Aflac Incorporated Q4 FY2025 earnings call

• Japan: Pleased with 15.7% Q4 sales increase and 16% full-year sales growth, driven by Miraito and Anshin Palette. Emphasizes third sector protection with Tsumitasu, repriced in September. Strong persistency at 93.1%. Expanded distribution channels including agencies, alliance partners, and banks. - U.S.: Generated nearly $1.6 billion in new sales in 2025, over 1/3 from Q4. Maintained strong persistency (79.2%) and increased net earned premiums by 2.9%. Focus on profitable growth via underwriting discipline and expense management. - Capital: Board increased 2026 Q1 dividend by 5.2%. Deployed $3.5 billion to repurchase shares and paid $1.2 billion in dividends in 2025. Strong capital ratios: SMR above 970%, estimated regulatory ESR with USP 253%, combined RBC 575%.

Japan: Fourth quarter net earned premiums in yen terms declined 1.9%. Underlying earned premiums (excluding deferred profit liability, paid-up policies, and reinsurance) declined 1.2%. Sales increased 15.7% in Q4 and 16% for 2025, driven by the 35.6% sales increase of Miraito cancer insurance and positive reception of Anshin Palette medical product. Persistency was strong at 93.1%. Expense ratio was 22% for the quarter, adjusted net investment income in yen terms was down 3.9%. U.S.: Net earned premiums were up 4%, premium persistency was 79.2%. Total benefit ratio was 48.6%, expense ratio was 40.4%, adjusted net investment income was down 2.8%. Pretax margin for U.S. was 17.4%.

• Japan: Expect underlying earned premiums to decline 1%-2% in 2026. Expense ratio expected in 20%-23% range. Benefit ratio expected in 60%-63% range. Pretax profit margin expected in 33%-36% range. - U.S.: Net earned premium growth expected in lower end of 3%-6% range. Benefit ratio expected in 48%-52% range. Expense ratio expected in 36%-39% range. Pretax profit margin expected in 17%-20% range.

• Interest rate impacts: Significant yen yield curve moves could affect product persistency and pricing. - Market volatility: Could impact capital and liquidity positions. - Competition/regulatory: Changes in competition or regulations could affect business operations.

Q: Question on Japan savings products surrender rates given rising yen yields.

A: Max Broden states they've seen significant yen yield moves and closely monitor for potential surrenders but haven't experienced it yet.

Q: Question on ESR and USP uplift decline.

A: Max Broden says the main driver is higher yen interest rates, which reduce the USP uplift impact.

Q: Question on Japan benefit ratio guidance.

A: Max Broden explains three factors contributing to lower benefit ratio: actuarial assumption update, lapse/reissue from new product introductions, and shrinkage of old savings policy block.