What changed in this filing

/stocks — the workspaceLOADING

Item 2. Management’s Discussion and Analysis

2025-08-05 compared with 2025-05-07 · 263 added, 148 removed, 1078 unchanged (28% of the section changed)

25 unchanged sentences

• ability to continue to develop and implement improvements in information technology systems and on successful execution of revenue growth and expense management initiatives

• interruption in telecommunication, information technology and other operational systems, or a failure to maintain the security, confidentiality, integrity or privacy of sensitive data residing on such systems, and uncertainty regarding the impact of the incident involving unauthorized access to the Company’s network in June 2025

• subsidiaries' ability to pay dividends to the Parent Company

12 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 three-month periods ended March 31, 2025 and 2024, 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 six-month periods ended June 30, 2025 and 2024, 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 $3.4 billion in the first quarter of 2025, compared with $5.4 billion in the first quarter of 2024, primarily due to net investment losses of $963 million in the first quarter of 2025 compared with net investment gains of $951 million in the first quarter of 2024.

Net earnings were $29 million, or $.05 per diluted share, in the first quarter of 2025, compared with $1.9 billion, or $3.25 per diluted share, in the first quarter of 2024.

Net earnings in the first quarter of 2025 included net investment losses of $963 million, compared with net investment gains of $951 million in the first quarter of 2024.

Net investment losses in the first quarter of 2025 included $888 million of net losses from certain derivative and foreign currency gains or losses;

$61 million of net losses on equity securities;

Total revenues were $4.2 billion in the second quarter of 2025, compared with $5.1 billion in the second quarter of 2024, primarily due to net investment losses of $421 million in the second quarter of 2025 compared with net investment gains of $696 million in the second quarter of 2024.

Net earnings were $599 million, or $1.11 per diluted share, in the second quarter of 2025, compared with $1.8 billion, or $3.10 per diluted share, in the second quarter of 2024.

Total revenues were $7.6 billion in the first six months of 2025, compared with $10.6 billion in the first six months of 2024, primarily due to net investment losses of $1.4 billion in the first six months of 2025 compared with net investment gains of $1.6 billion in the first six months of 2024.

Net earnings were $628 million, or $1.16 per diluted share, in the first six months of 2025, compared with $3.6 billion, or $6.35 per diluted share, in the first six months of 2024.

Net earnings in the second quarter of 2025 included net investment losses of $421 million, compared with net investment gains of $696 million in the second quarter of 2024.

Net investment losses in the second quarter of 2025 included $452 million of net losses from certain derivative and foreign currency gains or losses;

an increase in credit loss allowances of $58 million;

and $41 million of net gains from sales and redemptions.

The average yen/dollar exchange rate (1) for the three-month period ended March 31, 2025 was 152.40, or 2.4% weaker than the average yen/dollar exchange rate (1) of 148.67 for the same period in 2024.

Adjusted earnings (2) in the first quarter of 2025 were $906 million, or $1.66 per diluted share, compared with $961 million, or $1.66 per diluted share, in the first quarter of 2024.

The weaker yen/dollar exchange rate negatively impacted adjusted earnings per diluted share by $.01.

In the first three months of 2025, Aflac Incorporated repurchased $900 million, or 8.5 million of its common shares.

At March 31, 2025, the Company had 38.8 million remaining shares authorized for repurchase.

Shareholders’ equity was $26.3 billion, or $48.55 per share, at March 31, 2025, compared with $26.1 billion, or $47.45 per share, at December 31, 2024.

Shareholders’ equity at March 31, 2025 included a cumulative increase of $3.9 billion from the effect of changes in discount rate assumptions on insurance reserves, compared with a corresponding cumulative increase of $2.0 billion at December 31, 2024, and a net unrealized loss on investment securities and derivatives of $1.3 billion, compared with a net unrealized gain of $4 million at December 31, 2024.

Shareholders’ equity at March 31, 2025 also included an unrealized foreign currency translation loss of $4.5 billion, compared with an unrealized foreign currency translation loss of $5.0 billion at December 31, 2024.

The annualized return on average shareholders’ equity in the first quarter of 2025 was .4%.

Shareholders’ equity excluding accumulated other comprehensive income (AOCI) (2) (adjusted book value) was $28.2 billion, or $51.98 per share, at March 31, 2025, compared with $29.1 billion, or $52.87 per share, at December 31, 2024.

Adjusted book value excluding foreign currency remeasurement (2) was $23.1 billion, or $42.61 per share, at March 31, 2025, compared with $23.4 billion, or $42.46 per share, at December 31, 2024.

The annualized adjusted return on equity (ROE) excluding foreign currency remeasurement (2) in the first quarter of 2025 was 15.6%.

$6 million of impairments and $3 million of net losses from sales and redemptions;

offset by a $98 million gain from an increase in the fair value of equity securities.

Net earnings in the first six months of 2025 included net investment losses of $1.4 billion, compared with net investment gains of $1.6 billion in the first six months of 2024.

Net investment losses in the first six months of 2025 included $1.3 billion of net losses from certain derivative and foreign currency gains or losses;

an increase in credit loss allowances of $113 million and $6 million of impairments;

offset by $38 million of net gains from sales and redemptions and a $37 million gain from an increase in the fair value of equity securities.

The average yen/dollar exchange rate (1) for the three-month period ended June 30, 2025 was 144.60, or 7.7% stronger than the average yen/dollar exchange rate (1) of 155.70 for the same period in 2024.

The average yen/dollar exchange rate (1) for the six-month period ended June 30, 2025 was 148.32, or 2.7% stronger than the average yen/dollar exchange rate (1) of 152.30 for the same period in 2024.

Adjusted earnings (2) in the second quarter of 2025 were $957 million, or $1.78 per diluted share, compared with $1.0 billion, or $1.83 per diluted share in the second quarter of 2024.

The stronger yen/dollar exchange rate positively impacted adjusted earnings per diluted share by $.04.

Adjusted earnings (2) in the first six months of 2025 were $1.9 billion, or $3.43 per diluted share, compared with $2.0 billion, or $3.49 per diluted share, in the first six months of 2024.

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

In the first six months of 2025, Aflac Incorporated repurchased $1.7 billion, or 16.4 million of its common shares.

At June 30, 2025, the Company had 30.9 million remaining shares authorized for repurchase.

Shareholders’ equity was $27.2 billion, or $50.86 per share, at June 30, 2025, compared with $26.1 billion, or $47.45 per share, at December 31, 2024.

Shareholders’ equity at June 30, 2025 included a cumulative increase of $5.6 billion from the effect of changes in discount rate assumptions on insurance reserves, compared with a corresponding cumulative increase of $2.0 billion at December 31, 2024, and a net unrealized loss on investment securities and derivatives of $1.8 billion, compared with a net unrealized gain of $4 million at December 31, 2024.

Shareholders’ equity at June 30, 2025 also included an unrealized foreign currency translation loss of $4.3 billion, compared with an unrealized foreign currency

translation loss of $5.0 billion at December 31, 2024.

The annualized return on average shareholders’ equity in the second quarter of 2025 was 9.0%.

Shareholders’ equity excluding accumulated other comprehensive income (AOCI) (2) (adjusted book value) was $27.7 billion, or $51.78 per share, at June 30, 2025, compared with $29.1 billion, or $52.87 per share, at December 31, 2024.

Adjusted book value excluding foreign currency remeasurement (2) was $23.6 billion, or $44.17 per share, at June 30, 2025, compared with $23.4 billion, or $42.46 per share, at December 31, 2024.

The annualized adjusted return on equity (ROE) excluding foreign currency remeasurement (2) in the second quarter of 2025 was 16.4%.

Cyber Incident

On June 12, 2025, the Company identified an incident involving unauthorized access to its network in the U.S.

The Company promptly initiated its cybersecurity incident response protocols and believes that it contained the intrusion within hours.

The Company’s business remains operational, and its systems were not affected by ransomware.

The Company continues to serve its policyholders as it responds to this incident and can underwrite policies, review claims, and otherwise service customers as usual.

The Company has engaged leading third-party cybersecurity experts to support the Company’s response to the incident.

The Company is aware of the exfiltration of certain data including claims information, health information, social security numbers and/or other personal information relating to a substantial number of customers, beneficiaries, employees, agents, and other individuals in the Company’s U.S.

The Company is still in the process of validating the extent and nature of the files that were involved.

Based on the information currently available and the investigation to date, as of the date of this report, the Company has not determined that the incident is reasonably likely to have a material impact on the Company’s financial condition or results of operations.

However, the Company’s investigation remains ongoing and as a result, it does not yet know the full impact of the cybersecurity incident, including how much of the financial impact will be covered by insurance.

As a result of the cybersecurity incident, the Company has incurred certain costs and may, depending on future developments, incur additional costs, including but not limited to:

costs to provide credit monitoring, identity theft protection, and Medical Shield to impacted individuals and maintain a call center related to the provision of such services;

incident response costs;

expenses arising from potential litigation, governmental investigations, or enforcement actions;

expenses related to compliance, finance, and legal advisory services;

elevated cybersecurity insurance premiums;

and costs incurred in meeting evolving legal and regulatory requirements concerning cybersecurity governance, monitoring, and disclosure.

The costs associated with the incident to date, including the cost to investigate and respond to the incident as well as related legal and other professional services, resulted in a slight increase to the Company's expenses and are recorded in the insurance and other expenses line in the consolidated statement of earnings.

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

13 unchanged sentences

When the yen strengthens, translating yen into dollars results in more dollars being reported.

Consequently, yen weakening has the effect of suppressing current period results in relation to the comparable prior period, while yen strengthening has the effect of magnifying current period results in relation to the comparable prior period.

A significant portion of the Company’s business is conducted in yen and never converted into dollars but translated into dollars for U.S.

19 unchanged sentences

GAAP financial measure for adjusted net investment gains and losses is net investment gains and losses.

• Amortized hedge costs/income represent costs/income incurred or recognized as a result of using foreign currency derivatives to hedge certain foreign exchange risks in the Company's Japan segment or in Corporate

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 contractual term of the derivative.

22 unchanged sentences

GAAP financial measures for adjusted book value excluding foreign currency remeasurement and adjusted book value excluding foreign currency remeasurement per common share are total book value and total book value per common share, respectively.

• Adjusted return on equity is annualized adjusted earnings divided by average shareholders’ equity, excluding AOCI.

• Adjusted return on equity is annualized adjusted earnings divided by average shareholders’ equity, excluding accumulated other comprehensive income.

Management uses adjusted return on equity to evaluate the financial performance of the Company’s insurance operations on a consolidated basis and believes that a presentation of this financial measure is vitally important to an understanding of the underlying profitability drivers and trends of the Company’s insurance business.

The Company considers adjusted return on equity important as it excludes components of AOCI, which fluctuate due to market movements that are outside management's control.

The Company considers adjusted return on equity important as it excludes components of accumulated other comprehensive income, which fluctuate due to market movements that are outside management's control.

The most comparable U.S.

GAAP financial measure for adjusted return on equity is return on average equity as determined using annualized net earnings and average total shareholders’ equity.

• Adjusted return on equity excluding foreign currency remeasurement is annualized adjusted earnings divided by average shareholders’ equity, excluding both AOCI and the cumulative [beginning January 1, 2021] foreign currency gains/losses associated with i) foreign currency remeasurement and ii) sales and redemptions of invested assets.

The Company considers adjusted return on equity excluding foreign currency remeasurement important because it excludes both AOCI and the cumulative foreign currency remeasurement gains/losses, which fluctuate due to market movements that are outside management's control.

• Adjusted return on equity excluding foreign currency remeasurement is annualized adjusted earnings divided by average shareholders’ equity, excluding both accumulated other comprehensive income and the cumulative (beginning January 1, 2021) foreign currency gains/losses associated with i) foreign currency remeasurement and ii) sales and redemptions of invested assets.

The Company considers adjusted return on equity excluding foreign currency remeasurement important because it excludes both accumulated other comprehensive income and the cumulative foreign currency remeasurement gains/losses, which fluctuate due to market movements that are outside management's control.

The most comparable U.S.

GAAP financial measure for adjusted return on equity excluding foreign currency remeasurement is ROE as determined using annualized net earnings and average total shareholders’ equity.

GAAP financial measure for adjusted return on equity excluding foreign currency remeasurement is return on average equity as determined using annualized 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

In Millions Per Diluted Share

Three Months Ended March 31,

In Millions Per Diluted Share In Millions Per Diluted Share

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

2025 2024 2025 2024 2025 2024 2025 2024

7 unchanged sentences

Current period foreign currency impact (2)

8 N/A .01 N/A

(23) N/A (.04) N/A (15) N/A (.03) N/A

Adjusted earnings excluding current period foreign currency impact $ 934 $ 1,035 $ 1.73 $ 1.83 $ 1,848 $ 1,996 $ 3.41 $ 3.49

6 unchanged sentences

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

Three Months Ended March 31,

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

(In millions) 2025 2024 2025 2024

4 unchanged sentences

Net interest income (expense) from derivatives associated with certain investment strategies

(64) (89) (129) (177)

Impact of interest from derivatives associated with notes payable 0 9 4 17

41 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.

In 2025, as part of the U.S.

In January 2025, as part of the U.S.

defined benefit plan freeze, the Company purchased a nonparticipating single premium group annuity contract from an external insurer to settle its obligations under the plan and paid to the insurer the related annuity premium.

14 unchanged sentences

however, the yen strengthened against the U.S.

dollar during the first quarter of 2025.

dollar during the first six months of 2025.

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

3 unchanged sentences

The Company's combined U.S.

and Japanese effective income tax rate on pretax earnings was 80.3% for the three-month period ended March 31, 2025, compared with 13.4% for the same period in 2024.

and Japanese effective income tax rate on pretax earnings was 27.0% for the three-month period ended June 30, 2025, compared with 13.1% for the same period in 2024.

The Company's combined U.S.

and Japanese effective income tax rate on pretax earnings was 35.0% for the six-month period ended June 30, 2025, compared with 13.3% for the same period in 2024.

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

11 unchanged sentences

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

(In millions, except for share and per-share amounts) March 31,

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

2025 December 31,

27 unchanged sentences

GAAP financial measure of return on equity.

Three Months Ended March 31,

Three Months Ended June 30,

GAAP return on equity - net earnings (1)

42 unchanged sentences

In Dollars In Yen

Three Months Ended March 31, Three Months Ended March 31,

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

(In millions of dollars and billions of yen) 2025 2024 2025 2024 2025 2024 2025 2024

28 unchanged sentences

Pretax adjusted earnings (8.6) 5.1 (9.7) 4.0 (15.0) 18.6 (12.1) 17.2

(1) Includes a gain (loss) of an immaterial amount and $(3) for the three-month periods ended March 31, 2025 and 2024, 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 $(58) and $(79) for the three-month periods ended March 31, 2025 and 2024, 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 March 31, 2025, operating results in yen terms compared to the same period in the previous year were as follows:

(1) Includes a gain (loss) of an immaterial amount and $(2) for the three-month periods and an immaterial amount and $(5) for the six-month periods ended June 30, 2025 and 2024, 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 $(59) and $(79) for the three-month periods and $(117) and $(158) for the six-month periods ended June 30, 2025 and 2024, 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, 2025, 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 cancer reinsurance transaction with Aflac Re established in the fourth quarter of 2024 and approximately ¥4 billion from limited-pay products reaching premium paid-up status.

• Adjusted net investment income decreased primarily due to lower floating rate income and fixed-rate yen-denominated income.

• Adjusted net investment income decreased primarily due to lower floating rate income and the impact of yen strengthening on U.S.

dollar investments.

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

• Total benefits and claims decreased primarily due to the internal reinsurance transaction with Aflac Re established in the fourth quarter of 2024 and the impact of assumption updates performed in the third quarter of 2024.

• Total benefits and claims decreased primarily due to the impacts of assumption updates performed in the third quarter of 2024 and the internal reinsurance transaction with Aflac Re established in the fourth quarter of 2024.

• Total adjusted expenses increased primarily due to an increase in technology expenses, partially offset by the impact of the internal reinsurance transaction with Aflac Re established in the fourth quarter of 2024.

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

Annualized premiums in force decreased 2.7% to ¥1.20 trillion as of March 31, 2025, compared with ¥1.23 trillion as of March 31, 2024.

For the six-month period ended June 30, 2025, 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 ¥14 billion related to the internal cancer reinsurance transaction with Aflac Re established in the fourth quarter of 2024 and approximately ¥8 billion from limited-pay products reaching premium paid-up status.

• Adjusted net investment income decreased primarily due to lower floating rate income.

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

• Total benefits and claims decreased primarily due to the the impacts of assumption updates performed in the third quarter of 2024 and the internal reinsurance transaction with Aflac Re established in the fourth quarter of 2024.

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

Annualized premiums in force decreased 2.3% to ¥1.19 trillion as of June 30, 2025, compared with ¥1.22 trillion as of June 30, 2024.

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 $8.0 billion at March 31, 2025, compared with $8.1 billion at March 31, 2024.

As of March 31, 2025, Aflac Japan exceeded 22 million individual policies in force in Japan, with approximately 14 million cancer policies in force in Japan.

Annualized premiums in force, translated into dollars at respective period-end exchange rates, were $8.2 billion at June 30, 2025, compared with $7.6 billion at June 30, 2024.

As of June 30, 2025, Aflac Japan exceeded 22 million individual policies in force in Japan, with approximately 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 March 31,

For the Periods Ended June 30,

Including Foreign

1 unchanged sentence

Currency Changes

Three Months Six Months

2025 2024 2025 2024 2025 2024 2025 2024

2 unchanged sentences

Pretax adjusted earnings (15.0) 18.6 (12.1) 17.2 (11.5) 10.6 (10.7) 9.9

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.

Three Months Ended March 31,

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

Ratios to total adjusted revenues:

2025 2024 2025 2024

Total benefits and claims, net 47.4 % 46.9 % 48.0 % 48.0 %

9 unchanged sentences

Amortization of deferred policy acquisition costs 4.8 4.5 4.7 4.5

• For the three-month period ended March 31, 2025, the total benefits and claims to total premiums ratio decreased primarily due to a decrease in total benefits and claims related to reinsurance activity and the impact of assumption updates performed in the third quarter of 2024, partially offset by the decline in net earned premiums resulting from reinsurance activity and limited-pay products reaching premium paid-up status.

• For the three-month period ended March 31, 2025, the total adjusted expense ratio increased primarily due to an increase in technology expenses.

• In total, the pretax adjusted profit margin decreased in the three-month period ended March 31, 2025 primarily due to the decrease in total adjusted revenues, partially offset by the decrease in total benefits and claims.

The following table presents Aflac Japan's premium persistency on a 12-month rolling basis as of March 31.

• For the three- and six-month periods ended June 30, 2025, the total benefits and claims to total premiums ratio decreased primarily due to lower benefits following assumption updates in the third quarter of 2024.

Internal reinsurance activity increased this ratio overall by reducing the total of both benefits and claims and net earned premiums, with a greater proportional impact on net earned premiums.

The decrease in net earned premiums was also affected by limited-pay products reaching premium paid-up status.

• For the three- and six-month periods ended June 30, 2025, the total adjusted expense ratio increased primarily due to an increase in technology expenses.

• In total, the pretax adjusted profit margin decreased in the three- and six-month periods ended June 30, 2025 primarily due to the decrease in total adjusted revenues, partially offset by the decrease in total benefits and claims.

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

Premium persistency 93.7 % 93.3 %

Aflac Japan Sales

The following table presents Aflac Japan’s new annualized premium sales for the periods ended March 31.

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

In Dollars In Yen

Three Months Six Months

(In millions of dollars and billions of yen) 2025 2024 2025 2024 2025 2024 2025 2024

1 unchanged sentence

Increase (decrease) over prior period 32.8 % (7.8) % 23.0 % (11.5) % 23.2 % 4.5 % 18.7 % .1 %

The increase in new annualized premium sales on a yen basis in the first quarter of 2025 was driven primarily by strong sales of Tsumitasu as well as initial sales of a new cancer insurance product, Miraito , that was launched in certain sales channels in mid-March 2025 and available in all sales channels starting in the second quarter of 2025.

The following table details the contributions to Aflac Japan's new annualized premium sales by major insurance product for the periods ended March 31.

The increase in new annualized premium sales on a yen basis in the second quarter and first six months of 2025 was driven primarily by strong sales of the new cancer insurance product, Miraito , that was launched in certain sales channels in mid-March 2025 and available in all sales channels starting in the second quarter of 2025 as well as sales of Tsumitasu for the first six months of 2025.

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

2025 2024 2025 2024

Cancer 73.0 % 58.8 % 67.6 % 60.7 %

2 unchanged sentences

Traditional life (1)

14.4 21.8 17.6 15.9

WAYS 1.1 2.3 1.4 3.6

Child endowment .1 .2 .1 .2

Other .5 .9 .6 1.3

Total 100.0 % 100.0 % 100.0 % 100.0 %

5 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 March 31.

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.

Independent corporate and individual 46.8 % 49.5 %

2 unchanged sentences

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

During the three-month period ended March 31, 2025, Aflac Japan recruited 18 new sales agencies.

At March 31, 2025, Aflac Japan was represented by approximately 6,500 sales agencies, with approximately 113,000 licensed sales associates employed by those agencies.

During the three-month period ended June 30, 2025, Aflac Japan recruited 76 new sales agencies.

At June 30, 2025, Aflac Japan was represented by approximately 6,400 sales agencies, with approximately 111,000 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 March 31, 2025, Aflac Japan had agreements to sell its products at 358 banks, approximately 90% of the total number of banks in Japan.

At June 30, 2025, Aflac Japan had agreements to sell its products at 358 banks, approximately 90% of the total number of banks in Japan.

Aflac Japan Investments

7 unchanged sentences

Aflac Japan invests in both publicly traded and privately originated U.S.

denominated investment-grade and below-investment-grade fixed maturity securities and loan receivables, and has entered into foreign currency derivatives to hedge the currency risk on the fair value of a portion of the U.S.

dollar-denominated investment-grade and below-investment-grade fixed maturity securities and loan receivables, and has entered into foreign currency derivatives to economically hedge the currency risk on the fair value of a portion of the U.S.

dollar investments.

The following table details the investment purchases for Aflac Japan.

Three Months Ended March 31,

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

(In millions) 2025 2024 2025 2024

5 unchanged sentences

Equity securities 81 89 238 176

Commercial mortgage and other loans:

Other investments 7 8 17 14

14 unchanged sentences

Infrastructure debt $ 0 $ 0 $ 52 $ 0

Private placements 0 0 1 0

Other fixed maturity securities 66 0 66 0

Commercial mortgage and other loans:

4 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 2024 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 March 31.

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

Three Months Six Months

2025 2024 2025 2024

Total purchases for the period (in millions) (1)

3 unchanged sentences

Return on average invested assets (3)

3.38 3.59 3.19 3.37

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

The decrease in the Aflac Japan new money yield in the three-month period ended March 31, 2025 was primarily due to lower allocations to higher yielding asset classes.

The decrease in the Aflac Japan new money yield in the three-month period ended June 30, 2025 was primarily due to lower short-term rates on floating rate assets.

The decrease in the Aflac Japan new money yield in the six-month period ended June 30, 2025 was primarily due to lower 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 March 31,

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

(In millions) 2025 2024 2025 2024

1 unchanged sentence

Adjusted net investment income (1)

207 218 409 424

Other income 17 11 34 30

18 unchanged sentences

Pretax adjusted earnings 1.3 3.8 .9 2.5

(1) Net interest income/expense from derivatives associated with certain investment strategies of $(6) and $(9) for the three-month periods ended March 31, 2025 and 2024, 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 March 31, 2025, 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 $(6) and $(9) for the three-month periods and $(12) and $(19) for the six-month periods ended June 30, 2025 and 2024, 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 periods ended June 30, 2025, 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.

• Adjusted net investment income decreased primarily due to lower floating rate income.

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

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

• Total benefits and claims increased primarily due to higher incurred claims.

• Total adjusted expenses increased primarily due to higher deferred policy acquisition cost amortization and other expenses associated with the corresponding growth in net earned premiums.

• Pretax adjusted earnings increased primarily due to the increase in total adjusted revenues, mostly offset by the increases in total benefits and claims and total adjusted expenses.

For the six-month periods ended June 30, 2025, 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.

• Adjusted net investment income decreased primarily due to lower floating rate income.

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

• Total benefits and claims increased primarily due to higher incurred claims and lower reserve remeasurement gains reflecting actual experience.

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

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

Annualized premiums in force increased 4.7% to $6.5 billion at March 31, 2025, compared with $6.2 billion at March 31, 2024.

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 period in the previous year.

Three Months Ended March 31,

• Pretax adjusted earnings increased primarily due to the increase in total adjusted revenues, mostly offset by the increase in total benefits and claims.

Annualized premiums in force increased 4.3% to $6.5 billion at June 30, 2025, compared with $6.2 billion at June 30, 2024.

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,

Ratios to total adjusted revenues:

2025 2024 2025 2024

Total benefits and claims 41.2 % 40.4 % 41.4 % 40.3 %

9 unchanged sentences

Amortization of deferred policy acquisition costs 9.0 9.1 9.1 9.0

• For the three-month period ended March 31, 2025, the total benefits and claims ratio to total premiums ratio increased primarily due to higher incurred claims and lower reserve remeasurement gains reflecting actual experience.

• The total adjusted expense ratio decreased in the three-month period ended March 31, 2025 primarily due to expense efficiency efforts.

• In total, the pretax adjusted profit margin decreased slightly in the three-month period ended March 31, 2025, primarily due to the increase in the benefit ratio.

• For the three- and six-month periods ended June 30, 2025, the total benefits and claims to total premiums ratio increased primarily due to higher incurred claims.

• The total adjusted expense ratio decreased in the three- and six-month periods ended June 30, 2025 primarily due to expense efficiency efforts.

• In total, the pretax adjusted profit margin decreased in the three- and six-month periods ended June 30, 2025, primarily due to the increase in total benefits and claims.

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

on a 12-month rolling basis as of March 31.

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

Premium persistency 79.2 % 78.7 %

The following table presents Aflac's U.S.

new annualized premium sales for the periods ended March 31.

new annualized premium sales for the periods ended June 30.

Three Months Six Months

(In millions) 2025 2024 2025 2024

2 unchanged sentences

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

in the first quarter of 2025 was primarily driven by sales of group products.

in the second quarter and first six months of 2025 was primarily driven by sales of group products.

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

new annualized premium sales by major insurance product category for the periods ended March 31.

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

Three Months Six Months

2025 2024 2025 2024

Accident 19.0 % 21.2 % 20.0 % 21.8 %

1 unchanged sentence

Critical care (1)

21.8 21.1 21.8 21.6

Hospital indemnity 11.9 13.7 13.3 14.4

3 unchanged sentences

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

In the first quarter of 2025, the Aflac U.S.

In the second quarter of 2025, the Aflac U.S.

sales force included an average of approximately 5,400 U.S.

6 unchanged sentences

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

Three Months Ended March 31,

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

(In millions) 2025 2024 2025 2024

dollar-denominated:

Fixed maturity securities:

5 unchanged sentences

Transitional real estate loans 5 5 7 12

Commercial mortgage loans 0 13 0 13

Middle market loans 49 14 89 86

1 unchanged sentence

Other investments 59 6 73 14

dollar-denominated $ 386 $ 215 $ 892 $ 741

Other currencies:

Other investments $ 1 $ 0 $ 1 $ 0

Total other currencies $ 1 $ 0 $ 1 $ 0

Total Aflac U.S.

2 unchanged sentences

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

investment yields for the periods ended March 31.

investment yields for the periods ended June 30.

Three Months Six Months

2025 2024 2025 2024

Total purchases for period (in millions) (1)

$ 327 $ 209 $ 819 $ 727

New money yield (1),(2)

1 unchanged sentence

Return on average invested assets (3)

4.94 5.13 4.92 5.01

Portfolio book yield, end of period (1),(2)

5 unchanged sentences

The decrease in the Aflac U.S.

new money yield in the three-month period ended March 31, 2025 was primarily due to lower allocations to higher yielding asset classes.

new money yield in the three- and six-month periods ended June 30, 2025 was primarily due to lower short-term rates on floating rate assets.

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 March 31,

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

(In millions) 2025 2024 2025 2024

1 unchanged sentence

Net investment income (loss) (1)

98 57 194 107

Amortized hedge income 30 34 60 62

19 unchanged sentences

Pretax adjusted earnings (13.0) 144.2 200.0 136.2

(1) The change in value of federal historic rehabilitation and solar investments in partnerships of $8 and $32 for the three-month periods ended March 31, 2025 and 2024, respectively, is included as a reduction to net investment income.

Tax credits on these investments of $7 and $33 for the three-month periods ended March 31, 2025 and 2024, 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 $8 and $30 for the three-month periods and $16 and $62 for the six-month periods ended June 30, 2025 and 2024, respectively, is included as a reduction to net investment income.

Tax credits on these investments of $9 and $31 for the three-month periods and $16 and $64 for the six-month periods ended June 30, 2025 and 2024, 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 March 31, 2025, 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 the agreement established in the fourth quarter of 2024.

For the three-month period ended June 30, 2025, 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 internal reinsurance activity resulting from the agreement established in the fourth quarter of 2024.

• Adjusted net investment income increased primarily due to $22 million from a lower volume of federal historic rehabilitation and solar tax credit investments, with offsetting tax benefits recognized as a corresponding lower income tax expense, and higher Aflac Re consolidated investment income of $13 million from a higher volume of assets as part of the reinsurance agreement established in the fourth quarter of 2024.

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

• Total adjusted expenses increased primarily due to $30 million from higher costs pertaining to business operations, including costs to date to investigate and respond to the cybersecurity incident and legal and other professional services related thereto, $15 million associated with internal reinsurance activity and higher interest expense of $13 million.

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

For the six-month period ended June 30, 2025, 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 internal reinsurance activity resulting from the agreement established in the fourth quarter of 2024.

• Adjusted net investment income increased primarily due to $46 million from a lower volume of federal historic rehabilitation and solar tax credit investments, with offsetting tax benefits recognized as a corresponding lower income tax expense, and higher Aflac Re consolidated investment income of $24 million from a higher volume of assets as part of the reinsurance agreement established in the fourth quarter of 2024.

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

• Total adjusted expenses increased primarily due to reinsurance activity and higher interest expense.

• Total adjusted expenses increased primarily due to $29 million from higher costs pertaining to business operations, including costs to date to investigate and respond to the cybersecurity incident and legal and other professional services related thereto, $23 million associated with internal reinsurance activity and higher interest expense of $22 million.

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

13 unchanged sentences

Investment Securities by Segment

March 31, 2025

June 30, 2025

(In millions) Aflac Japan Aflac U.S.

65 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.

In the three-month period ended March 31, 2025, the Company completed foreclosure or deed in lieu of foreclosure on TREs collateralized with commercial real estate properties with an amortized cost of $87 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 $16 million in net investment gains (losses) for the three-month period ended March 31, 2025.

In the three-month period ended March 31, 2024, the Company completed foreclosure or deed in lieu of foreclosure on TREs collateralized with commercial real estate properties with an amortized cost of $31 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 $4 million in net investment gains (losses) for the three-month period ended March 31, 2024.

In the six-month period ended June 30, 2025, the Company completed foreclosure or deed in lieu of foreclosure on TREs collateralized with commercial real estate properties with an amortized cost of $257 million.

As a result of the amortized cost of the TREs exceeding the estimated fair value of the collateral upon consummating the foreclosures or deed in lieu of foreclosure transactions, the Company recognized a net loss of $10 million in net investment gains (losses) for the six-month period ended June 30, 2025.

In 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 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

March 31, 2025 December 31, 2024

June 30, 2025 December 31, 2024

Value Amortized

5 unchanged sentences

Total 100.0 % 100.0 % 100.0 % 100.0 %

As of March 31, 2025, the Company's direct and indirect exposure to securities in its investment portfolio that were guaranteed by third parties was immaterial both individually and in the aggregate.

The following table presents the 10 largest unrealized loss positions in the Company's portfolio as of March 31, 2025.

As of June 30, 2025, the Company's direct and indirect exposure to securities in its investment portfolio that were guaranteed by third parties was immaterial both individually and in the aggregate.

The following table presents the 10 largest unrealized loss positions in the Company's portfolio as of June 30, 2025.

(In millions) Credit

3 unchanged sentences

Urban Renaissance Agency A+ 168 111 (57)

KLM Royal Dutch Airlines B+ 133 96 (37)

Thames Water Utility CCC- 138 99 (39)

JP Morgan Chase and Co.

A- 220 181 (39)

Prologis LP A 151 121 (30)

KLM Royal Dutch Airlines B+ 138 99 (39)

Tokyo Gas Co Ltd A+ 104 73 (31)

Banco de Chile A 134 108 (26)

Mitsubishi Estate Co Ltd.

A 138 108 (30)

SNCF Reseau AA- 72 48 (24)

West Japan Railway Company A+ 91 62 (29)

Prologis LP A 156 128 (28)

SNCF Reseau AA- 75 49 (26)

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

March 31, 2025

June 30, 2025

(In millions) Par

5 unchanged sentences

Thames Water Utility 139 138 99 (39)

Telecom Italia SpA 134 134 175 41

KLM Royal Dutch Airlines 138 137 98 (39)

Telecom Italia SpA 138 138 180 42

IKB Deutsche Industriebank AG 90 48 78 30

Generalitat de Catalunya 55 24 53 29

Hawaiian Electric Industries Inc 35 35 29 (6)

Amarok Parent LLC 25 24 25 1

CPI Property Group SA 21 21 20 (1)

16 unchanged sentences

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

March 31, 2025

June 30, 2025

(In millions) Amortized

28 unchanged sentences

Investment Securities by Type of Issuance

March 31, 2025 December 31, 2024

June 30, 2025 December 31, 2024

(In millions) Amortized

15 unchanged sentences

Reverse Dual-Currency Securities (1)

(Amortized cost, in millions) March 31,

(Amortized cost, in millions) June 30,

2025 December 31,

32 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 March 31.

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.

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

FX forward (sell USD, buy yen) notional at end of period (in billions) (1)

Three Months Six Months

2025 2024 2025 2024

FX forward notional at end of period (in billions) (1)

$0.6 $0.0 $0.6 $0.0

Amortized hedge income (cost) for period (in millions) $(3) $0 $(3) $1

FX option notional at the end of period (in billions) (1)

$25.0 $24.7 $25.0 $24.7

Amortized hedge income (cost) for period (in millions) $(8) $(7) $(15) $(14)

Corporate and other (Parent Company):

FX forward (buy USD, sell yen) notional at end of period (in billions) (1)

FX forward notional at end of period (in billions) (1)

$1.9 $2.0 $1.9 $2.0

Amortized hedge income (cost) for period (in millions) $30 $34 $60 $62

FX option notional at the end of period (in billions) (1)

$0.0 $0.0 $0.0 $0.0

Amortized hedge income (cost) for period (in millions) $0 $0 $0 $0

1 unchanged sentence

Amortized hedge costs/income can fluctuate based upon many factors, including the derivative notional amount, the length of time of the derivative contract, changes in both U.S.

and Japan interest rates, and supply and demand for dollar funding.

and Japan interest rates, and supply and demand for U.S.

dollar funding.

Amortized hedge costs/income have fluctuated in recent periods due to changes in the previously mentioned factors.

32 unchanged sentences

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

As of March 31, 2025, none of the Company's foreign currency options hedging Aflac Japan's U.S.

As of June 30, 2025, none of the Company's foreign currency options hedging Aflac Japan's U.S.

dollar-denominated assets were in-the-money.

Foreign exchange derivatives used for hedging are periodically settled, which results in cash receipt or payment at maturity or early termination.

Foreign exchange derivatives used for hedging are periodically settled, which results in cash receipt or payment at inception, maturity or early termination.

The following table presents the settlements associated with the Company's currency derivatives used for hedging Aflac Japan’s U.S.

dollar-denominated investments.

Three Months Ended March 31,

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

(In millions) 2025 2024 2025 2024

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 $7.0 billion as of March 31, 2025, with hedging instruments comprised of $4.3 billion of yen-denominated debt and $2.7 billion of foreign currency forwards, compared with $5.9 billion as of December 31, 2024, with hedging instruments comprised of $4.1 billion of yen-denominated debt and $1.8 billion of foreign currency forwards .

The Company's consolidated yen-denominated net asset position was partially hedged at $7.4 billion as of June 30, 2025, with hedging instruments comprised of $5.5 billion of yen-denominated debt and $1.9 billion of foreign currency forwards, compared with $5.9 billion as of December 31, 2024, with hedging instruments comprised of $4.1 billion of yen-denominated debt and $1.8 billion of foreign currency forwards .

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-month periods ended March 31, 2025 and 2024, respectively.

The Company's net investment hedge was effective during the three- and six-month periods ended June 30, 2025 and 2024, respectively.

For additional information on the Company's net investment hedging strategy, see Note 4 of the Notes to the Consolidated Financial Statements.

17 unchanged sentences

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

(In millions) March 31,

2025 December 31, 2024 % Change

(In millions) June 30,

2025 December 31,

2024 % Change

Aflac Japan $ 5,614 $ 5,102 10.0 % (1)

1 unchanged sentence

Total $ 9,296 $ 8,758 6.1 %

(1) Aflac Japan’s deferred policy acquisition costs increased .4% in yen during the three months ended March 31, 2025.

(1) Aflac Japan’s deferred policy acquisition costs increased .7% in yen during the six months ended June 30, 2025.

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) March 31,

2025 December 31, 2024 % Change

(In millions) June 30,

2025 December 31,

2024 % Change

Aflac Japan $ 68,857 $ 67,549 1.9 % (1)

4 unchanged sentences

Total $ 78,904 $ 77,508 1.8 %

(1) Aflac Japan’s policy liabilities decreased 3.7% in yen during the three months ended March 31, 2025.

(1) Aflac Japan’s policy liabilities decreased 6.7% in yen during the six months ended June 30, 2025.

(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 three-month periods ended March 31, 2025 and March 31, 2024.

Accordingly, Aflac Japan did not recognize an expense for LIPPC assessments for the six-month periods ended June 30, 2025 and June 30, 2024.

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-month periods ended March 31, 2025 and 2024 were immaterial.

Guaranty fund assessments for the three- and six-month periods ended June 30, 2025 and 2024 were immaterial.

LIQUIDITY AND CAPITAL RESOURCES

13 unchanged sentences

The Company remains committed to prudent liquidity and capital management.

At March 31, 2025, the Company held $5.2 billion in cash and cash equivalents for stress conditions, which includes the Parent Company's target minimum amount of $1.8 billion.

At June 30, 2025, the Company held $7.0 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 three-month periods ended March 31.

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

Liquidity Provided by Subsidiaries to Parent Company

2 unchanged sentences

Dividends declared or paid by subsidiaries 2,567 2,111

The following table details Aflac Japan remittances, which are included in the totals above, for the three-month periods ended March 31.

The following table details Aflac Japan remittances, which are included in the totals above, for the six-month periods ended June 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 March 31, 2025.

The Company was in compliance with all of the covenants of its notes payable and lines of credit at June 30, 2025.

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 March 31, 2025, the Company had no material letters of credit, standby letters of credit, guarantees or standby repurchase obligations.

As of June 30, 2025, 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 three-month periods ended March 31.

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

(In millions) 2025 2024

18 unchanged sentences

As part of its overall corporate strategy, the Company has committed up to $400 million to Aflac Ventures, LLC (Aflac Ventures), as opportunities emerge.

As of March 31, 2025, of the $400 million committed, approximately $290 million has been deployed.

As of June 30, 2025, of the $400 million committed, approximately $294 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 investment funding from FHLB supported by acceptable forms of collateral pledged by Aflac U.S.

In the first three months of 2025, Aflac U.S.

In the first six months of 2025, Aflac U.S.

borrowed and repaid $331 million under this program.

As of March 31, 2025, Aflac U.S.

As of June 30, 2025, Aflac U.S.

had outstanding borrowings of $590 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.

Cash returned to shareholders through treasury stock purchases and dividends was $1.2 billion during the three-month period ended March 31, 2025, compared with $1.0 billion during the three-month period ended March 31, 2024.

The following tables present a summary of treasury stock activity during the three-month periods ended March 31.

In June 2025, the Parent Company issued four series of senior notes totaling ¥74.9 billion through a public debt offering under its U.S.

shelf registration statement.

The first series, which totaled ¥35.0 billion, bears interest at a fixed rate of 1.726% per annum, payable semi-annually, and will mature in October 2030.

The second series, which totaled ¥23.4 billion, bears interest at a fixed rate of 2.003% per annum, payable semi-annually, and will mature in December 2032.

The third series, which totaled ¥9.5 billion, bears interest at a fixed rate of 2.369% per annum, payable semi-annually, and will mature in June 2035.

The fourth series, which totaled ¥7.0 billion, bears interest at a fixed rate of 2.779% per annum, payable semi-annually, and will mature in June 2040.

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.

taxation, as specified in the indenture governing the terms of the issuance.

In addition, the notes maturing in October 2030, December 2032, June 2035 and June 2040 are redeemable at the Parent Company's option, in whole or in part from time to time, on or after July 18, 2030, September 14, 2032, December 5, 2034, and December 5, 2039, 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.

In May 2025, the Parent Company issued four series of senior notes totaling ¥75.1 billion through a private placement.

The first series, which totaled ¥18.2 billion, bears interest at a fixed rate of 1.990% per annum, payable semi-annually, and will mature in May 2032.

The second series, which totaled ¥38.3 billion, bears interest at a fixed rate of 2.320% per annum, payable semi-annually, and will mature in May 2035.

The third series, which totaled ¥11.6 billion, bears interest at a fixed rate of 2.650% per annum, payable semi-annually, and will mature in May 2040.

The fourth series, which totaled ¥7.0 billion, bears interest at a fixed rate of 3.040% per annum, payable semi-annually, and will mature in May 2045.

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.

See Note 9 of the Notes to the Consolidated Financial Statements for further information on the debt issuances discussed above.

Cash returned to shareholders through treasury stock purchases and dividends was $2.3 billion during the six-month period ended June 30, 2025, compared with $2.1 billion during the six-month period ended June 30, 2024.

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

Treasury Stock Purchased

12 unchanged sentences

Number of shares issued 633 714

As of March 31, 2025, a remaining balance of 38.8 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 $.58 per share in the first quarter of 2025, compared with $.50 per share in the first quarter of 2024.

The following table presents the dividend activity for the three-month periods ended March 31.

As of June 30, 2025, a remaining balance of 30.9 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 $.58 per share in the second quarter of 2025, compared with $.50 per share in the second quarter of 2024.

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

(In millions) 2025 2024

2 unchanged sentences

Total dividends to shareholders $ 629 $ 571

In April 2025, the board of directors declared the second quarter cash dividend of $.58 per share, an increase of 16.0% compared with the same period in 2024.

The dividend is payable on June 2, 2025 to shareholders of record at the close of business on May 21, 2025.

In August 2025, the board of directors declared the third quarter cash dividend of $.58 per share, an increase of 16.0% compared with the same period in 2024.

The dividend is payable on September 2, 2025 to shareholders of record at the close of business on August 20, 2025.

Regulatory Restrictions

19 unchanged sentences

See Notes 3, 4 and 8 of the Notes to the Consolidated Financial Statements in the 2024 Annual Report for additional information on the Company's investment strategies, hedging activities, and reinsurance, respectively.

As of March 31, 2025, Aflac Japan's SMR remains high and reflects a strong capital and surplus position.

As of June 30, 2025, 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.

4 unchanged sentences

GAAP and are intended to emphasize policyholder protection and company solvency.

The continued long-term growth of the Company's business may require increases in the statutory capital and surplus of its insurance operations.

The continued long-term growth of the Company's business may require increases in

the statutory capital and surplus of its insurance operations.

The Company's insurance operations may secure additional statutory capital through various sources, such as internally generated statutory earnings, reduced dividends paid to the Parent Company, capital contributions by the Parent Company from funds generated through debt or equity offerings, or reinsurance transactions.

1 unchanged sentence

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 March 31, 2025, Aflac U.S.'s combined RBC ratio remains high and reflects a strong capital and surplus position.

As of June 30, 2025, 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.

4 unchanged sentences

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).

Aflac Re is required to file an annual return for its Bermuda Solvency Capital Requirement (BSCR) which utilizes an Economic Balance Sheet (EBS) framework to determine Aflac Re’s Enhanced Capital Requirement (ECR).

Aflac Re is also subject to a Minimum Margin of Solvency (MMS) related to its statutory financial statements.

The MMS is equal to the greater of $500,000, 1.5% of the total statutory assets, or 25% of ECR.

Aflac Re is required to file annual and quarterly returns for its Bermuda Solvency Capital Requirement (BSCR) which utilizes an Economic Balance Sheet (EBS) framework to determine Aflac Re’s Enhanced Capital Requirement (ECR).

Aflac Re is also subject to a Minimum Margin of Solvency (MSM) related to its statutory financial statements.

The MSM is equal to the greater of $8,000,000;

2% of the first $500,000,000 of assets under management plus 1.5% of the amount by which assets exceed $500,000,000;

or 25% of ECR.

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.

18 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 93% of the Company's assets and 77% of its liabilities are reported as of March 31, 2025, and thus has a direct effect on net earnings and shareholders’ equity.

The application of these critical accounting estimates determines the values at which 92% of the Company's assets and 74% of its liabilities are reported as of June 30, 2025, and thus has a direct effect on net earnings and shareholders’ equity.

Subsequent experience or use of other assumptions could produce significantly different results.

There have been no changes in the items the Company has identified as critical accounting estimates during the three-month period ended March 31, 2025.

There have been no changes in the items the Company has identified as critical accounting estimates during the six-month period ended June 30, 2025.

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