Aflac (NYSE: AFL) net earnings fall 81.5% on portfolio losses, but dividend rises

Posted by Donald Scott on Nov 4th, 2026

What happened

Aflac Incorporated (NYSE: AFL) said third-quarter net earnings fell 81.5% to $303 million after the insurer booked losses while repositioning its investment portfolio. Net earnings per diluted share were $0.61, compared with $3.08 a year earlier.

Adjusted earnings held up better. The company uses this non-GAAP measure to track its insurance operations. It was $1.2 billion, down 8.5% from $1.3 billion in the third quarter of 2025. Total revenues fell 31.0% to $3.3 billion from $4.7 billion.

The board declared a fourth-quarter dividend that marks 44 consecutive years of increases. In the quarter Aflac returned $1.1 billion to shareholders: $804 million in share repurchases and $305 million in dividends.

Key numbers

Metric	Latest	Change	Source
Net earnings, Q3	$303 million	from $1.6 billion, -81.5%	SEC 8-K
Adjusted earnings, Q3	$1.2 billion	from $1.3 billion, -8.5%	SEC 8-K
Adjusted earnings per diluted share, Q3	$2.43	from $2.49, -2.4%	SEC 8-K
Total revenues, Q3	$3.3 billion	from $4.7 billion, -31.0%	SEC 8-K
Aflac U.S. pretax adjusted earnings, Q3	$493 million	from $375 million, +31.5%	SEC 8-K
Aflac Japan pretax adjusted earnings, Q3	$961 million	from $1.22 billion, -21.0%	SEC 8-K

Read more: Aflac (AFL) company research

Where the earnings gap comes from

Aflac blames the drop in net earnings mainly on realized losses from the portfolio repositioning. Net investment losses were $1.1 billion, or $2.15 per diluted share, compared with net investment gains of $275 million a year earlier. They included $842 million of net losses from sales and redemptions and $146 million of losses on certain derivatives and foreign currency activities.

Net earnings also carried a $51 million valuation allowance against deferred tax assets tied to tax capital loss carryforwards. That cost $0.10 per diluted share. By OptimistFi's calculation, adjusted earnings exceeded net earnings by $911 million in the quarter. The company's reconciliation traces that gap to adjusted net investment losses, a tax benefit on those items and the valuation allowance.

Adjusted earnings per diluted share fell a smaller 2.4% to $2.43. The diluted share count was down 6.3%. The weaker yen also cut adjusted earnings per share by $0.03. The average yen-dollar rate was 158.49, which is 6.8% weaker than 147.68 a year earlier.

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Japan slips while the U.S. gains

Aflac Japan's pretax adjusted earnings fell 21.0% to $961 million. Its pretax adjusted margin was 44.4% against 52.2% a year earlier. In yen, earnings fell 15.2%. The filing says the main driver was higher benefits from lower reserve remeasurement gains after unlocking actuarial assumptions.

Japan's net earned premiums fell 9.3% to $1.5 billion in dollars and 2.0% in yen. The company points mainly to an external reinsurance transaction effective in the first quarter. It also cites an internal one on cancer insurance blocks effective in the third quarter, and limited pay products reaching paid-up status. Aflac Japan ceded approximately 500 billion of reserves on an FSA basis tied to cancer policies to Aflac Re Bermuda.

Premium persistency in Japan was 92.9% against 93.3%. Japan sales fell 4.0% to 18.8 billion yen, or $118 million, against high prior-year sales of Miraito cancer insurance following its March 2025 launch.

Aflac U.S. pretax adjusted earnings rose 31.5% to $493 million, lifting the margin to 27.7% from 21.7%. The filing credits higher reserve remeasurement gains from unlocking actuarial assumptions, higher premiums and lower expenses. Net earned premiums grew 3.3%, persistency improved to 79.7% from 79.0%, and sales rose 3.5% to $403 million.

Nine months and the balance sheet

For the first nine months, revenues fell 4.6% to $11.7 billion from $12.3 billion. Net earnings were $2.1 billion, or $4.24 per diluted share, compared with $2.3 billion, or $4.21. Adjusted earnings were $3.0 billion against $3.2 billion, with adjusted earnings per diluted share flat at $5.92. Excluding a $0.10 drag from the weaker yen, that measure rose 1.7% to $6.02.

Shareholders' equity rose to $29.3 billion from $28.7 billion at Sept. 30, 2025. Adjusted book value excluding foreign currency remeasurement fell to $20.2 billion, or $40.73 per share, from $22.9 billion, or $43.52, a 6.4% drop per share. Annualized return on average shareholders' equity was 4.1% for the quarter. Annualized adjusted return on equity excluding foreign currency remeasurement was 23.7%.

Why it matters

OptimistFi has argued that Aflac's value comes from sticky, employer-distributed supplemental insurance and a capital base that keeps payouts steady. U.S. premium growth, better persistency and a 44th straight dividend increase fit that view. Japan's falling premiums and margin complicate it, so the quarter leaves the case mixed.

The U.S. and Japan results moved in opposite directions on reserve remeasurement gains. Part of each segment's swing therefore reflects actuarial assumption changes, not premium trends.

Net earnings may overstate the weakness in the insurance business, since the quarter carried portfolio repositioning losses, the tax allowance and a weaker yen. But adjusted earnings also benefited from the remeasurement gains, so they are not a clean read of premium trends either.

What's next

Aflac will webcast its third-quarter earnings call on Thursday, Nov. 5, at 8 a.m. ET. The dividend is payable Dec. 1 to holders of record on Nov. 18.

Another quarter of falling Japan margin and rising U.S. margin would deepen the split in this report. Stabilizing Japan premiums would ease the main concern for the case.