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Item 2. Management’s Discussion and Analysis

2024-11-01 compared with 2024-08-01 · 182 added, 185 removed, 1132 unchanged (24% of the section changed)

40 unchanged sentences

MD&A OVERVIEW

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 six-month periods ended June 30, 2024 and 2023, respectively.

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, 2024 and 2023, respectively.

Results of operations for interim periods are not necessarily indicative of results for the entire year.

27 unchanged sentences

Performance Highlights

Total revenues were $5.1 billion in the second quarter of 2024, compared with $5.2 billion in the second quarter of 2023.

Net earnings were $1.8 billion, or $3.10 per diluted share, in the second quarter of 2024, compared with $1.6 billion, or $2.71 per diluted share, in the second quarter of 2023.

Total revenues were $10.6 billion in the first six months of 2024, compared with $10.0 billion in the first six months of 2023.

Net earnings were $3.6 billion, or $6.35 per diluted share, in the first six months of 2024, compared with $2.8 billion, or $4.64 per diluted share, in the first six months of 2023.

Results in the second quarter of 2024 included pretax net investment gains of $696 million, compared with pretax net investment gains of $555 million in the second quarter of 2023.

Net investment gains in the second quarter of 2024 included an increase in credit loss allowances of $19 million;

$649 million of net gains from certain derivative and foreign currency gains or losses;

Total revenues were $2.9 billion in the third quarter of 2024, compared with $5.0 billion in the third quarter of 2023.

Net earnings were $(93) million, or $(.17) per diluted share, in the third quarter of 2024, compared with $1.6 billion, or $2.64 per diluted share, in the third quarter of 2023, primarily due to increased foreign exchange-related losses from the yen strengthening by 12.9% during the quarter.

Total revenues were $13.5 billion in the first nine months of 2024, compared with $14.9 billion in the first nine months of 2023.

Net earnings were $3.5 billion, or $6.23 per diluted share, in the first nine months of 2024, compared with $4.4 billion, or $7.28 per diluted share, in the first nine months of 2023.

Results in the third quarter of 2024 included pretax net investment losses of $1.4 billion, compared with pretax net investment gains of $423 million in the third quarter of 2023.

Net investment losses in the third quarter of 2024 included an increase in credit loss allowances of $141 million;

$1.4 billion of net losses from certain derivative and foreign currency gains or losses;

$13 million of net gains on equity securities;

and $105 million of net gains from sales and redemptions.

Results in the first six months of 2024 included pretax net investment gains of $1.6 billion, compared with pretax net investment gains of $678 million in the first six months of 2023.

Net investment gains in the first six months of 2024 included an increase in credit loss allowances of $20 million;

$1.4 billion of net gains from certain derivative and foreign currency gains or losses;

Results in the first nine months of 2024 included pretax net investment gains of $239 million, compared with pretax net investment gains of $1.1 billion in the first nine months of 2023.

Net investment gains in the first nine months of 2024 included an increase in credit loss allowances of $161 million;

$33 million of net losses from certain derivative and foreign currency gains or losses;

$100 million of net gains on equity securities;

and $333 million of net gains from sales and redemptions.

The average yen/dollar exchange rate (1) for the three-month period ended June 30, 2024 was 155.70, or 11.7% weaker than the average yen/dollar exchange rate (1) of 137.53 for the same period in 2023.

The average yen/dollar exchange rate (1) for the six-month period ended June 30, 2024 was 152.30, or 11.4% weaker than the average yen/dollar exchange rate (1) of 134.97 for the same period in 2023.

Adjusted earnings (2) in the second quarter of 2024 were $1.0 billion, or $1.83 per diluted share, compared with $954 million, or $1.58 per diluted share, in the second quarter of 2023.

The average yen/dollar exchange rate (1) for the three-month period ended September 30, 2024 was 147.95, or 2.0% weaker than the average yen/dollar exchange rate (1) of 144.97 for the same period in 2023.

The average yen/dollar exchange rate (1) for the nine-month period ended September 30, 2024 was 150.60, or 8.1% weaker than the average yen/dollar exchange rate (1) of 138.38 for the same period in 2023.

Adjusted earnings (2) in the third quarter of 2024 were $1.2 billion, or $2.16 per diluted share, compared with $1.1 billion, or $1.84 per diluted share, in the third quarter of 2023.

The weaker yen/dollar exchange rate negatively impacted adjusted earnings per diluted share by $.03.

Adjusted earnings (2) in the first six months of 2024 were $2.0 billion, or $3.49 per diluted share, compared with $1.9 billion, or $3.13 per diluted share, in the first six months of 2023.

Adjusted earnings (2) in the first nine months of 2024 were $3.2 billion, or $5.64 per diluted share, compared with $3.0 billion, or $4.97 per diluted share, in the first nine months of 2023.

The weaker yen/dollar exchange rate negatively impacted adjusted earnings per diluted share by $.17.

In the first six months of 2024, Aflac Incorporated repurchased $1.6 billion, or 18.6 million of its common shares.

At June 30, 2024, the Company had 59.2 million remaining shares authorized for repurchase.

Shareholders’ equity was $26.0 billion, or $46.40 per share, at June 30, 2024, compared with $22.0 billion, or $38.00 per share, at December 31, 2023.

Shareholders’ equity at June 30, 2024 included a cumulative increase of $1.4 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 $379 million, compared with a net unrealized gain of $1.1 billion at December 31, 2023.

Shareholders’ equity at June 30, 2024 also included an unrealized foreign currency translation loss of $5.1 billion, compared with an unrealized foreign currency translation loss of $4.1 billion at December 31, 2023.

The annualized return on average shareholders’ equity in the second quarter of 2024 was 28.3%.

Shareholders’ equity excluding accumulated other comprehensive income (AOCI) (2) (adjusted book value) was $29.3 billion, or $52.26 per share, at June 30, 2024, compared with $27.5 billion, or $47.55 per share, at December 31, 2023.

The annualized adjusted return on equity (ROE) excluding foreign currency impact (2) in the second quarter of 2024 was 14.8%.

In the first nine months of 2024, Aflac Incorporated repurchased $2.1 billion, or 23.4 million of its common shares as part of its share repurchase program.

At September 30, 2024, the Company had 54.3 million remaining shares authorized for repurchase.

Shareholders’ equity was $24.8 billion, or $44.60 per share, at September 30, 2024, compared with $22.0 billion, or $38.00 per share, at December 31, 2023.

Shareholders’ equity at September 30, 2024 included a cumulative decrease of $67 million 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 $537 million, compared with a net unrealized gain of $1.1 billion at December 31, 2023.

Shareholders’ equity at September 30, 2024 also included an unrealized foreign currency translation loss of $4.1 billion, compared with an unrealized foreign currency translation loss of $4.1 billion at December 31, 2023.

The annualized return on average shareholders’ equity in the third quarter of 2024 was (1.5)%.

Shareholders’ equity excluding accumulated other comprehensive income (AOCI) (2) (adjusted book value) was $28.5 billion, or $51.21 per share, at September 30, 2024, compared with $27.5 billion, or $47.55 per share, at December 31, 2023.

The annualized adjusted return on equity (ROE) excluding foreign currency impact (2) in the third quarter of 2024 was 17.0%.

dollar exchange rates are based on the published MUFG Bank, Ltd.

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In Millions Per Diluted Share In Millions Per Diluted Share

Three Months Ended June 30, Six Months Ended June 30,

Three Months Ended September 30, Nine Months Ended September 30,

2024 2023 2024 2023 2024 2023 2024 2023

14 unchanged sentences

Reconciliation of Net Investment (Gains) Losses to Adjusted Net Investment (Gains) Losses

Three Months Ended June 30, Six Months Ended June 30,

Three Months Ended September 30, Nine Months Ended September 30,

(In millions) 2024 2023 2024 2023

48 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.

On June 9, 2023, the Company amended the U.S.

In June 2023, the Company amended the U.S.

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.

6 unchanged sentences

The Company's combined U.S.

and Japanese effective income tax rate on pretax earnings was 13.1% for the three-month period ended June 30, 2024, compared with 10.4% for the same period in 2023.

and Japanese effective income tax rate on pretax earnings was 201.8% for the three-month period ended September 30, 2024, compared with 13.1% for the same period in 2023.

The Company's combined U.S.

and Japanese effective income tax rate on pretax earnings was 13.3% for the six-month period ended June 30, 2024, compared with 10.9% for the same period in 2023.

and Japanese effective income tax rate on pretax earnings was 17.3% for the nine-month period ended September 30, 2024, compared with 11.7% for the same period in 2023.

The combined effective tax rate differs from the U.S.

17 unchanged sentences

dollar foreign exchange rate at the end of the reporting period.

In recent periods, the Japanese yen has continued to weaken against the U.S.

In recent periods, the Japanese yen has weakened against the U.S.

Although the Company is unable to predict the timing or extent of future movements of the Japanese yen/U.S.

5 unchanged sentences

GAAP financial measures of book value and book value per diluted share, respectively.

(In millions, except for share and per-share amounts) June 30,

(In millions, except for share and per-share amounts) September 30,

2024 December 31,

22 unchanged sentences

GAAP financial measure of return on equity.

Three Months Ended June 30,

Three Months Ended September 30,

GAAP return on equity - net earnings (1)

45 unchanged sentences

In Dollars In Yen

Three Months Ended June 30, Six Months Ended June 30, Three Months Ended June 30, Six Months Ended June 30,

Three Months Ended September 30, Nine Months Ended September 30, Three Months Ended September 30, Nine Months Ended September 30,

(In millions of dollars and billions of yen) 2024 2023 2024 2023 2024 2023 2024 2023

Net earned premiums (1)

$ 1,709 $ 1,973 $ 5,241 $ 6,207 ¥ 255 ¥ 285 ¥ 793 ¥ 856

Net investment income:

2 unchanged sentences

Net investment income 668 705 2,055 2,075 100 102 311 287

Amortized hedge costs related to certain foreign currency

exposure management strategies 7 63 13 122 1 8 2 16

Amortized hedge costs 7 26 19 148 1 3 3 19

Adjusted net investment income 662 679 2,036 1,927 99 99 309 268

2 unchanged sentences

Benefits and claims:

Benefits and claims, excluding reserve

remeasurement 1,174 1,379 2,417 2,845 183 189 368 383

Benefits and claims, excluding reserve remeasurement 1,197 1,319 3,614 4,164 179 191 547 574

Reserve remeasurement (gains) losses (369) (33) (421) (68) (54) (5) (61) (10)

15 unchanged sentences

Pretax adjusted earnings 23.5 6.4 10.8 (3.2) 25.5 11.4 20.3 4.9

(1) Net interest income/expense from derivatives associated with certain investment strategies of $(79) and $(73) for the three-month periods and $(158) and $(135) for the six-month periods ended June 30, 2024 and 2023, respectively, have been reclassified from net investment gains (losses) and included in adjusted earnings as a component of net investment income.

For the three-month period ended June 30, 2024, operating results in yen terms compared to the same period in the previous year were as follows:

• Net earned premiums decreased primarily due to approximately ¥7 billion related to the internal reinsurance transaction with Aflac Re established in the fourth quarter of 2023 and approximately ¥5 billion in limited-pay products reaching premium paid-up status.

• Adjusted net investment income increased primarily due to the weakening of the yen on U.S.

dollar investments of ¥8 billion, lower hedge costs of ¥7 billion, higher variable investment income of ¥6 billion and higher call income of ¥4 billion.

• Total adjusted revenues increased primarily due to the increase in adjusted net investment income mostly offset by the decrease in net earned premiums.

• Total benefits and claims decreased primarily due to internal reinsurance activity.

(1) Includes a gain (loss) of $(75) and $22 for the three-month periods and $(80) and $22 for the nine-month periods ended September 30, 2024 and 2023, respectively, related to remeasurement of the deferred profit liability for limited-payment contracts.

(2) Net interest income/expense from derivatives associated with certain investment strategies of $(79) and $(79) for the three-month periods and $(237) and $(214) for the nine-month periods ended September 30, 2024 and 2023, respectively, have been reclassified from net investment gains (losses) and included in adjusted earnings as a component of net investment income.

For the three-month period ended September 30, 2024, operating results in yen terms compared to the same period in the previous year were as follows:

• Net earned premiums decreased primarily due to approximately ¥11 billion related to the remeasurement of the deferred profit liability for limited-pay contracts in the third quarter of 2024, approximately ¥7 billion related to the internal cancer reinsurance transaction with Aflac Re established in the fourth quarter of 2023 and approximately ¥5 billion from limited-pay products reaching premium paid-up status.

• Adjusted net investment income was essentially flat.

• Total adjusted revenues decreased primarily due to the decrease in net earned premiums.

• Total benefits and claims decreased primarily due to ¥50 billion of reserve remeasurement gains related to assumption updates in the third quarter of 2024 as well as internal reinsurance activity.

• Total adjusted expenses decreased primarily due to internal reinsurance activity.

• Pretax adjusted earnings increased primarily due to the increase in adjusted net investment income and the decrease in both total benefits and claims and total adjusted expenses, partially offset by the decrease in net earned premiums.

For the six-month period ended June 30, 2024, operating results in yen terms compared to the same period in the previous year were as follows:

• Net earned premiums decreased primarily due to approximately ¥15 billion related to the internal reinsurance transaction with Aflac Re established in the fourth quarter of 2023 and approximately ¥11 billion in limited-pay products reaching premium paid-up status.

• Adjusted net investment income increased primarily due to lower hedge costs of ¥14 billion, the weakening of the yen on U.S.

dollar investments of ¥13 billion, higher variable investment income of ¥10 billion and higher call income of ¥4 billion.

• Total adjusted revenues increased primarily due to the increase in adjusted net investment income mostly offset by the decrease in net earned premiums.

• Total benefits and claims decreased primarily due to internal reinsurance activity.

• Pretax adjusted earnings increased primarily due to the decrease in total benefits and claims, partially offset by the decrease in net earned premiums.

For the nine-month period ended September 30, 2024, operating results in yen terms compared to the same period in the previous year were as follows:

• Net earned premiums decreased primarily due to approximately ¥22 billion related to the internal cancer reinsurance transaction with Aflac Re established in the fourth quarter of 2023, approximately ¥16 billion from limited-pay products reaching premium paid-up status and approximately ¥11 billion related to the remeasurement of the deferred profit liability for limited-pay contracts in the third quarter of 2024.

• Adjusted net investment income increased primarily due to lower amortized hedge costs of ¥17 billion, the weakening of the yen on U.S.

dollar investments of ¥15 billion and higher variable investment income of ¥10 billion.

• Total adjusted revenues decreased primarily due to the decrease in net earned premiums, partially offset by the increase in adjusted net investment income.

• Total adjusted expenses decreased primarily due to internal reinsurance activity as well as expense control efforts.

Annualized premiums in force decreased 3.6% to ¥1.22 trillion as of June 30, 2024, compared with ¥1.27 trillion as of June 30, 2023.

• Pretax adjusted earnings increased primarily due to the decrease in both total benefits and claims and total adjusted expenses, partially offset by the decrease in net earned premiums.

Annualized premiums in force decreased 3.2% to ¥1.22 trillion as of September 30, 2024, compared with ¥1.26 trillion as of September 30, 2023.

The decrease in annualized premiums in force in yen was driven primarily by limited-pay products reaching premium paid-up status.

Annualized premiums in force, translated into dollars at respective period-end exchange rates, were $7.6 billion at June 30, 2024, compared with $8.7 billion at June 30, 2023.

As of June 30, 2024, Aflac Japan exceeded 22 million individual policies in force in Japan, with more than 14 million cancer policies in force in Japan.

Annualized premiums in force, translated into dollars at respective period-end exchange rates, were $8.5 billion at September 30, 2024, compared with $8.4 billion at September 30, 2023.

As of September 30, 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)

For the Periods Ended June 30,

For the Periods Ended September 30,

Including Foreign

1 unchanged sentence

Currency Changes

Three Months Six Months

Three Months Nine Months

2024 2023 2024 2023 2024 2023 2024 2023

3 unchanged sentences

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 periods in the previous year.

Three Months Ended June 30, Six Months Ended June 30,

Three Months Ended September 30, Nine Months Ended September 30,

Ratios to total adjusted revenues:

11 unchanged sentences

Amortization of deferred policy acquisition costs 4.8 4.0 4.6 4.0

• For the three- and six-month periods ended June 30, 2024, the total benefits and claims to total premiums ratio increased primarily due to reinsurance activity and limited-pay products reaching premium paid-up status.

• The total adjusted expense ratio decreased in the three- and six-month periods ended June 30, 2024 primarily due to the decrease in total adjusted expenses associated with reinsurance activity as well as expense control efforts.

• In total, the pretax adjusted profit margin increased in the three- and six-month periods ended June 30, 2024 primarily due to the lower expense ratio and lower total benefits and claims to total adjusted revenues ratio.

The following table presents Aflac Japan's premium persistency on a 12-month rolling basis as of June 30.

• For the three- and nine-month periods ended September 30, 2024, the total benefits and claims to total premiums ratio decreased primarily due to a decrease in total benefits and claims resulting from reserve remeasurement gains related to assumption updates in the third quarter of 2024, partially offset by the decline in net earned premiums resulting from reinsurance activity, limited-pay products reaching premium paid-up status, and a deferred profit liability remeasurement loss.

For the full year of 2024, the Company expects Aflac Japan to generate a benefit ratio in the range of 62% to 63% as a result of the impact from assumption updates in the third quarter of 2024.

• For the three-month period ended September 30, 2024, the total adjusted expense ratio increased primarily due to the decrease in total adjusted revenues.

The total adjusted expense ratio decreased in the nine-month period ended September 30, 2024, primarily due to the decrease in total adjusted expenses associated with reinsurance activity as well as expense control efforts.

• In total, the pretax adjusted profit margin increased in the three- and nine-month periods ended September 30, 2024 primarily due to a decrease in total benefits and claims.

The following table presents Aflac Japan's premium persistency on a 12-month rolling basis as of September 30.

Premium persistency 93.3 % 93.5 %

Aflac Japan Sales

The following table presents Aflac Japan’s new annualized premium sales for the periods ended June 30.

The following table presents Aflac Japan’s new annualized premium sales for the periods ended September 30.

In Dollars In Yen

Three Months Six Months

Three Months Nine Months

(In millions of dollars and billions of yen) 2024 2023 2024 2023 2024 2023 2024 2023

1 unchanged sentence

Increase (decrease) over prior period 8.6 % 7.8 % (4.8) % 7.9 % 12.3 % 12.4 % 4.4 % 16.6 %

The increase in new annualized premium sales on a yen basis in the second quarter and first six months of of 2024 was driven primarily by sales of Aflac Japan's new life insurance product, Tsumitasu, that offers an asset formation component and a nursing care option, which was launched in June 2024.

The following table details the contributions to Aflac Japan's new annualized premium sales by major insurance product for the periods ended June 30.

Three Months Six Months

The increase in new annualized premium sales on a yen basis in the third quarter and first nine months of 2024 was driven primarily by sales of Aflac Japan's new life insurance product, Tsumitasu, that offers an asset formation component and a nursing care option, which was launched in June 2024.

The following table details the contributions to Aflac Japan's new annualized premium sales by major insurance product for the periods ended September 30.

Three Months Nine Months

2024 2023 2024 2023

16 unchanged sentences

Further, Aflac Japan continues to utilize its virtual sales tool that enables online consultations and policy applications to be completed entirely online.

The following table details the contributions to Aflac Japan's new annualized premium sales by agency type for the three-month periods ended June 30.

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.

Independent corporate and individual 46.2 % 44.4 %

2 unchanged sentences

(1) Includes Japan Post Group, Dai-ichi Life and Daido Life

During the three-month period ended June 30, 2024, Aflac Japan recruited 12 new sales agencies.

At June 30, 2024, Aflac Japan was represented by approximately 6,700 sales agencies, with approximately 114,000 licensed sales associates employed by those agencies.

During the three-month period ended September 30, 2024, Aflac Japan recruited 19 new sales agencies.

At September 30, 2024, Aflac Japan was represented by approximately 6,600 sales agencies, with approximately 114,000

licensed sales associates employed by those agencies.

The number of sales agencies has declined in recent years due to Aflac Japan's focus on supporting agencies with strong management frameworks, high productivity and more producing agents.

At June 30, 2024, Aflac Japan had agreements to sell its products at 360 banks, approximately 90% of the total number of banks in Japan.

At September 30, 2024, Aflac Japan had agreements to sell its products at 360 banks, approximately 90% of the total number of banks in Japan.

Strategic Alliance with Japan Post Holdings

17 unchanged sentences

The following table details the investment purchases for Aflac Japan.

Three Months Ended June 30, Six Months Ended June 30,

Three Months Ended September 30, Nine Months Ended September 30,

(In millions) 2024 2023 2024 2023

17 unchanged sentences

Middle market loans 298 59 649 336

Other loans 40 0 40 0

Other investments 89 96 206 308

1 unchanged sentence

Other currencies:

Fixed maturity securities:

Infrastructure debt $ 26 $ 0 $ 26 $ 0

Commercial mortgage and other loans:

Other loans 32 0 32 0

Other investments 3 0 5 0

Total other currencies $ 61 $ 0 $ 63 $ 0

Total Aflac Japan purchases $ 1,390 $ 590 $ 4,555 $ 2,647

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.

The following table presents the results of Aflac Japan’s investment yields for the periods ended June 30.

Three Months Six Months

The following table presents the results of Aflac Japan’s investment yields for the periods ended September 30.

Three Months Nine Months

2024 2023 2024 2023

12 unchanged sentences

(3) Net of investment expenses and amortized hedge costs, year-to-date number reflected on a quarterly average basis

The increase in the Aflac Japan new money yield in the three- and six-month periods ended June 30, 2024 was primarily due to higher allocations to higher yielding asset classes.

The increase in the Aflac Japan new money yield in the three- and nine-month periods ended September 30, 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

Three Months Ended June 30, Six Months Ended June 30,

Three Months Ended September 30, Nine Months Ended September 30,

(In millions) 2024 2023 2024 2023

22 unchanged sentences

Pretax adjusted earnings (26.8) 38.6 (9.2) 17.5

(1) Net interest income/expense from derivatives associated with certain investment strategies of $(9) and $(8) for the three-month periods and $(19) and $(15) for the six-month periods ended June 30, 2024 and 2023, respectively, have been reclassified from net investment gains (losses) and included in adjusted earnings as a component of net investment income.

For the three-month period ended June 30, 2024, operating results compared to the same period in the previous year were as follows:

(1) Net interest income/expense from derivatives associated with certain investment strategies of $(9) and $(9) for the three-month periods and $(28) and $(24) for the nine-month periods ended September 30, 2024 and 2023, respectively, have been reclassified from net investment gains (losses) and included in adjusted earnings as a component of net investment income.

For the three-month period ended September 30, 2024, operating results compared to the same period in the previous year were as follows:

• Net earned premiums increased primarily due to higher net earned premiums from growth initiatives including group life and disability and consumer markets businesses and continued improvements in premium persistency.

• Adjusted net investment income increased primarily due to higher fixed rate income, higher variable income and higher short-term income.

• Total adjusted revenues increased primarily due to the increase in net earned premiums and the increase in adjusted net investment income.

• Total benefits and claims increased primarily due to growth of group life and disability and lower remeasurement gains reflecting actual experience.

• Adjusted net investment income was essentially flat.

• Total adjusted revenues increased primarily due to the increase in net earned premiums.

• Total benefits and claims increased primarily due to a decrease of approximately $139 million in reserve remeasurement gains related to assumption updates in the third quarter of 2024 and higher incurred claims.

• Total adjusted expenses decreased primarily due to improved expense efficiency.

• Pretax adjusted earnings increased primarily due to lower total adjusted expenses and higher total adjusted revenues offset by higher benefits.

For the six-month period ended June 30, 2024, operating results compared to the same period in the previous year were as follows:

• Pretax adjusted earnings decreased primarily due to the increase in total benefits and claims, partially offset by the increase in total adjusted revenues and the decrease in total adjusted expenses.

For the nine-month period ended September 30, 2024, operating results compared to the same period in the previous year were as follows:

• Adjusted net investment income increased primarily due to higher fixed rate income, higher variable income and higher short-term income.

• Total adjusted revenues increased primarily due to the increase in net earned premiums and the increase in adjusted net investment income.

• Total benefits and claims increased primarily due to growth of group life and disability and lower remeasurement gains reflecting actual experience.

• Total adjusted revenues increased primarily due to the increase in both net earned premiums and adjusted net investment income.

• Total adjusted expenses decreased primarily due to improved expense efficiency.

• Pretax adjusted earnings increased primarily due to higher total adjusted revenues and lower total adjusted expenses offset by higher benefits.

Annualized premiums in force increased 2.9% to $6.2 billion at June 30, 2024, compared with $6.1 billion at June 30, 2023.

Annualized premiums in force increased 3.3% to $6.3 billion at September 30, 2024, compared with $6.1 billion at September 30, 2023.

The following table presents a summary of operating ratios for Aflac U.S.

followed by a discussion of the significant drivers of changes in operating ratios compared to the same periods in the previous year.

Three Months Ended June 30, Six Months Ended June 30,

Three Months Ended September 30, Nine Months Ended September 30,

Ratios to total adjusted revenues:

11 unchanged sentences

Amortization of deferred policy acquisition costs 9.0 8.6 9.0 8.5

• For the three- and six-month periods ended June 30, 2024, the total benefits and claims to total premiums ratio increased primarily due to growth of group life and disability and lower remeasurement gains reflecting actual experience.

• The total adjusted expense ratio decreased in the three- and six-month periods ended June 30, 2024 primarily due to expense efficiency efforts.

• In total, the pretax adjusted profit margin increased slightly in the three- and six-month periods ended June 30, 2024 primarily due to higher total adjusted revenues and lower total adjusted expenses.

• For the three- and nine-month periods ended September 30, 2024, the total benefits and claims to total premiums ratio increased primarily due to the decrease in reserve remeasurement gains related to assumption updates in the third quarter of 2024 as well as higher incurred claims.

• The total adjusted expense ratio decreased in the three- and nine-month periods ended September 30, 2024 primarily due to expense efficiency efforts.

• In total, the pretax adjusted profit margin decreased in the three- and nine-month periods ended September 30, 2024 primarily due to the increase in total benefits and claims partially offset by higher total adjusted revenues and lower total adjusted expenses.

The following table presents premium persistency for Aflac U.S.

on a 12-month rolling basis as of June 30.

on a 12-month rolling basis as of September 30.

Premium persistency 78.9 % 78.7 %

The following table presents Aflac's U.S.

new annualized premium sales for the periods ended June 30.

Three Months Six Months

new annualized premium sales for the periods ended September 30.

Three Months Nine Months

(In millions) 2024 2023 2024 2023

2 unchanged sentences

The increase in new annualized premium sales for Aflac U.S.

in the second quarter of 2024 largely driven by group life, absence management and disability products as well as improved sales in individual voluntary benefits.

The decrease in the first six months of 2024 reflects continued strong underwriting discipline as the Company focuses on more profitable growth with an emphasis on persistency.

in the third quarter and first nine months of 2024 was primarily driven by group life, absence management and disability products, as well as cancer insurance.

The following table details the contributions to Aflac's U.S.

new annualized premium sales by major insurance product category for the periods ended June 30.

Three Months Six Months

new annualized premium sales by major insurance product category for the periods ended September 30.

Three Months Nine Months

2024 2023 2024 2023

8 unchanged sentences

(1) Includes cancer, critical illness, and hospital intensive care products

In the second quarter of 2024, the Aflac U.S.

In the third quarter of 2024, the Aflac U.S.

sales force included an average of approximately 5,900 U.S.

13 unchanged sentences

The following table details the investment purchases for Aflac U.S.

Three Months Ended June 30, Six Months Ended June 30,

Three Months Ended September 30, Nine Months Ended September 30,

(In millions) 2024 2023 2024 2023

14 unchanged sentences

The following table presents the results of Aflac's U.S.

investment yields for the periods ended June 30.

Three Months Six Months

investment yields for the periods ended September 30.

Three Months Nine Months

2024 2023 2024 2023

12 unchanged sentences

The decrease in the Aflac U.S.

new money yield in the three- and six-month periods ended June 30, 2024 was primarily due to higher allocations to lower yielding asset classes.

new money yield in the three- and nine-month periods ended September 30, 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.

3 unchanged sentences

Corporate and Other Summary of Operating Results

Three Months Ended June 30, Six Months Ended June 30,

Three Months Ended September 30, Nine Months Ended September 30,

(In millions) 2024 2023 2024 2023

1 unchanged sentence

Net investment income (loss) (1)

Amortized hedge income related to certain foreign currency

management strategies 34 38 62 67

Amortized hedge income 25 25 87 92

Adjusted net investment income 64 27 233 116

18 unchanged sentences

Pretax adjusted earnings 130.6 12.5 133.6 38.2

(1) The change in value of federal historic rehabilitation and solar investments in partnerships of $30 and $53 for the three-month periods and $62 and $105 for the six-month periods ended June 30, 2024, and 2023, respectively, is included as a reduction to net investment income.

Tax credits on these investments of $31 and $56 for the three-month periods and $64 and $108 for the six-month periods ended June 30, 2024, and 2023, respectively, have been recorded as an income tax benefit in the consolidated statements of earnings.

(1) The change in value of federal historic rehabilitation and solar investments in partnerships of $57 and $64 for the three-month periods and $119 and $169 for the nine-month periods ended September 30, 2024, and 2023, respectively, is included as a reduction to net investment income.

Tax credits on these investments of $78 and $63 for the three-month periods and $142 and $171 for the nine-month periods ended September 30, 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.

For the three-month period ended June 30, 2024, operating results compared to the same period in the previous year were as follows:

• Net earned premiums increased primarily due to higher reinsurance activity resulting from agreements established in the fourth quarter of 2023.

• Adjusted net investment income increased due to higher Aflac Re consolidated investment income of $15 million primarily due to a higher volume of assets as part of the reinsurance agreements established in the fourth quarter of 2023 and $23 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.

• Total adjusted revenues increased due to higher net earned premiums and higher adjusted net investment income.

• Total adjusted expenses increased primarily due to the higher reinsurance activity of $35 million.

• Pretax adjusted earnings increased due to higher total adjusted revenues partially offset by higher total adjusted expenses.

For the six-month period ended June 30, 2024, operating results compared to the same period in the previous year were as follows:

For the three-month period ended September 30, 2024, operating results compared to the same period in the previous year were as follows:

• 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.

• Adjusted net investment income increased due to higher Aflac Re consolidated investment income of $38 million primarily due to a higher volume of assets as part of the reinsurance agreements established in the fourth quarter of 2023 and $43 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.

• Total adjusted revenues increased due to higher net earned premiums and higher adjusted net investment income.

• Adjusted net investment income increased primarily due to higher Aflac Re consolidated investment income of $15 million primarily due to a higher volume of assets as part of the reinsurance agreements established in the fourth quarter of 2023 and $7 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.

• Total adjusted revenues increased primarily due to higher net earned premiums and higher adjusted net investment income.

• Total adjusted expenses increased primarily due to the higher reinsurance activity.

• Pretax adjusted earnings increased primarily due to higher total adjusted revenues partially offset by higher total benefits and adjusted expenses.

For the nine-month period ended September 30, 2024, operating results compared to the same period in the previous year were as follows:

• 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.

• Adjusted net investment income increased primarily due to higher Aflac Re consolidated investment income of $53 million primarily due to a higher volume of assets as part of the reinsurance agreements established in the fourth quarter of 2023 and $50 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.

• Total adjusted revenues increased primarily due to higher net earned premiums and higher adjusted net investment income.

• Total adjusted expenses increased primarily due to the higher reinsurance activity of $108 million as well as an increase in other general operating expenses.

• Pretax adjusted earnings increased due to higher total adjusted revenues partially offset by the higher total benefits and adjusted expenses.

• Pretax adjusted earnings increased primarily 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.

12 unchanged sentences

Investment Securities by Segment

June 30, 2024

September 30, 2024

(In millions) Aflac Japan Aflac U.S.

8 unchanged sentences

Transitional real estate loans 4,128 931 190 5,249

4,389 967 190 5,546

Commercial mortgage loans 933 612 0 1,545

976 615 0 1,591

Middle market loans 3,950 458 0 4,408

3,916 475 0 4,391

Other loans 250 77 15 342

172 80 15 267

Other investments:

24 unchanged sentences

Transitional real estate loans 4,795 1,011 192 5,998

4,795 1,011 192 5,998

Commercial mortgage loans 1,075 622 0 1,697

1,075 622 0 1,697

Middle market loans 4,095 436 0 4,531

4,095 436 0 4,531

Other loans 185 101 15 301

185 101 15 301

Other investments:

22 unchanged sentences

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.

For the six-month period ended June 30, 2024, the Company completed foreclosure or deed in lieu of foreclosure on TREs collateralized with commercial real estate properties with an amortized cost of $282 million.

As a result of the estimated fair value of the collateral exceeding the amortized cost of the TREs upon consummating the foreclosures or deed in lieu of foreclosure transactions, the Company recognized a net gain of $13 million in net investment gains (losses) for the six-month period ended June 30, 2024.

The Company did not complete any foreclosure or deed in lieu of foreclosure transactions in the six-month period ended June 30, 2023.

For the nine-month period ended September 30, 2024, the Company completed foreclosure or deed in lieu of foreclosure on TREs collateralized with commercial real estate properties with an amortized cost of $407 million.

As a result of the amortized cost of the TREs exceeding the estimated fair value of the collateral upon consummating the foreclosures or deed in lieu of foreclosure transactions, the Company recognized a net loss of $27 million in net investment gains (losses) for the nine-month period ended September 30, 2024.

For the nine-month period ended September 30, 2023, the Company completed foreclosure or deed in lieu of foreclosure on TREs collateralized with commercial real estate properties with an amortized cost of $142 million.

As a result of the amortized cost of the TREs exceeding the estimated fair value of the collateral upon consummating the foreclosures or deed in lieu of foreclosure transactions, the Company recognized a net loss of $53 million in net investment gains (losses) for the nine-month period ended September 30, 2023.

The Company utilizes third-party asset managers to source, underwrite and manage each loan, as well as any resulting REO.

9 unchanged sentences

Composition of Fixed Maturity Securities by Credit Rating

June 30, 2024 December 31, 2023

September 30, 2024 December 31, 2023

Value Amortized

5 unchanged sentences

Total 100.0 % 100.0 % 100.0 % 100.0 %

As of June 30, 2024, the Company's direct and indirect exposure to securities in its investment portfolio that were guaranteed by third parties was immaterial both individually and in the aggregate.

The following table presents the 10 largest unrealized loss positions in the Company's portfolio as of June 30, 2024.

As of September 30, 2024, the Company's direct and indirect exposure to securities in its investment portfolio that were guaranteed by third parties was immaterial both individually and in the aggregate.

The following table presents the 10 largest unrealized loss positions in the Company's portfolio as of September 30, 2024.

(In millions) Credit

4 unchanged sentences

KLM Royal Dutch Airlines B+ 139 104 (35)

Thames Water Utility CCC+ 140 112 (28)

JP Morgan Chase and Co.

1 unchanged sentence

Prologis LP A- 160 136 (24)

Investcorp Capital Limited BB 217 197 (20)

Alphabet Inc.

AA 84 65 (19)

Citigroup Inc A 145 126 (19)

Salesforce Inc A 93 74 (19)

Tokyo Gas Co Ltd A 93 74 (19)

BASF A- 70 47 (23)

SNCF Reseau AA 75 54 (21)

Anglian Water Services Financing A- 98 78 (20)

Mitsui Fudosan Co.

A- 73 53 (20)

Generally, declines in fair values can be a result of changes in interest rates, yen/dollar exchange rate, and changes in net spreads driven by a broad market move or a change in the issuer's underlying credit quality.

5 unchanged sentences

Below-Investment-Grade Investments

June 30, 2024

September 30, 2024

(In millions) Par

2 unchanged sentences

Investcorp Capital Limited $ 239 $ 239 $ 233 $ (6)

Commerzbank 155 128 179 51

Telecom Italia SpA 140 140 185 45

KLM Royal Dutch Airlines 140 139 104 (35)

Thames Water Utility 140 140 112 (28)

IKB Deutsche Industriebank AG 91 48 79 31

National Gas Co.

Trinidad & Tobago 52 50 48 (2)

Generalitat de Catalunya 56 24 55 31

1 unchanged sentence

CPI Property Group SA 21 21 21 0

Transalta Corporation 10 11 11 0

Other Issuers 13 14 11 (3)

15 unchanged sentences

The following table shows the distribution of fixed maturities by sector classification.

June 30, 2024

September 30, 2024

(In millions) Amortized Cost (1)

29 unchanged sentences

Investment Securities by Type of Issuance

June 30, 2024 December 31, 2023

September 30, 2024 December 31, 2023

(In millions) Amortized

15 unchanged sentences

Reverse-Dual Currency Securities (1)

(Amortized cost, in millions) June 30,

(Amortized cost, in millions) September 30,

2024 December 31,

31 unchanged sentences

The following table presents metrics related to Aflac Japan's U.S.

dollar-denominated hedge program and the Parent Company's enterprise corporate hedging program, including associated amortized hedge costs/income, for the periods ended June 30.

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.

See the Results of Operations section of this MD&A for the Company's definition of amortized hedge costs/income.

Three Months Six Months

Three Months Nine Months

2024 2023 2024 2023

25 unchanged sentences

dollar-denominated investments held by Aflac Japan.

September 30,

2024 December 31,

21 unchanged sentences

Dollar Program to mitigate against more extreme moves in foreign exchange and therefore support SMR.

As of June 30, 2024, some of the Company's foreign currency options hedging Aflac Japan's U.S.

As of September 30, 2024, some of the Company's foreign currency options hedging Aflac Japan's U.S.

dollar-denominated assets were in-the-money.

As of June 30, 2024, the fair value of Aflac Japan's unhedged U.S.

As of September 30, 2024, the fair value of Aflac Japan's unhedged U.S.

dollar-denominated portfolio was $648 million (excluding certain U.S.

3 unchanged sentences

dollar-denominated investments.

Three Months Ended June 30, Six Months Ended June 30,

Three Months Ended September 30, Nine Months Ended September 30,

(In millions) 2024 2023 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.

The Company's consolidated yen-denominated net asset position was partially hedged at $6.0 billion as of June 30, 2024, with hedging instruments comprised of $4.0 billion of yen-denominated debt and $2.0 billion of foreign currency forwards, compared with $6.8 billion as of December 31, 2023, with hedging instruments comprised of $3.7 billion of yen-denominated debt and $3.1 billion of foreign currency forwards and options .

The Company's consolidated yen-denominated net asset position was partially hedged at $6.5 billion as of September 30, 2024, with hedging instruments comprised of $4.6 billion of yen-denominated debt and $1.9 billion of foreign currency forwards, compared with $6.8 billion as of December 31, 2023, with hedging instruments comprised of $3.7 billion of yen-denominated debt and $3.1 billion of foreign currency forwards and options .

The Company 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.

The Company's net investment hedge was effective during the three- and six-month periods ended June 30, 2024 and 2023, respectively.

The Company's net investment hedge was effective during the three- and nine-month periods ended September 30, 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.

19 unchanged sentences

The following table presents deferred policy acquisition costs (DAC) by segment.

(In millions) June 30,

(In millions) September 30,

2024 December 31, 2023 % Change

2 unchanged sentences

Total $ 9,232 $ 9,132 1.1 %

(1) Aflac Japan’s deferred policy acquisition costs increased 1.2% in yen during the six months ended June 30, 2024.

(1) Aflac Japan’s deferred policy acquisition costs increased 1.7% in yen during the nine months ended September 30, 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.

(In millions) June 30,

(In millions) September 30,

2024 December 31, 2023 % Change

5 unchanged sentences

Total $ 87,554 $ 91,599 (4.4) %

(1) Aflac Japan’s policy liabilities decreased 5.9% in yen during the six months ended June 30, 2024.

(1) Aflac Japan’s policy liabilities decreased 4.6% in yen during the nine months ended September 30, 2024.

(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.

13 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.

Accordingly, Aflac Japan did not recognize an expense for LIPPC assessments for the six-month periods ended June 30, 2024 and 2023.

Accordingly, Aflac Japan did not recognize an expense for LIPPC assessments for the nine-month periods ended September 30, 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.

Guaranty fund assessments for the three- and six-month periods ended June 30, 2024 and 2023 were immaterial.

Guaranty fund assessments for the three- and nine-month periods ended September 30, 2024 and 2023 were immaterial.

LIQUIDITY AND CAPITAL RESOURCES

13 unchanged sentences

The Company remains committed to prudent liquidity and capital management.

At June 30, 2024, the Company held $6.1 billion in cash and cash equivalents for stress conditions, which includes the Parent Company's target minimum amount of $1.8 billion.

At September 30, 2024, the Company held $5.6 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.

The following table presents the amounts provided to the Parent Company for the six-month periods ended June 30.

The following table presents the amounts provided to the Parent Company for the nine-month periods ended September 30.

Liquidity Provided by Subsidiaries to Parent Company

2 unchanged sentences

Dividends declared or paid by subsidiaries 2,559 2,252

The following table details Aflac Japan remittances, which are included in the totals above, for the six-month periods ended June 30.

The following table details Aflac Japan remittances, which are included in the totals above, for the nine-month periods ended September 30.

Aflac Japan Remittances

13 unchanged sentences

The Company believes outside sources for additional debt and equity capital, if needed, will continue to be available.

The Company was in compliance with all of the covenants of its notes payable and lines of credit at June 30, 2024.

The Company was in compliance with all of the covenants of its notes payable and lines of credit at September 30, 2024.

For additional information, see Note 9 of the Notes to the Consolidated Financial Statements.

3 unchanged sentences

The Company has not engaged in material intra-period short-term financings during the periods presented that are not otherwise reported in its balance sheet or disclosed therein.

As of June 30, 2024, the Company had no material letters of credit, standby letters of credit, guarantees or standby repurchase obligations.

As of September 30, 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.

The following table summarizes consolidated cash flows by activity for the six-month periods ended June 30.

The following table summarizes consolidated cash flows by activity for the nine-month periods ended September 30.

(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.

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.

As of June 30, 2024, of the $400 million committed, approximately $280 million has been deployed.

As of September 30, 2024, of the $400 million committed, approximately $283 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.

In the first six months of 2024, Aflac U.S.

In the first nine months of 2024, Aflac U.S.

borrowed and repaid $325 million under this program.

As of June 30, 2024, Aflac U.S.

As of September 30, 2024, Aflac U.S.

had outstanding borrowings of $640 million reported in its balance sheet.

18 unchanged sentences

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.

Cash returned to shareholders through treasury stock purchases and dividends was $2.1 billion during the six-month period ended June 30, 2024, compared with $1.9 billion during the six-month period ended June 30, 2023.

The following tables present a summary of treasury stock activity during the six-month periods ended June 30.

Cash returned to shareholders through treasury stock purchases and dividends was $2.9 billion during the nine-month period ended September 30, 2024, compared with $2.8 billion during the nine-month period ended September 30, 2023.

The following tables present a summary of treasury stock activity during the nine-month periods ended September 30.

Treasury Stock Purchased

12 unchanged sentences

Number of shares issued 881 967

As of June 30, 2024, a remaining balance of 59.2 million shares of the Company's common stock was available for purchase under share repurchase authorizations by its board of directors.

Cash dividends paid to shareholders were $.50 per share in the second quarter of 2024, compared with $.42 per share in the second quarter of 2023.

The following table presents the dividend activity for the six-month periods ended June 30.

As of September 30, 2024, a remaining balance of 54.3 million shares of the Company's common stock was available for purchase under share repurchase authorizations by its board of directors.

Cash dividends paid to shareholders were $.50 per share in the third quarter of 2024, compared with $.42 per share in the third quarter of 2023.

The following table presents the dividend activity for the nine-month periods ended September 30.

(In millions) 2024 2023

2 unchanged sentences

Total dividends to shareholders $ 851 $ 758

In July 2024, the board of directors declared the third quarter cash dividend of $.50 per share, an increase of 19.0% compared with the same period in 2023.

The dividend is payable on September 2, 2024 to shareholders of record at the close of business on August 21, 2024.

In October 2024, the board of directors declared the fourth quarter cash dividend of $.50 per share, an increase of 19.0% compared with the same period in 2023.

The dividend is payable on December 2, 2024 to shareholders of record at the close of business on November 20, 2024.

Regulatory Restrictions

12 unchanged sentences

In order for a PRM-designated asset to be held at amortized cost, there are certain criteria that must be maintained.

The primary criterion relates to maintaining the duration of designated assets and

liabilities within a specified tolerance range.

The primary criterion relates to maintaining the duration of designated assets and liabilities within a specified tolerance range.

If the duration difference is not maintained within the specified range without rebalancing, then a certain portion of the assets must be reclassified as available-for-sale and held at fair value with any associated unrealized gain or loss recorded in surplus.

4 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.

As of June 30, 2024, Aflac Japan's SMR remains high and reflects a strong capital and surplus position.

As of September 30, 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.

8 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.

As of June 30, 2024, Aflac U.S.'s combined RBC ratio remains high and reflects a strong capital and surplus position.

As of September 30, 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.

13 unchanged sentences

Investors should note that the Company announces material financial information in its SEC filings, press releases and public conference calls.

In accordance with SEC guidance, the Company may also use the Investor Relations section of

the Company's website (http://investors.aflac.com) to communicate with investors about the Company.

In accordance with SEC guidance, the Company may also use the Investor Relations section of the Company's website (http://investors.aflac.com) to communicate with investors about the Company.

It is possible that the financial and other information the Company posts there could be deemed to be material information.

11 unchanged sentences

Calculations of DAC and the liability for future policy benefits require the use of estimates based on actuarial valuation techniques.

The application of these critical accounting estimates determines the values at which 92% of the Company's assets and 76% of its liabilities are reported as of June 30, 2024, and thus has a direct effect on net earnings and shareholders’ equity.

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 September 30, 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.

There have been no changes in the items the Company has identified as critical accounting estimates during the six-month period ended June 30, 2024.

There have been no changes in the items the Company has identified as critical accounting estimates during the nine-month period ended September 30, 2024.

For additional information, see the Critical Accounting Estimates section of Item 7.

3 unchanged sentences

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.

What changed 10-Q

Item 2. Management’s Discussion and Analysis