Aflac (AFL) Q1 2025 earnings summary

Executive summary

• Adjusted earnings per diluted share remained flat year-over-year at $1.66, with a $0.01 negative FX impact; reported EPS was $0.05 due to $963 million in net investment losses versus gains last year.

• Net earnings dropped sharply to $29 million from $1.9 billion, reflecting significant non-recurring investment losses.

• Strong capital deployment with $900 million in share repurchases and $317 million in dividends, totaling $1.2 billion returned to shareholders in Q1 2025.

• Japan segment sales grew 12.6% year-over-year, driven by new products like Tsumitasu and Miraito; U.S. sales increased 3.5%, led by group products.

• Solid start to the year with continued growth initiatives and prudent capital management.

Financial highlights

• Adjusted book value per share excluding FX rose 2.2% to $42.61; adjusted book value per share was $51.98.

• Adjusted ROE was 12.7%, or 15.6% excluding FX; annualized return on average shareholders' equity was 0.4%.

• Unencumbered holding company liquidity stood at $4.3 billion, $2.6 billion above minimum; leverage ratio at 20.7%, within the 20%-25% target range.

• SMR above 950%, regulatory ESR above 250%, combined RBC estimated above 600%.

• Net investment income was $955 million, down 4.5% year-over-year; variable investment income was $27 million below long-term expectations.

Outlook and guidance

• Management expects continued growth in Japan and U.S. markets, with 2025 sales forecasted above 2024; focus remains on profitable growth, disciplined underwriting, and expense management.

• New cancer insurance product Miraito in Japan expected to drive further sales growth, especially in Q2.

• Floating rate portfolio headwinds expected to persist, but actions underway to offset impact; no material changes to market risk exposures anticipated.

• Management remains flexible and tactical in capital deployment to drive strong risk-adjusted ROE.

• Continued commitment to dividend growth and balanced capital deployment between growth investments and share repurchases.