Aflac Japan generated 53% of adjusted revenues in 2025 and 76% of total assets; earnings tied to Japanese economy, JGBs, and yen exchange rate
Relevance 95·Dependency 90·Confidence 98
Source evidence
“Aflac Japan's adjusted revenues accounted for 53% of the Company's total adjusted revenues in 2025”
Japanese yen
Currency Exposure
Yen/dollar fluctuations materially affect reported earnings, cash flows and book value; yen weakening suppresses reported results.
Relevance 95·Dependency 85·Confidence 95
Source evidence
“fluctuations in the yen/dollar exchange rate can have a significant effect on reported results”
Cybersecurity risk
Regulatory Exposure
Cyber incidents, including the June 2025 exfiltration event, can cause regulatory sanctions, litigation, remediation costs, and reputational damage affecting U.S. and Japan operations.
Relevance 95·Dependency 80·Confidence 95
Source evidence
“the June 2025 cyber incident where the Company became aware of the exfiltration of certain personal information relating to a substantial number of customers, beneficiaries, employees, agents, and other individuals in the Company’s U.S. business”
Insurance regulation (U.S., Japan, Bermuda)
Regulatory Exposure
Nebraska, FSA/Japanese, and Bermuda regulation restrict subsidiary dividend capacity to the Parent, affecting debt service, dividends, and buybacks.
Relevance 90·Dependency 85·Confidence 92
Source evidence
“The FSA does not allow dividends or other payments from Aflac Japan unless it meets certain financial criteria as governed by Japanese corporate law.”
Japan's aging population and 100-year lifespans drive demand for supplemental health, asset formation, retirement and nursing care products in the Aflac Japan segment.
Relevance 85·Dependency 80·Confidence 95
Source evidence
“With Japan’s aging population and the rise in healthcare costs, supplemental health care insurance products remain attractive.”
Japan Post Group
Customer Exposure
Japan Post Group is a major affiliated corporate agency distribution channel with ~20,000 postal outlets selling Aflac Japan's cancer products
Relevance 85·Dependency 70·Confidence 93
Source evidence
“the number of postal outlets of Japan Post Co. Ltd. (Japan Post Co.) offering Aflac Japan's cancer product increased, with approximately 20,000 postal outlets as of December 31, 2025”
Japan Post Group
Customer Exposure
Japan Post Group has accounted for a significant portion of Aflac Japan's total sales in recent periods
Relevance 80·Dependency 75·Confidence 90
Source evidence
“such as Japan Post Group, which in recent periods has accounted for a significant portion of Aflac Japan's total sales”
Legacy IT systems and cloud adoption
Technology Dependency
Business depends on technology systems for employers, policyholders, associates, and brokers; legacy systems require heavy investment, and IT transformation and cloud adoption increase cyber attack exposure.
Relevance 80·Dependency 75·Confidence 92
Source evidence
“As the Company pursues IT transformation and increased cloud adoption, it inherently exposes the Company to potential cyber-related attacks.”
Global capital markets volatility
Competitive Exposure
Large investment portfolio and market-sensitive insurance liabilities and derivatives expose results to capital market stress and volatility.
Relevance 80·Dependency 70·Confidence 90
Source evidence
“Stressed conditions, volatility and disruptions in global capital markets... can have an adverse effect on the Company”
Third sector cancer and medical products
Demand Driver
Premium shift from first sector savings to third sector cancer/medical products drives Japan benefit ratio outlook and 2026 sales growth.
Relevance 75·Dependency 65·Confidence 90
Source evidence
“the premium shift over recent years from first sector savings products to third sector cancer and medical products, as well as first sector protection products”
U.S. dollar
Currency Exposure
USD-denominated investments at Aflac Japan/Aflac Re create unmatched FX exposure vs JPY liabilities; hedged proportion reduced, increasing earnings volatility
Relevance 75·Dependency 60·Confidence 90
Source evidence
“Investing in U.S. dollar-denominated investments in Aflac Japan and Aflac Re creates an unmatched foreign currency exposure and related capital ratio volatility”
interest rates
Demand Driver
Rate differentials raise FX hedging costs; JGB values and JPY reinvestment rates sensitive to BoJ policy; rising rates also create Japan regulatory impairment risk
Relevance 75·Dependency 55·Confidence 90
Source evidence
“The continuing difference between U.S. dollar and Japanese yen interest rates also contributes to costs of hedging foreign currency exchange risk”
Artificial intelligence
Regulatory Exposure
AI adoption raises cybersecurity risk and the Company incurs expenses for AI development; AI also makes cyber-attacks harder to detect and mitigate.
Relevance 75·Dependency 55·Confidence 90
Source evidence
“The Company will continue to incur expenses related to, among other things, investments in digital capabilities and product innovation including the development and use of artificial intelligence (AI).”
Dai-ichi Life
Customer Exposure
Dai-ichi Life's ~37,000 representatives distribute Aflac Japan's cancer products
Relevance 75·Dependency 55·Confidence 93
Source evidence
“approximately 37,000 Dai-ichi Life representatives offer Aflac Japan's cancer products”
Japan insurance market deregulation
Competitive Exposure
2001 deregulation increased number of insurers offering stand-alone cancer and medical insurance, intensifying competition
Relevance 70·Dependency 55·Confidence 88
Source evidence
“Since the deregulation of the Japan market in 2001, the number of insurance companies offering stand-alone cancer and medical insurance has increased, intensifying competition.”
Cybersecurity incident
Legal Exposure
Cybersecurity incident created expense and potential future litigation, investigation, and elevated insurance premium costs.
Relevance 70·Dependency 50·Confidence 90
Source evidence
“expenses arising from potential litigation, governmental investigations, or enforcement actions; ... elevated cybersecurity insurance premiums”
Japan bank channel
Customer Exposure
Banks are a key source of insurance solutions in Japan; Aflac Japan has agreements with ~90% of banks
Relevance 70·Dependency 50·Confidence 92
Source evidence
“At December 31, 2025, Aflac Japan had agreements with approximately 90% of the total number of banks in Japan to sell its products.”
U.S. and Japan tax law changes
Legal Exposure
Changes in U.S. or Japan tax laws or interpretations, plus audit results and earnings mix, could raise the effective tax rate and reduce earnings.
Relevance 70·Dependency 50·Confidence 90
Source evidence
“If the Company's effective tax rate were to increase, the Company's financial condition and results of operations could be adversely affected.”
Daido Life
Customer Exposure
Daido Life's ~3,700 representatives distribute cancer products to SME owners and executives
Relevance 70·Dependency 45·Confidence 92
Source evidence
“Aflac Japan's alliance with Daido Life was launched in 2013, and approximately 3,700 Daido Life representatives offer Aflac Japan's cancer products”
Third-party vendor operations
Supplier Dependency
Outsourced business support functions expose Aflac to vendor outages, cyber incidents, and foreign political/military disruptions affecting operations, revenues, and costs.
Relevance 65·Dependency 60·Confidence 88
Source evidence
“The reliance on these third-party vendors creates a number of business risks, such as the risk that the Company may not maintain service quality, control or effective management of the outsourced business operations”
Life, disability, dental and vision products
Demand Driver
Growth in these higher benefit ratio products drives Aflac U.S. 2026 benefit ratio guidance of 48%-52% and revenue growth expected to reduce expense ratios over time.
Relevance 65·Dependency 50·Confidence 85
Source evidence
“driven by growth in life, disability, and dental and vision insurance products, all of which typically carry higher benefit ratios”
Economic Solvency Ratio (ESR)
Regulatory Exposure
ESR at 100% is the basis for supervisory intervention by Japanese authorities
Relevance 65·Dependency 50·Confidence 85
Source evidence
“The ESR level, which is the basis for supervisory intervention by the authorities, is set at 100%.”
Solvency Margin Ratio (FSA)
Regulatory Exposure
Japan FSA prescribes the SMR for all Japanese life insurers to measure ability to pay policyholder claims
Relevance 65·Dependency 50·Confidence 85
Source evidence
“This insurance ratio is prescribed by the Japan Financial Services Agency (FSA) and is used for all life insurance companies in Japan”
Major medical carriers
Competitive Exposure
Major medical carriers entering supplemental segments and bundling/discounting products to gain market share pressure Aflac U.S.
Relevance 65·Dependency 50·Confidence 85
Source evidence
“leverage their core benefit offerings by bundling and discounting products in order to gain market share”
Catastrophic events
Legal Exposure
Catastrophes can cause claims volatility, premium grace periods, lapse-rate volatility, infrastructure disruption, and changes to 2026 Outlook guidance.
Relevance 60·Dependency 40·Confidence 90
Source evidence
“These catastrophic events may cause changes to estimates of future earnings, capital deployment and other guidance the Company has provided to the markets in the 2026 Outlook section of Item 7. MD&A.”
U.S. millennial and diverse consumer segments
Demand Driver
Shifting U.S. demographics including millennials, diverse cultural communities and aging baby boomers create new product opportunities and demand.
Relevance 60·Dependency 40·Confidence 85
Source evidence
“Customer demographics continue to shift, generating new opportunities across various consumer groups, including millennials and diverse cultural communities.”
U.S. interest rates
Revenue Exposure
Corporate and other 2026 pretax adjusted earnings outlook assumes U.S. interest rates remain stable.
Relevance 55·Dependency 40·Confidence 70
Source evidence
“assuming that U.S. interest rates remain stable and excluding the impact of tax credit investments”
Japanese banks (358 agreements)
Customer Exposure
Bank channel (3.3% of Japan new annualized premium sales in 2025) exposed to financial institution health
Relevance 55·Dependency 35·Confidence 95
Source evidence
“the Company had agreements with 358 banks to market Aflac's products in Japan. Sales through these banks represented 3.3% of Aflac Japan's new annualized premium sales in 2025”
U.S. labor market tightness
Cost Driver
Tight labor market and elevated turnover could increase Aflac U.S. operating costs and impair hiring/retention
Relevance 50·Dependency 40·Confidence 85
Source evidence
“These conditions, together with higher levels of inflation may result in increased operating expenses”