Aflac Reports Significant Revenue and Earnings Decline in Q2 and First Half of 2025

Aflac Incorporated reported a significant decline in its financial performance for the second quarter and first half of 2025, as detailed in its latest 10-Q filing. Total revenues for the three months ended June 30, 2025, were $4.16 billion, down from $5.14 billion in the same period of 2024. For the first six months of 2025, revenues decreased to $7.56 billion from $10.58 billion year-over-year. The company's net earnings also fell sharply, with $599 million, or $1.11 per diluted share, reported for the second quarter, compared to $1.76 billion, or $3.10 per diluted share, in the prior year. For the first half, net earnings were $628 million, or $1.16 per diluted share, down from $3.63 billion, or $6.35 per diluted share, in 2024.

The decline in revenue and profitability was primarily attributed to substantial net investment losses, which totaled $421 million in the second quarter and $1.38 billion in the first half of 2025, contrasting sharply with net investment gains of $696 million and $1.65 billion, respectively, in the previous year. The losses were influenced by various factors, including a $452 million loss from derivatives and foreign currency activities, an increase in credit loss allowances, and impairments. The average yen/dollar exchange rate for the second quarter was 144.60, a 7.7% improvement compared to the previous year, which positively impacted adjusted earnings.

In terms of operational metrics, Aflac Japan's net earned premiums for the second quarter increased by 2.7% to $1.76 billion, while Aflac U.S. saw a 3.4% rise to $1.50 billion. However, the overall annualized premiums in force for Aflac Japan decreased by 2.3% to ¥1.19 trillion, primarily due to limited-pay products reaching premium paid-up status. The company reported a total of over 22 million individual policies in force in Japan, with approximately 14 million being cancer policies.

Strategically, Aflac has continued to focus on its share repurchase program, buying back 16.4 million shares for $1.7 billion in the first half of 2025. The company also declared a cash dividend of $0.58 per share for the second quarter, up from $0.50 in the same period last year. As of June 30, 2025, Aflac's shareholders' equity stood at $27.2 billion, reflecting a cumulative increase from changes in discount rate assumptions, despite a net unrealized loss on investment securities and derivatives.

Looking ahead, Aflac's management remains cautious about the potential impacts of market conditions, including fluctuations in interest rates and foreign currency exchange rates, on its financial performance. The company is committed to maintaining strong capital levels and liquidity to support its operations and shareholder returns, while also navigating the challenges posed by the recent cybersecurity incident that involved unauthorized access to its network.