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F500-2021-131-Aflac

The insurance company is the largest provider of supplemental insurance in the U.S. and is best known for its payroll deduction coverage.

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F500-2020-146-Aflac

The supplemental health and life insurance provider is based in Columbus, Ga., and has a large business segment in Japan.

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Fortune Global 500

This year's Fortune 500 marks the 63rd running of the list.

We surveyed tens of thousands of young employees to create this list of millennials’ favorite workplaces.

best workplaces for millennials 2017 Aflac

Employees say: 
 
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"One of the best things about this company is the culture of honesty and transparency. If things are trending badly, we know about it and we know the plans that are in place to correct course. Everyone buys into the plan and executes together, as a team. When things are going great, we celebrate wins as a team. It's a great atmosphere—a competitive, winning atmosphere that I'm proud to be a part of." 
 
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"I feel that this is a great place to work mainly because this company gives me opportunities to make a difference while at work. I have gotten the opportunity to be part of the Aflac cancer committee and raise money for Aflac's cancer center in Atlanta. The trip to Atlanta was one of the most meaningful things I have done at work. It is nice to put in everyday work for a company that cares, and it is even better to get to directly contribute and be supported by management." 
 
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100 Best Large Workplaces for Millennials

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Google/Alphabet is the No. 1 place to work for the seventh time in 10 years. Six newcomers include Veterans United at No. 30, Hilton Hotels at No. 56, and Slalom Consulting at No. 100. IKEA’s U.S. arm returns to the list, along with GoDaddy and Sheetz.

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100 best workplaces for women 2016- aflac

Employees say: 
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"Aflac actually makes exceptions to our processes based on specific situations. The work environment is friendly and flexible. There is always something to do. I can go to management if my situation is not being addressed as I feel it should. I am treated as an individual when needed. The teams function as a family. We all work together to support the Aflac brand!! We are family!" 
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"[I appreciate] the encouragement of work/life balance,and that family and personal health is allowed to come first. Also, the ability of management to see their employees' skill sets and to develop them in the professional direction they would fit best, even if it means going outside their current department." 
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Read the Great Place to Work review .

100 Best Large Workplaces for Women

The second annual ranking of the best employers for workers 35 and under.

best workplaces for millennials 2016- Aflac

"I love how management is very approachable and attentive to what suggestions you may have. They try to implement them as best they can. I love how the company gives incentives just for being an Aflac employee, such as getting movies tickets at a discount, having valet dry cleaning services, etc. I love how when you go the extra mile you are noticed for it. I just love feeling appreciated and valued. I love Aflac!" says one millennial worker. 
 
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According to another millennial: "Aflac is an amazing place to work. The culture here is like no other. Leadership truly cares about the people, and in turn the people take care of the business." 
 
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Read the .

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BEST COMPANIES 2015  Aflac

Occupying slot number 132 on the Fortune 500 list, Aflac spreads its wings far and wide as one of the nation’s largest insurers. But that doesn’t keep the company from feeling intimate. In addition to a “spot awards” program that recognizes outstanding employee achievements with instant cash, company stock and swag, the company holds a weeklong celebration for its staff every year. The event has included ice skating, mini-golfing, family outings, and more. That’s not all—those who volunteer at or help plan the affair also get invited to a party at CEO Dan Amos’ country farm. As one worker gushes, “We are made to feel special and appreciated.” <a style="color:#ff0000;" href="http://us.greatrated.com/aflac-inc" target="_blank">Read the Great Place to Work review.</a>

Google tops the list once again, marking its eighth appearance and fifth time as No. 1.

Global business is back. After limping through a worldwide financial crisis and economic slowdown, the 500 largest companies ranked by revenues shattered all sorts of performance records in 2013: They racked up combined revenues of $31.1 trillion, up 2.5% from 2012, and profits soared 27% to nearly $2 trillion. China’s 95 companies (up from 89 last year) posted $5.8 trillion in revenues. The U.S. has four fewer companies on the list than last year but remains (for now) the country leader, with 128 corporations on the list—including No. 1 Wal-Mart Stores—reporting $8.6 trillion in revenues. 

Wal-Mart stayed on top as its sales crept closer to half-a-trillion dollars. Apple moved into the top five. And UnitedHealth Group continued its steady climb. 

Key Financials (last Fiscal Year)

Revenues ($M)

Profits ($M)

Assets ($M)

Total Stockholder Equity ($M)

Profit Ratios

Profit as % of Revenues

Profits as % of Assets

Profits as % of Stockholder Equity

Perks

100% health coverage

Unlimited sick days

Telecommuting

Job sharing

Subsidized childcare

Compressed work weeks

Fully-paid sabbaticals

On-site fitness/subsidized gym

On-site medical care facility

Non-discrimination policy includes sexual orientation

Health insurance for part-timers

Sick days for part-timers

College tuition reimbursement

Student loan debt repayment

Medical facility at all locations

Paid Time Off

PTO limit (days)

Compensation

Most common job (for salaried employee)

Hiring/staffing (past 12 Months)

Full-time and part-time job growth

# of job applicants

Avg. # of applicants per opening

FT voluntary turnover

Jobs filled internally

Jobs filled by referral

# New graduates hired

Company Info

Industry

Sector

HQ Location

Company Type

# Work Sites

U.S. Employees

Web Address

Best Companies

Best Companies Rank

Best Companies URL

Millennials In The Organization

# of millennial employees

Millennials as % of total workforce

Women In The Organization

% of Women in the Company

% of Women in Executive/Manager Positions

Current All-Star Rank

Previous All-Star Rank

Industry Rank

Previous Industry Rank

Overall Score

Innovation

People Management

Use of Corporate Assets

Social Responsibility

Quality of Management

Financial Soundness

Long-Term Investment Value

Quality of Products/Services

Global Competitiveness

Earnings Per Share (last Fiscal Year)

Earnings Per Share ($)

EPS % Change (from prior fiscal year)

EPS % Change (5 year annual rate)

EPS % Change (10 year annual rate)

Total Return

Total Return to Investors (last year)

Total Return to Investors (5 year, annualized)

Total Return to Investors (10 year, annualized)

Aflac is a leading provider of supplemental health and life insurance solutions. Through its two primary business segments—Aflac Japan and Aflac U.S.—the company delivers a comprehensive portfolio of products, including cancer, medical, nursing care, whole life, and specialized insurance offerings tailored to diverse market needs. Aflac’s distribution strategy leverages a multichannel network encompassing individual agents, corporate partners, banks, brokers, and independent associates, allowing for broad market reach. Established in 1955, the company is known for its innovative product development and commitment to helping clients manage health-related financial risks.

Q2 2026

Q1 2026

Q4 2025

Q2 2025

Q1 2025

Q4 2024

Aflac (AFL): Company Profile, Stock Price, News, Rankings

legacy

Aflac

aflac

Good day, and welcome to the Aflac Incorporated second quarter 2026 earnings conference call. All participants will be in a listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star, then one on a touch-tone phone. To withdraw your question, please press star, then two. Please note this event is being recorded. I would now like to turn the conference over to David Young, Senior Vice President, Capital Markets. Please go ahead.

Good morning, and welcome. Thank you for joining us for Aflac Incorporated second quarter 2026 earnings call. This morning, Dan Amos, Chairman, Chief Executive Officer of Aflac Incorporated, will provide an overview of our results and operations in Japan and the U.S. Then Max Brodén, Senior Executive Vice President and Chief Financial Officer of Aflac Incorporated, will provide more detail on this quarter's financial results, including our capital and liquidity.

These topics are also addressed in the materials we posted with our earnings release, financial supplement, and quarterly Chief Financial Officer video update on investors.aflac.com. For question-and-answer today, we are also joined by Virgil Miller, President of Aflac Incorporated and Aflac U.S., Charles Lake, Chairman and Representative Director, President of Aflac International, Masatoshi Koide, President and Representative Director, Aflac Life Insurance Japan, Shinsuke Morimoto, Deputy President and Director, Aflac Life Insurance Japan, and Brad Dyslin, Global Chief Investment Officer, President of Aflac Global Investments.

Before we begin, some statements in this teleconference are forward-looking within the meaning of federal securities laws. Although we believe these statements are reasonable, we give no assurance that they will prove to be accurate because they are prospective in nature. Actual results could differ materially from those we discuss today. We encourage you to look at our annual report on Form 10-K for some of the various risk factors that could materially impact our results. As I mentioned earlier, the earnings release with reconciliations of certain non-U.S. GAAP measures and related earnings materials are available on investors.aflac.com. I'll now hand the call over to Dan. Dan?

Thank you, David, and good morning, everyone. We're glad you joined us. The second quarter added to the first quarter solid financial start. Aflac Incorporated reported net earnings per diluted share of $1.63 and adjusted earnings per diluted share of $1.75. These results reflect the focused execution of our strategy, thus creating long-term value for the shareholders. Starting with Aflac Japan, as we told you, we were up against a strong second quarter in 2025 sales comparison following the launch of Miraito Cancer Insurance. As a result, sales declined 5.6% to JPY 11 billion in the quarter, but sales were up 7% for the first half of the year. This reflected strong sales results of Tsumitasu and bring sales in line with our expectations for the first half of the year.

As part of our ongoing strategy, we continue to promote the importance of third sector protection to new and younger customers with our innovative first sector savings-type life insurance product, Tsumitasu. During this quarter, both the refreshed Tsumitasu product and Anshin Palette medical insurance product, which we launched in December 2025, delivered strong sales growth year-over-year. As a result, we continue to expect Aflac Japan sales to exceed 2025. For the quarter, premium persistency was 92.7%, which was in line with last quarter. By maintaining strong persistency while adding new premium through sales, we seek to offset the impact of lapses and reissue, as well as policies reaching paid-up status. Our wide-ranging network of distribution channels, including agencies, alliance partners, and banks, continually leverage opportunities to help provide financial protection to Japanese consumers.

We view each channel as a distinct avenue to reach Japanese consumers in different demographics and stages of life. With this in mind, we evaluate and support each one with unique opportunities to help provide Japanese citizens with financial protection. Turning to Aflac U.S., we continue to focus on pursuing profitable growth with an eye on maintaining strong underwriting discipline and premium persistency. We generated a 2.6% increase in year-over-year sales in the second quarter. We are seeing momentum within our group business, especially our group voluntary products and network dental and vision. We generated a 2.3% increase in net earned premium for the quarter and maintained strong premium persistency of 79.4%. At the same time, Aflac U.S. has continued its prudent approach to expense management and maintained a solid pre-tax margin of 20.9%.

As public insurance companies, our primary responsibility is to fulfill the promises we make to our policyholders while being responsive to the needs of the shareholders. We continue to be pleased with our investments producing solid investment income. Our operations generated strong capital and cash flows on an ongoing basis as we remain committed to prudent liquidity and capital management. This financial strength is the foundation that backs up our promise to the policyholders, balanced with financial flexibility and tactical capital deployment. I am pleased with the company's financial strength, which supports our capital deployment. We treasure our 43 consecutive years of dividend increases and remain committed to extending this record in 2026. Combining share repurchase and dividends, we delivered $1.3 billion back to the shareholders in the second quarter and $2.6 billion for the first six months.

In doing so, we have maintained our position among companies with the highest return on capital and lowest cost of capital in the industry. We continue to pursue more profitable growth and the tactical opportunistic deployment of capital. The Japanese and U.S. insurance markets are two of the best insurance markets in the world. Both share characteristics that make them well-suited to the products we offer. Across Japan and the United States, consumers are feeling the strain of increasing out-of-pocket medical expenses. That's exactly where our products can help. As you have heard me say many times before, I believe the need for our products is actually more compelling in this type of environment because the financial risk to the household becomes more pronounced and more impactful.

As a pioneer in cancer insurance and leader in the industry, our employees, sales teams, and sales partners show up every day to help ease that burden, providing financial protection with genuine compassion and care. The ongoing foundational strength of our business and our capacity for continued growth support our leading position and build on our momentum. I'll now turn the program over to Max to cover more details of the financial results. Max?

Thank you, Dan. For the second quarter of 2026, adjusted earnings per diluted share increased 1.1% year-over-year to $1.80, excluding effect of foreign currency in the quarter. In this quarter, remeasurement gains on reserves totaled $46 million, reducing benefits with $7 million or $0.01 per diluted share below plan. Variable investment income ran $72 million or $0.11 per diluted share below our long-term return expectations. We also released a $26 million expense contingency with lowered expenses in our U.S. segment, benefiting results by $0.04 per share. Adjusted book value per share, excluding foreign currency remeasurement, decreased 4.1%. The adjusted ROE was 12.7% and 16.6%, excluding foreign currency remeasurement, a solid spread to our cost of capital. Overall, we view these results in the quarter as solid. Starting with our Japan segment. Net earned premiums in JPY terms for the quarter declined 3.7%.

Aflac Japan's underlying earned premiums, which excludes the impact of reinsurance, paid-up policies, and deferred profit liability, declined 1.4%. Japan's total benefit ratio came in at 64% for the quarter, down 250 basis points year-over-year. We estimate the impact from reserve remeasurement gains were under plan by approximately 60 basis points. We continue to have favorable trends in cancer and hospitalization. Recognizing that the year-to-date benefit ratio is 63.4%, we now expect to be at the high end of our guidance range of 60%-63% for the full year of 2026, excluding the annual actuarial assumption review in Q3. Persistency remains solid and in line with our expectations at 92.7%. We have continued to experience somewhat elevated lapse and reissue activity on recently launched products as we have expanded coverage options and competitiveness on our new products.

Lapses on our first sector savings block remain low and in line with previous periods, despite the increase in JPY interest rates. Our expense ratio in Japan was 20.2% for the quarter, down 40 basis points year-over-year. This is a strong result, especially on the back of the current inflationary pressures in Japan. For the quarter, adjusted net investment income in JPY terms was down 2.9%, primarily driven by lower call income and lower dollar-denominated floating rate income, partially offset by higher income on U.S. dollar assets due to the weakening of the JPY and higher dollar-denominated fixed rate income. The pre-tax margin for Japan in the quarter was 34.3%, up 230 basis points year-over-year. A very good result. As we previously discussed, Aflac Japan set an internal reinsurance target of up to 10% of U.S. GAAP assets.

We have revisited this target and aligned it with an FSA perspective of up to 30% of FSA reserves. This will allow us to continue to reduce risk, improve balance sheet efficiency, and ultimately generate a higher ROE for Aflac Japan and the group. Turning to U.S. results. Net earned premiums were up 2.3%. We expect our net earned premium growth rate for 2026 to be just below our guidance range of 3%-6%, versus previous guidance for the low end of this range. We continue, though, to expect our 2025-2027 net earned premium CAGR to be within the range of 3%-6%. Premium persistency remains solid at 79.4%, up 20 basis points year-over-year.

Our total benefit ratio came in at 49.5%, 220 basis points higher than Q2 2025, driven by an increase in incurred group disability claims in the quarter related to favorable results in the previous quarter. We estimate that reserve remeasurement gains impacted the benefit ratio by about 30 basis points above plan. Our expense ratio in the U.S. was 36.1%, down 20 basis points year-over-year. Adjusted net investment income in the U.S. was essentially flat, up 0.5% for the quarter, as higher call and fixed rate income were offset by lower floating rate and short-term income. Profitability in the U.S. segment was solid, with a pre-tax margin of 20.9%, 160 basis points decrease compared with a strong quarter a year ago. Corporate and other reported a pre-tax adjusted loss of $10 million, down from a $20 million gain last year.

The main drivers were lower adjusted net investment income from lower short-term income and reduced hedge benefits that were partially offset by higher fixed rate income. Although our tax credit investments impacted the adjusted net investment income line for U.S. GAAP purposes negatively by $6 million in the quarter with an associated credit to the tax line, the overall tax credit investment program benefited net earnings by $8 million. Higher interest expense and run-off impacts from our closed blocks of business also contributed to the net loss for the quarter. We're pleased with our overall performance of our investment portfolio. Our private credit portfolio, most notably our middle market loan portfolio, continues to deliver strong risk-adjusted net yields.

During the quarter, our Global Investments team were quite active, repositioning $4.8 billion of the portfolio through switch trades to capture the benefit of higher yields and further strengthen the overall quality of our consolidated portfolio. These trades capture foreign currency gains to minimize market losses on lower yielding assets, reduce the risk of future FSA impairments, improve our ALM, and boost net investment income. On an annualized basis, we expect this program to increase net investment income by over $50 million on a run rate basis, with a very limited impact on capital levels. We will continue pursuing opportunities that improve the overall health and performance of the portfolio. For U.S. statutory, we recorded $11 million of impairments on invested assets and $1 million valuation allowance on our mortgage loans as an unrealized loss during the quarter.

On a Japan FSA basis, we booked securities impairments of JPY 15.8 billion and an additional valuation allowance of JPY 33 million related to transitional real estate loans in Q2. This is well within our expectations and has a limited impact on regulatory earnings and capital. Aflac Inc. unencumbered liquidity stood at $3.3 billion, which was $2.3 billion above our minimum balance of $1 billion at the end of the quarter. Our adjusted leverage was 21.8% for the quarter, which is within our target range of 20%-25%. As we hold approximately 63% of our debt in yen, this leverage ratio is impacted by moves in the yen-dollar exchange rate. This is intentional and part of our enterprise hedging program, protecting the economic value of Aflac Japan in U.S. dollar terms. Our capital position remains strong. We ended the quarter with an estimated regulatory ESR of 226%.

If including the Undertaking-Specific Parameter, or USP, this would add 14 points to the regulatory ratio and result in an ESR with USP of 240%. The decline quarter-over-quarter was primarily driven by significant subsidiary dividends. We estimate our combined RBC to be slightly above 600%. These are strong capital ratios, which we actively monitor, stress, and manage to withstand both market volatility and credit cycles, as well as external shocks. Given the strength of our capital and liquidity, we repurchased $983 million of our own stock and paid dividends of $309 million in Q2. Offering good relative IRR on these capital deployments. We will continue to be flexible and tactical in the way we manage the balance sheet and deploy capital in order to drive strong risk-adjusted ROE with a meaningful spread to our cost of capital.

Thank you. I will now turn the call back over to David.

Thank you, Max. Before we begin our question-and-answer, we ask that you please limit yourself to one initial question and a related follow-up. You may then rejoin the queue to ask additional questions. Our operator for today's call will now give you instructions on how to rejoin the queue and then announce our first question.

We will now begin the question and answer session. To ask a question, you may press star then one on your touch tone phone. If you are using a speakerphone, please pick up your handset before pressing the keys. If at any time your question has been addressed and you would like to withdraw your question, please press star then two. We ask that you please limit yourself to one question and one follow-up. If you have additional questions, you may rejoin the question queue. At this time, we will pause momentarily to assemble our roster. The first question today comes from Ryan Krueger with Keefe, Bruyette & Woods. Please go ahead.

Hey, thanks. Good morning. My first question was on the asset repositioning that you did during the quarter. I guess first maybe a little bit more detail on what you did, probably more importantly, to what extent do you see additional opportunities to do more of this going forward?

Yeah, thank you, Ryan. Good morning. This is Brad. Yeah, I'm very pleased that we were able to reposition about 5% of our portfolio in a single quarter. Obviously, we're solving for multiple objectives here. Income is an important driver as are losses as you sell the lower yielding assets from prior periods, we also have to manage taxes, liquidity, ALM, et cetera. It's a pretty complex puzzle that we have to solve. What we were able to do this quarter was harvest gains from foreign currency on our dollar portfolio in Aflac Japan and use that to offset losses on some of those older bonds, both in our U.S. dollar portfolio, but also our JGB portfolio. We repositioned in both of those sectors.

Most of the activity was in Aflac Japan, we also touched Aflac U.S. and Aflac Bermuda with some adjustments to the portfolio there as well. In terms of the forward look, there's a reason insurance companies are often referred to as buy and hold. Not my favorite term, by the way, it is a complex puzzle to solve. When you can crack the code, you can have a pretty significant impact as we saw this quarter. We see a very big opportunity in front of us from the higher rate environment, and we didn't stop working on June 30th. We're going to do our best not to waste this opportunity, and I look forward to talking more about it in the third quarter.

On first sector sales in Japan, you had strong sales there. I think demand is generally increasing for first sector type products given the higher rate environment there, you've always been a third sector company. I was curious, is there any practical limit in your view of what percentage or amount of your Japan sales you'd be willing to have come from the first sector, given kind of there's probably a bigger growth opportunity there if you wanted it?

This is Max. Let me start and then I'll ask Japan to add some commentary to this. From a group standpoint, we don't have a certain or specific set limit of our mix between third sector and first sector business. The primary driver for us is the return that we can get on certain products and the risk that comes with those products. Right now, we are getting very good risk-adjusted return on the first sector business that we are writing today. We're very pleased with adding that to our portfolio. Overall, though, we do acknowledge that our in-force is predominantly driven by third sector business, and that's a business that is very stable, predictable, and it has risks that we are very comfortable with. The first sector business adds a different type of risk profile to our business, i.e. mortality spread and to some extent, longevity risk.

When we add that to our existing balance sheet, that is in relatively small portions, it's actually quite good for us from a diversification benefit standpoint. If it gets too high, those risks can actually be risk increasers overall for us. At this point, the first sector in-force is less than 20% of our total in-force, and it has been declining for quite a period of time, essentially since 2016 when we exited the WAYS business when JGB yields went negative. As of right now, we are starting to see very good returns on the first sector business, and we're very happy with the business we're selling.

This is Koide speaking from Aflac Japan. As Max just described, Tsumitasu, our first sector products, accounts for 20% of our total sales. It's not that we set a specific target or upper limit in terms of the first sector product sale. Tsumitasu is contributing in expanding our platform, our customer base, to a younger generation, and it's being well-received by those younger customers today. Tsumitasu is also making a great deal of contribution in expanding our sales in cancer and medical insurance through concurrent sale. We remain to be the third sector-oriented company, but Tsumitasu is definitely playing an important role from a strategic perspective.

The next question comes from Thomas Gallagher with Evercore ISI. Please go ahead.

Good morning. Dan, just wanted to start with a higher level M&A question for you. Historically, Aflac has done small deals. Should we expect that to be the case going forward, or would you consider going bigger and more strategic if opportunities arise?

I think the answer is, we continue to look at opportunities. Generally, if something's for sale, it's for sale for a reason. We want to be careful in how we spend the money. It took us a long time to make it, and we want to be careful with that. At the same time, if there's opportunities, we certainly want to look into it. I am pleased with the development of the small companies that we bought and what's taking place. They've turned around and done much better in the last year or so, and I'm encouraged by that. The answer is, yes, we would look elsewhere, but it would have to pass a strenuous test for us to be excited and really interested in something.

Okay, thanks for that. My follow-up is, Max, on the expansion of the limit in terms of reinsuring Japanese business to Bermuda, can you just give a little bit of color what the 30% of FSA reserves now, is that still just a company-imposed limit, or was that in consultation with the FSA? Will this signal an ability to actually do more each time you do them? Can we expect the cadence of reinsurance to be going up annually, or would you still expect it to be similar to what you've done in the past? Thanks.

Yeah. This move from having a ceding limit from 10% of U.S. GAAP assets to 30% of FSA reserves, this is an internally imposed limit that we have developed ourselves, but you should assume that we have shared this with external constituents as well and received feedback on it. This is something that makes sense for us. We feel it fits us well when we balance the overall risks and opportunities available to us. As it relates to the size of future transactions, there is obviously a cost with every transaction that you do. If you do any bigger transactions, that means that the cost per transaction now is somewhat lower. We obviously now feel that we have developed a strong track record, both internally and now also externally, to execute these transactions.

We feel very good about both significant opportunities that we have in front of us to improve the risk profile of the company and also the return profile of the company utilizing reinsurance.

The next question comes from Suneet Kamath with Jefferies. Please go ahead.

Hey, thanks. I want to start with the medical sales in Japan. I know they were up year-over-year, but they were down sequentially, despite the product launch in December. I would've thought that you had a little bit more runway, given the product launch. Can you just talk about what you're seeing in that product line and your expectations for the balance of the year? Thanks.

Thank you for your question. This is Yoshizumi, in charge of marketing sales in Aflac Japan. As you just described, the Anshin Palette or medical insurance product, its momentum is sustaining from the first quarter to second quarter. As a result, the first half of 2026 sales exceeded the prior year. It's also true that there was a decline from the first quarter to second quarter. This is because about the timing, this product was actually launched towards the end of December last year. We were making a thorough preparation towards that day during December. That is why we managed to get great sales or solid results in the first quarter. We enjoyed the more than expected momentum even in the second quarter. We expect this momentum to continue through third quarter and fourth quarter. That's all.

Okay, thanks. Then maybe shifting to the U.S. Virgil, can you just give us some thoughts on how you're feeling about sales so far this year? I think in the past you've given us some good color on how the traditional channel has performed relative to the brokerage channel. I was wondering if you could give us an update there as well. Thanks.

Yes, certainly. Good morning. Let me first start by saying that pretty much for the year, we're in line with expectations. Slightly at the lower end of my expectations, but as you indicated, I'm expecting a stronger second half of the year, heavily weighted in the fourth quarter due to the seasonality of our business and the strength we continue to see, though, in our plans or our group life, absence, disability business. Let me give you just a little bit more color on the performance of how the portfolio balances out. First, if you add just our group life, absence, disability to our dental and vision, just looking at those two products and then with our group voluntary benefits, we were up 7.1% for second quarter. Again, seeing good performance there.

When you look at the overall earned premium result for those group products, we were up 13% for the earned premium. That gives you kind of a little bit of color that we're seeing continued steady growth in our group business. It's in line with the market, though. You can see the market now as brokers have gone more heavily into voluntary benefits. They are selling more of the group product. We're seeing that. We are still dedicated, though, to our agency force. We continue to roll out strong individual traditional products for them, and I do expect, though, to have a stronger year with traditional overall this year, again, with a stronger second half, heavily weighted in the fourth quarter. Just a couple more things. Dan mentioned earlier about the investments we made, though, with the properties.

When you look at the dental and vision property, we were up 47% in the second quarter. Very strong performance, heavily driven by our agency force. We're going to push stronger in the second half of the year and really get brokers to adopt the network dental products. That's going to be our focus going into the second half of the year. I think also when you look at the dental and vision property, we continue, though, to be focused on ensuring that we're selling our voluntary benefits products alongside of that. For every dollar that we sold in the second quarter next to the voluntary benefits, what you will see is that we sold $1.07 of voluntary benefits. That's better than we ever expected, and that's the trend I want to see continue. We're not just selling it standalone. It drives VB alongside of it.

Just again, overall, we've got some strong comparisons in the second half of the year, but I'm expecting growth to be higher than last year, and I'm expecting a big, strong fourth quarter, though. Thank you.

The next question comes from Michael Ward with UBS. Please go ahead.

Hi, thanks. Good morning. I was wondering in Japan if you guys have seen any change in the lapse, paid-up, or surrender behavior given the inflationary kind of pressure and higher rates in Japan.

Yeah. Thank you for the question. So far we haven't really seen any sort of significant lapse uptick related to either inflation or to interest rates. If you look at our first sector block, which would be the block of business that should be the most sensitive to interest rates, we've seen a minor uptick, but that's from very low levels, we certainly have not seen any spikes or significant correlation with the increase in rates there. Even if you then think about inflation pressures as well, that hasn't necessarily had any significant impact on our lapse rates. The decline in persistency that you have seen year-over-year has more been driven by the product launches that we have experienced, both on cancer and medical. Much more so on the cancer side than the medical side.

When we do refresh our product portfolio and we come out with more attractive new products, we always see an element of increased levels of lapse and reissue, obviously impacting our persistency rate. We certainly experienced that with our Miraito launch. As we look forward, we do believe that Miraito is now through the full first year of being out there. With that, we would expect some decline in lapse and reissue going forward, and therefore we should expect our persistency rate as reported to stabilize going forward.

Thank you, Max. Dan, I just wanted to ask again about the M&A question. I totally get that properties that are for sale are for sale for a reason sometimes. Just curious how interested you guys might be in something that could really help you leapfrog in the U.S. specifically in a diversified way.

Right. We certainly are looking all the time, and if you have any suggestions, we're willing to listen. Our focus has been on turning these other programs around, which I'm very pleased with what's been going on there. Now that I'm at that point, our financial team brings us what they think makes financial sense, and then we see how it would coordinate and work well with our existing distribution, or do we look at it totally separate? We look at both ways. We look at it that if it's products we don't sell, how we might mix it together. If you talk about merging where we sell products that we already sell, that would be how we had to look at it from a discipline perspective and make sure that we're following guidelines, and we realize that can create disruption.

We're willing to do it if it makes sense. We'll continue to watch those.

The next question comes from Wes Carmichael with Wells Fargo. Please go ahead.

Hey, thank you. Good morning. First question was just on Japan sales. I think, Dan, last quarter you mentioned that you'd be happy this year if we got to JPY 80 billion in sales. Maybe the company would be satisfied with a little less. Just curious, we're halfway through the year. I think we're at JPY 37 billion and change of yen sales. Just curious what you're thinking for the rest of the year.

Well, I'd still be happy with sales at JPY 80 billion, but, as I stated today, we expect the 2026 numbers to exceed last year's numbers, and that I also said at the end of the first quarter. We delayed some of our direct mail campaigns in Japan, but are now back on track. The JPY 80 billion was a challenge to begin with and remains in the realm of possibilities for us to achieve. I won't rule it out, but I'm confident and can say that in terms of 2026 sales, we'll exceed 2025.

Got it. Thank you. Max, maybe just on ESR. I think as a rule of thumb in the past, you gave every 10 points was approximately $750 million-$1 billion of excess capital. Just curious if that still is a good rule of thumb to use, should we be thinking about including the USP when we think about your excess capital in Japan?

Thank you, Wes. That is continues to be a good rule of thumb for our ESR capital base. It relates to the USP, we manage our business including USP. We manage our risk profile, including USP, I would certainly include that. We think that gives a better view and better reflects the risks of our business when including USP in the ESR. That is why we're using it.

The next question comes from Joel Hurwitz with Dowling & Partners. Please go ahead.

Hey, good morning. Max, one more on inflation. In your prepared remarks on Japan, you highlighted good expense results despite the inflationary pressures. Can you just elaborate on how significant those inflation pressures are on your expense base, and I guess any other broader headwinds from inflation in Japan?

Aflac (AFL) Q2 2026 Earnings Call Transcript

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