This article first appeared on GuruFocus.
Release Date: November 05, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Aflac Inc (NYSE:AFL) reported strong net earnings per diluted share of $3.08 and adjusted earnings per diluted share of $2.49 for Q3 2025.
Aflac Japan saw an 11.8% year-over-year sales increase, with a notable 42% increase in cancer insurance sales driven by the new product, Maraito.
The company maintained strong premium persistency in both Japan and the US, with Japan at 93.3% and the US at 79%.
Aflac Inc (NYSE:AFL) deployed a record $1 billion in capital to repurchase 9.3 million shares and paid dividends of $309 million, returning $1.3 billion to shareholders in Q3 2025.
The company celebrated 43 consecutive years of dividend increases, supported by strong financial performance and capital management.
Net earned premiums in Japan declined by 4% for the quarter, with underlying earned premiums excluding certain impacts declining by 1.2%.
The US segment’s expense ratio increased by 90 basis points year-over-year, primarily due to a one-time early contract termination fee of $21 million.
Aflac Inc (NYSE:AFL) experienced an uptick in lapsation with the recently launched cancer product, although it remained within expectations.
The company faced challenges in stabilizing its dental operations, which are still not at scale and require more growth to achieve consistent profitability.
The US business saw pressure on individual product sales as brokers leaned towards group products, impacting overall sales performance.
Q: Can you discuss the trends in sales for Aflac US, particularly regarding dental and group sales versus core voluntary products? A: Virgil Miller, President of Aflac US, explained that brokers are increasingly favoring group products, which has put pressure on individual products. However, Aflac is focusing on growing its producer base and has seen an 8% increase in converting recruits into producers. The company also achieved a 24% increase in its buy-to-build initiative and won a contract with the state of Maine for claims administration. Dental operations have stabilized, showing a 40% increase for the first nine months.
Q: How did Japan sales perform, particularly for cancer insurance and the new Sumita product? A: Yoshizumi, in charge of sales and marketing for Aflac Japan, reported strong results driven by the cancer insurance product Miraito, which offers flexible protection and appeals to a wide demographic, including children. The Sumita product, after a rate revision, also showed solid growth starting in September. The company expects this momentum to continue into the fourth quarter.
Q: Can you elaborate on the repricing of policies in Japan, specifically regarding the Sumita product? A: The repricing was related to the Sumita product, where the assumed interest rate was increased due to rising yields. This adjustment was significant, moving the rate from 25 basis points to 1%. There was no repricing for cancer insurance products.
Q: How does Aflac plan to manage the launch of a new medical insurance product in Japan alongside existing products? A: Aflac Japan has undergone a marketing and sales transformation to support concurrent product launches. The new structure allows for cross-functional product development and marketing, enabling the company to manage multiple brands simultaneously. The team is confident in handling the new medical insurance launch while maintaining the success of existing products.
Q: What is the outlook for Aflac US’s buy-to-build initiative, and has it started yielding earnings? A: Virgil Miller noted that while the initiative is not yet at scale, there have been quarters with positive earnings. The company needs more growth to achieve consistent profitability. Dental operations have stabilized, and the focus is on increasing sales to drive premium growth.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.