12 unchanged sentences
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:
−Removed: • difficult conditions in global capital markets and the economy, including inflation and the continued effects caused by COVID-19
+Added: • difficult conditions in global capital markets and the economy, including inflation
• defaults and credit downgrades of investments
7 unchanged sentences
• decline in creditworthiness of other financial institutions
−Removed: • concentration of the Company's investments in any particular single-issuer or sector
−Removed: • major public health issues, including COVID-19 and any resulting or coincidental economic effects, on the Company's business and financial results
• the Company's ability to attract and retain qualified sales associates, brokers, employees, and distribution partners
1 unchanged sentence
• ability to continue to develop and implement improvements in information technology systems and on successful execution of revenue growth and expense management initiatives
−Removed: • 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
+Added: • 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
• subsidiaries' ability to pay dividends to the Parent Company
5 unchanged sentences
• competitive environment and ability to anticipate and respond to market trends
−Removed: • catastrophic events, including, but not limited to, as a result of climate change, epidemics, pandemics (such as COVID-19), tornadoes, hurricanes, earthquakes, tsunamis, war or other military action, terrorism or other acts of violence, and damage incidental to such events
+Added: • 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
1 unchanged sentence
• changes in accounting standards
−Removed: • level and outcome of litigation
+Added: • level and outcome of litigation or regulatory inquiries
• allegations or determinations of worker misclassification in the United States
MD&A OVERVIEW
−Removed: MD&A is intended to inform the reader about matters affecting the financial condition and results of operations of Aflac Incorporated and its subsidiaries for the nine-month periods ended September 30, 2023 and 2022, respectively.
+Added: MD&A is intended to inform the reader about matters affecting the financial condition and results of operations of Aflac Incorporated and its subsidiaries for the three-month periods ended March 31, 2024 and 2023, respectively.
Results of operations for interim periods are not necessarily indicative of results for the entire year.
14 unchanged sentences
Aflac Incorporated (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.).
−Removed: 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 the U.S.
+Added: 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.
The Company's insurance business consists of two reporting segments:
7 unchanged sentences
(collectively, Aflac U.S.).
−Removed: The Parent Company, other operating business units that are not individually reportable, and business activities, including reinsurance activities, not included in Aflac Japan or Aflac U.S.
−Removed: are included in Corporate and other.
−Removed: In 2022, the Company established Aflac Re Bermuda Ltd.
−Removed: (Aflac Re), a Bermuda domiciled insurer that reinsures certain policies issued by ALIJ.
−Removed: 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.
−Removed: Financial results from Aflac Re are included in Corporate and other.
+Added: The Parent Company, other operating business units that are not individually reportable, reinsurance activities, including internal reinsurance activity with Aflac Re Bermuda Ltd.
+Added: (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.
Performance Highlights
−Removed: Total revenues were $5.0 billion in the third quarter of 2023, compared with $4.7 billion in the third quarter of 2022.
−Removed: Net earnings were $1.6 billion, or $2.64 per diluted share in the third quarter of 2023, compared with $1.8 billion, or $2.82 per diluted share in the third quarter of 2022.
−Removed: Total revenues were $14.9 billion in the first nine months of 2023, compared with $15.2 billion in the first nine months of 2022.
−Removed: Net earnings were $4.4 billion, or $7.28 per diluted share in the first nine months of 2023, compared with $4.2 billion, or $6.57 per diluted share, in the first nine months of 2022.
−Removed: Results in the third quarter of 2023 included pretax net investment gains of $423 million, compared with pretax net investment gains of $199 million in the third quarter of 2022.
−Removed: Net investment gains in the third quarter of 2023 included an increase in credit loss allowances of $29 million;
+Added: Total revenues were $5.4 billion in the first three months of 2024, compared with $4.8 billion in the first three months of 2023, reflecting net investment gains.
+Added: Net earnings were $1.9 billion, or $3.25 per diluted share, in the first three months of 2024, compared with $1.2 billion, or $1.94 per diluted share, in the first three months of 2023.
+Added: Results in the first three months of 2024 included pretax net investment gains of $951 million, compared with pretax net investment gains of $123 million in the first three months of 2023.
+Added: Net investment gains in the first three months of 2024 included an increase in credit loss allowances of $1 million;
$703 million of net gains from certain derivative and foreign currency gains or losses;
1 unchanged sentence
and $173 million of net gains from sales and redemptions.
−Removed: Results in the first nine months of 2023 included pretax net investment gains of $1.1 billion, compared with pretax net investment gains of $885 million in the first nine months of 2022.
−Removed: Net investment gains in the first nine months of 2023 included an increase in credit loss allowances of $60 million;
−Removed: $1.0 billion of net gains from certain derivative and foreign currency gains or losses;
−Removed: $35 million of net gains on equity securities;
−Removed: and $105 million of net gains from sales and redemptions.
−Removed: The average yen/dollar exchange rate (1) for the three-month period ended September 30, 2023 was 144.97, or 5.4% weaker than the average yen/dollar exchange rate (1) of 137.08 for the same period in 2022.
−Removed: The average yen/dollar exchange rate (1) for the nine-month period ended September 30, 2023 was 138.38, or 8.5% weaker than the average yen/dollar exchange rate (1) of 126.65 for the same period in 2022.
−Removed: Adjusted earnings (2) in the third quarter of 2023 were $1.1 billion, or $1.84 per diluted share, compared with $910 million, or $1.44 per diluted share in the third quarter of 2022.
−Removed: The weaker yen/dollar exchange rate negatively impacted adjusted earnings per diluted share by $.06.
−Removed: Adjusted earnings (2) in the first nine months of 2023 were $3.0 billion, or $4.97 per diluted share, compared with $2.8 billion, or $4.35 per diluted share, in the first nine months of 2022.
+Added: The average yen/dollar exchange rate (1) for the three-month period ended March 31, 2024 was 148.67, or 11.0% weaker than the average yen/dollar exchange rate (1) of 132.30 for the same period in 2023.
+Added: Adjusted earnings (2) in the first three months of 2024 were $961 million, or $1.66 per diluted share, compared with $953 million, or $1.55 per diluted share, in the first three months of 2023.
The weaker yen/dollar exchange rate negatively impacted adjusted earnings per diluted share by $.08.
−Removed: Total investments and cash at September 30, 2023 were $111.3 billion, compared with $117.4 billion at December 31, 2022.
−Removed: In the first nine months of 2023, Aflac Incorporated repurchased $2.1 billion, or 30.2 million of its common shares.
−Removed: At September 30, 2023, the Company had 86.4 million remaining shares authorized for repurchase.
−Removed: Shareholders’ equity was $22.7 billion, or $38.63 per share, at September 30, 2023, compared with $20.1 billion, or $32.73 per share, at December 31, 2022.
−Removed: Shareholders’ equity at September 30, 2023 included a cumulative decrease of $866 million from the effect of changes in discount rate assumptions on insurance contracts, compared with a corresponding cumulative decrease of $2.1 billion at December 31, 2022, and a net unrealized loss on investment
−Removed: securities and derivatives of $427 million, compared with a net unrealized loss of $729 million at December 31, 2022.
−Removed: Shareholders’ equity at September 30, 2023 also included an unrealized foreign currency translation loss of $4.5 billion, compared with an unrealized foreign currency translation loss of $3.6 billion at December 31, 2022.
−Removed: The annualized return on average shareholders’ equity in the third quarter of 2023 was 29.1%.
−Removed: Shareholders’ equity excluding accumulated other comprehensive income (AOCI) (2) (adjusted book value) was $28.4 billion, or $48.44 per share at September 30, 2023, compared with $26.6 billion, or $43.18 per share, at December 31, 2022.
−Removed: The annualized adjusted return on equity (ROE) excluding foreign currency impact (2) in the third quarter of 2023 was 16.1%.
+Added: In the first three months of 2024, Aflac Incorporated repurchased $750 million, or 9.3 million of its common shares.
+Added: At March 31, 2024, the Company had 68.5 million remaining shares authorized for repurchase.
+Added: Shareholders’ equity was $23.5 billion, or $41.27 per share, at March 31, 2024, compared with $22.0 billion, or $38.00 per share, at December 31, 2023.
+Added: Shareholders’ equity at March 31, 2024 included a cumulative decrease of $1.5 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 $1.1 billion, compared with a net unrealized gain of $1.1 billion at December 31, 2023.
+Added: Shareholders’ equity at March 31, 2024 also included an unrealized foreign currency translation loss of $4.7 billion, compared with an unrealized foreign currency translation loss of $4.1 billion at December 31, 2023.
+Added: The annualized return on average shareholders’ equity in the first quarter of 2024 was 33.0%.
+Added: Shareholders’ equity excluding accumulated other comprehensive income (AOCI) (2) (adjusted book value) was $28.6 billion, or $50.22 per share at March 31, 2024, compared with $27.5 billion, or $47.55 per share, at December 31, 2023.
+Added: The annualized adjusted return on equity (ROE) excluding foreign currency impact (2) in the first quarter of 2024 was 14.3%.
dollar exchange rates are based on the published MUFG Bank, Ltd.
23 unchanged sentences
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.
−Removed: The adjustments to both revenues and expenses account for certain items that cannot be predicted or that are outside management’s control.
+Added: The adjustments to both revenues and expenses account for certain items that are outside of management’s control because they tend to be driven by general economic conditions and events or are related to infrequent activities not directly associated with insurance operations.
Adjusted revenues are U.S.
1 unchanged sentence
Adjusted expenses are U.S.
−Removed: GAAP total acquisition and operating expenses including the impact of interest cash flows from derivatives associated with notes payable but excluding any nonrecurring 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.
+Added: 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.
Management uses adjusted earnings and adjusted earnings per diluted share to evaluate the financial performance of the Company’s insurance operations on a consolidated basis and believes that a presentation of these financial measures is vitally important to an understanding of the underlying profitability drivers and trends of the Company’s insurance business.
1 unchanged sentence
GAAP financial measures for adjusted earnings and adjusted earnings per share (basic or diluted) are net earnings and net earnings per share, respectively.
−Removed: • Adjusted net investment gains and losses are net investment gains and losses adjusted for i) amortized hedge cost/income related to foreign currency exposure management strategies and certain derivative activity, ii) net interest cash flows from foreign currency and interest rate derivatives associated with certain investment
−Removed: strategies, which are both reclassified to net investment income, and iii) the impact of interest cash flows from derivatives associated with notes payable, which is reclassified to interest expense as a component of total adjusted expenses.
+Added: • Adjusted net investment gains and losses are net investment gains and losses adjusted for i) amortized hedge cost/income related to foreign currency exposure management strategies and certain derivative activity, ii) net interest income/expense from foreign currency and interest rate derivatives associated with certain investment strategies, which are both reclassified to net investment income, and iii) the impact of interest from derivatives associated with notes payable, which is reclassified to interest expense as a component of total adjusted expenses.
The Company considers adjusted net investment gains and losses important as it represents the remainder amount that is considered outside management’s control, while excluding the components that are within management’s control and are accordingly reclassified to net investment income and interest expense.
2 unchanged sentences
• 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.
−Removed: These amortized hedge costs/ income are estimated at the inception of the derivatives based on the specific terms of each contract and are recognized on a straight-line basis over the term of the hedge.
+Added: These amortized hedge costs/income are estimated at the inception of the derivatives based on the
+Added: specific terms of each contract and are recognized on a straight-line basis over the contractual term of the derivative.
The Company believes that amortized hedge costs/income measure the periodic currency risk management costs/income related to hedging certain foreign currency exchange risks and are an important component of net investment income.
17 unchanged sentences
The most comparable U.S.
−Removed: GAAP financial measure for adjusted return on equity excluding foreign currency impact is ROE as determined using net earnings and average total shareholders’ equity.
+Added: GAAP financial measure for adjusted return on equity excluding foreign currency impact is return on average equity (ROE) as determined using net earnings and average total shareholders’ equity.
dollar-denominated investment income excluding foreign currency impact represents amounts excluding foreign currency impact on U.S.
9 unchanged sentences
Reconciliation of Net Earnings to Adjusted Earnings
−Removed: In Millions Per Diluted Share In Millions Per Diluted Share
−Removed: Three Months Ended September 30, Nine Months Ended September 30,
+Added: In Millions Per Diluted Share
+Added: Three Months Ended March 31,
2024 2023 2024 2023
1 unchanged sentence
Items impacting net earnings:
−Removed: Adjusted net investment
−Removed: (gains) losses (1)
+Added: Adjusted net investment (gains) losses (1)
(1,009) (209) (1.75) (.34)
Other and non-recurring (income) loss 2 0 .00 .00
−Removed: (3) (1) (.01) .00 (38) (1) (.06) .00
−Removed: Income tax (benefit) expense
−Removed: on items excluded from
−Removed: adjusted earning (2)
−Removed: 33 (648) .06 (1.03) 12 (501) .02 (.78)
+Added: Income tax (benefit) expense on items excluded from adjusted earning 89 (26) .15 (.04)
Adjusted earnings 961 953 1.66 1.55
−Removed: Current period foreign currency
−Removed: 33 N/A .06 N/A 100 N/A .17 N/A
−Removed: Adjusted earnings excluding
−Removed: current period foreign currency
−Removed: impact $ 1,128 $ 910 $ 1.90 $ 1.44 $ 3,101 $ 2,797 $ 5.14 $ 4.35
+Added: Current period foreign currency impact (2)
+Added: 44 N/A .08 N/A
+Added: Adjusted earnings excluding current period foreign currency impact $ 1,005 $ 953 $ 1.74 $ 1.55
(1) See reconciliation of net investment (gains) losses to adjusted net investment (gains) losses below.
−Removed: (2) Primarily reflects release of $695 in deferred taxes in the third quarter of 2022
(2) Prior period foreign currency impact reflected as “N/A” to isolate change for current period only.
−Removed: Prior-year amounts have been adjusted for the adoption of accounting guidance on January 1, 2023 related to accounting for long-duration insurance contracts.
Reconciling Items
1 unchanged sentence
Reconciliation of Net Investment (Gains) Losses to Adjusted Net Investment (Gains) Losses
−Removed: Three Months Ended September 30, Nine Months Ended September 30,
+Added: Three Months Ended March 31,
(In millions) 2024 2023
3 unchanged sentences
Amortized hedge income 28 29
−Removed: Net interest cash flows from derivatives associated with certain investment strategies
−Removed: (88) (26) (239) (36)
−Removed: Interest rate component of the change in fair value of foreign currency swaps on notes payable
+Added: Net interest income (expense) from derivatives associated with certain investment strategies
+Added: Impact of interest from derivatives associated with notes payable 8 12
Adjusted net investment (gains) losses $ (1,009) $ (209)
40 unchanged sentences
Additionally, these costs are driven by changes in interest rates subsequent to the issuance of the debt, and the Company considers these interest rate changes to represent economic conditions not directly associated with its insurance operations.
−Removed: On June 9, 2023, the Company amended the U.S.
−Removed: defined benefit plan to freeze future benefits under the plan for all participants effective January 1, 2024, which resulted in the Company recognizing a curtailment gain of approximately $49 million in the second quarter of 2023.
−Removed: The curtailment gain is both unusual and non-recurring and is unrelated to other recurring benefit costs associated with the plan;
−Removed: therefore, the Company has excluded the curtailment gain from adjusted earnings.
−Removed: Other items excluded from adjusted earnings also included an impairment for certain finite-lived intangible assets of approximately $11 million in the second quarter of 2023 as a result of the Company exiting the third-party administration business acquired in connection with the purchase of Aflac Benefit Solutions, Inc.
−Removed: (formerly known as Argus Dental & Vision, Inc.) in 2019.
−Removed: The impairment of these intangible assets are not related to the ongoing operations of the business and occur infrequently;
−Removed: therefore, the Company has excluded the impairment from adjusted earnings.
The Company's combined U.S.
−Removed: and Japanese effective income tax rate on pretax earnings was 13.1% for the three-month period ended September 30, 2023, compared with (34.0)% for the same period in 2022.
−Removed: The Company's combined U.S.
−Removed: and Japanese effective income tax rate on pretax earnings was 11.7% for the nine-month period ended September 30, 2023, compared with 2.5% for the same period in 2022.
+Added: and Japanese effective income tax rate on pretax earnings was 13.4% for the three-month period ended March 31, 2024, compared with 11.5% for the same period in 2023.
The combined effective tax rate differs from the U.S.
2 unchanged sentences
MD&A in the 2023 Annual Report.
−Removed: Aflac Japan holds certain U.S.
−Removed: dollar-denominated assets in a Delaware Statutory Trust (DST).
−Removed: These assets are mostly comprised of various U.S.
−Removed: dollar-denominated commercial mortgage loans.
−Removed: The functional currency of the DST for U.S.
−Removed: tax purposes was historically the Japanese yen.
−Removed: In the third quarter of 2022, the Company requested a change in tax accounting method through the Internal Revenue Service's automatic consent procedures to change the functional currency of the DST for U.S.
−Removed: tax purposes to the U.S.
−Removed: As a result, foreign currency translation gains or losses on assets held in the DST are no longer recognized for U.S.
−Removed: tax purposes.
−Removed: The Company historically recorded a deferred tax liability for foreign currency translation gains on the DST assets, which was released in the third quarter of 2022 as a result of the functional currency change.
−Removed: The change in functional currency resulted in the Company recognizing an income tax benefit of $695 million ($1.10 per basic and diluted share, respectively) in the third quarter of 2022.
The Company expects that its effective tax rate on adjusted earnings for future periods will be approximately 20%.
16 unchanged sentences
GAAP financial measures of book value and book value per diluted share, respectively.
−Removed: (In millions, except for share and per-share amounts) September 30,
−Removed: 2023 December 31,
+Added: (In millions, except for share and per-share amounts) March 31, 2024 December 31, 2023
GAAP book value $ 23,537 $ 21,985
17 unchanged sentences
Adjusted book value per common share $ 50.22 $ 47.55
−Removed: Prior-year amounts have been adjusted for the adoption of accounting guidance on January 1, 2023 related to accounting for long-duration insurance contracts.
Reconciliation of Return on Equity to Adjusted Return on Equity
−Removed: The following table is a reconciliation of items impacting adjusted return on equity to the most directly comparable U.S.
−Removed: GAAP financial measure of return on equity for the three-month period ended September 30, 2023.
+Added: (Excluding the Impact of Foreign Currency)
+Added: The following table is a reconciliation of items impacting adjusted return on equity excluding the impact of foreign currency to the most directly comparable U.S.
+Added: GAAP financial measure of return on equity for the three-month periods ended March 31.
GAAP return on equity - net earnings (1)
+Added: 33.0 % 23.8 %
Impact of excluding unrealized foreign currency translation gains (losses) (5.1) (3.2)
12 unchanged sentences
The impact is the difference of the restated adjusted earnings compared to reported adjusted earnings.
−Removed: Current period income is restated using the weighted average prior period exchange rate, which eliminates the foreign currency impact for the current period.
+Added: For comparative purposes, only current period income is restated using the weighted average prior period exchange rate, which eliminates the foreign currency impact for the current period.
This allows for equal comparison of this financial measure.
5 unchanged sentences
Aflac Japan is the principal contributor to consolidated earnings.
−Removed: 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.
−Removed: are included in Corporate and other.
+Added: 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.
Business in the 2023 Annual Report for a summary of each segment's products and distribution channels.
19 unchanged sentences
Aflac Japan Summary of Operating Results
−Removed: Three Months Ended September 30, Nine Months Ended September 30,
−Removed: (In millions) 2023 2022 2023 2022
+Added: In Dollars In Yen
+Added: Three Months Ended March 31, Three Months Ended March 31,
+Added: (In millions of dollars and billions of yen) 2024 2023 2024 2023
Net earned premiums $ 1,816 $ 2,170 ¥ 270 ¥ 287
−Removed: $ 1,973 $ 2,125 $ 6,207 $ 7,084
Net investment income:
2 unchanged sentences
Net investment income 655 669 97 89
−Removed: Amortized hedge costs related to certain foreign currency exposure management strategies 26 28 148 84
+Added: Amortized hedge costs related to certain foreign currency
+Added: exposure management strategies 6 58 1 8
Adjusted net investment income 648 611 97 81
13 unchanged sentences
Weighted-average yen/dollar exchange rate 148.67 132.30 — —
−Removed: In Dollars In Yen
−Removed: Percentage change over
−Removed: previous period:
−Removed: Three Months Ended September 30, Nine Months Ended September 30, Three Months Ended September 30, Nine Months Ended September 30,
−Removed: 2023 2022 2023 2022 2023 2022 2023 2022
+Added: Percentage change over previous period
Net earned premiums (16.3) % (17.3) % (6.0) % (5.9) %
−Removed: Adjusted net investment
−Removed: income 2.4 (13.1) (6.7) (8.6) 7.2 9.8 .9 8.1
+Added: Adjusted net investment income 6.1 (10.1) 19.3 2.4
Total adjusted revenues (11.4) (15.8) (.4) (4.1)
+Added: Total benefits and claims, net (16.2) (18.3) (5.9) (7.1)
+Added: Adjusted expenses (18.9) (17.3) (8.9) (5.8)
Pretax adjusted earnings 2.8 (9.4) 15.6 3.2
−Removed: (1) Includes a gain (loss) of $22 and $(41) for the three-month periods and $22 and $(42) for the nine-month periods ended September 30, 2023 and 2022, respectively, related to remeasurement of the deferred profit liability for limited-payment contracts.
−Removed: (2) Net interest cash flows from derivatives associated with certain investment strategies of $(79) and $(25) for the three-month periods and $(214) and $(37) for the nine-month periods ended September 30, 2023 and 2022, respectively, have been reclassified from net investment gains (losses) and included in adjusted earnings as a component of net investment income.
−Removed: Prior-year amounts have been adjusted for the adoption of accounting guidance on January 1, 2023 related to accounting for long-duration insurance contracts.
−Removed: For the three- and nine-month periods ended September 30, 2023, net earned premiums in yen terms decreased, as compared with the same periods in 2022, primarily due to limited-pay products reaching premium paid-up status and the internal reinsurance transaction with Aflac Re that occurred in January 2023, partially offset by an unlock of future deferred profit liability assumptions in the third quarter of 2023.
−Removed: Adjusted net investment income in yen terms increased in the three-month period ended September 30, 2023, as compared with the same period in 2022, primarily due to higher
−Removed: variable net investment income and floating rate income.
−Removed: For the three- and nine-month periods ended September 30, 2023, total benefits and claims in yen terms decreased, as compared with the same periods in 2022, primarily due to annual assumption updates in the third quarter of 2023 and 2022.
−Removed: For the three- and nine-month periods ended September 30, 2023, pretax adjusted earnings in yen terms increased, as compared with the same periods in 2022, primarily due to the decrease in total benefits and claims and a decrease in total adjusted expenses related to expense control efforts and the internal reinsurance transaction with Aflac Re that occurred in January 2023, offset by lower revenues.
−Removed: Annualized premiums in force decreased 4.4% to ¥1.26 trillion as of September 30, 2023, compared with ¥1.32 trillion as of September 30, 2022.
+Added: (1) Net interest income/expense from derivatives associated with certain investment strategies of $(79) and $(62) for the three-month periods ended March 31, 2024 and 2023, respectively, have been reclassified from net investment gains (losses) and included in adjusted earnings as a component of net investment income.
+Added: For the three-month period ended March 31, 2024, operating results in yen terms compared to the same period in the previous year were as follows:
+Added: • Net earned premiums decreased primarily due to approximately ¥8 billion related to the internal reinsurance transaction with Aflac Re established in the fourth quarter of 2023 and approximately ¥6 billion in limited-pay products reaching premium paid-up status.
+Added: • Adjusted net investment income increased primarily due to lower hedge costs of ¥7 billion, the weakening of the yen of ¥6 billion, higher variable net investment income of ¥5 billion and higher fixed rate income of ¥3 billion, partially offset by lower floating rate income due to the increase in loans on nonaccrual status.
+Added: • Total adjusted revenues decreased slightly primarily due to the decrease in net earned premiums mostly offset by the increase in adjusted net investment income.
+Added: • Total benefits and claims decreased primarily due to the internal reinsurance transaction with Aflac Re established in the fourth quarter of 2023.
+Added: • Total adjusted expenses decreased primarily due to the internal reinsurance transaction with Aflac Re established in the fourth quarter of 2023 as well as expense control efforts.
+Added: • Pretax adjusted earnings increased primarily due to the decrease in both total benefits and claims and total adjusted expenses.
+Added: Annualized premiums in force decreased 3.8% to ¥1.23 trillion as of March 31, 2024, compared with ¥1.28 trillion as of March 31, 2023.
The decrease in annualized premiums in force in yen was driven primarily by limited-pay products reaching premium paid-up status.
−Removed: Annualized premiums in force, translated into dollars at respective period-end exchange rates, were $8.4 billion at September 30, 2023, compared with $9.1 billion at September 30, 2022.
−Removed: As of September 30, 2023, Aflac Japan exceeded 23 million individual policies in force in Japan, with more than 14 million cancer policies in force in Japan.
+Added: Annualized premiums in force, translated into dollars at respective period-end exchange rates, were $8.1 billion at March 31, 2024, compared with $9.6 billion at March 31, 2023.
+Added: As of March 31, 2024, Aflac Japan exceeded 22 million individual policies in force in Japan, with more than 14 million cancer policies in force in Japan.
Aflac Japan's investment portfolios include U.S.
11 unchanged sentences
(Yen Operating Results)
−Removed: For the Periods Ended September 30,
+Added: For the Periods Ended March 31,
Including Foreign
1 unchanged sentence
Currency Changes
−Removed: Three Months Nine Months
−Removed: Three Months Nine Months
2024 2023 2024 2023
2 unchanged sentences
Pretax adjusted earnings 15.6 3.2 9.3 (3.0)
−Removed: Prior-year amounts have been adjusted for the adoption of accounting guidance on January 1, 2023 related to accounting for long-duration insurance contracts.
−Removed: The following table presents a summary of operating ratios in yen terms for Aflac Japan.
−Removed: Three Months Ended September 30, Nine Months Ended September 30,
+Added: The following table presents a summary of operating ratios in yen terms for Aflac Japan followed by a discussion of the significant drivers of changes in operating ratios in yen compared to the same period in the previous year.
+Added: Three Months Ended March 31,
Ratios to total adjusted revenues:
−Removed: 2023 2022 2023 2022
Total benefits and claims, net 49.2 % 52.1 %
9 unchanged sentences
Amortization of deferred policy acquisition costs 4.6 3.9
−Removed: Prior-year amounts have been adjusted for the adoption of accounting guidance on January 1, 2023 related to accounting for long-duration insurance contracts.
−Removed: For the three- and nine-month periods ended September 30, 2023, the total benefits and claims ratio to total premiums decreased, as compared with the same periods in 2022, primarily due to a decrease in the third sector benefit ratio from lower medical hospitalization claims related to deemed hospitalization modifications and an associated update to reserve assumptions in the third quarter of 2023, internal reinsurance activity in 2023, and the continued change in the mix of first and third sector business.
−Removed: The total adjusted expense ratio decreased in the three- and nine-month periods ended September 30, 2023, as compared with the same periods in 2022, primarily due to the decrease in total adjusted revenues and an offsetting decrease in total adjusted expenses due to expense control efforts and the internal reinsurance transaction with Aflac Re that occurred in January 2023.
−Removed: In total, the pretax adjusted profit margin increased in the three- and nine-month periods ended September 30, 2023, as compared with the same periods in 2022, primarily due to the lower benefit ratio, the lower expense ratio and an offsetting decrease in total adjusted revenues.
−Removed: The following table presents Aflac Japan's premium persistency on a 12-month rolling basis as of September 30.
+Added: For the three-month period ended March 31, 2024, the total benefits and claims to total premiums ratio was flat.
+Added: The total adjusted expense ratio decreased in the three-month period ended March 31, 2024 primarily due to the decrease in total adjusted expenses associated with the internal reinsurance transaction with Aflac Re established in the fourth quarter of 2023 as well as expense control efforts.
+Added: In total, the pretax adjusted profit margin increased in the three-month period ended March 31, 2024 primarily due to the lower expense ratio and a slight offsetting decrease in total adjusted revenues.
+Added: The following table presents Aflac Japan's premium persistency on a 12-month rolling basis as of March 31.
Premium persistency 93.4 % 93.9 %
Aflac Japan Sales
−Removed: The following table presents Aflac Japan’s new annualized premium sales for the periods ended September 30.
+Added: The following table presents Aflac Japan’s new annualized premium sales for the periods ended March 31.
In Dollars In Yen
−Removed: Three Months Nine Months
−Removed: Three Months Nine Months
(In millions of dollars and billions of yen) 2024 2023 2024 2023
1 unchanged sentence
Increase (decrease) over prior period (15.5) % (3.2) % (5.1) % 10.8 %
−Removed: The increase in new annualized premium sales on a yen basis in the third quarter and the first nine months of 2023 was primarily driven by sales of Aflac Japan's new cancer insurance product and updated first sector products, all of which were launched in the second half of 2022.
−Removed: Further, these products were launched at Dai-ichi Life and other financial institutions in January 2023 and at Japan Post Group in April 2023.
−Removed: The following table details the contributions to Aflac Japan's new annualized premium sales by major insurance product for the periods ended September 30.
−Removed: Three Months Nine Months
−Removed: 2023 2022 2023 2022
+Added: The decrease in new annualized premium sales on a yen basis in the first quarter of 2024 was primarily due to a decrease in the sales of first sector products.
+Added: The following table details the contributions to Aflac Japan's new annualized premium sales by major insurance product for the periods ended March 31.
Cancer 63.2 % 59.9 %
4 unchanged sentences
Traditional life (1)
−Removed: 6.1 7.7 6.4 8.6
−Removed: WAYS 6.0 .6 7.1 .7
Child endowment .3 .6
2 unchanged sentences
(1) Includes term and whole life
−Removed: The foundation of Aflac Japan's product portfolio has been, and continues to be, third sector products, which include cancer, medical, income support, and other products such as nursing care and work leave insurance.
+Added: The foundation of Aflac Japan's product portfolio has been, and continues to be, third sector products, which include cancer, medical, income support and other products.
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.
4 unchanged sentences
In April 2023, Japan Post Group began selling Aflac Japan's new cancer insurance product that was first launched in other channels in August 2022.
−Removed: For additional information, see the risk factor entitled "Sales of the Company's products and services are dependent on its ability to attract, retain and support a network of qualified sales associates, brokers and employees in the U.S.
−Removed: and sales associates and other distribution partners in Japan," in Item 1A.
−Removed: Risk Factors in the 2022 Annual Report.
Aflac Japan continues to promote digital and web-based sales to groups and use of its system that enables smart device-based insurance application by allowing the customer and an Aflac Japan operator to see the same screen through their smart devices.
Further, Aflac Japan continues to utilize its virtual sales tool that enables online consultations and policy applications to be completed entirely online.
−Removed: The following table details the contributions to Aflac Japan's new annualized premium sales by agency type for the three-month periods ended September 30.
+Added: The following table details the contributions to Aflac Japan's new annualized premium sales by agency type for the three-month periods ended March 31.
Independent corporate and individual 48.9 % 50.9 %
2 unchanged sentences
(1) Includes Japan Post Group, Dai-ichi Life and Daido Life
−Removed: During the three-month period ended September 30, 2023, Aflac Japan recruited 6 new sales agencies.
−Removed: At September 30, 2023, Aflac Japan was represented by approximately 7,100 sales agencies, with approximately 113,000 licensed sales associates employed by those agencies.
+Added: During the three-month period ended March 31, 2024, Aflac Japan recruited 12 new sales agencies.
+Added: At March 31, 2024, Aflac Japan was represented by approximately 6,900 sales agencies, with approximately 113,000 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.
−Removed: At September 30, 2023, Aflac Japan had agreements to sell its products at 360 banks, approximately 90% of the total number of banks in Japan.
+Added: At March 31, 2024, Aflac Japan had agreements to sell its products at 360 banks, approximately 90% of the total number of banks in Japan.
Aflac Japan Investments
3 unchanged sentences
dollar-denominated investments.
−Removed: Yen-denominated investments primarily consist of JGBs, public and private fixed maturity securities and public equity securities.
+Added: Yen-denominated investments primarily consist of Japan Government Bonds (JGBs), public and private fixed maturity securities and public equity securities.
Aflac Japan's U.S.
−Removed: dollar-denominated investments include fixed maturity investments and growth assets, including alternative investments in limited partnerships or similar investment vehicles.
−Removed: Aflac Japan has been investing in both publicly traded and privately originated U.S.
+Added: dollar-denominated investments include fixed maturity investments, loan receivables, and growth assets, including alternative investments in limited partnerships or similar investment vehicles.
+Added: 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.
1 unchanged sentence
The following table details the investment purchases for Aflac Japan.
−Removed: Three Months Ended September 30, Nine Months Ended September 30,
+Added: Three Months Ended March 31,
(In millions) 2024 2023
5 unchanged sentences
Equity securities 87 123
+Added: Commercial mortgage and other loans:
+Added: Other loans 0 77
Other investments 7 6
5 unchanged sentences
Collateralized loan obligations 27 0
−Removed: Equity securities 0 0 0 22
Commercial mortgage and other loans:
5 unchanged sentences
See the Investments section of this MD&A for further discussion of these investment programs, and see Notes 3 and 4 of the Notes to the Consolidated Financial Statements and Notes 1, 3 and 4 of the Notes to the Consolidated Financial Statements in the 2023 Annual Report for more information regarding loans and loan receivables.
−Removed: The following table presents the results of Aflac Japan’s investment yields for the periods ended September 30.
−Removed: Three Months Nine Months
−Removed: 2023 2022 2023 2022
+Added: The following table presents the results of Aflac Japan’s investment yields for the periods ended March 31.
Total purchases for the period (in millions) (1)
3 unchanged sentences
Return on average invested assets (3)
−Removed: 3.07 2.87 2.80 2.79
Portfolio book yield, including U.S.
5 unchanged sentences
(3) Net of investment expenses and amortized hedge costs, year-to-date number reflected on a quarterly average basis
−Removed: The decrease in the Aflac Japan new money yield in the three-month period ended September 30, 2023 was primarily due to higher allocations to lower yielding yen-denominated securities.
−Removed: The increase in the Aflac Japan new money yield in the nine-month period ended September 30, 2023 was primarily due to increases in U.S.
−Removed: interest rates.
+Added: The increase in the Aflac Japan new money yield in the three-month period ended March 31, 2024 was primarily due to higher allocations to higher yielding asset classes.
See Notes 3, 4 and 5 of the Notes to the Consolidated Financial Statements and the Investments and Hedging Activities sections of this MD&A for additional information on the Company's investments and hedging strategies.
4 unchanged sentences
Summary of Operating Results
−Removed: Three Months Ended September 30, Nine Months Ended September 30,
+Added: Three Months Ended March 31,
(In millions) 2024 2023
1 unchanged sentence
Adjusted net investment income (1)
−Removed: 209 185 609 563
Other income 18 35
3 unchanged sentences
Reserve remeasurement (gains) losses (30) (40)
−Removed: Total benefits and claims 510 616 1,805 1,940
+Added: Total benefits and claims, net 686 651
Adjusted expenses:
9 unchanged sentences
Total adjusted revenues 2.3 1.3
+Added: Total benefits and claims, net 5.4 (2.3)
+Added: Adjusted expenses .2 2.7
Pretax adjusted earnings 1.1 5.7
−Removed: (1) Net interest cash flows from derivatives associated with certain investment strategies of $(9) and $(1) for the three-month periods and $(24) and $1 for the nine-month periods ended September 30, 2023 and 2022, respectively, have been reclassified from net investment gains (losses) and included in adjusted earnings as a component of net investment income.
−Removed: Prior-year amounts have been adjusted for the adoption of accounting guidance on January 1, 2023 related to accounting for long-duration insurance contracts.
−Removed: For the three- and nine-month periods ended September 30, 2023, net earned premiums increased, as compared with the same periods in 2022, primarily due to the strong contribution from growth initiatives, including group life and disability, network dental and vision, and consumer markets businesses.
−Removed: Adjusted net investment income increased in the three- and nine-month periods ended September 30, 2023, as compared with the same periods in 2022, primarily due to higher floating rate income due to higher volumes and rates and higher variable net investment income.
−Removed: Pretax adjusted earnings increased in the three- and nine-month periods ended September 30, 2023, as compared with the same periods in 2022, primarily due to lower benefits and claims driven by reserve remeasurement gains related to assumption updates in the third quarter of 2023 and an increase in adjusted revenues, partially offset by higher adjusted expenses.
−Removed: Higher adjusted expenses reflect ongoing investments in the U.S.
−Removed: platform, as well as a $31 million write-off of certain capitalized software development costs in the third quarter of 2023.
−Removed: Annualized premiums in force increased 2.9% to $6.1 billion at September 30, 2023, compared with $5.9 billion at September 30, 2022.
+Added: (1) Net interest income/expense from derivatives associated with certain investment strategies of $(9) and $(7) for the three-month periods ended March 31, 2024 and 2023, respectively, have been reclassified from net investment gains (losses) and included in adjusted earnings as a component of net investment income.
+Added: For the three-month period ended March 31, 2024, operating results compared to the same period in the previous year were as follows:
+Added: • Net earned premiums increased primarily due to higher net earned premiums from growth initiatives including group life and disability, network dental and vision, and consumer markets businesses.
+Added: • Adjusted net investment income increased primarily due to higher variable income, higher short-term income and higher yielding asset classes.
+Added: • Total adjusted revenues increased primarily due to the increase in net earned premiums.
+Added: • Total benefits and claims increased primarily due to growth of group life and disability and lower remeasurement gains reflecting actual experience.
+Added: • Total adjusted expenses increased slightly primarily due to higher deferred policy acquisition costs amortization and an offsetting decrease in insurance and other expenses.
+Added: • Pretax adjusted earnings increased primarily due to higher net earned premiums.
+Added: Annualized premiums in force increased 3.1% to $6.2 billion at March 31, 2024, compared with $6.0 billion at March 31, 2023.
The following table presents a summary of operating ratios for Aflac U.S.
−Removed: Three Months Ended September 30, Nine Months Ended September 30,
+Added: followed by a discussion of the significant drivers of changes in operating ratios compared to the same period in the previous year.
+Added: Three Months Ended March 31,
Ratios to total adjusted revenues:
−Removed: 2023 2022 2023 2022
Total benefits and claims 40.4 % 39.2 %
9 unchanged sentences
Amortization of deferred policy acquisition costs 8.9 8.3
−Removed: Prior-year amounts have been adjusted for the adoption of accounting guidance on January 1, 2023 related to accounting for long-duration insurance contracts.
−Removed: For the three- and nine-month periods ended September 30, 2023, the total benefits and claims ratio to total premiums decreased, as compared with the same periods in 2022, primarily due to reserve remeasurement gains related to assumption updates in the third quarter of 2023, along with reserve remeasurement gains related to favorable experience.
−Removed: The total adjusted expense ratio increased in the three- and nine-month periods ended September 30, 2023, as compared with the same periods in 2022, primarily due to ongoing investments in the U.S.
−Removed: platform, as well as a $31 million write-off of certain capitalized software development costs in the third quarter of 2023.
−Removed: The Company expects that this adjusted expense ratio will improve over time as its group life and disability, network dental and vision and consumer markets businesses grow to scale and improve their profitability.
−Removed: In total, the pretax adjusted profit margin increased in the three- and nine-month periods ended September 30, 2023, as compared with the same periods in 2022, primarily due to the lower benefit ratio.
−Removed: For the full year of 2023, the Company expects the benefit ratio to be below the outlook range of 47% to 50% and the expense ratio to be slightly above the outlook range of 37% to 40%.
+Added: For the three-month period ended March 31, 2024, the total benefits and claims to total premiums ratio increased primarily due to lower remeasurement gains.
+Added: The total adjusted expense ratio decreased in the three-month period ended March 31, 2024 primarily due to higher total adjusted revenues.
+Added: In total, the pretax adjusted profit margin decreased slightly in the three-month period ended March 31, 2024 primarily due to the higher total benefits and claims to total adjusted revenues ratio.
The following table presents premium persistency for Aflac U.S.
−Removed: on a 12-month rolling basis as of September 30.
+Added: on a 12-month rolling basis as of March 31.
Premium persistency 78.7 % 77.9 %
The following table presents Aflac's U.S.
−Removed: new annualized premium sales for the periods ended September 30.
−Removed: Three Months Nine Months
+Added: new annualized premium sales for the periods ended March 31.
(In millions) 2024 2023
1 unchanged sentence
Increase (decrease) over prior period (5.2) % 5.3 %
−Removed: New annualized premium sales for accident insurance decreased 5.2%;
−Removed: disability sales increased 3.7%;
−Removed: critical care insurance sales (including cancer insurance) increased 10.2%;
−Removed: hospital indemnity insurance sales decreased 4.0%;
−Removed: dental/vision sales decreased 2.1%;
−Removed: and life sales increased 66.2% in the third quarter of 2023, compared with the third quarter of 2022.
−Removed: The increase in new annualized premium sales for Aflac U.S.
−Removed: in the third quarter of 2023 reflects continued improvement from investment in growth initiatives as well as productivity gains.
+Added: The decrease in new annualized premium sales for Aflac U.S.
+Added: in the first quarter of 2024 reflects continued strong underwriting discipline.
The following table details the contributions to Aflac's U.S.
−Removed: new annualized premium sales by major insurance product category for the periods ended September 30.
−Removed: Three Months Nine Months
−Removed: 2023 2022 2023 2022
+Added: new annualized premium sales by major insurance product category for the periods ended March 31.
Accident 22.5 % 23.5 %
1 unchanged sentence
Critical care (1)
−Removed: 18.6 18.1 19.8 19.9
Hospital indemnity 15.1 15.9
3 unchanged sentences
(1) Includes cancer, critical illness, and hospital intensive care products
−Removed: In the third quarter of 2023, the Aflac U.S.
+Added: In the first quarter of 2024, the Aflac U.S.
sales force included an average of approximately 5,800 U.S.
1 unchanged sentence
The Company believes that this average weekly producer equivalent metric allows sales management to monitor progress and needs, as well as serve as a leading indicator of future production capacity.
−Removed: In July 2023, the U.S.
+Added: As previously reported in the 2023 Annual Report, i n July 2023, the U.S.
Department of Labor, U.S.
−Removed: Treasury Department and U.S.
−Removed: Department of Health and Human Services issued a proposed joint rule that, as written, would impose significant limitations on the structure of benefits for hospital indemnity and other fixed indemnity plans, including those sold by Aflac U.S.
−Removed: The current benefit structure for these products allows the Company to vary the amount of benefits by the services or items received, severity of illness or injury, or any other characteristics particular to a course of treatment.
−Removed: If finalized in its current form, the proposed rule would eliminate Aflac U.S.’s ability to vary the amount of benefits provided by these products.
−Removed: In addition, the proposed rule also proposes to change the tax treatment of all fixed indemnity products.
−Removed: Under the proposal, if premiums are paid on a pretax basis (either by the employer or by employee pretax salary reduction), then the entire amount of the benefit would be taxable income regardless of the amount of the employee’s unreimbursed medical expenses.
−Removed: Currently, only the benefits received in excess of unreimbursed medical or medical-related costs are subject to tax.
−Removed: The comment period for the proposed rule closed on September 11, 2023.
−Removed: has filed comments opposing the proposed rule.
−Removed: The timing and substance of the final regulations, if any, is not known, and any such final rule could be the subject of litigation.
+Added: Department of the Treasury and U.S.
+Added: Department of Health and Human Services (the tri-agencies) issued a proposed joint rule that, as written, could have potentially imposed significant limitations on the structure of benefits for hospital indemnity and other fixed indemnity plans, including those sold by Aflac U.S.
+Added: However, on March 28, 2024, the tri-agencies released the final regulations requiring expanded disclosures to consumers for hospital and fixed indemnity insurance.
+Added: The final regulations, which become effective June 17, 2024, did not include the proposals relating to the regulation and tax treatment of hospital and fixed indemnity insurance.
+Added: As such, the implementation of the final regulations is not anticipated to have a material impact on Aflac U.S.
The level of investment income is affected by available cash flow from operations, the timing of investing the cash flow, yields on new investments, and other factors.
As part of the Company's portfolio management and asset allocation process, Aflac U.S.
−Removed: invests in fixed maturity investments and growth assets, including public equity securities and alternative investments in limited partnerships.
−Removed: has been investing in both publicly traded and privately originated investment-grade and below-investment-grade fixed maturity securities and loan receivables.
+Added: invests in fixed maturity investments, loan receivables, and growth assets, including public equity securities and alternative investments in limited partnerships.
+Added: invests in both publicly traded and privately originated investment-grade and below-investment-grade fixed maturity securities and loan receivables.
The following table details the investment purchases for Aflac U.S.
−Removed: Three Months Ended September 30, Nine Months Ended September 30,
+Added: Three Months Ended March 31,
(In millions) 2024 2023
6 unchanged sentences
Transitional real estate loans 7 14
−Removed: Commercial mortgage loans 19 0 19 0
Middle market loans 72 19
4 unchanged sentences
The following table presents the results of Aflac's U.S.
−Removed: investment yields for the periods ended September 30.
−Removed: Three Months Nine Months
−Removed: 2023 2022 2023 2022
+Added: investment yields for the periods ended March 31.
Total purchases for period (in millions) (1)
−Removed: $ 217 $ 427 $ 748 $ 1,394
New money yield (1),(2)
1 unchanged sentence
Return on average invested assets (3)
−Removed: 5.04 4.57 4.84 4.74
Portfolio book yield, end of period (1),(2)
4 unchanged sentences
(3) Net of investment expenses, year-to-date number reflected on a quarterly average basis
−Removed: The increase in the Aflac U.S.
−Removed: new money yield in the three- and nine-month periods ended September 30, 2023 was primarily due to increases in U.S.
−Removed: interest rates.
+Added: The decrease in the Aflac U.S.
+Added: new money yield in the three-month period ended March 31, 2024 was primarily due to higher allocations to lower yielding asset classes.
See Notes 3 and 5 of the Notes to the Consolidated Financial Statements and the Investments section of this MD&A for additional information on the Company's investments.
1 unchanged sentence
Changes in the pretax adjusted earnings of Corporate and other are primarily affected by internal reinsurance activity and net investment income.
−Removed: The following table presents a summary of results for Corporate and other.
+Added: The following table presents a summary of operating results for Corporate and other.
Corporate and Other Summary of Operating Results
−Removed: Three Months Ended September 30, Nine Months Ended September 30,
+Added: Three Months Ended March 31,
(In millions) 2024 2023
1 unchanged sentence
Net investment income (loss) (1)
−Removed: Amortized hedge income related to certain foreign currency management strategies 25 19 92 44
+Added: Amortized hedge income related to certain foreign currency
+Added: management strategies 28 29
Adjusted net investment income 79 36
1 unchanged sentence
Total adjusted revenues 247 129
+Added: Benefits and claims:
+Added: Benefits and claims, excluding reserve remeasurement 108 46
+Added: Reserve remeasurement (gains) losses (1) 0
Total benefits and claims, net 107 46
5 unchanged sentences
Pretax adjusted earnings $ (3) $ (7)
−Removed: (1) The change in value of federal historic rehabilitation and solar investments in partnerships of $64 and $19 for the three-month periods and $169 and $61 for the nine-month periods ended September 30, 2023, and 2022, respectively, is included as a reduction to net investment income.
−Removed: Tax credits on these investments of $63 and $19 for the three-month periods and $171 and $63 for the nine-month periods ended September 30, 2023, and 2022, respectively, have been recorded as an income tax benefit in the consolidated statements of earnings.
+Added: Percentage change over previous period:
+Added: Net earned premiums 81.3 % 122.0 %
+Added: Adjusted net investment income 119.4 140.0
+Added: Total adjusted revenues 91.5 74.3
+Added: Total benefits and claims, net 132.6 24.3
+Added: Total adjusted expenses 58.9 12.5
+Added: Pretax adjusted earnings 57.1 83.3
+Added: (1) The change in value of federal historic rehabilitation and solar investments in partnerships of $32 and $51 for the three-month periods ended March 31, 2024, and 2023, respectively, is included as a reduction to net investment income.
+Added: Tax credits on these investments of $33 and $52 for the three-month periods ended March 31, 2024, and 2023, respectively, have been recorded as an income tax benefit in the consolidated statements of earnings.
See Note 3 of the Notes to the Consolidated Financial Statements for additional information on these investments.
−Removed: Prior-year amounts have been adjusted for the adoption of accounting guidance on January 1, 2023 related to accounting for long-duration insurance contracts.
−Removed: For the three-month period ended September 30, 2023, total adjusted revenues increased, as compared with the same period in 2022, primarily due to higher total premiums associated with the internal reinsurance transaction with Aflac Re that occurred in January 2023, partially offset by a decrease in adjusted net investment income resulting from the impact of historic and solar tax credits.
−Removed: For the nine-month period ended September 30, 2023, total adjusted revenues increased, as compared with the same period in 2022, primarily due to higher total premiums associated with the internal reinsurance transaction with Aflac Re that occurred in January 2023 and an increase in adjusted net investment income, which was partially offset by the impact of historic and solar tax credits.
−Removed: Total benefits and adjusted expenses increased, as compared with the same periods in 2022, primarily due to higher benefits and claims and expenses associated with the internal reinsurance transaction with Aflac Re that occurred in January 2023.
−Removed: These results also reflect the impact of foreign currency on total net earned premiums and the corresponding benefits.
−Removed: Pretax adjusted earnings increased in the three- and nine-month periods ended September 30, 2023, compared with the same periods in 2022, primarily due to the increase in total adjusted revenue, which was partially offset by higher benefits and claims associated with the internal reinsurance transaction with Aflac Re that occurred in January 2023 and the increase in total adjusted expenses.
+Added: For the three-month period ended March 31, 2024, operating results compared to the same period in the previous year were as follows:
+Added: • Net earned premiums and total benefits and claims increased primarily due to higher reinsurance activity resulting from agreements established in the fourth quarter of 2023.
+Added: • Adjusted net investment income increased due to higher Aflac Re consolidated investment income of $23 million primarily due to a higher volume of assets as part of the reinsurance agreements established in the fourth quarter of 2023 and $19 million due to a lower volume of federal historic rehabilitation and solar tax credit investments, with offsetting tax benefits recognized as a corresponding lower income tax expense.
+Added: • Total adjusted revenues increased due to higher net earned premiums and higher adjusted net investment income.
+Added: • Total adjusted expenses increased primarily due to the higher reinsurance activity of $37 million as well as an increase in other general operating expenses.
+Added: • Pretax adjusted earnings increased due to higher total adjusted revenues partially offset by the higher total benefits and adjusted expenses.
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.
3 unchanged sentences
The Company’s investment strategy utilizes disciplined asset and liability management while seeking long-term risk-adjusted investment returns and the delivery of stable income within regulatory and capital objectives, and preserving shareholder value.
−Removed: 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, U.S.
+Added: 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.
3 unchanged sentences
invests in both publicly traded and privately originated investment-grade and below-investment-grade fixed maturity securities and loans.
−Removed: The Company is also a signatory to the Principles for Responsible Investment, a global framework for incorporating sustainability considerations into investment and ownership decisions.
For additional information concerning the Company's investments, see Notes 3, 4, and 5 of the Notes to the Consolidated Financial Statements.
1 unchanged sentence
Investment Securities by Segment
−Removed: September 30, 2023
+Added: March 31, 2024
(In millions) Aflac Japan Aflac U.S.
13 unchanged sentences
4,002 485 0 4,487
+Added: Other loans (1)
+Added: 178 82 15 275
Other investments:
6 unchanged sentences
Investment in affiliate (3)
+Added: 0 403 (403) 0
Total investments 84,347 16,064 6,207 106,618
20 unchanged sentences
4,095 436 0 4,531
+Added: Other loans (1)
+Added: 185 101 15 301
Other investments:
3 unchanged sentences
Limited partnerships 2,360 258 132 2,750
+Added: Real estate owned 180 47 0 227
Other 0 35 0 35
7 unchanged sentences
(3) For consolidated reporting, Aflac U.S.'s investment in Aflac Re is eliminated in Corporate and other
−Removed: In recent quarters, the Company has noted a trend indicating a gradual strain in the valuations of the commercial real estate market in the United States, with specific concerns regarding office space.
−Removed: The Company monitors this trend and its impact on the valuations of the Company’s transitional real estate loans (TREs), commercial mortgage loans (CMLs) and related underlying commercial properties.
−Removed: Within the commercial mortgage and other loans category, the Company has invested in a variety of loans including TREs and CMLs that are collateralized by commercial real estate, including some that are designed as office space.
−Removed: These investments are well diversified by geography and among property types.
−Removed: Further, the portfolio is well positioned with exposures concentrated in high quality underlying properties with institutional investors who are positioned to manage their assets during periods of market volatility.
−Removed: The Company has invested in certain TREs that are currently in default of interest or maturity payments.
−Removed: The Company continues to work with the borrowers to resolve these specific situations through loan continuance with potential modifications, or through the process of foreclosure or deed in lieu of foreclosure.
−Removed: During the third quarter of 2023, the Company took possession of commercial real estate properties securing defaulted loans through foreclosure and deed in lieu of foreclosure.
−Removed: Properties acquired by the Company through foreclosure and deed in lieu of foreclosure are reported as real estate owned (REO) in other investments in the consolidated balance sheet.
−Removed: The Company utilizes third-party asset managers to source, underwrite and manage each loan.
+Added: T he Company has invested in a variety of commercial mortgage loans (CMLs) and other loans including transitional real estate loans (TREs).
+Added: The Company's TRE and CML investments are collateralized by commercial real estate, including some office properties.
+Added: The Company considers these investments to be well diversified by geography and among property types.
+Added: Further, the Company believes that the portfolio is generally well positioned with exposures concentrated in high quality underlying properties with institutional investors who are experienced in managing their assets during periods of market volatility.
+Added: While generally resilient, the Company's investments in TREs and CMLs have been affected by conditions in the commercial real estate market, with a greater impact on mortgages secured by office properties.
+Added: The Company invested in certain TREs and CMLs that are currently in default of interest or maturity payments.
+Added: The Company works with the affected borrowers to resolve specific situations through loan continuance with potential modifications, or through the process of foreclosure or deed in lieu of foreclosure.
+Added: Since the third quarter of 2023, the Company has taken possession, through foreclosure or deed in lieu of foreclosure, of certain commercial real estate properties, which secured defaulted loans.
+Added: Properties acquired by the Company through foreclosure and deed in lieu of foreclosure are reported as real estate owned (REO) in other investments in the Company's consolidated balance sheets.
+Added: The Company utilizes third-party asset managers to source, underwrite and manage each loan, as well as any resulting REO.
The Company closely monitors the activities of these managers.
8 unchanged sentences
Composition of Fixed Maturity Securities by Credit Rating
−Removed: September 30, 2023 December 31, 2022
+Added: March 31, 2024 December 31, 2023
Value Amortized
5 unchanged sentences
Total 100.0 % 100.0 % 100.0 % 100.0 %
−Removed: As of September 30, 2023, 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.
−Removed: The following table presents the 10 largest unrealized loss positions in the Company's portfolio as of September 30, 2023.
+Added: As of March 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.
+Added: The following table presents the 10 largest unrealized loss positions in the Company's portfolio as of March 31, 2024.
(In millions) Credit
1 unchanged sentence
Value Unrealized Loss
−Removed: BBB $ 100 $ 55 $ (45)
−Removed: Prologis LP A 153 120 (33)
−Removed: JP Morgan Chase and Co.
−Removed: A 184 153 (31)
−Removed: Autostrade Per Litalia Spa BBB 132 103 (29)
KLM Royal Dutch Airlines B $ 128 $ 99 $ (29)
Urban Renaissance Agency A 161 132 (29)
+Added: JP Morgan Chase and Co.
+Added: A 206 183 (23)
+Added: Prologis LP A 152 130 (22)
Alphabet Inc.
AA 85 67 (18)
−Removed: Vasakronan AB A 114 92 (22)
Salesforce Inc A 94 77 (17)
+Added: BASF A 66 49 (17)
+Added: Nippon Prologis REIT Inc.
+Added: Citigroup Inc A 153 137 (16)
Banco de Chile A 132 116 (16)
6 unchanged sentences
Below-Investment-Grade Investments
−Removed: September 30, 2023
+Added: March 31, 2024
(In millions) Par
2 unchanged sentences
Investcorp Capital Limited $ 228 $ 228 $ 228 $ 0
−Removed: Pemex Project Funding Master Trust 201 201 201 0
Commerzbank 165 134 189 55
−Removed: KLM Royal Dutch Airlines 134 126 98 (28)
Telecom Italia SpA 132 132 171 39
−Removed: Howmet Aerospace Inc.
+Added: KLM Royal Dutch Airlines 132 128 99 (29)
IKB Deutsche Industriebank AG 86 44 71 27
2 unchanged sentences
Trinidad & Tobago 52 50 48 (2)
+Added: Hawaiian Electric Industries Inc 35 35 28 (7)
Commonwealth of the Bahamas 18 17 14 (3)
6 unchanged sentences
(2) Securities initially purchased as investment grade, but have subsequently been downgraded to below investment grade
−Removed: The Company invests in middle market loans primarily to U.S.
−Removed: corporate borrowers, most of which have below-investment-grade ratings.
−Removed: The objectives of this program include enhancing the yield on invested assets, achieving further diversification of credit risk, and mitigating the risk of rising interest rates and hedge costs through the acquisition of floating rate assets.
The Company maintains an allocation to higher yielding corporate bonds within the Aflac Japan and Aflac U.S.
2 unchanged sentences
All investments in this program must have a minimum rating at purchase of low BB using the Company's above described rating methodology and are managed by the Company's internal credit portfolio management team.
+Added: The Company invests in middle market loans primarily to U.S.
+Added: corporate borrowers, most of which have below-investment-grade ratings.
+Added: The objectives of this program include enhancing the yield on invested assets, achieving further diversification of credit risk, and mitigating the risk of rising interest rates and hedge costs through the acquisition of floating rate assets.
Fixed Maturity Securities by Sector
1 unchanged sentence
The following table shows the distribution of fixed maturities by sector classification.
−Removed: September 30, 2023
+Added: March 31, 2024
(In millions) Amortized Cost (1)
29 unchanged sentences
Investment Securities by Type of Issuance
−Removed: September 30, 2023 December 31, 2022
+Added: March 31, 2024 December 31, 2023
(In millions) Amortized
15 unchanged sentences
Reverse-Dual Currency Securities (1)
−Removed: (Amortized cost, in millions) September 30,
+Added: (Amortized cost, in millions) March 31,
2024 December 31,
31 unchanged sentences
The following table presents metrics related to Aflac Japan's U.S.
−Removed: dollar-denominated hedge program and the Parent Company's enterprise corporate hedging program, including associated amortized hedge costs/income, for the periods ended September 30.
+Added: dollar-denominated hedge program and the Parent Company's enterprise corporate hedging program, including associated amortized hedge costs/income, for the periods ended March 31.
See the Results of Operations section of this MD&A for the Company's definition of amortized hedge costs/income.
−Removed: Three Months Nine Months
−Removed: 2023 2022 2023 2022
FX forward (sell USD, buy yen) notional at end of period (in billions) (1)
−Removed: $0.0 $4.1 $0.0 $4.1
Amortized hedge income (cost) for period (in millions) $2 $(39)
FX option notional at the end of period (in billions) (1)
−Removed: $24.4 $13.5 $24.4 $13.5
Amortized hedge income (cost) for period (in millions) $(8) $(19)
1 unchanged sentence
FX forward (buy USD, sell yen) notional at end of period (in billions) (1)
−Removed: $2.4 $5.0 $2.4 $5.0
Amortized hedge income (cost) for period (in millions) $28 $31
FX option notional at the end of period (in billions) (1)
−Removed: $0.9 $1.7 $0.9 $1.7
Amortized hedge income (cost) for period (in millions) $0 $(2)
(1) Notional is reported net of any offsetting positions within Aflac Japan or the Parent Company, respectively.
−Removed: (2) Tenor based on period reporting date to settlement date
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.
10 unchanged sentences
dollar-denominated investments held by Aflac Japan.
−Removed: September 30,
2024 December 31,
8 unchanged sentences
Middle market loans (floating rate) 4,002 3,972 4,095 4,065
+Added: Other loans 110 108 112 111
Other investments 4,358 4,358 2,361 2,361
10 unchanged sentences
Dollar Program to mitigate against more extreme moves in foreign exchange and therefore support SMR.
−Removed: As of September 30, 2023, there were no collars in Aflac Japan, and none of the Company's foreign currency options hedging Aflac Japan's U.S.
+Added: As of March 31, 2024, some of the Company's foreign currency options hedging Aflac Japan's U.S.
dollar-denominated assets were in-the-money.
−Removed: As of September 30, 2023, the fair value of Aflac Japan's unhedged U.S.
−Removed: dollar-denominated portfolio was $1.3 billion (excluding certain U.S.
+Added: As of March 31, 2024, the fair value of Aflac Japan's unhedged U.S.
+Added: dollar-denominated portfolio was $338 million (excluding certain U.S.
dollar-denominated assets shown in the table above as a result of consolidation that have been economically converted to yen using derivatives).
2 unchanged sentences
dollar-denominated investments.
−Removed: Three Months Ended September 30, Nine Months Ended September 30,
+Added: Three Months Ended March 31,
(In millions) 2024 2023
2 unchanged sentences
The Company has designated certain yen-denominated liabilities and foreign currency forwards and options of the Parent Company as accounting hedges of its net investment in Aflac Japan.
−Removed: The Company's consolidated yen-denominated net asset position was partially hedged at $6.8 billion as of September 30, 2023, with hedging instruments comprised of $3.5 billion of yen-denominated debt and $3.3 billion of foreign currency forwards and options, compared with $11.6 billion as of December 31, 2022, with hedging instruments comprised of $4.0 billion of yen-denominated debt and $7.6 billion of foreign currency forwards and options .
+Added: The Company's consolidated yen-denominated net asset position was partially hedged at $6.6 billion as of March 31, 2024, with hedging instruments comprised of $4.3 billion of yen-denominated debt and $2.3 billion of foreign currency forwards and options, 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 makes its accounting designation of net investment hedge at the beginning of each quarter.
If the total of the designated Parent Company non-derivative and derivative notional is equal to or less than the Company's net investment in Aflac Japan, the hedge is deemed to be effective, and the currency exchange effect on the yen-denominated liabilities and the change in estimated fair value of the derivatives are reported in the unrealized foreign currency component of other comprehensive income.
−Removed: The Company's net investment hedge was effective during the three- and nine-month periods ended September 30, 2023 and 2022, respectively.
+Added: The Company's net investment hedge was effective during the three-month periods ended March 31, 2024 and 2023, respectively.
For additional information on the Company's net investment hedging strategy, see Note 4 of the Notes to the Consolidated Financial Statements.
7 unchanged sentences
The Company continually evaluates the program’s efficacy.
−Removed: As part of the Company’s internal reinsurance platform, Aflac Re enters into foreign currency forwards with the Parent Company to economically manage the currency mismatch between Aflac Re's assets, which are mostly denominated in U.S.
−Removed: dollars, and liabilities, which are mostly denominated in yen, in order to support and optimize BMA capital requirements.
−Removed: For additional information on the Company's internal reinsurance platform, see Note 8 of the Notes to the Consolidated Financial Statements and the Liquidity and Capital Resources section of this MD&A.
+Added: 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.
+Added: dollars, and liabilities, which are mostly denominated in yen, in order to support and optimize Bermuda Monetary Authority (BMA) capital requirements.
+Added: For additional information on the Company's internal reinsurance platform, see Note 8 of the Notes to the Consolidated Financial Statements and the Liquidity and Capital Resources section of this MD&A and Note 8 of the Notes to Consolidated Financial Statements in the 2023 Annual Report.
Interest Rate Risk Hedge Program
7 unchanged sentences
The following table presents deferred policy acquisition costs (DAC) by segment.
−Removed: (In millions) September 30,
+Added: (In millions) March 31,
2024 December 31, 2023 % Change
2 unchanged sentences
Total $ 8,819 $ 9,132 (3.4) %
−Removed: (1) Aflac Japan’s deferred policy acquisition costs increased 2.3% in yen during the nine months ended September 30, 2023.
−Removed: Prior-year amounts have been adjusted for the adoption of accounting guidance on January 1, 2023 related to accounting for long-duration insurance contracts.
+Added: (1) Aflac Japan’s deferred policy acquisition costs increased .5% in yen during the three months ended March 31, 2024.
See Note 6 of the Notes to the Consolidated Financial Statements for additional information on the Company's deferred policy acquisition costs.
1 unchanged sentence
The following table presents policy liabilities by segment.
−Removed: (In millions) September 30,
+Added: (In millions) March 31,
2024 December 31, 2023 % Change
5 unchanged sentences
Total $ 85,364 $ 91,599 (6.8) %
−Removed: (1) Aflac Japan’s policy liabilities decreased .7% in yen during the nine months ended September 30, 2023.
−Removed: (2) Elimination entry necessary due to the internal reinsurance transaction with Aflac Re and to recapture of a portion of policy liabilities ceded externally as a result of the reinsurance retrocession transaction.
−Removed: See Note 8 of the Notes to the Consolidated Financial Statements.
−Removed: Prior-year amounts have been adjusted for the adoption of accounting guidance on January 1, 2023 related to accounting for long-duration insurance contracts.
+Added: (1) Aflac Japan’s policy liabilities decreased 1.3% in yen during the three months ended March 31, 2024.
+Added: (2) Elimination entry necessary due to the internal reinsurance transactions with Aflac Re and to recapture of a portion of policy liabilities ceded externally as a result of the reinsurance retrocession transaction.
+Added: See Note 8 of the Notes to the Consolidated Financial Statements in the 2023 Annual Report.
See Note 7 of the Notes to the Consolidated Financial Statements for additional information on the Company's policy liabilities.
11 unchanged sentences
As a result, additional contributions are not expected to be required unless the balance is reduced due to payments made by the LIPPC to the policyholders of insolvent insurers.
−Removed: Accordingly, Aflac Japan did not recognize an expense for LIPPC assessments for the nine-month period ended September 30, 2023.
−Removed: Aflac Japan recognized an expense for LIPPC assessments of ¥.9 billion for the nine-month period ended September 30, 2022.
+Added: Accordingly, Aflac Japan did not recognize an expense for LIPPC assessments for the three-month periods ended March 31, 2024 and 2023.
Guaranty Fund Assessments
1 unchanged sentence
The amount of the guaranty fund assessment that an insurer is assessed is based on its proportionate share of premiums in that state.
−Removed: Guaranty fund assessments for the three- and nine-month periods ended September 30, 2023 and 2022 were immaterial.
+Added: Guaranty fund assessments for the three-month periods ended March 31, 2024 and 2023 were immaterial.
LIQUIDITY AND CAPITAL RESOURCES
13 unchanged sentences
The Company remains committed to prudent liquidity and capital management.
−Removed: At September 30, 2023, the Company held $5.5 billion in cash and cash equivalents for stress conditions, which includes the Parent Company's target minimum amount of $1.8 billion.
+Added: At March 31, 2024, the Company held $5.1 billion in cash and cash equivalents for stress conditions, which includes the Parent Company's target minimum amount of $1.8 billion.
Aflac Japan and Aflac U.S.
1 unchanged sentence
The primary uses of cash by the Parent Company are shareholder dividends, the repurchase of its common stock, interest on its outstanding indebtedness and operating expenses.
−Removed: The following table presents the amounts provided to the Parent Company for the nine-month periods ended September 30.
+Added: The following table presents the amounts provided to the Parent Company for the three-month periods ended March 31.
Liquidity Provided by Subsidiaries to Parent Company
2 unchanged sentences
Dividends declared or paid by subsidiaries 658 780
−Removed: The following table details Aflac Japan remittances, which are included in the totals above, for the nine-month periods ended September 30.
+Added: The following table details Aflac Japan remittances, which are included in the totals above, for the three-month periods ended March 31.
Aflac Japan Remittances
4 unchanged sentences
The Company intends to maintain higher than historical levels of liquidity and capital at the Parent Company for stress conditions and with the goals of addressing the Company’s hedge costs and related potential need for collateral and mitigating against long-term weakening of the Japanese yen.
−Removed: Further, the Company plans to continue to maintain a portfolio of unhedged U.S.
+Added: 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.
−Removed: See the Hedging Activity subsection of this MD&A for more information.
+Added: See the Hedging Activities subsection of this MD&A for additional information.
The Company believes that its balance of cash and cash equivalents and cash generated by operations will be sufficient to satisfy both its short-term and long-term cash requirements and plans for cash, including material cash requirements from known contractual obligations and returning capital to shareholders through share repurchases and dividends.
4 unchanged sentences
The Company believes outside sources for additional debt and equity capital, if needed, will continue to be available.
−Removed: Additionally, as of September 30, 2023, the Parent Company and Aflac had four lines of credit with third parties and eleven intercompany lines of credit.
−Removed: The Company was in compliance with all of the covenants of its notes payable and lines of credit at September 30, 2023.
+Added: The Company was in compliance with all of the covenants of its notes payable and lines of credit at March 31, 2024.
For additional information, see Note 9 of the Notes to the Consolidated Financial Statements.
−Removed: As part of enterprise-wide capital management and optimization, the Company also utilizes the newly-created intercompany reinsurance platform to execute internal reinsurance transactions with Aflac Re.
+Added: As part of enterprise-wide capital management and optimization, the Company also utilizes the intercompany reinsurance platform to execute internal reinsurance transactions with Aflac Re.
For additional information, see Note 8 of the Notes to the Consolidated Financial Statements.
1 unchanged sentence
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.
−Removed: As of September 30, 2023, the Company had no material letters of credit, standby letters of credit, guarantees or standby repurchase obligations.
+Added: As of March 31, 2024, the Company had no material letters of credit, standby letters of credit, guarantees or standby repurchase obligations.
The Company has not entered into transactions involving the transfer of financial assets with an obligation to repurchase financial assets that have been accounted for as a sale under applicable accounting standards, including securities lending transactions.
8 unchanged sentences
When the yen strengthens, translating yen into dollars causes more dollars to be reported.
−Removed: The following table summarizes consolidated cash flows by activity for the nine-month periods ended September 30.
+Added: The following table summarizes consolidated cash flows by activity for the three-month periods ended March 31.
(In millions) 2024 2023
15 unchanged sentences
However, the long-term nature of the Company's business and its strong cash flows provide the Company with the ability to minimize the effect of mismatched durations and/or yields identified by various asset adequacy analyses.
−Removed: time or when market opportunities arise, the Company disposes of selected fixed maturity securities that are available-for-sale to improve the duration matching of assets and liabilities, improve future investment yields, and/or re-balance its portfolio.
+Added: From time to time or when market opportunities arise, the Company disposes of selected fixed maturity securities that are available-for-sale to improve the duration matching of assets and liabilities, improve future investment yields, and/or re-balance its portfolio.
As a result, dispositions before maturity can vary significantly from year to year.
As part of its overall corporate strategy, the Company has committed $400 million to Aflac Ventures, LLC (Aflac Ventures), as opportunities emerge.
+Added: As of March 31, 2024, of the $400 million committed, approximately $282 million has been deployed.
Aflac Ventures is a subsidiary of Aflac Global Ventures, LLC (Aflac Global Ventures) which is reported in Corporate and other.
4 unchanged sentences
obtains low-cost funding from FHLB supported by acceptable forms of collateral pledged by Aflac U.S.
−Removed: In the first nine months of 2023, Aflac U.S.
+Added: In the first three months of 2024, Aflac U.S.
borrowed and repaid $111 million under this program.
−Removed: As of September 30, 2023, Aflac U.S.
+Added: As of March 31, 2024, Aflac U.S.
had outstanding borrowings of $652 million reported in its balance sheet.
2 unchanged sentences
Cash flows from financing activities consist primarily of share repurchases, dividends to shareholders and, from time to time, debt issuances and redemptions.
−Removed: Cash returned to shareholders through treasury stock purchases and dividends was $2.8 billion during the nine-month period ended September 30, 2023, compared with $2.5 billion during the nine-month period ended September 30, 2022.
−Removed: The following tables present a summary of treasury stock activity during the nine-month periods ended September 30.
+Added: In March 2024, the Parent Company issued five series of senior notes totaling ¥75.0 billion through a private placement.
+Added: The first series, which totaled ¥18.3 billion, bears interest at a fixed rate of 1.600% per annum, payable semi-annually, and will mature in March 2034.
+Added: The second series, which totaled ¥15.0 billion, bears interest at a fixed rate of 1.740% per annum, payable semi-annually, and will mature in March 2036.
+Added: The third series, which totaled ¥16.5 billion, bears interest at a fixed rate of 1.920% per annum, payable semi-annually, and will mature in March 2039.
+Added: The fourth series, which totaled ¥5.7 billion, bears interest at a fixed rate of 2.160% per annum, payable semi-annually, and will mature in March 2044.
+Added: The fifth series, which totaled ¥19.5 billion, bears interest at a fixed rate of 2.400% per annum, payable semi-annually, and will mature in March 2054.
+Added: These notes are redeemable at the Parent Company's option (i) in whole at any time or (ii) in part from time to time in an amount not less than 5% of the aggregate principal amount then outstanding of the notes to be redeemed.
+Added: In March 2024, the Parent Company issued three series of senior notes totaling ¥48.6 billion through a public debt offering under its U.S.
+Added: shelf registration statement.
+Added: The first series, which totaled ¥13.0 billion, bears interest at a fixed rate of 1.048% per annum, payable semi-annually, and will mature in March 2029.
+Added: The second series, which totaled ¥27.9 billion, bears interest at a fixed rate of 1.412% per annum, payable semi-annually, and will mature in March 2031.
+Added: The third series, which totaled ¥7.7 billion, bears interest at a fixed rate of 1.682% per annum, payable semi-annually, and will mature in March 2034.
+Added: These notes are redeemable at the Parent Company’s option at any time, in whole but not in part, upon the occurrence of certain changes affecting U.S.
+Added: taxation, as specified in the indenture governing the terms of the issuance.
+Added: In addition, the notes maturing in March 2029, March 2031 and March 2034 are redeemable at the Parent Company's option, in whole or in part from time to time, on or after December 21, 2028, December 31, 2030 and September 21, 2033, respectively, at a redemption price equal to the aggregate principal amount of the applicable series to be redeemed plus accrued and unpaid interest on the principal amount to be redeemed to, but excluding, the date of redemption.
+Added: Cash returned to shareholders through treasury stock purchases and dividends was $1.0 billion during the three-month period ended March 31, 2024, compared with $948 million during the three-month period ended March 31, 2023.
+Added: The following tables present a summary of treasury stock activity during the three-month periods ended March 31.
Treasury Stock Purchased
12 unchanged sentences
Number of shares issued 450 458
−Removed: As of September 30, 2023, a remaining balance of 86.4 million shares of the Company's common stock was available for purchase under share repurchase authorizations by its board of directors.
−Removed: Cash dividends paid to shareholders were $.42 per share in the third quarter of 2023, compared with $.40 per share in the third quarter of 2022.
−Removed: The following table presents the dividend activity for the nine-month periods ended September 30.
+Added: As of March 31, 2024, a remaining balance of 68.5 million shares of the Company's common stock was available for purchase under share repurchase authorizations by its board of directors.
+Added: Cash dividends paid to shareholders were $.50 per share in the first quarter of 2024, compared with $.42 per share in the first quarter of 2023.
+Added: The following table presents the dividend activity for the three-month periods ended March 31.
(In millions) 2024 2023
2 unchanged sentences
Total dividends to shareholders $ 288 $ 257
−Removed: In October 2023, the board of directors declared the fourth quarter cash dividend of $.42 per share, an increase of 5.0% compared with the same period in 2022.
−Removed: The dividend is payable on December 1, 2023 to shareholders of record at the close of business on November 15, 2023.
−Removed: I n November 2023, the board of directors also announced a 19.0% increase in the quarterly cash dividend, effective with the first quarter of 2024.
−Removed: The first quarter 2024 cash dividend of $.50 per share is payable on March 1, 2024 to shareholders of record at the close of business on February 21, 2024.
+Added: In April 2024, the board of directors declared the second quarter cash dividend of $.50 per share, an increase of 19.0% compared with the same period in 2023.
+Added: The dividend is payable on June 3, 2024 to shareholders of record at the close of business on May 22, 2024.
Regulatory Restrictions
5 unchanged sentences
therefore, the Company continues to evaluate alternatives for reducing this sensitivity, including the reduction of subsidiary dividends paid to the Parent Company and Parent Company capital contributions.
−Removed: In the event of a rapid change in market risk conditions causing SMR to decline, the Company has one senior unsecured revolving credit facility in the amount of ¥100 billion and a committed reinsurance facility in the amount of approximately ¥120 billion as a capital contingency plan.
+Added: In the event of a rapid change in market risk conditions causing SMR to decline, the Company has a senior unsecured revolving credit facility in the amount of ¥100 billion as a capital contingency plan.
Additionally, subject to market conditions, the Company expects that it could take action to enter into derivatives on unhedged U.S.
11 unchanged sentences
See Notes 3, 4 and 8 of the Notes to the Consolidated Financial Statements in the 2023 Annual Report for additional information on the Company's investment strategies, hedging activities, and reinsurance, respectively.
−Removed: As of September 30, 2023, Aflac Japan's SMR remains high and reflects a strong capital and surplus position.
+Added: As of March 31, 2024, Aflac Japan's SMR remains high and reflects a strong capital and surplus position.
The Company is committed to maintaining strong capital levels, consistent with maintaining current insurance financial strength and credit ratings.
1 unchanged sentence
The FSA continues to conduct field testing with insurance companies in Japan for the purpose of investigating the impact of the introduction of such regulations.
−Removed: Final specifications are expected to be decided in 2024, and a new capital regime to replace the current solvency regime is expected to be introduced in 2025.
−Removed: A life insurance company’s statutory capital and surplus is determined according to rules prescribed by the National Association of Insurance Commissioners (NAIC), as modified by the insurance department in the insurance company’s
−Removed: state of domicile.
+Added: Final specifications are expected to be decided in 2024, and a new capital regime to replace the current solvency regime is expected to be introduced in Aflac Japan's 2025 fiscal year.
+Added: A life insurance company’s statutory capital and surplus is determined according to rules prescribed by the National Association of Insurance Commissioners (NAIC), as modified by the insurance department in the insurance company’s state of domicile.
Statutory accounting rules are different from U.S.
4 unchanged sentences
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.
−Removed: As of September 30, 2023, Aflac U.S.'s combined RBC ratio remains high and reflects a strong capital and surplus position.
+Added: As of March 31, 2024, Aflac U.S.'s combined RBC ratio remains high and reflects a strong capital and surplus position.
Aflac, CAIC and TOIC are domiciled in Nebraska and are subject to its regulations.
2 unchanged sentences
Similar laws apply in New York, the domiciliary jurisdiction of Aflac New York.
−Removed: State insurance departments conduct periodic examinations of the books and records, financial reporting, policy filings and market conduct of insurance companies domiciled in their states, generally once every three to five years.
−Removed: Examinations are generally carried out in cooperation with the insurance departments of other states under guidelines promulgated by the NAIC.
−Removed: In 2024, the Nebraska Department of Insurance and the New York State Department of Financial Services will commence full-scope, risk-focused financial examinations on their respective state domiciled insurance entities.
−Removed: The examinations will cover the reporting period January 1, 2020 – December 31, 2023.
−Removed: Privacy and Cybersecurity Governance
−Removed: The Company’s Board of Directors has adopted an information security policy directing management to establish and operate a global information security program with the goals of monitoring existing and emerging threats and ensuring that the Company’s information assets and data, and the data of its customers, are appropriately protected from loss or theft.
−Removed: The Board has delegated oversight of the Company’s information security program to the Audit and Risk Committee.
−Removed: The Company’s senior officers, including its Global Chief Information Security Officer, 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, current and evolving threats, and recommendations for changes in the information security program.
−Removed: The global information security program also 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.
−Removed: This framework establishes a protocol to report certain incidents to the Global Chief Information Security Officer and other senior officers, with the goal of timely assessing such incidents, determining applicable disclosure requirements and communicating with the Audit and Risk Committee.
−Removed: The incident response plan directs the executive officers to report certain incidents immediately and directly to the Lead Non-Management Director.
+Added: Corporate and Other
+Added: Aflac Re is licensed by the BMA as a long-term insurer and is subject to the Bermuda Insurance Act of 1978 (Bermuda Insurance Act).
+Added: 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).
+Added: Aflac Re is also subject to a Minimum Margin of Solvency (MMS) related to its statutory financial statements.
+Added: The MMS is equal to the greater of $500,000, 1.5% of the total statutory assets, or 25% of ECR.
+Added: Under the Bermuda Insurance Act, Aflac Re is prohibited from paying dividends in an amount that exceeds 25% of the prior year's statutory capital and surplus without an affidavit stating that Aflac Re will continue to meet its solvency margin.
+Added: Further, Aflac Re may not reduce its total statutory capital by 15% or more without prior regulatory approval.
+Added: Additionally, Aflac Re is not permitted to pay any dividends that would cause Aflac Re to fail to meet its minimum capital requirements.
For information regarding commitments and contingent liabilities, see Note 13 of the Notes to the Consolidated Financial Statements.
15 unchanged sentences
Calculations of DAC and the liability for future policy benefits require the use of estimates based on actuarial valuation techniques.
−Removed: 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 September 30, 2023, and thus has a direct effect on net earnings and shareholders’ equity.
+Added: The application of these critical accounting estimates determines the values at which 93% of the Company's assets and 78% of its liabilities are reported as of March 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.
−Removed: On January 1, 2023, the Company adopted Accounting Standards Update (ASU) 2018-12, Financial Services - Insurance:
−Removed: Targeted Improvements to the Accounting for Long-Duration Contracts (LDTI).
−Removed: The update significantly changes how insurers account for long-duration contracts and amends existing recognition, measurement, presentation, and disclosure requirements applicable to the Company related to liabilities for future policy benefits and DAC.
−Removed: As part of this adoption, the Company measures together all payments under an insurance contract including future expected claims and unpaid policy claims and related expenses, as an integrated reserve.
−Removed: This resulted in unpaid policy claims on long-duration insurance contracts and accrued claim adjustment expenses that were presented separately in the Company’s consolidated balance sheets pre-adoption to now be presented as part of liabilities for future policy benefits.
−Removed: For additional information, see Note 1 of the Notes to the Consolidated Financial Statements in this document and in the 2022 Annual Report.
−Removed: Deferred Policy Acquisition Costs
−Removed: Amortization of DAC is computed using the same contract groupings (also referred to as cohorts) and mortality and termination assumptions that are used in computing the liability for future policy benefits, and these assumptions are reviewed and updated at least annually.
−Removed: The effects of changes in assumptions are recognized prospectively over the remaining contract term as a revision of future amortization pattern, while current period amortization is calculated based on the actual experience during the quarter.
−Removed: For additional information, see Note 6 of the Notes to the Consolidated Financial Statements.
−Removed: Future Policy Benefits
−Removed: The Company's liabilities for future policy benefits are determined in accordance with applicable guidelines as defined under U.S.
−Removed: GAAP and Actuarial Standards of Practice and represent claims that are expected to occur in the future and already incurred claims (which represent claims that have been incurred and are in the process of payment as well as an estimate of those claims that have been incurred but have not yet been reported to the Company) and are measured using the net level premium method.
−Removed: Future policy benefits are calculated using assumptions and estimates including mortality, morbidity, termination (also referred to as lapses), expense, and discount rates.
−Removed: The assumptions and estimates that the Company uses depend on its judgment regarding the likelihood of future events and are inherently uncertain.
−Removed: Cash flow assumptions (mortality, morbidity, and termination) are established at policy inception and are evaluated each quarter to determine if an update is needed.
−Removed: To facilitate a more detailed review of cash flow assumptions, experience studies are performed annually during the third quarter.
−Removed: Changes in cash flow assumptions are recognized in reserve remeasurement (gains) losses in the consolidated statements of earnings.
−Removed: Expense assumptions are established at policy inception and are not updated.
−Removed: Actual experience is reflected in the calculation of future policy benefits each quarter, and changes in the liability due to actual experience are recognized in reserve remeasurement (gains) losses in the consolidated statements of earnings.
−Removed: Discount rates used to calculate net premiums are locked in at policy inception and represent the basis to recognize interest expense in the consolidated statements of earnings.
−Removed: Discount rates used to measure the carrying value of liability for future policy benefits 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) (AOCI).
−Removed: The discount rate methodology is designed to prioritize observable inputs based on market data available in the local debt markets where the respective policies were issued in
−Removed: the currency in which the policies are denominated.
−Removed: 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, which include, but are not limited to:
−Removed: (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.
−Removed: Upon adoption, if interest rates decreased by 100 basis points the Company's FPB balance as of December 31, 2022 would increase by $13.3 billion, and if interest rates increased by 100 basis points the Company's FPB balance as of December 31, 2022 would decrease by $10.4 billion.
−Removed: See Note 7 of the Notes to the Consolidated Financial Statements for details of future policy benefits activity.
−Removed: There have been no other changes in the items the Company has identified as critical accounting estimates during the nine-month period ended September 30, 2023.
+Added: There have been no changes in the items the Company has identified as critical accounting estimates during the three-month period ended March 31, 2024.
For additional information, see the Critical Accounting Estimates section of Item 7.
1 unchanged sentence
New Accounting Pronouncements
−Removed: On January 1, 2023, the Company adopted LDTI employing a modified retrospective transition method, which requires the amended guidance be applied as of the beginning of the earliest period presented beginning on the January 1, 2021 transition date (Transition Date).
−Removed: The Transition Date impact from adoption resulted in a decrease in AOCI of approximately $18.6 billion and a decrease in retained earnings of approximately $0.3 billion.
For information on new accounting pronouncements and the impact, if any, on the Company's financial position or results of operations, see Note 1 of the Notes to the Consolidated Financial Statements.
Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.