Japan sales shine, runoff still bites
- Aflac Japan new annualized premium sales rose 25.5% in Q1 2026, led by Anshin Palette and Miraito.
- Japan net earned premiums still fell 6.4% in dollars and 3.8% in yen, so the old book is still running off.
- Aflac U.S. sales grew 2.9%, helped by group products, while the traditional individual business stayed slightly down to flat.
- The company returned $1.3 billion to shareholders in Q1 2026 through buybacks and dividends.
- A new Japan reinsurance deal with Japan Post Insurance is small today but could become a new use of capital.
Good launches, slow core
Aflac is executing well where it needed to. In Japan, the new Anshin Palette medical product and Miraito cancer product pushed new annualized premium sales up 25.5% in Q1 2026. That matters because new sales are the main way to fight policy runoff, which means old policies reaching paid-up status or leaving the book.
The problem is that the runoff has not been solved yet. Aflac Japan net earned premiums fell 3.8% in yen and 6.4% in dollars in Q1 2026. Management still expects underlying earned premiums in Japan to decline in 2026, so strong product launches must keep working for more than one quarter.
In the U.S., the shift toward group benefits is helping. U.S. net earned premiums grew 3.5%, and new sales rose 2.9% in Q1 2026. But management also said the core traditional individual business is not growing and is slightly down to flat, which raises the question of whether future U.S. growth will come with lower margins.
Capital return remains a major part of the story. Aflac returned $1.3 billion to shareholders in Q1 2026, including $1.0 billion of share repurchases. The new Japan third-party reinsurance push adds a possible growth path, but the first Japan Post Insurance deal is still immaterial to current results.
Small policies, big back book
Aflac sells supplemental insurance. These policies help cover costs that regular health insurance may not pay, such as cash needs during cancer treatment, hospital stays, disability, or other health events.
The company makes money by collecting premiums, investing that money, and paying claims over time. Profit depends on pricing policies correctly, keeping customers, controlling expenses, and earning enough on the investment portfolio.
Japan is the larger profit engine and has high persistency, with premium persistency of 92.8% at March 31, 2026. But it also has mature policy books where premiums can run off. The U.S. business has lower persistency, 79.3% at March 31, 2026, and is trying to grow through group products, dental, vision, life, absence management, and disability.
Aflac also returns a lot of cash to shareholders. In Q1 2026, it repurchased $1.0 billion of stock and paid $315 million of dividends to shareholders. That can support per-share value, but it does not remove the need for new sales growth.
What Aflac sells
Miraito cancer insurance
Miraito is Aflac Japan's newer cancer product. Cancer made up 54.1% of Aflac Japan new annualized premium sales in Q1 2026.
Anshin Palette medical insurance
Anshin Palette is the new Japan medical product launched in December 2025. The 10-Q says it was a main driver of Japan's 25.5% sales increase in Q1 2026.
Tsumitasu life insurance
Tsumitasu is a first sector life product in Japan. Aflac uses it to attract younger customers and hopes to cross-sell higher-margin third sector products later.
U.S. group benefits
This includes group life, absence management, and disability. Management said these related group areas were up 12.4% in Q1 2026.
U.S. individual voluntary benefits
This is Aflac's classic worksite business sold to individuals. It remains important, but management said it is slightly down to flat.
Dental and vision
Dental and vision are part of the U.S. platform. Dental and vision were 7.7% of U.S. new annualized premium sales in Q1 2026.
Japan third-party reinsurance
Aflac Re Bermuda assumed a block of whole life annuities from Japan Post Insurance. The deal is small now, but it opens a new capital deployment path in Japan.
Japan and U.S. carry it
Mix uses Q1 2026 net earned premiums from the 10-Q: Aflac Japan $1.573 billion, Aflac U.S. $1.555 billion, and Corporate and other $182 million. Japan and the U.S. are the main insurance engines, while Corporate and other includes reinsurance and parent-level items.
What could go wrong
Japan sales fade before premiums stabilize
High impact · Medium oddsJapan sales jumped 25.5% in Q1 2026, but net earned premiums still declined. If Anshin Palette and Miraito lose momentum, Aflac may not replace enough runoff from older policies. The CEO's goal near JPY 80 billion of Japan sales is important, but the internal question remains whether that is enough to turn earned premiums in 2027.
U.S. mix shift lowers margins
Medium impact · High oddsThe U.S. business is growing through group products, but management said the traditional individual business is slightly down to flat. Group benefits can grow faster, but they may carry different margins and claims patterns. Aflac U.S. pretax adjusted margin was 20.4% in Q1 2026, down from 20.8% a year earlier.
Investment credit and real estate losses
Medium impact · Medium oddsAflac invests large insurance float in bonds, loans, and other assets. The 10-Q notes pressure in commercial real estate loans, especially office-backed loans, and says some loans are in default of interest or maturity payments. Credit losses can reduce earnings and capital flexibility.
Yen swings distort results
Medium impact · High oddsAflac earns a large share of its business in Japan, so yen-dollar moves change reported U.S. dollar earnings and book value. In Q1 2026, the average yen-dollar rate was 156.87, 2.8% weaker than the prior year average. The weaker yen reduced adjusted earnings per diluted share by $0.02.
Cyber incident costs rise
Medium impact · Medium oddsAflac disclosed unauthorized access to some U.S. systems in June 2025. The 10-Q says personal information tied to about 22.65 million people was involved, and the company may face costs tied to monitoring, legal work, investigations, and insurance. Management does not currently expect a material financial impact, but the final cost is not fully known.
In one breath
What does Aflac actually do?
Aflac sells supplemental health and life insurance in Japan and the U.S. These policies help pay costs that main health insurance may not cover.
Why is Japan so important to Aflac?
Japan is Aflac's largest profit engine and has very high policy persistency. In Q1 2026, Aflac Japan produced $759 million of pretax adjusted earnings versus $363 million for Aflac U.S.
Is Aflac growing?
New sales are growing, especially in Japan, where Q1 2026 new annualized premium sales rose 25.5%. But Japan earned premiums are still declining, so the company is not yet past its runoff problem.
Why does Aflac buy back so much stock?
Aflac generates cash from mature insurance books and has long used buybacks and dividends to return capital. In Q1 2026, it returned $1.3 billion to shareholders through repurchases and dividends.