Aflac executives outlined strong performance across both Japan and U.S. markets during a recent UBS investor conference, highlighting record shareholder returns and continued sales momentum in supplemental insurance. The insurance giant returned nearly $4.8 billion to shareholders in 2025 through dividends and share buybacks, while posting double-digit growth in several product categories. President Virgil Miller expressed satisfaction with Aflac’s 2025 results, emphasizing the company’s position in two of the world’s largest insurance markets.
According to Senior Vice President of Capital Markets David Young, Aflac repurchased $3.5 billion in shares during 2025 and extended its dividend increase streak to 43 consecutive years. The company continues to prioritize capital returns to shareholders while maintaining operational discipline and expense control, according to management remarks at the conference.
Aflac Japan Sales Driven by New Products and Distribution Expansion
In Japan, Aflac is addressing demographic headwinds through product innovation and expanded distribution channels. Miller said the company has responded to Japan’s aging population challenge by introducing products aimed at younger customers, including Tsumitasu, a savings-oriented offering sold primarily through bank alliances.
Additionally, the company reported solid growth from Miraito, a cancer insurance product, and launched Anshin Palette, a new medical product in the fourth quarter. Miller characterized these products as competitive in crowded market segments and positioned to capture younger demographics encouraged by Japan’s push toward long-term value building.
Management disclosed that Aflac increased the number of banks distributing its products in 2025 and successfully recruited approximately 1,300 agents and agencies during the year. Miller said he believes the Japan distribution business is “very near recovered” from post-pandemic challenges, with continued expansion through bank alliances and agency partnerships including Japan Post and Dai-ichi Life.
Interest Rate Flexibility Creates Opportunities
Miller explained that Tsumitasu features a unique design allowing Aflac to adjust rates as interest rates change, noting that the company implemented a rate change in September expected to support future sales. However, management emphasized that most Aflac Japan products are not highly interest-rate sensitive, with Tsumitasu representing the primary exception.
Young noted that higher Japanese government bond yields on the long end of the curve could create opportunities to sell more Tsumitasu through bank channels. He also mentioned potential investment opportunities in higher-yielding Japanese government bonds or investment-grade credit to better match asset and liability duration.
U.S. Market Shifts Toward Broker Distribution and Group Products
In the United States, Aflac reported significant growth driven by broker relationships and group product expansion. Miller said brokers now represent approximately 80 percent of the total U.S. market and generated more than 60 percent of Aflac’s U.S. sales in 2025, marking two consecutive years where broker sales exceeded the agency channel.
Meanwhile, the company posted strong results across multiple U.S. business lines. Overall group products grew 14 percent, which Miller characterized as approximately three times the market rate. Life, Absence, and Disability products delivered 11 percent growth, while dental and vision sales increased 48.8 percent following a recovery from previous operational challenges.
Miller said Aflac has increased recruiting in its agency channel for two consecutive years and improved the conversion rate of recruits into productive sellers by 16 percent. The company remains committed to streamlining enrollment processes, developing a new application designed to enroll customers “in one minute” to accommodate employers’ limited tolerance for lengthy face-to-face enrollments.
Technology and AI Investment Priorities
Management described Aflac as “more advanced” in AI deployment in Japan due to a single national regulator and regulatory encouragement, compared to the complexity of U.S. state-by-state filing requirements. In Japan, the company is using AI to improve agent efficiency, reduce back-office work, and enable AI-driven enrollment using bots and avatars, according to Miller.
In contrast, U.S. operations are using automation to improve efficiency while continuing to rely on agents and brokers for distribution. Miller noted that Aflac has digital products available for online purchase in certain cases, though the agent-broker model remains central to the U.S. strategy.
Capital Allocation Focused on Returns, Selective M&A Approach
Miller reiterated that Aflac’s capital priorities begin with dividends and share repurchases, crediting CFO Max Brédén for generating excess capital through strategies including the creation of Aflac Bermuda Re. He said management maintains an internal capital marker near 10 percent and currently operates at approximately 6 percent, with expectations to continue moving toward the 10 percent range before reevaluating allocation strategies.
On potential acquisitions, Miller said Aflac is “organic-driven” and does not pursue mergers and acquisitions simply to grow inorganically. He said he does not currently see an urgent product gap requiring an acquisition, contrasting that with past deals intended to fill product gaps in the U.S. group market under a “buy, then build” approach.
Management has not disclosed specific timelines for future capital allocation decisions or potential strategic initiatives beyond the stated focus on reaching internal capital targets. The company will continue evaluating opportunities as market conditions and operational priorities evolve.
