Cuộc họp báo cáo kết quả kinh doanh quý 3 năm 2026 của Aflac (AFL): Nâng triển vọng biên lợi nhuận tại Nhật Bản

Aflac Incorporated (NYSE: AFL) công bố lợi nhuận ròng quý 3/2026 đạt 0,61 USD trên mỗi cổ phiếu pha loãng và lợi nhuận điều chỉnh đạt 2,43 USD trên mỗi cổ phiếu pha loãng. Nếu loại trừ tác động tỷ giá, EPS điều chỉnh đạt 2,46 USD, giảm 1,2% so với cùng kỳ năm trước.

Những điểm nhấn chính

• Doanh số của Aflac Nhật Bản giảm 4% so với cùng kỳ năm trước xuống còn 18,8 tỷ JPY trong bối cảnh mức nền so sánh cao sau đợt ra mắt Miraito, nhưng đã tăng 3% trong 9 tháng đầu năm 2026.
• Doanh số của Aflac Mỹ tăng 3,5%, trong khi phí bảo hiểm thuần được hưởng tăng 3,3%. Phân khúc này ghi nhận biên lợi nhuận trước thuế đạt 27,7%.
• Việc cập nhật giả định tính toán bảo hiểm hàng năm đã đóng góp thêm 0,71 USD vào EPS pha loãng. Lợi nhuận từ việc đánh giá lại dự phòng trước thuế đạt tổng cộng 447 triệu USD, bao gồm 55 triệu USD lãi đánh giá lại theo kinh nghiệm thực tế.
• Ban lãnh đạo đã nâng biên lợi nhuận trước thuế kỳ vọng năm 2026 của Aflac Nhật Bản lên khoảng 35%-38%, đồng thời kỳ vọng biên lợi nhuận tại Mỹ sẽ kết thúc ở mức cao hơn phạm vi 17%-20% trước đó.
• Aflac Nhật Bản đã nhượng khoảng 500 tỷ JPY dự phòng FSA cho Aflac Re Bermuda, giúp giải phóng ước tính 1 tỷ USD vốn theo thời gian. Tỷ lệ dự phòng nhượng tái bảo hiểm tăng từ khoảng 10% lên 15%, so với hạn mức nội bộ là 30%.
• Aflac đã hoàn trả 1,1 tỷ USD cho cổ đông trong quý 3 thông qua 804 triệu USD mua lại cổ phiếu và 305 triệu USD cổ tức. Tổng số vốn hoàn trả cho cổ đông trong 9 tháng đạt 3,7 tỷ USD.

Dữ liệu tài chính cốt lõi

Kết quả kinh doanh và hoạt động

Aflac Nhật Bản

Phí bảo hiểm cơ bản được hưởng tính bằng đồng yên giảm 1,2%, nhìn chung phù hợp với kỳ vọng cả năm của ban lãnh đạo. Tỷ lệ bồi thường báo cáo là 49,2%; sau khi điều chỉnh cho việc đánh giá lại theo kinh nghiệm thực tế và điều chỉnh giả định, ban lãnh đạo ước tính tỷ lệ này ở mức 61,7%.

Xu hướng nằm viện và tử vong liên quan đến ung thư tiếp tục duy trì ở mức khả quan. Doanh số sản phẩm Tsumitasu tăng cả so với cùng kỳ năm trước và so với quý trước, trong khi doanh số của Anshin Palette tăng so với năm trước. Tsumitasu chiếm khoảng 20% tổng doanh số tại Nhật Bản và đang được dùng để thu hút khách hàng trẻ tuổi và trung niên, đồng thời hỗ trợ bán kèm các sản phẩm bảo hiểm ung thư và y tế.

Tỷ lệ chi phí hoạt động của Nhật Bản tăng 140 điểm cơ bản lên 21,2%. Các chi phí liên quan đến an ninh mạng và nâng cấp hệ thống đã làm tăng tỷ lệ này thêm khoảng 180 điểm cơ bản và làm giảm 0,06 USD EPS pha loãng, tương đương 40 triệu USD.

Thu nhập thuần từ đầu tư điều chỉnh tính bằng đồng yên tăng 3,7%, nhờ thu nhập từ tài sản lãi suất cố định cao hơn và thu nhập từ các tài sản định danh bằng USD tăng khi đồng yên suy yếu. Những lợi ích này bị bù trừ một phần bởi thu nhập từ tài sản lãi suất thả nổi thấp hơn và chi phí tăng cao.

Aflac Mỹ

Tăng trưởng được dẫn dắt bởi các sản phẩm bảo hiểm nhân thọ nhóm, bảo hiểm nghỉ phép và thương tật, cùng các sản phẩm nha khoa theo mạng lưới liên kết. Phí bảo hiểm được hưởng của nền tảng khách hàng nhóm tăng 17%, bao gồm mức tăng trưởng 29% ở mảng nhân thọ, nghỉ phép và thương tật, cùng 55% ở mảng nha khoa và thị lực. Phúc lợi tự nguyện tăng 7,5%, trong khi nền tảng khách hàng cá nhân giảm khoảng 1,5%.

Tỷ lệ bồi thường báo cáo giảm 490 điểm cơ bản xuống 40,7%, do tác động từ việc điều chỉnh giả định tính toán bảo hiểm. Ban lãnh đạo ước tính tỷ lệ điều chỉnh là 50,2% sau khi loại bỏ các tác động đánh giá lại.

Tỷ lệ chi phí hoạt động giảm 190 điểm cơ bản xuống 37%, một phần do kỳ cùng kỳ năm trước có bao gồm khoản phí chấm dứt hợp đồng sớm trị giá 21 triệu USD. Việc hoãn ghi nhận chi phí khai thác khi mảng kinh doanh bảo hiểm nhân thọ và thương tật nhóm mở rộng quy mô đã giúp giảm thêm 80 điểm cơ bản trong tỷ lệ chi phí quý 3, với mức hưởng lợi dự kiến sẽ nhỏ hơn trong các kỳ tiếp theo.

Đầu tư và Vốn

Aflac đã tái cơ cấu thêm 2,3 tỷ USD trái phiếu chính phủ Nhật Bản trong quý 3 nhằm nắm bắt mức lợi suất cao hơn. Ban lãnh đạo cho biết giao dịch này dự kiến sẽ đóng góp thêm hơn 30 triệu USD vào thu nhập thuần từ đầu tư hàng năm trong tương lai. Các biện pháp cơ cấu danh mục hoàn tất từ đầu năm đến nay đã bổ sung hơn 80 triệu USD thu nhập thuần từ đầu tư quy năm.

Công ty tiếp tục tăng trích lập dự phòng cho vay do áp lực từ định giá bất động sản thương mại và các kỳ vọng dài hạn về hiệu quả của các khoản vay doanh nghiệp tầm trung. Kết quả theo luật định tại Mỹ bao gồm 6 triệu USD chi phí suy giảm giá trị tài sản đầu tư và khoản dự phòng định giá cho vay thế chấp trị giá 6 triệu USD.

Định hướng của Ban lãnh đạo

• Ban lãnh đạo tiếp tục kỳ vọng doanh số năm 2026 của Aflac Nhật Bản sẽ vượt mức năm 2025. Các hoạt động bán hàng bị ảnh hưởng bởi sự cố an ninh mạng đã được nối lại vào tháng 9 và ban lãnh đạo cho biết doanh số đã trở lại bình thường trong quý 4.
• Tỷ lệ bồi thường năm 2026 của Aflac Nhật Bản hiện dự kiến sẽ thấp hơn một chút so với phạm vi 60%-63% trước đó.
• Tỷ lệ chi phí hoạt động của Nhật Bản dự kiến sẽ nằm ở cận dưới của phạm vi 20%-23%.
• Ban lãnh đạo đã nâng biên lợi nhuận trước thuế kỳ vọng năm 2026 của Nhật Bản lên 35%-38%.
• Tỷ lệ bồi thường tại Mỹ dự kiến sẽ kết thúc ở mức thấp hơn phạm vi 48%-52% trước đó.
• Tỷ lệ chi phí hoạt động tại Mỹ dự kiến sẽ ở mức gần giữa phạm vi 36%-39%.
• Ban lãnh đạo kỳ vọng biên lợi nhuận trước thuế năm 2026 tại Mỹ sẽ vượt phạm vi 17%-20% trước đó.
• Sau đợt cập nhật giả định, ban lãnh đạo kỳ vọng tỷ lệ bồi thường của các hợp đồng có hiệu lực sẽ giảm khoảng 70 điểm cơ bản tại Nhật Bản, 60 điểm cơ bản tại Mỹ và 320 điểm cơ bản tại Aflac Re Bermuda, trong điều kiện các yếu tố khác không đổi.

Rủi ro và Các yếu tố cần theo dõi

• Aflac Nhật Bản tiếp tục đối mặt với áp lực từ tình trạng hủy hợp đồng, tái cấp hợp đồng và các hợp đồng đã hoàn tất đóng phí, mặc dù hoạt động hủy và tái cấp hợp đồng gần đây đã có phần chững lại.
• Các sản phẩm tiết kiệm thuộc khu vực một thâm dụng vốn nhiều hơn và nhạy cảm hơn với lãi suất so với mảng kinh doanh cốt lõi thuộc khu vực ba của Aflac Nhật Bản. Ban lãnh đạo cho biết tăng trưởng cần duy trì tính linh hoạt và được hỗ trợ bởi các cấu trúc tài trợ như tái bảo hiểm.
• Các giao dịch hoán đổi trái phiếu tiếp theo có thể mang lại ít lợi ích hơn do cần phải cân nhắc đồng thời các khoản lỗ chưa thực hiện, thuế, thanh khoản, vốn và các ràng buộc về quản trị tài sản - nợ.
• Danh mục đầu tư vẫn chịu rủi ro từ áp lực lên định giá bất động sản thương mại và hiệu quả hoạt động của các khoản vay doanh nghiệp tầm trung.
• Khoảng 64% nợ của Aflac được định danh bằng đồng yên, khiến tỷ lệ đòn bẩy báo cáo trở nên nhạy cảm với biến động tỷ giá yên - USD. Ban lãnh đạo giải thích cấu trúc này là một phần trong chương trình phòng ngừa rủi ro của toàn doanh nghiệp.

Điểm nhấn phiên hỏi đáp với chuyên gia phân tích

Năng lực tái bảo hiểm tại Bermuda: Aflac Nhật Bản hiện đã nhượng khoảng 15% dự phòng FSA cho Aflac Re Bermuda, so với hạn mức nội bộ là 30%. Ban lãnh đạo cho biết điều này vẫn tạo ra dư địa đáng kể cho các giao dịch bổ sung, dù tiến độ khó có thể diễn ra đều đặn theo một đường thẳng.

Phân bổ vốn: Ban lãnh đạo cho biết việc phát hành hợp đồng mới tại Nhật Bản và Mỹ nhìn chung mang lại lợi nhuận kinh doanh mới tốt nhất. Tái bảo hiểm ra bên ngoài cũng được xem là một cơ hội dài hạn hơn, nhưng công ty không kỳ vọng điều này sẽ làm thay đổi đáng kể khuôn khổ cổ tức và mua lại cổ phiếu.

Cơ cấu sản phẩm tại Nhật Bản: Ban lãnh đạo tiếp tục tập trung vào bảo hiểm y tế và ung thư thuộc khu vực ba, nhưng nhận thấy còn dư địa mở rộng các sản phẩm tiết kiệm thuộc khu vực một khi lãi suất đồng yên tăng lên. Danh mục sản phẩm tiết kiệm khu vực một hiện hữu vẫn đang thu hẹp do danh mục WAYS giảm nhanh hơn tốc độ bổ sung các hợp đồng Tsumitasu mới.

Yêu cầu bồi thường bảo hiểm thương tật tại Mỹ: Ban lãnh đạo ghi nhận số lượng yêu cầu bồi thường bảo hiểm thương tật tăng nhẹ nhưng cho biết mảng kinh doanh này vẫn còn quá nhỏ để gây tác động trọng yếu. Tỷ lệ tổn thất thấp hơn một chút so với một năm trước đó và ban lãnh đạo coi điều kiện thị trường hiện tại là cơ hội để tiếp tục tăng trưởng đi kèm kỷ luật khai thác bảo hiểm và định phí.

Phục hồi doanh số tại Nhật Bản: Các cuộc gọi chủ động tới khách hàng, gửi thư trực tiếp và các sáng kiến bán hàng khác bị tạm dừng sau sự cố an ninh mạng đã được nối lại vào tháng 9. Ban lãnh đạo cho biết doanh số tháng 10 đạt đúng kỳ vọng.

Toàn văn biên bản cuộc họp công bố kết quả kinh doanh

Toàn văn cuộc gọi công bố kết quả kinh doanh

Phần trình bày của ban lãnh đạo

Operator

Good day, and welcome to the Aflac Incorporated Third Quarter 2026 Earnings Call. [Operator Instructions] Please note, this event is being recorded.

I would now like to hand the call to David Young, Senior Vice President, Capital Markets. Please go ahead.

David Young

Good morning, and welcome. Thank you for joining us for Aflac Incorporated's Third Quarter 2026 Earnings Call. This morning, Dan Amos, Chairman, CEO of Aflac Incorporated, will provide an overview of our results and operations in Japan and the United States. Then Max Broden, Senior Executive Vice President and CFO of Aflac Incorporated, will provide more detail on our third quarter financial results, including our capital and liquidity. These topics are also addressed in the materials we posted with our earnings release, financial supplement and quarterly CFO video update on investors.aflac.com.

For Q&A today, we are also joined by Virgil Miller, President of Aflac Incorporated and Aflac U.S.; Fred Simard, Deputy President of Aflac U.S.; Charles Lake, Chairman and Representative Director, President of Aflac International; Masatoshi Koide, President and Representative Director, Aflac Life Insurance Japan; Shinsuke Morimoto, Deputy President, Aflac Life Insurance Japan; Brad Dyslin, Global Chief Investment Officer, President of Aflac Global Investments.

Before we begin, some statements in this teleconference are forward-looking within the meaning of federal securities laws. Although we believe these statements are reasonable, we can give no assurance that they will prove to be accurate because they are prospective in nature. Actual results could differ materially from those we discuss today. We encourage you to look at our annual report on Form 10-K for some of the various risk factors that could materially impact our results.

As I mentioned earlier, the earnings release with reconciliations of certain non-U.S. GAAP measures and related earnings materials are available on investors.aflac.com. I'll now hand the call over to Dan. Dan?

Daniel Amos

Thank you, David, and good morning, everyone. We're glad you've joined us. You probably saw our announcement earlier this week about leadership promotions for Aflac Japan and Aflac U.S. that will be effective January 1, 2027. Deputy President of Aflac Japan, Shinsuke Morimoto will be promoted to President of Aflac Japan and Representative Director. Also Deputy President of Aflac U.S., Fred Simard, will be promoted to President of Aflac U.S. Masatoshi Koide, currently President of Aflac Japan, Representative Director will assume the role of Chairman of Aflac Japan and Representative Director. Charles Lake will become Executive Adviser of Aflac Japan and assume the role of Chairman of Aflac International.

These leadership announcements are the results of long-term and deliberate succession planning process and coordination overseen by Aflac Incorporated's Board of Directors to ensure we have the right people in the right places at the right time.

Virgil and I agree that the strength of the leadership bench is a testament to the strong foundation created by Charles and Koide-san, whose leadership has had a tremendous positive impact on Aflac Japan and across the Aflac organization. We are excited as each esteemed leader takes on new challenges and opportunities.

Now turning to the results. Aflac Incorporated reported third quarter net earnings per diluted share of $0.61 and adjusted earnings per diluted share of $2.43 as we executed on our strategy of creating long-term value for our shareholders.

Starting with Aflac Japan. As we communicated last quarter, we were against a challenging third quarter of 2025 sales comparison following the launch of Miraito cancer insurance. As a result, sales declined 4% to JPY 18.8 billion in the quarter, but we were up 3% for the first 9 months of the year. Sales of Tsumitasu were up both year-over-year and sequentially. Sales of Anshin Palette, our medical insurance product launched in December of 2025, increased over the prior year. Despite the tough sales comparisons, Miraito faces -- sales of this cancer insurance product remain relatively strong as Japanese citizens recognize the need to partner with well-respected brand for financial protection against cancer. We continue to expect Aflac Japan sales to exceed 2025.

For the quarter, premium persistency was 92.9%, which was solid and in line with our expectations by maintaining strong persistency, while adding new premium through sales we seek to offset the impact of lapses and reissue as well as policies reaching paid-up status. Our extensive network of distribution channels, including agencies, alliance partners and banks continually look for opportunities to help provide financial protection to Japanese consumers. We regard each channel as a distinct avenue to approach Japanese consumers in different demographics and stages of life. With this approach in mind, we evaluate and support each sales channel uniquely.

Turning to Aflac U.S. We remain well positioned to serve employers and employees with supplemental health products and related benefits and solutions. We are committed to our ongoing pursuit of profitable growth while maintaining strong underwriting discipline and premium persistency. Aflac U.S. generated a year-over-year 3.5% increase in sales for the third quarter. We are seeing momentum within our group business, especially group life, absence and disability and network dental offerings.

We generated a 3.3% increase in net earned premium for the quarter and maintained strong premium persistency of 79.7%. At the same time, Aflac U.S. has maintained a solid pretax profit margin of 27.7%. As a public insurance company, our primary responsibility is to fulfill the promises we make to our policyholders while being responsive to the needs of our shareholders.

We continue to be pleased with our investments producing solid investment income. Our operations generate strong capital and cash flows on an ongoing basis as we remain committed to prudent liquidity and capital management. This financial strength is the foundation that backs up our promise to our policyholders balanced with financial flexibility and tactical capital deployment.

We treasure our 2026 milestone of 44 consecutive years of dividend increases. Combining share repurchase and dividend, we delivered $1.1 billion back to the shareholders in the third quarter and $3.7 billion for the first 9 months. In doing so, we have maintained our position among companies with the highest return on capital and one of the lowest cost of capital in the industry.

We continue to pursue more profitable growth and make tactical opportunistic deployment of capital while being there for our policyholders when they need us most. The Japanese and U.S. insurance markets remain among the most dynamic and resilient insurance markets in the world. In both countries, rising health care costs continue to place pressure on household budgets, increasing the need for supplemental insurance solutions when unexpected medical expenses occur.

What differentiates us at Aflac is not only the experience and expertise our company has gathered in the 7 decades of operation but also our purpose. As a pioneer in cancer insurance and a recognized industry leader, our employees, sales team, work every day to deliver solutions that help protect financial well-being, while reflecting the compassion, empathy and trust that are known as hallmarks of our brand.

The ongoing foundational strengths of our business and our capacity for continued growth, support our leading position and build on the momentum.

Now I'd like to turn the program over to Max. Max?

Max Broden

Thank you, Dan. For the third quarter of 2026, adjusted earnings per diluted share decreased 1.2% year-over-year to $2.46, excluding the effect of foreign currency in the quarter. In this quarter, remeasurement gains on reserves from the actuarial assumption unlock including deferred profit liability, totaled $447 million on a pretax basis. Remeasurement gains also included $55 million of experience remeasurement on reserves, which was $2 million below plan, with no impact on earnings per share.

The total net impact from the Q3 assumption update increased earnings per share by $0.71. In addition, third quarter results included $40 million or $0.06 per diluted share of cybersecurity expenses and enhancements in Japan. Variable investment income went $22 million or $0.03 per diluted share below our long-term return expectations.

Adjusted book value per share, excluding foreign currency remeasurement decreased 6.4%. The adjusted ROE was 17.8% and 23.7%, excluding foreign currency remeasurement, a very significant spread to our cost of capital. Overall, we view these results in the quarter as solid.

Starting with our Japan segment. Net earned premiums in yen terms for the quarter declined 2%. Aflac Japan's underlying earned premiums, which excludes the impact of reinsurance, paid-up policies and deferred profit liability declined 1.2%, roughly in line with where we expect to be for the full year. Japan's total benefit ratio came in at 49.2% for the quarter, up 990 basis points year-over-year, reflecting a larger actuarial assumption unlock in the prior year. We estimate that the impact from reserve remeasurement gains, excluding the unlock was under plan by approximately 40 basis points in Q3 2026. Adjusting for both the experience in the quarter and the unlock of future assumptions, we estimate the benefit ratio to be 61.7% in the quarter.

We continue to experience favorable trends in cancer-related hospitalization and mortality, leading to favorable actual-to-expected experience. Persistency remains solid and in line with our expectations at 92.9%. We have continued to experience somewhat elevated lapse and reissue activity on recently launched products as we have expanded coverage options and competitiveness on new products. This activity in the quarter slightly declined, though, helping to improve persistency. Lapses on our first sector savings block remained low and in line with previous periods, despite the increase in yen interest rates.

Our expense ratio in Japan was 21.2% for the quarter, up 140 basis points year-over-year. Third quarter cybersecurity expenses and enhancements increased the expense ratio by approximately 180 basis points. For the quarter, adjusted net investment income in yen terms increased 3.7%, primarily driven by higher fixed rate income and higher income on U.S. dollar-denominated assets from the weakening yen, offset by lower floating rate income and higher expenses. The pretax margin for Japan in the quarter was 44.4%, down 780 basis points year-over-year, reflecting the very significant actuarial assumption unlock in the prior year, a very good result when even adjusting for this unlock.

As we previously discussed, Aflac Japan increased the internal reinsurance target from up to 10% of U.S. GAAP assets to 30% of FSA reserves. This will allow us to continue to reduce risk, improve balance sheet efficiency and ultimately generate a higher ROE for Aflac Japan and the group.

During the third quarter, Aflac Japan ceded approximately JPY 500 billion of reserves on an FSA basis associated with cancer insurance policies to Aflac Re Bermuda. We estimate that this transaction will release approximately $1 billion of capital that will, over time, be available for redeployment. Recognizing that the year-to-date benefit ratio is 58.8%, we now expect for 2026 that the benefit ratio in Japan will be slightly below the 60% to 63% range. And we expect the expense ratio to be on the lower end of the 20% to 23% range. As a result, we have raised the 2026 expected pretax profit margin range for Aflac Japan to 35% to 38%.

Turning to U.S. results. Net earned premiums were up 3.3%. Premium persistency remained solid at 79.7%, up 70 basis points year-over-year. Our total benefit ratio came in at 40.7%, 490 basis points lower than Q3 2025, driven by the unlocking of actuarial assumptions. We estimate that the impact from reserve remeasurement gains, excluding the unlock was above plan by approximately 50 basis points. We estimate that the benefit ratio adjusting for the remeasurement gains from both truing up for the experience in the quarter and unlocking our forward-looking assumptions was 50.2%.

Our expense ratio in the U.S. was 37%, down 190 basis points year-over-year, primarily driven by a onetime early contract termination fee of $21 million in the prior year. As our group life and disability block of business approaches scale and, therefore, experiences improved profitability, we are deferring acquisition expenses. This has helped the expense ratio in the quarter by 80 basis points, with a more modest impact expected in future periods. Adjusted net investment income in the U.S. was essentially flat, down 0.9% for the quarter.

Profitability in the U.S. segment was solid with a pretax margin of 27.7%, a 600 basis point increase, primarily due to the actuarial assumption unlock. In the U.S., we expect the benefit ratio for 2026 to be below the 48% to 52% range and the expense ratio to be in the middle of the 36% to 39% range as we continue to scale network dental and group life and disability. At the same time, we expect pretax profit margin for 2026 in the U.S. to be above the 17% to 20% range.

For the Corporate and other segment, total adjusted revenues increased 5% to $360 million. Pretax adjusted earnings were $72 million compared to $69 million last year, primarily driven by $91 million remeasurement gains as a result of unlocking actuarial assumptions and new reinsurance transactions. These earnings results were impacted by higher total adjusted expenses as well as lower adjusted net investment income from the reduced short-term asset balances and lower amortized hedge income.

We are pleased with our overall performance of our investment portfolio. Our private credit portfolios are delivering strong risk-adjusted net yields, but we continue to boost our loan reserves, reflecting continued pressure on commercial real estate property valuations and long-run expectations for middle-market loan performance.

Our third quarter results include the benefits from the very significant repositioning of our portfolio that began in the second quarter. Again, this quarter, our global investment teams executed another large switch trade, repositioning $2.3 billion of JGBs in our Aflac Japan portfolio to take advantage of what are the highest interest rates in a generation. These switch trades highlight our strong financial position and allow us to manage losses from lower-yielding assets and improve our run rate stable net investment income.

This quarter's activity improves future NII by over $30 million. Year-to-date, our approach to actively managing the portfolio has added over $80 million of annual NII and strengthen the overall quality of our consolidated portfolio by reducing the risk of future FSA impairments and improving our ALM in a very tax efficient way. We will continue pursuing opportunities that improve the overall health and performance of that portfolio.

For U.S. statutory, we recorded $6 million of impairments on invested assets and a $6 million valuation allowance on our mortgage loans as an unrealized loss during the quarter. On an FSA basis, securities impairment reversals led to a net realized gain of JPY 15.2 billion in the third quarter. And we booked an additional valuation allowance of JPY 5.2 billion related to transitional real estate loans. This is well within our expectations and has a limited impact on regulatory earnings and capital.

Aflac Inc. unencumbered liquidity stood at $2.7 billion, which was $1.7 billion above our minimum balance of $1 billion at the end of the quarter. Our adjusted leverage was 22.6% for the quarter, which is within our target range of 20% to 25% as we hold approximately 64% of our debt in yen, this leverage ratio is impacted by moves in the yen-dollar exchange rate. This is intentional and part of our enterprise hedging program protecting the economic value of Aflac Japan in U.S. dollar terms.

Our capital position remains strong. We ended the quarter with an estimated regulatory ESR of 225%. If including the undertaking specific parameter or USP, this would add 13 points to the regulatory ratio and result in an ESR with USP of 238%. We estimate our combined RBC to be slightly above 575%. These are strong capital ratios, which we actively monitor, stress and manage to withstand both market volatility and credit cycles as well as external shocks. Given the strength of our capital and liquidity, we repurchased $804 million of our own stock and paid dividends of $305 million in Q3, offering good relative IRR on these capital deployments.

We will continue to be flexible and tactical in the way we manage the balance sheet and deploy capital in order to drive strong risk-adjusted ROE with a meaningful spread to our cost of capital. Thank you. And now I'll turn the call over to David.

David Young

Thank you, Max. Before we begin our Q&A, we ask that you please limit yourself to one initial question and a related follow-up. You may then rejoin the queue to ask additional questions. Our operator for today's call will now give you instructions on how to rejoin the queue and then announce our first question.

Operator

[Operator Instructions] And our first question will come from Wilma Burdis of Raymond James & Associates.

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Wilma Jackson Burdis

You talked about the $1 billion that you freed up via the reinsurance transaction. Could you talk a little bit more about how much runway is there to continue with Bermuda reinsurance?

Max Broden

Thank you for the question, Wilma. So post this transaction, we have ceded roughly 15% of our total FSA reserves from Aflac Japan to Aflac Bermuda. And as we put -- in the last quarter, we communicated that we have changed the way we approach this from evaluating this on a U.S. GAAP basis to evaluating this on an FSA reserving basis. And with us now standing at about 15%, and we have an internal risk limit that we have set at 30%, that means that we have a very meaningful runway to continue to execute further reinsurance transactions between Aflac Japan and Aflac Re Bermuda to further improve the risk composition of Aflac Japan and also enhance the overall capital position and liquidity and ultimately improving the ROE of the total group.

Wilma Jackson Burdis

And I think Aflac as a whole has a ton of excess capital in different forms. But maybe you could talk about some of the deployment opportunities where you think you can grow? I know you talked a little bit more about having some appetite for third-party reinsurance acquiring blocks. Are there opportunities there? What are some of the other opportunities to grow?

Max Broden

So I think that overall for us, obviously, the best new business return opportunities that we have is to write another policy in our operations in the U.S. and Japan, that is generally where we see the best IRRs for our capital, and that's where we are pushing our capital to go. So that's number one.

In terms of external reinsurance, we see this as over time, as a significant opportunity for us, where we can leverage our balance sheet, and we can also leverage the strengths that we have having a balance sheet that is very long morbidity. And when we then write life and annuity business coming out of Japan, we get very significant diversification benefits. So we find ourselves in a very interesting opportunity to capitalize on this strength.

That being said, in terms of capital consumption, we would expect relatively limited capital consumption for this. And in fact, our reinsurance operations is very profitable as is. It's very cash capital generative as is. So this strategy, I don't think that it will materially shift the way we manage capital overall in terms of providing capital to all of our insurance operations as well as conduct capital management through dividends and buybacks.

Operator

The next question comes from Tom Gallagher of Evercore ISI.

Thomas Gallagher

First, one question on U.S. and then my follow-up is on Japan. So the U.S. question, there's been some group disability pressure at peers from behavioral health claims, which obviously creates some uncertainty right now. Now you're very small in that part of the market, but you're growing a lot. When you think about what's happening, does it make you want to pump the brakes and evaluate? Or do you see it more as an opportunity to take some market share as others look to raise rates?

Virgil Miller

Tom, this is Virgil. First, let me give some color on the question you just asked. As I do so, though, I want to go back to something Dan stated earlier. He congratulated some recent promotions for the organization. I do want to acknowledge and congratulate Fred Simard. He's our Deputy President for the U.S. He'll be taking over effective in January as the President. So I'm starting to transition some of my duties. I'll give you some color and then see if he wants to add, and we'll be doing the same today. I want to congratulate Morimoto-san in Aflac Japan. You're going to hear more from both of these 2 gentlemen today.

But to refer to your question, to your point, it is materially small for us at the time right now. Overall, I'm very pleased with the growth that we're seeing in our life and disability overall business, but when you look at the PFML, particularly and you look at the disability portion of our block, it is very, very small. We are seeing a slight uptick, but again, it has no materiality to us. And we're going to continue to maintain our strong discipline, though, of how we underwrite that particular business. So let me turn over to Fred and ask him if he has any additional comments.

Frederic Jean Simard

This is Fred Simard. A couple of things. First, our loss ratio actually from a year ago quarter to now is actually down a few bps. So we are keeping an eye on claim performance and our execution on the renewal program is very strong. We're able to get some good rate action and profit improvement. And the team has done a very good job at pricing that business. And so I see this as you were asking, as an opportunity for us to keep growing.

Thomas Gallagher

Got you. That's helpful. And then my follow-up on Japan. So third sector sales were weak, Tsumitasu continued to grow. Can you talk about how you see that mix changing? And if you'd be comfortable growing the more asset-intensive businesses since, obviously, with higher rates in Japan, there's probably more demand. But then I'm just wondering historically, Aflac hasn't really written much asset-intensive business. How do you balance the growth opportunity there with the cost of capital impacts as a firm if it does end up adding asset leverage depending on how much you grow?

Max Broden

So Tom, let me kick this off and address it from a capital standpoint. And then I invite Aflac Japan to also comment on this and give their views. Obviously, there is no doubt that the history of Aflac Japan is as a third sector company. That is the core of our business. It is also from my lens, it's a business that is not very much impacted by external macro factors. That means that this is a business that we are very much in control of. It's relatively easy for us to control the different risks of this business. And therefore, we will continue to be a very significant player in the third sector for many, many, many years into the future.

As it relates to first sector business, that becomes -- it's a more capital-intensive business. You need financing structures like reinsurance in order to play profitably in that sector. And it's also exposed to macro factors like interest rates, in particular. That means that you need to be much more flexible in how you price and reprice that business and also somewhat more flexible in how you approach that, i.e., you need to be a little bit opportunistic when you grow and when you shrink that business. And that's the view that we take. But I will tell you that right now, given the significant increase in yen interest rates that we have experienced, we are in a great position to not only grow that business from current levels, but I would argue significantly grow that business.

It offers extremely attractive new business IRRs and the VNB on this business is very, very attractive, especially post reinsurance that we are utilizing for the blocks that we have in place. So from that standpoint -- from a capital allocation standpoint, we're very pleased with the business we have written, and we feel very comfortable about continuing to grow that business.

Now we are sensitive that over time, if it becomes too big, it would have an impact, obviously, on our cost of capital as well. We're quite aware of that, and it's something that we monitor. But as of right now, our total first sector savings in force is actually still shrinking, i.e., the WAYS block is running off faster than what we add in Tsumitasu. So from that standpoint, we're very comfortable with where we are.

Daniel Amos

Morimoto, do you have any comments or Koide, whoever wants to take that, any comments?

Koichiro Yoshizumi

[Interpreted] This is Yoshizumi. Let me talk a little bit from the sales perspective. Currently, Tsumitasu accounts for approximately 20% of our total sales. While we remain the third sector oriented company, Tsumitasu is playing an important role as it is contributing to the expansion of our customer base and also making a contribution through concurrent sales with the third sector products.

Going forward, we will continue to strengthen our customer base by attracting young and middle-aged customers and new customers through Tsumitasu and promote concurrent sales of cancer and medical insurance.

Operator

The next question comes from Tracy...

Daniel Amos

Go ahead. All right. The comment I want to make about Tsumitasu is, we were very cautious in getting into this business, and it has hit all the expectations that I've wanted so far. I think of, of course, higher interest rates is what's driven it. But in addition to that, what we found is our medical aspect of the product is bringing on customers, and it's not quite as interest rate sensitive.

Now if you deal with financial institutions, they're much more so that way. But our existing sales organization finds that the Tsumitasu product helps fill a need in addition to the higher interest rates and better returns. So it's been both ways for us. And I think it's going to continue to play an important role in 2027 as well.

Going forward, it will depend on interest rates to a degree. But we're monitoring it, and we have the capacity today to react at a much faster level than we used to. And that, again, is a real difference in what we've done. I just like the way we've been structured. The one thing about it, at Aflac we've tried to do is when we see something, a trend that we don't like, then when that trend breaks, we fix it, work toward it and then improve. And that's what this product is. This is an improved product for us that has a lot of potential going forward.

Operator

The next question comes from Tracy Benguigui of Wolfe Research.

Tracy Dolin-Benguigui

It's good to see that you now ceded about 15% of Aflac Japan FSA reserves to Bermuda. Can you just confirm where cession stood before this transaction? The target moved from up to 10% of U.S. GAAP assets to 30% of FSA reserves. So that's a different basis. So I'm not sure of the starting point. We looked at the March 31, Japanese statutory filings, and we calculate about 12%. But I just want to confirm what is that right starting point?

Max Broden

Yes, you're in the ballpark. We were at 10% prior before this transaction and this moved it from 10% to 15%.

Tracy Dolin-Benguigui

Okay. So how does 5 points in 1 quarter kind of change your usual run rate when we were looking at those statutory filings we saw about 2.5 points a year. So would you say that was 5 points or a high watermark pace or just will help us in terms of getting to a time line to reach 30%?

Max Broden

Tracy, this is not necessarily going to be a straight line. And one of the things that we have evaluated with this transaction is that every time we execute a transaction, it doesn't matter if you cede the JPY 100 billion or if you cede JPY 500 billion, it's the same work that needs to go into a transaction, same number of people that needs to be involved, the same number of calculations that needs to be done.

So the sort of -- there's a fixed expense associated with each transaction. And that does not necessarily go up with any size. Therefore, we have opted in this time to do a little bit of a bigger transaction, as you clearly noted than what we have done in the past.

And that means that we may or may not do this on a linear basis going forward. But ultimately, this will be driven by the needs for Aflac Japan. Aflac Japan is the cedant. They control this time line, and they make the decisions what is best for Aflac Japan in order to ultimately end up with the best risk reward for Aflac Japan. And Aflac Re Bermuda, is here the provider of the capital solution to Aflac Japan. And obviously, Aflac Re Bermuda stands ready to serve its clients.

Tracy Dolin-Benguigui

Okay. And you've now done the 2 switch trades. What would the yen currency and Japanese yields need to look like for a third trade to make sense without meaningfully impacting capital? And can you contextualize how much older lower-yielding paper is left to sell?

Bradley Dyslin

Tracy, this is Brad. Yes. We've been quite active on the switch trades. We've done -- repositioned $7 billion through this program. This year alone, most of that has been in the JGB portfolio, where we're doing exactly what you're getting at, which is recycling the lower-yielding existing assets and capturing and accelerating the deployment into the current higher yield environment. There's a lot of pieces that have to come together behind the switch trade. There's accounting considerations, taxes, liquidity, capital, ALM, there's just a lot of boxes that need to be checked, including, of course, the unrealized losses on the assets that you're selling.

We're going to continue to look at this. The more we do, the harder it is to find additional opportunities. We'll see where rates go. Obviously, higher rates help on the reinvestment front, but they also can hurt you on the additional losses on the legacy book. So I'm really proud of the work the team has done to date. It takes a lot of coordination across the organization. We'll see what we can do going forward, but it's going to be difficult to have the same level of impact that we've had so far.

Operator

Next question comes from Pablo Singzon of Morgan Stanley (Sic) [ JP Morgan ].

Pablo Singzon

I appreciate the details on the assumption review. The question is, given the favorable update overall, would you expect an ongoing positive impact on the benefit ratios in Japan and the U.S.?

David Young

Pablo, I'm sorry, could you repeat that?

Pablo Singzon

Yes. So just given the favorable assumption update, would you expect an ongoing positive impact on the benefit ratios in Japan and in the U.S.?

Max Broden

Yes, Pablo. So with this unlock, we are lowering the future net premium ratios. And that means that there will be an ongoing future impact to the benefit ratios in the respective segments. So for Japan, we lowered the net premium ratio by 70 basis points. So we would expect all things being equal that as it relates to the in-force business, that in-force business will have roughly a 70 basis points lower benefit ratio going into the fourth quarter and going forward.

For the U.S., that same number is 60 basis points. And for Aflac Re Bermuda, it is 320 basis points.

Pablo Singzon

And then second question, my understanding is that third quarter sales in Japan were disrupted by the cyber incident. So just any update there? Are operations back to normal? And do you see some potential benefit from sales getting deferred into the next quarter?

Daniel Amos

Go ahead. Koichiro Yoshizumi should take that question. Our head of sales.

Koichiro Yoshizumi

[Interpreted] This is Yoshizumi speaking. Let me comment from a sales perspective. As Dan stated last quarter, we expect Aflac Japan sales to exceed 2025 sales as Aflac Japan continues to execute its strategy of meeting the needs of its customers based on which stage of life they are in. As mentioned earlier, upon this incident, we have been prioritizing our customer support. And to prioritize our customers, we have been suspending several initiatives, including direct mail, customer outbound calls. However, in September, we have resumed all these activities.

And since the entry to the fourth quarter, our sales has recovered and is now back to normal. And October sales is as we have been expecting. We will continue to leverage our diverse distribution channel, which is one of our core competitive advantages and promote all three product lines simultaneously to drive 2026 sales in excess of 2025.

Operator

The next question comes from Joseph Famularo of Jefferies.

Joseph Famularo

A lot of good color and commentary on Japan sales. I was hoping you could give some color and commentary on the U.S.

Virgil Miller

Yes. Thank you. This is Virgil. So first, let me just tell you that overall, I'm pleased with the quarter for the U.S. You saw a positive momentum. We were up 3.5% on new sales, up 3.2% for our overall earned premium. When you look underneath the new sales, though, as we've talked about it before that we invested in these buy-to-builds, our life, absence and disability business, our consumer markets platform and our dental and vision.

Just to give you a little bit more detail underneath behind the scenes, those 3 platforms for the U.S. made up a 15% growth in the quarter, and we're very pleased with the recovery that we've seen with our dental and vision platform and that is up 67% for the quarter. So -- and remember this, as part of our strategy, and I should have noted this earlier, with our dental and vision and with our group life and absence disability products, we're really looking to sell those alongside our voluntary benefit products.

And when you look at the dental and vision platform for the quarter, we were selling $0.90 to the $1, which basically means that for every dental product that we sell, $0.90 to the $1 that is also sold with a voluntary benefit product. That is the strategy that we had going in. That strategy is working and pleased with the overall performance of that. Any additional comments Fred?

Frederic Jean Simard

Well, no, I guess the thing I would say on earned premium is we grew 3.3%. If you look at the group platform, we grew 17%. As Virgil said, LAD, we actually grew 29% for the quarter on earned premium, D&V, 55%, which is very strong and voluntary benefits 7.5%. At the same time, the individual platform shrunk about 1.5%, and so we are working on that. So back to you.

Virgil Miller

Yes. And just one more comment to close out. You can see the momentum we have. If you look at the historical trends for the U.S., fourth quarter's normally our highest activity and our highest performance. I'm expecting that momentum to go in. But there's the way we count our business, I do want to note, though, that in the fourth quarter, we will have an extra week of productivity. So that will count towards this year's sales number, but either way, I'm expecting us to be better than what we were last year. So I do want to note that as we go into that fourth quarter.

Joseph Famularo

One quick question on remeasurement gains. We've continued to see them come in pretty strong over time, and now we have this favorable assumption review. What's the outlook? Is there a possibility for future normal quarter remeasurement gains moving forward?

Max Broden

Thank you for the question. Every third quarter, we do a deep dive into our future actuarial assumptions, and we true them up and we set the assumptions to the best that we can. And that is what we have now applied into this unlock. And the same thing relates to when we true up our experience in each quarter as well that we try to get it dialed in to the best estimate going forward. And that's how we ultimately both set assumptions and that will -- what is driving our reserves.

Now I do recognize that over time, we have had favorable remeasurement gains, and that is simply a function of the very favorable experience that our underlying reserves have generated, and we're very pleased and we're very fortunate for that. But that is the main driver of, obviously, the very good experience that we had. If you dive into this unlock in this quarter, the main driver, specifically in Japan has actually been mortality, where we've seen a mortality increase of noncancer-related mortality that have hit our first sector life insurance business where we actually saw reserves move up, while -- and so we had a remeasurement loss on the first sector.

But if you then turn to the third sector, which is predominantly our cancer insurance block we had very significant remeasurement gains because of the noncancer-related mortality that when you run that through our block of business is very favorable for us.

Operator

This concludes our question-and-answer session. I'd like to turn the call over to David Young for any closing remarks.

David Young

Thank you, Andrea, and thank you all for joining us today. Just want to remind you that we will be hosting our financial analyst briefing at the New York Stock Exchange on December 3 and if you would like to attend, please reach out to Investor and Rating Agency Relations. We look forward to seeing you or talking to you then, and thank you for your time today. Have a great rest of your week.

Operator

The conference has now concluded. Thank you for attending today's presentation, and you may now disconnect.

[Portions of this transcript that are marked [Interpreted] were spoken by an interpreter present on the live call.]