; this quarter included $49 million of net investment gains, driven by derivative and FX gains partly offset by CECL and impairments. The more relevant measure for investors is adjusted earnings, which were $901 million, down 0.6% year over year, while adjusted EPS rose 5.4% to $1.75 on a lower share count.

Excluding current-period FX, adjusted EPS grew 6.6% to $1.77^b. The quality of the quarter was mixed. Aflac Japan's pretax adjusted earnings rose 5.1% on a benefit ratio improvement of 290 basis points, though about 70 basis points of that came from reserve remeasurement gains and net earned premiums fell 3.8% in yen terms.

U.S. pretax adjusted earnings rose 1.4%, with a 20.4% margin, and the corporate segment swung to breakeven from a $43 million^c gain. Reserve remeasurement gains of $82 million also helped the quarter. Capital deployment remained substantial: Aflac repurchased $1.0 billion of stock and paid $315 million in dividends.

The quarterly dividend was raised 5.2% to $0.61^d, with the same amount declared for Q2, extending its streak of annual dividend increases. Capital and liquidity metrics were strong, with a regulatory ESR of 227% (243% including USP), a combined U.S. RBC ratio of about 560%, adjusted leverage of 21.2% (within the 20% to 25% target), and $3.4 billion of unencumbered holding-company liquidity. Adjusted ROE was 12.8%, or 16.4% excluding foreign currency remeasurement.

02—Key points

Key Highlights

Total revenues rose 27.9% to $4.3 billion; GAAP net earnings were $1.0 billion ($1.98 per diluted share) versus $29 million ($0.05) a year earlier, a comparison distorted by a $963 million net investment loss in Q1 2025.
Adjusted earnings fell 0.6% to $901 million, but adjusted EPS rose 5.4% to $1.75 (6.6% to $1.77 excluding current-period FX) on fewer diluted shares, which declined 5.9% year over year.
Aflac Japan pretax adjusted earnings rose 5.1% to $759 million; the benefit ratio improved 290 bps to 62.9%, with roughly 70 bps attributed to reserve remeasurement gains, while yen net earned premiums fell 3.8%.
Aflac U.S. pretax adjusted earnings rose 1.4% to $363 million on 3.5% premium growth, with a 20.4% pretax margin (down 40 bps) and a 70 bps higher expense ratio.
Corporate and other swung to breakeven pretax adjusted earnings from a $43 million gain a year ago, driven by lower hedge benefits, higher interest expense, and runoff impacts.
Aflac returned $1.3 billion to shareholders in Q1 ($1.0 billion in buybacks, $315 million in dividends) and raised the quarterly dividend 5.2% to $0.61, with the same rate declared for Q2.
Capital and leverage remained strong: regulatory ESR of 227% (243% with USP), combined U.S. RBC of about 560%, adjusted leverage of 21.2%, and $3.4 billion of unencumbered holding-company liquidity.

03—Questions

Frequently Asked Questions

Why did GAAP net earnings jump so sharply year over year, and is that the right measure of performance?
The jump from $29 million to $1.0 billion mainly reflects the absence of a $963 million net investment loss in Q1 2025, compared with $49 million of gains in Q1 2026. Aflac uses adjusted earnings to strip out these investment gains and losses, along with certain non-recurring items, because they are largely outside management's control. On that basis, adjusted earnings were roughly flat at $901 million (down 0.6%), so adjusted EPS (up 5.4%) is the more representative measure of underlying performance.
How much of the quarter's profitability came from one-time or favorable reserve items?
Reserve remeasurement gains of $82 million reduced benefits in Q1, with management stating $23 million was above plan (about $0.04 per diluted share). In Japan, roughly 70 bps of the 290 bps benefit ratio improvement was attributed to remeasurement gains exceeding plan, and in the U.S., remeasurement gains improved the benefit ratio by about 230 bps, roughly 80 bps above plan. Variable investment income also ran $14 million below long-term expectations, which partly offset these benefits.
What are the main headwinds investors should watch?
Key headwinds include a 3.8% decline in Japan's yen net earned premiums (underlying premiums down 1.3% per management), a weaker yen (average 156.87 per dollar, 2.8% weaker, a roughly $0.02 EPS drag), lower short-term rates reducing U.S. investment income, higher U.S. expense ratios from DAC amortization and commissions, and $24 million of real estate impairments plus $61 million of CECL charges. The corporate segment also turned to breakeven as hedge benefits declined and interest expense rose.
How strong is Aflac's capital position after the quarter's buybacks and dividends?
Capital remains strong. The estimated regulatory ESR was 227% (243% including the undertaking-specific parameter), combined U.S. RBC was about 560%, and adjusted leverage was 21.2%, inside the company's 20% to 25% target range. Holding-company unencumbered liquidity was $3.4 billion, $2.4 billion above the $1 billion minimum, which supports continued repurchases and dividend increases.
What is the outlook for dividends and share repurchases?
Aflac raised its first-quarter dividend 5.2% to $0.61 per share and declared the same $0.61 for Q2, which the company describes as continuing its streak of annual dividend increases (43 consecutive years in 2025). Management said it will remain flexible and tactical in deploying capital, targeting strong risk-adjusted ROE with a meaningful spread over its cost of capital. Q1 buybacks of $1.0 billion were of similar size to recent quarters, but the filing gives no explicit full-year repurchase target.

04—Continue

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