Aflac (AFL) Q2 2025 earnings summary

Executive summary

• Q2 2025 net earnings were $599 million ($1.11 per diluted share), down sharply year-over-year due to significant net investment losses and FX impacts, while adjusted EPS declined 2.7% to $1.78.

• Japan segment saw a 23.2% year-over-year sales increase, with cancer insurance sales up 53%, driven by the Miraito product and expanded distribution.

• U.S. segment generated $340 million in new sales, up 2.7% year-over-year, with strong premium persistency and net earned premium growth.

• Persistency rates remained strong in both Japan (93.7%) and the U.S. (79.2%) for Q2 2025.

• Maintained robust capital and liquidity, returning $1.1 billion to shareholders through buybacks and dividends in Q2.

Financial highlights

• Adjusted EPS decreased 2.7% year-over-year to $1.78, with a $0.04 positive FX impact; adjusted book value per share (ex-FX) increased 5.2% year-over-year to $44.17.

• Net investment losses of $421 million in Q2 2025, compared to gains of $696 million in Q2 2024, driven by derivative and FX losses.

• U.S. GAAP ROE dropped to 9.0% in Q2 2025 from 28.3% in Q2 2024; adjusted ROE was 13.7%, and adjusted ROE ex-FX remeasurement was 16.4%.

• U.S. GAAP book value per share increased 9.6% year-over-year to $50.86; adjusted book value per share was $51.78, down 0.9%.

• Cash and cash equivalents at June 30, 2025, were $7.0 billion, up from $6.2 billion at year-end 2024.

Outlook and guidance

• Japan earned premium guidance remains at -1% to -2% for the period, with Q2 results trending toward the lower end.

• Expense ratio in Japan expected to be within 20%-23% for the year, likely at the middle or lower end.

• Optimism for continued strong performance in Japan, especially with Miraito and upcoming new medical product launch.

• U.S. sales expected to strengthen in the second half, driven by fourth quarter enrollments and improved recruitment.

• Management plans to maintain higher liquidity and capital at the parent for stress conditions and hedge costs.