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1. Company Snapshot

1.a. Company Description

Aflac Incorporated, through its subsidiaries, provides supplemental health and life insurance products.It operates through two segments, Aflac Japan and Aflac U.S. The Aflac Japan segment offers cancer, medical, nursing care income support, GIFT, and whole and term life insurance products, as well as WAYS and child endowment plans under saving type insurance products in Japan.The Aflac U.S. segment provides cancer, accident, short-term disability, critical illness, hospital indemnity, dental, vision, long-term care and disability, and term and whole life insurance products in the United States.


It sells its products through sales associates, brokers, independent corporate agencies, individual agencies, and affiliated corporate agencies.The company was founded in 1955 and is based in Columbus, Georgia.

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1.b. Last Insights on AFL

Aflac Incorporated's recent performance was driven by strong sales in Japan and higher U.S. margins, which fueled shareholder returns through an increased buyback plan of 130.9M shares. The company's Q2 earnings beat estimates with $1.78 per share, despite declining revenue and EPS. Aflac's solid balance sheet and impressive dividend growth history are notable. The company's acceleration of digitalization and rising underwriting exposure are expected to drive growth, although pricing pressure remains a concern due to rising medical costs and inflation.

1.c. Company Highlights

2. Aflac's Q3 2025 Earnings: Strong Sales Growth and Profitable Underwriting

Aflac Incorporated reported adjusted earnings per diluted share of $2.49 for the third quarter of 2025, significantly beating analyst estimates of $1.77. The company's net earnings per diluted share were $3.08, driven by strong sales growth in Aflac Japan, particularly a 42% increase in cancer insurance sales. The total net impact from the Q3 assumption update increased EPS by $0.76. Aflac Japan's sales growth was across all distribution channels, with a significant contribution from the company's strategy to emphasize third sector protection to new and younger customers.

Publication Date: Nov -06

📋 Highlights
  • Japan Sales Growth:: Aflac Japan achieved an 11.8% YoY sales increase, with cancer insurance sales surging 42%.
  • U.S. New Sales Growth:: Aflac U.S. new sales rose 2.8% to $390 million, driven by 2.5% net earned premium growth and 79% premium persistency.
  • Adjusted Earnings Surge:: Adjusted EPS jumped 15.3% YoY to $2.49, bolstered by $580 million remeasurement gains and a $0.76 EPS boost from Q3 assumption updates.
  • Benefit Ratio Declines:: Japan’s total benefit ratio dropped 10ppt to 39.3%, while U.S. benefit ratio fell 200 bps to 45.6% in Q3 2025.
  • Shareholder Returns:: Aflac returned $1.3 billion to shareholders via $1 billion in stock repurchases and $309 million in dividends.

Financial Performance

The company's financial results were robust, with adjusted earnings per diluted share increasing 15.3% year-over-year, with no impact from foreign exchange. In Aflac Japan, net earned premiums declined 4%, but underlying earned premiums, excluding the impact of deferred profit liability, paid-up policies, and reinsurance, declined only 1.2%. In the U.S., net earned premium was up 2.5%, with a total benefit ratio of 45.6%, 200 basis points lower than Q3 2024. As Dan Amos, Chairman and CEO, stated, "These results are strong, driven by an 11.8% year-over-year sales increase in Aflac Japan."

Segment Performance

Aflac Japan's benefit ratio came in at 39.3% for the quarter, down nearly 10 percentage points year-over-year. The company's sales performance is driven by two main products: Tsumitasu and Miraito, a cancer insurance product with flexible protection design and customizable plans. In the U.S., new sales increased 2.8% year-over-year to $390 million, with strong premium persistency of 79%. The company's focus on driving profitable growth through underwriting discipline and premium persistency is yielding results.

Valuation and Outlook

With a Price-to-Book Ratio (P/B) of 2.19, the market is pricing in a certain level of growth and profitability for Aflac. Analysts estimate next year's revenue growth at -0.2%. Given the company's strong capital position, with an SMR above 900% and an estimated regulatory ESR above 250%, Aflac is well-positioned to continue delivering value to shareholders. The company's Dividend Yield is 2.01%, providing a relatively stable source of return for investors.

Growth Prospects

Aflac's growth prospects are tied to its ability to continue driving sales growth in Japan and the U.S. The company's focus on innovating and being efficient and effective in its business and technology is expected to drive gradual growth. In the U.S., the company is working on rebuilding its producer network and bundling dental with other products to drive sales growth. In Japan, the company assumes a slight improvement in cancer and hospitalization trends, but it's limited.

3. NewsRoom

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4 Accident & Health Insurers to Watch Amid Rising Medical Costs

Dec -02

Source: zacks.com

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Ameriflex and Aflac Partner to Deliver Seamless Consumer Directed Health Care Administration in the Public Sector Market

Dec -02

Source: businesswire.com

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Best Dividend Aristocrats For December 2025

Nov -29

Source: seekingalpha.com

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Wrap up more than a story: Aflac's "Beyond Words" is the perfect gift that gives back

Nov -25

Source: prnewswire.com

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3 Dividend Champions That Could Double Their Dividends From Here

Nov -23

Source: fool.com

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Traders Buy High Volume of Aflac Call Options (NYSE:AFL)

Nov -19

Source: defenseworld.net

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Avantax Advisory Services Inc. Sells 7,306 Shares of Aflac Incorporated $AFL

Nov -18

Source: defenseworld.net

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Aflac expands support for children with new book 'Beyond Words'

Nov -17

Source: prnewswire.com

4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (1.40%)

6. Segments

Aflac Japan

Expected Growth: 1.2%

Aflac Japan's growth is expected to be slightly lower than the global growth hypothesis due to the mature nature of the Japanese supplemental insurance market. However, the company's strong brand presence and distribution network will help maintain a stable revenue stream.

Aflac U.S.

Expected Growth: 2.0%

Aflac U.S. is expected to grow at a higher rate than the global growth hypothesis due to the growing demand for supplemental insurance products in the U.S. The segment's strong brand presence and product offerings will enable it to capitalize on this trend.

Unallocated Adjusted net investment gains (losses)

Expected Growth: 1.4%

The growth rate for Unallocated Adjusted net investment gains (losses) is assumed to be in line with the global growth hypothesis, as it is not directly related to the company's core insurance operations. The segment's revenue is driven by market conditions, which are expected to be relatively stable.

Unallocated Net Interest Cash Flows From Derivatives

Expected Growth: 1.0%

The growth rate for Unallocated Net Interest Cash Flows From Derivatives is expected to be lower than the global growth hypothesis, as the segment's revenue is driven by the performance of Aflac's derivatives portfolio, which can be volatile.

Unallocated Amortized Hedge Costs

Expected Growth: 1.4%

The growth rate for Unallocated Amortized Hedge Costs is assumed to be in line with the global growth hypothesis, as it is not directly related to the company's core insurance operations.

Unallocated Amortized Hedge Income

Expected Growth: 1.4%

The growth rate for Unallocated Amortized Hedge Income is assumed to be in line with the global growth hypothesis, as it is not directly related to the company's core insurance operations.

Corporate and Other

Expected Growth: 0.8%

The growth rate for Corporate and Other is expected to be lower than the global growth hypothesis, as the segment's revenue is not directly related to the company's core insurance operations and is largely driven by corporate overhead costs.

7. Detailed Products

Supplemental Insurance

Aflac offers supplemental insurance policies that provide additional financial protection to individuals and families in the event of unexpected medical expenses, accidents, or illnesses.

Life Insurance

Aflac provides life insurance policies that offer a financial safety net for families in the event of a loved one's passing.

Disability Insurance

Aflac's disability insurance policies provide income replacement benefits to individuals who become unable to work due to illness or injury.

Hospital Indemnity Insurance

Aflac's hospital indemnity insurance policies provide a cash benefit to help cover unexpected medical expenses related to hospital stays.

Accident Insurance

Aflac's accident insurance policies provide a cash benefit to help cover unexpected medical expenses related to accidents.

Critical Illness Insurance

Aflac's critical illness insurance policies provide a lump-sum payment to help cover expenses related to a critical illness diagnosis.

Vision Insurance

Aflac's vision insurance policies provide coverage for eye exams, glasses, and contact lenses.

Dental Insurance

Aflac's dental insurance policies provide coverage for routine dental care, including cleanings, fillings, and extractions.

8. Aflac Incorporated's Porter Forces

Forces Ranking

Threat Of Substitutes

Aflac Incorporated operates in the insurance industry, which has a moderate level of substitutes. While there are many insurance providers, Aflac's supplemental insurance products are designed to fill specific gaps in traditional insurance coverage, making them less substitutable.

Bargaining Power Of Customers

Aflac Incorporated's customers are primarily individuals and businesses seeking supplemental insurance coverage. While customers have some bargaining power, Aflac's strong brand recognition and diverse product offerings limit their ability to negotiate prices or terms.

Bargaining Power Of Suppliers

Aflac Incorporated's suppliers are primarily reinsurance companies and other business partners. Aflac's large size and diversified operations give it significant bargaining power over its suppliers, allowing it to negotiate favorable terms and prices.

Threat Of New Entrants

The insurance industry has significant barriers to entry, including regulatory hurdles, capital requirements, and the need for established distribution networks. These barriers limit the threat of new entrants and give Aflac Incorporated a competitive advantage.

Intensity Of Rivalry

The insurance industry is highly competitive, with many established players vying for market share. Aflac Incorporated faces intense competition from other supplemental insurance providers, which can lead to pricing pressure and marketing expenses.

9. SWOT Analysis

Strength

Weaknesses

Opportunities

Threats

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

Value
Debt Weight 24.97%
Debt Cost 3.95%
Equity Weight 75.03%
Equity Cost 8.50%
WACC 7.36%
Leverage 33.28%

11. Quality Control: Aflac Incorporated passed 6 out of 9 key points

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

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A-Score: 5.3/10

Value: 3.0

Growth: 4.2

Quality: 6.7

Yield: 4.0

Momentum: 4.0

Volatility: 10.0

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Peers Metrics

12.e Scoring Insights

12.f DCF BETA

Parameters

Short Term Growth

Short term Time

Long-Term Growth

WACC

Target Price

109.24$

Current Price

109.24$

Potential

-0.00%

Expected Cash-Flows