1) Financial Performance Overview
- Aflac reported net earnings per diluted share of $1.63 and adjusted earnings per diluted share of $1.75 for Q2 2026.
- Adjusted earnings per diluted share increased 1.1% YoY to $1.80, excluding foreign currency effects.
- Net earned premiums in Japan declined 3.7% YoY, while Aflac U.S. saw a 2.3% increase in net earned premiums.
- The total benefit ratio for Aflac U.S. was 49.5%, up 220 basis points YoY, primarily due to increased group disability claims.
- Aflac Japan's benefit ratio improved to 64%, down 250 basis points YoY, with an expected full-year range of 60% to 63%.

2) Strategic Initiatives and Product Development
- Aflac Japan's sales were JPY 19.6 billion, down 5.6% YoY, but up 7% for the first half of 2026, driven by strong performance in the Tsumitasu product.
- The company continues to promote third sector protection and has launched new products like Anshin Palette, which contributed to sales growth.
- Aflac U.S. is focusing on profitable growth with strong underwriting discipline, particularly in group voluntary products and network dental and vision, which saw a 47% increase in sales.
- The company is committed to maintaining its 43 consecutive years of dividend increases, returning $1.3 billion to shareholders in Q2 2026.

3) Operational Challenges and Market Conditions
- Aflac Japan experienced elevated lapse and reissue activity on recently launched products, impacting persistency rates, which remained at 92.7%.
- Inflationary pressures in Japan are being managed effectively, with an expense ratio of 20.2% despite rising costs.
- The company is closely monitoring the impact of external factors, such as the Middle East situation, on Japan's economy and inflation.

4) Capital Management and Shareholder Returns
- Aflac's unencumbered liquidity stood at $3.3 billion, significantly above the minimum balance requirement.
- The company repurchased $983 million of its stock and paid $309 million in dividends during the quarter.
- Aflac Japan's internal reinsurance target has been increased from 10% to 30% of FSA reserves, expected to free up significant capital over time.

5) Guidance and Future Outlook
- Aflac expects sales in Japan to exceed 2025 levels, with a target of JPY 80 billion still in consideration.
- The company anticipates a stronger second half of 2026, particularly in the U.S. market, driven by seasonal trends and ongoing product performance.
- There is no indication of significant changes to the foreign exchange program despite fluctuations in the yen-dollar exchange rate, as the company maintains a long-term perspective.

Bottom line: Aflac's solid financial performance in Q2 2026, driven by strategic product launches and disciplined capital management, positions the company well for continued growth and shareholder returns, despite facing operational challenges and market headwinds.