Aflac Incorporated (AFL) Q2 2026: Mixed Results with Strong Earnings Growth — Cautiously Optimistic

Aflac Incorporated (NYSE: AFL) reported its second quarter results for 2026, revealing a mixed performance compared to the previous year. Total revenues decreased by $43 million, or 1.0%, from $4.2 billion in Q2 2025 to $4.1 billion in Q2 2026. However, net earnings saw a significant increase, rising by $226 million, or 37.7%, from $599 million, or $1.11 per diluted share, to $825 million, or $1.63 per diluted share.

Despite the revenue decline, the substantial growth in net earnings is a positive indicator for shareholders. The increase in earnings per share (EPS) reflects effective cost management and improved operational efficiency, which are crucial in a challenging economic environment. However, the decrease in adjusted earnings, which fell by $74 million, or 7.7%, to $883 million, suggests that underlying operational challenges remain.

Key Financial Metrics:

• Total Revenues: $4.1 billion (down $43 million or -1.0% YoY)
• Net Earnings: $825 million (up $226 million or +37.7% YoY)
• Net Earnings per Diluted Share: $1.63 (up $0.52 or +46.8% YoY)
• Adjusted Earnings: $883 million (down $74 million or -7.7% YoY)
• Adjusted Earnings per Diluted Share: $1.75 (down $0.03 or -1.7% YoY)
• Annualized Return on Average Shareholders’ Equity: 10.9%
• Annualized Adjusted Return on Equity (excluding foreign currency remeasurement): 16.6%
• Shareholder Returns: $1.3 billion, including $983 million in share repurchases and $309 million in dividends.

The company also declared a third-quarter dividend of $0.61 per share, reflecting a 5.2% increase from the previous year. This commitment to returning capital to shareholders is a positive sign, especially as Aflac approaches its milestone of 43 consecutive years of dividend increases.

Analyst Opinion

This quarter presents a mixed bag for shareholders. While the significant increase in net earnings and EPS is commendable, the decline in total revenues and adjusted earnings raises concerns about the company's growth trajectory. The challenges faced in the Japanese market, particularly with the weaker yen impacting earnings, highlight the need for Aflac to navigate foreign exchange risks more effectively.

The company's focus on strategic product initiatives in Japan and the U.S. is encouraging, but the results indicate that execution must improve to sustain growth. The decline in adjusted earnings suggests that while Aflac is managing costs well, it may be struggling to drive revenue growth in a competitive environment.

Forward-Looking Catalysts

Investors should closely monitor Aflac's performance in the upcoming quarters, particularly regarding:

• The effectiveness of new product launches in Japan, such as Anshin Palette and Tsumitasu, and their impact on premium sales.
• The company's ability to maintain or improve its adjusted earnings in light of foreign currency fluctuations.
• Continued focus on shareholder returns through dividends and share repurchases, which may provide support for the stock price.

Overall, while the earnings growth is a positive takeaway, the revenue decline and challenges in adjusted earnings warrant a cautious approach moving forward.

Here are the extracted tables from the press release:

AFLAC INCORPORATED CONDENSED INCOME STATEMENT

(UNAUDITED – IN MILLIONS, EXCEPT FOR SHARE AND PER-SHARE AMOUNTS)

Note: All amounts in the following tables are in thousands.

THREE MONTHS ENDED JUNE 30,	2026	2025	% Change
Total revenues	$ 4,117	$ 4,160	-1.0 %
Benefits and claims, net	1,852	2,010	-7.9
Total acquisition and operating expenses	1,270	1,328	-4.4
Earnings before income taxes	995	822	21.0
Income taxes	170	223
Net earnings	$ 825	$ 599	37.7 %
Net earnings per share – basic	$ 1.64	$ 1.12	46.4 %
Net earnings per share – diluted	1.63	1.11	46.8
Shares used to compute earnings per share (000):
Basic	504,123	536,688	-6.1 %
Diluted	505,578	538,425	-6.1
Dividends paid per share	$ 0.61	$ 0.58	5.2 %

AFLAC INCORPORATED AND SUBSIDIARIES CONDENSED BALANCE SHEET

(UNAUDITED – IN MILLIONS, EXCEPT FOR SHARE AMOUNTS)

JUNE 30,	2026	2025	% Change
Assets:
Total investments and cash	$ 103,003	$ 111,769	-7.8 %
Deferred policy acquisition costs	8,948	9,296	-3.7
Other assets	4,010	3,671	9.2
Total assets	$ 115,961	$ 124,736	-7.0
Liabilities and shareholders’ equity:
Policy liabilities	$ 64,348	$ 78,904	-18.4
Notes payable and lease obligations	8,729	8,933	-2.3
Other liabilities	12,572	9,699	29.6
Shareholders’ equity	30,312	27,200	11.4
Total liabilities and shareholders’ equity	$ 115,961	$ 124,736	-7.0
Shares outstanding at end of period (000)	502,257	534,809	-6.1

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