Aflac (AFL) Q3 2024 earnings summary

Executive summary

• Q3 2024 net loss of $93 million, or $0.17 per diluted share, mainly due to $1.4 billion in net investment and FX losses, while adjusted EPS rose 17.4% to $2.16 and adjusted earnings increased 10.6% to $1.2 billion.

• Year-to-date adjusted EPS increased 13.5% to $5.64, with strong sales momentum in Japan (12.3% growth) and U.S. (5.5% growth) driven by new products and channels.

• Record profit margins achieved in Japan; U.S. segment saw robust growth in group life, absence management, and disability, though higher claims impacted U.S. pretax earnings.

• Maintained 42 consecutive years of dividend growth, with Q4 dividend declared at $0.50 per share, a 19% increase year-over-year.

• $500 million in share repurchases during Q3; $2.1 billion repurchased in the first nine months, with 54.3 million shares remaining authorized.

Financial highlights

• Adjusted earnings per diluted share up 17.4% year-over-year to $2.16; GAAP loss per share of $0.17 due to FX and investment losses.

• Adjusted book value per share increased 7.3% to $51.21; adjusted ROE was 17.0% for Q3.

• Japan segment: net-to-earned premiums declined 10.5% in yen due to internal reinsurance and paid-up policies; pretax adjusted earnings up 23.5%.

• U.S. segment: net-to-earned premium up 2.8%; pretax margin at 20.8%, but pretax adjusted earnings down 26.8% due to higher claims.

• Commercial real estate loan watch list at ~$1B, with less than $250M in foreclosure; $3M increase in CSO reserves.

Outlook and guidance

• Japan full-year benefit ratio expected at 62%-63%, lower than prior guidance due to assumption unlock.

• U.S. full-year benefit ratio expected at higher end of 45%-47% guidance; expense ratio to remain within 38%-40%.

• Japan pre-tax margin for full year expected at 35%-36%.

• Stable Tsumitasu sales expected through year-end; new product launches planned for next year.

• Effective tax rate on adjusted earnings for future periods expected to be approximately 20%.