Aflac Q3 Profit Falls to $303 Million on Investment Losses

Aflac Incorporated (AFL ) reported third-quarter net earnings of $303 million, or $0.61 per diluted share, on November 4, 2026, down from $1.639 billion, or $3.08, a year earlier, as strategic portfolio repositioning produced substantial investment losses. The insurer also declared a $0.61-per-share fourth-quarter dividend in its quarterly results announcement.

Net investment losses totaled $1.072 billion, compared with $275 million of gains a year earlier. Sales and redemptions accounted for $842 million of losses, alongside $146 million from derivatives and foreign-currency activities and $102 million of current expected credit losses. A $51 million tax capital-loss valuation allowance further reduced net earnings by $0.10 per diluted share. Total revenues fell 31.0% to $3.271 billion from $4.740 billion. Aflac primarily attributed the earnings decline to realized losses associated with the portfolio repositioning.

Adjusted earnings, which Aflac defines as adjusted revenues less benefits and adjusted expenses, were $1.214 billion, down 8.5%. Adjusted earnings per diluted share declined 2.4% to $2.43. The measure removes adjusted net investment gains and losses from revenues and certain non-recurring items from expenses, separating the insurance operations from much of the portfolio swing. Even so, adjusted earnings included $453 million of reserve remeasurement gains, making those gains central to understanding the segment results.

Reserve Gains Shape Japan and U.S. Profit Trends

Aflac Japan’s pretax adjusted earnings declined 15.2% in yen to ¥152.3 billion and fell 17.9% on a currency-neutral basis. Its pretax adjusted profit margin narrowed to 44.4% from 52.2%. Aflac principally attributed the decline to higher benefits resulting from lower reserve remeasurement gains following actuarial-assumption unlocking.

Japan’s net earned premiums decreased 2.0% to ¥240.3 billion, reflecting an external reinsurance transaction effective in the first quarter, the third-quarter internal cancer-insurance reinsurance transaction and limited-pay products reaching paid-up status. New annualized premium sales fell 4.0% to ¥18.8 billion against high prior-year sales of Miraito cancer insurance following its March 2025 launch.

Aflac U.S. moved in the opposite direction. Net earned premiums increased 3.3% to $1.544 billion, while total adjusted revenues rose 3.1% to $1.781 billion. Pretax adjusted earnings increased 31.5% to $493 million, lifting the pretax adjusted profit margin to 27.7% from 21.7%. Aflac primarily credited higher reserve remeasurement gains, increased premiums and lower expenses. U.S. sales rose 3.5% to $403 million, primarily benefiting from network dental and group life and disability products.

Reinsurance and Currency Affect Reported Comparisons

The internal Japanese transaction involved approximately ¥500 billion of reserves on an FSA basis associated with cancer insurance policies, ceded to Aflac Re Bermuda during the third quarter. Chairman and Chief Executive Officer Daniel P. Amos said Japan’s results reflect the reinsurance strategy’s income-statement impact within Corporate and Other, where Aflac Re Bermuda is consolidated.

Corporate and Other adjusted revenues increased 5.0% to $360 million, while pretax adjusted earnings rose to $72 million from $69 million. Higher reserve remeasurement gains and new reinsurance transactions supported the result, partly offset by higher expenses and lower adjusted net investment income.

Currency added another layer to the comparisons. The average yen-dollar exchange rate was 158.49, 6.8% weaker than 147.68 a year earlier, reducing adjusted earnings per share by $0.03. Excluding current-period currency effects by using the prior-year average rate, adjusted earnings per diluted share were $2.46, down 1.2%. Currency translation therefore explained only part of the adjusted decline.

Capital Returns Continue During Portfolio Repositioning

Aflac returned $1.1 billion to shareholders during the quarter through $804 million of share repurchases and $305 million of dividends. Shares outstanding at September 30, 2026 totaled approximately 495.7 million, down 5.7% from 525.7 million a year earlier.

The newly declared dividend is payable December 1, 2026, to shareholders of record at the close of business on November 18, 2026. Its declaration marked Aflac’s 44th consecutive year of dividend increases.

The quarter separates the portfolio’s immediate effect on reported earnings from the insurance businesses’ adjusted performance. U.S. premium and sales growth contrasted with reinsurance-affected premiums in Japan, while reserve remeasurement influenced profits in both segments. The key question for subsequent results is how much adjusted profitability is supported by premiums, investment income and expenses rather than by reserve effects that materially shaped these comparisons.