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| Total revenues were $2.9 billion in the third quarter of 2024, compared with $5.0 billion in the third quarter of 2023. Net losses were $93 million, or losses of $0.17 per diluted share, compared with earnings of $1.6 billion, or $2.64 per diluted share a year ago, primarily due to increased foreign exchange-related losses from yen strengthening by 12.9% during the quarter. |
| Net losses in the third quarter of 2024 included net investment losses of $1.4 billion, or $2.51 per diluted share, compared with net investment gains of $423 million, or $0.71 per diluted share a year ago. These net investment losses were driven by net losses of $1.4 billion on certain derivatives and foreign currency activities; net gains from sales and redemptions of $105 million; a $13 million gain from an increase in the fair value of equity securities; an $86 million increase in credit losses; and a $55 million impairment due to the anticipated sale of investments with unrealized losses. |
| Adjusted earnings* in the third quarter were $1.2 billion, compared with $1.1 billion in the third quarter of 2023, reflecting an increase of 10.6%. Adjusted earnings per diluted share* increased 17.4% to $2.16 in the quarter. Variable investment income ran $27 million below the company's long-term return expectations. The weaker yen/dollar exchange rate negatively impacted adjusted earnings per share by $0.03. |
| The average yen/dollar exchange rate in the third quarter of 2024 was 147.95, or 2.0% weaker than the average rate of 144.97 in the third quarter of 2023. For the first nine months, the average exchange rate was 150.60, or 8.1% weaker than the rate of 138.38 a year ago. |
| Shareholders' equity was $24.8 billion, or $44.60 per share, at September 30, 2024, compared with $22.7 billion, or $38.63 per share, at September 30, 2023. Shareholders' equity at the end of the third quarter included a cumulative decrease of $67 million for the effect of the change in discount rate assumptions on insurance reserves, compared with a corresponding cumulative decrease of $866 million at September 30, 2023, and a net unrealized gain on investment securities and derivatives of $537 million, compared with a net unrealized loss of $427 million at September 30, 2023. Shareholders' equity at the end of the third quarter also included an unrealized foreign currency translation loss of $4.1 billion, compared with an unrealized foreign currency translation loss of $4.5 billion on September 30, 2023. The annualized return on average shareholders' equity in the third quarter was (1.5)%. |
| For the first nine months of 2024, total revenues were down 9.4% to $13.5 billion, compared with $14.9 billion in the first nine months of 2023. Net earnings were $3.5 billion, or $6.23 per diluted share, compared with $4.4 billion, or $7.28 per diluted share, for the first nine months of 2023. Adjusted earnings for the first nine months of 2024 were $3.2 billion, or $5.64 per diluted share, compared with $3.0 billion, or $4.97 per diluted share, in 2023. Excluding the negative impact of $0.17 per share from the weaker yen/dollar exchange rate, adjusted earnings per diluted share increased 16.9% to $5.81 for the first nine months of 2024. |
| Shareholders' equity excluding AOCI (or adjusted book value*) was $28.5 billion, or $51.21 per share on September 30, 2024, compared with $28.4 billion, or $48.44 per share, on September 30, 2023. The annualized adjusted return on equity excluding foreign currency impact* in the third quarter was 17.0%. |
| AFLAC JAPAN |
| In yen terms, Aflac Japan's net earned premiums were ¥255.4 billion for the quarter, or 10.5% lower than a year ago, mainly due to the changes in deferred profit liability including the impact from actuarial assumption updates, prior year internal cancer reinsurance transactions, as well as limited-pay policies reaching paid-up status. Adjusted net investment income increased 0.1% to ¥99.0 billion. Total adjusted revenues in yen declined 7.8% to ¥355.3 billion. Pretax adjusted earnings in yen for the quarter increased 25.5% on a reported basis to ¥158.7 billion, primarily due to lower benefits and expenses during the quarter, partially offset by lower net earned premiums. Pretax adjusted earnings increased 24.0% on a currency-neutral basis. The pretax adjusted profit margin for the Japan segment increased to 44.7%, compared with 32.8% a year ago, primarily due to higher remeasurement gains of ¥39.7 billion from unlocking assumptions. |
| For the first nine months, net earned premiums in yen were ¥792.6 billion, or 7.4% lower than a year ago. Adjusted net investment income increased 15.2% to ¥308.5 billion. Total adjusted revenues in yen were down 2.0% to ¥1.1 trillion. Pretax adjusted earnings were ¥413.8 billion, or 20.3% higher than a year ago. |
| In dollar terms, net earned premiums decreased 13.4% to $1.7 billion in the third quarter. Adjusted net investment income decreased 2.5% to $662 million. Total adjusted revenues declined by 10.6% to $2.4 billion. Pretax adjusted earnings increased 23.5% to $1.1 billion. |
| For the first nine months, net earned premiums in dollars were $5.2 billion, or 15.6% lower than a year ago. Adjusted net investment income increased 5.7% to $2.0 billion. Total adjusted revenues were down 10.6% to $7.3 billion. Pretax adjusted earnings were $2.7 billion, or 10.8% higher than a year ago. |
| For the quarter, total new annualized premium sales (sales) increased 12.3% to ¥17.5 billion, or $117 million, primarily reflecting sales of the new first sector product. For the first nine months, total new sales increased 4.4% to ¥46.9 billion, or $309 million. |
| AFLAC U.S. |
| Aflac's U.S. net earned premiums increased 2.8% to $1.5 billion in the third quarter compared to the prior year, reflecting improved sales and continued improvement in persistency. Adjusted net investment income increased 0.5% to $210 million. Total adjusted revenues were up 1.4% to $1.7 billion. Pretax adjusted earnings were $350 million, 26.8% lower than a year ago, primarily due to higher benefits resulting from lower remeasurement gains and higher incurred claims. As a result, the pretax adjusted profit margin for the U.S. segment was 20.8%, compared with 28.8% a year ago. |
| For the first nine months, net earned premiums increased 2.7% to $4.4 billion. Adjusted net investment income increased 4.1% to $634 million. Total adjusted revenues were up 1.7% to $5.1 billion. Pretax adjusted earnings were $1.1 billion, or 9.2% lower than a year ago. |
| Aflac U.S. sales increased 5.5% in the quarter to $379 million, largely driven by premier group life, absence management and disability products, as well as cancer insurance. For the first nine months of the year, total new sales increased 1.0% to $1.0 billion. |
| CORPORATE AND OTHER |
| For the quarter, total adjusted revenues increased 95.7% to $225 million compared to the prior year primarily due to increasing total net earned premiums and adjusted net investment income, all of which reflect the impact of reinsurance transactions in the fourth quarter of 2023. Net investment income also benefited from a combination of higher rates and asset balances, as well as a continued lower volume of tax credit investments. Total benefits and adjusted expenses increased by $47 million compared to the prior year primarily as a result of the increased reinsurance activity. Pretax adjusted earnings were a gain of $15 million, compared with a loss of $49 million a year ago. |
| For the first nine months, total adjusted revenues increased 88.3% to $723 million. Pretax adjusted earnings were a gain of $36 million, compared with a loss of $107 million a year ago. |
| DIVIDENDS AND CAPITAL RETURNED TO SHAREHOLDERS |
| The board of directors declared the fourth quarter dividend of $0.50 per share, payable on December 2, 2024, to shareholders of record at the close of business on November 20, 2024. |
| In the third quarter, Aflac Incorporated deployed $500 million in capital to repurchase 4.9 million of its common shares. At the end of September 2024, the company had 54.3 million remaining shares authorized for repurchase. |
| OUTLOOK |
| Commenting on the company's results, Aflac Incorporated Chairman and Chief Executive Officer Daniel P. Amos stated: "I am pleased that Aflac delivered very solid adjusted earnings for the quarter and the first nine months. We have continued to actively concentrate on generating profitable growth in the U.S. and Japan with new products and distribution strategies. We believe our strategy will continue to create long-term value for shareholders. |
| "Looking at our operations in Japan, we have continued to focus on third-sector products as well as introducing these policies to new and younger customers. While still in the very early stages, we were pleased with the initial introduction of our latest life insurance product which offers an asset formation component and a nursing care option. This drove the 12.3% sales increase for the quarter. This approach is in line with our strategy of connecting with younger customers to provide them with integrated financial protection and services through different life stages. |
| "In the U.S., we achieved 5.5% sales growth for the quarter, which is a welcome result as we enter the fourth quarter, which tends to be the heaviest enrollment period. At the same time, we continue to focus on more profitable growth and are seeing improvement in net earned premiums. We continue our prudent approach to expense management and maintaining a strong pretax margin. |
| "We continue to generate strong capital and cash flows while maintaining our commitment to prudent liquidity and capital management. We have been very pleased with our investments, which have continued to produce strong net investment income with minimal losses and impairments. I am very pleased that 2024 marks 42 consecutive years of dividend increases, a record we treasure. We remain committed to extending this record, supported by our financial strength. In the quarter, we repurchased $500 million in shares and intend to continue our balanced approach of investing in growth and driving long-term operating efficiencies." |
| *See the Non-U.S. GAAP Financial Measures section for an explanation of foreign exchange and its impact on the financial statements and definitions of the non-U.S. GAAP financial measures used in this earnings release, as well as a reconciliation of such non-U.S. GAAP financial measures to the most comparable U.S. GAAP financial measures. |
| ABOUT AFLAC INCORPORATED |
| Aflac Incorporated (NYSE: AFL), a Fortune 500 company, has helped provide financial protection and peace of mind for nearly seven decades to millions of policyholders and customers through its subsidiaries in the U.S. and Japan. In the U.S., Aflac is the No. 1 provider of supplemental health insurance products.1 In Japan, Aflac Life Insurance Japan is the leading provider of cancer and medical insurance in terms of policies in force. The company takes pride in being there for its policyholders when they need us most, as well as being included in the World's Most Ethical Companies by Ethisphere for 18 consecutive years (2024), Fortune's World's Most Admired Companies for 23 years (2024) and Bloomberg's Gender-Equality Index for the fourth consecutive year (2023). In addition, the company became a signatory of the Principles for Responsible Investment (PRI) in 2021 and has been included in the Dow Jones Sustainability North America Index (2023) for 10 years. To find out how to get help with expenses health insurance doesn't cover, get to know us at aflac.com or aflac.com/espanol. Investors may learn more about Aflac Incorporated and its commitment to corporate social responsibility and sustainability at investors.aflac.com under "Sustainability." |
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| Aflac Incorporated |
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