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Aflac Q3 Earnings Beat Estimates on Strong U.S. Profit Growth
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Key Takeaways
Aflac's Q3 adjusted EPS of $2.43 beat estimates by 35%, despite a 2.4% year-over-year decline.
U.S. pretax earnings surged 31.5% to $493M, driven by higher premiums, reserve gains and lower expenses.
Japan's pretax earnings fell 21%, while AFL returned $1.1B to shareholders through buybacks and dividends.
Aflac Incorporated (AFL - Free Report) reported third-quarter 2026 adjusted earnings per share (EPS) of $2.43, which beat the Zacks Consensus Estimate of $1.80 by 35%. However, the bottom line declined 2.4% year over year.
Adjusted revenues totaled $4.3 billion, which declined 9.3% year over year. The top line surpassed the consensus mark by 2.2%.
AFL's quarterly performance benefited from improved U.S. profitability, higher reserve remeasurement gains in the domestic business and lower U.S. expenses. Nevertheless, weaker Japanese operations and unfavorable foreign exchange movements partly offset the upside.
Aflac Incorporated Price, Consensus and EPS Surprise
Adjusted net investment income declined 5.1% year over year to $957 million.
Net benefits and claims increased 0.2% year over year to $1.4 billion. Total acquisition and operating expenses rose 1.7% to $1.3 billion.
Pretax adjusted earnings declined 8.1% to $1.5 billion.
Inside Aflac’s Segments
Aflac Japan: The segment’s adjusted revenues declined 7.7% year over year to $2.2 billion in the third quarter but beat the Zacks Consensus Estimate by 0.1%. Net earned premiums of $1.5 billion slipped 9.3% year over year and missed the consensus mark by 0.9%.
Adjusted net investment income decreased 3.9% to $639 million. The unit’s pretax adjusted earnings slumped 21% to $961 million but beat the consensus mark by 25.2%.
New annualized premium sales fell 4% year over year to $118 million. The decline reflected elevated prior-year Miraito cancer insurance sales, partly offset by growth in Tsumitasu savings-type life insurance and Anshin Palette medical insurance.
Premium persistency stood at 92.9%, down 40 bps year over year. The benefit ratio deteriorated to 49.2% from 39.3%.
Aflac U.S.: Adjusted revenues of $1.8 billion grew 3.1% year over year and beat the Zacks Consensus Estimate by 1.8%. Net earned premiums advanced 3.3% to $1.5 billion, supported by improved sales and strong policy persistency. The metric beat the consensus mark by 0.6%.
Adjusted net investment income totaled $212 million, down 0.9% year over year. However, pretax adjusted earnings surged 31.5% to $493 million, benefiting from higher reserve remeasurement gains, increased premiums and lower expenses. The metric beat the consensus mark of $332.8 million.
The unit's pretax adjusted profit margin expanded 600 bps to 27.7%. Its benefit ratio improved to 40.7% from 45.6%.
Sales rose 3.5% to $403 million, primarily driven by network dental and group life and disability products. Premium persistency improved 70 bps to 79.7%.
AFL’s Q3 Financial Position
Aflac exited the third quarter with total investments and cash of $100.4 billion, down from $103.8 billion at 2025-end. Total assets declined to $113.5 billion from $116.5 billion.
Total shareholders' equity decreased to $29.3 billion from $29.5 billion at 2025-end. Adjusted book value per share increased 1.7% year over year to $54.21.
Adjusted debt amounted to $7.9 billion, up from $7.7 billion recorded as of Dec. 31, 2025.
The adjusted leverage ratio stood at 22.6%, within management's targeted range of 20-25%. Adjusted return on equity, excluding foreign currency remeasurement, improved to 23.7% from 23.1% a year ago.
AFL’s Capital Deployment
Aflac returned $1.1 billion to its shareholders during the third quarter through $804 million in share repurchases and $305 million in dividends.
The board declared a fourth-quarter dividend of $0.61 per share, payable on Dec. 1, 2026, to its shareholders of record as of Nov. 18. This marked 44 consecutive years of dividend increases.
AFL’s Revised 2026 Outlook
Aflac expects the Japan segment's 2026 benefit ratio to remain slightly below its 60-63% range. Its expense ratio is expected to be near the lower end of the 20-23% range.
Management upwardly revised the Japan segment's pretax profit margin outlook to 35-38%, reflecting its updated profitability expectations.
For Aflac U.S., the benefit ratio is expected to remain below the 48-52% range. The expense ratio is projected to stay near the middle of the 36-39% range.
The U.S. pretax profit margin is expected to exceed the company's 17-20% guidance range.
Here are some stocks from the broader insurance space that have also reported their quarterly results: Everest Group, Ltd. (EG - Free Report) , Aon plc (AON - Free Report) and The Hartford Insurance Group, Inc. (HIG - Free Report) . Here's how they have performed:
Everest Group reported third-quarter 2026 operating income of $7.62 per share, which missed the Zacks Consensus Estimate of $9.38 by 18.8%. The bottom line increased 1.1% year over year. Total revenues of $3.71 billion declined 14% year over year. Higher catastrophe losses and adverse prior-year reserve development weighed on underwriting profitability. Lower earned premiums hurt EG’s top line despite strong investment income growth.
Aon reported third-quarter 2026 adjusted earnings of $3.36 per share, which surpassed the Zacks Consensus Estimate by 0.6%. The bottom line advanced 10% year over year. Total revenues of $4.1 billion grew 3% year over year. AON’s quarterly results were supported by strong organic revenue growth, healthy client retention, adjusted operating margin expansion and disciplined execution. Solid performance across the Commercial Risk, Reinsurance and Health Solutions businesses was partly offset by lower revenues in Wealth Solutions, primarily due to divestitures.
The Hartford delivered third-quarter 2026 core earnings per share of $3.50, beating the Zacks Consensus Estimate by 11.1%. However, the bottom line declined 2.5% year over year. Revenues came in at $5.4 billion, which improved 5.3% year over year. HIG’s quarterly results benefited from higher investment income and premium growth in Business Insurance. However, higher catastrophe losses and weaker Employee Benefits profitability partly offset the upside.
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Aflac Q3 Earnings Beat Estimates on Strong U.S. Profit Growth
Key Takeaways
Aflac Incorporated (AFL - Free Report) reported third-quarter 2026 adjusted earnings per share (EPS) of $2.43, which beat the Zacks Consensus Estimate of $1.80 by 35%. However, the bottom line declined 2.4% year over year.
Adjusted revenues totaled $4.3 billion, which declined 9.3% year over year. The top line surpassed the consensus mark by 2.2%.
AFL's quarterly performance benefited from improved U.S. profitability, higher reserve remeasurement gains in the domestic business and lower U.S. expenses. Nevertheless, weaker Japanese operations and unfavorable foreign exchange movements partly offset the upside.
Aflac Incorporated Price, Consensus and EPS Surprise
Aflac Incorporated price-consensus-eps-surprise-chart | Aflac Incorporated Quote
AFL’s Q3 Performance
Adjusted net investment income declined 5.1% year over year to $957 million.
Net benefits and claims increased 0.2% year over year to $1.4 billion. Total acquisition and operating expenses rose 1.7% to $1.3 billion.
Pretax adjusted earnings declined 8.1% to $1.5 billion.
Inside Aflac’s Segments
Aflac Japan: The segment’s adjusted revenues declined 7.7% year over year to $2.2 billion in the third quarter but beat the Zacks Consensus Estimate by 0.1%. Net earned premiums of $1.5 billion slipped 9.3% year over year and missed the consensus mark by 0.9%.
Adjusted net investment income decreased 3.9% to $639 million. The unit’s pretax adjusted earnings slumped 21% to $961 million but beat the consensus mark by 25.2%.
New annualized premium sales fell 4% year over year to $118 million. The decline reflected elevated prior-year Miraito cancer insurance sales, partly offset by growth in Tsumitasu savings-type life insurance and Anshin Palette medical insurance.
Premium persistency stood at 92.9%, down 40 bps year over year. The benefit ratio deteriorated to 49.2% from 39.3%.
Aflac U.S.: Adjusted revenues of $1.8 billion grew 3.1% year over year and beat the Zacks Consensus Estimate by 1.8%. Net earned premiums advanced 3.3% to $1.5 billion, supported by improved sales and strong policy persistency. The metric beat the consensus mark by 0.6%.
Adjusted net investment income totaled $212 million, down 0.9% year over year. However, pretax adjusted earnings surged 31.5% to $493 million, benefiting from higher reserve remeasurement gains, increased premiums and lower expenses. The metric beat the consensus mark of $332.8 million.
The unit's pretax adjusted profit margin expanded 600 bps to 27.7%. Its benefit ratio improved to 40.7% from 45.6%.
Sales rose 3.5% to $403 million, primarily driven by network dental and group life and disability products. Premium persistency improved 70 bps to 79.7%.
AFL’s Q3 Financial Position
Aflac exited the third quarter with total investments and cash of $100.4 billion, down from $103.8 billion at 2025-end. Total assets declined to $113.5 billion from $116.5 billion.
Total shareholders' equity decreased to $29.3 billion from $29.5 billion at 2025-end. Adjusted book value per share increased 1.7% year over year to $54.21.
Adjusted debt amounted to $7.9 billion, up from $7.7 billion recorded as of Dec. 31, 2025.
The adjusted leverage ratio stood at 22.6%, within management's targeted range of 20-25%. Adjusted return on equity, excluding foreign currency remeasurement, improved to 23.7% from 23.1% a year ago.
AFL’s Capital Deployment
Aflac returned $1.1 billion to its shareholders during the third quarter through $804 million in share repurchases and $305 million in dividends.
The board declared a fourth-quarter dividend of $0.61 per share, payable on Dec. 1, 2026, to its shareholders of record as of Nov. 18. This marked 44 consecutive years of dividend increases.
AFL’s Revised 2026 Outlook
Aflac expects the Japan segment's 2026 benefit ratio to remain slightly below its 60-63% range. Its expense ratio is expected to be near the lower end of the 20-23% range.
Management upwardly revised the Japan segment's pretax profit margin outlook to 35-38%, reflecting its updated profitability expectations.
For Aflac U.S., the benefit ratio is expected to remain below the 48-52% range. The expense ratio is projected to stay near the middle of the 36-39% range.
The U.S. pretax profit margin is expected to exceed the company's 17-20% guidance range.
AFL’s Zacks Rank
AFL currently has 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?
Here are some stocks from the broader insurance space that have also reported their quarterly results: Everest Group, Ltd. (EG - Free Report) , Aon plc (AON - Free Report) and The Hartford Insurance Group, Inc. (HIG - Free Report) . Here's how they have performed:
Everest Group reported third-quarter 2026 operating income of $7.62 per share, which missed the Zacks Consensus Estimate of $9.38 by 18.8%. The bottom line increased 1.1% year over year. Total revenues of $3.71 billion declined 14% year over year. Higher catastrophe losses and adverse prior-year reserve development weighed on underwriting profitability. Lower earned premiums hurt EG’s top line despite strong investment income growth.
Aon reported third-quarter 2026 adjusted earnings of $3.36 per share, which surpassed the Zacks Consensus Estimate by 0.6%. The bottom line advanced 10% year over year. Total revenues of $4.1 billion grew 3% year over year. AON’s quarterly results were supported by strong organic revenue growth, healthy client retention, adjusted operating margin expansion and disciplined execution. Solid performance across the Commercial Risk, Reinsurance and Health Solutions businesses was partly offset by lower revenues in Wealth Solutions, primarily due to divestitures.
The Hartford delivered third-quarter 2026 core earnings per share of $3.50, beating the Zacks Consensus Estimate by 11.1%. However, the bottom line declined 2.5% year over year. Revenues came in at $5.4 billion, which improved 5.3% year over year. HIG’s quarterly results benefited from higher investment income and premium growth in Business Insurance. However, higher catastrophe losses and weaker Employee Benefits profitability partly offset the upside.