Aflac Q2 2026 Earnings: Lower Investment Losses Lift GAAP Profit as Adjusted Earnings Fall

Aflac (NYSE: AFL) reported Q2 2026 revenue of $4.117 billion, down 1.0% from $4.160 billion a year earlier, while diluted GAAP EPS rose to $1.63 from $1.11. Net earnings increased as net investment losses narrowed, but adjusted earnings fell 7.7% and the weaker yen reduced adjusted EPS by $0.05. Favorable benefits supported Japan’s profitability, whereas higher U.S. benefits compressed that segment’s margin.

Core financial results

For the quarter ended June 30, 2026, Aflac’s GAAP profitability improved despite the modest revenue decline. The main driver was a substantial reduction in net investment losses rather than an equivalent improvement in adjusted operating earnings.

Adjusted earnings declined more than adjusted EPS because average diluted shares fell 6.1% to 505.6 million. Excluding current-period currency effects, adjusted EPS increased 1.1%, indicating that foreign-exchange translation accounted for the reported per-share decline.

Lower investment losses lifted GAAP profit while currency pressured adjusted results

Aflac recorded $153 million of GAAP net investment losses, down from $421 million a year earlier. The current-quarter amount included $238 million of losses from sales and redemptions, $77 million of current expected credit losses and $11 million of impairments. These were partially offset by an $87 million gain from equity-security fair-value changes and $86 million of gains on certain derivatives and foreign-currency activities.

After the company’s non-GAAP adjustments, investment losses were $106 million, compared with $377 million in Q2 2025. Because these investment items are excluded from adjusted earnings, the sharp improvement had a much larger effect on GAAP net earnings than on Aflac’s adjusted results.

Currency created another important difference. The average yen-dollar exchange rate was 159.45 yen per dollar, 9.3% weaker than the prior-year rate of 144.60. That reduced adjusted EPS by $0.05. Adjusted earnings excluding current-period currency effects still declined 4.9% to $910 million, showing that currency was a meaningful—but not the only—source of pressure.

Business and segment performance

Japan and the United States moved in different directions. Japan’s yen-based pretax margin expanded on favorable benefits, while the U.S. generated higher premiums and revenue but lower profit because benefits rose faster.

Aflac Japan’s premium decline reflected a new external reinsurance transaction for WAYS and Tsumitasu, as well as limited-pay products reaching paid-up status. Adjusted investment income fell 2.9% in yen because of reduced call income and lower dollar-denominated floating-rate income, partly offset by higher fixed-rate income and the effect of the weaker yen on dollar-denominated assets.

Favorable benefits lifted Japan’s yen-based pretax adjusted earnings and reduced its benefits ratio by 250 basis points to 64.0%. However, pretax adjusted earnings fell 2.1% on a currency-neutral basis and 6.2% when translated into dollars. Japan sales declined 5.6% to ¥19.6 billion against a high comparison following the March 2025 launch of Miraito cancer insurance. Growth in the refreshed Tsumitasu life product and Anshin Palette medical insurance provided a partial offset.

In the U.S., improved sales and persistency supported premium growth. Sales rose 2.6% to $349 million, mainly because of group voluntary benefits and network dental and vision products. However, the benefits ratio increased 220 basis points to 49.5%, driving the decline in pretax adjusted earnings despite a slight improvement in the expense ratio.

Corporate and Other moved to a pretax adjusted loss because of lower short-term investment income, reduced hedge benefits, higher interest expense and runoff effects from closed blocks of business.

Profitability, capital and the balance sheet

Aflac’s reported shareholders’ equity increased, but the movement was heavily influenced by accumulated other comprehensive income and insurance-reserve discount-rate assumptions. Adjusted book value was nearly unchanged in total, while the lower share count supported growth on a per-share basis.

Quarter-end equity included a cumulative $10.4 billion increase from changes in insurance-reserve discount-rate assumptions, compared with $5.6 billion a year earlier. It also included a $2.8 billion unrealized loss on investments and derivatives and a $5.0 billion foreign-currency translation loss.

Aflac returned approximately $1.3 billion to shareholders during the quarter, consisting of $983 million in share repurchases and $309 million in dividends. The board also declared a third-quarter dividend of $0.61 per share, payable September 1, 2026, to shareholders of record on August 19.

Management’s perspective

Chairman and CEO Daniel Amos emphasized product initiatives in Japan, including Anshin Palette, Miraito and Tsumitasu. In the U.S., management remains focused on supplemental health products and related benefits for employers and employees. The company also reiterated its approach of investing in growth while using capital through dividends and opportunistic repurchases.

Recent insider transactions

During the latest six-month period in the supplied data, insiders reported purchases of 577,654 shares across 24 transactions and sales of 1,487,779 shares across 68 transactions. That produced net reported sales of 910,125 shares, equal to 1.60% of the 54.9 million shares held by insiders.

The 10 latest reported records were dominated by indirect sales from Japan Post Holdings. Transaction values below are the amounts reported by the source, not share quantities.

These disclosures establish the transaction dates, types and reported values but do not state the insiders’ reasons for trading.

Risks investors should monitor

• Yen translation: Aflac’s large Japan operation makes reported dollar results sensitive to exchange rates. The weaker yen reduced Q2 adjusted EPS by $0.05 and amplified the decline in Japan’s dollar-denominated results.
• Higher U.S. benefits: The U.S. benefits ratio increased to 49.5%, causing pretax adjusted earnings and margin to decline even as premiums and revenue grew.
• Japan premium and persistency pressure: Japan premiums fell because of reinsurance and limited-pay policies reaching paid-up status, while quarterly sales declined against a high comparison and persistency decreased by 100 basis points.
• Investment and corporate earnings volatility: Consolidated adjusted net investment income fell 9.6%, and Corporate and Other recorded a loss amid lower short-term income, reduced hedge benefits and higher interest expense. Credit losses, impairments and market-value changes also continued to affect GAAP results and book value.

Summary

Aflac’s Q2 2026 results showed a clear divergence between GAAP and adjusted performance. Smaller investment losses lifted net earnings and GAAP EPS, while the weaker yen, lower adjusted investment income, higher U.S. benefits and a Corporate and Other loss weighed on underlying results. Future reporting will need to show whether U.S. benefit pressure moderates, Japan’s newer products can offset premium and sales headwinds, and currency-neutral adjusted earnings can regain momentum.