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What were the key takeaways from Aflac's earnings call?

- **Financial Strength**: Adjusted EPS up 15% to $2.49, driven by $580M remeasurement gains.
- **Japan Growth**: Underlying earned premiums down 1.2%, but pretax margin 52.2% (750bp YoY increase).
- **U.S. Efficiency**: Pretax margin 21.7% (90bp YoY increase), offsetting $21M one-time contract fee.
- **Capital Discipline**: $1B stock buyback, 22% leverage ratio, SMR >900%, ESR >250%.

**【CFO Financial Commentary】**
- **Adjusted EPS**: $2.49 (15% YoY increase), driven by $580M remeasurement gains and $55M deferred profit liability increase.
- **Japan Segment**: 
  - Net earned premiums declined 4% (underlying -1.2%), benefit ratio 39.3% (10% YoY improvement), persistency 93.3%.
  - Expense ratio 19.8% (20bp YoY decline), pretax margin 52.2% (750bp YoY increase).
- **U.S. Segment**: 
  - Net earned premiums up 2.5%, benefit ratio 45.6% (200bp YoY improvement).
  - Expense ratio 38.9% (90bp YoY increase) due to $21M one-time contract termination fee.
  - Pretax margin 21.7% (90bp YoY increase), adjusted net investment income up 1.9%.
- **Corporate & Other**: 
  - Pretax earnings $69M, adjusted net investment income $66M (6% YoY increase).
  - CECL reserves increased by $28M (commercial real estate) and $7M (middle market loans).
  - Liquidity $4.5B (270% above minimum), leverage 22% (within 20-25% target).
- **Capital Deployment**: 
  - Repurchased $1B stock, paid $9M dividends, maintaining strong capital ratios (SMR >900%, ESR >250%).
  - 2025 guidance: Japan pretax margin 35-38%, U.S. pretax margin 17-20% range upper end.

Aflac Incorporated (AFL) Q3 2025 Earnings Call Transcript

Revenue

Sales and Services Revenue

Financing Services Revenue

Other Revenue

Cost of Revenue

Cost of Goods and Services

Cost of Financing Services

Other Cost

Gross Profit

Other Operating Income

Operating Expenses

Selling, General and Administrative Expenses

Selling and Marketing Expenses

General and Administrative Expenses

Research and Development Expenses

Loss on Bad Debts

Loss on Impairment of Other Assets

Loss on Disposal of Assets

Other Operating Expenses

Operating Income

Non-Operating Income (Loss)

Income (Loss) from Affiliates

Income (Loss) from Associates

Income (Loss) from Joint ventures

Gain (Loss) on Other Investment

Gain (Loss) on Change in Fair Value

Gain (Loss) on Foreign Currency Exchange

Other Non-Operating Income (Loss)

Net Interest Expense

Interest Expense

Interest Income

Pretax Income From Continuing Operations

Income Tax Expense

Current Income Tax

Deferred Income Tax

Income Tax Adjustments

Net Income from Continuing Operations

Income from Discontinued Operations

Other Items Before Net Income

Net Income

Net Income Attributable to Minority Interests

Net Income Attributable to Owners of the Company

Preferred Stock Dividends

Other Adjustments

Net Income Attributable to Common Stockholders

Other Comprehensive Income

Total Comprehensive Income

Total Comprehensive Income Attributable to Minority Interests

Total Comprehensive Income Attributable to Owners of the Company

Basic EPS

Basic EPS from Continuing Operations

Basic EPS from Discontinued Operations

Diluted EPS

Diluted EPS from Continuing Operations

Diluted EPS from Discontinued Operations

AFL

AFL fundamentals

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