AFLAC INC [AFL] Filings

10-Q 1 afl-20240930.htm 10-Q afl-20240930

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

☒

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2024

☐

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission File Number: 001-07434

Aflac Incorporated

_________________________________________________________________________________________________________________________________________________________________________________________________________________________________________

(Exact name of registrant as specified in its charter)

Georgia

58-1167100

(State or other jurisdiction of incorporation or organization)

(I.R.S. Employer Identification No.)

1932 Wynnton Road

Columbus,

Georgia

31999

(Address of principal executive offices)

(ZIP Code)

706.323.3431

(Registrant's telephone number, including area code)


(Former name, former address and former fiscal year, if changed since last report)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading Symbol(s)

Name of each exchange on which registered

Common Stock, $.10 par value per share

AFL

New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. þ Yes ¨ No

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). þ Yes ¨ No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.


Large accelerated filer	þ	Accelerated filer	☐
Non-accelerated filer	¨	Smaller reporting company	☐
		Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). ☐ Yes þ No

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date. 555,528,417 shares of the issuer's common stock were outstanding as of October 24, 2024.

Aflac Incorporated and Subsidiaries

Quarterly Report on Form 10-Q

For the Quarter Ended September 30, 2024

Table of Contents


PART I.		FINANCIAL INFORMATION:	Page

	Item 1.	Financial Statements (Unaudited)

		Consolidated Statements of Earnings Three Months Ended September 30, 2024 and 2023 Nine Months Ended September 30, 2024 and 2023	1

		Consolidated Statements of Comprehensive Income (Loss) Three Months Ended September 30, 2024 and 2023 Nine Months Ended September 30, 2024 and 2023	2

		Consolidated Balance Sheets September 30, 2024, and December 31, 2023	3

		Consolidated Statements of Shareholders' Equity Three Months Ended March 31, 2024 and 2023 Three Months Ended June 30, 2024 and 2023 Three Months Ended September 30, 2024 and 2023	4

		Consolidated Statements of Cash Flows Nine Months Ended September 30, 2024 and 2023	8

		Notes to the Consolidated Financial Statements	9

	Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	80

	Item 3.	Quantitative and Qualitative Disclosures about Market Risk	119

	Item 4.	Controls and Procedures	119

PART II.		OTHER INFORMATION:



	Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	120

	Item 5.	Other Information	120

	Item 6.	Exhibits	121

Glossary of Selected Terms			122

Items other than those listed above are omitted because they are not required or are not applicable.

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements.

Aflac Incorporated and Subsidiaries

Consolidated Statements of Earnings


	Three Months Ended September 30,						Nine Months Ended September 30,
(In millions, except for share and per-share amounts - Unaudited)	2024			2023			2024			2023
Revenues:
Net earned premiums, principally supplemental health insurance (1)		$	3,328		$	3,476		$	10,109		$	10,737
Net investment income		1,006			1,004			3,100			2,946
Net investment gains (losses)		(1,408)			423			239			1,101
Other income (loss)		23			47			76			139
Total revenues		2,949			4,950			13,524			14,923
Benefits and expenses:
Benefits and claims, excluding reserve remeasurement		2,003			2,065			6,042			6,420
Reserve remeasurement (gains) losses		(408)			(205)			(515)			(312)
Total benefits and claims, net		1,595			1,860			5,527			6,108
Acquisition and operating expenses:
Amortization of deferred policy acquisition costs		214			201			638			608
Insurance commissions		251			250			751			797
Insurance and other expenses		747			785			2,179			2,290
Interest expense		50			49			147			148
Total acquisition and operating expenses		1,262			1,285			3,715			3,843
Total benefits and expenses		2,857			3,145			9,242			9,951
Earnings before income taxes		92			1,805			4,282			4,972
Income taxes		185			236			741			581
Net earnings		$	(93)		$	1,569		$	3,541		$	4,391
Net earnings per share:
Basic		$	(.17)		$	2.65		$	6.26		$	7.31
Diluted		(.17)			2.64			6.23			7.28
Weighted-average outstanding common shares used in computing earnings per share (In thousands):
Basic		557,899			591,246			565,757			600,991
Diluted		560,414			593,596			568,216			603,419
Cash dividends per share		$	.50		$	.42		$	1.50		$	1.26

(1) Includes a gain (loss) of $(75) and $22 for the three-month periods and $(80) and $22 for the nine-month periods ended September 30, 2024 and 2023, respectively, related to remeasurement of the deferred profit liability for limited-payment contracts.

See the accompanying Notes to the Consolidated Financial Statements.

Aflac Incorporated and Subsidiaries

Consolidated Statements of Comprehensive Income (Loss)


	Three Months Ended September 30,						Nine Months Ended September 30,
(In millions - Unaudited)	2024			2023			2024			2023
Net earnings		$	(93)		$	1,569		$	3,541		$	4,391
Other comprehensive income (loss) before income taxes:
Unrealized foreign currency translation gains (losses) during period		788			(194)			(52)			(674)
Unrealized gains (losses) on fixed maturity securities:
Unrealized holding gains (losses) on fixed maturity securities during period		268			(2,978)			(457)			489
Reclassification adjustment for (gains) losses on fixed maturity securities included in net earnings		(53)			(41)			(271)			(125)
Unrealized gains (losses) on derivatives during period		2			1			3			4
Effect of changes in discount rate assumptions during period		(1,889)			5,309			3,157			1,563
Pension liability adjustment during period		(3)			1			0			68
Total other comprehensive income (loss) before income taxes		(887)			2,098			2,380			1,325
Income tax expense (benefit) related to items of other comprehensive income (loss)		(502)			520			537			656
Other comprehensive income (loss), net of income taxes		(385)			1,578			1,843			669
Total comprehensive income (loss)		$	(478)		$	3,147		$	5,384		$	5,060

See the accompanying Notes to the Consolidated Financial Statements.

Aflac Incorporated and Subsidiaries

Consolidated Balance Sheets


(In millions, except for share and per-share amounts)	September 30, 2024 (Unaudited)			December 31, 2023
Assets:
Investments and cash:
Fixed maturity securities available-for-sale, at fair value (no allowance for credit losses in 2024 and 2023, amortized cost $67,289 in 2024 and $67,807 in 2023)		$	68,261		$	69,578
Fixed maturity securities available-for-sale - consolidated variable interest entities, at fair value (amortized cost $3,130 in 2024 and $2,882 in 2023)		4,031			3,712
Fixed maturity securities held-to-maturity, at amortized cost, net of allowance for credit losses of $5 in 2024 and $5 in 2023 (fair value $18,975 in 2024 and $19,657 in 2023)		17,698			17,819
Equity securities, at fair value		808			1,088
Commercial mortgage and other loans, net of allowance for credit losses of $284 in 2024 and $274 in 2023 (includes $9,261 in 2024 and $10,150 in 2023 of consolidated variable interest entities)		11,544			12,527
Other investments (includes $2,704 in 2024 and $2,381 in 2023 of consolidated variable interest entities)		7,647			4,530
Cash and cash equivalents		5,612			4,306
Total investments and cash		115,601			113,560
Receivables		814			848
Accrued investment income		696			731
Deferred policy acquisition costs		9,232			9,132
Property and equipment, at cost less accumulated depreciation		421			445
Other		1,678			2,008
Total assets		$	128,442		$	126,724
Liabilities and shareholders’ equity:
Liabilities:
Policy liabilities:
Future policy benefits		$	79,672		$	83,718
Unpaid policy claims		381			261
Unearned premiums		1,406			1,451
Other policyholders’ funds		6,095			6,169
Total policy liabilities		87,554			91,599
Income taxes		454			154
Payables for return of cash collateral on loaned securities		4,233			1,503
Notes payable and lease obligations		7,978			7,364
Other		3,393			4,119
Total liabilities		103,612			104,739
Commitments and contingent liabilities (Note 13)
Shareholders’ equity:
Common stock of $.10 par value. In thousands: authorized 1,900,000 shares in 2024 and 2023; issued 1,356,692 shares in 2024 and 1,355,398 shares in 2023		136			136
Additional paid-in capital		2,876			2,771
Retained earnings		50,972			47,993
Accumulated other comprehensive income (loss):
Unrealized foreign currency translation gains (losses)		(4,139)			(4,069)
Unrealized gains (losses) on fixed maturity securities		557			1,139
Unrealized gains (losses) on derivatives		(20)			(22)
Effect of changes in discount rate assumptions		(67)			(2,560)
Pension liability adjustment		(8)			(8)
Treasury stock, at average cost		(25,477)			(23,395)
Total shareholders’ equity		24,830			21,985
Total liabilities and shareholders’ equity		$	128,442		$	126,724

See the accompanying Notes to the Consolidated Financial Statements.

Aflac Incorporated and Subsidiaries

Consolidated Statements of Shareholders’ Equity


(In millions, except for per share amounts - Unaudited)	Common Stock		Additional Paid-in Capital		Retained Earnings		Accumulated Other Comprehensive Income (Loss)		Treasury Stock		Total Shareholders' Equity
Balance at December 31, 2023	$	136	$	2,771	$	47,993	$	(5,520)	$	(23,395)	$	21,985
Net earnings	0		0		1,879		0		0		1,879
Unrealized foreign currency translation gains (losses) during period, net of income taxes	0		0		0		(597)		0		(597)
Unrealized gains (losses) on fixed maturity securities during period, net of income taxes and reclassification adjustments	0		0		0		(47)		0		(47)
Unrealized gains (losses) on derivatives during period, net of income taxes	0		0		0		(4)		0		(4)
Effect of changes in discount rate assumptions during period, net of income taxes	0		0		0		1,065		0		1,065
Pension liability adjustment during period, net of income taxes	0		0		0		1		0		1
Dividends to shareholders (1) ($.00 per share)	0		0		0		0		0		0
Exercise of stock options	0		4		0		0		0		4
Share-based compensation	0		18		0		0		0		18
Purchases of treasury stock	0		0		0		0		(793)		(793)
Treasury stock reissued	0		13		0		0		13		26
Balance at March 31, 2024	$	136	$	2,806	$	49,872	$	(5,102)	$	(24,175)	$	23,537
Net earnings	0		0		1,755		0		0		1,755
Unrealized foreign currency translation gains (losses) during period, net of income taxes	0		0		0		(425)		0		(425)
Unrealized gains (losses) on fixed maturity securities during period, net of income taxes and reclassification adjustments	0		0		0		(691)		0		(691)
Unrealized gains (losses) on derivatives during period, net of income taxes	0		0		0		4		0		4
Effect of changes in discount rate assumptions during period, net of income taxes	0		0		0		2,920		0		2,920
Pension liability adjustment during period, net of income taxes	0		0		0		2		0		2
Dividends to shareholders (1) ($.50 per share)	0		0		(282)		0		0		(282)
Exercise of stock options	0		2		0		0		0		2
Share-based compensation	0		12		0		0		0		12
Purchases of treasury stock	0		0		0		0		(810)		(810)
Treasury stock reissued	0		15		0		0		8		23
Balance at June 30, 2024	$	136	$	2,835	$	51,345	$	(3,292)	$	(24,977)	$	26,047

(1) Dividends to shareholders are recorded in the period in which they are declared.

See the accompanying Notes to the Consolidated Financial Statements.

(continued)

Aflac Incorporated and Subsidiaries

Consolidated Statements of Shareholders’ Equity (continued)


(In millions, except for per share amounts - Unaudited)	Common Stock		Additional Paid-in Capital		Retained Earnings		Accumulated Other Comprehensive Income (Loss)		Treasury Stock		Total Shareholders' Equity
Balance at June 30, 2024	$	136	$	2,835	$	51,345	$	(3,292)	$	(24,977)	$	26,047
Net earnings	0		0		(93)		0		0		(93)
Unrealized foreign currency translation gains (losses) during period, net of income taxes	0		0		0		952		0		952
Unrealized gains (losses) on fixed maturity securities during period, net of income taxes and reclassification adjustments	0		0		0		156		0		156
Unrealized gains (losses) on derivatives during period, net of income taxes	0		0		0		2		0		2
Effect of changes in discount rate assumptions during period, net of income taxes	0		0		0		(1,492)		0		(1,492)
Pension liability adjustment during period, net of income taxes	0		0		0		(3)		0		(3)
Dividends to shareholders (1) ($.50 per share)	0		0		(280)		0		0		(280)
Exercise of stock options	0		1		0		0		0		1
Share-based compensation	0		21		0		0		0		21
Purchases of treasury stock	0		0		0		0		(505)		(505)

AFLAC INC [AFL] Filings
10-Q	[2024-11]
10-Q	[2024-08]
10-Q	[2024-05-02]
10-K	[2024-02-22]
10-Q	[2023-11-02]
10-Q	[2023-08-02]
10-Q	[2023-05-01]
10-K	[2023-02-24]
10-Q	[2022-11-02]
10-Q	[2022-08-02]
10-Q	[2022-04-29]
10-K	[2022-02-23]
10-Q	[2021-10-28]
10-Q	[2021-07-29]
10-Q	[2021-04-29]
10-K	[2021-02-23]
10-Q	[2020-10-29]
10-Q	[2020-07-29]
10-Q	[2020-04-30]
10-K	[2020-02-21]
10-Q	[2019-10-25]
10-Q	[2019-07-26]
10-Q	[2019-04-26]
10-K	[2019-02-25]
10-Q	[2018-11-01]
10-Q	[2018-08-03]
10-Q	[2018-05-04]
10-K	[2018-02-23]
10-Q	[2017-11-02]
10-Q	[2017-08-03]
10-Q	[2017-05-03]
10-K	[2017-02-24]
10-Q	[2016-11-04]
10-Q	[2016-08-05]
10-Q	[2016-05-04]
10-K	[2016-02-25]
10-Q	[2015-11-03]
10-Q	[2015-08-04]
10-Q	[2015-05-01]
10-K	[2015-02-26]
10-Q	[2014-11-03]
10-Q	[2014-08-05]
10-Q	[2014-05-02]
10-K	[2014-02-27]
10-Q	[2013-11-05]
10-Q	[2013-08-06]
10-Q	[2013-05-06]
10-K	[2013-02-27]
10-Q	[2012-11-02]
10-Q	[2012-08-03]
10-Q	[2012-05-07]
10-K	[2012-02-27]