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What changed in Aflac's 10-K — 2024 vs 2025

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Paragraph-level year-over-year comparison of Aflac's 2024 and 2025 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2025 report.

+909 added−852 removedSource: 10-K (2026-02-25) vs 10-K (2025-02-26)

Top changes in Aflac's 2025 10-K

909 paragraphs added · 852 removed · 730 edited across 9 sections

Item 1. Business

Business — how the company describes what it does

48 edited+76 added−9 removed43 unchanged
Biggest changeSee the risk factor below entitled, “The Company is exposed to significant interest rate risk, which may adversely affect its results of operations, financial condition and liquidity” for additional information. See the Investments and Results of Operations by Segment sections of Item 7. MD&A, for additional information.
Biggest changeThe Company is not able to predict the ultimate impact of inflation, interest rate changes, interest rate differences and other changing market conditions on the Company’s investments and hedging programs. See the risk factor below entitled, “The Company is exposed to significant interest rate risk, which may adversely affect its results of operations, financial condition and liquidity” for additional information.
As consumers have grown more concerned about the protection of their data, as well as how their data is used by organizations, jurisdictions within and outside of the U.S. have created legislation and issued regulations that apply or may in the future apply to aspects of Aflac U.S. operations and allow consumers the right to access, correct, delete, or opt out of the sale, share, or use of their data.
As consumers have grown more concerned about the protection of their data, as well as how their data is used by organizations, jurisdictions within and outside of the U.S. have created legislation and issued regulations that apply or may in the future apply to aspects of Aflac U.S. operations and allow consumers the right to access, correct, delete, or opt out of the sale or share, or limit the use of their data.
Business For additional information on the Company's other operations, see the Corporate and other subsection of Item 7. MD&A and Note 8 of the Notes to the Consolidated Financial Statements.
For additional information on the Company's other operations, see the Corporate and other subsection of Item 7. MD&A and Note 8 of the Notes to the Consolidated Financial Statements.
Companies below specific trigger points or ratios are classified within certain levels, each of which requires specified corrective action. The levels are company action, regulatory action, authorized control, and mandatory control. See Note 13 of the Notes to the Consolidated Financial Statements and the Liquidity and Capital Resources section of Item 7. MD&A for additional information on RBC.
Companies below specific trigger points or ratios are classified within certain levels, each of which requires specified corrective action. The levels are company action, regulatory action, authorized control, and mandatory control. See Note 14 of the Notes to the Consolidated Financial Statements and the Liquidity and Capital Resources section of Item 7. MD&A for additional information on RBC.
Tillman Senior Executive Vice President, Aflac Incorporated and Aflac, since 2025; General Counsel, Aflac Incorporated and Aflac, since 2014; Executive Vice President, Aflac Incorporated and Aflac, from 2014 until 2025 60 (1) Unless specifically noted, the respective executive officer has held the occupation(s) set forth in the table for at least the last five years.
Tillman Senior Executive Vice President, Aflac Incorporated and Aflac, since 2025; General Counsel, Aflac Incorporated and Aflac, since 2014; Executive Vice President, Aflac Incorporated and Aflac, from 2014 until 2025 61 (1) Unless specifically noted, the respective executive officer has held the occupation(s) set forth in the table for at least the last five years.
Risk Factors for the risk factor entitled, "Extensive regulation and changes in legislation can impact profitability and growth" for additional information. • Dodd-Frank Act Title VII of the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 (Dodd-Frank) and regulations issued thereunder, in particular rules to require central clearing for certain types of derivatives, may have an impact on the Company's derivative activity, including activity on behalf of Aflac Japan. 8 Item 1.
Risk Factors for the risk factor entitled, "Extensive regulation and changes in legislation can impact profitability and growth" for additional information. • Dodd-Frank Act Title VII of the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 (Dodd-Frank) and regulations issued thereunder, in particular rules to require central clearing for certain types of derivatives, may have an impact on the Company's derivative activity, including activity on behalf of Aflac Japan.
Certain federal regulations applicable to Aflac U.S. are outlined below. • Patient Protection and Affordable Care Act The Patient Protection and Affordable Care Act and the Health Care and Education Reconciliation Act of 2010 (collectively, the ACA), federal health care reform legislation, gave the U.S. federal government direct regulatory authority over the business of health insurance.
Certain federal and state laws and regulations applicable to Aflac U.S. are outlined below. • Patient Protection and Affordable Care Act The Patient Protection and Affordable Care Act and the Health Care and Education Reconciliation Act of 2010 (collectively, the ACA), federal health care reform legislation, gave the U.S. federal government direct regulatory authority over the business of health insurance.
Aflac Re is subject to regulation in Bermuda, where the Bermuda Monetary Authority (BMA) has broad administrative powers relating to granting and revoking licenses to transact reinsurance business, approval of specific reinsurance transactions, capital requirements and solvency standards, limitations on dividends to shareholders, the nature of and limitations on investments, and the filing of financial statements in accordance with prescribed or permitted accounting practices. 9 Item 1.
Aflac Re is subject to regulation in Bermuda, where the Bermuda Monetary Authority (BMA) has broad administrative powers relating to granting and revoking licenses to transact reinsurance business, approval of specific reinsurance transactions, capital requirements and solvency standards, limitations on dividends to shareholders, the nature of and limitations on investments, and the filing of financial statements in accordance with prescribed or permitted accounting practices.
Miller President, Aflac Incorporated, since 2025; President, Aflac U.S., since 2023; Deputy President, Aflac U.S., from 2022 until 2023; Executive Vice President, President of Group and Individual Benefits Division, Aflac U.S., from 2021 until 2022; Executive Vice President, Chief Operating Officer, Aflac U.S., from 2018 until 2021 56 Frederic J.
Miller President, Aflac Incorporated, since 2025; President, Aflac U.S., since 2023; Deputy President, Aflac U.S., from 2022 until 2023; Executive Vice President, President of Group and Individual Benefits Division, Aflac U.S., from 2021 until 2022; Executive Vice President, Chief Operating Officer, Aflac U.S., from 2018 until 2021 57 Frederic J.
HUMAN CAPITAL The Company’s overarching human capital philosophy is, “If you take care of your employees, your employees will take care of the business.” The Company's compensation and benefit expense totaled approximately $2.0 billion in 2024 and $1.9 billion in 2023. The Company believes its employee relations are generally satisfactory.
HUMAN CAPITAL The Company’s overarching human capital philosophy is, “If you take care of your employees, your employees will take care of the business.” The Company's compensation and benefit expense totaled approximately $2.1 billion in 2025 and $2.0 billion in 2024. The Company believes its employee relations are generally satisfactory. 9 Item 1.
Blackmon Chief Accounting Officer, Aflac Incorporated, since 2024; Senior Vice President, Financial Services, Aflac Incorporated, since 2024; Vice President, Deputy Chief Accounting Officer, Aflac Incorporated, from 2023 until 2024; Vice President, Corporate Financial Planning and Analysis, Aflac Incorporated, from 2019 until 2023 61 Max K.
Blackmon Chief Accounting Officer, Aflac Incorporated, since 2024; Senior Vice President, Financial Services, Aflac Incorporated, since 2024; Vice President, Deputy Chief Accounting Officer, Aflac Incorporated, from 2023 until 2024; Vice President, Corporate Financial Planning and Analysis, Aflac Incorporated, from 2019 until 2023 62 Max K.
Simard Executive Vice President, Aflac U.S., since 2025; Chief Operating Officer, Aflac U.S., since 2025; Chief Financial Officer, Aflac U.S., since 2023; Senior Vice President, Aflac U.S., from 2023 until 2025; Consultant, Gerson Lehrman Group, a financial services company, in 2023; Chief Financial Officer, North American Life and Health Division, General Electric Company, an industrial and financial services company, in 2022; Chief Financial Officer and Chief Actuary, Employee Benefits, The Guardian Life Insurance Company of America, a life insurance company, from 2018 until 2022 56 Audrey B.
Simard Deputy President, Aflac U.S., since 2026; Executive Vice President, Chief Operating Officer, Aflac U.S., from 2025 until 2026; Chief Financial Officer, Aflac U.S., from 2023 until 2026; Senior Vice President, Aflac U.S., from 2023 until 2025; Consultant, Gerson Lehrman Group, a financial services company, in 2023; Chief Financial Officer, North American Life and Health Division, General Electric Company, an industrial and financial services company, in 2022; Chief Financial Officer and Chief Actuary, Employee Benefits, The Guardian Life Insurance Company of America, a life insurance company, from 2018 until 2022 57 Audrey B.
Brodén Senior Executive Vice President, Aflac Incorporated and Aflac, since 2025; Chief Financial Officer, Aflac Incorporated, since 2020; Executive Vice President, Aflac Incorporated and Aflac, from 2020 until 2025; Treasurer, Aflac, from 2017 until 2024; Treasurer, Aflac Incorporated from 2017 until 2021; Senior Vice President, Aflac Incorporated and Aflac, from 2017 until 2020 46 Bradley E.
Brodén Senior Executive Vice President, Aflac Incorporated and Aflac, since 2025; Chief Financial Officer, Aflac Incorporated, since 2020; Executive Vice President, Aflac Incorporated and Aflac, from 2020 until 2025; Treasurer, Aflac, from 2017 until 2024; Treasurer, Aflac Incorporated from 2017 until 2021 47 Bradley E.
Beaver Executive Vice President, Chief Financial Officer, Aflac Japan, since 2024; First Senior Vice President, Deputy Chief Financial Officer, Aflac Japan, from 2023 until 2024; Senior Vice President, Chief Financial Officer, Aflac U.S., from 2019 until 2023 60 Robin L.
Beaver Executive Vice President, Chief Financial Officer, Aflac Japan, since 2024; First Senior Vice President, Deputy Chief Financial Officer, Aflac Japan, from 2023 until 2024; Senior Vice President, Chief Financial Officer, Aflac U.S., from 2019 until 2023 61 Robin L.
Amos Chairman, Aflac Incorporated and Aflac, since 2001; Chief Executive Officer, Aflac Incorporated and Aflac, since 1990; President, Aflac Incorporated, from 2024 until 2025 73 Steven K.
Amos Chairman, Aflac Incorporated and Aflac, since 2001; Chief Executive Officer, Aflac Incorporated and Aflac, since 1990; President, Aflac Incorporated, from 2024 until 2025 74 Steven K.
Dyslin Executive Vice President, Global Chief Investment Officer, Aflac, since 2023; President, Aflac Asset Management LLC, since 2023; Deputy Global Chief Investment Officer, Aflac, from 2021 until 2023; Senior Managing Director, Global Head of Credit and Strategic Investment Opportunities, Aflac, from 2017 until 2021 59 Masatoshi Koide President and Representative Director, Aflac Japan, since 2018 (2) 64 Charles D.
Dyslin Executive Vice President, Global Chief Investment Officer, Aflac, since 2023; President, Aflac Asset Management LLC, since 2023; Deputy Global Chief Investment Officer, Aflac, from 2021 until 2023; Senior Managing Director, Global Head of Credit and Strategic Investment Opportunities, Aflac, from 2017 until 2021 60 Masatoshi Koide President and Representative Director, Aflac Japan, since 2018 (2) 65 Charles D.
Health and Wellness In 2024, Aflac Japan was certified, for the seventh consecutive year, as one of the top 500 Leading Companies in Health and Productivity Management under the Certified Health & Productivity Management Outstanding Organizations Recognition Program with Japan's Ministry of Economy, Trade and Industry.
Health and Wellness In 2025, Aflac Japan was certified, for the eighth consecutive year, as one of the top 500 Leading Companies in Health and Productivity Management under the Certified Health & Productivity Management Outstanding Organizations Recognition Program with Japan's Ministry of Economy, Trade and Industry.
Lake II President, Aflac International, since 2014; Chairman and Representative Director, Aflac Japan, since 2018 (2) 63 Virgil R.
Lake II President, Aflac International, since 2014; Chairman and Representative Director, Aflac Japan, since 2018 (2) 64 Virgil R.
Aflac Japan's current certification was in recognition of regular monitoring of key health indicators by members of Aflac Japan's management, strategic implementation of health management initiatives and disclosure of information, and efforts to promote and maintain employee health. 10 Item 1. Business Aflac U.S.
Aflac Japan's current certification was in recognition of regular monitoring of key health indicators by members of Aflac Japan's management, strategic implementation of health management initiatives and disclosure of information, and efforts to promote and maintain employee health. Aflac U.S.
Aflac Japan has certain regulatory accounting requirements for realizing impairments that could be triggered by credit-related losses, which may be different from U.S. GAAP and statutory requirements. These impairment losses could negatively impact Aflac Japan's earnings, and the 14
Aflac Japan has certain regulatory accounting requirements for realizing impairments that could be triggered by credit-related losses, which may be different from U.S. GAAP and statutory requirements. These impairment losses could negatively impact Aflac Japan's earnings, and the corresponding dividends and capital deployment.
Additional risks and uncertainties not presently known to the Company or that the Company currently believes to be immaterial may also adversely affect its business. If any of the following risks and uncertainties develops into actual events, there could be a material impact on the Company.
Additional risks and uncertainties not presently known to the Company or that the Company currently believes to be immaterial may also adversely affect its business. If any of the following risks and uncertainties develops into actual events, there could be a material impact on the Company's business, results of operations, financial condition and liquidity.
In most states, the definition is met with a declaration of financial insolvency by a court of competent jurisdiction. Federal Regulation Federal legislation and administrative policies in several areas, including health care reform legislation, financial services reform legislation, securities regulation, pension regulation, privacy, tort reform legislation and taxation, can significantly and adversely affect insurance companies.
In most states, the definition is met with a declaration of financial insolvency by a court of competent jurisdiction. Federal and State Regulation Federal and state legislation and regulations in several areas, including health care reform legislation, financial services reform legislation, securities regulation, pension regulation, privacy, anti-money laundering, tort reform legislation and taxation, can significantly and adversely affect insurance companies.
The additional government debt from fiscal stimulus actions could adversely impact the Japan sovereign credit profile, which could in turn lead to volatility in Japanese capital and currency markets.
The additional government debt from fiscal stimulus 13 Item 1A. Risk Factors actions could adversely impact the Japan sovereign credit profile, which could in turn lead to volatility in Japanese capital and currency markets.
Workforce Demographics • As of December 31, 2024, women account for 55% of Aflac Japan employees and 34% of those in leadership roles. Women also held 19% of senior management roles. • As of December 31, 2024, 48% of Aflac U.S. and the Parent Company employees located in the U.S. were people of color and 66% were women.
Workforce Demographics • As of December 31, 2025, women account for 55% of Aflac Japan employees and 34% of those in leadership roles. Women also held 22% of senior management roles. • As of December 31, 2025, 47% of Aflac U.S. and the Parent Company employees located in the U.S. were people of color and 65% were women.
The following table details the number of full-time employees as of December 31. 2024 Aflac Japan 6,737 Aflac U.S. 5,041 Corporate and other 916 Total 12,694 Talent The Company uses internal and external resources to attract, retain and develop talent across a variety of backgrounds and demographics.
Business The following table details the number of full-time employees as of December 31. 2025 Aflac Japan 6,804 Aflac U.S. 5,117 Corporate and other 795 Total 12,716 Talent The Company uses internal and external resources to attract, retain and develop talent across a variety of backgrounds and demographics.
Personally identifiable information is used in support of many of the Company's business processes. For many years, the standard for protection and treatment of that data was benchmarked by privacy and security provisions of the federal Gramm-Leach-Bliley Act of 1999 (GLBA) and in the Health Insurance Portability and Accountability Act of 1996 (HIPAA).
For many years, the standard for protection and treatment of that data was benchmarked by privacy and security provisions of the federal Gramm-Leach-Bliley Act of 1999 (GLBA) and in the Health Insurance Portability and Accountability Act of 1996 (HIPAA).
Government actions to stimulate the economy affect the value of the Company's existing 13 Item 1A. Risk Factors holdings, its reinvestment rate on new investments in JGBs or other yen-denominated assets, and consumer behavior relative to the Company's suite of insurance products.
Japan is the largest market for the Company's insurance products, and the Company owns substantial holdings in Japan Government Bonds (JGBs). Government actions to stimulate the economy affect the value of the Company's existing holdings, its reinvestment rate on new investments in JGBs or other Japanese yen-denominated assets, and consumer behavior relative to the Company's suite of insurance products.
Aflac Heartful Services has established a barrier-free work environment and provides, among other things, specialized training, specially-trained supervisors and development opportunities to support those with disabilities. Of Aflac Heartful Services’ 153 employees as of December 31, 2024, 119 have a disability. Aflac Heartful Services supports these employees with the assistance of advisors for long-term career support.
(Aflac Heartful Services), a subsidiary of Aflac Japan, promotes the hiring of employees with disabilities. Aflac Heartful Services has established a barrier-free work environment and provides, among other things, specialized training, specially-trained supervisors and development opportunities to support those with disabilities. Of Aflac Heartful Services’ 158 employees as of December 31, 2025, 124 have a disability.
Aflac U.S. provides an employee engagement survey every other year to employees to gather their views on company culture and satisfaction, and works with its leadership to monitor continuous improvements and enhance the employee experience. 11 Item 1. Business Information about the Company's Executive Officers NAME PRINCIPAL OCCUPATION (1) AGE Daniel P.
Aflac U.S. conducts an employee engagement survey every two years to capture feedback on company culture and overall satisfaction. Insights from the survey are used in collaboration with leadership to drive continuous improvements and enhance the employee experience. 11 Item 1. Business Information about the Company's Executive Officers NAME PRINCIPAL OCCUPATION (1) AGE Daniel P.
Item 1. Business Parent Company) must generally file with the NDOI an application for change of control containing certain information required by statute and published regulations and provide a copy to the Company.
A person seeking to acquire control, directly or indirectly, of a domestic insurance company or of any person controlling a domestic insurance company (in the case of Aflac, CAIC and TOIC, the Parent Company) must generally file with the NDOI an application for change of control containing certain information required by statute and published regulations and provide a copy to the Company.
The Bank of Japan remains an exception to the major central bank loosening trends, ending a prolonged period of negative interest rates on bank reserves in March 2024. Continuing armed conflicts in Ukraine and the Middle East exacerbate uncertainty and have contributed to volatility in energy and other commodity prices.
The Bank of Japan remains an exception to the major central bank loosening trends, ending a prolonged period of negative interest rates on bank reserves in March 2024. Continuing geopolitical tensions, including armed conflicts and regime changes, exacerbate uncertainty and can contribute to volatility across both physical and financial asset classes.
As the Company holds a significant amount of fixed maturity securities issued by borrowers located in many different parts of the world, its financial results are directly influenced by global financial markets. Recent weakness in global capital markets could adversely affect the Company's financial condition, including its capital position and overall profitability.
See the Investments and Results of Operations by Segment sections of Item 7. MD&A, for additional information. As the Company holds a significant amount of fixed maturity securities issued by borrowers located in many different parts of the world, its financial results are directly influenced by global financial markets.
Market volatility and recessionary pressures could result in significant realized or unrealized losses due to severe price declines driven by high interest rates or increases in credit spreads, defaults in payment of principal or interest, or credit rating downgrades. Japan is the largest market for the Company's insurance products, and the Company owns substantial holdings in Japan Government Bonds (JGBs).
Potential weakness in global capital markets could adversely affect the Company's financial condition, including its capital position and overall profitability. Market volatility and recessionary pressures could result in significant realized or unrealized losses due to severe price declines driven by high interest rates or increases in credit spreads, defaults in payment of principal or interest, or credit rating downgrades.
The Company's results of operations are materially affected by conditions in the global capital markets and the global economy generally, including in its two primary operating markets of the U.S. and Japan.
The Company's results of operations are materially affected by conditions in the global capital markets and the global economy generally, including in its two primary operating markets of the U.S. and Japan. Inflation globally remains elevated but continues to trend downwards after monetary tightening, recovery of supply chains, and phasing out of extraordinary fiscal support.
For further information concerning Aflac U.S. operations, see the Aflac U.S. Segment subsection of Item 7. MD&A and Notes 2 and 13 of the Notes to the Consolidated Financial Statements. CORPORATE AND OTHER The Company's other operations include the Parent Company, Aflac Global Ventures LLC and its subsidiaries, asset management subsidiaries, results of reinsurance activities including Aflac Re Bermuda Ltd.
CORPORATE AND OTHER The Company's other operations include the Parent Company, Aflac Global Ventures LLC and its subsidiaries, asset management subsidiaries, results of reinsurance activities including Aflac Re Bermuda Ltd. (Aflac Re), and a printing subsidiary.
Women also occupied 52% of leadership roles located in the U.S. and 36% of senior management roles. In 2024, 60% of new hires located in the U.S. were people of color and 69% were women. • Established in 2009, Aflac Heartful Services Co., Ltd. (Aflac Heartful Services), a subsidiary of Aflac Japan, promotes the hiring of employees with disabilities.
Women also occupied 51% of leadership roles located in the U.S. and 35% of senior management roles. In 2025, 55% of new hires located in the U.S. were people of color and 68% were women. 10 Item 1. Business • Established in 2009, Aflac Heartful Services Co., Ltd.
The results of the survey are reported to Aflac Japan's Human Capital Management Policy Committee to identify issues, formulate enhancement/improvement measures and implement them.
Each year, Aflac Japan conducts an employee engagement survey in which all employees answer questions about the company and their organization to measure engagement across the company and detect organizational issues. The results of the survey are reported to Aflac Japan's Human Capital Management Policy Committee to identify issues, formulate enhancement/improvement measures and implement them.
Examinations are generally carried out in cooperation with the insurance departments of other states under guidelines promulgated by the National Association of Insurance Commissioners (NAIC).
Examinations are generally carried out in cooperation with the insurance departments of other states under guidelines promulgated by the National Association of Insurance Commissioners (NAIC). Beginning in 2024 and concluding in 2025, the NDOI and the New York State Department of Financial Services (NYSDFS) conducted full-scope, risk-focused 7 Item 1.
Aflac Japan implemented a human capital management system, beginning in January 2021 with managers and more senior leadership positions and in January 2022 with all other employees. Under the system, employees have access to descriptions and necessary skills for all job positions across the Company and are able to more proactively design their careers.
For example, in 2024, Aflac Japan launched Aflac Leadership Academy, a corporate learning initiative specializing in the development of Aflac Japan's next-generation management. Aflac Japan also implemented a human capital management system that provides employees access to descriptions and necessary skills for all job positions across the Company to more proactively design their careers.
Department of the Treasury to monitor all aspects of the insurance industry and of lines of business other than certain health insurance, certain long-term care insurance and crop insurance. • Privacy and Cybersecurity In the absence of a comprehensive federal privacy law, states are making a push towards privacy legislation.
The Dodd-Frank Act also established a Federal Insurance Office (FIO) under the U.S. Department of the Treasury to monitor all aspects of the insurance industry and of lines of business other than certain health insurance, certain long-term care insurance and crop insurance. 8 Item 1.
Compensation The Aflac Japan and Aflac U.S. Human Resources divisions operate as centralized internal compensation functions to provide oversight and input to the respective management teams with the objective of providing compensation that is consistent with job scope, duties and responsibilities. The compensation function evaluates new-hire job offers, promotions and compensation adjustments with the goal of consistent and equitable compensation.
Compensation Aflac Japan and Aflac U.S. Human Resources operate as centralized compensation functions, providing guidance and oversight to management teams to ensure pay aligns with job scope, responsibilities, and duties. This function reviews new-hire offers, promotions and salary adjustments to maintain fairness and consistency. Defined salary structures are regularly evaluated and updated using market data.
The Company may need to adjust its investment strategy and/or be forced to liquidate investments to pay claims. In addition, the continuing difference between interest rates in the U.S. and Japan contributed to a weakening of the yen over 2024, which had the effect of suppressing the Company's current period results in relation to the comparable prior period.
The Company may need to adjust its investment strategy and/or be forced to liquidate investments to pay claims. The continuing difference between U.S. dollar and Japanese yen interest rates also contributes to costs of hedging foreign currency exchange risk of U.S. dollar-denominated investments held by Aflac Japan.
Economic uncertainty is also driven by potential policy changes from a new presidential administration in the U.S. including proposals to impose trade tariffs and the potential for retaliatory tariffs from other countries, as well as increasing trade restrictions driven by security concerns.
Economic uncertainty is also impacted by potential policy changes in the U.S., including proposed domestic regulations focused on consumer pricing, trade tariffs and increasing trade restrictions driven by security concerns and broader geopolitical tensions.
Employee Engagement and Culture The Company strives to have an engaged employee culture by developing programs including career development support and programs emphasizing work life balance. Each year, Aflac Japan conducts an employee engagement survey in which all employees answer questions about the company and their organization to measure engagement across the company and detect organizational issues.
Aflac Heartful Services supports these employees with the assistance of advisors for long-term career support. Employee Engagement and Culture The Company strives to have an engaged employee culture by developing programs including career development support and programs emphasizing work life balance.
In 2024, the NDOI and the New York State Department of Financial Services (NYSDFS) commenced full-scope, risk-focused financial examinations on their respective state domiciled insurance entities covering the reporting period January 1, 2020 – December 31, 2023 that are currently ongoing.
Business financial examinations on their respective state domiciled insurance entities covering the reporting period January 1, 2020 – December 31, 2023. Additionally, beginning in 2023 and concluding in 2025, the NYSDFS conducted a routine market conduct examination on Aflac New York covering the five-year period ended on December 31, 2022.
Additionally, in 2023, the NYSDFS commenced a routine market conduct examination on Aflac New York covering the five-year period ended on December 31, 2022 that is currently ongoing. NAIC Risk-Based Capital The NAIC continually reviews regulatory matters, such as risk-based capital (RBC) modernization, group capital calculations and liquidity risk assessment.
There were no material findings in any of the NDOI and NYSDFS final examination reports. NAIC Risk-Based Capital The NAIC continually reviews regulatory matters, such as risk-based capital (RBC) modernization, group capital calculations and liquidity risk assessment.
Aflac U.S. recruiting efforts include partnerships with colleges and universities and civic organizations to attract top-tier talent. Aflac U.S. also offers a variety of internships, co-operative opportunities and transitional programs to allow emerging talent to develop. Educational opportunities are available for self-development and growth to help employees further enhance their technical and professional skills.
Aflac U.S. actively partners with colleges, universities and civic organizations to attract exceptional talent. Aflac U.S. provides a range of internships, co-op programs and transitional opportunities designed to help emerging professionals grow and succeed. Additionally, employees have access to educational resources that support self-development and skill-enhancement, enabling them to strengthen both technical and professional capabilities.
Defined salary structures are reviewed regularly and updated utilizing market data. Job levels and associated compensation are determined based on annually updated market data, job scope, duties and responsibilities. Employee performance reviews are conducted annually and are factored into employee bonuses and salaries.
Job levels and corresponding compensation are determined annually based on market benchmarks and role requirements. Employee performance reviews occur each year end and influence both bonuses and salary decisions.
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Business The Dodd-Frank Act also established a Federal Insurance Office (FIO) under the U.S.
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Business PART I FORWARD-LOOKING INFORMATION The Private Securities Litigation Reform Act of 1995 provides a safe harbor to encourage companies to provide prospective information, so long as those informational statements are identified as forward-looking and are accompanied by meaningful cautionary statements identifying important factors that could cause actual results to differ materially from those included in the forward-looking statements.
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Although not all apply to Aflac U.S. operations, examples of these types of legislation include the California Consumer Privacy Act (CCPA), California Privacy Rights Act (CPRA), UK General Data Protection Regulation (UK GDPR), UK Data Protection Act of 2018 (UK DPA), Connecticut Data Privacy Act (CDPA), Utah Consumer Privacy Act (UCPA), Virginia Consumer Data Protection Act (VCDPA), Colorado Privacy Act (CPA), Oregon Consumer Privacy Act (OCPA), Montana Consumer Data Privacy Act (MCDPA) and Nebraska Data Privacy Act (NDPA).
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Aflac Incorporated and its subsidiaries (the Company) desire to take advantage of these provisions.
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Cybersecurity continues to be an area of evolving focus for legislation and regulatory activity. In addition to the information required by Item 1C. Cybersecurity of this report, industry regulators as well as the federal government have updated existing standards and increased their focus on enforcement.
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This report contains cautionary statements identifying important factors that could cause actual results to differ materially from those projected herein, and in any other statements made by Company officials in communications with the financial community and contained in documents filed with or furnished to the Securities and Exchange Commission (SEC).
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For example, the National Institute of Standards and Technology (NIST) issued an updated version of the Cybersecurity Framework as well as guidelines on managing risks associated with the use of artificial intelligence and the Cybersecurity & Infrastructure Security Agency (CISA) published additional security guidelines related to ransomware and software security.
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Forward-looking statements are not based on historical information and relate to future operations, strategies, financial results or other developments. Furthermore, forward-looking information is subject to numerous assumptions, risks and uncertainties. In particular, statements containing words such as the ones listed below or similar words, as well as specific projections of future results, generally qualify as forward-looking.
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Additionally, certain states are adopting the NAIC Model Bulletin on the Use of Artificial Intelligence Systems by Insurers. The Company has a cross-functional team that tracks and monitors new and emerging legislation and regulations to ensure privacy and cybersecurity programs are evaluated and comply with regulatory requirements. This includes a robust third-party risk management and assessment program.
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The Company undertakes no obligation to update such forward-looking statements, except as may be required by law. • expect • anticipate • believe • goal • objective • strategy • may • should • estimate • intend • project • future • will • assume • potential • target • outlook • continue The Company cautions readers that the following factors, in addition to other factors mentioned from time to time, could cause actual results to differ materially from those contemplated by the forward-looking statements: • difficult conditions in global capital markets and the economy, including inflation • defaults and credit downgrades of investments • global fluctuations in interest rates and exposure to significant interest rate risk • concentration of business in Japan • limited availability of acceptable Japanese yen-denominated investments • foreign currency fluctuations in the yen/dollar exchange rate • differing interpretations applied to investment valuations • significant valuation judgments in determination of expected credit losses recorded on the Company's investments • decreases in the Company's financial strength or debt ratings • decline in creditworthiness of other financial institutions • the Company's ability to attract and retain qualified sales associates, brokers, employees, and distribution partners • deviations in actual experience from pricing and reserving assumptions • ability to continue to develop and implement improvements in information technology systems and on successful execution of revenue growth and expense management initiatives • interruption in telecommunication, information technology and other operational systems, or a failure to maintain the security, confidentiality, integrity or privacy of sensitive data residing on such systems, and uncertainty regarding the impact of the incident involving unauthorized access to the Company’s network in June 2025 • subsidiaries' ability to pay dividends to the Parent Company • inherent limitations to risk management policies and procedures • operational risks of third-party vendors • tax rates applicable to the Company may change • failure to comply with restrictions on policyholder privacy and information security • extensive regulation and changes in law or regulation by governmental authorities • competitive environment and ability to anticipate and respond to market trends • catastrophic events, including, but not limited to, as a result of climate change, epidemics, pandemics, tornadoes, hurricanes, earthquakes, tsunamis, war or other military action, major public health issues, terrorism or other acts of violence, and damage incidental to such events • ability to protect the Aflac brand and the Company's reputation • ability to effectively manage key executive succession • changes in accounting standards • level and outcome of litigation or regulatory inquiries • allegations or determinations of worker misclassification in the United States 1 Item 1.
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Over the last several years, processes have developed to support the data subject request process required by CCPA, privacy impact assessments have been implemented as required by CPRA and a dedicated privacy and security center has been added to the Company website to provide consumers with information about the use of and protection of their data.
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Business ITEM 1. BUSINESS OVERVIEW Aflac Incorporated (the Parent Company) was incorporated in 1973 under the laws of the state of Georgia. The Parent Company and its subsidiaries (collectively, the Company) provide financial protection to millions of policyholders and customers in Japan and the United States (U.S.).
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For example, Aflac Japan’s Leadership Program allows select managers to participate in a comprehensive training program to learn about innovation and the global business environment. In 2024, Aflac Japan launched Aflac Leadership Academy, a corporate learning initiative specializing in the development of Aflac Japan's next-generation management.
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The Company’s principal business is supplemental health and life insurance products with the goal to provide customers the best value in supplemental insurance products in Japan and the U.S. When a policyholder or insured gets sick or hurt, the Company pays cash benefits fairly and promptly for eligible claims.
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High rates of inflation globally from 2022 continued to be reduced due to monetary tightening in many countries and normalization of certain trends after COVID-19, including supply chain recovery and phasing out of extraordinary fiscal support.
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Throughout its 70-year history, the Company’s supplemental insurance policies have given policyholders the opportunity to focus on recovery, not financial stress. The Company is authorized to conduct insurance business in all 50 states, the District of Columbia, several U.S. territories, and Japan. The Company’s website is: www.aflac.com.
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The continuing difference between U.S. dollar and yen interest rates also contributes to costs of hedging currency risk of U.S. dollar-denominated investments held by Aflac Japan. The Company is not able to predict the ultimate impact of inflation, interest rate changes, interest rate differences and other changing market conditions on the Company’s investments and hedging programs.
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Information included on the Company’s website is not incorporated by reference into this filing.
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The Company makes available free of charge through its website, its annual report on Form 10-K, its quarterly reports on Form 10-Q, current reports on Form 8-K, and amendments to those reports as soon as reasonably practicable after they have been electronically filed with or furnished to the SEC.
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REVENUE-GENERATING ACTIVITIES The Company's strategy for growth in Japan and the U.S. has remained straightforward and consistent for many years. The Company develops relevant supplemental health insurance products offering financial protection from the rising out-of-pocket expenses associated with medical events that are not covered by the insureds' primary coverage.
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The Company also offers a complement of other voluntary and employer-paid health and life insurance products to fit the needs of its customers. Additionally, the Company aims to obtain more customers by selling where the customer prefers to purchase protection, whether through an agent or broker, a distribution partner or directly from the Company.
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To help promote its insurance products, the Company’s marketing campaigns feature the Aflac Duck. LONG-TERM GROWTH STRATEGY In 1999, the Company had been running commercials for nearly a decade, but its brand awareness was hovering at about 10%. An innovative marketing campaign with something unique and memorable that would build brand awareness was needed.
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The Aflac Duck’s first commercial in the U.S., “Park Bench,” aired on January 1, 2000 and taught consumers how to pronounce “Aflac.” The Aflac Duck made its international debut in Japan in 2003.
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In the time since its U.S. debut, the Aflac Duck has become one of the most familiar advertising icons in the world, appearing in many commercials and countless print ads in both the U.S. and Japan. Celebrating its 25th anniversary in the U.S., the Aflac Duck continues to be a helpmate who increases brand knowledge and connection. 2 Item 1.
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Business The Company's insurance business consists of two reporting segments: Aflac Japan and Aflac U.S. The primary insurance subsidiary in the Aflac Japan segment is Aflac Life Insurance Japan Ltd. (ALIJ).
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Aflac U.S. includes the insurance subsidiaries American Family Life Assurance Company of Columbus (Aflac); Continental American Insurance Company (CAIC), branded as Aflac Group Insurance (AGI); American Family Life Assurance Company of New York (Aflac New York); Tier One Insurance Company (TOIC); and Aflac Benefits Solutions, Inc. (ABS), which provides a platform for Aflac Dental and Vision in the U.S.
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For information on the Company's results of operations and financial information by segment, see Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations (MD&A) and Note 2 of the Notes to the Consolidated Financial Statements.
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AFLAC JAPAN Aflac Japan is the principal contributor to the Parent Company's consolidated earnings and the largest insurer in Japan in terms of cancer and medical (third sector insurance products) policies in force. For information on Aflac Japan's operating results, see the Aflac Japan Segment section of Item 7. MD&A.
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Insurance Products Aflac Japan's third sector insurance products are supplemental products designed to help consumers pay for medical and nonmedical costs that are not reimbursed under Japan's national health insurance system. Changes in Japan's economy and an aging population have put increasing pressure on Japan's national health care system.
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As a result, more costs have been shifted to Japanese consumers, who in turn have become increasingly interested in insurance products that help them manage those costs. Aflac Japan has responded to this consumer need by enhancing existing products and developing new products.
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Aflac Japan remains focused on maintaining leadership in third sector insurance products that are less interest rate sensitive and have strong and stable margins. At the same time, Aflac Japan complements this core business with similarly profitable first sector products as outlined below.
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Third Sector Insurance Products Cancer Cancer Insurance Aflac Japan pioneered the cancer insurance market in Japan in 1974, and remains the number one provider of cancer insurance in Japan today.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

77 edited+9 added−7 removed132 unchanged
Biggest changeRisk Factors has an impact when cash in the form of yen is converted to U.S. dollars for investment into U.S. dollar-denominated assets. The exchange rates prevailing at the time of dividend payment may differ from the exchange rates prevailing at the time the yen profits were earned.
Biggest changeThis primarily occurs when Aflac Japan pays dividends in Japanese yen to the Parent Company, but it also has an impact when cash in the form of Japanese yen is converted to U.S. dollars for investment into U.S. dollar-denominated assets.
Compliance with applicable laws and regulations is time consuming and personnel-intensive, and changes in these laws and regulations may materially increase the Company's direct and indirect compliance and other expenses of doing business, thus having a material adverse effect on the Company's financial condition and results of operations. For additional information, see the Government Regulation subsections of Item 1.
Compliance with applicable laws and regulations is time consuming and personnel-intensive, and changes in these laws and regulations may materially increase the Company's direct and indirect compliance and other expenses of doing business, thus having a material adverse effect on the Company's financial condition and results of operations. For additional information, see the Government Regulation subsections of Item 1. Business.
Lack of availability of acceptable yen-denominated investments could adversely affect the Company's results of operations, financial position or liquidity. The Company aims to match both the duration and currency of its assets with its liabilities. This is very difficult for Aflac Japan and Aflac Re due to the lack of available long-dated yen-denominated fixed income instruments beyond JGBs.
Lack of availability of acceptable Japanese yen-denominated investments could adversely affect the Company's results of operations, financial position or liquidity. The Company aims to match both the duration and currency of its assets with its liabilities. This is very difficult for Aflac Japan and Aflac Re due to the lack of available long-dated Japanese yen-denominated fixed income instruments beyond JGBs.
As an example of the latter, if the Company’s actual insurance risk experience in Japan is as expected or more favorable than expected, the need for yen to pay expenses and claims would correspondingly remain at or below expected levels, thereby diminishing operational requirements to convert U.S. dollar-denominated investments to yen.
As an example of the latter, if the Company’s actual insurance risk experience in Japan is as expected or more favorable than expected, the need for Japanese yen to pay expenses and claims would correspondingly remain at or below expected levels, thereby diminishing operational requirements to convert U.S. dollar-denominated investments to Japanese yen.
For additional information regarding unhedged U.S. dollar-denominated securities, see the risk factor above entitled, “Lack of availability of acceptable yen-denominated investments could adversely affect the Company’s results of operations, financial position or liquidity”. See the Currency Risk subsection of Item 7A. Quantitative and Qualitative Disclosures about Market Risk for additional information.
For additional information regarding unhedged U.S. dollar-denominated securities, see the risk factor above entitled, “Lack of availability of acceptable Japanese yen-denominated investments could adversely affect the Company’s results of operations, financial position or liquidity”. See the Currency Risk subsection of Item 7A. Quantitative and Qualitative Disclosures about Market Risk for additional information.
See the risk factor entitled “Any decrease in the Company's financial strength or debt ratings may have an adverse effect on its competitive position and access to liquidity and capital” for additional information. The Company seeks to match investment currency and interest rate risk to its yen liabilities.
See the risk factor entitled “Any decrease in the Company's financial strength or debt ratings may have an adverse effect on its competitive position and access to liquidity and capital” for additional information. The Company seeks to match investment currency and interest rate risk to its Japanese yen liabilities.
Additionally, changes in the overall legal or regulatory environment may, even absent any particular regulator's or enforcement authority's interpretation of an issue changing, cause the Company to change its views regarding the actions it needs to take from a legal or regulatory risk management perspective.
Risk Factors Additionally, changes in the overall legal or regulatory environment may, even absent any particular regulator's or enforcement authority's interpretation of an issue changing, cause the Company to change its views regarding the actions it needs to take from a legal or regulatory risk management perspective.
A sustained labor shortage or continuing increased turnover rates within the Aflac U.S. workforce, due to labor market factors or the state of the U.S. economy, could lead to increased costs of the day-to-day operation of the Aflac U.S. business, the inability to hire and retain employees, or the outsourcing of certain operations.
A sustained labor shortage or continuing elevated turnover rates within the Aflac U.S. workforce, due to labor market factors or the state of the U.S. economy, could lead to increased costs of the day-to-day operation of the Aflac U.S. business, the inability to hire and retain employees, or the outsourcing of certain operations.
The low interest rates on yen-denominated securities has a negative effect on overall net investment income. A large portion of the cash available for reinvestment each year is deployed in yen-denominated instruments and subject to the low level of yen interest rates.
The low interest rates on Japanese yen-denominated securities has a negative effect on overall net investment income. A large portion of the cash available for reinvestment each year is deployed in Japanese yen-denominated instruments and subject to the low level of Japanese yen interest rates.
Although the Company engages in certain foreign exchange hedging activities to partially mitigate this risk, and such hedged assets may be used to satisfy yen-denominated insurance liabilities and other business obligations, important risks remain.
Although the Company engages in certain foreign exchange hedging activities to partially mitigate this risk, and such hedged assets may be used to satisfy Japanese yen-denominated insurance liabilities and other business obligations, important risks remain.
Interruption in telecommunication, information technology and other operational systems, or a failure to maintain the security, confidentiality or privacy of sensitive data residing on such systems, whether due to actions by the Company or others, including third-party providers and participants in the company’s distribution channels, could delay or disrupt the Company's ability to do business and service its customers, seriously harm the Company's brand, reputation, and ability to compete effectively, subject it to regulatory sanctions and other claims, lead to a loss of customers and revenues and otherwise adversely affect the Company's business.
Risk Factors Interruption in telecommunication, information technology and other operational systems, or a failure to maintain the security, confidentiality or privacy of sensitive data residing on such systems, whether due to actions by the Company or others, including third-party providers and participants in the company’s distribution channels, could delay or disrupt the Company's ability to do business and service its customers, seriously harm the Company's brand, reputation, and ability to compete effectively, subject it to regulatory sanctions and other claims, lead to a loss of customers and revenues and otherwise adversely affect the Company's business.
Further, because of the concentration of the Company's business in Japan and its need for long-dated yen-denominated assets, the Company has a substantial concentration of JGBs in its investment portfolio exposing the Company to credit deterioration and potential downgrades of JGBs.
Further, because of the concentration of the Company's business in Japan and its need for long-dated Japanese yen-denominated assets, the Company has a substantial concentration of JGBs in its investment portfolio exposing the Company to credit deterioration and potential downgrades of JGBs.
These foreign currency gains or losses on the investments are only economically realized, or monetized, through sale, maturity or redemption of the investments and concurrent conversion to yen.
These foreign currency gains or losses on the investments are only economically realized, or monetized, through sale, maturity or redemption of the investments and concurrent conversion to Japanese yen.
If the Company fails to comply with restrictions on customer privacy and information security, including taking steps to ensure that its third-party service providers and business associates who access, store, process or transmit sensitive customer information maintain its security, integrity, confidentiality and availability, the Company's reputation and business operations could be materially adversely affected.
Risk Factors If the Company fails to comply with restrictions on customer privacy and information security, including taking steps to ensure that its third-party service providers and business associates who access, store, process or transmit sensitive customer information maintain its security, integrity, confidentiality and availability, the Company's reputation and business operations could be materially adversely affected.
Rapidly changing and unprecedented credit and equity market conditions could materially impact the valuation of securities as reported within the Company's consolidated financial statements and the period-to-period changes in value could vary significantly. Valuations of the Company's derivatives fluctuate with changes in underlying market variables, such as interest rates and foreign currency exchange rates.
Rapidly changing and unprecedented credit and equity market conditions could materially impact the valuation of securities as reported within the Company's consolidated financial statements and the period-to-period changes in fair value could vary significantly. Valuations of the Company's derivatives fluctuate with changes in underlying market variables, such as interest rates and foreign exchange rates.
Aflac Re's investment strategy also includes U.S. dollar-denominated investments that are presently comprised exclusively of public investment-grade bonds. Investing in U.S. dollar-denominated investments in Aflac Japan and Aflac Re creates an unmatched foreign currency exposure and related capital ratio volatility, as both Aflac Japan and Aflac Re insurance liabilities are yen-denominated.
Aflac Re's investment strategy also includes U.S. dollar-denominated investments that are presently comprised exclusively of investment-grade bonds. Investing in U.S. dollar-denominated investments in Aflac Japan and Aflac Re creates an unmatched foreign currency exposure and related capital ratio volatility, as both Aflac Japan and Aflac Re insurance liabilities are Japanese yen-denominated.
The Company's sales associates, brokers and other distribution partners are independent contractors and may sell products of its competitors. If the Company's competitors offer products that are more attractive, or pay higher commissions than the Company does, any or all of these distribution partners may concentrate their efforts on selling the Company's competitors' products instead of the Company's.
The Company's sales associates, brokers and other distribution partners are independent contractors and may sell products of its competitors. If the Company's competitors offer products that are more attractive, or pay more competitive commissions than the Company does, any or all of these distribution partners may concentrate their efforts on selling the Company's competitors' products instead of the Company's.
Risk Factors As a holding company, the Parent Company depends on the ability of its subsidiaries to transfer funds to it to meet its debt service and other obligations and to pay dividends on its common stock. The Parent Company is a holding company and has no direct operations, and its most significant assets are the stock of its subsidiaries.
As a holding company, the Parent Company depends on the ability of its subsidiaries to transfer funds to it to meet its debt service and other obligations and to pay dividends on its common stock. The Parent Company is a holding company and has no direct operations, and its most significant assets are the stock of its subsidiaries.
In Japan, the Company's sales results are dependent upon its relationship with sales associates and other distribution partners, including Japan Post Group, which in recent periods has accounted for a significant portion of Aflac Japan's total sales. The Company competes with other insurers and financial institutions primarily on the basis of its products, compensation, support services and financial rating.
In Japan, the Company's sales results are dependent upon its relationship with sales associates and other distribution partners, such as Japan Post Group, which in recent periods has accounted for a significant portion of Aflac Japan's total sales. The Company competes with other insurers and financial institutions primarily on the basis of its products, compensation, support services and financial rating.
These catastrophic events may cause changes to estimates of future earnings, capital deployment and other guidance the Company has provided to the markets in the 2025 Outlook section of Item 7. MD&A.
These catastrophic events may cause changes to estimates of future earnings, capital deployment and other guidance the Company has provided to the markets in the 2026 Outlook section of Item 7. MD&A.
Any inability of Aflac to pay dividends or make other payments to the Parent Company could have a material adverse effect on the Company's financial condition and results of operations.
Any inability of the Company's subsidiaries to pay dividends or make other payments to the Parent Company could have a material adverse effect on the Company's financial condition and results of operations.
However, the Company may not realize the benefit of offsetting adverse cash settlements on hedging derivatives with cash receipts on the U.S. dollar-denominated investments if the currency exchange rates move in an adverse direction before the investments are converted to yen, or if the investments are never converted to yen.
However, the Company may not realize the benefit of offsetting adverse cash settlements on hedging derivatives with cash receipts on the U.S. dollar-denominated investments if the foreign exchange rates move in an adverse direction before the investments are converted to Japanese yen, or if the investments are never converted to Japanese yen.
Further, regulatory authorities periodically re-examine existing laws and regulations applicable to insurance companies and their products. Changes in these laws and regulations, or in interpretations thereof, could have a material adverse effect on the Company's financial condition and results of operations.
Further, regulatory authorities periodically re-examine existing laws and regulations applicable to insurance companies and their products. Changes in these laws and regulations, or in interpretations thereof, could have a material adverse effect on the Company's financial condition and results of operations. 24 Item 1A.
Any of these factors could cause the Company to experience an effective tax rate significantly different from previous periods or the Company's current estimates. If the Company's effective tax rate were to increase, the Company's financial condition and results of operations could be adversely affected.
Any of these factors could cause the Company to experience an effective tax rate significantly different from previous periods or the Company's current estimates. If the Company's effective tax rate were to increase, the Company's financial condition and results of operations could be adversely affected. 23 Item 1A.
An increase in the differential of short-term U.S. and Japan interest rates would also increase the cost of hedging a portion of the U.S. dollar-denominated assets in the Aflac Japan segment into yen, which could have a material adverse effect on the Company's business, results of operations or financial condition.
An increase in the differential of short-term U.S. and Japan interest rates would also increase the cost of hedging a portion of the U.S. dollar-denominated assets held by Aflac Japan into Japanese yen, which could have a material adverse effect on the Company's business, results of operations or financial condition.
Many of the Company's risk management strategies or techniques are based upon historical customer and market behavior and all such strategies and techniques are based to some degree on management’s subjective judgment. The Company cannot provide assurance that its risk management framework, including the underlying assumptions or strategies, will be accurate and effective.
Many of the Company's risk management strategies or techniques are based upon historical customer and market behavior and all such strategies and techniques are based to some degree on management’s subjective judgment. The 22 Item 1A. Risk Factors Company cannot provide assurance that its risk management framework, including the underlying assumptions or strategies, will be accurate and effective.
With regard to personal information obtained from policyholders, the insured, or others, Aflac Japan is regulated in Japan by the APPI and guidelines issued by FSA and other governmental authorities. 23 Item 1A. Risk Factors Various state laws in the U.S. address the unauthorized access and acquisition of personal information and the use and disclosure of individually identifiable health data.
With regard to personal information obtained from policyholders, the insured, or others, Aflac Japan is regulated in Japan by the APPI and guidelines issued by FSA and other governmental authorities. Various state laws in the U.S. address the unauthorized access and acquisition of personal information and the use and disclosure of individually identifiable health data.
The determination of the amount of expected credit losses recorded on the Company's investments is based on significant valuation judgments and could materially impact its results of operations or financial position. The Company estimates an expected lifetime credit loss on investments measured at amortized cost including held-to-maturity fixed maturity securities, loan receivables and loan commitments.
The determination of the amount of expected credit losses recorded on the Company's investments is based on significant valuation judgments and could materially impact its results of operations or financial position. The Company estimates an allowance for credit losses on investments measured at amortized cost including held-to-maturity securities, loan receivables and loan commitments.
Rising interest rates also negatively impact capital ratios in certain jurisdictions because unrealized losses on the available-for-sale investment portfolio factor into the ratio. In addition to the unrealized losses negatively impacting capital ratios, significant unrealized losses could impact the amount of dividends 15 Item 1A. Risk Factors that could be paid under local regulations, including in Japan.
Rising interest rates also negatively impact capital ratios in certain jurisdictions because unrealized losses on the available-for-sale investment portfolio factor into the ratio. In addition to the unrealized losses negatively impacting capital ratios, significant unrealized losses could impact the amount of dividends that could be paid under local regulations, including in Japan.
The Company and its third-parties or vendors have and may continue to experience outages or cyberattacks that disrupt the operations or impact the confidentiality, availability or integrity of information, which may result in operational, legal, regulatory or financial harm.
The Company and its third-parties or vendors have and may continue to experience outages or cyber-related attacks that disrupt the operations or impact the confidentiality, availability or integrity of information, which may result in operational, legal, regulatory or financial harm.
At the same time, the unhedged U.S. dollar-denominated investment portfolio creates an unmatched foreign currency exposure and subjects Aflac Japan to volatility in regulatory capital and earnings, which may adversely impact Aflac Japan’s ability to pay dividends to the Parent Company.
At the same time, the unhedged U.S. dollar-denominated investment portfolio creates an unmatched foreign currency exposure and subjects Aflac Japan to volatility in regulatory capital and earnings, which may adversely impact Aflac Japan’s ability to 17 Item 1A. Risk Factors pay dividends to the Parent Company.
The Company's concentration of business in Japan poses risks to its operations and financial condition. Aflac Japan's adjusted revenues accounted for 55% of the Company's total adjusted revenues in 2024, compared with 60% in 2023 and 64% in 2022.
The Company's concentration of business in Japan poses risks to its operations and financial condition. Aflac Japan's adjusted revenues accounted for 53% of the Company's total adjusted revenues in 2025, compared with 55% in 2024 and 60% in 2023.
The percentage of the Company's total assets attributable to Aflac Japan was 77% at December 31, 2024, compared with 80% at December 31, 2023. See Note 2 of the Notes to the Consolidated Financial Statements for additional information.
The percentage of the Company's total assets attributable to Aflac Japan was 76% at December 31, 2025, compared with 77% at December 31, 2024. See Note 2 of the Notes to the Consolidated Financial Statements for additional information.
Negative events or developments affecting any one of these counterparties could have an adverse effect on the Company's financial position or results of operations. 19 Item 1A. Risk Factors All of these risks related to exposure to other financial institutions could adversely impact the Company's consolidated results of operations and financial condition.
Negative events or developments affecting any one of these counterparties could have an adverse effect on the Company's financial position or results of operations. All of these risks related to exposure to other financial institutions could adversely impact the Company's consolidated results of operations and financial condition.
In addition, an increase in the difference between short-term U.S. and Japan interest rates would increase the cost of hedging a portion of the U.S. dollar-denominated assets in the Aflac Japan segment into yen, which could have a material adverse effect on the Company's business, results of operations or financial condition.
However, an increase in the difference between short-term U.S. and Japan interest rates would increase the cost of hedging a portion of the U.S. dollar-denominated assets held by Aflac Japan into Japanese yen, which could have a material adverse effect on the Company's business, results of operations or financial condition.
Due to the size of Aflac Japan, where functional currency is the Japanese yen, fluctuations in the exchange rate between the yen and the U.S. dollar can have a significant effect on the Company's reported financial position and results of operations.
Due to the size of Aflac Japan, where functional currency is the Japanese yen, fluctuations in the foreign exchange rate between the Japanese yen and the U.S. dollar have had, and may continue to have, a significant effect on the Company's reported financial position and results of operations.
For Aflac Japan, rising interest rates and widening credit spreads, which reduce the fair value of Aflac Japan’s fixed-maturity investments, when combined with a strengthening yen, and the resulting decrease in the yen value of Aflac Japan’s U.S. dollar-denominated fixed-maturity investments, have a negative impact on Aflac Japan's regulatory capital.
For Aflac Japan, rising interest rates and widening credit 15 Item 1A. Risk Factors spreads, which reduce the fair value of Aflac Japan’s fixed-maturity investments, when combined with a strengthening Japanese yen, and the resulting decrease in the Japanese yen value of Aflac Japan’s U.S. dollar-denominated fixed-maturity investments, have a negative impact on Aflac Japan's regulatory capital.
The Company’s approach to estimating credit losses is complex and incorporates significant judgments. In addition to a security, or an asset class, or issuer-specific credit fundamentals, it considers relevant historical information (e.g. loss statistics), current market conditions and reasonable and supportable micro and macroeconomic forecasts.
The Company’s approach to estimating an allowance for credit losses is complex and incorporates significant judgments. In addition to a security, an asset class, or issuer-specific credit fundamentals, it considers relevant historical information 18 Item 1A. Risk Factors (e.g. loss statistics), current market conditions and reasonable and supportable micro and macroeconomic forecasts.
The Company is exposed to significant interest rate risk, which may adversely affect its results of operations, financial condition and liquidity. The Company has substantial investment portfolios that support its policy liabilities.
Quantitative and Qualitative Disclosures about Market Risk. The Company is exposed to significant interest rate risk, which may adversely affect its results of operations, financial condition and liquidity. The Company has substantial investment portfolios that support its policy liabilities.
If the Company's actual experience is different from its assumptions or estimates, the Company's premiums and reserves may prove inadequate. Reserve assumptions are regularly reviewed by the Company and may be revised if future expectations change.
If the Company's actual experience is different from its assumptions or estimates, the Company's premiums and reserves may prove inadequate. Reserve assumptions are 20 Item 1A. Risk Factors regularly reviewed by the Company and may be revised if future expectations change.
The settlement of the foreign exchange derivatives is reported in the investing activities section of the Company’s consolidated statements of cash flows in the line item settlement of derivatives, net. See the risk factor entitled “The Company is exposed to foreign currency fluctuations in the yen/dollar exchange rate”, the Hedging Activities subsection of Item 7.
The settlement of the foreign currency derivatives is included in settlement of derivatives, net in the investing activities section of the Company’s consolidated statements of cash flows. See the risk factor entitled “The Company is exposed to foreign currency fluctuations in the Japanese yen/U.S. dollar (yen/dollar) exchange rate”, the Hedging Activities subsection of Item 7.
As the Company pursues IT transformation and increased cloud adoption, it inherently exposes the Company to potential cyber related attacks.
As the Company pursues IT transformation and increased cloud adoption, it inherently exposes the Company to potential cyber-related attacks. 21 Item 1A.
For collateral dependent financial assets, including loans where foreclosure is probable, expected credit losses are based on the fair value of the underlying collateral. For the Company’s available-for-sale fixed maturity securities, the Company evaluates estimated credit losses only when the fair value of the available-for-sale fixed maturity security is below its amortized cost basis.
For collateral dependent financial assets, including loans where foreclosure is probable, the allowance for credit losses is based on the fair value of the underlying collateral. For the Company’s available-for-sale securities, the Company evaluates an estimate for credit losses only when the fair value of the available-for-sale security is below its amortized cost basis.
The ability of Aflac and Aflac Japan to pay dividends or make other payments to the Parent Company could also be constrained by the Company's dependency on financial strength ratings from independent rating agencies. The Company's ratings from these agencies depend to a large extent on Aflac's capitalization level.
The ability of Aflac and Aflac Japan to pay dividends or make other payments to the Parent Company could also be constrained by the Company's dependency on financial strength ratings from independent rating agencies.
HIPAA requires the Company to impose privacy and security requirements on its business associates (as such term is defined in the HIPAA regulations). Several states, including California and New York, have made changes to their privacy or cybersecurity laws or regulations in recent years. Additionally, the U.S.
HIPAA requires the Company to impose privacy and security requirements on its business associates (as such term is defined in the HIPAA regulations). A number of states, including California and New York, have adopted and continue to expand their privacy and cybersecurity laws and regulations in recent years. Additionally, the U.S.
The Company has historically maintained and currently maintains the size of the unhedged portfolio at levels below the economic equity surplus in Aflac Japan, but there can be no assurance that this strategy will be successful.
The Company has historically maintained and currently maintains the size of the unhedged portfolio at levels below the economic equity surplus in Aflac Japan, but this strategy may not be successful.
These risks can significantly impact the Company's consolidated results of operations, financial position or liquidity. Further, foreign exchange derivatives used for hedging are periodically settled, which results in cash receipt or payment at maturity or early termination.
These risks can significantly impact the Company's consolidated results of operations, financial position or liquidity. Further, foreign currency derivatives used for hedging are periodically settled, which results in cash receipt or payment at inception, maturity or early termination. Cumulative net cash settlements on derivatives hedging currency exposure of 16 Item 1A.
Risk Factors complexity of models the Company utilizes expands, increasing the Company's exposure to error in the design, implementation or use of models, including the associated input data and assumptions.
As the Company's businesses continue to grow and evolve, the number and complexity of models the Company utilizes expands, increasing the Company's exposure to error in the design, implementation or use of models, including the associated input data and assumptions.
These models are utilized under a risk management policy approved by the Company's executive risk management committees, however, the models may not operate properly and rely on assumptions and projections that are inherently uncertain. As the Company's businesses continue to grow and evolve, the number and 22 Item 1A.
These models are utilized under a risk management policy approved by the Company's executive risk management committees, however, the models may not operate properly and rely on assumptions and projections that are inherently uncertain.
Risk Factors For regulatory accounting purposes for Aflac Japan, there are certain requirements for realizing impairments that could be triggered by rising interest rates, credit-related losses, or changes in foreign exchange, negatively impacting Aflac Japan's earnings and corresponding dividend and capital deployment.
These higher losses would also negatively affect the Company's solvency ratios in the U.S., Japan and Bermuda. For regulatory accounting purposes for Aflac Japan, there are certain requirements for realizing impairments that could be triggered by rising interest rates, credit-related losses, or changes in foreign exchange rates, negatively impacting Aflac Japan's earnings and corresponding dividend and capital deployment.
The Company has made significant investments in the Aflac brand over a long period of time. Because insurance products are intangible, the Company's ability to compete for and maintain policyholders relies to a large extent on consumer trust in the Company's business, including its alliance partners, sales associates and other distribution partners.
Because insurance products are intangible, the Company's ability to compete for and maintain policyholders relies to a large extent on consumer trust in the Company's business, including its alliance partners, sales associates and other distribution partners.
Based on the timing and severity of exchange rate fluctuations combined with the level of outstanding activity in this program, the cash strain at the Parent Company could be significant.
Based on the timing and severity of foreign exchange rate fluctuations combined with the level of outstanding activity in this program, the cash strain at the Parent Company could be significant. These hedging activities are limited in scope and the strategies may not be successful.
Further, the Company cannot predict the effects that any legal or regulatory changes made in response to climate change concerns or major public health issues would have on the Company's business. 25 Item 1A. Risk Factors Events, including those external to the Company's operations, could damage the Company's reputation.
Further, the Company cannot predict the effects that any legal or regulatory changes made in response to climate change concerns or major public health issues would have on the Company's business. Events, including those external to the Company's operations, could damage the Company's reputation. The Company has made significant investments in the Aflac brand over a long period of time.
Although the Company attempts to manage its exposure to such events through the purchase of cyber liability insurance, such events are inherently unpredictable, and insurance may not be sufficient to protect the Company against all losses. As a result, events such as these could adversely affect the Company's financial condition or results of operation.
Although the Company attempts to manage its exposure to such events through the purchase of cyber liability insurance, such events are inherently unpredictable, and insurance may not be sufficient to protect the Company against all losses.
Increased market volatility also makes it difficult to value certain of the Company's investment holdings. For additional information, see the Critical Accounting Estimates section of Item 7. MD&A, and the Credit Risk subsection of Item 7A. Quantitative and Qualitative Disclosures about Market Risk.
A tightening of credit spreads could reduce the net investment income available to the Company on new credit investments. Increased market volatility also makes it difficult to value certain of the Company's investment holdings. For additional information, see the Critical Accounting Estimates section of Item 7. MD&A, and the Credit Risk subsection of Item 7A.
Risk Factors hedged that have since been sold, matured or redeemed and may or may not have not been converted to yen. The Company’s foreign exchange derivatives are typically shorter-dated than the underlying U.S. dollar-denominated investments being hedged, which creates roll-over risks within the hedging program that could increase the cost of such derivatives.
The Company’s foreign exchange derivatives are typically shorter-dated than the underlying U.S. dollar-denominated investments being hedged, which creates roll-over risks within the hedging program that could increase the cost of such derivatives.
The Company operates in a competitive environment and in an industry that is subject to ongoing changes from market pressures brought about by customer demands, legislative reform, marketing practices and changes to health care and health insurance delivery.
General Risk Factors Competition could adversely affect the Company's ability to increase or maintain its market share or profitability. The Company operates in a competitive environment and in an industry that is subject to ongoing changes from market pressures brought about by customer demands, legislative reform, marketing practices and changes to health care and health insurance delivery.
The Company is also exposed to the risk that there may be a decline in value of securities posted as collateral for securities lending programs or a decline in value of investments made with cash posted as collateral for such programs. Further, the Company has agreements with various Japanese financial institutions for the distribution of its insurance products.
The Company is also exposed to the risk that there may be a decline in value of securities posted as collateral for securities lending programs or a decline in value of investments made with cash posted as collateral for such programs. 19 Item 1A.
Additionally, the Company is exposed to currency risk when yen cash flows are converted into U.S. dollars, resulting in changes in the Company's U.S. dollar-denominated cash flows and earnings when exchange gains or losses, respectively, are realized. This primarily occurs when Aflac Japan pays dividends in yen to the Parent Company, but it also 17 Item 1A.
The Company is exposed to currency risk when Japanese yen cash flows are converted into U.S. dollars, resulting in changes in the Company's U.S. dollar-denominated cash flows and earnings when foreign currency exchange gains or losses, respectively, are realized.
A widening of credit spreads could reduce the value of the Company's existing portfolio, create unrealized losses on its investment portfolio, and reduce the Company's adjusted capital position and/or the dividend capacity of the Company's insurance subsidiaries. A tightening of credit spreads could reduce the net investment income available to the Company on new credit investments.
Item 1A. Risk Factors The Company is also exposed to the general movement in credit market spreads. A widening of credit spreads could reduce the value of the Company's existing portfolio, create unrealized losses on its investment portfolio, and reduce the Company's adjusted capital position and/or the dividend capacity of the Company's insurance subsidiaries.
For regulatory accounting purposes, there are certain requirements for realizing impairments that could be triggered by changes in the rate of exchange between the yen and U.S. dollar and could negatively impact Aflac Japan's earnings and the corresponding dividends and capital deployment.
For regulatory accounting purposes, there are certain requirements for realizing impairments that could be triggered by changes in the yen/dollar exchange rate and could negatively impact Aflac Japan's earnings and the corresponding dividends and capital deployment. The Company engages in certain foreign currency hedging activities to hedge the exposure to Japanese yen from its net investment in Japanese operations.
Catastrophic events, including those as a result of climate change or major public health issues, could adversely affect the Company's financial condition and results of operations as well as the availability of the Company’s infrastructure and systems.
Catastrophic events could adversely affect the Company's financial condition and results of operations as well as the availability of the Company’s infrastructure and systems.
Risk Factors The success of the Company's business depends in part on effective information technology systems, on continuing to develop and implement improvements in technology, and on successful execution of revenue growth and expense management initiatives.
These experience deviations and assumption updates could have a material adverse effect on the Company's business, results of operations and financial condition. The success of the Company's business depends in part on effective information technology systems, on continuing to develop and implement improvements in technology, and on successful execution of revenue growth and expense management initiatives.
While the assessment of risks related to climate change are part of the Company's credit review process, climate change-related risks may adversely impact the value of the securities that the Company holds. Climate change may increase the frequency and severity of natural disasters such as hurricanes, tornadoes, floods and forest fires.
While the assessment of risks related to climate change are part of the Company's credit review process, climate change-related risks may adversely impact the value of the securities that 25 Item 1A. Risk Factors the Company holds.
The Company plans to continue adding other instruments denominated in U.S. dollars, including floating rate investments, to improve the portfolio diversification and/or return profile. Some of the U.S. dollar-denominated asset classes that the Company has added, and anticipates continuing to add, have less liquidity than investment-grade corporate bonds.
The Company plans to continue adding other instruments denominated in U.S. dollars, including floating rate investments, to improve the portfolio diversification and/or return profile.
Although the minor data leakage issues the Company has experienced to date have not had a material effect on its business, there is no assurance that the Company's security systems or processes will prevent or mitigate future break-ins, tampering, security breaches or other cyber-related attacks.
Although data leakage issues the Company has experienced, as of the date of this report, have not been determined to have a reasonably likely material impact on the Company's financial condition or results of operations, the Company's security systems or processes may not prevent or mitigate future break-ins, tampering, security breaches or other cyber-related attacks.
For example, at December 31, 2024, the Company had agreements with 360 banks to market Aflac's products in Japan. Sales through these banks represented 3% of Aflac Japan's new annualized premium sales in 2024. Any material adverse effect on these or other financial institutions could also have an adverse effect on the Company's sales.
Risk Factors Further, the Company has agreements with various Japanese financial institutions for the distribution of its insurance products. For example, at December 31, 2025, the Company had agreements with 358 banks to market Aflac's products in Japan. Sales through these banks represented 3.3% of Aflac Japan's new annualized premium sales in 2025.
The risk of a cyber incident impacting business operations has grown as third parties continue to develop new and highly sophisticated methods of attack.
The risk of a cybersecurity incident impacting business operations has grown as third parties continue to develop new and highly sophisticated methods of attack. The rapid evolution and increased adoption of artificial intelligence technologies may also heighten the Company's cybersecurity risks by making cyber-attacks more difficult to detect, contain, and mitigate.
Aflac Japan's premiums and a significant portion of its investment income are received in yen, and its claims and almost all expenses are paid in yen. Aflac Japan purchases yen-denominated assets and U.S. dollar-denominated assets, which may be hedged to yen, to support yen-denominated policy liabilities.
Aflac Japan purchases Japanese yen-denominated assets and U.S. dollar-denominated assets, which may be hedged to Japanese yen, to support Japanese yen-denominated policy liabilities.
Certain unhedged U.S. dollar denominated assets and liabilities held by Aflac Japan are re-measured to yen with the volatility reported in earnings. Furthermore, the yen-denominated balance sheet of Aflac Japan is translated into U.S. dollars for financial reporting purposes with foreign exchange impact reflected in equity.
GAAP, U.S. dollar denominated assets and liabilities held by Aflac Japan are remeasured to Japanese yen and Japanese yen-denominated assets and liabilities held by Aflac Re are remeasured to U.S. dollar with the resulting foreign currency remeasurement for certain of these assets and liabilities included in earnings.
The Company has entered into significant reinsurance transactions with large, highly rated counterparties as well as among the Company's subsidiaries. In addition, Aflac Japan has entered into reinsurance transactions with Aflac Re, which has less capital than external counterparties with which the Company has conducted reinsurance transactions in the past.
Any material adverse effect on these or other financial institutions could also have an adverse effect on the Company's sales. Aflac Japan has entered into reinsurance transactions with Aflac Re, which has less capital than external counterparties with which the Company has conducted reinsurance transactions in the past.
The Parent Company utilizes forward contracts to accomplish a dual objective of hedging foreign currency exchange rate risk related to dividend payments by Aflac Japan, and reducing enterprise-wide hedge costs. However, if the markets experience a significant strengthening of yen, this could cause cash strain at the Parent Company as a result of cash collateral and potentially cash settlement requirements.
The foreign exchange rates prevailing at the time of dividend payment may differ from the foreign exchange rates prevailing at the time the Japanese yen profits were earned. If the markets experience a significant strengthening of Japanese yen, this could cause cash strain at the Parent Company as a result of cash collateral and potentially cash settlement requirements.
Cumulative net cash settlements on derivatives hedging currency exposure of Aflac Japan's U.S. dollar-denominated investments are associated with existing U.S. dollar-denominated investments that continue to be hedged, previously hedged investments that continue to be held but are no longer hedged, and investments previously 16 Item 1A.
Risk Factors Aflac Japan's U.S. dollar-denominated investments are associated with existing U.S. dollar-denominated investments that continue to be hedged, previously hedged investments that continue to be held but are no longer hedged, and investments previously hedged that have since been sold, matured or redeemed and may or may not have not been converted to Japanese yen.
In addition, the costs to address or remediate system interruptions or security threats and vulnerabilities, whether before or after an incident, could be significant. 21 Item 1A.
In addition, the costs to address or remediate system interruptions or security threats and vulnerabilities, whether before or after an incident, could be significant. The Company could also be subject to legal risk, including government enforcement action and civil litigation, related to cyber-attacks and security breaches, which could adversely affect the Company’s business, reputation, financial condition or results of operations.
The Nebraska insurance department also must approve service arrangements and other transactions within the affiliated group of companies. After the Japan branch conversion, the Nebraska insurance department and the FSA approved their respective domiciled insurance company service arrangements and transactions.
The Nebraska insurance department also must approve service arrangements and other transactions within the affiliated group of companies. The FSA does not allow dividends or other payments from Aflac Japan unless it meets certain financial criteria as governed by Japanese corporate law.
Accordingly, fluctuations in the yen/dollar exchange rate can have a significant effect on the Company's reported financial position and results of operations. Yen weakening has the effect of suppressing current year results in relation to the prior year, while yen strengthening has the effect of magnifying current year results in relation to the prior year.
Japanese yen weakening has the effect of suppressing current year results in relation to the prior year, including the resulting negative impact on equity. Japanese yen strengthening has the effect of magnifying current year results in relation to the prior year, including the resulting positive impact on equity. Also in accordance with U.S.
The FSA does not allow dividends or other payments from Aflac Japan unless it meets certain financial criteria as governed by Japanese corporate law. Under these criteria, dividend capacity at the Japan subsidiary will be defined as retained earnings plus other capital reserve less net after-tax net unrealized losses on available-for-sale securities.
Under these criteria, dividend capacity at the Japan subsidiary is defined as total equity excluding common stock and capital reserves but reduced for net after-tax unrealized losses on available-for-sale securities.
Removed
Item 1A. Risk Factors corresponding dividends and capital deployment. The Company is also subject to the risk that any collateral providing credit enhancement to the Company's investments could deteriorate. The Company is also exposed to the general movement in credit market spreads.
Added
In addition, uncertainty regarding the timing, pace and magnitude of future interest rate changes could further increase fluctuations in the value of the Company’s assets and liabilities and adversely affect its capital position and liquidity.
Removed
In addition, the weakening of the yen relative to the U.S. dollar will generally adversely affect the value of the Company's yen-denominated investments in U.S. dollar terms. When the yen strengthens in relation to the U.S. dollar, the yen value of Aflac Japan's unhedged U.S. dollar-denominated investments decreases, resulting in a decrease in Aflac Japan regulatory capital.

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Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

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Biggest changeAs a part of the global information security program, an enterprise cybersecurity risk assessment is performed annually in coordination with the GSCISO to identify and assess material cybersecurity risks and mitigating controls. The assessment results are incorporated into a risk register managed by the Company’s overall enterprise risk management group to integrate the risks into the overall risk management processes.
Biggest changePost-incident reviews are also performed as appropriate to identify potential additional controls that may feasibly be implemented to help prevent recurrence. As a part of the global information security program, an enterprise cybersecurity risk assessment is performed annually in coordination with the GCISO to identify and assess cybersecurity risks and mitigating controls.
The global information security program includes a cybersecurity incident response plan that is designed to provide a management framework across Company functions for a coordinated assessment and response to potential security incidents.
The global information security program includes a cybersecurity incident response plan that is designed to provide a management framework across Company functions for a coordinated assessment and response to cybersecurity incidents.
The Company also utilizes professionals from the Company’s legal team and GSCISO's leadership team, a majority of whom have specialized skills and knowledge in cybersecurity risk management based on their prior work experience and relevant industry certifications, such as Certified Information Systems Security Professional and Certified Information Security Manager, to assist in employee awareness and training, as well as assessing cybersecurity risks, materiality of cybersecurity incidents and disclosures of the same.
The Company also utilizes professionals from the Company’s legal team and GCISO's leadership team, a majority of whom have specialized skills and knowledge in cybersecurity risk management based on their prior work experience and relevant industry certifications, such as Certified Information Systems Security Professional and Certified Information Security Manager, to assist in employee awareness and training, as well as assessing cybersecurity risks, materiality of cybersecurity incidents and disclosures of the same.
The Company’s senior officers, including its Global Security and Chief Information Security Officer (GSCISO), are responsible for the operation of the global information security program and communicate quarterly with the Audit and Risk Committee on the program, including with respect to the state of the program, compliance with applicable regulations, risks associated with current and evolving threats, and recommendations for changes in the information security program.
The Company’s senior officers, including its Global Chief Information Security Officer (GCISO), are responsible for the operation of the global information security program and communicate quarterly with the Audit and Risk Committee on the program, including with respect to the state of the program, compliance with applicable regulations, risks associated with current and evolving threats, and recommendations for changes in the information security program.
Specifically, the GSCISO has security experience in the public sector and private sector financial services industry holding positions in areas such as business continuity, information assurance, and technology risk management as well as being a Certified Information Systems Security Professional, Certified Information Security Manager and Certified Project Manager as well as being certified in Risk and Information 27
Specifically, the GCISO has security experience in the public sector and private sector financial services industry holding positions in areas such as business continuity, information assurance, and technology risk management as well as being a Certified Information Systems Security Professional, Certified Information Security Manager and Certified Project Manager as well as being certified in Risk and Information 27
This framework establishes a protocol to report certain incidents to the GSCISO and other senior officers, with the goal of timely assessing such incidents, determining applicable disclosure requirements and communicating with the Board of Directors.
This framework establishes a protocol to report certain incidents to the GCISO and other senior officers, with the goal of timely assessing such incidents, determining applicable disclosure requirements, and communicating with the Board of Directors as appropriate.
Issues identified during third-party risk assessments are documented and escalated to Company management through an established committee structure based on the risk ratings associated with each issue.
Additionally, the Company performs third-party risk assessments to evaluate security controls and identify inherent and residual risks associated with third-party engagements. Issues identified during third-party risk assessments are documented and escalated to Company management through an established committee structure based on the risk ratings associated with each issue.
The incident response plan directs the executive officers to report certain incidents immediately and directly to the Lead Non-Management Director and/or the Chair of the Audit and Risk Committee.
The incident response plan directs the executive officers to report certain incidents immediately and directly to the Lead Non-Management Director and/or the Chair of the Audit and Risk Committee. The above framework tracks and allows team members to monitor each incident throughout its lifecycle to help ensure the Company is informed about cybersecurity incidents as they are mitigated and remediated.
Removed
The above framework tracks and allows team members to monitor each incident throughout its lifecycle to ensure the Company is informed about and following cybersecurity incidents as they are mitigated and remediated. Post-incident reviews are also performed to determine if there are any additional controls that may feasibly be implemented to prevent recurrence.
Added
The assessment results are incorporated into a risk register managed by the Company’s overall enterprise risk management group to integrate the risks into the overall risk management processes. The Company engages with independent firms to conduct operational control assessments, which cover information protection. Periodically, the Company engages independent consultants to review certain aspects of the cyber program.
Removed
The Company engages with independent firms to conduct operational control assessments, which cover information protection. Every three years, the Company engages independent consultants specifically for cyber matters. Additionally, the Company performs third-party risk assessments to evaluate security controls and identify inherent and residual risks associated with third-party engagements.

Item 2. Properties

Properties — owned and leased real estate

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Biggest changeThe Company leases office space in Columbia, South Carolina, which houses the Company's CAIC subsidiary (branded as Aflac Group Insurance); in New York, New York, which houses the Company's Global Investment division; in Tampa, Florida, which houses the Company's ABS subsidiary; and in Farmington, Connecticut, Windsor, Connecticut and Plantation, Florida, which houses the operations of the Company's group life, disability and absence management business.
Biggest changeThe Company leases office space in Columbia, South Carolina, which houses the Company's CAIC subsidiary (branded as Aflac Group Insurance); in New York, New York, which houses the Company's Global Investment division; in Tampa, Florida, which houses the Company's ABS subsidiary; and in Windsor, Connecticut and Plantation, Florida, which house the operations of the Company's group life, disability and absence management business.
ITEM 2. PROPERTIES In Tokyo, Japan, the Company has two primary campuses. The first campus includes a building, owned by the Company, for the customer call center, the claims department, the information technology departments, and training facility. This campus also includes a leased property, which houses Aflac Japan's policy administration and customer service departments.
ITEM 2. PROPERTIES In Tokyo, Japan, the Company has two primary campuses. The first campus includes a building, owned by the Company, for the customer call center, the claims department, the information technology departments, and a training facility. This campus also includes a leased property, which houses Aflac Japan's policy administration and customer service departments.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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Biggest changeITEM 3. LEGAL PROCEEDINGS The Company is a defendant in various lawsuits and receives various regulatory inquiries considered to be in the normal course of business. Members of the Company's senior legal and financial management teams review litigation and regulatory inquiries on a quarterly and annual basis.
Biggest changeITEM 3. LEGAL PROCEEDINGS The Company is a defendant in various lawsuits and receives various regulatory inquiries considered to be in the normal course of business.
Holders As of February 18, 2025, there were 78,663 holders of record of the Company's common stock. Dividends For a summary of dividends paid to shareholders in 2024 and 2023 and potential restrictions on the Company's ability to pay future dividends, see the Liquidity and Capital Resources section of Item 7. MD&A. 29 Item 5.
Holders As of February 16, 2026, there were 75,463 holders of record of the Company's common stock. Dividends For a summary of dividends paid to shareholders in 2025 and 2024 and potential restrictions on the Company's ability to pay future dividends, see the Liquidity and Capital Resources section of Item 7. MD&A. 29 Item 5.
Performance Graphic Index December 31, 2019 2020 2021 2022 2023 2024 Aflac Incorporated 100.00 86.42 116.29 146.94 172.49 220.92 S&P 500 100.00 118.40 152.39 124.79 157.59 197.02 S&P 500 Life & Health Insurance 100.00 90.52 123.73 136.53 142.87 171.87 Copyright © 2025 Standard & Poor’s, a division of S&P Global. All rights reserved. 30
Performance Graphic Index December 31, 2020 2021 2022 2023 2024 2025 Aflac Incorporated 100.00 134.56 170.03 199.58 255.62 278.50 S&P 500 100.00 128.71 105.40 133.10 166.40 196.16 S&P 500 Life & Health Insurance 100.00 136.68 150.82 157.83 189.87 201.00 Copyright © 2026 Standard & Poor’s, a division of S&P Global. All rights reserved. 30
Added
Members of the Company's senior legal and financial management teams review litigation and regulatory inquiries on a quarterly and annual basis and the Company updates the related estimates, accruals, and disclosures, if any, based on such reviews.
Added
For litigation and regulatory matters where it is probable that a loss has been incurred, and the amount of that loss can be reasonably estimated, the Company establishes accruals for loss contingencies. Where a loss may be reasonably possible but not probable, or is probable but not reasonably estimable, no accrual is recorded.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

71 edited+17 added−14 removed43 unchanged
Biggest changeCertain Derivative and Foreign Currency Activities The Company's derivative activities include: • foreign currency forwards and options used in hedging foreign exchange risk on U.S. dollar-denominated investments in Aflac Japan's portfolio, with options used on a standalone basis and/or in a collar strategy; • foreign currency forwards and options used to economically hedge certain portions of forecasted cash flows denominated in yen and hedge the Company's long term exposure to a weakening yen; • cross-currency interest rate swaps, also referred to as foreign currency swaps, associated with certain senior notes and subordinated debentures; • foreign currency swaps that are associated with variable interest entity (VIE) bond purchase commitments, and investments in special-purpose entities, including VIEs where the Company is the primary beneficiary; • interest rate swaps used to economically hedge interest rate fluctuations in certain variable-rate investments; • interest rate swaptions used to hedge changes in the fair value associated with interest rate fluctuations for certain U.S. dollar-denominated available-for-sale fixed-maturity securities; and • bond purchase commitments at the inception of investments in consolidated VIEs.
Biggest changeCertain Derivative and Foreign Currency Activities The Company's derivative activities include: • foreign currency forwards and options used in hedging foreign currency exchange risk on U.S. dollar-denominated investments held by Aflac Japan, with options used on a standalone basis and/or in a collar strategy; • foreign currency forwards and options used to economically hedge certain portions of forecasted cash flows denominated in Japanese yen and hedge the Company's long-term exposure to a weakening Japanese yen; • foreign currency swaps used to economically hedge the foreign currency exchange risk associated with certain investments denominated in other foreign currencies held by Aflac Japan; • cross-currency swaps, also referred to as foreign currency swaps, associated with certain senior notes and subordinated debentures; • foreign currency swaps that are associated with variable interest entity (VIE) bond purchase commitments, and investments in special-purpose entities, including VIEs where the Company is the primary beneficiary; • foreign currency forwards used to economically hedge the foreign currency exchange risk associated with certain investments denominated in other foreign currencies held by Aflac Japan; • interest rate swaps used to economically hedge interest rate fluctuations in certain variable-rate investments; • interest rate swaptions (swaptions) used to hedge changes in the fair value associated with interest rate fluctuations for certain U.S. dollar-denominated available-for-sale securities; and • bond purchase commitments at the inception of investments in consolidated VIEs.
(1) Yen/U.S. dollar exchange rates are based on the published MUFG Bank, Ltd. telegraphic transfer middle rate (TTM). (2) See the Results of Operations section of this MD&A for a definition of this non-U.S. GAAP financial measure.
(1) Yen/dollar exchange rates are based on the published MUFG Bank, Ltd. telegraphic transfer middle rate (TTM). (2) See the Results of Operations section of this MD&A for a definition of this non-U.S. GAAP financial measure.
GAAP financial measure for adjusted net investment gains and losses is net investment gains and losses. • Amortized hedge costs/income represent costs/income incurred or recognized as a result of using foreign currency derivatives to hedge certain foreign exchange risks in the Company's Japan segment or in Corporate and other.
GAAP financial measure for adjusted net investment gains and losses is net investment gains and losses. • Amortized hedge costs/income represent costs/income incurred or recognized as a result of using foreign currency derivatives to hedge certain foreign currency exchange risks in the Company's Japan segment or in Corporate and other.
GAAP financial measure for amortized hedge costs/income. • Adjusted earnings excluding current period foreign currency impact are computed using the average foreign currency exchange rate for the comparable prior-year period, which eliminates fluctuations driven solely by foreign currency exchange rate changes.
GAAP financial measure for amortized hedge costs/income. • Adjusted earnings excluding current period foreign currency impact are computed using the average foreign exchange rate for the comparable prior-year period, which eliminates fluctuations driven solely by foreign exchange rate changes.
Gains and losses are recognized as a result of valuing these derivatives, net of the effects of hedge accounting. The Company also excludes from adjusted earnings the accounting impacts of foreign currency remeasurement associated with changes in the foreign currency exchange rate.
Gains and losses are recognized as a result of valuing these derivatives, net of the effects of hedge accounting. The Company also excludes from adjusted earnings the accounting impacts of foreign currency remeasurement associated with changes in the foreign exchange rate.
Yen-denominated income statement accounts are translated to U.S. dollars using the weighted average Japanese yen/U.S. dollar foreign exchange rate for the reporting period, except realized gains and losses on securities transactions which are translated at the exchange rate on the trade date of each transaction.
Japanese yen-denominated income statement accounts are translated to U.S. dollars using the weighted average yen/dollar foreign exchange rate for the reporting period, except realized gains and losses on securities transactions which are translated at the foreign exchange rate on the trade date of each transaction.
GAAP financial measure for adjusted return on equity excluding foreign currency remeasurement is ROE as determined using annualized net earnings and average total shareholders’ equity. • U.S. dollar-denominated investment income excluding foreign currency impact represents amounts excluding foreign currency impact on U.S. dollar-denominated investment income using the average foreign currency exchange rate for the comparable prior year period.
GAAP financial measure for adjusted return on equity excluding foreign currency remeasurement is return on equity as determined using annualized net earnings and average total shareholders’ equity. • U.S. dollar-denominated investment income excluding foreign currency impact represents amounts excluding foreign currency impact on U.S. dollar-denominated investment income using the average foreign exchange rate for the comparable prior year period.
The Company's economic solvency ratio (ESR) target range is 170% to 230% for Aflac Japan and a target combined RBC range of 350% to 450%, over time, for Aflac U.S., which is consistent with the Company's risk management practices.
The Company's target range for economic solvency ratio (ESR) is 170% to 230% for Aflac Japan and a target combined RBC range of 350% to 450%, over time, for Aflac U.S., which are consistent with the Company's risk management practices.
Credit losses include losses for held-to-maturity fixed maturity securities, available-for-sale fixed maturity securities, loan receivables, loan commitments and reinsurance recoverables. Changes in the fair value of equity securities are the result of gains or losses driven by fluctuations in market prices.
Credit losses include losses for held-to-maturity securities, available-for-sale securities, loan receivables, loan commitments and reinsurance recoverables. Changes in the fair value of equity securities are the result of gains or losses driven by fluctuations in market prices.
This investment strategy incorporates asset-liability matching (ALM) to align the expected cash flows of the portfolio to the needs of the Company's liability structure. The Company does not purchase securities with the intent of generating investment gains or losses.
This investment strategy incorporates asset-liability matching to align the expected cash flows of the portfolio to the needs of the Company's liability structure. The Company does not purchase securities with the intent of generating investment gains or losses.
Yen-denominated balance sheet accounts are translated to U.S. dollars using the spot Japanese yen/U.S. dollar foreign exchange rate at the end of the reporting period. In recent periods, the Japanese yen has weakened against the U.S. dollar.
Japanese yen-denominated balance sheet accounts are translated to U.S. dollars using the spot yen/dollar exchange rate at the end of the reporting period. In recent periods, the Japanese yen has weakened against the U.S. dollar.
Additional performance measures used to evaluate the financial condition and performance of the Company's segments are listed below. • Operating Ratios • New Annualized Premium Sales • New Money Yield • Return on Average Invested Assets • Average Weekly Producer • Premium Persistency For additional information on the Company’s performance measures included in this MD&A, see the Glossary of Selected Terms found directly following Part IV.
Additional performance measures used to evaluate the financial condition and performance of the Company's segments are listed below. • Operating Ratios • New Annualized Premium Sales • New Money Yield • Return on Average Invested Assets • Portfolio Book Yield • Average Weekly Producer • Premium Persistency For additional information on the Company’s performance measures included in this MD&A, see the Glossary of Selected Terms found directly following Part IV.
For important disclosures applicable to statements made in this 2025 Outlook, please see the statement on Forward-Looking Information at the beginning of Item 1. Business, the Risk Factors identified in Item 1A. and this Item 7. MD&A. RESULTS OF OPERATIONS The Company earns its revenues principally from insurance premiums and investments.
For important disclosures applicable to statements made in this 2026 Outlook, please see the statement on Forward-Looking Information at the beginning of Item 1. Business, the Risk Factors identified in Item 1A. and this Item 7. MD&A. RESULTS OF OPERATIONS The Company earns its revenues principally from insurance premiums and investments.
(2) Prior period foreign currency impact reflected as “N/A” to isolate change for current period only. Reconciling Items Net Investment Gains and Losses The following table is a reconciliation of items impacting adjusted net investment (gains) losses to the most directly comparable U.S. GAAP financial measures of net investment (gains) losses for the years ended December 31.
(2) Prior period foreign currency impact reflected as “N/A” to isolate change for current period only. Reconciling Items Net Investment Gains and Losses The following table is a reconciliation of items impacting adjusted net investment (gains) losses to the most directly comparable U.S. GAAP financial measure of net investment (gains) losses for the years ended December 31.
Aflac Japan purchases yen-denominated assets and U.S. dollar-denominated assets, which may be hedged to yen, to support yen-denominated policy liabilities.
Aflac Japan purchases Japanese yen-denominated assets and U.S. dollar-denominated assets, which may be hedged to Japanese yen, to support Japanese yen-denominated policy liabilities.
GAAP guidance for segment reporting, pretax adjusted earnings is the Company's U.S. GAAP measure of segment performance. The Company believes that a presentation of this measure is vitally important to an understanding of the underlying profitability drivers and trends of its business.
Consistent with U.S. GAAP guidance for segment reporting, pretax adjusted earnings is the Company's U.S. GAAP measure of segment performance. The Company believes that a presentation of this measure is vitally important to an understanding of the underlying profitability drivers and trends of its business.
Management's Discussion and Analysis of Financial Condition and Results of Operations Reconciliation of Book Value to Adjusted Book Value (Excluding Foreign Currency Remeasurement) The following table is a reconciliation of items impacting adjusted book value and adjusted book value per diluted share excluding foreign currency remeasurement to the most directly comparable U.S.
Management's Discussion and Analysis of Financial Condition and Results of Operations Reconciliation of Book Value to Adjusted Book Value (Excluding Foreign Currency Remeasurement) The following table is a reconciliation of items impacting adjusted book value excluding foreign currency remeasurement and adjusted book value excluding foreign currency remeasurement per common share to the most directly comparable U.S.
The Company’s actual results may differ, possibly materially, from expectations or estimates reflected in such forward-looking statements. Certain important factors that could cause actual results to differ, possibly materially, from expectations or estimates reflected in such forward-looking statements can be found in the Risk Factors and Forward-Looking Information sections herein.
Certain important factors that could cause actual results to differ, possibly materially, from expectations or estimates reflected in such forward-looking statements can be found in the Risk Factors and Forward-Looking Information sections herein.
This MD&A is divided into the following sections: Page Executive Summary 33 Industry Trends 33 Outlook 34 Results of Operations 35 Investments 52 Hedging Activities 58 Policy Liabilities 61 Benefit Plans 61 Policyholder Protection 62 Liquidity and Capital Resources 62 Critical Accounting Estimates 69 The Company has elected to omit discussion on the earliest of the three years covered by the consolidated financial statements presented in Item 8.
This MD&A is divided into the following sections: Page Executive Summary 33 Industry Trends 34 Outlook 34 Results of Operations 35 Investments 53 Hedging Activities 58 Policy Liabilities 61 Benefit Plans 62 Policyholder Protection 62 Liquidity and Capital Resources 62 Critical Accounting Estimates 68 The Company has elected to omit discussion on the earliest of the three years covered by the consolidated financial statements presented in Item 8.
Although the Company is unable to predict the timing or extent of future movements of the Japanese yen/U.S. dollar foreign exchange rate, the Company maintains hedging strategies (see the Hedging Activities section of this MD&A) that are intended to mitigate the impacts of yen fluctuation on the Company’s financial position and results of operations.
Although the Company is unable to predict the timing or extent of future movements of the yen/dollar exchange rate, the Company maintains hedging strategies (see the Hedging Activities section of this MD&A) that are intended to mitigate the impacts of Japanese yen fluctuation on the Company’s financial position and results of operations.
GAAP return on equity - net earnings (1) 22.6 % 22.1 % Impact of excluding unrealized foreign currency translation gains (losses) (3.6) (3.1) Impact of excluding unrealized gains (losses) on securities and derivatives .4 .2 Impact of excluding effect of changes in discount rate assumptions (.2) (1.9) Impact of excluding pension liability adjustment .0 .0 Impact of excluding accumulated other comprehensive income (3.4) (4.9) U.S.
GAAP return on equity - net earnings (1) 13.1 % 22.6 % Impact of excluding unrealized foreign currency translation gains (losses) (2.6) (3.6) Impact of excluding unrealized gains (losses) on securities and derivatives (.5) .4 Impact of excluding effect of changes in discount rate assumptions 2.6 (.2) Impact of excluding pension liability adjustment .0 .0 Impact of excluding accumulated other comprehensive income (.4) (3.4) U.S.
GAAP return on equity less accumulated other comprehensive income 19.2 17.2 Differences between adjusted earnings and net earnings (2) (4.8) (3.4) Adjusted return on equity - reported 14.4 13.8 Impact of excluding gains (losses) associated with foreign currency remeasurement (3) 2.9 1.8 Adjusted return on equity excluding foreign currency remeasurement 17.3 15.6 (1) U.S.
GAAP return on equity less accumulated other comprehensive income 12.8 19.2 Differences between adjusted earnings and net earnings (2) 1.3 (4.8) Adjusted return on equity - reported 14.0 14.4 Impact of excluding gains (losses) associated with foreign currency remeasurement (3) 3.6 2.9 Adjusted return on equity excluding foreign currency remeasurement 17.6 17.3 (1) U.S.
Management's Discussion and Analysis of Financial Condition and Results of Operations located in the Company's Annual Report on Form 10-K for the year ended December 31, 2023 , filed on February 22, 2024, for reference to discussions of the year ended December 31, 2022, the earliest of the three years presented.
Management's Discussion and Analysis of Financial Condition and Results of Operations located in the Company's Annual Report on Form 10-K for the year ended December 31, 2024 , filed on February 26, 2025, for reference to discussions of the year ended December 31, 2023, the earliest of the three years presented.
Due to the size of Aflac Japan, where the functional currency is the Japanese yen, fluctuations in the yen/dollar exchange rate can have a significant effect on reported results. In periods when the yen weakens, translating yen into dollars results in fewer dollars being reported. When the yen strengthens, translating yen into dollars results in more dollars being reported.
Due to the size of Aflac Japan, where the functional currency is the Japanese yen, fluctuations in the yen/dollar exchange rate can have a significant effect on reported results. In periods when the Japanese yen weakens, translating Japanese yen into U.S. dollars results in fewer U.S. dollars being reported.
GAAP financial measure of return on equity for the years ended December 31. 2024 2023 U.S.
GAAP financial measure of return on equity for the years ended December 31. 2025 2024 U.S.
The Company considers adjusted book value excluding foreign currency remeasurement and adjusted book value excluding foreign currency remeasurement per common share important as they exclude both AOCI and the cumulative foreign currency remeasurement gains/losses, which fluctuate due to market movements that are outside management's control. The most comparable U.S.
The Company considers adjusted book value excluding foreign currency remeasurement and adjusted book value excluding foreign currency remeasurement per common share important as they exclude both accumulated other comprehensive income and the cumulative foreign currency remeasurement gains/losses, which fluctuate due to market movements that are outside management's control. The most comparable U.S.
See the risk factor entitled “The Company is exposed to foreign currency fluctuations in the yen/dollar exchange rate” in Part I, Item 1A. Risk Factors for more information. Income Taxes The Company's combined U.S. and Japanese effective income tax rate on pretax earnings was 15.2% in 2024 and 11.5% in 2023.
See the risk factor entitled “The Company is exposed to foreign currency fluctuations in the yen/dollar exchange rate” in Part I, Item 1A. Risk Factors for more information. Income Taxes The Company's combined U.S. and Japanese effective income tax rate on pretax earnings was 19.6% in 2025 and 15.2% in 2024.
GAAP financial measure for adjusted return on equity is return on average equity (ROE) as determined using annualized net earnings and average total shareholders’ equity. • Adjusted return on equity excluding foreign currency remeasurement is annualized adjusted earnings divided by average shareholders’ equity, excluding both AOCI and the cumulative [beginning January 1, 2021] foreign currency gains/losses associated with i) foreign currency remeasurement and ii) sales and redemptions of invested assets.
GAAP financial measure for adjusted return on equity is return on equity as determined using annualized net earnings and average total shareholders’ equity. • Adjusted return on equity excluding foreign currency remeasurement is annualized adjusted earnings divided by average shareholders’ equity, excluding both accumulated other comprehensive income and the cumulative (beginning January 1, 2021) foreign currency gains/losses associated with i) foreign currency remeasurement and ii) sales and redemptions of invested assets.
The Company considers adjusted return on equity excluding foreign currency remeasurement important because it excludes both AOCI and the cumulative foreign currency remeasurement gains/losses, which fluctuate due to market movements that are outside management's control. The most comparable U.S.
The Company considers adjusted return on equity excluding foreign currency remeasurement important because it excludes both accumulated other comprehensive income and the cumulative foreign currency remeasurement gains/losses, which fluctuate due to market movements that are outside management's control. The most comparable U.S.
GAAP financial measures for adjusted book value excluding foreign currency remeasurement and adjusted book value excluding foreign currency remeasurement per common share are total book value and total book value per common share, respectively. • Adjusted return on equity is annualized adjusted earnings divided by average shareholders’ equity, excluding AOCI.
GAAP financial measures for adjusted book value excluding foreign currency remeasurement and adjusted book value excluding foreign currency remeasurement per common share are total book value and total book value per common share, respectively. • Adjusted return on equity is annualized adjusted earnings divided by average shareholders’ equity, excluding accumulated other comprehensive income.
The Company considers adjusted return on equity important as it excludes components of AOCI, which fluctuate due to market movements that are outside management's control. The most comparable U.S.
The Company considers adjusted return on equity important as it excludes components of accumulated other comprehensive income, which fluctuate due to market movements that are outside management's control. The most comparable U.S.
Shareholders’ equity at December 31, 2024 also included an unrealized foreign currency translation loss of $5.0 billion, compared with an unrealized foreign currency translation loss of $4.1 billion at December 31, 2023. The annualized return on average shareholders’ equity in 2024 was 22.6%.
Shareholders’ equity at December 31, 2025 also included an unrealized foreign currency translation loss of $4.8 billion, compared with an unrealized foreign currency translation loss of $5.0 billion at December 31, 2024. The annualized return on average shareholders’ equity in 2025 was 13.1%.
Shareholders’ equity at December 31, 2024 included a cumulative increase of $2.0 billion from the effect of changes in discount rate assumptions on insurance contracts, compared with a corresponding cumulative decrease of $2.6 billion at December 31, 2023, and a net unrealized gain on investment securities and derivatives of $4 million, compared with a net unrealized gain of $1.1 billion at December 31, 2023.
Shareholders’ equity at December 31, 2025 included a cumulative increase of $8.0 billion from the effect of changes in discount rate assumptions on insurance reserves, compared with a corresponding cumulative increase of $2.0 billion at December 31, 2024, and a net unrealized loss on investment securities and derivatives of $1.8 billion, compared with a net unrealized gain of $4 million at December 31, 2024.
In addition, the Parent Company, other business units that are not individually reportable, and business activities, including reinsurance activities, not included in Aflac Japan or Aflac U.S. are included in Corporate and other. See Item 1. Business for a summary of each segment's products and distribution channels. Consistent with U.S.
In addition, the Parent Company, other business units that are not individually reportable, reinsurance activities, including internal reinsurance activity with Aflac Re, and other business activities not included in Aflac Japan or Aflac U.S., as well as intercompany eliminations, are included in Corporate and other. See Item 1. Business for a summary of each segment's products and distribution channels.
Japanese income taxes on Aflac Japan's results account for most of the Company's consolidated income tax expense. For additional information, see Note 10 of the Notes to the Consolidated Financial Statements and the Critical Accounting Estimates - Income Taxes section of this MD&A.
Total income taxes were $887 million in 2025 and $974 million in 2024. Japanese income taxes on Aflac Japan's results account for most of the Company's consolidated income tax expense. For additional information, see Note 10 of the Notes to the Consolidated Financial Statements and the Critical Accounting Estimates - Income Taxes section of this MD&A.
Corporate and other The Company's objectives for Corporate and other in 2025 include maintaining strong pretax adjusted earnings as compared with 2024, assuming that U.S. interest rates remain stable and excluding the impact of tax credit investments, as tax benefits are recognized in a corresponding lower income tax expense.
Corporate and other The Company's objectives for Corporate and other in 2026 include achieving solid pretax adjusted earnings, assuming that U.S. interest rates remain stable and excluding the impact of tax credit investments, as tax benefits are recognized in a corresponding lower income tax expense.
Reconciliation of Net Investment (Gains) Losses to Adjusted Net Investment (Gains) Losses (In millions) 2024 2023 Net investment (gains) losses $ (1,271) $ (590) Items impacting net investment (gains) losses: Amortized hedge costs (26) (157) Amortized hedge income 113 121 Net interest income (expense) from derivatives associated with certain investment strategies (338) (328) Impact of interest from derivatives associated with notes payable 27 41 Adjusted net investment (gains) losses $ (1,495) $ (914) The Company's investment strategy is to invest primarily in fixed maturity securities to provide a reliable stream of investment income, which is one of the drivers of the Company’s profitability.
Reconciliation of Net Investment (Gains) Losses to Adjusted Net Investment (Gains) Losses (In millions) 2025 2024 Net investment (gains) losses $ 572 $ (1,271) Items impacting net investment (gains) losses: Amortized hedge costs (45) (26) Amortized hedge income 98 113 Net interest income (expense) from derivatives associated with certain investment strategies (252) (338) Impact of interest from derivatives associated with notes payable 2 27 Adjusted net investment (gains) losses $ 375 $ (1,495) The Company's investment strategy is to invest primarily in fixed maturity securities to provide a reliable stream of investment income, which is one of the drivers of the Company’s profitability.
GAAP financial measures of book value and book value per diluted share, respectively, for the years ended December 31. (In millions, except for share and per-share amounts) 2024 2023 U.S. GAAP book value $ 26,098 $ 21,985 Items impacting U.S.
GAAP financial measures of book value and book value per common share, respectively, for the years ended December 31. (In millions, except for share and per-share amounts) 2025 2024 U.S. GAAP book value $ 29,490 $ 26,098 Items impacting U.S.
Net earnings were $5.4 billion, or $9.63 per diluted share, for the full year of 2024, compared with $4.7 billion, or $7.78 per diluted share, for the full year of 2023. Net earnings in 2024 included net investment gains of $1.3 billion, compared with net investment gains of $590 million in 2023.
Net earnings were $3.6 billion, or $6.82 per diluted share, for the full year of 2025, compared with $5.4 billion, or $9.63 per diluted share, for the full year of 2024. Net earnings in 2025 included net investment losses of $572 million, compared with net investment gains of $1.3 billion in 2024.
Adjusted book value excluding foreign currency remeasurement (2) was $23.4 billion, or $42.46 per share, at December 31, 2024, compared with $23.8 billion, or $41.15 per share, at December 31, 2023. The annualized adjusted return on equity excluding foreign currency remeasurement (2) in 2024 was 17.3%.
Adjusted book value excluding foreign currency remeasurement (2) was $22.1 billion, or $42.66 per share, at December 31, 2025, compared with $23.4 billion, or $42.46 per share, at December 31, 2024. The annualized adjusted return on equity excluding foreign currency remeasurement (2) in 2025 was 17.6%.
The most comparable U.S. GAAP financial measures for adjusted earnings excluding current period foreign currency impact and adjusted earnings per diluted share excluding current period foreign currency impact are net earnings and net earnings per share, respectively. • Adjusted book value is the U.S. GAAP book value (representing total shareholders’ equity), less AOCI as recorded on the U.S.
The most comparable U.S. GAAP financial measures for adjusted earnings excluding current period foreign currency impact and adjusted earnings per diluted share excluding current period foreign currency impact are net earnings and net earnings per share, respectively. • Adjusted book value is the U.S.
GAAP book value per common share $ 47.45 $ 38.00 Items impacting U.S.
GAAP book value per common share $ 56.85 $ 47.45 Items impacting U.S.
GAAP book value per common share: Unrealized foreign currency translation gains (losses) per common share (9.09) (7.03) Unrealized gains (losses) on securities and derivatives per common share .01 1.93 Effect of changes in discount rate assumptions per common share 3.65 (4.43) Pension liability adjustment per common share .02 (.01) Total accumulated other comprehensive income per common share (5.41) (9.54) Adjusted book value per common share 52.87 47.55 Foreign currency remeasurement gains (losses) per common share 10.41 6.40 Adjusted book value excluding foreign currency remeasurement per common share 42.46 41.15 41 Item 7.
GAAP book value per common share: Unrealized foreign currency translation gains (losses) per common share (9.34) (9.09) Unrealized gains (losses) on securities and derivatives per common share (3.51) .01 Effect of changes in discount rate assumptions per common share 15.49 3.65 Pension liability adjustment per common share .17 .02 Total accumulated other comprehensive income per common share 2.80 (5.41) Adjusted book value per common share 54.06 52.87 Foreign currency remeasurement gains (losses) per common share 11.39 10.41 Adjusted book value excluding foreign currency remeasurement per common share 42.66 42.46 41 Item 7.
(2) The total remaining shares available for purchase at December 31, 2024, consisted of shares related to a 100,000,000 share repurchase authorization by the board of directors announced in November 2022. ITEM 6. [RESERVED] 31 Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations ITEM 7.
(2) The total remaining shares available for purchase at December 31, 2025, consisted of 14,324,044 shares related to a 100,000,000 share repurchase authorization by the board of directors announced in November 2022 and 100,000,000 shares related to a 100,000,000 share repurchase authorization by the board of directors announced in August 2025. ITEM 6. [RESERVED] 31 Item 7.
Competitive Markets for a discussion of the competitive environment and the basis on which the Company competes in each of its segments. 2025 OUTLOOK The Company’s strategy to drive long-term shareholder value is to pursue growth and strong profit margins and to exercise tactical capital deployment.
Business - Aflac Japan Competitive Markets and Aflac U.S. Competitive Markets for a discussion of the competitive environment and the basis on which the Company competes in each of its segments. 2026 OUTLOOK The Company’s strategy to drive long-term shareholder value is to pursue growth and maintain solid pretax profit margins while exercising tactical capital deployment.
GAAP book value: Unrealized foreign currency translation gains (losses) (4,998) (4,069) Unrealized gains (losses) on securities and derivatives 4 1,117 Effect of changes in discount rate assumptions 2,006 (2,560) Pension liability adjustment 10 (8) Total accumulated other comprehensive income (2,978) (5,520) Adjusted book value 29,076 27,505 Foreign currency remeasurement gains (losses) 5,725 3,700 Adjusted book value excluding foreign currency remeasurement 23,351 23,805 Number of shares outstanding at end of period 549,964 578,479 U.S.
GAAP book value: Unrealized foreign currency translation gains (losses) (4,847) (4,998) Unrealized gains (losses) on securities and derivatives (1,822) 4 Effect of changes in discount rate assumptions 8,035 2,006 Pension liability adjustment 86 10 Total accumulated other comprehensive income 1,452 (2,978) Adjusted book value 28,038 29,076 Foreign currency remeasurement gains (losses) 5,910 5,725 Adjusted book value excluding foreign currency remeasurement 22,128 23,351 Number of shares outstanding at end of period 518,690 549,964 U.S.
Shareholders’ equity excluding accumulated other comprehensive income (AOCI) (2) (adjusted book value) was $29.1 billion, or $52.87 per share, at December 31, 2024, compared with $27.5 billion, or $47.55 per share, at December 31, 2023.
Shareholders’ equity excluding accumulated other comprehensive income (adjusted book value (2) ) was $28.0 billion, or $54.06 per share, at December 31, 2025, compared with $29.1 billion, or $52.87 per share, at December 31, 2024.
Reconciliation of Net Earnings to Adjusted Earnings In Millions Per Diluted Share 2024 2023 2024 2023 Net earnings $ 5,443 $ 4,659 $ 9.63 $ 7.78 Items impacting net earnings: Adjusted net investment (gains) losses (1) (1,495) (914) (2.65) (1.53) Other and non-recurring (income) loss 23 (39) .04 (.07) Income tax (benefit) expense on items excluded from adjusted earnings 101 26 .18 .04 Adjusted earnings 4,072 3,733 7.21 6.23 Current period foreign currency impact (2) 103 N/A .18 N/A Adjusted earnings excluding current period foreign currency impact $ 4,175 $ 3,733 $ 7.39 $ 6.23 (1) See reconciliation of net investment (gains) losses to adjusted net investment (gains) losses below.
Reconciliation of Net Earnings to Adjusted Earnings In Millions Per Diluted Share 2025 2024 2025 2024 Net earnings $ 3,646 $ 5,443 $ 6.82 $ 9.63 Items impacting net earnings: Adjusted net investment (gains) losses (1) 375 (1,495) .70 (2.65) Other and non-recurring (income) loss 54 23 .10 .04 Income tax (benefit) expense on items excluded from adjusted earnings (67) 101 (.13) .18 Adjusted earnings 4,008 4,072 7.49 7.21 Current period foreign currency impact (2) (19) N/A (.04) N/A Adjusted earnings excluding current period foreign currency impact $ 3,989 $ 4,072 $ 7.46 $ 7.21 (1) See reconciliation of net investment (gains) losses to adjusted net investment (gains) losses below.
The average yen/dollar exchange rate (1) in 2024 was 150.97, or 6.9% weaker than the rate of 140.57 in 2023. Adjusted earnings (2) for the full year of 2024 were $4.1 billion, or $7.21 per diluted share, compared with $3.7 billion, or $6.23 per diluted share, in 2023.
The average yen/dollar exchange rate (1) in 2025 was 149.32, or 1.1% stronger than the rate of 150.97 in 2024. Adjusted earnings (2) for the full year of 2025 were $4.0 billion, or $7.49 per diluted share, compared with $4.1 billion, or $7.21 per diluted share, in 2024.
The combined effective tax rate differs from the U.S. statutory rate primarily due to historic and solar tax credits and the exclusion of foreign currency translation gains and losses on certain Aflac Japan U.S. dollar-denominated assets held in the Delaware Statutory Trust (DST). Total income taxes were $974 million in 2024 and $603 million in 2023.
The combined effective tax rate differs from the U.S. statutory rate primarily due to the impact of tax credits from federal historic rehabilitation and solar investments in partnerships and the exclusion of foreign currency translation gains and losses on certain Aflac Japan U.S. dollar-denominated investments held in the Delaware Statutory Trust.
The weaker yen/dollar exchange rate negatively impacted adjusted earnings per diluted share by $.18. In 2024, Aflac Incorporated repurchased $2.8 billion, or 30.4 million of its common shares. At December 31, 2024, the Company had 47.3 million remaining shares authorized for repurchase.
The stronger yen/dollar exchange rate positively impacted adjusted earnings per diluted share by $.04. In 2025, Aflac Incorporated repurchased $3.5 billion, or 33.0 million of its common shares. At December 31, 2025, the Company had 114.3 million remaining shares authorized for repurchase.
GAAP book value (representing total shareholders’ equity), less AOCI as recorded on the U.S. GAAP balance sheet and excluding the cumulative [beginning January 1, 2021] foreign currency gains/losses associated with i) foreign currency remeasurement and ii) sales and redemptions of invested assets.
GAAP balance sheet and excluding the cumulative (beginning January 1, 2021) foreign currency gains/losses associated with i) foreign currency remeasurement and ii) sales and redemptions of invested assets.
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Certain statements included in this section constitute forward-looking statements within the meaning of the U.S. Private Securities Litigation Reform Act of 1995. Forward-looking statements are made based on management’s current expectations and beliefs concerning future developments and their potential effects upon the Company.
Management's Discussion and Analysis of Financial Condition and Results of Operations ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Certain statements included in this section constitute forward-looking statements within the meaning of the U.S. Private Securities Litigation Reform Act of 1995.
Shareholders’ equity was $26.1 billion, or $47.45 per share, at December 31, 2024, compared with $22.0 billion, or $38.00 per share, at December 31, 2023.
Shareholders’ equity was $29.5 billion, or $56.85 per share, at December 31, 2025, compared with $26.1 billion, or $47.45 per share, at December 31, 2024.
The Company also expects that benefit and expense ratios will continue to experience some level of revenue pressure due to the impact of paid up policies and internal reinsurance transactions.
The Company expects Aflac Japan to generate an expense ratio in the range of 20% to 23% reflecting continued growth and strategic initiatives. The Company also expects that benefit and expense ratios will continue to experience some level of revenue pressure due to the impact of paid-up policies and internal reinsurance transactions. Aflac U.S.
Government Regulation for a discussion of regulatory developments that may impact the Company and the associated risks. Competitive Environment See Item 1. Business - Aflac Japan Competitive Markets and Aflac U.S.
Furthermore, the insurance industry continues to be impacted by the financial security requirements and healthcare demands of the aging baby boomer generation. Regulatory Environment See Item 1. Business - Aflac Japan Government Regulation and Aflac U.S. Government Regulation for a discussion of regulatory developments that may impact the Company and the associated risks. Competitive Environment See Item 1.
Risk Factors for the risk factor entitled, "Difficult conditions in global capital markets and the economy could have a material adverse effect on the Company's investments, capital position, revenue, profitability, and liquidity and harm the Company's business." 33 Item 7.
Risk Factors for the risk factor entitled, "Difficult conditions in global capital markets and the economy could have a material adverse effect on the Company's investments, capital position, revenue, profitability, and liquidity and harm the Company's business." Demographics Aflac Japan Segment With Japan’s aging population and the rise in healthcare costs, supplemental health care insurance products remain attractive.
Adjusted earnings per share (basic or diluted) are the adjusted earnings for the period divided by the weighted average outstanding shares (basic or diluted) for the period presented.
GAAP financial measures included in this document as follows: • Adjusted earnings are adjusted revenues less benefits and adjusted expenses. Adjusted earnings per share (basic or diluted) are the adjusted earnings for the period divided by the weighted average outstanding shares (basic or diluted) for the period presented.
Amounts reported in this MD&A may not foot due to rounding. 32 Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations EXECUTIVE SUMMARY Performance Highlights For the full year of 2024, total revenues were up 1.2% to $18.9 billion, compared with $18.7 billion for the full year of 2023.
Management's Discussion and Analysis of Financial Condition and Results of Operations EXECUTIVE SUMMARY Performance Highlights For the full year of 2025, total revenues were down 9.3% to $17.2 billion, compared with $18.9 billion for the full year of 2024, primarily due to net investment losses of $572 million in 2025 compared with net investment gains of $1.3 billion in 2024.
The impairment of these intangible assets was not related to the ongoing operations of the business and occurs infrequently; therefore, the Company excluded the impairment from adjusted earnings. Foreign Currency Translation Aflac Japan’s premiums and a significant portion of its investment income are received in yen, and its claims and most expenses are paid in yen.
The settlement charge was both unusual and non-recurring and unrelated to other recurring benefit costs associated with the plan; therefore, the Company excluded the settlement charge from adjusted earnings. Foreign Currency Translation Aflac Japan’s premiums and a significant portion of its investment income are received in Japanese yen, and its claims and most expenses are paid in Japanese yen.
Consequently, yen weakening has the effect of suppressing current period results in relation to the comparable prior period, while yen strengthening has the effect of magnifying current period results in relation to the comparable prior period. A significant portion of the Company’s business is conducted in yen and never converted into dollars but translated into dollars for U.S.
When the Japanese yen strengthens, translating Japanese yen into U.S. dollars results in more U.S. dollars being reported. Consequently, Japanese yen weakening has the effect of suppressing current period results in relation to the comparable prior period, while Japanese yen strengthening has the effect of magnifying current period results in relation to the comparable prior period.
Net investment gains in 2024 included an increase in credit loss allowances of $256 million; $1.1 billion of net gains from certain derivative and foreign currency gains or losses; $140 million of net gains on equity securities; and $259 million of net gains from sales and redemptions.
Net investment losses in 2025 included $467 million of net losses from certain derivative and foreign currency gains or losses; an increase in credit loss allowances of $191 million and $6 million of impairments; offset by a $72 million gain from an increase in the fair value of equity securities and $20 million of net gains from sales and redemptions.
For the 2025 through 2027 period, the Company expects Aflac U.S. to generate a benefit ratio in the range of 48% to 52% and an expense ratio in the range of 36% to 39%.
Segment For 2026, the Company expects Aflac U.S. to generate a benefit ratio in the range of 48% to 52% driven by growth in life, disability, and dental and vision insurance products, all of which typically carry higher benefit ratios. The Company expects Aflac U.S. to generate an expense ratio in the range of 36% to 39%.
The most comparable U.S. GAAP financial measures for adjusted book value and adjusted book value per common share are total book value and total book value per common share, respectively. 36 Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations • Adjusted book value excluding foreign currency remeasurement is the U.S.
GAAP financial measures for adjusted book value and adjusted book value per common share are total book value and total book value per common share, respectively. • Adjusted book value excluding foreign currency remeasurement is the U.S. GAAP book value (representing total shareholders’ equity), less accumulated other comprehensive income as recorded on the U.S.
GAAP reporting purposes, which results in foreign currency impact to earnings, cash flows and book value on a U.S. GAAP basis. Management evaluates the Company's financial performance both including and excluding the impact of foreign currency translation to monitor, respectively, cumulative currency impacts and the currency-neutral operating performance over time.
Management evaluates the Company's financial performance both including and excluding the impact of foreign currency translation to monitor, respectively, cumulative currency impacts and the currency-neutral operating performance over time. The average yen/dollar exchange rate is based on the published MUFG Bank, Ltd. telegraphic transfer middle rate (TTM). The Company defines the non-U.S.
Aflac Japan Segment For Aflac Japan, the Company anticipates that favorable morbidity experience and the shift in premiums over the last several years from first sector savings products to third sector cancer and medical products and first sector protection products will result in stable benefit ratios in the Aflac Japan segment with a slightly higher expense ratio reflecting growth and strategic initiatives.
Aflac Japan Segment For 2026, the Company expects Aflac Japan to generate a benefit ratio in the range of 60% to 63% driven by favorable trends in morbidity experience, new product launches featuring lower benefit ratios, and the premium shift over recent years from first sector savings products to third sector cancer and medical products, as well as first sector protection products.
Management's Discussion and Analysis of Financial Condition and Results of Operations In 2024, as part of the U.S. defined benefit plan freeze, the Company offered lump sum payments to certain participants.
Management's Discussion and Analysis of Financial Condition and Results of Operations In 2025, as part of the U.S. defined benefit plan freeze effective January 1, 2024, the Company purchased a nonparticipating single premium group annuity contract from an external insurer to settle its obligations under the plan and paid to the insurer the related annuity premium.
GAAP balance sheet. Adjusted book value per common share is adjusted book value at the period end divided by the ending outstanding common shares for the period presented. The Company considers adjusted book value and adjusted book value per common share important as they exclude AOCI, which fluctuates due to market movements that are outside management’s control.
The Company considers adjusted book value and adjusted book value per common share important 36 Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations as they exclude accumulated other comprehensive income, which fluctuates due to market movements that are outside management’s control. The most comparable U.S.
Management's Discussion and Analysis of Financial Condition and Results of Operations Demographics Aflac Japan Segment With Japan’s aging population and the rise in healthcare costs, supplemental health care insurance products remain attractive. Additionally, as Japan enters an era of 100-year lifespans, customers' needs for asset formation and retirement coverage, including nursing care, are increasing.
Additionally, as Japan enters an era of 100-year lifespans, customers' needs for asset formation and retirement coverage, including nursing care, are increasing. Japan’s existing customers and potential customers seek products that are easily understood, affordable and accessible via digital platforms. Aflac U.S.
The settlement charge was both unusual and non-recurring and unrelated to other recurring benefit costs associated with the plan; therefore, the Company excluded the settlement charge from adjusted earnings.
As a result, the Company recognized a settlement charge of $55 million in 2025. The settlement charge was both unusual and non-recurring; therefore, the Company excluded the settlement charge from adjusted earnings. In 2024, as part of the U.S. defined benefit plan freeze effective January 1, 2024, the Company offered lump sum payments to certain participants.
The Company's approach to pursue growth is through product development and distribution expansion and to achieve efficiencies by modernizing its technology and streamlining its operations. The Company's objectives in 2025 include maintaining strong pretax margins with increased sales production through product refreshments and growth initiatives in both its Aflac Japan and Aflac U.S. segments.
The Company's objectives in 2026 include preserving solid pretax profit margins with increased sales production achieved through the ongoing promotional efforts for products launched in 2025 in Aflac Japan and continued growth initiatives across both its Aflac Japan and Aflac U.S. segments. The Company believes this strategy positions it for future growth 34 Item 7.
Removed
Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities Issuer Purchases of Equity Securities During the year ended December 31, 2024, the Parent Company repurchased shares of its common stock as follows: Period Total Number of Shares Purchased Average Price Paid Per Share Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs Maximum Number of Shares that May Yet Be Purchased Under the Plans or Programs January 1 - January 31 0 $ 0.00 0 77,745,381 February 1 - February 29 5,308,570 78.58 4,859,803 72,885,578 March 1 - March 31 4,424,657 83.34 4,416,656 68,468,922 April 1 - April 30 2,674,130 83.18 2,665,236 65,803,686 May 1 - May 31 3,680,826 86.25 3,678,430 62,125,256 June 1 - June 30 2,956,250 88.72 2,944,026 59,181,230 July 1 - July 31 1,385,917 91.09 1,385,917 57,795,313 August 1 - August 31 1,684,841 104.59 1,684,841 56,110,472 September 1 - September 30 1,821,000 109.15 1,810,629 54,299,843 October 1 - October 31 1,710,909 112.02 1,710,909 52,588,934 November 1 - November 30 1,369,301 110.15 1,369,301 51,219,633 December 1 - December 31 3,905,910 104.46 3,902,079 47,317,554 Total 30,922,311 (1) $ 91.84 30,427,827 47,317,554 (2) (1) During the year ended December 31, 2024, 494,484 shares were purchased in connection with income tax withholding obligations related to the vesting of restricted-share-based awards during the period.
Added
Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities Issuer Purchases of Equity Securities During the year ended December 31, 2025, the Parent Company repurchased shares of its common stock as follows: Period Total Number of Shares Purchased Average Price Paid Per Share Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs Maximum Number of Shares that May Yet Be Purchased Under the Plans or Programs January 1 - January 31 2,698,784 $ 104.83 2,698,784 44,618,770 February 1 - February 28 3,230,149 104.37 2,835,980 41,782,790 March 1 - March 31 2,965,821 108.23 2,961,981 38,820,809 April 1 - April 30 2,066,573 106.68 2,066,573 36,754,236 May 1 - May 31 3,421,623 104.89 3,420,321 33,333,915 June 1 - June 30 2,431,870 102.92 2,428,908 30,905,007 July 1 - July 31 0 0.00 0 30,905,007 August 1 - August 31 4,346,516 106.09 4,346,516 126,558,491 September 1 - September 30 4,989,921 108.13 4,984,848 121,573,643 October 1 - October 31 2,098,587 109.26 2,098,587 119,475,056 November 1 - November 30 2,393,020 111.96 2,392,998 117,082,058 December 1 - December 31 2,761,491 109.83 2,758,014 114,324,044 Total 33,404,355 (1) $ 106.93 32,993,510 114,324,044 (2) (1) During the year ended December 31, 2025, 410,845 shares were purchased in connection with income tax withholding obligations related to the vesting of restricted-share-based awards during the period.
Removed
Japan’s existing customers and potential customers seek products that are easily understood, cost-effective and can be accessed through technology-enabled devices. Aflac U.S. Segment Customer demographics continue to evolve and new opportunities present themselves in different customer segments such as the millennial and multicultural markets. Customer expectations and preferences are changing.
Added
Forward-looking statements are made based on management’s current expectations and beliefs concerning future developments and their potential effects upon the Company. The Company’s actual results may differ, possibly materially, from expectations or estimates reflected in such forward-looking statements.
Removed
Trends indicate existing customers and potential customers seek cost-effective solutions that are easily understood and can be accessed through technology-enabled devices. Additionally, income protection and the health needs of retiring baby boomers are continuing to shape the insurance industry. Regulatory Environment See Item 1. Business - Aflac Japan Government Regulation and Aflac U.S.
Added
Amounts reported in this MD&A may not foot due to rounding. 32 Item 7.
Removed
For Aflac Japan, this includes continuing to focus on third sector products as well as introducing policies to new and younger customers. For Aflac U.S., this includes continuing to focus on realizing benefits from its buy to build initiatives and other platform investments, maintaining strong expense management discipline and strengthening the number of career agents for Aflac U.S.
Added
Cyber Incident As previously disclosed, the Company identified an incident involving unauthorized access to a limited number of its systems in the U.S. on June 12, 2025. The Company promptly initiated its cybersecurity incident response protocols and believes it contained the unauthorized access within hours.
Removed
The Company believes that its strategy of positioning itself for future growth and efficiency while defending and leveraging its market-leading position, powerful brand recognition and varied distribution in Japan and the U.S. will provide support toward these objectives.

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Item 6. [Reserved]

Selected Financial Data — reserved (removed by SEC in 2021)

1 edited+0 added−0 removed0 unchanged
Biggest changeItem 6. [Reserved] 31 Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations 32 Item 7A. Quantitative and Qualitative Disclosures About Market Risk 71 Item 8. Financial Statements and Supplementary Data 79 Item 9. Changes in and Disagreements With Accountants on Accounting and Financial Disclosure 184 Item 9A. Controls and Procedures 184 Item 9B.
Biggest changeItem 6. [Reserved] 31 Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations 32 Item 7A. Quantitative and Qualitative Disclosures About Market Risk 71 Item 8. Financial Statements and Supplementary Data 79 Item 9. Changes in and Disagreements With Accountants on Accounting and Financial Disclosure 188 Item 9A. Controls and Procedures 188 Item 9B.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

192 edited+30 added−36 removed69 unchanged
Biggest changeManagement's Discussion and Analysis of Financial Condition and Results of Operations In 2024, operating results compared to the previous year were as follows: • Net earned premiums increased primarily due to higher reinsurance activity resulting from agreements established in the fourth quarter of 2024 and 2023. • Adjusted net investment income increased primarily due to $178 million from a lower volume of federal historic rehabilitation and solar tax credit investments, with offsetting tax benefits recognized as a corresponding lower income tax expense, and higher Aflac Re consolidated investment income of $68 million primarily due to a higher volume of assets as part of the reinsurance agreements established in the fourth quarter of 2024 and 2023. • Total adjusted revenues increased primarily due to higher net earned premiums and higher adjusted net investment income. • Total benefits and claims decreased primarily due to the impact of $163 million in the fourth quarter of 2023 related to a novation agreement under which Aflac Re assumed the duties, obligations and liabilities through a reinsurance of business ALIJ previously ceded to an external reinsurer, which was partially offset by higher benefits from the reinsurance agreements established in the fourth quarter of 2024 and 2023. • Total adjusted expenses increased primarily due to the higher reinsurance activity of $137 million and higher interest expense of $12 million. • Pretax adjusted earnings increased primarily due to higher total adjusted revenues and lower total benefits and claims partially offset by higher total adjusted expenses.
Biggest changeThe increase in total benefits and claims was partially offset by $31 million of reserve remeasurement gains related to assumption updates in the third quarter of 2025, compared to reserve remeasurement gains of $20 million in the third quarter of 2024. • Adjusted net investment income increased primarily due to $100 million from a lower volume of federal historic rehabilitation and solar tax credit investments, with offsetting tax benefits recognized as a corresponding lower income tax expense, and higher Aflac Re investment income of $46 million from a higher volume of assets as part of the reinsurance agreement established in the fourth quarter of 2024. • Total adjusted revenues increased primarily due to the increases in adjusted net investment income and net earned premiums. • Total adjusted expenses increased primarily due to $61 million from higher costs pertaining to business operations, including costs related to the ongoing response to the cybersecurity incident and legal and other professional services related thereto, higher interest expense of $54 million, and $35 million associated with internal reinsurance activity. • Pretax adjusted earnings increased primarily due to the increase in total adjusted revenues, partially offset by the increases in total adjusted expenses and total benefits and claims. 52 Item 7.
Amounts excluding foreign currency impact on U.S. dollar-denominated investment income were determined using the average foreign currency exchange rate for the comparable prior year period. See non-U.S. GAAP financial measures defined above.
Amounts excluding foreign currency impact on U.S. dollar-denominated investment income were determined using the average foreign exchange rate for the comparable prior year period. See non-U.S. GAAP financial measures defined above.
With continued cost pressure on Japan’s health care system, the Company expects the need for third sector products will continue to rise in the future and that the medical and cancer insurance products Aflac Japan provides will continue to be an important part of its product portfolio.
With continued cost pressure on Japan’s health care system, the Company expects the need for third sector products will continue to rise in the future and that the cancer and medical insurance products Aflac Japan provides will continue to be an important part of its product portfolio.
Aflac Japan’s investments in yen-denominated privately issued securities consist primarily of non-Japanese issuers, are rated investment grade at purchase and have longer maturities, thereby allowing the Company to improve asset/liability matching and overall investment returns.
Aflac Japan’s investments in Japanese yen-denominated privately issued securities consist primarily of non-Japanese issuers, are rated investment grade at purchase and have longer maturities, thereby allowing the Company to improve asset/liability matching and overall investment returns.
These may include a prohibition of certain activities by the borrower, maintenance of certain financial measures, and specific conditions impacting the payment of the Company's notes. HEDGING ACTIVITIES The Company uses derivative contracts to hedge foreign currency exchange rate risk and interest rate risk. The Company uses various strategies, including derivatives, to manage these risks. See Item 7A.
These may include a prohibition of certain activities by the borrower, maintenance of certain financial measures, and specific conditions impacting the payment of the Company's notes. HEDGING ACTIVITIES The Company uses derivative contracts to hedge foreign currency exchange risk and interest rate risk. The Company uses various strategies, including derivatives, to manage these risks. See Item 7A.
Dollar-Denominated Hedge Program below). • Aflac Japan maintains certain unhedged U.S. dollar-denominated securities, which serve as an economic currency hedge of a portion of the Company's investment in Aflac Japan, while utilizing foreign currency options to mitigate against significant movements in the yen/U.S. dollar exchange rate (see Aflac Japan’s U.S.
Dollar-Denominated Hedge Program below). • Aflac Japan maintains certain unhedged U.S. dollar-denominated securities, which serve as an economic currency hedge of a portion of the Company's investment in Aflac Japan, while utilizing foreign currency options to mitigate against significant movements in the yen/dollar exchange rate (see Aflac Japan’s U.S.
The Company also periodically discusses with its pricing brokers and vendors the pricing techniques they use to monitor the consistency of their approach and periodically assess the appropriateness of the valuation level assigned to the values obtained from them.
The Company also periodically discusses with its pricing brokers and vendors the pricing techniques they use to monitor the consistency of their approach and to periodically assess the appropriateness of the valuation level assigned to the values obtained from them.
Additionally, as discussed in detail in the Risk Factors section titled “Lack of availability of acceptable yen-denominated investments could adversely affect the Company's results of operations, financial position or liquidity,” there is a risk that losses realized on derivative settlements during periods of yen weakening may not be recouped through realization of the corresponding holding currency gains on the hedged U.S. dollar-denominated investments if these investments are not ultimately sold and the U.S. dollar proceeds converted to yen.
Additionally, as discussed in detail in the Risk Factors section titled “Lack of availability of acceptable Japanese yen-denominated investments could adversely affect the Company's results of operations, financial position or liquidity,” there is a risk that losses realized on derivative settlements during periods of Japanese yen weakening may not be recouped through realization of the corresponding holding currency gains on the hedged U.S. dollar-denominated investments if these investments are not ultimately sold and the U.S. dollar proceeds converted to Japanese yen.
Corporate and Other Total Available-for-sale, fixed maturity securities, at fair value $ 45,970 $ 12,296 $ 7,003 $ 65,269 Held-to-maturity, fixed maturity securities, at amortized cost (1) 15,966 0 0 15,966 Equity securities 458 2 336 796 Commercial mortgage and other loans: (1) Transitional real estate loans 3,648 866 189 4,703 Commercial mortgage loans 915 608 0 1,523 Middle market loans 3,847 436 0 4,283 Other loans 284 61 15 360 Other investments: Policy loans 168 35 0 203 Short-term investments (2) 484 366 749 1,599 Limited partnerships 2,861 306 268 3,435 Real estate owned 570 112 0 682 Other 0 39 0 39 Investment in affiliate (3) 0 638 (638) 0 Total investments 75,171 15,765 7,922 98,858 Cash and cash equivalents 2,062 1,010 3,157 6,229 Total investments and cash $ 77,233 $ 16,775 $ 11,079 $ 105,087 (1) Net of allowance for credit losses (2) Includes securities lending collateral (3) For consolidated reporting, Aflac U.S.'s investment in Aflac Re is eliminated in Corporate and other 53 Item 7.
Corporate and Other Total Fixed maturity securities available-for-sale, at fair value $ 45,970 $ 12,296 $ 7,003 $ 65,269 Fixed maturity securities held-to-maturity, at amortized cost (1) 15,966 0 0 15,966 Equity securities 458 2 336 796 Commercial mortgage and other loans: (1) Transitional real estate loans 3,648 866 189 4,703 Commercial mortgage loans 915 608 0 1,523 Middle market loans 3,847 436 0 4,283 Other loans 284 61 15 360 Other investments: Policy loans 168 35 0 203 Short-term investments (2) 484 366 749 1,599 Limited partnerships 2,861 306 268 3,435 Real estate owned 570 112 0 682 Other 0 39 0 39 Investment in affiliate (3) 0 638 (638) 0 Total investments 75,171 15,765 7,922 98,858 Cash and cash equivalents 2,062 1,010 3,157 6,229 Total investments and cash $ 77,233 $ 16,775 $ 11,079 $ 105,087 (1) Net of allowance for credit losses (2) Includes securities lending collateral (3) For consolidated reporting, Aflac U.S.'s investment in Aflac Re is eliminated in Corporate and other.
With the exception of disclosed activities in those referenced footnotes and the Risk Factors entitled, "The Company is exposed to foreign currency fluctuations in the yen/dollar exchange rate" and "Lack of availability of acceptable yen-denominated investments could adversely affect the Company's results of operations, financial position or liquidity," the Company is not aware of any trend, demand, commitment, event or uncertainty that would reasonably result in its liquidity increasing or decreasing by a material amount.
With the exception of disclosed activities in those referenced footnotes and the Risk Factors entitled, "The Company is exposed to foreign currency fluctuations in the yen/dollar exchange rate" and "Lack of availability of acceptable Japanese yen-denominated investments could adversely affect the Company's results of operations, financial position or liquidity," the Company is not aware of any trend, demand, commitment, event or uncertainty that would reasonably result in its liquidity increasing or decreasing by a material amount.
Consolidated Cash Flows The Company consistently generates positive cash flows from operations, and has the ability to adjust cash flow management from other sources of liquidity including reinvestment cash flows and selling investments in order to meet short-term cash needs. The Company translates cash flows for Aflac Japan's yen-denominated items into U.S. dollars using weighted-average exchange rates.
Consolidated Cash Flows The Company consistently generates positive cash flows from operations, and has the ability to adjust cash flow management from other sources of liquidity including reinvestment cash flows and selling investments in order to meet short-term cash needs. The Company translates cash flows for Aflac Japan's yen-denominated items into U.S. dollars using weighted-average foreign exchange rates.
Based on management's analysis, the valuation is confirmed or may be revised if there is evidence of a more appropriate estimate of fair value based on available market data. The Company has performed verification of the inputs and calculations in any valuation models to confirm that the valuations represent reasonable estimates of fair value.
Based on management's analysis, the valuation is confirmed or may be revised if there is evidence of a more appropriate estimate of fair value based on available market data and information. The Company has performed verification of the inputs and calculations in any valuation models to confirm that the valuations represent reasonable estimates of fair value.
Internal reinsurance transactions create foreign currency exposure at Aflac Re, primarily due to yen-denominated reinsurance liabilities to Aflac Japan while a majority of Aflac Re's assets are denominated in U.S. dollars, which may require Aflac Re to convert U.S. dollars to yen or enter foreign exchange derivatives with the Parent Company to manage yen-denominated liabilities.
Internal reinsurance transactions create foreign currency exposure at Aflac Re, primarily due to Japanese yen-denominated reinsurance liabilities to Aflac Japan while a majority of Aflac Re's assets are denominated in U.S. dollars, which may require Aflac Re to convert U.S. dollars to Japanese yen or enter foreign exchange derivatives with the Parent Company to manage Japanese yen-denominated liabilities.
In addition to yen payments and internal reinsurance transactions, certain investment activities for Aflac Japan expose the Company to economic currency risk when yen are converted into U.S. dollars. As noted above, the Company invests a portion of its yen cash flows in U.S. dollar-denominated assets.
In addition to Japanese yen payments and internal reinsurance transactions, certain investment activities for Aflac Japan expose the Company to economic currency risk when Japanese yen are converted into U.S. dollars. As noted above, the Company invests a portion of its Japanese yen cash flows in U.S. dollar-denominated assets.
This requires that the Company convert the yen cash flows to U.S. dollars before investing. As previously discussed, for certain of its U.S. dollar-denominated securities, the Company enters into foreign currency forward and option contracts to hedge the currency risk on the fair value of hedged investments.
This requires that the Company convert the Japanese yen cash flows to U.S. dollars before investing. As previously discussed, for certain of its U.S. dollar-denominated securities, the Company enters into foreign currency forward and option contracts to hedge the currency risk on the fair value of hedged investments.
There is a risk that in a scenario of long-term yen weakening there could be significant derivative losses that create corresponding liquidity requirements to support interim derivative settlements. Further, the derivatives used for hedging are shorter in duration than the hedged investments, so there is rollover risk.
There is a risk that in a scenario of long-term Japanese yen weakening there could be significant derivative losses that create corresponding liquidity requirements to support interim derivative settlements. Further, the derivatives used for hedging are shorter in duration than the hedged investments, so there is rollover risk.
As part of the Company's portfolio management and asset allocation process, Aflac U.S. invests in fixed maturity investments and growth assets, including public equity securities and alternative investments in limited partnerships. Aflac U.S. invests in both publicly traded and privately originated investment-grade and below-investment-grade fixed maturity securities and loans.
As part of the Company's portfolio management and asset allocation process, Aflac U.S. invests in fixed maturity securities and growth assets, including equity securities and alternative investments in limited partnerships. Aflac U.S. invests in both publicly traded and privately originated investment-grade and below-investment-grade fixed maturity securities and loans.
See Part I, Item 1A. Risk Factors for the risk factor titled "The Company is exposed to foreign currency fluctuations in the yen/dollar exchange rate" for additional information. Corporate and Other The Company is exposed to currency risk when yen funds are converted into U.S. dollars.
See Part I, Item 1A. Risk Factors for the risk factor titled "The Company is exposed to foreign currency fluctuations in the yen/dollar exchange rate" for additional information. Corporate and Other The Company is exposed to currency risk when Japanese yen funds are converted into U.S. dollars.
The estimates that the Company deems to be most critical to an understanding of its results of operations and financial condition are those related to the valuation of investments and derivatives, deferred policy acquisition costs (DAC), liabilities for future policy benefits, and income taxes.
The estimates that the Company deems to be most critical to an understanding of its results of operations and financial condition are those related to the valuation of investments and derivatives, deferred policy acquisition costs (DAC), liabilities for future policy benefits (LFPB), and income taxes.
Aflac Japan’s premiums and a significant portion of its investment income are received in yen, and its claims and most expenses are paid in yen. Aflac Japan purchases yen-denominated assets and U.S. dollar-denominated assets, which may be hedged to yen, to support yen-denominated policy liabilities.
Aflac Japan’s premiums and a significant portion of its investment income are received in Japanese yen, and its claims and most expenses are paid in Japanese yen. Aflac Japan purchases Japanese yen-denominated assets and U.S. dollar-denominated assets, which may be hedged to Japanese yen, to support Japanese yen-denominated policy liabilities.
In attempting to optimally balance these objectives, the Company seeks to maintain on behalf of Aflac Japan a diversified portfolio of yen-denominated investment assets, a U.S. dollar-denominated investment portfolio hedged back to yen and a portfolio of unhedged U.S. dollar-denominated assets.
In attempting to optimally balance these objectives, the Company seeks to maintain on behalf of Aflac Japan a diversified portfolio of Japanese yen-denominated investment assets, a U.S. dollar-denominated investment portfolio hedged back to Japanese yen and a portfolio of unhedged U.S. dollar-denominated assets.
The Company may use a portion of the yen dividend and management fee payments to service Aflac Incorporated's yen-denominated notes payable with the remainder converted into U.S. dollars.
The Company may use a portion of the Japanese yen dividend and management fee payments to service Aflac Incorporated's Japanese yen-denominated notes payable with the remainder converted into U.S. dollars.
In years when the yen weakens, translating U.S. dollar-denominated investment income into yen magnifies growth rates for net investment income, total adjusted revenues, and pretax adjusted earnings in yen terms.
In years when the Japanese yen weakens, translating U.S. dollar-denominated investment income into Japanese yen magnifies growth rates for net investment income, total adjusted revenues and pretax adjusted earnings in Japanese yen terms.
Dollar Program) Aflac Japan buys U.S. dollar-denominated investments, typically corporate bonds, and hedges them back to yen with foreign currency forwards and options to hedge foreign currency exchange rate risk. This economically creates yen assets that match yen liabilities during the life of the derivative and provides favorable capital treatment under the Japan SMR calculations.
Dollar Program) Aflac Japan buys U.S. dollar-denominated investments, typically corporate bonds, and hedges them back to Japanese yen with foreign currency forwards and options to hedge foreign currency exchange risk. This economically creates Japanese yen assets that match Japanese yen liabilities during the life of the derivative and provides favorable capital treatment under the Japan SMR calculations.
The following table illustrates the effect of translating Aflac Japan's U.S. dollar-denominated investment income and related items into yen by comparing certain segment results with those that would have been reported had foreign currency exchange rates remained unchanged from the prior year.
The following table illustrates the effect of translating Aflac Japan's U.S. dollar-denominated investment income and related items into Japanese yen by comparing certain segment results with those that would have been reported had foreign exchange rates remained unchanged from the prior year.
Foreign exchange derivatives used for hedging are periodically settled, which results in cash receipt or payment at maturity or early termination. The following table presents the settlements associated with the Company's currency derivatives used for hedging Aflac Japan’s U.S. dollar-denominated investments for the years ended December 31.
Foreign currency derivatives used for hedging are periodically settled, which results in cash receipt or payment at inception, maturity or early termination. The following table presents the settlements associated with the Company's foreign currency derivatives used for hedging Aflac Japan’s U.S. dollar-denominated investments for the years ended December 31.
This occurs when yen-denominated funds are paid as dividends and management fees from Aflac Japan to the Parent Company and with quarterly settlements of internal reinsurance transactions. The exchange rates prevailing at the time of yen payments will differ from the exchange rates prevailing at the time the yen profits were earned.
This occurs when Japanese yen-denominated funds are paid as dividends and management fees from Aflac Japan to the Parent Company and with quarterly settlements of internal reinsurance transactions. The foreign exchange rates prevailing at the time of Japanese yen payments will differ from the foreign exchange rates prevailing at the time the Japanese yen profits were earned.
Management's Discussion and Analysis of Financial Condition and Results of Operations Foreign Currency Exchange Rate Risk Hedge Program The Company has deployed the following hedging strategies to mitigate exposure to foreign currency exchange rate risk: • Aflac Japan hedges U.S. dollar-denominated investments back to yen (see Aflac Japan’s U.S.
Management's Discussion and Analysis of Financial Condition and Results of Operations Foreign Currency Exchange Risk Hedge Program The Company has deployed the following hedging strategies to mitigate exposure to foreign currency exchange risk: • Aflac Japan hedges U.S. dollar-denominated investments back to Japanese yen (see Aflac Japan’s U.S.
The Company has not engaged in material intra-period short-term financings during the periods presented that are not otherwise reported in its balance sheet or disclosed therein. As of December 31, 2024, the Company had no material letters of credit, standby letters of credit, guarantees or standby repurchase obligations.
The Company has not engaged in material intra-period short-term financings during the periods presented that are not otherwise reported in its balance sheet or disclosed therein. As of December 31, 2025, the Company had no material letters of credit, standby letters of credit, guarantees or standby repurchase obligations.
If a fair value appears unreasonable, the Company will re-examine the inputs and assess the reasonableness of the pricing data with the vendor. Additionally, the Company may compare the inputs to relevant market indices and other performance measurements.
If a fair value appears unreasonable, the Company will re-examine the inputs and assess the reasonableness of the pricing data with the provider. Additionally, the Company may compare the inputs to relevant market indices and other performance measurements.
From time to time, Aflac Japan also maintains a collar program on a portion of its U.S. Dollar Program to mitigate against more extreme moves in foreign exchange and therefore support SMR. As of December 31, 2024, none of the Company's foreign currency options hedging Aflac Japan's U.S. dollar-denominated assets were in-the-money.
From time to time, Aflac Japan also maintains a collar program on a portion of its U.S. Dollar Program to mitigate against more extreme moves in foreign exchange rates and therefore support SMR. As of December 31, 2025, none of the Company's foreign currency options hedging Aflac Japan's U.S. dollar-denominated assets were in-the-money.
Further, the Company plans to continue to maintain a population of unhedged U.S. dollar-denominated investments at Aflac Japan and to consider whether the amount of such investments should be increased or decreased relative to the Company’s view of economic equity surplus in Aflac Japan in light of potentially rising hedge costs and other factors.
Further, the Company plans to continue to maintain a population of unhedged U.S. dollar-denominated investments held by Aflac Japan and to consider whether the amount of such investments should be increased or decreased relative to the Company’s view of economic equity surplus in Aflac Japan in light of potentially rising hedge costs and other factors.
The effects of changes in assumptions are recognized prospectively over the remaining contract term as a revision of the future amortization pattern, while current period amortization is calculated based on the actual experience during the quarter. For additional information, see Note 6 of the Notes to the Consolidated Financial Statements.
The effects of changes in assumptions are recognized prospectively over the remaining contract term as a revision of the future amortization pattern, while current period amortization is calculated based on the actual experience during the quarter. For additional information, see Notes 1 and 6 of the Notes to the Consolidated Financial Statements.
The change in value of each investment is recorded as a reduction to net investment income. Tax credits generated by these investments are recorded as an income tax benefit in the consolidated statements of earnings.
The change in value of each investment is reported as a reduction to net investment income. Tax credits generated by these investments are reported as an income tax benefit in the consolidated statements of earnings.
As a result of the amortized cost of the TREs exceeding the estimated fair value of the collateral upon consummating the foreclosures or deed in lieu of foreclosure transactions, the Company recognized a net loss of $34 million in net investment gains (losses) for the year ended December 31, 2024.
As a result of the amortized cost of the TREs exceeding the estimated fair value of the collateral upon consummating the foreclosures or deed in lieu of foreclosure transactions, the Company recognized a net loss of $34 million in net investment gains (losses) for the year ended December 31, 2024. 54 Item 7.
As of December 31, 2024, Aflac U.S. had outstanding borrowings of $589 million reported in its balance sheet. See Note 3 of the Notes to the Consolidated Financial Statements for details on certain investment commitments. Financing Activities Cash flows from financing activities consist primarily of share repurchases, dividends to shareholders and from time to time debt issuances and redemptions.
As of December 31, 2025, Aflac U.S. had outstanding borrowings of $334 million reported in its balance sheet. See Note 3 of the Notes to the Consolidated Financial Statements for details on certain investment commitments. Financing Activities Cash flows from financing activities consist primarily of share repurchases, dividends to shareholders and, from time to time, debt issuances and redemptions.
Purchases of securities from period to period are determined based on multiple objectives including appropriate portfolio diversification, the relative value of a potential investment and availability of investment opportunities, liquidity, credit and other risk factors while adhering to the Company's investment policy guidelines. 47 Item 7.
Purchases of securities from period to period are determined based on multiple objectives including appropriate portfolio diversification, the relative value of a potential investment and availability of investment opportunities, liquidity, credit and other risk factors while adhering to the Company's investment policy guidelines.
Purchases of securities from period to period are determined based on multiple objectives, including appropriate portfolio diversification, the relative value of a potential investment and availability of investment opportunities, liquidity, credit and other risk factors while adhering to the Company's investment policy guidelines. 50 Item 7.
Purchases of securities from period to period are determined based on multiple objectives, including appropriate portfolio diversification, the relative value of a potential investment and availability of investment opportunities, liquidity, credit and other risk factors while adhering to the Company's investment policy guidelines.
See Notes 3, 4 and 8 of the Notes to the Consolidated Financial Statements for additional information on the Company's investment strategies, hedging activities, and reinsurance, respectively. Aflac Japan's SMR remains high and reflects a strong capital and surplus position. As of December 31, 2024, Aflac Japan's SMR was 1,221%, compared with 1,219% at December 31, 2023.
See Notes 3, 4 and 8 of the Notes to the Consolidated Financial Statements for additional information on the Company's investment strategies, hedging activities, and reinsurance, respectively. Aflac Japan's SMR remains high and reflects a strong capital and surplus position. As of December 31, 2025, Aflac Japan's SMR was 995%, compared with 1,221% at December 31, 2024.
The Company monitors the estimated fair values obtained from its pricing vendors and brokers for consistency from month to month, while considering current market conditions.
The Company monitors the estimated fair values obtained from its pricing vendors, external managers, and brokers for consistency from month to month, while considering current market conditions.
Management's Discussion and Analysis of Financial Condition and Results of Operations Below-Investment-Grade Securities The Company's portfolio of below-investment-grade securities includes debt securities purchased while the issuer was rated investment grade plus other loans and bonds invested in as part of an allocation to that segment of the market. The following is the Company's below-investment-grade exposure at December 31.
Management's Discussion and Analysis of Financial Condition and Results of Operations Below-Investment-Grade Securities The Company's portfolio of below-investment-grade securities includes fixed maturity securities purchased while the issuer was rated investment grade plus other loans and bonds invested in as part of an allocation to that segment of the market. The following is the Company's below-investment-grade exposure as of December 31.
The Company's judgments and assumptions are subject to change given the inherent uncertainty in predicting future performance and specific industry and investment market conditions. An increase or decrease in the Company's effective tax rate by one percentage point would have resulted in an increase or decrease in the Company's 2024 income tax expense of $49 million.
The Company's judgments and assumptions are subject to change given the inherent uncertainty in predicting future performance and specific industry and investment market conditions. An increase or decrease in the Company's effective tax rate by one percentage point would have resulted in an increase or decrease in the Company's 2025 income tax expense of $50 million.
Under these criteria, dividend capacity at Aflac Japan is defined as total equity excluding common stock and capital reserves (representing statutorily required amounts in Japan) but reduced for net after-tax unrealized losses on available-for-sale securities. These dividend capacity requirements are generally aligned with the SMR. Japan's FSA maintains its own solvency standard which is quantified through the SMR.
Under these criteria, dividend capacity at Aflac Japan is defined as total equity excluding common stock and capital reserves but reduced for net after-tax unrealized losses on available-for-sale securities. These dividend capacity requirements are generally aligned with the SMR. Japan's FSA maintains its own solvency standard which is quantified through the SMR.
The amount of the guaranty fund assessment that an insurer is assessed is based on its proportionate share of premiums in that state. See Note 15 of the Notes to the Consolidated Financial Statements for further information on guaranty fund assessments. Guaranty fund assessments for the years ended December 31, 2024 and 2023 were immaterial.
The amount of the guaranty fund assessment that an insurer is assessed is based on its proportionate share of premiums in that state. See Note 15 of the Notes to the Consolidated Financial Statements for additional information on guaranty fund assessments. Guaranty fund assessments for the years ended December 31, 2025 and 2024 were immaterial.
The following table presents Aflac Japan's premium persistency on a 12-month rolling basis as of December 31. 2024 2023 Premium persistency 93.4 % 93.4 % Aflac Japan Sales The following table presents Aflac Japan's new annualized premium sales for the years ended December 31.
The following table presents Aflac Japan's premium persistency on a 12-month rolling basis as of December 31. 2025 2024 Premium persistency 93.1 % 93.4 % Aflac Japan Sales The following table presents Aflac Japan's new annualized premium sales for the years ended December 31.
Investments are included in equity securities or the other investments line in the consolidated balance sheets. As part of an arrangement with Federal Home Loan Bank of Atlanta (FHLB), Aflac U.S. obtains low-cost investment funding from FHLB supported by acceptable forms of collateral pledged by Aflac U.S. In 2024, Aflac U.S. borrowed and repaid $466 million under this program.
Investments are included in equity securities or other investments in the consolidated balance sheets. As part of an arrangement with Federal Home Loan Bank of Atlanta (FHLB), Aflac U.S. obtains low-cost investment funding from FHLB supported by acceptable forms of collateral pledged by Aflac U.S. In 2025, Aflac U.S. borrowed and repaid $777 million under this program.
The distributions of fixed maturity securities the Company owns, by credit rating, as of December 31 were as follows: Composition of Fixed Maturity Securities by Credit Rating 2024 2023 Amortized Cost Fair Value Amortized Cost Fair Value AAA 1.5 % 1.5 % 1.6 % 1.6 % AA 6.0 6.3 5.7 5.9 A 68.0 66.1 68.1 67.2 BBB 22.9 24.4 22.9 23.5 BB or lower 1.6 1.7 1.7 1.8 Total 100.0 % 100.0 % 100.0 % 100.0 % As of December 31, 2024, the Company's direct and indirect exposure to securities in its investment portfolio that were guaranteed by third parties was immaterial both individually and in the aggregate.
The distributions of fixed maturity securities the Company owns, by credit rating, as of December 31 were as follows: Composition of Fixed Maturity Securities by Credit Rating 2025 2024 Amortized Cost Fair Value Amortized Cost Fair Value AAA 1.1 % 1.1 % 1.5 % 1.5 % AA 6.6 7.1 6.0 6.3 A 69.0 66.0 68.0 66.1 BBB 21.9 24.2 22.9 24.4 BB or lower 1.4 1.6 1.6 1.7 Total 100.0 % 100.0 % 100.0 % 100.0 % As of December 31, 2025, the Company's direct and indirect exposure to securities in its investment portfolio that were guaranteed by third parties was immaterial both individually and in the aggregate.
As part of its overall corporate strategy, the Company has committed up to $400 million to Aflac Ventures, LLC (Aflac Ventures), as opportunities emerge. As of December 31, 2024, of the $400 million committed, approximately $285 million has been deployed. Aflac Ventures is a subsidiary of Aflac Global Ventures, LLC (Aflac Global Ventures) which is reported in Corporate and other.
As part of its overall corporate strategy, the Company has committed up to $400 million to Aflac Ventures, LLC (Aflac Ventures), as opportunities emerge. As of December 31, 2025, of the $400 million committed, approximately $297 million has been deployed. Aflac Ventures is a subsidiary of Aflac Global Ventures, LLC (Aflac Global Ventures) which is reported in Corporate and other.
Aflac Japan Investments The level of investment income in yen is affected by available cash flow from operations, the timing of investing the cash flow, yields on new investments, the effect of yen/dollar exchange rates on U.S. dollar-denominated investment income, and other factors.
Aflac Japan Investments The level of investment income in Japanese yen is affected by available cash flow from operations, the timing of investing the cash flow, yields on new investments, the effect of yen/dollar exchange rates on U.S. dollar-denominated investment income and other factors. 46 Item 7.
Actual future payments as reported in dollars will fluctuate with changes in the yen/dollar exchange rate.
Actual future payments as reported in U.S. dollars will fluctuate with changes in the yen/dollar exchange rate.
Aflac Japan invests in both publicly traded and privately originated U.S. dollar-denominated investment-grade and below-investment-grade fixed maturity securities and loan receivables, and has entered into foreign currency forwards and options to hedge the currency risk on the fair value of a portion of the U.S. dollar investments.
Aflac Japan invests in both publicly traded and privately originated U.S. dollar-denominated investment-grade and below-investment-grade fixed maturity securities and loan receivables, and has entered into foreign currency derivatives to economically hedge the foreign currency exchange risk on the fair value of a portion of the U.S. dollar-denominated investments.
Management's Discussion and Analysis of Financial Condition and Results of Operations 2023 (In millions) Aflac Japan Aflac U.S.
Management's Discussion and Analysis of Financial Condition and Results of Operations 2024 (In millions) Aflac Japan Aflac U.S.
As part of the Company's portfolio management and asset allocation process, Aflac Japan invests in yen and U.S. dollar-denominated investments. Yen-denominated investments primarily consist of JGBs, public and private fixed maturity 46 Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations securities and public equity securities.
Management's Discussion and Analysis of Financial Condition and Results of Operations As part of the Company's portfolio management and asset allocation process, Aflac Japan primarily invests in Japanese yen- and U.S. dollar-denominated investments. Aflac Japan's Japanese yen-denominated investments primarily consist of JGBs, public and private fixed maturity securities and equity securities.
(2) Net interest income/expense from derivatives associated with certain investment strategies of $(305) and $(294) in 2024 and 2023, respectively, have been reclassified from net investment gains (losses) and included in adjusted earnings as a component of net investment income.
(2) Net interest income/expense from derivatives associated with certain investment strategies of $(228) and $(305) in 2025 and 2024, respectively, have been reclassified from net investment gains (losses) and included in adjusted earnings as a component of net investment income.
According to a Form 13F filed by Japan Post Holdings with the SEC on January 16, 2025, Japan Post Holdings owned 52.3 million Aflac Incorporated common shares as of December 31, 2024.
According to a Form 13F filed by Japan Post Holdings with the SEC on January 27, 2026, Japan Post Holdings owned 52.3 million Aflac Incorporated common shares as of December 31, 2025.
At December 31, 2024, Aflac Japan was represented by approximately 6,600 sales agencies, with approximately 114,000 licensed sales associates employed by those agencies. The number of sales agencies has declined in recent years due to Aflac Japan's focus on supporting agencies with strong management frameworks, high productivity and more producing agents.
At December 31, 2025, Aflac Japan was represented by approximately 6,300 sales agencies, with approximately 112,000 licensed sales associates employed by those agencies. The number of sales agencies has declined in recent years due to Aflac Japan's focus on supporting agencies with strong management frameworks, high productivity and more producing agents.
The application of these critical accounting estimates determines the values at which 92% of the Company's assets and 78% of its liabilities are reported as of December 31, 2024, and thus has a direct effect on net earnings and shareholders' equity. Subsequent experience or use of other assumptions could produce significantly different results.
The application of these critical accounting estimates determines the values at which 92% of the Company's assets and 74% of its liabilities are reported as of December 31, 2025, and thus has a direct effect on net earnings and shareholders' equity. Subsequent experience or use of other assumptions could produce significantly different results. 68 Item 7.
Aflac Re is required to file an annual return for its Bermuda Solvency Capital Requirement (BSCR) which utilizes an Economic Balance Sheet (EBS) framework to determine Aflac Re’s Enhanced Capital Requirement (ECR). Aflac Re is also subject to a Minimum Margin of Solvency (MMS) related to its statutory financial statements.
Aflac Re is required to file annual and quarterly returns for its Bermuda Solvency Capital Requirement (BSCR) which utilizes an Economic Balance Sheet (EBS) framework to determine Aflac Re’s Enhanced Capital Requirement (ECR). Aflac Re is also subject to a Minimum Margin of Solvency (MSM) related to its statutory financial statements.
Inputs used to value derivatives include, but are not limited to, interest rates, credit spreads, foreign currency forward and spot rates, foreign currency volatility, and interest rate volatility. The Company estimates an expected lifetime credit loss on investments measured at amortized cost including held-to-maturity fixed maturity securities, loan receivables and certain loan commitments on a quarterly basis.
Inputs used to value derivatives include, but are not limited to, interest rates, credit spreads, foreign currency forward and spot rates, foreign currency volatility, and interest rate volatility. The Company estimates an allowance for credit losses on investments measured at amortized cost including held-to-maturity securities, loan receivables and certain loan commitments on a quarterly basis.
Management's Discussion and Analysis of Financial Condition and Results of Operations As part of the Company’s internal reinsurance platform, Aflac Re enters into foreign currency forwards with the Parent Company, and may enter into such forwards with third parties, to economically manage the currency mismatch between Aflac Re's assets, which are mostly denominated in U.S. dollars, and liabilities, which are mostly denominated in yen, in order to support and optimize BMA capital requirements.
As part of the Company’s internal reinsurance platform, Aflac Re enters into foreign currency forwards with the Parent Company, and may enter into such forwards with third parties, to economically manage the currency mismatch between Aflac Re's assets, which are mostly denominated in U.S. dollars, and liabilities, which are mostly denominated in Japanese yen, in order to support and optimize BMA capital requirements.
Amortized hedge costs/income can fluctuate based upon many factors, including the derivative notional amount, the length of time of the derivative contract, changes in both U.S. and Japan interest rates, and supply and demand for dollar funding. Amortized hedge costs/income have fluctuated in recent periods due to changes in the previously mentioned factors. Aflac Japan’s U.S. Dollar-Denominated Hedge Program (U.S.
Amortized hedge costs/income can fluctuate based upon many factors, including the derivative notional amount, the length of time of the derivative contract, changes in both U.S. and Japan interest rates, and the cross-currency basis. Amortized hedge costs/income have fluctuated in recent periods due to changes in the previously mentioned factors. Aflac Japan’s U.S. Dollar-Denominated Hedge Program (U.S.
The following table presents premium persistency for Aflac U.S. on a 12-month rolling basis as of December 31. 2024 2023 Premium persistency 79.3 % 78.6 % Aflac U.S. Sales The following table presents Aflac's U.S. new annualized premium sales for the years ended December 31.
The following table presents premium persistency for Aflac U.S. on a 12-month rolling basis as of December 31. 2025 2024 Premium persistency 79.2 % 79.3 % Aflac U.S. Sales The following table presents Aflac's U.S. new annualized premium sales for the years ended December 31.
In 2023, the Company completed foreclosure or deed in lieu of foreclosure on TREs collateralized with commercial real estate properties with an amortized cost of $284 million.
In 2025, the Company completed foreclosure or deed in lieu of foreclosure on TREs collateralized with commercial real estate properties with an amortized cost of $257 million.
Reverse Dual-Currency Securities (1) (Amortized cost, in millions) 2024 2023 Privately issued reverse dual-currency securities $ 3,368 $ 3,740 Publicly issued collateral structured as reverse dual-currency securities 945 1,232 Total reverse dual-currency securities $ 4,313 $ 4,972 Reverse dual-currency securities as a percentage of total investment securities 5.3 % 5.5 % (1) Principal payments in yen and interest payments in dollars Aflac Japan has a portfolio of privately issued securities to better match liability characteristics and secure higher yields than those available on Japanese government or other public corporate bonds.
Reverse Dual-Currency Securities (1) (Amortized cost, in millions) 2025 2024 Privately issued reverse dual-currency securities $ 3,196 $ 3,368 Publicly issued collateral structured as reverse dual-currency securities 895 945 Total reverse dual-currency securities $ 4,091 $ 4,313 Reverse dual-currency securities as a percentage of total investment securities 5.0 % 5.3 % (1) Principal payments in Japanese yen and interest payments in U.S. dollars Aflac Japan has a portfolio of privately issued securities to better match liability characteristics and secure higher yields than those available on Japanese government or other public corporate bonds.
The Parent Company invests in partnerships that specialize in rehabilitating historic structures or the installation of solar equipment in order to receive federal historic rehabilitation and solar tax credits. These investments are classified as limited partnerships and included in other investments in the consolidated balance sheets.
Management's Discussion and Analysis of Financial Condition and Results of Operations The Parent Company invests in partnerships that specialize in rehabilitating historic structures or the installation of solar equipment in order to receive federal historic rehabilitation and solar tax credits. These investments are classified as limited partnerships and included in other investments in the consolidated balance sheets.
As a result of the amortized cost of the TREs exceeding the estimated fair value of the collateral upon consummating the foreclosures or deed in lieu of foreclosure transactions, the Company recognized a net loss of $66 million in net investment gains (losses) for the year ended December 31, 2023. 54 Item 7.
As a result of the amortized cost of the TREs exceeding the estimated fair value of the collateral upon consummating the foreclosures or deed in lieu of foreclosure transactions, the Company recognized a net loss of $10 million in net investment gains (losses) for the year ended December 31, 2025.
The target minimum amount for the Parent Company’s cash and cash equivalents is approximately $1.8 billion to provide a capital buffer and liquidity support at the holding company. The Company remains committed to prudent liquidity and capital management.
The Company remains committed to prudent liquidity and capital management. To provide a capital buffer and liquidity support at the holding company, the target minimum amount for the Parent Company is approximately $1.0 billion.
If the duration difference is not maintained within the specified range without rebalancing, then a certain portion of the assets must be reclassified as available-for-sale and held at fair value with any associated unrealized gain or loss recorded in surplus.
The primary criterion relates to maintaining the duration of designated assets and liabilities within a specified tolerance range. If the duration difference is not maintained within the specified range without rebalancing, then a certain portion of the assets must be reclassified as available-for-sale and held at fair value with any associated unrealized gain or loss recorded in surplus.
The RBC formula quantifies insurance risk, business risk, asset risk and interest rate risk by weighing the types and mixtures of risks inherent in the insurer’s operations. The combined RBC ratio for Aflac U.S. as of December 31, 2024 was 677%, compared with 710% as of December 31, 2023.
The RBC formula quantifies insurance risk, business risk, asset risk and interest rate risk by weighing the types and mixtures of risks inherent in the insurer’s operations. The combined RBC ratio for Aflac U.S. as of December 31, 2025 was estimated to be 570%, compared with 677% as of December 31, 2024.
Management's Discussion and Analysis of Financial Condition and Results of Operations The following table presents the results of Aflac Japan's investment yields for the years ended and as of December 31 2024 2023 Total purchases for the period (in millions) (1) $ 4,894 $ 2,741 New money yield (1),(2) 6.11 % 5.18 % Return on average invested assets (3) 3.33 2.90 Portfolio book yield, including U.S. dollar-denominated investments, end of period (1),(2) 3.22 % 3.18 % (1) Includes fixed maturity securities, commercial mortgage and other loans, equity securities, and excludes alternative investments in limited partnerships (2) Reported on a gross yield basis; excludes investment expenses, external management fees, and amortized hedge costs (3) Net of investment expenses and amortized hedge costs, year-to-date number reflected on a quarterly average basis The increase in the Aflac Japan new money yield in 2024 was primarily due to higher allocations to higher yielding asset classes.
The following table presents the results of Aflac Japan's investment yields for the years ended and as of December 31 2025 2024 Total purchases for the period (in millions) (1) $ 11,631 $ 4,894 New money yield (1),(2) 4.17 % 6.11 % Return on average invested assets (3) 3.22 3.33 Portfolio book yield, including U.S. dollar-denominated investments, end of period (1),(2) 3.26 % 3.22 % (1) Includes fixed maturity securities, commercial mortgage and other loans, equity securities, and excludes alternative investments in limited partnerships (2) Reported on a gross yield basis; excludes investment expenses, external management fees and amortized hedge costs (3) Net of investment expenses and amortized hedge costs, year-to-date number reflected on a quarterly average basis The decrease in the Aflac Japan new money yield in 2025 was primarily due to higher allocations to lower yielding asset classes.
The Company's consolidated yen-denominated net asset position was partially hedged at $5.9 billion as of December 31, 2024, with hedging instruments comprised of $4.1 billion of yen-denominated debt and $1.8 billion of foreign currency forwards, compared with $6.8 billion as of December 31, 2023, with hedging instruments comprised of $3.7 billion of yen-denominated debt and $3.1 billion of foreign currency forwards and options.
The Company's consolidated Japanese yen-denominated net asset position was partially hedged at $6.8 billion as of December 31, 2025, with hedging instruments comprised of $5.0 billion of Japanese yen-denominated debt and $1.8 billion of foreign currency forwards, compared with $5.9 billion as of December 31, 2024, with hedging instruments comprised of $4.1 billion of Japanese yen-denominated debt and $1.8 billion of foreign currency forwards.
At December 31, 2024, Aflac Japan had agreements to sell its products at 360 banks, approximately 90% of the total number of banks in Japan.
At December 31, 2025, Aflac Japan had agreements to sell its products at 358 banks, approximately 90% of the total number of banks in Japan.
Discount rates used to calculate net premiums are locked in at policy inception and represent the basis to recognize interest expense accreted on insurance reserves in benefits and claims, excluding reserve remeasurement in the consolidated statements of earnings.
These expense assumptions are locked in and remain unchanged over the term of the insurance policy. Discount rates used to calculate net premiums are locked in at policy inception and represent the basis to recognize interest expense accreted on insurance reserves included in benefits and claims, excluding reserve remeasurement in the consolidated statements of earnings.
Discount rates used to measure the carrying value of LFPB in the consolidated balance sheets are updated each reporting period, and the differences between the liability balances calculated using the locked-in discount rates and the updated discount rates are recognized in accumulated other comprehensive income (loss).
Discount rates used to measure the carrying value of the LFPB in the consolidated balance sheets are updated each reporting period, and the differences between the liability balances calculated using the locked-in discount rates and the updated discount rates is included in the effect of changes in discount rate assumptions in accumulated other comprehensive income (loss).
Funds available for investment include cash flows from operations, investment income, and funds generated from maturities, redemptions, securities lending, and other securities transactions. Securities lending is also used from time to time to accelerate the availability of funds for investment.
Management's Discussion and Analysis of Financial Condition and Results of Operations Funds available for investment include cash flows from operations, investment income and funds generated from maturities, redemptions, securities lending and other securities transactions. Securities lending is also used from time to time to accelerate the availability of funds for investment.
Management's Discussion and Analysis of Financial Condition and Results of Operations The following table details the contributions to Aflac's U.S. new annualized premium sales by major insurance product category for the years ended December 31. 2024 2023 Accident 19.6 % 20.9 % Disability 26.3 25.6 Critical care (1) 20.9 20.7 Hospital indemnity 13.7 14.5 Dental/vision 5.3 6.3 Life 14.2 12.0 Total 100.0 % 100.0 % (1) Includes cancer, critical illness and hospital intensive care products In 2024, the Aflac U.S. sales force included an average of approximately 6,000 U.S. agents, including brokers, who were actively producing business on a weekly basis.
The following table details the contributions to Aflac's U.S. new annualized premium sales by major insurance product category for the years ended December 31. 2025 2024 Accident 18.9 % 19.6 % Disability 26.4 26.3 Critical care (1) 19.8 20.9 Hospital indemnity 13.2 13.7 Dental/vision 6.2 5.3 Life 15.5 14.2 Total 100.0 % 100.0 % (1) Includes cancer, critical illness and hospital intensive care products In 2025, the Aflac U.S. sales force included an average of approximately 5,300 U.S. agents, including brokers, who were actively producing business on a weekly basis.
For the discount rates applicable to tenors for which the single-A debt market is not liquid or there is little or no observable market data, the Company uses various estimation techniques consistent with the fair value guidance in ASC 820 - Fair Value Measurement, which include, but are not limited to: (i) for tenors where there is less observable market data and/or the observable market data is available for similar instruments, estimating tenor-specific single-A credit spreads and 70 Item 7.
For the discount rates applicable to tenors for which the single-A debt market is not liquid or there is little or no observable market data, the Company uses various estimation techniques consistent with the fair value guidance in ASC 820 - Fair Value Measurement, which include, but are not limited to: (i) for tenors where there is less observable market data and/or the observable market data is available for similar instruments, estimating tenor-specific single-A credit spreads and applying them to risk-free government rates; (ii) for tenors where there is very limited or no observable single-A or similar market data, interpolation and extrapolation techniques.
The following table presents a summary of operating ratios for Aflac U.S. for the years ended December 31 followed by a discussion of the significant drivers of changes in operating ratios compared to the previous year.
Management's Discussion and Analysis of Financial Condition and Results of Operations The following table presents a summary of operating ratios for Aflac U.S. for the years ended December 31 followed by a discussion of the significant drivers of changes in operating ratios compared to the previous year.
Any gross premium in excess of the net premium is deferred and recorded as a deferred profit liability, a component of the LFPB, which is subsequently amortized in net earned premiums such that profits are recognized in a constant relationship with insurance in force. Benefits are recorded as an expense when they are incurred.
Any gross premium in excess of the net premium is deferred and reported as a deferred profit liability, a component of the LFPB, which is subsequently amortized in net earned premiums such that profits are recognized in a constant relationship with insurance in force.
The Company regularly monitors its market risks and uses a variety of strategies to manage its exposure to these market risks. 71 Item 7A. Quantitative and Qualitative Disclosures About Market Risk Currency Risk Aflac Japan The functional currency of Aflac Japan's insurance operations is the Japanese yen.
The Company regularly monitors its market risks and uses a variety of strategies to manage its exposure to these market risks. Currency Risk Aflac Japan The functional currency of Aflac Japan's insurance operations is the Japanese yen.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

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Biggest changeFinancial Statements and Supplementary Data Aflac Incorporated and Subsidiaries Consolidated Statements of Shareholders’ Equity (In millions, except for per share amounts) Common Stock Additional Paid-in Capital Retained Earnings Accumulated Other Comprehensive Income (Loss) Treasury Stock Total Shareholders' Equity Balance at December 31, 2021 $ 135 $ 2,529 $ 40,963 $ (8,411) $ (18,185) $ 17,031 Net earnings 0 0 4,418 0 0 4,418 Unrealized foreign currency translation gains (losses) during period, net of income taxes 0 0 0 (1,579) 0 (1,579) Unrealized gains (losses) on fixed maturity securities during period, net of income taxes and reclassification adjustments 0 0 0 (10,304) 0 (10,304) Unrealized gains (losses) on derivatives during period, net of income taxes 0 0 0 3 0 3 Effect of changes in discount rate assumptions during period, net of income taxes 0 0 0 13,732 0 13,732 Pension liability adjustment during period, net of income taxes 0 0 0 130 0 130 Dividends to shareholders (1) ($1.62 per share) 0 0 (1,014) 0 0 (1,014) Exercise of stock options 0 12 0 0 0 12 Share-based compensation 0 62 0 0 0 62 Purchases of treasury stock 0 0 0 0 (2,425) (2,425) Treasury stock reissued 0 38 0 0 36 74 Balance at December 31, 2022 135 2,641 44,367 (6,429) (20,574) 20,140 Net earnings 0 0 4,659 0 0 4,659 Unrealized foreign currency translation gains (losses) during period, net of income taxes 0 0 0 (505) 0 (505) Unrealized gains (losses) on fixed maturity securities during period, net of income taxes and reclassification adjustments 0 0 0 1,841 0 1,841 Unrealized gains (losses) on derivatives during period, net of income taxes 0 0 0 5 0 5 Effect of changes in discount rate assumptions during period, net of income taxes 0 0 0 (460) 0 (460) Pension liability adjustment during period, net of income taxes 0 0 0 28 0 28 Dividends to shareholders (1) ($1.76 per share) 0 0 (1,033) 0 0 (1,033) Exercise of stock options 0 13 0 0 0 13 Share-based compensation 1 74 0 0 0 75 Purchases of treasury stock 0 0 0 0 (2,854) (2,854) Treasury stock reissued 0 43 0 0 33 76 Balance at December 31, 2023 $ 136 $ 2,771 $ 47,993 $ (5,520) $ (23,395) $ 21,985 (1) Dividends to shareholders are recorded in the period in which they are declared.
Biggest changeFinancial Statements and Supplementary Data Aflac Incorporated and Subsidiaries Consolidated Statements of Shareholders’ Equity (continued) (In millions, except for per share amounts) Common Stock Additional Paid-in Capital Retained Earnings Accumulated Other Comprehensive Income (Loss) Treasury Stock Total Shareholders' Equity Balance at December 31, 2024 $ 136 $ 2,894 $ 52,277 $ (2,978) $ (26,231) $ 26,098 Net earnings 0 0 3,646 0 0 3,646 Unrealized foreign currency translation gains (losses) during period, net of income taxes 0 0 0 151 0 151 Unrealized gains (losses) on fixed maturity securities during period, net of income taxes and reclassification adjustments 0 0 0 (1,833) 0 (1,833) Unrealized gains (losses) on derivatives during period, net of income taxes 0 0 0 7 0 7 Effect of changes in discount rate assumptions during period, net of income taxes 0 0 0 6,029 0 6,029 Pension liability adjustment during period, net of income taxes 0 0 0 76 0 76 Dividends to shareholders (1) ($2.35 per share) 0 0 (1,241) 0 0 (1,241) Exercise of stock options 0 7 0 0 0 7 Share-based compensation 0 76 0 0 0 76 Purchases of treasury stock 0 0 0 0 (3,606) (3,606) Treasury stock reissued 0 47 0 0 33 80 Balance at December 31, 2025 $ 136 $ 3,024 $ 54,682 $ 1,452 $ (29,804) $ 29,490 (1) Dividends to shareholders are recorded in the period in which they are declared.
Net premium is calculated as gross premium multiplied by the net premium ratio (NPR) and represents the portion of gross premium required to provide for benefits and expenses. Benefits are recorded as an expense when they are incurred. An LFPB is recorded when premiums are recognized using the net premium method.
Net premium is calculated as gross premium multiplied by the net premium ratio (NPR) and represents the portion of gross premium required to provide for benefits and expenses. Benefits are recorded as an expense when they are incurred and LFPB is recorded when premiums are recognized using the net premium method.
The Company's maximum loss is limited to its original investment and, in certain cases, to any unfunded commitment held in the VIE. Neither the Company nor any of its creditors have the ability to obtain the underlying collateral, nor does the Company have control over the instruments held in the VIEs, unless there is an event of default.
The Company's maximum loss is limited to its original investment and, in certain cases, to any unfunded commitment held in the VIE. Neither the Company nor any of its creditors have the ability to obtain the underlying collateral, nor does the Company have control over the instruments held in VIEs, unless there is an event of default.
Other investments include policy loans, limited partnerships, real estate owned (REO), and short-term investments with maturities at the time of purchase of one year or less, but greater than 90 days. Limited partnerships are accounted for using the equity method of accounting.
Other Investments Other investments include limited partnerships, real estate owned (REO), short-term investments with maturities at the time of purchase of one year or less, but greater than 90 days, and policy loans. Limited partnerships are accounted for using the equity method of accounting.
The credit allowance for held-to-maturity securities and loan receivables is estimated using a probability-of-default (PD) / loss-given-default (LGD) method, discounted for the time value of money. For held-to-maturity securities, available-for-sale securities and loan receivables, the Company includes the change in present value due to the passage of time in the change in the allowance for credit losses.
The allowance for credit losses for held-to-maturity securities and loan receivables is estimated using a probability-of-default (PD) / loss-given-default (LGD) method, discounted for the time value of money. For held-to-maturity securities, available-for-sale securities, and loan receivables, the Company includes the change in present value due to the passage of time in the change in the allowance for credit losses.
The following table presents carrying value and balance sheet caption in which the assets and liabilities of consolidated VIEs are reported as of December 31.
The following table presents the carrying value and balance sheet caption in which the assets and liabilities of consolidated VIEs are reported as of December 31.
Notes payable The fair values of the Company's publicly issued notes payable are determined by utilizing available sources of observable inputs from third-party pricing vendors and are classified as Level 2. The Company's private placement notes payable are valued using the same internal models that the Company uses for its yen-denominated and U.S. dollar-denominated private placement investment portfolio.
Notes payable The fair values of the Company's publicly issued notes payable are determined by utilizing available sources of observable inputs from third-party pricing vendors and are classified as Level 2. The Company's private placement notes payable are valued using the same internal models that the Company uses for its Japanese yen-denominated and U.S. dollar-denominated private placement investment portfolio.
The combination of purchasing the put option and selling the call option results in no net premium being paid (i.e. a costless or zero-cost collar). From time to time, the Company may also enter into foreign currency forwards and options to hedge the currency risk associated with the net investment in Aflac Japan.
The combination of purchasing the put option and selling the call option results in no net premium being paid (i.e. a costless or zero-cost collar). From time to time, the Company may also enter into foreign currency forwards and options to hedge the foreign currency exchange risk associated with the net investment in Aflac Japan.
The Company discontinues hedge accounting prospectively when (1) it is determined that the derivative is no longer highly effective in offsetting changes in the estimated cash flows or fair value of a hedged item; (2) the derivative is de-designated as a hedging instrument; or (3) the derivative expires or is sold, terminated or exercised.
Hedge Accounting Termination The Company discontinues hedge accounting prospectively when (1) it is determined that the derivative is no longer highly effective in offsetting changes in the estimated cash flows or fair value of a hedged item; (2) the derivative is de-designated as a hedging instrument; or (3) the derivative expires or is sold, terminated or exercised.
In the option transactions, the Company may use a combination of foreign currency options to protect expected future cash flows by simultaneously purchasing yen put options (options that protect against a weakening yen) and selling yen call options (options that limit participation in a strengthening yen). The combination of these two actions create a zero-cost collar.
In the option transactions, the Company may use a combination of foreign currency options to protect expected future cash flows by simultaneously purchasing Japanese yen put options (options that protect against a weakening Japanese yen) and selling Japanese yen call options (options that limit participation in a strengthening Japanese yen). The combination of these two actions create a zero-cost collar.
The most significant items on the Company's balance sheet that involve a greater degree of accounting estimates and actuarial determinations subject to changes in the future are the valuation of investments and derivatives, deferred policy acquisition costs (DAC), liabilities for future policy benefits and income taxes.
The most significant items on the Company's balance sheet that involve a greater degree of accounting estimates and actuarial determinations subject to changes in the future are the valuation of investments and derivatives, deferred policy acquisition costs (DAC), liabilities for future policy benefits (LFPB) and income taxes.
Discount rates used to calculate net premiums are locked in at policy inception and represent the basis to recognize interest expense accreted on insurance reserves in benefits and claims, excluding reserve remeasurement in the consolidated statements of earnings.
Discount rates used to calculate net premiums are locked in at policy inception and represent the basis to recognize interest expense accreted on insurance reserves included in benefits and claims, excluding reserve remeasurement in the consolidated statements of earnings.
Discount rates used to calculate net premiums are locked in at policy inception and represent the basis to recognize interest expense accreted on insurance reserves in benefits and claims, excluding reserve remeasurement in the consolidated statements of earnings.
Discount rates used to calculate net premiums are locked in at policy inception and represent the basis to recognize interest expense accreted on insurance reserves included in benefits and claims, excluding reserve remeasurement in the consolidated statements of earnings.
Financial Statements and Supplementary Data These models are discounted cash flow (DCF) valuation models but also use information from related markets, specifically public bond markets and the credit default swap (CDS) market, to estimate expected cash flows.
Financial Statements and Supplementary Data These models are discounted cash flow valuation models but also use information from related markets, specifically public bond markets and the credit default swap (CDS) market, to estimate expected cash flows.
The locked-in interest accretion rate utilized for accretion of interest expense on insurance reserves is the original discount rate used at contract issue date. Advertising expense is reported as incurred in insurance and other expenses in the consolidated statements of earnings.
The locked-in interest accretion rate utilized for accretion of interest expense on insurance reserves is the original discount rate used at contract issue date. Advertising expense is reported as incurred and included in insurance and other expenses in the consolidated statements of earnings.
In cases where a credit curve cannot be developed from market information for the specific issuer, the valuation methodology takes into consideration other market observable inputs, including: • the most appropriate comparable security(ies) of a guarantor and/or parent • CDS spreads of a guarantor and/or parent • bonds of comparable issuers with similar characteristics such as rating, geography, or sector • CDS spreads of an appropriate index or of comparable issuers with similar characteristics such as rating, geography, or sector • bond indices that are comparative in rating, industry, maturity, and region. 136 Item 8.
In cases where a credit curve cannot be developed from market information for the specific issuer, the valuation methodology takes into consideration other market observable inputs, including: • the most appropriate comparable security(ies) of a guarantor and/or parent • CDS spreads of a guarantor and/or parent • bonds of comparable issuers with similar characteristics such as rating, geography, or sector • CDS spreads of an appropriate index or of comparable issuers with similar characteristics such as rating, geography, or sector • bond indices that are comparative in rating, industry, maturity, and region. 138 Item 8.
Financial Statements and Supplementary Data Report of Independent Registered Public Accounting Firm To the Shareholders and Board of Directors Aflac Incorporated: Opinion on the Consolidated Financial Statements We have audited the accompanying consolidated balance sheets of Aflac Incorporated and subsidiaries (the Company) as of December 31, 2024 and 2023, the related consolidated statements of earnings, comprehensive income (loss), shareholders’ equity, and cash flows for each of the years in the three‑year period ended December 31, 2024, and the related notes and financial statement schedules II, III, and IV (collectively, the consolidated financial statements).
Financial Statements and Supplementary Data Report of Independent Registered Public Accounting Firm To the Shareholders and Board of Directors Aflac Incorporated: Opinion on the Consolidated Financial Statements We have audited the accompanying consolidated balance sheets of Aflac Incorporated and subsidiaries (the Company) as of December 31, 2025 and 2024, the related consolidated statements of earnings, comprehensive income (loss), shareholders’ equity, and cash flows for each of the years in the three‑year period ended December 31, 2025, and the related notes and financial statement schedules II, III, and IV (collectively, the consolidated financial statements).
In the purchased put transactions, Aflac Japan obtains the option to buy a fixed amount of yen and sell a corresponding amount of U.S. dollars at a specified future date. In the sold call transactions, Aflac Japan agrees to sell a fixed amount of yen and buy a corresponding amount of U.S. dollars at a specified future date.
In the purchased put transactions, Aflac Japan obtains the option to buy a fixed amount of Japanese yen and sell a corresponding amount of U.S. dollars at a specified future date. In the sold call transactions, Aflac Japan agrees to sell a fixed amount of Japanese yen and buy a corresponding amount of U.S. dollars at a specified future date.
In these forward transactions, the Company agrees with another party to buy a fixed amount of U.S. dollars and sell a corresponding amount of yen at a specified price at a specified future date.
In these forward transactions, the Company agrees with another party to buy a fixed amount of U.S. dollars and sell a corresponding amount of Japanese yen at a specified price at a specified future date.
If collateral posting agreements are not in place or the counterparty defaults on its collateral posting obligations, the counterparty risk associated with foreign currency forwards and foreign currency options is the risk that at expiry of the contract, the counterparty is unable to deliver the agreed upon amount of yen at the agreed upon price or delivery date, thus exposing the Company to additional unhedged exposure to U.S. dollars in the Aflac Japan investment portfolio.
If collateral posting agreements are not in place or the counterparty defaults on its collateral posting obligations, the counterparty risk associated with foreign currency forwards and foreign currency options is the risk that at expiry of the contract, the counterparty is unable to deliver the agreed upon amount of Japanese yen at the agreed upon price or delivery date, thus exposing the Company to additional unhedged exposure to U.S. dollars held in the Aflac Japan investment portfolio.
The Company also considers ratings from Nationally Recognized Statistical Rating Organizations (NRSROs), as well as the specific characteristics of the security it owns including seniority in the issuer's capital structure, covenant protections, or other relevant features. From these reviews, the Company evaluates the issuers' continued ability to service the Company's investment through payment of interest and principal. 111 Item 8.
The Company also considers ratings from Nationally Recognized Statistical Rating Organizations (NRSROs), as well as the specific characteristics of the security it owns including seniority in the issuer's capital structure, covenant protections, or other relevant features. From these reviews, the Company evaluates the issuers' continued ability to service the Company's investment through payment of interest and principal. 113 Item 8.
Financial Statements and Supplementary Data Report of Independent Registered Public Accounting Firm To the Shareholders and Board of Directors Aflac Incorporated: Opinion on Internal Control Over Financial Reporting We have audited Aflac Incorporated and subsidiaries’ (the Company) internal control over financial reporting as of December 31, 2024, based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission.
Financial Statements and Supplementary Data Report of Independent Registered Public Accounting Firm To the Shareholders and Board of Directors Aflac Incorporated: Opinion on Internal Control Over Financial Reporting We have audited Aflac Incorporated and subsidiaries’ (the Company) internal control over financial reporting as of December 31, 2025, based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission.
In forward transactions, Aflac Japan agrees with another party to buy a fixed amount of yen and sell a corresponding amount of U.S. dollars at a specified future date. The Company also uses one-sided foreign currency put options to mitigate the settlement risk on U.S. dollar-denominated assets related to extreme foreign currency rate changes.
In forward transactions, Aflac Japan agrees with another party to buy a fixed amount of Japanese yen and sell a corresponding amount of U.S. dollars at a specified future date. The Company also uses one-sided foreign currency put options to mitigate the settlement risk on U.S. dollar-denominated assets related to extreme foreign exchange rate changes.
These two types of inputs create three valuation hierarchy levels, as follows: • Level 1 valuations reflect quoted market prices for identical assets or liabilities in active markets. • Level 2 valuations reflect quoted market prices for similar assets or liabilities in an active market, quoted market prices for identical or similar assets or liabilities in non-active markets or model-derived valuations in which all significant valuation inputs are observable in active markets. • Level 3 valuations reflect valuations in which one or more of the significant inputs are not observable in an active market. 131 Item 8.
These two types of inputs create three valuation hierarchy levels, as follows: • Level 1 valuations reflect quoted market prices for identical assets or liabilities in active markets. • Level 2 valuations reflect quoted market prices for similar assets or liabilities in an active market, quoted market prices for identical or similar assets or liabilities in non-active markets or model-derived valuations in which all significant valuation inputs are observable in active markets. • Level 3 valuations reflect valuations in which one or more of the significant inputs are not observable in an active market. 133 Item 8.
The Company did not have any repurchase agreements or repurchase-to-maturity transactions outstanding as of December 31, 2024 and 2023, respectively. Certain fixed maturity securities can be pledged as collateral as part of derivative transactions, or pledged to support state deposit requirements on certain investment programs. For additional information regarding pledged securities related to derivative transactions, see Note 4.
The Company did not have any repurchase agreements or repurchase-to-maturity transactions outstanding as of December 31, 2025 and 2024, respectively. Certain fixed maturity securities can be pledged as collateral as part of derivative transactions, or pledged to support state deposit requirements on certain investment programs. For additional information regarding pledged securities related to derivative transactions, see Note 4.
KPMG LLP (PCAOB Firm ID 185), an independent registered public accounting firm, has issued an attestation report from the firm's location in Atlanta, Georgia on the effectiveness of internal control over the Company's financial reporting as of December 31, 2024, which is included herein. 79 Item 8.
KPMG LLP (PCAOB Firm ID 185), an independent registered public accounting firm, has issued an attestation report from the firm's location in Atlanta, Georgia on the effectiveness of internal control over the Company's financial reporting as of December 31, 2025, which is included herein. 79 Item 8.
In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2024 and 2023, and the results of its operations and its cash flows for each of the years in the three‑year period ended December 31, 2024, in conformity with U.S. generally accepted accounting principles.
In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2025 and 2024, and the results of its operations and its cash flows for each of the years in the three‑year period ended December 31, 2025, in conformity with U.S. generally accepted accounting principles.
For the periods presented, the Company has not adjusted the quotes or prices it obtains from the pricing services and brokers it uses. For internally generated valuations, the Company utilizes valuation models developed by a third-party pricing vendor. The models and associated processes and controls are executed by Company personnel. 135 Item 8.
For the periods presented, the Company has not adjusted the quotes or prices it obtains from the pricing services and brokers it uses. For internally generated valuations, the Company utilizes valuation models developed by a third-party pricing vendor. The models and associated processes and controls are executed by Company personnel. 137 Item 8.
Derivatives The Company uses derivative instruments to manage the risk associated with certain assets. However, the derivative instrument may not be classified in the same fair value hierarchy level as the associated asset. The significant inputs to pricing derivatives are generally observable in the market or can be derived by observable market data.
Derivatives The Company uses derivative instruments to manage the risk associated with certain assets. However, the derivative instrument may not be classified in the same fair value hierarchy level as the associated asset. The significant inputs to pricing derivatives are generally observable in the market or can be derived from observable market data.
GAAP total acquisition and operating expenses including the impact of interest cash flows from derivatives associated with notes payable but excluding any non-recurring or other items not associated with the normal course of the Company’s insurance operations and that do not reflect the Company’s underlying business performance.
GAAP total acquisition and operating expenses including the impact of interest from derivatives associated with notes payable but excluding any non-recurring or other items not associated with the normal course of the Company’s insurance operations and that do not reflect the Company’s underlying business performance.
The risk of counterparty default for the Company's foreign currency swaps, certain foreign currency forwards, and foreign currency options is mitigated by collateral posting requirements that counterparties to those transactions must meet. As of December 31, 2024, all of the Company's derivative agreement counterparties were investment grade.
The risk of counterparty default for the Company's foreign currency swaps, certain foreign currency forwards, and foreign currency options is mitigated by collateral posting requirements that counterparties to those transactions must meet. As of December 31, 2025, all of the Company's derivative agreement counterparties were investment grade.
For some products, policyholders can elect to modify product benefits, features, rights or coverages by exchanging a contract for a new contract or by amendment, endorsement, or rider to a contract, or by the election of a feature or coverage within a contract. These transactions are known as internal replacements.
Internal Replacements For some products, policyholders can elect to modify product benefits, features, rights or coverages. These transactions are known as internal replacements and can occur by: • exchanging a contract for a new contract, or • amendment, endorsement, or rider to a contract, or • the election of a feature or coverage within a contract.
Excluding these commitments, the Company does not provide financial or other support to consolidated VIEs. VIEs - Not Consolidated The table below reflects the carrying value and balance sheet caption in which the Company's investments in VIEs that are not consolidated are reported as of December 31.
Excluding these commitments, the Company does not provide financial or other support to consolidated VIEs. VIEs - Not Consolidated The table below presents the carrying value and balance sheet caption in which the Company's investments in VIEs that are not consolidated are reported as of December 31.
Commitments and Contingent Liabilities 182 Management's Annual Report on Internal Control Over Financial Reporting Management is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in Rule 13a-15(f) under the Exchange Act.
Commitments and Contingent Liabilities 186 Management's Annual Report on Internal Control Over Financial Reporting Management is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in Rule 13a-15(f) under the Exchange Act.
In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2024, based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission.
In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2025, based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission.
Transfers of funds from Aflac Japan: Aflac Japan makes payments to the Parent Company for management fees and remittances of earnings. Information on transfers for each of the years ended December 31 is shown below. See Note 13 for information concerning restrictions on transfers from Aflac Japan.
Transfers of funds from Aflac Japan: Aflac Japan makes payments to the Parent Company for management fees and remittances of earnings. Information on transfers for each of the years ended December 31 is shown below. See Note 14 for information concerning restrictions on transfers from Aflac Japan.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated balance sheets of the Company as of December 31, 2024 and 2023, the related consolidated statements of earnings, comprehensive income (loss), shareholders’ equity, and cash flows for each of the years in the three-year period ended December 31, 2024, and the related notes and financial statement schedules II, III, and IV (collectively, the consolidated financial statements), and our report dated February 26, 2025 expressed an unqualified opinion on those consolidated financial statements.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated balance sheets of the Company as of December 31, 2025 and 2024, the related consolidated statements of earnings, comprehensive income (loss), shareholders’ equity, and cash flows for each of the years in the three-year period ended December 31, 2025, and the related notes and financial statement schedules II, III, and IV (collectively, the consolidated financial statements), and our report dated February 25, 2026 expressed an unqualified opinion on those consolidated financial statements.
The Company’s methodology for estimating credit losses for available-for-sale securities utilizes the discounted cash flow model, based on past events, current market conditions and future economic conditions, as well as industry analysis and credit ratings of the securities.
The Company’s methodology for estimating an allowance for credit losses for available-for-sale securities utilizes the discounted cash flow model, based on past events, current market conditions and future economic conditions, as well as industry analysis and credit ratings of the securities.
Commercial mortgage and other loans include transitional real estate loans (TREs), commercial mortgage loans (CMLs), middle market loans (MMLs), and other loans. The Company's investments in TREs, CMLs, MMLs, and other loans are accounted for as loan receivables and are recorded at amortized cost on the acquisition date.
Commercial Mortgage and Other Loans Commercial mortgage and other loans include transitional real estate loans (TREs), commercial mortgage loans (CMLs), middle market loans (MMLs), and other loans. The Company's investments in TREs, CMLs, MMLs, and other loans are accounted for as loan receivables and are reported at amortized cost on the acquisition date.
GAAP total revenues excluding net investment gains and losses, except for amortized hedge costs/income related to foreign currency exposure management strategies and net interest cash flows from derivatives associated with certain investment strategies, which are reclassified from net investment gains (losses) and included in adjusted earnings as a component of adjusted net investment income when analyzing operations. ◦ Adjusted expenses are U.S.
GAAP total revenues excluding net investment gains and losses, except for amortized hedge costs/income related to foreign currency exposure management strategies and net interest income/expense from derivatives associated with certain investment strategies, which are reclassified from net investment gains (losses) and included in adjusted earnings as a component of adjusted net investment income when analyzing operations. ◦ Adjusted expenses are U.S.
There were no changes to the inputs, judgments or methods used to determine amortization amounts during 2024 and 2023. The Company updated the assumptions used to determine amortization using the same assumptions as those used for measuring the liability for future policy benefits during 2024 and 2023.
There were no changes to the inputs, judgments or methods used to determine amortization amounts during 2025 and 2024. The Company updated the assumptions used to determine amortization using the same assumptions as those used for measuring the liability for future policy benefits during 2025 and 2024.
The Company had no fair value hedges of interest rate risk as of December 31, 2024 and 2023; therefore, the amounts presented in the table below are related to previous fair value hedges of interest rate risk that were discontinued.
The Company had no fair value hedges of interest rate risk as of December 31, 2025 and 2024; therefore, the amounts presented in the table below are related to previous fair value hedges of interest rate risk that were discontinued.
For additional information on interest rate derivatives, see the Hedging Activities subsection of Item 7. MD&A and Note 4 of the Notes to the Consolidated Financial Statements. Credit Risk A significant portion of the Company's investment portfolio consists of debt securities and loans that expose it to the credit risk of the underlying issuer or borrower.
For additional information on interest rate derivatives, see the Hedging Activities subsection of Item 7. MD&A and Note 4 of the Notes to the Consolidated Financial Statements. Credit Risk A significant portion of the Company's investment portfolio consists of fixed maturity securities and loans that expose it to the credit risk of the underlying issuer or borrower.
If equity prices experienced a hypothetical broad-based decline of 10%, the fair value of the Company's equity investments would decline by approximately $80 million. 78 Item 8. Financial Statements and Supplementary Data ITEM 8.
If equity prices experienced a hypothetical broad-based decline of 10%, the fair value of the Company's equity investments would decline by approximately $89 million. 78 Item 8. Financial Statements and Supplementary Data ITEM 8.
The fair values for these private placements are deemed Level 2 valuations, as they are model-derived valuations that are generated internally with all significant valuation inputs being observed in active markets. The fair values of the Company's yen-denominated loans approximate their carrying values and are classified as Level 3. 141 Item 8.
The fair values for these private placements are deemed Level 2 valuations, as they are model-derived valuations that are generated internally with all significant valuation inputs being observed in active markets. The fair values of the Company's Japanese yen-denominated loans approximate their carrying values and are classified as Level 3. 143 Item 8.
We involved valuation professionals with specialized skills and knowledge to assist in assessing the estimated fair values of such securities, which included • Evaluating the Company's valuation methodology for compliance with U.S. generally accepted accounting principles • Assessing the Company's model developed by a third party to estimate the fair values of privately issued securities by determining that differences in fair values between that model and an internally developed model above pre-established tolerances, if any, were investigated by the Company • Evaluating, for a selection of privately issued securities, the comparable securities used to develop an issuer-specific credit curve by assessing whether the determination of comparable securities was reasonable based on the Company’s methodology and our knowledge of the securities and the markets for such securities • Developing an independent estimate of fair value for a selection of privately issued securities based on independently developed valuation models and assumptions, as applicable, using market data sources and comparing our independent estimate to the Company's fair value.
We involved valuation professionals with specialized skills and knowledge to assist in assessing the estimated fair values of such securities, which included • Evaluating the Company's valuation methodology for compliance with U.S. generally accepted accounting principles • Assessing the Company's model to estimate the fair values of privately issued securities by determining that differences in fair values between that model and an independent internal model above pre-established tolerances, if any, were investigated by the Company • Evaluating, for a selection of privately issued securities, the comparable securities used to develop an issuer-specific loss adjusted credit curve by assessing whether the determination of comparable securities was reasonable based on the Company’s methodology and our knowledge of the securities and the markets for such securities • Developing an independent estimate of fair value for a selection of privately issued securities based on independently developed valuation models and assumptions, as applicable, using market data sources and comparing our independent estimate to the Company's fair value.
The Company early adopted this guidance on July 1, 2023. The adoption of this guidance did not have a significant impact on the Company's financial position, results of operations or disclosures. 98 Item 8.
The Company early adopted this guidance on July 1, 2023. The adoption of this guidance did not have a significant impact on the Company's financial position, results of operations or disclosures. 100 Item 8.
The Company records deferred tax assets for tax positions taken based on its assessment of whether the tax position is more likely than not to be sustained upon examination by taxing authorities. A valuation allowance is established for deferred tax assets when it is more likely than not that an amount will not be realized. 97 Item 8.
The Company records deferred tax assets for tax positions taken based on its assessment of whether the tax position is more likely than not to be sustained upon examination by taxing authorities. A valuation allowance is established for deferred tax assets when it is more likely than not that an amount will not be realized.
Derivative Types Foreign currency forwards and options are executed for the Aflac Japan segment in order to hedge the currency risk on the carrying value of certain U.S. dollar-denominated investments. The average maturity of these forwards and options can change depending on factors such as market conditions and types of investments being held.
Foreign currency forwards and options are executed for Aflac Japan in order to hedge the foreign currency exchange risk on the carrying value of certain U.S. dollar-denominated investments. The average maturity of these forwards and options can change depending on factors such as market conditions and types of investments being held.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company’s internal control over financial reporting as of December 31, 2024, based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission, and our report dated February 26, 2025 expressed an unqualified opinion on the effectiveness of the Company’s internal control over financial reporting.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company’s internal control over financial reporting as of December 31, 2025, based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission, and our report dated February 25, 2026 expressed an unqualified opinion on the effectiveness of the Company’s internal control over financial reporting.
As of December 31, 2024, the Company had commitments of approximately $1 million to fund future other loans. These commitments are contingent upon the availability of other loans that meet the Company's underwriting criteria.
As of December 31, 2025, the Company had commitments of approximately $1 million to fund future other loans. These commitments are contingent upon the availability of other loans that meet the Company's underwriting criteria.
In addition, the Company evaluates the specific issuer’s probability of default and expected recovery of its position in the event of default based on the underlying financial condition and assets of the borrower as well as seniority and/or security of other debt holders in the issuer when developing management’s best estimate of expected cash flows. 117 Item 8.
In addition, the Company evaluates the specific issuer’s probability of default and expected recovery of its position in the event of default based on the underlying financial condition and assets of the borrower as well as seniority and/or security of other debt holders in the issuer when developing management’s best estimate of expected cash flows.
Under the equity method of accounting, the Company reports its proportionate share of the investee's earnings or losses as a component of net investment income in its consolidated statements of earnings. The underlying investments held by the Company’s limited partnerships primarily consist of private equity and real estate.
Under the equity method of accounting, the Company reports its proportionate share of the investee's earnings or losses as a component of net investment income in the consolidated statements of earnings. The underlying investments held by the Company’s limited partnerships primarily consist of private equity and real estate. 92 Item 8.
If the credit-risk-related contingent features underlying these agreements had been triggered on December 31, 2024, the Company estimates that it would be required to post a maximum of $475 million of additional collateral to these derivative counterparties. The Company is generally allowed to sell or repledge collateral obtained from its derivative counterparties, although it does not typically exercise such rights.
If the credit-risk-related contingent features underlying these agreements had been triggered on December 31, 2025, the Company estimates that it would be required to post a maximum of $669 million of additional collateral to these derivative counterparties. The Company is generally allowed to sell or repledge collateral obtained from its derivative counterparties, although it does not typically exercise such rights.
For loans where the Company receives as collateral securities that the Company is not permitted to sell or repledge, the collateral is not reflected in the consolidated financial statements. 120 Item 8.
For loans where the Company receives as collateral securities that the Company is not permitted to sell or repledge, the collateral is not reflected in the consolidated financial statements. 93 Item 8.
If the Company determines that the embedded derivative is not clearly and closely related to the host contract, and a separate instrument with the same terms would qualify as a derivative instrument, the embedded derivative is separated from that contract, held at fair value, and reported with the host instrument in the consolidated balance sheets, with changes in fair value reported in earnings.
If the Company determines that the embedded derivative is not clearly and closely related to the host contract, and a separate instrument with the same terms would qualify as a derivative instrument, the embedded derivative is separated from that contract and reported at fair value with the host instrument in the consolidated balance sheets.
Based on the Company's evaluation under this framework, management has concluded that the Company's internal control over financial reporting was effective as of December 31, 2024.
Based on the Company's evaluation under this framework, management has concluded that the Company's internal control over financial reporting was effective as of December 31, 2025.
Based on an evaluation of its securities currently in an unrealized loss position, the Company has determined that those securities should not have an allowance for credit losses as of December 31, 2024. Refer to the Allowance for Credit Losses section below for additional information.
Based on an evaluation of its securities currently in an unrealized loss position, the Company has determined that those securities should not have an allowance for credit losses as of December 31, 2025. Refer to the Allowance for Credit Losses Methodology section below for additional information.
For additional information on the Company's investments and financial instruments, see Notes 1, 3 and 4. 144 Item 8. Financial Statements and Supplementary Data 6. DEFERRED POLICY ACQUISITION COSTS The following tables present a rollforward of deferred policy acquisition costs by reporting segment and disaggregated by product type for the years ended December 31. 2024 Aflac Japan Aflac U.S.
For additional information on the Company's investments and financial instruments, see Notes 1, 3 and 4. 146 Item 8. Financial Statements and Supplementary Data 6. DEFERRED POLICY ACQUISITION COSTS The following tables present a rollforward of deferred policy acquisition costs by reporting segment and disaggregated by product type for the years ended December 31. 2025 Aflac Japan Aflac U.S.
For example, if the current duration of a debt security is 10 years, then the fair value of that security will increase by approximately 10% if market interest rates decrease by 100 basis points, assuming all other factors remain constant.
For example, if the current duration of a fixed maturity security is 10 years, then the fair value of that security will increase by approximately 10% if market interest rates decrease by 100 basis points, assuming all other factors remain constant.
The underlying collateral assets and funding of these consolidated VIEs are generally static in nature. 119 Item 8. Financial Statements and Supplementary Data Investments in Unit Trust Structures The Company also utilizes unit trust structures in its Aflac Japan segment to invest in various asset classes, which include CMLs, MMLs, TREs, other loans and limited partnerships.
The underlying collateral assets and funding of these consolidated VIEs are generally static in nature. 121 Item 8. Financial Statements and Supplementary Data Investments in Unit Trust Structures The Company also utilizes unit trust structures in Aflac Japan to invest in various asset classes, which include CMLs, MMLs, TREs, other loans and limited partnerships.
The models are market standard DCF models and all associated processes and controls are executed by Company personnel. These models take into consideration any unique characteristics of the derivatives in determining the appropriate valuation methodology to estimate expected cash flows.
The models are market standard discounted cash flow models and all associated processes and controls are executed by Company personnel. These models take into consideration any unique characteristics of the derivatives in determining the appropriate valuation methodology to estimate expected cash flows.
Aflac Re recorded net earned premiums of $568 million in 2024, $258 million in 2023 and $1 million in 2022 related to these reinsurance transactions with Aflac Japan. These internal reinsurance transactions have no financial statement impact on a consolidated basis, except for the effect of foreign currency accounting. For additional information on these internal reinsurance transactions, see Note 8.
Aflac Re recorded net earned premiums of $692 million in 2025, $568 million in 2024 and $258 million in 2023 related to these reinsurance transactions with Aflac Japan. These internal reinsurance transactions have no financial statement impact on a consolidated basis, except for the effect of foreign currency accounting. For additional information on these internal reinsurance transactions, see Note 8.
Middle Market Loans MMLs are typically first lien senior secured cash flow loans to small to mid-size companies for working capital, refinancing, acquisition, and recapitalization. These loans are generally considered to be below investment grade. As of December 31, 2024, the Company had commitments of approximately $739 million to fund future MMLs.
Middle Market Loans MMLs are typically first lien senior secured cash flow loans to small to mid-size companies for working capital, refinancing, acquisition, and recapitalization. These loans are generally considered to be below investment grade. As of December 31, 2025, the Company had commitments of approximately $704 million to fund future MMLs.
Decreases in market yields generally improve the fair value of debt securities, while increases in market yields generally have a negative impact on the fair value of the Company's debt securities. However, the Company does not expect to realize a majority of any unrealized gains or losses.
Decreases in market yields generally improve the fair value of fixed maturity securities, while increases in market yields generally have a negative impact on the fair value of the Company's fixed maturity securities. However, the Company does not expect to realize a majority of any unrealized gains or losses.
In addition, many of the Company's largest holdings are yen-denominated, therefore strengthening of the yen can increase its position in dollars, and weakening of the yen can decrease its position in dollars. The Company's global investment guidelines establish concentration limits for its investment portfolios. 76 Item 7A.
In addition, many of the Company's largest holdings are Japanese yen-denominated, therefore strengthening of the Japanese yen can increase its position in U.S. dollars, and weakening of the Japanese yen can decrease its position in U.S. dollars. The Company's global investment guidelines establish concentration limits for its investment portfolios. 76 Item 7A.
The tables below summarize the Company's derivatives and securities lending transactions as of December 31, and as reflected in the tables, in accordance with U.S. GAAP, the Company's policy is to not offset these financial instruments in the consolidated balance sheets.
The tables below summarize the Company's derivatives and securities lending transactions as of December 31, and as reflected in the tables, in accordance with U.S. GAAP, the Company's policy is to not offset these financial instruments in the consolidated balance sheets. 129 Item 8.
Offsetting of Financial Assets and Derivative Assets 2024 Gross Amounts Not Offset in Balance Sheet (In millions) Gross Amount of Recognized Assets Gross Amount Offset in Balance Sheet Net Amount of Assets Presented in Balance Sheet Financial Instruments Securities Collateral Cash Collateral Received Net Amount Derivative assets: Derivative assets subject to a master netting agreement or offsetting arrangement OTC - bilateral $ 187 $ 0 $ 187 $ 0 $ (45) $ (135) $ 7 Total derivative assets subject to a master netting agreement or offsetting arrangement 187 0 187 0 (45) (135) 7 Derivative assets not subject to a master netting agreement or offsetting arrangement OTC - bilateral 53 53 53 Total derivative assets not subject to a master netting agreement or offsetting arrangement 53 53 53 Total derivative assets 240 0 240 0 (45) (135) 60 Securities lending and similar arrangements 2,001 0 2,001 0 0 (2,001) 0 Total $ 2,241 $ 0 $ 2,241 $ 0 $ (45) $ (2,136) $ 60 128 Item 8.
Financial Statements and Supplementary Data 2024 Gross Amounts Not Offset in Balance Sheet (In millions) Gross Amount of Recognized Assets Gross Amount Offset in Balance Sheet Net Amount of Assets Presented in Balance Sheet Financial Instruments Securities Collateral Cash Collateral Received Net Amount Derivative assets: Derivative assets subject to a master netting agreement or offsetting arrangement OTC - bilateral $ 187 $ 0 $ 187 $ 0 $ (45) $ (135) $ 7 Total derivative assets subject to a master netting agreement or offsetting arrangement 187 0 187 0 (45) (135) 7 Derivative assets not subject to a master netting agreement or offsetting arrangement OTC - bilateral 53 53 53 Total derivative assets not subject to a master netting agreement or offsetting arrangement 53 53 53 Total derivative assets 240 0 240 0 (45) (135) 60 Securities lending and similar arrangements 2,001 0 2,001 0 0 (2,001) 0 Total $ 2,241 $ 0 $ 2,241 $ 0 $ (45) $ (2,136) $ 60 131 Item 8.
The following table demonstrates the effect of foreign currency fluctuations by presenting the dollar values of the Company's yen-denominated assets and liabilities, and its consolidated yen-denominated net asset exposure at selected exchange rates as of December 31.
The following table demonstrates the effect of foreign currency fluctuations by presenting the dollar values of the Company's Japanese yen-denominated assets and liabilities, and its consolidated Japanese yen-denominated net asset exposure at selected foreign exchange rates as of December 31. U.S.
Goodwill is not amortized, but is tested for impairment at a level of a reporting unit at least annually, in the same reporting period each year. Goodwill is included in the other assets line item in the consolidated balance sheets and was $263 million at December 31, 2024, compared with $265 million at December 31, 2023.
Goodwill is not amortized, but is tested for impairment at a level of a reporting unit at least annually, in the same reporting period each year. Goodwill is included in the other assets line item in the consolidated balance sheets and was $260 million at December 31, 2025, compared with $263 million at December 31, 2024.
The Company monitors its investment portfolio on a quarterly basis utilizing a full valuation methodology, measuring price volatility, and sensitivity of the fair values of its investments to interest rate changes on the debt securities the Company owns.
The Company monitors its investment portfolio on a quarterly basis utilizing a full valuation methodology, measuring price volatility, and sensitivity of the fair values of its investments to interest rate changes on the fixed maturity securities the Company owns.
Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. /s/ KPMG LLP Atlanta, Georgia February 26, 2025 80 Item 8.
Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. /s/ KPMG LLP Atlanta, Georgia February 25, 2026 80 Item 8.
The LFPB is determined as the present value of expected future policy benefits to be paid to or on the behalf of policyholders and certain related expenses less the present value of expected future net premiums receivable under the Company’s insurance contracts, where expected future net premiums receivable are future gross premiums receivable under the contract multiplied by the NPR.
The LFPB is determined using the net level premium method as the present value of expected future policy benefits to be paid to or on the behalf of policyholders and certain related expenses less the present value of expected future net premiums receivable under the Company’s insurance contracts, where expected future net premiums receivable are future gross premiums receivable under the contract multiplied by the NPR.
The Company incorporates the assessment of the NRSROs in assigning credit ratings and incorporates the rating methodologies of its external managers in assigning loan ratings to portfolio holdings. The Company performs extensive internal assessments of the credit risks for all its portfolio holdings and potential new investments, which includes using analyses provided by the Company's 75 Item 7A.
The Company incorporates the assessment of the NRSROs in assigning credit ratings and incorporates the rating methodologies of its external managers in assigning loan ratings to portfolio holdings. The Company performs extensive internal assessments of the credit risks for all its portfolio holdings and potential new investments, which includes using analyses provided by the Company's specialist external managers.
(In years) 2024 2023 U.S. dollar-denominated debt securities 7 7 Policy benefits and related expenses to be paid in future years 8 8 Premiums to be received in future years on policies in force 6 6 The following table shows a comparison of average required interest rates for future policy benefits and investment yields, based on amortized cost, for the years ended December 31.
(In years) 2025 2024 U.S. dollar-denominated fixed maturity securities 7 7 Policy benefits and related expenses to be paid in future years 7 8 Premiums to be received in future years on policies in force 6 6 The following table shows a comparison of average required interest rates for future policy benefits and investment yields, based on amortized cost, for the years ended December 31.
The Company adopted this guidance for the annual period beginning January 1, 2024. The adoption of this guidance did not have an impact on the Company’s financial position or results of operations. See Note 2 for expanded disclosures required as a result of the amended guidance.
The Company adopted this guidance for the annual period beginning January 1, 2024, and interim periods beginning January 1, 2025. The adoption of this guidance did not have an impact on the Company’s financial position or results of operations. See Note 2 for expanded disclosures required as a result of the amended guidance.
The present value of expected future net premiums and the present value of expected future policy benefits are presented gross of internal and external ceded reinsurance. 146
The present value of expected future net premiums and the present value of expected future policy benefits are presented gross of internal and external ceded reinsurance. 148
Financial Statements and Supplementary Data The following tables present the pricing sources for the fair values of the Company's fixed maturity and equity securities as of December 31. 2024 (In millions) Quoted Prices in Active Markets for Identical Assets (Level 1) Significant Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) Total Fair Value Securities available-for-sale, carried at fair value: Fixed maturity securities: Government and agencies: Third-party pricing vendor $ 17,088 $ 446 $ 0 $ 17,534 Internal 0 312 0 312 Total government and agencies 17,088 758 0 17,846 Municipalities: Third-party pricing vendor 0 1,791 0 1,791 Internal 0 243 0 243 Total municipalities 0 2,034 0 2,034 Mortgage- and asset-backed securities: Third-party pricing vendor 0 2,352 0 2,352 Internal 0 55 37 92 Broker/other 0 0 1,119 1,119 Total mortgage- and asset-backed securities 0 2,407 1,156 3,563 Public utilities: Third-party pricing vendor 0 3,628 0 3,628 Internal 0 2,770 0 2,770 Broker/other 0 0 647 647 Total public utilities 0 6,398 647 7,045 Sovereign and supranational: Third-party pricing vendor 0 78 0 78 Internal 0 315 0 315 Broker/other 0 0 23 23 Total sovereign and supranational 0 393 23 416 Banks/financial institutions: Third-party pricing vendor 0 4,975 0 4,975 Internal 0 3,971 5 3,976 Broker/other 0 0 5 5 Total banks/financial institutions 0 8,946 10 8,956 Other corporate: Third-party pricing vendor 0 20,051 0 20,051 Internal 0 5,127 116 5,243 Broker/other 0 0 115 115 Total other corporate 0 25,178 231 25,409 Total securities available-for-sale $ 17,088 $ 46,114 $ 2,067 $ 65,269 Equity securities, carried at fair value: Third-party pricing vendor $ 639 $ 0 $ 0 $ 639 Internal 0 0 26 26 Broker/other 0 0 131 131 Total equity securities $ 639 $ 0 $ 157 $ 796 137 Item 8.
Financial Statements and Supplementary Data 2024 (In millions) Quoted Prices in Active Markets for Identical Assets (Level 1) Significant Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) Total Fair Value Securities available-for-sale, carried at fair value: Fixed maturity securities: Government and agencies: Third-party pricing vendor $ 17,088 $ 446 $ 0 $ 17,534 Internal 0 312 0 312 Total government and agencies 17,088 758 0 17,846 Municipalities: Third-party pricing vendor 0 1,791 0 1,791 Internal 0 243 0 243 Total municipalities 0 2,034 0 2,034 Mortgage- and asset-backed securities: Third-party pricing vendor 0 2,352 0 2,352 Internal 0 55 37 92 Broker/other 0 0 1,119 1,119 Total mortgage- and asset-backed securities 0 2,407 1,156 3,563 Public utilities: Third-party pricing vendor 0 3,628 0 3,628 Internal 0 2,770 0 2,770 Broker/other 0 0 647 647 Total public utilities 0 6,398 647 7,045 Sovereign and supranational: Third-party pricing vendor 0 78 0 78 Internal 0 315 0 315 Broker/other 0 0 23 23 Total sovereign and supranational 0 393 23 416 Banks/financial institutions: Third-party pricing vendor 0 4,975 0 4,975 Internal 0 3,971 5 3,976 Broker/other 0 0 5 5 Total banks/financial institutions 0 8,946 10 8,956 Other corporate: Third-party pricing vendor 0 20,051 0 20,051 Internal 0 5,127 116 5,243 Broker/other 0 0 115 115 Total other corporate 0 25,178 231 25,409 Total securities available-for-sale $ 17,088 $ 46,114 $ 2,067 $ 65,269 Equity securities, carried at fair value: Third-party pricing vendor $ 639 $ 0 $ 0 $ 639 Internal 0 0 26 26 Broker/other 0 0 131 131 Total equity securities $ 639 $ 0 $ 157 $ 796 141 Item 8.
Due to the complexity of the valuation models, subjective auditor judgment, and specialized valuation skills and knowledge were needed to evaluate the valuation models, the methodology used to estimate fair value and the Company's determination of the most appropriate comparable securities to develop an issuer-specific credit curve, when necessary.
Due to the complexity of the valuation model, subjective auditor judgment and specialized valuation skills and knowledge were needed to evaluate the valuation model, the methodology used to estimate fair value, and the Company's determination of the most appropriate comparable securities to develop an issuer-specific loss adjusted credit curve, when necessary.
Financial Statements and Supplementary Data Allowance for Credit Losses The Company calculates its allowance for credit losses for held-to-maturity securities, loan receivables and loan commitments by grouping assets with similar risk characteristics when there is not a specific expectation of a loss for an individual asset.
Held-to-maturity Securities, Loan Receivables, and Loan Commitments The Company calculates its allowance for credit losses for held-to-maturity securities, loan receivables and loan commitments by grouping assets with similar risk characteristics when there is not a specific expectation of a loss for an individual asset.

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