COLUMBUS, Ga. - May 1, 2024 - Aflac Incorporated (NYSE: AFL) today reported its first quarter results.

Total revenues were $5.4 billion in the first quarter of 2024, compared with $4.8 billion in the first quarter of 2023, reflecting net investment gains. Net earnings were $1.9 billion, or $3.25 per diluted share, compared with $1.2 billion, or $1.94 per diluted share a year ago.

Net earnings in the first quarter of 2024 included net investment gains of $951 million, or $1.65 per diluted share, compared with net investment gains of $123 million, or $0.20 per diluted share a year ago. These net investment gains were driven by net gains of $703 million on certain derivatives and foreign currency; net gains from sales and redemptions of $173 million; and a $76 million gain from an increase in the fair value of equity securities, offset by a $1 million increase in the company's current expected credit losses (CECL) reserves.

Adjusted earnings* in the first quarter were $961 million, compared with $953 million in the first quarter of 2023, reflecting an increase of 0.8%. Adjusted earnings per diluted share* increased 7.1% to $1.66 in the quarter. Variable investment income ran $11 million, or $0.01 per share, below the company's long-term return expectations. The weaker yen/dollar exchange rate negatively impacted adjusted earnings per share by $0.08.

The average yen/dollar exchange rate in the first quarter of 2024 was 148.67, or 11.0% weaker than the average rate of 132.30 in the first quarter of 2023.

Shareholders’ equity was $23.5 billion, or $41.27 per share, at March 31, 2024, compared with $19.8 billion, or $32.65 per share, at March 31, 2023. Shareholders’ equity at the end of the first quarter included a cumulative decrease of $1.5 billion for the effect of the change in discount rate assumptions on insurance reserves, compared with a corresponding cumulative decrease of $4.9 billion at March 31, 2023 and a net unrealized gain on investment securities and derivatives of $1.1 billion, compared with a net unrealized gain of $1.3 billion at March 31, 2023. Shareholders’ equity at the end of the first quarter also included an unrealized foreign currency translation loss of $4.7 billion, compared with an unrealized foreign currency translation loss of $3.6 billion at March 31, 2023. The annualized return on average shareholders’ equity in the first quarter was 33.0%.

Shareholders’ equity excluding AOCI (or adjusted book value*) was $28.6 billion, or $50.22 per share at March 31, 2024, compared with $27.1 billion, or $44.66 per share, at March 31, 2023. The annualized adjusted return on equity excluding foreign currency impact* in the first quarter was 14.3%.

In yen terms, Aflac Japan's net earned premiums were ¥269.9 billion for the quarter, or 6.0% lower than a year ago, mainly due to the prior year reinsurance transactions and limited-pay policies reaching paid-up status. Adjusted net investment income increased 19.3% to ¥96.6 billion, mainly due to lower hedge costs, the favorable impact of the weakening yen on U.S. dollar investments, and higher variable investment income. Total adjusted revenues in yen declined 0.4% to ¥367.6 billion. Pretax adjusted earnings in yen for the quarter increased 15.6% on a reported basis to ¥120.6 billion, primarily due to lower benefits and expenses during the quarter. Pretax adjusted earnings increased 9.3% on a currency-neutral basis. The pretax adjusted profit margin for the Japan segment increased to 32.8%, compared with 28.2% a year ago.

In dollar terms, net earned premiums decreased 16.3% to $1.8 billion in the first quarter. Adjusted net investment income increased 6.1% to $648 million. Total adjusted revenues declined by 11.4% to $2.5 billion. Pretax adjusted earnings increased 2.8% to $810 million.

For the quarter, total new annualized premium sales (sales) decreased 5.1% to ¥12.5 billion, or $84 million, primarily reflecting softer first sector sales.

Aflac U.S. net earned premiums increased 3.3% to $1.5 billion in the first quarter compared to the prior year due primarily to sales recovery in the prior year and continued improvement in persistency. Adjusted net investment income increased 4.6% to $206 million, largely due to higher variable investment income and a shift to higher-yielding fixed-income investments. Total adjusted revenues were up 2.3% to $1.7 billion. Pretax adjusted earnings were $356 million, 1.1% higher than a year ago, primarily due to higher revenue and lower expenses offset by higher benefits. The pretax adjusted profit margin for the U.S. segment was 21.0%, compared with 21.2% a year ago.

Aflac U.S. sales decreased 5.2% in the quarter to $298 million, reflecting continued strong underwriting discipline.

For the quarter, total adjusted revenues increased 91.5% to $247 million compared to the prior year primarily due to reinsurance transactions in the fourth quarter of 2023 resulting in an increase to both total net earned premiums and adjusted net investment income, which also increased due to a lower volume of tax credit investments. Total benefits and adjusted expenses increased $114 million compared to prior year primarily as a result of the increased reinsurance activity. Pretax adjusted earnings were a loss of $3 million, compared with a loss of $7 million a year ago.

The board of directors declared the second quarter dividend of $0.50 per share, payable on June 3, 2024 to shareholders of record at the close of business on May 22, 2024.

In the first quarter, Aflac Incorporated deployed $750 million in capital to repurchase 9.3 million of its common shares. At the end of March 2024, the company had 68.5 million remaining shares authorized for repurchase.

Commenting on the company’s results, Aflac Incorporated Chairman, Chief Executive Officer and President Daniel P. Amos stated: "Aflac delivered very solid earnings for the quarter. We have continued to actively concentrate on driving profitable growth in the U.S. and Japan with new products and distribution strategies. We believe our strategy will continue to create long-term value for shareholders.

"Looking at our operations in Japan, we have maintained disciplined underwriting and expense management to drive strong pretax profit margins. We expect sales campaigns around our 50th anniversary in Japan starting in the second quarter to get us back on track for the year.

"In the U.S., we continue to focus on more profitable growth by exercising a stronger underwriting discipline with an emphasis on persistency. As a result, we are seeing positive results in both net earned premiums growth and persistency. At the same time, we continue our disciplined approach to expense management and maintaining a strong pretax margin. We expect to drive further improvements throughout the year.

"We continue to generate strong capital and cash flows while maintaining our commitment to prudent liquidity and capital management. We treasure our track record of 41 consecutive years of dividend growth and remain committed to extending it, supported by our financial strength. In the quarter, we repurchased a record $750 million in shares and intend to continue our balanced approach of investing in growth and driving long-term operating efficiencies."

*See Non-U.S. GAAP Financial Measures section for an explanation of foreign exchange and its impact on the financial statements and definitions of the non-U.S. GAAP financial measures used in this earnings release, as well as a reconciliation of such non-U.S. GAAP financial measures to the most comparable U.S. GAAP financial measures.

Aflac Incorporated (NYSE: AFL), a Fortune 500 company, has helped provide financial protection and peace of mind for more than 68 years to millions of policyholders and customers through its subsidiaries in the U.S. and Japan. In the U.S., Aflac is the No. 1 provider of supplemental health insurance products.1 In Japan, Aflac Life Insurance Japan is the leading provider of cancer and medical insurance in terms of policies in force. The company takes pride in being there for its policyholders when they need us most, as well as being included in the World’s Most Ethical Companies by Ethisphere for 18 consecutive years (2024), Fortune’s World’s Most Admired Companies for 23 years (2024) and Bloomberg’s Gender-Equality Index for the fourth consecutive year (2023). In addition, the company became a signatory of the Principles for Responsible Investment (PRI) in 2021 and has been included in the Dow Jones Sustainability North America Index (2023) for 10 years. To find out how to get help with expenses health insurance doesn't cover, get to know us at aflac.com or aflac.com/espanol. Investors may learn more about Aflac Incorporated and its commitment to corporate social responsibility and sustainability at investors.aflac.com under “Sustainability.”

1 LIMRA 2022 U.S. Supplemental Health Insurance Total Market Report

A copy of Aflac’s financial supplement for the quarter can be found on the “Investors” page at aflac.com.

Aflac Incorporated will webcast its quarterly conference call via the “Investors” page of aflac.com at 7:00 a.m. (ET) on May 2, 2024.

Note: Tables within this document may not foot due to rounding.

The company defines the non-U.S. GAAP financial measures included in this earnings release as follows:

•Adjusted earnings are adjusted revenues less benefits and adjusted expenses. Adjusted earnings per share (basic or diluted) are the adjusted earnings for the period divided by the weighted average outstanding shares (basic or diluted) for the period presented. The adjustments to both revenues and expenses account for certain items that are outside of management’s control because they tend to be driven by general economic conditions and events or are related to infrequent activities not directly associated with insurance operations. Adjusted revenues are U.S. GAAP total revenues excluding adjusted net investment gains and losses. Adjusted expenses are U.S. GAAP total acquisition and operating expenses including the impact of interest from derivatives associated with notes payable but excluding any non-recurring or other items not associated with the normal course of the Company’s insurance operations and that do not reflect the Company's underlying business performance. Management uses adjusted earnings and adjusted earnings per diluted share to evaluate the financial performance of the Company’s insurance operations on a consolidated basis and believes that a presentation of these financial measures is vitally important to an understanding of the underlying profitability drivers and trends of the Company’s insurance business. The most comparable U.S. GAAP financial measures for adjusted earnings and adjusted earnings per share (basic or diluted) are net earnings and net earnings per share, respectively.

•Adjusted earnings excluding current period foreign currency impact are computed using the average foreign currency exchange rate for the comparable prior-year period, which eliminates fluctuations driven solely by foreign currency exchange rate changes. Adjusted earnings per diluted share excluding current period foreign currency impact is adjusted earnings excluding current period foreign currency impact divided by the weighted average outstanding diluted shares for the period presented. The Company considers adjusted earnings excluding current period foreign currency impact and adjusted earnings per diluted share excluding current period foreign currency impact important because a significant portion of the Company's business is conducted in Japan and foreign exchange rates are outside management’s control; therefore, the Company believes it is important to understand the impact of translating foreign currency (primarily Japanese yen) into U.S. dollars. The most comparable U.S. GAAP financial measures for adjusted earnings excluding current period foreign currency impact and adjusted earnings per diluted share excluding current period foreign currency impact are net earnings and net earnings per share, respectively.

•Adjusted return on equity is adjusted earnings divided by average shareholders’ equity, excluding accumulated other comprehensive income (AOCI). Management uses adjusted return on equity to evaluate the financial performance of the Company’s insurance operations on a consolidated basis and believes that a presentation of this financial measure is vitally important to an understanding of the underlying profitability drivers and trends of the Company’s insurance business. The Company considers adjusted return on equity important as it excludes components of AOCI, which fluctuate due to market movements that are outside management's control. The most comparable U.S. GAAP financial measure for adjusted return on equity is return on average equity (ROE) as determined using net earnings and average total shareholders’ equity.

•Adjusted return on equity excluding foreign currency impact is adjusted earnings excluding the current period foreign currency impact divided by average shareholders’ equity, excluding AOCI. The Company considers adjusted return on equity excluding foreign currency impact important as it excludes changes in foreign currency and components of AOCI, which fluctuate due to market movements that are outside management's control. The most comparable U.S. GAAP financial measure for adjusted return on equity excluding foreign currency impact is return on average equity (ROE) as determined using net earnings and average total shareholders’ equity.

•Amortized hedge costs/income represent costs/income incurred or recognized as a result of using foreign currency derivatives to hedge certain foreign exchange risks in the Company's Japan segment or in Corporate and other. These amortized hedge costs/income are estimated at the inception of the derivatives based on the specific terms of each contract and are recognized on a straight-line basis over the contractual term of the derivative. The Company believes that amortized hedge costs/income measure the periodic currency risk management costs/income related to hedging certain foreign currency exchange risks and are an important component of net investment income. There is no comparable U.S. GAAP financial measure for amortized hedge costs/income.

•Adjusted book value is the U.S. GAAP book value (representing total shareholders’ equity), less AOCI as recorded on the U.S. GAAP balance sheet. Adjusted book value per common share is adjusted book value at the period end divided by the ending outstanding common shares for the period presented. The Company considers adjusted book value and adjusted book value per common share important as they exclude AOCI, which fluctuates due to market movements that are outside management’s control. The most comparable U.S. GAAP financial measures for adjusted book value and adjusted book value per common share are total book value and total book value per common share, respectively.

•Adjusted book value including unrealized foreign currency translation gains and losses is adjusted book value plus unrealized foreign currency translation gains and losses. Adjusted book value including unrealized foreign currency translation gains and losses per common share is adjusted book value plus unrealized foreign currency translation gains and losses at the period end divided by the ending outstanding common shares for the period presented. The Company considers adjusted book value including unrealized foreign currency translation gains and losses, and its related per share financial measure, important as they exclude certain components of AOCI, which fluctuate due to market movements that are outside management's control; however, it includes the impact of foreign currency as a result of the significance of Aflac’s Japan operation. The most comparable U.S. GAAP financial measures for adjusted book value including unrealized foreign currency translation gains and losses and adjusted book value including unrealized foreign currency translation gains and losses per common share are total book value and total book value per common share, respectively.

•Adjusted net investment income is net investment income adjusted for i) amortized hedge cost/income related to foreign currency exposure management strategies and certain derivative activity, and ii) net interest income/expense from foreign currency and interest rate derivatives associated with certain investment strategies, which are reclassified from net investment gains and losses to net investment income. The Company considers adjusted net investment income important because it provides a more comprehensive understanding of the costs and income associated with the Company’s investments and related hedging strategies. The most comparable U.S. GAAP financial measure for adjusted net investment income is net investment income.

•Adjusted net investment gains and losses are net investment gains and losses adjusted for i) amortized hedge cost/income related to foreign currency exposure management strategies and certain derivative activity, ii) net interest income/expense from foreign currency and interest rate derivatives associated with certain investment strategies, which are both reclassified to net investment income, and iii) the impact of interest from derivatives associated with notes payable, which is reclassified to interest expense as a component of total adjusted expenses. The Company considers adjusted net investment gains and losses important as it represents the remainder amount that is considered outside management’s control, while excluding the components that are within management’s control and are accordingly reclassified to net investment income and interest expense. The most comparable U.S. GAAP financial measure for adjusted net investment gains and losses is net investment gains and losses.

1    Prior period foreign currency impact reflected as “N/A” to isolate change for current period only.

2    Amounts excluding current period foreign currency impact are computed using the average foreign currency exchange rate for the comparable prior-year period, which eliminates fluctuations driven solely by foreign currency exchange rate changes.

1    Amounts are included with interest expenses that are a component of adjusted expenses.

1    U.S. GAAP ROE is calculated by dividing net earnings (annualized) by average shareholders' equity.

2    See separate reconciliation of net income to adjusted earnings.

3    Impact of foreign currency is calculated by restating all foreign currency components of the income statement to the weighted average foreign currency exchange rate for the comparable prior year period. The impact is the difference of the restated adjusted earnings compared to reported adjusted earnings. For comparative purposes, only current period income is restated using the weighted average prior period exchange rate, which eliminates the foreign currency impact for the current period. This allows for equal comparison of this financial measure.

1Refer to previously defined adjusted earnings and adjusted earnings per diluted share.

2Amounts excluding currency changes were determined using the same foreign currency exchange rate for the current period as the comparable period in the prior year, which eliminates dollar-based fluctuations driven solely from currency rate changes.

3Net of reinsurance

4Refer to previously defined adjusted net investment income.

Analyst and investor contact - David A. Young, 706.596.3264; 800.235.2667 or dyoung@aflac.com

Media contact - Ines Gutzmer, 762.207.7601 or igutzmer@aflac.com

FINAL                     5/1/2024

This document is a statistical supplement to Aflac’s quarterly earnings release. Throughout the presentation, amounts presented may not foot due to rounding. As you review the supplement, please note the non-U.S. GAAP financial measures and definitions found at the back of this document.

The Company adopted the Financial Accounting Standards Board’s Accounting Standard Update 2018-12 Financial Services - Insurance: Targeted Improvements to the Accounting for Long-Duration Contracts, as clarified and amended by (i) ASU 2019-09 Financial Services - Insurance: Effective Date, and (ii) ASU 2020-11 Financial Services - Insurance: Effective Date and Early Application (collectively, “LDTI”) as of January 1, 2023. The amended guidance is applied as of the beginning of the earliest period presented in the Company’s quarterly and annual financial statements, which results in a January 1, 2021 Transition Date. In conjunction with the adoption of LDTI, the Company changed its practice of recording the change in the deferred profit liability (DPL) on products with limited-payment features from the benefits and claims, net line item to the net earned premiums line item in the consolidated statement of earnings. This change in presentation has no impact on net earnings. All quarterly and annual amounts for 2021 and 2022 presented herein reflect these changes for LDTI and DPL.

(1) Includes previously owned shares used to purchase options (swapped shares) and/or shares purchased for deferred compensation program