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Aflac Q1 Earnings Miss Estimates on Lower Investment Income
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Key Takeaways
Aflac Q1 EPS missed estimates as revenues fell 1.9% on lower investment income and FX headwinds.
Aflac Japan revenues declined, but new premium sales jumped 25.5% on strong product demand.
Aflac U.S. posted revenues and premium growth, supported by higher group product sales.
Aflac Incorporated (AFL - Free Report) reported first-quarter 2026 adjusted earnings per share (EPS) of $1.75, which missed the Zacks Consensus Estimate by 2.9%. However, the bottom line improved 5.4% year over year.
Adjusted revenues totaled $4.2 billion, which declined 1.9% year over year. The top line missed the consensus mark by 2.1%.
AFL’s quarterly performance was affected by lower net investment income and exchange rate. Nevertheless, the downside was partly offset by higher sales in the U.S. unit.
Aflac Incorporated Price, Consensus and EPS Surprise
Adjusted net investment income declined 1.2% year over year to $902 million in the quarter under review.
Net benefits and claims totaled $1.8 billion, which declined 5.8% year over year. Total acquisition and operating expenses decreased 1.5% year over year to $1.3 billion.
Pre-tax earnings increased to $1.2 billion from $145 million in the prior-year quarter.
Inside Aflac’s Segments
Aflac Japan: The segment’s adjusted revenues dipped 4.4% year over year to $2.2 billion in the first quarter and missed the Zacks Consensus Estimate of $2.3 billion. Net earned premiums of $1.6 billion slipped 6.4% year over year and missed the consensus mark by 3.1%.
Adjusted net investment income increased 0.9% year over year to $591 million. The unit’s pretax adjusted earnings rose 5.1% to $759 million but missed the consensus mark of $800.9 million.
New annualized premium sales advanced 25.5% year over year to $113 million on the back of solid sales of Anshin Palette, Miraito and Tsumitasu.
Aflac U.S.: Adjusted revenues of $1.8 billion grew 3.4% year over year and beat the Zacks Consensus Estimate by 0.3%. Net earned premiums advanced 3.5% year over year to $1.6 billion, attributable to higher sales. The metric beat the consensus mark of $1.5 billion.
Adjusted net investment income totaled $201 million, which inched down 0.5% year over year in the quarter under review. Pretax adjusted earnings of the segment increased 1.4% year over year to $363 million. The metric beat the consensus mark of $359.1 million.
The unit’s sales totaled $318 million, up 2.9% year over year, on the back of higher sales of group products.
Financial Position (As of March 31, 2026)
Aflac exited the first quarter with total investments and cash of $103.2 billion, down from the 2025-end level of $103.8 billion. Total assets of $116.3 billion decreased 0.2% from the year-end figure.
Adjusted debt amounted to $7.6 billion, down 1.2% from the figure as of Dec. 31, 2025. Adjusted debt to adjusted capitalization, excluding accumulated other comprehensive income, was 21.2%, which improved 20 basis points (bps) from the 2025-end level.
Total shareholders' equity of $30 billion advanced 1.6% from the 2025-end figure.
Adjusted book value per share increased 5.7% year over year to $54.96. Adjusted return on equity, excluding foreign currency impacts, was 16.4%, which improved 80 bps year over year.
AFL’s Capital Deployment
Aflac bought back shares worth $1 billion in the first quarter of 2026. Management paid a dividend of $315 million in the same quarter.
AFL’s 2026 Outlook
Aflac still expects a benefit ratio of 60-63% for the Aflac Japan unit in 2026. The metric for the Aflac U.S. unit is still projected to be in the 48-52% range.
The expense ratio for Aflac Japan is still estimated to be 20-23%. The same for Aflac U.S. is reiterated to be in the band of 36-39%.
Underlying earned premiums were likely to witness a year-over-year decline of 1-2% for the Japan unit in 2026. Net earned premiums for the U.S. unit were likely to be at the lower end of the 3-6% range.
The pretax profit margin for Aflac Japan is still estimated to be between 33% and 36%, and the same for Aflac U.S. is projected to be in the range of 17-20% for 2026.
Several companies in the insurance space, including RenaissanceRe Holdings Ltd. (RNR - Free Report) , AMERISAFE, Inc. (AMSF - Free Report) and The Hartford Insurance Group, Inc. (HIG - Free Report) , have already reported their financial results for the March quarter of 2026. Here’s how they had performed:
RenaissanceRe reported first-quarter 2026 operating income of $13.75 per share, which surpassed the Zacks Consensus Estimate by 24.2%. The bottom line improved from the year-ago quarter’s operating loss of $1.49. Total operating revenues declined 16.6% year over year to $2.6 billion. The top line missed the consensus mark by 10.6%. RNR’s quarterly earnings were aided by a decline in expenses and strong underwriting performance in both segments. Improved combined ratio and fee income contributed to the upside. However, the upside was partly offset by lower net premiums earned across both segments.
AMERISAFE reported first-quarter 2026 adjusted earnings per share of 50 cents, which missed the Zacks Consensus Estimate of 52 cents. The bottom line declined 16.7% year over year. Operating revenues increased 7.9% year over year to $81.75 million but missed the consensus estimate by 0.9%. AMSF’s quarterly result was affected by higher expenses and weaker underwriting margins, with additional pressure from lower fee income and weaker investment income. Stronger premium growth partially offsets the downside.
Hartford posted first-quarter fiscal 2026 core earnings per share of $3.09, up 40.5% from $2.20 in the prior-year quarter. The figure missed the Zacks Consensus Estimate of $3.29 by 6.1%. Operating revenues totaled $5.09 billion, up 7% year over year, but missed the consensus mark by 2.1%. HIG’s weaker-than-expected results were caused by less favorable prior-year reserve development, higher expenses and pressure in Employee Benefits. The negatives were partially offset by high demand for expensive risk events, stronger investment income and a massive turnaround in Personal Insurance.
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Aflac Q1 Earnings Miss Estimates on Lower Investment Income
Key Takeaways
Aflac Incorporated (AFL - Free Report) reported first-quarter 2026 adjusted earnings per share (EPS) of $1.75, which missed the Zacks Consensus Estimate by 2.9%. However, the bottom line improved 5.4% year over year.
Adjusted revenues totaled $4.2 billion, which declined 1.9% year over year. The top line missed the consensus mark by 2.1%.
AFL’s quarterly performance was affected by lower net investment income and exchange rate. Nevertheless, the downside was partly offset by higher sales in the U.S. unit.
Aflac Incorporated Price, Consensus and EPS Surprise
Aflac Incorporated price-consensus-eps-surprise-chart | Aflac Incorporated Quote
AFL’s Q1 Performance
Adjusted net investment income declined 1.2% year over year to $902 million in the quarter under review.
Net benefits and claims totaled $1.8 billion, which declined 5.8% year over year. Total acquisition and operating expenses decreased 1.5% year over year to $1.3 billion.
Pre-tax earnings increased to $1.2 billion from $145 million in the prior-year quarter.
Inside Aflac’s Segments
Aflac Japan: The segment’s adjusted revenues dipped 4.4% year over year to $2.2 billion in the first quarter and missed the Zacks Consensus Estimate of $2.3 billion. Net earned premiums of $1.6 billion slipped 6.4% year over year and missed the consensus mark by 3.1%.
Adjusted net investment income increased 0.9% year over year to $591 million. The unit’s pretax adjusted earnings rose 5.1% to $759 million but missed the consensus mark of $800.9 million.
New annualized premium sales advanced 25.5% year over year to $113 million on the back of solid sales of Anshin Palette, Miraito and Tsumitasu.
Aflac U.S.: Adjusted revenues of $1.8 billion grew 3.4% year over year and beat the Zacks Consensus Estimate by 0.3%. Net earned premiums advanced 3.5% year over year to $1.6 billion, attributable to higher sales. The metric beat the consensus mark of $1.5 billion.
Adjusted net investment income totaled $201 million, which inched down 0.5% year over year in the quarter under review. Pretax adjusted earnings of the segment increased 1.4% year over year to $363 million. The metric beat the consensus mark of $359.1 million.
The unit’s sales totaled $318 million, up 2.9% year over year, on the back of higher sales of group products.
Financial Position (As of March 31, 2026)
Aflac exited the first quarter with total investments and cash of $103.2 billion, down from the 2025-end level of $103.8 billion. Total assets of $116.3 billion decreased 0.2% from the year-end figure.
Adjusted debt amounted to $7.6 billion, down 1.2% from the figure as of Dec. 31, 2025. Adjusted debt to adjusted capitalization, excluding accumulated other comprehensive income, was 21.2%, which improved 20 basis points (bps) from the 2025-end level.
Total shareholders' equity of $30 billion advanced 1.6% from the 2025-end figure.
Adjusted book value per share increased 5.7% year over year to $54.96. Adjusted return on equity, excluding foreign currency impacts, was 16.4%, which improved 80 bps year over year.
AFL’s Capital Deployment
Aflac bought back shares worth $1 billion in the first quarter of 2026. Management paid a dividend of $315 million in the same quarter.
AFL’s 2026 Outlook
Aflac still expects a benefit ratio of 60-63% for the Aflac Japan unit in 2026. The metric for the Aflac U.S. unit is still projected to be in the 48-52% range.
The expense ratio for Aflac Japan is still estimated to be 20-23%. The same for Aflac U.S. is reiterated to be in the band of 36-39%.
Underlying earned premiums were likely to witness a year-over-year decline of 1-2% for the Japan unit in 2026. Net earned premiums for the U.S. unit were likely to be at the lower end of the 3-6% range.
The pretax profit margin for Aflac Japan is still estimated to be between 33% and 36%, and the same for Aflac U.S. is projected to be in the range of 17-20% for 2026.
AFL’s Zacks Rank
AFL currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
How Did Peers Perform?
Several companies in the insurance space, including RenaissanceRe Holdings Ltd. (RNR - Free Report) , AMERISAFE, Inc. (AMSF - Free Report) and The Hartford Insurance Group, Inc. (HIG - Free Report) , have already reported their financial results for the March quarter of 2026. Here’s how they had performed:
RenaissanceRe reported first-quarter 2026 operating income of $13.75 per share, which surpassed the Zacks Consensus Estimate by 24.2%. The bottom line improved from the year-ago quarter’s operating loss of $1.49. Total operating revenues declined 16.6% year over year to $2.6 billion. The top line missed the consensus mark by 10.6%. RNR’s quarterly earnings were aided by a decline in expenses and strong underwriting performance in both segments. Improved combined ratio and fee income contributed to the upside. However, the upside was partly offset by lower net premiums earned across both segments.
AMERISAFE reported first-quarter 2026 adjusted earnings per share of 50 cents, which missed the Zacks Consensus Estimate of 52 cents. The bottom line declined 16.7% year over year. Operating revenues increased 7.9% year over year to $81.75 million but missed the consensus estimate by 0.9%. AMSF’s quarterly result was affected by higher expenses and weaker underwriting margins, with additional pressure from lower fee income and weaker investment income. Stronger premium growth partially offsets the downside.
Hartford posted first-quarter fiscal 2026 core earnings per share of $3.09, up 40.5% from $2.20 in the prior-year quarter. The figure missed the Zacks Consensus Estimate of $3.29 by 6.1%. Operating revenues totaled $5.09 billion, up 7% year over year, but missed the consensus mark by 2.1%. HIG’s weaker-than-expected results were caused by less favorable prior-year reserve development, higher expenses and pressure in Employee Benefits. The negatives were partially offset by high demand for expensive risk events, stronger investment income and a massive turnaround in Personal Insurance.