AFLAC INC

Company Overview

Aflac Incorporated (the Parent Company) and its subsidiaries (collectively, the Company) provide financial protection to millions of policyholders and customers in Japan and the United States (U.S.). The Company’s principal business is supplemental health and life insurance products with the goal to provide customers the best value in supplemental insurance products in Japan and the U.S. The Company's insurance business consists of two reporting segments: Aflac Japan and Aflac U.S. The Parent Company’s primary insurance subsidiaries are Aflac Life Insurance Japan Ltd. in Japan (Aflac Japan) and American Family Life Assurance Company of Columbus (Aflac); Continental American Insurance Company (CAIC), branded as Aflac Group Insurance (AGI); American Family Life Assurance Company of New York (Aflac New York); Tier One Insurance Company (TOIC) and Aflac Benefits Solutions, Inc. (ABS), which provides a platform for Aflac Dental and Vision in the U.S. (collectively, Aflac U.S.). The Parent Company, other operating business units that are not individually reportable, reinsurance activities, including reinsurance activity of Aflac Re Bermuda Ltd. (Aflac Re), and other business activities not included in Aflac Japan or Aflac U.S., as well as intercompany eliminations, are included in Corporate and other.

Performance Highlights

Total revenues were $4.3 billion in the first quarter of 2026, compared with $3.4 billion in the first quarter of 2025, primarily due to net investment gains of $49 million in the first quarter of 2026 compared with net investment losses of $963 million in the first quarter of 2025.

Net earnings were $1.0 billion, or $1.98 per diluted share, in the first quarter of 2026, compared with $29 million, or $.05 per diluted share, in the first quarter of 2025.

Net earnings in the first quarter of 2026 included net investment gains of $49 million, compared with net investment losses of $963 million in the first quarter of 2025. Net investment gains in the first quarter of 2026 included $164 million of net gains from certain derivative and foreign currency gains or losses; offset by an increase in credit loss allowances of $61 million; $24 million of impairments; $16 million of net losses from sales and redemptions; and a $14 million loss from a decrease in the fair value of equity securities.

Adjusted earnings(1) in the first quarter of 2026 were $901 million, or $1.75 per diluted share, compared with $906 million, or $1.66 per diluted share, in the first quarter of 2025. The average yen/dollar exchange rate(2) for the three-month period ended March 31, 2026 was 156.87, or 2.8% weaker than the average rate of 152.40 for the same period in 2025. The weaker yen/dollar exchange rate negatively impacted adjusted earnings per diluted share by $.02.

Shareholders’ equity was $30.0 billion, or $58.69 per share, at March 31, 2026, compared with $29.5 billion, or $56.85 per share, at December 31, 2025.

Shareholders’ equity at March 31, 2026 included a cumulative increase of $9.5 billion from the effect of changes in discount rate assumptions on insurance reserves, compared with a corresponding cumulative increase of $8.0 billion at December 31, 2025, and a net unrealized loss on investment securities and derivatives of $2.7 billion, compared with a net unrealized loss of $1.8 billion at December 31, 2025. Shareholders’ equity at March 31, 2026 also included an unrealized foreign currency translation loss of $5.0 billion, compared with an unrealized foreign currency translation loss of $4.8 billion at December 31, 2025. The annualized return on average shareholders’ equity in the first quarter of 2026 was 13.7%.

Shareholders’ equity excluding accumulated other comprehensive income (adjusted book value(1)) was $28.1 billion, or $54.96 per share, at March 31, 2026, compared with $28.0 billion, or $54.06 per share, at December 31, 2025. Adjusted book value excluding foreign currency remeasurement(1) was $21.8 billion, or $42.71 per share, at March 31, 2026, compared with $22.1 billion, or $42.66 per share, at December 31, 2025. The annualized adjusted return on equity excluding foreign currency remeasurement(1) in the first quarter of 2026 was 16.4%.

In the first three months of 2026, Aflac Incorporated repurchased $1.0 billion, or 9.0 million of its common shares. At March 31, 2026, the Company had 105.3 million remaining shares authorized for repurchase.

(1)See the Results of Operations section of this MD&A for a definition of this non-U.S. GAAP financial measure.

(2) Yen/dollar exchange rates are based on the published MUFG Bank, Ltd. telegraphic transfer middle rate (TTM).

Cyber Incident

As previously disclosed, the Company identified an incident involving unauthorized access to a limited number of its systems in the U.S. on June 12, 2025. The Company promptly initiated its cybersecurity incident response protocols and believes it contained the unauthorized access within hours. The Company's systems were not affected by ransomware, and the Company remained able to serve its policyholders and underwrite policies, review claims, and otherwise service customers as usual.

The Company is aware of the exfiltration of certain data including claims information, health information, social security numbers and/or other personal information relating to customers, beneficiaries, employees, agents, and other individuals in the Company’s U.S. business. In December 2025, the Company completed a detailed review of the potentially impacted files and determined that personal information associated with approximately 22.65 million individuals was involved. As of the date of this filing, the Company has completed the notification process to impacted individuals and regulatory authorities as required by applicable laws.

Based on the information currently available, as of the date of this report, the Company does not believe that the incident is reasonably likely to have a material impact on the Company’s financial condition or results of operations. The Company continues to assess the financial impact of the cybersecurity incident, including how much of the financial impact will be covered by insurance. As a result of the cybersecurity incident, the Company has incurred certain costs and may, depending on future developments, incur additional costs, including but not limited to: costs to provide credit monitoring, identity theft protection, and Medical Shield to impacted individuals and maintain a call center related to the provision of such services; incident response costs; expenses arising from potential litigation, governmental investigations, or enforcement actions; expenses related to compliance, finance, and legal advisory services; elevated cybersecurity insurance premiums; and costs incurred in meeting evolving legal and regulatory requirements concerning cybersecurity governance, monitoring, and disclosure.