Aflac's Q1 2025 Earnings Call: Unraveling Key Contradictions in Reinsurance, Capital Strategy, and Sales Performance

Reinsurance strategy and ESR impact, capital allocation and return philosophy, sales strategy and product focus in Japan, ESR management strategy and impact of FX fluctuations, dental sales and product issues are the key contradictions discussed in Aflac's latest 2025Q1 earnings call.



Japan Sales and Product Launch:
- Aflac Japan reported a 12.6% year-over-year increase in sales, with a 6.3% increase in cancer insurance sales.
- The growth was driven by the introduction of the Tsumitasu and Miraito cancer insurance products, which appeal to younger customers.

U.S. Sales and Product Focus:
- Aflac U.S. experienced a 3.5% year-over-year increase in sales, with notable momentum in group life, disability, and network dental products.
- The company's efforts to drive profitable growth through underwriting discipline and expense management contributed to this sales increase.

Investment Income and Financial Performance:
- Adjusted earnings per diluted share were flat year-over-year at $1.66, with variable investment income below long-term expectations.
- Profitability was maintained through strong net investment income, despite lower floating rate income and absorption of reinsurance charges.

Capital Deployment and Shareholder Returns:
- Aflac deployed $900 million in capital to repurchase 8.5 million shares, contributing to $1.2 billion returned to shareholders in the first quarter of 2025.
- This was part of a strategy to support shareholder needs while maintaining financial strength and solid capital ratios.