Aflac Q3 2026 GAAP Profit Falls on Investment Losses

Aflac Incorporated (NYSE: AFL) reported a sharp decline in third-quarter 2026 U.S. GAAP earnings as investment losses weighed on results, while adjusted profit declined more modestly and profitability in both its Japan and U.S. insurance businesses remained above their stated 2026 margin ranges.

Net earnings fell 81.5% to $303 million from $1.64 billion a year earlier. Diluted net earnings per share dropped 80.2% to $0.61 from $3.08, primarily reflecting $1.03 billion of adjusted net investment losses, compared with $335 million of adjusted net investment gains in the prior-year quarter.

Adjusted earnings, which exclude items Aflac says can obscure the underlying performance of its insurance operations, decreased 8.5% to $1.21 billion. Adjusted diluted earnings per share declined 2.4% to $2.43 from $2.49. Excluding the current-period effect of foreign-currency translation, adjusted EPS was $2.46, down 1.2%, while adjusted earnings were $1.23 billion, 7.5% lower.

Insurance Margins Exceed Stated Ranges

Aflac Japan recorded a third-quarter benefit ratio of 49.2%, an expense ratio of 21.2% and a pretax profit margin of 44.4%. For 2026, the company expects the benefit ratio to be slightly below its stated 60%-63% range and the expense ratio to be at the lower end of a 20%-23% range. Aflac revised its Japan pretax profit-margin outlook upward to a range of 35%-38%.

Aflac U.S. posted a benefit ratio of 40.7%, an expense ratio of 37.0% and a pretax profit margin of 27.7% for the quarter. The company expects its 2026 U.S. benefit ratio to be below the stated 48%-52% range, the expense ratio to be around the middle of a 36%-39% range and the pretax profit margin to be above a 17%-20% range.

The presentation did not provide premium, sales or revenue figures for either operating segment, limiting the available detail on underlying business growth.

Returns, Capital and Shareholder Distributions

U.S. GAAP return on equity fell to 4.1% from 23.5%, reflecting the decline in net earnings. Adjusted return on equity was 17.8%, compared with 19.1% a year earlier. Excluding foreign-currency remeasurement, adjusted ROE increased to 23.7% from 23.1%.

At Sept. 30, U.S. GAAP book value per common share was $59.08, up 8.3% year over year. Adjusted book value per share increased 1.7% to $54.21, while adjusted book value excluding foreign-currency remeasurement declined 6.4% to $40.73.

Aflac’s adjusted leverage ratio was 22.6%, within its target range of 20%-25%, compared with 22.0% a year earlier. Its GAAP leverage ratio was 23.3%, up slightly from 23.2%.

The company estimated Aflac Japan’s regulatory economic solvency ratio at 238% with an undertaking-specific parameter, which adds an estimated 13 percentage points. Its combined U.S. risk-based capital ratio was estimated at more than 575%.

Aflac returned $1.11 billion to shareholders during the quarter, comprising $804 million of share repurchases and $305 million of dividends. That compared with total capital deployment of $1.31 billion in the third quarter of 2025.

Currency and Other Risks

Because a significant portion of Aflac’s business is conducted in Japan, movements in the yen-dollar exchange rate can materially affect reported earnings, cash flow and book value when yen-denominated results are translated into U.S. dollars. The company also identified capital-market conditions, inflation, interest-rate exposure, investment defaults or downgrades, regulatory changes and competitive pressures as material uncertainties.

Operational risks include the company’s ability to maintain secure technology systems and protect sensitive data. Aflac also cited continuing uncertainty over the impact of unauthorized access to its network in June 2025, as well as risks involving third-party vendors, litigation, catastrophic events and the ability of subsidiaries to distribute capital to the parent company.